Bengang Steel Plates Co., Ltd. Interim Report 2010
1
本钢板材股份有限公司
BENGANG STEEL PLATES CO.,LTD.
Interim Report 2010
January 1 – June 30
(Prepared Under International Accounting Standard)
August 20, 2010Bengang Steel Plates Co., Ltd. Interim Report 2010
2
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.
Independent director Ms. Wang Yiqiu was on business trip and absented the meeting. She empowered
independent director Mr. Tian Binfu to vote on her behalf.
Financial statements carried in this interim report are not audited.
Chairman of the Board – Mr. Yu Tianchen, Chief Financial Officer and General Manager – Mr. Cao Aimin,
and Head of Accounting Dept. – Mr. Zuo Zhanguo hereby declare: the authenticity and integrality 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.Bengang Steel Plates Co., Ltd. Interim Report 2010
3
Table of Contents
I. Company Profile 4
II. Major Financial Information 5
III. Movement of Capital Share and Top Ten Shareholders 7
IV. Particulars about the Directors, Supervisors and Senior Executives 10
V. Report of the Board 11
VI. Significant Events 13
VII. Financial Report 25
VIII. Documents Ready for Inquiring 25Bengang Steel Plates Co., Ltd. Interim Report 2010
4
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 abbriviation: BSP
2. Legal representative Yu Tianchen
3. Secretary of Board: Zhang Jichen
Securities Affairs Representatives: Mr. Lu Xiaoyong
Contact address: No.16, Renmin Road, Pingshan District, Benxi City, Liaoning
Tel: 0414－7828360 7828010
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: bgbc761＠126.com
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 A-Shares: BENGANGBANCAI Stock Code: 000761
(2) Short Form of B-Shares: BENGANGBAN-B Stock Code: 200761
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, ShanghaiBengang Steel Plates Co., Ltd. Interim Report 2010
5
II. Major Financial Information
1. Main indices
In RMB
Ended this report
term
Ended previous
year
Increase/decrease
(%)
Gross Assets 35,926,395,494.06 34,821,686,467.03 3.17%
Owners’ equity to shareholders of the listed
company 14,773,599,317.36 14,124,642,552.32 4.59%
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)
4.7110 4.5040 4.60%
Report term
(Jan-Jun)
Same period last
year
Increase/decrease
(%)
Turnover 22,354,385,410.54 16,461,627,817.78 35.80%
Operation profit 686,808,575.93 -898,699,565.07 176.42%
Total profit 693,493,263.72 -898,357,341.66 177.20%
Net profit attributable to the shareholders of
the listed company 688,606,765.04 -909,886,400.39 175.68%
Net profit after deducting of non-recurring
gain/loss attributable to the shareholders of
the listed company
683,593,249.20 -910,143,067.95 175.11%
Basic earnings per share (Yuan/share) 0.22 -0.29 175.68%
Diluted earnings per share (Yuan/share) 0.22 -0.29 175.68%
Net return on equity (%) 4.77% -6.16% 10.93%
Cash flow generated by business operation,
net 602,108,047.71 1,772,540,299.38 -66.03%
Net Cash flow per share generated by
business operation (yuan/share) 0.1920 0.5652 -66.03%
2. Non-recurring profit/loss items
In RMB
Non-recurring gain and loss items Amount Note (if
applicable)
Gain/loss of non-current assets 722,298.30
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.
317,493.00
Gain/loss from debt reorganization 5,595,455.72
Other non-business income and expenditures other than the above 49,440.77
Influenced amount of income tax -1,671,171.95
Total 5,013,515.84 -Bengang Steel Plates Co., Ltd. Interim Report 2010
6
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 688,606,765.04 -909,886,400.39 14,773,599,317.36 14,124,642,552.32
On domestic
accounting standard 688,606,765.04 -909,886,400.39 14,773,599,317.36 14,124,642,552.32
Individual and total of adjustment according to IAS
Total of differences
between the IAS
and domestic
accounting standard
0.00 0.00 0.00 0.00
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.Bengang Steel Plates Co., Ltd. Interim Report 2010
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
2,038,410,050 65.00% 2,038,410,050 65.00%
1. State-owned
shares
2. State-owned legal
person shares 2,038,400,000 65.00% 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
1,097,589,950 35.00% 1,097,589,950 35.00%
1. Common shares in
RMB 697,589,950 22.24% 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%Bengang Steel Plates Co., Ltd. Interim Report 2010
8
2. Particulars about the top 10 shareholders and top 10 unconditional-share holders
in shares
Total of shareholders 71,080
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
DREYFUS PREMIER
INVESTMENT FDS
INC.-DREYFUS GREATER
CHINA FD
Overseas natural
person 1.62% 50,778,447
GOVERNMENT OF
SINGAPORE INV. CORP.-
A/C "C"
Overseas natural
person 0.72% 22,577,348
NOMURA TST N BK
CO.,LTD ATTF ASIA ATTR
DIV STK FD MTH FD
Overseas natural
person 0.58% 18,049,086
GSIC A/C MONETARY
AUTHORITY OF
SINGAPORE
Overseas natural
person 0.32% 9,955,059
RENAISSANCE CHINA
PLUS FUND
Overseas natural
person 0.25% 7,760,556
CREDIT SUISSE (HONG
KONG) LIMITED
Overseas natural
person 0.19% 5,829,634
KOREA EXCHANGE
BANK(DB CHINA
EQUITY FUND)
Overseas natural
person 0.15% 4,620,226
APS CHINA ALPHA FUND Overseas natural
person 0.15% 4,616,701
BOCHK INVESTMENT
FUNDS-BOCHK CHINA
GOLDEN DRAGON FUND
Overseas natural
person 0.14% 4,499,952
Top 10 holders of unconditional shares
Name of the shareholder Unconditional shares Category of shares
Benxi Steel & Iron Group） Co., Ltd. 536,800,000 Renminbi common shares
DREYFUS PREMIER INVESTMENT FDS
INC.-DREYFUS GREATER CHINA FD 50,778,447 Foreign shares placed in
domestic exchange
GOVERNMENT OF SINGAPORE INV. CORP.-
A/C "C" 22,577,348 Foreign shares placed in
domestic exchange
NOMURA TST N BK CO.,LTD ATTF ASIA
ATTR DIV STK FD MTH FD 18,049,086 Foreign shares placed in
domestic exchange
GSIC A/C MONETARY AUTHORITY OF
SINGAPORE 9,955,059 Foreign shares placed in
domestic exchange
RENAISSANCE CHINA PLUS FUND 7,760,556 Foreign shares placed in
domestic exchange
CREDIT SUISSE (HONG KONG) LIMITED 5,829,634 Foreign shares placed in
domestic exchange
KOREA EXCHANGE BANK(DB CHINA
EQUITY FUND) 4,620,226 Foreign shares placed in
domestic exchange
APS CHINA ALPHA FUND 4,616,701 Foreign shares placed in
domestic exchange
BOCHK INVESTMENT FUNDS-BOCHK
CHINA GOLDEN DRAGON FUND 4,499,952 Foreign shares placed in
domestic exchange
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 shareholderBengang Steel Plates Co., Ltd. Interim Report 2010
9
As approved by the provincial government, Benxi Steel & Iron (Group) Co., Ltd. has been merged with
Beitai Iron & Steel (Group) Co., Ltd., the newly founded enterprise is named Bengang Group Co., Ltd.
Upon founding of Bengang Group Co., Ltd., the relationship between the Company and the substantial
holder has changed as the following:
Before the merger After the merger
Liaoning State Asset Committee
Bengang Group Ltd.
Benxi Steel & Iron (Group) Ltd.
100%
100%
Bengang Steel Plates Co., Ltd.
82.12%
Liaoning State Asset Committee
Benxi Steel & Iron (Group) Ltd.
Bengang Steel Plates Co., Ltd.
100%
82.12%Bengang Steel Plates Co., Ltd. Interim Report 2010
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
Zhang
Xiaofang Vice Chairman 0 0 0 0
Cao Aimin Director, GM 0 0 0 0
Zhang
Jichen
Director, Secretary of
the Board 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
Zhao Wei Supervisor 0 0 0 0
Liu
Engquan Supervisor 0 0 0 0
Wang Pu Supervisor 0 0 0 0
Zhang
Chuang Supervisor 0 0 0 0
Zhang
guohua Vice General Manager 0 0 0 0
Zhang
Guiyu Vice General Manager 0 0 0 0
Nai Zuoxin Vice General Manager 0 0 0 0
2. Engaging and dismissing of directors, supervisors and executives.
(1) As elected at the Shareholders’ Annual Meeting 2009 held on June 3, 2010, Mr. Yu Tianchen, Ms.
