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公司公告

本钢板B:财务会计报告(英文版)2018-08-28  

						Bengang Steel Plates Co., Ltd.


  FINANCIAL STATEMENTS



     (From January to June 2018)



           (Unaudited)




        27 August 2018
                INDEX                  PAGES



CONSOLIDATED STATEMENT OF FINANCIAL        1-4
POSITION AND STATEMENT OF FINANCIAL
POSITION


CONSOLIDATED STATEMENT OF                  5-6
COMPREHENSIVE INCOME AND STATEMENT
OF COMPREHENSIVE INCOME


CONSOLIDATED STATEMENT OF CASH FLOWS       7-8
AND STATEMENT OF CASH FLOWS


CONSOLIDATED STATEMENT OF CHANGES IN      9-12
EQUITY AND STATEMENT OF CHANGES IN
EQUITY


NOTES TO THE FINANCIAL STATEMENTS         1-96
                              BENGANG STEEL PLATES CO., LTD.
                      CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                         As at 30 June 2018
                          (Expressed in Renminbi unless otherwise indicated)
                        Assets                             Notes           Ending balance           Beginning balance
Current assets:
Cash at bank and on hand                                    5(1)               18,570,241,607.21       17,037,713,410.49
Settlement provisions
Capital lent
Financial assets at fair value through profit or loss
Derivative financial assets
Notes receivable                                           5(2)               3,164,893,647.96          3,846,433,700.87
Accounts receivable                                        5(3)                  707,889,986.34           728,597,926.39
Prepayments                                                5(4)               1,200,163,813.66          1,280,689,094.33
Premium receivable
Reinsurance accounts receivable
Receivable deposit for reinsurance contract
Interests receivable                                       5(5)                    3,503,285.16            18,448,520.50
Dividends receivable
Other receivables                                          5(6)                  271,090,946.12           290,376,985.34
Redemptory financial assets for sale
Inventories                                                5(7)              12,893,804,549.47         11,209,898,096.16
Assets classified as held for sale
Non-current assets due within one year
Other current assets                                       5(8)                  217,616,432.96           809,322,127.79
Total current assets                                                         37,029,204,268.88         35,221,479,861.87
Non-current assets:
Loan and advances issued
Available-for-sale financial assets                        5(9)                    4,088,980.00             3,888,980.00
Held-to-maturity investment
Long-term receivables
Long-term equity investments                              5(10)                    2,726,009.03             2,726,009.03
Investment properties
Fixed assets                                              5(11)              22,739,708,839.78         23,852,067,166.10
Construction in progress                                  5(12)               2,740,359,727.63          2,391,584,410.46
Construction materials                                    5(13)                    2,925,581.89             4,558,919.60
Disposal of fixed assets
Productive biological assets
Oil and gas assets
Intangible assets                                         5(14)                  281,428,909.47           253,884,881.48
Development expenditure
Goodwill
Long-term deferred expenses
Deferred tax assets                                       5(15)                  194,939,124.19           200,618,461.36
Other non-current assets                                  5(16)               1,037,735,849.00          1,067,334,823.12
Total non-current assets                                                     27,003,913,020.99         27,776,663,651.15
Total assets                                                                 64,033,117,289.87         62,998,143,513.02
   The notes to the financial statements attached form part of these financial statements.


   Legal Representative:                      Person in charge of accounting:                Accounting Dept. Leader:




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

   Legal Representative:                      Person in charge of accounting:                 Accounting Dept. Leader:




                                                    Financial Statements Page 2
  BENGANG STEEL PLATES CO., LTD.
                    STATEMENT OF FINANCIAL POSITION
                                As at 30 June 2018
                 (Expressed in Renminbi unless otherwise indicated)
                         Assets                            Notes            Ending balance         Beginning balance
Current assets:
Cash at bank and on hand                                                      17,784,602,468.77       16,717,913,081.42
Financial assets at fair value through profit or loss

Derivative financial assets
Notes receivable                                                               3,592,298,525.73        3,515,361,992.96
Accounts receivable                                        14(1)                441,694,805.16           482,181,593.45
Prepayments                                                                    1,200,163,813.66        1,280,354,579.87
Interests receivable                                                               3,503,285.16           18,377,036.96
Dividends receivable
Other receivables                                          14(2)                359,047,123.99           376,863,448.72
Inventories                                                                   10,890,539,001.27        9,228,860,225.75
Assets classified as held for sale
Non-current assets due within one year
Other current assets                                                            183,648,538.95           682,211,823.73
Total current assets                                                          34,455,497,562.69       32,302,123,782.86
Non-current assets:
Available-for-sale financial assets                                                3,888,980.00            3,888,980.00
Held-to-maturity investment
Long-term receivables
Long-term equity investments                               14(3)               2,016,281,902.16        1,756,981,902.16
Investment properties
Fixed assets                                                                  20,682,878,459.91       21,621,369,452.27
Construction in progress                                                       2,729,970,930.48        2,383,533,130.37
Construction materials                                                             2,500,795.57            4,134,133.28
Disposal of fixed assets
Productive biological assets
Oil and gas assets
Intangible assets                                                               150,429,246.60           152,082,315.24
Development expenditure
Goodwill
Long-term deferred expenses
Deferred tax assets                                                              94,510,584.16           100,189,921.33
Other non-current assets                                                       1,037,735,849.00        1,037,735,849.00
Total non-current assets                                                      26,718,196,747.88       27,059,915,683.65
Total assets                                                                61,173,694,310.57         59,362,039,466.51
  The notes to the financial statements attached form part of these financial statements.


  Legal Representative:                   Person in charge of accounting:               Accounting Dept. Leader:




                                                Financial Statements Page 3
                                      BENGANG STEEL PLATES CO., LTD.
                                STATEMENT OF FINANCIAL POSITION (Continued)
                                                 As at 30 June 2018
                                    (Expressed in Renminbi unless otherwise indicated)
                    Liabilities and equities                         Notes             Ending balance         Beginning balance
Current Liabilities:
Short-term loans                                                                       20,221,393,300.00       20,499,694,500.00
Financial liabilities at fair value through profit or loss

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

    Legal Representative:                           Person in charge of accounting:                Accounting Dept. Leader:




                                                         Financial Statements Page 4
                               BENGANG STEEL PLATES CO., LTD.
                     CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                     From January to June 2018
                             (Expressed in Renminbi unless otherwise indicated)
                                          Items                                               Notes    January to June     January to June
                                                                                                            2018                2017
1. Total operating income                                                                             23,441,247,377.14   20,736,486,903.74
Including: Operating income                                                                   5(35)   23,441,247,377.14   20,736,486,903.74
             Interest income
             Premium earned
             Income from handling charges and commission
2. Total operating cost                                                                               22,717,986,325.30   20,109,129,759.95
Including: Operating cost                                                                     5(35)   20,804,207,420.98   18,690,665,966.11
             Interest cost
             Expenditure for handling charges and commission
             Surrender value
             Net expenditure for compensation
             Net provision for insurance contract appropriated
             Bonus payment for policy
             Reinsurance premium
             Taxes and surcharges                                                             5(36)     153,307,375.64      133,756,731.07
             Selling and distribution expenses                                                5(37)     514,038,008.95      587,632,707.43
             General and administrative expenses                                              5(38)     464,313,066.09      358,951,405.08
             Financial expenses                                                               5(39)     803,038,417.28      381,513,404.80
             Asset impairment loss                                                            5(40)     -20,917,963.64      -43,390,454.54
Add: Gains from the change in fair value ("-" for loss)
        Income on investment ("-" for loss)                                                   5(41)        3,493,150.68        3,294,593.14
        Including: Income from associates and joint ventures
        Exchange Income ("-" for loss)
        Gains from disposal of Asset ("-" for loss)                                           5(42)         825,580.63        3,015,294.00
        Other income                                                                          5(43)      41,274,238.70       15,047,000.00
3. Operating profit ("-" for loss)                                                                      768,854,021.85      648,714,030.93
Add: Non-operating income                                                                     5(44)       2,138,397.80        2,952,194.58
Less: Non-operating expenses                                                                  5(45)       1,382,402.26        4,593,420.30
4. Total profit ("-" for total loss)                                                                    769,610,017.39      647,072,805.21
Less: Income tax expenses                                                                     5(46)      11,636,226.04      117,105,061.16
5. Net Profit ("-" for net loss)                                                                        757,973,791.35      529,967,744.05
1) Classified by going concern
  (1) Net profit from continuing operations                                                             757,973,791.35      529,967,744.05
  (2) Net profit from discontinuing operation
2) Classified by ownership
   Non-controlling shareholders                                                                           1,021,803.76        6,332,090.48
   Attributable to: Owners of parent company                                                            756,951,987.59      523,635,653.57
6. Other comprehensive income after tax
Other comprehensive income attributable to owners of parent company after tax
1) Other comprehensive income unable to be reclassified into profit and loss afterwards
   (1) Change of net liabilities or net assets through remeasuring defined benefit plan
   (2) Share of other comprehensive income of investee not to be classified into profit or
loss afterwards under equity method
2) Other comprehensive income to be reclassified into profit and loss afterwards
   (1) Share of other comprehensive income of investee to be classified into profit or
       loss afterwards under equity method
   (2) Gains and losses on remeasuring available-for-sale financial assets
   (3) Gains and losses resulting from reclassification of held-to maturity investment to
financial assets held-for sale
   (4) Effective portion of gains or losses from cash flow hedging
   (5)           Gains and losses resulting from translating the foreign          currency
financial statements
   (6) Other
Other comprehensive income attributable to non-controlling shareholders after tax
7. Total comprehensive income                                                                           757,973,791.35      529,967,744.05
      Total comprehensive income attributable to owners of parent company                               756,951,987.59      523,635,653.57
      Total comprehensive income attributable to non-controlling shareholders                             1,021,803.76        6,332,090.48
8. Earnings per share:
      1) Basic earnings per share (RMB)                                                                          0.195               0.167
      2) Diluted earnings per share (RMB)                                                                        0.195               0.167


    The notes to the financial statements attached form part of these financial statements.
    Legal Representative:        Person in charge of accounting:       Accounting Dept. Leader:




                                                      Financial Statements Page 5
                                       BENGANG STEEL PLATES CO., LTD.
                                   STATEMENT OF COMPREHENSIVE INCOME
                                              From January to June 2018
                                   (Expressed in Renminbi unless otherwise indicated)

                                Items                              Notes    January to June 2018        January to June 2017

1. Operating income                                                14(4)            23,682,865,109.14         21,197,516,779.20
Less: Operating cost                                               14(4)            21,401,191,962.20         19,482,976,074.32
       Taxes and surcharges                                                            135,543,392.96           116,783,416.00
       Selling and distribution expenses                                               265,554,867.46           373,519,186.39
       General and administrative expenses                                             440,663,658.86           336,370,276.02
       Financial expenses                                                              774,523,490.60           350,175,885.42
       Asset impairment loss                                                           -20,917,963.64            -43,390,454.54
Add: Gains from the change in fair value ("-" for loss)
       Income on investment ("-" for loss)                         14(5)                 3,493,150.68           105,369,227.90
       Including: Income from associates and joint ventures
      Gains from disposal of assets ("-" for loss)                                         825,580.63              3,015,294.00
       Other income                                                                     41,274,238.70            15,047,000.00
2. Operating profit ("-" for loss)                                                     731,898,670.71           704,513,917.49
Add: Non-operating income                                                                1,714,748.66              2,214,787.86
Less: Non-operating expenses                                                             1,382,402.26              4,593,420.30
3. Total profit ("-" for total loss)                                                   732,231,017.11           702,135,285.05
Less: Income tax expenses                                                                5,679,337.17           100,308,537.10
4. Net Profit ("-" for net loss)                                                       726,551,679.94           601,826,747.95
 (1) Net profit from continuing operations                                             726,551,679.94           601,826,747.95
 (2) Net profit from discontinuing operation
5. Other comprehensive income after tax
  1) Other comprehensive income unable to be reclassified
     into profit and loss afterwards
     (1) Change of net liabilities or net assets through
     remeasuring defined benefit plan
     (2) Share of other comprehensive income of investee not
     to be classified into profit or loss afterwards under
     equity method
  2) Other comprehensive income to be reclassified into
     profit and loss afterwards
     (1) Share of other comprehensive income of investee to
     be classified into profit or loss afterwards under equity
     method
     (2) Gains and losses on remeasuring available-for-sale
     financial assets
     (3) Gains and losses resulting from reclassification of
     held-to-maturity investment to financial assets held for
     saleEffective portion of gains or losses from cash flow
     hedging
     (5)Gains and losses resulting from translating the foreign
     currency financial statements
     (6) Other
6. Total comprehensive income                                                          726,551,679.94           601,826,747.95
7. Earnings per share:
     1) Basic earnings per share (RMB)
     2) Diluted earnings per share (RMB)
     The notes to the financial statements attached form part of these financial statements.
     Legal Representative:                     Person in charge of accounting:     Accounting Dept. Leader:
                                                   Financial Statements Page 6
                                          BENGANG STEEL PLATES CO., LTD.
                                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                                 From January to June 2018
                                      (Expressed in Renminbi unless otherwise indicated)
                               Items                                    Notes         January to June 2018       January to June 2017
1.Cash flow from operating activities
Cash received from sale of goods or rendering of services                                   15,984,735,085.76          14,489,666,407.59
Net increase of customers' deposit and interbank deposit
Net increase of loan from central bank
Net increase of loans from other financial institutions
Cash received for premium of original insurance contract
Net cash received for reinsurance business
Net increase of deposit and investment of the insured
Net increase of Financial assets at fair value through profit or loss
Cash from receiving interest, handling charge and commission
Net increase of loans from other financial institutions
Net increase of fund for buy-back business
Tax rebate received                                                                            246,514,404.27              71,132,309.30
Other cash received relating to operating activities                    5(47)                   81,782,480.19              87,817,078.61
Subtotal of cash inflows from operating activities                                          16,313,031,970.22          14,648,615,795.50
Cash paid for goods and services                                                            14,086,077,537.47          17,237,734,129.30
Net increase of customer's loan and advances
Net increase of deposit in central bank and interbank deposit
Cash for payment of compensation for original insurance contract
Cash for payment of interest, handling charge and commission
Cash for payment of policy bonus
Cash paid to and on behalf of employees                                                        779,373,374.96             719,101,828.61
Cash paid for all types of taxes                                                               406,064,168.90             390,701,219.38
Other cash paid relating to operating activities                        5(47)                  310,997,147.42             348,384,302.93
Subtotal of cash outflows from operating activities                                         15,582,512,228.75          18,695,921,480.22
Net cash flows from operating activities                                                       730,519,741.47          -4,047,305,684.72
2. Cash flows from investing activities
Cash received from return on investments                                                       500,000,000.00             424,000,000.00
Cash received from distribution of dividends or profit                                           3,493,150.68               3,294,593.14
Net cash received from disposal of fixed assets, intangible assets
and other long-term assets
Net cash received from disposal of subsidiary and other operating
units
Other cash paid relating to investing activities
Subtotal of cash inflows from investing activities                                             503,493,150.68             427,294,593.14
Cash paid for acquisition of fixed assets, intangible assets and
other long-term assets                                                                         680,441,782.39             702,058,422.96
Cash paid for acquisition of investments                                                                                  180,000,000.00
Net increase of mortgage loan
Net cash received from subsidiary and other operating unit
Other cash paid relating to investing activities
Subtotal of cash outflows from investing activities                                            680,441,782.39             882,058,422.96
Net cash flows from investing activities                                                      -176,948,631.71            -454,763,829.82
3. Cash flows from financing activities
Proceeds from investment                                                                      3,965,799,988.19
Including: Proceeds from investment of non-controlling
shareholders of subsidiary
Proceeds from borrowings                                                                      9,721,396,957.08         10,419,164,500.00
Cash received from bond issuance
Other proceeds relating to financing activities
Subtotal of cash inflows from financing activities                                          13,687,196,945.27          10,419,164,500.00
Cash repayments of borrowings                                                               14,683,452,081.71           6,099,082,442.74
Cash payments for distribution of dividends, profit or interest
expenses                                                                                       661,538,139.82             565,025,996.70
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                                         15,344,990,221.53            6,664,108,439.44
Net cash flows from financing activities                                                    -1,657,793,276.26            3,755,056,060.56
4. Effect of foreign exchange rate changes on cash and cash
equivalents                                                                                    105,015,610.23             -41,586,403.20
5. Net increase in cash and cash equivalents                                                  -999,206,556.27            -788,599,857.18
Add: Cash and cash equivalents at the beginning of the period                               17,037,713,410.49          12,273,574,488.67
6. Cash and cash equivalents at the ending of the period                                    16,038,506,854.22          11,484,974,631.49
      The notes to the financial statements attached form part of these financial statements.
      Legal Representative:                              Person in charge of accounting:              Accounting Dept. Leader:




                                                            Financial Statements Page 7
                                       BENGANG STEEL PLATES CO., LTD.
                                          STATEMENT OF CASH FLOWS
                                              From January to June 2018
                                   (Expressed in Renminbi unless otherwise indicated)
                                                                                         January to June          January to June
                                   Items                                     Notes
                                                                                              2018                     2017
1. Cash flow from operating activities
Cash received from sale of goods or rendering of services                                  15,778,223,117.53        14,377,855,065.89
Tax rebate received                                                                             119,119,395.04         21,102,552.86
Other cash received relating to operating activities                                             76,026,838.22         80,547,620.06
Subtotal of cash inflows from operating activities                                         15,973,369,350.79        14,479,505,238.81
Cash paid for goods and services                                                           13,721,886,325.25        17,094,207,253.57
Cash paid to and on behalf of employees                                                         726,170,588.86        672,852,272.11
Cash paid for all types of taxes                                                                341,018,028.32        330,314,831.68
Other cash paid relating to operating activities                                                222,352,157.09        244,216,504.53
Subtotal of cash outflows from operating activities                                        15,011,427,099.52        18,341,590,861.89
Net cash flows from operating activities                                                        961,942,251.27      -3,862,085,623.08
2. Cash flows from investing activities
Cash received from return on investments                                                        500,000,000.00        424,000,000.00
Cash received from distribution of dividends or profit                                             3,493,150.68       105,353,447.08
Net cash received from disposal of fixed assets, intangible assets and
other long-term assets
Net cash received from disposal of subsidiary and other operating
units
Other cash received relating to investing activities
Subtotal of cash inflows from investing activities                                              503,493,150.68        529,353,447.08
Cash paid for acquisition of fixed assets, intangible assets and other
long-term assets                                                                                677,920,104.21        687,313,444.96

Cash paid for acquisition of investments                                                        259,300,000.00        180,000,000.00
Net cash paid for acquisition of subsidiary & other operating unit
Other cash paid relating to investing activities
Subtotal of cash outflows paid for investing activities                                         937,220,104.21        867,313,444.96
Net cash flows from investing activities                                                        -433,726,953.53       -337,959,997.88
3. Cash flows from financing activities
Proceeds from investment                                                                    3,965,799,988.19
Cash received from borrowings                                                               8,986,529,900.00         9,396,164,500.00
Other proceeds relating to financing activities
Other cash received relating to financing activities
Subtotal of cash inflows from financing activities                                         12,952,329,888.19         9,396,164,500.00
Cash repayments of borrowings                                                              13,939,938,977.79         5,345,526,396.17
Cash payments for distribution of dividends, profit or interest                                 635,530,683.74        399,928,132.12
Other cash payments relating to financing activities
Subtotal of cash outflows from financing activities                                        14,575,469,661.53         5,745,454,528.29
Net cash flows from financing activities                                                    -1,623,139,773.34        3,650,709,971.71
4. Effect of foreign exchange rate changes on cash and cash
equivalents                                                                                     105,012,744.72         -41,635,090.04

5. Net increase in cash and cash equivalents                                                    -989,911,730.88       -590,970,739.29
Add: Cash and cash equivalents at the beginning of the period                              16,713,104,199.65        11,876,536,613.66
6. Ending balance of cash and cash equivalents                                             15,723,192,468.77        11,285,565,874.37
      The notes to the financial statements attached form part of these financial statements.
      Legal Representative:                     Person in charge of accounting:                   Accounting Dept. Leader:

                                                     Financial Statements Page 8
                                                                                                   BENGANG STEEL PLATES CO., LTD.
                                                                                           CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                                                                          From January to June 2018
                                                                                               (Expressed in Renminbi unless otherwise indicated)
                                                                                                                                                            January to June 2018
                                                                                                                       Owner’s equity attributable to parent company                                                              Non-controlling   Total shareholder’s
                                                                                                                                                                                                                                      interests            equity
                           Item
                                                                                Other equity instruments                             Less:          Other                                             General
                                                                                                                                                                        Special        Surplus                  Undistributed
                                                         Share capital     Preference    Perpetu               Capital reserves     treasury   comprehensive                                           risk
                                                                                                      Others                                                            reserves       reserves                    profits
                                                                             shares      al bond                                    shares         income                                             reserve
1. Ending balance of last year                          3,136,000,000.00                                       9,114,845,542.05                                         475,046.75   961,105,529.85             1,103,162,610.35    533,475,744.19      14,849,064,473.19
Add: Change of accounting policies
      Correction of errors for last period
      Business consolidation under common control
      Others
2. Beginning balance of current year                    3,136,000,000.00                                       9,114,845,542.05                                         475,046.75   961,105,529.85             1,103,162,610.35    533,475,744.19      14,849,064,473.19
3. Changes in current year (“-” for decrease)          739,371,532.00                                        3,228,364,305.24                                     15,490,078.17                                563,183,410.99       1,436,886.02       4,547,846,212.42
  1) Total comprehensive income                                                                                                                                                                                  756,951,987.59       1,021,803.76         757,973,791.35
  2) Capital increase and decrease by shareholders       739,371,532.00                                        3,228,364,305.24                                                                                                                          3,967,735,837.24
      (1) Common share invested by shareholders          739,371,532.00                                        3,228,364,305.24                                                                                                                          3,967,735,837.24
      (2) Capital input by the holder of other equity
      instruments
      (3) Share-based payment attributable to owners'
      equity
      (4) Others
  3) Profit distribution                                                                                                                                                                                         -193,768,576.60                          -193,768,576.60
      (1) Appropriation to surplus reserves
      (2) Appropriation to general risk reserve
      (3) Profit distribution to shareholders                                                                                                                                                                    -193,768,576.60                          -193,768,576.60
      (4) Others
  4) Transfers within shareholders' equity
      (1) Capital reserves transferred into paid-in
      capital (or stock)
      (2) Surplus reserves transferred into paid-in
      capital (or stock)
      (3) Surplus reserves to recover loss
      (4) Others
  5) Special reserves                                                                                                                                               15,490,078.17                                                      415,082.26           15,905,160.43
     (1) Provision of special reserves                                                                                                                              22,983,003.78                                                      415,082.26           23,398,086.04
     (2) Use of special reserves                                                                                                                                     7,492,925.61                                                                            7,492,925.61
  6) Others
4. Ending balance of current year                       3,875,371,532.00                                        12,343,209,847.29                                   15,965,124.92    961,105,529.85             1,666,346,021.34    534,912,630.21      19,396,910,685.61


                      The notes to the financial statements attached form part of these financial statements.
                      Legal Representative:                                           Person in charge of accounting:                                                        Accounting Dept. Leader:
                                                                                                                         Financial Statements Page 9
                                                                                                 BENGANG STEEL PLATES CO., LTD.
                                                                                      CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
                                                                                                       From January to June 2018
                                                                                                (Expressed in Renminbi unless otherwise indicated)
                                                                                                                                                           January to June 2017
                                                                                                                        Owner’s equity attributable to parent company
                           Item                                                 Other equity instruments                             Less:            Other                                            General                      Non-controlling   Total shareholder’s
                                                                                                                                                                         Special        Surplus                  Undistributed
                                                         Share capital     Preference    Perpetu               Capital reserves    treasury       comprehensive                                         risk                           interests            equity
                                                                                                      Others                                                             reserves       reserves                    profits
                                                                             shares      al bond                                    shares           income                                            reserve
1. Ending balance of last year                          3,136,000,000.00                                       9,156,845,542.05                                          372,721.86   961,105,529.85              -496,947,619.42    549,205,917.49      13,306,582,091.83
Add: Change of accounting policies
      Correction of errors for last period
      Business consolidation under common control
      Others
2. Beginning balance of current year                    3,136,000,000.00                                       9,156,845,542.05                                          372,721.86   961,105,529.85              -496,947,619.42    549,205,917.49      13,306,582,091.83
3. Changes in current year (“-” for decrease)                                                                  -42,000,000.00                                          102,324.89                              1,600,110,229.77    -15,730,173.30       1,542,482,381.36
  1) Total comprehensive income                                                                                                                                                                                  1,600,110,229.77      9,280,477.96       1,609,390,707.73
  2) Capital increase and decrease by shareholders                                                                                                                                                                                     9,000,000.00           9,000,000.00
      (1) Common share invested by shareholders
      (2) Capital input by the holder of other equity
      instruments
      (3) Share-based payment attributable to owners'
      equity
      (4) Others                                                                                                                                                                                                                       9,000,000.00           9,000,000.00
  3) Profit distribution                                                                                                                                                                                                             -34,024,878.25         -34,024,878.25
      (1) Appropriation to surplus reserves
      (2) Appropriation to general risk reserve
      (3) Profit distribution to shareholders                                                                                                                                                                                        -34,024,878.25         -34,024,878.25
      (4) Others
  4) Transfers within shareholders' equity
      (1) Capital reserves transferred into paid-in
      capital (or stock)
      (2) Surplus reserves transferred into paid-in
      capital (or stock)
      (3) Surplus reserves to recover loss
      (4) Others
  5) Special reserves                                                                                                                                                    102,324.89                                                       14,226.99             116,551.88
     (1) Provision of special reserves                                                                                                                               40,325,168.14                                                        14,226.99          40,339,395.13
     (2) Use of special reserves                                                                                                                                     40,222,843.25                                                                           40,222,843.25
  6) Others                                                                                                      -42,000,000.00                                                                                                                             -42,000,000.00
4. Ending balance of current year                       3,136,000,000.00                                       9,114,845,542.05                                          475,046.75   961,105,529.85             1,103,162,610.35    533,475,744.19      14,849,064,473.19

                        The notes to the financial statements attached form part of these financial statements.
                        Legal Representative:                                                      Person in charge of accounting:                                 Accounting Dept. Leader:
                                                                                                                        Financial Statements Page 10
                                                                                                     BENGANG STEEL PLATES CO., LTD.
                                                                                                    STATEMENT OF CHANGES IN EQUITY
                                                                                                            From January to June 2018
                                                                                                 (Expressed in Renminbi unless otherwise indicated)
                                                                                                                                                      January to June 2018
                                                                                               Other equity instruments                            Less:          Other
                                 Item                                                                                                                                           Special                                                   Total shareholder’s
                                                                        Share capital      Preference   Perpetual             Capital reserves    treasury     comprehensi                    Surplus reserves    Undistributed profits
                                                                                                                     Others                                                     reserves                                                        equity
                                                                                             shares       bond                                    shares        ve income

1. Ending balance of last year                                          3,136,000,000.00                                       8,694,693,859.93                                 276,727.96       961,105,529.85         613,351,724.38       13,405,427,842.12

Add: Change of accounting policies
     Correction of errors for last period
     Others
2. Beginning balance of current year                                    3,136,000,000.00                                       8,694,693,859.93                                 276,727.96       961,105,529.85         613,351,724.38       13,405,427,842.12
3. Changes in current year (“-” for decrease)                          739,371,532.00                                        3,228,364,305.24                               12,991,356.16                             532,783,103.34        4,513,510,296.74
  1) Total comprehensive income                                                                                                                                                                                         726,551,679.94          726,551,679.94
  2) Capital increase and decrease by shareholders                       739,371,532.00                                        3,228,364,305.24                                                                                               3,967,735,837.24
     (1) Common share invested by shareholders                           739,371,532.00                                        3,228,364,305.24                                                                                               3,967,735,837.24
     (2) Capital input by the holder of other equity instruments
     (3) Share-based payment attributable to owners' equity
     (4) Others
  3) Profit distribution                                                                                                                                                                                               -193,768,576.60         -193,768,576.60
     (1) Appropriation to surplus reserves
     (2) Profit distribution to shareholders                                                                                                                                                                           -193,768,576.60         -193,768,576.60
     (3) Others
  4) Transfers within shareholders' equity
     (1) Capital reserves transferred into paid-in capital (or stock)
     (2) Surplus reserves transferred into paid-in capital (or stock)
     (3) Surplus reserves to recover loss
     (4) Others

  5) Special reserves                                                                                                                                                         12,991,356.16                                                      12,991,356.16

     (1) Provision of special reserves                                                                                                                                        20,342,777.03                                                      20,342,777.03
     (2) Use of special reserves                                                                                                                                               7,351,420.87                                                       7,351,420.87
  6) Others
4. Ending balance of current year                                       3,875,371,532.00                                      11,923,058,165.17                               13,268,084.12      961,105,529.85       1,146,134,827.72       17,918,938,138.86

              The notes to the financial statements attached form part of these financial statements.


