本钢板材股份有限公司
BENGANG STEEL PLATES CO.,LTD.
Interim Report 2009
January 1 – June 30 2009
(Prepared Under International Accounting Standard)
August 27, 20092
Important Statement
The Board of Directors and the directors of the Company guarantee that there are no significant omissions,
fictitious or misleading statements carried in the Report and we will accept individual and joint responsibilities for
the truthfulness, accuracy and completeness of the Report.
None of the directors, supervisors, or executives holds any opinion that is against the authenticity, accuracy and
completeness of this report’s content.
Financial statements carried in this interim report are not audited.
Chairman of the Board – Mr. Yu Tianchen and Chief Financial Officer, General Manager– Mr. Kang Wei, and
Head of Accounting Dept. – Mr. Zuo Zhanguo hereby declare: the authenticity and completeness of the report are
guaranteed.
This report is prepared both in English and Chinese. When there is any conflict in understanding, the Chinese
version shall prevail.3
Table of Contents
I. Company Profile........................................................................................................................4
II. Major Financial Information...................................................................................................5
III. Movement of Capital Share and Top Ten Shareholders......................................................6
IV. Particulars about the Directors, Supervisors and Senior Executives................................10
V. Report of the Board.................................................................................................................10
VI. Significant Events ..................................................................................................................13
VII. Financial Report ..................................................................................................................27
VIII. Documents Ready for Inquiring .......................................................................................274
I. Company Profile
1. Legal Name of the Company in Chinese: 本钢板材股份有限公司
In English: BENGANG STEEL PLATES CO., LTD
English abbreviation: BSP
2. Legal representative Yu Tianchen
3. Secretary of the Board: Zhang Jichen, Stock Affair Representative: Lu Xiaoyong
Contact address: No.16, Renmin Road, Pingshan District, Benxi City, Liaoning
Tel: 0414－7828360 7828734 Fax: 0414－7824158 7827004
Email：bgbczjc761@126.coom
4. Registered address: No.18 Guangtie Rd., Pingshan District, Benxi City, Liaoning
Office address: No.16, Renmin Road, Pingshan District, Benxi City, Liaoning
Post code: 117000
Email: bgbctwg＠mail.bxptt.ln.cn
5. Information disclosure media stipulated by the company:
China Securities Journal, Security Times, Hong Kong Commercial Daily
Annual reports also published online at: http://www.cninfo.com.cn
Place where the annual report is prepared and ready for reference: Stock Affair Department of the Company
6. Stock listed in: Shenzhen Stock Exchange
(1) Short Form of B-Shares: BENGANGBAN-B Stock Code: 200761
(2) Short Form of the Stock of A-Shares: BENGANGBANCAI Stock Code: 000761
7. Misc. information:
Initial business registration on: June 27 1997
Business registration renewed on: June 15, 2007
Business registration renewed with: Liaoning Commerce & Industry Administration Bureau
Business license number: 2100001049024
Taxation registration number: 210502242690243
Public accountant engaged by the Company:
Shulun Pan Certified Public Accountants Co., Ltd.
Address: 4/F 61 Nanjing Rd. East, Huangpu, Shanghai5
II. Major Financial Information
1. Main indices
In RMB
Ended this report
term
Ended previous
year
Increase/decrease
(%)
Gross Assets 34,089,267,355.13 32,722,333,254.16 4.18%
Owners’ equity to shareholders of the listed
company 14,759,947,184.30 15,826,633,584.69 -6.74%
Share capital 3,136,000,000.00 3,136,000,000.00 0.00%
Net asset per share attributable to the shareholders
of the listed company (Yuan/share) 4.7066 5.0468 -6.74%
Report term
(Jan-Jun)
Same period last
year
Increase/decrease
(%)
Turnover 16,461,627,817.78 18,769,857,158.04 -12.30%
Operation profit -898,699,565.07 1,344,183,959.74 -166.86%
Total profit -898,357,341.66 1,353,458,749.19 -166.37%
Net profit attributable to the shareholders of the
listed company -909,886,400.39 1,015,441,808.47 -189.60%
Net profit after deducting of non-recurring
gain/loss attributable to the shareholders of the
listed company
-910,143,067.95 1,008,485,716.38 -190.25%
Basic earnings per share (Yuan/share) -0.2901 0.3238 -189.59%
Diluted earnings per share (Yuan/share) -0.2901 0.3238 -189.59%
Net return on equity (%) -6.16% 6.06% -12.22%
Cash flow generated by business operation, net 1,772,540,299.38 793,281,907.07 123.44%
Net Cash flow per share generated by business
operation (yuan/share) 0.565 0.253 123.32%
2. Non-recurring profit/loss items
In RMB
Non-recurring gain and loss items Amount Note (if
applicable)
Gain/loss of non-current assets 4,120.00
Government subsidies accounted into current gain/loss account, other than those
closely related to the Company’s common business, comply with the national policy
and continues to enjoy at certain fixed rate or amount.
50,000.00
Gain/loss from debt reorganization 1,287,477.28
Other gain/loss items satisfying the definition of non-recurring gain/loss account -999,373.87
Influenced amount of income tax -85,555.85
Total 256,667.56 -
3. Diversity of domestic and international accounting standard
Net profit attributable to the shareholders of the
listed company
Owners’ equity to shareholders of the listed
company
Current term Amount of last term End of term Beginning of term
On IAS -909,886,400.39 1,015,441,808.47 14,759,947,184.30 15,826,633,584.69
On domestic accounting
standard -909,886,400.39 1,015,441,808.47 14,759,947,184.30 15,826,633,584.69
Individual and total of adjustment according to IAS
Total of differences between
the IAS and domestic
accounting standard
0.00 0.00 0.00 0.006
Statement on differences
between the IAS and Chinese
Accounting Standard
The differences between the new Chinese accounting standard and the international accounting
standard make no influence on the net profit and the net asset of the term.
There were 4 million shares under pledge: In the lawsuit event of China Xinda Asset Management Co., Ltd.
Shenyang Office against Dandong Chemical Fibre (Group) Co., Ltd. for overdue payment, China Xinda Asset
Management Co., Ltd. Shenyang Office claimed Bengang Group to undertake the guarantee responsibility, and
requested Liaoning Provincial High Court to freeze the 4 million shares of the Company held by Bengang Group
in Shenzhen Stock Exchange.On December 25, 2008, Bengang Group signed the credit transferring contract with
China Xinda Asset Management Co., Ltd. Shenyang Office, by which Bengang Group tookover the credit held by
China Xinda Asset Management Co., Ltd. Shenyang Office in Dandong Chemical Fibre (Group) Co., Ltd., and
the guarantee responsibilities of Bengang Group was released thereon. China Xinda Asset Management Co., Ltd.
Shenyang Office promised to release the 4 million shares said above upon completion of consideration payment
made by the Group according to the contract (the consideration payment deadline was September 20, 2009
according to the contract).7
III. Movement of Capital Share and Top Ten Shareholders
1. Change of share equity
Before the change Changed (+,-) After the change
Amount Proportion
Issuing
of new
shares
Bonus
shares
Transferred
from
reserves
Others Sub-total Amount Proportion
I. Shares with
conditional
subscription
2,518,410,050 80.31% -480,000,000 -480,000,000 2,038,410,050 65.00%
1. State-owned shares
2. State-owned legal
person shares 2,518,400,000 80.31% -480,000,000 -480,000,000 2,038,400,000 65.00%
3. Other domestic
shares
Incl.
Non-government
domestic legal person
shares
Domestic natural
person shares
4. Share held by
foreign investors
Incl. Shares held by
foreign legal persons
Foreign natural
person shares
5. Management shares 10,050 0.00% 10,050 0.00%
II. Shares with
unconditional
subscription
617,589,950 19.69% 480,000,000 480,000,000 1,097,589,950 35.00%
1. Common shares in
RMB 217,589,950 6.94% 480,000,000 480,000,000 697,589,950 22.24%
2. Foreign shares in
domestic market 400,000,000 12.76% 400,000,000 12.76%
3. Foreign shares in
overseas market
4. Others
III. Total of capital
shares 3,136,000,000 100.00% 3,136,000,000 100.00%
Note 1. 480000000 conditional shares were released in the report term.
2. According to the related rules of Shenzhen Stock Exchange, 75% of the shares held by directors, supervisors
and senior management are restricted from selling, and 25% of which are unrestricted. Thus none of the restricted
and unrestricted shares were changed in the report term.8
2. Particulars about the top 10 shareholders and top 10 unconditional-share holders
in shares
Total of shareholders 68,476
Top 10 Shareholders
Name of the shareholder Properties of
shareholder
Share
proportion % Total shares Conditional shares Pledged or frozen
Benxi Steel (Group) Ltd. State-owned
legal person 82.12% 2,575,200,000 2,038,400,000 4,000,000
DREYFUS
PIFI-DREYFUS
PREMIER GREATER
CHINA
Overseas
natural person 1.53% 48,000,855
GOVERNMENT OF
SINGAPORE INV.
CORP.- A/C "C"
Overseas
natural person 0.73% 22,974,953
China Construction Bank
– Shangtou Morgan China
Advantage Securities
Investment Fund
Domestic
natural person 0.60% 18,972,120
HTHK-MANULIFE
CHINA VALUE FUND
Overseas
natural person 0.47% 14,622,133
DWS INVEST-DWS
INVEST CHINESE
EQUITIES
Overseas
natural person 0.45% 14,208,135
GSIC A/C MONETARY
AUTHORITY OF
SINGAPORE
Overseas
natural person 0.36% 11,192,925
HTHK-VALUE
PARTNERS
INTELLIGENT
FD-CHINA B SHS FD
Overseas
natural person 0.35% 10,982,588
RENAISSANCE CHINA
PLUS FUND
Overseas
natural person 0.28% 8,760,556
MORGAN STANLEY &
CO. INTERNATIONAL
PLC
Overseas
natural person 0.23% 7,274,300
Top 10 holders of unconditional shares
Name of the shareholder Unconditional shares Category of shares
Benxi Steel (Group) Ltd. 536,800,000 RMB common shares
DREYFUS PIFI-DREYFUS PREMIER
GREATER CHINA 48,000,855 Foreign shares placed in domestic
exchange
GOVERNMENT OF SINGAPORE INV.
CORP.- A/C "C" 22,974,953 Foreign shares placed in domestic
exchange
China Construction Bank – Shangtou
Morgan China Advantage Securities
Investment Fund
18,972,120 RMB common shares
HTHK-MANULIFE CHINA VALUE
FUND 14,622,133 Foreign shares placed in domestic
exchange
DWS INVEST-DWS INVEST CHINESE
EQUITIES 14,208,135 Foreign shares placed in domestic
exchange
GSIC A/C MONETARY AUTHORITY
OF SINGAPORE 11,192,925 Foreign shares placed in domestic
exchange
HTHK-VALUE PARTNERS
INTELLIGENT FD-CHINA B SHS FD 10,982,588 Foreign shares placed in domestic
exchange
RENAISSANCE CHINA PLUS FUND 8,760,556 Foreign shares placed in domestic
exchange
MORGAN STANLEY & CO.
INTERNATIONAL PLC 7,274,300 Foreign shares placed in domestic
exchange9
Notes to relationship or
“action in concert” among
the top ten shareholders.
It is unknown to the Company whether there is any related connection or ‘Action in
Concert’ as described by Rules of Information Disclosing Regarding Changing of
Shareholding Status of Listed Companies existing among the above shareholders.
3. Profile of the controlling shareholder
The controlling shareholder or substantial dominator of the Company was not changed.10
IV. Particulars about the Directors, Supervisors and Senior
Executives
1. Shareholding position of the directors, supervisors and senior executives in the current
term.
Name Position Shares held at the
beginning of term
Amount of shares
increased in the
report term
Amount of shares
decreased in the
report term
Shares held at
the end of
term
Cause of
change
Yu
Tianchen Chairman 13,400 0 0 13,400
Kang Wei Vice Chairman, GM 0 0 0 0
Zhang
Jichen
Director, Secretary
of the Board 0 0 0 0
Zhao Wei Director 0 0 0 0
Tian Binfu Independent Director 0 0 0 0
Li Kai Independent Director 0 0 0 0
Wang
Yiqiu Independent Director 0 0 0 0
Liu
Junyou
Chairman of the
supervisory
committee
0 0 0 0
Cao Aimin Supervisor 0 0 0 0
Liu
Engquan Supervisor 0 0 0 0
Li
Binqiang Supervisor 0 0 0 0
Wang Pu Supervisor 0 0 0 0
Zhang
guohua
Vice General
Manager 0 0 0 0
2. Engaging and dismissing of directors, supervisors and executives.
As elected at the Shareholders’ Annual Meeting 2008 held on May 11, 2009, Mr. Li Kai and Ms. Wang Yiqiu were
elected the independent directors of the 4th term of Board of the Company. Ms. Zhong Tianli and Mr. Xue
Xiangxin have expired for their office term. Relative resolutions were published on China Securities Journal,
Securities Times and Hong Kong Commercial Daily dated May 12, 2009.
V. Report of the Board
1. Business Overview
Since the beginning of 2009, the impact of global financial crisis was becoming more serious on domestic
industries, especially steel & iron industries. Facing the significant pressure and challenge, the Company keeps
following the scientific development strategies, doing all its efforts to realize its business target. We set the
direction to “upgrading, flexibility, and globalization” and achieved “no production declining, no employee
dismissing, and no pay cutting”, and the production target was on schedule.
For the period of January to June, the Company realized iron output of 4.5672 million ton, increased by 20.22%
over the same period of last year; steel output of 4.4595 million ton, increased by 16.81%; hot-rolled plate of11
3.6908 million ton, increased by 8.8%; cool-rolled plate of 635.6 thousand ton, increased by 27.09%; high
value-adding products accounted for 80% of the total, and the sales rate reached 100%.
2. Operation in the report term
A. Distribution of main business in products
In RMB 10 thousand Yuan
Distribution on industries
On industry or
product Turnover Operation cost Gross profit
ratio (%)
Increase/decre
ase of
turnover over
the same
period of last
year (%)
Increase/decre
ase of
operation cost
over the same
period of last
year (%)
Increase/decrea
se of gross
profit ratio
over the same
period of last
year (%)
Industry 1,646,162.78 1,558,547.42 5.32% -12.30% -0.34% -14.40%
Distribution of main businesses
1. Steel plate 1,217,283.08 1,205,479.81 0.97% -25.61% -9.41% -17.71%
2. Steel billet 216,419.23 135,657.37 37.32% 37.32%
3. Others 212,460.48 217,410.24 -2.33% -11.73% -6.77% -5.44%
B. Distribution of main business in territories
In RMB 10 thousand Yuan
Regions Turnover Change of income over last year
%
Northeast 780,857.46 -16.66%
North 315,330.35 26.63%
East 392,260.16 20.14%
Northwest 1,636.25 -41.91%
Mid-south 137,331.21 -25.96%
Export 18,747.35 -89.36%
Total 1,646,162.78 -12.30%
C. Investment in the report term
Utilizing of fund raised previously:
The fund raised in previous share placing has already been put into utilization completely. The details have been
disclosed in the interim report and annual report of 2006.
In the report term, using of non-financing funds were as the followings:
In the first half of 2009, the Company has completed technical reforming investment amounted to RMB1.09280
billion.
1. Super thin cool rolling reengineering project: planned for RMB1126.19 million of investment, started in 2006.
RMB13.09 million invested in the first half of 2009. Accumulated to RMB983.45 million at the end of June 2009
(including RMB970.36 million of construction in process transferred to fixed assets). Scheduled to be completed
in 2009.
2. Moving and reengineering project of blast furnace (blast furnace 8#): planned for RMB2.267 billion, started in
2006. RMB265.02 million was invested in the first half of 2009. Accumulated to RMB2.07778 billion at the end
of June 2009 (including RMB1.52732 million of construction in process transferred to fixed assets). Scheduled to
be completed in 2009.
3. Environmental project of iron making material yard: planned for RMB703.12 million of investment, started in
2005. RMB49.29 million invested in the first half of 2009. Accumulated to RMB610.18 million at the end of June
2009 (including RMB3.45 million of construction in process transferred to fixed assets). Scheduled to be
completed in 2009.
4. IT project: planned for RMB274.44 million of investment, started in 2005. RMB14.83 million invested in the12
first half of 2009. Accumulated to RMB113.19 million at the end of June 2009. Scheduled to be completed in
2010.
5. 180t converter project: planned for RMB1500.00 million of investment, started in 2003. RMB16 million
invested in the first half of 2009. Accumulated to RMB1.44984 billion at the end of June 2009 (including
RMB1.07408 billion of construction in process transferred to fixed assets). . Scheduled to be completed in 2009.
6. Moving and reengineering project of coking furnace (coking furnace 8# 9#): planned for RMB1.44376 billion,
started in 2006. RMB257.13 million was invested in the first half of 2009. Accumulated to RMB1.13253 billion at
the end of June 2009 (including RMB769.35 million of construction in process transferred to fixed assets).
Scheduled to be completed in 2009.
7. Reconstruction of billet plate continuous casting line: planned for RMB1.93266 billion, started in 2007.
RMB189.93 million was invested in the first half of 2009. Accumulated to RMB1.46198 billion at the end of June
2009. Scheduled to be completed in 2009.
8. Energy saving and environmental reengineering project of converter system: planned for RMB780 million,
started in 2007. RMB20.08 million was invested in the first half of 2009. Accumulated to RMB85.32 million at
the end of June 2009. Scheduled to be completed in 2010.
9. Ma’erlin ore project: planned with RMB481.36 million of investment, started in 2007. RMB30 million invested
in the first half of 2009. Accumulated to RMB345.72 at the end of June 2009. Scheduled to complete in 2009.
10. Packaging and truck loading line: planned with investment of RMB305.84 million, started in 2008.
RMB30.58 invested in the first half of 2009. Accumulated to RMB138.36 at the end of June 2009. Scheduled to
complete in 2010.
11. Dandong stainless steel cool rolling project: planned with investment of RMB151.47 million, started in 2008.
RMB34.38 million invested in the first half of 2009. Accumulated to RMB119.36 million at end of June 2009.
Scheduled to complete in 2010.
12. 60K oxygen generator project: planned with RMB673.23 million, started in 2008. RMB53.13 invested in the
first half of 2009, accumulated to RMB90.81 million at end of June 2009. Scheduled to complete in 2010.13
VI. Significant Events
1. Company Administration
The Company was following with the Company Law, Securities Law, Listed Company Administrative Criteria,
Listed Company Shareholders’ Meeting Criteria, Opinions on Increasing the Quality of Listed Companies, and
Guidance for Articles of Association of Listed Companies, kept establishing and improving the administrative
structure, and executed the regulations in daily operation. No behaviors violating or departure from the
regulations were conducted.
The controlling shareholder was acting its rights as sponsor legally. Basically no competition was conducted
against the Company’s business operation. The Company has established a long-term controlling shareholder
behaving system. The shareholders’ meetings have been operated with clear responsibilities and clear meeting
criteria. Regulations were established to give convenient to the public investors to participate in decision making
process. Online voting system was opened to public shareholders to vote on major issues of the Company.
Shareholders’ meetings were held legally according to the laws, regulations, regulatory regulations, and the
Articles of Association.
The Board of Directors, Supervisory Committee, and executives were working with clear responsibilities and
meeting criteria. All of the directors, supervisors, and executives were fulfilling their duties. Administrative
systems have been established regarding internal controlling, finance, decision-making over major investment,
decision-making over related transactions, and other internal criteria. The systems are reviewed and assessed
periodically, and relative information is released. The Company has also established internal restricting
mechanism and responsibility tracking mechanism. Responsibilities are clearly undertaken and invalid
decision-making is effectively restricted. Information disclosure regulations were established and executed to
ensure authentic, precise, complete, timely, and fair information disclosure.
2. Dividend plan and execution
The profit distribution plan for year 2008 was as: upon the total capital share of 3,136,000,000 at present, cash
dividend of RMB0.50 (tax included for A shares) would be distributed to each 10 shares. The registration date of
the distribution was June 24 2009, the final trading date for B shares was June 24 2009, and the ex-dividend date
was June 25 2009.
Neither dividend distribution nor capitalizing of common reserves will be implemented for the interim term.
No share equity motivation scheme has been implemented in the report term.
3. Material lawsuit and arbitrations
No material lawsuit and arbitrations occurred in the report term or carried down to the report term from previous
terms.
In the report term, the Company held no share equities in other listed companies or financial organizations such as
commercial banks, securities companies, insurance companies, trust companies, or futures companies.
4. Material asset acquisition, selling, and merger
No material asset acquisition, selling or merger occurred in the report term or carried down to the report term
from previous terms.14
5. Material Events about Related Transactions
(I) Related parties
1. Parent company of the Company
at RMB100 million
Name of the parent co. Relationship Ownership
sector
Reg.
Add.
Legal
representative
Business
property
Registered
capital
Benxi Steel (Group)
Co., Ltd. Parent company Fully
state-owned Benxi Yu Tianchen Production 53.69
(Continued)
Name of the parent co. Share portion in the
Company %
Voting rights in the
Company %
Substaintial
controller Organization code
Benxi Steel (Group) Co.,
Ltd. 82.12 82.12
Liaoning Provincial
State-asset
Administration
11972626-3
2. Particulars of the subsidiaries of the Company
In RMB 10 thousand
Name of the subsidiaries Ownership of the
subsidiary
Ownership
type
Reg.
Add.
Legal
representative
Business
property
Xiamen Bengang Steel Sales
Ltd.
Fully-owned subsidiary Limited
liability Xiamen Zhang Guoming Sales
Wuxi Bengang Steel Sales Ltd. Fully-owned subsidiary Limited
liability Wuxi Wen Yonggang Sales
Tianjin Bengang Steel Trading
Ltd.
Fully-owned subsidiary Limited
liability Tianjin Liu Chuang Sales
Nanjing Bengang Material Sales
Ltd.
Fully-owned subsidiary Limited
liability Nanjin Pang Zonghua Sales
Yantai Bengang Steel Sales Ltd. Fully-owned subsidiary Limited
liability Yantai Song Xingang Sales
Harbin Bengang Steel & Iron
Sales Ltd.
Fully-owned subsidiary Limited
liability Harbin Fei Jixi Sales
Changchun Bengang Steel Sales
Ltd.
Fully-owned subsidiary Limited
liability Changchun Li Zhichao Sales
Guangzhou Bengang Trade Co.,
Ltd.
Fully-owned subsidiary Limited
liability Guangzhou Wu Shaogang Sales
Shanghai Bengang Metallurgy
Tech. Ltd.
Fully-owned subsidiary Limited
liability Shanghai Fei Jixi Sales
(Continued)
Name of the subsidiaries Registered
capital
Share
proportion
%
Portion of
voting rights
Organization
code
Xiamen Bengang Steel Sales Ltd. 50.00 100.00% 100.00% 73788827-8
Wuxi Bengang Steel Sales Ltd. 100.00 100.00% 100.00% 73654820-4
Tianjin Bengang Steel Trading Ltd. 300.00 100.00% 100.00% 74135658-1
Nanjing Bengang Material Sales Ltd. 115.00 100.00% 100.00% 75945466-5
Yantai Bengang Steel Sales Ltd. 50.00 100.00% 100.00% 74451514-6
Harbin Bengang Steel & Iron Sales Ltd. 50.00 100.00% 100.00% 73137417-X
Changchun Bengang Steel Sales Ltd. 50.00 100.00% 100.00% 74841484-4
Guangzhou Bengang Trade Co., Ltd. 100.00 100.00％ 100.00％ 68328959-4
Shanghai Bengang Metallurgy Tech. Ltd. 500.00 100.00％ 100.00％ 68408762-8
Change in registered capital (or paid-in capital, share capital) of subsidiaries:
In RMB 10 thousand15
Name of the subsidiaries Balance at the beginning of
term
Increased this
term
Decreased this
term
Balance at the end of
term
Xiamen Bengang Steel Sales Ltd. 50.00 50.00
Wuxi Bengang Steel Sales Ltd. 100.00 100.00
Tianjin Bengang Steel Trading Ltd. 300.00 300.00
Nanjing Bengang Material Sales
Ltd. 115.00 115.00
Yantai Bengang Steel Sales Ltd. 50.00 50.00
Harbin Bengang Steel & Iron
Sales Ltd. 50.00 50.00
Changchun Bengang Steel Sales
Ltd. 50.00 50.00
Guangzhou Bengang Trade Co.,
Ltd. 0 100.00 0.00 100.00
Shanghai Bengang Metallurgy
Tech. Ltd. 0 500.00 0.00 500.00
3. Joint ventures and affiliates
No joint ventures or affiliates.
4. Other related parties
Name of the related parties Relationship to the Company
Benxi Steel (Group) Machinery Co., Ltd. Same parent
Bengang Group International Trading Ltd. Same parent
Benxi Steel (Group) Tengda Holdings Ltd. Same parent
Guangshou Free Trade Zone Bengang Sales Co., Ltd. Same parent
Shanghai Bengang Steel & Iron Trading Co., Ltd. Same parent
Liaoning Bengang Steel & Iron Trading Co., Ltd. Same parent
Dalian Boluole Steel Tube Ltd. Same parent
Shenyang North Bengang Sales Ltd. Same parent
Benxi Steel (Group) Steel Process and Logistics Co., Ltd. Same parent
Benxi Steel (Group) Construction & Repairing Co., Ltd. Same parent
Bengang Fire-resistance Material Co. Same parent
Benxi Steel (Group) Metallurgy Residues Co., Ltd. Same parent
Liaoning Metallurgy Technician College Same parent
Benxi Steel (Group) Industrial Development Co., Ltd. Same parent
Benxi Steel (Group) Construction Co., Ltd. Same parent
Yinkou Bengang International Logistics Co., Ltd. Same parent
Benxi Steel (Group) Real-estate Development Co., Ltd. Same parent
Benxi Steel (Group) Education Center Same parent
Benxi Steel (Group) Drilling Tools Co., Ltd. Same parent
Benxi Steel (Group) Designing Institute Same parent
Benxi Steel (Group) Information and Automatic Tech. Ltd. Same parent
Benxi Steel (Group) News Center Same parent
Benxi Steel (Group) New Industrial Development Co., Ltd. Same parent
Benxi Steel (Group) Mining Co., Ltd. Same parent
Benxi Steel (Group) Electronics Co., Ltd. Same parent
Benxi Steel (Group) Thermal Power Development Co., Ltd. Same parent
Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. Same parent
Benxi Steel & Iron (Group) Inspection Co., Ltd. Same parent
(II) Related Transactions
1. Transactions among subsidiaries with controlling relationships and included in the consolidation
range of financial statements, are neutralized.16
2. Related transactions of selling goods and providing services
Amount of the Current
Term
Amount of the Previous
Term
Related parties
Subjects of the
related
transactions Amount
RMB0’000
Portion in
similar trade
%
Amount
RMB0’000
Portion in
similar trade
%
Benxi Steel & Iron (Group) Ltd. Products 216,419.23
13.15 -
Benxi Steel & Iron (Group) Ltd. Material and parts 33,208.73
2.02
26,741.83 1.42
Benxi Steel & Iron (Group) Ltd. Power supply 9,649.98
0.59
78.25 0.004
Bengang Group International Trading Ltd. Products 18,747.35
1.14
176,212.03 9.39
Dalian Boluole Steel Tube Ltd. Products 2,272.32
0.14
5,857.05 0.31
Guangshou Free Trade Zone Bengang Sales Co., Ltd. Products 19,803.08
1.20
26,485.40 1.41
Shanghai Bengang Steel & Iron Trading Co., Ltd. Products 41,149.38
2.50
47,765.98 2.54
Liaoning Bengang Steel & Iron Trading Co., Ltd. Products 20,875.55
1.27
35,469.37 1.89
Benxi Steel (Group) Steel Process & Logistics Ltd. Products 15,435.71
0.94
22,693.42 1.21
Benxi Steel (Group) Steel Process & Logistics Ltd. Power supply 41.39
0.003
41.96 0.002
Bengang Group Dahe Industry Co., Ltd. Power supply 11.41
0.001
10.30 0.001
Benxi Steel (Group) Industrial Development Ltd. Material and parts 1,961.72
0.12
3,488.17 0.19
Benxi Steel (Group) Industrial Development Ltd. Power supply 41.03
-
40.13 0.002
Benxi Steel (Group) Construction Ltd. Material and parts 391.58
0.02
2,102.69 0.112
Benxi Steel (Group) Construction Ltd. Power supply 365.66
0.02
396.03 0.021
Benxi Steel (Group) Machinery Ltd. Power supply 1,344.59
0.08
1,723.93 0.09
Bengang Group Mineral Co., Ltd. Material and parts 45,197.73
2.75
47,762.24 2.54
Bengang Group Mineral Co., Ltd. Power supply 31,332.66
1.90
24,328.04 1.3
Bengang Group Mineral Co., Ltd. Freight income 502.02
0.03 -
Bengang Group New Industry Development Co., Ltd. Power supply 19.23
-
21.15 0.001
Benxi Steel (Group) Construction Ltd. Material and parts 56.13
-
4,504.52 0.24
Benxi Steel (Group) Construction Ltd. Power supply 869.76
0.05
56.98 0.003
Bengang Group Metallurgy Residue Ltd. Material and parts 5,378.55
0.33
2,942.18 0.16
Bengang Group Metallurgy Residue Ltd. Power supply 191.97
0.01
154.98 0.01
Bengang Electronics Co., Ltd. Power supply 95.05
0.01
79.18 0.004
Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. Products 240,207.78
14.59
366,612.13 19.53
Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. Material and parts 16,905.00
1.03
27,178.97 1.45
Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. Power supply 16,643.48
1.01
12,982.77 0.69
Bengang Group Thermal Power Development Co.,
Ltd. Power supply 3,427.28
0.21
2,495.80 0.13
Bengang Group Thermal Power Development Co.,
Ltd. Material and parts 1,401.97
0.09
2,311.55 0.12
Bengang Group Property Co., Ltd. Power supply 202.21
0.01
29.56 0.00217
Amount of the Current
Term
Amount of the Previous
Term
Related parties
Subjects of the
related
transactions Amount
RMB0’000
Portion in
similar trade
%
Amount
RMB0’000
Portion in
similar trade
%
Bengang Fire-resistance Material Co. Power supply 2,346.53
0.14
779.63 0.04
Bengang Fire-resistance Material Co. Freight income 254.71
0.02 -
Total Power supply 746,750.78 45.36 841,346.24 44.81
Pricing policies at trading with related parties:
On April 15, 2009, our company concluded with Bengang Steel Group Company for a comprehensive service
agreement. It includes providing of raw materials, auxiliary material, supporting services, and rent of properties
by the Group, and our company sells products to the Group including raw materials, auxiliary material, energy
power, spare parts, trademark, patent, supporting services, waste materials. According to the request of this
agreement, the pricing principle of the relevant subjects is as follows:
I. Pricing of services provided by Bengang Group to Bengang Company shall under the following
principles:
1. Raw material supplying services
1.1 Fine iron ore
Price of fine iron ore will not higher than the average customs C&F price from countries like Brazil and Australia
in the last half year, plus inland freight, port fee, and quality adjustment price.