Zhang Xiaofang, Mr. Cao Aimin, and Mr. Zhang Jichen were engaged as the directors of the 5th term of
Board, while Mr. Tian Binfu, Mr. Li Kai, and Ms. Wang Yiqiu were engaged as the independent directors
of the 5th term of Board. Mr. Liu Junyou, Mr. Zhao Wei, Mr. Liu Enquan, Mr. Wang Pu, and Mr. Zhang
Chuang were engaged the supervisors of the 5th term of Supervisory Committee. The resolutions of the
meeting were released by China Securities Journal, Securities Times, and Hong Kong Commercial Daily
dated June 4, 2010.
(2) As approved at the 1st meeting of the 5th term of Board held on June 3, 2010, Mr. Yu Tianchen was
elected Chairman of the 5th term of Board, Ms. Zhang Xiaofang was elected Vice Chairman of the Board;
Mr. Cao Aimin was engaged the General Manager of the Company, Mr. Zhang Jichen was engaged the
Secretary of Board; Mr. Zhang Guohua, Mr. Zhang Guiyu, and Mr. Nai Zuoxin were engaged the Vice
General Managers. The resolutions of the meeting were released by China Securities Journal, Securities
Times, and Hong Kong Commercial Daily dated June 4, 2010.Bengang Steel Plates Co., Ltd. Interim Report 2010
11
V. Report of the Board
1. Business Overview
In the first half of 2010, the Company has been seizing the opportunities brought by global economical
recovering and aggressive national policies, kept focusing on improving of economical efficiency, and
achieved the best growth ever, laid a solid foundation for realizing of the business target of the whole year.
For the period of January to June, the Company realized iron output of 4.8275 million ton, increased by
5.7% over the same period of last year; steel output of 4.8902 million ton, increased by 9.66%; hot-rolled
plate of 4.6063 million ton, increased by 24.8%; cool-rolled plate of 857.1 thousand ton, increased by
34.85%; 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
Segments on industries
On
industry
or
product
Turnover Operation
cost
Gross
profit
ratio
(%)
Increase/decrease
of turnover over
the same period of
last year (%)
Increase/decrease
of operation cost
over the same
period of last year
(%)
Increase/decrease
of gross profit ratio
over the same
period of last year
(%)
Industry 1,979,155.46 1,732,565.30 12.46% 36.26% 26.78% 6.55%
Segments on products
1. Steel
plate 1,946,250.98 1,704,112.47 12.44% 59.88% 41.36% 11.47%
2. Steel
billet 106.15 77.48 27.01% -99.95% -99.94% -10.31%
3.
Others 32,798.34 28,375.35 13.49% 74.92% 11.29% 49.47%
B. Distribution of main business in territories
In RMB 10 thousand Yuan
Regions Turnover Change of income over last year %
North-east 698,680.02 19.00%
North 295,015.74 -6.44%
East 443,013.66 12.94%
Northwest 6,982.52 326.74%
Mid-south 181,544.90 32.19%
Export 353,918.63 1,787.83%
Total 1,979,155.46 36.26%
C. Investment of 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.Bengang Steel Plates Co., Ltd. Interim Report 2010
12
In the report term, using of non-financing funds were as the followings:
In the first half of 2010, the Company has accomplished RMB933.82 million of investment in technical
reformation projects.
1. IT project: planned for RMB274.64 million of investment, started in 2005. RMB8.21 million invested
in the 1st half of 2010. Accumulated to RMB152.01 million at the end of June 2010 (including:
RMB19.40 million transferred from construction-in-process to fixed assets). Scheduled to be completed in
2012.
2. Super thin cool rolling reengineering project: planned for RMB1126.19 million of investment, started in
2006. RMB100 thousand invested the 1st half of 2010. Accumulated to RMB1008.52 million at the end of
June 2010 (including RMB970.36 million of construction in process transferred to fixed assets).
Scheduled to be completed in 2010.
3. Moving and reengineering project of coking furnace (coking furnace 8# 9#): planned for RMB1.42571
billion, started in 2006. Accumulated to RMB1.41534 billion at the end of June 2010 (including
RMB1403.06 million of construction in process transferred to fixed assets). Scheduled to be completed in
2010.
4. Reengineering of billet plate continuous casting line: planned for RMB1.99740 billion, started in 2007.
RMB63.75 million was invested in the 1st half of 2010. Accumulated to RMB2002.40 million at the end
of June 2010 (including RMB1587.67 million transferred to fixed assets). Scheduled to be completed in
2010.
5. Energy saving and environmental reengineering project of 180 ton converter system: planned for
RMB1277.30 million, started in 2007. RMB223.25 million was invested in the 1st half of 2010.
Accumulated to RMB519.75 million at the end of June 2010. Scheduled to be completed in 2012.
6. Dandong stainless steel cool rolling project: planned with investment of RMB151.47 million, started in
2008. RMB153.88 million invested in the 1st half of 2010. Accumulated to RMB323.05 million at end of
June 2010. Scheduled to complete in 2011.
7. 60K oxygen generator project: planned with RMB673.23 million, started in 2008. RMB143.11 million
invested in the first half of 2010, accumulated to RMB265.48 million at end of June 2010. Scheduled to
complete in 2010.
8. Cold rolling silicon steel project: planned with RMB526.32 million, started in 2009. RMB188.53
million invested in the 1st half of 2010, accumulated to RMB248.24 million at end of June 2010.
Scheduled to be completed in 2010.Bengang Steel Plates Co., Ltd. Interim Report 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 2009 was as: upon the total capital share of 3,136,000,000 at present,
cash dividend of RMB0.30 (tax included for A shares) would be distributed to each 10 shares. The
registration date of the distribution was July 20, 2010, the final trading date for B shares was July 20 2010,
and the ex-dividend date was July 21 2010.
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.Bengang Steel Plates Co., Ltd. Interim Report 2010
14
5. Material Events about Related Transactions
(I) Parent company of the Company (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.
Shareholding
portion of the parent
co.
Voting power of the
parent co.
Substantial holder
of the Company Organization code
Benxi Steel (Group)
Co., Ltd. 82.12 82.12
Liaoning Provincial
State-asset
Administration
11972626-3
(II) 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 Pang Zonghua 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 Metallurgy Tech Co., Ltd. Fully-owned
subsidiary
Limited
liability Shanghai Fei Jixi Sales
Bengang Steel Plate Liaoyang Orel Ball Co., Ltd. Fully-owned
subsidiary
Limited
liability Liaoyuang Zhang
Shiming
Production
Bengang Stainless Cool-rolling (Dandong) Co.,
Ltd.
Fully-owned
subsidiary
Limited
liability Dandong Yu Tianchen Production
(Continued)
Name of the subsidiaries
Registered
capital
Share
portion %
Voting power
%
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 73654820-4Bengang Steel Plates Co., Ltd. Interim Report 2010
15
Name of the subsidiaries
Registered
capital
Share
portion %
Voting power
%
Organization
code
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 Metallurgy Tech Co., Ltd. 500.00 100.00 100.00 68408762-8
Bengang Steel Plate Liaoyang Orel Ball Co., Ltd. 1,000.00 100.00 100.00 68968094-9
Bengang Stainless Cool-rolling (Dandong) Co., Ltd. 16,000.00 100.00 100.00 69941004-5
(III) Other related parties
Name of the related parties Relationship with the Company Organization code
Benxi Steel (Group) Machinery Co., Ltd. Same parent 701577718
Bengang Group International Trading Ltd. Same parent 701581055
Benxi Steel (Group) Tengda Holdings Ltd. Same parent 11968922-0
Guangshou Free Trade Zone Bengang Sales Co., Ltd. Same parent 231289622
Shanghai Bengang Steel & Iron Trading Co., Ltd. Same parent 784796085
Liaoning Bengang Steel & Iron Trading Co., Ltd. Same parent 78458403-1
Dalian Boluole Steel Tube Ltd. Same parent 60480260-2
Benxi Steel (Group) Steel Process and Logistics Co., Ltd. Same parent 752795993
Benxi Steel (Group) Construction & Repairing Co., Ltd. Same parent 701578219
Bengang Fire-resistance Material Co. Same parent 78124925-8
Benxi Steel (Group) Metallurgy Residues Co., Ltd. Same parent 701578155
Liaoning Metallurgy Technician College Same parent 463564144
Benxi Steel (Group) Industrial Development Co., Ltd. Same parent 701578120
Benxi Steel (Group) Construction Co., Ltd. Same parent 119726538
Yinkou Bengang International Logistics Co., Ltd. Same parent 74712716-5
Benxi Steel (Group) Real-estate Development Co., Ltd. Same parent 819664921
Benxi Steel (Group) Education Center Same parent 463567636
Benxi Steel (Group) Drilling Tools Co., Ltd. Same parent 74710835-1
Benxi Steel (Group) Designing Institute Same parent 78510290-3
Benxi Steel (Group) Information and Automatic Tech. Ltd. Same parent 752798182
Benxi Steel (Group) News Center Same parent 774640431
Benxi Steel (Group) New Industrial Development Co., Ltd. Same parent 701578198
Benxi Steel (Group) Mining Co., Ltd. Same parent 701577726
Benxi Steel (Group) Electronics Co., Ltd. Same parent 781648511
Benxi Steel (Group) Thermal Power Development Co., Ltd. Same parent 701579297
Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. Same parent 717851072
Benxi Steel & Iron (Group) Inspection Co., Ltd. Same parent 736708677
(IV) Related party transactions
1. For those subsidiaries with holding relationship have been included in the consolidated financial
statement, thus the trade among them and with the parent company have been neutralized.