              Legal Representative:                                                              Person in charge of accounting:                                          Accounting Dept. Leader:

                                                                                                                    Financial Statements Page 11
                                                                                    BENGANG STEEL PLATES CO., LTD.
                                                                             STATEMENT OF CHANGES IN EQUITY (Continued)
                                                                                          From January to June 2018
                                                                                (Expressed in Renminbi unless otherwise indicated)
                                                                                                                                          January to June 2017
                                                                                 Other equity instruments                             Less:         Other
                        Item                                                                                                                                       Special                                                       Total shareholder’s
                                                       Share capital       Preference    Perpetual               Capital reserves    treasury   comprehensive                     Surplus reserves     Undistributed profits
                                                                                                        Others                                                     reserves                                                            equity
                                                                             shares        bond                                      shares         income
1. Ending balance of last year                          3,136,000,000.00                                          8,694,693,859.93                                  393,372.05        961,105,529.85         -1,684,456,000.89        11,107,736,760.94
Add: Change of accounting policies
      Correction of errors for last period
      Others
2. Beginning balance of current year                    3,136,000,000.00                                          8,694,693,859.93                                  393,372.05        961,105,529.85         -1,684,456,000.89        11,107,736,760.94
3. Changes in current year (“-” for decrease)                                                                                                                     -162,636.16                                677,743,710.71           677,581,074.55
   1) Total comprehensive income                                                                                                                                                                               677,743,710.71           677,743,710.71
   2) Capital increase and decrease by shareholders
     (1) Common share invested by shareholders
     (2) Capital input by the holder of other 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) Others
   5) Special reserves                                                                                                                                              -162,636.16                                                            -162,636.16
      (1) Provision of special reserves                                                                                                                           34,079,630.37                                                          34,079,630.37
      (2) Use of special reserves                                                                                                                                 34,242,266.53                                                          34,242,266.53
   6) Others
4. Ending balance of current year                       3,136,000,000.00                                          8,694,693,859.93                                  230,735.89        961,105,529.85         -1,006,712,290.18        11,785,317,835.49

         The notes to the financial statements attached form part of these financial statements.

         Legal Representative:                                                   Person in charge of accounting:                                             Accounting Dept. Leader:



                                                                                                     Financial Statements Page 12
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

                 Bengang Steel Plates Co., Ltd.
                             Notes to the financial statements
                                From January to June 2018
                     (Expressed in Renminbi unless otherwise indicated)

1. Basic Information of the Company
(1) Company profile
     Bengang Steel Plates Co., Ltd.(hereinafter referred to as “the Company”), as approved in
     Liao-Zheng(1997) No. 57 by 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 400,000,000 B-shares at HKD2.38 each in Shenzhen Stock
     Exchange on 10 June 1997. On 3 November 1997, the Company issued another 120,000,000
     A-shares (Renminbi common Shares) at RMB5.40 each, and listed in Shenzhen Stock
     Exchange since 15 January 1998. The capital shares were totaled to 1,136,000,000 shares
     including 616,000,000 shares held by the promoter.


     On 14 March 2006, according to the resolutions of 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 40,800,000 shares of the total 616,000,000 shares it was holding.
     Shareholding positions have been registered with China Securities Depository & Clearing
     Corporation Ltd. Shenzhen Office. However, the total amount of capital shares of Bengang
     Steel Plates Co., Ltd. was not changed through the share equity relocation action.


     According to the approval document “Zheng-Jian-Gong-Si-Zi [2006] No. 126” by China
     Securities Regulatory Commission on 30 June 2006, the Company was approved to place 2
     billion Renminbi common shares particularly to Bengang Group and the proceeds would be
     used to purchase the related assets of the Group. On the same day, Bengang Group received
     circular Zheng-Jian-Gong-Si-Zi [2006] No. 127 issued by China Securities Regulatory
     Committee, and were exempted for the liability of undertaking the purchase offer. The

                                       Notes to the financial statements Page 1
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     liability was caused by subscribing of the 2 billion new shares and the total shareholding was
     thus increased to 2.5752 billion shares (accounting 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 new
     shares were placed in the market with face value of RMB1.00 per share and the placing price
     was RMB 4.6733 per share.


     On August 21, 2017, Bengang Steel acquired the “Security Regulatory Permission [2017] No.
     1476” issued by the China Securities Regulatory Commission on August 11, 2017. The paper
     approved that the non-public issuance of Bengang Steel Plates should not exceed
     739,371,354 shares. On February 12, 2018, the company completed the registration of this
     non-public offering of shares and restricted shares. On March 5, 2018, the company's
     non-public offering of new shares was listed, and the issue price was RMB 5.41 per share.




     Up to 30 June 2018, the capital shares of Bengang Steel Plates Co., Ltd were amounted to
     3,875,371,532 shares. The unified social credit code was 91210000242690243E. The
     registered address is 16th Renmin Road, Pingshan District, Benxi, Liaoning Province. The
     registered capital is RMB 3,875,371,532. The legal representative is Wang Shu.


     The parent company of Bengang Steel Plates Co., Ltd is Benxi Steel and Iron (Group) Co.,
     Ltd. and the actual controller is the State-owned Assets Supervision and Administration
     Commission of the State Council of Liaoning province.


     Bengang Steel Plates Co., Ltd. belongs to ferrous metal smelting and rolling processing
     industry, and is mainly involved in producing and trading of ferrous metal products.


     The financial statements have been approved for reporting by the board of directors of the
     Company on 27 August 2018.


(2) Consolidation Scope
     As at 30 June 2018, subsidiaries included in 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.

                                       Notes to the financial statements Page 2
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
       Bengang Steel Plate Liaoyang Orel Ball Co., Ltd.
       Dalian Benruitong Automobile Material Technologies Co., Ltd.
       Changchun Bengang Steel & Iron Sales Co., Ltd.
       Harbin Bengang Economic and Trading Co., Ltd.
       Nanjing Bengang Steel Material Sales Ltd.
       Wuxi Bengang Steel & Iron Sales Co., Ltd.
       Xiamen Bengang Steel & Iron Sales Co., Ltd.
       Yantai Bengang Steel & Iron Sales Co., Ltd.
       Tianjin Bengang Steel & Iron Trading Co., Ltd.
       Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd.
       Benxi Bengang Steel Sales Co., Ltd
       Shenyang Bengang Metallurgical Science and Technology Co., Ltd.
       Chongqing Liaoben Steel & Iron Trading Co., Ltd.
       Bengang Baojin (Shenyang)Automobile New Material Technology Co., Ltd.
Notes: For the details of the scope and changes of the consolidated financial statements of the
current period, please refer to “VI. Changes in the scope of consolidation” and “VII. Interests in
other entities” in this note.



2. Basis of Preparation
(1) Basis of Preparation
     The financial statements have been prepared on the going concern basis of actual trading and
     events in accordance with “Accounting Standards for Business Enterprises – Basic Standard”
     and relevant specific standards, application materials, interpretations (together hereinafter
     referred to as “Accounting Standards for Business Enterprises”) issued by the Ministry of
     Finance, and “Information Disclosure Rules for Companies of securities for public issuance
     No. 15 – General Regulations for Financial Statements” issued by the China Securities
     Regulatory Commission.


(2) Going Concern
     The Company is operating normally and in a good condition, and thus has the capability to
     continue to operate in the next twelve months from the end of reporting period.


3. Significant accounting policies and accounting estimates
     (The following disclosed content covers the detailed accounting policies and accounting
     estimates that are adopted by the Company according to the actual features of production or
     operation.)


(1) Statement of compliance with China Accounting Standards for Business Enterprises

                                       Notes to the financial statements Page 3
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     The financial statements present truly and completely the financial position, operation results
     and cash flows of the Company during the reporting period in accordance with China
     Accounting Standards for Business Enterprises.


(2) Accounting year
     The Accounting year is from 1 January to 31 December.


(3) Operating period
     The operating period is twelve months.


(4) Functional currency
     The Company’s functional currency is RMB.


(5) The accounting treatment for Business combination under/now under common control
     Business consolidation under common control: The assets and liabilities that the Company
     acquired in a business combination shall be measured on the basis of their carrying amount 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 involving entities now under common control: The Company shall, on
     the acquisition date, measure the assets given and liabilities incurred or assumed by an
     enterprise for a business combination in light of their fair values, and shall record the
     balances between them and their carrying amounts into the profits and losses at the current
     period.


     The Company shall recognize the positive balance between the combination costs and the fair
     value of the identifiable net assets it obtains from the acquiree as goodwill. The Company
     shall treat the negative balance between the combination costs and the fair value of the
     identifiable net assets it obtains from the acquiree into the profits and losses of the current
     period.


     The intermediary costs and relevant management fee for the business combination now under
     same control paid by the acquirer, including the expenses for audit, assessment and legal
     services, shall be recorded into the profits and losses at the current period. The transaction

                                       Notes to the financial statements Page 4
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     expenses for the issuance of equity securities for the business combination shall be recorded
     into the initial recognition amount of equity securities.


(6) Consolidation of Financial Statements
     1. Scope of consolidation
     The scope of consolidation of consolidated financial statements is determined based on
     control. All the subsidies (including separable sections of the investees controlled by the
     Company) have been consolidated into the scope of consolidation for this period ended.




     2. Procedure of consolidation


     The consolidated financial statements shall be presented by the parent based on the financial
     statements of the parent and its subsidiaries, and using other related information. When
     preparing consolidated financial statements, the parent shall consider the entire group as an
     accounting entity, adopt uniform accounting policies and apply the requirements of
     Accounting Standard for Business Enterprises related to recognition, measurement and
     presentation. The consolidated financial statements shall reflect the overall financial position,
     operating results and cash flows of the group.


     The accounting policy and accounting period of the subsidiaries within the consolidation
     scope shall be in accordance with those of the Company. If not, it is necessary to make the
     adjustment according to 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.

                                       Notes to the financial statements Page 5
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     Where losses assumed by the minority exceed the minority’s interests in the beginning equity
     of a subsidiary, the excess shall be charged against the minority’s interests.


         (1) Increase of new subsidiary and business
         If the Company has a new subsidiary due to business combination under common control
         during a reporting period, it shall adjust the beginning balance in the consolidated
         statement of financial position when preparing consolidated statement of financial
         position. The revenue, expenses and profits of the subsidiaries from the acquisition date to
         the end of the reporting period are included in 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.


         When the Company becomes capable of exercising control over an investee now under
         common control due to additional investment or other reasons, the acquirer shall
         remeasure its previously held equity interest in the acquiree to its fair value at the
         acquisition date. The difference between the fair value and the carrying amount shall be

                                       Notes to the financial statements Page 6
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
         recognized as investment income for the period when the acquisition takes place. When
         the previously-held equity investment is accounted for under the equity method, any other
         comprehensive income previously recognized in relation to 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 subsidiary or business
             1. General treatment
             If the Company disposes a subsidiary during a reporting period, the revenue, expenses
             and profits of the subsidiary from the beginning of the reporting period to disposal
             date are included in 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 remeasure the remaining equity interests in the acquiree to
             its fair value at the acquisition date. The difference, between sums of consideration
             received for disposal equity shares and fair value of the remaining shares, and sums of
             share of net assets of the subsidiary calculated continuously from the acquisition date
             or the combination date based on the previous shareholding proportion and goodwill,
             shall be recognized as investment income for the period when the Company loses
             control over acquiree. When the previously-held equity investment is accounted for
             under the equity method, any other comprehensive income previously recognized in
             relation to 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 remeasurement of
             defined benefit plan is excluded. When the Company loses control over a subsidiary
             due to the increase of capital from other investors and thus the shareholding ratio of
             the Company declines, accounting treatment shall be in accordance with the
             above-mentioned principles


             2. Disposing the subsidiary by multiple transactions
             Where the Company loses control of a subsidiary in multiple transactions in which it
             disposes of its subsidiary in stages, in determining whether to account for the multiple
             transactions as a single transaction, the Company shall consider all of the terms and
             conditions of the transactions and their economic effects. One or more of the following

                                       Notes to the financial statements Page 7
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
             may indicate that the Company shall account for the multiple arrangements as a single
             transaction:
             (a) Arrangements are entered into at the same time or in contemplation of each other;
             (b) Arrangements work together to achieve an overall commercial effect;
             (c) The occurrence of one arrangement is dependent on the occurrence of at least one
             other arrangement; and
             (d) One arrangement considered on its own is not economically justified, but it is
             economically justified when considered together with other arrangements.


             If each of the multiple transactions forms part of a bundled transaction which
             eventually results in loss of control of the subsidiary, these multiple transactions shall
             be accounted for as a single transaction. In the consolidated financial statements, the
             difference between the consideration received and the corresponding proportion of 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 subsidiary’s 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 partial long-term equity investments in a subsidiary without loss of
         control
         When the Company disposes of a portion of the long-term equity investments in a
         subsidiary without loss of control, the difference between the amount of the consideration
         received and the corresponding portion of the nest assets of the subsidiary calculated
         continuously from the acquisition date or the combination date related to the disposal of

                                       Notes to the financial statements Page 8
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
         the long-term equity investments shall be adjusted to the capital reserve (capital premium
         or share premium) in the consolidated financial statements. If the balance of the capital
         reserve is not sufficient, any excess shall be adjusted against retained earnings.




(7) Recognition of cash and cash equivalents
     For the purpose of preparing the statement of cash flows, the term “cash” refers to the cash
     on hand and the unrestricted deposit. And the term “cash equivalents” refers to short-term
     (maturing within three months from acquisition) and highly liquid investments that are
     readily convertible to known amounts of cash and which are subject to an insignificant risk of
     change in value.


(8) Foreign currency transaction and translation of foreign currency financial statements
     1. Foreign currency transaction
     Foreign currency transactions are translated into RMB at the current rate at the day of
     transactions.


     The foreign currency monetary items shall be translated at the spot exchange rate on the
     balance sheet date. The balance of exchange arising from the difference between the spot
     exchange rate on the balance sheet date and the spot exchange rate at the time of initial
     recognition or prior to the balance sheet date, except those arising from the raising of special
     foreign debt for the purchase or construction of capitalizable assets thus shall be capitalized
     according to the borrowing costs capitalization principle, shall be recorded into the profits
     and losses at the current period. The foreign currency non-monetary items measured at the
     historical cost shall still be translated at the spot exchange rate on the transaction date, of
     which the amount of functional currency shall not be changed. The foreign currency
     non-monetary items measured at the fair value shall still be translated at the spot exchange
     rate on the date of confirming the fair value and the balance of exchange arising from it shall
     be recorded into profits and losses at the current period of disposal or capital reserves.


     2. Translation of foreign currency financial statements
     The asset and liability items in the statement of financial position shall be translated at a spot
     exchange rate on the balance sheet date. Among the owner's equity items, except the ones as
     “undistributed profits”, others shall be translated at the spot exchange rate at the time when
     they are incurred. The income and expense items in the statement of comprehensive income
     shall be translated at the spot exchange rate of the transaction date.




                                       Notes to the financial statements Page 9
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
      When disposing an overseas business, the Company shall shift the balance, which is
      presented under the items of the owner's equities in the statement of financial position and
      arises from the translation of foreign currency financial statements related to this oversea
      business, into the disposal profits and losses of the current period. If the overseas business is
      disposed of partially, the Company shall calculate the balance arising from the translation of
      foreign currency statements of the part of disposal based on the disposal rate and shall shift
      them into the profits and losses of the current period.


(9)   Financial instruments
      Financial instruments include financial assets, financial liabilities and equity instruments.


      1. Classification of financial instruments
      The classification of financial assets and financial liabilities at initial recognition are as
      follows: financial assets or financial liabilities designated at fair value through current profit
      and loss, including: trading financial investment, held-to-maturity investment, loans and
      receivables, available-for-sale investment and other financial liabilities.

      2. Recognition and measurement of financial instruments
       (1) The financial assets (liabilities) at fair value through profit or loss
       The financial assets (financial liabilities) at fair value through profit or loss are recognized
       initially at fair value (minus cash dividends declared but not received or bond interest
       matured but not drawn yet). The relevant transaction cost is recognized in current profit and
       loss when occurred.


       The cash dividends or interest are recognized as investment income when the Company
       receives such financial assets. At the balance sheet date, the Company recognizes the fair
       value changes in current profit and loss.


       The Company recognizes the difference between initial recognition and fair value of the
       financial assets as investment income when disposing the financial assets and at the same
       time adjusts the fair value changes in current profit and loss.


       (2) Held-to-maturity investment
       The Held-to-maturity investments are recognized initially at fair value (minus bond interest
       matured but not drawn yet) plus any related transaction cost.


       The held-to-maturity investments are measured at amortized cost using the effective interest
       rate. The interest income is recognized as investment income. The effective interest will be

                                   Notes to the financial statements Page 10
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
       determined at the initial recognition and will not be changed in the holding period or within
       a shorter applicable period.


       When disposing the held-to-maturity investment, the difference between the investing
       proceeds and the carrying value is recognized as investment income.


       (3) Receivables
       Receivables from selling products and rendering services or receivable of other company
       not including the receivables with quoted price in the active market(including: accounts
       receivable, other receivables, notes receivable, prepayments, long-term receivables) are
       measured at contract price; if the receivables is of financing nature, it shall be recognized at
       the present value initially.


       When disposing the receivables, the difference between the proceeds and the carrying value
       is recognized in current profit and loss.


       (4) Available-for-sale financial assets
       Available-for-sale financial assets are initially recorded at the sum of fair values (deducting
       cash dividends that have been declared but not distributed and bond interests that have
       matured but not been drawn) and transaction costs when acquired.


       The Company recognizes the interest or cash dividends as investment income. At each
       balance sheet date, available-for-sale financial assets are measured at fair value and the fair
       value changes are recognized in the capital reserve - other capital reserve.


       The difference between the proceeds of the disposal and the carrying value shall be
       recognized as investment income. And the related fair value change in the shareholders’
       equity shall be transferred out, and recorded as investment income.


       (5) Other financial liabilities
       For other financial liabilities, they are initially recognized at fair value plus any directly
       attributable transaction costs. After the initial recognition, the other financial liabilities are
       measured at amortized cost.


     3. Determination and measurement of financial assets transfer
     Where the Company has transferred nearly all of the risks and rewards related to the
     ownership of the financial asset to the transferee, it shall stop recognizing the financial asset.
     If it retained nearly all of the risks and rewards related to the ownership of the financial asset,
     it shall not stop recognizing the financial asset.
                                   Notes to the financial statements Page 11
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements


     To judge whether the transfer of a financial asset can satisfy the conditions as prescribed in
     these Standards for stopping the recognition of a financial asset, the Company shall follow
     the principle of the substance over form. Transfer of an entire financial asset can be divided
     into partial financial assets transfer and entire financial asset transfer. If the transfer of an
     entire financial asset satisfies the conditions for de-recognition, the difference between the
     amounts of the following 2 items shall be recorded in the profits and losses of the current
     period:
     (1) The book value of the transferred financial asset; and
     (2) The sum of consideration received from the transfer, and the accumulative amount of the
     changes of the fair value originally recorded in the owners' equities (in the event that the
     financial asset involved in the transfer is a financial asset Available-for-sale).


     If the transfer of partial financial asset satisfies the conditions to derecognize, the entire book
     value of the transferred financial asset shall, between the portion whose recognition has been
     stopped and the portion whose recognition has not been stopped(under such circumstance,
     the service asset retained shall be deemed as a portion of financial asset whose recognition
     has not been stopped), be apportioned according to their respective relative fair value, and the
     difference between the amounts of the following 2 items shall be included into the profits and
     losses of the current period :
     (1) The book value of the portion whose recognition has been stopped; and
     (2) The sum of consideration of the portion whose recognition has been stopped, and the
     portion of the accumulative amount of the changes in the fair value originally recorded in the
     owner's equities which is corresponding to the portion whose recognition has been stopped
     (in the event that the financial asset involved in the transfer is a financial asset
     Available-for-sale).


     If the transfer of financial assets does not satisfy the conditions to stop the recognition, it
     shall continue to be recognized as financial assets and the consideration received shall be
     recognized as financial liabilities.
     4. Recognition of termination of financial liabilities
     Only when the prevailing obligations of a financial liability are relieved in all or in part may
     the recognition of the financial liability be terminated in all or partly.


     Where the Company (debtor) enters into an agreement with a creditor so as to substitute the
     existing financial liabilities by way of any new financial liability, and if the contractual
     stipulations regarding the new financial liability is substantially different from that regarding



                                   Notes to the financial statements Page 12
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     the existing financial liability, it shall terminate the recognition of the existing financial
     liability, and shall at the same time recognize the new financial liability.


     Where the Company makes substantial revisions to some or all of the contractual stipulations
     of the existing financial liability, it shall terminated the recognition of the existing financial
     liability or part of it, and at the same time recognize the financial liability after revising the
     contractual stipulations as a new financial liability.


     Where the recognition of a financial liability is totally or partially terminated, the enterprise
     concerned shall include into the profits and losses of the current period the gap between the
     carrying amount which has been terminated from recognition and the considerations it has
     paid (including the non-cash assets it has transferred out and the new financial liabilities it
     has assumed).


     Where the Company buys back part of its financial liabilities, it shall distribute, on the date of
     repurchase, the carrying amount of the whole financial liabilities in light of the comparatively
     fair value of the part that continues to be recognized and the part whose recognition has
     already been terminated. The gap between the carrying amount which is distributed to the
     part whose recognition has terminated and the considerations it has paid (including the
     noncash assets it has transferred out and the new financial liabilities it has assumed) shall be
     recorded into the profits and losses of the current period.


     5. Determination of the fair value
     The fair values of the financial assets or financial liabilities measured at fair value shall be
     determined by reference to the quoted prices in the active market.


     6. Impairment provision of the financial assets (not including accounts receivables)
     The Company shall carry out impairment review for the financial assets at the balance sheet
     date except for the financial assets at fair value through profit or loss. Where there is any
     objective evidence proving that such financial asset has been impaired, an impairment
     provision shall be made.


       (1) Impairment of available-for-sale financial assets
       An impairment provision shall be made where the fair value of the held-to-maturity
       financial assets drops significantly at the balance sheet date or the trend of decrease is
       expected not to be temporary after taking various factors into consideration. The
       accumulative losses arising from the decrease of the fair value of the owners’ equity which
       was directly included shall be transferred out and recorded as impairment loss.

                                   Notes to the financial statements Page 13
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements


       Where any available-for-sale debt instruments is recognized as having suffered from any
       impairment loss, if there is any objective evidence proving that the value of the said debt
       instruments has been restored, and it is objectively related to the events that occur after such
       loss is recognized, the impairment-related losses as originally recognized shall be reversed
       and be recorded into the profits and losses of the current period.


       Impairment losses incurred by investment transactions of available-for-sale equity
       instruments shall not be reversed through profits and losses.


       The criteria for “serious” level of the decrease of fair value of available-for-sale financial
       instruments are as follows: the decrease of fair value for the equity investment with the
       active transaction in a market of good liquidity is normally 50%.
       The “non-temporary” measure of the fair value decrease of the Company's investment in
       available-for-sale equity instruments is: the available-for-sale equity instruments that held
       over one year (including one year) due to material abnormal events or less than their initial
       investment costs indicates that it is impaired.



       (2) Impairment of held-to-maturity investment
       The impairment of the held-to-maturity investment can be measured at reference to the
       measurement of the impairment of accounts receivables.


(10) Receivables
     1. The recognition and provision for bad debts for the individually significant
        receivables
       The recognition standard of bad debts provision for the individually significant receivables:


       Individually significant receivables refer to accounts receivable over RMB 10 million or
       other receivables over RMB 5 million.


     The provision for bad debts for the individually significant receivables:
     The impairment test shall be assessed individually for each individually significant receivable.
     If the there is evidence indicating the receivables have been impaired, the difference between
     the present value of the future cash flows and the book value of receivables shall be
     recognized as bad debts provision and shall be recorded into the profits and losses at the
     current period.


     2. The recognition and provision for bad debts for the receivables in portfolio

                                   Notes to the financial statements Page 14
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
 Criteria for Recognition of Portfolio
 Portfolio                      Insignificant amount of receivables and unadjusted individual receivables
 Recognition and provision for bad debts for portfolio
 Portfolio 1:                   Aging analysis method



  Aging analysis method for bad debts provision:

                                                 Bad debts ratio for accounts      Bad debts ratio for other
                    Aging
                                                         receivable (%)                 receivables (%)
 Within 1 year (inclusive)
 1-2 years (inclusive)                                                      5.00                             5.00

 2-3 years (inclusive)                                                     20.00                            20.00

 Over 3 years                                                             100.00                        100.00



     3. Insignificant individual amounts of accounts receivable that recognize bad debts
        individually:
       (1) Reasons for individual recognition and provision of bad debts. Receivables that are not
       individually significant but are impaired after a single test.


       (2) Method of bad debts recognition and provision
       The impairment loss is recognized and the provision for bad debts is made based on the
       difference between the present value of the estimated future cash flow and the book value


(11) Inventories
     1. Inventory classification
     Inventories include material in transit, raw material, low-valued consumables, work in
     process, finished goods, materials for consigned processing, etc.


     2. Valuation method for inventory dispatched
     The weighted average method is used to confirm the actual cost of the inventories dispatched.