Quality adjustment on prices will be basing on the weighted average of imported fine iron ore in the first half of
year, and on the basis of 10 yuan per ton to 1% of quality difference.
1.2 Iron ore pellets
Iron ore pellet provided by Bengang Group to Bengang Company is agreed to be at market price.
1.3 Recycling steel
The price for recycled steel will not be higher than the weighted average of the recycled steel the Company
purchased from the independent 3rd parties in the previous month, and to be decided upon negotiation.
1.4 Cold hard plate
Cold hard plate provided by Bengang Group to Bengang Company is priced as: the price of the current month
equals to the weighted average of prices of hot rolled plates provided by Bengang Company to third parties in the
previous month plus RMB335 of processing fee. The processing fee will be determined once a year.
1.5 Sales of cold plate and Galvanized Steel Plate
Cold plate and zinc plate provided by Bengang Group to the sales subsidiaries of Bengang Company will be at
market price.
2. Supplementary material supplying services
Pricing of auxiliary materials: limestone, fire resistance material and auxiliary materials provided by Bengang
Group will be at market price.
3. Supporting services
3.1 Land rental
Land rentals provided by Bengang Group to Bengang Company are decided under the conditions of “Land Using
Right Leasing Agreement” which is effective at present.
3.2 Rental of 2300mm hot rolling line
For the 1st quarter of 2009, the prices of billet provided to the 2300mm hot rolling line of the Group are still
decided according to the “Steel Billet Sales Agreement” engaged in 2008. Namely RMB4623 per ton (tax
excluded). This arrangement will be terminated automatically as soon as the “Leasing Agreement” regarding the
2300 hot rolling line takes effect.
Rental service of 2300mm hot rolling line provided by the Group to the Company is priced according to the18
Rental Agreement.
3.3 Transportation
Trucking and railway services provided by the Group are agreed to be decided upon market price.
3.4 Spare parts
Spare parts provided by Bengang Group to Bengang Company are agreed to be decided upon market price.
3.5 Workshop and equipment maintaining services
Bengang Group will provide those workshop and equipment maintaining services which Bengang Company can’t
do by itself. Fees are decided according to the degree of difficulty and workload of particular works.
3.6 Agency servcies
Before the Company is authorized to do import & export trade, the international business is done by Bengang
Group. All business are on normal commercial operation. Commissions are decided through negotiation within
the range of 0.5%-1.5% of the total value of the goods.
When the Company is authorized to do import & export trade, the agent service can be terminated on notice.
Bengang Group is not the sole agent of the Company, namely the Company has the right to choose another party
to do the agent.
3.7 Engineering and designing services
Engineering and designing services provided by the Group to the Company are on national prices.
3.8 Construction services
Construction services provided by the Group to the Company are on market prices.
3.9 Heating services
Heating services are on national prices.
3.10 Printing, news press, media and publishing services
Printing, news press, media and publishing services are on national prices.
3.11 Education facilities and services
Education facility rental, vocational education, and employee training services provided by the Group are on
market prices.
3.12 Office space
Office spaces provided by the Group to the Company will be at market prices.
3.13 Car services
Car services provided by the Group to the Company will be at market prices.
3.14 Property management
Property management services provided by the Group to the Company will be at market prices.
3.15 Packaging servcies
Packaging services provided by the Group to the Company will be at market prices.
3.16 Labor safty services
Labor safety services provided by the Group to the Company will be at market prices.
3.17 Trademark property
Trademark “Bengang” (Registration No.149389) was registered by National Industry and Commerce
Administrative Bureau to the Group in 1981 and extended to 2013 in 2003. The trademark was registered for the
merchandises of: steel materials, steel strips, metal products, steel wires, steel tubes, steel billets, thin steel plates,
mid-ply plates, pig irons, fine iron ores. The Group is the holder of the trademark.
The Group allow the Company to use the trademark “Bengang” on the Company’s products. The Company shall
not allow any other party to use the trademark. The Group shall not allow any other party to use the trademark on
competitive products of the Company. In case the Group has already entered trademark-related agreement with
any third party, it shall remain in original extent and shall not be extended upon expiration.19
It is Bengang Group’s responsibility to keep trademark “Bengang” legally under its possession and shall
compensate the Company if any fault happened to it.
It is Bengang Group’s responsibility to keep trademark “Bengang” valid and extend to future at the Group’s
expenses. If the trademark became invalid due to fault of the Group, the Group shall compensate the losses caused
to the Company.
Bengang Group is responsible to claim to any third party which illegally use the trademark “Bengang”.
Bengang Company is responsible to keep products sold with “Bengang” trademark at a high quality.
Bengang Company has the right to register its own trademarks at any time it thinks appropriate.
II. Pricing of services provided by Bengang Company to Bengang Group shall under the following
principles:
1. Raw material supplying services
1.1 Hot rolling thin plates
For the hot rolled thin plates, the price will be upon the following policy: the price for hot rolled thin plates for the
current month will be the weighted average of the prices (at same quality) the Company offered to the 3rd parties
in the previous month.
1.2 Coke and chemical products
Coke and chemical products provided by the Company to the Group are on market prices.
1.3 Steel and iron residues (water residues)
Steel and iron residues provided by the Company to the Group are handled by the Group at market price.
2. Infrastructure services
The supplies from the Company to Bengang Group, i.e. oxygen, nitrogen, argon, blast furnace gas, coke furnace
gas, steam, clean water, fresh water, recycling water, and soft water, are at complete costs plus national surplus tax
and reasonable profit.
Power supply to the Group are at the national price plus transferring cost.
Transmitting cost: the sum of production cost, overhead, financial expenses of Power Supply Plant of Bengang
Company, and the reasonable share of overhead and financial expenses, amortized to each power supplying unit.
3. Supporting services
3.1 Transportation
It is to the consent of both parties that the railroad transportation service provided by the Company to the Group
will be on the price provided by the national government.
3.2 Raw materials, fuel, auxiliary materials, equipment, and spare parts
Raw materials, fuel, auxiliary materials, equipment, and spare parts provided by the Company to the Group are at
purchasing prices of the Company plus 0.5-1.5% of purchasing fee.
3.3 Quality inspection, measuring, and weighting services
For those services, such as quality testing / analyzing and measurement, which the Company can’t do by itself, the
Group has agreed to provide on the price provided by the national government.
3.4 Research and developing services
For those researches which the Company can’t do by itself, the Group has agreed to provide on the price provided
by the national government.
III. Other agreements
1. Price paid for agreement services shall be:
(1) National fixed price is applicable if available;
(2) market price if national price is not available;
(3) complete cost plus national surtax plus reasonable profit margin if market price is not available;
(4) price decided otherwise by both of the parties.20
2. For agreement services adopt national prices, if the national prices are not available, the prices shall be decided
at priority sequence of (2), (3), and (4).
National prices shall be reapplied whenever they become available in future time. If there are no national prices
but market price available, then the market prices are applied, unless otherwise decided by the parties.
3. In case complete cost is used in pricing, the provider shall submit relative books or records of costs and
examined by both parties to decide the prices in the next period. The period will be six months as decided by both
parties.
Scale of adjustment on the complete costs annually shall not greater than the raw material inflation rate published
by national departments in the previous year.
IV. According to “Supplementary agreement on land renting (II)” entered on April 15, 2009, the rental for
land using rights are on the agreement rate, namely RMB0.624 per square meter per month.21
3. Related transactions of purchasing goods and providing services
Amount of the Current
Term Amount of the Previous Term
Related parties Subjects of the related
transactions Amount
RMB0’000
Portion in annual
trade %
Amount
RMB0’000
Portion in
annual trade %
Benxi Steel & Iron (Group) Ltd. Raw materials 14.83
0.001 0.00
Benxi Steel & Iron (Group) Ltd. Maintaining 9,921.58
0.57 0.00
Bengang Puxiang Cool Rolling Steel
Sheet Co., Ltd. Raw materials 31,059.98
1.79
67,765.36 4.33
Bengang Group Mineral Co., Ltd. Repairing services 731.63
0.04
978.11 0.06
Bengang Group Mineral Co., Ltd. Raw materials 182,138.76
10.49
180,591.84 11.55
Bengang Group Mineral Co., Ltd. Transportation 5.84
0.0003 -
Bengang Group Metallurgy Residue
Ltd. Residue treatment 5.10
0.0003 -
Bengang Group Metallurgy Residue
Ltd. Raw materials 5,433.95
0.31
3,936.15 0.25
Bengang Group Steel Process &
Logistics Ltd. Process fee 28.03
0.002
45.37 0.003
Bengang Group Property
Development Ltd. Raw materials 2,372.88
0.14 -
Bengang Group Property Co., Ltd. Rental 13.65
0.001 -
Bengang Group Property Co., Ltd. Property management
fee 39.02
0.002 -
Bengang Group Machinery Ltd. Spare parts 17,859.74
1.03
12,821.03 0.82
Bengang Group Machinery Ltd. Repairing services 662.53
0.04
163.38 0.01
Bengang Group Machinery Ltd. Raw materials 148.14
0.01 -
Bengang Group Construction Ltd. Spare parts 259.48
0.01
243.42 0.01
Bengang Group Construction Ltd. Repairing services 7,676.82
0.44
1,293.98 0.08
Bengang Group Construction Ltd. Raw materials 356.83
0.02
2,374.29 0.15
Bengang Group Construction Ltd. Transportation 1,176.08
0.07 -
Benxi Steel (Group) Industrial
Development Ltd. Spare parts 43.40
0.002
137.00 0.11
Benxi Steel (Group) Industrial
Development Ltd. Raw materials 5,569.06
0.32
5,348.20 0.34
Benxi Steel (Group) Industrial
Development Ltd. Repairing services 831.07
0.05
132.10 0.01
Benxi Steel (Group) Industrial
Development Ltd. Transportation 634.59
0.04 -
Benxi Steel (Group) Construction
Ltd. Material and parts 64.68
0.004
43.80 0.003
Benxi Steel (Group) Construction
Ltd. Maintaining 4,704.56
0.27
645.58 0.04
Bengang Electronics Co., Ltd. Raw materials 2,995.16
0.17
380.34 0.02
Bengang Electronics Co., Ltd. Repairing services 490.89
0.03
299.68 0.02
Bengang Electronics Co., Ltd. Heating 59.31
- -
Benxi Steel (Group) Drilling Tools
Co., Ltd. Spare parts 804.45
0.05
801.41 0.05
Bengang Group New Industry
Development Co., Ltd. Labour security fee 77.76
0.004 -
Liaoning Metallurgy Technician
College Spare parts 895.00
0.05
1,760.82 0.11
Benxi Steel (Group) Information and
Automatic Tech. Ltd. Spare parts 68.34
0.004
2,782.37 0.1122
Amount of the Current
Term Amount of the Previous Term
Related parties Subjects of the related
transactions Amount
RMB0’000
Portion in annual
trade %
Amount
RMB0’000
Portion in
annual trade %
Benxi Steel (Group) Information and
Automatic Tech. Ltd. Repairing services 288.00
0.02 -
Bengang Group Thermal Power
Development Co., Ltd. Heating fee 1,594.50
0.09 -
Bengang Fire-resistance Material Co. Raw materials 25,545.57
1.47
49,984.98 3.2
Benxi Steel (Group) Designing
Institute Repairing services 63.64
0.004 -
Total 304,634.85 17.55 332,529.23 21.28
4． Other related transactions
Items Current term
Previous ter
m
With the Group
Repairing 99,215,816.53 96,956,494.00
Payment for purchasing 0.00 243,860,000.00
Bengang Group International Trading Ltd.
Import of equipment 133,412,067.76 287,857,085.28
with Bengang Electronics Co., Ltd.
Engineering fee paid 445,230.77 410,256.42
Benggang Group Real-estate Co., Ltd.
Property management 390,187.98 25,073.10
Property rental paid 136,479.29 73,021.64
Benxi Steel (Group) New Industrial Development Co., Ltd.
Labor safety fee 5,172,298.52 7,735,673.77
Benxi Steel (Group) Construction Ltd.
Construction 256,316,333.04 473,187,204.54
Transportation 11,760,835.92 23,532,660.41
5． Receivable & payable with related parties
End of term RMB0’000 Beginning of year RMB0’000
Related parties Book
balance
Portionin
thecategory
%
Bad debt
provision
Book
balance
Portion
in the
category
%
Bad debt
provision
Account receivable
Bengang Group Machinery Ltd. 3,137.48 3.06 1,868.24 2.18
Bengang Group Thermal Power Development Co., Ltd. 2.35 0.00 855.62 1
Benxi Steel (Group) Industrial Development Ltd. 2,782.19 2.71 4,557.41 5.32
Bengang Group New Industry Development Co., Ltd. 0.74 0.00 42.47 0.05
Bengang Group Metallurgy Residue Ltd. 8,259.36 8.05 5,890.44 6.88
Sub-total 14,182.12 3.06 13,214.18 15.43
Advance account
Bengang Group International Trading Ltd. 22,209.41 13.76 0.00 0.00
Liaoning Bengang Steel & Iron Trading Co., Ltd. 7,993.73 4.95 0.00 0.00
Benxi Steel (Group) Construction Ltd. 901.17 0.56 25.6 0.02
Bengang Group Construction Ltd. 8,768.18 5.43 6,002.61 3.8223
Benxi Steel (Group) Drilling Tools Co., Ltd. 0.00 0.00 0.47 0.00
Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. 9,374.76 5.81 10,405.47 6.62
Benxi Steel (Group) Medical Co. Ltd. 0.00 0.00 2 0.00
Benxi Steel (Group) Machinery Co., Ltd. 2,339.94 1.45 5,943.90 3.78
Sub-total 51,587.18 31.96 22,380.05 14.24
Account payable
Bengang Fire-resistance Material Co. 7,558.62 1.37 11,761.35 1.71
Liaoning Bengang Steel & Iron Trading Co., Ltd. 219.95 0.04 3,221.61 0.47
Liaoning Metallurgy Technician College 677.68 0.12 1,602.20 0.23
Benxi Steel (Group) Drilling Tools Co., Ltd. 288.12 0.05 713.84 0.10
Bengang Group New Industry Development Co., Ltd. 0.00 0.00 0.89 0.00
Bengang Group Property Co., Ltd. 383.06 0.07 621.84 0.09
Bengang Group Construction Supervisory Co., Ltd. 34.00 0.01 54 0.01
Benxi Xingye Therapy and Sanitary Co., Ltd. 75.32 0.01 56.85 0.01
Benxi Yitong Pipe Co., Ltd. 56.37 0.01 54 0.01
Bengang Group Machinery Ltd. 2,507.22 0.45 1,319.08 0.19
Bengang Group Construction Ltd. 1,288.05 0.23 546.66 0.08
Bengang Group Mineral Co., Ltd. 13,210.06 2.40 6,588.26 0.96
Benxi Steel (Group) Industrial Development Ltd. 6,960.27 1.26 5,992.16 0.87
Benxi Steel (Group) Construction Ltd. 256.27 0.05 504.24 0.07
Bengang Group Metallurgy Residue Ltd. 8,259.36 1.50 6,354.47 0.92
Benxi Steel (Group) Information and Automatic Tech.
Ltd. 457.56 0.08 2,066.70 0.3
Bengang Group Electronics Co., Ltd. 908.13 0.16 780.6 0.11
Benxi Steel (Group) Designing Institute 262.00 0.05 3,823.83 0.55
Benxi Steel (Group) Education Center 0.00 0.00 481.68 0.07
Benxi Steel (Group) Thermal Power Development Co.,
Ltd. 2.72 0.00 7.67 0.00
Sub-total 43,404.76 7.87 46,551.93 6.75
Other account payable
Bengang Group Machinery Ltd. 0.00 0.00 12.62 0.02
Shanghai Bengang Steel & Iron Trading Co., Ltd. 0.00 0.00 721.1 1.03
Benxi Steel (Group) Construction Ltd. 4,241.49 5.62 2,734.53 3.92
Benxi Steel (Group) Industrial Development Ltd. 0.00 0.00 1,392.92 1.99
Bengang Group Construction Ltd. 25,091.80 33.27 9,046.83 12.96
Bengang Group Property Co., Ltd. 93.95 0.12 156.5 0.22
Benxi Steel (Group) Information and Automatic Tech.
Ltd. 1,760.42 2.33 391.52 0.56
Bengang Group New Industry Development Co., Ltd. 134.77 0.18 399.69 0.57
Benxi Electronics Co., Ltd. 455.13 0.60 874.57 1.25
Bengang Group Training Center 158.40 0.21 285.63 0.41
Dalian Boluole Steel Tube Ltd. 120.00 0.16 223.07 0.32
Guangshou Free Trade Zone Bengang Sales Co., Ltd. 0.00 0.00 339.81 0.49
Benxi Steel (Group) Designing Institute 2,096.94 2.78 139.46 0.2
Liaoning Metallurgy Technician College 96.83 0.13 6 0.0124
Bengang Group International Trading Ltd. 0.00 0.00 11,057.04 15.84
Bengang Group Mineral Co., Ltd. 446.99 0.59 450.83 0.65
Bengang Group Steel Process & Logistics Ltd. 14.70 0.02 664.39 0.95
Benxi Steel & Iron (Group) Ltd. 0.00 0.00 2,914.85 4.17
Liaoning Bengang Steel & Iron Trading Co., Ltd. 0.00 0.00 968.33 1.39
Benxi Steel (Group) News Center 0.00 0.00 225.07 0.32
Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. 0.00 0.00 37.6 0.05
Bengang Group Thermal Power Development Co., Ltd. 0.26 0.00 0.26 0.00
Sub-total 34,711.68 46.03 33,042.62 47.32
Account received in advance
Dalian Boluole Steel Tube Ltd. 685.23
0 27 611.63 0.3
Bengang Group Steel Process & Logistics Ltd. 1,911.43
0 76 3,030.23 1.5
Bengang Group Construction Ltd. 0.00 0.00 178.72 0.09
Benxi Steel (Group) Industrial Development Ltd. 0.00 0.00 20.76 0.01
Guangshou Free Trade Zone Bengang Sales Co., Ltd. 10,607.96
4 23 3,152.12 1.56
Benxi Steel & Iron (Group) Ltd. 0.00 0.00 7,753.58 3.84
Liaoning Bengang Steel & Iron Trading Co., Ltd. 3,077.70
1 23 2,822.72 1.4
Shanghai Bengang Steel & Iron Trading Co., Ltd. 1,865.04
0 74 3,642.65 1.8
Tianjin Bengang Steel Plate Processing and Delivery
Co Ltd 2,050.00
0 82 2,850.00 1.41
Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. 17,933.75
7 15 4,105.81 2.03
Bengang Group Mineral Co., Ltd. 0.07
0 00 0.67 0.00
Bengang Group New Industry Development Co., Ltd. 0.03
0 00 0.03 0.00
Sub-total 38,131.21 15.20 28,168.92 13.94
Notes payable
Bengang Group Construction Ltd. 0.00 0.00 657.53 0.36
Benxi Steel (Group) Industrial Development Ltd. 0.00 0.00 701.69 0.38
Liaoning Bengang Steel & Iron Trading Co., Ltd. 0.00 0.00 770.00 0.42
Bengang Group New Industry Development Co., Ltd. 0.00 0.00 10.00 0.01
Bengang Fire-resistance Material Co., Ltd. 0.00 0.00 4,910.00 2.66
Bengang Group Machinery Ltd. 0.00 0.00 2,268.30 1.23
Bengang Group Property Co., Ltd. 0.00 0.00 915.00 0.50
Bengang Group Mineral Co., Ltd. 0.00 0.00 248.00 0.13
Bengang Electronics Co., Ltd. 0.00 0.00 1,230.00 0.67
Sub-total 0.00 0.00 11,710.52 6.36
Other account receivable
Benxi Steel & Iron (Group) Ltd. 7,070.11
24 79 0.00 0.00
Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. 0.00 0.00 1,025.90 6.38
Bengang Group Supervisory Co., Ltd. 25.00
0 09 25 0.16
Bengang Group Machinery Ltd. 0.00 0.00 338.84 2.11
Bengang Group Mineral Co., Ltd. 0.00 0.00 1.41 0.01
Benxi Steel (Group) Industrial Development Ltd. 0.00 0.00 168.59 1.05
Bengang Group Steel Process & Logistics Ltd. 0.08
0 00 0.08 0.00
Guangzhou Bengang Trade Co., Ltd. 0.00 0.00 100 0.6225
Shanghai Bengang Metallurgy Tech. Ltd. 0.00 0.00 500 3.11
Sub-total 7,095.19 24.88 0.00 2,159.82 13.44
6. Other significant issues, their influences, and resolutions
(1) No security investment and gains in the report term;
(2) The Company was not holding other PLCs’ shares in the report term;
(3) No capital adoption by the holding shareholder or other related parties occurred in the report term or
carried over from the previous term. No providing of external guarantee occurred in the report term.
7. Engaging and fulfilling of material contracts
(1) The Company has never been involved in such events as keeping as custodian, contracted or leased any
other company’s assets and vice versa in the report period.
(2) No providing of external guarantee occurred in the report term.
(3) No providing or accepting of cash asset management to or from other parties occurred during the report
term.
(4) No other material contract engaged in the report term.
8. Reception of visitors and investigations
In the report term, the Company properly executed “Investor Management Instruction” issued by China Securities
Regulatory Commission, and “Fair Information Disclosure Instruction” issued by Shenzhen Stock Exchange,
accepted investigations, inquiring, and visiting of organization investors and individual investors. All information
provided are those have already been disclosed in regular and provisional reports and announcements. The
Company never provided, disclosed or leaked any major information to any particular object that is closed to the
public.
Time/date Place Way Visitors Main content involved and
material provided
May 13,
2009
Meeting room and the
production site
Onsite
investigation Southern Foundation, etc. Business operation
Jun 03
2009
Meeting room and the
production site
Onsite
investigation
Guangdong Development
Securities, etc. Business operation
9. No commitment made by shareholders holding 5% or above of the Company’s capital
shares in the report term or carried down to the report term from previous terms.
Commitments made by the former holder of non-negotiable shares during the share equity reorganization, and
fulfilling
(1) Since the date when the right of trading being granted, the controlling shareholder shall not put the shares it
holds in the market within at least 24 months. While shall not sell the shares more than 5% of the total shares held
between 24 months to 36 months.
(2) The Company has issued new A shares privately to Bengang Group to purchase its steel & iron assets.
Bengang Group committed not to put the newly placed shares in the market or sell to others in 36 months since
the date when the share registration is done. (Except for transferring to strategic investors by ways approved by
the national policies, however the undertaker should takeover the commitment made by Bengang Group.)
(3) From completion day of this acquisition up to the end of 2010, Bengang Group will hold not lower than 65%
of the Company’s shares (Except for transferring to strategic investors by ways approved by the national policies,
however the undertaker should takeover the commitment made by Bengang Group.)
(4) When Bengang disposes or transfers the Company’s shares before 2010, the transaction price shall not be
lower than the net asset per share provided by the latest auditing report. Bengang Group committed to put the
gains from transferring or disposing of the shares to the Company if the shares were transferred or disposed with26
violating of the above commitments.
(5) Bengang Group promises to compensate other shareholders’ losses when above commitments are not fulfilled
or not completely fulfilled.
The above commitments are under processing at present and no breaching of commitment has occurred.
10. Construction of internal controlling system and acceptance of social responsibilities
In accordance with the Company Law, Securities Law, PLC Information Disclosure Administrative Criteria,
Internal Control Guide by Shenzhen Stock Exchange, and Administrative Rules of PLC, the Company has
produced the Criteria of General Meeting, Criteria of Board Meeting, Criteria of Supervisory Committee Meeting,
and Working Rules of the General Manager, clarified the responsibilities and working procedures of the General
Meeting, the Board of Directors, the Supervisory Committee, and the managements. All of the meetings and
decision making processes of the General Meeting, Board meeting, and Supervisory Committee have been
conducted legally, validly, frankly, and effectively.
In the report term, according to the provisions of documents regarding social responsibilities, along with pursuing
of economic return and best interest of shareholders, the Company initiatively protected the creditors’ interests
and the legal benefits of whole employees, treated the suppliers, customers and clients with best faith, and did
actively in environment protection and community construction. In business operation, the Company kept
following the principle of free will, fairness, equality, and faith, abiding social morality and profession standard,
accept supervising of the government departments and the public, fulfilled the responsibilities an enterprise
should do.
11. Auditing issues and change of CPA
The Interim Financial Report was not audited.
No issue regarding altering of CPAs in the report term.
12. In the report term, none of the directors, supervisors, executives, shareholders, substantial
dominators, buyer of the Company was investigated by relative departments, executed by
legal & discipline departments, delivered to legal departments, appeared for crime,
investigated or punished by China Securities Regulatory Commission, restricted to security
market, criticized publicly, regarded as improper person, punished by other executive
departments, or publicly condemned by the Stock Exchange.
None of the above happened.
13. No other material issues occurred in the report term or carried down to the report term
from previous term.
14. Special statement and independent opinions of the Independent Directors on capital
adoption by related parties and providing of external guarantees
According to Document Zheng-Jian-Fa (2003)56 issued by China Securities Regulatory Commission regarding
capital trade with related parties and providing of external guarantees, as the independent directors of the
Company, we carefully verified and inspected over the capital trade with related parties and providing of external
guarantees. Basing on necessary inspection and inquiries, we provide the following opinions: The Company has
provided no guarantees to any of the holding shareholder, other related parties with shares below 50%, non-legal
person, or individual, and hasn’t provided external guarantees by any means. The external guarantees were
accumulated to zero. No capital adoption by any of the holding shareholder or other related parties.27
VII. Financial Report
Enclosed please find the Financial Statements and Notes to Financial Statements.
VIII. Documents Ready for Inquiring
1. Interim Report 2007 signed and stamped by the legal representative;
2. Accounting Statements with signatures and seals of the legal representative, Chief Financial Officer and
Manager of the Accounting Department;
3. All the originals of the Company’s documents and public notices disclosed in the newspapers designated by
China Securities Regulatory Commission in the report period;
4. Other relative documents.
The Board of Directors of
Bengang Steel Plate Co., Ltd.
The Chairman: Yu Tiancheng
August 27, 2009Bengang Steel Plates Co., Ltd. Interim Report 2009
28
Bengang Steel Plates Co., Ltd.