2. Related transactions of sales of goods and providing of servicesBengang Steel Plates Co., Ltd. Interim Report 2010
16
In RMB 10 thousand
Amount of the Current Term
Amount of the Previous
Term
Related parties Subjects of the Amount Amount
related transactions
RMB0’000
Portion in
similar trade % RMB0’000
Portion in
similar trade %
Benxi Steel & Iron (Group) Ltd. Products 0.00 - 216,419.23 13.15
Benxi Steel & Iron (Group) Ltd. Material and parts 19,269.33 0.86 33,208.73 2.02
Benxi Steel & Iron (Group) Ltd. Power supply 62.39 0.00 9,649.98 0.59
Dalian Boluole Steel Tube Ltd. Products 2,234.11 0.10 2,272.32 0.14
Guangshou Free Trade Zone
Bengang Sales Co., Ltd. Products 2,265.29 0.10 19,803.08 1.2
Shanghai Bengang Steel & Iron
Trading Co., Ltd. Products 0.00 - 41,149.38 2.5
Liaoning Bengang Steel & Iron
Trading Co., Ltd. Products 17,095.78 0.76 20,875.55 1.27
Benxi Steel (Group) Steel
Process & Logistics Ltd. Products 15,127.06 0.68 15,435.71 0.94
Benxi Steel (Group) Steel
Process & Logistics Ltd. Power supply 56.23 0.00 41.39 0.003
Bengang Group Dahe Industry
Co., Ltd. Power supply 18.17 0.00 11.41 0.001
Benxi Steel (Group) Industrial
Development Ltd. Material and parts 3,654.62 0.16 1,961.72 0.12
Benxi Steel (Group) Industrial
Development Ltd. Power supply 111.95 0.01 41.03 -
Benxi Steel (Group)
Construction Ltd. Material and parts 14.63 0.00 391.58 0.02
Benxi Steel (Group)
Construction Ltd. Power supply 447.73 0.02 365.66 0.02
Benxi Steel (Group) Machinery
Ltd. Power supply 1,807.37 0.08 1,344.59 0.08
Bengang Group Mineral Co.,
Ltd. Material and parts 83,266.60 3.72 45,197.73 2.75
Bengang Group Mineral Co.,
Ltd. Power supply 21,102.64 0.94 31,332.66 1.9
Bengang Group Mineral Co.,
Ltd. Freight income 499.76 0.02 502.02 0.03
Bengang Group New Industry
Development Co., Ltd. Power supply 32.95 0.00 19.23 -
Benxi Steel (Group)
Construction Ltd. Material and parts 169.73 0.01 56.13 -
Benxi Steel (Group)
Construction Ltd. Power supply 112.26 0.01 869.76 0.05
Bengang Group Metallurgy
Residue Ltd. Material and parts 6,808.84 0.30 5,378.55 0.33
Bengang Group Metallurgy
Residue Ltd. Power supply 3,637.70 0.16 191.97 0.01
Bengang Electronics Co., Ltd. Power supply 137.98 0.01 95.05 0.01
Bengang Puxiang Cool Rolling
Steel Sheet Co., Ltd. Products 322,960.34 14.45 240,207.78 14.59
Bengang Puxiang Cool Rolling
Steel Sheet Co., Ltd. Material and parts 25,427.75 1.14 16,905.00 1.03
Bengang Puxiang Cool Rolling
Steel Sheet Co., Ltd. Power supply 19,211.78 0.86 16,643.48 1.01
Bengang Group Thermal Power
Development Co., Ltd. Power supply 5,274.33 0.24 3,427.28 0.21
Bengang Group Thermal Power
Development Co., Ltd. Material and parts 4,036.66 0.18 1,401.97 0.09
Bengang Group Property Co.,
Ltd. Power supply 227.22 0.01 202.21 0.01Bengang Steel Plates Co., Ltd. Interim Report 2010
17
Amount of the Current Term
Amount of the Previous
Term
Amount Amount
Bengang Fire-resistance
Material Co. Power supply 3,825.04 0.17 2,346.53 0.14
Bengang Fire-resistance
Material Co. Freight income 1,334.80 0.06 254.71 0.02
Total 560,231.01 25.06 728,003.42 44.23
3. Related transactions of purchasing of products and accepting of services
In RMB 10 thousand
Amount of the Current Term
Amount of the Previous
Term
Related parties Amount Amount
Subjects of the related
transactions RMB0’000
Portion in
annual trade
% RMB0’000
Portion in
annual trade
%
Benxi Steel & Iron (Group) Ltd. Raw materials 128.12 0.01 14.83 0.001
Benxi Steel & Iron (Group) Ltd. Maintaining 7,356.52 0.37 9921.58 0.57
Bengang Puxiang Cool Rolling
Steel Sheet Co., Ltd. Raw materials 124,100.99 6.32 31,059.98 1.79
Bengang Group Mineral Co.,
Ltd. Repairing services 176.31 0.01 731.63 0.04
Bengang Group Mineral Co.,
Ltd. Raw materials 181,706.58 9.25 182,138.76 10.49
Bengang Group Mineral Co.,
Ltd. Transportation 3.59 0.00 5.84 0.0003
Bengang Group Metallurgy
Residue Ltd. Residue treatment 0 0.00 5.1 0.0003
Bengang Group Metallurgy
Residue Ltd. Raw materials 4,360.01 0.22 5,433.95 0.31
Bengang Group Steel Process &
Logistics Ltd. Process fee 220.74 0.01 28.03 0.002
Bengang Group Property
Development Ltd. Raw materials 3,217.25 0.16 2372.88 0.14
Bengang Group Property Co.,
Ltd. Rental 3.76 0.00 13.65 0.001
Bengang Group Property Co.,
Ltd.
Property management
fee 164.73 0.01 39.02 0.002
Bengang Group Machinery Ltd. Spare parts 16,767.73 0.85 17,859.74 1.03
Bengang Group Machinery Ltd. Repairing services 518.55 0.03 662.53 0.04
Bengang Group Machinery Ltd. Raw materials 132.29 0.01 148.14 0.01
Bengang Group Construction
Ltd. Spare parts 547.32 0.03 259.48 0.01
Bengang Group Construction
Ltd. Repairing services 22,163.08 1.13 7,676.82 0.44
Bengang Group Construction
Ltd. Raw materials 527.88 0.03 356.83 0.02
Bengang Group Construction
Ltd. Transportation 214.25 0.01 1176.08 0.07
Benxi Steel (Group) Industrial
Development Ltd. Spare parts 26.26 0.00 43.4 0.002
Benxi Steel (Group) Industrial
Development Ltd. Raw materials 7,099.90 0.36 5,569.06 0.32
Benxi Steel (Group) Industrial
Development Ltd. Repairing services 656.02 0.03 831.07 0.05
Benxi Steel (Group) Industrial
Development Ltd. Transportation 585.30 0.03 634.59 0.04Bengang Steel Plates Co., Ltd. Interim Report 2010
18
Amount of the Current Term
Amount of the Previous
Term
Amount Amount
Benxi Steel (Group)
Construction Ltd. Material and parts
1,272.22 0.06 64.68 0.004
Benxi Steel (Group)
Construction Ltd. Maintaining 7,501.75 0.38 4704.56 0.27
Bengang Electronics Co., Ltd. Raw materials 4,779.39 0.24 2995.16 0.17
Bengang Electronics Co., Ltd. Repairing services 1,022.71 0.05 490.89 0.03
Bengang Electronics Co., Ltd. Heating 0 0.00 59.31 -
Benxi Steel (Group) Drilling
Tools Co., Ltd. Spare parts 926.69 0.05 804.45 0.05
Bengang Group New Industry
Development Co., Ltd. Labour security fee 103.92 0.01 77.76 0.004
Liaoning Metallurgy Technician
College Spare parts 837.69 0.04 895.00 0.05
Benxi Steel (Group) Information
and Automatic Tech. Ltd. Spare parts 349.45 0.02 68.34 0.004
Benxi Steel (Group) Information
and Automatic Tech. Ltd. Repairing services 2,268.76 0.12 288 0.02
Bengang Group Thermal Power
Development Co., Ltd. Heating fee 11.74 0.00 1594.5 0.09
Bengang Fire-resistance
Material Co. Raw materials 18,277.22 0.93 25,545.57 1.47
Benxi Steel (Group) Designing
Institute Repairing services 846.10 0.04 63.64 0.004
Total 408,874.80 20.82 304,634.85 17.54
Pricing policies at trading with related parties:
(1) On December 28, 2005 and June 26, 2008, and April 15, 2009, the Company entered the “Land Rent
Contract”, “Land Rent Contract Supplementary”, “Land Rent Contract Supplementary II” and
“Material and Service Providing Agreement” with Bengang Group, which setout the providing of raw
materials, supplementary materials, supporting serves, trade mark, patent, and land renting by the Group
to the Company; as well as sales of products, supplementary materials, power, spare parts, and waste
materials to the Group.