     3. The basis for confirming the net realizable value of inventories and the methods to
     make provision for the inventories impairment loss
     The net realizable value of inventories (finished products, stock commodity, material, etc.)
     held for direct selling in the daily business activity shall be calculated by deducting the
     estimated sale expense and relevant taxes from the estimated sale price of inventories.




                                     Notes to the financial statements Page 15
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     The net realizable value of inventories for further processing in the daily business activity
     shall be calculated by deducting the estimated cost of completion, estimated sale expense and
     relevant taxes from the estimated sale price of inventories.


     The net realizable value of inventories held for the execution of sales contracts or labor
     contracts shall be calculated on the ground of the contract price. If an enterprise holds more
     inventories than the quantities subscribed in the sales contract, the net realizable value of the
     excessive part of the inventories shall be calculated on the ground of the general sales price.


     The Company shall make provision for loss on decline in value of inventories on the ground
     of each item of inventories at the year end. For inventories with large quantity and relatively
     low unit prices, the provision for loss on decline in value of inventories shall be made on the
     ground of the categories of inventories. For the inventories related to the series of products
     manufactured and sold in the same area, and of which the final use or purpose is identical or
     similar thereto, and if it is difficult to measure them by separating them from other items, the
     provision for loss on decline in value of inventories shall be made on a combination basis.


     Unless clear evidence shows that the market price is exceptionally fluctuating, the net
     realizable value of inventory is based on the market price at the balance sheet date.


     The net realizable value of inventory at the year-end is based on the market price at the
     balance sheet date.


     4. Inventory system
     The Company uses perpetual inventory system.


     5. Amortization of low-valued consumables and packing materials
       (1) Low-valued consumables shall be amortized in full amount on issuance.
       (2) Packing materials shall be amortized in full amount on issuance


(12) Long-term equity investment
     1. Criteria of join control and significant influence
     Joint control is the contractually agreed sharing of control of an arrangement, which exists
     only when decisions about the relevant activities require the unanimous consent of the parties
     sharing control.

     Significant influence is the power to participate in the financial and operating policy
     decisions of the investee but not control or join control of those policies. If the Company


                                   Notes to the financial statements Page 16
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     could exert significant influence over the investee, the investee is the associate of the
     Company.

     2. The initial cost of long-term equity investment from business acquisition
       (1) Long-term equity investment from business acquisition
       For a business combination involving enterprises under common control, if the
       consideration of the combination is satisfied by paying cash, transfer of non-cash assets or
       assumption of liabilities and issue of equity securities, the initial investment cost of the
       long-term equity investment shall be the 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.


       When an investor becomes capable of exercising control over an investee now under
       common control due to additional investment or other reasons, the investor shall change to
       the cost method and use the carrying amount of the cost method and use the carrying
       amount of the previously-held equity investment, together with the additional investment
       cost, as the initial investment cost under the cost method.

       (2) The initial cost of the long-term equity investment other than from business
       acquisition
       The initial cost of a long-term equity investment obtained by making payment in cash shall
       be the purchase cost which is actually paid.


       The initial cost of a long-term equity investment obtained on the basis of issuing equity
       securities shall be the fair value of the equity securities issued.


       The initial cost of a long-term equity investment of an investor shall be the value stipulated
       in the investment contract or agreement (minus cash dividend or profit declared but not paid)

                                   Notes to the financial statements Page 17
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
       except the unfair value stipulated in the contract or agreement.


       If the exchange of non-monetary assets is commercial in nature and the fair values of both
       the assets received and surrendered can be reliably measured, the fair value of the assets
       surrendered shall be used as the basis for determining the cost of the assets received, unless
       there is any exact evidence showing that the fair value of the assets received is more
       reliable. Where any non-monetary assets transaction does not meet the conditions as
       prescribed above, the carrying value and relevant payable taxes of the assets surrendered
       shall be the initial cost of the assets received.


       The initial cost of a long-term equity investment obtained by debt restructuring shall be
       ascertained on the basis of fair values.


     3. Subsequent measurement and profit or loss recognition
       (1) Cost method
       The Company adopts cost method for the long term investment in subsidiary company.
       Under the cost method, an investing enterprise shall, in accordance with the attributable
       share of the net profits or losses of the invested entity, recognize the investment profits or
       losses except the dividend declared but unpaid, which is included in the payment when
       acquiring the investment.

       (2) Equity method
       A long-term equity investment in an associate or a joint venture shall be accounted for
       using the equity method. Where the initial investment cost of a long-term equity investment
       exceeds 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, and the cost of the long-term equity investment shall be adjusted
       accordingly.


       The Company shall recognize its share of the investee’s net profits or losses, as well as its
       share of the investee’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

                                   Notes to the financial statements Page 18
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
       carrying amount of the long-term equity investment shall be adjusted accordingly.


       The investor shall recognize its share of the investee’s net profits or losses after making
       appropriate adjustments based on the fair values of the investee’s identifiable net assets at
       the acquisition date.


       The unrealized profits or losses resulting from transactions between the investor and its
       associate or joint venture shall be eliminated in proportion to 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 and associate and
       joint venture and the assets is a business, it shall apply the treatment mentioned in Note 2(5)
       “The accounting treatment for Business combination under/now under common control”
       and Note 2(6) “Consolidation of Financial Statements”.


       When the Company recognizes the losses of invested enterprise, it shall follow the
       following sequence: First of all, offset the book value of long term equity investment. If the
       book value of long term equity is insufficient to dilute, the investing enterprise shall
       recognize the net losses of the invested enterprise until the book value of the long-term
       equity investment and other long-term rights and interests which substantially form the net
       investment made to the invested entity are reduced to zero. If the company still has the
       obligation to undertake extra losses per contract, and then estimated liabilities shall be
       recognized into current profit and loss accordingly to the estimated obligation.



       (3) Disposal of long-term equity investment
       On disposal of a long-term equity investment, the difference between the proceeds actually
       received and the carrying amount shall be recognized in profit or loss for the current period.


       When the previously-held equity investment is accounted for under the equity method, any
       other comprehensive income previously recognized shall be accounted for on the same
       basis as would have been required if the investee had directly disposed of the related assets
       or liabilities.


       Those owner's equity recognized other than the change of net profits or loss, other
       comprehensive income, profit distribution of the invested entity shall be transferred
       proportionally into profit or loss of current period, other comprehensive income arising
                                   Notes to the financial statements Page 19
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
       from the remeasurement of defined benefit plan is excluded.


       When an investor can no longer exercise joint control of or significant influence over an
       investee due to partial disposal of equity investment or other reasons, the remaining equity
       investment shall be accounted for in accordance with “Accounting Standard for Business
       Enterprises No. 22-Financial instruments: recognition and measurement”. The difference
       between the fair value and the carrying amount at the date of the loss of join control or
       significant influence shall be charged to profit or loss for the current period. When the
       previously-held equity investment is accounted for under the equity method, any other
       comprehensive income previously recognized shall be accounted for on the same basis as
       would have been required if the investee had directly disposed of the related assets or
       liabilities for the current period upon discontinuation of the equity method.


       Those owner's equity recognized other than the change of net profits or loss, other
       comprehensive income, profit distribution of the invested entity shall be transferred into
       profit or loss of current period in full when the Company cease to adopt the equity method.


       When the Company can no longer exercise control over an investee due to partial disposal
       of equity investment or other reasons, and with the retained interest, still has joint control of,
       or significant influence over, the investee, when preparing the individual financial
       statements, the investor shall change to the equity method and adjust the remaining equity
       investment as if the equity method had been applied from the date of the first acquisition. If
       the investor cannot exercise joint control of or significant influence over the investee after
       partial disposal of equity investment, the remaining equity investment shall be accounted
       for in accordance with “Accounting Standard for Business Enterprises No.22-Financial
       instruments: Recognition and Measurement”, and the difference between the fair value and
       carrying amount at the date of the loss of control shall be charged to profit or loss for the
       current period.


       When the equity investment disposed is acquired through business combination due to
       additional investment or other reasons, in stand-alone financial statement, the remaining
       equity investment shall adopt cost method or equity method, any other comprehensive
       income and 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 “Accounting
       Standard for Business Enterprises No.22-Financial instruments: Recognition and
       Measurement” after disposal, other comprehensive income and other owner’s interests

                                   Notes to the financial statements Page 20
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
       previously recognized shall be transferred to profit or loss in full.


(13) Fixed assets
     1. Recognition of Fixed assets
     The term "fixed assets" refers to the tangible assets that simultaneously possess the features
     as follows:
       (1) They are held for the sake of producing commodities, rendering labor service, renting or
       business management; and
       (2) Their useful life is in excess of one fiscal year.


     No fixed asset may be recognized unless it simultaneously meets the conditions as follows:
       (1) The economic benefits pertinent to the fixed asset are likely to flow into the enterprise;
       and
       (2) The cost of the fixed asset can be measured reliably.


     2. Fixed assets depreciation
     Fixed assets are depreciated under the straight-line method. The depreciation rate is
     determined according to the category of assets, the useful life and the expected residual rate.
     If the components of the fixed assets have different useful lives or provide the economic
     benefits in a different way, then different depreciation rate or method shall be applied and the
     depreciation of the components shall be calculated separately.


     Fixed assets acquired under financial leasing is depreciated over the useful life if it is
     reasonably certain that the ownership of the leased assets will be acquired upon expiry of
     lease, or over the shorter of lease term and useful life if it is not reasonably certain that the
     ownership of the leased assets will be acquired upon expiry of lease.


     Details of classification, depreciation period, residual value rate and annual depreciation rate
     are as follows:
                                                 Depreciation       Residual Value Rate    Depreciation Rate
              Classification
                                                   Period                  (%)                   (%)
 Plants and Buildings                                  8-40 years                   0.00           2.50-12.50
 Machinery                                             4-18 years                   3.00           5.39-24.25
 Transportation and other equipment                    5-18 years                   3.00           5.39-19.40


     3. Recognition criteria for fixed asset leased in by financial leasing and its valuation
     Where a lease satisfies one or more of the following criteria, it shall be recognized as a
     financial leasing:


                                      Notes to the financial statements Page 21
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     (1) The ownership of the leased asset is transferred to the lessee when the term of lease
     expires;
     (2) The lessee has the option to buy the leased asset at a price which is expected to be far
     lower than the fair value of the leased asset at the date when the option becomes exercisable;
     (3) The lease term covers the major part of the use life of the leased asset; and
     (4) The present value of the minimum lease payments on the lease beginning date amounts to
     substantially all of the fair value of the leased asset on the lease beginning date.


     On the lease beginning date, the Company shall record the lower one of the fair value of the
     leased asset and the present value of the minimum lease payments on the lease beginning
     date as the initial book value, recognize the amount of the minimum lease payments as the
     initial book value of long-term account payable, and treat the difference between the recorded
     amount of the leased asset and the long-term account payable as unrecognized financing
     charges.




(14) Construction in progress
     The cost of fixed assets transferred from a construction in progress includes all the necessary
     expenses incurred for bringing the asset to the expected conditions for use. Construction in
     progress is transferred to fixed asset when it has reached its working condition for its
     intended use. In case the final project accounts have not been completed or approved, the
     asset shall be transferred to fixed assets at an estimated value by considering project budget,
     cost or actual cost of the project and etc., and the deprecation of the said fixed assets shall be
     provided in accordance with 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.


(15) Borrowing cost
     1. Principle of the recognition of capitalized borrowing costs
     The borrowing costs shall include interest on borrowings, amortization of discounts or
     premiums on borrowings, ancillary expenses, and exchange balance on foreign currency
     borrowings.


     Where the borrowing costs incurred to an enterprise can be directly attributable to the
     acquisition and construction or production of assets eligible for capitalization, it shall be
     capitalized and recorded into the costs of relevant assets. Other borrowing costs shall be


                                   Notes to the financial statements Page 22
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     recognized as expenses on the basis of the actual amount incurred, and shall be recorded into
     the current profits and losses.


     The term "assets eligible for capitalization" shall refer to the fixed assets, investment real
     estate, inventories and other assets, of which the acquisition and construction or production
     may take quite a long time to get ready for its intended use or for sale.


     The borrowing costs shall not be capitalized unless they simultaneously meet the following
     requirements:
     (1) The asset disbursements have already incurred, which shall include cash, transferred
     non-cash assets or interest bearing debts paid for the acquisition and construction or
     production activities for preparing assets eligible for capitalization;
     (2) The borrowing costs has already incurred; and
     (3) The acquisition and construction or production activities which are necessary to prepare
     the asset for its intended use or sale have already started.




     2. The capitalization period of borrowing costs
     The capitalization period shall refer to the period from the commencement to the cessation of
     capitalization of the borrowing costs, excluding the period of suspension of capitalization of
     the borrowing costs.


     When the qualified asset under acquisition and construction or production is ready for the
     intended use or sale, the capitalization of the borrowing costs shall be ceased.


     Where each part of a qualified asset under acquisition and construction or production is
     completed separately and is ready for use, the capitalization of the borrowing costs in relation
     to this part of asset shall be ceased.


     Where each part of an asset under acquisition and construction or production is completed
     separately and is ready for use or sale during the continuing construction of other parts, but it
     cannot be used or sold until the asset is entirely completed, the capitalization of the
     borrowing costs shall be ceased when the asset is completed entirely.


     3. The suspension of capitalization of borrowing costs
     Where the acquisition and construction or production of a qualified asset is interrupted
     abnormally and the interruption period lasts for more than 3 months, the capitalization of the
     borrowing costs shall be suspended. If the interruption is a necessary step for making the

                                   Notes to the financial statements Page 23
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     qualified asset under acquisition and construction or production ready for the intended use or
     sale, the capitalization of the borrowing costs shall continue. The borrowing costs incurred
     during such period shall be recognized as expenses, and shall be recorded into the profits and
     losses of the current period, till the acquisition and construction or production of the asset
     restarts.


     4. Method of calculating the capitalization rate and capitalized amount of borrowing
        costs
     For interest expense (minus the income of interests earned on the unused borrowing loans as
     a deposit in the bank or investment income earned on the loan as a temporary investment)
     and the ancillary expense incurred to a specifically borrowed loan, those incurred before a
     qualified asset under acquisition, construction or production is ready for the intended use or
     sale shall be capitalized at the incurred amount when they are incurred, and shall be recorded
     into the costs of the asset eligible for capitalization.


     The Company shall calculate and determine the to-be-capitalized amount of interests on the
     general borrowing by multiplying the weighted average asset disbursement of the part of the
     accumulative asset disbursements minus the general borrowing by the capitalization rate of
     the general borrowing used. The capitalization rate shall be calculated and determined in light
     of the weighted average interest rate of the general borrowing.


     Where there is any discount or premium, the amount of discounts or premiums that shall be
     amortized during each accounting period shall be determined by the effective interest rate
     method, and an adjustment shall be made to the amount of interests in each period.
(16) Intangible assets
     1. Measurement of Intangible Assets
       (1) Initial measurement is based on cost upon acquisition
       The cost of an intangible asset on acquisition include the purchase price, relevant taxes and
       other necessary disbursements which may be directly attributable to bringing the intangible
       asset to the conditions for the expected purpose. If the payment for an intangible asset is
       delayed beyond the normal credit conditions and it is of the financing nature, the cost of the
       intangible asset shall be determined on the basis of the present value of the purchase price.


       For intangible assets obtained from debt restructuring as settlement of liabilities from
       debtors, initial recognition is based on its fair value, and the difference between the debt
       restructured and the fair value of the intangible assets are recognized in the current profit
       and loss.



                                   Notes to the financial statements Page 24
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
       For intangible assets obtained from non-monetary transactions with commercial substance,
       and the fair value of the assets obtained or surrendered can be reliably measured, the initial
       recognition of the asset obtained is based on the fair value of the asset surrendered, unless
       there is strong evidence that the fair value of the asset obtained is more reliable. For
       intangible assets obtained through non-monetary transactions which do not meet the above
       criteria, the initial recognition is based on the book value of the assets surrendered and the
       relevant taxes payable. No gain or loss will be recognized.


       (2) Subsequent Measurement
       The Company shall analyze and judge the beneficial period of intangible assets upon
       acquisition.


       Intangible assets with finite beneficial period shall be amortized under the straight-line
       method during the period when the intangible asset can bring economic benefits to the
       enterprise. If it is unable to estimate the beneficial period of the intangible asset, it shall be
       regarded as an intangible asset with uncertain service life and shall not be amortized.


     2. Estimated useful lives of intangible assets with limited useful lives
              Item                         Estimated useful life                        Criteria
        Land use right                           50 years                      Land use right certificate


     The Company shall review the useful lives and amortization methods of intangible assets
     with limited useful lives at each year end.


     Per review, the useful lives and amortization methods of intangible assets with limited useful
     lives at each year-end is the same with that of last year.


     3. Determination of intangible assets with uncertain useful lives
     As at the balance sheet date, the Company has no intangible assets with uncertain useful
     lives.


     4. Classification criteria for internal research phase and development phase
     The expenditures for its internal research and development projects of an enterprise shall be
     classified into research expenditures and development expenditures.


     Research phase refers to the phase of creative and planned investigation to acquire and study
     to acquire and understand new scientific or technological knowledge.



                                   Notes to the financial statements Page 25
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     Development phase refers to the phase during which the result of research phase or other
     knowledge is applied into certain projects or designs for the manufacturing of new or
     substantially improved material, device and product.


(17) Impairment of long-term assets
     For long-term assets under the cost model such as fixed assets, construction in progress,
     intangible assets etc., the Company shall perform impairment tests at the period end if there
     is clear indication of impairment.


     If the recoverable amounts of long-term assets are less than their carrying amounts, the
     carrying amounts of the assets shall be written down to their recoverable amounts. The
     write-downs are recognized as impairment losses and charged to current profit and loss. The
     recoverable amounts of long-term assets are the higher of their fair values less costs to sell
     and the present values of the future cash flows expected to be derived from the assets. The
     Company shall estimate its recoverable amount on an individual basis. Where it is difficult to
     do so, it shall determine the recoverable amount of the group assets on the basis of the asset
     group to which the asset belongs. The term "group assets” refers to a minimum combination
     of assets by which the cash flows could be generated independently


     The goodwill shall be subject to an impairment test at least at the end of each year.


     When the Company makes an impairment test of assets, it shall, as of the purchasing day,
     apportion the carrying value of the business reputation formed by merger of enterprises to the
     relevant asset groups by a reasonable method. Where it is difficult to do so, it shall be
     apportioned to the relevant combinations of asset groups.
     When apportioning the carrying value of the business reputation to the relevant asset groups
     or combinations of asset groups, it shall be apportioned on the basis of the proportion of the
     fair value of each asset group or combination of asset groups to the total fair value of the
     relevant asset groups or combinations of asset groups. Where it is difficult to measure the fair
     value reliably, it shall be apportioned on the basis of the proportion of the carrying value of
     each asset group or combination of asset groups to the total carrying value of the relevant
     asset groups or combinations of asset groups.


     When making an impairment test on the relevant asset groups or combination of asset groups
     containing business reputation, if any evidence shows that the impairment of asset groups or
     combinations of asset groups is possible, the Company shall first make an impairment test on
     the asset groups or combinations of asset groups not containing business reputation, calculate
     the recoverable amount, compare it with the relevant carrying value and recognize the

                                   Notes to the financial statements Page 26
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     corresponding impairment loss. Then the Company shall make an impairment test of the asset
     groups or combinations of asset groups containing business reputation, and compare the
     carrying value of these asset groups or combinations of asset groups (including the carrying
     value of the business reputation apportioned thereto) with the recoverable amount. Where the
     recoverable amount of the relevant assets or combinations of the asset groups is lower than
     the carrying value thereof, it shall recognize the impairment loss of the business reputation.


     Impairment losses on long-term assets shall not be reversed in subsequent accounting periods
     once recognized.


(18) Long-term deferred expense
     The long-term deferred expense refers to the expenses incurred but shall be borne by current
     and subsequent accounting period, which is more than one year. The long-term deferred
     expense shall be amortized over its beneficiary period evenly.


(19) Employee benefits
     1. Accounting treatment for short employee benefit
     The Company shall recognize, in the accounting period in which an employee provides
     service, actually occurred short-term employee benefits as a liability, with a corresponding
     charge to the profit or loss or cost of an asset for the current period.


     Payments made by an enterprise of social security contributions for employees, payments of
     housing funds, and union running costs employee education costs provided in accordance
     with relevant requirements shall, in the accounting period in which employees provide
     services, be calculated according to prescribed bases and percentages in determining the
     amount of employee benefits.


     The employee benefits which are non-monetary benefits shall be measured at fair value if it
     could be measured reliably.


     2. Accounting treatment of post-employment benefits
       The Company shall recognize, in the accounting period in which an employee provides
       service, pension fund and unemployment fund for employees as a liability according to the
       local government regulations. The amount shall be calculated according to local prescribed
       bases and percentages in determining the amount of employee benefits, with a
       corresponding charge to the profit or loss or cost of an asset for the current period.


         In addition to the basic endowment insurance, the company has also established an

                                   Notes to the financial statements Page 27
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

       enterprise annuity payment system (supplementary pension insurance)/enterprise annuity

       plan based on the relevant policies of the national enterprise annuity system. The Company

       pays the local social insurance institution's payment/annuity plan according to a certain

       percentage of the total wages of the employees, and the corresponding expenses are

       included in the current profit and loss or related asset costs.


     3. Accounting treatment of termination benefits
     The Company which provides termination benefits to employees shall recognize an employee
     benefits liability for termination benefits, with a corresponding charge to the profit or loss for
     the current period, at the earlier of the following dates:
       (1) When the Company cannot unilaterally withdraw the offer of termination benefits
       because of an employment termination plan or a curtailment proposal
       (2) When the Company recognizes costs or expenses related to a restructuring that involves
       the payment of termination benefits


(20) Estimated liabilities
     1. Recognition Criteria of estimated liabilities
     The obligation pertinent to a Contingency (litigation, guarantees, loss contract, restructuring)
     shall be recognized as an estimated liability when the following conditions are satisfied
     simultaneously:
       (1) That obligation is a current obligation of the enterprise;
       (2) It is likely to cause any economic benefit to flow out of the enterprise as a result of
       performance of the obligation; and
       (3) The amount of the obligation can be measured in a reliable way.


     2. Measurement of estimated liabilities
     The estimated debts shall be initially measured in accordance with the best estimate of the
     necessary expenses for the performance of the current obligation.


     To determine the best estimate, an enterprise shall take into full consideration of the risks,
     uncertainty, time value of money, and other factors pertinent to the Contingencies. If the time
     value of money is of great significance, the best estimate shall be determined after
     discounting the relevant future outflow of cash.


     The best estimate shall be conducted in accordance with the following situations,
     respectively:


                                   Notes to the financial statements Page 28
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     If there is a continuous range for the necessary expenses and if all the outcomes within this
     range are equally likely to occur, the best estimate shall be determined in accordance with the
     average estimate within the range, that is, the average of the upper and lower limit.


     If there is not a sequent range for the necessary expenses and if the outcomes within this
     range are not equally likely to occur, the best estimate shall be determined as follows:
       (1) If the Contingencies concern a single item, it shall be determined in the light of the most
       likely outcome.
       (2) If the Contingencies concern two or more items, the best estimate shall be calculated
       and determined in accordance with all possible outcomes and the relevant probabilities.


     When all or some of the expenses necessary for the liquidation of an estimated debts of an
     enterprise is expected to be compensated by a third party, the compensation shall be
     separately recognized as an asset only when it is virtually certain that the reimbursement will
     be obtained. The amount recognized for the reimbursement shall not exceed the book value
     of the estimated debts.


(21) Revenue
     1. The general principle of revenue recognition and measurement
       The Company has transferred to the buyer the significant risks and rewards of ownership of
       the goods; and retained neither continuing managerial involvement which usually relates to
       the ownership nor exerts effective control over the goods sold. The relevant amount of
       revenue can be measured reliably, the economic benefits related to the transaction will flow
       into the enterprise; and the relevant costs incurred or to be incurred can be measured
       reliably. Revenue from the sale of goods may be recognized.


     2. The specific criteria of revenue recognition and measurement
       The amount of sale of goods is recognized according to the contract or agreement terms.


       The Company mainly sells steel and other products. Domestic sales revenue is recognized
       when the following conditions are met: The Company has delivered the products to buyer
       under the contract, amount of product sales revenue is determinable, received or the
       certificate of the right to receive the amount has been obtained and the relevant economic
       benefits are likely to flow into the entity, and related costs can be measured reliably.
       Export sales revenue is recognized when the following conditions are met: the Company
       has undertaken the Customs declaration and delivery has occurred under the contract, bill of
       lading has been obtained, amount of product sales revenue is determinable, received or the



                                   Notes to the financial statements Page 29
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
       certificate of the right to receive the amount has been obtained and the relevant economic
       benefits are likely to flow into the entity, and related costs can be measured reliably.


     3. Recognition Criteria for the Revenue from alienating of Assets Use Rights
       When it is probable that economic benefits in relation to the transaction will flow into the
       enterprise; and the amount of revenues can be measured reliably. The Company shall
       ascertain the amount of revenues from the transfer of Assets Use Right based on the
       following circumstances respectively:
         (1) Interest income shall be calculated based on the duration of which the Company's cash
         is used by others and the actual interest rate; or
         (2) Royalty revenue shall be calculated based on the period and method of charging as
         stipulated in the relevant contract or agreement.


(22) Government subsidies
     1. Types of government subsidies
     A government subsidy means the monetary or non-monetary assets obtained free of charge
     by the Company from the government. Government subsidies consist of the government
     subsidies pertinent to assets and government subsidies pertinent to income.


     Government subsidies related to assets are government subsidies whose primary condition is
     that an entity qualifying for them should purchase, construct or otherwise acquire long-term
     assets. Government subsidies related to incomes refer to the government subsidies beside
     government subsidies pertinent to assets.


     The specific condition of government subsidies related to assets for the Company is that,
     government subsidies qualifying for the Company should purchase, construct or otherwise
     acquire long-term assets.
     Government subsidies related to incomes refer to the government subsidies beside
     government subsidies pertinent to assets.

     For the government documents that do not clearly stipulate the subsidy object, the company's

     judgment on the government subsidy is related to the assets or related to the income: whether

     it is used for the purchase or construction or other forms of long-term assets.


     2. Recognition

     The recognition time of the company's government-related subsidies is: when the actual

     receipt of government subsidies is received, and from the long-term asset is ready for use, the

     deferred income will be transferred to profit and loss of that period according to the expected
                                   Notes to the financial statements Page 30
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

     life of the long-term assets.

     The recognition time of the company's government subsidies related to income is: the actual

     receipt of government subsidies, used to compensate enterprises

If the relevant expenses or losses during the subsequent period of the industry are included in the

current non-operating income during the period in which the relevant expenses are recognized;

If it is used to compensate the related expenses or losses that have occurred in the enterprise, it

will be directly included in the current non-operating income when it is acquired.


     3. Accounting treatment
     Government subsidies related to assets shall be recognized by deducting the subsidies at the
     caring amount of the assets or recognized as deferred income. Subsidies that recognized as
     deferred income shall be recognized in profit or loss on a systematic basis over the periods
     during the useful lives of the relevant assets (Subsidies related to daily activities should be
     figured into Other Income. Subsidies that unrelated to daily activities should be figured into
     Non-operating Income).