Financial Report
(January 1 – June 30 2009)
(Not Audited)Bengang Steel Plates Co., Ltd. Interim Report 2009
29
Balance Sheet
Prepared by: Bengang Steel Plates Co., Ltd. June 30 2009 RMB Yuan
End of term Beginning of term
Items Note Consolidated Parent company Consolidated Parent company
Current asset:
Monetary capital 1 4,531,352,009.75 4,437,783,936.90 2,220,835,995.51 2,209,824,428.24
Settlement provision
Outgoing call loan
Transactional financial assets
Notes receivable 2 893,260,848.07 766,605,008.07 849,900,747.04 837,453,565.97
Account receivable 3 677,337,336.41 687,505,161.85 507,305,392.11 518,376,780.61
Prepayment 4 1,614,214,676.48 1,559,458,420.48 1,572,141,296.94 1,466,086,612.21
Insurance receivable
Interest receivable 7,255,724.59 7,255,724.59
Other account receivable 5 245,567,191.94 289,598,067.59 111,144,143.81 185,904,884.86
Repurchasing of financial assets
Inventories 6 6,446,477,057.55 6,254,946,181.61 7,859,743,442.03 7,586,045,815.48
Non-current asset due in 1 year
Other current asset 7 182,211,823.73 182,211,823.73 191,775,764.22 182,211,823.73
Total of current asset 14,590,420,943.93 14,178,108,600.23 13,320,102,506.25 12,993,159,635.69
Non-current assets
Loans and payment on other’s behalf
disbursed
Disposable financial asset
Expired investment in possess
Long-term receivable
Long-term share equity investment 62,100,529.68 56,100,529.68
Investment properties
Fixed assets 8 13,956,930,127.77 13,954,639,089.66 15,114,030,741.42 15,111,510,961.84
Construction in process 9 4,963,499,856.85 4,963,499,856.85 3,871,536,579.58 3,871,536,579.58
Engineering goods 10 172,655,394.48 172,655,394.48 10,902,394.81 10,902,394.81
Fixed asset disposal
Intangible assets
R&D expense
Goodwill
Long-term amortizable expenses
Differed income tax asset 11 405,761,032.10 403,792,692.38 405,761,032.10 403,792,692.38
Other non-current asset
Total of non-current assets 19,498,846,411.20 19,556,687,563.05 19,402,230,747.91 19,453,843,158.29
Total of assets 34,089,267,355.13 33,734,796,163.28 32,722,333,254.16 32,447,002,793.98
Chairman of the Company: Yu Tianchen, CFO: Kang Wei, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2009
30
Balance Sheet (Cont.)
Prepared by: Bengang Steel Plates Co., Ltd. June 30 2009 RMB Yuan
End of term Beginning of term
Items NOte Consolidated Parent company Consolidated Parent company
Current liabilities
Short-term loans 13 3,622,212,000.00 3,622,212,000.00 2,887,352,200.00 2,887,352,200.00
Trade off financial
li bili i
Notes payable 14 4,587,696,895.92 4,587,696,895.92 1,844,612,512.13 1,844,612,512.13
Account payable 15 5,515,657,536.21 5,446,116,305.21 6,894,797,428.30 6,812,978,403.70
Prepayment
i d
16 2,508,924,476.36 2,296,758,271.85 2,018,405,589.55 1,857,162,119.04
Selling of
h d
Fees and
i i
Employees’ wage
bl
17 283,378,129.66 283,377,329.66 321,360,373.18 321,360,373.18
Tax payable 18 -75,755,969.11 -71,986,404.29 -251,596,127.71 -254,028,564.17
Interest payable
Dividend payable
Other account
bl
19 754,164,965.51 731,710,126.10 698,210,191.67 674,126,990.12
Non-current
li bili d i 1
20 101,661,116.62 101,661,116.62 448,753,264.40 448,753,264.40
Other current
li bili
Total of current
li bili
17,297,939,151.17 16,997,545,641.07 14,861,895,431.52 14,592,317,298.40
Non-current
li bili i
Long-term
b i
21 2,016,069,540.91 2,016,069,540.91 2,018,558,759.20 2,018,558,759.20
Bond payable
Long-term
bl
Special payable 22 8,566,000.00 8,566,000.00 8,500,000.00 8,500,000.00
Expected
li bili i
Differed income
li bili
Other
i
23 6,745,478.75 6,745,478.75 6,745,478.75 6,745,478.75
Total of non-current
li bili i
2,031,381,019.66 2,031,381,019.66 2,033,804,237.95 2,033,804,237.95
Total of liability 19,329,320,170.83 19,028,926,660.73 16,895,699,669.47 16,626,121,536.35
Owners’ equity (or
h h ld ’ i )
Capital paid in (or
h itl)
24 3,136,000,000.00 3,136,000,000.00 3,136,000,000.00 3,136,000,000.00
Capital reserves 25 8,736,261,134.76 8,736,261,134.76 8,736,261,134.76 8,736,261,134.76
Less: Shares in
k
Surplus reserves 26 921,277,509.22 921,277,509.22 921,277,509.22 921,277,509.22
Common risk
i i
Retained profit 27 1,966,408,540.32 1,912,330,858.57 3,033,094,940.71 3,027,342,613.65
Different of
f i
Total of owner’s
it b l t th
14,759,947,184.30 14,705,869,502.55 15,826,633,584.69 15,820,881,257.63
Minor shareholders’
i
Total of owners’
i
14,759,947,184.30 14,705,869,502.55 15,826,633,584.69 15,820,881,257.63
Total of liabilities
d ’ i
34,089,267,355.13 33,734,796,163.28 32,722,333,254.16 32,447,002,793.98
Chairman of the Company: Yu Tianchen, CFO: Kang Wei, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2009
31
Income Statement
Prepared by: Bengang Steel Plates Co., Ltd. Jan-Jun 2009 RMB Yuan
Current term Same period last year
Items Note Consolidated Parent company Consolidated Parent company
I. Total revenue 28 16,461,627,817.78 16,014,758,985.68 18,769,857,158.04 17,526,620,396.75
II. Total business cost 17,360,327,382.85 16,971,948,350.65 17,425,673,198.30 16,220,715,946.69
Incl. Business cost 15,585,474,227.82 15,217,655,306.75 15,638,741,975.78 14,471,588,501.28
Business tax and
surcharge 29 10,965,698.18 10,105,559.86 76,892,122.47 75,935,119.06
Sales expense 30 128,303,748.52 94,939,798.13 318,673,199.36 289,813,999.49
Administrative
expense 31 1,543,804,837.22 1,536,654,350.19 1,241,523,501.11 1,233,367,783.29
Financial expenses 32 112,423,525.73 112,593,335.72 149,842,399.58 150,010,543.57
Asset impairment
loss 33 -20,644,654.62
Plus: Gains from
change of fair value
Investment gain
(“-“ for loss)
Gains from currency
exchange (“-“ for
III. Operational profit
(“-“ for loss) -898,699,565.07 -957,189,364.97 1,344,183,959.74 1,305,904,450.06
Plus: Non business
income 34 471,629.65 -906,733.87 9,355,498.45 8,575,498.45
Less: Non-business
expenses 35 129,406.24 115,656.24 80,709.00 80,069.00
Incl. Loss from
disposal of
IV. Gross profit
(“-“ for loss) -898,357,341.66 -958,211,755.08 1,353,458,749.19 1,314,399,879.51
Less: Income tax
expenses 36 11,529,058.73 - 338,016,940.72 328,599,969.88
V. Net profit (“-“ for
net loss) -909,886,400.39 -958,211,755.08 1,015,441,808.47 985,799,909.63
Net profit attributable
to the owners of -909,886,400.39 -958,211,755.08 1,015,441,808.47 985,799,909.63
Minor shareholders’
equity
VI. Earnings per
share: 37
(I) Basic earnings per
share -0.29 -0.31 0.32 0.31
(II) Diluted earnings
per share -0.29 -0.31 0.32 0.31
Chairman of the Company: Yu Tianchen, CFO: Kang Wei, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2009
32
Cash Flow Statement
Prepared by: Bengang Steel Plates Co., Ltd. Jan-Jun 2009 RMB Yuan
Current term Same period last year
Items
Note
Consolidated Parent company Consolidated Parent company
I. Net cash flow from business
operation
Cash received from sales of products
and providing of services 14,615,479,565.34 14,489,888,280.55 16,541,511,419.60 16,496,739,099.05
Net increase of trade financial asset
disposal
Tax returned 50,000.00 61,674,295.14 60,994,295.14
Other cash received from business
operation 38 15,791,741.33 14,987,634.26 9,355,498.45 8,575,498.45
Sub-total of cash inflow from business
activities 14,631,321,306.67 14,504,875,914.81 16,612,541,213.19 16,566,308,892.64
Cash paid for purchasing of
merchandise and services 11,158,785,617.75 11,158,785,617.75 12,833,324,335.48 12,833,324,335.48
Cash paid to staffs or paid for staffs 511,399,424.98 508,735,368.98 539,735,535.89 536,932,637.39
Taxes paid 289,775,093.73 277,998,848.18 1,237,122,261.85 1,215,815,989.91
Other cash paid for business activities 39 898,820,870.83 869,372,286.10 1,209,077,172.90 1,182,409,385.24
Sub-total of cash outflow from
business activities 12,858,781,007.29 12,814,892,121.01 15,819,259,306.12 15,768,482,348.02
Cash flow generated by business
operation, net 1,772,540,299.38 1,689,983,793.80 793,281,907.07 797,826,544.62
II. Cash flow generated by investing
Cash received from investment
retrieving
Cash received as investment gains
Net cash retrieved from disposal of
fixed assets, intangible assets, and
other long-term assets 72,410.00 72,410.00
Net cash received from disposal of
subsidiaries or other operational units
Other investment-related cash received
Sub-total of cash inflow due to
investment activities - - 72,410.00 72,410.00
Cash paid for construction of fixed
assets, intangible assets and other
long-term assets 1,896,344,298.54 1,896,344,298.54 1,525,690,231.41 1,525,690,231.41
Cash paid as investment
Net cash received from subsidiaries
and other operational units
Other cash paid for investment
activities 243,860,000.00 243,860,000.00
Sub-total of cash outflow due to
investment activities 1,896,344,298.54 1,896,344,298.54 1,769,550,231.41 1,769,550,231.41
Net cash flow generated by investment -1,896,344,298.54 -1,896,344,298.54 -1,769,477,821.41 -1,769,477,821.41
III. Cash flow generated by financing
Cash received as investment
Incl. Cash received as investment from
minor shareholders
Cash received as loans 3,382,792,025.86 3,382,792,025.86 3,285,816,962.34 3,285,816,962.34
Other financing-related cash received
Subtotal of cash inflow from financing
activities 3,382,792,025.86 3,382,792,025.86 3,285,816,962.34 3,285,816,962.34Bengang Steel Plates Co., Ltd. Interim Report 2009
33
Cash Flow Statement (Cont.)
Prepared by: Bengang Steel Plates Co., Ltd. Jan-Jun 2009 RMB Yuan
Current term Same period last year
Items
Not
e
Consolidated Parent company Consolidated Parent company
Cash to repay debts 3,218,252,539.31 3,218,252,539.31 2,888,029,888.00 2,888,029,888.00
Cash paid as dividend, profit, or interests 272,314,632.88 272,314,632.88 232,909,182.93 232,909,182.93
Subtotal of cash outflow due to financing activities 3,490,567,172.19 3,490,567,172.19 3,120,939,070.93 3,120,939,070.93
Net cash flow generated by financing -107,775,146.33 -107,775,146.33 164,877,891.41 164,877,891.41
IV. Influence of exchange rate alternation on cash
and cash equivalents -166,380.27 -166,380.27 -510,355.35 -510,355.35
V. Net increase of cash and cash equivalents -231,745,525.76 -314,302,031.34 -811,828,378.28 -807,283,740.73
Plus: Balance of cash and cash equivalents at the
beginning of term 2,220,835,995.51 2,209,824,428.24 2,242,866,884.97 2,232,308,962.38
VI. Balance of cash and cash equivalents at the end
of term 1,989,090,469.75 1,895,522,396.90 1,431,038,506.69 1,425,025,221.65
Chairman of the Company: Yu Tianchen, CFO: Kang Wei, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2009
34
Detailed Table of Asset Impairment Provisions
Bengang Steel Plate Co., Ltd. Jun 30, 2009 In RMB Yuan
Decreased this term
Items
Book balance at
beginning of year
Provided
this term Written back Transferred
Balance of book
value at end of term
I. Bad debt provision 398,486,408.83 398,486,408.83
II. Inventory
impairment provision 701,332,232.90 20,644,654.62 680,687,578.28
III. Disposable
financial asset
impairment provision 0.00
IV. Investment equity
hold till expiring
impairment provision 0.00
V. Long-term equity
investment
impairment provision 0.00
VI. Property
investment
impairment provision 0.00
VII. Fixed asset
impairment provision 74,296,238.89 74,296,238.89
VIII. Project material
impairment provision 0.00
IX. Construction in
process impairment
provision 0.00
X. Production
biological material
asset impairment
provision 0.00
Incl. Mature
production biological
material asset
impairment provision 0.00
XI. Gas & oil asset
impairment provision 0.00
XII. Intangible asset
impairment provision 0.00
XIII. Goodwill
impairment provision 0.00
XIV. Other 0.00
Total 1,174,114,880.62 0.00 20,644,654.62 0.00 1,153,470,226.00
Chairman of the Company: Yu Tianchen, CFO: Kang Wei, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2009
35
Consolidated Statement of Change in Owners’ Equity
Prepared by: Bengang Steel Plates Co., Ltd. Jan-Jun 2009 RMB Yuan
Amount of the Current Term
Items Shareholders’ equity attributable to the parent company
Capital paid in Capital reserves Surplus Retained profit
Total of
shareholders’
I. Balance at the end of last year 3,136,000,000.00 8,736,261,134.76 921,277,509.22 3,033,094,940.71 15,8it26,633,584.69
Plus: Change of accounting policy 0.00
Correcting of previous errors 0.00
Others 0.00
II. Balance at the beginning of current year 3,136,000,000.00 8,736,261,134.76 921,277,509.22 3,033,094,940.71 15,826,633,584.69
III. Changed in the current year (“-“ for decrease) 0.00 0.00 0.00 -1,066,686,400.39 -1,066,686,400.39
(I) Net profit 0.00 0.00 0.00 -909,886,400.39 -909,886,400.39
(II) Gains and losses accounted as shareholders’ 0.00 0.00 0.00 0.00 0.00
1. Change in fair value of sellable financial 0.00
2. Influence of change in other owners’ equity of 0.00
3. Income tax influence related to shareholders’ 0.00
4. Others 0.00
Total of (I) and (II) 0.00 0.00 0.00 -909,886,400.39 -909,886,400.39
(III) Inputting or withdrawing of shareholders’ 0.00 0.00 0.00 0.00 0.00
1. Inputting of shareholders’ investment
2. Amount of share payment accounted into
3. Others
(IV) Profit distribution of the year 0.00 0.00 0.00 -156,800,000.00 -156,800,000.00
1. Surplus reserves provided 0.00
2. Dividends to the shareholders 0.00 0.00 0.00 -156,800,000.00 -156,800,000.00
3. Others 0.00
(V) Internal transferring of shareholders’ equity 0.00 0.00 0.00 0.00 0.00
1. Capitalizing of capital reserves (or to capital 0.00
2. Capitalizing of surplus reserves (or to capital 0.00
3. Making up losses by surplus reserves 0.00
IV. Balance at the end of this term 3,136,000,000.00 8,736,261,134.76 921,277,509.22 1,966,408,540.32 14,759,947,184.30
Chairman of the Company: Yu Tianchen, CFO: Kang Wei, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2009
36
Consolidated Statement of Change in Owners’ Equity (Cont.)
Prepared by: Bengang Steel Plates Co., Ltd. Jan-Jun 2009 RMB Yuan
Amount of the same period of last year
Items Shareholders’ equity attributable to the parent company
Capital paid in (or Capital reserves Surplus reserves Retained profit
Total of
shareholders’
I. Balance at the end of last year 3,136,000,000.00 8,705,011,134.76 914,289,107.82 3,985,462,287.2 16,7i40,762,529.86
Plus: Change of accounting policy
Correcting of previous errors
Others 3,409,702.40 3,409,702.40
II. Balance at the beginning of current year 3,136,000,000.00 8,705,011,134.76 914,289,107.82 3,988,871,989.6 16,744,172,232.26
III. Changed in the current year (“-“ for decrease) 11,921,808.47 11,921,808.47
(I) Net profit 1,015,441,808.4 1,015,441,808.47
(II) Gains and losses accounted as shareholders’
1. Change in fair value of sellable financial assets,
2. Influence of change in other owners’ equity of
3. Income tax influence related to shareholders’
4. Others
Total of (I) and (II) 1,015,441,808.4 1,015,441,808.47
(III) Inputting or withdrawing of shareholders’
1. Inputting of shareholders’ investment
2. Amount of share payment accounted into
3. Others
(IV) Profit distribution of the year -1,003,520,000. -1,003,520,000.00
1. Surplus reserves provided
2. Dividends to the shareholders
3. Others -1,003,520,000. -1,003,520,000.00
(V) Internal transferring of shareholders’ equity
1. Capitalizing of capital reserves (or to capital
2. Capitalizing of surplus reserves (or to capital
3. Making up losses by surplus reserves
IV. Balance at the end of this term 3,136,000,000.00 8,705,011,134.76 914,289,107.82 4,000,793,798.1 16,756,094,040.73
Chairman of the Company: Yu Tianchen, CFO: Kang Wei, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2009
37
Statement of Change in Owners’ Equity (Parent Company)
Prepared by: Bengang Steel Plates Co., Ltd. Jan-Jun 2009 RMB Yuan
Amount of the Current Term
Items Shareholders’ equity attributable to the parent company
Capital paid in Capital reserves Surplus Retained profit
Total of
shareholders’
I. Balance at the end of last year 3,136,000,000.00 8,736,261,134.76 921,277,509.22 3,027,342,613.65 15,8it20,881,257.63
Plus: Change of accounting policy
Correcting of previous errors
Others
II. Balance at the beginning of current year 3,136,000,000.00 8,736,261,134.76 921,277,509.22 3,027,342,613.65 15,820,881,257.63
III. Changed in the current year (“-“ for decrease) -1,115,011,755.08 -1,115,011,755.08
(I) Net profit -958,211,755.08 -958,211,755.08
(II) Gains and losses accounted as shareholders’
1. Change in fair value of sellable financial
2. Influence of change in other owners’ equity of
3. Income tax influence related to shareholders’
4. Others
Total of (I) and (II) -958,211,755.08 -958,211,755.08
(III) Inputting or withdrawing of shareholders’
1. Inputting of shareholders’ investment
2. Amount of share payment accounted into
3. Others
(IV) Profit distribution of the year -156,800,000.00 -156,800,000.00
1. Surplus reserves provided
2. Dividends to the shareholders -156,800,000.00 -156,800,000.00
3. Others
(V) Internal transferring of shareholders’ equity
1. Capitalizing of capital reserves (or to capital
2. Capitalizing of surplus reserves (or to capital
3. Making up losses by surplus reserves
IV. Balance at the end of this term 3,136,000,000.00 8,736,261,134.76 921,277,509.22 1,912,330,858.57 14,705,869,502.55
Chairman of the Company: Yu Tianchen, CFO: Kang Wei, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2009
38
Statement of Change in Owners’ Equity (Parent Company) (Cont.)
Prepared by: Bengang Steel Plates Co., Ltd. Jan-Jun 2009 RMB Yuan
Amount of the same period of last year
Items Shareholders’ equity attributable to the parent company
Capital paid in (or Capital reserves Surplus reserves Retained profit
Total of
shareholders’
I. Balance at the end of last year 3,136,000,000.00 8,705,011,134.76 914,289,107.82 3,967,967,001.0 16,7i23,267,243.67
Plus: Change of accounting policy
Correcting of previous errors
Others -133,413,961.57 -133,413,961.57
II. Balance at the beginning of current year 3,136,000,000.00 8,705,011,134.76 914,289,107.82 3,834,553,039.5 16,744,172,232.26
III. Changed in the current year (“-“ for decrease) -17,720,090.37 -17,720,090.37
(I) Net profit 985,799,909.63 985,799,909.63
(II) Gains and losses accounted as shareholders’
1. Change in fair value of sellable financial assets,
2. Influence of change in other owners’ equity of
3. Income tax influence related to shareholders’
4. Others
Total of (I) and (II) 985,799,909.63 985,799,909.63
(III) Inputting or withdrawing of shareholders’
1. Inputting of shareholders’ investment
2. Amount of share payment accounted into
3. Others
(IV) Profit distribution of the year -1,003,520,000. -1,003,520,000.00
1. Surplus reserves provided
2. Dividends to the shareholders
3. Others -1,003,520,000. -1,003,520,000.00
(V) Internal transferring of shareholders’ equity
1. Capitalizing of capital reserves (or to capital
2. Capitalizing of surplus reserves (or to capital
3. Making up losses by surplus reserves
IV. Balance at the end of this term 3,136,000,000.00 8,705,011,134.76 914,289,107.82 3,816,832,949.1 16,572,133,191.73
Chairman of the Company: Yu Tianchen, CFO: Kang Wei, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2009
39
Bengang Steel Plates Co., Ltd.
Notes to Financial Statements
(January 1 – June 30 2009)
(Amount are in RMB Yuan except for stated particularly)
I. Company Profile
Bengang Steel Plates Co., Ltd. (the “Company”) was incorporated as a joint stock limited company in the
People’s Republic of China on June 27 1997 by Benxi Iron and Steel (Group) Limited “Bengang Group”,
through reorganization of operations, assets and liabilities of its plants, namely, Steel Smelting plant,
Primary Rolling Plant and Continuous Hot Rolling Plant. Establishing of the Company was approved by
Liaoning People’s Government on March 27 1997 with Liao-Zheng (1997)57.
As approved by China Securities Regulatory Commission, the Company issued 400,000,000 B-shares at
RMB2.38 each in Shenzhen Stock Exchange on 10 June 1997. On 3 November 1997, the Company issued
another 120,000,000 A-shares (Renminbi Common Shares) at RMB5.40 each, and listed in Shenzhen
Stock Exchange since 15 January 1998. The capital shares were totalled to 1,136,000,000 shares including
616,000,000 shares held by the promoter.
On March 14 2006, according to the resolutions of the Shareholders’ Meeting regarding share equity
relocation, the Share Equity Relocation Scheme, Response to Bengang Steel Plate Co., Ltd. about Share
Equity Relocation issued by Liaoning Provincial Government State-owned Asset Administrative
Committee, Bengang Group – the only holder of non-negotiable state-owned legal person shares paid the
consideration to the current shareholders to obtain the current option for the 40,800,000 shares of the total
616,000,000 shares it was holding. Shareholding positions have been registered with China Securities
Depository & Clearing Corporation Ltd. However the total of capital shares of Bengang Steel Plate was
not changed through the share equity relocation action.
China Securities Regulatory Commission issued Zheng-Jian-Gong-Si-Zi [2006] 126 on June 30th 2006
and served to the Company on July 6th 2006. The Company was approved to place 2 billion Renminbi
common shares particularly to Bengang Group and the proceeds would be used to purchase the related
assets of the Group. On the same day, Bengang Group received circular Zheng-Jian-Gong-Si-Zi [2006]
127 issued by China Securities Regulatory Committee, and was exempted for the liability of undertaking
the purchase offer. The liability was caused by subscribing of the 2 billion new shares and the total
shareholding was thus increased to 2.5752 billion shares (account for 82.12% of the total capital shares of
the Company). On August 28 2006, as approved by China Securities Depository & Clearing Corporation
Ltd. Shenzhen Office, the registration and conditional placing procedures of the 2 billion new shares were
completed. On September 28 2006, the privately placed shares were approved by Shenzhen Stock
Exchange to be placed in the stock market. The new shares were placed in the market on October 9th 2006,
with face value of RMB1.00 per share and the placing price was RMB4.6733 per share. The newly placed
shares were restricted to be sold in 36 months since August 28, 2006 when they were registered to the
account of Bengang Group.
Capital inputted for the newly placed shares was the main steel & iron assets of Bengang Group amounted
to RMB10,097,917,959.13 provided by the auditing report dated May 31st 2006 (i.e. the purchase price of
the steel & iron assets). The price for each share was RMB4.6733. The balance between the net value of
inputted assets and the share capital has formed capital reserves of RMB7,346,600,000 and liability to
Bengang Group of RMB751,317,959.13.Bengang Steel Plates Co., Ltd. Interim Report 2009
40
The main steel and iron assets of Bengang Group have been appraised by Zhongzi Asset Appraisal Co.,
Ltd. based on 30 June 2005. The appraisal report was filed “Zhongzi-Ping-Bao-Zi (2005) 142.”
As of December 31 2006, the capital shares of Bengang was amounted to 3,136,000,000 shares. The
business registration was renewed on December 21 2006. The business license was numbered
2100001049024. The registered address is: 18th Gangtie Road, Pingshan, Benxi, Liaoning. The registered
capital is RMB3,136,000,000. The legal representative is Yu Tianchen.
Bengang Steel Plate Co., Ltd. is mainly involved in processing and trading of recycled metal (including
color metal), steel & iron making, rolling, and trading, oxygen making, special pre-shaped steel material,
metal process, goods and technology import & export (exclude categories prohibited by the national
government, constrained products can only be traded with special certificates), measuring instruments,
electronic & mechanical equipment, sales of steel, new industrial products, developing of technologies,
recycling of gas dust and waste oil (excluding dangerous materials), production of dangerous chemical
materials.
II. Basis of Preparation and Statement of Compliance
The Financial Statements have been prepared on the assumption of continuing operation and in
accordance with the requirements of the China Accounting Standards for Business Enterprises(CAS(2006))
issued by the Ministry of Finance(MOF).
The financial statements present truly and completely the financial position, operation results and cash
flows of the company.
III. Significant Accounting policies, Accounting Estimates and
Error Correction
1. Fiscal year
A fiscal year starts from January 1 and ends at December 31.
2. Standard currency for bookkeeping
The Company takes RMB as the standard currency for bookkeeping.
3. Bookkeeping basis and methods
Credit-debit method is adopted and on accrual basis.
4. Recognition of cash equivalent
Cash equivalent refers to the investments with short term, strong liquidity and small risk of value
fluctuation that are held by the Company and easily converted into cash with known amount.
Cash and cash equivalents are: cash, bank deposits that can be used for payment at anytime, other
monetary capital, and short term investment not longer than three months.
5. Foreign currencies
1) Foreign currency transactions are translated into RMB at the current rate at the day of transactions.
Balance of monetary foreign currency items are translated into RMB and adjusted at the current rate at the
day of Balance Sheet. None monetary foreign currency items measured at fair value are translated into
RMB at the exchange rate of the day when the fair value is recognized. The exchange difference of special
loans in foreign currency, which are caused by purchasing or manufacturing of assets satisfied the
condition of capitalization, are capitalized as asset cost. Other conversion difference thus incurred is
included in financial expenses. Conversion differences between different foreign currencies are included
in financial expenses.Bengang Steel Plates Co., Ltd. Interim Report 2009
41
2) Translation of foreign currency financial statements
Items of assets and liabilities on the balance sheet will be translated at the closing rate at the date of that
balance sheet; except for undistributed profit, other items in the category of stockholder’s equity will be
translated at the rate of transactions, income and expenses for each income statement are translated at the
weighted averaged rate for the year. The resulting of exchange differences included in equity under a
separate item.
6. Financial instruments
1) Classification of financial assets and liabilities
The Company classified its financial assets as: financial assets held for trading; financial assets designated
at fair value through profit or loss; loans and receivables; held to maturity investments and available for
sale financial assets. Financial liabilities including: financial liabilities held for trading; financial assets
designated at fair value through profit or loss; other financial liabilities.
Management determines the classification of its financial assets and liabilities as: The financial assets at
fair value through profit or loss, includes: financial assets held-for-trading, and those designated at fair
value through profit or loss at inception; Held-to-maturity investment; Receivables; Available for sale
financial assets; and Other financial liabilities.
2) Measurement of financial instruments
(1) The financial assets at fair value through profit or loss includes: financial assets held-for-trading, and
those designated at fair value through profit or loss at inception.
The company purchases the stocks, bonds, funds, etc., which are the financial assets at fair value through
profit or loss which recognized at fair value initially. The relevant transaction cost recognized in the
income statement when occurred. The price includes the declared but not received cash dividends or bond
interest is recognized as a separate item.
The cash of dividends or interest are recognized as investment income when the Company received when
holding such financial assets. At the balance sheet date, the Company recognizes the fair value changes in
the income statements.
