January 2023 – 30 June 2023
Contents Page
Financial statements
Consolidated statement of financial position and 1-4
parent company’s statement of financial position
Consolidated statement of profit or loss and other 5-6
comprehensive income and parent company’s
statement of profit or loss and other comprehensive
income
Consolidated statement of cash flows and parent 7-8
company’s statement of cash flows
Consolidated statement of changes in equity and 9-12
parent company’s statement of changes in equity
Notes to the financial statements 1-168
Bengang Steel Plates Co., Ltd.
Consolidated Statement of Financial Position
30 June 2023
(Expressed in RMB unless otherwise stated)
Balance as at 30 Balance as at 31
Assets Note V
June 2023 December 2022
CURRENT ASSETS:
Monetary funds 1 3,656,559,532.07 1,461,145,641.87
Settlements provision
Loans to banks and other financial institutions
Financial assets held-for-trading
Derivative financial assets
Notes receivable 2 87,391,995.82 429,707,174.70
Accounts receivable 3 914,407,662.17 897,230,896.06
Accounts receivable financing 4 953,938,535.80 137,591,996.02
Prepayments 5 937,624,582.00 1,247,177,748.33
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserves receivable
Other receivables 6 98,776,833.29 127,198,692.92
Financial assets purchased under resale agreements
Inventories 7 7,602,269,679.35 8,463,728,475.18
Contract assets
Assets held for sale
Non-current assets maturing within one year
Other current assets 8 39,068,241.10 395,441,136.26
TOTAL CURRENT ASSETS 14,290,037,061.60 13,159,221,761.34
NON-CURRENT ASSETS:
Disbursement of advances and loans
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 9 47,556,655.02 51,030,777.18
Other equity instrument investments 10 1,020,418,482.31 1,020,418,482.31
Other non-current financial assets
Investment properties
Fixed assets 11 24,254,961,069.74 24,836,556,422.90
Construction in progress 12 4,151,149,369.23 3,158,195,899.65
Productive biological assets
Oil and natural gas assets
Right-of-use assets 13 1,349,803,446.63 1,379,990,713.89
Intangible assets 14 259,745,931.54 262,784,937.41
Development costs
Goodwill
Long-term deferred expenses
Deferred tax assets 15 148,010,869.57 136,387,885.28
Other non-current assets 16 349,815,196.20 110,065,560.68
TOTAL NON-CURRENT ASSETS 31,581,461,020.24 30,955,430,679.30
TOTAL ASSETS 45,871,498,081.84 44,114,652,440.64
The following notes are as part of the financial statements.
Legal representative: Chief financial officer: Chief accountant:
Financial Statements Page 1
Bengang Steel Plates Co., Ltd.
Consolidated Statement of Financial Position(Continued)
30 June 2023
(Expressed in RMB unless otherwise stated)
Balance as at 30 June Balance as at 31
Liabilities and Equity Note V
2023 December 2022
CURRENT LIABILITIES:
Short-term borrowings 17 300,020,000.00 49,200,000.00
Borrowings from central bank
Loans from banks and other financial institutions
Financial liabilities held-for-trading
Derivative financial liabilities
Notes payable 18 7,719,942,239.59 4,389,336,619.36
Accounts payable 19 4,092,895,525.39 3,696,420,463.85
Advances from customers
Contract liabilities 20 3,733,739,770.22 3,794,115,592.29
Financial assets sold under repurchase agreements
Deposits and balances from customers and banks
Customer securities brokerage deposits
Customer securities underwriting deposits
Employee benefits payable 21 12,952,463.97 10,046,363.27
Taxes and surcharges payable 22 106,443,329.12 44,392,920.78
Other payables 23 1,639,486,201.24 1,247,722,165.47
Fees and commissions payable
Reinsurance payables
Liabilities held for sale
Non-current liabilities maturing within one year 24 1,613,201,458.81 2,586,250,886.43
Other current liabilities 25 485,575,516.40 493,235,027.03
TOTAL CURRENT LIABILITIES 19,704,256,504.74 16,310,720,038.48
NON-CURRENT LIABILITIES:
Insurance contract reserve
Long-term borrowings 26 959,713,911.60 1,726,938,302.30
Bonds payable 27 5,382,304,119.20 5,276,502,232.78
Including: Preferred stock
Perpetual bonds
Lease liabilities 28 1,364,333,523.13 1,384,348,462.18
Long-term payables
Long-term employee benefits payable
Provision
Deferred income 29 41,387,816.78 42,377,015.51
Deferred tax liabilities 27,309.01 27,309.01
Other non-current liabilities
TOTAL NON-CURRENT LIABILITIES 7,747,766,679.72 8,430,193,321.78
TOTAL LIABILITIES 27,452,023,184.46 24,740,913,360.26
OWNERS' EQUITY:
Share capital 30 4,108,214,747.00 4,108,212,217.00
Other equity instruments 31 947,861,798.36 947,863,834.02
Including: Preferred stocks
Perpetual bonds
Capital reserves 32 13,272,212,557.25 13,272,205,160.21
Less: treasury stock
Other comprehensive income 33 -15,904,760.02 -15,904,760.02
Special reserves 34 29,010,352.89 2,217,913.77
Surplus reserves 35 1,195,116,522.37 1,195,116,522.37
General risk reserves
Undistributed profits 36 -1,725,505,294.41 -720,559,670.73
Total equity attributable to the owners of the parent company 17,811,005,923.44 18,789,151,216.62
Non-controlling interests 608,468,973.94 584,587,863.76
TOTAL OWNERS' EQUITY 18,419,474,897.38 19,373,739,080.38
TOTAL LIABILITIES AND OWNERS' EQUITY 45,871,498,081.84 44,114,652,440.64
The following notes are as part of the financial statements.
Legal representative: Chief financial officer: Chief accountant:
Financial Statements Page 2
Bengang Steel Plates Co., Ltd.
Parent Company's Statement of Financial Position
30 June 2023
(Expressed in RMB unless otherwise stated)
Balance as at 30 June Balance as at 31
Assets Note XIV
2023 December 2022
CURRENT ASSETS:
Monetary funds 2,494,741,609.19 585,125,555.12
Financial assets held-for-trading
Derivative financial assets
Notes receivable 1 877,829,539.94 669,193,401.02
Accounts receivable 2 693,637,618.60 931,035,796.58
Accounts receivable financing 3 827,579,316.11 127,468,835.80
Prepayments 922,061,764.36 1,247,084,271.88
Other receivables 4 166,743,093.49 150,724,545.56
Inventories 6,714,763,093.25 6,988,993,205.61
Contract assets
Assets held for sale
Non-current assets maturing within one year
Other current assets 848,555.43 310,293,996.25
TOTAL CURRENT ASSETS 12,698,204,590.37 11,009,919,607.82
NON-CURRENT ASSETS:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 5 2,269,838,245.27 2,270,277,904.85
Other equity instrument investment 1,020,418,482.31 1,020,418,482.31
Other non-current financial assets
Investment properties
Fixed assets 23,245,968,241.40 23,777,736,434.39
Construction in progress 4,120,300,973.77 3,127,247,793.98
Productive biological assets
Oil and natural gas assets
Right-of-use assets 1,349,803,446.63 1,379,990,713.89
Intangible assets 172,578,872.34 174,295,096.19
Development costs
Goodwill
Long-term deferred expenses
Deferred tax assets 145,264,403.37 115,126,210.76
Other non-current assets 349,815,196.20 110,065,560.68
TOTAL NON-CURRENT ASSETS 32,673,987,861.29 31,975,158,197.05
TOTAL ASSETS 45,372,192,451.66 42,985,077,804.87
The following notes are as part of the financial statements.
Legal representative: Chief financial officer: Chief accountant:
Financial Statements Page 3
Bengang Steel Plates Co., Ltd.
Parent company’s Statement of Financial Position(Continued)
30 June 2023
(Expressed in RMB unless otherwise stated)
Balance as at 31
Liabilities and Equity Note Balance as at 30 June 2023
December 2022
CURRENT LIABILITIES:
Short-term borrowings 300,020,000.00 49,200,000.00
Financial liabilities held-for-trading
Derivative financial liabilities
Notes payable 7,715,109,085.39 3,982,738,952.59
Accounts payable 4,236,729,868.04 3,821,848,200.25
Advances from customers
Contract liabilities 4,845,887,001.18 4,805,281,178.80
Employee benefits payable 12,147,392.67 9,901,551.31
Taxes and surcharges payable 80,296,377.93 22,518,649.65
Other payables 1,481,659,234.98 861,392,691.88
Liabilities held for sale
Non-current liabilities maturing within one
year 1,613,201,458.81 2,586,250,886.43
Other current liabilities 629,965,310.15 624,686,553.24
TOTAL CURRENT LIABILITIES 20,915,015,729.15 16,763,818,664.15
NON-CURRENT LIABILITIES:
Long-term borrowings 959,713,911.60 1,726,938,302.30
Bonds payable 5,382,304,119.20 5,276,502,232.78
Including: Preferred stock
Perpetual bonds
Lease liabilities 1,364,333,523.13 1,384,348,462.18
Long-term payables
Long-term employee benefits payable
Provision
Deferred income 41,387,816.78 42,377,015.51
Deferred tax liabilities 27,309.01 27,309.01
Other non-current liabilities
TOTAL NON-CURRENT LIABILITIES 7,747,766,679.72 8,430,193,321.78
TOTAL LIABILITIES 28,662,782,408.87 25,194,011,985.93
OWNERS' EQUITY:
Share capital 4,108,214,747.00 4,108,212,217.00
Other equity instrument 947,861,798.36 947,863,834.02
Including: Preferred stocks
Perpetual bonds
Capital reserves 12,852,060,875.13 12,852,053,478.09
Less: treasury stock
Other comprehensive income -15,904,760.02 -15,904,760.02
Special reserves 19,831,812.69 58,212.15
Surplus reserves 1,195,116,522.37 1,195,116,522.37
Undistributed profits -2,397,770,952.74 -1,296,333,684.67
TOTAL OWNERS' EQUITY 16,709,410,042.79 17,791,065,818.94
TOTAL LIABILITIES AND OWNERS'
EQUITY 45,372,192,451.66 42,985,077,804.87
The following notes are as part of the financial statements.
Legal representative: Chief financial officer: Chief accountant:
Financial Statements Page 4
Bengang Steel Plates Co., Ltd.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
January to June 2023
(Expressed in RMB unless otherwise stated)
Items Note V Current period Previous period
I. REVENUE 30,567,409,205.03 35,015,177,304.98
Including: Operating income 37 30,567,409,205.03 35,015,177,304.98
Interests income
Earned premiums
Income from handling charges and commissions
II. CO ST O F SALES 31,417,700,991.35 34,212,560,449.82
Including: Operating costs 37 30,714,640,963.91 33,377,477,540.63
Interest expenses
Handling charges and commissions expenses
Surrender value
Net amount of insurance claims
Net provision of insurance contract reserve
Policy dividend payment
Reinsurance expense
Taxes and surcharges 38 99,040,677.75 99,885,445.23
Selling expenses 39 69,901,883.24 67,430,875.17
Administrative expenses 40 339,569,021.49 352,304,684.10
Research and development expenses 41 32,990,679.09 22,368,496.87
Finance costs 42 161,557,765.87 293,093,407.82
Including: Interest expenses 234,419,462.35 342,674,208.42
Interest income 27,351,519.21 61,019,147.27
Add: Other income 43 3,518,092.14 30,655,542.92
Investment income ("-" for losses) 44 -2,541,506.30 115,842.84
Including: Income from investment in associates and joint ventures -439,659.58 85,455.22
Gains /(losses) from derecognition of financial assets
measured at amortised cost
Foreign exchange gains ("-" for losses)
Income /(losses) from net exposure hedging
Gains from changes in fair value ("-" for losses)
Credit impairment losses ("-" for losses) 45 -17,450,773.47 -793,906.73
Asset impairment losses ("-" for losses) 46 -84,458,260.66 -72,880,991.53
Gains on disposal of assets ("-" for losses) 47 3,648,546.62
III. PRO FIT FRO M O PERATIO NS ("-" For Losses) -951,224,234.61 763,361,889.28
Add: Non-operating income 48 51,584,548.03 30,572,281.35
Less: Non-operating expenses 49 50,585,327.13 10,765,339.79
IV. PRO FIT BEFO RE TAX ("-" For Total Losses) -950,225,013.71 783,168,830.84
Less: Income tax expenses 50 33,191,710.84 203,204,954.60
V. NET PRO FIT ("-" For Net Loss) -983,416,724.55 579,963,876.24
I. Classified by going concern:
Net profit from the continuing operations("-" for net loss) -983,416,724.55 579,963,876.24
Net profit from the discontinued operations("-" for net loss)
II. Classified by ownership:
Net profit attributable to the owners of the parent company("-" for net
-1,004,945,623.68 561,735,377.41
loss)
Non-controlling interests("-" for net loss) 21,528,899.13 18,228,498.83
VI. NET AMO UNT O F O THER CO MPREHENSIVE INCOME AFTER
TAX
Net amount of other comprehensive income attributable to owners of the
parent company, net of tax
(i) Other comprehensive incomes that cannot be reclassified into profit or
loss
1. Changes arising from recalculating defined benefit plans
2. Other comprehensive incomes that cannot be reclassified into
profit or loss under equity accounting method
3. Changes in fair value of other equity instrument investment
4. Changes in fair value of the company’s own credit risks
(ii) Other comprehensive incomes that will be reclassified into profit or loss
1. Other comprehensive incomes that will be reclassified into
profit or loss under equity accounting method
2. Changes in fair value of other debt instrument investment
3. Other comprehensive income arising from the reclassification of
financial assets
4. Provision for credit impairment in other debt investments
5. Cash flow hedge reserve
6. Foreign currency translation differences in financial statements
7. Others
Net amount of other comprehensive income attributable to minority
shareholders, net of tax
VII. TO TAL CO MPREHENSIVE INCO ME -983,416,724.55 579,963,876.24
Total comprehensive income attributable to owners of the parent company -1,004,945,623.68 561,735,377.41
Total comprehensive income attributable to minority shareholders 21,528,899.13 18,228,498.83
VIII. EARNINGS PER SHARE:
1. Basic earnings per share (yuan/share) -0.2446 0.14
2. Diluted earnings per share (yuan/share) -0.1558 0.14
The following notes are as part of the financial statements.
Legal representative: Chief financial officer: Chief accountant:
Financial Statements Page 5
Bengang Steel Plates Co., Ltd.
Parent Company's Statement of Profit or Loss and Other Comprehensive Income
January to June 2023
(Expressed in RMB unless otherwise stated)
Note
Items Current period Previous period
XIV
I. REVENUE 6 30,351,590,885.27 35,774,038,070.43
Less: Operating costs 6 30,725,796,931.13 34,404,712,933.07
Taxes and surcharges 70,444,069.04 74,061,344.22
Selling expenses 72,626,552.38 58,854,346.91
Administrative expenses 320,165,443.13 323,747,875.71
Research and development expenses 32,990,679.09 22,368,496.87
Finance costs 168,567,801.72 290,720,557.98
Including: Interest expenses 233,021,988.80 327,728,944.07
Interest income 18,139,148.26 48,263,709.87
Add: Other income 2,943,726.56 30,272,965.00
Investment income ("-" for losses) 7 -2,247,043.73 59,198,924.51
Including: Income from investment in associates and joint
ventures -439,659.58
Gains from derecognition of financial assets
measured at amortized cost
Income from net exposure hedging ("-" for losses)
Gains from changes in fair value ("-" for losses)
Credit impairment losses ("-" for losses) -11,635,010.35 -1,392,974.69
Asset impairment losses ("-" for losses) -84,458,260.66 -72,880,991.53
Gains on disposal of assets ("-" for losses) 3,669,258.68
II. PROFIT FROM OPERATIONS ("-" For Losses) -1,134,397,179.40 618,439,697.64
Add: Non-operating income 51,556,172.07 24,296,108.68
Less: Non-operating expenses 50,585,327.13 10,736,478.75
III. PROFIT BEFORE TAX ("-" For Total Losses) -1,133,426,334.46 631,999,327.57
Less: Income tax expenses -31,989,066.39 150,685,673.12
IV. NET PROFIT ("-" For Net Loss) -1,101,437,268.07 481,313,654.45
1. Net profit/(loss) from continuing operation -1,101,437,268.07 481,313,654.45
2. Net profit/(loss) from discontinued operation
V. NET AMOUNT OF OTHER COMPREHENSIVE INCOME
AFTER TAX
(i) Other comprehensive incomes that cannot be reclassified into
profit or loss
1. Changes arising from recalculating defined benefit plans
2. Other comprehensive incomes that cannot be reclassified
into profit or loss under equity accounting method
3. Changes in fair value of other equity instrument
investment
4. Changes in fair value of the company’s own credit risks
(ii) Other comprehensive incomes that will be reclassified into profit
or loss
1. Other comprehensive incomes that will be reclassified
into profit or loss under equity accounting method
2. Changes in fair value of other debt instrument investment
3. Other comprehensive income arising from the
reclassification of financial assets
4. Provision for credit impairment in other debt investments
5. Cash flow hedge reserve
6. Foreign currency translation differences in financial
statements
7. Others
VI. TOTAL COMPREHENSIVE INCOME -1,101,437,268.07 481,313,654.45
VII. EARNINGS PER SHARE:
1. Basic earnings per share (yuan/share)
2. Diluted earnings per share (yuan/share)
The following notes are as part of the financial statements.
Legal representative: Chief financial officer: Chief accountant:
Financial Statements Page 6
Bengang Steel Plates Co., Ltd.
Consolidated Statement of Cash Flows
January to June 2023
(Expressed in RMB unless otherwise stated)
Items Note Current period Previous period
I. CASH FLO WS FROM OPERATING ACTIVITIES:
Cash received from sale of goods and rendering of services 28,113,350,099.51 30,399,917,736.81
Net increase in deposits from customers and other banks
Net increase in borrowings from central bank
Net increase in loans from other financial institutions
Cash received from receiving insurance premium of original insurance contracts
Net cash received from reinsurance business
Net increase in deposits and investments from policyholders
Cash received from interest, handling charges and commissions
Net increase in loans from banks and other financial institutions
Net increase in repurchase business funds
Net cash received from securities trading brokerage business
Cash received from tax refund 152,957,619.94 411,362,662.88
Cash received from other operating activities 66,147,192.05 168,719,124.22
SUB-TO TAL O F CASH INFLO WS FRO M OPERATING ACTIVITIES 28,332,454,911.50 30,979,999,523.91
Cash paid for goods purchased and services received 22,042,504,737.63 28,939,015,822.97
Net increase in loans and advances to customers
Net increase in deposits in central bank and other banks
Cash paid for original insurance contract claims
Net increase in loans to banks and other financial institutions
Cash paid for interest, handling charges and commissions
Cash paid for policy dividends
Cash paid to and on behalf of employees 1,233,151,555.08 1,281,589,573.82
Cash paid for taxes and surcharges 216,708,235.51 282,883,307.60
Cash paid for other operating activities 177,453,101.47 249,058,977.31
SUB-TO TAL O F CASH OUTFLO WS FRO M OPERATING ACTIVITIES 23,669,817,629.69 30,752,547,681.70
NET CASH FLO WS FROM O PERATING ACTIVITIES 4,662,637,281.81 227,451,842.21
II. CASH FLO WS FROM INVESTING ACTIVITIES:
Cash received from disposal of investments 1,843,800.00
Cash received from returns on investments 896,200.00
Net cash received from disposal of fixed assets, intangible assets and other
long-term assets 31,053,599.66 60,800.00
Net cash received from disposal of subsidiaries and other business units
Cash received from other investing activities
SUB-TO TAL O F CASH INFLO WS FRO M INVESTING ACTIVITIES 33,793,599.66 60,800.00
Cash paid to acquire and construct fixed assets, intangible assets and other
long-term assets 926,848,281.71 755,407,575.62
Cash paid for investments
Net increase in pledge loans
Net cash paid to acquire subsidiaries and other business units
Cash paid for other investing activities
SUB-TO TAL O F CASH OUTFLO WS FRO M INVESTING ACTIVITIES 926,848,281.71 755,407,575.62
NET CASH FLO WS FROM INVESTING ACTIVITIES -893,054,682.05 -755,346,775.62
III. CASH FLO WS FRO M FINANCING ACTIVITIES:
Cash from absorption of investments
Including: Cash received by subsidiaries from investments by minority
shareholders
Cash received from borrowings 300,000,000.00 602,067,123.44
Cash received from other financing activities 299,914,718.38 2,548,792,921.60
SUB-TO TAL O F CASH INFLO WS FRO M FINANCING ACTIVITIES 599,914,718.38 3,150,860,045.04
Cash paid for debt repayments 1,691,272,090.32 1,393,191,834.05
Cash paid for distribution of dividends and profits or payment of interest 174,775,117.17 2,708,922,405.78
Including: Dividends and profits paid to minority shareholders by subsidiaries
Cash paid for other financing activities 695,121,631.51 71,693,646.43
SUB-TO TAL O F CASH OUTFLO WS FRO M FINANCING ACTIVITIES 2,561,168,839.00 4,173,807,886.26
NET CASH FLO WS FROM FINANCING ACTIVITIES -1,961,254,120.62 -1,022,947,841.22
IV. EFFECT O F FLUCTUATIO N IN EXCHANGE RATE O N CASH AND CASH
30,544,772.80 2,217,009.66
EQ UIVALENTS
V. NET INCREASE IN CASH AND CASH EQ UIVALENTS 1,838,873,251.94 -1,548,625,764.97
Add: Balance of cash and cash equivalents at the beginning of the period 1,296,662,683.20 6,299,099,063.48
VI. BALANCE O F CASH AND CASH EQ UIVALENTS AT THE END O F THE
3,135,535,935.14 4,750,473,298.51
PERIO D
The following notes are as part of the financial statements.
Legal representative: Chief financial officer: Chief accountant:
Financial Statements Page 7
Bengang Steel Plates Co., Ltd.
Parent Company's Statement of Cash Flows
January to June 2023
(Expressed in RMB unless otherwise stated)
Items Note Current period Previous period
I. CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from sale of goods and rendering of services 27,625,067,518.78 30,919,471,674.38
Cash received from tax refund 144,310,086.64 406,487,928.59
Cash received from other operating activities 55,780,538.64 155,803,337.55
SUB-TOTAL OF CASH INFLOWS FROM OPERATING
27,825,158,144.06 31,481,762,940.52
ACTIVITIES
Cash paid for goods purchased and services received 22,087,125,206.72 29,479,472,246.34
Cash paid to and on behalf of employees 1,169,170,038.27 1,197,357,426.66
Cash paid for taxes and surcharges 64,558,833.83 102,560,662.62
Cash paid for other operating activities 159,109,487.43 138,755,917.63
SUB-TOTAL OF CASH OUTFLOWS FROM OPERATING
23,479,963,566.25 30,918,146,253.25
ACTIVITIES
NET CASH FLOWS FROM OPERATING ACTIVITIES 4,345,194,577.81 563,616,687.27
II. CASH FLOWS FROM INVESTING ACTIVITIES:
Cash received from returns on investments
Cash received from returns on investments
53,139,377.16
Net cash received from disposal of fixed assets, intangible assets
and other long-term assets 31,053,599.66 60,800.00
Net cash received from disposal of subsidiaries and other business
units 33,061,417.35
Cash received from other investing activities
17,624,754.20
SUB-TOTAL OF CASH INFLOWS FROM INVESTING
ACTIVITIES 48,678,353.86 86,261,594.51
Cash paid to acquire and construct fixed assets, intangible assets
and other long-term assets 925,373,942.02 749,875,275.53
Cash paid for investments
850,000,000.00
Net cash paid to acquire subsidiaries and other business units
Cash paid for other investing activities
SUB-TOTAL OF CASH OUTFLOWS FROM INVESTING
ACTIVITIES 925,373,942.02 1,599,875,275.53
NET CASH FLOWS FROM INVESTING ACTIVITIES -876,695,588.16 -1,513,613,681.02
III. CASH FLOWS FROM FINANCING ACTIVITIES:
Cash from absorption of investments
Cash received from borrowings 300,000,000.00 602,067,123.44
Cash received from other financing activities 299,914,718.38 2,548,792,921.60
SUB-TOTAL OF CASH INFLOWS FROM FINANCING
ACTIVITIES 599,914,718.38 3,150,860,045.04
Cash paid for debt repayments 1,691,272,090.32 1,293,191,834.05
Cash paid for distribution of dividends and profits or payment of
interest 174,775,117.17 2,695,763,155.78
Cash paid for other financing activities 678,225,192.33 71,693,646.43
SUB-TOTAL OF CASH OUTFLOWS FROM FINANCING
2,544,272,399.82 4,060,648,636.26
ACTIVITIES
NET CASH FLOWS FROM FINANCING ACTIVITIES -1,944,357,681.44 -909,788,591.22
IV. EFFECT OF FLUCTUATION IN EXCHANGE RATE ON
28,934,107.60 1,506,171.92
CASH AND CASH EQUIVALENTS
V. NET INCREASE IN CASH AND CASH EQUIVALENTS 1,553,075,415.81 -1,858,279,413.05
Add: Balance of cash and cash equivalents at the beginning of the
period 420,642,596.45 5,048,875,333.01
VI. BALANCE OF CASH AND CASH EQUIVALENTS AT THE
END OF THE PERIOD 1,973,718,012.26 3,190,595,919.96
The following notes are as part of the financial statements.
Legal representative: Chief financial officer: Chief accountant:
Financial Statements Page 8
Bengang Steel Plates Co., Ltd.
Consolidated Statement of Changes in Equity
January to June 2023
(Expressed in RMB unless otherwise stated)
Current period
Owner's equity attributable to parent company Total of
Items Other equity instruments General Non-controlling
Less: Treasury Other comprehensive Special Undistributed shareholders’
Share capital Preference Perpetual Capital reserves Surplus reserves risk Subtotal interest
shares income reserves profits equity
shares bond Others reserves
I. Ending balance of last y ear 4,108,212,217.00 947,863,834.02 13,272,205,160.21 -15,904,760.02 2,217,913.77 1,195,116,522.37 -720,559,670.73 18,789,151,216.62 584,587,863.76 19,373,739,080.38
Add: Change of accounting policies
Correction of errors for last period
Business consolidation under common control
Others
II. Opening balance of current y ear
4,108,212,217.00 947,863,834.02 13,272,205,160.21 -15,904,760.02 2,217,913.77 1,195,116,522.37 -720,559,670.73 18,789,151,216.62 584,587,863.76 19,373,739,080.38
III. Changes in current y ear (“-” for decreases)
2,530.00 -2,035.66 7,397.04 26,792,439.12 -1,004,945,623.68 -978,145,293.18 23,881,110.18 -954,264,183.00
1. Total comprehensive income
-1,004,945,623.68 -1,004,945,623.68 21,528,899.13 -983,416,724.55
2. Capital increases and decreases by shareholders
2,530.00 -2,035.66 7,397.04 7,891.38 7,891.38
(1) Common share invested by shareholders
(2) Capital input by the holder of other equity
instruments
(3) Share-based pay ment attributable to owners’
equity
(4) Others
2,530.00 -2,035.66 7,397.04 7,891.38 7,891.38
3. Profit distribution
(1) Appropriation to surplus reserves
(2) Appropriation to general risk reserves
(3) Profit distribution to shareholders
(4) Others
4. Transfers within shareholders’ equity
(1) Capital reserves transferred into paid-in capital (or
share capital)
(2) Surplus reserves transferred into paid-in capital (or
share capital)
(3) Surplus reserves to recover losses
(4) Net changes of defined contribution plans
transferred into retained earnings
(5) Other comprehensive income transferred into
retained earnings
Financial Statements Page 9
Current period
Owner's equity attributable to parent company Total of
Items Other equity instruments General Non-controlling
Less: Treasury Other comprehensive Special Undistributed shareholders’
Share capital Preference Perpetual Capital reserves Surplus reserves risk Subtotal interest
shares income reserves profits equity
shares bond Others reserves
(6) Others
5. Special reserves
26,792,439.12 26,792,439.12 2,352,211.05 29,144,650.17
(1) Provision of special reserves
34,099,757.81 34,099,757.81 2,472,551.75 36,572,309.56
(2) Use of special reserves
7,307,318.69 7,307,318.69 120,340.70 7,427,659.39
6. Others
IV. Ending balance of current y ear 4,108,214,747.00 947,861,798.36 13,272,212,557.25 -15,904,760.02 29,010,352.89 1,195,116,522.37 -1,725,505,294.41 17,811,005,923.44 608,468,973.94 18,419,474,897.38
The following notes are as part of the financial statements.
Legal representative: Chief financial officer: Chief accountant:
Financial Statements Page 10
Bengang Steel Plates Co., Ltd.
Consolidated Statement of Changes in Equity(Continued)
January to June 2023
(Expressed in RMB unless otherwise stated)
Previous period
Owner's equity attributable to parent company Total of
Items Other equity instruments Less: Other General Non-controlling
Special Undistributed shareholders’
Share capital Preference Perpetual Capital reserves Treasury comprehensive Surplus reserves risk Subtotal interest
reserves profits equity
shares bond Others shares income reserves
I. Ending balance of last y ear 4,108,191,379.00 947,882,663.63 13,272,134,173.09 337,978.57 1,195,116,522.37 2,977,306,297.64 22,500,969,014.30 565,441,001.73 23,066,410,016.03
Add: Change of accounting policies
Correction of errors for last period
Business consolidation under common control
Others
II. Opening balance of current y ear
4,108,191,379.00 947,882,663.63 13,272,134,173.09 337,978.57 1,195,116,522.37 2,977,306,297.64 22,500,969,014.30 565,441,001.73 23,066,410,016.03
III. Changes in current y ear (“-” for decreases)
17,727.00 -16,325.76 61,887.86 31,151,584.66 -1,903,179,449.99 -1,871,964,576.23 20,714,933.09 -1,851,249,643.14
1. Total comprehensive income
561,735,377.41 561,735,377.41 18,228,498.83 579,963,876.24
2. Capital increases and decreases by shareholders
17,727.00 -16,325.76 61,887.86 63,289.10 63,289.10
(1) Common share invested by shareholders
(2) Capital input by the holder of other equity instruments
(3) Share-based pay ment attributable to owners’ equity
(4) Others
17,727.00 -16,325.76 61,887.86 63,289.10 63,289.10
3. Profit distribution
-2,464,914,827.40 -2,464,914,827.40 -2,464,914,827.40
(1) Appropriation to surplus reserves
(2) Appropriation to general risk reserves
(3) Profit distribution to shareholders
-2,464,914,827.40 -2,464,914,827.40 -2,464,914,827.40
(4) Others
4. Transfers within shareholders’ equity
(1) Capital reserves transferred into paid-in capital (or share capital)
(2) Surplus reserves transferred into paid-in capital (or share capital)
(3) Surplus reserves to recover losses
(4) Net changes of defined contribution plans transferred into retained
earnings
(5) Other comprehensive income transferred into retained earnings
Financial Statements Page 11
Previous period
Owner's equity attributable to parent company Total of
Items Other equity instruments Less: Other General Non-controlling
Special Undistributed shareholders’
Share capital Preference Perpetual Capital reserves Treasury comprehensive Surplus reserves risk Subtotal interest
reserves profits equity
shares bond Others shares income reserves
(6) Others
5. Special reserves
31,151,584.66 31,151,584.66 2,486,434.26 33,638,018.92
(1) Provision of special reserves
38,838,893.44 38,838,893.44 2,489,359.76 41,328,253.20
(2) Use of special reserves
7,687,308.78 7,687,308.78 2,925.50 7,690,234.28
6. Others
IV. Ending balance of current y ear 4,108,209,106.00 947,866,337.87 13,272,196,060.95 31,489,563.23 1,195,116,522.37 1,074,126,847.65 20,629,004,438.07 586,155,934.82 21,215,160,372.89
The following notes are as part of the financial statements.
Legal representative: Chief financial officer: Chief accountant:
Financial Statements Page 12
Bengang Steel Plates Co., Ltd.
Parent Company's Statement of Changes in Equity
January to June 2023
(Expressed in RMB unless otherwise stated)
Current period
Items Other equity instruments Less: Treasury Other comprehensive Total of shareholders’
Share capital Preference Perpetual Capital reserves Special reserves Surplus reserves Undistributed profits
shares income
shares bond Others equity
I. Ending balance of last y ear 4,108,212,217.00 947,863,834.02 12,852,053,478.09 -15,904,760.02 58,212.15 1,195,116,522.37 -1,296,333,684.67 17,791,065,818.94
Add: Change of accounting policies
Correction of errors for last period
Others
II. Opening balance of current y ear
4,108,212,217.00 947,863,834.02 12,852,053,478.09 -15,904,760.02 58,212.15 1,195,116,522.37 -1,296,333,684.67 17,791,065,818.94
III. Changes in current y ear (“-” for decreases)
2,530.00 -2,035.66 7,397.04 19,773,600.54 -1,101,437,268.07 -1,081,655,776.15
1. Total comprehensive income
-1,101,437,268.07 -1,101,437,268.07
2. Capital increases and decreases by shareholders
2,530.00 -2,035.66 7,397.04 7,891.38
(1) Common share invested by shareholders
(2) Capital input by the holder of other equity instruments
(3) Share-based pay ment attributable to owners’ equity
(4) Others
2,530.00 -2,035.66 7,397.04 7,891.38
3. Profit distribution
(1) Appropriation to surplus reserves
(2) Appropriation to general risk reserves
(3) Profit distribution to shareholders
5. Transfers within shareholders’ equity
(1) Capital reserves transferred into paid-in capital (or share capital)
(2) Surplus reserves transferred into paid-in capital (or share capital)
(3) Surplus reserves to recover losses
(4) Net changes of defined contribution plans transferred into
retained earnings
(5) Other comprehensive income transferred into retained earnings
(6) Others
5. Special reserves
19,773,600.54 19,773,600.54
(1) Provision of special reserves
26,797,787.85 26,797,787.85
Financial Statements Page 13
Current period
Items Other equity instruments Less: Treasury Other comprehensive Total of shareholders’
Share capital Preference Perpetual Capital reserves Special reserves Surplus reserves Undistributed profits
shares income
shares bond Others equity
(2) Use of special reserves
7,024,187.31 7,024,187.31
6. Others
IV. Ending balance of current y ear 4,108,214,747.00 947,861,798.36 12,852,060,875.13 -15,904,760.02 19,831,812.69 1,195,116,522.37 -2,397,770,952.74 16,709,410,042.79
The following notes are as part of the financial statements.
Legal representative: Chief financial officer: Chief accountant:
Financial Statements Page 14
Bengang Steel Plates Co., Ltd.