     The government subsidies related to incomes to compensate future expenses, shall be
     recognized as deferred income and transferred to current profit or loss (Subsidies related to
     daily activities should be figured into Other Income. Subsidies that unrelated to daily
     activities should be figured into Non-operating Income) in the period during which the
     expenses compensation is recognized, or deduct relevant cost or loss. Government subsidies
     to compensate expenses or losses already incurred shall be recognized in current profit and
     loss (Subsidies related to daily activities should be figured into Other Income. Subsidies that
     unrelated to daily activities should be figured into Non-operating Income) or deduct relevant
     cost or loss.


(23) Deferred tax assets and deferred tax liabilities
     An enterprise shall recognize the deferred income tax liabilities arising from a deductible
     temporary difference to the extent of the amount of the taxable income which it is most likely
     to obtain and which can be deducted from the deductible temporary difference.


     As for any deductible loss or tax deduction that can be carried forward to the next year, the
     corresponding deferred income tax assets shall be determined to the extent that the amount of
     future taxable income to be offset by the deductible loss or tax deduction to be likely
     obtained.


                                   Notes to the financial statements Page 31
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     All taxable temporary differences shall be recognized as deferred tax liabilities with certain
     limited exceptions.


     Exceptions when deferred tax assets and deferred tax liabilities are not recognized include:
     initial recognition of goodwill; initial recognition of an asset or liability in a transaction or
     event that is not a business combination and at the time of the transaction, affects neither
     accounting profit nor taxable profit (tax loss)


     An entity shall offset deferred tax assets and deferred tax liabilities if, and only if:(a) the
     entity has a legally enforceable right to set off current tax assets against current tax liabilities;
     and(b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by
     the same taxation authority on either:(i) the same taxable entity; or(ii) different taxable
     entities which intend either to settle current tax liabilities and assets on a net basis, or to
     realize the assets and settle the liabilities simultaneously, in each future period in which
     significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.


(24) Leases
     1. Accounting treatment of operating lease
       (1) The rents paid for operating leases shall be recorded in the profits and losses of the
       current period by using the straight-line method over each period of the lease term. The
       initial direct costs paid by the Company shall be recorded into the profits and losses of the
       current period


       If the lessor has shouldered any expense related to the lease which shall have been borne by
       the Company, the Company shall deduct these expenses from the total rental expense and
       the remaining rental expense shall be allocated to each period during the lease term


       (2) The rents collected from operating leases shall be recorded in the profits and losses of
       the current period by using the straight-line method over each period of the whole lease
       term in which free lease period is included. The initial direct costs paid by the Company
       shall be recorded into the profits and losses of the current period. The initial direct costs
       shall be capitalized if it is material, and be allocated to each period as per the basis for
       rental revenue recognition.


       If the Company has shouldered any expense related to the lease which shall have been
       borne by the lessee, the company shall deduct these expenses from the total rental revenue
       and the remaining rental revenue shall be allocated to each period during the lease term.



                                   Notes to the financial statements Page 32
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
     2. Accounting treatment of financial leasing
       (1) Leased in asset
       On the lease beginning date, a lessee shall record the lower one of the fair value of the
       leased asset and the present value of the minimum lease payments on the lease beginning
       date as the initial book value, recognize the amount of the minimum lease payments as the
       initial book value of long-term account payable, and treat the balance between the recorded
       amount of the leased asset and the long-term account payable as unrecognized financing
       charges.


       The lessee shall adopt the effective interest rate method to calculate and recognize the
       financing charge in the current period. The unrecognized financing charge shall be
       amortized to each period during the lease term. Initial direct costs incurred by the Company
       shall be recorded in the value of the leased asset.


       (2) Leased out asset
       On the lease beginning date, a lessee shall record the balance between the sum of finance
       lease receivables plus unguaranteed residual value and the present value of the sum as
       unrealized financing income, and record rental as revenue when received for each period in
       the future.


       Initial direct costs incurred by the Company related to the leased asset shall be recorded in
       the initial measurement of the finance lease receivables, and reduce the amount of revenue
       recognized during the lease term.


(25) Discontinuing operation
     Discontinuing operation is a component that has been disposed or classified as held for sale
     by the Company, and can be distinguished separately in operating and preparing financial
     statements when one of the following conditions is met:
     (1) The component stands for an independent main business or a major business area;
     (2) The component is a part of disposal plan of an independent main business or a major
          business area;
     (3) The component is a subsidiary which is acquired only for sale again.


(26) Significant accounting policies and change of accounting estimate
     1. Significant changes in accounting policies.
       The company’s accounting policies have not changed during the reporting period.


     2. Significant changes in accounting estimates

                                   Notes to the financial statements Page 33
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
        The company’s accounting estimates have not changed during the reporting period.


4. Taxes
(1) Major type of taxes and corresponding tax rates

                 Tax                                         Taxation Method                        Tax Rate
                                         The balance of output VAT calculated based on product
                                         sales and taxable services revenue in accordance with     16%,10%,6
Value-added Tax (VAT)                    the tax laws after subtracting the deductible input VAT
                                         of the period                                                 %

City maintenance and construction                                                                    7%,5%
                                         Based on VAT and business tax actually paid
tax
                                         Based on VAT and business tax actually paid
Educational surcharges                                                                               3%,2%
                                         Based on taxable profit
Enterprise income tax                                                                                 25%


(2) Others
      According to the "Notice on Adjusting the VAT Rate" issued by the Ministry of Finance and
      the State Administration of Taxation (Cai Shui [2018] No. 32), the company has adjusted the
      17% and 11% VAT rates to 16% and 10% since May 1, 2018.


5. Notes to the consolidated financial statements
(1) Cast at bank and on hand

                        Items                              Ending balance                Beginning balance

Cash on hand                                                              20,372.11                  20,871.51

Cash at bank                                                   16,038,486,482.11              12,317,555,907.42

Other monetary funds                                               2,531,734,752.99            4,720,136,631.56

                        Total                                  18,570,241,607.21              17,037,713,410.49

Including: Funds that are deposited abroad


      The details of restricted monetary funds resulted from guarantee or pledge or freeze
accounts are as follows:

                       Items                              Ending balance                 Beginning balance

Margin for bank acceptance bill                                    1,463,123,892.06            3,147,582,187.96

Fixed deposits or Notice deposits for guaranty                     1,068,610,860.93            1,572,554,443.60

                        Total                                      2,531,734,752.99            4,720,136,631.56


(2) Notes receivable
      1.         Notes receivable disclosed by category

                 Items                              Ending balance                     Beginning balance
                                    Notes to the financial statements Page 34
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

Bank acceptance bill                                           3,004,534,752.04                     3,622,042,309.91

Commercial acceptance bill                                       160,358,895.92                      224,391,390.96

                       Total                                   3,164,893,647.96                     3,846,433,700.87


     2.            The pledged acceptance at the year-end

                               Items                                   The pledged acceptance bill at the year-end

Bank acceptance bill                                                                                1,801,103,300.17

           Total                                                                                    1,801,103,300.17


     3.            The amount of Notes receivable endorsed over but no yet matured at the
                   year-end.

                   Items                        Derecognized ending balance         Underecognized ending balance

Bank acceptance bill                                         11,045,298,083.12

Commercial acceptance bill                                                                           103,741,236.92

                       Total                                 11,045,298,083.12                       103,741,236.92


     4.    No Notes receivable has been transferred into accounts receivable due to inability
     of drawer to meet acceptance bill at the year-end.


(3) Accounts receivable
          1. Accounts receivable disclosed by category

                                                                       Ending balance
                                           Carrying amount                Provision for bad debts
                                                                                            Bad
               Items
                                                         Percentage                        debts       Book value
                                         Amount                             Amount
                                                            (%)                            ratio
                                                                                            (%)
Individually significant and            47,762,337.18           5.04      47,762,337.18    100.00
tested for impairment
individually
Accounts receivable tested for         900,339,070.86          94.96     192,449,084.52     21.38    707,889,986.34
impairment by portfolio
Other insignificant items but
tested for impairment
individually
               Total                   948,101,408.04         100.00     240,211,421.70              707,889,986.34



                                                                   Beginning balance
               Items
                                           Carrying amount               Provision for bad debts       Book value
                                        Notes to the financial statements Page 35
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
                                                                                              Bad
                                                       Percentage                            debts
                                       Amount                               Amount
                                                           (%)                               ratio
                                                                                              (%)
Individually significant and
tested for impairment              47,762,337.18              4.86         47,762,337.18     100.00
individually
Accounts receivable tested
                                 934,445,274.36              95.14      205,847,347.97        22.03     728,597,926.39
for impairment by portfolio
Other insignificant items but
tested for impairment
individually
               Total              982,207,611.54            100.00      253,609,685.15                  728,597,926.39


       Individually significant and tested for impairment individually

                                                                     Ending balance

       Accounts receivable              Accounts           Provision for        Accounts
                                                                                                        Reason
                                        receivable          bad debts           receivable
Benxi Nanfen Xinhe
Metallurgical Co., Ltd.                47,762,337.18       47,762,337.18          100.00%           Stop production

                 Total                 47,762,337.18       47,762,337.18




       Accounts receivables tested for impairment by portfolio using the method of Aging analysis:

                                                                  Ending balance
              Items
                                 Carrying amount             Provision for bad debts          Bad debts ratio (%)

Within 1 year (inclusive)                 606,575,905.21

1-2 years (inclusive)                      32,499,752.60                    1,624,987.63                           5.00

2-3 years (inclusive)                      88,049,145.20                   17,609,829.04                          20.00

Over 3 years                              173,214,267.85                173,214,267.85                           100.00

              Total                       900,339,070.86                192,449,084.52


            2. Information of provision, reversal or recovery of bad debts of current period.
             The provision of bad debts of current period is RMB 13,398,263.45.

            3. No accounts receivable has been written off this year.


            4. Top five debtors at the year-end

                     Company                                                Ending balance



                                   Notes to the financial statements Page 36
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
                                                                               Percentage of
                                                                                                     Provision for bad
                                                         Amount                total accounts
                                                                                                          debts
                                                                              receivable (%)
No.1.                                                     298,586,735.80                  31.49
No.2                                                       86,329,597.52                   9.11           6,513,105.93

No.3.                                                      47,762,337.18                   5.04          47,762,337.18
No.4.                                                      46,980,327.61                   4.96          22,754,881.58

No.5.                                                      34,624,704.64                   3.65           8,840,761.28

                      Total                               514,283,702.75                  54.24          85,871,085.97



(4) Prepayments
        1.      Prepayments disclosed by aging

                                        Ending balance                                Beginning balance
         Aging
                                  Amount            Percentage (%)              Amount                Percentage (%)

Within 1 year                    1,179,625,676.28               98.29           1,259,327,577.20                  98.33

1-2 years                          12,847,731.88                 1.07               13,457,173.07                   1.05

2-3 years                            1,535,096.44                0.13                1,669,541.26                   0.13

Over 3 years                         6,155,309.06                0.51                6,234,802.80                   0.49

             Total               1,200,163,813.66             100.00            1,280,689,094.33               100.00
        Notes: Significant prepayment with aging over 1 year is paid for commodity in advance, and
        the settlement terms agreed in the contract are not due.


        2.      Top five prepaid companies at the year-end

                              Name of the company                                     Amount          Percentage (%)

 No.1                                                                               707,225,626.32                58.93
 No.2                                                                               178,742,709.55                14.89
 No.3                                                                               127,417,058.31                10.62
 No.4                                                                                37,291,000.00                  3.11
 No.5                                                                                24,882,543.25                  2.07
                                      Total                                     1,075,558,937.43                  89.62



(5) Interest receivable
        1.      Interest receivable disclosed by category

                         Items                                Ending balance                    Beginning balance
                                                                        3,503,285.16                     18,448,520.50
 Interest on deposit
                                                                        3,503,285.16                     18,448,520.50
                         Total


(6) Other receivables

                                        Notes to the financial statements Page 37
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
      1. Other receivables disclosed by category:

                                                                  Ending balance
                                       Carrying amount                  Provision for bad debts
                                                                                             Bad
            Items
                                                    Percentage                             debts         Book value
                                    Amount                                Amount
                                                        (%)                                  ratio
                                                                                             (%)
Individually significant
and tested for impairment
individually
Accounts receivable
tested for impairment by         339,279,331.51         99.49           69,928,385.39      20.61        269,350,946.12
portfolio
Other insignificant items
but tested for impairment         1,740,000.00          0.51                                             1,740,000.00
individually
            Total                341,019,331.51         100             69,928,385.39                   271,090,946.12



                                                                   Beginning balance
                                          Carrying amount                 Provision for bad debts
                                                                                               Bad
               Items
                                                        Percentage                             debts       Book value
                                        Amount                               Amount
                                                            (%)                                ratio
                                                                                               (%)
Individually significant and
tested for impairment
individually
Accounts receivable tested for
                                     359,690,439.99             99.52      71,053,454.65       19.75     288,636,985.34
impairment by portfolio
Other insignificant items but
tested for impairment                   1,740,000.00             0.48                                      1,740,000.00
individually
               Total                 361,430,439.99            100.00      71,053,454.65                 290,376,985.34


      Other receivables tested for impairment by portfolio using the method of Aging analysis:

                                                                   Ending balance
            Items
                                    Other receivables           Provision for bad debts            Bad debts ratio (%)

Within 1 year(inclusive)                  250,287,509.96

1-2 years(inclusive)                         8,603,549.60                       430,177.48                         5.00

2-3 years(inclusive)                       13,612,580.05                      2,722,516.01                        20.00

Over 3 years                               66,775,691.90                     66,775,691.90                       100.00

             Total                        339,279,331.51                     69,928,385.39


                                      Notes to the financial statements Page 38
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
       Other receivables individually insignificant but tested for impairment individually

          Items               Carrying amount       Provision for bad debts        Bad debts ratio (%)       Reason
Sinking Fund of
Japanese yen from
Finance Bureau of
Benxi                              1,740,000.00                                                            Sinking fund
          Total                    1,740,000.00
       Notes: The Sinking Fund of Japanese yen from Finance Bureau of Benxi is the margin for JPY
       loans of which the aging is over 3 years and no bad debts provision has been made for it.


       2. Information of provision, reversal or recovery of bad debts of current period.
               The provision of bad debts of current period is RMB1,125,069.26

       3. No other receivables have been written off this year.


       4. Other receivables disclosed by nature

                 Nature                           Ending balance                          Beginning balance

Accounts                                                    324,237,613.93                               345,146,993.73
Margin and deposit                                            3,746,111.37                                 3,045,619.00
Others                                                       13,035,606.21                                13,237,827.26

                  Total                                     341,019,331.51                               361,430,439.99


       5. Top five debtors at the year-end

                                                                                        Percentage of       Provision
  Company             Nature or content       Amount                  Aging               total other        for bad
                                                                                          receivables         debts
                                                                     Within 1
No.1                 Accounts              17,464,021.64      year17,455,404.12,                  5.12         8,617.52
                                                             over 3 years8,617.52
                                                                   Within 1 year
No.2                 Accounts              16,083,670.47       12,553,032.8, 1-2                  4.72      176,531.88
                                                              years 3,530,637.67
No.3                 Accounts              12,626,479.38             1-3 years                    3.70     2,462,178.25
No.4                 Accounts               9,188,976.40           Within 1 year                  2.69
No.5                 Others                 5,922,247.07           Within 1 year                  1.74

       Total                               61,285,394.96                --                       17.97     2,647,327.65




                                      Notes to the financial statements Page 39
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements




(7) Inventories
      1.      Inventories disclosed by category

                                                          Ending balance                                                                    Beginning balance
            Items
                               Carrying amount            Impairment                  Book value                   Carrying amount            Impairment               Book value
Raw material and main
                                       5,768,189,545.16        4,894,918.76             5,763,294,626.40              5,612,450,076.70              4,894,918.76        5,607,555,157.94
material
Work in process and
self-made semi-finished                2,021,513,151.82       20,668,681.48             2,000,844,470.34              1,689,682,178.82             23,431,222.63        1,666,250,956.19
product
Finished products                      5,154,722,855.66       25,057,402.93             5,129,665,452.73              3,964,781,474.74             28,689,492.71        3,936,091,982.03

             Total                 12,944,425,552.64          50,621,003.17            12,893,804,549.47             11,266,913,730.26             57,015,634.10       11,209,898,096.16
      Notes: No inventories are used as mortgage or guarantee at the year-end.


      2.      Impairment of inventory

                                                                Increase in current period                            Decrease in current period
           Items             Beginning balance                                                                                                                     Ending balance
                                                               Provision                 Others             Write-back or write-off                Others
Raw material and main
                                          4,894,918.76                                                                                                                    4,894,918.76
material
Work in process and
self-made                                23,431,222.63             20,668,681.48                                            23,431,222.63                                20,668,681.48
semi-finished product
Finished products                        28,689,492.71             25,057,402.93                                            28,689,492.71                                25,057,402.93

           Total                         57,015,634.10             45,726,084.41                                            52,120,715.34                                50,621,003.17




                                                                       Notes to the financial statements Page 40
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements




(8) Other current assets

                                         Items                                                            Ending balance                                  Beginning balance

Prepaid enterprise income tax                                                                                                182,228,953.96                              182,938,934.20

Input tax to be deducted                                                                                                      35,387,479.00                              120,383,193.59

Bank Short-Term Financial Products                                                                                                                                       506,000,000.00

                                         Total                                                                               217,616,432.96                              809,322,127.79


(9) Available-for-sale financial assets
     1.    Details of available-for-sale financial assets

                                                                 Ending balance                                                               Beginning balance
           Items
                                       Carrying amount                Impairment               Book value             Carrying amount           Impairment              Book value
Available-for-sale debt
instruments
Available-for-sale equity
                                                 18,503,673.00           14,414,693.00            4,088,980.00             18,303,673.00            14,414,693.00             3,888,980.00
instruments
Including: Measured at fair
  value
  Measured at cost                               18,503,673.00           14,414,693.00            4,088,980.00             18,303,673.00            14,414,693.00             3,888,980.00
              Total                              18,503,673.00           14,414,693.00            4,088,980.00             18,303,673.00            14,414,693.00             3,888,980.00




                                                                          Notes to the financial statements Page 41
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

       2.     Available-for-sale financial assets measured at cost

                                                   Carrying amount                                                       Total impairment                                                    Cash
                                                                                                                                                                      Percentage of        dividend
       Company
                                                                                    Ending           Beginning                                          Ending        share in the          of the
     invested in        Beginning Balance      Increase         Decrease                                                Increase      Decrease
                                                                                  Balance             Balance                                          Balance          firm (%)           current
                                                                                                                                                                                            period
Guangzhou Ben
Pu auto plate sales                            200,000.00                           200,000.00                                                                                   10.00
Co., Ltd.
Suzhou Bengang
                                3,888,980.00                                      3,888,980.00                                                                                   20.10
Industrial Co., Ltd.
China Steel
Shanghai Steel
                               14,414,693.00                                    14,414,693.00        14,414,693.00                                    14,414,693.00              15.00
Processing Co.,
Ltd.
         Total                 18,303,673.00   200,000.00                       18,503,673.00        14,414,693.00                                    14,414,693.00


(10) Long-term investment
                                                                                         Increase or decrease
                                                                                                                                                                                          Ending
                                                                     Investment      Adjustment of
     Company           Beginning                                                                                     Declaration of                                    Ending            balance of
                                         Add           Reduce      income or loss        other       Other equity                     Provision for
     invested in        balance                                                                                      cash dividends                      Others        balance        provision for
                                      investment      investment     under equity comprehensive        changes                        impairment
                                                                                                                        or profit                                                        impairment
                                                                       method           income

1.     Joint venture

2.     Associated enterprise




                                                                            Notes to the financial statements Page 42
 Bengang Steel Plates Co., Ltd.
 For the half year ended 30 June 2018
 Notes to the financial statements

 ZhejiangBengang
 Elite Steel
                        2,726,009.03                                                                                                       2,726,009.03
 Processing Co.,
 Ltd.
 Subtotal               2,726,009.03                                                                                                       2,726,009.03
 Total                  2,726,009.03                                                                                                       2,726,009.03


 (11) Fixed assets
         1.    Details of fixed assets

                   Items                     Buildings                              Machinery                 Transportation equipment            Total
1. Total original value

 Beginning balance                               12,311,587,761.99                        41,626,541,563.48               902,411,923.49            54,840,541,248.96
 Increase
                                                          637,829.46                          33,999,698.90                  180,000.00                   34,817,528.36
 in current period
 Including: Purchase
               Transferred            from
                                                          637,829.46                          33,999,698.90                  180,000.00                   34,817,528.36
               construction in progress
               Merging
               Others

 Decrease in current period                              4,500,116.36                         18,821,400.78                                               23,321,517.14
 Including: Disposal                                     4,500,116.36                         18,821,400.78                                               23,321,517.14
               Others

 Ending balance                                  12,307,725,475.09                        41,641,719,861.60               902,591,923.49            54,852,037,260.18
2.Total accumulated depreciation

 Beginning balance                                5,276,168,794.08                        25,159,715,530.00               541,830,618.28            30,977,714,942.36
 Increase                                           163,421,339.99                           973,734,423.39                 7,828,431.62             1,144,984,195.00


                                                                  Notes to the financial statements Page 43
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements


                 Items                            Buildings                              Machinery                 Transportation equipment     Total
in current period
Including: Provision                                     163,421,339.99                           973,734,423.39                 7,828,431.62      1,144,984,195.00
           Others

Decrease in current period                                    4,285,981.20                         16,843,876.26                                        21,129,857.46
Including: Disposal                                           4,285,981.20                         16,843,876.26                                        21,129,857.46
           Others

Ending balance                                          5,435,304,152.87                       26,116,606,077.13               549,659,049.90     32,101,569,279.90
3. Total impairment

Beginning balance                                             8,208,087.85                          2,551,052.65                                        10,759,140.50
Increase
in current period
Including: Provision
           Others

Decrease in current period
Including: Disposal
           Others

Ending balance                                                8,208,087.85                          2,551,052.65                                        10,759,140.50
4. Total net book value of Fixed assets

Ending book value                                       6,864,213,234.37                       15,522,562,731.82               352,932,873.59     22,739,708,839.78
Beginning book value                                    7,027,210,880.06                       16,464,274,980.83               360,581,305.21     23,852,067,166.10


      2.   Fixed assets leased out by operating lease

                                          Items                                                                                    Book value




                                                                       Notes to the financial statements Page 44
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements


                                           Items                                                                                       Book value
Buildings                                                                                                                                                                22,879,743.91
Machinery                                                                                                                                                                 4,504,638.67

                                           Total                                                                                                                         27,384,382.58


      3.    Fixed assets without property rights certificates at the year-end

                             Items                                                    Book value                                                     Reason
Plants and Buildings                                                                                      1,135,305,101.78                  To be handled in batches



(12) Construction in progress
      1. Details of construction in progress

                                                                     Ending balance                                                         Beginning balance
                 Items                                                                                                                        Impairm
                                           Carrying amount         Impairment              Book value                    Carrying amount                          Book value
                                                                                                                                                  ent
High Strength Cold Rolling Steel
                                               1,248,815,568.07                                1,248,815,568.07              1,187,165,940.86                          1,187,165,940.86
Renovation Project
The Third Cold Rolling Work Hot-Dip
                                                614,011,518.07                                   614,011,518.07                611,760,000.00                           611,760,000.00
Galvanizing Production Line Project
Energy Saving And Environmental
Protection Reconstruction Of The
                                                172,038,373.79                                   172,038,373.79                170,359,741.31                           170,359,741.31
Converter System And 180 Ton
Dephophorization Converter Project
Modification of ultra-thin pickling line           32,745,791.58                                  32,745,791.58                 32,745,791.58                            32,745,791.58
Information System Engineering                     34,970,271.44                                  34,970,271.44                 32,708,961.76                            32,708,961.76
Upgrading of hot blast stove and other             32,592,428.11                                  32,592,428.11                 27,289,578.22                            27,289,578.22


                                                                        Notes to the financial statements Page 45
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements


                                                               Ending balance                                                    Beginning balance
                 Items                                                                                                             Impairm
                                       Carrying amount       Impairment              Book value               Carrying amount                        Book value
                                                                                                                                       ent
systems in ironworks
The 360 Square Meter Sintering
                                             59,021,874.99                                  59,021,874.99            26,592,065.27                         26,592,065.27
Machine
Manufacturing Department Energy
                                             20,289,005.83                                  20,289,005.83            20,289,005.83                         20,289,005.83
Control Center
Energy Control Center                        15,976,501.70                                  15,976,501.70              8,617,499.91                         8,617,499.91
Other Projects                              509,898,394.05                                 509,898,394.05           274,055,825.72                       274,055,825.72

                 Total                    2,740,359,727.63                               2,740,359,727.63         2,391,584,410.46                     2,391,584,410.46




                                                                  Notes to the financial statements Page 46
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

      2. The change of major construction in progress

                                  Budget (In 10                                           Increase                                  Other
            Items                Thousand Yuan)         Beginning balance                                      Transfer to FA                 Ending balance
                                                                                          Amount                                   decrease
High Strength Cold Rolling
                                       613,498.00             1,187,165,940.86               61,649,627.21                                        1,248,815,568.07
Steel Renovation Project
The Third Cold Rolling
Work Hot-Dip Galvanizing                86,918.00               611,760,000.00                2,251,518.07                                          614,011,518.07
Production Line Project
Energy Saving And
Environmental Protection
Reconstruction Of The
                                       177,864.40               170,359,741.31                1,678,632.48                                          172,038,373.79
Converter System And 180
Ton Dephophorization
Converter Project
Modification of ultra-thin
                                         5,219.00                32,745,791.58                                                                       32,745,791.58
pickling line
Information System
                                         3,687.00                32,708,961.76                2,261,309.68                                           34,970,271.44
Engineering
Upgrading of hot blast stove
and other systems in                    18,535.14                27,289,578.22                5,302,849.89                                           32,592,428.11
ironworks
The 360 Square Meter
                                       128,403.20                26,592,065.27               32,429,809.72                                           59,021,874.99
Sintering Machine
Manufacturing Department
                                         2,600.00                20,289,005.83                                                                       20,289,005.83
Energy Control Center
Energy Control Center                   29,450.00                 8,617,499.91                7,359,001.79                                           15,976,501.70
Other Projects                                                  274,055,825.72             270,660,096.69          34,817,528.36                    509,898,394.05

            Total                                             2,391,584,410.46             383,592,845.53          34,817,528.36                  2,740,359,727.63
                                                                   Notes to the financial statements Page 47
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements


Continued
                                                                                               Including:
                                   Input of                   Accumulated amount of
              Items                              Progress                                 capitalized interest    Capitalization rate       Source of fund
                                   Budget                       capitalized interest
                                                                                           of current period
High Strength Cold Rolling
                                         85%            98%              906,733,767.70           50,832,345.91         3.48            self-raised funds and Loan
Steel Renovation Project
The Third Cold Rolling Work
Hot-Dip Galvanizing                      72%            90%                                                                                 self-raised funds