The Company recognize the difference between initial recognition and fair value of the financial assets at
investment income when dispose of the financial assets.
(2) Held-to-maturity investment
Financial assets classified as held to maturity are non-derivative financial assets with fixed or
determinable payments and fixed maturities that the Company’s management has both the positive
intention and the ability to hold to maturity.
The Company classified the fixed-rate bonds, floating rate bonds issued by corporate to held-to-maturity
investments. They are initially recorded at fair value plus any directly attributable transaction costs and are
subsequently measured at amortized cost using the effective interest rate. The price includes the declared
but not received bond interest is recognized as a separate item.
The held-to-maturity investments measured at amortized cost. The interest income was recognized in the
investment income. The effective interest will not be changed after initial recognition, if the difference
between effective rate and coupon rate is not material, it also can be measured at coupon rate, the interest
income recognized in the investment income.
When disposing the held-to-maturity investment, the difference between the investing proceeds and the
carrying value is recognized as investment income. If the Company changes the intention or ability, this
kind of held to maturity investment should be classified as available-for-sale financial assets, and
measured at fair value subsequently. On the date of reclassification, the difference between the fair value
and the carrying value should be recognized in the equity. When the available-for-sale financial assets are
impaired or de-recognized, the related amounts need to be transferred out from equity and recognized in
the income statements.
(3) Receivables
Receivables (including accounts receivable and other receivables) are measured at contract price;Bengang Steel Plates Co., Ltd. Interim Report 2009
42
(4) Available for sale financial assets
Financial assets classified as available for sale are non-derivatives that are either designated as such or are
not classified in any of the other categories:
A. Financial assets at fair value through profit or loss
B. Held-to-maturity investments;
C. Loans and receivables
Available for sale financial assets are initially recorded at fair value plus any directly attributable
transaction costs on the trade date and subsequently re-measured at fair value. The price includes the
declared but not received bond interest or cash dividend is recognized as a separate item.
The Company recognizes the interest or cash dividends as investment income. At each balance sheet date,
available-for-sale financial assets were measured at fair value and the fair value changes are recognized in
the capital reserve - other capital reserve.
The difference between the proceeds of the disposal and the carrying value should be recognized as
investment income. And the related fair value change in the equity should be transferred out, and recorded
as investment income.
(5) The Company classifies financial liabilities at fair value through profit or loss as held-for-trading, and
those designated at fair value through profit or loss at inception. Financial liabilities are measured at fair
value, and do not deduct the future settlement transaction cost.
These financial liabilities are accounted at fair value, and the possible trading expenses in future clearing
of accounts will not be deducted.
If the fair value is not applicable, the financial liabilities should be measured at amortized cost.
(6) Other financial liabilities
For other financial liabilities which are not at fair value through profit or loss, for example financial
guaranteed contracts, they are initially recognized at fair value plus any directly attributable transaction
costs. After the initial recognition, the other financial liabilities are measured at the higher of the amount
measured in accordance with “Accounting Standards for Business Enterprises– Contingency” and the
amortized balance measured in accordance with “Accounting Standards for Business Enterprises –
Revenue”.
3) Determination of the fair value of financial assets and financial liabilities
The fair value of active market existed financial assets and liabilities should be on the quoted price of the
active market. The quoted price of the active market referred as the prices which can be regularly and
easily received from bourse, broker’s agency, and trade society and quotation service agency etc., and also
referred as the actual market price in fair transactions. The fair value of non-active market existed
financial assets and liabilities should be used the estimated skill to confirm the value. The fair value of
investments that are actively traded in organized financial markets is determined by reference to quoted
market prices. For investments where there is no active market, fair value is determined using valuation
techniques. Such techniques include using recent arm’s length market transactions; reference to the current
market value of another instrument, which is substantially the same; a discounted cash flow analysis;
option pricing models and other valuation models.
4) Impairment for financial assets
The Company assesses at each balance sheet date whether there is any objective evidence that a financial
asset or a group of financial assets is impaired. Positive evidences refer to those occurred after the initial
recognition, have effect on estimated future cash flows of the financial assets, and can be measured
reliably. An individual impairment assessment should be performed on the balances that are individually
significant. For the financial assets which are not individually significant, they should be allocated into
asset groups which contain similar risk characteristics and assess collectively.
The followings are the impairment testing method for each main financial asset:
(1) For the available for sale financial asset whose fair value can be reliably measured, the amount that is
recognized in income statement is the difference between the book value and current fair value; for theBengang Steel Plates Co., Ltd. Interim Report 2009
43
available for sale financial asset whose fair value cannot be reliably measured, the impairment loss which
is recognized in income statement is the difference between the book value and the present value of
estimated future cash flow (excludes credit loss that has not happened yet). When a decline in the fair
value of an available for sale financial asset has been recognized directly in equity and there is objective
evidence that the asset is impaired the cumulative loss that had been recognized directly in capital surplus
are removed from equity and recognized in profit or loss of the current period.
(2) Financial assets carried at cost
If there is objective evidence that the financial assets have been impaired, the amount of the impairment
loss is measured as the difference between the carrying amount of the financial asset and the present value
of estimated future cash flows discounted at the current market rate of return for a similar financial asset,
and recognized in the income statement of the current year.
(3) Financial assets carried at amortized cost
If objective evidence shows that the financial assets carried at amortized cost are impaired, the carrying
amount of the financial asset shall be reduced to the present value of the estimated future cash flow
(excluding future credit losses that have not been incurred). The amount of reduction is recognized as an
impairment loss in the income statement. Present value of estimated future cash flow is discounted at the
financial asset’s original effective interest rate and includes the value of any related collateral.
7. Bad debt provision
For each individually significant receivable, the impairment test should be assessed individually. Where
there is evidence that indicates a impairment, the loss should be recognized with the respective provision
accrued, equaling to the difference between the present value of the future cash flows and the book value
of receivables.
For the receivables which are not individually significant, they together with the receivables which are
indicated not impaired during the individual assessment should be allocated into groups which contain
similar risk characteristics and accrue the bad debt provision based on the actual bad debt percentage in
experience and the situation in current period.
The Company makes the specific bad debt provision for the receivables whose collect ability is doubtful;
the Company does not make bad debt provision for the receivables which are used for guarantee purpose;
for other receivables, the Company makes the bad debt provision using the allowance method. The
Company makes the following percentages of bad debt provision for accounts receivable and other
receivables:
Age Percentage (%)
within 1 year 0.00
1-2 yrs 5.00
2-3 years 20.00
Over 3 yrs 100.00
The Company makes no bad debt provision for receivables other than accounts receivable and other
receivables by taking into accounts of the actual situation of the Company. For some specific items whose
credit risk characteristics are obviously different, the Company performs individual analysis on them and
confirms the actual loss rate.
The Company makes no bad debt provision for the receivables happened between subsidiaries or between
subsidiary and parent company in the scope of consolidation.
When there is objective evidence shows a specific receivable is not collectable, the Company treats it as
bad debt and write off against the bad debt provision.
A. Description of the receivable classification
(a) Individually significant item – Above RMB 10 million in accounts receivable or above RMB 5 million
in other receivables;
(b) Items not individually significant but credit risk of the group which the receivables are classifying to isBengang Steel Plates Co., Ltd. Interim Report 2009
44
high – account aging is above 3 years except for these individually significant;
(c) Other items not individually significant – items other than specified in (a) or (b).
B. Standard of recognizing a bad debt
Debtor is discharged or bankrupt, the uncollected amount after the legal procedures; debtor dies, the
uncollected amount after the repayment by using all of the debtor’s assets or legacies; the debtor did not
fulfill his/her duty to repay the debt when it is overdue, and there is an objective evidence indicating that
the receivables is not collectible. For these receivables, the Company charges off the bad debt in
accordance with the company’s management authority.
8. Inventories
1) Inventory classification
Inventories include raw material, low-valued consumables, work-in process, and finished goods etc.
2) Valuation method for inventory issuing
Inventories should be recorded at their historical cost on acquisition; inventories requested or issued
should be accounted for at their historical cost, which should be determined using the weighted average
method to confirm the actual cost.
3) Low-valued consumables amortization
Low-valued consumables should be amortized in full amount on issuance.
4) Verifying standard for inventory provision and way for accrued
Inventories should be measured at the lower of cost and net realizable value, and a provision for inventory
write-down should be established for any difference between the cost the lower net realizable value.
Normally the Company accrued inventory provision on single item; at the end of the period, if the reasons
of past accrued inventory provision have been disappeared, the accrued amount should be transferred
back.
5) Net realizable value of the inventory
Net realizable value of the inventory is amount that the estimated sales value minus the estimated
completed cost, expenses and related taxes.
6) Inventory system
The Company use perpetual inventory system.
9. Long-term equity investment
1) Initial measurement
(1) The initial cost of long-term equity investment from business acquisition is determined by:
A. For the acquisition under the common control, if the consideration of the acquiring enterprise is that it
makes payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of acquisition,
regard the share of the book value of the owner's equity of the acquired enterprise as the initial cost of the
long-term equity investment. The difference between the initial cost of the long-term equity investment
and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by the
acquiring party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the
retained earnings shall be adjusted.
If the consideration of the acquiring enterprise is that it issues equity securities, it shall, on the date of
acquisition, regard the share of the book value of the owner's equity of the acquired enterprise as the initial
cost of the long-term equity investment. The total face value of the stocks issued shall be regarded as the
capital stock, while the difference between the initial cost of the long-term equity investment and total
face value of the shares issued shall offset against the capital reserve. If the capital reserve is insufficient
to dilute, the retained earnings shall be adjusted.
B. For the combination not under the common control, the acquirer shall, on the acquisition date, measure
the assets obtained and liabilities borne or assumed for a business combination in light of their fair values,
and shall record the balances between them and their carrying amounts into the profits and losses at theBengang Steel Plates Co., Ltd. Interim Report 2009
45
current period. The acquirer shall recognize the positive balance of the acquisition costs over the fair value
of the identifiable net assets it obtained from the acquiree as goodwill. When the acquisition cost is less
than the fair value of identifiable net assets it obtained, the Company should review the fair value of the
share of the acquired company’s identifiable net assets, and record the difference into income statement if
the result of review is still in negative.
(2) The initial measure of the long term equity investment other than from business acquisition:
A. The initial cost of a long-term equity investment obtained by making payment in cash shall be the
purchase cost which is actually paid. The initial cost consists of the expenses directly relating to acquiring
the long term equity investment, taxes and other necessary expenses.
B. The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall
be the fair value of the equity securities issued.
C. The initial cost of a long-term equity investment of an investor shall be the value stipulated in the
investment contract or agreement except the unfair value stipulated in the contract or agreement.
D. The initial cost of a long-term investment obtained by the exchange of non-monetary assets shall be
ascertained in accordance with the Accounting Standards for Enterprises No. 7 – Exchange of
Non-monetary Assets.
E. The initial cost of a long-term equity investment obtained by recombination of liabilities shall be
ascertained in accordance with Accounting Standards for Enterprises No. 12 – Debt Restructuring.
2) Subsequent measurement
The Company adopts cost method for the long term investment in the company in which the Company has
control and makes adjustment according to equity method when preparing consolidation. The Company
adopts equity method for the long term investment in the company in which the Company has significant
influence or joint control. For the long term investment in the company in which the Company has no
significant influence and joint control, the Company adopts the cost method.
Control refers to the rights to decide a company’s financial or operating policy and obtain the benefit from
this company’s business activities. Directly holding or holding through its subsidiaries more than half of
the invested company’s voting shares represent the Company can control the invested company. Holding
less than half of the invested company’s voting share, but satisfying one of the following conditions, will
be regarded as the controlling company, however, except for there is evidence representing the parent
company cannot control the invested company:
(1) Through the agreement with the other investors of the invested company, the Company holding more
than half voting rights;
(2) As per the invested company’s article of association or agreement, the Company has the right to decide
the invested company’s financial and operating policy;
(3) Has the right to remove most of the invested company’s members in board of directors or similar
institutions;
(4) Has the most voting right in invested company’s board of directors or similar institutions
Joint control refers to the Company and other party controlling an operating activity together in
accordance with an agreement, only existing when the Company and other party both agree on the
important financial and operating decisions.
Major influence is the power to influence the making of financial or operational decisions of an
enterprise. However the decision-making is not under total control, neither jointly nor individually with
other party.
3) Impairment
At the balance sheet date, there is indication of impairment such as continuous decrease of market value or
poor performance of the invested company’s operation, the net realizable value of the long term equity
investment should be determined at the higher of fair value of the long term equity investment less any
disposal charges and the net present value of the estimated future cash flow. When the net realizable value
is less than the book value, an impairment provision should be made for long term equity investment, theBengang Steel Plates Co., Ltd. Interim Report 2009
46
impairment loss go the income statement. The impairment provision should not be reversed in future.
The Company assesses the goodwill arisen from the business combination every year regardless whether
there is indication of impairment.
10. Goodwill
The goodwill arisen from business acquisition refers to the positive difference of consideration paid over
the share of net identifiable assets obtained. Goodwill should be measured at the cost of initial
measurement less any cumulative impairment loss.
The Company performs an impairment assessment at the end of each year.
In order to perform assessment on goodwill, the Company classifies goodwill arisen from business
combination to relevant asset groups by using a reasonable method and classifies the goodwill which is
difficult to be classified to a relevant asset group to a group of asset group.
The Company apportions the book value of goodwill to asset group or group of asset group by the ratio of
the fair value of asset group or group of asset group over the fair value of total asset group or group of
asset group. When the fair value cannot be reliably measured, apportioning by the ratio of the book value
of asset group or group of asset group over the book value of total asset group or group of asset group.
When performing the impairment test on goodwill’s relevant asset group or group of asset group, if there
is indication of impairment for the asset group or group of asset group, firstly performs an impairment test
on the asset group or group of asset group excluding goodwill and calculates the collectible amounts and
compares it to the book value to determine the impairment loss; then, performs a further impairment test
on the asset group or group of asset group including goodwill, compares the collectible amounts to the
book value of the asset group or group of asset group, if the collectible amounts are less than the book
value of the asset group or group of asset group, recognizes the impairment loss according the following:
1) First deducts the book value of goodwill apportioned to asset group or group of asset group;
2) Then, deducts each asset’s book value by the ratio of the book value of each asset over the book value
of asset group or group of asset group excluding the goodwill
The deduction of the book value of the above assets is regarded as the impairment loss of each individual
asset and recorded in income statement. The deducted book value of the asset cannot be less than the
following: this asset’s fair value less any disposal charges; the present value of estimated future cash flow
and zero. The unallocated impairment loss resulted from the above reasons should be allocated by the ratio
of book value of other assets over the book value of asset group or group of asset group.
Recognized impairment loss on goodwill should not be reversed in future.
11. Fixed Assets and Accumulated Depreciation
1) Standard
The company’s fixed assets mean the intangible assets with more than one accounting year which were
held for the purpose of manufacturing commodities, rendering of service, leasing, operation and
management.
2) Valuation method of fixed assets
Fixed assets should be recorded at the cost, and consider the influence amount of the disposal cost The
cost of the procured fixed assets included the purchase price, import duties, delivery costs and insurance,
and other expenditures necessary for bring the fixed assets to working condition for its intended use. The
amount of a fixed asset contributed by an investor should be recorded on the value agreed upon by all the
investors, except for the unfair value.
Fixed assets are recognized when related income will inflow to the Company and related cost can be
recognized. Continuing expenses related with fixed assets which can be recognized can be recorded as the
cost of fixed assets, and stop recognized the replaced book value; otherwise, these expenses should be
recorded as gain/loss of current period.
3) Fixed assets classification and depreciation
Except for fully depreciated fixed assets that are still in use; and land that is revalued separately andBengang Steel Plates Co., Ltd. Interim Report 2009
47
recorded as a fixed asset item, other fixed assets should be depreciated. Straight line method is used.
Details of classification, depreciation period, depreciation rate and residual value rate are as follows:
Category of fixed assets Depreciation age (year) Annual depreciation
ratio Residual Value Rate
Houses & buildings 8-30 years 3.33%-12.5% 0%
Equipment &
machinery 2.4-9 years 10.778%-40.417% 3%
Vehicle and other
equipment 3-10.8 years 8.981%-32.333% 3%
At the end of the period, the Company will check the estimated useful life, residual value rate, and
depreciation way. If the checked estimated useful life is different from the past one, the company would
change the useful of the fixed assets. If the checked estimated residual value is different from the past one,
the company would change it. If the related income that comes from the fixed assets changes a lot, the
deprecation way would be changed.
12. Construction-in-progress
The construction in process (the “CIP”) means the capital construction and Renewal improvement project
which is in progress.
1) The CIP valuation
The construction project cost shall be confirmed according to actual expend. There into: Self-management
project shall be valued according to direct materials, direct labor cost, direct construction fee; construction
transferred to others shall be valued according to the payment of project price; Equipment setup project
shall be valued according to the setup equipment price, setup expense, expense from the running-in of the
project; Renewal improvement project shall be valued according to the book value before renewal, direct
expense, running-in of the project, and administrate fee apportioned.
2) The time point of the CIP transfer into fixed asset
The CIP constructed by us should be transferred to fixed asset when achieve the predetermined running
condition. The cost should be confirmed according to the Project budget, actual cost of project and etc.
And it also can be confirmed by estimation, the depreciation should be accrued in next month, the
estimation should be adjusted when transacted the final accounts, but the accrued depreciation may not be
adjusted.
13. The Intangible Assets Measurement
1) Initial Valuation Measurement of intangible assets
The intangible assets shall be initially measured according to its actual cost. The cost of outsourcing
intangible assets shall be the purchase price; the cost invested into intangible assets by investors shall be
determined according to the conventional value in the investment contract or agreement, except for those
of unfair value in the contract or agreement. The expenditure for the internal research and development
shall be recognized as per the Company’s rules.
2) Amortization measurement and time of intangible assets
We analyze and judge the service life of intangible assets, when it obtains intangible assets. As for the
intangible assets with limited service life, we shall estimate the years of its service life, or the amount of
the output or any other similar measurement unit, which constitutes its service life. If it is unable to
forecast the period when the intangible asset can bring economic benefits to the enterprise, it shall be
regarded as an intangible asset with uncertain service life.
With regard to intangible assets with limited service life, its amortization amount shall be amortized
within its service life systematically and reasonably. Intangible assets with uncertain service life may not
be amortized.
We shall, at least at the end of each year, check the service life and the amortization method of intangibleBengang Steel Plates Co., Ltd. Interim Report 2009
48
assets with limited service life. When the service life and the amortization method of intangible assets are
different from those before, the years and method of the amortization shall be changed. We shall check the
service life of intangible assets with uncertain service life during each accounting period. Where there are
evidences to prove the intangible assets have limited service life, it shall be estimated of its service life,
and be treated according to these Standards.
3）The Division standard of the development expenditures for research and development
The development expenditures for its internal research and development projects of an enterprise may be
confirmed as intangible assets when they satisfy the following conditions simultaneously:
(1) It is feasible technically to finish intangible assets for use or sale;
(2) It is intended to finish and use or sell the intangible assets;
(3) The usefulness of methods for intangible assets to generate economic benefits shall be proved,
including being able to prove that there is a potential market for the products manufactured by applying
the intangible assets or there is a potential market for the intangible assets itself or the intangible assets
will be used internally;
(4) It is able to finish the development of the intangible assets, and able to use or sell the intangible assets,
with the support of sufficient technologies, financial resources and other resources; and
(5) The development expenditures of the intangible assets can be reliably measured.
14. Accounting Treatment of Borrowing Costs
1) Principle of the recognition of capitalized borrowing costs
Where the borrowing costs incurred to an enterprise can be directly attributable to the acquisition and
construction or production of assets eligible for capitalization, it shall be capitalized and recorded into the
costs of relevant assets. Other borrowing costs shall be recognized as expenses on the basis of the actual
amount incurred, and shall be recorded into the current profits and losses.
The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements:
(1) The asset disbursements have already incurred, which shall include cash, transferred non-cash assets or
interest bearing debts paid for the acquisition and construction or production activities for preparing assets
eligible for capitalization;
(2) The borrowing costs has already incurred; and
(3) The acquisition and construction or production activities which are necessary to prepare the asset for
its intended use or sale have already started.
2) The Stopped point of capitalization of borrowing costs
When the qualified asset under acquisition and construction or production is ready for the intended use or
sale, the capitalization of the borrowing costs shall be ceased. The borrowing costs incurred after the
qualified asset under acquisition and construction or production is ready for the intended use or sale shall
be recognized as expenses at the incurred amount when they are incurred, and shall be recorded into the
profits and losses of the current period.
3) Method of calculating capitalized borrowing costs
(1) Method of calculating specifically borrowing costs
As for specifically borrowed loans for the acquisition and construction or production of assets eligible for
capitalization, the to-be-capitalized amount of interests shall be determined in light of the actual cost
incurred of the specially borrowed loan at the present period minus the income of interests earned on the
unused borrowing loans as a deposit in the bank or as a temporary investmentBengang Steel Plates Co., Ltd. Interim Report 2009
49
(2) Method of calculating general borrowing costs
Where a general borrowing is used for the acquisition and construction or production of assets eligible for
capitalization, the enterprise shall calculate and determine the to-be-capitalized amount of interests on the
general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative
asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used.
The capitalization rate shall be calculated and determined in light of the weighted average interest rate of
the general borrowing.
15. Impairment of Assets
The term "impairment of assets" refers to that the recoverable amount of assets is lower than its carrying
value.
The company accrues impairment of assets for the assets expect inventory, deferred income tax, monetary
assets and the long-term investment with no bidding in the active market and no dependably measured fair
value, which was calculated according to the following method:
When recoverable value is less than carrying value, the carrying value of assets should be decreased to the
recoverable value, the decreased amount should be recognized as loss on impairment of assets, recorded
into current profit or loss, and accrue provision of impairment accordingly. The recoverable amount shall
be determined in light of the higher one of the net amount of the fair value of the assets minus the disposal
expenses and the current value of the expected future cash flow of the assets. This impairment cannot be
reversed during the subsequent periods.
There may be an impairment of assets when one of the following signs occurs:
(1) The current market price of assets falls, and its decrease is obviously higher than the expected drop
over time or due to the normal use;
(2) The economic, technological or legal environment in which the enterprise operates, or the market
where the assets is situated will have any significant change in the current period or in the near future,
which will cause adverse impact on the enterprise;
(3) The market interest rate or any other market investment return rate has risen in the current period, and
thus the discount rate of the enterprise for calculating the expected future cash flow of the assets will be
affected, which will result in great decline of the recoverable amount of the assets;
(4) Any evidence shows that the assets have become obsolete or have been damaged substantially;
(5) The assets have been or will be left unused, or terminated for use, or disposed ahead of schedule;
(6) Any evidence in the internal report of the enterprise shows that the economic performance of the assets
have been or will be lower than the expected performance, for example, the net cash flow created by
assets or the operating profit (or loss) realized is lower (higher) than the excepted amount, etc.; and
(7) Other evidence indicates that the impairment of assets has probably occurred.
16. Accounting Treatment for Accrued Payable
1) Principle of recognition: The obligation pertinent to a Contingency shall be recognized as an estimated
debt when the following conditions are satisfied simultaneously, such as outside guarantee, discount of
business acceptance, lawsuit for pending and Product quality guarantee:
(1) That obligation is a current obligation of the enterprise;
(2) It is likely to cause any economic benefit to flow out of the enterprise as a result of performance of
the obligation; and
(3) The amount of the obligation can be measured in a reliable way.Bengang Steel Plates Co., Ltd. Interim Report 2009
50
2) Measurement method: The estimated debts shall be initially measured in accordance with the best
estimate of the necessary expenses for the performance of the current obligation.
17. Revenue Recognition
1) Revenue from the sale of goods should be recognized when all the following conditions have been
satisfied:
a. the enterprise has transferred to the buyer the significant risks and rewards of ownership of the goods;
b. the enterprise retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;
c. it is probably that economic benefits associated with the transaction will flow to the enterprise; and
d. the relevant amount of revenue and costs can be measured reliably.
2) Rendering of services
When the provision of services is started and completed within the same accounting year, revenue should
be recognized at the time of completion of the services. When the provision of service is started and
completed in different accounting years and the outcome of a transaction involving the rendering of
services can be estimated reliably, and enterprise should recognize the service revenue at the balance sheet
date using the percentage of completion method.
3) Revenue arising from the use by others of enterprise assets should meet the following requirements:
a. It is probable that the economic benefits associated with the transaction will flow to the enterprise;
b. When the amount of the revenue can be measured reliably, interest should be measured based on the
length of time for which the enterprise’s cash is used by others and the applicable interest rate; royalties
fees should be measured according to the period and method of charging as specified in relevant contract
and agreement.
18. Government Grants
Government grants refers to monetary or non-monetary assets received by an enterprise from the
government, but excludes capital invested in the Group by the government that gives the government
ownership rights.
Government grants are recognized where there is reasonable assurance that the grant will be received and
all attaching conditions will be complied with.
Monetary grants are measured on the basis of the amount received or the amount receivable.
Non-monetary grants are being measured based on the fair value of relevant assets.
Where the grant relates to an asset, the fair value is credited to a deferred income account and is released
to the income statement over the expected useful life of the relevant asset by equal annual installments.
Government grants relating to income are handled accordingly as follows:
(i) Those to be used as compensation for future expenses or losses are recognized as deferred income and
are be recorded in the profit and loss account for the period where the relevant expenses are recognized; or
(ii) Those to be used as compensation for relevant expenses or losses already incurred are recorded
directly in the profit and loss account for the current period.
19. Income tax
The measurement of income tax adopts the balance sheet liability method. The tax base is determined
when the assets and liabilities are initially recognized. A deferred tax asset or liability is recognized for the
temporary difference arisen between the carrying amount and its tax base.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted at the balance sheet date. When the applied tax rate is changes, the recognizedBengang Steel Plates Co., Ltd. Interim Report 2009
51
deferred tax asset or liability should be re-measured. The influence of the tax rate change should be
recorded as income tax expense, except for the deferred tax asset or liability arisen from the transactions
or events which are directly recognized in equity.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilized. Conversely, previously unrecognized deferred tax assets are reassessed at
each balance sheet date and are recognized to the extent that it is probable that sufficient taxable profit
will be available to allow all or part of the deferred tax asset to be utilized.
20. Accounting Methods of Employees’ Benefits
Employee benefits refer to all kinds of remunerations and other relevant reimbursements made by
enterprises to their employees in exchange for services of employees. It includes wages and salaries,
bonuses, allowances and subsidies, welfare expenses, Medical insurance, endowment insurance,
unemployment insurance and other social insurances, housing benefits, Labor union expenditure and
employee education expenses, non-monetary benefits, termination benefits, and other pension benefits
directly relevant to services provided.
1) Share based payment
Some employees have been granted by share base payment, which is measured by the fair value of the
share. For these awarded that can be exercised immediately, it needs to be recognized as relevant costs or
expenses according to equity instruments and increase share premium accordingly. For these only can be
exercised when service fulfilled in the waiting period or met the defined performance condition, on each
balance sheet date in the waiting period, based on the best estimate to quantity of equity instrument and
the fair value on the date equity instruments awarded, the service obtained in the current period is
recognized as relevant costs or expenses and share premium. The recognized relevant costs or expenses
and owner’s equity will not be adjusted any longer after the date of exercise.
2) Termination Benefits
Our company will terminate the employment of an employee or group of employees before the normal
retirement date; or provide termination benefits as a result of an offer made in order to encourage
voluntary redundancy. The enterprise will be demonstrably committed to a termination when, and only
when, it has a detailed formal plan for the termination and is without realistic possibility of withdrawal.
The provision incurred from compensation for the termination of labor relationship will be recognized to
income statement of the current period.
The treatment for the early retirement planning is on the same basis to that of the termination benefits. The
salaries and the social insurance expenses for the period from the employee’s termination of service and
the normal retirement of these staffs are recognized as employee benefits payable when meeting the above
said retirement benefits recognition requirements, and recognized to income statement of the current
period.
3) Other employee benefits
During the accounting periods that our company is providing service, the benefits payable to employees
are recognized as liabilities. Except termination benefits, according costs of products, costs of services and
costs of assets will be recognized based on benefited objects where employee provide services.
21. Business combination
(1) Business combination under common control
As for business combination under common control, pooling of interest method is adopted. Except the
adjustments for different accounting policies, the assets and liabilities obtained by the acquirer shall be
measured on the basis of the carrying amount in the acquiree's accounts as at the date of combination.
Where there is a difference between the carrying amount of the net assets acquired by the acquirer and theBengang Steel Plates Co., Ltd. Interim Report 2009
52
carrying amount of the consideration paid by it (or the total par value of the shares issued), capital surplus
shall be adjusted. If the capital surplus is not sufficient to offset the value of the net assets acquired,
retained earnings shall be adjusted.