Parent Company’s Statement of Changes in Equity(Continued)
January to June 2023
(Expressed in RMB unless otherwise stated)
Current period
Items Other equity instruments Total of shareholders’
Share capital Capital reserves Less: Treasury shares Other comprehensive income Special reserves Surplus reserves Undistributed profits
Preference shares Perpetual bond Others equity
I. Ending balance of last y ear
4,108,191,379.00 947,882,663.63 12,851,982,490.97 155,469.58 1,195,116,522.37 2,491,021,746.82 21,594,350,272.37
Add: Change of accounting policies
Correction of errors for last period
Others
II. Opening balance of current y ear
4,108,191,379.00 947,882,663.63 12,851,982,490.97 155,469.58 1,195,116,522.37 2,491,021,746.82 21,594,350,272.37
III. Changes in current y ear (“-” for decreases)
17,727.00 -16,325.76 61,887.86 22,374,153.44 -1,983,601,172.95 -1,961,163,730.41
1. Total comprehensive income
481,313,654.45 481,313,654.45
2. Capital increases and decreases by shareholders
17,727.00 -16,325.76 61,887.86 63,289.10
(1) Common share invested by shareholders
(2) Capital input by the holder of other equity instruments
(3) Share-based pay ment attributable to owners’ equity
(4) Others
17,727.00 -16,325.76 61,887.86 63,289.10
3. Profit distribution
-2,464,914,827.40 -2,464,914,827.40
(1) Appropriation to surplus reserves
(2) Appropriation to general risk reserves
-2,464,914,827.40 -2,464,914,827.40
(3) Profit distribution to shareholders
5. Transfers within shareholders’ equity
(1) Capital reserves transferred into paid-in capital (or share capital)
(2) Surplus reserves transferred into paid-in capital (or share capital)
(3) Surplus reserves to recover losses
(4) Net changes of defined contribution plans transferred into retained earnings
(5) Other comprehensive income transferred into retained earnings
(6) Others
5. Special reserves
22,374,153.44 22,374,153.44
(1) Provision of special reserves
30,052,685.76 30,052,685.76
Financial Statements Page 15
Current period
Items Other equity instruments Total of shareholders’
Share capital Capital reserves Less: Treasury shares Other comprehensive income Special reserves Surplus reserves Undistributed profits
Preference shares Perpetual bond Others equity
(2) Use of special reserves
7,678,532.32 7,678,532.32
6. Others
IV. Ending balance of current y ear 4,108,209,106.00 947,866,337.87 12,852,044,378.83 22,529,623.02 1,195,116,522.37 507,420,573.87 19,633,186,541.96
The following notes are as part of the financial statements.
Legal representative: Chief financial officer: Chief accountant:
Financial Statements Page 16
Bengang Steel Plates Co., Ltd.
Notes to 2023 Semi-Annual Financial Report
(All amounts expressed in RMB unless otherwise stated)
I. Company's Basic Information
1. Company Profile
Bengang Steel Plates Co., Ltd. (hereinafter referred to as “Bengang Steel Plates” or
“Company” or “the Company”) was approved by the People's Government of Liaoning
Province on March 27, 1997 in “Liao Zheng [1997] No. 57”. Benxi Steel and Iron (Group)
Co., Ltd. (hereinafter referred to as Benxi Iron and Steel) will be reorganized with the
assets and liabilities of its steelmaking plant, preliminary rolling plant and hot continuous
rolling plant in relation to the steel plate business, it is a joint stock limited company
established on June 27, 1997 by issuing domestically listed foreign shares (B shares) by
way of public offering.
Approved by the China Securities Regulatory Commission, Benxi Iron and Steel Co., Ltd.
publicly issued 400,000,000 B shares on the Shenzhen Stock Exchange on June 10, 1997,
at an issue price of HK$2.38 per share. On November 3, 1997, it successfully issued
120,000,000 RMB ordinary shares (A shares) to the public at an issue price of RMB 5.4
per share. The A shares were listed on the Shenzhen Stock Exchange on January 15, 1998.
The total share capital is 1,136,000,000 shares. According to the resolutions of the
relevant shareholders' meeting of Bengang Steel Plates Co., Ltd. on the shareholding
structure reform, the “Bengang Steel Plates Co., Ltd. shareholding structure reform plan”,
the State-owned Assets Supervision and Administration Commission “Reply on Relevant
Issues Concerning Bengang Steel Plates Co., Ltd.’s Equity Separation Reform”, Benxi
Iron and Steel, the only non-tradable state-owned legal person shareholder of Bengang
Steel Plates Co., Ltd., in order to obtain the circulation right of the shares held, on 14
March 2006, 40,800,000 of the 616,000,000 shares of Bengang Steel Plates were paid to
shareholders of Bengang Steel Plates’ A-share tradable shares. The total share capital of
Bengang Steel Plates has not changed in this shareholding reform.
On July 6, 2006, Benxi Steel Plates obtained the “Zheng Jian Company Zi (2006) No. 126”
document issued by the China Securities Regulatory Commission on June 30, 2006.
The article approved the issuance of 2 billion RMB ordinary shares by Benxi Iron and
Steel to Benxi Iron and Steel for the acquisition of relevant assets of Benxi Iron and Steel.
On the same day, Benxi Iron and Steel obtained the document “Zheng Jian Company Zi
Financial Statements Page 17
(2006) No. 127” issued by the China Securities Regulatory Commission, the article
agreed to exempt Benxi Iron and Steel from the obligation of tender offer due to the
acquisition of 2 billion new shares issued by the Company, resulting in the number of
shares held reaching 2.5752 billion shares (accounting for 82.12% of the Company's total
share capital). On August 28, 2006, with the approval of Shenzhen Branch of China
Securities Depository and Clearing Co., Ltd., Benxi Steel Plates completed the
registration of the newly issued 2 billion shares and restricted sales of shares. On
September 28, 2006, the listing procedures for the non-public issuance of new shares of
Benxi Steel Plates Co., Ltd. were approved by the Shenzhen Stock Exchange. The new
issue price: 4.6733 yuan / share.
Approved by the China Securities Regulatory Commission’s Zhengjian Xuke [2017] No.
1476, Benxi Steel Plate will issue no more than 739,371,534 RMB ordinary shares (A
shares) in a non-public manner to no more than 10 issuers. This non-public offering was
completed on February 9, 2018, and 739,371,532 shares were actually issued. The new
issue price: 5.41 yuan / share. On August 20, 2021, the State-owned Assets Supervision
and Administration Commission of the Liaoning Provincial People's Government
(hereinafter referred to as the Liaoning Provincial SASAC) and Ansteel Group Co., Ltd.
(hereinafter referred to as the Ansteel Group) signed the “National Assets Supervision and
Administration Commission of the People's Government of Liaoning Province and
Ansteel Group Co., Ltd. on the gratuitous transfer of state-owned equity of Bensteel
Group Co., Ltd.”. According to the agreement, the State-owned Assets Supervision and
Administration Commission of Liaoning Province transferred its 51% equity of Bensteel
Group Co., Ltd. (hereinafter referred to as Bensteel Group) to Ansteel Group for free.
After the completion of this gratuitous transfer, Ansteel Group will become the
controlling shareholder of Bensteel Group, and Ansteel Group will indirectly hold 81.07%
of the total share capital of Bengang Iron and Steel Plates.
As of June 30, 2023, the Company has issued a total of 4,108,214,747.00 shares, with a
registered capital of RMB 4,108,214,700.00. The registered place is No. 16, Renmin Road,
Pingshan District, Benxi City, Liaoning Province. The Company's main business activities
are: ferrous metal smelting and rolling processing. The parent company of the Company
is Benxi Steel and Iron (Group) Co., Ltd., and the actual controller of the company is
Ansteel Group Co., Ltd.
Financial Statements Page 18
2. Scope of consolidated financial statements
For details about the relevant information of the Company's subsidiaries, please refer to
“VII. Interests in Other Entities” in this note.
For details of changes in the scope of consolidation during the reporting period, please
refer to “VI. Changes in the Scope of Consolidation” in this note.
II. Basis of Preparation of Financial Statements
1. Basis of Preparation
The financial statements are prepared in accordance with the “Accounting Standards for
Business Enterprises - Basic Standards” and relevant specific accounting standards,
application guidance for Accounting Standards for Business Enterprises, interpretations
for Accounting Standards for Business Enterprises and other related provisions issued by
the Ministry of Finance (hereinafter collectively referred to as “Accounting Standards for
Business Enterprises”), 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
These financial statements are prepared on going concern basis. The Company has
evaluated that it has the ability to continue operating within 12 months from the end of the
reporting period, and there are no matters that cause serious doubts about the ability to
continue as going concern.
III. Significant Accounting Policies and Accounting Estimates
Notes for specific accounting policies and accounting estimates:
The following disclosures have covered the specific accounting policies and accounting
estimates that are adopted by the Company based on the actual production and operation
characteristics. For details, please refer to Note III.10 Financial instruments, III.11
Inventories, III.15 Fixed assets, III.24 Revenue in this notes.
1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements have been prepared in compliance with the requirements of the
Accounting Standards for Business Enterprises by the Ministry of Finance to truly and
completely present the consolidated and the parent company’s financial position of the
Financial Statements Page 19
Company as at 30 June 2023 and of the consolidated and the parent company’s financial
performance and cash flows from January to June 2023.
2. Accounting Period
The Company's accounting year is from 1 January to 31 December.
3. Operating Cycle
The Company's operating cycle is 12 months.
4. Functional Currency
The Company adopts RMB as the functional currency.
5. Accounting Treatment of Business Combinations under Common Control and not
under Common Control
Business combination under common control: The assets and liabilities acquired by the
merging party in the business combination (including the goodwill formed by the
acquisition of the merged party by the ultimate controlling party) shall be measured on the
basis of the book value of the assets and liabilities of the merged party on the merger date
in the consolidated financial statements of the ultimate controlling party. The difference
between the book value of the net assets obtained in the merger and the book value of the
merger consideration paid (or the total par value of the issued shares) is adjusted to the
share premium in the capital reserve, and if the share premium in the capital reserve is not
enough to offset, the retained earnings are adjusted.
Business combination not under common control: The combination cost is the fair value
of the assets paid, liabilities incurred or assumed, and equity securities issued by the
purchaser in order to obtain the control of the purchased party on the date of purchase.
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 identifiable assets, liabilities and contingent liabilities of the
acquiree acquired in the merger that meet the recognition conditions are measured at fair
value on the date of purchase.
The direct related expenses incurred for the business combination shall be included in the
Financial Statements Page 20
current profit and loss when incurred. The transaction costs of issuing equity securities or
debt securities for business combination shall be included in the initial recognition
amount of equity securities or debt securities.
6. Preparation Method of Consolidated Financial Statements
(1) Scope of consolidation
The scope of consolidation of consolidated financial statements is determined on
the basis of control, and the scope of consolidation includes the Company and all
subsidiaries. Control means that the company has power over the investee, enjoys
variable returns by participating in the relevant activities of the investee, and has
the ability to use its power over the investee to affect its return.
(2) Consolidation procedure
The Company regards the entire enterprise group as an accounting entity, and
prepares consolidated financial statements in accordance with unified accounting
policies to reflect the overall financial status, operating results and cash flow of the
enterprise group. The impact of internal transactions between the Company and its
subsidiaries and between subsidiaries shall be offset. If the internal transaction
shows that the relevant asset has an impairment loss, the full amount of the loss
shall be recognized.
If the accounting policy and accounting period adopted by the subsidiary are
inconsistent with the Company, necessary adjustments shall be made in accordance
with the Company's accounting policy and accounting period when preparing the
consolidated financial statements.
Subsidiary owners' equity, net profit and loss for the current period and the share of
minority shareholders in the current comprehensive income are listed separately
under the owner's equity item in the consolidated balance sheet, the net profit item
in the consolidated income statement, and the total comprehensive income item.
The current loss shared by the minority shareholders of the subsidiary exceeds the
balance formed by the minority shareholders in the initial owner's equity of the
subsidiary, offsetting the minority shareholders' equity.
1) Add a subsidiary or business
During the reporting period, if a subsidiary or business is added due to a business
Financial Statements Page 21
combination under the same control, the operating results and cash flows of the
subsidiary or business combination from the beginning of the current period to the
end of the reporting period shall be included in the consolidated financial
statements. At the same time, the opening balance of the consolidated financial
statements and the relevant items in the comparative statements shall be adjusted,
as if the consolidated reporting entity has always existed since the time when the
ultimate controlling party began to control it.
During the reporting period, if a subsidiary or business is added due to a business
combination not under the same control, it shall be included in the consolidated
financial statements from the purchase date on the basis of the fair value of each
identifiable asset, liability and contingent liability determined on the purchase date.
2) Disposal of subsidiaries
①General treatment
When the control of the investee is lost due to the disposal of part of the equity
investment or other reasons, the remaining equity investment after disposal shall be
remeasured according to its fair value on the date of loss of control.
The difference between the sum of the consideration obtained from the disposal of
equity and the fair value of the remaining equity, minus the share of the original
subsidiary’s net assets calculated continuously from the purchase date or the
merger date and the sum of goodwill calculated according to the original
shareholding ratio, the difference will be included in the investment income of the
period when the control right is lost. Other comprehensive income related to the
equity investment of the original subsidiary that can be reclassified into profit or
loss, and other changes in owner's equity accounted for under the equity method
are converted into current investment income when control is lost.
②Step-by-step disposal of subsidiaries
Where the equity investment in a subsidiary is disposed of step by step through
multiple transactions until it loses control, the terms, conditions and economic
impact of each transaction for disposing of the equity investment in a subsidiary
meet one or more of the following conditions, it usually indicates that the multiple
transactions are a package deal:
ⅰ．These transactions were entered into simultaneously or taking into account the
Financial Statements Page 22
mutual influence;
ⅱ．These transactions were entered into simultaneously or taking into account the
mutual influence;
ⅲ．The occurrence of one transaction depends on the occurrence of at least one
other transaction;
ⅳ．A transaction is not economical alone, but it is economical when considered
together with other transactions.
If each transaction belongs to a package deal, each transaction shall be accounted
for as a transaction for disposing of a subsidiary and losing control; The difference
between each disposal price before the loss of control and the share of the
subsidiary's net assets corresponding to the disposal investment is recognized as
other comprehensive income in the consolidated financial statements, and is
transferred to the current profit and loss of the loss of control when the control is
lost.
If each transaction does not belong to a package deal, before the loss of control, the
equity investment of the subsidiary is partially disposed without losing control;
when the control is lost, the accounting treatment is carried out according to the
general treatment method for disposing of subsidiaries.
3) Purchase a minority stake in a subsidiary
The difference between the newly acquired long-term equity investment due to the
purchase of minority shares and the share of net assets that should be enjoyed by
the subsidiary continuously calculated from the purchase date or the merger date
based on the newly increased shareholding ratio will adjust the share premium in
the capital reserve in the consolidated balance sheet, and if the share premium in
the capital reserve is insufficient to offset, the retained earnings will be adjusted.
4) Partial disposal of an equity investment in a subsidiary without loss of control
The difference between the disposal price and the share of the subsidiary’s net
assets that has been continuously calculated since the purchase date or the merger
date corresponding to the disposal of the long-term equity investment will adjust
the share premium in the capital reserve in the consolidated balance sheet, and if
the share premium in the capital reserve is insufficient to offset, the retained
earnings will be adjusted.
Financial Statements Page 23
7. Classification of Joint Arrangements and Accounting Treatment of Joint Operations
Joint arrangements are divided into joint operations and joint ventures.
Joint operation refers to a joint venture arrangement in which the joint venture party
enjoys the assets related to the arrangement and assumes the liabilities related to the
arrangement.
The Company confirms the following items related to the interest share in the joint
operation:
(1) Confirm the assets held individually by the Company and the assets jointly held by the
Company;
(2) Confirm the liabilities borne by the Company alone and the liabilities jointly borne by
the Company;
(3) Recognition of income from the sale of the Company's share of the output of joint
operations;
(4) Recognize the income generated by the joint operation from the sale of output
according to the share of the Company;
(5) Confirm the expenses incurred independently, and confirm the expenses incurred in
joint operation according to the share of the Company.
The Company's investment in joint ventures is accounted for using the equity method. For
details, please refer to “III.13 Long-term equity investments” in this note.
8. Determination Criteria for Cash and Cash Equivalents
Cash refers to the Company's cash on hand and deposits that can be used for payment at
any time. Cash equivalents refer to short-term, highly liquid investments held by the
Company that are easily convertible into known amounts of cash and have little risk of
value change.
9. Foreign Currency Transactions and Translation of Foreign Currency Financial
Statements
(1) Foreign currency business
For foreign currency business, the spot exchange rate on the transaction date is
used as the conversion rate to convert the foreign currency amount into RMB for
bookkeeping.
The balance of foreign currency monetary items on the balance sheet date is
translated at the spot exchange rate on the balance sheet date. The resulting
Financial Statements Page 24
exchange differences, except for the exchange differences arising from foreign
currency special loans related to the acquisition and construction of assets eligible
for capitalization are treated in accordance with the principle of capitalization of
borrowing costs, are included in the current profit and loss.
(2) Translation of foreign currency financial statements
The asset and liability items in the statement of financial position are converted at
the spot exchange rate on the balance sheet date; the owner's equity items are
converted at the spot exchange rate at the time of occurrence except for
“Undistributed profit”. The income and expense items in the statement of profit or
loss and other comprehensive income shall be converted at the spot exchange rate
on the transaction date.
When disposing of an overseas operation, the translation difference of the foreign
currency financial statements related to the overseas operation shall be transferred
from the owner's equity item to the current profit and loss of the disposal.
10. Financial Instruments
When the Company becomes a party to a financial instrument contract, it recognizes a
financial asset, financial liability or equity instrument.
(1) Classification of financial instruments
According to the Company's business model for managing financial assets and the
contractual cash flow characteristics of financial assets, financial assets are
classified into: financial assets measured at amortized cost, financial assets
measured at fair value through other comprehensive income and financial assets at
fair value through profit or loss.
The Company classifies financial assets that meet the following conditions and are
not designated as financial assets at fair value through profit or loss as financial
assets at amortized cost:
－ The business model is to collect contractual cash flows;
－ Contractual cash flows are only payments of principal and interest on the
principal amount outstanding.
The Company classifies financial assets that meet the following conditions and are
not designated as financial assets at fair value through profit or loss as financial
Financial Statements Page 25
assets at fair value through other comprehensive income (debt instruments):
－ The business model aims at both collecting contractual cash flows and selling
the financial asset;
－ Contractual cash flows are only payments of principal and interest on the
principal amount outstanding.
For non-trading equity instrument investments, the Company can irrevocably
designate them as financial assets (equity instruments) measured at fair value and
whose changes are included in other comprehensive income at the time of initial
recognition. The designation is made on an individual investment basis, and the
underlying investment meets the definition of an equity instrument from the
perspective of the issuer.
Except for the above financial assets measured at amortized cost and at fair value
through other comprehensive income, the Company classifies all other financial
assets as financial assets at fair value through profit or loss.
Financial liabilities are classified at initial recognition into: financial liabilities at
fair value through profit or loss and financial liabilities at amortized cost.
Financial liabilities that meet one of the following conditions can be designated as
financial liabilities at fair value through profit or loss at the time of initial
measurement:
1) Financial liabilities that meet one of the following conditions can be designated
as financial liabilities at fair value through profit or loss at the time of initial
measurement:
2) According to the corporate risk management or investment strategy stated in
formal written documents, manage and evaluate the performance of financial
liability portfolios or financial assets and financial liability portfolios based on fair
value, and report to key management personal within the Company on this basis.
3) This financial liability contains embedded derivatives that need to be separated
separately.
(2) Recognition basis and measurement method of financial instruments
1) Financial assets measured at amortized cost
Financial Statements Page 26
Financial assets measured at amortized cost include notes receivable, accounts
receivable, other receivables, long-term receivables, debt investments, etc., and are
initially measured at fair value, and relevant transaction costs are included in the
initially recognized amount; excluding that the accounts receivable of the major
financing component and the accounts receivable of the financing component that
the Company decides not to consider for no more than one year shall be initially
measured at the contract transaction price.
The interest calculated using the effective interest rate method during the holding
period is included in the current profit and loss.
When recovering or disposing, the difference between the price obtained and the
book value of the financial asset is included in the current profit and loss.
2) Financial assets at fair value through other comprehensive income (debt
instruments)
Financial assets (debt instruments) measured at fair value and whose changes are
included in other comprehensive income include receivables financing, other debt
investments, etc., and are initially measured at fair value, and relevant transaction
costs are included in the initial recognition amount. The financial assets are
subsequently measured at fair value, and changes in fair value are included in other
comprehensive income, except for interest calculated using the effective interest
rate method, impairment losses or gains, and exchange gains and losses.
When derecognition is terminated, the accumulated gains or losses previously
included in other comprehensive income are transferred out of other
comprehensive income and included in current profit and loss.
3) Financial assets (equity instruments) measured at fair value through other
comprehensive income
Financial assets (equity instruments) measured at fair value through other
comprehensive income, including other equity instrument investments, are initially
measured at fair value, and relevant transaction costs are included in the initially
recognized amount. The financial assets are subsequently measured at fair value,
and changes in fair value are included in other comprehensive income. Dividends
obtained are included in current profit and loss.
When derecognition is terminated, the accumulated gains or losses previously
Financial Statements Page 27
included in other comprehensive income are transferred out of other
comprehensive income and included in retained earnings.
4) Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through profit or loss include transactional
financial assets, derivative financial assets, and other non-current financial assets,
etc., and are initially measured at fair value, and relevant transaction costs are
included in current profit or loss. The financial assets are subsequently measured at
fair value, and changes in fair value are included in current profit and loss.
5) Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at fair value and whose changes are included in
current profit and loss include trading financial liabilities and derivative financial
liabilities, etc., and are initially measured at fair value, and relevant transaction
costs are included in current profit and loss. The financial liabilities are
subsequently measured at fair value, and changes in fair value are included in
current profit and loss.
When derecognition is terminated, the difference between its book value and the
consideration paid is included in the current profit and loss.
6) Financial liabilities measured at amortized cost
Financial liabilities measured at amortized cost include short-term loans, notes
payable, accounts payable, other payables, long-term loans, bonds payable, and
long-term payables, and are initially measured at fair value, and relevant
transaction costs are included in the initial recognition amount.
The interest calculated using the effective interest rate method during the holding
period is included in the current profit and loss.
When derecognition is terminated, the difference between the consideration paid
and the book value of the financial liability is included in the current profit and
loss.
(3) Derecognition of financial assets and transfer of financial assets
When one of the following conditions is met, the Company derecognizes financial
assets:
Financial Statements Page 28
－ Termination of contractual rights to receive cash flows from financial assets;
－ The financial asset has been transferred, and almost all the risks and rewards of
ownership of the financial asset have been transferred to the transferee;
－ The financial assets have been transferred. Although the Company neither
transfers nor retains almost all the risks and rewards of ownership of the financial
assets, it does not retain control over the financial assets.
When a financial asset is transferred, if almost all the risks and rewards of
ownership of the financial asset are retained, the financial asset will not be
derecognized.
When judging whether the transfer of financial assets meets the above conditions
for derecognition of financial assets, the principle of substance over form is
adopted. The Company distinguishes the transfer of financial assets into the
transfer of financial assets as a whole and the transfer of parts. If the overall
transfer of financial assets meets the conditions for derecognition, the difference
between the following two amounts shall be included in the current profit and loss:
1) The book value of the financial asset transferred;
2) The consideration received due to the transfer, and the cumulative amount of
changes in fair value that were originally included in the owner’s equity (if the
financial asset involved in the transfer is a financial asset (debt instrument) that is
measured at fair value and whose changes are included in other comprehensive
income).
If the partial transfer of financial assets meets the conditions for derecognition, the
overall book value of the transferred financial assets shall be apportioned between
the derecognized part and the unterminated part according to their respective
relative fair values, and the difference between the following two amounts shall be
included in current profit and loss:
1) The book value of the derecognized portion;
2) The consideration for the derecognition part, and the amount corresponding to
the derecognition part of the accumulative amount of fair value changes that were
originally included in the owner’s equity (the financial assets involved in the
transfer are financial assets that are measured at fair value and whose changes are
Financial Statements Page 29
included in other comprehensive income ( in the case of debt instruments)).
If the transfer of financial assets does not meet the conditions for derecognition, the
financial assets shall continue to be recognized, and the consideration received
shall be recognized as a financial liability.
(4) Derecognition of financial liabilities
If all or part of the current obligation of a financial liability has been discharged,
the financial liability or a part thereof shall be derecognized; if the Company signs
an agreement with the creditor to replace the existing financial liability by
assuming a new financial liability, and if the contract terms of the new financial
liability and the existing financial liability are substantially different, the existing
financial liability shall be derecognized and the new financial liability shall be
recognized at the same time.
If a substantive modification is made to all or part of the contract terms of an
existing financial liability, the existing financial liability or a part thereof shall be
derecognized, and the financial liability after the modified terms shall be
recognized as a new financial liability.
When all or part of a financial liability is derecognized, the difference between the
book value of the derecognized financial liability and the consideration paid
(including non-cash assets transferred out or new financial liabilities assumed) is
included in the current profit and loss.
If the Company repurchases part of the financial liabilities, the book value of the
financial liabilities as a whole shall be allocated on the date of repurchase
according to the relative fair value of the part that continues to be recognized and
the part that is derecognized. The difference between the book value allocated to
the derecognized part and the consideration paid (including non-cash assets
transferred out or new financial liabilities assumed) is included in the current profit
and loss.
(5) Determination of fair value of financial assets and financial liabilities
For financial instruments with an active market, their fair value is determined by
the quoted price in the active market. For financial instruments that do not have an
active market, valuation techniques are used to determine their fair value. When
Financial Statements Page 30
valuing, the Company adopts valuation techniques that are applicable in the current
situation and supported by sufficient available data and other information, and
select inputs consistent with the characteristics of assets or liabilities considered by
market participants in transactions of related assets or liabilities, and give
preference to relevant observable inputs. Use unobservable input values only when
the relevant observable input values are not available or practicable to obtain.
(6) Test method and accounting treatment method for impairment of financial
assets
The Company estimates the expected credit losses of financial assets measured at
amortized cost, financial assets at fair value through other comprehensive income
(debt instruments) and financial guarantee contracts, either individually or in
combination.
The Company considers reasonable and well-founded information about past
events, current conditions, and forecasts of future economic conditions, and uses
the risk of default as the weight to calculate the difference between the cash flow
receivable by the contract and the cash flow expected to be received. The
probability-weighted amount of the present value of the recognized expected credit
loss. If the credit risk of the financial instrument has increased significantly since
the initial recognition, the Company shall measure its loss provision at an amount
equivalent to the expected credit loss of the financial instrument throughout its
duration. If the credit risk of the financial instrument has not increased significantly
since the initial recognition, the Company shall measure its loss provision at an
amount equivalent to the expected credit loss of the financial instrument within the
next 12 months. The resulting increase or reversal of the loss provision is included
in the current profit and loss as an impairment loss or gain.
The Company compares the default risk of financial instruments on the balance
sheet date with the risk of default on the initial recognition date to determine the
relative change in the default risk of financial instruments during the expected
duration, and to assess the credit risk of financial instruments has increased
significantly since initial recognition. Usually overdue for more than 30 days, the
Company considers that the credit risk of the financial instrument has increased
significantly, unless there is conclusive evidence to prove that the credit risk of the
financial instrument has not increased significantly since the initial recognition.
Financial Statements Page 31
If the credit risk of a financial instrument is relatively low on the balance sheet date,
the Company considers that the credit risk of the financial instrument has not
increased significantly since initial recognition.
If there is objective evidence that a certain financial asset has been credit-impaired,
the Company shall make provision for impairment of the financial asset on an
individual basis. For the accounts receivables and contract assets formed by the
transactions regulated by “Accounting Standards for Business Enterprises No. 14 –
Revenue” (2017), regardless of whether they contain significant financing
components, the Company calculates them according to the expected credit loss
equivalent to the entire duration to measure its loss allowance.
For lease receivables, the Company chooses to measure its loss provision at an
amount equivalent to the expected credit loss during its full lifetime.
If the Company no longer reasonably expects that the cash flow of the financial
asset contract can be recovered in whole or in part, it will directly write down the
book balance of the financial assets.
11. Inventories
(1) Classification and costs of inventories
Inventory is classified into: materials in transit, raw materials, turnover materials,
stock goods, work in progress, goods delivered, and materials for commissioned
processing, etc.
Inventories are initially measured at cost, and inventory costs include purchase
costs, processing costs and other expenses incurred to bring the inventories to their
current location and state.
(2) Valuation method for dispatched inventory
Inventories are priced using the weighted average method when they are
dispatched.
(3) Basis for determining the net realizable value of different categories of
inventories
On the balance sheet date, inventories shall be measured at the lower of cost and
net realizable value. When the cost of inventory is higher than its net realizable
Financial Statements Page 32
value, a provision for price of inventory decline shall be made. The net realizable
value of inventories refers to the estimated selling price of inventories in ordinary
activities minus the estimated costs to be incurred until completion, estimated sales
expenses and related taxes.
Inventories of finished goods, goods in stock and materials for sale, etc., which are
directly used for sale, are determined by the estimated selling price of the inventory
minus the estimated sales expenses and relevant taxes and fees during the normal
production and operation process to determine the net realizable value. Inventory
of materials that need to be processed, in the normal production and operation
process, is determined by the estimated selling price of the finished product minus
the estimated cost to be incurred until completion, estimated sales expenses and
related taxes and fees to determine the net realizable value. For inventories held for
the execution of sales contracts or service contracts, the net realizable value is
calculated based on the contract price. If the quantity of inventories held exceeds
the quantity ordered in the sales contract, the net realizable value of the excess
inventory is calculated based on the general sales price.
After provision for inventory decline, if the factors affecting the reduction of
inventory value before have disappeared, resulting in the net realizable value of the
inventory being higher than its book value, it shall be reversed within the amount
of the original provision for inventory decline and the reversed amount is included
in the current profit and loss.
(4) Inventory system
The Company adopts the perpetual inventory system.
(5) Amortization of low-valued consumables and packing materials
1) Low-valued consumables shall be amortized in full amount on issuance.
2) Packing materials shall be amortized in full amount on issuance.
12. Contract Assets
(1) Recognition method and standard of contract assets
The Company presents contract assets or contract liabilities in the balance sheet
according to the relationship between performance obligations and customer
Financial Statements Page 33
payments. The Company's right to receive consideration for transferring goods or
providing services to customers (and this right depends on factors other than the
passage of time) is listed as contract assets. Contract assets and contract liabilities
under the same contract are presented on a net basis. The Company's unconditional
(depending only on the passage of time) right to collect consideration from the
customer is shown separately as receivables.
(2) Determination method and accounting treatment method of expected credit
loss of contract assets
For details, please refer to “III.10 (6) Financial Instruments - Test Method and
Accounting Treatment Method for Impairment of Financial Assets" in this note.
13. Long-term Equity Investments
(1) Judgment criteria for joint control and significant influence
Joint control refers to the shared control of an arrangement in accordance with the
relevant agreement, and the relevant activities of the arrangement must be
unanimously agreed by the parties sharing the control right before decisions can be
made. If the Company and other joint venture parties exercise joint control over the
invested unit and have rights to the net assets of the invested unit, the invested unit
is a joint venture of the Company.
Significant influence refers to the right to participate in the decision-making of the
investee's financial and operating decisions, but cannot control or jointly control
the formulation of these policies with other parties. If the Company is able to exert
significant influence on the invested unit, the invested unit is an associate of the
Company.
(2) Determination of initial investment cost
1) Long-term equity investment formed by business combination
For a long-term equity investment in a subsidiary formed by a business
combination under the same control, the initial investment cost of the long-term
equity investment shall be the share of the book value of the owner's equity of the
merged party in the consolidated financial statements of the ultimate controlling
party on the date of combination. For the difference between the initial investment
cost of long-term equity investment and the book value of the consideration paid,
Financial Statements Page 34
the equity premium in the capital reserve shall be adjusted; if the equity premium
in the capital reserve is insufficient to offset, the retained earnings shall be
adjusted.
For a long-term equity investment in a subsidiary formed by a business
combination not under the same control, the initial investment cost of the long-term
equity investment shall be the combination cost determined on the purchase date.
2) Long-term equity investment obtained through other means than business
combination
For long-term equity investment acquired by cash payment, the actual purchase
price paid shall be regarded as the initial investment cost.
For long-term equity investment obtained by issuing equity securities, the initial
investment cost shall be the fair value of the issued equity securities.
(3) Subsequent measurement and profit or loss recognition method
1) Long-term equity investment accounted for by cost method
The Company's long-term equity investment in subsidiaries is accounted for using
the cost method, unless the investment meets the conditions of being held for sale.
Except for the price actually paid when acquiring the investment or the cash
dividends or profits that have been declared but not yet distributed included in the
consideration, the Company recognizes the current investment income according to
the cash dividends or profits declared by the invested unit.
2) Long-term equity investment accounted for by equity method
Long-term equity investments in associates and joint ventures are accounted for
using the equity method. If the initial investment cost is greater than the difference
between the share of the fair value of the identifiable net assets of the investee that
should be enjoyed at the time of investment, the initial investment cost of the
long-term equity investment will not be adjusted; The difference between the initial
investment cost and the share of the fair value of the identifiable net assets of the
investee that should be enjoyed at the time of investment shall be included in the
current profit and loss, and the cost of long-term equity investment shall be
adjusted at the same time.
The Company recognizes the investment income and other comprehensive income
Financial Statements Page 35
respectively according to the share of the net profit or loss and other
comprehensive income realized by the invested unit that it should enjoy or share,
and adjust the book value of the long-term equity investment at the same time; The
book value of the long-term equity investment shall be correspondingly reduced
according to the portion of the profits or cash dividends declared by the investee to
be distributed; For other changes in the owner's equity of the investee other than
net profit and loss, other comprehensive income and profit distribution (referred to
as “other changes in owner’s equity”), the book value of the long-term equity
investment is adjusted and included in the owner's equity.
When confirming the share of the investee's net profit or loss, other comprehensive
income and other changes in owner's equity, it is based on the fair value of the
investee's identifiable net assets when the investment is obtained, and in
accordance with the Company's accounting policies and accounting periods. It is
confirmed after adjusting the net profit and other comprehensive income of the
invested unit.
The unrealized profit and loss of internal transactions between the Company and its
associates and joint ventures shall be calculated according to the share attributable
to the Company and offset, investment income is recognized on this basis, except
that the assets invested or sold constitute a business. If the unrealized internal
transaction loss with the invested unit is an asset impairment loss, it shall be
recognized in full.
The Company’s net losses to joint ventures or joint ventures, in addition to the
obligation to bear additional losses, are limited to zero when the book value of
long-term equity investments and other long-term interests that substantially
constitute net investments in joint ventures or joint ventures are reduced to zero. If
the joint venture or associated enterprise realizes net profit in the future, the
Company shall restore the recognition of the profit share after the share of the
profit makes up for the share of the unrecognized loss.
3) Disposal of long-term equity investment
For the disposal of long-term equity investment, the difference between its book
value and the actual acquisition price shall be included in the current profit and
loss.
If part of the long-term equity investment accounted for by the equity method is
Financial Statements Page 36
disposed of, and the remaining equity is still accounted for by the equity method,
the other comprehensive income recognized by the original equity method shall be
carried forward on the same basis as the invested entity’s direct disposal of related
assets or liabilities and shall be carried forward in corresponding proportions,
changes in other owners' equity are transferred to the current profit and loss in
proportion.
If the joint control or significant influence on the invested unit is lost due to the
disposal of equity investment and other reasons, other comprehensive income
recognized by the original equity investment due to the adoption of equity method
accounting, when the equity method of accounting is terminated, the accounting
treatment is carried out on the same basis as the investee directly disposing of
related assets or liabilities, and other changes in owner's equity are all transferred to
the current profit and loss when the equity method of accounting is terminated.
If the control over the invested unit is lost due to the disposal of part of the equity
investment, etc., when preparing individual financial statements, if the remaining
equity can exercise joint control or significant influence on the invested unit, it
shall be accounted for using the equity method. And the remaining equity is
deemed to be adjusted using the equity method since it is acquired, and other
comprehensive income recognized before obtaining the control of the invested
company is carried forward on the same basis as the invested company's direct
disposal of related assets or liabilities. Changes in other owners' equity due to the
adoption of equity method accounting and confirmation are carried forward to the
current profit and loss in proportion; If the remaining equity cannot exercise joint
control or exert significant influence on the invested unit, it is recognized as a
financial asset. The difference between the fair value and the book value on the
date when the control is lost is included in the current profit and loss, and all other
comprehensive income and other changes in owner's equity recognized before
obtaining the control of the invested entity are all carried forward.
If the equity investment in a subsidiary is disposed of step by step through multiple
transactions until the control is lost, if it belongs to a package deal, each transaction
shall be accounted for as a transaction for disposing of the equity investment in the
subsidiary and losing control; The difference between each disposal price before
the loss of control and the book value of the long-term equity investment
corresponding to the disposed equity is first recognized as other comprehensive
Financial Statements Page 37
income in the individual financial statements. When the control right is lost, it will
be transferred to the current profit and loss of the loss of control right. If it does not
belong to a package deal, each transaction shall be accounted for separately.