A: The pricing of subjects purchased from Bengang Group:
Pricing of raw materials:
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.
The price for iron ore pellets is according to the market price at same quality.
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.
The price for cool hard plate is decided at the weighted average of the hot rolled plate the Company sold
to the independent 3rd parties in the previous month plus processing fee, the processing fee is revised once
a year, which is RMB363 per ton for 2010.
Cool plate and galvanized sheet are on market prices.
Pricing of auxiliary materials: limestone, fire resistance material and auxiliary materials provided by
Bengang Group will be at market price.
Pricing of spare parts: the spare parts manufactured by the Group itself will be at market price.Bengang Steel Plates Co., Ltd. Interim Report 2010
19
Rental for the 2300mm hot rolling line is decided by the “Lease Agreement”.
Trucking service: on market price.
Pricing of the heating service of the dwelling house for staff and workers: carried out according to the
price set forth by the national government.
Workshop and equipment maintaining services: maintaining services are priced upon negotiation.
Designing and engineering service will be at national government price.
Construction service: construction services provided by Bengang Group to the Company will be at market
price.
Printing, newspapers, media and other publications: on national government price.
Education facilities and services: education facilities, vocational education programs, and onsite training
courses provided by Bengang Group are at market price.
Agent service: 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
beforehand 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.
Pricing of telephone, fax and the TV service: carried out according to the price set forth by the national
government.
Office spaces: on market price during the effective period of this agreement.
Car service: on market price during the effective period of this agreement.
Property management: on market price during the effective period of this agreement.
Packing service: on market price during the effective period of this agreement.
Labor safety services: on market price during the effective period of this agreement.
Pricing of trademark: Bengang Group allows the Company to use “Bengang” trademark by free. However
the Company can’t allow any other parties to use it. The Company has the right to register its own
trademark at any time.
B: Pricing of sales to Bengang Group:
Hot-rolled steel sheet: carried out according to the weighting average price of the same quality products
which our company sold to the independent third party in the previous month.
Coke and chemical products are on market prices.
Steel and iron residue is on market price.
Pricing of public service: Power supply to the Group was on the market price plus transferring cost. 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.
Railway transportation, quality test, measuring, weighting: at national price.
Iron and steel scrap, including the iron material: carried out according to the market price.
Raw material, supplementary material and spare parts: based on purchase price of the Company plus
0.5%-1.5% purchasing fee.
R&D service: R&D that Bengang Group can’t do by itself are provided by the Company. The expenses
shall be the national price.
② Land rent from Bengang Group to the Company, it was agreed to carry forward the Land Using Right
Rent Agreement” which is effective at present. Namely the price is RMB6.24 /m2/year.Bengang Steel Plates Co., Ltd. Interim Report 2010
20
4. Rental with related parties
Remarks on the rental with related party:
In 2009, the Company leased 2300mm hot rolling mill production line from shareholder Benxi Steel
(Group) Co., Ltd. The value of the whole line amounts to 5 billion RMB. The stage from the effective date
of the lease contract to December 31st, 2009 is a testing period. Benxi Steel (Group) Co., Ltd charged no
rent and any loss related to the lease subject is borne by Benxi Steel (Group) Co., Ltd and the profit
belongs to the company if there is any. The second stage: From January 1st 2010 to the end of the lease
period, the company will pay 30% of the profit to Benxi Steel (Group) Co., Ltd as rent, and the annual
rent will be no more than 5%(excluding 5%) of the audited net assets, and any loss related to the lease
subject will be borne by the company.
5. Receivable and payables due with related parties
End of term RMB0’000 Beginning of term 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. 11,529.88 18.34 11,168.18 11.66
Bengang Group Thermal Power Development
Co., Ltd. 1,109.91 1.77 2396.92 2.5
Benxi Steel (Group) Construction Ltd. 8,372.22 13.32 7909.86 8.26
Benxi Steel (Group) Industrial Development Ltd. 459.74 0.73 1,803.36 1.88
Bengang Group New Industry Development Co.,
Ltd. 494.35 0.79 573.29 0.6
Bengang Fire-resistance Material Co. 8,462.57 13.46 6,631.10 6.92
Bengang Group Metallurgy Residue Ltd. 1,323.41 2.11 5,601.76 5.85
Shanghai Bengang Steel & Iron Trading Co.,
Ltd. 339.07 0.54 0.00 0.00
Benxi Steel (Group) Real-estate Development
Co., Ltd. 292.58 0.47 0.75 0.00
Sub-total 32,383.73 51.51 36,085.22 37.67
Advance account
Bengang Group International Trading Ltd. 30,162.53 27.60 17,668.27 15.36
Benxi Steel (Group) Repairing & Building Ltd. 934.89 0.86 46.19 0.04
Benxi Steel (Group) Construction Ltd. 7,824.31 7.16 4,369.49 3.8
Benxi Steel (Group) Industrial Development Ltd. 315.73 0.29 17.19 0.01
Bengang Puxiang Cool Rolling Steel Sheet Co.,
Ltd. 0.00 0.00 1,604.02 1.39
Benxi Steel (Group) Machinery Co., Ltd. 1,748.66 1.60 2,253.13 1.96
Sub-total 40,986.11 37.51 25,958.30 22.56
Account payable
Bengang Fire-resistance Material Co. 16,325.99 2.61 12,012.00 1.92
Liaoning Bengang Steel & Iron Trading Co., Ltd. 197.57 0.03 281.88 0.05
Liaoning Metallurgy Technician College 826.15 0.13 1,424.11 0.23
Benxi Steel (Group) Ltd. 189.83 0.03 274.56 0.04
Benxi Steel (Group) Drilling Tools Co., Ltd. 385.71 0.06 803.79 0.13Bengang Steel Plates Co., Ltd. Interim Report 2010
21
End of term RMB0’000 Beginning of term RMB0’000
Related parties
Book
balance
Portion
in the
category
%
Bad debt
provision
Book
balance
Portion
in the
category
%
Bad debt
provision
Bengang Group New Industry Development Co.,
Ltd. 0.00 0.00 1.35 0.00
Bengang Group Property Co., Ltd. 270.89 0.04 594.82 0.1
Bengang Group Construction Inspection Co.,
Ltd. 24.43 0.00 39.48 0.01
Benxi Xingye Therapy and Sanitary Co., Ltd. 41.23 0.01 83.74 0.01
Benxi Yitong Pipe Co., Ltd. 86.30 0.01 205.36 0.03
Bengang Group Machinery Ltd. 2,648.01 0.42 2,709.88 0.43
Benxi Steel (Group) Construction Ltd. 23,405.45 3.74 1089.45 0.17
Bengang Group Mineral Co., Ltd. 12,505.15 2.00 74,957.52 11.97
Benxi Steel (Group) Industrial Development Ltd. 4,070.89 0.65 3,961.86 0.63
Benxi Steel (Group) Repairing & Building Ltd. 15,506.31 2.48 0.00 0.00
Bengang Group Metallurgy Residue Ltd. 758.48 0.12 4,898.44 0.78
Benxi Steel (Group) Information and Automatic
Tech. Ltd. 1,574.43 0.25 1,601.62 0.26
Bengang Group Electronics Co., Ltd. 911.90 0.15 1005.12 0.16
Benxi Steel (Group) Designing Institute 0.00 0.00 1,529.72 0.24
Benxi Steel (Group) Education Center 148.98 0.02 329.5 0.05
Benxi Steel (Group) Thermal Power
Development Co., Ltd. 8.25 0.00 10.32 0
Sub-total 79,885.95 12.77 107,814.50 17.21
Other account payable 0
Bengang Group Machinery Ltd. 421.26 0.48 382.7 0.45