Any costs directly attributable to the combination are recognized as expenses when incurred.
(2) Business combination involving entities not under common control
As for business combination involving entities not under common control, combination by purchase
method is adopted. The cost of combination is the aggregate of the fair values, at the acquisition date, of
the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange
for control of the acquiree. The acquirer shall measure the acquiree’s identifiable assets, liabilities and
contingent liabilities acquired in the business combination at their fair values on the acquisition date.
Where the cost of a business combination exceeds the acquirer’s interest in the fair value of the acquiree’s
identifiable net assets, the difference shall be recognized as goodwill and the value shall be recognized as
the cost of a business combination after deducting accumulated impairment provision. Where the cost of
combination is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the
difference shall be accounted as expenses after review.
Any costs directly attributable to the combination are recognized as expenses when incurred.
22. Consolidation of Financial Statements
The consolidation of consolidated financial statements is based on the financial statements of the Parent
Company and its subsidiaries. Based on other relevant information, it is prepared by the Parent Company
after adjustment to long-term equity investment to its subsidiaries according to equity method.
1) Scope of consolidation of consolidated financial statements
The scope of consolidation of consolidated financial statements is determined based on control.
A. The parent company directly, or indirectly, owns over more than one half of the voting rights,
indicating the parent company can control the invested companies and recognize the invested companies
as subsidiaries and to consolidate the invested companies into the scope of consolidation; but it excludes
where the control not be evidenced by the parent company.
B. The Parent Company owns over more than one half of the voting rights, and if one of the following
conditions is met, it regarded that Parent Company can control the invested companies; the invested
companies will be recognized as subsidiaries and to be consolidated into the scope of consolidation. But it
excludes where the control not be evidenced by the parent company:
a. over more than one half of the voting rights by virtue of an agreement with other investors; or
b. to govern the financial and operating policies of the other enterprise under a statute or an agreement; or
c. to appoint or remove the majority of the members of the board of directors; or
d. to cast the majority of votes at a meeting of the board of directors.
All the subsidies have been consolidated into the scope of consolidation for this period ended.
2) Method of Accounting for the consolidation of financial statements.
The consolidation of financial statements are in accordance with the requirement of ‘Accounting
Standards for Business Enterprises No. 31 – Financial statements consolidation’ and application guidance
published by Ministry of Finance. All significant inter-company transactions and balances within the
Group are eliminated on consolidation.Bengang Steel Plates Co., Ltd. Interim Report 2009
53
23. Significant accounting policies, changes to accounting estimates and Accounting
Error Rectification
1) Changes to accounting policies
No accounting policy change with the Company.
2) Changes to accounting estimates
No accounting estimates change with the Company.
3) Correction of prior period errors
According to the Benxi Tax bureau’s reply for “Tax deduction for purchasing domestically made
equipment for Technology reformation of Bengang Steel Plates Co., Ltd”, the deductible tax for
purchasing domestically-produced equipment in 2007 was RMB 160.989.130.60. When the enterprise did
the settlement and payments of the yearly income tax, the actual deductible tax for purchasing
domestically-produced equipment is RMB 54,040,320.08. Therefore the beginning balances of Owner’s
equity and surplus reserves were adjusted retrospectively, reducing owner’s equity and surplus reserves by
RMB 96,253,929.47 and RMB 10,694,881.05 respectively.
IV. Taxation
(I) Major Taxes and Rates
1. VAT
VAT is paid at 17% of the taxable sales income less the withholding approved at the current term.
Tax refund rate for export products: According to “Notice on further increasing of tax refund rate for
exported products” (财税〔2009〕88 号) issued by Ministry of Finance and National Tax Bureau, since
June 1, 2009, the refunding rate for exported hot-rolled plate will be 9%; and for cool-rolled plate and
special alloy steel will be 13%.
2. City maintenance and construction tax: 7% of the turnover tax practically paid.
3. Enterprise income tax: The tax should be paid at 25% of taxable profit
4. Property tax: 1.2% of the 70% of original value of properties.
5. Other taxes: calculated and paid according to relative provisions of the tax law.
(II) Tax Preference
There is no tax preference this year.
V. Consolidated Financial Statements
The consolidated financial statements are the structural report on the financial status, business
performance and cash flow statement of the whole enterprise including parent company and its
subsidiaries.
According to the accounting standards No.33- Consolidated Financial Statement, the subsidiaries under
the control and the subsidiaries for special purposes are combined into the consolidated financial
statements.
The consolidation of consolidated financial statements is based on the financial statements of the Parent
Company and its subsidiaries. Based on other relevant information, it is prepared by the Parent Company
after adjustment to long-term equity investment to its subsidiaries according to equity method. AtBengang Steel Plates Co., Ltd. Interim Report 2009
54
consolidation, the internal equity investment and owners’ equity of subsidiaries, internal investment gains
and profit distribution by subsidiaries, internal transactions, internal debts and credits are neutralized.
The difference which the costs of combination are more than the assessable net asset of the acquiree is
goodwill. The difference which the costs of combination are less than the assessable net asset of the
acquiree is regarded as expense.
Consistent accounting policies are employed in the preparation and presentation of the consolidated
financial statement.
The monetary unit in this chapter is in RMB10 thousand unless otherwise stated.
(I) Subsidiaries
1. The subsidiaries acquired through combination under common control
Name of the subsidiaries
Ownership
of the
subsidiary
Reg. Add. Business
property
Registered
capital Business Scope
Xiamen Bengang Steel Sales
Ltd.
Fully-owned
subsidiary Xiamen Sales 50
Metal, steel, pig
iron & mechanical
wholesale and
retail.
Wuxi Bengang Steel Sales
Ltd.
Fully-owned
subsidiary Wuxi Sales 100
Metal materials,
chemical raw
materials and
products sales
Tianjin Bengang Steel
Trading Ltd.
Fully-owned
subsidiary Tianjin Sales 300
Steel, pig iron,
chemical raw
material sales
Nanjing Bengang Material
Sales Ltd.
Fully-owned
subsidiary Nanjin Sales 115
Construction
material, chemical
product sales and
metal material
processing
Yantai Bengang Steel Sales
Ltd.
Fully-owned
subsidiary Yantai Sales 50
Construction
material, metal
material wholesales
and retail
Harbin Bengang Steel &
Iron Sales Ltd.
Fully-owned
subsidiary Harbin Sales 50
Construction
material, metal
material wholesales
and retail
Changchun Bengang Steel
Sales Ltd.
Fully-owned
subsidiary Changchun Sales 50 steel and pig iron
sales
Guangzhou Bengang Trade
Co., Ltd.
Fully-owned
subsidiary Guangzhou Sales 100
Sales of steel and
iron products and
chemical products
Shanghai Bengang
Metallurgy Tech. Ltd.
Fully-owned
subsidiary Shanghai Sales 500 Sales of steel plates
and other plates
(Continued)
Name of the subsidiaries Investment of
the Company
Share of the
Company % Voting rights % Consolidated?
Xiamen Bengang Steel Sales
Ltd 109.57 100.00 100.00 Yes
Wuxi Bengang Steel Sales
Ltd 94.80 100.00 100.00 Yes
Tianjin Bengang Steel Trading
Ltd 3,330.68 100.00 100.00 Yes
Nanjing Bengang Material
Sales Ltd 208.14 100.00 100.00 YesBengang Steel Plates Co., Ltd. Interim Report 2009
55
Yantai Bengang Steel Sales
Ltd 1,960.03 100.00 100.00 Yes
Harbin Bengang Steel & Iron
Sales Ltd 42.34 100.00 100.00 Yes
Changchun Bengang Steel
Sales Ltd -135.51 100.00 100.00 Yes
Guangzhou Bengang Trade
Co Ltd 100 100.00 100.00 Yes
Shanghai Bengang Metallurgy
Tech Ltd
500 100.00 100.00 Yes
The recognition of the subsidiaries acquired under the same control:
Xiamen Bengang Steel & Iron Sales Co., Ltd., Wuxi Bengang Steel & Iron Sales Co., Ltd., Tianjin
Bengang Steel & Iron Trade Co., Ltd., Nanjing Bengang Material Co., Ltd., Yantai Bengang Steel Sales
Co., Ltd., Ha’erbin Bengang Steel Sales Co., Ltd. Changchun Bengang Steel Sales Co., Ltd. are the
subsidiaries acquired from Bengang Group in 2006 by way of private share placing. Guangzhou Bengang
Steel Trading Co., Ltd. was incorporated on January 13, 2009, Shanghai Bengang Metallurgy Tech. Ltd.
was incorporated on February 17, 2009.
2. The subsidiaries acquired through business combination not under the common control
No subsidiaries acquired through combination not under the common control
3. Subsidiaries acquired not through Business Combination
No subsidiaries acquired not through business combination
(II)The change of subsidiaries
There is no change of subsidiaries.
(III) Consolidated subsidiaries which the parent company owns half or less than half of
voting rights and the reason
No consolidated subsidiaries which the parent company owns half or less than half voting rights.
(IV) The invested company which the parent company owns more than half of voting
rights without control.
No above matters.
(V) The change in the scope of the consolidation
No change in the scope of the consolidation this year.
(VI) The limited capability of the subsidiaries to transfer capital to the parent company
The situation above does not exist.
(VII) The operating activities of the consolidated subsidiaries for special purposes
entities
No consolidated subsidiaries for special purpose entities.
(VIII) The situation which the special purpose entities are not consolidated
No above situation.Bengang Steel Plates Co., Ltd. Interim Report 2009
56
VI. Notes to the consolidated financial statements
In the following financial information, except for otherwise stated, “Beginning of year” or “beginning of
term” refers to January 1 2009, “End of term” refers to June 30 2009, “current term” refers to the period
between January 1 to June 30 of 2009. All of amounts are in RMB except for stated otherwise.
(I) Monetary capital
Balance at the end of term Balance at the beginning of term
Items Original
currency
Exchange
rate Amount RMB Original
currency
Exchange
rate Amount RMB
Cash
RMB 68,515.07 1.0000 68,515.07 20,031.44 1.0000 20,031.44
Sub-total 68,515.07 20,031.44
Bank
deposit
RMB
1,981,584,105.60 1.0000 1,981,584,105.60 1,033,339,855.77 1.0000 1,033,339,855.77
USD 17,000.83 6.8316 116,142.87 11,291.45 6.8346 77,172.54
EURO 13,255.40 9.5868 127,076.87 13,250.17 9.6590 127,983.39
HKD 16,262.33 0.8819 14,341.75
Sub-total 1,981,827,325.34 1,033,559,353.45
Other
monetary
fund
RMB 2,549,456,169.34 1.0000 2,549,456,169.34 1,187,256,610.62 1.0000 1,187,256,610.62
Sub-total 2,549,456,169.34 1,187,256,610.62
Total 4,531,352,009.75 2,220,835,995.51
Including: Details of other monetary capital:
Items Balance at the end of term Balance at the beginning of
term
Fixed deposit 7,194,629.34 818,152,630.71
Deposit of L/C
Deposit for bank accepted drafts 2,542,261,540.00 369,103,979.91
Total 2,549,456,169.34 1,187,256,610.62
Up to the balance sheet date, there is no bank deposit freeze, pledged deposit, oversea deposits or deposits
under the potential risk of uncollectibility.
(II) Notes receivable
Items Balance at the end of term Balance at the beginning of
term
Bank acceptance 893,260,848.07 849,900,747.04
Total 893,260,848.07 849,900,747.04
1. No pledged acceptance bill at the year end.Bengang Steel Plates Co., Ltd. Interim Report 2009
57
2. No notes receivable has been transferred into accounts receivable due to the endorsement dispute.
3. At end of the term, within the aforesaid balance, there is no amount due from the shareholders who
holds 5% or more the voting shares of the Company.
4. There is no notes receivable from related parties at the end of the year.
(III) Account receivable
1. Composition of receivable accounts
1) Presented by ages
Balance at the end of term Balance at the beginning of term
Items
Book balance Percentage
%
Bad debt
provision
%
Bad debt
provision Book balance Percentage
%
Bad debt
provision
%
Bad debt
provision
within
1 year 536,433,463.30 52.27 366,401,519.00 42.79
1-2
yrs 126,302,174.48 12.31 5.00 6,315,108.72 126,302,174.48 14.75 5.00 6,315,108.72
2-3
yrs 26,146,009.20 2.55 20.00 5,229,201.85 26,146,009.20 3.05 20.00 5,229,201.85
Over
3 yrs 337,365,961.50 32.87 100.00 337,365,961.50 337,365,961.50 39.41 100.00 337,365,961.50
Total 1,026,247,608.48 100.00 348,910,272.07 856,215,664.18 100.00 348,910,272.07
2) Accounts receivable presented by the level of materiality
Balance at the end of term
Items
Book balance Percentage
%
Bad debt
provision
%
Bad debt
provision
1.individually significant and make
provision individually
2.individually insignificant and make
provision individually
3.other items with similar credit risk
characteristics judged by aging 1,026,247,608.48 100.00 34.00 348,910,272.07
including: Individually significant 442,797,631.95 43.15 3.32 14,714,238.02
Individually insignificant 583,449,976.53 56.85 57.28 334,196,034.05
including：Group of insignificant items
with similar credit risk characteristic that
has significant risk 322,711,873.07 31.45 100.00 322,711,873.07
Total 1,026,247,608.48 100.00 348,910,272.07
(Continued)
Balance at the beginning of term
Items
Book balance Percentage
%
Bad debt
provision
%
Bad debt
provision
1.individually significant and make
provision individually
2.individually insignificant and make
provision individually
3.other items with similar credit risk
characteristics judged by aging 856,215,664.18 100.00 40.75 348,910,272.07
including: Individually significant 266,474,413.39 31.12 5.52 14,714,238.02
Individually insignificant 589,741,250.79 68.88 56.67 334,196,034.05Bengang Steel Plates Co., Ltd. Interim Report 2009
58
including：Group of insignificant items with
similar credit risk characteristic that has
significant risk 322,711,873.07 37.69 100.00 322,711,873.07
Total 856,215,664.18 100.00 348,910,272.07
2. The change of provision for bad debt is as follow:
Decreased this term
Items
Balance of
book value at
beginning of
term
Provided this
term Written back Transferred
Balance of book
value at end of
term
Year 2007 305,844,554.45 31,488,644.85 337,333,199.30
Year 2008 337,333,199.30 11,577,072.77 348,910,272.07
Jan-Jun
2009
348,910,272.07 348,910,272.07
3. No accounts receivable has been written off this year.
4. Within the aforesaid balance, there is no amount due from the shareholders that hold 5% or more of the
company’s voting shares
5. The accounts receivable of related parties is disclosed in Notes VIII.II.5
6. The top five debtors at the end of term:
Ranking Relationship with
the Company Amount Aging Percentage in total receivables
No.1 Client 176,323,218.56 1-2 yrs 17.18%
No.2 Client
82,593,587.94 1-2 yrs 8.05%
No.3 Client
23,905,588.91 1-2 yrs 2.33%
No.4 Client
20,356,917.92 1-2 yrs 1.98%
No.5 Client
18,253,961.75 1-2 yrs 1.78%
7. The amount of accounts receivable at the year end has increased by RMB170,031,944.30 and 19.86%
compared with the beginning balance of the year. The increase was mainly caused by the Company’s
change of clearance with petrol pipe clients.
(IV) Prepayment
1. Age analyzis
Balance at the end of term Balance at the beginning of term
Age
Amount Percentage % Amount Percentage %
within 1 year 1,577,475,531.94 97.72 1,535,402,152.40 97.66
1-2 yrs 36,739,144.54 2.28 36,739,144.54 2.34
2-3 yrs
Over 3 yrs
Total 1,614,214,676.48 100 1,572,141,296.94 100.00
2. Top 5 debtors:
Balance at the end of term Balance at the beginning of
Name of the companies term
Amount Percentage
% Amount Percentage
%
No.1
222,094,106.40 13.76 204,349,306.87 13.00
No.2 194,999,956.31 12.08 177,999,816.37 11.32
No.3 95,150,657.46 5.89 159,840,701.17 10.17Bengang Steel Plates Co., Ltd. Interim Report 2009
59
Balance at the end of term Balance at the beginning of
Name of the companies term
Amount Percentage
% Amount Percentage
%
No.4 93,747,591.10 5.81 105,122,903.98 6.69
No.5 87,681,762.03 5.43 100,406,764.50 6.39
3. At end of term, within the aforesaid balance, there is no amount due from the shareholders that hold 5%
or more of the Company’s voting shares
4. The accounts receivable of related parties is disclosed in Note VIII (II)5
5. The balance of prepayments has increased by RMB42,073,379.54 at the year end compared with the
beginning balance. The increase rate is 2.68% and is mainly caused by prepayment for raw materials and
spare parts, and settlement of project payment.
(V) Other account receivable
1. Composition of other receivable accounts
1) Presented by ages
Balance at the end of term Balance at the beginning of term
Items
Book balance Percentage
%
Bad debt
provision
%
Bad debt
provision Book balance Percentage
%
Bad debt
provision
%
Bad debt
provision
within
1 year 204,383,599.96 69.25 69,960,551.83 43.53
1-2
yrs 4,842,728.73 1.64 5 242,136.44 4,842,728.73 3.01 5 242,136.44
2-3
yrs 43,553,749.60 14.76 20 8,710,749.91 43,553,749.60 27.1 20 8,710,749.91
Over
3 yrs 42,363,250.41 14.35 95.89 40,623,250.41 42,363,250.41 26.36 95.89 40,623,250.41
Total 295,143,328.70 100.00 49,576,136.76 160,720,280.57 100 49,576,136.76
2) Accounts receivable presented by the level of materiality
Balance at the end of term
Items
Book balance Percentage
%
Bad debt
provision
%
Bad debt
provision
1.individually significant and make provision
individually
2.individually insignificant and make
provision individually 1,740,000.00 0.59
3.other items with similar credit risk
characteristics judged by aging 293,403,328.70 99.41 16.90 49,576,136.76
including: Individually significant 5,000,000.00 1.69 0.00
Individually insignificant 288,403,328.70 97.72 17.19 49,576,136.76
including：Group of insignificant items with
similar credit risk characteristic that has
significant risk 40,576,422.96 13.75 100.00 40,576,422.96
Total 295,143,328.70 100.00 49,576,136.76
(Continued)
Balance at the beginning of term
Items
Book balance Percentage
%
Bad debt
provision
%
Bad debt
provisionBengang Steel Plates Co., Ltd. Interim Report 2009
60
Balance at the beginning of term
Items
Book balance Percentage
%
Bad debt
provision
%
Bad debt
provision
1.individually significant and make provision
individually
2.individually insignificant and make
provision individually 1,740,000.00 1.08
3.other items with similar credit risk
characteristics judged by aging 158,980,280.57 98.92 31.18 49,576,136.76
including: Individually significant 5,000,000.00 3.11
Individually insignificant 153,980,280.57 95.81 32.2 49,576,136.76
including：Group of insignificant items with
similar credit risk characteristic that has
significant risk 40,576,422.96 25.25 100 40,576,422.96
Total 160,720,280.57 100 49,576,136.76
2. Change of bad debt provision on other receivable accounts
Decreased this term
Items
Balance of
book value at
beginning of
term
Provided this
term Written back Transferred
Balance of book
value at end of
term
Year 2007 39,788,674.33 5,079,952.41 69,464.19 44,799,162.55
Year 2008 44,799,162.55 4,776,974.21 49,576,136.76
Jan-Jun
2009 49,576,136.76 49,576,136.76
3. Up to June 30, 2009, other receivables which are individually significant and with individual bad debt
provision totaled RMB 1,740,000.00, which was deposit of JPY loan. According to the nature of the funds,
we do not make any provision for it.
4. No write-off of other receivables this year.
5. At end of report term, within the aforesaid balance, there is no amount due from the shareholders who
holds 5% or more the voting shares of the Company.
6. The accounts receivable of related parties is disclosed in Note VIII (II)5
7. Top 5 other receivable accounts
Ranking
Relationship
with the
Company
Description Amount Age Percentage in total of
other receivables
No.1 Parent Current 70,701,095.52 within 1 23.95%
No.2 Client Current
acco nt
17,443,192.94 within 1
ear
5.91%
No.3 Client Current
acco nt
16,471,986.83 within 1
ear
5.58%
No.4 Client Current
t
10,526,157.39 within 1 3.57%
No.5 Client Current 6,106,003.52 within 1 2.07%
(VI) Inventory and impairment provision
Balance at the end of term Balance at the beginning of term
Items
Book balance Impairment
provision Book balance Impairment
provision
Raw materials and
main materials 3,990,709,538.27 345,919,253.96 6,277,155,574.02 345,919,253.96
Semi-finished Product 911,791,346.14 123,153,835.91 617,854,304.29 123,153,835.91Bengang Steel Plates Co., Ltd. Interim Report 2009
61
Stock products 2,224,663,751.42 211,614,488.41 1,666,065,796.62 232,259,143.03
Total 7,127,164,635.83 680,687,578.28 8,561,075,674.93 701,332,232.90
1. There are no inventories used as mortgage and guarantee at the end of the year.
2. Inventory impairment provisions
Decreased this term
Categories
Balance of
book value at
beginning of
term
Provided this
term Written back Transferred
Balance of
book value at
end of term
Raw materials and
main materials 345,919,253.96 345,919,253.96
Semi-finished
Product 123,153,835.91 123,153,835.91
Products in stock 232,259,143.03 20,644,654.62 211,614,488.41
Total 701,332,232.90 680,687,578.28
3. Balance of inventory decreased by RMB1,433,911,039.10 and 16.75%, which was caused by decrease
of raw materials.
(VII) Other current asset
Other current asset of RMB182,211,823.73 was the prepaid income tax.
(VIII) Fixed Assets and accumulated depreciation
1. Original value of fixed asset
Categories Balance at the
beginning of term Increased this term Decreased this
term
Balance at end of
term
Houses & buildings 6,887,357,412.66 816,318.00 6,888,173,730.66
Equipment &
machinery 21,806,460,467.50
19,205,556.22 21,825,666,023.72
Transportation
equipment 662,010,090.11 150,452.00 661,859,638.11
Total 29,355,827,970.27 20,021,874.22 150,452.00
29,375,699,392.49
Including: the original value of construction in process transferred to fixed assets was RMB842,157.96.
2. Accumulative depreciation
Categories Balance at the
beginning of term
Increased
this term
Provided this
term
Decreased
this term
Balance at the end
of term
Houses &
buildings 1,533,042,405.91 97,319,345.17 1,630,361,751.08
Equipment &
machinery 12,242,623,988.12 1,074,928,302.42 13,317,552,290.54
Transportation
equipment 391,834,595.93 4,870,326.72 145,938.44 396,558,984.21
Total 14,167,500,989.96 1,177,117,974.31 145,938.44 15,344,473,025.83
3. Fixed assets impairment provision
Categories
Balance at the
beginning of
term
Increased this
term
Decreased this
term
Balance at the
end of term
Reason to
provide
Houses &
buildings 29,136,311.38 29,136,311.38 To be disposed
Equipment &
machinery 45,159,927.51 45,159,927.51 To be disposed
Total 74,296,238.89 74,296,238.89
4. Fixed asset book valueBengang Steel Plates Co., Ltd. Interim Report 2009
62
Categories Balance at the
beginning of term
Increased this
term
Decreased this
term
Balance at the end
of term
Houses & buildings 5,325,178,695.37 816,318.00 97,319,345.17 5,228,675,668.20
Equipment &
machinery 9,518,676,551.87
19,205,556.22 1,074,928,302.42 8,463,953,805.67
Transportation
equipment 270,175,494.18 0.00 4,874,840.28 265,300,653.90
Total 15,114,030,741.42 20,021,874.22 1,177,122,487.87 13,956,930,127.77
5. No fixed asset was under pledge or guarantee
(IX) Construction in process
Balance at the end of term Balance at the beginning of term
Items
Book balance Impairment
provision Book value Book balance Impairment
provision Book value
Converter
4#5#6# 375,763,153.63 375,763,153.63 359,761,566.92 359,761,566.92
1# blast
furnace
reconstruction 550,466,100.34 550,466,100.34 285,439,847.72 285,439,847.72
Super thin
cool rolling
plate
reformation 13090934.19 13090934.19
Material
factory
reforming 610,179,944.91 610,179,944.91 560,886,192.35 560,886,192.35
IT project of
the Company 113,189,243.81 113,189,243.81 98,352,813.39 98,352,813.39
Replacing and
relocating of
coke furnace 363,179,726.19 363,179,726.19 106,048,378.39 106,048,378.39
Energy saving
reconstruction
of converter 85,317,363.67 85,317,363.67 65,239,550.37 65,239,550.37
Plate-billet
continuous
casting
machine
reformation 1,461,978,888.69 1,461,978,888.69 1,272,048,916.36 1,272,048,916.36
Iron mixture
converter dust
removing
station 70,633,824.16 70,633,824.16 67,489,170.26 67,489,170.26
Ma’erlin ore 345,722,204.33 345,722,204.33 315,717,467.24 315,717,467.24
Environmental
reconstruction
of Special
Steel Factory 138,057,036.14 138,057,036.14 105,876,251.63 105,876,251.63
Upgrading of
continuous
casting 62,803,330.54 62,803,330.54 62,803,330.54 62,803,330.54
Environmental
production
tech 53,917,589.02 53,917,589.02 37,048,283.40 37,048,283.40Bengang Steel Plates Co., Ltd. Interim Report 2009
63
Balance at the end of term Balance at the beginning of term
Items
Book balance Impairment
provision Book value Book balance Impairment
provision Book value
Improving of
special steel
800/650 99,981,885.41 99,981,885.41 88,389,064.61 88,389,064.61
Packaging of
transportation
line 138,365,937.98 138,365,937.98 107,781,374.12 107,781,374.12
stainless steel
cool rolling 119,359,875.66 119,359,875.66 84,974,807.31 84,974,807.31
Taizi river
transformer
substation 38,893,893.00 38,893,893.00 38,868,693.00 38,868,693.00
4#RH 115,106,886.58 115,106,886.58 110,452,466.67 110,452,466.67
Recycling
steel plant
phase II
Reforming 32,945,548.98 32,945,548.98 19,534,335.98 19,534,335.98
60000 cubic
meter oxygen
generator 90,812,863.23 90,812,863.23 37,676,900.73 37,676,900.73
Other small
projects 83,733,626.39 83,733,626.39 47,147,168.59 47,147,168.59
Total 4,963,499,856.85 4,963,499,856.85 3,871,536,579.58 3,871,536,579.58
1. Change of construction-in-process
Decreased this term
Name of projects Budget
Balance at the
beginning of
term
Increased this
term
Transferred
into fixed
assets
Other
decreases
Converter 4#5#6# 1,500,000,000.00 359,761,566.92 16,001,586.71
1# blast furnace
reconstruction 2,267,000,000.00 285,439,847.72 265,026,252.62
Super thin cool
rolling plate
reformation 1,126,190,000.00 13,090,934.19
Material factory
reforming 703,120,000.00 560,886,192.35 49,293,752.56
IT project of the
Company 274,440,000.00 98,352,813.39 14,836,430.42
Replacing and
relocating of coke
furnace 1,443,760,000.00 106,048,378.39 257,131,347.80
Energy saving and
environmental
protection
reconstruction of
the converter
system 780,000,000.00 65,239,550.37 20,077,813.30
Plate-billet
continuous casting
machine
reformation 1,932,660,000.00 1,272,048,916.36 189,929,972.33
Dust removing
and southern
station 109,740,000.00 67,489,170.26 3,144,653.90Bengang Steel Plates Co., Ltd. Interim Report 2009
64
Decreased this term
Name of projects Budget
Balance at the
beginning of
term
Increased this
term
Transferred
into fixed
assets
Other
decreases
Ma’erlin ore 481,360,000.00 315,717,467.24 30,004,737.09
Energy saving
reconstruction of
special steel
factory 223,890,000.00 105,876,251.63 32,180,784.51
Upgrading of
continuous casting 110,260,000.00 62,803,330.54 -
Environmental
reengineering 96,000,000.00 37,048,283.40 16,869,305.62
Improving of
special steel
800/650 138,090,000.00 88,389,064.61 11,592,820.80
Packaging of
transportation line 305,840,000.00 107,781,374.12 30,584,563.86
stainless steel cool
rolling 1,514,700,000.00 84,974,807.31 34,385,068.35
Taizi river
transformer
substation 66KV
line 120,000,000.00 38,868,693.00 25,200.00
4#RH 119,280,000.00 110,452,466.67 4,654,419.91
Recycling steel
plant phase
Reforming 182,800,000.00 19,534,335.98 13,411,213.00
60000 cubic meter
oxygen generator 673,230,000.00 37,676,900.73 53,135,962.50
Other small
projects 47,147,168.59 37,428,615.76 842,157.96
Total 14,102,360,000.00 3,871,536,579.58 1,092,805,435.23 842,157.96
(Continued)
Name of projects Balance at the
end of term Progress Financial
resource
Portion of
investment on
budget
Converter 4#5#6# 375,763,153.63 90% Independent 25%
1# blast furnace reconstruction 550,466,100.34 95% Independent 24%
Super thin cool rolling plate reformation 13,090,934.19 95% Independent 1%
Material factory reforming 610,179,944.91 90% Independent 87%
IT project of the Company 113,189,243.81 70% Independent 41%
Replacing and relocating of coke
furnace 363,179,726.19 95% Independent 25%
Energy saving and environmental
protection reconstruction of the
converter system 85,317,363.67 20% Independent 11%
Plate-billet continuous casting machine
reformation 1,461,978,888.69 95% Independent 76%
Dust removing and southern station 70,633,824.16 95% Independent 64%
Ma’erlin ore 345,722,204.33 80% Independent 72%
Energy saving reconstruction of special
steel factory 138,057,036.14 80% Independent 62%Bengang Steel Plates Co., Ltd. Interim Report 2009
65
Upgrading of continuous casting 62,803,330.54 90% Independent 57%
Environmental reengineering 53,917,589.02 50% Independent 56%
Improving of special steel 800/650 99,981,885.41 70% Independent 72%
Packaging of transportation line 138,365,937.98 50% Independent 45%
stainless steel cool rolling 119,359,875.66 20% Independent 8%
Taizi river transformer substation 66KV
line 38,893,893.00 90% Independent 32%
4#RH 115,106,886.58 95% Independent 97%
Recycling steel plant phase Reforming 32,945,548.98 30% Independent 18%
60000 cubic meter oxygen generator 90,812,863.23 30% Independent 13%
Other small projects 83,733,626.39 Independent
Total 4,963,499,856.85 35%
2. Loan interest expenses capitalized to project costs
Name of
projects
Balance at the
beginning of
term
Increased this
term
Transferred
into fixed
asset this
term
Other
decreases
Balance at the
end of term
Capitalizing
rate
Converter
4#5#6# 24,191,300.00 7,425,600.00 31,616,900.00 100%
Outdated
coking
furnace
reconstruction 23,904,500.00 23,904,500.00 100%
Plate-billet
continuous
casting
machine
reformation 85,082,991.59 33,995,500.00 119,078,491.59 100%
Total 109,274,291.59 65,325,600.00 0.00 0.00 174,599,891.59
3. No impairment provision for CIP this year.
4. The ending balance of CIP has increased by RMB1,091,963,277.27 compared with the beginning
balance with the increase rate 28.2 %, which is mainly caused by increase of reconstruction projects.