14. Investment properties
Investment properties refers to properties held for the purpose of earning rent or capital
appreciation, or both, including leased land use rights, land use rights held and prepared to
be transferred after appreciation, leased buildings (Including buildings that are built for
rent after self-construction or development activities are completed, and buildings that are
in the process of being built or developed for future rent).
Subsequent expenditures related to investment properties are included in the cost of
investment properties when the relevant economic benefits are likely to flow in and the
cost can be measured reliably; otherwise, they are included in the current profit and loss
when incurred.
The Company adopts the cost model to measure the existing investment properties. The
same depreciation policy as the Company's fixed assets is adopted for the investment
properties measured according to the cost model - buildings for lease, and the same
amortization policy as for intangible assets is adopted for the land use right for lease.
15. Fixed Assets
(1) Recognition and initial measurement of fixed assets
Fixed assets refer to tangible assets that are held for the production of goods,
provision of labor services, lease or operation and management, and have a useful
life of more than one accounting year.
Fixed assets are recognized when the following conditions are met at the same time:
1) The economic benefits related to the fixed assets are probable to flow into the
Company;
2) The cost of the fixed asset can be measured reliably.
Fixed assets are initially measured at cost (and taking into account the impact of
estimated disposal costs).
Subsequent expenditures related to fixed assets are included in the cost of fixed
assets when the related economic benefits are likely to flow in and the cost can be
reliably measured; for the replaced part, its book value is derecognized;
All other subsequent expenses are included in the current profit and loss when
Financial Statements Page 38
incurred.
(2) Depreciation method
The depreciation of fixed assets is classified and accrued using the average-year
method, and the depreciation rate is determined according to the category of fixed
assets, estimated service life and estimated net residual value rate. For fixed assets
with provision for depreciation, the depreciation amount will be determined
according to the book value after deduction of provision for depreciation and the
remaining useful life in the future period. If the service life of each component of
the fixed asset is different or it provides economic benefits to the Company in
different ways, different depreciation rates or depreciation methods should be
selected to accrue depreciation separately.
The depreciation methods, depreciation period, scrap value rate and annual
depreciation rate of various fixed assets are as follows:
Scrap value Annual
Depreciation Depreciation
Category rate depreciation rate
method period (years)
(%) (%)
Average Years
Property and plant
5 2.38 40
Method
Average Years
Mechanical equipment
5 3.96-5.59 17-24
Method
Transport and other Average Years
equipment 5 7.92-19.00 5-12
Method
(3) Disposal of fixed assets
When a fixed asset is disposed of, or it is not expected to generate economic
benefits through use or disposal, the fixed asset is derecognized. The income from
the sale, transfer, retirement or damage of fixed assets after deducting their book
value and related taxes and fees is included in the current profit and loss.
16. Construction in Progress
The cost of construction in progress is measured by the actual cost incurred. Actual costs
include construction costs, installation costs, borrowing costs eligible for capitalization
and other necessary expenditures incurred before the construction in progress reaches the
intended usable state. When the construction in progress reaches the intended usable state,
Financial Statements Page 39
it will be transferred to fixed assets and depreciation will be accrued from the next month.
17. Borrowing Costs
(1) Recognition principles for capitalization of borrowing costs
The borrowing expenses incurred by the Company, which can be directly
attributable to the purchase, construction or production of assets eligible for
capitalization, shall be capitalized and included in the cost of relevant assets; other
borrowing expenses shall be recognized as expenses based on the amount incurred
when they occur, and shall be calculated and included in current profit and loss.
Assets eligible for capitalization refer to assets such as fixed assets, investment real
estate, and inventories that require a long period of purchase, construction or
production activities to reach the intended usable or salable state.
(2) Period of capitalization of borrowing costs
The capitalization period refers to the period from the start of capitalization of
borrowing costs to the cessation of capitalization, excluding the period of
suspension of capitalization of borrowing costs.
Borrowing costs start to be capitalized when the following conditions are met at the
same time:
1) Asset expenditures have occurred, and asset expenditures include expenditures
incurred in the form of cash payments, transfer of non-cash assets, or assumption
of interest-bearing debts for the purchase, construction or production of assets
eligible for capitalization;
2) Borrowing costs have been incurred;
3) The acquisition, construction or production activities necessary to make the asset
ready for use or sale have started.
Capitalization of borrowing costs stops when the purchased, constructed or
produced assets eligible for capitalization have reached the intended usable or
salable state.
(3) Suspension of capitalization period
Capitalization of borrowing costs shall be suspended if the acquisition,
construction or production process of an asset eligible for capitalization is
interrupted abnormally and the interruption lasts for more than 3 months; If the
Financial Statements Page 40
interruption is a necessary procedure for the purchased, constructed or produced
assets eligible for capitalization to reach the intended usable state or salable state,
the borrowing costs will continue to be capitalized. Borrowing costs incurred
during the interruption period are recognized as current profit and loss, and the
borrowing costs continue to be capitalized after the acquisition and construction of
assets or production activities resume.
(4) Calculation method of borrowing cost capitalization rate and capitalized
amount
For special loans borrowed for the purchase, construction or production of assets
eligible for capitalization, the capitalized amount of borrowing costs is determined
by the amount of the borrowing costs actually incurred in the current period of the
special borrowing minus the interest income obtained by depositing the unused
borrowing funds in the bank or the investment income obtained from the temporary
investment.
For general borrowings used for the acquisition, construction or production of
assets eligible for capitalization, calculate and determine the amount of borrowing
costs that should be capitalized for general borrowings by multiplying the weighted
average of asset expenditures that exceed the portion of special borrowings
multiplied by the capitalization rate of general borrowings. The capitalization rate
is determined based on the weighted average actual interest rate of general
borrowings.
During the capitalization period, the exchange difference between the principal and
interest of foreign currency special loans shall be capitalized and included in the
cost of assets eligible for capitalization. The exchange difference arising from the
principal and interest of other foreign currency loans other than foreign currency
special loans is included in the current profit and loss.
18. Intangible Assets
(1) Valuation method of intangible assets
1) Initially measured at cost when the Company acquires intangible assets
The cost of purchased intangible assets includes the purchase price, relevant taxes
and other expenditures that are directly attributable to making the asset reach its
intended use.
Financial Statements Page 41
2) Subsequent measurement
When acquiring intangible assets, analyze and judge their service life.
For intangible assets with limited service life, they are amortized within the period
of bringing economic benefits to the enterprise; if the period of intangible assets
bringing economic benefits to the enterprise cannot be foreseen, they are regarded
as intangible assets with indefinite service life and shall not be amortized.
(2) Estimated useful life of intangible assets with limited useful life
Expected Amortization Basis for expected
Item Residual rate
useful life method useful life
Average Years Land use right
Land use rights 50 years 0
Method certificate
(3) Judgment basis for intangible assets with indefinite useful life and procedures
for reviewing their useful life
As of the end of the reporting period, the Company had no intangible assets with
indefinite useful life.
(4) Specific criteria for dividing the research phase and development phase
The Company's internal research and development project expenditures are divided
into research phase expenditures and development phase expenditures.
Research phase: The phase of original planned investigation and research activities
to acquire and understand new scientific or technical knowledge, etc.
Development stage: Before commercial production or use, research results or other
knowledge are applied to a certain plan or design to produce new or substantially
improved materials, devices, products, etc.
(5) Development phase expenditures qualify for capitalization specific conditions
Expenditures in the research stage are included in the current profit and loss when
incurred. Expenditures in the development stage that meet the following conditions
at the same time are recognized as intangible assets, and expenditures in the
development stage that cannot meet the following conditions are included in the
current profit and loss:
1) It is technically feasible to complete the intangible asset so that it can be used or
Financial Statements Page 42
sold;
2) It has the intention to complete the intangible asset and use or sell it;
3) The way intangible assets generate economic benefits, including the ability to
prove that there is a market for the products produced by using the intangible asset
or the intangible asset itself has a market, and if the intangible asset will be used
internally, it can prove its usefulness;
4) Have sufficient technical, financial and other resource support to complete the
development of the intangible asset and have the ability to use or sell the intangible
asset;
5) The expenditure attributable to the development stage of the intangible asset can
be reliably measured.
19. Impairment of Long-term Assets
For long-term equity investment, investment real estate measured by the cost model, fixed
assets, construction in progress, right-of-use assets, intangible assets with limited service
life, oil and gas assets and other long-term assets, if there is any sign of impairment on the
balance sheet date, an impairment test is required. If the results of the impairment test
show that the recoverable amount of the asset is lower than its book value, the difference
shall be recognized as an impairment provision and included in the impairment loss. The
recoverable amount is the higher of the net amount of the asset's fair value minus disposal
costs and the present value of the estimated future cash flow of the asset. Asset
impairment provision is calculated and confirmed on the basis of individual assets. If it is
difficult to estimate the recoverable amount of a single asset, the recoverable amount of
the asset group is determined based on the asset group to which the asset belongs. An
asset group is the smallest combination of assets that can independently generate cash
inflows.
For goodwill formed by business combination, intangible assets with indefinite useful life,
and intangible assets that have not yet reached the usable state, regardless of whether
there is any sign of impairment, an impairment test shall be conducted at least at the end
of each year.
The Company carries out the goodwill impairment test, and the book value of the
goodwill formed by the business combination shall be apportioned to the relevant asset
groups according to a reasonable method from the date of purchase. If it is difficult to
allocate to the relevant asset group, it shall be allocated to the relevant asset group
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combination. The related asset group or asset group combination is the asset group or
asset group combination that can benefit from the synergistic effect of the business
combination.
When performing an impairment test on the relevant asset group or combination of asset
groups containing goodwill, if there is any sign of impairment in the asset group or
combination of asset groups related to goodwill, first perform an impairment test on the
asset group or combination of asset groups that does not contain goodwill, calculate the
recoverable amount and compare it with the relevant book value to confirm the
corresponding impairment loss. Then conduct an impairment test on the asset group or
asset group combination containing goodwill, compare its book value with the
recoverable amount, if the recoverable amount is lower than the book value, the amount
of the impairment loss shall first be deducted from the book value of the goodwill
apportioned to the asset group or asset group combination, then according to the
proportion of the book value of other assets except goodwill in the asset group or asset
group combination, the book value of other assets shall be offset in proportion. Once the
above asset impairment loss is confirmed, it will not be reversed in the subsequent
accounting period.
20. Long-term Deferred Expenses
Long-term deferred expenses refer to various expenses that have occurred but should be
borne by the current and subsequent periods with an amortization period of more than one
year.
Long-term deferred expenses are amortized evenly during the beneficiary period.
21. Contract Liabilities
The Company presents contract assets or contract liabilities in the balance sheet according
to the relationship between performance obligations and customer payments. The
Company has received or receivable the customer's consideration and the obligation to
transfer goods or provide services to the customer is listed as contract liabilities. Contract
assets and contract liabilities under the same contract are presented on a net basis.
22. Employee Benefits
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(1) Accounting treatment of short-term employee benefits
During the accounting period when employees provide services to the Company,
the Company recognizes the actual short-term remuneration as a liability, and
includes it in the current profit and loss or related asset costs.
The social insurance premiums and housing provident funds paid by the Company
for employees, as well as labor union funds and employee education funds drawn
according to regulations, are paid according to regulations during the accounting
period when employees provide services to the Company. The accrual basis and
accrual ratio are calculated to determine the corresponding amount of employee
remuneration.
The employee welfare expenses incurred by the Company are included in the
current profit and loss or the cost of related assets according to the actual amount
when they actually occur. Among them, non-monetary benefits are measured at fair
value.
(2) Accounting treatment of post-employment benefits
1) Defined contribution plans
The Company pays the basic endowment insurance and unemployment insurance
for employees according to the relevant regulations of the local government.
During the accounting period when the employees provide services to the Company,
the amount payable is calculated according to the payment base and proportion
stipulated by the local government, recognized as liabilities, and included in
current profit or loss or related asset cost. In addition, the Company also
participates in the enterprise annuity plan/supplementary pension insurance fund
approved by the relevant state departments. The Company pays premiums to the
annuity plan/local social insurance agency according to a certain percentage of the
total salary of employees, and the corresponding expenditure is included in the
current profit and loss or the cost of related assets.
2) Defined benefit plans
The Company has no defined benefit plan.
(3) Accounting treatment of termination benefits
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If the Company provides termination benefits to employees, the employee salary
liabilities arising from the termination benefits shall be recognized on the earlier of
the following two dates and included in the current profit and loss: when the
Company cannot unilaterally withdraw the termination benefits provided due to the
termination of labor relationship plans or layoff proposals; when the Company
recognizes costs or expenses associated with a restructuring involving the payment
of termination benefits.
23. Provisions
When the obligations related to contingencies meet the following conditions at the same
time, the Company will recognize them as provision:
1) The obligation is a present obligation of the Company;
2) It is probable that the performance of the obligation will result in an outflow of
economic benefits from the Company;
3) The amount of the obligation can be measured reliably.
Estimated liabilities are initially measured based on the best estimate of the expenditure
required to fulfill the relevant current obligations.
When determining the best estimate, factors such as risks, uncertainties and time value of
money related to contingencies shall be considered comprehensively. If the time value of
money has a significant impact, the best estimate is determined after discounting the
relevant future cash outflows.
If there is a continuous range of required expenditures, and the possibility of occurrence
of various outcomes within this range is the same, the best estimate shall be determined
according to the median value within the range; in other cases, the best estimate shall be
dealt with in the following situations:
If a contingency involves a single item, it shall be determined according to the most
likely amount;
If a contingency involves multiple projects, it shall be calculated and determined
according to various possible results and related probabilities.
If all or part of the expenditure required to pay off the estimated liability is expected to be
compensated by a third party, the compensation amount shall be recognized as an asset
separately when it is basically confirmed that it can be received, and the confirmed
compensation amount shall not exceed the book value of the estimated liability.
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The Company shall review the book value of estimated liabilities on the balance sheet
date. If there is conclusive evidence that the book value cannot reflect the current best
estimate, the book value shall be adjusted according to the current best estimate.
24. Revenue
(1) Accounting policies adopted for revenue recognition and measurement
The Company recognizes revenue when the Company fulfills the performance
obligations in the contract, that is, when the customer obtains control over the
relevant goods or services. Obtaining the right to control the relevant goods or
services refers to being able to dominate the use of the goods or services and obtain
almost all economic benefits from them.
If the contract contains two or more performance obligations, the Company will
allocate the transaction price to each individual performance obligation in
accordance with the relative proportion of the stand-alone selling price of the goods
or services promised by each individual performance obligation on the inception
date of the contract. The Company measures revenue based on the transaction price
allocated to each individual performance obligation.
The transaction price refers to the amount of consideration to which the Company
is expected to be entitled for the transfer of goods or services to the customer,
excluding amounts collected on behalf of third parties and amounts expected to be
refunded to the customer. The Company determines the transaction price in
accordance with the terms of the contract and in combination with its previous
practices, and when determining the transaction price, it takes into account the
influence of factors such as variable consideration, significant financing
components in the contract, non-cash consideration, and consideration payable to
customers. The Company determines the transaction price including the variable
consideration at an amount that does not exceed the amount that the accumulated
recognized revenue is unlikely to be significantly reversed when the relevant
uncertainties are eliminated. If there is a significant financing component in the
contract, the Company determines the transaction price based on the amount
payable in cash when the customer obtains the control of the goods or services, and
uses the actual interest rate method to amortize the difference between the
transaction price and the contract consideration during the contract period.
If one of the following conditions is met, the performance obligation shall be
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fulfilled within a certain period of time; otherwise, the performance obligation shall
be fulfilled at a certain point in time:
The customer obtains and consumes the economic benefits brought by the
Company's performance at the same time as the Company's performance of the
contract.
The customer is able to control the goods under construction during the
Company's performance.
The goods produced by the Company during the performance of the contract have
irreplaceable uses, and the Company has the right to collect payment for the
performance part that has been completed so far during the entire contract period.
For performance obligations fulfilled within a certain period of time, the Company
recognizes revenue according to the progress of the performance within that period
of time, except that the progress of the performance of the contract cannot be
reasonably determined. The Company considers the nature of the goods or services
and adopts the output method or input method to determine the performance
progress. When the performance progress cannot be reasonably determined, and
the incurred costs are expected to be compensated, the Company shall recognize
the revenue according to the incurred cost amount until the performance progress
can be reasonably determined.
For performance obligations fulfilled at a certain point in time, the Company
recognizes revenue at the point in time when the customer obtains control over the
relevant goods or services. When judging whether the customer has obtained
control of the goods or services, the Company considers the following signs:
The Company has the current right to receive payment for the goods or
services, that is, the customer has a current payment obligation for the goods or
services.
The Company has transferred the legal title to the product to the customer, that
is, the customer already has the legal title to the product.
The Company has transferred the product to the customer in kind, that is, the
customer has taken possession of the product in kind.
The Company has transferred the main risks and rewards of the ownership of
the commodity to the customer, that is, the customer has obtained the main risks
and rewards of the ownership of the commodity.
The customer has accepted the good or service, etc.
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(2) Specific accounting policies for revenue recognition
Contracts for the sale of goods between companies and customers often contain
only performance obligations for the transfer of goods or services such as steel.
Such performance obligations are performance obligations performed at a certain
point in time, and the Company recognizes revenue at the point in time when the
customer obtains control over the relevant goods or services. When judging
whether the customer has obtained control of the goods or services, the Company
considers the following signs: the Company obtains the current right to collect the
goods, the legal ownership of the goods is transferred to the customer, the physical
assets of the goods are transferred to the customer, the Company transfers the main
risks and rewards of the ownership of the goods to the customer, and the customer
has accepted the goods.
25. Contract Costs
Contract costs include contract fulfillment costs and contract obtaining costs.
If the cost incurred by the Company for the performance of the contract does not fall
within the scope of relevant standards such as inventories, fixed assets or intangible assets,
it shall be recognized as an asset as a contract performance cost when the following
conditions are met at the same time:
1) The cost is directly related to a current or anticipated contract;
2) The cost increases the Company's future resources to meet performance obligations;
3) The cost is expected to be recoverable.
If the incremental cost incurred by the Company to acquire the contract is expected to be
recoverable, it is recognized as an asset as the cost of acquiring the contract.
Assets related to contract costs are amortized on the same basis as the recognition of
goods or service revenue related to the assets; however, if the amortization period of
contract acquisition costs does not exceed one year, the Company will include them in the
current profit and loss when incurred.
For assets related to contract costs, if the book value is higher than the difference between
the following two items, the Company will make provision for impairment for the excess
part and recognize it as asset impairment loss:
1) The remaining consideration expected to be obtained from the transfer of goods or
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services related to the asset;
2) The estimated costs to be incurred for the transfer of the related good or service.
If the depreciation factor in the previous period changes later, so that the aforementioned
difference is higher than the book value of the asset, the Company will reverse the
original depreciation provision and include it in the current profit and loss, but the book
value of the asset after the reversal shall not exceed the book value of the asset on the
transfer-back date assuming no provision for impairment is made.
26. Government Grants
(1) Categories
Government grants are monetary assets or non-monetary assets obtained by the
Company from the government for free. It is divided into government grants
related to assets and government grants related to income.
Asset-related government grants refer to government grants obtained by the
Company for purchase and construction or to form long-term assets in other ways.
Government grants related to income refer to government grants other than
government grants related to assets.
The Company classifies government grants as assets-related specific criteria:
government grants obtained by the enterprise and used to purchase and construct or
form long-term assets in other ways.
The specific criteria for the Company to classify government grants as
income-related are: government grants with specified grant targets other than
asset-related government grants.
For government documents that do not clearly specify the grants object, the
Company's judgment basis for classifying the government grants as asset-related or
income-related is as follows: for those that can form long-term assets, the part of
the government grants corresponding to the asset value shall be regarded as the
government grants related to assets, and the rest shall be regarded as the
government grants related to income; if it is difficult to distinguish, the government
grants as a whole shall be regarded as the government grants related to income.
(2) Timing of recognition
The Company's asset-related government grants are recognized when the
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government grants are actually received, and the deferred income is evenly
amortized and transferred to the current profit and loss according to the expected
service life of the long-term assets from the time the long-term assets are available
for use.
The Company’s government grants related to income are recognized at the
following points: if the government grants are actually received and used to
compensate the Company’s related expenses or losses in the future, it will be
included in the current non-operating income during the period when the relevant
expenses are confirmed; if it is used to compensate the relevant expenses or losses
incurred by the Company, it shall be directly included in the non-operating income
of the current period when it is obtained.
(3) Accounting treatment
Government grants related to assets are offset against the book value of related
assets or recognized as deferred income. If it is recognized as deferred income, it
shall be included in the current profit and loss in stages in a reasonable and
systematic manner within the useful life of the relevant assets (if it is related to the
Company's ordinary activities, it will be included in other income; if it is not
related to the Company's ordinary activities, it will be included in non-operating
income).
Government grants related to income, which are used to compensate the relevant
costs or losses of the enterprise in the future period, shall be recognized as deferred
income, and shall be included in the current profit and loss during the period when
the relevant costs or losses are recognized (if it is related to the Company's ordinary
activities, it will be included in other income; if it is not related to the Company's
ordinary activities, it will be included in non-operating income) or offset related
costs or losses; If it is used to compensate the relevant costs or losses incurred by
the Company, it shall be directly included in the current profit and loss (if it is
related to the Company's ordinary activities, it will be included in other income; if
it is not related to the Company's ordinary activities, it will be included in
non-operating income) or offset related costs or losses.
The policy-based preferential loan interest discount obtained by the Company is
divided into the following two situations, and the accounting treatment is carried
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out separately:
1) If the finance department allocates interest discount funds to the lending bank,
and the lending bank provides loans to the Company at a preferential policy rate,
the Company takes the actual amount of the loan received as the entry value of the
loan, and calculates it based on the principal of the loan and the policy preferential
rate related borrowing costs.
2) If the finance department directly allocates the interest discount funds to the
Company, the Company will offset the corresponding borrowing costs with the
corresponding discount interest.
27. Deferred Tax Assets and Deferred Tax Liabilities
Income tax includes current income tax and deferred tax. Except for the income tax
arising from business mergers and transactions or events that are directly included in
owner's equity (including other comprehensive income), the Company includes current
income tax and deferred tax in current profit and loss.
Deferred tax assets and deferred tax liabilities are calculated and recognized based on the
difference (temporary difference) between the tax basis of assets and liabilities and their
book value.
Deferred tax assets recognized for deductible temporary differences shall be limited to the
amount of taxable income that is likely to be obtained in the future to offset the deductible
temporary differences. For the deductible losses and tax credits that can be carried
forward to the following years, the corresponding deferred tax assets are recognized
within the limit of the future taxable income that is likely to be used to offset the
deductible losses and tax credits .
For taxable temporary differences, except for special circumstances, deferred income tax
liabilities are recognized.
The special circumstances that do not recognize deferred tax assets or deferred tax
liabilities include:
Initial recognition of goodwill;
Transactions or events that are neither business combinations nor affect accounting
profits and taxable income (or deductible losses) when they occur.
For taxable temporary differences related to investments in associates and joint ventures,
deferred tax liabilities are recognized, unless the Company is able to control the timing of
the reversal of the temporary difference and the temporary difference is likely not to be
Financial Statements Page 52
transferred back in the foreseeable future. For the deductible temporary difference related
to the investment in associates and joint ventures, when the temporary difference is likely
to be reversed in the foreseeable future and the taxable income used to offset the
deductible temporary difference is likely to be obtained in the future, the deferred tax
assets are recognized.
On the balance sheet date, the deferred tax assets and deferred tax liabilities shall be
measured at the applicable tax rate during the period when the relevant assets are
expected to be recovered or the relevant liabilities are expected to be paid off in
accordance with the provisions of the tax law.
On the balance sheet date, the Company reviews the book value of the deferred tax assets.
If it is likely that sufficient taxable income will not be obtained in the future to offset the
benefits of the deferred tax asset, the book value of the deferred tax asset shall be written
down. When it is probable that sufficient taxable income will be obtained, the reduced
amount shall be reversed.
When there is a legal right to settle on a net basis and there is an intention to settle on a
net basis or to obtain assets and pay off liabilities simultaneously, the current income tax
assets and current income tax liabilities are presented as the net amount after offsetting.
On the balance sheet date, the deferred income tax assets and deferred income tax
liabilities are presented as the net amount after offsetting when the following conditions
are met at the same time:
The taxpayer has the legal right to settle the current income tax assets and current
income tax liabilities on a net basis;
Deferred tax assets and deferred tax liabilities are related to the income tax levied on
the same taxpayer by the same tax collection authority or to different taxpayers, but
each important deferred tax asset and liability will be reversed in the future, the
taxpayers involved intend to settle the current income tax assets and liabilities on a
net basis or acquire assets and pay off liabilities at the same time.
28. Leases
Lease refers to a contract in which the lessor transfers the right to use an asset to the
lessee for consideration within a certain period of time. On the inception date of the
contract, the Company assesses whether the contract is or contains a lease. A contract is,
or contains, a lease if one party to the contract transfers the right to control the use of one
or more identified assets for a period of time in exchange for consideration.
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If the contract contains multiple separate leases at the same time, the Company will split
the contract and conduct accounting treatment for each separate lease separately. If the
contract contains both lease and non-lease parts, the lessee and lessor will separate the
lease and non-lease parts.
For rental concessions, such as rent reductions, deferred payments, etc., directly caused by
the COVID-19 Epidemic, the Company adopts a simplified method for all lease options,
and does not evaluate whether there is a lease change and lease classification will not be
reassessed if the following conditions are met at the same time:
The lease consideration after the concession is reduced or basically unchanged from
that before the concession, and the lease consideration can be undiscounted or
discounted at the discount rate before the concession;
The concession is only for the lease payments payable before 30 June 30 2022. An
increase in the lease payments payable after 30 June 2022 does not affect the
fulfillment of this condition, and a decrease in the lease payments payable after 30
June 30 2022 does not meet this condition;
After comprehensive consideration of qualitative and quantitative factors, it is
determined that there is no significant change in other terms and conditions of the
lease.
(1) The Company acts as the lessee
1) Right-of-use assets
On the commencement date of the lease term, the Company recognizes right-of-use
assets for leases other than short-term leases and low-value asset leases.
Right-of-use assets are initially measured at cost. This cost includes:
The initial measurement amount of the lease liability;
For the lease payment paid on or before the start date of the lease term, if
there is a lease incentive, the relevant amount of the lease incentive already
enjoyed shall be deducted;
Initial direct costs incurred by the Company;
The cost expected to be incurred by the Company for dismantling and
removing the leased asset, restoring the site where the leased asset is located,
or restoring the leased asset to the state stipulated in the lease terms. However,
costs incurred for the production of inventories are not included.
The Company subsequently adopts the straight-line method to depreciate the
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right-of-use assets. If it can be reasonably determined that the ownership of the
leased asset will be obtained when the lease term expires, the Company shall
accrue depreciation within the remaining useful life of the leased asset. Otherwise,
the leased asset is depreciated over the shorter period of the lease term or the
remaining useful life of the leased asset
The company determines whether the right-of-use asset has been impaired in
accordance with the principles stated in “III. (19) Impairment of Long-term Assets”
in this note, and conducts accounting treatment for the identified impairment loss.
2) Lease liability
On the commencement date of the lease term, the Company recognizes lease
liabilities for leases other than short-term leases and low-value asset leases. The
lease liability is initially measured at the present value of the unpaid lease
payments. Lease payments include:
Fixed payments (including substantive fixed payments), if there is a lease
incentive, deduct the relevant amount of the lease incentive;
Variable lease payments that depend on an index or rate;
The amount expected to be paid according to the residual value of the
guarantee provided by the Company;
The exercise price of the option to purchase, if the Company is reasonably
certain that the option will be exercised;
Amounts payable for exercising the option to terminate the lease, provided the
term of the lease reflects the exercise of the option to terminate the lease.
The Company uses the lease implicit interest rate as the discount rate, but if the
lease implicit interest rate cannot be reasonably determined, the Company's
incremental borrowing rate is used as the discount rate.
The Company calculates the interest expense of the lease liability in each period of
the lease period according to the fixed periodic interest rate, and includes it in the
current profit and loss or the cost of related assets.
Variable lease payments that are not included in the measurement of lease liabilities
are included in current profit or loss or related asset costs when they actually occur.
After the start date of the lease term, if the following circumstances occur, the
Company will remeasure the lease liability and adjust the corresponding
right-of-use asset. If the book value of the right-of-use asset has been reduced to
Financial Statements Page 55
zero, but the lease liability still needs to be further reduced, the difference is
included in the current profit and loss:
When the evaluation results of the purchase option, lease renewal option or
termination option change, or the actual exercise of the aforementioned
options is inconsistent with the original evaluation results, the Company will
use the lease payment amount after the change and the revised discount rate to
calculate the present value and remeasure the lease liability;
When the actual fixed payment amount changes, the estimated payable
amount of the residual value of the guarantee changes, or the index or ratio
used to determine the lease payment changes, the Company recalculates the
present value based on the changed lease payment amount and the original
discount rate and measure the lease liability. However, where changes in lease
payments arise from changes in floating interest rates, a revised discount rate
is used to calculate the present value.
3) Short-term leases and leases of low-value assets
The Company chooses not to recognize right-of-use assets and lease liabilities for
short-term leases and low-value asset leases, and includes the relevant lease
payments in the current profit and loss or related asset costs on a straight-line basis
during each period of the lease term. Short-term lease refers to a lease with a lease
term of no more than 12 months on the commencement date of the lease term and
does not include the option to purchase. Lease of low-value assets refers to a lease
with a relatively low value when the single leased asset is a brand new asset.
Where a company subleases or expects to sublease leased assets, the original lease
does not belong to low-value asset leases.
4) Lease change
If the lease is changed and the following conditions are met at the same time, the
Company will account for the lease change as a separate lease:
The lease modification expands the scope of the lease by increasing the use
rights of one or more leased assets;
The increased consideration is equal to the individual price of the extended
part of the leased scope after adjustment according to the conditions of the
contract.
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If the lease change is not accounted for as a separate lease, on the effective date of
the lease change, the Company re-allocates the consideration of the changed
contract, re-determines the lease term, and calculates the cash value based on the
changed lease payment and the revised discount rate to remeasure the lease
liability.
If the change of the lease results in a reduction in the scope of the lease or a
shortening of the lease term, the Company shall reduce the book value of the
right-of-use asset accordingly, and include the relevant gains or losses related to the
partial or complete termination of the lease in the current profit and loss. If other
lease changes lead to the remeasurement of lease liabilities, the Company shall
adjust the book value of the right-of-use asset accordingly.
5) Rent concessions related to COVID-19 epidemic
For those who adopt the simplified method of rent reduction related to the
COVID-19 epidemic, the Company will not evaluate whether there is a lease
change, and continue to calculate the interest expense of the lease liability at the
same discount rate as before the reduction and include it in the current profit and
loss. The right-of-use asset is depreciated in the same way as before. In the event of
rent reduction or exemption, the Company will use the reduced or exempt rent as
the variable lease payment, and when the original rent payment obligation is
terminated by reaching a reduction agreement, the discounted amount at the
undiscounted or pre-reduction discount rate will be used to offset the cost of the
relevant assets or expenses, and adjust the lease liabilities accordingly; if the rent
payment is deferred, the Company will offset the lease liabilities recognized in the
previous period when the actual payment is made.
For short-term leases and leases of low-value assets, the Company will continue to
include the original contract rent in the cost or expense of the relevant assets in the
same way as before the reduction. In case of rent reduction or exemption, the
Company will use the reduced rent as the variable lease payment, and offset the
cost or expenses of related assets during the reduction or exemption period. The
payables confirmed in the previous period are deducted when the actual payment is
made.
(2) The Company acts as the lessor
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On the commencement date of the lease, the Company classifies leases into finance
leases and operating leases. Finance lease refers to a lease that substantially
transfers almost all the risks and rewards related to the ownership of the leased
asset, regardless of whether the ownership is ultimately transferred. Operating
leases refer to leases other than finance leases. When the Company acts as the
lessor of the sublease, it classifies the sublease based on the right-of-use assets
arising from the original lease.
1) Accounting for operating lease
The lease receipts from operating leases are recognized as rental income on a
straight-line basis during each period of the lease term. The Company capitalizes
the initial direct expenses related to operating leases, and amortizes them in the
current profit and loss on the same basis as the recognition of rental income during
the lease period. Variable lease payments not included in lease receipts are included
in current profit or loss when actually incurred. If the operating lease is changed,
the Company will take it as a new lease for accounting treatment from the effective
date of the change, and the pre-receipt or receivable lease receipts related to the
lease before the change will be regarded as the receipts of the new lease.
2) Accounting treatment of finance lease
On the commencement date of the lease, the Company recognizes the finance lease
receivable for the finance lease and derecognizes the finance lease assets. When the
Company initially measures the receivable finance lease, it takes the net lease
investment as the entry value of the finance lease receivable. The net lease
investment is the sum of the unguaranteed residual value and the present value of
the unreceived lease receipts at the commencement date of the lease period
discounted at the interest rate implicit in the lease.
The Company calculates and recognizes the interest income in each period of the
lease term according to the fixed periodic interest rate. The derecognition and
impairment of finance lease receivables shall be accounted for in accordance with
“III.10 Financial Instruments” in this note.
Variable lease payments that are not included in the measurement of net lease
investment are included in current profit or loss when they actually occur.
If the financial lease is changed and meets the following conditions at the same
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time, the Company shall treat the change as a separate lease for accounting
treatment:
The change expands the scope of the lease by adding the right to use one or
more of the leased assets;
The increased consideration is equal to the individual price of the expanded
part of the leased scope after adjustment according to the conditions of the
contract.
If the modification of the financial lease is not accounted for as a separate lease, the
Company handles the modified lease according to the following circumstances:
If the change takes effect on the lease commencement date, the lease will be
classified as an operating lease, and the Company will account for it as a new
lease from the lease change effective date, and the lease investment net
amount before the lease change becomes effective as the lease the book value
of the asset;
If the change takes effect on the lease commencement date, the lease will be
classified as a finance lease, and the Company will conduct accounting
treatment in accordance with the policy on modifying or renegotiating the
contract in “III.10 Financial Instruments” in this note.
3) Rent concessions related to COVID-19 Epidemic
For operating leases that adopt the simplified method of rent reduction related
to the COVID-19 Epidemic, the Company will continue to recognize the
original contract rent as lease income in accordance with the method before
the reduction. The amount of payment shall be offset against the rental income
during the reduction or exemption period; if the rent is deferred, the Company
shall recognize the rent payable as an account receivable during the original
collection period, and offset the previously confirmed account receivable
when it is actually received.
For financial leases that adopt the simplified method of rental concessions
related to the COVID-19 epidemic, the Company continues to calculate
interest at the same discount rate as before the concession and recognize it as
lease income. In the event of rent reduction or exemption, the Company will
use the reduced or exempt rent as the variable lease payment, and when the
right to collect the original rent is waived after reaching a concession
Financial Statements Page 59
agreement, the discounted amount at the undiscounted or pre-reduction
discount rate will offset the originally recognized lease income, the part that is
not enough to be offset is included in investment income, and the financial
lease receivables are adjusted accordingly; if the rent is deferred, the
Company will offset the financial lease receivables confirmed in the previous
period when it is actually received.
(3) Sale and leaseback transactions
The Company evaluates and determines whether the asset transfer in the sale and
leaseback transaction is a sale in accordance with the principles stated in “III.24
Revenue” in this note.