Benxi Steel (Group) Repairing & Building Ltd. 468.26 0.53 513.48 0.6
Benxi Steel (Group) Industrial Development Ltd. 889.72 1.01 1,052.63 1.24
Benxi Steel (Group) Construction Ltd. 8,574.50 9.71 8,944.11 10.52
Bengang Group Property Co., Ltd. 17.46 0.02 25 0.03
Benxi Steel (Group) Information and Automatic
Tech. Ltd. 854.95 0.97 949.67 1.12
Bengang Group New Industry Development Co.,
Ltd. 18.56 0.02 252.14 0.3
Benxi Electronics Co., Ltd. 247.96 0.28 303.47 0.36
Bengang Group Training Center 9.55 0.01 395.32 0.47
Bengang Fire-resistance Material Co. 17.85 0.02 45.99 0.05
Benxi Steel (Group) Designing Institute 79.64 0.09 135.01 0.16
Liaoning Metallurgy Technician College 258.74 0.29 412.57 0.49
Benxi Steel (Group) Steel Process & Logistics
Ltd. 48.26 0.05 24.7 0.03
Benxi Steel (Group) Ltd. 18,064.74 20.46 14,460.68 17.02
Benxi Steel (Group) News Center 0.00 0.00 386.84 0.46
Bengang Puxiang Cool Rolling Steel Sheet Co.,
Ltd. 178.26 0.20 94.79 0.11
Bengang Group Thermal Power Development
Co., Ltd. 3.75 0.00 1416.77 1.67Bengang Steel Plates Co., Ltd. Interim Report 2010
22
End of term RMB0’000 Beginning of term RMB0’000
Related parties
Book
balance
Portion
in the
category
%
Bad debt
provision
Book
balance
Portion
in the
category
%
Bad debt
provision
Bengang Group Metallurgy Residue Ltd. 28.04 0.03 45.09 0.05
Sub-total 30,181.51 34.18 29,840.96 35.13
Account received in advance
Dalian Boluole Steel Tube Ltd. 604.18 0.19 843.93 0.33
Benxi Steel (Group) Steel Process & Logistics
Ltd. 2,553.98 0.81 3,796.53 1.5
Benxi Steel (Group) Construction Ltd. 0.00 0.00 17.58 0.01
Benxi Steel (Group) Industrial Development Ltd. 0.00 0.00 640.29 0.25
Guangshou Free Trade Zone Bengang Sales Co.,
Ltd. 2,753.02 0.88 4,934.74 1.94
Liaoning Bengang Steel & Iron Trading Co., Ltd. 2,206.97 0.70 2,403.13 0.95
Shanghai Bengang Steel & Iron Trading Co.,
Ltd. 0.00 0.00 1.91 0.00
Tianjin Bengang Steel Plate Processing and
Delivery Co., Ltd. 1,917.38 0.61 2,050.00 0.81
Bengang Puxiang Cool Rolling Steel Sheet Co.,
Ltd. 43,225.13 13.78 0.00 0.00
Bengang Group New Industry Development Co.,
Ltd. 0.00 0.00 0.07 0
Liaoning Metallurgy Technician College 0.00 0.00 29.33 0.01
Benxi Steel (Group) Medical Co. Ltd. 0.00 0.00 1.21 0.00
Bengang Group Metallurgy Residue Ltd. 0.00 0.00 0.1 0.00
Benxi Steel (Group) Machinery Co., Ltd. 0.00 0.00 38.26 0.02
Benxi Steel (Group) Culture Center 0.00 0.00 0.42 0.00
Benxi Steel (Group) Tengda Holdings Ltd. 0.00 0.00 0.27 0.00
Sub-total 53,260.65 16.98 14,757.78 5.82
Notes payable
Benxi Steel (Group) Construction Ltd. 179.65 0.09 864.03 0.2
Benxi Steel (Group) Industrial Development Ltd. 693.39 0.36 2137.34 0.5
Liaoning Bengang Steel & Iron Trading Co., Ltd. 174.77 0.09 210 0.05
Bengang Group New Industry Development Co.,
Ltd. 0.00 0.00 10 0.00
Bengang Fire-resistance Material Co., Ltd. 1,023.12 0.53 2,100.00 0.5
Benxi Steel (Group) Information and Automatic
Tech. Ltd. 236.89 0.12 475.09 0.11
Bengang Group Machinery Ltd. 115.30 0.06 2,388.61 0.56
Bengang Group Property Co., Ltd. 0.00 0.00 367.9 0.09
Bengang Electronics Co., Ltd. 0.00 0.00 881.00 0.21
Benxi Steel (Group) Drilling Tools Co., Ltd. 485.28 0.25 0.00 0.00
Bengang Group Construction and Repairing Co.,
Ltd. 0.00 0.00 330.6 0.08
Liaoning Metallurgy Technician College 0.00 0.00 786.3 0.19
Sub-total 2,908.40 1.52 10,550.87 2.49
Other account receivableBengang Steel Plates Co., Ltd. Interim Report 2010
23
End of term RMB0’000 Beginning of term RMB0’000
Related parties
Book
balance
Portion
in the
category
%
Bad debt
provision
Book
balance
Portion
in the
category
%
Bad debt
provision
Bengang Group Inspection Co., Ltd. 25.05 0.21 25 0.17
Benxi Steel (Group) Industrial Development Ltd. 27.50 0.23 41.62 0.28
Benxi Steel (Group) Real-estate Development
Co., Ltd. 240.26 1.98 222.18 1.49
Benxi Steel (Group) Electronics Co., Ltd. 287.22 2.37 147.63 0.99
Sub-total 580.03 4.78 436.43 2.93
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
Jan 14, 2010 Office of the secretary of
Board
Field
research Guojin Securities etc. Production and operation situation
Jan 16, 2010 Office of the secretary of
Board
Field
research China Merchants Securities Production and operation situation
Mar 5, 2010 Office of the secretary of
Board
Field
research CITIC Securities Production and operation situation
Mar 17,
2010
Office of the secretary of
Board
Field
research
Xihua Asset, Yinhua
Foundation, etc. Production and operation situation
May 14
2010
Office of the secretary of
Board
Field
research Ping’an Securities Production and operation situation
June 10,
2010
Office of the secretary of
Board
Field
research Orient Securities Production and operation situationBengang Steel Plates Co., Ltd. Interim Report 2010
24
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 with 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 change of CPA occurred 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.Bengang Steel Plates Co., Ltd. Interim Report 2010
25
13. Other material issues occurred in the report term or carried down to the report term from previous
term.
No such issues happened.
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.
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 20, 2010Bengang Steel Plates Co., Ltd. Interim Report 2010
26
Bengang Steel Plates Co., Ltd.
Financial Report
(January 1 – June 30 2010)
(Not Audited)
August 20, 2010Bengang Steel Plates Co., Ltd. Interim Report 2010
27
Balance Sheet
Prepared by: Bengang Steel Plates Co., Ltd. Ended June 30 2010 RMB Yuan
Items End of term Beginning of term
Note Consolidated Parent company Consolidated Parent company
Current asset:
Monetary capital V(I) 2,570,517,350.82 2,295,771,447.81 2,842,961,050.60 2,795,043,926.41
Settlement provision
Outgoing call loan
Transactional financial
assets
Notes receivable V(II) 3,019,989,658.02 2,939,476,677.96 1,758,593,662.55 1,692,464,732.45
Account receivable V(III) 628,656,027.68 786,656,027.68 578,413,768.04 736,508,549.83
Prepayment V(IV) 1,092,650,190.55 1,076,679,845.36 1,150,044,136.73 1,134,073,791.54
Insurance receivable
Interest receivable
Other account receivable V(V) 121,254,081.35 223,818,748.12 93,630,458.88 210,275,779.87
Repurchasing of financial
assets
Inventories V(VI) 8,383,177,882.01 7,899,793,969.81 8,075,674,235.63 7,701,138,465.80
Non-current asset due in 1
year
Other current asset V(VII) 182,211,823.73 182,211,823.73 182,211,823.73 182,211,823.73
Total of current asset 15,998,457,014.16 15,404,408,540.47 14,681,529,136.16 14,451,717,069.63
Non-current assets
Loans and payment on
other’s behalf disbursed
Sellable financial asset
Expired investment in
possess
Long-term receivable
Long-term share equity
investment
5,732,780.00
703,597,157.17
1,843,800.00
539,708,177.17
Investment properties
Fixed assets V(VIII)
16,930,818,376.85
16,501,855,007.08
17,962,489,063.75
17,518,704,793.06
Construction in process V(IX)
2,753,138,634.06
2,745,093,999.11
1,826,180,938.13
1,826,180,938.13
Engineering goods V(X)
26,574,932.11
26,574,932.11
137,969,772.11
137,969,772.11
Fixed asset disposal
Intangible assets
R&D expense
Goodwill
Long-term amortizable
expenses
Differed income tax asset V(XI) 211,673,756.88 210,573,821.71 211,673,756.88 210,573,821.71
Other non-current asset
Total of non-current assets 19,927,938,479.90 20,187,694,917.18 20,140,157,330.87 20,233,137,502.18
Total of assets 35,926,395,494.06 35,592,103,457.65 34,821,686,467.03 34,684,854,571.81
The Notes to the Financial Statements attached hereafter are the essential parts of the Financial Statements.