(X) Engineering goods
Balance at the beginning of
term Increased this term Decreased this term Balance at the end of term
Items
Book balance Impairment
provision Book balance Impairment
provision Book balance Impairment
provision Book balance Impairment
provision
Special
equipment 10,902,394.81 618,317,781.29 456,564,781.62 172,655,394.48
Total
10,902,394.81 0.00 618,317,781.29 0.00 456,564,781.62 0.00 172,655,394.48
(XI) Deferred tax asset and deferred tax liability
1. Recognized deferred tax asset
Items Balance at the end of term Balance at the beginning
of term
Impairment provision 293,528,720.16 293,528,720.16
Welfare for retired employee 58,129,713.14 58,129,713.14Bengang Steel Plates Co., Ltd. Interim Report 2009
66
Unrealized profit in inter-company sales 725,131.57 725,131.57
Employee wages payable 10,801,040.63 10,801,040.63
Reserved expenses 42,576,426.60 42,576,426.60
Total 405,761,032.10 405,761,032.10
Temporary difference corresponding to asset items lead to temporary difference:
Items Balance at the end of
term
Balance at the beginning
of term
Impairment provision 1,174,114,880.62 1,174,114,880.62
Welfare for retired employee 232,518,852.56 232,518,852.56
Unrealized profit in inter-company sales 2,900,526.26 2,900,526.26
Employee wages payable 43,204,162.52 43,204,162.52
Reserved expenses 170,305,706.41 170,305,706.41
Total 1,623,044,128.37 1,623,044,128.37
(XII) Asset impairment provision
Decreased this term
Items
Balance of book
value at
beginning of
term
Provided
this term Written back Transferred
Balance of book
value at end of
term
1. Bad debt
provision 398,486,408.83 398,486,408.83
2. Inventory
impairment
provisions 701,332,232.90
20,644,654.62 680,687,578.28
3. Fixed assets
impairment
provision 74,296,238.89 74,296,238.89
4. Construction in
process impairment
provision 0.00
Total 1,174,114,880.62 0.00 20,644,654.62 0.00 1,153,470,226.00
(XIII) Short-term loans
1. Short-term loans
Categories Balance at the end of term Balance at the beginning of term
Credit loan 2,520,212,000.00 1,759,842,200.00
Guarantee loan 1,102,000,000.00 1,127,510,000.00
Total 3,622,212,000.00 2,887,352,200.00
In which the details of foreign currency loan is as follows:
Categories Original currency Original currency Exchange rate Translated to RMB
Credit loan USD 70,000,000.00 6.8316 478,212,000.00
Total 478,212,000.00
2. There is no overdue short-term loan which has not been paid back at the end of term.
3. Details of short-term loans
In RMBBengang Steel Plates Co., Ltd. Interim Report 2009
67
Loan
provided by Currency Original currency
Annual
interest
rate Term
Translated to
RMB Means
China
Agriculture
Bank
USD 35,000,000.00 Float
rates 2009.2.28-2010.2.25 239,106,000.00 Credit
China
Agriculture
Bank
USD 35,000,000.00 Float
rates 2009.3.11-2010.2.25 239,106,000.00 Credit
CICB RMB 90,000,000.00 7.47 2008.07.25-2009.07.23 90,000,000.00 Credit
CICB RMB 130,000,000.00 5.04 2009.05.15-2010.05.14 130,000,000.00 Credit
CICB RMB 100,000,000.00 6.66 2008.11.07-2009.10.26 100,000,000.00 Credit
CICB RMB 100,000,000.00 6.66 2008.11.07-2009.10.27 100,000,000.00 Credit
CICB RMB 100,000,000.00 6.66 2008.11.06-2009.11.05 100,000,000.00 Credit
CICB RMB 100,000,000.00 6.66 2008.11.06-2009.11.04 100,000,000.00 Credit
CICB RMB 150,000,000.00 5.04 2008.05.14-2010.05.13 150,000,000.00 Credit
CICB RMB 42,000,000.00 5.58 2008.12.10-2009.12.08 42,000,000.00 Credit
CICB RMB 100,000,000.00 5.31 2009.01.05-2009.11.24 100,000,000.00 Credit
CICB RMB 130,000,000.00 5.31 2009.01.05-2009.11.19 130,000,000.00 Credit
CICB RMB 150,000,000.00 5.31 2009.01.05-2009.12.17 150,000,000.00 Credit
CICB RMB 150,000,000.00 5.31 2009.01.05-2009.12.22 150,000,000.00 Credit
China
Construction
Bank
RMB 110,000,000.00
4.86
2009.02.10-2009.08.09 110,000,000.00 Guarantee
China
Construction
Bank
RMB 300,000,000.00 4.86 2009.03.11-2009.09.10 300,000,000.00 Guarantee
China
Construction
Bank
RMB 170,000,000.00 4.86 2009.03.10-2009.09.09 170,000,000.00 Guarantee
China
Construction
Bank
RMB 177,000,000.00 4.86 2009.03.09-2009.09.08 177,000,000.00 Guarantee
Bank of
China RMB 145,000,000.00 5.04 2009.02.06-2010.02.05 145,000,000.00 Guarantee
Bank of
China RMB 200,000,000.00 5.04 2009.02.27-2010.02.26 200,000,000.00 Guarantee
China
Agriculture
Bank
RMB 200,000,000.00 5.04 2009.02.06-2010.02.02 200,000,000.00 Credit
China
Agriculture
Bank
RMB 200,000,000.00 5.04 2009.03.16-2010.03.12 200,000,000.00 Credit
China
Agriculture
Bank
RMB 300,000,000.00 5.04 2009.01.17-2010.01.13 300,000,000.00 Credit
Total 3,622,212,000.00 3,622,212,000.00
(XIV) Notes payable
Categories Balance at the end of term Balance at the beginning of
termBengang Steel Plates Co., Ltd. Interim Report 2009
68
Bank acceptance 4,587,696,895.92 1,844,612,512.13
Commercial acceptance
Total 4,587,696,895.92 1,844,612,512.13
There is no notes payable owed to shareholders who hold 5% or above voting shares at the end of this
year.
As to the ending balance of notes payable with regard to related parties, please See details in Notes
VIII(II)5
3. The ending balance of notes payable increased 2,743,084,383.79 compared with the beginning balance
with the increase rate of 148.71%, which is mainly caused by increase of bank acceptance bill settlement.
(XV) Account payable
Items Balance at the end of term Balance at the beginning of term
within 1 year 5,228,467,401.61 6,598,605,920.00
1-2 yrs 218,912,221.69 226,481,745.81
2-3 yrs 27,625,238.47 27,661,224.84
Over 3 yrs 40,652,674.44 42,048,537.65
Total 5,515,657,536.21 6,894,797,428.30
1. There is no accounts payable owed to shareholders who hold 5% or above voting shares at the end of
this year.
2. As to the ending balance of notes payable with regard to related parties, please See details in Notes
VIII(II)5
3. Decreasing of payable accounts by RMB1,379,139,892.09 and 20% was caused by decrease of raw
material trade settlement.
4. The top 5 payables are amounted to RMB704,472,937.09 which is account for 12.77% of the total
payable accounts at end of term.
(XVI) Account received in advance
Items Balance at the end of term Balance at the beginning of term
within 1 year 2,446,289,601.69 1,956,527,067.01
1-2 yrs 47,395,838.82 46,639,486.69
2-3 yrs 6,728,213.77 6,728,213.77
Over 3 yrs 8,510,822.08 8,510,822.08
Total 2,508,924,476.36 2,018,405,589.55
1. No debt due from shareholders with 5% or over of shares of the Company at end of the term.
2. Balance of account received in advance due over 1 year were balance of trades and deposits.
3. As to the ending balance of notes payable with regard to related parties, please See details in Notes
VIII(II)5
4. Top 5 accounts received in advance were totaled to RMB457,173,835.92, accounted for 18.22% of the
total accounts received in advance.
(XVII) Employees’ wage payable
1. Wage payable
Items
Balance at the
beginning of
term
Increased this
term Paid this term Balance at the
end of term
(1)Salary, bonus, allowance and
subsidy 43,204,162.52 529,233,381.39 520,708,999.75 51,728,544.16
(2)Employee welfare 16,765,277.47 16,765,277.47 0.00Bengang Steel Plates Co., Ltd. Interim Report 2009
69
(3)Social Insurance 899,828.60 211,770,861.44 212,650,046.48 20,643.56
Incl. A. Pension fund 139,242,023.48 139,242,023.48 0.00
B. Annual fee
(supplementary pension fund) 0.00
C. Basic medical
insurance 1,030.00 45,264,990.86 45,266,020.86 0.00
D. Supplementary medical
insurance 1,247,269.00 1,247,269.00 0.00
E. Unemployment
insurance 102.9 14,321,012.59 14,321,115.49 0.00
F. Labor safety insurance 898,695.70 11,695,565.51 12,573,617.65 20,643.56
G. Maternity insurance 0.00
(4) Housing fund 8,851,753.00 87,760,805.00 87,251,225.00 9,361,333.00
(5) Trade union and education fee 35,885,776.50 19,216,224.34 12,488,409.20 42,613,591.64
(6) Non-monetary welfare 0.00
(7) Dismissing compensation 232,518,852.56 52,864,835.26 179,654,017.30
(8) Employees’ bonus and
welfare fund 0.00
(9) Others 0.00
Incl. Share payment in cash 0.00
Total 321,360,373.18 864,746,549.64 902,728,793.16 283,378,129.66
(XVIII) Tax payable
Tax items Balance at the end of
term
Balance at the beginning of
term
VAT -67,355,077.80 68,157,773.55
Deductible fixed assets VAT 0.00 -329,469,485.93
Business tax 33,657.48 38,324.40
City construction tax -6,705,808.73 5,920,742.67
Enterprise income tax 2,046,969.74 148,804.77
Property tax 0.00 1,117,752.43
Education surtax -3,237,750.04 1,180,629.16
Local education charge -594,199.99 1,209,633.48
Others 56,240.23 99,697.76
Total -75,755,969.11 -251,596,127.71
The ending balance of tax payable has increased by RMB175,840,158.60 compared with the beginning
balance, which is mainly caused by direct deducting of fixed asset VAT (including the amount of last
year).
(XIX) Other account payable
Balance at the Items end of term Balance at the beginning of term
Amount Portion Amount Portion
within 1 year
648 587 620 79
86 00
594,808,276.3
3 85.19
1-2 yrs 70,909,292.55
9.40 65,952,416.92 9.45Bengang Steel Plates Co., Ltd. Interim Report 2009
70
2-3 yrs 18,950,554.64
2.51 21,716,518.16 3.11
Over 3 yrs 15,717,497.53 2.09 15,732,980.26 2.25
Total 754,164,965.51
100 00
698,210,191.6
7 100.00
1. No account payable to shareholders with 5% or over of the Company’s shares at end of term.
2. Account payable to related parties are available with Note VIII (II)5.
3. Top 5 of the other accounts payable were amounted to RMB444,124,374.29, account for 58.89% of the
total other payable accounts at end of term.
4. Large accrued account due over one year was mainly the trade accounts not paid yet.
(XX) Non-current liability due in 1 year
Items Balance at the end of term Balance at the beginning of term
Long-term borrowings 101,661,116.62 448,753,264.40
Total 101,661,116.62 448,753,264.40
Long-term loans due in 1 year
Categories Balance at the end of term Balance at the beginning of term
Credit loan 100,000,000.00 447,000,000.00
Guarantee loan 1,661,116.62 1,753,264.40
Total 101,661,116.62 448,753,264.40
Loan Balance at the end of term
provided by
Commence
date
Terminate
date Interest rates Currency Amount Translated to RMB
Bank of
China
Benxi
Branch
2004-05-20 2009-12-20 6.39% RMB 50,000,000.00
Bank of
China
Benxi
Branch
2005-03-25 2009-09-25 5.58% RMB 50,000,000.00
Bank of
China
Benxi
Branch
1997-09-10 2027-09-10 2.10% JPY 23,176,000.00 1,753,264.40
Total 101,661,116.62
(Continued)
Balance at the beginning of term
Loan provided by Commence
date
Terminate
date Interest
rates Currency Amount Translated to
RMB
Bank of China Benxi
Branch 2004-05-20 2009-12-20 6.39% RMB 50,000,000.00
Bank of China Benxi
Branch 2005-03-25 2009-09-25 5.58% RMB 50,000,000.00
Construction Bank
of China Benxi
Branch
2006-12-07 2009-11-06 7.56% RMB 170,000,000.00Bengang Steel Plates Co., Ltd. Interim Report 2009
71
Industrial and
Commercial Bank of
China Benxi Branch
2006-12-13 2009-10-12 7.56% RMB 177,000,000.00
Bank of China Benxi
Branch 1997-09-10 2027-09-10 2.10% JPY 23,176,000.00 1,753,264.40
Total 448,753,264.40
(XXI) Long-term borrowings
Categories Balance at the end of term Balance at the beginning of term
Credit loan 950,000,000.00 1,087,000,000.00
Guarantee loan 1,066,069,540.91 931,558,759.20
Total 2,016,069,540.91 2,018,558,759.20
Loan Balance at the end of term
provided by
Commence
date
Terminate
date Interest rates Currency Amount Translated to RMB
Bank of
China 2004-05-20 2010-12-20 6.39% RMB 63,500,000.00
Bank of
China 2005-03-25 2010-03-24 5.85% RMB 36,500,000.00
China
Construction
Bank
2007-11-23 2010-11-22 Float rates RMB
100,000,000.00
China
Construction
Bank
2007-12-03 2012-07-25 Float rates RMB
200,000,000.00
China
Construction
Bank
2007-04-30 2014-04-29 7.11% RMB
200,000,000.00
China
Construction
Bank
2008-04-29 2013-04-15 7.74% RMB
400,000,000.00
China
Construction
Bank
2008-11-18 2011-11-17 6.75% RMB
37,000,000.00
CICB 1997-09-10 2027-09-10 2.10% JPY 405,580,000.00 29,069,540.91
CICB 2007-09-14 2010-09-09 7.20% RMB 520,000,000.00
CICB 2007-07-23 2010-07-22 7.20% RMB 200,000,000.00
CICB 2008-01-23 2015-01-20 7.83% RMB 230,000,000.00
Total 2,016,069,540.91
(Continued)
Loan provided Balance at the beginning of term
by
Commence
date
Terminate
date Interest
rates Currency Amount Translated to
RMB
Bank of China 2004-05-20 2010-12-20 6.39% RMB 63,500,000.00
Bank of China 2005-03-25 2010-03-24 5.85% RMB 36,500,000.00
China
Construction
Bank
2007-11-23 2010-11-22 Float
rates RMB
100,000,000.00Bengang Steel Plates Co., Ltd. Interim Report 2009
72
China
Construction
Bank
2007-12-03 2012-07-25 Float
rates RMB
200,000,000.00
China
Construction
Bank
2007-04-30 2014-04-29 7.11% RMB
200,000,000.00
China
Construction
Bank
2008-04-29 2013-04-15 7.74% RMB
400,000,000.00
China
Construction
Bank
2008-11-18 2011-11-17 6.75% RMB
37,000,000.00
CICB 1997-09-10 2027-09-10 2.10% JPY 417,168,000.00 31,558,759.20
CICB 2007-09-14 2010-09-09 7.20% RMB 520,000,000.00
CICB 2007-07-23 2010-07-22 7.20% RMB 200,000,000.00
CICB 2008-01-23 2015-01-20 7.83% RMB 230,000,000.00
Total 2,018,558,759.20
(XXII) Special payable
Items
Balance at
the
beginning of
term
Increased
this term
Transferred
this term
End of term
Remarks
6#7#coke oven
of dry Quenching
coke 8,500,000.00 8,500,000.00
Development fee
of high quality
special steel large
billet 66,000.00 66,000.00
Total 8,500,000.00 66,000.00 8,566,000.00
Funds for the project of dry extinguishing coke of 6#、7#coke furnace were issued by the Liaoning
province Finance Administration Department “2008 the budget of energy saving project notice” which
was received in 2008. The newly added RMB66 thousand was granted by Liaoning Provincial Finance
Bureau.
(XXIII) Other non-recurring liabilities
Items Balance at the end of term Balance at the beginning of
term
High grade no-direction silicon steel project 700,951.75 700,951.75
Iron ore comprehensive utilization 4,044,527.00 4,044,527.00
3 government technology financing funds 2,000,000.00 2,000,000.00
Total 6,745,478.75 6,745,478.75
“3 government technology financing funds” was the fund granted by Liaoning Provincial Bureau of
Finance for the thin plate billet, continuous casting, and short circle continuous rolling project of the
Company. (Liao-cai-zhi-qi) (2006)341) “Circular about granting of 3 technology financing funds”.
(XXIV) Share capital
The paid-in share capital of the company is as follows:
Items Balance at the end of term Balance at the beginning of termBengang Steel Plates Co., Ltd. Interim Report 2009
73
Amount of
shares Amount Amount of
shares Amount
A shares 2,736,000,000.00 2,736,000,000.00 2,736,000,000.00 2,736,000,000.00
B shares 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00
The change of share capital is as follows:
In 10 thousand shares
Balance at the
beginning of term Changed this term Balance at the end of
term
Items
Amount Portion
%
Issuing
of new
shares
Bonus
shares
Transferred
from
reserves
Others Sub-total Amount Portion
%
1.Shares
with
restricted
sales
condition
251,841.005 80.31 -48,000.00 -48,000.00 203,841.005 65.00
(1)
State-owned
shares
(2) Shares
held by
State-owned
corporation
251,840.00 80.31 -48,000.00 -48,000.00 203,840.00 65.00
(3) Other
domestic
shares
Including:
Domestic
legal person
shares
Domestic
natural
person
shares
(4) Foreign
capital
shares
Including:
Foreign
legal person
shares
Foreign
natural
person
shares
(5)
Executive
shares
1.005 0.00 1.005 0.00
2. Current
shares
without
restriction
to sell
61,758.995 19.69 48,000.00 48,000.00 109,758.995 35.00
(1) RMB
common
shares
21,758.995 6.94 48,000.00 48,000.00 69,758.995 22.24Bengang Steel Plates Co., Ltd. Interim Report 2009
74
Balance at the
beginning of term Changed this term Balance at the end of
term
Items
Amount Portion
%
Issuing
of new
shares
Bonus
shares
Transferred
from
reserves
Others Sub-total Amount Portion
%
(2) Foreign
capital
shares listed
domestic
40,000.00 12.76 40,000.00 12.76
(3) Shares
listed
overseas
(4) Others
Total 313,600.00 313,600.00
(XXV) Capital reserves
Items
Balance at the
beginning of
term
Increased this
term
Decreased
this term
Balance at the
end of term
Capital premium (share capital
premium) 8,706,903,665.94 0.00 0.00 8,706,903,665.94
Other capital reserves 29,357,468.82 0.00 0.00 29,357,468.82
Total 8,736,261,134.76 0.00 0.00 8,736,261,134.76
(XXVI) Surplus reserves
Items Balance at the
beginning of term
Increased this
term
Decreased this
term
Balance at the
end of term
Statutory surplus
reserves 921,277,509.22 0.00 0.00 921,277,509.22
Total 921,277,509.22 0.00 0.00 921,277,509.22
(XXVII) Retained profit
Items Amount Percentage of
drawing or allocation
Balance at end of previous term 3,033,094,940.71
Plus: Change of accounting policy
Correcting of previous errors
Balance at beginning of current term 3,033,094,940.7
Plus: Net profit attributable to parent company of
current term -909,886,400.39
Less: Statutory surplus reserves 10.00%
Optional surplus reserves
Reserves
Enterprise development fund
Providing of employees’ bonus and welfare fund
Common share dividend payable 156,800,000.00 RMB0.5 / 10 shares
Common share dividend transferred to capital
shareBengang Steel Plates Co., Ltd. Interim Report 2009
75
Plus: Other transferred in
Plus: surplus used to makeup losses
Balance at end of current term 1,966,408,540.32
(XXVIII) Operating income and operating cost
Amount of the Current Term Amount of the Previous Term
Items
Turnover Cost Turnover Cost
Major business 14,524,523,361.97 13,666,345,819.82 16,651,621,486.64 13,560,124,299.68
Other business 1,937,104,455.81 1,919,128,408.00 2,118,235,671.40 2,078,617,676.10
Total 16,461,627,817.78 15,585,474,227.82 18,769,857,158.04 15,638,741,975.78
1. Principal operating revenue classified by business industry:
Amount of the Current Term Amount of the Previous Term
Items Major business
turnover
Major business
cost
Major business
turnover
Major business
cost
Industry 14,524,523,361.97 13,666,345,819.82 16,651,621,486.64 13,560,124,299.68
Total 14,524,523,361.97 13,666,345,819.82 16,651,621,486.64 13,560,124,299.68
2. Principal operating revenue classified by products variety:
Amount of the Current Term Amount of the Previous Term
Items Major business
turnover Major business cost Major business
turnover Major business cost
Steel plate 12,172,830,766.82 12,054,798,105.54
16,363,003,808.34 13,306,695,418.95
Steel billet 2,164,192,270.68 1,356,573,735.54
Others 187,500,324.47 254,973,978.74
288,617,678.30 253,428,880.73
Total 14,524,523,361.97 13,666,345,819.82 16,651,621,486.64 13,560,124,299.68
3. Principal operating revenue classified by areas:
Amount of the Current Term Amount of the Previous Term
Items Major business
turnover
Major business
cost
Major business
turnover
Major business
cost
Northeast 5,871,470,108.94 5,524,555,882.48 7,251,369,075.72 5,905,098,556.84
North 3,153,303,535.00 2,966,991,446.83 2,490,252,090.18 2,027,918,296.57
East 3,922,601,644.32 3,690,835,785.02 3,265,009,406.04 2,658,836,163.26
Northwest 16,362,452.39 15,395,681.31 28,169,062.74 22,939,267.05
South 1,373,312,100.10 1,292,170,325.37 1,854,701,532.32 1,510,362,419.49
Export 187,473,521.22 176,396,698.82 1,762,120,319.64 1,434,969,596.47
Total 14,524,523,361.97 13,666,345,819.82 16,651,621,486.64 13,560,124,299.68
4. Top five clients’ principal operating revenue is as follows:
Client Ranking Total of principal turnover Percentage in total business turnover
of the Company
No.1 2,737,562,611.17 18.85
No.2 2,164,192,270.68 14.90
No.3 415,460,086.10 2.86Bengang Steel Plates Co., Ltd. Interim Report 2009
76
No.5 305,088,888.89 2.10
No.5 291,547,020.71 2.01
Total of sales income from top 5 companies:
Items Current term Previous term
Total of sales to top 5 customers 5,913,850,877.55 6,514,043,433.32
Percentage in principal turnover 40.72 34.70%
5. The amount of operating income has decreased by RMB2,308,229,340.26 in the term compared with
balance of last term. The decrease rate is 12.30 %, which was mainly caused by the decrease of sales
prices.
(XXIX) Business tax and surcharge
Items Tax basis Amount of the Current Term Amount of the Previous
Term
Business tax 5% 547,610.47 586,573.59
City construction tax 7% 6,630,940.41 48,906,077.78
Education surtax 3% 2,849,382.18 20,549,603.32
Local education
development charge 1% 937,765.12 6,849,867.78
Total 10,965,698.18 76,892,122.47
(XXX) Sales expense
Selling expenses is RMB128,303,748.52 this term, which comprise freight, customs tariff and so on.
Compared with the last term, it has decreased by RMB190,369,450.84 with increase rate of 59.74%,
which is mainly caused by the decrease of export.
(XXXI) Administrative expense
Administrative expense was RMB1,543,804,837.22 in the current term, which comprises wages,
insurances, fixed asset repairing fee, and office expenses. It increased by RMB302,281,336.11 and
24.35% over the same period of last year, which was caused by increasing of fixed asset repairing fees.
(XXXII) Financial expenses
Categories Amount of the Current Term Amount of the Previous Term
(1) Interest paid, net 111,559,324.00 167,666,664.58
Incl. Interest paid 124,456,938.41 174,189,776.64
Interest income 12,897,614.41 6,523,112.06
(2) Exchange loss, net -1,808,850.60 -19,369,640.35
(3) Other expenses 2,673,052.33 1,545,375.35
Incl. Bank charges 2,673,052.33 1,545,375.35
Total 112,423,525.73 149,842,399.58
Decrease of financial expenses was caused by adjustment of loan interests by the national government.
(XXXIII) Asset impairment loss
Items Amount of the Current Term Amount of the Previous Term
1. Bad debt loss 0.00 0.00
2. Inventory impairment losses -20,644,654.62 0.00
3. Fixed asset impairment 0.00 0.00
Total -20,644,654.62 0.00
For the in-stock products of the sales company were sold out, the inventory impairment provisions
provided in last year were written back by RMB20,644,654.62.Bengang Steel Plates Co., Ltd. Interim Report 2009
77
(XXXIV) Non-operational income
Items Amount of the Current Term Amount of the Previous
Term
1. Total of gains from disposal of non-current
assets 4,120.00 42,847.86
Incl. Gains from disposal of fixed assets 4,120.00 42,847.86
Gains from disposal of intangible assets
2. Gains from non-monetary capital exchange
3. Gains from debt reorganizing 1,303,133.52 5,504,541.11
4. Government subsidies 50,000.00 58,023.00
5. Gains from inventory overage
6. Gains from donation
7. Payable account practically not payable
8. Gains from penalties
9. Others -885,623.87 3,750,086.48
Total 471,629.65 9,355,498.45
Non-operational gains decreased by RMB-8,883,868.80 and 94.96% from the previous term. Which was
caused by decrease of gains from debt reorganizing.