Production Line Project
Energy Saving And
Environmental Protection
Reconstruction Of The
                                         87%            96%              127,847,567.31                                                 self-raised funds and Loan
Converter System And 180
Ton Dephophorization
Converter Project
Modification of ultra-thin
                                         63%            70%                                                                                 self-raised funds
pickling line
Information System
                                         89%            90%                2,190,983.43              489,297.87         3.48            self-raised funds and Loan
Engineering
Upgrading of hot blast stove
and other systems in                     64%            85%                                                                                 self-raised funds

ironworks
The 360 Square Meter
                                            5%          98%               68,627,433.26                                                 self-raised funds and Loan
Sintering Machine
Manufacturing Department
                                         78%            80%                                                                                 self-raised funds
Energy Control Center
Energy Control Center                    98%            98%               45,372,134.03                                                 self-raised funds and Loan

                                                                  Notes to the financial statements Page 48
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

                                                                                          Including:
                                   Input of              Accumulated amount of
            Items                             Progress                               capitalized interest    Capitalization rate   Source of fund
                                   Budget                  capitalized interest
                                                                                      of current period
Other projects                                                                                                                     self-raised funds

            Total                                                 1,150,771,885.73           51,321,643.78




                                                             Notes to the financial statements Page 49
 Bengang Steel Plates Co., Ltd.
 For the half year ended 30 June 2018
 Notes to the financial statements
 (13) Construction material

                Items                          Beginning balance                         Ending balance
  Special equipment                                          2,925,581.89                           4,558,919.60

                Total                                        2,925,581.89                           4,558,919.60



 (14) Intangible assets
       1. Details of intangible assets

             Items                      Land use right             Office software                Total
1.Total of original value
 Beginning balance                          296,245,314.76                  409,458.15            296,654,772.91
 Increase                                    30,783,483.08                                         30,783,483.08
 Including: Purchase                         30,783,483.08                                         30,783,483.08
 Decrease
 Including: Disposal
 Ending balance                             327,028,797.84                  409,458.15            327,438,255.99
2. Total of       Accumulated
 Amortization
 Beginning balance                           42,688,601.63                   81,289.80             42,769,891.43
 Increase                                     3,219,446.92                   20,008.17              3,239,455.09
 Including: Provision                         3,219,446.92                   20,008.17              3,239,455.09
 Decrease
 Including: Disposal
 Ending balance                              45,908,048.55                  101,297.97             46,009,346.52
4. Total of Impairment
 Beginning balance
 Increase
 Including: Provision
 Decrease
 Including: Disposal
 Ending balance
5. Total of Net value
 Ending book value                          281,120,749.29                  308,160.19            281,428,909.48
 Beginning book value                       253,556,713.13                  328,168.35            253,884,881.48



 (15) Deferred tax assets and deferred tax liability
       1. Undeducted deferred tax asset

                                               Ending balance                        Beginning balance
                                        Deductible                              Deductible
              Items                                      Deferred tax                             Deferred tax
                                        temporary                               temporary
                                                             asset                                    asset
                                        differences                             differences

                                    Notes to the financial statements Page 50
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

Asset impairment provision             373,970,223.70       93,492,555.93        403,885,112.30       100,971,278.09
No profit from internal
                                         71,807,414.00        17,951,853.50          64,609,874.03      16,152,468.51
transactions
Differences of depreciation and
                                        333,978,859.03        83,494,714.76         333,978,859.03      83,494,714.76
amortization
               Total                   779,756,496.73      194,939,124.19        802,473,845.36       200,618,461.36


       2. Unrecognized deferred tax assets

                       Item                                 Ending balance                      Beginning balance

Deductible temporary differences                                              2,722,439.35                2,967,495.10
Deductible losses                                                       1,377,226,268.38              2,105,332,277.56

                       Total                                            1,379,948,707.73              2,108,299,772.66


       3. The deductible loss of unrecognized deferred tax assets due in the following period:

           Year                        Ending balance               Beginning balance                    Notes

2018                                                                            4,904,050.21
2019
2020                                       1,365,805,145.49                 2,086,284,665.11
2021                                          12,562,922.76                    12,562,922.76
2022                                           1,580,639.48                     1,580,639.48
2023

           Total                           1,379,948,707.73                 2,105,332,277.56


(16) Other non-current assets

                       Item                                 Ending balance                      Beginning balance

Prepaid long-term assets                                                1,037,735,849.00              1,067,334,823.12

                       Total                                            1,037,735,849.00              1,067,334,823.12

       Note: Prepaid long-term assets at the end of the period of an amount of RMB 1,037,735,849.00
       was used to pay the investment of Northeast Special Steel Group Co., Ltd.


(17) Short-term loans

                               Items                              Ending balance               Beginning balance
Guaranteed loans                                                        825,000,000.00                1,470,000,000.00
Credit loans
Mortgage loans                                                       15,413,162,700.00               11,529,063,300.00
Pledge loans                                                          5,546,640,000.00                9,000,040,600.00

                               Total                                 21,784,802,700.00               21,999,103,900.00


(18) Notes payable
                                        Notes to the financial statements Page 51
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

                       Items                              Ending balance                    Beginning balance

Bank acceptance bill                                           5,286,291,966.46                   8,782,045,779.95

Commercial acceptance bill                                     1,798,307,730.12                   1,812,544,047.32

Domestic letter of credit                                      1,400,000,000.00                    900,000,000.00

                       Total                                   8,484,599,696.58                  11,494,589,827.27


(19) Accounts payable
      1. Accounts payable disclosed by category:

                       Item                             Ending balance                      Beginning balance
Accounts payable for goods                                   3,390,784,690.68                      3,116,873,305.58
Accounts payable for labor                                       4,563,306.49                           4,467,697.76
Accounts payable for project and equipment                     260,141,728.27                        254,691,333.73
Accounts payable for repair                                    592,745,474.27                        519,035,208.21
Others                                                           2,637,902.24                           2,600,968.49

                       Total                                 4,250,873,101.95                      3,897,668,513.77


      2. Significant accounts payable aging over one year:

                            Items                             Ending balance                       Reason
BHP Billiton Trading Company                                         29,311,486.15              Not yet settled
China Metallurgical Southern Engineering Technology
                                                                     17,030,034.24              Not yet settled
Co., Ltd.
Jixi Huasheng Feng Yuan Coal Preparation Co., Ltd.                   26,485,138.18              Not yet settled
Hangzhou Tian Shen materials Co., Ltd..                              20,145,902.64              Not yet settled
                            Total                                    92,972,561.21



(20) Advance from customers
      1. Advance from customers disclosed by category

                       Items                              Ending balance                     Beginning balance

Advance for goods                                                3,389,201,256.80                  3,308,567,598.05

                       Total                                     3,389,201,256.80                  3,308,567,598.05
      2. There is no significant advance from customers aging over one year.
         None


(21) Employee benefits payable
      1. Employee benefits payable

                                    Beginning
            Items                                        Increase                Decrease         Ending balance
                                     balance

                                     Notes to the financial statements Page 52
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

                                    Beginning
             Items                                          Increase             Decrease           Ending balance
                                     balance

Short-term           employee
                                    39,492,800.76          943,263,601.67       943,135,390.76        39,621,011.67
benefits

Post-employment benefits -
                                       58,897.24            47,540,582.84        47,540,326.12            59,153.96
defined contribution plans
                                     4,170,839.58                                 1,144,626.18         3,026,213.40
Termination benefits
                                    43,722,537.58          990,804,184.51       991,820,343.06        42,706,379.03
             Total

      2. Short-term employee benefits

                                        Beginning                                                        Ending
               Items                                            Increase             Decrease
                                         balance                                                         balance
(1) Salary, bonus, allowance and
                                        29,509,509.38          641,081,645.94      641,141,079.43     29,450,075.89
subsidy
(2) Employee welfare                       403,019.22           45,026,921.33       45,026,921.33        403,019.22
(3) Social Insurance                       663,146.90          192,937,976.71      192,926,811.12        674,312.49
Including: Medical insurance                                    44,401,255.18       44,401,255.18
           Work            injury
                                           663,146.90           16,468,829.44       16,468,829.44        663,146.90
           insurance
           Maternity insurance                                      11,511.84           11,511.84              0.00
(4) Housing                              6,850,655.00           50,579,409.00       50,575,375.00      6,854,689.00
(5) Union funds and staff
                                         2,066,470.26           12,732,865.04       12,560,420.23      2,238,915.07
education fee
(6) Short-term compensated
absences
(7) Short-term profit - sharing
scheme
(8) Others                                                        904,783.65           904,783.65

                                        39,492,800.76          943,263,601.67      943,135,390.76     39,621,011.67
                Total

      3. Defined contribution plans

                                        Beginning                                                        Ending
               Items                                            Increase             Decrease
                                         balance                                                         balance
                                               57,445.11        44,401,255.18       44,401,255.18         57,445.11
Basic pension fund
                                                1,452.13         3,139,327.66        3,139,070.94          1,708.85
Unemployment insurance
                                               58,897.24        47,540,582.84       47,540,326.12         59,153.96
                Total


(22) Current tax liabilities

                        Items                          Ending balance                   Beginning balance

 Value-added Tax (VAT)                                          37,172,905.08                         44,433,347.78


                                     Notes to the financial statements Page 53
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

                   Items                            Ending balance                    Beginning balance

 Enterprise income tax                                        4,233,500.49                      12,706,288.46

 City maintenance and construction tax                       10,340,536.48                      13,007,637.50

 Housing property tax                                         3,013,016.57                        2,990,847.04

 Educational surcharges                                       7,400,127.44                        9,382,026.01

 Others                                                       9,925,077.37                        5,286,981.71

                   Total                                     72,085,163.43                      87,807,128.50


(23) Interests payable

                            Items                              Ending balance            Beginning balance
                                                                                               70,109,821.13
 Corporate bond interest
                                                                     51,920,388.97             14,029,466.89
 Loan interests
                                                                     51,920,388.97             84,139,288.02
                            Total


(24) Dividends payable

                            Items                              Ending balance            Beginning balance
                                                                    193,768,576.60
 Common stock dividends
                                                                    193,768,576.60
                            Total


(25) Other payables
     1. Other payables disclosed by nature

                  Items                              Ending balance                    Beginning balance
Deposit                                                         2,429,895.77                       2,475,771.82

Margin                                                        163,854,042.94                     145,686,888.01

Accounts                                                      323,615,754.77                     349,363,687.04

Others                                                         71,096,069.89                      79,463,585.44

                  Total                                       560,995,763.37                     576,989,932.31



     2. Significant other payables ageing over one year

                          Name                                Ending balance                   Reason
Benxi Steel & Iron (Group) Co., Ltd.                                  86,805,543.86        Not yet settled
                           Total                                      86,805,543.86



(26) Non-current liabilities due within one year
     1. Breakdown of Non-current liabilities due within one year

                        Item                              Ending balance                Beginning balance
                                    Notes to the financial statements Page 54
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Long-term loans due within one year                               1,040,765,614.98               2,311,995,410.89

Long-term payables due within one year                                                           1,499,545,179.95

                         Total                                    1,040,765,614.98               3,811,540,590.84



     2. Long-term loans due within one year

                        Items                               Ending balance                   Beginning balance

Guaranteed loans                                                  1,040,765,614.98                2,280,404,670.89

Credit loans                                                                                        31,590,740.00

                         Total                                    1,040,765,614.98                2,311,995,410.89



(27) Other current liabilities

                        Items                               Ending balance                   Beginning balance

Pending VAT                                                          25,283,327.37                  27,979,093.21
                         Total                                       25,283,327.37                  27,979,093.21


(28) Long-term loans

                       Categories                           Ending balance                   Beginning balance
                                                                   3,186,004,295.10              2,267,263,140.28
 Guarantee the loan
                                                                   1,220,995,278.78                176,922,490.00
 Credit loan
                                                                   4,406,999,573.88              2,444,185,630.28
                         Total

(29) Deferred income

               Items                Ending balance          Increase              Decrease        Beginning balance
Government Subsidies                  372,785,000.00         694,300.00       41,274,238.70          332,205,061.30
               Total                  372,785,000.00         694,300.00       41,274,238.70          332,205,061.30




                                      Notes to the financial statements Page 55
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements


                                                                                                                          Other
                     Items                        Beginning balance   Increase      Transfer to non-operating income                 Ending balance    Related to assets or income
                                                                                                                          decrease
MES PROJECT SPECIAL FUND                               3,440,000.00                                         860,000.00                  2,580,000.00              Assets
Industrial Enterprise Energy Management Center                                                                                                                    Assets
                                                       9,280,000.00                                        1,160,000.00                 8,120,000.00
Construction Demonstration Project
Environment Pollution Renovation Project               7,240,000.00                                        1,810,000.00                 5,430,000.00              Assets
Environment Renovation Project and Regional                                                                                                                       Assets
                                                         680,000.00                                         170,000.00                   510,000.00
Basin Environment Protection Project
High Strength Cold Rolling Steel Renovation                                                                                                                       Assets
                                                     250,000,000.00                                      25,000,000.00               225,000,000.00
Project
Automobile High-class Electrolytic Zinc Steel                                                                                                                     Assets
                                                      24,624,000.00                                        4,104,000.00                20,520,000.00
Plate Production Line Project
Sintering Machine Residue Heat Usage and                                                                                                                          Assets
                                                       8,408,000.00                                        2,102,000.00                 6,306,000.00
Desulfurization Project
7 130t Boilers Flue Gas Desulfurization                                                                                                                           Assets
                                                      24,000,000.00                                        2,400,000.00                21,600,000.00
Renovation Project of Power Plant
Treatment and Salt Extraction Project of                                                                                                                          Assets
                                                         100,000.00                                           50,000.00                   50,000.00
Desulfurization Waste Liquid of Coke Plant
Overseas Advanced Technology Introduction                                                                                                                         Assets
                                                       9,768,000.00                                        1,442,000.00                 8,326,000.00
Special Fund
Automobile Steel Sheet Engineering Laboratory                                                                                                                     Assets
                                                       1,000,000.00                                                                     1,000,000.00
Project
Third-generation High Strength Steels for                                                                                                                         Assets
                                                       2,900,000.00                                                                     2,900,000.00
Automobile R&D Project
The 360 Cubic Meter Sintering Machine Flue                                                                                                                        Assets
Gas Desulfurization Renovation Project of Blast          400,000.00                                         100,000.00                   300,000.00
Furnace Plant



                                                                      Notes to the financial statements Page 56
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements


                                                                                                                          Other
                      Items                       Beginning balance   Increase      Transfer to non-operating income                 Ending balance    Related to assets or income
                                                                                                                          decrease
Environment Protection Project Special Fund            2,320,000.00                                         580,000.00                  1,740,000.00              Assets
Advance Treatment of Carbon Fiber Waste Water
                                                       9,500,000.00                                                                     9,500,000.00              Assets
Project of Plates Coke Plant Dongfeng Workshop
Coal-fired Boiler Desulfuration and Denitration
Project of Bengang Power Plant High Pressure           5,400,000.00                                         300,000.00                  5,100,000.00              Assets
Workshop
Cogeneration Transformation Project of Power
                                                      10,000,000.00                                                                    10,000,000.00              Assets
Plant the Third Workshop
Sintering Machine Energy Conservation and
Environment Protection Project of Iron Making          3,480,000.00                                         580,000.00                  2,900,000.00              Assets
Plant
Air Quality Automatic Monitoring System                  245,000.00                                           35,000.00                  210,000.00               Assets
Compensation from Xihu Resource Management
                                                                      414,300.00                            414,300.00                          0.00              Profit
Committee
Liaoning craftsman subsidy and skill master
                                                                      280,000.00                            166,938.70                   113,061.30               Profit
workstation subsidy
                      Total                          372,785,000.00   694,300.00                         41,274,238.70               332,205,061.30




                                                                      Notes to the financial statements Page 57
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
(30) Share capital

                                                                                                                    Ending
                                                            Increase/decrease (+, -)
                   Beginning                                                                                        balance
 Items
                    balance          Issuing of        Bonus         Transferred from     Other      Subtota

                                    new share          shares            reserves         s             l

Capital           3,136,000,00     739,371,532.0                                                   739,371,53      3,875,371,5

shares                    0.00                    0                                                      2.00            32.00


(31) Capital reserves

                  Items                    Beginning balance             Increase         Decrease       Ending balance

Capital premium over par value                 8,998,928,073.23      3,228,364,305.24                    12,227,292,378.47

Other capital reserves                            115,917,468.82                                             115,917,468.82

                  Total                        9,114,845,542.05      3,228,364,305.24                    12,343,209,847.29


(32) Special reserves

             Items                      Beginning balance           Increase            Decrease            Ending balance

Safety production cost                         475,046.75          22,983,003.78         7,492,925.61           15,965,124.92

                 Total                         475,046.75          22,983,003.78         7,492,925.61           15,965,124.92


(33) Surplus reserves

      Items               Beginning balance                 Increase                Decrease            Ending balance

Statutory surplus
                                  961,105,529.85                                                             961,105,529.85
reserves

         Total                    961,105,529.85                                                             961,105,529.85


(34) Undistributed profits

                                 Item                                          Amount                 Distribution rate

Before adjustments: undistributed profits at last year-end                     1,103,162,610.35             -496,969,242.61

Adjustments of the beginning distributed profits(increase

+ / decease -)

After adjustments: undistributed profit at this
                                                                               1,103,162,610.35             -496,969,242.61
year-beginning

Add: undistributed profit belonging to parent company                           756,951,987.59               523,635,653.57

Less: Statutory surplus reserves

Discretionary reserves

General risk reserves

                                            Notes to the financial statements Page 58
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

Common shares dividend payable                                          193,768,576.60

Common shares dividend transferred to paid-in capital

Ending balance of undistributed profits                               1,666,346,021.34               26,666,410.96


(35) Operating income and operating cost

                               January to June 2018                               January to June 2017
   Item
                        Revenue                   Cost                     Revenue                    Cost

Principal
                      21,302,037,073.89      19,140,922,165.53         19,476,278,905.41         17,638,682,335.86
business

Other
                       2,139,210,303.25        1,663,285,255.45         1,260,207,998.33          1,051,983,630.25
business
                      23,441,247,377.14      20,804,207,420.98         20,736,486,903.74         18,690,665,966.11
   Total


(36) Tax and surcharges

              Items                        January to June 2018                      January to June 2017

Housing property tax                                      36,610,915.20                              37,046,142.33

City maintenance and
                                                          48,666,138.65                              46,713,364.91
construction tax

Educational surcharges                                    34,952,935.92                              33,504,830.35

Land use right                                              6,486,432.24                              3,155,810.05

Others                                                    12,694,429.33                              13,336,583.43

Environmental Tax                                         13,896,524.30

Total                                                    153,307,375.64                             133,756,731.07

Notes:
The business activities of the occurrence of property tax, land use tax, vehicle and vessel use tax, stamp tax from
May 1, 2017 is reclassified from “General and administrative expenses” to “Tax and surcharges”. The tax occurred
before May 1, 2017 shall not be adjusted. Comparative data stays unadjusted.


(37) Selling and distribution expenses

                       Items                             January to June 2018             January to June 2017

Freight                                                             393,290,897.61                  428,678,322.48

Port surcharges                                                      56,907,191.59                   86,681,806.22

Agency fee                                                           35,649,297.75                   38,969,368.55

Salary and benefits                                                  11,993,852.41                   10,794,773.70

Others                                                               12,721,174.90                   19,399,396.68

Package fee                                                           3,475,594.69                    3,109,039.80


                                      Notes to the financial statements Page 59
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

                        Total                                         514,038,008.95              587,632,707.43

Notes:
Selling and distribution expenses of the current period was RMB 587,632,707.43, increased RMB 157,571,644.29
compared to last period which was RMB 430,061,063.14, at the rate of 36.64%. The reason of the increase is the
increase of external freight expenses.


(38) General and administrative expenses

                       Items                              January to June 2018           January to June 2017

Salary and benefits                                                   116,352,823.92               94,209,841.05

Accounts payable for repair                                           174,107,156.65               80,215,426.18

Pollution discharge fee                                                                            25,709,122.00

Land use right fee                                                     27,345,714.30               27,345,714.30

Others                                                                 59,604,807.84               56,552,255.19

Depreciation                                                           26,164,322.31               25,945,531.46

Social security expense                                                23,452,571.91               21,716,785.13

Heating fee                                                            20,783,413.87               11,677,556.25

Water resources fee                                                     6,546,763.90                5,596,700.00

Housing fund                                                            4,445,529.00                4,614,199.60

Amortization of intangible assets                                       2,982,926.09                2,982,306.37

Entertainment expense                                                   1,527,871.52                1,535,128.96

Lease expense                                                             543,240.66                  572,987.24

Freight                                                                   455,924.12                  277,851.35

                       Total                                          464,313,066.09              358,951,405.08



(39) Financial expenses

                      Category                            January to June 2018           January to June 2017

Interest cost                                                         575,001,615.20              434,308,806.10

  Less: Interest income                                                61,605,403.34               36,772,069.07

Exchange loss                                                         286,291,324.68              -23,234,309.69

Others                                                                  3,350,880.74                7,210,977.46

                       Total                                          803,038,417.28              381,513,404.80

Notes:
Financial expenses of the current period were RMB 803,038,417.28, increased by RMB 421,525,012.48, at the rate
of 110.49% compared to the previous period. The reason of the increase is because of the increase of exchange
loss.


(40) Asset impairment loss

                                Items                             January to June 2018    January to June 2017
                                        Notes to the financial statements Page 60
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

                             Items                                January to June 2018       January to June 2017

Loss for bad debts                                                      -14,523,332.71                  -6,653,848.89

Impairment of inventories                                                 -6,394,630.93                -36,736,605.65

Impairment of available-for-sale assets

Impairment of Fixed assets

                             Total                                      -20,917,963.64                 -43,390,454.54



(41) Income on investment

                              Items                                 January to June 2018      January to June 2017

Equity method Income

Income on disposal of long-term equity investment

Income on the changes of financial assets fair value

Income on the disposal of financial assets where the fair value

changed

Income on held-to-maturity investment

Income on available-for-sale financial assets

Investment on disposal of available-for-sale financial assets

Income from bank short-term financial products                              3,493,150.68                3,294,593.14

                              Total                                         3,493,150.68                3,294,593.14



(42) Gains on disposal of assets

                     January to
       Items                           January to June 2017       The amount recognized in non-operating profit
                     June 2018
Disposal gains

or losses of

fixed assets            825,580.63               3,015,294.00                                             825,580.63

not held for

sale
                        825,580.63               3,015,294.00                                             825,580.63
       Total


(43) Other income
                                                                                                          Related
                                                                  January to        January to
                             Items                                                                       to assets
                                                                  June 2018         June 2017
                                                                                                        or income
 MES PROJECT SPECIAL FUND                                            860,000.00           860,000.00       Assets
 Second Batch of National Cleaned Manufacturing                                                            Assets
                                                                                          400,000.00
 Demonstration Project Fund
 Industrial Enterprise Energy Management Center                                                            Assets
                                                                   1,160,000.00
 Construction Demonstration Project

                                      Notes to the financial statements Page 61
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
                                                                                                         Related
                                                                   January to        January to
                          Items                                                                         to assets
                                                                   June 2018         June 2017
                                                                                                       or income
 Environment Pollution Renovation Project                          1,810,000.00       2,617,000.00       Assets
 Environment Renovation Project and Regional Basin                                                       Assets
                                                                     170,000.00         250,000.00
 Environment Protection Project
 Energy-saving Technological Reform Fiscal Reward                                                        Assets
                                                                                      1,477,000.00
 Project
 High Strength Cold Rolling Steel Renovation Project            25,000,000.00                            Assets
 Automobile High-class Electrolytic Zinc Steel Plate                                                     Assets
                                                                   4,104,000.00       4,104,000.00
 Production Line Project
 Sintering Machine Residue Heat Usage and                                                                Assets
                                                                   2,102,000.00       2,102,000.00
 Desulfurization Project
 Wastewater Treatment Plant Renovation Project                                          750,000.00       Assets
 7 130t Boilers Flue Gas Desulfurization Renovation
                                                                   2,400,000.00                          Assets
 Project of Power Plant
 Treatment and Salt Extraction Project of Desulfurization
                                                                      50,000.00          50,000.00       Assets
 Waste Liquid of Coke Plant
 Overseas Advanced Technology Introduction Special
                                                                   1,442,000.00         442,000.00       Income
 Fund
 The 360 Cubic Meter Sintering Machine Flue Gas                                                          Assets
 Desulfurization Renovation Project of Blast Furnace                 100,000.00         100,000.00
 Plant
 Environment Protection Project Special Fund                         580,000.00         580,000.00       Assets
 Desulphurization and Denitrification of Coal-Fired
                                                                     300,000.00                          Assets
 Boilers in High Pressure Workshop of Power Plant
 Energy Saving and Environmental Protection of Sintering                                                 Assets
                                                                     580,000.00         580,000.00
 Plant in Ironworks
 Air quality automatic monitoring system                              35,000.00          35,000.00       Assets
 Compensation from Xihu Resource Management
                                                                     414,300.00         700,000.00       Income
 Committee
 Liaoning craftsman subsidy and skill master workstation
                                                                     166,938.70                          Income
 subsidy
                           Total                                41,274,238.70        15,047,000.00



(44) Non-operating income

                             January to June           January to June            The amount recognized in
          Items
                                    2018                    2017                non-recurring profit and loss
Debt restructuring gain             945,892.23                822,116.45                              945,892.23

Others                             1,192,505.57             2,130,078.13                             1,192,505.57

                                   2,138,397.80             2,952,194.58                             2,138,397.80
          Total



(45) Non-operating expenses

                             January to June           January to June            The amount recognized in
          Items
                                    2018                    2017                non-recurring profit and loss
Non-current assets
                                   1,382,402.26             4,593,420.30                             1,382,402.26
disposal loss

Including: Fixed assets            1,382,402.26             4,593,420.30                             1,382,402.26

                                    Notes to the financial statements Page 62
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

disposal loss

Fines and overdue

payment

Others
                                       1,382,402.26            4,593,420.30                         1,382,402.26
           Total



(46) Income tax expense
      1. Income tax expense

                         Items                                January to June 2018          January to June 2017

Income tax payable for the current year                                   5,956,888.87                16,796,524.06

Deferred income tax expense                                               5,679,337.17              100,308,537.10

                          Total                                          11,636,226.04               117,105,061.16



      2. Accounting profit and income tax expense adjustment process

                                Item                                                January to June 2018

Total profit                                                                                        769,610,017.39

Income tax expense calculate according to the official or
                                                                                                    192,402,504.35
applicable tax rate

Effect of different tax rates applied by subsidiaries

Effect of adjustment of the income tax expense of prior period

Effect of non-taxable income

Effect of undeductable costs, expenses or losses
Effect of use of deductible losses of unrecognized deferred tax
                                                                                                    180,766,278.31
asset of prior period

Effect of deductible temporary differences or deductible losses

of unrecognized deferred tax asset of current period

Income tax expense                                                                                    11,636,226.04



(47) Notes of statement of cash flows
      1. Cash received related to other operating activities

                        Items                                January to June 2018           January to June 2017
Withdraw of current accounts, advance for another                       19,218,434.76                 49,988,918.77

Interest income                                                         61,605,403.34                 36,772,069.07

Special subsidy income                                                     694,300.00                      700,000.00