Legal representative: Yu Tianchen, CFO: Cao Aimin, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2010
28Bengang Steel Plates Co., Ltd. Interim Report 2010
29
Balance Sheet (Cont.)
Prepared by: Bengang Steel Plates Co., Ltd. Ended June 30 2010 RMB Yuan
Items NOte End of term Beginning of term
Consolidated Parent company Consolidated Parent company
Current liabilities
Short-term loans V(XIII) 3,133,081,400.00 3,133,081,400.00 2,845,850,700.00 2,845,850,700.00
Trade off financial liabilities
Notes payable V(XIV) 1,914,593,445.70 1,914,593,445.70 4,238,076,393.71 4,238,076,393.71
Account payable V(XV) 6,255,624,899.48 6,587,654,554.29 6,261,007,678.94 6,401,502,740.43
Prepayment received V(XVI) 3,137,218,806.02 3,089,537,774.41 2,538,565,736.60 2,418,365,310.33
Selling of repurchased financial
assets
Fees and commissions
receivable
Employees’ wage payable V(XVII) 196,305,973.57 196,305,973.57 245,128,249.09 245,128,249.09
Tax payable V(XVIII) 21,966,172.24 29,850,172.56 -117,251,269.73 -99,007,033.77
Interest payable
Dividend payable V(XIX) 94,080,000.00 94,080,000.00
Other account payable X(XX) 883,012,773.18 842,462,191.78 849,874,951.99 747,373,431.76
Non-current liability due in 1
year V(XXI))
183,540,085.42 183,540,085.42 960,040,053.18 960,040,053.18
Other current liability
Total of current liability 15,819,423,555.61 16,071,105,597.73 17,821,292,493.78 17,757,329,844.73
Non-current liabilities
Long-term borrowings V(XXII) 5,239,217,304.42 4,729,217,304.42 2,869,036,104.26 2,869,036,104.26
Bond payable
Long-term payable
Special payable V(XXIII) 93,106,666.67 93,106,666.67 5,666,666.67 5,666,666.67
Expected liabilities
Differed income tax liability
Other non-recurring liabilities V(XXIV) 1,048,650.00 1,048,650.00 1,048,650.00 1,048,650.00
Total of non-current liabilities 5,333,372,621.09 4,823,372,621.09 2,875,751,420.93 2,875,751,420.93
Total of liability 21,152,796,176.70 20,894,478,218.82 20,697,043,914.71 20,633,081,265.66
Owners’ equity (or shareholders’
equity)
Capital paid in (or share capital) V(XXV) 3,136,000,000.00 3,136,000,000.00 3,136,000,000.00 3,136,000,000.00
Capital reserves V(XXVI) 8,790,691,134.76 8,790,691,134.76 8,736,261,134.76 8,736,261,134.76
Less: Shares in stock
Surplus reserves V(XXVII) 921,277,509.22 921,277,509.22 921,277,509.22 921,277,509.22
Common risk provision
Retained profit V(XXVIII) 1,925,630,673.38 1,849,656,594.85 1,331,103,908.34 1,258,234,662.17
Different of foreign currency
translation
Total of owner’s equity belong to
the parent company
14,773,599,317.36 14,697,625,238.83 14,124,642,552.32 14,051,773,306.15
Minor shareholders’ equity
Total of owners’ equity 14,773,599,317.36 14,697,625,238.83 14,124,642,552.32 14,051,773,306.15
Total of liabilities and owners’
equity 35,926,395,494.06 35,592,103,457.65 34,821,686,467.03 34,684,854,571.81
The Notes to the Financial Statements attached hereafter are the essential parts of the Financial Statements.
Legal representative: Yu Tianchen, CFO: Cao Aimin, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2010
30
Income Statement
Prepared by: Bengang Steel Plates Co., Ltd. Jan-Jun 2010 RMB Yuan
Items Note ConsolidateCdu rrent tePramre nt company ConsolSidaamteed p eriod lPaastr eyneta cr ompany
I. Turnover V(XXIX) 22,354,385,410.54 21,088,872,060.37 16,461,627,817.78 16,014,758,985.68
II. Total business cost 21,667,576,834.61 20,409,841,097.26 17,360,327,382.85 16,971,948,350.65
Incl. Business cost 19,639,448,948.70 18,444,526,168.35 15,585,474,227.82 15,217,655,306.75
Business tax and surcharge V(XXX) 88,875,246.52 87,819,905.91 10,965,698.18 10,105,559.86
Sales expense V(XXXI) 232,468,074.79 189,455,641.04 128,303,748.52 94,939,798.13
Administrative expense V(XXXII) 1,588,857,380.97 1,569,917,072.92 1,543,804,837.22 1,536,654,350.19
Financial expenses V(XXXIII) 117,927,183.63 118,122,309.04 112,423,525.73 112,593,335.72
Asset impairment loss V(XXXIV) - - -20,644,654.62 -
Plus: Gains from change of fair
value (“-“ for loss)
Investment gain
(“-“ for loss)
Incl. Investment gains from
affiliates
III. Operational profit (“-“ for loss) 686,808,575.93 679,030,963.11 -898,699,565.07 -957,189,364.97
Plus: Non business income V(35) 6,695,012.42 6,470,969.57 471,629.65 -906,733.87
Less: Non-business expenses V(36) 10,324.63 129,406.24 115,656.24
Incl. Loss from disposal of
non-current assets
IV. Gross profit (“-“ for loss) 693,493,263.72 685,501,932.68 -898,357,341.66 -958,211,755.08
Less: Income tax expenses V(37) 4,886,498.68 - 11,529,058.73 -
V. Net profit (“-“ for net loss) 688,606,765.04 685,501,932.68 -909,886,400.39 -958,211,755.08
Net profit attributable to the
owners of parent company 688,606,765.04 685,501,932.68 -909,886,400.39 -958,211,755.08
Minor shareholders’ equity
VI. Earnings per share: V(38)
(I) Basic earnings per share 0.22 0.22 -0.29 -0.31
(II) Diluted earnings per share 0.22 0.22 -0.29 -0.31
VII. Other misc. incomes
VIII. Total of misc. incomes 688,606,765.04 685,501,932.68 -909,886,400.39 -958,211,755.08
Total of misc. incomes attributable
to the owners of the parent
company
688,606,765.04 685,501,932.68 -909,886,400.39 -958,211,755.08
Total misc gains attributable to the
minor shareholders
The Notes to the Financial Statements attached hereafter are the essential parts of the Financial Statements.
Legal representative: Yu Tianchen, CFO: Cao Aimin, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2010
31
Cash Flow Statement
Prepared by: Bengang Steel Plates Co., Ltd. Jan-Jun 2010 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 14,762,247,471.37 14,600,827,028.72 14,615,479,565.34 14,489,888,280.55
Net increase of trade
financial asset disposal
Tax returned 83,873,824.81 80,970,050.35 50,000.00 -
Other cash received from
business operation V(XXXIX) 16,154,358.56 15,478,322.37 15,791,741.33 14,987,634.26
Sub-total of cash inflow
from business activities 14,862,275,654.74 14,697,275,401.44 14,631,321,306.67 14,504,875,914.81
Cash paid for purchasing of
merchandise and services 12,667,550,050.98 12,667,550,050.98 11,158,785,617.75 11,158,785,617.75
Cash paid to staffs or paid
for staffs 574,115,193.91 569,463,180.14 511,399,424.98 508,735,368.98
Taxes paid 454,263,009.67 433,824,484.04 289,775,093.73 277,998,848.18
Other cash paid for business
activities V(XXXIX) 564,239,352.47 431,501,248.39 898,820,870.83 869,372,286.10
Sub-total of cash outflow
from business activities 14,260,167,607.03 14,102,338,963.55 12,858,781,007.29 12,814,892,121.01
Cash flow generated by
business operation, net 602,108,047.71 594,936,437.89 1,772,540,299.38 1,689,983,793.80
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
307,991.00 307,991.00 - -
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 307,991.00 307,991.00 - -
Cash paid for construction
of fixed assets, intangible assets
and other long-term assets
2,689,301,949.00 2,138,959,118.00 1,896,344,298.54 1,896,344,298.54
Cash paid as investment 68,888,980.00 328,888,980.00 - -
Net cash received from
subsidiaries and other operational
units
Other cash paid for
investment activities
Sub-total of cash outflow
due to investment activities 2,758,190,929.00 2,467,848,098.00 1,896,344,298.54 1,896,344,298.54
Net cash flow generated
by investment -2,757,882,938.00 -2,467,540,107.00 -1,896,344,298.54 -1,896,344,298.54
III. Cash flow generated by
financing
Cash received as investment
Incl. Cash received as investment
from minor shareholders
Cash received as loans 5,325,370,214.03 4,815,370,214.03 3,382,792,025.86 3,382,792,025.86
Other financing-related cash
received
Subtotal of cash inflow
from financing activities 5,325,370,214.03 4,815,370,214.03 3,382,792,025.86 3,382,792,025.86Bengang Steel Plates Co., Ltd. Interim Report 2010
32
Cash Flow Statement (Cont.)