(XXXV) Non-operational expenditure
Items Amount of the Current Term Amount of the Previous
Term
1. Total of loss from disposal of non-current
assets 0.00 640.00
Incl. Loss from disposal of fixed assets 0.00 640.00
Loss from disposal of intangible assets
2. Loss from non-monetary capital exchange
3. Loss from debt reorganizing
15,656.24
4. Donations paid
1,000.00
5. Non-recurring losses
6. Penalties paid 112,750.00 80,000.00
7. Compensation paid
8. Breach of faith 69.00
9. Loss from inventory shortage
10. Others
Total 129,406.24 80,709.00
(XXXVI) Income tax expenses
Items Amount of the Current Term
Amount of the Previous
Term
Income tax of current term 11,529,058.73 338,016,940.72
Deferred income tax
Total 11,529,058.73 338,016,940.72
Income tax expenses decreased by RMB326,487,881.99 and 96.59%, which was caused by significant
decrease of profit realized in the current term.Bengang Steel Plates Co., Ltd. Interim Report 2009
78
(XXXVII) Earnings per share
Calculating of earnings per share Calculating Current term Previous term
Net profit attributable to common
shareholders of parent company
A -909,886,400.39 1,015,441,808.47
Weighted average of common shares
issued by the parent company
B 3,136,000,000.00 3,136,000,000.00
Basic gains per share A/B -0.29 0.32
(XXXVIII) Other cash inflow related to operation
Other cash relating to business operation received of RMB15,791,741.33 is including:
Items Current term Previous term
Interest income 12,897,614.41 6,302,132.42
Other trades 2,844,126.92 2,995,343.03
Government grants 50,000.00 58,023.00
Total 15,791,741.33 9,355,498.45
(XXXIX) Other cash paid related to operation
Other cash paid related to business operation of RMB898,820,870.83 is including:
Items Current term Previous term
Others 747,132,396.15 930,917,907.85
Freight 49,912,862.20 131,488,255.70
Port fee 13,369,990.48 96,299,492.60
Land using rights 57,426,000.00 0.00
Labor service 1,076,557.57 1,152,948.74
Process fee 54,141.31 11,213,854.19
Packaging 24,384,070.75 25,141,036.31
Quality warrant fee 5,464,852.37 7,763,677.52
Water resource fee 0.00 5,100,000.00
Total 898,820,870.83 1,209,077,172.91
(XXXX) Supplementary information of cash flow statement
Items Amount of the
Current Term
Amount of the
Previous Term
I. Net profit adjusted to cash flow of business operation
Net profit -909,886,400.39 1,015,441,808.47
Plus: Asset impairment provision
Fixed asset depreciation, gas and petrol depreciation, production
goods depreciation 1,177,117,974.31 1,513,382,559.61
Amortizing of intangible assets
Amortizing of long-term expenses
Loss from disposal of fixed assets, intangible assets, and other
long-term assets (“-“ for gains) -72,410.00
Loss from fixed asset discard (“-“ for gains)
Loss from fair value fluctuation (“-“ for gains)
Financial expenses (“-“ for gains) 112,423,525.73 149,842,399.58
Investment losses (“-“ for gains)
Decrease of deferred income tax asset (“-“ for increase)
Increase of deferred income tax liability (“-“ for decrease)
Decrease of inventory (“-“ for increase) 1,413,266,384.48 -2,872,901,024.09Bengang Steel Plates Co., Ltd. Interim Report 2009
79
Items Amount of the
Current Term
Amount of the
Previous Term
Decrease of operational receivable items (“-“ for increase) -789,888,473.00 -794,826,585.67
Increase of operational payable items (“-“ for decrease) 650,418,152.35 1,639,595,249.39
Others
119,089,135.90
142,819,909.78
Cash flow generated by business operation, net 1,772,540,299.38 793,281,907.07
II. Major investment and financing activities without involving in
cash transmission
Liabilities converted to capital
Convertible bond expire in 1 year
Fixed assets leased through financing
III. Net fluctuation of cash and cash equivalents
Balance of cash at end of year 1,989,090,469.75 1,431,038,506.69
Less: Balance of cash at beginning of year 2,220,835,995.51 2,242,866,884.97
Plus: Balance of cash equivalents at end of term
Less: Balance of cash equivalents at beginning of term
Net increasing of cash and cash equivalents -231,745,525.76 -811,828,378.28Bengang Steel Plates Co., Ltd. Interim Report 2009
80
VII. NOTES TO THE FINANCIAL STATEMENTS OF
PARENT COMPANY
(I) Account receivable
1. Composition of receivable accounts
1) Presented by ages
Balance at the end of term Balance at the beginning of term
Age
Book balance Percentage
%
Bad debt
provision
Bad debt
provision
rate
%
Book balance Percentage
%
Bad debt
provision
Bad debt
provision
rate %
within
1 year 546,688,352.03 52.86 377,559,970.79 43.64
1-2
yrs 126,302,174.48 12.21 6,315,108.72 5 126,302,174.48 14.6 6,315,108.72 5
2-3
yrs 26,037,180.09 2.52 5,207,436.03 20 26,037,180.09 3.01 5,207,436.03 20
Over
3 yrs 335,285,862.59 32.42 335,285,862.59 100 335,285,862.59 38.75 335,285,862.59 100
Total 1,034,313,569.19 100.00 346,808,407.34 865,185,187.95 100.00 346,808,407.34
2) Accounts receivable presented by the level of materiality
Balance at the end of term
Categories
Book balance Percentage
%
Bad debt
provision
Bad debt
provision
rate %
1.Individually significant with individual
bad debt provision
2.Individually insignificant with
individual bad debt provision
3.Other Group of similar credit risk
characteristics 1,034,313,569.19 100.00 346,808,407.34 33.53
including: Individually significant 442,797,631.95 42.81 14,714,238.02 3.32
Individually insignificant 591,515,937.24 57.19 332,094,169.32 56.14
including：Group of insignificant items
with similar credit risk characteristic that
has significant risk 322,711,873.07 31.20 322,711,873.07 100.00
Total 1,034,313,569.19 100.00 346,808,407.34 33.53
(Continued)
Balance at the beginning of term
Categories
Book balance Percentage
%
Bad debt
provision
Bad debt
provision
rate %
1.Individually significant with individual
bad debt provision
2.Individually insignificant with individual
bad debt provision
3.Other Group of similar credit risk
characteristics 865,185,187.95 100.00 346,808,407.34 40.08
including: Individually significant 266,474,413.39 30.80 14,714,238.02 5.52Bengang Steel Plates Co., Ltd. Interim Report 2009
81
Individually insignificant 598,710,774.56 69.20 332,094,169.32 55.47
including：Group of insignificant items with
similar credit risk characteristic that has
significant risk
322,711,873.07 37.30 322,711,873.07 100.00
Total 865,185,187.95 100.00 346,808,407.34 40.08
Changes of bad debt provision on receivable accounts are:
Decreased this term
Items
Balance of book
value at
beginning of
term
Provided this
term Written back Transferred
Balance of book
value at end of
term
Year 2007 303,764,455.54 31,483,203.39 335,247,658.93
Year 2008 335,247,658.93
11,560,748.41 346,808,407.34
Jan-Jun 2009 346,808,407.34 346,808,407.34
3. No accounts receivable has been written off this year
4. No amount due from shareholders who hold 5% or more of the voting shares of the Company is
included in the ending balance of accounts receivable.
5. The top 5 of the accounts receivable:
Ranking
Relationship
with the
Company
Amount Age Percentage in total
receivables
No.1 Client 176,323,218.56 1-2 yrs 17.05%
No.2 Client 82,593,587.94 1-2 yrs 7.99%
No.3 Client 23,905,588.91 1-2 yrs 2.31%
No.4 Client 20,356,917.92 1-2 yrs 1.97%
No.5 Client 18,253,961.75 1-2 yrs 1.76%
6. The amount of accounts receivable at the year end has increased by RMB169,128,381.24 and 19.54%
compared with the beginning balance of the year. The increase was mainly caused by the Company’s
change of clearance with petrol pipe clients.
(II) Other account receivable
1. Composition of other receivable accounts
1) Presented by ages
Balance at the end of term Balance at the beginning of term
Age
Book balance Percentage
%
Bad debt
provision
Bad debt
provision
rate %
Book balance Percentage
%
Bad debt
provision
Bad debt
provision
rate %
within
1 year 248,763,179.78 73.37 145,069,997.05 61.64
1-2
yrs 4,673,873.73 1.38 233,693.69 5 4,673,873.73 1.99 233,693.69 5.00
2-3
yrs 43,318,384.70 12.78 8,663,676.93 20 43,318,384.70 18.41 8,663,676.93 20.00
Over
3 yrs 42,276,422.96 12.47 40,536,422.96 95.88 42,276,422.96 17.96 40,536,422.96 95.88
Total 339,031,861.17 100.00 49,433,793.58 235,338,678.44 100.00 49,433,793.58
2) Accounts receivable presented by the level of materiality
Balance at the end of term
Categories
Book balance Percentage
%
Bad debt
provision
Bad debt
provision rate
%Bengang Steel Plates Co., Ltd. Interim Report 2009
82
1.Individually significant with
individual bad debt provision
2.Individually insignificant with
individual bad debt provision 1,740,000.00 0.51
3.Other Group of similar credit risk
characteristics 337,291,861.17 99.49 49,433,793.58 14.66
including: Individually significant 126,419,778.77 37.29
Individually insignificant 210,872,082.40 62.20 49,433,793.58 23.44
including：Group of insignificant items
with similar credit risk characteristic
that has significant risk 40,576,422.96 11.97 40,576,422.96 100
Total 339,031,861.17 100.00 49,433,793.58
(Continued)
Balance at the beginning of term
Categories
Book balance Percentage
%
Bad debt
provision
Bad debt
provision rate
%
1.Individually significant with
individual bad debt provision
2.Individually insignificant with
individual bad debt provision 1,740,000.00 0.74
3.Other Group of similar credit risk
characteristics 233,598,678.44 99.26 49,433,793.58 21.16
including: Individually significant 126,419,778.77 53.72
Individually insignificant 107,178,899.67 45.54 49,433,793.58 46.12
including：Group of insignificant items
with similar credit risk characteristic
that has significant risk 40,576,422.96 17.24 40,576,422.96 100
Total 235,338,678.44 100 49,433,793.58
2. Change of bad debt provision on other receivable accounts
Decreased this term
Items
Balance of book
value at beginning
of term
Provided this
term Written
back Transferred
Balance of book
value at end of
term
Year 2007 39,708,846.88 5,064,322.13 69,464.19 44,703,704.82
Year 2008 44,703,704.82 4,721,491.67 49,425,196.49
Jan-Jun 2009 49,425,196.49 49,425,196.49
3. At the end of the term, the other receivable which are individually insignificant and with individual
provision totaled RMB 1,740,000.00, which is the deposit for the loan.
4. None of other receivables has been written off this term.
5. None of the other receivable accounts is due from shareholders with 5% or over of the Company’s
voting shares.
6. For details of other receivable accounts due from related parties at the end of report term please see
Note VIII (II)5.
7. Top 5 other receivable accounts
Ranking
Relationship
with the
Company
Description Amount Age Percentage in total of
other receivables
No.1
Parent
company
Current
account 70,701,095.52
within 1
year
20.85Bengang Steel Plates Co., Ltd. Interim Report 2009
83
No.2 Client
Current
account 17,443,192.94
within 1
year
5.15
No.3 Client
Current
account 16,471,986.83
within 1
year
4.86
No.4 Client
Current
account 10,526,157.39
within 1
year
3.10
No.5 Client
Current
account 6,106,003.52
within 1
year
1.80
(III) Long-term share equity investment
Balance at the end of term Balance at the beginning of term
Items
Book balance Impairment
provision Book balance Impairment
provision
Long-term equity investment in
subsidiaries 62,100,529.68 56,100,529.68
Long-term equity investment on
equity basis
Joint ventures
Affiliates
Subtotal
Long-term equity investment on
cost basis
Total 62,100,529.68 56,100,529.68
1. Investment in subsidiaries
Name of the subsidiaries Initial amount
Balance at the
beginning of
term
Increased
this term
Decreased
this term
Balance at the
end of term
Haerbin Bengang
International Trading Ltd. 500,000.00 423,398.23 423,398.23
Changchun Bengang Steel
Sales Ltd. 500,000.00 -1,355,124.64 -1,355,124.64
Tianjin Bengang Steel
Trading Ltd. 3,000,000.00 33,306,820.76 33,318,095.80
Yantai Bengang Steel
Sales Ltd. 500,000.00 19,600,329.41 19,600,329.41
Nanjing Bengang Steel
Sales Ltd. 1,150,000.00 2,081,400.65 2,081,400.65
Wuxi Bengang Steel Sales
Ltd. 1,000,000.00 947,993.61 936,718.57
Xiamen Bengang Steel
Sales Ltd. 500,000.00 1,095,711.66 1,095,711.66
Guangzhou Bengang
Trade Co., Ltd. 1,000,000.00 1,000,000.00 1,000,000.00
Shanghai Bengang
Metallurgy Tech. Ltd. 5,000,000.00 5,000,000.00 5,000,000.00
Total 62,100,529.68 56,100,529.68 6,000,000.000 62,100,529.68
Subsidiaries newly added are presented in Note V (II).
(IV) Operating income and operating cost
Amount of Items the Current Term Amount of the Previous Term
Turnover Cost Turnover Cost
Major business 14,077,654,529.87 13,298,526,898.75 15,408,384,725.35 12,392,970,825.18
Other business 1,937,104,455.81 1,919,128,408.00 2,118,235,671.40 2,078,617,676.10Bengang Steel Plates Co., Ltd. Interim Report 2009
84
Total 16,014,758,985.68 15,217,655,306.75 17,526,620,396.75 14,471,588,501.28
1. Principal operating revenue classified by business industry:
Amount of the Current Term Amount of the Previous Term
Items
Turnover Cost Turnover Cost
Industry 14,077,654,529.87 13,298,526,898.75 15,408,384,725.35 12,392,970,825.18
Total 14,077,654,529.87 13,298,526,898.75 15,408,384,725.35 12,392,970,825.18
2. Principal operating revenue classified by products variety:
Amount of the Current Term Amount of the Current Term
Items Major business
turnover
Major business
cost
Major business
turnover
Major business
cost
1. Steel plate 11,725,961,934.72 11,686,979,184.47 15,119,767,047.05 12,139,541,944.45
2. Steel billet 2,164,192,270.68 1,356,573,735.54
3. Others 187,500,324.47 254,973,978.74 288,617,678.30 253,428,880.73
Total 14,077,654,529.87 13,298,526,898.75 15,408,384,725.35 12,392,970,825.18
3. Geographic distribution of main business turnover and cost
Amount of the Current Term Amount of the Previous Term
Items Major business
turnover
Major business
cost
Major business
turnover
Major business
cost
Northeast 5,424,601,276.84 5,124,376,780.38 6,008,132,314.43 4,737,945,082.33
North 3,153,303,535.00 2,978,783,986.44 2,490,252,090.18 2,027,918,296.57
East 3,922,601,644.32 3,705,505,300.57 3,265,009,406.04 2,658,836,163.26
Northwest 16,362,452.39 15,456,872.65 28,169,062.74 22,939,267.05
Mid-south 1,373,312,100.10 1,297,306,157.41 1,854,701,532.32 1,510,362,419.49
Export 187,473,521.22 177,097,801.30 1,762,120,319.64 1,434,969,596.47
Total 14,077,654,529.87 13,298,526,898.75 15,408,384,725.35 12,392,970,825.17
4. Top five clients’ principal operating revenue is as follows:
Client Ranking Total of principal turnover Percentage in total main business
turnover %
No.1 2,737,562,611.17 19.45
No.2 2,164,192,270.68 15.37
No.3 415,460,086.10 2.95
No.4 305,088,888.89 2.17
No.5 291,547,020.71 2.07
5. Business turnover decreased by RMB1,511,861,411.07 and 8.63% from the previous term, which was
caused by significant decrease of sales prices.
(V) Supplementary information of the cash flow statement
Items Amount of the
Current Term
Amount of the
Previous Term
I. Net profit adjusted to cash flow of business operation
Net profit -958,211,755.08 985,799,909.53
Plus: Asset impairment provisionBengang Steel Plates Co., Ltd. Interim Report 2009
85
Items Amount of the
Current Term
Amount of the
Previous Term
Fixed asset depreciation, gas and petrol depreciation, production
goods depreciation 1,177,117,974.31 1,513,382,559.61
Amortizing of intangible assets
Amortizing of long-term expenses
Loss from disposal of fixed assets, intangible assets, and other
long-term assets (“-“ for gains) -72,410.00
Loss from fixed asset discard (“-“ for gains)
Loss from fair value fluctuation (“-“ for gains)
Financial expenses (“-“ for gains) 112,593,335.72 149,842,399.58
Investment losses (“-“ for gains)
Decrease of deferred income tax asset (“-“ for increase)
Increase of deferred income tax liability (“-“ for decrease)
Decrease of inventory (“-“ for increase) 1,331,099,633.87 -2,930,157,944.51
Decrease of operational receivable items (“-“ for increase) -666,689,123.88 -724,534,298.37
Increase of operational payable items (“-“ for decrease) 643,401,574.09 1,797,336,280.45
Others
50,672,154.77
6,230,048.23
Cash flow generated by business operation, net 1,689,983,793.80 797,826,544.52
II. Major investment and financing activities without involving in
cash transmission
Liabilities converted to capital
Convertible bond expire in 1 year
Fixed assets leased through financing
III. Net fluctuation of cash and cash equivalents
Balance of cash at end of year 1,895,522,396.90 1,425,025,221.65
Less: Balance of cash at beginning of year 2,209,824,428.24 2,232,308,962.38
Plus: Balance of cash equivalents at end of term
Less: Balance of cash equivalents at beginning of term
Net increasing of cash and cash equivalents -314,302,031.34 -807,283,740.73Bengang Steel Plates Co., Ltd. Interim Report 2009
86
VIII. Related parties and transactions
(I) Related parties
1. Parent company of the Company
at RMB100 million
Name of the
parent co. Relationship Ownership
type
Reg.
Add.
Legal
representative
Business
property
Registered
capital
Benxi Steel
(Group) Co., Ltd. Parent company Fully
state-owned Benxi Yu Tianchen Production 53.69
(Continued)
Name of the parent
co.
Share portion in
the Company %
Voting rights in the
Company %
Substaintial
controller
Organization
code
Benxi Steel (Group)
Co., Ltd. 82.12 82.12
Liaoning
Provincial
State-asset
Administration
11972626-3
2. Particulars of the subsidiaries of the Company
In RMB 10 thousand
Name of the subsidiaries
Ownership
of the
subsidiary
Ownership
type
Reg. Add. Legal
representative
Business
property
Xiamen Bengang Steel Sales Ltd. Fully-owned
subsidiary
Limited
liability Xiamen Zhang
Guoming
Sales
Wuxi Bengang Steel Sales Ltd. Fully-owned
subsidiary
Limited
liability Wuxi Wen
Yonggang
Sales
Tianjin Bengang Steel Trading Ltd. Fully-owned
subsidiary
Limited
liability Tianjin Liu Chuang Sales
Nanjing Bengang Material Sales
Ltd.
Fully-owned
subsidiary
Limited
liability Nanjin Pang
Zonghua
Sales
Yantai Bengang Steel Sales Ltd. Fully-owned
subsidiary
Limited
liability Yantai Song
Xingang
Sales
Harbin Bengang Steel & Iron Sales
Ltd.
Fully-owned
subsidiary
Limited
liability Harbin Fei Jixi Sales
Changchun Bengang Steel Sales
Ltd.
Fully-owned
subsidiary
Limited
liability Changchun Li Zhichao Sales
Guangzhou Bengang Trade Co.,
Ltd.
Fully-owned
subsidiary
Limited
liability Guangzhou Wu Shaogang Sales
Shanghai Bengang Metallurgy Tech.
Ltd.
Fully-owned
subsidiary
Limited
liability Shanghai Fei Jixi Sales
(Continued)
Name of the subsidiaries Registered
capital
Share
proportion
%
Portion of
voting
rights
Organization
code
Xiamen Bengang Steel Sales Ltd. 50.00 100.00% 100.00% 73788827-8
Wuxi Bengang Steel Sales Ltd. 100.00 100.00% 100.00% 73654820-4
Tianjin Bengang Steel Trading Ltd. 300.00 100.00% 100.00% 74135658-1
Nanjing Bengang Material Sales Ltd. 115.00 100.00% 100.00% 75945466-5
Yantai Bengang Steel Sales Ltd. 50.00 100.00% 100.00% 74451514-6
Harbin Bengang Steel & Iron Sales Ltd. 50.00 100.00% 100.00% 73137417-X
Changchun Bengang Steel Sales Ltd. 50.00 100.00% 100.00% 74841484-4
Guangzhou Bengang Trade Co., Ltd. 100.00 100.00％ 100.00％ 68328959-4Bengang Steel Plates Co., Ltd. Interim Report 2009
87
Name of the subsidiaries Registered
capital
Share
proportion
%
Portion of
voting
rights
Organization
code
Shanghai Bengang Metallurgy Tech. Ltd. 500.00 100.00％ 100.00％ 68408762-8
Change in registered capital (or paid-in capital, share capital) of subsidiaries:
In RMB 10 thousand
Name of the subsidiaries
Balance at the
beginning of
term
Increased this
term
Decreased this
term
Balance at the
end of term
Xiamen Bengang Steel Sales
Ltd 50.00 50.00
Wuxi Bengang Steel Sales
Ltd. 100.00 100.00
Tianjin Bengang Steel
Trading Ltd. 300.00 300.00
Nanjing Bengang Material
Sales Ltd. 115.00 115.00
Yantai Bengang Steel Sales
Ltd. 50.00 50.00
Harbin Bengang Steel & Iron
Sales Ltd. 50.00 50.00
Changchun Bengang Steel
Sales Ltd. 50.00 50.00
Guangzhou Bengang Trade
Co., Ltd. 0 100.00 0.00 100.00
Shanghai Bengang
Metallurgy Tech. Ltd. 0 500.00 0.00 500.00
3. Joint ventures and affiliates
No joint ventures or affiliates.
4. Other related parties
Name of the related parties Relationship to the Company
Benxi Steel (Group) Machinery Co., Ltd. Same parent
Bengang Group International Trading Ltd. Same parent
Benxi Steel (Group) Tengda Holdings Ltd. Same parent
Guangshou Free Trade Zone Bengang Sales Co., Ltd. Same parent
Shanghai Bengang Steel & Iron Trading Co., Ltd. Same parent
Liaoning Bengang Steel & Iron Trading Co., Ltd. Same parent
Dalian Boluole Steel Tube Ltd. Same parent
Shenyang North Bengang Sales Ltd. Same parent
Benxi Steel (Group) Steel Process and Logistics Co., Ltd. Same parent
Benxi Steel (Group) Construction & Repairing Co., Ltd. Same parent
Bengang Fire-resistance Material Co. Same parent
Benxi Steel (Group) Metallurgy Residues Co., Ltd. Same parent
Liaoning Metallurgy Technician College Same parent
Benxi Steel (Group) Industrial Development Co., Ltd. Same parent
Benxi Steel (Group) Construction Co., Ltd. Same parent
Yinkou Bengang International Logistics Co., Ltd. Same parent
Benxi Steel (Group) Real-estate Development Co., Ltd. Same parent
Benxi Steel (Group) Education Center Same parent
Benxi Steel (Group) Drilling Tools Co., Ltd. Same parent
Benxi Steel (Group) Designing Institute Same parent
Benxi Steel (Group) Information and Automatic Tech. Ltd. Same parent
Benxi Steel (Group) News Center Same parentBengang Steel Plates Co., Ltd. Interim Report 2009
88
Name of the related parties Relationship to the Company
Benxi Steel (Group) New Industrial Development Co., Ltd. Same parent
Benxi Steel (Group) Mining Co., Ltd. Same parent
Benxi Steel (Group) Electronics Co., Ltd. Same parent
Benxi Steel (Group) Thermal Power Development Co., Ltd. Same parent
Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. Same parent
Benxi Steel & Iron (Group) Inspection Co., Ltd. Same parent
(II) Related Transactions
1. Transactions among subsidiaries with controlling relationships and included in the consolidation range
of financial statements, are neutralized.
2. Related transactions of selling goods and providing services
Amount of the Current
Term Amount of the Previous Term
Related parties
Subjects of the
related
transactions Amount
RMB0’000
Portion in
similar
trade %
Amount
RMB0’000
Portion in
similar
trade %
Benxi Steel & Iron
(Group) Ltd. Products 216,419.23
13.15 -
Benxi Steel & Iron
(Group) Ltd.
Material and
parts 33,208.73
2.02
26,741.83 1.42
Benxi Steel & Iron
(Group) Ltd. Power supply 9,649.98
0.59
78.25 0.004
Bengang Group
International Trading
Ltd. Products 18,747.35
1.14
176,212.03 9.39
Dalian Boluole Steel
Tube Ltd. Products 2,272.32
0.14
5,857.05 0.31
Guangshou Free Trade
Zone Bengang Sales
Co., Ltd. Products 19,803.08
1.20
26,485.40 1.41
Shanghai Bengang Steel
& Iron Trading Co., Ltd. Products 41,149.38
2.50
47,765.98 2.54
Liaoning Bengang Steel
& Iron Trading Co., Ltd. Products 20,875.55
1.27
35,469.37 1.89
Benxi Steel (Group)
Steel Process &
Logistics Ltd. Products 15,435.71
0.94
22,693.42 1.21
Benxi Steel (Group)
Steel Process &
Logistics Ltd. Power supply 41.39
0.003
41.96 0.002
Bengang Group Dahe
Industry Co., Ltd. Power supply 11.41
0.001
10.30 0.001
Benxi Steel (Group)
Industrial Development
Ltd.
Material and
parts 1,961.72
0.12
3,488.17 0.19
Benxi Steel (Group)
Industrial Development
Ltd. Power supply 41.03
-
40.13 0.002
Benxi Steel (Group)
Construction Ltd.
Material and
parts 391.58
0.02
2,102.69 0.112
Benxi Steel (Group)
Construction Ltd. Power supply 365.66
0.02
396.03 0.021
Benxi Steel (Group)
Machinery Ltd. Power supply 1,344.59
0.08
1,723.93 0.09Bengang Steel Plates Co., Ltd. Interim Report 2009
89
Amount of the Current
Term Amount of the Previous Term
Related parties
Subjects of the
related
transactions Amount
RMB0’000
Portion in
similar
trade %
Amount
RMB0’000
Portion in
similar
trade %
Bengang Group Mineral
Co., Ltd.
Material and
parts 45,197.73
2.75
47,762.24 2.54
Bengang Group Mineral
Co., Ltd. Power supply 31,332.66
1.90
24,328.04 1.3
Bengang Group Mineral
Co., Ltd. Freight income 502.02
0.03 -
Bengang Group New
Industry Development
Co., Ltd. Power supply 19.23
-
21.15 0.001
Benxi Steel (Group)
Construction Ltd.
Material and
parts 56.13
-
4,504.52 0.24
Benxi Steel (Group)
Construction Ltd. Power supply 869.76
0.05
56.98 0.003
Bengang Group
Metallurgy Residue Ltd.
Material and
parts 5,378.55
0.33
2,942.18 0.16
Bengang Group
Metallurgy Residue Ltd. Power supply 191.97
0.01
154.98 0.01
Bengang Electronics
Co., Ltd. Power supply 95.05
0.01
79.18 0.004
Bengang Puxiang Cool
Rolling Steel Sheet Co.,
Ltd. Products 240,207.78
14.59
366,612.13 19.53
Bengang Puxiang Cool
Rolling Steel Sheet Co.,
Ltd.
Material and
parts 16,905.00
1.03
27,178.97 1.45
Bengang Puxiang Cool
Rolling Steel Sheet Co.,
Ltd. Power supply 16,643.48
1.01
12,982.77 0.69
Bengang Group Thermal
Power Development
Co., Ltd. Power supply 3,427.28
0.21
2,495.80 0.13
Bengang Group Thermal
Power Development
Co., Ltd.
Material and
parts 1,401.97
0.09
2,311.55 0.12
Bengang Group Property
Co., Ltd. Power supply 202.21
0.01
29.56 0.002
Bengang Fire-resistance
Material Co. Power supply 2,346.53
0.14
779.63 0.04
Bengang Fire-resistance
Material Co. Freight income 254.71
0.02 -
Total Power supply 746,750.78 45.36 841,346.24 44.81
Pricing policies at trading with related parties:
On April 15, 2009, our company concluded with Bengang Steel Group Company for a comprehensive
service agreement. It includes providing of raw materials, auxiliary material, supporting services, and rent
of properties by the Group, and our company sells products to the Group including raw materials,
auxiliary material, energy power, spare parts, trademark, patent, supporting services, waste materials.