1) As lessee
If the asset transfer in the sale-and-leaseback transaction is a sale, the Company, as
the lessee, measures the right-of-use asset formed by the sale-and-leaseback based
on the part of the book value of the original asset related to the right to use
acquired by the leaseback and recognize the relevant gain or loss only for the rights
assigned to the lessor; If the asset transfer in the sale-and-leaseback transaction is
not a sale, the Company, as the lessee, shall continue to recognize the transferred
asset and at the same time recognize a financial liability equal to the transfer
income. For the accounting treatment of financial liabilities, please refer to “III.10
Financial Instruments" in this note.
2) As lessor
If the asset transfer in the sale-and-leaseback transaction is a sale, the Company, as
the lessor, conducts accounting treatment for the asset purchase, and conducts
accounting treatment for the asset lease in accordance with the policy of "2. The
Company as the lessor; If the transfer of assets in a sale-and-leaseback transaction
is not a sale, the Company, as the lessor, does not recognize the transferred asset,
but recognizes a financial asset equal to the transfer income. For the accounting
treatment of financial assets, please refer to “III.10 Financial Instruments” in this
note.
29. Discontinued Operations
Discontinued operation is a separately distinguishable component that meets one of the
following conditions, and the component has been disposed of by the company or
Financial Statements Page 60
classified as held for sale by the company:
(1) The component represents an independent principal business or a separate principal
area of operation;
(2) The component is a part of an associated plan to dispose of an independent main
business or a separate main business area;
(3) This component is a subsidiary acquired exclusively for resale.
Profit and loss from continuing operations and profit and loss from discontinued
operations are presented separately in the income statement. Operating profit and loss
such as impairment loss and reversal amount of discontinued operation and disposal profit
and loss are presented as discontinued operation profit and loss. For the discontinued
operations reported in the current period, the Company re-reported the information
originally presented as continuing operating profit and loss in the current financial
statements as the discontinued operating profit and loss of the comparable accounting
period.
30. Major Accounting Estimates and Judgments
When preparing financial statements, the Company's management needs to use estimates
and assumptions, which will affect the application of accounting policies and the amount
of assets, liabilities, income and expenses. Actual results may differ from these estimates.
The management of the Company conducts continuous evaluation on the key assumptions
and uncertain factors involved in the estimation, and the impact of changes in accounting
estimates is confirmed in the current and future periods of the changes.
The main uncertain factors of the estimated amount are as follows:
(1) Measurement of expected credit losses
The Company calculates expected credit losses through default risk exposure and
expected credit loss rate, and determines expected credit loss rate based on default
probability and default loss rate. When determining the expected credit loss rate, the
Company uses data such as internal historical credit loss experience, and adjusts historical
data in combination with current conditions and forward-looking information. In
considering forward-looking information, the Company uses indicators including the risk
of economic downturn, the expected increase in the unemployment rate, changes in the
external market environment, technological environment and customer conditions, etc.
The Company regularly monitors and reviews assumptions related to the calculation of
expected credit losses.
Financial Statements Page 61
(2) Provision for price of inventory decline
As mentioned in “III. (11) Inventories” in this note, the Company regularly estimates the
net realizable value of the inventory, and recognizes the loss for price of inventory decline
for the difference between the inventory cost and the net realizable value. When
estimating the net realizable value of inventories, the Company considers the purpose of
holding the inventories and uses the available information as the basis for the estimation,
including the market price of the inventories and the Company's past operating costs. The
actual selling price, cost of completion, sales expenses and taxes of inventories may
change with changes in market sales conditions, production technology or actual use of
inventories, so the amount of provision for price of inventory decline may change due to
the above reasons. The adjustment to the provision for price of inventory decline will
affect the profit and loss of the period when the estimate is changed.
(3) Impairment of assets other than inventories and financial assets
As described in “III. (19) Impairment of Long-term Assets" in this note, the Company
conducts impairment assessment on assets other than inventories and financial assets on
the balance sheet date to determine whether the recoverable amount of the asset has fallen
below its book value. Where circumstances indicate that the carrying amount of a
long-term asset may not be recoverable in full, the asset is considered to be impaired and
an impairment loss is recognized accordingly.
The recoverable amount is the higher of the net amount of the fair value of the asset (or
asset group) minus the disposal costs and the present value of the expected future cash
flow of the asset (or asset group). Because the Company cannot reliably obtain the public
market price of the asset (or asset group), and cannot reliably and accurately estimate the
fair value of the asset. Therefore, the Company regards the present value of estimated
future cash flow as the recoverable amount. When estimating the present value of future
cash flows, it is necessary to make major judgments on the output, selling price, related
operating costs, and discount rate used in calculating the present value of the asset (or
asset group). When estimating the recoverable amount, the Company will use all available
relevant information, including the prediction of production, selling price and related
operating costs based on reasonable and supportable assumptions.
(4) Depreciation and amortization of assets such as fixed assets and intangible assets
Financial Statements Page 62
As described in “3. (15) Fixed Assets” and “3. (18) Intangible Assets” in this note, the
Company accrues depreciation and amortization within the useful life of assets such as
fixed assets and intangible assets after considering their scrap value. The Company
regularly reviews the useful life of the relevant assets to determine the amount of
depreciation and amortization expense to be included in each reporting period. The
service life of assets is determined by the Company based on past experience of similar
assets and in combination with expected technological changes. The depreciation and
amortization expense is adjusted in future periods if there are material changes from
previous estimates.
(5) Deferred Tax Assets
When it is estimated that sufficient taxable income can be obtained in the future period to
utilize unrecovered tax losses and deductible temporary differences, the Company is
limited to the amount of taxable income that is likely to be obtained to offset unrecovered
tax losses and deductible temporary differences, and calculates and recognizes the
relevant deferred income tax assets on the basis of the applicable income tax rate during
the period in which the assets are expected to be recovered .
The Company needs to use judgment to estimate the time and amount of taxable income
to be obtained in the future, and make reasonable estimates and judgments on the future
applicable income tax rate according to the current tax policy and other relevant policies.
To determine the amount of deferred income tax assets that should be recognized. If there
is a difference between the time and amount of profit actually generated in the future or
the actual applicable income tax rate and the management's estimate, the difference will
have an impact on the amount of deferred tax assets.
31. Changes in Important Accounting Policies and Accounting Estimates
(1) Changes in important accounting policies
None.
(2) Changes in important accounting estimates
None.
IV. Taxation
1. Major Types of Taxes and Tax Rates
Financial Statements Page 63
Tax rate
Tax type Tax basis
(%)
Output VATs are calculated based on the sales of goods and
taxable service income calculated according to the Tax Law.
Value-added Tax (‘VAT’) 6、9、13
After deducting the input VATs that are allowed to be deducted
in the current period, the difference is the VAT payable.
City maintenance and
construction tax Based on actual payment of VAT and consumption tax 7、5
Corporate income tax Based on taxable profits 25
2. Tax Incentives
None.
V. Notes to Consolidated Financial Statements Items
1. Monetary Funds
Balance as at 30 June Balance as at 31
Items
2023 December 2022
Cash on hand
Digital currency
Bank deposits
3,135,535,935.14 1,296,662,683.20
Other monetary fund
521,023,596.93 164,482,958.67
Total 2,408,325,571.25 1,074,918,531.75
Including: Total overseas deposits
Funds deposited in finance company
2,244,735,874.76 1,074,918,531.75
Among them, there are restrictions on use due to mortgage, pledge or freezing,
restrictions on withdrawals due to centralized management of funds, and details of
monetary funds placed overseas and restricted on repatriation of funds are as follows:
Balance as at 31 December
Items Balance as at 30 June 2023
2022
Margin for bank acceptance bill 421,023,596.93 163,297,958.67
Margin for letter of credit 100,000,000.00
Margin for performance
Financial Statements Page 64
Balance as at 31 December
Items Balance as at 30 June 2023
2022
Time deposit or notice deposit for
guarantee
Money placed offshore with restrictions on
repatriation of funds
Restricted funds due to centralized
1,185,000.00
management of funds
Total 521,023,596.93 164,482,958.67
2. Notes Receivable
(1) Notes receivable presented by category
Balance as at 31 December
Items Balance as at 30 June 2023
2022
Banker's acceptance bill 20,000.00 139,442,122.88
Acceptance bill of finance company 87,371,995.82 290,265,051.82
Commercial acceptance bill
Total 87,391,995.82 429,707,174.70
(2) Notes receivable pledged by the company at the end of the period
Items Amount pledged at the end of the period
Banker's acceptance bill 255,189,626.40
Acceptance bill of finance company
Commercial acceptance bill
Total 255,189,626.40
(3) Bills receivable that have been endorsed or discounted by the company at the
end of the period and have not yet expired on the balance sheet date
Financial Statements Page 65
Amount derecognized at the Amount not derecognized at
Items
end of the period the end of the period
Bank acceptance bill 5,623,759,903.70
Acceptance bill of finance company 82,950,793.43
Commercial acceptance bill
Total 5,623,759,903.70 82,950,793.43
Financial Statements Page 66
3. Accounts Receivable
(1) Disclosure by aging of accounts receivable
Balance as at 31 December
Aging Balance as at 30 June 2023
2022
Within 1 year
920,913,586.81 892,035,646.81
1 to 2 years
865,863.89 14,717,227.92
2 to 3 years
7,249,049.16 5,931,757.76
More than 3 years 437,107,384.70 456,148,481.98
Subtoal 1,366,135,884.56 1,368,833,114.47
Less: Provision for bad debts 451,728,222.39 471,602,218.41
Total 914,407,662.17 897,230,896.06
Financial Statements Page 67
(2) Classified by bad debt provision method
Balance as at 30 June 2023 Balance as at 31 December 2022
Book balance Bad debt provision Book balance Bad debt provision
Types
Percentage Bad debts Book value Percentage Bad debts Book value
Amount Amount Amount Amount
(%) ratio (%) (%) ratio (%)
Bad debt provisions made on an
367,153,964.12 26.88 367,153,964.12 100.00 353,419,325.80 25.82 353,419,325.80 100.00
individual basis
Bad debt provisions made on the
combination of credit risk 998,981,920.44 73.12 84,574,258.27 8.47 914,407,662.17 1,015,413,788.67 74.18 118,182,892.61 11.64 897,230,896.06
characteristics
Including:
Aging portfolio 998,981,920.44 73.12 84,574,258.27 8.47 914,407,662.17 1,015,413,788.67 74.18 118,182,892.61 11.64 897,230,896.06
Total 1,366,135,884.56 100.00 451,728,222.39 914,407,662.17 1,368,833,114.47 100.00 471,602,218.41 897,230,896.06
Financial Statements Page 68
Bad debt provisions made on an individual basis:
Balance as at 30 June 2023
Name Bad debt Bad debts ratio Reason for
Book balance
provision (%) provision
Benxi Nanfenxinhe
Discontinued, no
Metallurgical Charge
48,196,244.68 48,196,244.68 100.00 return expected
Co., Ltd.
Bankruptcy and
Benxi Iron and Steel
reorganization of
(Group) Third
the enterprise is
Construction 10,613,567.47 10,613,567.47 100.00
expected to be
Engineering Co., Ltd.
irrecoverable
Bankruptcy and
Benxi Iron and Steel
reorganization of
(Group) First
the enterprise is
Construction 3,121,070.85 3,121,070.85 100.00
expected to be
Engineering Co., Ltd.
irrecoverable
Bankruptcy and
reorganization of
Huachen Auto Group
the enterprise is
Holdings Limited 305,223,081.12 305,223,081.12 100.00
expected to be
irrecoverable
Total
367,153,964.12 367,153,964.12
Bad debt provisions made on the combination:
Balance as at 30 June 2023
Name
Accounts receivable Bad debt provision Bad debts ratio (%)
Within 1 year
920,913,586.81 9,209,135.87 1.00
1 to 2 years
865,863.89 86,586.39 10.00
2 to 3 years
2,404,917.15 480,983.42 20.00
More than 3 years
74,797,552.59 74,797,552.59 100.00
Total 998,981,920.44 84,574,258.27
Financial Statements Page 69
(3) The provision for bad debts accrued, reversed or recovered in the current
period
Amount changed during the period
Balance as at
Transferred Balance as at
Type 31 December Reversed or Other
Accrued or 30 June 2023
2022 recovered changes
written-off
Provision
for bad
debts of 471,602,218.41 18,426,234.94 1,447,761.08 451,728,222.39
accounts
receivable
Total 471,602,218.41 18,426,234.94 1,447,761.08 451,728,222.39
(4) Actual written-off of accounts receivable in the current period
Items Amount of written-off
Actual written-off of accounts receivable 1,447,761.08
Important write-off of accounts receivable:
Whether the
Nature of Written-off payment is
Amount of Reason of
Name of debtor accounts procedures generated by a
written-off written-off
receivable performed related party
transaction
General
Jining Forging Manager
Sales of products 461,229.33 Deregistered No
Center Office
Meeting
Xuzhou
General
Jinshanqiao
Manager
Development Zone Sales of products 200,265.48 Revoked No
Office
Yongan Metal
Meeting
Material Co., Ltd.
Shanghai Benxi General
Iron and Steel Manager
Sales of products 193,625.29 Deregistered No
Industry and Trade Office
Company Meeting
China Ordnance
Materials General
Northeast Manager
Sales of products 155,616.74 Revoked No
Company Fushun Office
Technology and Meeting
Trade Center
Tonghua Grain and General
Oil Machinery Sales of products 141,139.39 Deregistered Manager No
Factory Office
Financial Statements Page 70
Whether the
Nature of Written-off payment is
Amount of Reason of
Name of debtor accounts procedures generated by a
written-off written-off
receivable performed related party
transaction
Meeting
General
Benxi Steel Yantai
Manager
Marketing Co., Sales of products 138,378.96 Deregistered No
Office
Ltd.
Meeting
Shandong
General
Zhucheng
Manager
Industrial Supply Sales of products 87,085.43 Revoked No
Office
and Marketing
Meeting
Corporation
Tieling Jinlong General
Petroleum Pipeline Manager
Sales of products 24,608.99 Deregistered No
Machinery Product Office
Distribution Office Meeting
Shenzhen
General
Zhongtianda
Manager
Materials Industry Sales of products 20,441.96 Deregistered No
Office
and Trade Co.,
Meeting
Ltd.
General
Shunde
Manager
Xinqiangsheng Sales of products 12,635.20 Deregistered No
Office
Mold Co., Ltd.
Meeting
General
Benxi Steel
Manager
Material Sales of products 7,167.87 Revoked No
Office
Distribution Office
Meeting
Guangdong
Zhaoqing
General
Township
Manager
Enterprise Sales of products 5,566.44 Deregistered No
Office
Building Materials
Meeting
and Minerals
Company
Total 1,447,761.08
(5) The top five units with the ending balance of accounts receivable collected by
the debtor
Balance as at 30 June 2023
% of the total
Name of debtor closing balance of Bad debt
Book balance
accounts provision
receivable
The first 640,621,130.96 46.89 6,406,211.31
The second 305,223,081.12 22.34 305,223,081.12
The third 76,326,718.36 5.59 763,267.18
The fourth 50,834,840.47 3.72 508,348.40
The fifth 48,196,244.68 3.53 48,196,244.68
Total 1,121,202,015.59 82.07 361,097,152.69
4. Accounts Receivable Financing
Financial Statements Page 71
Details of accounts receivable financing
Items Balance as at 30 June 2023 Balance as at 31 December 2022
Notes receivable 953,938,535.80 137,591,996.02
Accounts receivable
Total 953,938,535.80 137,591,996.02
5. Prepayments
(1) Disclosure by aging of prepayments
Balance as at 30 June 2023 Balance as at 31 December 2022
Aging Percentage Percentage
Amount Amount
(%) (%)
Within 1 year
932,168,955.31 99.42 1,235,907,044.32 99.10
1 to 2 years
5,128,693.51 0.55 8,892,828.10 0.71
2 to 3 years
20,696.05 2,301,638.78 0.18
More than 3 years
306,237.13 0.03 76,237.13 0.01
Total 937,624,582.00 100.00 1,247,177,748.33 100.00
As of the end of the reporting period, there were no prepayments with an age of
more than one year and significant amounts.
(2) The top five units of the ending balance of prepayments collected by the
debtor
Balance as at 30 June % of the total closing
Name of debtor
2023 balance of prepayments
The first 104,332,332.83 15.62
The second 103,804,229.89 15.54
The third 88,096,459.67 13.19
The fourth 80,010,275.85 11.98
The fifth 58,014,169.46 8.69
Total 434,257,467.70 65.02
6. Other Receivables
Financial Statements Page 72
Balance as at 31
Items Balance as at 30 June 2023
December 2022
Interest receivable
Dividends receivable
Other receivables
98,776,833.29 127,198,692.92
Total 98,776,833.29 127,198,692.92
Other receivables
(1) Disclosure by aging of other receivable
Balance as at 31 December
Aging Balance as at 30 June 2023
2022
Within 1 year
95,787,862.39 85,596,605.22
1 to 2 years
1,920,566.77 38,267,869.02
2 to 3 years
2,772,924.29 3,519,908.21
More than 3 years
97,497,769.42 63,947,507.23
Subtoal 197,979,122.87 191,331,889.68
Less: Provision for bad debts 99,202,289.58 64,133,196.76
Total 98,776,833.29 127,198,692.92
Financial Statements Page 73
(2) Classified by bad debt provision method
Balance as at 30 June 2023 Balance as at 31 December 2022
Book balance Bad debt provision Book balance Bad debt provision
Bad Bad
Types
Percentage debts Book value Percentage debts Book value
Amount Amount Amount Amount
(%) ratio (%) ratio
(%) (%)
Bad debt
provisions made
49,333,315.37 24.92 49,333,315.37 100.00 15,031,598.34 7.86 15,031,598.34 100.00
on an individual
basis
Bad debt
provisions made
on the
148,645,807.50 75.08 49,868,974.21 33.55 98,776,833.29 176,300,291.34 92.14 49,101,598.42 27.85 127,198,692.92
combination of
credit risk
characteristics
Including:
Aging portfolio 148,645,807.50 75.08 49,868,974.21 33.55 98,776,833.29 141,980,250.55 49,101,598.42 92,878,652.13
Risk free
34,320,040.79 34,320,040.79
portfolio
Total 197,979,122.87 100.00 99,202,289.58 98,776,833.29 191,331,889.68 100.00 64,133,196.76 127,198,692.92
Financial Statements Page 74
Bad debt provisions made on an individual basis:
Balance as at 30 June 2023
Name of debtor Bad debt Bad debts
Book balance Provision reason
provision ratio (%)
Unrecoverable taxes (VAT,
Cannot be
properrty tax, transfer-out input 13,017,578.30 13,017,578.30 100.00
recovered
tax)
Cannot be
Others 20,518,449.85 20,518,449.85 100.00
recovered
Benxi City Xihu District
Cannot be
Renewable Resources Utilization 2,951,245.44 2,951,245.44 100.00
recovered
Corporation
Liaoning Hengyi Financial Cannot be
2,357,285.76 2,357,285.76 100.00
Leasing Co., Ltd. recovered
Dalian China Metallurgical
Cannot be
Import & Export Dalian 2,000,000.00 2,000,000.00 100.00
recovered
Company
Financial Services Bureau Daily Cannot be
1,740,000.00 1,740,000.00 100.00
Loan Sinking Fund recovered
Cannot be
Personal loan 1,370,308.33 1,370,308.33 100.00
recovered
Benxi Peace Material Supply and Cannot be
1,097,678.20 1,097,678.20 100.00
Marketing Company recovered
Xiuyan Manchu Autonomous
Cannot be
County Materials Recycling Co., 1,018,878.71 1,018,878.71 100.00
recovered
Ltd.
Inner Mongolia Haotong Energy Cannot be
970,860.82 970,860.82 100.00
Co., Ltd. recovered
Benxi Economic Development
Cannot be
Zone Fuben Industry and Trade 730,362.94 730,362.94 100.00
recovered
Industrial Company
Benxi City Pingshan Minzheng Cannot be
672,803.75 672,803.75 100.00
Steel Factory recovered
Cannot be
Qigang in Heilongjiang Province 627,080.88 627,080.88 100.00
recovered
Bankruptcy and
Benxi Iron and Steel (Group) reorganization of
Third Construction Engineering 260,782.39 260,782.39 100.00 enterprises,
Co., Ltd. expected to be
irrecoverable
Total 49,333,315.37 49,333,315.37
Financial Statements Page 75
Bad debt provisions made on the combination:
Balance as at 30 June 2023
Types Book balance of other
Bad debt provision Bad debts ratio (%)
receivables
Within 1 year
95,787,862.39 957,878.62 1.00
1 to 2 years
1,920,566.77 192,056.68 10.00
2 to 3 years
2,772,924.29 554,584.86 20.00
More than 3 years
48,164,454.05 48,164,454.05 100.00
Total 148,645,807.50 49,868,974.21
(3) Situation of bad debt provisions
The second The third
The first stage
stage stage
Expected
Expected credit
credit loss
losses over the Total
Bad debt provision Expected credit over the entire
entire duration
losses over the duration
(no credit
next 12 months (credit
impairment
impairment
occurred)
has occurred)
Balance as at 31 December
850,661.71 1,353,672.38 61,928,862.67 64,133,196.76
2022
Balance as at 31 December
2022 is in the current period
-- Transfer to the second
-199,513.15 199,513.15
stage
-- Transfer to the third stage -931,818.80 931,818.80
-- Transfer back to the
second stage
-- Transfer back to the first
stage
Provision for this period 306,730.06 125,274.81 35,445,003.54 35,877,008.41
Transfer back in this period
Transfer and derecognition
in this period
Derecognition in this period 807,915.59 807,915.59
Other changes
Balance as at 30 June 2023 957,878.62 746,641.53 97,497,769.42 99,202,289.58
Changes in the book balance of other receivables:
Financial Statements Page 76
The second The third
The first stage
stage stage
Expected
Expected credit
credit loss
losses over the
Book balance Expected credit over the entire Total
entire duration
losses over the duration
(no credit
next 12 months (credit
impairment
impairment
occurred)
has occurred)
Balance as at 31 December
2022 85,596,605.22 43,806,421.79 61,928,862.67 191,331,889.68
Balance as at 31 December
2022 is in the current period
-- Transfer to the second
stage -11,943,705.87 11,943,705.87
-- Transfer to the third stage -4,778,004.33 4,778,004.33
-- Transfer back to the
second stage
-- Transfer back to the first
stage
Additions in this period 30,673,006.36 251,994.13 36,755,531.19 67,680,531.68
Derecognition in this period 530,434.22 46,530,626.40 3,970,088.74 51,031,149.36
Other changes 807,915.59 807,915.59
Balance as at 30 June 2023 103,795,471.49 4,693,491.06 98,684,393.86 207,173,356.41
(4) The provision for bad debts accrued, reversed or recovered in the current period
Balance as at Amount changed during the period
Balance as at
Reversed Transferred
Type 31 December Other
or or
Accrued changes 30 June 2023
2022 recovered written-off
Provision
for bad
debts of 64,133,196.76 35,877,008.41 807,915.59 99,202,289.58
other
receivables
Total 64,133,196.76 35,877,008.41 807,915.59 99,202,289.58
(5) Other receivables actually written off in the current period
Financial Statements Page 77
Item Amount written off
Other receivables actually written off 807,915.59
Important write-off of other receivables:
Whether the
Nature of Written-off payment is
Amount of Reason of
Name of debtor other procedures generated by a
written-off written-off
receivables performed related party
transaction
General
Beijing Bensteel
Sales of Manager
Material Sales 807,915.59 Revoked No
products Office
Center
Meeting
Total 807,915.59
(6) Classification by nature of payment
Book balance as at 30 June Book balance as at 31 December
Nature
2023 2022
Temporary payment 164,622,765.92 181,771,075.61
Others 33,356,356.95 9,560,814.07
Total 197,979,122.87 191,331,889.68
Financial Statements Page 78
(7) The top five units with the ending balance of other receivables collected by the
debtor
% of the total
Provision for
Nature of closing
Balance as at 30 bad debts as
Name of debtor other Aging balance of
June 2023 at 30 June
receivables other
2023
receivables
Temporary Within 1
The first 14,431,832.25 7.29 144,318.32
payment year
Temporary Within 1
The second 12,212,650.80 6.17 122,126.51
payment year
Temporary Within 1
The third 4,532,904.80 2.29 45,329.05
payment year
Temporary Within 1
The fourth 4,609,686.93 2.33 46,096.87
payment year
Temporary Within 1
The fifth 4,399,240.94 2.22 43,992.41
payment year
Total 40,186,315.72 20.30 401,863.16
Financial Statements Page 79
7. Inventories
(1) Inventory classification
Balance as at 30 June 2023 Balance as at 31 December 2022
Provision for price of inventory Provision for price of inventory
Items
Book balance decline/provision for impairment of contract Book value Book balance decline/provision for impairment of contract Book value
performance cost performance cost
Raw materials and main
4,361,671,293.63 26,986,533.69 4,334,684,759.94 4,215,260,584.25 24,954,852.46 4,190,305,731.79
materials
Work in progress and
self-made semi-finished 1,776,598,180.55 16,239,572.86 1,760,358,607.69 2,070,182,298.44 18,271,254.09 2,051,911,044.35
products
Stock goods 1,606,888,537.54 99,662,225.82 1,507,226,311.72 2,236,715,664.20 15,203,965.16 2,221,511,699.04
Total 7,745,158,011.72 142,888,332.37 7,602,269,679.35 8,522,158,546.89 58,430,071.71 8,463,728,475.18
(2) Provision for price of inventory decline and provision for impairment of contract performance cost
Additions in this period Reductions in this period
Balance as at 31 Balance as at 30 June
Items Transferred back or
December 2022 Accrued Others Others 2023
written-off
Raw materials and main materials 24,954,852.46 24,954,852.46
Work in progress and self-made
18,271,254.09 9,135,627.05 18,271,254.09 9,135,627.05
semi-finished products
Stock goods 15,203,965.16 108,797,852.86 15,203,965.16 108,797,852.86
Total 58,430,071.71 117,933,479.91 33,475,219.25 142,888,332.37
Financial Statements Page 80
8. Other Current Assets
Balance as at 30 June Balance as at 31
Items
2023 December 2022
Prepaid tax 408,957.27 166,991,140.45
VAT input tax 38,659,283.83 228,449,995.81
Total 39,068,241.10 395,441,136.26
Financial Statements Page 81
9. Long-term Equity Investments
Changes in current period
Investment
Balance of
Balance as at Gains and Other
Declaration of Provision Balance as at provision for
Investees 31 December Additional Reduced losses comprehensive Other equity
cash dividends or for Others 30 June 2023 impairment as
2022 investment investment recognized income changes
profit impairment at 30 June 2023
under the adjustment
equity method
1．Associates
Bensteel Baojin (Shenyang)
Automotive New Material 47,996,314.61 -439,659.59 47,556,655.02
Technology Co., Ltd.
Zhejiang Jingrui Steel
3,034,462.57 -2,740,000.00 -294,462.57
Processing Co., Ltd.
Total 51,030,777.18 -2,740,000.00 -734,122.16 47,556,655.02
Financial Statements Page 82
10. Other Equity Instrument Investments
(1) Situation of other equity instrument investments
Balance as at 30 June Balance as at 31
Items
2023 December 2022
Equity of Suzhou Longben Metal Materials Co., Ltd. 3,998,216.04 3,998,216.04
Equity of Northeast Special Steel Group Co., Ltd. 1,016,420,266.27 1,016,420,266.27
Total 1,020,418,482.31 1,020,418,482.31
11. Fixed Assets
(1) Fixed assets and disposal of fixed assets
Items Balance as at 30 June 2023 Balance as at 31 December 2022
Fixed assets
24,254,087,872.28 24,836,556,422.90
Disposal of fixed assets
873,197.46
Total 24,254,961,069.74 24,836,556,422.90
Financial Statements Page 83
(2) Situation of fixed assets
Transport equipment and
Items Property and plant Mechanical equipment Total
other equipment
1．Original book value
(1) Balance as at 31 December 2022 12,443,526,672.94 51,336,275,140.55 598,601,340.47 64,378,403,153.96
(2) Additions in this period 562,119,788.26 588,245,439.05 890,384.03 1,151,255,611.34
—Purchase 243,362.83 243,362.83
—Construction in progress
562,119,788.26 588,245,439.05 647,021.20 1,151,012,248.51
transferred in
—Increase in business mergers
(3) Reductions in this period 320,593,768.57 783,359,987.04 7,217,992.84 1,111,171,748.45
—Disposal or scrapping 320,593,768.57 783,359,987.04 7,217,992.84 1,111,171,748.45
(4) Balance as at 30 June 2023 12,685,052,692.63 51,141,160,592.56 592,273,731.66 64,418,487,016.85
2．Accumulated depreciation
(1) Balance as at 31 December 2022 6,322,977,252.32 32,708,591,476.02 416,799,906.76 39,448,368,635.10
(2) Additions in this period 313,255,445.84 899,386,391.18 16,612,386.86 1,229,254,223.88
—Accrued 313,255,445.84 899,386,391.18 16,612,386.86 1,229,254,223.88
(3) Reductions in this period 83,842,247.55 515,897,099.77 5,846,606.81 605,585,954.13
—Disposal or scrapping 83,842,247.55 515,897,099.77 5,846,606.81 605,585,954.13
Financial Statements Page 84
Transport equipment and
Items Property and plant Mechanical equipment Total
other equipment
(4) Balance as at 30 June 2023 6,552,390,450.61 33,092,080,767.43 427,565,686.81 40,072,036,904.85
3．Provision for impairment
(1) Balance as at 31 December 2022 84,098,414.32 9,379,681.64 93,478,095.96
(2) Additions in this period
—Accrued
(3) Reductions in this period 849,152.24 266,704.00 1,115,856.24
—Disposal or scrapping 849,152.24 266,704.00 1,115,856.24
(4) Balance as at 30 June 2023 83,249,262.08 9,112,977.64 92,362,239.72
4．Carrying value
(1) Carrying value as at 30 June 2023 6,049,412,979.94 18,039,966,847.49 164,708,044.85 24,254,087,872.28
(2) Carrying value as at 31 December
6,036,451,006.30 18,618,303,982.89 181,801,433.71 24,836,556,422.90
2022
Financial Statements Page 85
(3) Temporarily idle fixed assets
Original book Accumulated Provision for
Items Book value Notes
value depreciation impairment
Property and
219,866,137.05 136,754,246.14 83,111,890.91
plant
Mechanical
81,371,079.50 74,206,339.46 5,656,705.72 1,508,034.32
equipment
Total 301,237,216.55 210,960,585.60 88,768,596.63 1,508,034.32
(4) Fixed assets leased out through operating leases
Items Property and plant Total
1．Original book value
(1) Balance as at 31 December 2022 1,239,002.14 1,239,002.14
(2) Additions in this period
—Purchase
—Construction in progress
transferred in
—Increase in business mergers
(3) Reductions in this period
—Disposal or scrapping
—Convert to own use
(4) Balance as at 30 June 2023 1,239,002.14 1,239,002.14
2．Accumulated depreciation
(1) Balance as at 31 December 2022
(2) Additions in this period
—Accrued
(3) Reductions in this period
—Disposal or scrapping
(4) Balance as at 30 June 2023
3．Provision for impairment
(1) Balance as at 31 December 2022
(2) Additions in this period
—Accrued
Financial Statements Page 86
Items Property and plant Total
(3) Reductions in this period
—Disposal or scrapping
(4) Balance as at 30 June 2023
4．Carrying value
(1) Carrying value as at 30 June 2023 1,239,002.14 1,239,002.14
(2) Carrying value as at 31 December
1,239,002.14 1,239,002.14
2022
(5) Fixed assets with title certificates not yet completed
Reasons for not handling the certificate of
Items Book value
title
Property and plant 1,263,898,352.97 In progress
(6) Disposal of fixed assets
Balance as at 31 December
Items Balance as at 30 June 2023
2022
Mechanical equipment 873,197.46
Total 873,197.46
12. Construction in Progress
(1) Construction in progress and project materials
Items Balance as at 30 June 2023 Balance as at 31 December 2022
Construction in progress 4,151,149,369.23 3,158,195,899.65
Project materials
Total 4,151,149,369.23 3,158,195,899.65
Financial Statements Page 87
(2) Situation of construction in progress
Balance as at 30 June 2023 Balance as at 31 December 2022
Items Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Special Steel Electric Furnace Upgrading Project 1,468,183,183.99 1,468,183,183.99 1,437,078,751.92 1,437,078,751.92
Special steel rolling mill renovation project 496,329,489.14 496,329,489.14 470,182,411.88 470,182,411.88
Environmental protection transformation of sheet metal raw material yard 370,260,075.28 370,260,075.28 165,792,014.40 165,792,014.40
A cold rolling transformation project 212,176,267.19 212,176,267.19 90,087,329.61 90,087,329.61
566 square meters sintering waste heat utilization project 92,259,450.24 92,259,450.24 92,259,450.24 92,259,450.24
Environmental protection and intelligent upgrading of board material yard——Environmental protection renovation
90,337,806.17 90,337,806.17 19,266.06 19,266.06
project of No. 2 Coal Storage Yard
1780 production line upgrade 77,088,750.00 77,088,750.00
T he ABC and DEF stockyards of the Plate Ironmaking Plant are closed 69,735,369.56 69,735,369.56 150,000.00 150,000.00
Caixi Special Steel Feeding Station of Plate Scrap Steel Plant 68,245,410.08 68,245,410.08 51,959,719.57 51,959,719.57
New tertiary dedusting system for 1#2#3#7# converter in steelmaking plant 67,696,017.28 67,696,017.28 42,834,455.31 42,834,455.31
Plate company's No. 1 CDQ boiler pressure boost transformation and new No. 34 unit project 50,522,370.80 50,522,370.80 20,249,501.21 20,249,501.21
T he integrated construction of Anben restructuring information system 49,170,020.61 49,170,020.61
Desulfurization Waste Liquid Acid Production Project of Plate Ironmaking Plant 47,798,252.00 47,798,252.00 30,000.00 30,000.00
Plate energy centralized control project 40,945,397.20 40,945,397.20
T he overall improvement of the production and manufacturing management of Benxi Iron and Steel Co., Ltd. 39,756,485.12 39,756,485.12 39,756,485.12 39,756,485.12
Benxi Iron and Steel Posco Cold Rolling Quality Improvement Improvement Project 30,542,546.40 30,542,546.40 27,093,496.08 27,093,496.08
Flue gas desulfurization and desulphurization project of 4B and 5 furnace groups of Benxi Steel Plate Ironmaking
30,342,580.00 30,342,580.00
Plant
Cold-rolled high-strength steel project of cold-rolling general plant 27,466,133.97 27,466,133.97
Bensteel Plate Ironmaking General Plant Nanfen Pipe Concentrate Outbound Supporting Project 26,722,444.32 26,722,444.32
Relocation and transformation of ladle hot repair station in steelmaking plant 25,712,793.58 25,712,793.58 9,792,793.58 9,792,793.58
Others 769,858,526.30 769,858,526.30 710,910,224.67 710,910,224.67
Total 4,151,149,369.23 4,151,149,369.23 3,158,195,899.65 3,158,195,899.65
Financial Statements Page 88
(3) The change of major construction in progress
Proportion
Other of Including:
Accumulated Current
T ransfer to decrease cumulative capitalized
Balance as at 31 Additions in Balance as at 30 Project amount of interest Sources of
Project name Budget amount fixed assets in in project amount of
December 2022 this period June 2023 progress interest capitalization funds
this period current investment interest in the
capitalized rate (%)
period to budget current period
(%)
Special Steel Electric Fundraising,
1,732,481,000.00 1,437,078,751.92 31,104,432.07 1,468,183,183.99 84.74% 84.74% 14,566,446.28 6,489,004.08
Furnace Upgrading Project self-financing
Special steel rolling mill
734,730,000.00 470,182,411.88 26,147,077.26 496,329,489.14 67.55% 67.55% 17,363,637.07 4,198,950.69 Self-financing
renovation project
Environmental protection
transformation of sheet 1,286,370,000.00 165,792,014.40 204,468,060.88 370,260,075.28 28.78% 28.78% 10,710,578.63 6,408,379.79 Self-financing
metal raw material yard
A cold rolling
843,640,000.00 90,087,329.61 122,088,937.58 212,176,267.19 25.15% 25.15% 10,565,776.04 4,688,814.80 Self-financing
transformation project
566 square meters sintering
waste heat utilization 1,247,841,000.00 92,259,450.24 92,259,450.24 7.39% 7.39% 68,627,433.26
project
Environmental protection
and intelligent upgrading of
board material
yard——Environmental 310,000,000.00 19,266.06 90,318,540.11 90,337,806.17 29.14% 29.14% Self-financing
protection renovation
project of No. 2 Coal
Storage Yard
1780 production line
193,000,000.00 77,088,750.00 77,088,750.00 39.94% 39.94% Self-financing
upgrade
T he ABC and DEF
stockyards of the Plate
125,000,000.00 150,000.00 69,585,369.56 69,735,369.56 55.79% 55.79% Self-financing
Ironmaking Plant are
closed
Caixi Special Steel Feeding
Station of Plate Scrap Steel 118,453,701.00 51,959,719.57 26,633,367.20 10,347,676.69 68,245,410.08 66.35% 66.35% Self-financing
Plant
New tertiary dedusting
system for 1#2#3#7#
111,310,000.00 42,834,455.31 36,432,354.59 11,570,792.62 67,696,017.28 71.21% 71.21% 2,357,404.64 1,397,589.10 Self-financing
converter in steelmaking
plant
Plate company's No. 1
CDQ boiler pressure boost
93,270,000.00 20,249,501.21 30,272,869.59 50,522,370.80 54.17% 54.17% Self-financing
transformation and new
No. 34 unit project
T he integrated construction
of Anben restructuring 232,100,000.00 49,170,020.61 49,170,020.61 21.18% 21.18% 3,961,087.97 2,115,020.61 Self-financing
information system
Desulfurization Waste
Liquid Acid Production
99,760,000.00 30,000.00 47,768,252.00 47,798,252.00 47.91% 47.91% Self-financing
Project of Plate Ironmaking
Plant
Plate energy centralized 119,730,000.00 40,945,397.20 40,945,397.20 34.20% 34.20% Self-financing
Financial Statements Page 89
Proportion
Other of Including:
Accumulated Current
T ransfer to decrease cumulative capitalized
Balance as at 31 Additions in Balance as at 30 Project amount of interest Sources of
Project name Budget amount fixed assets in in project amount of
December 2022 this period June 2023 progress interest capitalization funds
this period current investment interest in the
capitalized rate (%)
period to budget current period
(%)
control project
T he overall improvement
of the production and
manufacturing management 56,000,000.00 39,756,485.12 39,756,485.12 70.99% 70.99% Self-financing
of Benxi Iron and Steel
Co., Ltd.