Prepared by: Bengang Steel Plates Co., Ltd. Jan-Jun 2010 RMB Yuan
Current term Same period last year
Items
Note
Consolidated
Parent
company Consolidated
Parent
company
Cash to repay debts
3,274,231,276.00 3,274,231,276.00 3,218,252,539.31 3,218,252,539.31
Cash paid as dividend, profit, or interests
167,758,690.74 167,758,690.74 272,314,632.88 272,314,632.88
Subtotal of cash outflow due to financing
activities
3,441,989,966.74 3,441,989,966.74 3,490,567,172.19 3,490,567,172.19
Net cash flow generated by financing
1,883,380,247.29 1,373,380,247.29 -107,775,146.33 -107,775,146.33
IV. Influence of exchange rate
alternation on cash and cash equivalents
-49,056.78 -49,056.78 -166,380.27 -166,380.27
V. Net increase of cash and cash
equivalents
-272,443,699.78 -499,272,478.60 -231,745,525.76 -314,302,031.34
Plus: Balance of cash and cash
equivalents at the beginning of term
2,842,961,050.60 2,795,043,926.41 2,220,835,995.51 2,209,824,428.24
VI. Balance of cash and cash
equivalents at the end of term
2,570,517,350.82 2,295,771,447.81 1,989,090,469.75 1,895,522,396.90
The Notes to the Financial Statements attached hereafter are the essential parts of the Financial Statements.
Legal representative: Yu Tianchen, CFO: Cao Aimin, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2010
33
Detailed Table of Asset Impairment Provisions
Bengang Steel Plate Co., Ltd.
June 30, 2010
In RMB Yuan
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
I. Bad debt provision
434,444,112.24 434,444,112.24
II. Inventory impairment provision
91,672,354.68 91,672,354.68
III. Disposable financial asset
impairment provision
0 0.00
IV. Investment equity hold till
expiring impairment provision
0 0.00
V. Long-term equity investment
impairment provision
0 0.00
VI. Property investment
impairment provision
0 0.00
VII. Fixed asset impairment
provision
8,237,689.11 8,237,689.11
VIII. Project material impairment
provision
0 0.00
IX. Construction in process
impairment provision
0 0.00
X. Production biological material
asset impairment provision
0 0.00
Incl. Mature production
biological material asset
impairment provision
0 0.00
XI. Gas & oil asset impairment
provision
0 0.00
XII. Intangible asset impairment
provision
0 0.00
XIII. Goodwill impairment
provision
0 0.00
XIV. Other
0 0.00
Total
534,354,156.03 534,354,156.03
Legal representative: Yu Tianchen, CFO: Cao Aimin, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2010
34
Change in Owners’ Equities
Jan-Jun 2010
(In RMB Yuan except for otherwise specified)
Amount of the Current Term
Items Share capital Capital
reserves
Less:
Shares
in stock
Special
reserves
Surplus
reserves
Common risk
provision
Retained
profit
Total of
owners’ equity
I. Balance at the end of last year 3,136,000,000.00 8,736,261,134.76 921,277,509.22 1,258,234,662.17 14,051,773,306.15
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 1,258,234,662.17 14,051,773,306.15
III. Changed in the report term (“-“ for
decrease) 54,430,000.00 591,421,932.68 645,851,932.68
(I) Net profit 685,501,932.68 685,501,932.68
(II) Other misc. income
Total of (I) and (II) 685,501,932.68 685,501,932.68
(III) Investment or decreasing of capital by
owners 54,430,000.00 54,430,000.00
1. Capital inputted by owners
2. Amount of shares paid and accounted as
owners’ equity -
3. Others 54,430,000.00 54,430,000.00
(IV) Profit allotment -94,080,000.00 -94,080,000.00
1. Providing of surplus reserves
2. Common risk provision
3. Allotment to the owners (or shareholders) -94,080,000.00 -94,080,000.00
4. Others
(V) Internal transferring of owners’ equity
1. Capitalizing of capital reserves (or to
capital shares)
2. Capitalizing of surplus reserves (or to
capital shares)
3. Making up losses by surplus reserves
4. Others
(VI) Special reserves
1. Provided this year
2. Used this term
IV. Balance at the end of this term 3,136,000,000.00 8,790,691,134.76 921,277,509.22 1,849,656,594.85 14,697,625,238.83
Legal representative: Yu Tianchen, CFO: Cao Aimin, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2010
35
Change in Owners’ Equities (Cont.)
Jan-Jun 2010
(In RMB Yuan except for otherwise specified)
Items Amount of the same period of last year Share capital Capital reserves Less: Shares in stock Special reserves Surplus reserves Common risk provision Retained profit Total of owners’ equity
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 15,820,881,257.63
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 report term (“-“ for decrease) -1,115,011,755.08 -1,115,011,755.08
(I) Net profit -958,211,755.08 -958,211,755.08
(II) Other misc. income
Total of (I) and (II) -958,211,755.08 -958,211,755.08
(III) Investment or decreasing of capital by owners
1. Capital inputted by owners
2. Amount of shares paid and accounted as owners’ equity -
3. Others
(IV) Profit allotment -156,800,000.00 -156,800,000.00
1. Providing of surplus reserves
2. Common risk provision
3. Allotment to the owners (or shareholders) -156,800,000.00 -156,800,000.00
4. Others
(V) Internal transferring of owners’ equity
1. Capitalizing of capital reserves (or to capital shares)
2. Capitalizing of surplus reserves (or to capital shares)
3. Making up losses by surplus reserves
4. Others
(VI) Special reserves
1. Provided this year
2. Used this term
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
Legal representative: Yu Tianchen, CFO: Cao Aimin, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2010
36
Consolidated Statement of Change in Owners’ Equity
Jan-Jun 2010
(In RMB Yuan except for otherwise specified)
Amount of the Current Term
Owners’ Equity Items Attributable to the Parent Company
Share capital Capital
reserves
Less: Shares
in stock
Special
reserves
Surplus
reserves
Common risk
provision Retained profit Others
Minor
shareholders’
equity
Total of owners’
equity
I. Balance at the end of last year 3,136,000,000.00 8,736,261,134.76 921,277,509.22 1,331,103,908.34 14,124,642,552.32
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 1,331,103,908.34 14,124,642,552.32
III. Changed in the report term (“-“ for
decrease) 54,430,000.00
594,526,765.04 648,956,765.04
(I) Net profit 688,606,765.04 688,606,765.04
(II) Other misc. income
Total of (I) and (II) 594,526,765.04 594,526,765.04
(III) Investment or decreasing of capital by
owners 54,430,000.00
54,430,000.00
1. Capital inputted by owners
2. Amount of shares paid and accounted as
owners’ equity
3. Others 54,430,000.00 54,430,000.00
(IV) Profit allotment -94,080,000.00 -94,080,000.00
1. Providing of surplus reserves
2. Common risk provision
3. Allotment to the owners (or shareholders) -94,080,000.00 -94,080,000.00
4. Others
(V) Internal transferring of owners’ equity
1. Capitalizing of capital reserves (or to capital
shares)
2. Capitalizing of surplus reserves (or to
capital shares)
3. Making up losses by surplus reserves
4. Others
(VI) Special reserves
1. Provided this year
2. Used this term
IV. Balance at the end of this term 3,136,000,000.00 8,790,691,134.76 921,277,509.22 1,925,630,673.38 14,773,599,317.36
Legal representative: Yu Tianchen, CFO: Cao Aimin, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Interim Report 2010
37
Consolidated Change in Owners’ Equities (Cont.)
Jan-Jun 2010
(In RMB Yuan except for otherwise specified)
Amount of the same period of last year
Owners’ Equity Items Attributable to the Parent Company
Share capital Capital
reserves
Less: Shares in
stock
Special
reserves
Surplus
reserves
Common risk
provision Retained profit Others
Minor
Shareholders
equity
Total of
Owners’ equity
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 15,826,633,584.69
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 3,033,094,940.71 15,826,633,584.69
III. Changed in the report term (“-“ for
decrease)
-1,066,686,400.39 -1,066,686,400.39
(I) Net profit -909,886,400.39 -909,886,400.39
(II) Other misc. income
Total of (I) and (II) -909,886,400.39 -909,886,400.39
(III) Investment or decreasing of capital by
owners
1. Capital inputted by owners
2. Amount of shares paid and accounted
as owners’ equity
3. Others
(IV) Profit allotment -156,800,000.00 -156,800,000.00
1. Providing of surplus reserves
2. Common risk provision
3. Allotment to the owners (or
shareholders)
-156,800,000.00 -156,800,000.00
4. Others
(V) Internal transferring of owners’ equity
1. Capitalizing of capital reserves (or to
capital shares)
2. Capitalizing of surplus reserves (or to
capital shares)
3. Making up losses by surplus reserves
4. Others
(VI) Special reserves
1. Provided this year
2. Used this term
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
Legal representative: Yu Tianchen, CFO: Cao Aimin, Accounting Manager: Zuo ZhanguoBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
35
Bengang Steel Plates Co., Ltd.