Non-operating income                                                       162,619.82                      350,490.77

Others                                                                     101,722.27                        5,600.00
                                        Notes to the financial statements Page 63
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

                         Items                                 January to June 2018            January to June 2017

                          Total                                           81,782,480.19                 87,817,078.61



      2. Cash paid related to other operating activities

                          Item                                 January to June 2018            January to June 2017

Current accounts, advance for another                                    285,018,187.10                317,981,786.61

General and administrative expenses                                        4,646,000.62                   4,534,010.56

Selling and distribution expenses                                         18,078,644.22                 18,370,234.96

Bank charges                                                               2,896,060.69                   7,210,977.46

Others                                                                       358,254.79                    287,293.34

                          Total                                          310,997,147.42                348,384,302.93



(48) Supplementary details of statement of cash flows
      1. Supplementary details of statement of cash flows

                                                                            January to June        January to June
                                  Items
                                                                                  2018                   2017
1. A reconciliation of net profit to cash flows from operating
activities:
Net profit                                                                     757,973,791.35         529,967,744.05
Add: Asset impairment losses                                                   -20,917,963.64         -43,390,454.54
Depreciation of fixed assets and so on                                       1,144,984,195.00         935,125,024.26
Amortization of intangible assets                                                 3,239,455.09          2,982,306.37
Amortization of long-term prepayment
Losses proceeds from disposal of PPE, intangible assets and other
                                                                                      556,821.63        1,578,126.30
long-term assets (Earnings marked“-”)
Scrapped losses from fixed assets
Fair value losses (Earnings marked“-”)
Financial expenses (Earnings marked“-”)                                     803,038,417.28       381,513,404.80
Investment losses (Earnings marked“-”)                                     -3,493,150.68          -3,294,593.14
Deferred tax assets reduction (Addition marked“-”)                          5,679,337.17         100,308,537.11
Deferred tax liabilities increased (Reduction marked“-”)
Reduction of inventory (Addition marked“-”)                              -1,683,906,453.31         -52,529,908.92
Operating receivable items reduction (Addition marked“-”)                   817,004,548.19          40,403,360.62
Operating payable items increase (Less marked"-")                          -1,093,639,256.61       -5,939,969,231.63
Others
Net cash flows generated from operating activities                             730,519,741.47       -4,047,305,684.72
2. Payments of investing and financing activities not involving
cash:
Liabilities transferred to capital

Convertible bonds due within one year

Fixed assets financed by leasing


                                          Notes to the financial statements Page 64
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
                                                                           January to June        January to June
                               Items
                                                                                2018                     2017
3. The net increase in cash and cash equivalents:
Ending balance of the monetary funds                                       16,038,506,854.22      11,484,974,631.49
Less: Beginning balance of the monetary funds                              17,037,713,410.49      12,273,574,488.67
Add: Ending balance of cash equivalents

Less: Opening balance of cash equivalents
The net increase in cash and cash equivalents                                -999,206,556.27        -788,599,857.18


      2. The structure of cash and cash equivalents

                               Items                                     Ending balance          Beginning balance
1. Cash                                                                    16,038,506,854.22       17,037,713,410.49

Including: Cash on hand                                                            20,372.11                20,871.51

       Bank deposits available on demand                                   16,038,486,482.11       17,037,692,538.98

       Other monetary funds available on demand

       Central bank deposits available on demand

       Balances with other financial institutions

       Loans to other financial institutions
2. Cash equivalents

Including: Investment of securities due within 3 months
3. Ending balance of cash and cash equivalents                             16,038,506,854.22       17,037,713,410.49

Including: Cash and cash equivalents limited to use by the parent

company of other subsidiary in the group



(49) Assets of which ownership or right to use are restricted

                       Items                            Ending balance                         Reason
Monetary assets                                         2,531,734,752.99             Deposit for notes and L/C

Notes receivable                                        1,801,103,300.17     Pledged for acceptance bill and bank loan

                       Total                            4,332,838,053.16

(50) Foreign currency monetary items

                                       Ending balance in        Exchange rate at the             Ending balance
                Item
                                       foreign currency              year-end                   translated to RMB

Cash at bank and on hand                                                                            3,521,674,538.56
Including: HKD                                  1,009,179.92                       0.8431                  850,839.59

          USD                              433,576,750.11                          6.6166           2,868,803,924.78

          EUR                                  85,214,634.28                       7.6515               652,019,774.19



                                       Notes to the financial statements Page 65
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

                                    Ending balance in           Exchange rate at the              Ending balance
               Item
                                     foreign currency                year-end                translated to RMB

Short-term loans                                                                                     6,369,393,300.00

Including: USD                            865,500,000.00                         6.6166              5,726,667,300.00

Including: EUR                               84,000,000.00                       7.6515                642,726,000.00



Non-current liabilities due
                                                                                                     1,005,866,915.68
within one year

Including: USD                            148,000,000.00                         6.6166                979,256,800.00

Including: EUR                                3,296,330.56                       7.6515                 25,221,873.28

       JPY                                   23,176,000.00                       0.0599                  1,388,242.40



Long-term loans                                                                                      1,498,631,297.21
Including: USD                            128,300,000.00                         6.6166                848,909,780.00

        EUR                                  83,372,078.26                       7.6515                637,921,456.81

       JPY                                196,996,000.00                         0.0599                 11,800,060.40


6. Change of the consolidation scope


      There is no change in the consolidation scope.


7. Equity in other entities
     (1)     Constitution of enterprise group

Name of the                                        Registered        Notes of        Shareholding            Acquiring
                  Principal place of business
subsidiaries                                         address         business             ratio               method
                                                                                    Direct        Indirect
                                                                                                              Business
                                                                                                              consolida
Xiamen Bengang Steel &                                                                                        tion
                                  Xiamen             Xiamen            Sales        100.00
Iron Sales Co., Ltd.                                                                                          under
                                                                                                              common
                                                                                                              control
                                                                                                              Business
                                                                                                              consolida
Wuxi Bengang Steel & Iron                                                                                     tion
                                   Wuxi               Wuxi             Sales        100.00
Sales Co., Ltd.                                                                                               under
                                                                                                              common
                                                                                                              control
Tianjin Bengang Steel &                                                                                       Business
                                   Tianjin           Tianjin           Sales        100.00
Iron Trading Co., Ltd.                                                                                        consolida

                                     Notes to the financial statements Page 66
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Name of the                                     Registered        Notes of      Shareholding           Acquiring
                 Principal place of business
subsidiaries                                      address         business          ratio               method
                                                                                Direct      Indirect
                                                                                                        tion
                                                                                                        under
                                                                                                        common
                                                                                                        control
                                                                                                        Business
                                                                                                        consolida
Nanjing Bengang Steel                                                                                   tion
                                 Nanjing          Nanjing           Sales       100.00
Material Sales Ltd.                                                                                     under
                                                                                                        common
                                                                                                        control
                                                                                                        Business
                                                                                                        consolida
Yantai Bengang Steel &                                                                                  tion
                                  Yantai           Yantai           Sales       100.00
Iron Sales Co., Ltd.                                                                                    under
                                                                                                        common
                                                                                                        control
                                                                                                        Business
                                                                                                        consolida
Harbin Bengang Economic                                                                                 tion
                                  Harbin           Harbin           Sales       100.00
and Trading Co., Ltd.                                                                                   under
                                                                                                        common
                                                                                                        control
                                                                                                        Business
                                                                                                        consolida
Changchun Bengang Steel                                                                                 tion
                                Changchun        Changchun          Sales       100.00
& Iron Sales Co., Ltd.                                                                                  under
                                                                                                        common
                                                                                                        control
Guangzhou Bengang Steel                                                                                  Establish
                               Guangzhou         Guangzhou          Sales       100.00
& Iron Trading Co., Ltd.                                                                                   ment
Shanghai Bengang
                                                                                                         Establish
Metallurgy Science and           Shanghai         Shanghai          Sales       100.00
                                                                                                           ment
Technology Co., Ltd.
Bengang Steel Plate
                                                                 Manufacturi                             Establish
Liaoyang Orel Ball Co.,         Liaoyang          Liaoyang                      100.00
                                                                      ng                                   ment
Ltd.
Dalian Benruitong
                                                                 Manufacturi                             Establish
Automobile Material               Dalian           Dalian                       65.00
                                                                      ng                                   ment
Technologies Co., Ltd.
Bengang Puxiang Cool                                                                                    Business
                                                                 Manufacturi
Rolling Steel Sheet Co.,          Benxi            Benxi                        75.00                   consolida
                                                                      ng
Ltd.                                                                                                    tion

                                    Notes to the financial statements Page 67
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Name of the                                              Registered           Notes of           Shareholding              Acquiring
                  Principal place of business
subsidiaries                                                address           business                ratio                 method
                                                                                                 Direct       Indirect
                                                                                                                             under
                                                                                                                             common
                                                                                                                             control
Benxi Bengang Steel Sales                                                                                                    Establish
                                       Benxi                 Benxi               Sales           100.00
Co., Ltd                                                                                                                        ment
Shenyang Bengang
                                                                                                                             Establish
Metallurgical Science and             Shenyang              Shenyang             Sales           100.00
                                                                                                                                ment
Technology Co., Ltd.
Chongqing Liaoben Steel                                                                                                      Establish
                                   Chongqing             Chongqing               Sales           100.00
& Iron Trading Co., Ltd.                                                                                                        ment
                                                                                                                             Business
                                                                                                                             consolida
Bengang Baojin
                                                                                                                             tion
(Shenyang) Automobile                 Shenyang              Shenyang             Sales           85.00
                                                                                                                             under
New Material Co., Ltd
                                                                                                                             common
                                                                                                                             control


       (2) Significant not wholly-owned subsidiaries

                                                                                              Dividend
                                                             Profits and losses                                           Ending
                                Proportion of                                                declared to
       Name of the                                            attributing to                                             balance of
                               non-controlling                                              distribute to
       subsidiaries                                          non-controlling                                         non-controlling
                                 interests (%)                                             non-controlling
                                                               shareholders                                               interests
                                                                                            shareholders
Bengang Puxiang Cool
Rolling Steel Sheet Co.,               25.00                   1,377,927.80                                          499,584,045.29
Ltd.
Dalian Benruitong
Automobile Material                    35.00                      -312,957.88                                           26,375,164.18
Technologies Co., Ltd.


(3) The main financial information of significant not wholly owned subsidiary

                                                                       Ending balance
                                                                                                            Non-cu
   Name of the
                            Current            Non-current                                  Current          rrent           Total
   subsidiaries                                                      Total Assets
                             assets                assets                                 Liabilities       liabiliti      liabilities
                                                                                                               es
Bengang Puxiang
Cool Rolling Steel       3,280,879,837.58      1,849,476,058.98   5,130,355,896.56       3,132,019,715.41                3,132,019,715.41
Sheet Co., Ltd.
Dalian Benruitong          130,501,245.20       150,077,740.12        280,578,985.32      205,221,373.39                  205,221,373.39


                                         Notes to the financial statements Page 68
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
   Name of the                                                 Ending balance
Automobile
Material
Technologies Co.,
Ltd.




                                                             Beginning balance
                                                                                                  Non-cu
   Subsidiaries
                         Current         Non-current                              Current          rrent           Total
       Name                                                  Total Assets
                          assets             assets                             Liabilities       liabiliti      liabilities
                                                                                                     es
Bengang Puxiang
Cool Rolling Steel    2,386,618,039.83   2,003,972,503.03   4,390,590,542.86   2,399,426,402.00                2,399,426,402.00
Sheet Co., Ltd.
Dalian Benruitong
Automobile
Material                169,295,050.97    153,808,054.26      323,103,105.23    246,851,327.92                  246,851,327.92
Technologies Co.,
Ltd.



                                                            January to June 2018
   Name of the                                                                   Total                    Net cash flows
   subsidiaries       Operating income                Net Profit            comprehensive              from operating
                                                                                income                        activities
Bengang Puxiang
Cool Rolling Steel       3,971,529,847.27               5,511,711.19             5,511,711.19                 686,401,003.83
Sheet Co., Ltd.
Dalian Benruitong
Automobile
Material                    99,283,350.57                -894,165.38              -894,165.38                  12,596,859.61
Technologies Co.,
Ltd.


                                                            January to June 2017
   Name of the                                                                   Total                    Net cash flows
   subsidiaries       Operating income                Net Profit            comprehensive              from operating
                                                                                income                        activities
Bengang Puxiang
Cool Rolling Steel       3,953,643,069.30              28,005,452.68            28,005,452.68                 -44,864,088.81
Sheet Co., Ltd.
Dalian Benruitong           84,612,504.06              -1,936,593.41            -1,936,593.41                  16,421,759.65

                                     Notes to the financial statements Page 69
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
Automobile
Material
Technologies Co.,
Ltd.


8. Risks associated with financial instruments
(1)    Credit risk
       Credit risk refers to a financial loss to a party due to failure to discharge an obligation by the
       counterparties. The Company is exposed to credit risk arising from customers’ failure to discharge
       an obligation in sales on credit. In order to minimize the credit risk, the management of the
       Company is responsible for determination of credit limits, credit approvals and other monitoring
       procedures to ensure that follow-up actions are taken to recover overdue debts.


       In addition, the Company strictly approves the line of credit, and only sells on credit to important
       customers for newly-developed products. In the monitoring of credit risk of customers, the
       Company sorts customers into groups by their credit characteristics. Those customers which are
       rated as “high risk” will be put in the restricted client list. The Company can only sell to these
       customers on credit with additional approval; otherwise the Company must ask for a
       corresponding deposit in advance.

(2)    Market risk
       Market risk of financial instruments refers to fluctuations of fair value or future cash flows due to
       market price changes, including currency risk, interest rate risk, and other price risk.
       1. Interest rate risk
       Interest rate risk refers to fluctuations of fair value or future cash flows due to market rate changes.
       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.


       Although these measures may not ensures that the Company completely avoids the risk of paying
       at a risk higher than market risk, or that the cash flow risk relevant to interest income fluctuations
       is completely eliminated, in the opinion of the management, these measures could achieve a
       reasonable balance among these risks.

       2. Currency risk
       Currency risk refers to fluctuations of fair value or future cash flows due to exchange rate changes.

                                    Notes to the financial statements Page 70
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
       The Company has been constantly working on the adjustment of the organizational framework of
       risk management and optimization of debt structures to lower the currency risk.

       The currency risk facing the Company originates from the assets and liabilities measured by US
       dollars, Euro, Hong Kong dollars and Japanese Yen. The ending balance of the assets and
       liabilities after converted in RMB is shown as below:
                                                                                       (In 10 Thousand Yuan)
                                                 Ending balance
      Items                                                  Hong Kong                              Total
                        USD                  EUR                                  Japanese Yen
                                                                Dollars
      Assets            286,880.39            65,201.98               85.08                         352,167.45
   liabilities          755,483.39           130,586.93                               63,930.97     950,001.29
      Total            1,042,363.78          195,788.91               85.08           63,930.97    1,302,168.74


       The table below shows the sensitivity analysis of RMB vs. other currencies when RMB
       deprecated or appreciated by 5% over other currencies under the assumption that other variables
       remain the same. 5% is the sensitivity rate used by the management for internal report of currency
       risk and it represents the estimation of the management over the possible change of foreign
       currency. Sensitivity analysis only includes the monetary items measured by foreign currency
       unpaid and will be adjusted at the year-end by 5%. The positive figures reflect the increase of
       profit by 5% and the negative figures indicate the reduction of profit.
                                                                                       (In 10 Thousand Yuan)
                                               At end of the period
      Items                                Impact on          Impact on            Impact on        Total
                   Impact on USD
                                             Euro                HKD              Japanese Yen
Appreciation by
                         -23,430.15            -3,269.25                  4.25         -3,196.55    -29,891.69
       5%
Depreciation by
                          23,430.15             3,269.25               -4.25            3,196.55     29,891.69
       5%


(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
                                      Notes to the financial statements Page 71
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
          Company can be required to pay. The table includes both interest and principal cash flows.
                                                                                                (In 10 Thousand Yuan)

                                                                                 Ending balance
                    Items                        Within 1             1-2                         Over 5
                                                                                    2-5 years                         Total
                                                   year           years                            years
                                                                                                                   1,365,694.9
Trade and Other payables                        1,365,435.62          54.28            124.74          80.27
                                                                                                                                1
                                                                 5,956.8            219,975.8     214,628.4        2,723,256.7
Loans and interests                             2,282,695.66
                                                                             0              8               5                   9
Non-current liabilities due within one
year
                                                                 6,011.0            220,100.6     214,708.7        4,088,951.7
                     Total                      3,648,131.27
                                                                             8              2               2                   0




                                                                                 Beginning balance
                     Items                                                                           Over 5
                                                Within 1 year     1-2 years           2-5 years                         Total
                                                                                                     years
Trade and Other payables                         1,618,161.06               73.68        159.73           97.25     1,618,491.72
Loans and interests                              2,470,640.43     31,954.06           81,123.04   165,472.33        2,749,189.86
Non-current liabilities due within one year        149,954.52                                                         149,954.52

                     Total                       4,238,756.01     32,027.74           81,282.77   165,569.58        4,517,636.10



9. Related party transactions
(1)       Details of parent company
                                                                                                       (In 100 Million Yuan)
Name of
 parent            Place of          Notes of             Registered                Share proportion            Voting rights
compan             Registry          Business               capital                       (%)                       (%)
      y
Benxi
Steel &
Iron                Benxi         Manufacturing                   62.92                           59.91                   59.91
(Group)
Co., Ltd.
          Note: The parent company of Benxi Steel (Group) Co., Ltd. is Bengang Group Co., Ltd.
          The ultimate controlling party of the Company is the State-owned Assets Supervision and
          Administration Commission of Liaoning Province.


(2)       Details of the subsidiaries
          For details of subsidiaries of the Company please refer to Note 7 “Equity in other entities”.

                                     Notes to the financial statements Page 72
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements


(3)    Details of other related parties

             Name of Other related parties                                        Relationship
Bengang Group International Economic and Trading Co.,
                                                                    Both belong to Bengang Group Co., Ltd.
Ltd.
Bengang Cold-rolled Stainless Steel Dandong Co., Ltd.                         Same parent company
Benxi Beiying Steel & Iron(Group) Co., Ltd.                         Both belong to Bengang Group Co., Ltd.
Bengang Electronics and Gas Co., Ltd.                         Both belong to Benxi Steel and Iron(Group) Co., Ltd.
Benxi Steel & Iron(Group) Real-estate Development Co.,
                                                                              Same parent company
Ltd.
Benxi Steel & Iron(Group) Steel & Iron Process and
                                                                              Same parent company
Logistics Co., Ltd.
Benxi Steel & Iron(Group) Machinery Manufacture Co.,
                                                                              Same parent company
Ltd.
Benxi Steel & Iron(Group) Construction Co., Ltd.                              Same parent company
Benxi Steel & Iron(Group) Mining Co., Ltd.                                    Same parent company
Benxi Steel & Iron(Group) Thermal Power Development
                                                                              Same parent company
Co., Ltd.
Benxi Steel & Iron(Group) Designing Institute                                 Same parent company
Benxi Steel & Iron(Group) Industrial Development Co.,
                                                                              Same parent company
Ltd.
Benxi Steel & Iron(Group) Information and Automatic
                                                                              Same parent company
Tech Co., Ltd.
Benxi Steel & Iron(Group) Construction and Repairing
                                                                              Same parent company
Co., Ltd.
Benxi Steel & Iron(Group) Metallurgy Residues Co., Ltd.                       Same parent company
Benxi Steel & Iron(Group)Plant Construction Supervisor
                                                                              Same parent company
Co., Ltd.
Benxi Steel & Iron(Group) Zhengtai Construction
                                                                              Same parent company
Materials Co., Ltd.
Benxi High-tech Drilling Tools Manufacture Co., Ltd.                Both belong to Bengang Group Co., Ltd.
Benxi New Career Development Co., Ltd.                                        Same parent company
Dalian Boluole Steel Tube Co., Ltd.                           Both belong to Benxi Steel and Iron(Group) Co., Ltd.
Guangzhou Free Trade Zone Bengang Sales Co., Ltd.             Both belong to Benxi Steel and Iron(Group) Co., Ltd.
Benxi Steel & Iron(Group) General Hospital                    Both belong to Benxi Steel and Iron(Group) Co., Ltd.
Liaoning Bengang Steel & Iron Trading Co., Ltd.                               Same parent company
Liaoning Hengtai Heavy Machinery Co., Ltd.                                    Same parent company
Liaoning Hengtong Metallurgical Equipment Manufacture
                                                                              Same parent company
Co., Ltd.
Liaoning Metallurgy Technician College                                        Same parent company
Liaoning Metallurgy Career Technical College                                  Same parent company
Suzhou Bengang Industrial Co., Ltd.                                          Shareholding company

                                      Notes to the financial statements Page 73
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

             Name of Other related parties                                       Relationship

Benxi Steel & Iron(Group) Medical Department                Both belong to Benxi Steel and Iron(Group) Co., Ltd.
Bengang Group Finance Co., Ltd.                                      Both belong to Bengang Group Co., Ltd.

Liaoning Hengyi Financial Leasing Co., Ltd.                          Both belong to Bengang Group Co., Ltd.



(4)    Related Party Transactions
       1. Related party transactions of purchasing goods and services

       Company as the purchaser                                                         (In 10 Thousand Yuan)
                                                    The content of related      January to      January to June
                     Name
                                                     party transactions          June 2018           2017
Benxi Steel & Iron (Group) Co., Ltd.                   Repair expense             19,767.05            12,781.87
Benxi Steel & Iron (Group) Co., Ltd.                   Land lease fee              2,734.57             2,734.57
Bengang Cold-rolled Stainless Steel Dandong
                                                          Products                    64.19                   17.50
Co., Ltd.
Benxi Steel & Iron (Group) Mining Co., Ltd.              Labor cost                  386.75                 253.76
                                                     Raw material and
Benxi Steel & Iron (Group) Mining Co., Ltd.                                      203,816.33           217,638.69
                                                   supplementary material
Benxi Steel & Iron (Group) Mining Co., Ltd.                Freight                                             3.18
Benxi Steel & Iron (Group) Metallurgy                Raw material and
                                                                                  12,852.84            12,820.08
Residues Co., Ltd.                                 supplementary material
Benxi Steel & Iron (Group) Steel & Iron
                                                       Processing fee                 87.67                   76.12
Process and Logistics Co., Ltd.
Benxi Steel & Iron (Group) Real-estate
                                                       Raw materials               3,627.99             5,006.75
Development Co., Ltd.
Benxi Steel & Iron (Group) Machinery
                                                         Spare parts               4,600.29             5,522.36
Manufacture Co., Ltd.
Benxi Steel & Iron (Group) Machinery
                                                       Repair services               495.18                 368.87
Manufacture Co., Ltd.
Benxi Steel & Iron (Group) Construction Co.,
                                                         Spare parts                 191.80                 734.34
Ltd.
Benxi Steel & Iron (Group) Construction Co.,
                                                         Project fee               2,028.95            12,940.60
Ltd.
Benxi Steel & Iron (Group) Construction Co.,
                                                       Repair services            11,481.87             3,237.98
Ltd.
Benxi Steel & Iron (Group) Construction Co.,         Raw material and
                                                                                     109.40                 464.78
Ltd.                                               supplementary material
Benxi Steel & Iron (Group) Construction Co.,
                                                           Freight                   131.35                 155.04
Ltd.
Benxi Steel & Iron (Group) Industrial
                                                         Spare parts               2,808.40             8,905.66
Development Co., Ltd.
Benxi Steel & Iron (Group) Industrial                Raw material and
                                                                                   6,730.62            10,672.66
Development Co., Ltd.                              supplementary material
                                    Notes to the financial statements Page 74
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
                                                    The content of related      January to   January to June
                      Name
                                                     party transactions         June 2018         2017
Benxi Steel & Iron (Group) Industrial
                                                       Repair services            1,829.45           1,117.99
Development Co., Ltd.
Benxi Steel & Iron (Group) Industrial
                                                           Freight                  101.81               137.06
Development Co., Ltd.
Benxi Steel & Iron (Group) Industrial
                                                         Project fee                 91.68               139.82
Development Co., Ltd.
                                                      Raw material &
Benxi Steel & Iron (Group) Construction and
                                                  supplementary materials           326.39               139.66
Repairing Co., Ltd.
                                                        & spare parts
Benxi Steel & Iron (Group) Construction and
                                                         Project fee              1,175.38           2,870.64
Repairing Co., Ltd.
Benxi Steel & Iron (Group) Construction and
                                                       Repair expense             8,327.40           2,130.99
Repairing Co., Ltd.
                                                     Raw material and
Bengang Electronics and Gas Co., Ltd.                                             6,411.95           8,426.07
                                                   supplementary material
Bengang Electronics and Gas Co., Ltd.                    Project fee                  0.00                41.94
Bengang Electronics and Gas Co., Ltd.                  Repair services            1,862.90               692.18
Benxi High-tech Drilling Tools Manufacture
                                                         Spare parts                 31.12                39.31
Co., Ltd.
Benxi New Career Development Co., Ltd.              Labor protection fee             44.20                29.45
Liaoning Metallurgy Technician College                   Spare parts                317.07           1,319.31
Liaoning Metallurgy Technician College                   Spare parts                603.74               230.33
Bengang Group International Economic and
                                                         Agency fee               3,564.93           3,685.68
Trading Co., Ltd.
Bengang Group International Economic and
                                                       Port surcharges            5,690.72           7,751.15
Trading Co., Ltd.
Benxi Steel & Iron (Group) Information and
                                                         Spare parts                933.25               693.23
Automatic Tech Co., Ltd.
Benxi Steel & Iron (Group) Information and
                                                       Repair services            2,335.89               305.94
Automatic Tech Co., Ltd.
Benxi Steel & Iron (Group) Thermal Power
                                                       Heating costs                 37.73               168.60
Development Co., Ltd.
Benxi Steel & Iron (Group) Designing Institute          Design fees                 231.58               235.90
                                                     Raw material and
Benxi Beiying Steel & Iron (Group) Co., Ltd.                                    566,834.95         472,729.42
                                                   supplementary material
Benxi Beiying Steel & Iron (Group) Co., Ltd.          Energy & Power             38,865.84          50,184.08
Benxi Beiying Steel & Iron (Group) Co., Ltd.               Freight                  303.15               889.48
Benxi Beiying Steel & Iron (Group) Co., Ltd.             Labor cost               3,931.44           5,563.01
Benxi Beiying Steel & Iron (Group) Co., Ltd.             Spare parts              1,064.59           1,844.21
Liaoning Hengtong Metallurgical Equipment          Raw material and spare
                                                                                  5,398.61          10,661.54
Manufacture Co., Ltd.                                       parts
                                    Notes to the financial statements Page 75
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
                                                   The content of related      January to     January to June
                    Name
                                                    party transactions         June 2018           2017
                                                  Raw material and spare
Liaoning Hengtai Heavy Machinery Co., Ltd.                                         124.87             3,873.44
                                                           parts
Liaoning Hengtai Heavy Machinery Co., Ltd.         Repair and labor cost         1,477.37                 636.47
Bengang Group Co., Ltd.                         Property management fee             31.07                  31.07