Benxi Iron and Steel Posco
Cold Rolling Quality
69,820,000.00 27,093,496.08 3,449,050.32 30,542,546.40 43.74% 43.74% Self-financing
Improvement Improvement
Project
Flue gas desulfurization
and desulphurization
project of 4B and 5 furnace 120,679,500.00 30,342,580.00 30,342,580.00 25.14% 25.14%
groups of Benxi Steel Plate
Ironmaking Plant
Cold-rolled high-strength
steel project of cold-rolling 6,169,170,000.00 27,466,133.97 27,466,133.97 0.45% 0.45% 867,286,087.53 Self-financing
general plant
Bensteel Plate Ironmaking
General Plant Nanfen Pipe
49,553,200.00 26,722,444.32 26,722,444.32 53.93% 53.93% Self-financing
Concentrate Outbound
Supporting Project
Relocation and
transformation of ladle hot
31,160,000.00 9,792,793.58 15,920,000.00 25,712,793.58 82.52% 82.52% Self-financing
repair station in
steelmaking plant
Total 13,744,068,401.00 2,447,285,674.98 955,923,637.26 21,918,469.31 3,381,290,842.93 995,438,451.42 25,297,759.07
Financial Statements Page 90
13. Right-of-use Assets
Items Land Property and plant Total
1．Original book value
(1) Balance as at 31
1,132,274,415.17 368,465,367.56 1,500,739,782.73
December 2022
(2) Additions in this period
—Newly added lease
—Increase in
business mergers
—Revaluation
adjustment
(3) Reductions in this
period
—Transfer to fixed
assets
—Disposal
(4) Balance as at 30 June
1,132,274,415.17 368,465,367.56 1,500,739,782.73
2023
2．Accumulated
depreciation
(1) Balance as at 31
79,808,472.44 40,940,596.40 120,749,068.84
December 2022
(2) Additions in this period 19,952,118.12 10,235,149.14 30,187,267.26
—Accrued 19,952,118.12 10,235,149.14 30,187,267.26
(3) Reductions in this
period
—Transfer to fixed
assets
—Disposal
(4) Balance as at 30 June
99,760,590.56 51,175,745.54 150,936,336.10
2023
3．Provision for impairment
(1) Balance as at 31
December 2022
(2) Additions in this period
—Accrued
(3) Reductions in this
period
—Transfer to fixed
assets
Financial Statements Page 91
Items Land Property and plant Total
—Disposal
(4) Balance as at 30 June
2023
4．Carrying value
(1) Carrying value as at 30
1,032,513,824.61 317,289,622.02 1,349,803,446.63
June 2023
(2) Carrying value as at 31
1,052,465,942.73 327,524,771.16 1,379,990,713.89
December 2022
14. Intangible Assets
(1) Situation of intangible assets
Software and
Items Land use rights Total
others
1．Original book value
(1) Balance as at 31 December 2022 336,885,314.76 267,948.72 337,153,263.48
(2) Additions in this period
—Purchase
—Internal research and development
—Increase in business mergers
(3) Reductions in this period
—Disposal
—Lapsed and derecognized
(4) Balance as at 30 June 2023 336,885,314.76 267,948.72 337,153,263.48
2．Accumulated depreciation
(1) Balance as at 31 December 2022 74,208,486.41 159,839.66 74,368,326.07
(2) Additions in this period 3,025,608.41 13,397.46 3,039,005.87
—Accrued 3,025,608.41 13,397.46 3,039,005.87
(3) Reductions in this period
—Disposal
—Lapsed and derecognized
(4) Balance as at 30 June 2023 77,234,094.82 173,237.12 77,407,331.94
3．Provision for impairment
(1) Balance as at 31 December 2022
(2) Additions in this period
—Accrued
(3) Reductions in this period
—Disposal
—Lapsed and derecognized
(4) Balance as at 30 June 2023
4．Carrying value
(1) Carrying value as at 30 June 2023 259,651,219.94 94,711.60 259,745,931.54
(2) Carrying value as at 31 December 2022 262,676,828.35 108,109.06 262,784,937.41
(2) Situation of land use rights without title certificates
Financial Statements Page 92
Reasons for not handling the certificate of
Items Book value
title
Land use rights 38,743,466.68 In progress
Total 38,743,466.68
15. Deferred Tax Assets and Deferred Tax Liabilities
(1) Deferred tax assets not offset
Balance as at 30 June 2023 Balance as at 31 December 2022
Deductible Deductible
Items Deferred tax Deferred tax
temporary temporary
assets assets
differences differences
Provision for
518,167,260.88 129,541,815.22 396,834,109.83 99,208,527.46
impairment of assets
Unrealized profits from
859,549.28 214,887.32 80,751,325.52 20,187,831.38
internal transactions
Changes in fair value of
other financial assets
21,315,582.72 5,328,895.68 21,315,582.73 5,328,895.68
included in other
comprehensive income
Lease liabilities 1,349,803,446.64 337,450,861.66 1,379,990,713.88 344,997,678.47
Others 51,701,085.40 12,925,271.35 46,650,523.04 11,662,630.76
Total 1,941,846,924.92 485,461,731.23 1,925,542,255.00 481,385,563.75
(2) Deferred tax liabilities not offset
Balance as at 30 June 2023 Balance as at 31 December 2022
Taxable Taxable
Items Deferred tax Deferred tax
temporary temporary
liabilities liabilities
differences differences
Right-of-use assets 1,349,803,446.63 337,450,861.66 1,379,990,713.89 344,997,678.47
Changes in fair value of
other financial assets
109,236.04 27,309.01 109,236.04 27,309.01
included in other
comprehensive income
Total 1,349,912,682.67 337,478,170.67 1,380,099,949.93 345,024,987.48
(3) Deferred tax assets or liabilities presented in net amount after offset
Financial Statements Page 93
30 June 2023 31 December 2022
Offsetting Balance of Offsetting Balance of
amount of deferred tax amount of deferred tax
Items
deferred tax assets or deferred tax assets or
assets and liabilities after assets and liabilities after
liabilities offset liabilities offset
Deferred tax assets 337,450,861.66 148,010,869.57 344,997,678.47 136,387,885.28
Deferred tax liabilities 337,450,861.66 27,309.01 344,997,678.47 27,309.01
(4) Details of unrecognized deferred tax assets
Balance as at 30 June Balance as at 31
Items
2023 December 2022
Deductible temporary difference 305,227,125.75 305,224,166.01
Deductible loss 2,599,959,695.35 1,349,817,349.12
Total 2,905,186,821.10 1,655,041,515.13
(5) Deductible losses for unrecognized deferred tax assets will expire in the
following years
Balance as at 30 June Balance as at 31
Year Notes
2023 December 2022
Year 2023 4,678,743.89 6,836,473.11
Year 2024 12,164,389.35 12,164,389.35
Year 2025 8,257,832.98 8,257,832.98
Year 2026 6,799,314.77 6,799,314.77
Year 2027 1,315,759,338.91 1,315,759,338.91
Year 2028 1,252,300,075.45
Total 2,599,959,695.35 1,349,817,349.12
Financial Statements Page 94
16. Other Non-current Assets
Balance as at 30 June 2023 Balance as at 31 December 2022
Items Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Prepayments
for long-term 349,815,196.20 349,815,196.20 110,065,560.68 110,065,560.68
assets
Total 349,815,196.20 349,815,196.20 110,065,560.68 110,065,560.68
17. Short-term Borrowings
(1) Classification of short-term borrowings
Balance as at 30 June Balance as at 31
Items
2023 December 2022
Credit loan 300,000,000.00
Discounted undue notes 20,000.00 49,200,000.00
Total 300,020,000.00 49,200,000.00
(2) Overdue short-term borrowings
None.
18. Notes Payable
Balance as at 31 December
Types Balance as at 30 June 2023
2022
Banker's acceptance bill
4,929,414,404.12 2,242,219,356.03
Commercial acceptance bill
750,527,835.47 1,407,117,263.33
Domestic letter of credit
2,040,000,000.00 740,000,000.00
Total 7,719,942,239.59 4,389,336,619.36
At the end of the period, there were no bills payable that were due but not paid.
Financial Statements Page 95
19. Accounts Payable
(1) Details of accounts payable
Balance as at 31 December
Items Balance as at 30 June 2023
2022
Accounts payable 3,394,258,784.62 2,650,335,777.91
Service 174,409,816.97 60,238,703.49
Payables for engineering and equipment 299,798,220.11 767,867,762.87
Repair costs and others 224,428,703.69 217,978,219.58
Total 4,092,895,525.39 3,696,420,463.85
(2) Important accounts payable aged over 1 year
Reasons for non-payment or
Items Balance as at 30 June 2023
carryover
Billing conditions have not
Company 1 9,014,897.80
been met
Billing conditions have not
Company 2 4,193,831.29
been met
Billing conditions have not
Company 3 4,091,809.05
been met
Billing conditions have not
Company 4 3,127,924.07
been met
Billing conditions have not
Company 5 1,342,440.00
been met
Total 21,770,902.21
20. Contract Liabilities
Details of contract liabilities
Balance as at 31
Items Balance as at 30 June 2023
December 2022
Advances from customers 3,733,739,770.22 3,794,115,592.29
Total 3,733,739,770.22 3,794,115,592.29
21. Employee Benefits Payable
Financial Statements Page 96
(1) Employee benefits payable presentation
Balance as at
Additions in this Reductions in Balance as at
Items 31 December
period this period 30 June 2023
2022
Short-term employee
10,046,363.27 1,101,071,973.76 1,098,165,873.06 12,952,463.97
benefits
Post-employment benefits -
138,804,290.70 138,804,290.70
defined contribution plans
Termination benefits 8,183,513.99 8,183,513.99
Other benefits due within
one year
Total 10,046,363.27 1,248,059,778.45 1,245,153,677.75 12,952,463.97
(2) Short-term employee benefits presentation
Balance as at
Additions in this Reductions in Balance as at
Items 31 December period this period
30 June 2023
2022
I. Salaries, bonus,
allowances and subsidies 794,299,383.08 794,299,383.08
II. Staff welfare
93,936,208.17 93,936,208.17
III. Social insurances
95,670,156.88 95,670,156.88
Including: Medical
insurance and maternity
73,981,150.79 73,981,150.79
insurance
Work-related
injury insurance 21,678,022.69 21,678,022.69
Others
10,983.40 10,983.40
IV. Housing Fund
6,622,309.00 95,210,946.00 95,210,946.00 6,622,309.00
V. Labor union fees, staff
and workers’ education fee 3,424,054.27 21,955,279.63 19,049,178.93 6,330,154.97
VI. Short-term paid
absences
VII. Short-term
profit-sharing plan
Total 10,046,363.27 1,101,071,973.76 1,098,165,873.06 12,952,463.97
Financial Statements Page 97
(3) Defined contribution plans presentation
Balance as at
Additions in Reductions in Balance as at
Items 31 December
this period this period 30 June 2023
2022
I. Basic pension 134,565,282.08 134,565,282.08
II. Unemployment insurance 4,239,008.62 4,239,008.62
III. Enterprise annuity
payment
Total 138,804,290.70 138,804,290.70
22. Taxes and Surcharges Payable
Balance as at 31 December
Items Balance as at 30 June 2023
2022
VAT 66,496,383.29 5,168,511.13
Corporate income tax 12,274,395.43 11,469,020.92
Individual income tax 783,980.67 2,546,699.73
City maintenance and construction tax 1,660,244.53 175,567.61
Property tax 6,901,254.66 3,785,986.96
Educational surcharge 1,220,343.26 125,405.40
Land use tax 1,049,336.05 1,051,651.99
Others 16,057,391.23 20,070,077.04
Total 106,443,329.12 44,392,920.78
23. Other Payables
Balance as at 30 June Balance as at 31
Items
2023 December 2022
Interest payable
Dividends payable
Other payables
1,639,486,201.24 1,247,722,165.47
Total 1,639,486,201.24 1,247,722,165.47
Financial Statements Page 98
Other payables
Other payables by nature
Items Balance as at 30 June 2023 Balance as at 31 December 2022
Deposit 869,292.00 2,303,050.00
Margin 317,146,084.62 290,353,044.56
Accounts 1,108,631,647.65 941,440,196.32
Others 212,839,176.97 13,625,874.59
Total 1,639,486,201.24 1,247,722,165.47
24. Non-current Liabilities Maturing within One Year
Balance as at 31 December
Items Balance as at 30 June 2023
2022
Long-term borrowings maturing within
1,572,461,117.60 2,501,169,854.72
one year
Bonds payable maturing within one year 44,762,324.73
Lease liability maturing within one year 40,740,341.21 40,318,706.98
Total 1,613,201,458.81 2,586,250,886.43
25. Other Current Liabilities
Balance as at 31 December
Items Balance as at 30 June 2023
2022
Output tax to be transferred 485,575,516.40 493,235,027.03
Total 485,575,516.40 493,235,027.03
Financial Statements Page 99
26. Long-term Borrowings
Long-term loans presented by category:
Balance as at 31 December
Items Balance as at 30 June 2023
2022
Guaranteed loans 360,780,612.70
Credit loans 959,713,911.60 1,366,157,689.60
Total 959,713,911.60 1,726,938,302.30
27. Bonds Payable
(1) Details of bonds payable
Balance as at 31 December
Items Balance as at 30 June 2023
2022
Convertible bonds 5,382,304,119.20 5,276,502,232.78
Total 5,382,304,119.20 5,276,502,232.78
Financial Statements Page 100
(2) Changes in bonds payable (Excluding other financial instruments such as preferred stocks and perpetual bonds classified as financial
liabilities)
Premium and Convert to
Name of Term to Balance as at 31 Current Interest accrued Repayment Balance as at 30
Face value Issue date Issuance amount discount stock this
bond maturity December 2022 issue at face value this period June 2023
amortization period
Bengang
Convertible
Bonds
6,800,000,000.00 2020/6/29 6 years 6,800,000,000.00 5,276,502,232.78 42,232,875.75 148,044,762.17 10,000.00 5,382,304,119.20
(Code of
bond:
127018)
Total 6,800,000,000.00 5,276,502,232.78 42,232,875.75 148,044,762.17 10,000.00 5,382,304,119.20
Financial Statements Page 101
(3) Description of the conditions and time for conversion of convertible bonds
Approved by Shenzhen Stock Exchange "Shen Zheng Shang [2020] No. 656", the
Company’s RMB 6.80 billion convertible corporate bonds were listed on the
Shenzhen Stock Exchange on August 4, 2020, and the abbreviation is "Bengang
Convertible Bonds". The bond code is "127018". The conversion period of the
convertible corporate bonds issued this time is from the first trading day after six
months of the issuance of the convertible corporate bonds (July 3, 2020) to the
maturity date of the convertible corporate bonds, that is, from January 4, 2021 to
June 28, 2026. The initial conversion price of the convertible bonds is RMB 5.03
per share. During the period from January 1, 2021 to December 31, 2021, the
Company's A-share convertible bonds of RMB 1,168,855,400.00 were converted
into the Company's A-share ordinary shares, and the number of converted shares
was 232,819,847 shares. Of which:
In the first quarter of 2022, Bengang's convertible bonds decreased by RMB
67,000.00 (670 bonds) due to share conversion, the number of shares converted
was 14,698 shares, and the conversion price was RMB 4.55 per share;
In the second quarter of 2022, Bengang's convertible bonds decreased by RMB
13,200.00 (132 bonds) due to share conversion, the number of shares converted
was 3,029.00 shares, and the conversion price was RMB 3.95 per share;
In the third quarter of 2022, Bengang's convertible bonds decreased by RMB
9,300.00 (93 bonds) due to share conversion, the number of shares converted was
2,352 shares, and the conversion price was RMB 3.95 per share;
In the fourth quarter of 2022, Bengang's convertible bonds decreased by RMB
3,000.00 (30 bonds) due to share conversion, the number of shares converted was
759 shares, and the conversion price was RMB 3.95 per share;
In the first quarter of 2023, Bengang's convertible bonds decreased by RMB
4,000.00 (40 bonds) due to share conversion, the number of shares converted was
1,012 shares, and the conversion price was RMB 3.95 per share;
In the second quarter of 2023, Bengang's convertible bonds decreased by RMB
6,000.00 (60 bonds) due to share conversion, the number of shares converted was
1,518 shares, and the conversion price was RMB 3.95 per share;
As at June 30, 2023, the Company's remaining balance of convertible bonds was
RMB 5,631,042,100.00 (56,310,421 bonds).
Financial Statements Page 102
(4) Notes to other financial instruments classified as financial liabilities
None.
28. Lease Liabilities
Balance as at 30 June Balance as at 31
Items
2023 December 2022
Lease payments 2,186,301,130.48 2,191,946,735.27
Unrecognized financing charges 781,227,266.14 767,279,566.11
Reclassified to non-current liabilities due
40,740,341.21 40,318,706.98
within one year
Total 1,364,333,523.13 1,384,348,462.18
29. Deferred Income
Balance as at
Additions in Reductions in Balance as at
Items 31 December this period this period Reasons
30 June 2023
2022
Government Government
42,377,015.51 850,000.00 1,839,198.73 41,387,816.78
grant grant
Total 42,377,015.51 850,000.00 1,839,198.73 41,387,816.78
Financial Statements Page 103
Projects related to government grants:
Amount included in
Balance as at New subsidy
the current profit and Other Balance as at Asset-related
Liabilities items 31 December amount in this
loss in the current changes 30 June 2023 /Revenue-related
2022 period
period
Research and development of the third-generation high-strength
1,160,000.00 290,000.00 870,000.00 Asset-related
steel for automobiles
Carbon fiber wastewater advanced treatment project in
5,700,000.00 950,000.00 4,750,000.00 Asset-related
Dongfeng plant area of sheet metal coking plant
Desulfurization and denitrification project of coal-fired boiler in
2,400,000.00 300,000.00 2,100,000.00 Asset-related
high-voltage workshop of Benxi Iron and Steel Power Plant
Air Pollution Prevention and Control Fund - Second Sintering
Cleaning and Dust Removal Ultra-low Emission Transformation 1,230,000.00 205,000.00 1,025,000.00 Asset-related
Project
2021 Special Fund Project for Intellectual Manufacturing and
8,100,000.00 8,100,000.00 Asset-related
Strengthening the Province
2021 Benxi City Expert Talent and Enterprise Docking Project 5,000.00 5,000.00 Asset-related
2021 Benxi City Pollution Control and Energy Conservation and
Carbon Reduction Special Project (Converter Gas Recovery and 1,500,000.00 44,117.65 1,455,882.35 Asset-related
Efficiency Improvement Transformation Project)
2021 Municipal Skillmaster Workstation Fees 77,297.51 81.08 77,216.43 Asset-related
2018 Liaoning Provincial "Hundred Thousands of Talents
220,000.00 220,000.00 Asset-related
Project" Funding Project
2018 Municipal Skillmaster Workstation Fees 58,766.34 58,766.34 Asset-related
Financial Statements Page 104
Amount included in
Balance as at New subsidy
the current profit and Other Balance as at Asset-related
Liabilities items 31 December amount in this
loss in the current changes 30 June 2023 /Revenue-related
2022 period
period
2019 Municipal Skillmaster Workstation Fees 69,500.19 69,500.19 Asset-related
2020 special ecological civilization construction project (special
20,000,000.00 20,000,000.00 Asset-related
steel electric furnace upgrade project)
Liaoning Artisan Subsidy 2.97 2.97 Asset-related
Effect mechanism and control of rare earth oxysulfide on the
334,448.50 334,448.50 Asset-related
plasticity of automobile steel
Design of rare earth steel metallurgical slag system and research
340,000.00 340,000.00 Revenue-related
on its physical and chemical properties
Provincial Science and Technology Department National Natural
Science Foundation of China-Liaoning Provincial Government 334,000.00 334,000.00 Revenue-related
Joint Fund Project
2019 Provincial Skill Master Workstation Fees 200,000.00 200,000.00 Revenue-related
2020 Provincial Skillmaster Workstation Fees 100,000.00 100,000.00 Revenue-related
Basic research on the new technology of composite iron coke
168,000.00 168,000.00 Revenue-related
low-carbon ironmaking charge
2021 the second batch of planned projects of Liaoning
Provincial Central Government Guidance for Local Science and 300,000.00 300,000.00 Revenue-related
Technology Development Funds
2020 Liaoning Provincial "Hundred Thousands of Talents
50,000.00 50,000.00 Revenue-related
Project" Funding Project
Provincial Science and Technology Department 2022 Liaoning
30,000.00 30,000.00 Revenue-related
Provincial Natural Science Foundation Project Fund
Financial Statements Page 105
Amount included in
Balance as at New subsidy
the current profit and Other Balance as at Asset-related
Liabilities items 31 December amount in this
loss in the current changes 30 June 2023 /Revenue-related
2022 period
period
2022 Liaoning will become a strong province with digital
300,000.00 300,000.00 Revenue-related
intelligence
Municipal enterprise operation patent navigation project funding
200,000.00 200,000.00 Revenue-related
subsidy
Xingliao Talents Program government subsidy 350,000.00 350,000.00 Revenue-related
Total 42,377,015.51 850,000.00 1,839,198.73 41,387,816.78
Financial Statements Page 106
30. Share Capital
Changes in the current period increase (+) decrease (-)
Provident
Balance as at 31 Issuance Balance as at 30
Items Bonus fund
December 2022 of new Others Subtoal June 2023
shares converted
shares
into share
Total
4,108,212,217.00 2,530.00 2,530.00 4,108,214,747.00
shares
Other notes:
The increase in this period is due to the conversion of A-share convertible bonds issued by
the Company into 2,530.00 A-share ordinary shares. Please refer to Note V. (27) Bonds
Payable for details.
Financial Statements Page 107
31. Other Equity Instruments
(1) Basic information on other financial instruments such as gold preferred shares and perpetual bonds issued outside at the end of the period
Other equity instruments at the end of the period are the equity part of convertible corporate bonds. For the basic information of convertible corporate
bonds, please refer to Note V. (27) Bonds Payable.
(2) Changes in financial instruments such as preferred stocks and perpetual bonds issued at the end of the period
Financial instruments 31 December 2022 Additions in this period Reductions in this period 30 June 2023
issued outside Number Book value Number Book value Number Book value Number Book value
Convertible bonds 56,310,521.00 947,863,834.02 100.00 2,035.66 56,310,421.00 947,861,798.36
Total 56,310,521.00 947,863,834.02 100.00 2,035.66 56,310,421.00 947,861,798.36
A total of RMB 10,000.00 (100 bonds) of A-share convertible bonds issued by the Company were converted into ordinary A-shares of the Company during
the period. As of June 30, 2023, the Company's remaining convertible bond balance is RMB 5,631,042,100.00 (56,310,421 bonds). For details, please refer
to Note V. (27) Bonds Payable.
Financial Statements Page 108
32. Capital Reserves
Additions in this Reductions in
Balance as at 31 Balance as at 30
Items period this period
December 2022 June 2023
Capital premium
13,156,287,691.39 7,397.04 13,156,295,088.43
(Equity premium)
Other capital reserves 115,917,468.82 115,917,468.82
Total 13,272,205,160.21 7,397.04 13,272,212,557.25
The increase in capital premium is due to the conversion of convertible bonds into the
Company’s A-share ordinary shares.
Financial Statements Page 109
33. Other Comprehensive Income
Current period
Amount Less: included in other Less: included in other
Balance as at 31 Attributable Attributable Balance as at 30
before comprehensive income in comprehensive income in the Less:
Items to the parent to minority
December 2022 income tax in the previous period and previous period and income tax June 2023
company shareholders
the current transferred to profit or loss transferred to retained expense
after tax after tax
period in the current period earnings in the current period
I. Other comprehensive income
that will not be reclassified into -15,904,760.02 -15,904,760.02
profits and losses
Including: Remeasurement of
changes in defined benefit plan
Other comprehensive
income that cannot be
transferred to profit or loss
under the equity method
Changes in fair value of
other equity instrument -15,904,760.02 -15,904,760.02
investments
Changes in the fair value
of the enterprise's own credit
risk
2．Other co mprehensive income
which will be reclassified into
profits and losses
Including: Other comprehensive
income that can be transferred to
profit or loss under the equity
method
Changes in fair value of
other debt investments
Amount of
reclassification of financial
assets included in other
comprehensive income
Provision for credit
impairment of other debt
investments
Cash flow hedge reserve
Translation differences
Financial Statements Page 110
Current period
Amount Less: included in other Less: included in other
Balance as at 31 Attributable Attributable Balance as at 30
Items before comprehensive income in comprehensive income in the Less:
to the parent to minority
December 2022 income tax in the previous period and previous period and income tax June 2023
company shareholders
the current transferred to profit or loss transferred to retained expense
after tax after tax
period in the current period earnings in the current period
of foreign currency financial
statements
Total other comprehensive
-15,904,760.02 -15,904,760.02
income
Financial Statements Page 111
34. Special Reserves
Additions in this Reductions in this
Balance as at 31 Balance as at 30
Items period period
December 2022 June 2023
Safety production
2,217,913.77 34,099,757.81 7,307,318.69 29,010,352.89
fee
Total 2,217,913.77 34,099,757.81 7,307,318.69 29,010,352.89
35. Surplus Reserves
Additions Reductions
Balance as at 31 Balance as at 1 Balance as at 30
Items in this in this
December 2022 January 2023 June 2023
period period
Statutory
1,195,116,522.37 1,195,116,522.37 1,195,116,522.37
surplus
reserves
Total
1,195,116,522.37 1,195,116,522.37 1,195,116,522.37
36. Undistributed Profits
Items Current period Previous period
Undistributed profit at the end of the previous year -720,559,670.73 2,977,306,297.64
before adjustment
Adjust the total undistributed profit at the
beginning of the year (increase +, decrease -)
Adjusted undistributed profit at the beginning of -720,559,670.73 2,977,306,297.64
the year
Add: Net profit attributable to owners of the parent -1,004,945,623.68 -1,232,976,557.37
company in the current period
Other transfers 25,416.40
Less: Provision of statutory surplus reserve
Provision of any provident fund
Provision of general risk reserve in the
current period
Dividends payable on common stock 2,464,914,827.40
Financial Statements Page 112
Items Current period Previous period
Common stock dividends transferred to share
capital
Other transfers
Undistributed profit at the end of the period -1,725,505,294.41 -720,559,670.73
Adjustment of undistributed profit details at the beginning of the period: due to the
retrospective adjustment of the “Accounting Standards for Business Enterprises” and
related new regulations, the undistributed profit at the beginning of the period was
affected by RMB 10,592,129.13.
37. Operating Income and Operating Costs
Details of operating income and operating costs
Current period Previous period
Items
Revenue Costs Revenue Costs
Principal
30,178,980,302.21 30,346,840,599.33 33,109,977,666.90 31,509,788,033.31
business
Other
388,428,902.82 367,800,364.58 1,905,199,638.08 1,867,689,507.32
business
Total 30,567,409,205.03 30,714,640,963.91 35,015,177,304.98 33,377,477,540.63
Details of operating income:
Principal business Other business
Contract classification Total
income income
Classified by business area
Domestic 26,612,052,408.77 388,428,902.82 27,000,481,311.59
Abroad 3,566,927,893.44 3,566,927,893.44
Total 30,178,980,302.21 388,428,902.82 30,567,409,205.03
Classified by the time of
commodity transfer
Recognized at a certain point in
30,178,980,302.21 387,065,834.86 30,566,046,137.07
time
Recognized over a certain
1,363,067.96 1,363,067.96
period of time
Total 30,178,980,302.21 388,428,902.82 30,567,409,205.03
38. Tax and surcharges
Financial Statements Page 113
Items Current period Previous period
City maintenance and construction tax 6,576,796.79 4,726,087.15
Educational surcharge 4,800,732.70 3,554,726.34
Housing property tax 40,884,994.48 40,822,272.51
Land use right tax 6,075,969.40 6,847,915.75
Environmental tax 9,527,874.78 11,411,384.22
Stamp duty 30,849,463.63 32,496,146.38
Others 324,845.97 26,912.88
Total 99,040,677.75 99,885,445.23
39. Selling Expenses
Items Current period Previous period
Import and export agency fee 21,131,652.66 36,702,096.00
Salary and benefits 37,771,652.79 18,244,427.10
Package fee 4,973,464.77
Others 9,615,841.56 7,510,887.30
Sales service fee 1,382,736.23
Total 69,901,883.24 67,430,875.17
40. Administrative Expenses
Items Current period Previous period
Employee's salaries 206,440,312.89 149,216,492.01
Repair expenses 298,281.38 105,587,548.07
Heating costs 34,042,689.20 19,965,273.48
Depreciation 19,462,599.70 22,309,498.45
land use fees 1,322,782.02 19,696,001.68
Environmental protection fees 4,442,540.02 1,099,369.60
Water resources fees 16,331,031.46 3,176,610.83
Others 57,228,784.82 31,253,889.98
Total 339,569,021.49 352,304,684.10
41. Research and Development Expenses
Financial Statements Page 114
Items Current period Previous period
Depreciation, materials and wages, etc. 32,990,679.09 22,368,496.87
Total 32,990,679.09 22,368,496.87
42. Finance Costs
Items Current period Previous period
Interest expenses 234,419,462.35 342,674,208.42
Including: Interest expense on lease
27,047,108.38 27,576,079.44
liabilities
Less: Interest income 27,351,519.21 61,019,147.27
Exchange gains and losses -49,493,753.99 5,012,400.26
Other expenses 3,983,576.72 6,425,946.41
Total 161,557,765.87 293,093,407.82
43. Other income
Items Current period Previous period
Government grant 2,379,198.73 30,272,965.00
Withholding personal income tax
913,893.41
handling fee
Others 225,000.00 382,577.92
Total 3,518,092.14 30,655,542.92
Financial Statements Page 115
44. Investment Income
Items Current period Previous period
Long-term equity investment income measured by equity
-439,659.58 85,455.22
method
Investment income from disposal of long-term equity
-294,462.57
investment
Investment income from disposal of financial assets
-2,502,067.50
held-for-trading
Investment income from debt restructuring 694,683.35
Others 30,387.62
Total -2,541,506.30 115,842.84
45. Credit Impairment Losses
Items Current period Previous period
Bad debt loss of accounts receivable 18,426,234.94 -2,845,559.93
Bad debt loss of other receivables -35,877,008.41 2,051,653.20
Total -17,450,773.47 -793,906.73
46. Asset Impairment Losses
Items Current period Previous period
Inventory falling price loss and impairment loss on
-84,458,260.66 -72,880,991.53
contract performance costs
Total -84,458,260.66 -72,880,991.53
Financial Statements Page 116
47. Gains on Disposal of Assets
Current Previous Amount included in the current
Items
period period non-recurring gains and losses
Gains or losses on disposal of fixed
3,648,546.62
assets not classified as held for sale
Total 3,648,546.62
48. Non-operating Income
Current Previous Amount included in the current
Items
period period non-recurring gains and losses
Gains from damage and
17,095,345.19 711,708.55 17,095,345.19
scrapping of non-current assets
Compensation for breach of
980,399.63 980,399.63
contract
Unpayable accounts payable 2,447,931.60 27,948,070.49 2,447,931.60
Others 31,060,871.61 1,912,502.31 31,060,871.61
Total 51,584,548.03 30,572,281.35 51,584,548.03
49. Non-operating Expenses
Current Previous Amount included in the current
Items
period period non-recurring gains and losses
Non-current asset damage and
48,484,833.89 10,765,339.79 48,484,833.89
scrapping loss
Fines, compensation for breach of
2,072,844.13 2,072,844.13
contract, compensation payments
Others 27,649.11 27,649.11
Total 50,585,327.13 10,765,339.79 50,585,327.13
50. Income Tax Expenses
(1) Income tax expense table
Financial Statements Page 117
Items Current period Previous period
Current income tax expenses
46,665,568.90 197,785,904.70
Deferred tax expenses
-13,473,858.06 5,419,049.90
Total 33,191,710.84 203,204,954.60
(2) Accounting profit and income tax expense adjustment process
Items Current period
Total profit -950,225,013.71
Income tax expense calculate according to the official or applicable tax
-242,556,253.43
rate
Impact of different tax rates applicable to subsidiaries
Effect of adjusting prior period income taxes 22,945,743.75
Effect of non-taxable income -109,914.90
Effect of non-deductible costs, expenses or losses 100,437.96
Effect of use of deductible losses of unrecognized deferred tax asset of
-543,713.22
prior period
The impact of deductible temporary differences or deductible losses of
255,856,087.61
deferred income tax assets not recognized in the current period
Others -2,500,676.93
Income tax expenses 33,191,710.84
Financial Statements Page 118
51. Notes of Statement of Cash Flows
(1) Cash received from other operating activities
Items Current period Previous period
Recover current payment and advance payment 36,965,273.21 97,205,274.52
Interest income 27,351,519.21 61,019,147.27
Special subsidies and grants 850,000.00 9,690,000.00
Others 980,399.63 804,702.43
Total 66,147,192.05 168,719,124.22
(2) Cash paid for other operating activities
Items Current period Previous period
Current payment with different entities 28,422,075.16 22,514,446.73
Administrative expenses 112,917,219.14 168,184,142.54
Selling expenses 32,130,230.45 50,910,874.42
Handling fee 3,983,576.72 6,425,946.41
Others 1,023,567.21
Total 177,453,101.47 249,058,977.31
(3) Cash received from other financing activities
Items Current period Previous period
Margin for bill, letter of guarantee and letter of
299,914,718.38 2,548,792,921.60
credit
Total 299,914,718.38 2,548,792,921.60
Financial Statements Page 119
(4) Cash paid for other financing activities
Items Current period Previous period
Margin for bill, letter of guarantee and letter of credit 695,121,631.51 71,693,646.43
Total 695,121,631.51 71,693,646.43
52. Supplementary Information to Cash Flow Statement
(1) Supplementary information to cash flow statement
Supplementary information Current period Previous period
1. Reconciliation of net profit to cash flows from operating
activities
Net profit -983,416,724.55 579,963,876.24
Add: Credit impairment loss 17,450,773.47 793,906.73
Impairment of assets 84,458,260.66 72,880,991.53
Depreciation of fixed assets 823,089,855.07 1,105,263,552.94
Depletion of oil and gas properties
Depreciation of right-of-use assets 30,187,267.26 30,187,267.22
Amortization of intangible assets 3,039,005.87 3,690,085.26
Amortization of long-term deferred expenses
Losses on disposal of fixed assets, intangible assets and
-3,648,546.62
other long-term assets("-" for net income)
Losses on retirement of fixed assets("-" for net income) 31,389,488.70 10,053,631.24
Losses from changes in fair value("-" for net income)
Finance expenses("-" for net income) 184,925,708.36 342,674,208.42
Investment loss("-" for net income) 2,541,506.30 -115,842.84
Decrease in deferred tax assets("-" for increase) -11,622,984.29 5,419,049.90
Increase in deferred tax liabilities("-" for decrease)
Decrease in inventory("-" for increase) 784,701,660.05 1,435,572,851.38
Decrease in operating receivables("-" for increase) -816,626,771.10 2,160,572,533.72
Increase in operating payables("-" for decrease) 4,512,520,236.01 -5,468,912,532.78
Others -46,943,190.13
Net cash flow from operating activities 4,662,637,281.81 227,451,842.21
2. Significant investment and financing activities that do not
involve cash receipts and payments:
Conversion of debt into capital
Convertible corporate bonds due within one year
Leasing of fixed assets through financing
3. Net changes in cash and cash equivalents:
Closing balance of cash 3,135,535,935.14 4,750,473,298.51
Less: Opening balance of cash 1,296,662,683.20 6,299,099,063.48
Add: Closing balance of cash equivalents
Less: Opening balance of cash
Net increase in cash and cash equivalents 1,838,873,251.94 -1,548,625,764.97
Financial Statements Page 120
(2) Composition of cash and cash equivalents
Balance as at 30 June Balance as at 31
Items
2023 December 2022
I. Cash 3,135,535,935.14 1,296,662,683.20
Including: Cash on hand
Digital currency available for payment at any time
Bank deposits available for payment at any time 3,135,535,935.14 1,296,662,683.20
Other monetary funds readily available for
payment
Money deposited with the central bank for
payment
Interbank deposit
Interbank money
II. Cash equivalents
Including: Bond investments maturing within three months
III. Balance of cash and cash equivalents at the end of the
3,135,535,935.14 1,296,662,683.20
period
Including: Restricted cash and cash equivalents used by the
parent company or subsidiaries within the group
53. Assets whose Ownership or Use Rights Are Restricted
Balance as at 30 June
Items Reason for restriction
2023
Monetary funds 521,023,596.93 Deposit for notes and letter of credit
Notes receivable 255,189,626.40 Pledge for banker's acceptance bill
Total 776,213,223.33
Financial Statements Page 121
54. Foreign Currency Monetary Items
(1) Foreign currency monetary items
Closing balance of Translation Closing balance
Items foreign currency rate converted into RMB
Monetary funds
562,525,888.30
Including: U.S. Dollar
77,083,100.68 7.2258 556,987,068.89
Euro 2,840.49 7.8771 22,374.82
Hong Kong Dollar
5,983,128.62 0.9220 5,516,444.59
Long-term borrowings
5,225,029.20
Including: U.S. Dollar
Euro
Hong Kong Dollar
104,292,000.00 0.0501 5,225,029.20
(2) The company has no overseas operating entities.