According to the request of this agreement, the pricing principle of the relevant subjects is as follows:
I. Pricing of services provided by Bengang Group to Bengang Company shall under the followingBengang Steel Plates Co., Ltd. Interim Report 2009
90
principles:
1. Raw material supplying services
1.1 Fine iron ore
Price of fine iron ore will not higher than the average customs C&F price from countries like Brazil and
Australia in the last half year, plus inland freight, port fee, and quality adjustment price.
Quality adjustment on prices will be basing on the weighted average of imported fine iron ore in the first
half of year, and on the basis of 10 yuan per ton to 1% of quality difference.
1.2 Iron ore pellets
Iron ore pellet provided by Bengang Group to Bengang Company is agreed to be at market price.
1.3 Recycling steel
The price for recycled steel will not be higher than the weighted average of the recycled steel the
Company purchased from the independent 3rd parties in the previous month, and to be decided upon
negotiation.
1.4 Cold hard plate
Cold hard plate provided by Bengang Group to Bengang Company is priced as: the price of the current
month equals to the weighted average of prices of hot rolled plates provided by Bengang Company to
third parties in the previous month plus RMB335 of processing fee. The processing fee will be determined
once a year.
1.5 Sales of cold plate and Galvanized Steel Plate
Cold plate and zinc plate provided by Bengang Group to the sales subsidiaries of Bengang Company will
be at market price.
2. Supplementary material supplying services
Pricing of auxiliary materials: limestone, fire resistance material and auxiliary materials provided by
Bengang Group will be at market price.
3. Supporting services
3.1 Land rental
Land rentals provided by Bengang Group to Bengang Company are decided under the conditions of “Land
Using Right Leasing Agreement” which is effective at present.
3.2 Rental of 2300mm hot rolling line
For the 1st quarter of 2009, the prices of billet provided to the 2300mm hot rolling line of the Group are
still decided according to the “Steel Billet Sales Agreement” engaged in 2008. Namely RMB4623 per ton
(tax excluded). This arrangement will be terminated automatically as soon as the “Leasing Agreement”
regarding the 2300 hot rolling line takes effect.
Rental service of 2300mm hot rolling line provided by the Group to the Company is priced according to
the Rental Agreement.
3.3 Transportation
Trucking and railway services provided by the Group are agreed to be decided upon market price.
3.4 Spare parts
Spare parts provided by Bengang Group to Bengang Company are agreed to be decided upon market
price.
3.5 Workshop and equipment maintaining services
Bengang Group will provide those workshop and equipment maintaining services which Bengang
Company can’t do by itself. Fees are decided according to the degree of difficulty and workload ofBengang Steel Plates Co., Ltd. Interim Report 2009
91
particular works.
3.6 Agency services
Before the Company is authorized to do import & export trade, the international business is done by
Bengang Group. All business are on normal commercial operation. Commissions are decided through
negotiation within the range of 0.5%-1.5% of the total value of the goods.
When the Company is authorized to do import & export trade, the agent service can be terminated on
notice. Bengang Group is not the sole agent of the Company, namely the Company has the right to choose
another party to do the agent.
3.7 Engineering and designing services
Engineering and designing services provided by the Group to the Company are on national prices.
3.8 Construction services
Construction services provided by the Group to the Company are on market prices.
3.9 Heating services
Heating services are on national prices.
3.10 Printing, news press, media and publishing services
Printing, news press, media and publishing services are on national prices.
3.11 Education facilities and services
Education facility rental, vocational education, and employee training services provided by the Group are
on market prices.
3.12 Office space
Office spaces provided by the Group to the Company will be at market prices.
3.13 Car services
Car services provided by the Group to the Company will be at market prices.
3.14 Property management
Property management services provided by the Group to the Company will be at market prices.
3.15 Packaging services
Packaging services provided by the Group to the Company will be at market prices.
3.16 Labor safety services
Labor safety services provided by the Group to the Company will be at market prices.
3.17 Trademark property
Trademark “Bengang” (Registration No.149389) was registered by National Industry and Commerce
Administrative Bureau to the Group in 1981 and extended to 2013 in 2003. The trademark was registered
for the merchandises of: steel materials, steel strips, metal products, steel wires, steel tubes, steel billets,
thin steel plates, mid-ply plates, pig irons, fine iron ores. The Group is the holder of the trademark.
The Group allow the Company to use the trademark “Bengang” on the Company’s products. The
Company shall not allow any other party to use the trademark. The Group shall not allow any other party
to use the trademark on competitive products of the Company. In case the Group has already entered
trademark-related agreement with any third party, it shall remain in original extent and shall not be
extended upon expiration.
It is Bengang Group’s responsibility to keep trademark “Bengang” legally under its possession and shall
compensate the Company if any fault happened to it.
It is Bengang Group’s responsibility to keep trademark “Bengang” valid and extend to future at the
Group’s expenses. If the trademark became invalid due to fault of the Group, the Group shall compensate
the losses caused to the Company.Bengang Steel Plates Co., Ltd. Interim Report 2009
92
Bengang Group is responsible to claim to any third party which illegally use the trademark “Bengang”.
Bengang Company is responsible to keep products sold with “Bengang” trademark at a high quality.
Bengang Company has the right to register its own trademarks at any time it thinks appropriate.
II. Pricing of services provided by Bengang Company to Bengang Group shall under the following
principles:
1. Raw material supplying services
1.1 Hot rolling thin plates
For the hot rolled thin plates, the price will be upon the following policy: the price for hot rolled thin
plates for the current month will be the weighted average of the prices (at same quality) the Company
offered to the 3rd parties in the previous month.
1.2 Coke and chemical products
Coke and chemical products provided by the Company to the Group are on market prices.
1.3 Steel and iron residues (water residues)
Steel and iron residues provided by the Company to the Group are handled by the Group at market price.
2. Infrastructure services
The supplies from the Company to Bengang Group, i.e. oxygen, nitrogen, argon, blast furnace gas, coke
furnace gas, steam, clean water, fresh water, recycling water, and soft water, are at complete costs plus
national surplus tax and reasonable profit.
Power supply to the Group are at the national price plus transferring cost.
Transmitting cost: the sum of production cost, overhead, financial expenses of Power Supply Plant of
Bengang Company, and the reasonable share of overhead and financial expenses, amortized to each power
supplying unit.
3. Supporting services
3.1 Transportation
It is to the consent of both parties that the railroad transportation service provided by the Company to the
Group will be on the price provided by the national government.
3.2 Raw materials, fuel, auxiliary materials, equipment, and spare parts
Raw materials, fuel, auxiliary materials, equipment, and spare parts provided by the Company to the
Group are at purchasing prices of the Company plus 0.5-1.5% of purchasing fee.
3.3 Quality inspection, measuring, and weighting services
For those services, such as quality testing / analyzing and measurement, which the Company can’t do by
itself, the Group has agreed to provide on the price provided by the national government.
3.4 Research and developing services
For those researches which the Company can’t do by itself, the Group has agreed to provide on the price
provided by the national government.
III. Other agreements
1. Price paid for agreement services shall be:
(1) National fixed price is applicable if available;
(2) market price if national price is not available;
(3) complete cost plus national surtax plus reasonable profit margin if market price is not available;
(4) price decided otherwise by both of the parties.
2. For agreement services adopt national prices, if the national prices are not available, the prices shall be
decided at priority sequence of (2), (3), and (4).Bengang Steel Plates Co., Ltd. Interim Report 2009
93
National prices shall be reapplied whenever they become available in future time. If there are no national
prices but market price available, then the market prices are applied, unless otherwise decided by the
parties.
3. In case complete cost is used in pricing, the provider shall submit relative books or records of costs and
examined by both parties to decide the prices in the next period. The period will be six months as decided
by both parties.
Scale of adjustment on the complete costs annually shall not greater than the raw material inflation rate
published by national departments in the previous year.
IV. According to “Supplementary agreement on land renting (II)” entered on April 15, 2009, the
rental for land using rights are on the agreement rate, namely RMB0.624 per square meter per
month.
3. Related transactions of purchasing goods and providing services
Amount of the
Current Term
Amount of the
Previous Term
Related parties
Subjects of the
related
transactions Amount
RMB0’000
Portion
in
annual
trade %
Amount
RMB0’000
Portion
in
annual
trade %
Benxi Steel & Iron (Group) Ltd. Raw materials 14.83
0.001 0.00
Benxi Steel & Iron (Group) Ltd. Maintaining 9,921.58
0.57 0.00
Bengang Puxiang Cool Rolling
Steel Sheet Co., Ltd. Raw materials 31,059.98
1.79
67,765.36 4.33
Bengang Group Mineral Co.,
Ltd.
Repairing
services 731.63
0.04
978.11 0.06
Bengang Group Mineral Co.,
Ltd. Raw materials 182,138.76
10.49
180,591.84 11.55
Bengang Group Mineral Co.,
Ltd. Transportation 5.84
0.0003 -
Bengang Group Metallurgy
Residue Ltd.
Residue
treatment 5.10
0.0003 -
Bengang Group Metallurgy
Residue Ltd. Raw materials 5,433.95
0.31
3,936.15 0.25
Bengang Group Steel Process &
Logistics Ltd. Process fee 28.03
0.002
45.37 0.003
Bengang Group Property
Development Ltd. Raw materials 2,372.88
0.14 -
Bengang Group Property Co.,
Ltd. Rental 13.65
0.001 -
Bengang Group Property Co.,
Ltd.
Property
management
fee
39.02
0.002 -
Bengang Group Machinery Ltd. Spare parts 17,859.74
1.03
12,821.03 0.82
Bengang Group Machinery Ltd. Repairing
services 662.53
0.04
163.38 0.01
Bengang Group Machinery Ltd. Raw materials 148.14
0.01 -
Bengang Group Construction
Ltd. Spare parts 259.48
0.01
243.42 0.01
Bengang Group Construction
Ltd.
Repairing
services 7,676.82
0.44
1,293.98 0.08
Bengang Group Construction
Ltd. Raw materials 356.83
0.02
2,374.29 0.15Bengang Steel Plates Co., Ltd. Interim Report 2009
94
Amount of the
Current Term
Amount of the
Previous Term
Related parties
Subjects of the
related
transactions Amount
RMB0’000
Portion
in
annual
trade %
Amount
RMB0’000
Portion
in
annual
trade %
Bengang Group Construction
Ltd. Transportation 1,176.08
0.07 -
Benxi Steel (Group) Industrial
Development Ltd. Spare parts 43.40
0.002
137.00 0.11
Benxi Steel (Group) Industrial
Development Ltd. Raw materials 5,569.06
0.32
5,348.20 0.34
Benxi Steel (Group) Industrial
Development Ltd.
Repairing
services 831.07
0.05
132.10 0.01
Benxi Steel (Group) Industrial
Development Ltd. Transportation 634.59
0.04 -
Benxi Steel (Group)
Construction Ltd.
Material and
parts 64.68
0.004
43.80 0.003
Benxi Steel (Group)
Construction Ltd. Maintaining 4,704.56
0.27
645.58 0.04
Bengang Electronics Co., Ltd. Raw materials 2,995.16
0.17
380.34 0.02
Bengang Electronics Co., Ltd. Repairing
services 490.89
0.03
299.68 0.02
Bengang Electronics Co., Ltd. Heating 59.31
- -
Benxi Steel (Group) Drilling
Tools Co., Ltd. Spare parts 804.45
0.05
801.41 0.05
Bengang Group New Industry
Development Co., Ltd.
Labour
security fee 77.76
0.004 -
Liaoning Metallurgy Technician
College Spare parts 895.00
0.05
1,760.82 0.11
Benxi Steel (Group) Information
and Automatic Tech. Ltd. Spare parts 68.34
0.004
2,782.37 0.11
Benxi Steel (Group) Information
and Automatic Tech. Ltd.
Repairing
services 288.00
0.02 -
Bengang Group Thermal Power
Development Co., Ltd. Heating fee 1,594.50
0.09 -
Bengang Fire-resistance Material
Co. Raw materials 25,545.57
1.47
49,984.98 3.2
Benxi Steel (Group) Designing
Institute
Repairing
services 63.64
0.004 -
Total 304,634.85 17.55 332,529.23 21.28
4. Other related transactions
Items Current term Previous term
With the Group
Repairing 99,215,816.53 96,956,494.00
Payment for purchasing 0.00 243,860,000.00
Bengang Group International Trading Ltd.
Import of equipment 133,412,067.76 287,857,085.28
with Bengang Electronics Co., Ltd.
Engineering fee paid 445,230.77 410,256.42
Benggang Group Real-estate Co., Ltd.Bengang Steel Plates Co., Ltd. Interim Report 2009
95
Property management 390,187.98 25,073.10
Property rental paid 136,479.29 73,021.64
Benxi Steel (Group) New Industrial Development Co., Ltd.
Labor safety fee 5,172,298.52 7,735,673.77
Benxi Steel (Group) Construction Ltd.
Construction 256,316,333.04 473,187,204.54
Transportation 11,760,835.92 23,532,660.41
5. Receivable & payable with related parties
End of term RMB0’000 Beginning of year RMB0’000
Related parties Book
balance
Portion
in the
category
%
Bad debt
provision
Book
balance
Portion
in the
category
%
Bad debt
provision
Account receivable
Bengang Group Machinery Ltd. 3,137.48 3.06 1,868.24 2.18
Bengang Group Thermal Power
De elopment Co Ltd
2.35 0.00 855.62 1
Benxi Steel (Group) Industrial
De elopment Ltd
2,782.19 2.71 4,557.41 5.32
Bengang Group New Industry
De elopment Co Ltd
0.74 0.00 42.47 0.05
Bengang Group Metallurgy
Resid e Ltd
8,259.36 8.05 5,890.44 6.88
Sub-total 14,182.12 3.06 13,214.18 15.43
Advance account
Bengang Group International
Trading Ltd. 22,209.41 13.76 0.00 0.00
Liaoning Bengang Steel & Iron
Trading Co., Ltd. 7,993.73 4.95 0.00 0.00
Benxi Steel (Group) Construction
Ltd. 901.17 0.56 25.6 0.02
Bengang Group Construction Ltd. 8,768.18 5.43 6,002.61 3.82
Benxi Steel (Group) Drilling Tools
Co., Ltd. 0.00 0.00 0.47 0.00
Bengang Puxiang Cool Rolling
Steel Sheet Co., Ltd. 9,374.76 5.81 10,405.47 6.62
Benxi Steel (Group) Medical Co.
Ltd. 0.00 0.00 2 0.00
Benxi Steel (Group) Machinery
Co., Ltd. 2,339.94 1.45 5,943.90 3.78
Sub-total 51,587.18 31.96 22,380.05 14.24
Account payable
Bengang Fire-resistance Material
Co. 7,558.62 1.37 11,761.35 1.71
Liaoning Bengang Steel & Iron
Trading Co., Ltd. 219.95 0.04 3,221.61 0.47
Liaoning Metallurgy Technician
College 677.68 0.12 1,602.20 0.23
Benxi Steel (Group) Drilling Tools
Co., Ltd. 288.12 0.05 713.84 0.10Bengang Steel Plates Co., Ltd. Interim Report 2009
96
Bengang Group New Industry
Development Co., Ltd. 0.00 0.00 0.89 0.00
Bengang Group Property Co., Ltd. 383.06 0.07 621.84 0.09
Bengang Group Construction
Supervisory Co., Ltd. 34.00 0.01 54 0.01
Benxi Xingye Therapy and
Sanitary Co., Ltd. 75.32 0.01 56.85 0.01
Benxi Yitong Pipe Co., Ltd. 56.37 0.01 54 0.01
Bengang Group Machinery Ltd. 2,507.22 0.45 1,319.08 0.19
Bengang Group Construction Ltd. 1,288.05 0.23 546.66 0.08
Bengang Group Mineral Co., Ltd. 13,210.06 2.40 6,588.26 0.96
Benxi Steel (Group) Industrial
Development Ltd. 6,960.27 1.26 5,992.16 0.87
Benxi Steel (Group) Construction
Ltd. 256.27 0.05 504.24 0.07
Bengang Group Metallurgy
Residue Ltd. 8,259.36 1.50 6,354.47 0.92
Benxi Steel (Group) Information
and Automatic Tech. Ltd. 457.56 0.08 2,066.70 0.3
Bengang Group Electronics Co.,
Ltd. 908.13 0.16 780.6 0.11
Benxi Steel (Group) Designing
Institute 262.00 0.05 3,823.83 0.55
Benxi Steel (Group) Education
Center 0.00 0.00 481.68 0.07
Benxi Steel (Group) Thermal
Power Development Co., Ltd. 2.72 0.00 7.67 0.00
Sub-total 43,404.76 7.87 46,551.93 6.75
Other account payable
Bengang Group Machinery Ltd. 0.00 0.00 12.62 0.02
Shanghai Bengang Steel & Iron
Trading Co., Ltd. 0.00 0.00 721.1 1.03
Benxi Steel (Group) Construction
Ltd. 4,241.49 5.62 2,734.53 3.92
Benxi Steel (Group) Industrial
Development Ltd. 0.00 0.00 1,392.92 1.99
Bengang Group Construction Ltd. 25,091.80 33.27 9,046.83 12.96
Bengang Group Property Co., Ltd. 93.95 0.12 156.5 0.22
Benxi Steel (Group) Information
and Automatic Tech. Ltd. 1,760.42 2.33 391.52 0.56
Bengang Group New Industry
Development Co., Ltd. 134.77 0.18 399.69 0.57
Benxi Electronics Co., Ltd. 455.13 0.60 874.57 1.25
Bengang Group Training Center 158.40 0.21 285.63 0.41
Dalian Boluole Steel Tube Ltd. 120.00 0.16 223.07 0.32
Guangshou Free Trade Zone
Bengang Sales Co., Ltd. 0.00 0.00 339.81 0.49
Benxi Steel (Group) Designing
Institute 2,096.94 2.78 139.46 0.2
Liaoning Metallurgy Technician
College 96.83 0.13 6 0.01Bengang Steel Plates Co., Ltd. Interim Report 2009
97
Bengang Group International
Trading Ltd. 0.00 0.00 11,057.04 15.84
Bengang Group Mineral Co., Ltd. 446.99 0.59 450.83 0.65
Bengang Group Steel Process &
Logistics Ltd. 14.70 0.02 664.39 0.95
Benxi Steel & Iron (Group) Ltd. 0.00 0.00 2,914.85 4.17
Liaoning Bengang Steel & Iron
Trading Co., Ltd. 0.00 0.00 968.33 1.39
Benxi Steel (Group) News Center 0.00 0.00 225.07 0.32
Bengang Puxiang Cool Rolling
Steel Sheet Co., Ltd. 0.00 0.00 37.6 0.05
Bengang Group Thermal Power
Development Co., Ltd. 0.26 0.00 0.26 0.00
Sub-total 34,711.68 46.03 33,042.62 47.32
Account received in advance
Dalian Boluole Steel Tube Ltd. 685.23
0 27
611.63 0.3
Bengang Group Steel Process &
L i ti Ltd
1,911.43
0 76
3,030.23 1.5
Bengang Group Construction Ltd. 0.00 0.00 178.72 0.09
Benxi Steel (Group) Industrial
De elopment Ltd
0.00 0.00 20.76 0.01
Guangshou Free Trade Zone
B Sl C Ltd
10,607.96
4 23
3,152.12 1.56
Benxi Steel & Iron (Group) Ltd. 0.00 0.00 7,753.58 3.84
Liaoning Bengang Steel & Iron
Trading Co Ltd
3,077.70
1 23
2,822.72 1.4
Shanghai Bengang Steel & Iron
T di C Ltd
1,865.04
0 74
3,642.65 1.8
Tianjin Bengang Steel Plate
Processing and Deli er Co Ltd
2,050.00
0 82
2,850.00 1.41
Bengang Puxiang Cool Rolling
Steel Sheet Co Ltd
17,933.75
7 15
4,105.81 2.03
Bengang Group Mineral Co., Ltd. 0.07
0 00
0.67 0.00
Bengang Group New Industry
De elopment Co Ltd
0.03
0 00
0.03 0.00
Sub-total 38,131.21 15.20 28,168.92 13.94
Notes payable
Bengang Group Construction Ltd. 0.00 0.00 657.53 0.36
Benxi Steel (Group) Industrial
Development Ltd. 0.00 0.00 701.69 0.38
Liaoning Bengang Steel & Iron
Trading Co., Ltd. 0.00 0.00 770.00 0.42
Bengang Group New Industry
Development Co., Ltd. 0.00 0.00 10.00 0.01
Bengang Fire-resistance Material
Co., Ltd. 0.00 0.00 4,910.00 2.66
Bengang Group Machinery Ltd. 0.00 0.00 2,268.30 1.23
Bengang Group Property Co., Ltd. 0.00 0.00 915.00 0.50
Bengang Group Mineral Co., Ltd. 0.00 0.00 248.00 0.13
Bengang Electronics Co., Ltd. 0.00 0.00 1,230.00 0.67
Sub-total 0.00 0.00 11,710.52 6.36
Other account receivable
Benxi Steel & Iron (Group) Ltd. 7,070.11
24 79
0.00 0.00
Bengang Puxiang Cool Rolling
Steel Sheet Co Ltd
0.00 0.00 1,025.90 6.38Bengang Steel Plates Co., Ltd. Interim Report 2009
98
Bengang Group Supervisory Co.,
Ltd
25.00
0 09
25 0.16
Bengang Group Machinery Ltd. 0.00 0.00 338.84 2.11
Bengang Group Mineral Co., Ltd. 0.00 0.00 1.41 0.01
Benxi Steel (Group) Industrial
De elopment Ltd
0.00 0.00 168.59 1.05
Bengang Group Steel Process &
L i ti Ltd
0.08
0 00
0.08 0.00
Guangzhou Bengang Trade Co.,
Ltd
0.00 0.00 100 0.62
Shanghai Bengang Metallurgy
Tech Ltd
0.00 0.00 500 3.11
Sub-total 7,095.19 24.88 0.00 2,159.82 13.44
IX. Contingent Events
No contingent event to be disclosed up to the date of this report.
X. Commitments
No commitment issues to be disclosed up to the date of this report.
XI. Post balance sheet issues
No post balance sheet non-adjustment issues to be disclosed up to the date of this report.
XII. Other statements
(I) Non-monetary capital exchange
No non-monetary capital exchange to be disclosed up to the date of this report.
(II) Other major issues
No other major issues to be disclosed up to the date of this report.
XIII. Supplementary Information
(I) Non-recurring gains and losses attributable to ordinary shareholders this year are listed as follows:
(gain marked as “+” and loss marked as “-“)Bengang Steel Plates Co., Ltd. Interim Report 2009
99
Items Amount
(I) Gains and losses from disposal of non-current assets including the written-off of the
provision of asset impairment 4,120
(II) Beyond authority approval, or no official approving documents, or non-recurring tax
refunding and exemption
(III) Government subsidy accounted into current income account, but closely related to
normal business operation and meeting with national policies, but exclude government
subsidies at fixed amount and on continuous basis
50,000
(IV) Capital adoption fee collected from non-financial institutions and accounted into
current income account;
(V) Gains from the balance of investment costs on acquiring of subsidiaries, joint
ventures, and affiliates lower than the share of recognizable net asset fair value;
(VI) Gain/loss from exchange of non-monetary capital
(VII) Gain/loss from investment or assets consigned to others;
(VIII) Impairment provisions on capitals provided for force majeure or natural disasters;
(IX) Gain/loss from debt reorganizing; 1,287,477.28
(X) Reorganization expenses, e.g. expenses for relocation of employees and integration
expenses;
(XI) Gain/loss from the balance of value of obviously unfair trade over fair value;
(XII) Net gain/loss of subsidiaries obtained by merger of firms under common control
from the beginning of year to the date of merger;
(XIII) Gain/loss from contingent issues without relating to normal business operation;
(XIV) Gain/loss from fair value fluctuation of transactional financial assets, transactional
financial liabilities other than effective hedging operations related to normal operation, and
investment gains from disposal of transactional financial assets, transactional financial
liabilities and sellable financial assets;
(XV) Restoring of impairment provision on account receivable which are tested
individually;
(XVI) Gain/loss from consigned loans;
(XVII) Gain/loss from fluctuation of fair value of investment properties of which
subsequent measurement are on fair value basis;
(XVIII) Influence of one-off adjustment on current gain/loss according to the taxation and
accounting laws and regulations;
(XIX) Commission for entrusted management;
(XX) Non-operating income and expenditure in addition to the above items -999,373.87
(XXI) Other gain/loss items meeting with the definition of non-recurring gain/loss;
(XXII) Influence of minority shareholders’ gain/loss;
(XXIII) Influence of income tax; -85,555.85
Total
256,667.56Bengang Steel Plates Co., Ltd. Interim Report 2009
100
(II) Income on net asset ratio and earnings per share
Net return on equity (%) Earnings per share
Items On full
amortizing
basis
weighted
average
Basic gains per
share
Diluted gains
per share
Current term
Main business profit 5.8142 5.6115 0.2737 0.2737
Business profit -6.0888 -5.8764 -0.2866 -0.2866
Net profit attributable to common
shareholders -6.1646 -5.9496 -0.2901 -0.2901
Net profit after deducting of
non-recurring gain/loss and
attributable to the common
shareholders -6.1663 -5.9513 -0.2902 -0.2902
Previous term
Main business profit 17.9911 17.9993 0.9613 0.9613
Business profit 8.0221 8.0257 0.4286 0.4286
Net profit attributable to common
shareholders 6.0601 6.0629 0.3238 0.3238
Net profit after deducting of
non-recurring gain/loss and
attributable to the common
shareholders 6.0186 6.0214 0.3216 0.3216
1. Calculation processes
The above figures are the results calculated by the following formulas:
Net income on asset, fully diluted
Fully diluted net income on asset = P÷E
In which:
P = net profit attributable to common shareholders of the Company, or net profit attributable to common
shareholders after deducting of non-recurring gain/loss
E = Net asset attributable to the common share holders at end of year.
“Net profit attributable to common shareholders” is not including gain/loss of minority shareholders; “Net
profit attributable to common shareholders after deducting of non-recurring gain/loss” is based on the
consolidated net profit after deducting of minority shareholders’ gain/loss, and deducting of the share of
common shareholders of the Company of non-recurring gain/loss of the parent company (with considering
of influences of income tax) and non-recurring gain/loss of subsidiaries (with considering of influence of
income tax); “net asset attributable to the common shareholders end end of year” is not including the share
of minority shareholders’ equity.
Net income on asset, weighted
Weighted average income on net asset ratio =P/（E0 ＋ NP÷2 ＋ Ei×Mi÷M0 － Ej×Mj÷M0±Ek
×Mk÷M0）
In which:
P is respectively corresponding to the net profit attributable to the common shareholders of the Company,
and the net profit attributable to the common shareholders after deducting of non-recurring gain/loss;
NP = net profit attributable to common shareholders
E0 = net asset attributable to the common shareholders at beginning of year;
Ei = newly added net asset attributable to common share holders due to placing of new shares or
transferred from debt in the report term
Ej = net asset attributable to common share holders decreased due to repurchasing or cash dividend
M0 = number of months of the report term
Mi = number of months from the next month of the newly added asset to the end of report term;
Mj = number of months from the next month of the newly deducted net asset to the end of report term;
Ek = change of net asset due to other trade or eventBengang Steel Plates Co., Ltd. Interim Report 2009
101
Mk = number of months from the next month of other change of net asset to the end of report term.
Basic earnings per share
Basic earnings per share = P÷S
S= S0 ＋ S1 ＋ Si×Mi÷M0 － Sj×Mj÷M0－Sk
In which:
P = net profit attributable to common shareholders of the Company, or net profit attributable to common
shareholders after deducting of non-recurring gain/loss
S = weighted average of common shares issued in the market
S0 = total of capital shares at beginning of year;
S1 = increased shares due to capitalizing of common reserves or dividend
Si = shares increased due to placing of new shares or transferred from debt in the report term
Sj = shares decreased due to actions such as repurchasing in the report term
SK = the amount of shares reduced
M0 = number of months of the report term
Mi = number of months from month next to the share increasing to the end of report term
Mj = number of months from month next to the share decreasing to the end of report term
Diluted gains per share
② Diluted earning per share=[P+（Diluting prospective common share interest recognized as expense －
transfer expense）×（1-income tax rate）]（/ S0 ＋ S1 ＋ Si×Mi÷M0 － Sj×Mj÷M0—Sk+ weighted
average of common shares increased by term of subscription certificates, share future options, or
convertible bonds）
In which:
P = net profit attributable to common shareholders of the Company, or net profit attributable to common
shareholders after deducting of non-recurring gain/loss. At calculating of diluted earnings per share, the
Company has considered the influences of the entire dilute potential common shares, until the diluted
earnings per share had reached the minimum level.
XIV. Approval of the Financial Statements
This financial statement was approved by the Board on August 25, 2009.
Bengang Steel Plates Co., Ltd.
August 25, 2009