                     Total                                                     923,864.33           870,902.78



       Company as the seller                                                          (In 10 Thousand Yuan)
                                                   The content of related      January to     January to June
                    Name
                                                    party transactions         June 2018           2017
Bengang Electronics and Gas Co., Ltd.                Energy & Power                 51.90                  49.63
                                                     Raw material &
Benxi Beiying Steel & Iron (Group) Co., Ltd.     supplementary materials       116,469.29            34,778.43
                                                       & spare parts
Benxi Beiying Steel & Iron (Group) Co., Ltd.             Products                 1,230.13                497.33
Benxi Beiying Steel & Iron (Group) Co., Ltd.         Energy & Power               5,706.89           14,389.31
Benxi Steel & Iron (Group) Real-estate
                                                     Energy & Power                   6.94                 13.76
Development Co., Ltd.
Benxi Steel & Iron (Group) Steel & Iron
                                                     Energy & Power                 37.52                  50.30
Process and Logistics Co., Ltd.
Benxi Steel & Iron (Group) Machinery
                                                         Products                  973.31                 462.07
Manufacture Co., Ltd.
Benxi Steel & Iron (Group) Machinery
                                                     Energy & Power                943.21                 791.36
Manufacture Co., Ltd.
                                                     Raw material &
Benxi Steel & Iron (Group) Machinery
                                                 supplementary materials           113.58                  51.41
Manufacture Co., Ltd.
                                                       & spare parts
Benxi Steel & Iron (Group) Construction Co.,
                                                     Energy & Power                 94.13                 214.45
Ltd.
                                                     Raw material &
Benxi Steel & Iron (Group) Construction Co.,
                                                 supplementary materials            71.24                 138.41
Ltd.
                                                       & spare parts
Benxi Steel & Iron (Group) Mining Co., Ltd.          Energy & Power             35,940.67            45,858.21
                                                     Raw material &
Benxi Steel & Iron (Group) Mining Co., Ltd.      supplementary materials          2,831.52                646.77
                                                       & spare parts
Benxi Steel & Iron (Group) Mining Co., Ltd.              Products                  402.48                 407.23
Benxi Steel & Iron (Group) Thermal Power
                                                     Energy & Power               2,374.96            1,452.38
Development Co., Ltd.
Benxi Steel & Iron (Group) Thermal Power             Raw material &
                                                                                   801.85                  68.57
Development Co., Ltd.                            supplementary materials

                                   Notes to the financial statements Page 76
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
                                                    The content of related      January to   January to June
                      Name
                                                     party transactions         June 2018         2017
                                                        & spare parts
Benxi Steel & Iron (Group) Thermal Power
                                                          Products                    8.58                 9.67
Development Co., Ltd.
Benxi Steel & Iron (Group) Industrial
                                                      Energy & Power                388.54               405.31
Development Co., Ltd.
Benxi Steel & Iron (Group) Industrial
                                                          Products                   11.32                12.69
Development Co., Ltd.
                                                      Raw material &
Benxi Steel & Iron (Group) Industrial
                                                  supplementary materials         1,251.78           2,759.53
Development Co., Ltd.
                                                        & spare parts
Benxi Steel & Iron (Group) Information and
                                                      Energy & Power                  9.01                 8.30
Automatic Tech Co., Ltd.
Benxi Steel & Iron (Group) Construction and
                                                      Energy & Power                 83.99                77.22
Repairing Co., Ltd.
                                                      Raw material &
Benxi Steel & Iron (Group) Construction and
                                                  supplementary materials            12.26                 9.84
Repairing Co., Ltd.
                                                        & spare parts
Benxi Steel & Iron (Group) Metallurgy
                                                      Energy & Power                260.48               130.04
Residues Co., Ltd.
                                                      Raw material &
Benxi Steel & Iron (Group) Metallurgy
                                                  supplementary materials         9,045.64           4,358.02
Residues Co., Ltd.
                                                        & spare parts
Benxi Steel & Iron (Group) Metallurgy
                                                          Products                  711.36                 0.31
Residues Co., Ltd.
Benxi Steel & Iron (Group) Metallurgy
                                                          Products                    0.00               712.63
Residues Co., Ltd.
Benxi Steel & Iron (Group) Co., Ltd.                  Energy & Power                702.65               614.52
                                                      Raw material &
Benxi Steel & Iron (Group) Co., Ltd.              supplementary materials           270.51               321.55
                                                        & spare parts
Benxi New Career Development Co., Ltd.                Energy & Power                 18.10                18.60
Benxi Steel & Iron (Group) General Hospital               Products                  175.76               223.79
Benxi Steel & Iron (Group) Zhengtai
                                                          Products                    0.00                46.04
Construction Materials Co., Ltd.
Liaoning Hengtong Metallurgical Equipment
                                                      Energy & Power                  3.42                 5.17
Manufacture Co., Ltd.
Liaoning Hengtong Metallurgical Equipment
                                                      Energy & Power                  0.00               899.19
Manufacture Co., Ltd.
                                                      Raw material &
Liaoning Hengtong Metallurgical Equipment
                                                  supplementary materials         1,305.43               879.76
Manufacture Co., Ltd.
                                                        & spare parts

                                    Notes to the financial statements Page 77
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
                                                         The content of related       January to       January to June
                       Name
                                                          party transactions          June 2018             2017
Suzhou Bengang Industrial Co., Ltd.                            Products                 17,052.85             13,623.10
Bengang Group Finance Co., Ltd.                            Energy & Power                      0.70                 0.75
Bengang Group Co., Ltd.                                    Energy & Power                      9.47                 7.63
                       Total                                                          199,371.47            124,993.26



       2. Lease information of related parties

            Company as the lessor:                                                                         (in Yuan)
                                                                                  The lease income     The lease income
                      Lessee                        Lease capital category        confirmed in this    confirmed in last
                                                                                        year                 year
Benxi Steel & Iron (Group) Steel & Iron                  Warehouse and
                                                                                        250,000.00          250,000.00
Process and Logistics Co., Ltd.                            machinery
Benxi Steel & Iron (Group) Machinery
                                                      Plants and machinery              245,000.00          244,805.87
Manufacture Co., Ltd.



       Company as the lessee:
       Lessor              Lease capital           Lease charges of the        Lease charges of the         Nature
                                category              current period              previous period
Benxi Steel & Iron         2300 Hot rolling
                                                          120,000,000.00              120,000,000.00           1
(Group) Co., Ltd.              product line
Benxi Steel & Iron
                            Land use right                 27,345,714.30               27,345,714.30           2
(Group) Co., Ltd.
Benxi Beiying Steel
                           1780 Hot rolling
& Iron (Group) Co.,                                        64,929,604.02               77,816,940.06           3
                               product line
Ltd.
        Notes:
       1. The Company leases 2300 hot rolling product line from the Group. Lease period lasts from
       1 January 2018 to 31 December 2020. Lease charges are negotiated between the lessor and
       the lessee based on the original cost, depreciation, and national taxation of the product line,
       with consideration of conditions of production and equipment performance.


       2. The Company leases land use right from the Group. Lease period lasts from 15 April 2009.
       The leasing fee is determined by the area of the land which is 7,669,068.17 square meters.
       Average price is RMB 0.594 per Square meter per month; hence annual rent is RMB 54.69
       million.


       3. The Company leases 1780 hot rolling product line from Benxi Beiying Steel & Iron
       (Group) Co., Ltd. “Notice on Bengang Steel Plates Co., Ltd. signing a renewal agreement

                                         Notes to the financial statements Page 78
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
      with Benxi Steel (group) Co., Ltd” was adopted on the sixth meeting of the seventh Board of
      Directors on 30 March 2017, it stipulated that the company leased the 1780 hot rolling
      product line from Benxi Beiying Steel & Iron (Group) Co., Ltd., lease period lasts from 1
      January 2017 to 31 December 2019. Lease charges are negotiated between the lessor and the
      lessee based on the original cost, depreciation, and national taxation of the product line, with
      consideration of conditions of production and equipment performance. The annual rent shall
      not exceed RMB 150,000,000.00.
3. Information of Guarantee among related parties

      Company as the warrantee
      (1) Guarantee of bank loans                                                                        (in Yuan)
                                                                                                       Has the
                                       Amount of guarantee       Starting date      Ending date of
           Warrantor                                                                                  guarantee
                                       in original currency      of Guarantee        Guarantee
                                                                                                     been fulfilled
Benxi Steel & Iron (Group) Co., Ltd.     RMB270,000,000.00         2018-1-23          2019-1-22           No
Benxi Steel & Iron (Group) Co., Ltd.      RMB60,000,000.00          2018-2-1          2019-1-31           No
Benxi Steel & Iron (Group) Co., Ltd.      RMB74,000,000.00         2018-5-25          2019-5-24           No
Benxi Steel & Iron (Group) Co., Ltd.     RMB150,000,000.00         2018-5-18          2019-5-17           No
Benxi Steel & Iron (Group) Co., Ltd.     RMB340,000,000.00         2018-2-11          2019-2-10           No
Benxi Steel & Iron (Group) Co., Ltd.     RMB200,000,000.00         2018-6-13          2019-6-12           No
Benxi Steel & Iron (Group) Co., Ltd.     RMB200,000,000.00         2018-6-12          2019-6-11           No

Benxi Steel & Iron (Group) Co., Ltd.     RMB100,000,000.00         2018-1-25          2019-1-23           No

Bengang Group Co., Ltd.                  RMB150,000,000.00         2017-7-12          2018-7-12           No

Bengang Group Co., Ltd.                  RMB150,000,000.00         2017-7-12          2018-7-12           No

Bengang Group Co., Ltd.                   RMB87,280,000.00         2018-3-26          2024-6-21           No

Bengang Group Co., Ltd.                  RMB140,000,000.00         2018-1-19          2019-1-19           No

Bengang Group Co., Ltd.                   RMB83,000,000.00         2018-1-19         2018-12-28           No

Bengang Group Co., Ltd.                  RMB490,000,000.00         2017-8-28          2018-8-23           No

Benxi Steel & Iron (Group) Co., Ltd.     RMB100,000,000.00          2018-1-4         2018-12-12           No

Benxi Steel & Iron (Group) Co., Ltd.
                                         RMB200,000,000.00          2017-9-6          2018-9-5            No
and Bengang Group Co., Ltd.

Benxi Steel & Iron (Group) Co., Ltd.
                                         RMB150,000,000.00        2017-10-23         2018-10-16           No
and Bengang Group Co., Ltd.

Benxi Steel & Iron (Group) Co., Ltd.
                                         RMB200,000,000.00        2017-10-16         2018-10-14           No
and Bengang Group Co., Ltd.

Benxi Steel & Iron (Group) Co., Ltd.
                                         RMB200,000,000.00        2017-11-13          2018-11-8           No
and Bengang Group Co., Ltd.


                                        Notes to the financial statements Page 79
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
                                                                                                       Has the
                                       Amount of guarantee       Starting date      Ending date of
           Warrantor                                                                                  guarantee
                                       in original currency      of Guarantee        Guarantee
                                                                                                     been fulfilled
Benxi Steel & Iron (Group) Co., Ltd.
                                         RMB200,000,000.00        2017-11-15         2018-11-13           No
and Bengang Group Co., Ltd.

Benxi Steel & Iron (Group) Co., Ltd.
                                          RMB78,000,000.00        2017-12-15         2018-12-12           No
and Bengang Group Co., Ltd.

Bengang Group Co., Ltd.                  RMB160,000,000.00         2018-5-24          2019-5-24           No
Bengang Group Co., Ltd.                  RMB200,000,000.00         2018-4-28         2018-10-27           No
Bengang Group Co., Ltd.                  RMB200,000,000.00         2018-5-25         2018-11-24           No
Bengang Group Co., Ltd.                  RMB310,000,000.00         2018-3-28          2019-3-27           No

Bengang Group Co., Ltd.                  RMB720,000,000.00          2018-4-2          2019-4-1            No

Bengang Group Co., Ltd.                  RMB480,000,000.00         2018-1-22          2019-1-21           No
Bengang Group Co., Ltd.                  RMB135,000,000.00         2018-1-17         2018-12-28           No
Bengang Group Co., Ltd.                RMB2,500,000,000.00          2018-3-9          2019-3-9            No
Bengang Group Co., Ltd.                  RMB300,000,000.00         2017-9-27          2018-9-26           No
Bengang Group Co., Ltd.                RMB1,000,000,000.00        2017-11-16         2018-11-15           No
Bengang Group Co., Ltd.                RMB1,190,000,000.00        2017-11-20         2018-11-19           No
Bengang Group Co., Ltd.                  RMB110,000,000.00         2017-9-29          2018-9-28           No
Bengang Group Co., Ltd.                  RMB110,000,000.00         2017-9-29          2018-9-27           No
Benxi Steel & Iron (Group) Co., Ltd.      USD 90,000,000.00        2018-5-22          2019-5-21           No
Benxi Steel & Iron (Group) Co., Ltd.     USD 150,000,000.00        2018-5-18          2019-5-17           No
Benxi Steel & Iron (Group) Co., Ltd.     USD 103,000,000.00        2018-5-18          2019-5-17           No
Benxi Steel & Iron (Group) Co., Ltd.     USD 100,000,000.00        2018-2-24          2019-2-23           No
Benxi Steel & Iron (Group) Co., Ltd.      USD 22,500,000.00       2017-12-26         2018-12-25           No
Bengang Group Co., Ltd.                   EUR 42,000,000.00        2017-8-24          2018-8-19           No
Bengang Group Co., Ltd.                   EUR 42,000,000.00        2017-8-24          2018-8-19           No
Benxi Steel & Iron (Group) Co., Ltd.
                                         RMB100,000,000.00        2017-10-24         2018-10-18           No
and Bengang Group Co., Ltd.

Bengang Group Co., Ltd.                  RMB100,000,000.00        2017-10-12          2018-7-3            No
Bengang Group Co., Ltd.                  RMB340,000,000.00         2017-8-29          2018-8-24           No
Bengang Group Co., Ltd.                  RMB220,000,000.00        2017-10-13         2018-10-13           No
Bengang Group Co., Ltd.                  USD 100,000,000.00        2016-8-30          2018-8-28           No
Bengang Group Co., Ltd.                   USD 48,000,000.00        2016-7-14          2018-7-12           No
Bengang Group Co., Ltd.                   USD 80,000,000.00         2018-5-2          2020-5-21           No
Bengang Group Co., Ltd.                   USD 20,000,000.00         2018-5-8          2020-5-7            No
Bengang Group Co., Ltd.                      EUR 233,211.77        2015-6-25          2025-9-30           No
Bengang Group Co., Ltd.                    EUR 7,967,631.00        2015-8-20          2025-9-30           No
Bengang Group Co., Ltd.                      EUR 597,187.50        2015-8-20          2019-9-30           No
Bengang Group Co., Ltd.                         EUR 6,162.48       2015-6-25          2026-4-30           No
Bengang Group Co., Ltd.                      EUR 557,460.75        2015-6-25          2026-4-30           No
Bengang Group Co., Ltd.                         EUR 4,069.11      2015-12-28          2026-4-30           No
Bengang Group Co., Ltd.                    EUR 6,798,868.28       2015-12-28          2026-4-30           No

                                        Notes to the financial statements Page 80
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
                                                                                                       Has the
                                       Amount of guarantee       Starting date      Ending date of
           Warrantor                                                                                  guarantee
                                       in original currency      of Guarantee        Guarantee
                                                                                                     been fulfilled
Bengang Group Co., Ltd.                    EUR 1,948,053.95        2015-6-25          2020-4-30           No
Bengang Group Co., Ltd.                      EUR 696,676.50       2015-12-28          2020-4-30           No
Bengang Group Co., Ltd.                      EUR 483,803.97        2015-6-25          2025-6-30           No
Bengang Group Co., Ltd.                   EUR 13,834,496.03        2015-6-25          2025-6-30           No
Bengang Group Co., Ltd.                      EUR 424,686.41       2015-12-28          2025-6-30           No
Bengang Group Co., Ltd.                      EUR 960,631.08        2015-6-25          2019-6-30           No
Bengang Group Co., Ltd.                      EUR 687,534.21       2015-12-28          2019-6-30           No
Bengang Group Co., Ltd.                      EUR 719,075.68        2015-6-25         2025-10-31           No
Bengang Group Co., Ltd.                    EUR 9,901,243.51        2015-6-25         2025-10-31           No
Bengang Group Co., Ltd.                    EUR 4,579,846.88       2015-12-28         2025-10-31           No
Bengang Group Co., Ltd.                    EUR 2,311,613.67        2015-6-25         2019-10-31           No
Bengang Group Co., Ltd.                       EUR 44,356.22       2015-12-28         2019-10-31           No
Bengang Group Co., Ltd.                      EUR 609,296.41        2015-6-25          2025-8-31           No
Bengang Group Co., Ltd.                   EUR 11,990,585.71        2015-6-25          2025-8-31           No
Bengang Group Co., Ltd.                      EUR 253,120.00       2015-12-28          2025-8-31           No
Bengang Group Co., Ltd.                    EUR 1,813,049.60        2015-6-25          2019-8-31           No
Bengang Group Co., Ltd.                      EUR 239,173.64       2015-12-28          2019-8-31           No
Bengang Group Co., Ltd.                      EUR 642,082.50       2015-12-28          2019-7-30           No
Bengang Group Co., Ltd.                      EUR 410,699.25        2016-6-27          2020-4-30           No
Bengang Group Co., Ltd.                    EUR 3,727,122.75        2016-6-27          2020-4-30           No
Bengang Group Co., Ltd.                    EUR 2,833,183.48       2016-12-14          2026-4-30           No
Bengang Group Co., Ltd.                       EUR 36,617.16       2016-12-14          2020-4-30           No
Benxi Steel & Iron (Group) Co., Ltd.      JPY 208,584,000.00      1997-10-10          2027-9-10           No
Benxi Steel & Iron (Group) Co., Ltd.
                                         RMB100,000,000.00         2016-3-30          2025-3-20           No
and Bengang Group Co., Ltd.

Bengang Group Co., Ltd.                  RMB100,000,000.00         2016-3-31          2018-3-31           No
Bengang Group Co., Ltd.                   RMB16,280,000.00         2015-3-26          2019-3-21           No
Bengang Group Co., Ltd.                  RMB100,000,000.00         2015-6-25          2021-9-21           No
Bengang Group Co., Ltd.                   RMB24,000,000.00         2015-12-9          2022-3-21           No
Bengang Group Co., Ltd.                   RMB36,450,000.00        2016-12-27          2020-6-21           No
Benxi Steel & Iron (Group) Co., Ltd.
                                         RMB700,000,000.00         2017-2-27          2025-2-20           No
and Bengang Group Co., Ltd.

Bengang Group Co., Ltd.                   RMB59,570,000.00        2017-11-15         2021-12-21           No
Bengang Group Co., Ltd.                  RMB622,600,000.00        2017-12-15          2024-8-20           No
Bengang Group Co., Ltd.                       EUR 21,690.00        2017-6-30          2019-9-30           No
Bengang Group Co., Ltd.                    EUR 1,091,628.91        2017-6-30          2019-9-30           No
Bengang Group Co., Ltd.                       EUR 33,315.97        2015-6-25          2025-9-30           No
Bengang Group Co., Ltd.                    EUR 1,138,233.00        2015-8-20          2025-9-30           No
Bengang Group Co., Ltd.                      EUR 597,187.50        2015-8-20          2019-9-30           No
Bengang Group Co., Ltd.                       EUR 75,149.76        2015-6-25          2026-4-30           No


                                        Notes to the financial statements Page 81
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
                                                                                                          Has the
                                       Amount of guarantee        Starting date       Ending date of
            Warrantor                                                                                   guarantee
                                         in original currency     of Guarantee          Guarantee
                                                                                                       been fulfilled
Bengang Group Co., Ltd.                       EUR 907,058.32       2015-12-28           2026-4-30           No
Bengang Group Co., Ltd.                     EUR 1,298,702.63        2015-6-25           2020-4-30           No
Bengang Group Co., Ltd.                       EUR 464,451.00       2015-12-28           2020-4-30           No
Bengang Group Co., Ltd.                        EUR 74,431.38        2015-6-25           2025-6-30           No
Bengang Group Co., Ltd.                     EUR 2,128,384.00        2015-6-25           2025-6-30           No
Bengang Group Co., Ltd.                        EUR 65,336.37       2015-12-28           2025-6-30           No
Bengang Group Co., Ltd.                     EUR 1,921,262.14        2015-6-25           2019-6-30           No
Bengang Group Co., Ltd.                     EUR 1,375,068.40       2015-12-28           2019-6-30           No
Bengang Group Co., Ltd.                     EUR 1,517,188.46        2015-6-25           2025-10-31          No
Bengang Group Co., Ltd.                       EUR 654,263.84       2015-12-28           2025-10-31          No
Bengang Group Co., Ltd.                      EUR 2,311,613.66       2015-6-25           2019-10-31          No
Bengang Group Co., Ltd.                        EUR 44,356.25       2015-12-28           2019-10-31          No
Bengang Group Co., Ltd.                     EUR 1,799,983.16        2015-6-25           2025-8-31           No
Bengang Group Co., Ltd.                        EUR 36,160.00       2015-12-28           2025-8-31           No
Bengang Group Co., Ltd.                     EUR 1,813,049.60        2015-6-25           2019-8-31           No
Bengang Group Co., Ltd.                       EUR 239,173.63       2015-12-28           2019-8-31           No
Bengang Group Co., Ltd.                       EUR 642,082.50       2015-12-28           2019-7-30           No
Bengang Group Co., Ltd.                       EUR 273,799.50        2016-6-27           2020-4-30           No
Bengang Group Co., Ltd.                       EUR 496,949.70        2016-6-27           2020-4-30           No
Bengang Group Co., Ltd.                       EUR 377,757.80       2016-12-14           2026-4-30           No
Bengang Group Co., Ltd.                        EUR 24,411.42       2016-12-14           2020-4-30           No
Bengang Group Co., Ltd.                    RMB42,860,000.00         2015-3-26           2019-3-21           No
Bengang Group Co., Ltd.                    RMB35,700,000.00        2016-12-27           2020-6-21           No
Bengang Group Co., Ltd.                        EUR 21,690.00        2017-6-30           2019-9-30           No
Bengang Group Co., Ltd.                       EUR 155,946.98        2017-6-30           2019-9-30           No
Benxi Steel & Iron (Group) Co., Ltd.        JPY 23,176,000.00      1997-10-10           2027-9-10           No



      4. Other related party transactions
      (1) Loan from and deposits in Bengang Group Finance Co., Ltd.                         (In 10 Thousand Yuan)

    Items         Beginning balance           Increase            Decrease           Ending balance       Notes

Deposits                    895,092.14        8,124,747.92        8,170,013.95           849,826.11

            The interests of deposits in Bengang Group Finance Co., Ltd. is RMB 12,943.20
            thousand from January to June in 2018.As at 30 June 2018, interest due from Bengang
            Group Finance Co., Ltd is RMB 892.60 thousand. From January to June 2018, the
            deposit interest income of the Company in Bengang Group Finance Co., Ltd. (hereinafter
            referred to as "finance company") was 51.184 million yuan. From January to June 2018,
            the amount of acceptance drafts issued by the financial company was 6.306 billion yuan,
            and the amount of acceptance drafts drawn by the financial company as at 30 June 2018
                                         Notes to the financial statements Page 82
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

           was 1.689 billion yuan.

       (2) Loans from and deposits in Benxi Steel and Iron (Group) Co., Ltd.
                                                                                           (In 10 Thousand Yuan)

                                        Beginning
                Items                                         Increase             Decrease             Ending balance
                                         balance
Entrusted loans through Bengang
                                        9,940.94                 1,422.00                3,322.00             8,040.94
      Group Finance Co., Ltd.


       The details of borrowing balance by 30 June 2018 are as follows:                                   (in Yuan)
          Name                           Lease form                 Loan amount            Start date       Due date
Benxi Steel &                Entrusted loan through Bengang
                                                                    14,220,000.00          2018-2-8         2019-2-8
Iron(Group) Co., Ltd.        Group Finance Co., Ltd.
Benxi Steel &                Entrusted loan through Bengang
                                                                    11,369,400.00        2017-10-25        2018-10-25
Iron(Group) Co., Ltd.        Group Finance Co., Ltd.
Benxi Steel &                Entrusted loan through Bengang
                                                                    32,700,000.00        2017-11-10        2018-11-10
Iron(Group) Co., Ltd.        Group Finance Co., Ltd.
Benxi Steel &                Entrusted loan through Bengang
                                                                    22,120,000.00          2018-2-8         2019-2-8
Iron(Group) Co., Ltd.        Group Finance Co., Ltd.
           Total                                                    80,409,400.00

           The interest accrued is RMB 2,313,129.8, and as at 30 June 2018, the interest payable is
           RMB 250,796.57.