Financial Statements Page 122
55. Government Grants
(1) Government grants related to assets
Items presented Amount included in the current profit and loss or
Items included in current
in the statement offsetting related costs and expenses
Types Amount profit or loss or written off
of financial
Current period Previous period related costs and expenses
position
Research and development of the
third-generation high-strength steel for 2,900,000.00 Deferred income 290,000.00 290,000.00 Other income
automobiles
Carbon fiber wastewater advanced treatment
project in Dongfeng plant area of sheet metal 9,500,000.00 Deferred income 950,000.00 950,000.00 Other income
coking plant
Desulfurization and denitrification project of
coal-fired boiler in high-voltage workshop of 6,000,000.00 Deferred income 300,000.00 300,000.00 Other income
Benxi Iron and Steel Power Plant
Air Pollution Prevention and Control Fund -
Second Sintering Cleaning and Dust Removal 2,050,000.00 Deferred income 205,000.00 205,000.00 Other income
Ultra-low Emission Transformation Project
2021 Special Fund Project for Intellectual
8,100,000.00 Deferred income Other income
Manufacturing and Strengthening the Province
2021 Benxi City Pollution Control and Energy
Conservation and Carbon Reduction Special 1,500,000.00 Deferred income 44,117.65 Other income
Project (Converter Gas Recovery and Efficiency
Financial Statements Page 123
Items presented Amount included in the current profit and loss or
Items included in current
in the statement offsetting related costs and expenses
Types Amount profit or loss or written off
of financial
Current period Previous period related costs and expenses
position
Improvement Transformation Project)
2021 Municipal Skillmaster Workstation Fees 80,000.00 Deferred income 81.08 Other income
The 2018 Liaoning Provincial "Hundred
250,000.00 Deferred income Other income
Thousands of Talents Project" Funding Project
2018 Municipal Skillmaster Workstation Fees 240,000.00 Deferred income Other income
2019 Municipal Skillmaster Workstation Fees 180,000.00 Deferred income Other income
2020 special ecological civilization construction
project (special steel electric furnace upgrade 20,000,000.00 Deferred income Other income
project)
Liaoning Artisan Subsidy 180,000.00 Deferred income Other income
Flue gas desulfurization project of seven
24,000,000.00 Deferred income 2,400,000.00 Other income
130-ton combustion boilers in a power plant
Fund for cogeneration renovation project of the
10,000,000.00 Deferred income 1,000,000.00 Other income
third electric workshop of the power plant
Cold-rolled high-strength steel transformation
250,000,000.00 Deferred income 25,000,000.00 Other income
project
Financial Statements Page 124
(2) Government grants related to income
Amount included in the current profit and
Items included in current profit or loss or
Types Amount loss or offsetting related costs and expenses
written off related costs and expenses
Current period Previous period
Effect mechanism and control of rare earth oxysulfide on the
547,040.00 122,965.00 Other income
plasticity of automobile steel
2021 Benxi City Expert Talent and Enterprise Docking
10,000.00 5,000.00 Other income
Project
Design of rare earth steel metallurgical slag system and
340,000.00 Other income
research on its physical and chemical properties
Provincial Science and Technology Department National
Natural Science Foundation of China-Liaoning Provincial 334,000.00 Other income
Government Joint Fund Project
2019 Provincial Skill Master Workstation Fees 200,000.00 Other income
2020 Provincial Skillmaster Workstation Fees 100,000.00 Other income
Basic research on the new technology of composite iron
168,000.00 Other income
coke low-carbon ironmaking charge
In 2021, the second batch of planned projects of Liaoning
Provincial Central Government Guidance for Local Science 300,000.00 Other income
and Technology Development Funds
The 2020 Liaoning Provincial "Hundred Thousands of
50,000.00 50,000.00 Other income
Talents Project" Funding Project
Provincial Science and Technology Department 2022
30,000.00 Other income
Liaoning Provincial Natural Science Foundation Project
Financial Statements Page 125
Amount included in the current profit and
Items included in current profit or loss or
Types Amount loss or offsetting related costs and expenses
written off related costs and expenses
Current period Previous period
Fund
In 2022, Liaoning will become a strong province with digital
300,000.00 Other income
intelligence
Municipal enterprise operation patent navigation project
200,000.00 Other income
funding subsidy
"Xingliao Talents Program" government subsidy 350,000.00 Other income
Financial Statements Page 126
56. Leases
As lessee
Items Current period Previous period
Interest expense on the lease liabilities 27,047,108.38 27,576,079.44
Simplified short-term lease expenses included in
relevant asset costs or current profit and loss
Simplified rental expenses of low-value assets
included in relevant asset costs or current profit
and loss (except for short-term rental expenses of
low-value assets)
Variable lease payments not included in the
measurement of lease liabilities that are included in
the cost of related assets or current profit and loss
Including: the part generated by the sale and
leaseback transaction
Income from sub-leasing of right-of-use assets
Total cash outflows related to leases 46,640,413.20 46,846,358.31
Related gains and losses arising from sale and
leaseback transactions
Cash inflow from sale and leaseback transactions
Cash outflow from sale and leaseback transactions
VI. Changes in the scope of consolidation
There is no change in the scope of consolidation in this period.
VII. Interests in Other Entities
Financial Statements Page 127
1. Interests in Subsidiaries
(1) Composition of the corporate group
Principal Shareholding
Registered Nature of Acquiring
Name of the subsidiaries place of ratio
address business method
business Direct Indirect
Guangzhou Bensteel
Guangzhou Guangzhou Sale 100 Set up
Trading Co., Ltd.
Shanghai Bensteel
Metallurgical Technology Shanghai Shanghai Sale 100 Set up
Co., Ltd.
Dalian Benruitong
Automotive Material Dalian Dalian Production 65 Set up
Technology Co., Ltd.
Business
Bengang Puxiang Cool combination
Rolling Steel Sheet Co., Benxi Benxi Production 75 under
Ltd. common
control
Business
combination
Changchun Bensteel Sales
Changchun Changchun Sale 100 under
Co., Ltd.
common
control
Business
combination
Yantai Bengang Iron and
Yantai Yantai Sale 100 under
Steel Sales Co., Ltd.
common
control
Business
combination
Tianjin Bengang Iron and
Tianjin Tianjin Sale 100 under
Steel Trading Co., Ltd.
common
control
Benxi Bensteel Sales Co.,
Benxi Benxi Sale 100 Set up
Ltd.
Shenyang Bensteel
Metallurgical Technology Shenyang Shenyang Sale 100 Set up
Co., Ltd.
Explanation that the proportion of shares held in subsidiaries is different from the
proportion of voting rights: there is no such matter in the Company.
Financial Statements Page 128
Basis for holding half or less of the voting rights but still controlling the invested
company, and holding more than half of the voting rights but not controlling the
invested company: the Company does not have such matters.
For important structured entities included in the scope of consolidation, the basis
for control: there is no such matter in the Company.
(2) Significant but not wholly-owned subsidiaries
Dividend
Profits and losses Closing
Proportion of declared to
attributing to balance of
Name of the subsidiaries non-controlling distribute to
non-controlling non-controlling
interests (%) non-controlling
shareholders interests
shareholders
Bengang Puxiang Cool
Rolling Steel Sheet Co., 25% 17,461,806.81 595,620,461.21
Ltd.
Explanation that the shareholding ratio of the minority shareholders of the
subsidiary is different from the ratio of voting rights: there is no such matter in the
Company.
Financial Statements Page 129
(3) Main financial information of important non-wholly owned subsidiaries
Balance as at 30 June 2023 Balance as at 31 December 2022
Name of the
Non-current Current Non-current Non-current Current Non-current
subsidiaries Current assets Total assets Total liabilities Current assets Total assets Total liabilities
assets liabilities liabilities assets liabilities liabilities
Bengang Puxiang Cool
Rolling Steel Sheet 3,611,025,289.22 984,679,076.32 4,595,704,365.54 2,213,222,520.70 2,213,222,520.70 2,642,318,664.91 1,031,753,449.22 3,674,072,114.13 1,370,714,059.80 1,370,714,059.80
Co., Ltd.
Current period Previous period
Name of the subsidiaries Total comprehensive Net cash flows from Total comprehensive Net cash flows from
Operating income Net profit Operating income Net profit
income operating activities income operating activities
Bengang Puxiang Cool Rolling Steel
4,253,071,574.21 69,847,227.23 69,847,227.23 171,658,194.18 5,229,533,000.35 91,532,242.77 91,532,242.77 306,038,909.09
Sheet Co., Ltd.
Financial Statements Page 130
2. Interests in Joint Arrangements or Associates
(1) Important joint ventures or associates
The Company has no significant joint ventures or associates.
(2) Summary financial information of insignificant joint ventures and associates
Balance as at 30 June 2023/ Balance as at 31 December
Current period 2022/ Previous period
Associates:
Total book value of investments 47,556,655.02 51,030,777.18
Total of the following items calculated
according to the shareholding ratio
—Net profit -734,122.16 -1,444,809.15
—Other comprehensive income
—Total comprehensive income -734,122.16 -1,444,809.15
VIII. Risks Associated with Financial Instruments
The Company faces various financial risks in the course of operation: credit risk, liquidity
risk and market risk (including exchange rate risk, interest rate risk and other price risks).
The above financial risks and the risk management policies adopted by the Company to
reduce these risks are as follows:
The Board of Directors is responsible for planning and establishing the Company's risk
management structure, formulating the Company's risk management policies and relevant
guidelines, and supervising the implementation of risk management measures. The
Company has formulated risk management policies to identify and analyze the risks faced
by the Company. These risk management policies clearly stipulate specific risks, covering
many aspects such as market risk, credit risk and liquidity risk management. The
Company regularly evaluates changes in the market environment and the Company’s
business activities to determine whether to update risk management policies and systems.
The Company’s risk management is carried out by the Risk Management Committee in
accordance with the policies approved by the Board of Directors. The Risk Management
Committee identifies, evaluates and avoids relevant risks through close cooperation with
other business departments of the company. The company’s internal audit department
conducts regular audits on risk management controls and procedures, and reports the audit
Financial Statements Page 131
results to the company's audit committee.
The overall goal of the Company’s risk management is to formulate risk management
policies that reduce risks as much as possible without excessively affecting the
Company’s competitiveness and resilience.
1. Credit risk
Credit risk refers to the risk that the counterparty fails to perform its contractual
obligations and cause financial losses to the Company.
The Company mainly faces customer credit risk caused by credit sales. Before entering
into a new contract, the Company conducts an assessment of the credit risk of the new
client, including an external credit rating and, in some cases, bank references (when this
information is available). The Company sets a credit sales limit for each customer, which
is the maximum amount that does not require additional approval.
The Company ensures that the company's overall credit risk is within a controllable range
through regular monitoring of existing customer credit ratings and regular review of
accounts receivable aging analysis. When monitoring the credit risk of customers, group
them according to their credit characteristics. Customers rated as "high risk" will be
placed on a restricted customer list, and only with additional approval, the Company can
sell to them on credit in the future, otherwise they must be required to pay the
corresponding amount in advance.
2. Liquidity risk
Liquidity risk refers to the risk of a shortage of funds when an enterprise fulfills its
obligations for settlement by delivery of cash or other financial assets.
It is the Company's policy to ensure that it has sufficient cash to meet debt obligations as
they fall due. Liquidity risk is centrally controlled by the Company's financial department.
The financial department ensures that the company has sufficient funds to repay debts
under all reasonable forecasts by monitoring cash balances, marketable securities that can
be realized at any time, and rolling forecasts of cash flows for the next 12 months. At the
same time, continue to monitor whether the company complies with the provisions of the
loan agreement, and obtain commitments from major financial institutions to provide
sufficient backup funds to meet short-term and long-term funding needs.
The Company's various financial liabilities are listed as follows in terms of undiscounted
contractual cash flow by maturity date:
Financial Statements Page 132
Amount unit: RMB ten thousand
Balance as at 30 June 2023
Items Repayment Within 1 Over 5
1-2 years 2-5 years Total
on demand year years
Trade and
920,298.97 920,298.97
other payables
Borrowing and
252,786.75 40,752.91 83,945.86 377,485.52
interest
Total 1,173,085.72 40,752.91 83,945.86 1,297,784.49
Balance as at 31 December 2022
Items Repayment Within 1 Over 5
1-2 years 2-5 years Total
on demand year years
Trade and
693,670.74 693,670.74
other payables
Borrowing
494,568.82 255,904.22 678,612.89 695.49 1,429,781.42
and interest
Total 1,188,239.56 255,904.22 678,612.89 695.49 2,123,452.16
3. Market risk
The market risk of financial instruments refers to the risk of fluctuations in the fair value
or future cash flow of financial instruments due to changes in market prices, including
exchange rate risk, interest rate risk and other price risks.
(1) Interest rate risk
Interest rate risk refers to the risk of fluctuations in the fair value of financial
instruments or future cash flows due to changes in market interest rates.
The interest rate risk faced by the Company mainly comes from floating-rate bank
deposits and floating-rate loans to bear the cash flow interest rate risk. The
Company has not formulated a policy to manage its interest rate risk, but the
management will carefully choose financing methods, combining fixed and
floating interest rates, short-term debt and long-term debt. Utilize effective interest
rate risk management methods, closely monitor interest rate risk, and use interest
rate swaps when necessary to achieve the expected interest rate structure.
Financial Statements Page 133
(2) Exchange rate risk
Exchange rate risk refers to the risk of fluctuations in the fair value of financial
instruments or future cash flows due to changes in foreign exchange rates.
The Company continuously monitors the scale of foreign currency transactions and
foreign currency assets and liabilities to minimize the foreign exchange risk it faces.
In addition, the Company may also sign forward foreign exchange contracts or
currency swap contracts to achieve the purpose of avoiding exchange rate risks.
During the reporting period, the Company did not sign any forward foreign
exchange contracts or currency swap contracts.
The exchange rate risk faced by the Company mainly comes from the financial
assets and financial liabilities denominated in US dollars. The amount of foreign
currency financial assets and foreign currency financial liabilities converted into
RMB is listed as follows:
Amount unit: RMB ten thousand
Balance as at 30 June 2023 Balance as at 31 December 2022
Other Other
Items
US dollar foreign Total US dollar foreign Total
currency currency
Assets 55,698.71 553.88 56,252.59 4,428.43 495.12 4,923.55
Liabilities 522.50 522.50 4,979.69 21,521.13 26,500.82
Total 55,698.71 1,076.38 56,775.09 9,408.12 22,016.25 31,424.37
On June 30, 2023, with all other variables held constant, if the exchange rates of
the U.S. dollar, the euro, and the Japanese yen against the renminbi appreciate or
depreciate by 5%, then the Company will increase or decrease the net profit by
RMB 27.865 million (31 December 2022: RMB 10.7886 million). The
management believes that 5% reasonably reflects the reasonable range of possible
changes of the US dollar, Euro and Japanese yen against RMB in the next year.
IX. Disclosure of Fair Value
The input values used in fair value measurement are divided into three levels:
The first-level input value is the unadjusted quoted price in an active market for the same
asset or liability that can be obtained on the measurement date.
The second-level input value is the directly or indirectly observable input value of the
Financial Statements Page 134
relevant asset or liability other than the first-level input value.
The third-level input value is the unobservable input value of related assets or liabilities.
The level to which the fair value measurement results belong is determined by the lowest
level to which the input values that are important to the fair value measurement as a
whole belong.
1. Closing Fair Value of Assets and Liabilities Measured at Fair Value
Closing fair value
The first The second
The third level of
Items level of fair level of fair
fair value Total
value value
measurement
measurement measurement
I. Continuous fair value
measurement
◆Financial assets
held-for-trading
1. Financial assets measured
at fair value through profit or
loss
(1) Investment in debt
instruments
(2) Investment in equity
instruments
(3) Derivative financial
assets
(4)Others
2. Designated as financial
assets at fair value through
profit or loss
(1) Investment in debt
instruments
(2) Others
◆Accounts receivable
953,938,535.80 953,938,535.80
financing
◆Other debt investments
◆Other equity instruments 1,020,418,482.31 1,020,418,482.31
investments
◆Other non-current financial
assets
1. Financial assets measured
Financial Statements Page 135
Closing fair value
The first The second
The third level of
Items level of fair level of fair
fair value Total
value value
measurement
measurement measurement
at fair value through profit or
loss
(1) Investment in debt
instruments
(2) Investment in equity
instruments
(3) Derivative financial
assets
(4)Others
2. Designated as financial
assets at fair value through
profit or loss
(1) Investment in debt
instruments
(2) Others
Total assets continuously
1,974,357,018.11 1,974,357,018.11
measured at fair value
◆Financial liabilities
held-for-trading
1. Financial liabilities
held-for-trading
(1) Trading bonds issued
(2) Derivative financial
liabilities
(3)Others
2. Designated as financial
liabilities at fair value through
profit or loss
Total liabilities continuously
measured at fair value
II. Non-continuous fair value
measurement
◆Assets held for sale
Total assets non-continuous
fair value measurement
◆Liabilities held for sale
Total liabilities
non-continuous fair value
Financial Statements Page 136
Closing fair value
The first The second
The third level of
Items level of fair level of fair
fair value Total
value value
measurement
measurement measurement
measurement
2. The basis for determining the market value of the continuous and non-continuous
first-level fair value measurement projects
The Company has no first level fair value measurement project.
3. Continuous and non-continuous second-level fair value measurement items, using
valuation techniques and qualitative and quantitative information on important
parameters
The Company has no second level fair value measurement items.
4. Continuous and non-continuous third-level fair value measurement items, using
valuation techniques and qualitative and quantitative information on important
parameters
Other equity instrument investments that continue to be measured at the third level of fair
value are unlisted equity investments held by the Company.
The receivable financing of continuous third-level fair value measurement is the banker’s
acceptance bill held by the Company, and its fair value is confirmed with reference to the
face value.
The Company uses valuation techniques for fair value measurement, mainly using the
valuation techniques of the non-listed company comparison method.
Financial Statements Page 137
X. Related Party and Related Party Transactions
1. Information about the Parent of the Company
Registered The parent Proportion of
company's voting rights
Registration Business capital (100 shareholding of the parent
Name of parent
place nature percentage in company to
million the the
Company(%) Company(%)
yuan)
Benxi Steel and Iron Benxi,
Manufacturing 74.01 58.65 58.65
(Group) Co., Ltd. Liaoning
The ultimate controlling party of the Company is Ansteel Group Co., Ltd.
2. Subsidiaries of the Company
For the details of the Company's subsidiaries, please refer to "VII. Interests in Other
Entities" in this note.
3. The Company's Joint Ventures and Associates
For details of the important joint ventures or associates of the Company, please refer to
"VII. Interests in other entities" in this note.
The situation of other joint ventures or associates that had related party transactions with
the Company in the current period, or had balances with the Company in the previous
period is as follows:
Name of joint venture or associate Relationship with the Company
Bengang Baojin (Shenyang) Automotive New Material
Associate
Technology Co., Ltd.
Zhejiang Bengang Jingrui Steel Processing Co., Ltd. Associate
Financial Statements Page 138
4. Situation of Other Related Parties
Relationship between other related parties
Name of other related parties
and the Company
Controlling shareholder of the parent
Bensteel Group Co., Ltd.
company
Ansteel Electric Co., Ltd. Both belong to Ansteel Group
Ansteel Scrap Resources (Anshan) Co., Ltd. Both belong to Ansteel Group
Ansteel Scrap Resources (Anshan) Co., Ltd. Chaoyang
Both belong to Ansteel Group
Branch
Ansteel Processing and Distribution (Dalian) Co., Ltd. Both belong to Ansteel Group
Ansteel Processing and Distribution (Changchun) Co.,
Both belong to Ansteel Group
Ltd.
Ansteel Processing and Distribution (Zhengzhou) Co.,
Both belong to Ansteel Group
Ltd.
Ansteel Distribution (Hefei) Co., Ltd. Both belong to Ansteel Group
Ansteel Distribution (Wuhan) Co., Ltd. Both belong to Ansteel Group
Ansteel Rope Co., Ltd. Both belong to Ansteel Group
Ansteel Co., Ltd. Both belong to Ansteel Group
Ansteel Chemical Technology Co., Ltd. Both belong to Ansteel Group
Ansteel Group (Anshan) Railway Transportation
Both belong to Ansteel Group
Equipment Manufacturing Co., Ltd.
Ansteel Group Finance Co., Ltd. Both belong to Ansteel Group
Ansteel Group Engineering Technology Development
Both belong to Ansteel Group
Co., Ltd.
Ansteel Group Engineering Technology Co., Ltd. Associate of Ansteel Group
Ansteel Group International Economic and Trade Co.,
Both belong to Ansteel Group
Ltd.
Ansteel Group Mining Gongchangling Co., Ltd. Both belong to Ansteel Group
Ansteel Group Mining Co., Ltd. Both belong to Ansteel Group
Ansteel Group Co., Ltd. Both belong to Ansteel Group
Ansteel Group Automation Co., Ltd. Both belong to Ansteel Group
Ansteel Construction Group Co., Ltd. Both belong to Ansteel Group
Ansteel Metal Structure Co., Ltd. Both belong to Ansteel Group
Ansteel Technology Development Co., Ltd. Both belong to Ansteel Group
Ansteel Mining Machinery Manufacturing Co., Ltd. Both belong to Ansteel Group
Ansteel Green Resources Technology Co., Ltd. Both belong to Ansteel Group
Ansteel Energy Technology Co., Ltd. Both belong to Ansteel Group
Ansteel Industrial Group (Anshan) Equipment Operation
Both belong to Ansteel Group
and Maintenance Co., Ltd.
Ansteel Industrial Group Metallurgical Machinery Co., Both belong to Ansteel Group
Financial Statements Page 139
Relationship between other related parties
Name of other related parties
and the Company
Ltd.
Ansteel Shuangsheng (Anshan) Fan Co., Ltd. Both belong to Ansteel Group
Ansteel Modern City Service (Anshan) Co., Ltd. Both belong to Ansteel Group
Ansteel Roll Co., Ltd. Both belong to Ansteel Group
Ansteel Heavy Machinery Design and Research Institute
Both belong to Ansteel Group
Co., Ltd.
Ansteel Heavy Machinery Co., Ltd. Both belong to Ansteel Group
Ansteel Cast Steel Co., Ltd. Both belong to Ansteel Group
North Hengda Logistics Co., Ltd. Both belong to Bensteel Group
Bengang Stainless Steel Cold Rolling Dandong Co., Ltd. Same parent company
Bengang Electric Co., Ltd. Associate of parent company
Bensteel Group Finance Co., Ltd. Both belong to Bensteel Group
Bensteel Group International Economic and Trade Co., Both belong to Bensteel Group
Ltd.
Bengang Tendering Co., Ltd. Both belong to Bensteel Group
Benxi Beitai Casting Pipe Co., Ltd. Both belong to Bensteel Group
Benxi Beiying Iron and Steel (Group) Co., Ltd. Both belong to Bensteel Group
Benxi Iron and Steel (Group) Real Estate Development
Same parent company
Co., Ltd.
Benxi Iron and Steel (Group) Engineering Construction Same parent company
Supervision Co., Ltd.
Benxi Iron and Steel (Group) Machinery Manufacturing Same parent company
Co., Ltd.
Benxi Iron and Steel (Group) Construction Co., Ltd. Same parent company
Benxi Iron and Steel (Group) Mining Co., Ltd. Same parent company
Benxi Iron and Steel (Group) Thermal Power Same parent company
Development Co., Ltd.
Benxi Iron and Steel (Group) Equipment Engineering Same parent company
Co., Ltd.
Benxi Iron and Steel (Group) Design and Research Same parent company
Institute
Benxi Iron and Steel (Group) Industrial Development Same parent company
Co., Ltd.
Benxi Iron and Steel (Group) Information Automation Same parent company
Co., Ltd.
Benxi Iron and Steel (Group) Construction Co., Ltd. Same parent company
Benxi Iron and Steel (Group) Metallurgical Slag Co., Same parent company
Ltd.
Benxi Steel and Iron (Group) Co., Ltd. Parent company
Benxi Iron and Steel (Group) Chint Building Materials
Same parent company
Co., Ltd.
Financial Statements Page 140
Relationship between other related parties
Name of other related parties
and the Company
Benxi High-tech Drilling Tools Manufacturing Co., Ltd. Both belong to Bensteel Group
Benxi New Business Development Co., Ltd. Same parent company
Chengdu Pangang Hotel Co., Ltd. Both belong to Ansteel Group
Dalian Borolle Steel Pipe Co., Ltd. Same parent company
Delin Industrial Products Co., Ltd. Both belong to Ansteel Group
Delin Lugang Supply Chain Service Co., Ltd. Both belong to Ansteel Group
Guangzhou Angang Steel Processing Co., Ltd. Both belong to Ansteel Group
Guangzhou Free Trade Zone Benxi Steel Sales Co., Ltd. Same parent company
Liaoning Hengtai Heavy Machinery Co., Ltd. Same parent company
Liaoning Hengyi Steel Trading Co., Ltd. Both belong to Bensteel Group
Liaoning Metallurgical Technician College Same parent company
Liaoning Vocational and Technical College of Metallurgy Same parent company
Pangang Group Xichang Steel and Vanadium Co., Ltd. Both belong to Ansteel Group
Panzhong Yihong Metal Products (Chongqing) Co., Ltd. Both belong to Ansteel Group
Suzhou Longben Metal Materials Co., Ltd. Hold an equity interest in the company
Tianjin Angang Steel Processing and Distribution Co.,
Both belong to Ansteel Group
Ltd.
Tianjin Ansteel International North Trading Co., Ltd. Both belong to Ansteel Group
Wuhan Yuanhong Trading Co., Ltd. Hold an equity interest in the company
Changchun FAW Angang Steel Processing and
Both belong to Ansteel Group
Distribution Co., Ltd.
Ansteel Tendering Co., Ltd. Both belong to Ansteel Group
5. Situation of Related Party Transactions
(1) Related party transactions of purchasing or selling goods, rendering and
receiving services
Table of purchase of goods/receiving of services
Whether the
Related Approved transaction
Amount in this Amount in
Related parties transaction transaction amount limit is
period previous period
content (if applicable) exceeded (if
applicable)
Ansteel Electric Not
Repair service 261,249.99 Not applicable
Co., Ltd. applicable
Ansteel Scrap
Resources
Raw materials 370,082,138.82 1,300,000,000.00 No 96,065,566.10
(Anshan) Co.,
Ltd.
Ansteel Steel
Processing and Not
Service fee Not applicable 11,353.84
Distribution applicable
(Dalian) Co., Ltd.
Ansteel Rope
Spare parts 169,538.40 10,000,000.00 No
Co., Ltd.
Not
Raw fuel Not applicable 75,504,413.81
Ansteel Co., Ltd. applicable
Ansteel Group Spare parts 872,000.00 Not applicable Not
Financial Statements Page 141
Whether the
Related Approved transaction
Amount in this Amount in
Related parties transaction transaction amount limit is
period previous period
content (if applicable) exceeded (if
applicable)
(Anshan) applicable
Railway
Transportation
Equip ment
Manufacturing
Co., Ltd.
Ansteel Group Financial Not
303,708.86 Not applicable
Finance Co., Ltd. services applicable
Ansteel Group
Engineering Engineering Not
512,000.00 Not applicable
Technology Co., design applicable
Ltd.
Ansteel Group
Engineering Construction
117,959,759.13 23,000,000.00 No
Technology Co., and installation
Ltd.
Ansteel Group
Engineering Not
Equipment 76,337,521.60 Not applicable
Technology Co., applicable
Ltd.
Ansteel Group
Engineering Not
Repair service 260,000.00 Not applicable
Technology Co., applicable
Ltd.
Ansteel Group
International Not
Raw materials Not applicable 8,328,324.66
Economic and applicable
Trade Co., Ltd.
Ansteel Group
Mining
Raw materials 200,408,297.44 500,000,000.00 No 238,405,486.63
Gongchangling
Co., Ltd.
Ansteel Group
Automation Co., Software 47,055,000.00 230,000,000.00 No
Ltd.
Ansteel
Not
Construction Project costs Not applicable 21,192,660.55
applicable
Group Co., Ltd.
Ansteel
Research and
Technology Not
development 633,962.27 Not applicable
Develop ment applicable
service
Co., Ltd.
Ansteel Industrial
Group (Anshan)
Equip ment
Labor service 3,253,333.20 10,000,000.00 No
Operation and
Maintenance Co.,
Ltd.
Ansteel Industrial
Group
Not
Metallurgical Repair service 5,097,094.81 Not applicable 563,736.00
applicable
Machinery Co.,
Ltd.
Angang
Shuangsheng Not
Spare parts 69,000.00 Not applicable
(Anshan) Fan applicable
Co., Ltd.
Ansteel Heavy
Not
Machinery Co., Repair service 1,565,966.00 Not applicable
applicable
Ltd.
North Hengda
Not
Logistics Co., Processing fee 599,384.02 Not applicable
applicable
Ltd.
North Hengda
Not
Logistics Co., Raw material 942,680.16 Not applicable
applicable
Ltd.
North Hengda Transportation
Logistics Co., and storage 66,562,921.54 30,000,000.00 Yes 14,102,106.06
Ltd. Fees
Financial Statements Page 142
Whether the
Related Approved transaction
Amount in this Amount in
Related parties transaction transaction amount limit is
period previous period
content (if applicable) exceeded (if
applicable)
Bengang Electric
Spare parts 53,735,396.26 200,000,000.00 No
Co., Ltd.
Bengang Electric Not
Repair service 3,857,674.29 Not applicable
Co., Ltd. applicable
Bengang Electric Not
Raw materials Not applicable 65,419,935.95
Co., Ltd. applicable
Bensteel Group
International
Agency service 32,464,379.89 200,000,000.00 No 133,605,645.86
Economic and
Trade Co., Ltd.
Bensteel Group
Rental fees 4,972,711.56 100,000,000.00 No 1,947,299.50
Co., Ltd.
Ben xi Beiying
Not
Iron and Steel Inspection fees 71,796.00 Not applicable
applicable
(Group) Co., Ltd.
Ben xi Beiying
Iron and Steel Energy power 329,215,977.30 800,000,000.00 No 354,632,805.17
(Group) Co., Ltd.
Ben xi Beiying
Iron and Steel Repair service 2,163,383.85 100,000,000.00 No 46,977,784.13
(Group) Co., Ltd.
Ben xi Beiying
Iron and Steel Raw materials 6,177,881,267.18 15,080,000,000.00 No 6,247,319,985.72
(Group) Co., Ltd.
Ben xi Beiying
Not
Iron and Steel Rental fees 5,979,849.05 Not applicable
applicable
(Group) Co., Ltd.
Ben xi Iron and
Steel (Group)
Engineering Not
Supervision fee 836,573.63 Not applicable
Construction applicable
Supervision Co.,
Ltd.
Ben xi Iron and
Steel (Group)
Machinery Spare parts 29,846,785.48 120,000,000.00 No 23,012,269.46
Manufacturing
Co., Ltd.
Ben xi Iron and
Steel (Group)
Machinery Labor service 4,456,401.89 80,000,000.00 No 38,577,078.16
Manufacturing
Co., Ltd.
Ben xi Iron and
Steel (Group)
Equipment fees Not
Machinery 8,487,520.00 Not applicable
applicable
Manufacturing
Co., Ltd.
Ben xi Iron and
Steel (Group)
Not
Machinery Raw materials 2,940,750.95 Not applicable
applicable
Manufacturing
Co., Ltd.
Ben xi Iron and
Steel (Group)
Not
Machinery Rental fees 16,578,454.81 Not applicable
applicable
Manufacturing
Co., Ltd.
Ben xi Iron and
Steel (Group) Not
Spare parts 4,854,600.01 Not applicable 4,646,764.56
Construction Co., applicable
Ltd.
Ben xi Iron and
Steel (Group) Construction Not
184,925,593.15 Not applicable 90,638,976.00
Construction Co., and installation applicable
Ltd.
Ben xi Iron and
Not
Steel (Group) Brokerage agent 3,156,976.43 Not applicable
applicable
Construction Co.,
Financial Statements Page 143
Whether the
Related Approved transaction
Amount in this Amount in
Related parties transaction transaction amount limit is
period previous period
content (if applicable) exceeded (if
applicable)
Ltd.
Ben xi Iron and
Steel (Group)
Labor service 9,511,440.90 585,000,000.00 No
Construction Co.,
Ltd.
Ben xi Iron and
Steel (Group) Not
Equipment fees 48,514,680.00 Not applicable
Construction Co., applicable
Ltd.
Ben xi Iron and
Steel (Group) Not
Raw materials 2,783,241.40 Not applicable 4,646,764.56
Construction Co., applicable
Ltd.
Ben xi Iron and
Steel (Group) Transportation Not
358,232.94 Not applicable
Construction Co., service applicable
Ltd.
Ben xi Iron and
Not
Steel (Group) Service fee Not applicable 2,613,517.18
applicable
Mining Co., Ltd.
Ben xi Iron and
Steel (Group) Raw materials 1,981,592,292.78 8,950,000,000.00 No 3,510,974,470.81
Mining Co., Ltd.
Ben xi Iron and
Steel (Group)
Not
Thermal Power Heating costs 293,698.06 Not applicable 708,146.88
applicable
Develop ment
Co., Ltd.
Ben xi Iron and
Steel (Group)
Not
Thermal Power Raw materials 142,424.64 Not applicable 35,759.46
applicable
Develop ment
Co., Ltd.
Ben xi Iron and
Steel (Group)
Not
Equip ment Spare parts 527,996.85 Not applicable
applicable
Engineering Co.,
Ltd.
Ben xi Iron and
Steel (Group)
Construction Not
Equip ment 52,248,696.53 Not applicable
and installation applicable
Engineering Co.,
Ltd.
Ben xi Iron and
Steel (Group)
Not
Equip ment Labor service 16,676,640.31 Not applicable 17,144,271.62
applicable
Engineering Co.,
Ltd.
Ben xi Iron and
Steel (Group)
Not
Equip ment Equipment fees 78,905,792.00 Not applicable
applicable
Engineering Co.,
Ltd.
Ben xi Iron and
Steel (Group)
Equip ment Repair service 33,669,653.98 100,000,000.00 No 5,748,486.32
Engineering Co.,
Ltd.
Ben xi Iron and
Steel (Group)
Not
Equip ment Raw materials 3,413,348.23 Not applicable 2,058,346.87
applicable
Engineering Co.,
Ltd.
Ben xi Iron and
Steel (Group)
Transportation Not
Equip ment 562,115.92 Not applicable
service applicable
Engineering Co.,
Ltd.
Ben xi Iron and Office 293,726.74 Not applicable Not
Financial Statements Page 144
Whether the
Related Approved transaction
Amount in this Amount in
Related parties transaction transaction amount limit is
period previous period
content (if applicable) exceeded (if
applicable)
Steel (Group) equipment applicable
Industrial
Develop ment
Co., Ltd.
Ben xi Iron and
Steel (Group)
Construction Not
Industrial 184,024.72 Not applicable
and installation applicable
Develop ment
Co., Ltd.
Ben xi Iron and
Steel (Group)
Not
Industrial Labor service 582,738.30 Not applicable
applicable
Develop ment
Co., Ltd.
Ben xi Iron and
Steel (Group)
Daily Not
Industrial 1,826,368.18 Not applicable
necessities applicable
Develop ment
Co., Ltd.
Ben xi Iron and
Steel (Group)
Not
Industrial Repair service 446,808.00 Not applicable 443,449.54
applicable
Develop ment
Co., Ltd.
Ben xi Iron and
Steel (Group)
Industrial Raw materials 9,559,452.37 600,000,000.00 No 52,820,474.67
Develop ment
Co., Ltd.
Ben xi Iron and
Steel (Group)
Transportation Not
Industrial 3,030,721.77 Not applicable
service applicable
Develop ment
Co., Ltd.
Ben xi Iron and
Steel (Group)
Not
Information Spare parts 16,818,802.44 Not applicable 4,990,030.05
applicable
Automation Co.,
Ltd.
Ben xi Iron and
Steel (Group)
Construction Not
Information 897,468.01 Not applicable 18,816,098.36
and installation applicable
Automation Co.,
Ltd.
Ben xi Iron and
Steel (Group)
Information Software 58,674,627.61 100,000,000.00 否
Automation Co.,
Ltd.
Ben xi Iron and
Steel (Group)
Not
Information Repair service 548,300.00 Not applicable 910,634.86
applicable
Automation Co.,
Ltd.
Ben xi Iron and
Steel (Group)
Raw materials 123,153,136.39 300,000,000.00 No 139,381,388.64
Metallurgical
Slag Co., Ltd.
Ben xi Steel and
Financial Not
Iron (Group) Co., 1,406,819.97 Not applicable
services applicable
Ltd.
Ben xi Steel and
Not
Iron (Group) Co., Energy power 208,218.19 Not applicable
applicable
Ltd.
Ben xi Steel and
Daily Not
Iron (Group) Co., 2,602.04 Not applicable
necessities applicable
Ltd.
Ben xi Steel and Equipment Not
2,150,000.00 Not applicable
Iron (Group) Co., inspection applicable
Financial Statements Page 145
Whether the
Related Approved transaction
Amount in this Amount in
Related parties transaction transaction amount limit is
period previous period
content (if applicable) exceeded (if
applicable)
Ltd.
Ben xi Steel and
Iron (Group) Co., Repair service 85,545,984.60 350,000,000.00 No 122,783,160.52
Ltd.
Ben xi Steel and
Not
Iron (Group) Co., Raw materials 221,106.88 Not applicable
applicable
Ltd.
Ben xi Steel and
Transportation Not
Iron (Group) Co., 70,844.04 Not applicable
service applicable
Ltd.
Ben xi Steel and
Not
Iron (Group) Co., Rental fees 35,687,852.59 Not applicable 30,187,267.22
applicable
Ltd.
Ben xi High-tech
Drilling Tools Not
Spare parts Not applicable 71,251.70
Manufacturing applicable
Co., Ltd.
Ben xi New
Business Not
Spare parts 8,892.94 Not applicable
Develop ment applicable
Co., Ltd.
Ben xi New
Business Catering and Not
608,112.36 Not applicable
Develop ment accommodation applicable
Co., Ltd.
Ben xi New
Business Daily Not
157,261.01 Not applicable
Develop ment necessities applicable
Co., Ltd.
Chengdu
Catering and Not
Pangang Hotel 937.74 Not applicable
accommodation applicable
Co., Ltd.
Dalian Borolle
Not
Steel Pipe Co., Raw materials 599,495.23 Not applicable
applicable
Ltd.
Delin Industrial
Office Not
Products Co., 682,715.44 Not applicable
equipment applicable
Ltd.
Delin Industrial
Not
Products Co., Spare parts 14,447,322.53 Not applicable
applicable
Ltd.
Delin Industrial
Not
Products Co., Raw materials 8,538.92 Not applicable
applicable
Ltd.
Liaoning Hengtai
Heavy Construction Not
1,044,084.00 Not applicable
Machinery Co., and installation applicable
Ltd.
Liaoning Hengtai
Heavy Not
Equipment 12,130,000.00 Not applicable
Machinery Co., applicable
Ltd.
Liaoning Hengtai
Heavy
Repair service 25,586,655.43 50,000,000.00 No 3,363,187.60
Machinery Co.,
Ltd.
Liaoning Hengtai
Heavy Not
Raw materials 619,327.43 Not applicable 1,158,044.41
Machinery Co., applicable
Ltd.
Liaoning Hengtai
Heavy Transportation Not
35,137.61 Not applicable
Machinery Co., service applicable
Ltd.
Liaoning
Hengtong
Not
Metallurgical Raw materials Not applicable 66,215,321.16
applicable
Equip ment
Manufacturing
Financial Statements Page 146
Whether the
Related Approved transaction
Amount in this Amount in
Related parties transaction transaction amount limit is
period previous period
content (if applicable) exceeded (if
applicable)
Co., Ltd.
Liaoning
Metallurgical Not
Training fee Not applicable 580,509.17
Technician applicable
College
Table for sale of goods/render of services
Related
Amount in this Amount in previous
Related parties transaction
period period
content
Angang Steel Processing and Distribution
Goods 27,577,837.53
(Dalian) Co., Ltd.
Angang Steel Processing and Distribution
Goods 2,003,478.27
(Changchun) Co., Ltd.
Angang Steel Processing and Distribution
Goods 10,433,394.39
(Zhengzhou) Co., Ltd.
Angang Steel Distribution (Hefei) Co., Ltd. Goods 9,109,492.59
Angang Steel Distribution (Wuhan) Co., Ltd. Goods 55,103,512.47
Ansteel Co., Ltd. Goods 94,339.62 33,602,226.06
Ansteel Chemical Technology Co., Ltd. Goods 46,858,532.33 85,184,242.50
Ansteel Group Mining Co., Ltd. Goods 6,415.09
Ansteel Construction Group Co., Ltd. Energy power 24,962.53
Ansteel Green Resources Technology Co., Ltd. Goods 8,928,632.16 14,016,402.04
Raw materials
Ansteel Green Resources Technology Co., Ltd. 70,586,829.06
and spare parts
Raw materials
Ansteel Energy Technology Co., Ltd. 97,132.19
and spare parts
Ansteel Energy Technology Co., Ltd. Energy power 7,772,270.08
Ansteel Cast Steel Co., Ltd. Goods 87,707.40
North Hengda Logistics Co., Ltd. Goods 1,646,632,183.35 732,332,869.53
Bengang Electric Co., Ltd. Energy power 2,966,904.10
Bensteel Gaoyuan Industrial Develop ment Co.,
Goods 611.32
Ltd.
Bensteel Group Finance Co., Ltd. Energy power 6,024.27
Bensteel Group International Economic and
Goods 3,566,927,893.44
Trade Co., Ltd.
Bengang Group Co., Ltd. Energy power 101,729.51 54,228.93
Benxi North Steel Pipe Co., Ltd. Energy power 8,456.61
Benxi Northern Iron Industry Co., Ltd. Goods 11,065,842.59 341,033,255.96
Benxi Beiying Iron and Steel (Group) Co., Ltd. Goods 3,951,328.22 7,805,748.05
Raw materials
Benxi Beiying Iron and Steel (Group) Co., Ltd. 84,897,746.67 404,510,783.18
and spare parts
Benxi Beiying Iron and Steel (Group) Co., Ltd. Energy power 33,632,066.23 36,045,489.04
Ben xi Dongfeng Lake Steel Resources
Goods 14,111,556.08 11,652,917.70
Utilization Co., Ltd.
Financial Statements Page 147
Related
Amount in this Amount in previous
Related parties transaction
period period
content
Ben xi Dongfeng Lake Steel Resources
Energy power 2,482,745.43 3,170,242.42
Utilization Co., Ltd.
Ben xi Iron and Steel (Group) Real Estate
Energy power 40,312.15
Development Co., Ltd.
Ben xi Iron and Steel (Group) Information
Energy power 78,150.86
Automation Co., Ltd.
Ben xi Iron and Steel (Group) Real Estate
Energy power 60,649.99
Development Co., Ltd.
Ben xi Iron and Steel (Group) Engineering
Energy power 1,208.43
Construction Supervision Co., Ltd.
Ben xi Iron and Steel (Group) Electro mechanical
Energy power 272,525.36
Installation Engineering Co., Ltd.
Ben xi Iron and Steel (Group) Machinery
Goods 116,745.28 10,523,900.28
Manufacturing Co., Ltd.
Ben xi Iron and Steel (Group) Machinery
Energy power 6,405,245.79 10,883,794.65
Manufacturing Co., Ltd.
Ben xi Iron and Steel (Group) Construction
Energy power 527.01
Advanced Decoration Co., Ltd.
Ben xi Iron and Steel (Group) Construction Co.,
Energy power 3,330,406.11 7,783,309.92
Ltd.
Ben xi Iron and Steel (Group) Mine Construction
Energy power 425,543.04
Engineering Co., Ltd.
Ben xi Iron and Steel (Group) Min ing Liaoyang
Goods 4,753.02
Jiajiabao Iron Mine Co., Ltd.
Ben xi Iron and Steel (Group) Min ing Liaoyang
Energy power 54,895,941.41
Jiajiabao Iron Mine Co., Ltd.
Ben xi Iron and Steel (Group) M ining Yanjiagou
Energy power 2,017,672.71
Limestone Mine Co., Ltd.
Benxi Iron and Steel (Group) Mining Co., Ltd. Goods 2,357,654.90 1,298,986.47
Raw materials
Benxi Iron and Steel (Group) Mining Co., Ltd. 35,299,728.81 67,380,113.36
and spare parts
Freight income 391,007.89 4,717,137.94
Benxi Iron and Steel (Group) Mining Co., Ltd. Energy power 373,480,762.43 368,746,319.95
Ben xi Iron and Steel (Group) Road and Bridge
Goods 4,695.28
Construction Engineering Co., Ltd.
Ben xi Iron and Steel (Group) Thermal Power Raw materials
20,195,062.17 13,425,740.25
Development Co., Ltd. and spare parts
Ben xi Iron and Steel (Group) Thermal Power
Energy power 14,367,856.89 17,198,224.54
Development Co., Ltd.
Ben xi Iron and Steel (Group) Equip ment
Energy power 650,778.47
Engineering Co., Ltd.
Ben xi Iron and Steel (Group) Industrial
Energy power 1,490,023.36 1,312,651.56
Development Co., Ltd.
Ben xi Iron and Steel (Group) Information
Energy power 118,042.75
Automation Co., Ltd.
Ben xi Iron and Steel (Group) Construction Co., Energy power 508,442.14
Financial Statements Page 148
Related
Amount in this Amount in previous
Related parties transaction
period period
content
Ltd.
Ben xi Iron and Steel (Group) Metallurgical Slag
Goods 49,114,278.31 81,209,016.00
Co., Ltd.
Ben xi Iron and Steel (Group) Metallurgical Slag Raw materials
1,606.35 6,434,506.40
Co., Ltd. and spare parts
Ben xi Iron and Steel (Group) Metallurgical Slag
Energy power 3,203,925.07 2,923,049.91
Co., Ltd.
Raw materials
Benxi Steel and Iron (Group) Co., Ltd. 479,091.24 2,815,485.28
and spare parts
Benxi Steel and Iron (Group) Co., Ltd. Energy power 1,769,725.68 1,830,219.24
Benxi Well Surfacing Manufacturing Co., Ltd. Energy power 17,115.96 23,434.19
Benxi New Business Development Co., Ltd. Goods 2,330.66
Benxi New Business Development Co., Ltd. Energy power 24,362.71 56,559.67
Dalian Borolle Steel Pipe Co., Ltd. Goods 7,978,875.12 10,411,580.55
Freight income 3,396.23
Delin Lugang Supply Chain Service Co., Ltd. Goods 162,901,409.17
Guangzhou Angang Steel Processing Co., Ltd. Goods 10,131,627.29
Liaoning Hengtai Heavy Machinery Co., Ltd. Goods 8,451.93
Liaoning Hengtai Heavy Machinery Co., Ltd. Energy power 130.66 59,737.59
Liaoning Hengtong Metallurgical Equip ment
Goods 16,460,796.56 16,247,225.07
Manufacturing Co., Ltd.
Liaoning Hengtong Metallurgical Equip ment Raw materials
2,432,735.65
Manufacturing Co., Ltd. and spare parts
Liaoning Slag Powder Co., Ltd. Goods 30,084,672.83
Liaoning Tianyu Fire Engineering Co., Ltd. Energy power 27,076.31
Pangang Group Jiangyou Great Wall Special
Goods 1,542,012.35
Steel Co., Ltd.
Panzhong Yihong Metal Products (Chongqing)
Goods 8,131,733.60
Co., Ltd.
Suzhou Bengang Industrial Co., Ltd. Goods 1,706,801.34
Tianjin Angang Steel Processing and
Goods 539,449.69
Distribution Co., Ltd.
Tianjin Ansteel International North Trad ing Co.,
Goods 249,512,844.48
Ltd.
Changchun FAW Angang Steel Processing and
Goods 99,910.50 9,458,338.35
Distribution Co., Ltd.
(2) Situation of related party lease
The Company as lessor:
Lease income Lease income
Types of leased
Lessee name recognized in the recognized in the
assets
current period previous period
Financial Statements Page 149
Lease income Lease income
Types of leased
Lessee name recognized in the recognized in the
assets
current period previous period
Plant and
Bengang Tendering Co., Ltd. ancillary 250,917.43
equipment
Financial Statements Page 150
The Company as lessee:
Amount in this period Amount in previous period
Simplified Simplified
treatment of treatment of
Variable lease Variable lease
rental expenses Interest rental expenses Interest
Lessor Types of leased payments not Increased payments not Increased
for short-term expense on for short-term expense on
name assets included in the Rent paid right-of-use included in the Rent paid right-of-use
leases and lease liability leases and lease liability
measurement of assets measurement of assets
leases of assumed leases of assumed
the lease liability the lease liability
low-value low-value
assets assets
7,669,068.17
Ben xi square meters of
Steel and land use rights,
27,627,809.26 19,750,096.20 27,625,616.70 19,500,054.00
Iron 42,920.00 square
(Group) meters of land
Co., Ltd. use rights
Ben xi
2300 Hot rolling
Steel and
mill production
Iron 8,049,080.53 3,736,932.14 8,049,080.53 3,870,344.33
line, related real
(Group)
estate
Co., Ltd.
Ben xi
Beiying 1780 Hot rolling
Iron and mill production
7,557,730.91 2,877,975.14 6,198,949.54 2,980,721.72
Steel line, related real
(Group) estate
Co., Ltd.
Financial Statements Page 151
Amount in this period Amount in previous period
Simplified Simplified
treatment of treatment of
Variable lease Variable lease
rental expenses Interest rental expenses Interest
Lessor Types of leased payments not Increased payments not Increased
for short-term expense on for short-term expense on
name assets included in the Rent paid right-of-use included in the Rent paid right-of-use
leases and lease liability leases and lease liability
measurement of assets measurement of assets
leases of assumed leases of assumed
the lease liability the lease liability
low-value low-value
assets assets
Bengang Land use right
Group Co., 728,282.30 4,972,711.54 1,315,378.20 4,972,711.54 1,224,959.39
Ltd. square meters
Description of related party leases:
1) According to the “Land Use Right Leasing Contract” and subsequent supplementary agreements signed between the Company and Bengang Steel
(Group)on April 7, 1997, December 30, 2005 and subsequent, the Company leases land from Benxi Steel (Group), with a monthly rent of 0.594 yuan
per square meter. The leased land is 7,669,068.17 square meters and the annual rent is RMB 54,665.10 thousand yuan.
2) On August 14, 2019, the Company signed the “House Lease Agreement” with Benxi Steel (Group) and Beiying Iron and Steel Company, and leased
the houses and auxiliary facilities occupied by the 2300 hot rolling mill production line and the 1780 hot rolling mill production line. The lease term of
the houses and ancillary facilities is until December 31, 2038.
3) On July 15, 2019, the Company signed “Land Lease Agreement” with Bensteel Group and Bengang Steel (Group) respectively, leased and used a
total of 8 pieces of land from Bensteel Group and Bensteel Group Company, with leased areas of 42,920.00 square meters and 728,282.30 square
meters. The lease term is 20 years, the rental price is RMB 1.138 yuan per square meter per month.
Financial Statements Page 152
6. Receivables and Payable from Related Parties
(1) Receivables from related parties
Balance as at 30 June 2023 Balance as at 31 December 2022
Project name Related parties Bad debt Bad debt
Book balance Book balance
provision provision
Notes
receivable
Ben xi Iron and Steel
(Group) Machinery 294,500.00
Manufacturing Co., Ltd.
Ben xi Iron and Steel
(Group) Construction 940,100.00
Co., Ltd.
Ben xi Beiying Iron and
3,100,000.00
Steel (Group) Co., Ltd.
Ben xi Iron and Steel
5,518,976.33
(Group) Mining Co., Ltd.
Ansteel Roll Co., Ltd. 200,000.00
Ansteel Heavy
189,621.75
Machinery Co., Ltd.
Pangang Group Xichang
Steel and Vanadiu m Co., 30,000,000.00
Ltd.
Pangang Group
Panzhihua Steel 5,000,000.00
Vanadium Co., Ltd.
Accounts
receivable
financing
North Hengda Logistics
1,370,000.00
Co., Ltd.
Ben xi Beiying Iron and
1,170,132.15
Steel (Group) Co., Ltd.
Ben xi Iron and Steel
(Group) Machinery 2,108,116.44
Manufacturing Co., Ltd.
Ben xi Iron and Steel
(Group) Construction 330,000.00
Co., Ltd.
Ben xi Steel and Iron
755,842.13
(Group) Co., Ltd.
Dalian Boro lle Steel Pipe
200,000.00
Co., Ltd.
Liaoning Hengtong
Metallurgical Equip ment 1,200,000.00
Manufacturing Co., Ltd.
Ben xi Iron and Steel
500,000.00
(Group) Mining Co., Ltd.
Accounts
receivable
Angang Steel Processing
and Distribution (Dalian) 19,636,110.01 196,361.10
Co., Ltd.
Angang Steel Processing
and Distribution 1,759,216.34 17,592.16 4,477,814.06 44,778.14
(Zhengzhou) Co., Ltd.
Angang Steel
Distribution (Hefei) Co., 1,575,359.32 15,753.59 248,775.35 2,487.75
Ltd.
Angang Steel
Distribution (Wuhan) 9,609,762.44 96,097.62 8,113,115.19 81,131.15
Co., Ltd.
Ansteel Co., Ltd. 30,314,005.82 303,140.06
Ansteel Green Resources
2,218,608.01 22,186.08 4,667,550.15 46,675.50
Technology Co., Ltd.
Ansteel Energy
742,072.08 7,420.72
Technology Co., Ltd.
Financial Statements Page 153
Balance as at 30 June 2023 Balance as at 31 December 2022
Project name Related parties Bad debt Bad debt
Book balance Book balance
provision provision
Bensteel Gaoyuan
Industrial Develop ment 648.00
Co., Ltd.
Bensteel Group
International Econo mic 828,337,954.80 8,283,379.55 663,311,074.79 6,633,110.75
and Trade Co., Ltd.
Bengang Group Co., Ltd. 17,036.30
Ben xi Northern Iron
3,655,505.09 36,555.05
Industry Co., Ltd.
Ben xi Beiying Iron and
132,650,454.66 1,326,504.55
Steel (Group) Co., Ltd.
Ben xi Iron and Steel
(Group) Real Estate 1,157,124.62 975,449.31
Development Co., Ltd.
Ben xi Iron and Steel
(Group) Machinery 186,041,227.34 1,860,412.27
Manufacturing Co., Ltd.
Ben xi Iron and Steel
(Group) Construction
808.72 8.09
Advanced Decoration
Co., Ltd.
Ben xi Iron and Steel
(Group) Construction 40,272,376.48 932,849.76
Co., Ltd.
Ben xi Iron and Steel
(Group) Mine
5,099,269.05 50,992.69
Construction
Engineering Co., Ltd.
Ben xi Iron and Steel
(Group) Mining
777,713.41 7,777.13
Yan jiagou Limestone
Mine Co., Ltd.
Ben xi Iron and Steel
144,284,531.52 1,442,845.32 44,914,278.63 449,142.79
(Group) Mining Co., Ltd.
Ben xi Iron and Steel
(Group) Road and Bridge
1,772,553.54 334,490.54
Construction
Engineering Co., Ltd.
Ben xi Iron and Steel
(Group) Thermal Power 17,373,796.70 173,737.97 840,398.67 8,403.99
Development Co., Ltd.
Ben xi Iron and Steel
(Group) Equip ment 1,348,327.24 13,483.27
Engineering Co., Ltd.
Ben xi Iron and Steel
(Group) Industrial 16,573,242.31 13,860,703.41
Development Co., Ltd.
Ben xi Iron and Steel
(Group) Information 23,016.93 230.17
Automation Co., Ltd.
Ben xi Iron and Steel
(Group) Metallurgical 7,437,743.49 74,377.43
Slag Co., Ltd.
Ben xi Steel and Iron
22,529,365.14 225,293.65
(Group) Co., Ltd.
Ben xi Weier Surfacing
188,119.71 10,591.31
Manufacturing Co., Ltd.
Ben xi New Business
50,257.41 502.57
Development Co., Ltd.
Liaoning Hengtong
Metallurgical Equip ment 1,850,333.39 18,503.33 144,307.22 1,443.07
Manufacturing Co., Ltd.
Bengang Electric Co.,
142,269.51 1,422.70
Ltd.
Prepayments
Ansteel Co., Ltd. 489,219.01
North Hengda Logistics
121,074.27
Co., Ltd.
Bensteel Group
International Econo mic 104,332,332.83 398,341,075.41
and Trade Co., Ltd.
Financial Statements Page 154
Balance as at 30 June 2023 Balance as at 31 December 2022
Project name Related parties Bad debt Bad debt
Book balance Book balance
provision provision
Ben xi Beiying Iron and
Steel Group Import and 894,762.41
Export Co., Ltd.
Ben xi Iron and Steel
(Group) Machinery 49,429,296.57
Manufacturing Co., Ltd.
Ben xi Steel and Iron
24,076,357.53
(Group) Co., Ltd.
Liaoning Hengtai Heavy
13,619,388.23
Machinery Co., Ltd.
Ben xi New Business
2,324,912.22
Development Co., Ltd.
Other
receivables
Ansteel Co., Ltd. 45,559.67 45,559.67 421,142.66 421,142.66
North Hengda Logistics
5,000.00 50.00 65,563.55
Co., Ltd.
Bensteel Group
International Econo mic 2,204,289.89 28,594.24 6,617.52
and Trade Co., Ltd.
Ben xi Dongfeng Lake
Steel Resources 3,367,748.44 33,677.48
Utilization Co., Ltd.
Ben xi Iron and Steel
(Group) Machinery 1,061,981.67 827,808.58
Manufacturing Co., Ltd.
Ben xi Iron and Steel
(Group) Construction 250,679.61 250,679.61 13,028,492.10 433,910.93
Co., Ltd.
Ben xi Iron and Steel
(Group) Industrial 542,141.50 114,818.03
Development Co., Ltd.
Ben xi Steel and Iron
9,674,663.19 4,584,322.38
(Group) Co., Ltd.
Ben xi New Business
Develop ment Co., Ltd. 2,280,942.73 456,188.55
Hot Spring Sanatorium
Ben xi Iron and Steel
(Group) Real Estate 1,097,290.88 991,268.28
Development Co., Ltd.
Ansteel Heavy
Machinery Design and
5,176,720.00 51,767.20
Research Institute Co.,
Ltd.
Ben xi Iron and Steel
1,193,997.66 11,939.98
(Group) Mining Co., Ltd.
Ben xi Iron and Steel
(Group) Equip ment 4,760,949.45 47,609.49
Engineering Co., Ltd.
Liaoning Hengtong
Metallurgical Equip ment 4,249,698.29 42,496.98
Manufacturing Co., Ltd.
Bengang Electric Co.,
36,455.28 364.55
Ltd.
Ansteel Group
Engineering Technology 73,908.67 739.09
Co., Ltd.
Other
non-current
assets
Ansteel Group
Engineering Technology 83,071,228.82
Co., Ltd.
Ansteel Construction
16,254,830.53 132,687.84
Group Co., Ltd.
Ansteel Heavy
Machinery Design and
5,176,720.00
Research Institute Co.,
Ltd.
Ben xi Iron and Steel
4,176.00
(Group) Machinery
Financial Statements Page 155
Balance as at 30 June 2023 Balance as at 31 December 2022
Project name Related parties Bad debt Bad debt
Book balance Book balance
provision provision
Manufacturing Co., Ltd.
Ben xi Iron and Steel
(Group) Construction 33,175,372.34
Co., Ltd.
Ben xi Iron and Steel
(Group) Mine
4,193,364.46
Construction
Engineering Co., Ltd.
Ben xi Iron and Steel
(Group) Equip ment 46,123,888.51
Engineering Co., Ltd.
Ben xi Iron and Steel
(Group) Industrial 833,139.38
Development Co., Ltd.
Ben xi Iron and Steel
(Group) Information 7,175,371.14
Automation Co., Ltd.
Liaoning Hengtai Heavy
225,977.40
Machinery Co., Ltd.
(2) Payables from related parties
Balance as at 30 June Balance as at 31
Items Related parties
2023 December 2022
Notes
payable
Ansteel Electric Co., Ltd. 494,065.00
Ansteel Rope Co., Ltd. 894,924.67
Ansteel Group (Anshan) Railway Transportation
611,999.91
Equipment Manufacturing Co., Ltd.
Ansteel Industrial Group Metallurgical
5,098,946.77 572,213.92
Machinery Co., Ltd.
Angang Shuangsheng (Anshan) Fan Co., Ltd. 168,370.00
Ansteel Heavy Machinery Co., Ltd. 4,102,837.35 745,501.68
Anshan Iron and Steel Metallurgical Furnace
1,011,012.83
Materials Technology Co., Ltd.
Bensteel Gaoyuan Industrial Develop ment Co.,
341,547.50
Ltd.
Benxi Aike Hydraulic Seal Co., Ltd. 4,017,931.36
Benxi Beiying Iron and Steel (Group) Co., Ltd. 3,544,400,000.00 659,999,999.00
Ben xi Dongfeng Lake Steel Resources
28,021,980.30
Utilization Co., Ltd.
Ben xi Iron and Steel (Group) International Trade
201,007,087.52
Tengda Co., Ltd.
Ben xi Iron and Steel (Group) Electro mechanical
4,034,726.24
Installation Engineering Co., Ltd.
Ben xi Iron and Steel (Group) Machinery
55,093,250.74 41,781,569.75
Manufacturing Co., Ltd.
Ben xi Iron and Steel (Group) Construction Co.,
352,395.99 3,789,095.21
Ltd.
Ben xi Iron and Steel (Group) Mine Construction
595,773.93
Engineering Co., Ltd.
Financial Statements Page 156
Balance as at 30 June Balance as at 31
Items Related parties
2023 December 2022
Benxi Iron and Steel (Group) Mining Co., Ltd. 666,877,903.00 151,930,597.68
Ben xi Iron and Steel (Group) Equip ment
949,553.06 1,611,555.04
Engineering Co., Ltd.
Ben xi Iron and Steel (Group) Industrial
24,812,439.34
Development Co., Ltd.
Ben xi Iron and Steel (Group) Industrial
1,127,635.91
Development Co., Ltd. Recycling Branch
Ben xi Iron and Steel (Group) Information
163,107.15 1,150,225.42
Automation Co., Ltd.
Ben xi Iron and Steel (Group) Metallurgical Slag
19,731,837.68 10,866,603.68
Co., Ltd.
Benxi Steel and Iron (Group) Co., Ltd. 915,300.00 361,277.52
Benxi Xihu Metallurgical Charge Co., Ltd. 100,964,915.60
Dalian Borolle Steel Pipe Co., Ltd. 472,187.26
Liaoning Hengtai Heavy Machinery Co., Ltd. 6,761,265.63 2,877,574.99
Liaoning Hengtong Metallurgical Equip ment
80,188,977.92 34,223,234.99
Manufacturing Co., Ltd.
Liaoning Hengyi Financial Leasing Co., Ltd. 9,104.14
Liaoning Yitong Machinery Manufacturing Co.,
11,496,157.32
Ltd.
Bensteel Group International Economic and
82,782,219.21
Trade Co., Ltd.
Ben xi Iron and Steel (Group) Industrial
10,191,802.55
Development Co., Ltd.
Liaoning Vocational and Technical College of
528,854.07
Metallurgy
Bengang Electric Co., Ltd. 25,016,176.00
Ansteel Group Mining Co., Ltd. 79,210,057.06
Ansteel Technology Development Co., Ltd. 39,644.00
Ansteel Heavy Machinery Design and Research
6,827,200.00
Institute Co., Ltd.
North Hengda Logistics Co., Ltd. 11,350.04
Liaoning Hengyi Steel Trading Co., Ltd. 8,941,086.81
Accounts
payable
Ansteel Electric Co., Ltd. 324,789.48
Ansteel Scrap Resources (Anshan) Co., Ltd. 95,508,032.52 52,203,765.63
Angang Steel Processing and Distribution
81,119.58
(Changchun) Co., Ltd.
Ansteel Rope Co., Ltd. 191,578.40 894,924.67
Ansteel Group (Anshan) Railway Transportation
985,360.00 577,232.81
Equipment Manufacturing Co., Ltd.
Ansteel Group International Economic and Trade
16,733,519.12
Co., Ltd.
Ansteel Group Mining Gongchangling Co., Ltd. 117,603,581.10
Ansteel Group Mining Co., Ltd. 591,193.88 591,193.88
Ansteel Construction Group Co., Ltd. 8,527.00
Financial Statements Page 157
Balance as at 30 June Balance as at 31
Items Related parties
2023 December 2022
Ansteel Technology Development Co., Ltd. 140,000.00
Ansteel Industrial Group (Anshan) Equip ment
2,228,028.59
Operation and Maintenance Co., Ltd.
Ansteel Industrial Group Metallurgical
3,197,220.37 2,265,928.00
Machinery Co., Ltd.
Angang Shuangsheng (Anshan) Fan Co., Ltd. 77,970.00 168,370.00
Ansteel Heavy Machinery Co., Ltd. 3,398,533.80 2,873,047.05
Anshan Iron and Steel Metallurgical Furnace
1,466,444.82
Materials Technology Co., Ltd.
North Hengda Logistics Co., Ltd. 25,435,334.70
Bengang Stainless Steel Cold Rolling Dandong
102,005.30
Co., Ltd.
Bensteel Gaoyuan Industrial Develop ment Co.,
1,281,746.64
Ltd.
Bensteel Group International Economic and
51,306,166.70
Trade Co., Ltd.
Bengang Group Co., Ltd. 4,688,315.28 50,000.00
Benxi Aike Hydraulic Seal Co., Ltd. 3,207,003.01
Benxi Northern Iron Industry Co., Ltd. 149,204,699.40
Benxi Beiying Iron and Steel (Group) Co., Ltd. 448,104,637.52 131,248,293.37
Ben xi Dongfeng Lake Steel Resources
18,999,688.27
Utilization Co., Ltd.
Ben xi Iron and Steel (Group) Real Estate
372,520.06 372,520.06
Development Co., Ltd.
Ben xi Iron and Steel (Group) International Trade
65,147,129.15
Tengda Co., Ltd.
Ben xi Iron and Steel (Group) Machinery
73,536,470.40 2,874,934.49
Manufacturing Co., Ltd.
Ben xi Iron and Steel (Group) Construction
397,711.62
Advanced Decoration Co., Ltd.
Ben xi Iron and Steel (Group) Construction Co.,
9,471,479.60 240,928,491.19
Ltd.
Ben xi Iron and Steel (Group) Mine Construction
5,704,240.75
Engineering Co., Ltd.
Benxi Iron and Steel (Group) Mining Co., Ltd. 160,936,135.74 45,768,605.27
Ben xi Iron and Steel (Group) Road and Bridge
791,935.13
Construction Engineering Co., Ltd.
Ben xi Iron and Steel (Group) Thermal Power
100,889.78 413,463.33
Development Co., Ltd.
Ben xi Iron and Steel (Group) Equip ment
56,006,170.72 87,111,368.27
Engineering Co., Ltd.
Ben xi Iron and Steel (Group) Industrial
25,748,822.56 75,043,780.30
Development Co., Ltd.
Ben xi Iron and Steel (Group) Information
13,453,191.94 88,684,293.06
Automation Co., Ltd.