(5)     Receivables and payables of the related parties
       1. Receivables of the Company

                                                                  Ending balance                Beginning balance
Items                                                                       Provision                        Provision
                                Name                           Carrying                      Carrying
Name                                                                         for bad                          for bad
                                                                amount                        amount
                                                                                 debts                         debts
Accounts receivable
            Benxi Beiying Steel & Iron (Group) Co., Ltd.          209.31                         701.26
            Bengang Electronics and Gas Co., Ltd.                 269.04           70.51         317.53          70.51
            Benxi Steel & Iron (Group) Machinery
                                                                 4698.03         2275.49        6224.21        2275.49
            Manufacture Co., Ltd.
            Benxi Steel & Iron (Group) Industrial
                                                                 3462.47          884.08        4108.83         884.08
            Development Co., Ltd.
            Benxi New Career Development Co., Ltd.                311.87          486.25         632.98         486.25
            Benxi Steel & Iron (Group) Thermal Power
                                                                  240.43                         273.52
            Development Co., Ltd.
            Bengang Cold-rolled Stainless Steel Dandong
                                                                  136.08            4.11         163.42           4.11
            Co., Ltd.
            Liaoning Hengtong Metallurgical Equipment             890.78                        1022.42

                                     Notes to the financial statements Page 83
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

                                                                 Ending balance               Beginning balance
Items                                                                      Provision                        Provision
                               Name                          Carrying                       Carrying
Name                                                                          for bad                        for bad
                                                              amount                         amount
                                                                                debts                        debts
           Manufacture Co., Ltd.
           Bengang Group International Economic and
                                                               1935.33                        4142.04
           Trading Co., Ltd.
Subtotal                                                      12,153.34       3,720.43      17,586.21        3,720.43

Prepayments
           Benxi Beiying Steel & Iron(Group) Co., Ltd.        70,722.56                     66,415.14
           Benxi Steel & Iron(Group) Machinery
                                                                 991.50                        967.60
           Manufacture Co., Ltd.
           Bengang Cold-rolled Stainless Steel Dandong
                                                                   4.00                          4.73
           Co., Ltd.
Subtotal                                                      71,718.06                     67,387.47

Other receivables
           Benxi Steel & Iron (Group) Real-estate
                                                                 244.41           95.18        248.21           95.18
           Development Co., Ltd.
           Liaoning Metallurgy Technician College                 13.24           15.63         15.63           15.63
           Benxi Steel & Iron (Group) Machinery
                                                               1,262.65          246.22      1,489.04          246.22
           Manufacture Co., Ltd.
           Benxi Steel & Iron (Group) Construction Co.,
                                                                   84.8            84.8          84.8            84.8
           Ltd.
           Bengang Group International Economic and
                                                               1,746.40            0.86      2,001.40            0.86
           Trading Co., Ltd.
           Benxi Steel & Iron (Group) Industrial
                                                                  52.87           43.58         52.22           43.58
           Development Co., Ltd.
           Benxi Steel & Iron (Group) Zhengtai
                                                                   19.9           19.34          19.9           19.34
           Construction Materials Co., Ltd.
           Benxi Steel & Iron (Group) Medical Services
                                                                  77.47           67.48         91.36           67.48
           Department;

Subtotal                                                       3,501.73          573.08      4,002.55          573.08



     2. Payables of the Company

 Items                                        Name                                        Ending balance      Beginning balance

Notes payable
            Benxi Steel & Iron (Group) Industrial Development Co., Ltd.                           345.42                7,099.55
            Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd.                             27.28                4,778.56
            Bengang Electronics and Gas Co., Ltd.                                                  26.11                 904.35
            Benxi Steel & Iron (Group) Construction and Repairing Co., Ltd.                             0                274.74
            Liaoning Metallurgy Technician College                                                 15.07                1,298.88


                                    Notes to the financial statements Page 84
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

 Items                                      Name                                      Ending balance   Beginning balance
            Benxi Steel & Iron (Group) Mining Co., Ltd.                                   144,244.03          188,559.94
            Benxi Steel & Iron (Group) Construction Co., Ltd.                                   48.1              153.09
            Benxi Steel & Iron (Group) Information and Automatic Tech Co., Ltd.                                   189.74
            Benxi Beiying Steel & Iron (Group) Co., Ltd.                                  458,503.42          444,936.18
            Liaoning Hengtong Metallurgical Equipment Manufacture Co., Ltd.                                     3,778.76
            Liaoning Metallurgy Vocational Technical College                                  252.36               86.79
            Liaoning Hengtai Heavy Machinery Co., Ltd.                                                             37.13
            Benxi Steel & Iron (Group) Metallurgy Residues Co., Ltd.                                               38.56
            Benxi High-tech Drilling Tools Manufacture Co., Ltd.                               90.04              132.73
            Benxi Steel & Iron (Group) Real-estate Development Co., Ltd.                      607.62              540.44

 Subtotal                                                                                 604,159.43          652,809.45

Accounts payable
            Bengang Electronics and Gas Co., Ltd.                                           1,140.07            1,308.22
            Benxi Steel & Iron (Group) Real-estate Development Co., Ltd.                      255.86               295.9
            Bengang Group International Economic and Trading Co., Ltd.                     33,823.00           26,957.04
            Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd.                     15,000.44           15,233.51
            Benxi Steel & Iron (Group) Construction Co., Ltd.                               6,049.12            6,143.11
            Benxi Steel & Iron (Group) Mining Co., Ltd.                                    26,792.14           31,618.85
            Benxi Steel & Iron (Group) Industrial Development Co., Ltd.                     7,712.03            8,885.85
            Benxi New Career Development Co., Ltd.                                            787.69              898.94
            Benxi Steel & Iron (Group) Construction and Repairing Co., Ltd.                 7,799.44            6,420.88
            Benxi Steel & Iron (Group) Metallurgy Residues Co., Ltd.                        5,723.39            4,589.73
            Benxi Steel & Iron (Group) Medical Services Department;                             2.09                2.04
            Benxi Steel & Iron (Group) Information and Automatic Tech Co., Ltd.             3,574.97            4,086.15
            Benxi High-tech Drilling Tools Manufacture Co., Ltd.                               11.31               11.07
            Liaoning Metallurgy Technician College                                            505.58              768.35
            Benxi Steel & Iron (Group) Thermal Power Development Co., Ltd.                     16.67               15.13
            Benxi Steel & Iron (Group) Zhengtai Construction Materials Co., Ltd.               37.96               37.44
            Liaoning Hengtong Metallurgical Equipment Manufacture Co., Ltd.                 1,009.90            1,025.60
            Liaoning Metallurgy Vocational Technical College                                  203.32              232.56
            Bengang Cold-rolled Stainless Steel Dandong Co., Ltd.                             108.02              105.41
            Liaoning Hengtai Heavy Machinery Co., Ltd.                                      2,734.58            2,670.49

Subtotal                                                                                  113,287.57          111,306.26

Advance from customers
            Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd.                        228.67              232.22
            Benxi Steel & Iron (Group) Industrial Development Co., Ltd.                        48.78               59.15
            Benxi Steel & Iron (Group) Metallurgy Residues Co., Ltd.                          134.27              285.07
            Benxi Steel & Iron (Group) Steel & Iron Process and Logistics Co., Ltd.           740.99              754.21
            Dalian Boluole Steel Tube Co., Ltd.                                                 9.41               38.11

                                    Notes to the financial statements Page 85
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

 Items                                        Name                                       Ending balance   Beginning balance
              Liaoning Bengang Steel & Iron Trading Co., Ltd.                                                       5,804.14
              Liaoning Hengtong Metallurgical Equipment Manufacture Co., Ltd.                    132.74              160.95
              Suzhou Bengang Industrial Co., Ltd.                                              3,406.79             2,957.84

 Subtotal                                                                                      4,701.66            10,291.71

Other payables
              Benxi Steel & Iron (Group) Real-estate Development Co., Ltd.                       118.44              143.59
              Bengang Group International Economic and Trading Co., Ltd.                       3,757.89             3,925.10
              Benxi Steel & Iron (Group) Machinery Manufacture Co., Ltd.                                                1.41
              Benxi Steel & Iron (Group) Construction Co., Ltd.                                  355.61              417.15
              Benxi Steel & Iron (Group) Industrial Development Co., Ltd.                        100.17               98.07
              Benxi New Career Development Co., Ltd.                                             101.47              109.64
              Benxi Steel & Iron (Group) Metallurgy Residues Co., Ltd.                              50                   50
              Benxi Steel & Iron (Group) Information and Automatic Tech Co., Ltd.                 10.54                 10.7
              Benxi Steel & Iron (Group) Steel & Iron Process and Logistics Co., Ltd.            317.74              331.87
              Benxi Steel & Iron (Group) Co., Ltd.                                             8,680.55             7,107.05
              Benxi Steel & Iron (Group) Thermal Power Development Co., Ltd.                     448.61              369.53
              Guangzhou Free Trade Zone Bengang Sales Co., Ltd.                                  324.68              267.44
              Benxi Steel & Iron (Group) Benxi Steel & Iron (Group)                               72.52                  71
              Liaoning Hengyi Financial Leasing Co., Ltd.                                         62.45                 0.36
              Liaoning Metallurgy Vocational Technical College                                      0.3                  0.3

 Subtotal                                                                                     14,400.97            12,903.22



10. Government subsidy
(1)   Government subsidy related to assets
                                                                                             Amount recognized
            Category               Amount             Item listed on the balance sheet        in the profit of
                                                                                              current period
 High Strength Cold
 Rolling            Steel        250,000,000.00               Deferred income                      25,000,000.00
 Renovation Project
 Automobile High-class
 Electrolytic Zinc Steel
                                  41,040,000.00               Deferred income                       4,104,000.00
 Plate Production Line
 Project
 Environment Pollution
                                  26,170,000.00               Deferred income                       1,810,000.00
 Renovation Project
 7 130t Boilers Flue Gas
 Desulfurization
                                  24,000,000.00               Deferred income                       2,400,000.00
 Renovation Project of
 Power Plant
 Sintering       Machine
 Residue Heat Usage and           21,020,000.00               Deferred income                       2,102,000.00
 Desulfurization Project
 Overseas      Advanced
 Technology
                                  14,420,000.00               Deferred income                       1,442,000.00
 Introduction     Special
 Fund

                                      Notes to the financial statements Page 86
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
                                                                                      Amount recognized
        Category                Amount            Item listed on the balance sheet     in the profit of
                                                                                       current period
 Industrial    Enterprise
 Energy     Management
                                11,600,000.00              Deferred income                   1,160,000.00
 Center     Construction
 Demonstration Project
 Power Plant No 3
 workshop Heat and
                                10,000,000.00              Deferred income
 Power      Cogeneration
 Renovation Project
 Advanced Treatment of
 Carbon             Fiber
 Wastewater Project of           9,500,000.00              Deferred income
 Coke Plant Dongfeng
 Area
 MES Project Special
                                 8,600,000.00              Deferred income                    860,000.00
 Fund
 Desulfurization      and
 Denitration Projects for
 Coal-fired Boiler of
                                 6,000,000.00              Deferred income                    300,000.00
 Power              Plant
 High-pressure
 Workshop
 Sintering       Machine
 Energy Saving and
 Environmental                   5,800,000.00              Deferred income                    580,000.00
 Protection Project of
 Blast Furnace Plant
 Environment Protection
                                 5,800,000.00              Deferred income                    580,000.00
 Project Special Fund
 Third-generation High
 Strength Steels for
                                 2,900,000.00              Deferred income
 Automobile         R&D
 Project
 Environment
 Renovation Project and
 Regional          Basin         2,400,000.00              Deferred income                    170,000.00
 Environment Protection
 Project
 The 360 Cubic Meter
 Sintering Machine Flue
 Gas      Desulfurization        1,000,000.00              Deferred income                    100,000.00
 Renovation Project of
 Blast Furnace Plant
 Automobile Steel Sheet
 Engineering Laboratory          1,000,000.00              Deferred income
 Project
 Treatment and Salt
 Extraction Project of
                                   500,000.00              Deferred income                     50,000.00
 Desulfurization Waste
 Liquid of Coke Plant
 Air Quality Automatic
                                   350,000.00              Deferred income                     35,000.00
 Monitoring System


(2)   Government subsidy related to income
                                                                                       Amount recognized
         Category                Amount            Item listed on the balance sheet     in the profit of
                                                                                        current period
 Compensation from Xihu
 Resource   Management             414,300.00                Other income                      414,300.00
 Committee


                                   Notes to the financial statements Page 87
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
                                                                                      Amount recognized
           Category              Amount            Item listed on the balance sheet    in the profit of
                                                                                       current period
 Liaoning        craftsman
 subsidy and skill master          280,000.00                Other income                     280,000.00
 workstation subsidy


11. Commitments and Contingencies

      1. Lease contracts in progress or to be performed and their financial impacts
      (1) For the land leased from the Company to the Group, price is RMB 0.594 per Square meter
      per month, and the area of the land is 7,669,068.17 square meters; hence annual rent is RMB
      54,691.4 thousand.


      (2) For the 2300 hot rolling product line leased from the Group to the Company, lease period
      lasts from 1 January 2018 to 31 December 2020. Lease charges are negotiated between the
      lessor and the lessee based on the original cost, depreciation, and national taxation of the
      product line, with consideration of conditions of production and equipment performance.


      (3) For the 1780 hot rolling product line leased from Benxi Beiying Steel & Iron (Group) Co.,
      Ltd. to the Company. “Notice on Bengang Steel Plates Co., Ltd. signing a renewal agreement
      with Benxi Steel (group) Co., Ltd” was adopted on the sixth meeting of the seventh Board of
      Directors on 30 March 2017, it stipulated that the company leased the 1780 hot rolling
      product line from Benxi Beiying Steel & Iron (Group) Co., Ltd., lease period lasts from 1
      January 2017 to 31 December 2019. Lease charges are negotiated between the lessor and the
      lessee based on the original cost, depreciation, and national taxation of the product line, with
      consideration of conditions of production and equipment performance. The annual rent shall
      not exceed RMB 150,000,000.00.



      2.   Contingencies

      At the balance sheet date, no significant contingencies need to be disclosed.


12. Subsequent events
(1)   Dividend distribution
      At the fifteenth meeting of the seventh Board of Directors on April 18, 2018, based on the
      existing 3,875,371,532.00 shares, the Company planned to distribute cash dividends RMB0.5
      per 10 shares (including tax) to shareholders. The Company planned to distribute
      RMB193,768,576.60 dividends for ordinary shares. The dividend distribution scheme was
      approved by the Annual General Meeting of Shareholders in 2017, which was held in May 24,
      2018. On July 11, 2018, the Board of Directors of the Company issued Announcement of

                                   Notes to the financial statements Page 88
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
      Dividend Distribution for Year 2017. The registration date of A shares is July 17, 2018, the
      ex-dividend date is July 18, 2018; the registration date of B shares is July 20, 2018, the
      ex-dividend date is July 18, 2018. As of the announcement date of this report, dividend
      distribution for year 2018 is over.


13. Other significant events
(1)   Segment information
      Since the Company’s main product is steel with other products accounting for only a small
      proportion, and the main production base is located in Liaoning area, segmented reporting is
      not applicable.


(2)   Other significant events which affect the investors’ decision making
      1. On 5 February 2015, the Company publicly issued a three-year corporate bond worth RMB
      1.5 billion with interest rate at 5.17%. The Company delisted the bond in accordance with
      statutory procedures in 1 February 2018 and completed the payment in 5 February 2018.


      2. On 27 December 2016, the Company's first Provisional General Meeting of Shareholders
      in 2016 considered and adopted the "Proposal on the Company's non-public offering of A
      shares (December 2016 revised version) ". On 16 December 2017, the Company's first
      Provisional General Meeting of Shareholders in 2017 considered and adopted the "Proposal
      on the extension of term of validity of non-public offering of stocks shareholders meeting
      resolution". The proposed issue of stocks to specific targets would raise 4 billion yuan. The
      main purposes of the fund raised by the Company are cold-rolled high-strength steel
      transformation project, hot-dip galvanizing production line project of the third cold rolling
      mill, and repayment of bank loans. As of 8 Februry 2018, the Company actually issued
      739,371,532 shares of RMB common stock to investors in private, with a par value of 1 yuan
      per share and an issue price of 5.41 yuan per share, raising a total of 3,999,999,988.12 yuan.
      After deducting all the issuing fees, the Company's net funds raised was RMB
      3,967,735,837.24 yuan. Availability of the above-mentioned fund was verified by BDO
      China Shu Lun Pan Certified Public Accountants LLP and issued the Capital Verification
      Report (PCPAR (2018) No. ZB10054). The Company has adopted a special account storage
      system for the fund.


      3. As at 30 June 2018, the controlling shareholder Benxi Steel & Iron (Group) Co., Ltd. held
      a total number of 1,523,095,133 shares pledged, and a total number of 45,000,000.00 shares
      frozon.




                                   Notes to the financial statements Page 89
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
14. Notes to the financial statement of parent company
(1)      Accounts receivable

           1. Accounts receivable disclosed by category
                                                                  Ending balance
                                    Carrying amount                 Provision for bad debts
            Items
                                                  Percenta                         Bad debts ratio      Book value
                                   Amount                          Amount
                                                   ge (%)                               (%)
Individually significant and
tested     for     impairment     47,762,337.18        7.03      47,762,337.18            100.00
individually
Accounts receivable tested
                                 631,735,005.27       92.97     190,040,200.11               30.08     441,694,805.16
for impairment by portfolio
Other insignificant items
but tested for impairment
individually
             Total               679,497,342.45     100.00      237,802,537.29                         441,694,805.16



                                                                 Beginning balance
                                    Carrying amount                 Provision for bad debts
            Items
                                                  Percenta                         Bad debts ratio      Book value
                                   Amount                          Amount
                                                   ge (%)                               (%)
Individually significant and
tested     for     impairment     47,762,337.18        6.51      47,762,337.18                100
individually
Accounts receivable tested
                                 685,620,057.01       93.49     203,438,463.56               29.67     482,181,593.45
for impairment by portfolio
Other insignificant items
but tested for impairment
individually
             Total               733,382,394.19        100      251,200,800.74                         482,181,593.45



Individually significant and tested for impairment individually
                                                                 Ending balance
           Items
                              Carrying amount     Provision for bad debts     Bad debts ratio (%)          Reason
Benxi Nanfen Xinhe                                                                                           stop
                                 47,762,337.18                47,762,337.18                   100.00
Metallurgical Co., Ltd.                                                                                   production
           Total                 47,762,337.18                47,762,337.18



Accounts receivables tested for impairment by portfolio:
                                                                      Ending balance
                 Items
                                         Carrying amount           Provision for bad debts     Bad debts ratio (%)
                                     Notes to the financial statements Page 90
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

                                                                      Ending balance
                Items
                                         Carrying amount          Provision for bad debts       Bad debts ratio (%)

Within 1 year(inclusive)                        341,466,965.43
1-2 years(inclusive)                             31,356,340.60                 1,567,817.03                       5.00
2-3 years(inclusive)                             88,049,145.20               17,609,829.04                       20.00
Over 3 years                                    170,862,554.04              170,862,554.04                      100.00

                 Total                          631,735,005.27              190,040,200.11



           2. Information of provision, reversal or recovery of bad debts of current period.
           The provision of bad debts of current period is RMB 13,398,263.45.


           3. No accounts receivable has been written off this year.


           4. Top five debtors at the year-end
                                                                  Ending balance
           Company                                                   Percentage of total           Provision for bad
                                          Amount
                                                                 accounts receivable (%)                debts
               No.1                        179,688,274.41                             26.44
               No.2                          86,329,597.52                            12.70              6,513,105.93
               No.3                          47,762,337.18                             7.03             47,762,337.18
               No.4                          46,980,327.61                             6.91              22754881.58
               No.5                          34,624,704.64                             5.10              8,840,761.28
             Total                         395,385,241.36                             58.19             85,871,085.97



(2)   Other receivables

           1. Other receivables disclosed by category:
                                                                  Ending balance
                                        Carrying amount                 Provision for bad debts
                                                                                           Bad
             Items
                                                      Percentage                           debts         Book value
                                       Amount                              Amount
                                                          (%)                              ratio
                                                                                           (%)
Individually significant and
tested for impairment
individually
Accounts receivable tested
                                  423,551,471.68             99.59        66,244,347.69       15.64    357,307,123.99
for impairment by portfolio
Other insignificant items but
tested for impairment                  1,740,000.00           0.41                                       1,740,000.00
individually

                                   Notes to the financial statements Page 91
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements
               Total               425,291,471.68          100.00        66,244,347.69              359,047,123.99




                                                                  Beginning balance
                                           Carrying amount              Provision for bad debts
                                                                                         Bad
                Items
                                                        Percentage                       debts       Book value
                                         Amount                           Amount
                                                           (%)                           ratio
                                                                                         (%)
Individually significant and
tested for impairment
individually
Accounts receivable tested for
                                       442,492,865.67          99.61     67,369,416.95    15.22     375,123,448.72
impairment by portfolio
Other insignificant items but
tested for impairment                    1,740,000.00           0.39                                  1,740,000.00
individually
                Total                  444,232,865.67       100.00       67,369,416.95              376,863,448.72



Other receivables tested for impairment by portfolio using the method of Aging analysis:
                                                                       Ending balance
                  Items
                                           Other receivables      Provision for bad debts    Bad debts ratio (%)

Within 1 year(inclusive)                        215,735,192.31
1-2 years(inclusive)                               8,601,980.20                 430,099.01                    5.00
2-3 years(inclusive)                            136,122,500.50                2,722,450.01                  20.00
Over 3 years                                      63,091,798.67              63,091,798.67                 100.00

                  Total                         423,551,471.68               66,244,347.69



Other receivables individually insignificant but tested for impairment individually
         Items             Carrying amount        Provision for bad debts     Bad debts ratio (%)       Reason
Sinking Fund of
Japanese yen from
Finance Bureau of
Benxi                            1,740,000.00                                                         Sinking fund
          Total                  1,740,000.00
      Notes: The Sinking Fund of Japanese yen from Finance Bureau of Benxi is the margin for JPY
loans of which the aging is over 3 years and no bad debts provision has been made for it.



           2. Information of provision, reversal or recovery of bad debts of current period.
           Reversal of bad debts for other receivables in current period is RMB 1,125,069.26.

                                    Notes to the financial statements Page 92
    Bengang Steel Plates Co., Ltd.
    For the half year ended 30 June 2018
    Notes to the financial statements



                3. No other receivables have been written off this year.


                4. Other receivables disclosed by nature
                    Nature                              Ending balance                             Beginning balance

     Accounts                                                         416,486,206.68                              435,666,187.53
     Export tax rebate                                                  7,065,265.00                                8,566,678.14
     Others                                                           423,551,471.68                              444,232,865.67

                    Total                                             416,486,206.68                              435,666,187.53



                5. Top five debtors at the year-end:
                                                                                                   Percentage of          Provision
                            Notes or                                                                                         for
      Company                                   Amount                        Aging                 total other
                            content                                                                                      bad debts
                                                                                                    receivables
                                                                    Within 1 year RMB
            No. 1        Accounts             16,083,670.47       12,553,032.8; within 1-2                    3.78        176,531.88
                                                                  years RMB 3,530,637.67
            No. 2        Accounts             12,626,479.38           Within 1-3 years                        2.97      2,462,178.25
            No. 3        Accounts               9,188,976.40           Within 1 year                          2.16
            No. 4        Accounts               5,922,247.07           Within 1 years                         1.39
            No. 5        Accounts               4,341,257.18            Over 3 years                          1.02      4,341,257.18

            Total                             48,162,630.50                                                  11.32      6,979,967.31



    (3)      Long-term equity investment
                                          Ending balance                                       Beginning balance

          Items          Carrying                                                 Carrying
                                            Impairment      Book value                             Impairment        Book value
                            amount                                                    amount
     Subsidiaries      2,016,281,902.16                    2,016,281,902.16     1,756,981,902.16                   1,756,981,902.16

            Total      2,016,281,902.16                    2,016,281,902.16     1,756,981,902.16                   1,756,981,902.16




            Details of investment in subsidiaries

                                                                                                           Impair
                                                                                                                           Ending
                                Beginning                                                                  ment of
   Name of entity                                      Increase         Decrease        Ending balance                    balance of
                                 balance                                                                   current
                                                                                                                         impairment
                                                                                                           period

Guangzhou Bengang

Steel & Iron Trading                  1,000,000.00    29,000,000.00                        30,000,000.00

Co., Ltd.


                                              Notes to the financial statements Page 93
    Bengang Steel Plates Co., Ltd.
    For the half year ended 30 June 2018
    Notes to the financial statements

                                                                                                    Impair
                                                                                                               Ending
                            Beginning                                                               ment of
   Name of entity                                Increase       Decrease     Ending balance                   balance of
                             balance                                                                current
                                                                                                              impairment
                                                                                                    period

Shanghai Bengang

Metallurgy Science
                              19,200,000.00     10,800,000.00                       30,000,000.00
and Technology Co.,

Ltd.

Bengang Steel Plate

Liaoyang Orel Ball           529,899,801.38                                     529,899,801.38

Co., Ltd.

Dalian Benruitong

Automobile Material
                              65,000,000.00                                         65,000,000.00
Technologies Co.,

Ltd.

Bengang Puxiang

Cool Rolling Steel          1,019,781,571.10                                  1,019,781,571.10

Sheet Co., Ltd.

Changchun Bengang

Steel & Iron Sales             -1,355,124.64    29,500,000.00                       28,144,875.36

Co., Ltd.

Harbin Bengang

Economic and                     423,398.23     29,500,000.00                       29,923,398.23

Trading Co., Ltd.

Nanjing Bengang

Steel Material Sales           2,081,400.65                                          2,081,400.65

Ltd.

Wuxi Bengang Steel
                                 936,718.57     29,000,000.00                       29,936,718.57
& Iron Sales Co., Ltd.

Xiamen Bengang

Steel & Iron Sales              1,095,711.66                                         1,095,711.66

Co., Ltd.

Yantai Bengang Steel
                              19,600,329.41     29,500,000.00                       49,100,329.41
& Iron Sales Co., Ltd.

Tianjin Bengang

Steel & Iron Trading          33,318,095.80     27,000,000.00                       60,318,095.80

Co., Ltd.

Benxi Bengang Steel            5,000,000.00     25,000,000.00                       30,000,000.00

                                        Notes to the financial statements Page 94
    Bengang Steel Plates Co., Ltd.
    For the half year ended 30 June 2018
    Notes to the financial statements

                                                                                                     Impair
                                                                                                                   Ending
                             Beginning                                                               ment of
   Name of entity                                  Increase        Decrease     Ending balance                    balance of
                               balance                                                               current
                                                                                                               impairment
                                                                                                     period

Sales Co., Ltd

Shenyang Bengang

Metallurgical Science
                                 5,000,000.00     25,000,000.00                      30,000,000.00
and Technology Co.,

Ltd.

Chongqing Liaobeng

Steel & Iron Trading             5,000,000.00     25,000,000.00                      30,000,000.00

Co., Ltd.

Bengang Baojin
(Shenyang)
                                51,000,000.00                                        51,000,000.00
Automobile New

Material Co, Ltd.

          Total              1,756,981,902.16    259,300,000.00                  2,016,281,902.16



   (4)      Operating income and operating cost

                                      January to June 2018                             January to June 2017
             Item
                                 Revenue                    Cost                 Revenue                   Cost
                             21,543,654,805.89       19,737,906,706.75        19,350,686,493.45      17,842,348,026.16
       Principal business
                              2,139,210,303.25          1,663,285,255.45       1,846,830,285.75       1,640,628,048.16
       Other business
                             23,682,865,109.14       21,401,191,962.20        21,197,516,779.20      19,482,976,074.32
             Total


   (5)      Income on investment

                                                                              January to June        January to June
                                    Items
                                                                                     2018                  2017
                                                                                                        102,074,634.76
       Income from long-term equity investment(cost method)
                                                                                     3,493,150.68         3,294,593.14
       Income from bank short-term financial products
                                                                                     3,493,150.68       105,369,227.90
                                    Total


    15. Supplementary information
   (1)      Details of non-recurring profit and loss

                                      Items                                                 Amount             Notes


                                         Notes to the financial statements Page 95
Bengang Steel Plates Co., Ltd.
For the half year ended 30 June 2018
Notes to the financial statements

                                      Items                                             Amount               Notes

Profit or loss from disposal of non-current assets                                         -556,821.63
Details of government subsidies recorded into current profits and
loss(except such government subsidy closely related to the company’s
normal business operation,,meeting the regulation of national policy and                41,274,238.70
enjoyed constantly in certain quota or quantity according to a certain
standard)
Profit or loss from investment or assets entrusted to others

Profit or loss from debt restructuring                                                     945,892.23

Other non-operating revenue and expenditure other than above items                        1,192,505.57

Impact of income tax                                                                    -10,713,953.72

Impact of minority interests                                                              - 112,829.54

                                      Total                                              32,029,031.62



(2)     Net asset yield and earnings per share
                                               Weighted average                 Earnings per share (Yuan)
      Profit in the Reporting Period
                                              net assets yield (%)          Basic EPS             Diluted EPS
Net profit attributable to ordinary
                                                      4.56                    0.195                      0.195
shareholders
Net profit attributable to ordinary
shareholders after deducting                          4.37                    0.187                      0.187
non-recurring profit and loss




                                                                                 Bengang Steel Plates Co., Ltd.


                                                                                            27 August 201 8




                                         Notes to the financial statements Page 96