Ben xi Iron and Steel (Group) Metallurgical Slag
47,009,411.99 47,468,411.05
Co., Ltd.
Financial Statements Page 158
Balance as at 30 June Balance as at 31
Items Related parties
2023 December 2022
Benxi Steel and Iron (Group) Co., Ltd. 39,872,070.78
Ben xi Iron and Steel (Group) Min ing Liaoyang
116,207,873.93
Maling Pellet Co., Ltd.
Ben xi Meter & Control Electronic Instrument
28,802.83
Industry Co., Ltd.
Benxi Xihu Metallurgical Charge Co., Ltd. 20,313,571.32
Benxi Well Surfacing Manufacturing Co., Ltd. 234,112.13
Freight income 57,637.09 18,937.09
Dalian Borolle Steel Pipe Co., Ltd. 450,952.17
Delin Industrial Products Co., Ltd. 34,853,190.84 9,556,739.82
Liaoning Hengtai Heavy Machinery Co., Ltd. 14,627,776.85
Liaoning Hengtong Metallurgical Equip ment
15,943,904.64 30,626,084.39
Manufacturing Co., Ltd.
Liaoning Tianyu Fire Engineering Co., Ltd.
Liaoning Metallurgical Technician College 10,107,863.07
Liaoning Vocational and Technical College of
48,048.00 513,779.95
Metallurgy
Liaoning Yitong Machinery Manufacturing Co.,
3,037,287.88
Ltd.
Tianjin Bengang Plate Processing and
223,096.00
Distribution Co., Ltd.
Bengang Electric Co., Ltd. 1,893,516.67
Ben xi High-tech Drilling Tools Manufacturing
14,400.16
Co., Ltd.
Contract
liabilities
Angang Steel Processing and Distribution
26,248.21 2,468,274.66
(Dalian) Co., Ltd.
Angang Steel Processing and Distribution
433,765.38 695,012.13
(Changchun) Co., Ltd.
Angang Steel Distribution (Hefei) Co., Ltd. 3,122,010.92 4,731,954.99
Ansteel Co., Ltd. 930,287.84
Ansteel Chemical Technology Co., Ltd. 4,381,585.23 3,631,726.76
Ansteel Energy Technology Co., Ltd. 12,048.13
North Hengda Logistics Co., Ltd. 118,994,396.13 53,109,140.37
Ben xi Dongfeng Lake Steel Resources
1,035,901.39
Utilization Co., Ltd.
Ben xi Iron and Steel (Group) Construction Co.,
5,898.81
Ltd.
Ben xi Iron and Steel (Group) Mining M ineral
90,019.77
Resources Development Co., Ltd.
Ben xi Iron and Steel (Group) Min ing Liaoyang
40,057,730.41
Jiajiabao Iron Mine Co., Ltd.
Ben xi Iron and Steel (Group) Industrial
357,907.98 535,124.96
Development Co., Ltd.
Ben xi Iron and Steel (Group) Metallurgical Slag
1,044,047.73
Co., Ltd.
Financial Statements Page 159
Balance as at 30 June Balance as at 31
Items Related parties
2023 December 2022
Benxi Iron and Steel (Group) Mining Co., Ltd. 1,450,610.94
Ben xi Iron and Steel (Group) Min ing Liaoyang
2,970,163.60
Maling Pellet Co., Ltd.
Benxi Xihu Metallurgical Charge Co., Ltd. 20,000.00
Dalian Borolle Steel Pipe Co., Ltd. 1,647,687.00 1,776,832.88
Delin Lugang Supply Chain Service Co., Ltd. 47,447,914.81 14,902,176.11
Guangzhou Angang Steel Processing Co., Ltd. 1,598,818.30 644,213.74
Liaoning Hengtong Metallurgical Equip ment
40,540.25
Manufacturing Co., Ltd.
Liaoning Vocational and Technical College of
0.01
Metallurgy
Pangang Group Jiangyou Great Wall Special
776,933.91
Steel Co., Ltd.
Tianjin Angang Steel Processing and
95,477.46
Distribution Co., Ltd.
Tianjin Ansteel International No rth Trading Co.,
54,050,485.38 32,000,000.00
Ltd.
Changchun FAW Angang Steel Processing and
132,535.72 69,561.39
Distribution Co., Ltd.
Zhejiang Jingrui Steel Processing Co., Ltd. 80,484,269.96
Wuhan Yuanhong Trading Co., Ltd. 4,736,783.67
Other
payables
Ansteel Scrap Resources (Anshan) Co., Ltd. 1,000,000.00 1,000,000.00
Ansteel Group Automation Co., Ltd. 29,869,230.00 3,565,330.00
Ansteel Construction Group Co., Ltd. 607,805.64 5,389,177.00
Ansteel Metal Structure Co., Ltd. 10,000.00 10,000.00
Ansteel Technology Development Co., Ltd. 345,269.90
Ansteel Industrial Group (Anshan) Equip ment
4,101,254.08
Operation and Maintenance Co., Ltd.
Bensteel Gaoyuan Industrial Develop ment Co.,
2,280,175.76
Ltd.
Bensteel Group International Economic and
37,172,569.99 11,894,493.16
Trade Co., Ltd.
Bengang Group Co., Ltd. 903,375.93 7,716,476.47
Benxi Aike Hydraulic Seal Co., Ltd. 10,000.00
Benxi Beiying Iron and Steel (Group) Co., Ltd. 20,777,431.47
Ben xi Dongfeng Lake Steel Resources
210,000.00
Utilization Co., Ltd.
Ben xi Iron and Steel (Group) Real Estate
510,910.37 510,910.37
Development Co., Ltd.
Ben xi Iron and Steel (Group) Eng ineering
1,413,282.10 1,523,543.12
Construction Supervision Co., Ltd.
Ben xi Iron and Steel (Group) International Trade
65,212.55
Tengda Co., Ltd.
Ben xi Iron and Steel (Group) Machinery
24,458,712.03 1,681,991.53
Manufacturing Co., Ltd.
Financial Statements Page 160
Balance as at 30 June Balance as at 31
Items Related parties
2023 December 2022
Ben xi Iron and Steel (Group) Inspection and
190,140.00
Testing Co., Ltd.
Ben xi Iron and Steel (Group) Construction
2,386,190.08
Advanced Decoration Co., Ltd.
Ben xi Iron and Steel (Group) Construction Co.,
215,351,886.72 53,547,549.48
Ltd.
Ben xi Iron and Steel (Group) Mine Construction
23,651,293.09
Engineering Co., Ltd.
Ben xi Iron and Steel (Group) Road and Bridge
10,619,579.34
Construction Engineering Co., Ltd.
Ben xi Iron and Steel (Group) Thermal Power
846,078.80 2,129,446.86
Development Co., Ltd.
Ben xi Iron and Steel (Group) Equip ment
155,059,385.61 1,089,595.17
Engineering Co., Ltd.
Ben xi Iron and Steel (Group) Industrial
4,324,889.25 1,259,239.61
Development Co., Ltd.
Ben xi Iron and Steel (Group) Information
82,094,205.42 2,881,047.50
Automation Co., Ltd.
Benxi Steel and Iron (Group) Co., Ltd. 24,481,244.88 81,104,935.20
Benxi Xihu Metallurgical Charge Co., Ltd. 100,000.00
Benxi New Business Development Co., Ltd. 23,157,491.13 33,755,860.72
Dalian Borolle Steel Pipe Co., Ltd. 20,000.00 20,000.00
Liaoning Hengtai Heavy Machinery Co., Ltd. 4,996,287.37 22,000,196.88
Liaoning Hengtong Metallurgical Equip ment
10,000.00 3,366,743.50
Manufacturing Co., Ltd.
Liaoning Metallurgical Technician College 388,880.00 427,188.00
Liaoning Vocational and Technical College of
353,630.00 6,401,530.88
Metallurgy
Liaoning Yitong Machinery Manufacturing Co.,
15,545.00
Ltd.
Bengang Electric Co., Ltd. 9,353,903.06
Ansteel Electric Co., Ltd. 523,642.00
North Hengda Logistics Co., Ltd. 4,384,330.48
Benxi Iron and Steel (Group) Mining Co., Ltd. 543,412.47
Ansteel Group Engineering Technology Co., Ltd. 23,401,702.63
7. Centralized management of funds
(1) The main contents of the centralized fund management arrangement that the
Company participates in and implements are as follows:
In April 2021, after negotiation with Benxi Iron and Steel Group Finance Co., Ltd.
(hereinafter referred to as Bengang Finance Company), the Company signed the
“Financial Service Agreement” with Bengang Finance Company to agree on the
Financial Statements Page 161
terms of the financial business and the upper limit of the relevant transaction
amount between the Company and its subsidiaries and Bengang Finance Company.
The agreement stipulates that in the next twelve months, the maximum daily
deposit balance of the company and its holding subsidiaries will be RMB 11 billion
yuan, the maximum loan and other credit business will be RMB 8 billion yuan, and
the maximum credit line will be RMB 8 billion yuan.
In December 2021, after negotiating with Ansteel Group Finance Co., Ltd.
(hereinafter referred to as Ansteel Finance Company), the “Financial Service
Agreement (2022-2024)” was signed, in order to agree on the relevant financial
business terms and the upper limit of the relevant transaction amount between the
Company and its subsidiaries and Ansteel Finance Company in 2022, 2023 and
2024. The agreement stipulates that in the next twelve months, the maximum daily
deposit balance of the Company and its holding subsidiaries in Ansteel Finance
Company is RMB 4.5 billion yuan, and the maximum credit limit for loans, bills
and other forms is RMB 5 billion yuan. Ansteel Finance Company provides the
Company with a maximum entrusted loan of RMB 2 billion yuan.
Financial Statements Page 162
(2) Funds collected by the Company to the Group
Funds that the Company does not collect into the account of the parent company of
the group but directly deposits into the finance company
Balance as at 30 June 2023 Balance as at 31 December 2022
Project name Bad debt Bad debt
Book balance Book balance
provision provision
Monetary funds
(deposited in Ansteel
2,244,735,874.76 1,074,918,531.75
Group Finance Co.,
Ltd.)
Total 2,244,735,874.76 1,074,918,531.75
Including: Funds with
restricted withdrawals
due to centralized
management of funds
(3) Funds borrowed by the company from the parent company or member units
of the group
Balance as at 31
Project name Balance as at 30 June 2023
December 2022
Other payables 12,014,973.55 85,617,500.00
Total 12,014,973.55 85,617,500.00
The subsidiary Dalian Benruitong Automotive Material Technology Co., Ltd.
borrowed RMB 75,000,000.00 from Benxi Steel and Iron (Group) Co., Ltd., as of
June 30, 2023, the Company has not yet paid interest of RMB 12,014,973.55.
XI. Commitments and Contingencies
Important Commitments
Important leasing contracts that have been signed and are being performed
and their financial impact
(1) According to the “Land Use Right Leasing Contract” and subsequent
supplementary agreements signed between the Company and Bengang Group Co.,
Ltd. on April 7, 1997, December 30, 2005 and later, the Company leases land from
Bengang Group Co., Ltd. at RMB 0.594 per square meter per month. The leased
Financial Statements Page 163
land area is 7,669,068.17 square meters and the annual rent is RMB 54.6651
million.
(2) On August 14, 2019, the Company signed the “House Lease Agreement” with
Benxi Steel (Group) and Beiying Steel respectively, leasing the houses and
auxiliary facilities occupied by 2300 and 1780 hot rolling mill production lines,
and the lease term ends on December 31, 2038. The rental fee is based on the
depreciation of the original rent value and the national additional tax, plus
reasonable profit negotiation. The estimated annual rent is not more than RMB 20
million yuan and RMB 18 million yuan respectively. The rental fee is settled and
paid monthly. This related party transaction has been reviewed and approved at the
fourth meeting of the eighth Board of Directors of the Company.
(3) On July 15, 2019, the Company signed "Land Lease Agreement" with Bensteel
Group and Benxi Steel (Group) respectively, and leased and used a total of 8 pieces
of land of the two companies. The lease areas are 42,920.00 square meters and
728,282.30 square meters respectively, with a lease term of 20 years, and a rental
price of RMB 1.138 yuan per square meter per month. After the agreement comes
into effect, considering the national law and policy adjustments every five years,
both parties should determine whether the rent needs to be adjusted according to
the pricing basis stipulated in Article 2 of this agreement. This related party
transaction has been reviewed and approved at the third meeting of the eighth
Board of Directors of the Company.
XII. Events after the Balance Sheet Date
Description of other events after the balance sheet date
Bengang Steel Plates Co., Ltd. intends to exchange assets with Benxi Steel and Iron
(Group) Co., Ltd. (hereinafter referred to as "Benxi Steel"), the assets to be acquired by
the Company are 100% equity of Benxi Iron and Steel (Group) Mining Co., Ltd. The
assets to be acquired by the Company are all assets and liabilities of the listed company
except retained assets and liabilities, the difference between the assets to be purchased
and the assets to be sold out shall be made up by one party to the other in cash (hereinafter
referred to as "the transaction").
As of the disclosure date of this announcement, this transaction plan needs further
demonstration, communication and negotiation, and the scope of the underlying assets of
the transaction, transaction price and other factors have not been finalized. After the
Financial Statements Page 164
relevant matters are determined, the Company will reconvene the Board of Directors for
review and approval.
XIII. Other Important Matters
Other important matters affecting investor decision-making
As of June 30, 2023, the Company's controlling shareholder, Benxi Steel and Iron (Group)
Co., Ltd. holds 2,409,628,094 shares of the company, among them, 360,000,000 shares
are pledged, and 108,326,179 shares are restricted and frozen.
XIV. Notes to the Main Items of the Financial Statements of the Parent company
1. Notes Receivable
(1) Notes receivable presented by category
Balance as at 31 December
Items Balance as at 30 June 2023
2022
Banker's acceptance bill 20,000.00 139,442,122.88
Acceptance bill of finance company 877,809,539.94
Commercial acceptance bill 529,751,278.14
Total 877,829,539.94 669,193,401.02
(2) Notes receivable pledged by the company at the end of the period
Items Amount pledged at the end of the period
Banker's acceptance bill 255,189,626.40
Total 255,189,626.40
(3) Bills receivable that have been endorsed or discounted by the company at the
end of the period and have not yet expired on the balance sheet date
Amount derecognized at the Amount not derecognized at
Items
end of the period the end of the period
Banker's acceptance bill 5,623,759,903.70 20,000.00
Acceptance bill of finance company 850,706,864.21
Commercial acceptance bill
Total 5,623,759,903.70 850,726,864.21
Financial Statements Page 165
2. Accounts Receivable
(1) Disclosure by aging of accounts receivable
Balance as at 31 December
Aging Balance as at 30 June 2023
2022
Within 1 year
693,021,659.55 924,570,849.45
1 to 2 years
865,863.89 14,717,227.92
2 to 3 years
2,404,917.15 1,087,625.52
Over 3 years 134,431,991.41 153,473,088.92
Subtoal 830,724,432.00 1,093,848,791.81
Less: Provision for bad debts 137,086,813.40 162,812,995.23
Total 693,637,618.60 931,035,796.58
Financial Statements Page 166
(2) Classified by bad debt provision method
Balance as at 30 June 2023 Balance as at 31 December 2022
Book balance Bad debt provision Book balance Bad debt provision
Types
Percentage Percentage Book value Percentage Percentage Book value
Amount Amount Amount Amount
(%) (%) (%) (%)
Bad debt
provisions
made on an 61,930,883.00 7.46 61,930,883.00 100.00 48,196,244.68 4.41 48,196,244.68 100.00
individual
basis
Bad debt
provisions
768,793,549.00 92.54 75,155,930.40 9.78 693,637,618.60 1,045,652,547.13 95.59 114,616,750.55 10.96 931,035,796.58
made on the
combination
Including:
Aging
284,497,106.87 75,155,930.40 209,341,176.47 886,147,539.07 81.01 114,616,750.55 12.93 771,530,788.52
portfolio
Combination
of related
parties within 484,296,442.13 484,296,442.13 159,505,008.06 14.58 159,505,008.06
the scope of
consolidation
Total 830,724,432.00 100.00 137,086,813.40 693,637,618.60 1,093,848,791.81 100.00 162,812,995.23 931,035,796.58
Financial Statements Page 167
Bad debt provisions made on an individual basis:
Balance as at 30 June 2023
Name of debtor Bad debt Bad debts ratio Reason for
Book balance
provision (%) provision
Benxi Nanfenxinhe
Discontinued, no
Metallurgical 48,196,244.68 48,196,244.68 100.00
return expected
Charge Co., Ltd.
Benxi Iron and Bankruptcy and
Steel (Group) Third reorganization of
Construction 10,613,567.47 10,613,567.47 100.00 the enterprise is
Engineering Co., expected to be
Ltd. irrecoverable
Benxi Iron and Bankruptcy and
Steel (Group) First reorganization of
Construction 3,121,070.85 3,121,070.85 100.00 the enterprise is
Engineering Co., expected to be
Ltd. irrecoverable
Total 61,930,883.00 61,930,883.00
Bad debt provisions made on the combination:
Balance as at 30 June 2023
Items
Accounts receivable Bad debt provision Bad debts ratio (%)
Within 1 year
208,725,217.42 2,087,252.17 1.00
1 to 2 years
865,863.89 86,586.39 10.00
2 to 3 years
2,404,917.15 480,983.43 20.00
More than 3 years
72,501,108.41 72,501,108.41 100.00
Total 284,497,106.87 75,155,930.40
Financial Statements Page 168
(3) The provision for bad debts accrued, reversed or recovered in the current
period
Amount changed during the period
Balance as at
Transferred Balance as at
Type 31 December Reversed or Other
Accrued or 30 June 2023
2022 recovered changes
written-off
Provision
for bad
debts of 162,812,995.23 24,278,420.75 1,447,761.08 137,086,813.40
accounts
receivable
Total 162,812,995.23 24,278,420.75 1,447,761.08 137,086,813.40
(4) Actual written-off of accounts receivable in the current period
Items Amount of written-off
Actual written-off of accounts receivable 1,447,761.08
Important write-off of accounts receivable:
Whether
the
payment is
Nature of Written-off
Amount of Reason of generated
Name of debtor accounts procedures
written-off written-off by a
receivable performed
related
party
transaction
General
Sales of Manager
Jining Forging Center Deregistered No
products 461,229.33 Office
Meeting
General
Xuzhou Jinshanqiao
Sales of Manager
Development Zone Yongan Revoked No
products 200,265.48 Office
Metal Material Co., Ltd.
Meeting
General
Shanghai Benxi Iron and
Sales of Manager
Steel Industry and Trade Deregistered No
products 193,625.29 Office
Company
Meeting
General
China Ordnance Materials
Sales of Manager
Northeast Company Fushun Revoked No
products 155,616.74 Office
Technology and Trade Center
Meeting
General
Tonghua Grain and Oil Sales of
Deregistered Manager No
Machinery Factory products 141,139.39
Office
Financial Statements Page 169
Whether
the
payment is
Nature of Written-off
Amount of Reason of generated
Name of debtor accounts procedures
written-off written-off by a
receivable performed
related
party
transaction
Meeting
Sales of General
Benxi Steel Yantai Marketing products Manager
Deregistered No
Co., Ltd. 138,378.96 Office
Meeting
Sales of General
Shandong Zhucheng
products Manager
Industrial Supply and Revoked No
87,085.43 Office
Marketing Corporation
Meeting
Sales of Deregistered General
Tieling Jinlong Petroleum
products Manager
Pipeline Machinery Product No
24,608.99 Office
Distribution Office
Meeting
Sales of Deregistered General
Shenzhen Zhongtianda
products Manager
Materials Industry and Trade No
20,441.96 Office
Co., Ltd.
Meeting
Sales of General
Shunde Xinqiangsheng Mold products Manager
Deregistered No
Co., Ltd. 12,635.20 Office
Meeting
Sales of General
Benxi Steel Material products Manager
Revoked No
Distribution Office 7,167.87 Office
Meeting
Guangdong Zhaoqing General
Township Enterprise Building Sales of Manager
Deregistered No
Materials and Minerals products 5,566.44 Office
Company Meeting
Total 1,447,761.08
(5) The top five units with the ending balance of accounts receivable collected by
the debtor
Balance as at 30 June 2023
% of the total
Name of debtor closing balance Bad debt
Book balance
of accounts provision
receivable
The first 238,750,179.09 28.74
The second 149,938,272.79 18.05
The third 76,326,718.36 9.19 763,267.18
The fourth 50,924,691.25 6.13
The fifth 50,834,840.47 6.12 508,348.40
Total 566,774,701.96 68.23 1,271,615.58
(6) Accounts receivable derecognized due to transfer of financial assets
Financial Statements Page 170
None.
(7) Amount of assets and liabilities formed by the transfer of accounts receivable
and continued involvement
None.
3. Accounts Receivable Financing
(1) Details of accounts receivable financing
Items Balance as at 30 June 2023 Balance as at 31 December 2022
Notes receivable 827,579,316.11 127,468,835.80
Total 827,579,316.11 127,468,835.80
4. Other Receivables
Balance as at 30 June Balance as at 31
Items
2023 December 2022
Interest receivable
Dividends receivable
Other receivables 166,743,093.49 150,724,545.56
Total 166,743,093.49 150,724,545.56
Other receivables
(1) Disclosure by aging of other receivable
Balance as at 31 December
Aging Balance as at 30 June 2023
2022
Within 1 year 95,131,756.52 89,160,291.73
1 to 2 years 70,536,371.78 58,187,051.40
2 to 3 years 2,772,924.29 3,519,908.21
More than 3 years 96,810,437.76 63,260,175.57
Subtoal 265,251,490.35 214,127,426.91
Less: Provision for bad debts 98,508,396.86 63,402,881.35
Total 166,743,093.49 150,724,545.56
Financial Statements Page 171
(2) Classified by bad debt provision method
Balance as at 30 June 2023 Balance as at 31 December 2022
Book balance Bad debt provision Book balance Bad debt provision
Types Bad Bad
Percentage Book value Percentage Book value
Amount Amount debts Amount Amount debts
(%) (%)
ratio (%) ratio (%)
Bad debt
provisions made
49,333,315.37 18.60 49,333,315.37 100.00 15,031,598.34 7.02 15,031,598.34 100.00
on an individual
basis
Bad debt
provisions made
on the
215,918,174.98 81.40 49,175,081.49 22.77 166,743,093.49 199,095,828.57 92.98 48,371,283.01 24.30 150,724,545.56
combination of
credit risk
characteristics
Including:
Combination 1:
147,302,369.97 55.53 49,175,081.49 49.92 98,127,288.48 136,339,409.35 63.67 48,371,283.01 35.48 87,968,126.34
Aging portfolio
Combination 2:
Combination of
related parties 68,615,805.01 25.87 68,615,805.01 62,756,419.22 29.31 62,756,419.22
within the scope
of consolidation
Total 265,251,490.35 100.00 98,508,396.86 166,743,093.49 214,127,426.91 100.00 63,402,881.35 150,724,545.56
Financial Statements Page 172
Bad debt provisions made on an individual basis:
Balance as at 30 June 2023
Name of debtor Bad debt Bad debts
Book balance Provision reason
provision ratio (%)
Unrecoverable taxes (VAT,
Cannot be
properrty tax, transfer-out input 13,017,578.30 13,017,578.30 100.00
recovered
tax)
Cannot be
Others 20,518,449.85 20,518,449.85 100.00
recovered
Benxi City Xihu District
Cannot be
Renewable Resources Utilization 2,951,245.44 2,951,245.44 100.00
recovered
Corporation
Liaoning Hengyi Financial Cannot be
2,357,285.76 2,357,285.76 100.00
Leasing Co., Ltd. recovered
Dalian China Metallurgical
Cannot be
Import & Export Dalian 2,000,000.00 2,000,000.00 100.00
recovered
Company
Financial Services Bureau Daily Cannot be
1,740,000.00 1,740,000.00 100.00
Loan Sinking Fund recovered
Cannot be
Personal loan 1,370,308.33 1,370,308.33 100.00
recovered
Benxi Peace Material Supply and Cannot be
1,097,678.20 1,097,678.20 100.00
Marketing Company recovered
Xiuyan Manchu Autonomous
Cannot be
County Materials Recycling Co., 1,018,878.71 1,018,878.71 100.00
recovered
Ltd.
Inner Mongolia Haotong Energy Cannot be
970,860.82 970,860.82 100.00
Co., Ltd. recovered
Benxi Economic Development
Cannot be
Zone Fuben Industry and Trade 730,362.94 730,362.94 100.00
recovered
Industrial Company
Benxi City Pingshan Minzheng Cannot be
672,803.75 672,803.75 100.00
Steel Factory recovered
Cannot be
Qigang in Heilongjiang Province 627,080.88 627,080.88 100.00
recovered
Bankruptcy and
Benxi Iron and Steel (Group) reorganization of
Third Construction Engineering 260,782.39 260,782.39 100.00 enterprises,
Co., Ltd. expected to be
irrecoverable
Total 49,333,315.37 49,333,315.37
Financial Statements Page 173
Bad debt provisions made on the combination:
Balance as at 30 June 2023
Types Book balance of other
Bad debt provision Bad debts ratio (%)
receivables
Within 1 year 95,131,756.52 951,317.57 1.00
1 to 2 years 1,920,566.77 192,056.68 10.00
2 to 3 years 2,772,924.29 554,584.85 20.00
More than 3 years 47,477,122.39 47,477,122.39 100.00
Total 147,302,369.97 49,175,081.49
(3) Situation of bad debt provisions
The second The third
The first stage
stage stage
Expected
Expected credit
credit loss
losses over the
Bad debt provision Expected credit over the entire Total
entire duration
losses over the duration
(no credit
next 12 months (credit
impairment
impairment
occurred)
has occurred)
Balance as at 31 December
801,060.44 1,353,672.38 61,248,148.53 63,402,881.35
2022
Balance as at 31 December
2022 is in the current period
-- Transfer to the second
-154,164.80 154,164.80
stage
-- Transfer to the third stage -925,201.28 925,201.28
-- Transfer back to the
second stage
-- Transfer back to the first
stage
Provision for this period 304,421.93 164,005.63 35,445,003.54 35,913,431.10
Transfer back in this period
Transfer and derecognition
in this period
Derecognition in this period 807,915.59 807,915.59
Other changes
Balance as at 30 June 2023 951,317.57 746,641.53 96,810,437.76 98,508,396.86
Financial Statements Page 174
Changes in the book balance of other receivables:
The second
The first stage The third stage
stage
Expected Expected
credit losses credit loss over
Book balance Expected credit over the entire the entire Total
losses over the duration (no duration
next 12 months credit (credit
impairment impairment
occurred) has occurred)
Balance as at 31 December
109,079,474.11 41,787,777.23 63,260,175.57 214,127,426.91
2022
Balance as at 31 December
2022 is in the current period
-- Transfer to the second stage -7,408,871.32 7,408,871.32
-- Transfer to the third stage -178,931.04 178,931.04
-- Transfer back to the second
stage
-- Transfer back to the first
stage
Additions in this period 30,442,192.94 44,388,476.32 36,748,913.67 111,579,582.93
Derecognition in this period 28,973,430.11 20,096,897.76 1,383,042.49 50,453,370.36
Other changes 807,915.59 807,915.59
Balance as at 30 June 2023 103,139,365.62 73,309,296.07 97,997,062.20 274,445,723.89
(4) The provision for bad debts accrued, reversed or recovered in the current period
Amount changed during the period
Balance as at
Reversed Transferred Balance as at
Type 31 December Other
Accrued or or 30 June 2023
2022 changes
recovered written-off
Provision
for bad
debts of 63,402,881.35 35,913,431.10 807,915.59 98,508,396.86
other
receivables
Total 63,402,881.35 35,913,431.10 807,915.59 98,508,396.86
Financial Statements Page 175
(5) Other receivables actually written off in the current period
Item Amount written off
Other receivables actually written off 807,915.59
Important write-off of other receivables:
Whether the
payment is
Nature of Written-off
Amount of Reason of generated by
Name of debtor other procedures
written-off written-off a related
receivables performed
party
transaction
General
Beijing Bensteel Sales of Manager
807,915.59 Revoked No
Material Sales Center products Office
Meeting
Total 807,915.59
(6) Classification by nature of payment
Book balance as at 31 December
Nature Book balance as at 30 June 2023
2022
Temporary payment 231,895,133.40 205,620,987.47
Others 33,356,356.95 8,506,439.44
Total 265,251,490.35 214,127,426.91
Financial Statements Page 176
(7) The top five units with the ending balance of other receivables collected by the
debtor
% of the total
Nature of closing Provision for
Name of Balance as at 30
other Aging balance of bad debts as at
debtor June 2023
receivables other 30 June 2023
receivables
Temporary Within 1
The first 14,431,832.25 5.44 144,318.32
payment year
Temporary Within 1
The second 12,212,650.80 4.60 122,126.51
payment year
Temporary
The third 11,348,676.33 1-2 years 4.28
payment
Temporary Within 1
The fourth 4,010,871.64 1.51 40,108.72
payment year
Temporary Within 1
The fifth 4,609,686.93 1.74 46,096.87
payment year
Total 46,613,717.95 17.57 352,650.42
(8) Other receivables involving government grants
None.
(9) Other receivables derecognized due to transfer of financial assets
None.
(10) The amount of assets and liabilities formed by transferring other receivables
and continuing to be involved
None.
Financial Statements Page 177
5. Long-term Equity Investments
Balance as at 30 June 2023 Balance as at 31 December 2022
Provision Provision
Items
Book balance for Book value Book balance for Book value
impairment impairment
Investment
in 2,222,281,590.24 2,222,281,590.24 2,222,281,590.24 2,222,281,590.24
subsidiaries
Investment
in
associates 47,556,655.03 47,556,655.03 47,996,314.61 47,996,314.61
and joint
ventures
Total 2,269,838,245.27 2,269,838,245.27 2,270,277,904.85 2,270,277,904.85
(1) Investment in subsidiaries
Provision Balance of
for provision
Balance as at 31 Increase in Decrease in Balance as at 30 impairment for
Investees
December 2022 this period this period June 2023 in the impairment
current as at 30
period June 2023
Guangzhou Bensteel
200,000,000.00 200,000,000.00
Trading Co., Ltd.
Shanghai Bensteel
Metallurgical 229,936,718.57 229,936,718.57
Technology Co., Ltd.
Dalian Benruitong
Automotive Material 65,000,000.00 65,000,000.00
Technology Co., Ltd.
Bengang Puxiang
Cool Rolling Steel 1,019,781,571.10 1,019,781,571.10
Sheet Co., Ltd.
Changchun Bensteel
28,144,875.36 28,144,875.36
Sales Co., Ltd.
Yantai Bengang Iron
and Steel Sales Co., 219,100,329.41 219,100,329.41
Ltd.
Tianjin Bengang Iron
and Steel Trading 230,318,095.80 230,318,095.80
Co., Ltd.
Benxi Bensteel Sales
30,000,000.00 30,000,000.00
Co., Ltd.
Shenyang Bensteel
Metallurgical 200,000,000.00 200,000,000.00
Technology Co., Ltd.
Total 2,222,281,590.24 2,222,281,590.24
Financial Statements Page 178
(2) Investment in associates and joint ventures
Changes in current period Balance of
Investment provision
Balance as at Other
Gains and losses Other Provision Balance as at for
Investees 31 December Additional Reduced comprehensive Declaration of cash
recognized equity for Others 30 June 2023 impairment
2022 investment investment income dividends or profit
under the equity changes impairment as at 30
adjustment
method June 2023
Associates
Bensteel Baojin
(Shenyang) Automotive
47,996,314.61 -439,659.58 47,556,655.03
New Material
Technology Co., Ltd.
Subtoal 47,996,314.61 -439,659.58 47,556,655.03
Total 47,996,314.61 -439,659.58 47,556,655.03
Financial Statements Page 179
6. Operating Income and Operating Costs
(1) Details of operating income and operating costs
Current period Previous period
Items
Revenue Costs Revenue Costs
Principal business 29,752,956,987.48 30,143,666,528.21 33,392,817,816.17 32,060,330,971.40
Other business 598,633,897.79 582,130,402.92 2,381,220,254.26 2,344,381,961.67
Total 30,351,590,885.27 30,725,796,931.13 35,774,038,070.43 34,404,712,933.07
(2) Revenue generated by the contract
Contract classification Current period amount
Classified by business area
Domestic 27,268,083,739.08
Abroad 3,083,507,146.19
Total 30,351,590,885.27
Classified by the time of commodity transfer
Recognized at a certain point in time 30,350,227,817.31
Recognizde over a certain period of time 1,363,067.96
Total 30,351,590,885.27
7. Investment Income
Items Current period Previous period
Long-term equity investment income measured by cost
53,139,377.16
method
Long-term equity investment income measured by equity
-439,659.58
method
Investment income from disposal of long-term equity
6,059,547.35
investment
Investment income of financial assets held-for-trading
-2,502,067.50
during the holding period
Investment income from debt restructuring 694,683.35
Total -2,247,043.73 59,198,924.51
Financial Statements Page 180
XV. Supplementary Information
1. Details of Non-recurring Profit and Loss
Items Amount Notes
Profit or loss from disposal of non-current assets
Tax refunds, reductions and exemptions for ultra vires
approval or without formal approval documents
Government grants attributable to profit and loss of
current period (except such government subsidy
closely related to the company's normal business
34,571,691.80
operation, meeting the regulation of national policy
and enjoyed constantly in certain quota or quantity
according to a certain standard)
Fund occupancy fees charged to non-financial
enterprises included in current profit and loss
The investment cost of the enterprise to obtain
subsidiaries, associates and joint ventures is less than
the income generated by the fair value of the
identifiable net assets of the invested unit that should
be enjoyed when the investment is obtained
Non-monetary asset exchange gains and losses
Profit and loss from entrusting others to invest or
-2,796,530.07
manage assets
Provisions for asset impairment due to force majeure
factors, such as natural disasters
Debt restructuring profit and loss 694,683.35
Enterprise reorganization expenses, such as expenses
for relocating employees, integration expenses, etc.
Profit and loss exceeding the fair value of a
transaction whose transaction price is obviously
unfair
Net profit and loss for the current period from the
beginning of the period to the date of combination of
subsidiaries arising from a business combination
under common control
Profit and loss arising from contingencies unrelated to
the normal business operations of the company
In addition to the effective hedging business related to
the company's normal business operations, gains and
losses from changes in fair value arising from holding
transactional financial assets, derivative financial
assets, transactional financial liabilities, and
derivative financial liabilities, as well as disposal of
Financial Statements Page 181
Items Amount Notes
transactional financial assets and derivative financial
assets Investment income from assets, trading
financial liabilities, derivative financial liabilities and
other debt investments
Accounts receivable and contract asset impairment
provision that have been individually tested for
impairment
Profit and loss from external entrusted loans
Profit and loss arising from changes in the fair value
of investment real estate that adopts the fair value
model for subsequent measurement
The impact of one-time adjustment to the current
profit and loss in accordance with the requirements of
taxation, accounting and other laws and regulations
on the current profit and loss
Custody fee income from entrusted operations
Other non-operating revenue and expenditure other
-30,054,378.76
than above items
Other profit and loss items that meet the definition of
non-recurring profit and loss
Subtoal 2,415,466.32
Impact of income tax -75,725.75
Impact of minority interests (net of tax) -6,025.40
Total 2,333,715.17
2. Return on Equity and Earnings Per Share
Weighted average Earnings per share (Yuan)
Profit in the Reporting Period
Return on Equity (%) Basic EPS Diluted EPS
Net profit attributable to ordinary
shareholders -5.49% -0.2446 -0.1558
Net profit attributable to ordinary
shareholders after deducting
non-recurring profit and loss -5.50% -0.2452 -0.1563
Bengang Steel Plates Co., Ltd.
(Affix Official Seal)
29 August 2023
Financial Statements Page 182