Notes to Financial Statements
(January 1 – June 30 2010)
(Amount are in RMB Yuan except for stated particularly)
I. Company Profiles
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. Notes to Financial Statements Interim 2010
36
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.”
The business registration was renewed on December 21 2006. The business license was numbered
2100001049024. As of December 31 2007, the capital shares of Bengang was amounted to
3,136,000,000 shares. 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. Main Accounting Policies, Accounting Estimations and
Retrospective Correcting of Previous Errors
(1) Basis for the preparation of financial statements
The Financial Statements have been prepared on the assumption of continuing operation and upon the
trades and events actually occurred in accordance with the requirements of the China Accounting
Standards for Business Enterprises(CAS(2006)) issued by the Ministry of Finance(MOF).
(2) Statement of compliance to the Enterprise Accounting Standard
The financial statements present truly and completely the financial position, operation results and cash
flow of the company.
(3) Fiscal period
A fiscal year starts from January 1 and ends at December 31 of a calendar year.
(4) Standard currency for bookkeeping
The Company uses Renminbi (RMB) as the standard currency for book keeping.
(5) Accounting treatment of the entities under common control and different control
as well
1. Business combination under common control
The assets and liabilities that the combining party obtains in a business combination shall be measured
on the basis of their carrying amount in the combined party on the combining date. As for the balance
between the carrying amount of the net assets obtained by the combining party and the carrying amount
of the consideration paid by it (or the total par value of the shares issued),the additional paid-in capital
shall be adjusted. If the additional paid-in capital is not sufficient to be offset, the retained earnings shall
be adjusted.
The direct cost for the business combination of the combining party shall, including the expenses for
audit, assessment and legal services, be recorded into the profits and losses at the current period.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
37
The handling fees, commissions and other expenses for the issuance of equity securities for the business
combination shall be credited against the surplus of equity securities; if the surplus is not sufficient, the
retained earnings shall be offset.
Where the accounting policy adopted by the combined party is different from that adopted by the
combining party, the combining party shall, according to accounting policy it adopts, adjust the relevant
items in the financial statements of the combined party, and shall, pursuant to the present Standard,
recognize them on the basis of such adjustment.
2. Consolidation of entities under different control
The acquirer shall, on the acquisition date, measure the assets given and liabilities incurred or assumed
by an enterprise for a business combination in light of their fair values, and shall record the balances
between them and their carrying amounts into the profits and losses at the current period.
The acquirer shall distribute the combination costs on the acquisition date.
The acquirer shall recognize the positive balance between the combination costs and the fair value of the
identifiable net assets it obtains from the acquiree as business reputation. The acquirer shall treat the
balance between the combination costs and the fair value of the identifiable net assets it obtains from the
acquiree into the profits and losses of the current period.
As for the assets other than intangible assets acquired from the acquiree in a business combination (not
limited to the assets which have been recognized by the acquiree), if the economic benefits brought by
them are likely to flow into the enterprise and their fair values can be measured reliably, they shall be
separately recognized and measured in light of their fair values. As for any intangible asset acquired in a
combination, if its fair value can be measured reliably, it shall be separately recognized as an intangible
asset and shall measured in light of its fair value. As for the liabilities other than contingent liabilities
acquired from the acquiree, if the performance of the relevant obligations is likely to result in any
out-flow of economic benefits from the enterprise, and their fair values can be measured reliably, they
shall be separately recognized and measured in light of their fair values. As for the contingent liabilities
of the acquiree obtained in a combination, if their fair values can be measured reliably, they shall
separately be recognized as liabilities and shall be measured in light of their fair values.
(6) Preparation of Consolidated Financial Statements
The scope of consolidation of consolidated financial statements is determined based on control. All the
subsidies have been consolidated into the scope of consolidation for this period ended.
The accounting policy and accounting period of the subsidiaries within the consolidation scope shall be
in accordance with those of “the Company”. If not, it is necessary to make the adjustment according to
the Company’s accounting policies and accounting period when preparing the consolidated financial
statements.
The consolidated financial statements shall, on the basis of the financial statements of the parent
company and its subsidiaries together with other relevant material, be prepared by the parent company
after the long term equity investments in the subsidiaries are adjusted through the equity method.
The impact of transactions between the Company and its subsidiaries and inter-subsidiaries for the
consolidated balance sheet, consolidated income statement, consolidated statement of cash flow and
consolidated statement of changes of equity are eliminated when preparing the consolidated financial
statements.
Where losses applicable to the minority exceed the minority’s interests in the beginning equity of a
subsidiary, the excess, are charged against the Group’s interest if the minority does not have a binding
obligation according to the Article or agreement; if the minority has a binding obligation to cover the
losses according to the Article or agreement, the excess are charged against the minority’s interests.
If the parent company has a new subsidiary due to business combination under a same control during aBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
38
reporting period, it shall adjust the beginning balance in the consolidated balance sheets when preparing
consolidated balance sheets. the sales, expenses and profits of the subsidiaries from the acquisition date
to the end of the reporting period are included in the parent company’s consolidated Profit statements
The cash flow of the subsidiaries from the acquisition date to the end of the reporting period are included
in the parent company’s consolidated cash flow statements.
If it is not under a same control the parent company shall not adjust the beginning balance in the
consolidated balance sheets when preparing consolidated balance sheets. the sales, expenses and profits
of the subsidiaries from the acquisition date to the end of the reporting are included in the parent
company’s consolidated profit statements. the cash flow of the subsidiaries from the acquisition date to
the end of the reporting period are included in the parent company’s consolidated cash flow statements.
If the parent company disposes of a subsidiary within reporting period, the sales, expenses and profits of
the subsidiaries from the beginning of the reporting period to the disposal date are included in the parent
company’s consolidated profit statements. the cash flow of the subsidiaries from the beginning of the
reporting period to the disposal date are included in the parent’s consolidated cash flow statements.
(7) Recognition of cash and cash equivalents
At preparing of cash flow statement, those investments, which are featured with short term (expire
within 3 months since purchased), high liquidity, easy to convert to know cash, low in risk of value
change, could be recognized as cash equivalents. Equity investment are not recognized as cash
equivalents.
(8) Foreign currency transaction and translation of foreign currency financial statements
1. Foreign currencies
Foreign currency transactions are translated into RMB at the current rate at the day of transactions.
The foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet
date. The balance of exchange arising from the difference between the spot exchange rate on the balance
sheet date and the spot exchange rate at the time of initial recognition or prior to the balance sheet date
shall be recorded into the profits and losses at the current period. The foreign currency non-monetary
items measured at the historical cost shall still be translated at the spot exchange rate on the transaction
date, of which the amount of functional currency shall not be changed. The foreign currency
non-monetary items measured at the fair value shall still be translated at the spot exchange rate on the
date of confirming the fair value and the balance of exchange arising from it shall be recorded into
profits and losses at the current period or capital reserves.
2. Translation of foreign currency financial statements
The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the
balance sheet date. Among the owner's equity items, except the ones as "undistributed profits", others
shall be translated at the spot exchange rate at the time when they are incurred. The income and expense
items in the profit statements shall be translated at the spot exchange rate of the transaction date. The
balance arisen from the translation of foreign currency financial statements in compliance with the
aforesaid Items shall be presented separately under the owner's equity item of the balance sheets.
When disposing an overseas business, an enterprise shall shift the balance, which is presented under the
items of the owner's equities in the balance sheet and arises from the translation of foreign currency
financial statements related to this oversea business, into the disposal profits and losses of the current
period. If the overseas business is disposed of partially, the enterprise shall calculate the balance arising
from the translation of foreign currency statements of the part of disposal based on the disposal rate and
shall shift them into the profits and losses of the current period.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
39
(9) Financial instrument
Financial instruments include financial assets, financial liabilities and equity instruments.
1. Classification of financial instruments
According to the purpose of holding financial assets and financial liabilities, the Company classifies its
financial assets and financial liabilities as: financial assets or financial liabilities designated at fair value
through profit or loss, including: Held-to-maturity investment; loans and receivables and other financial
liabilities.
2. Recognition and Measurement of financial instruments
(1) The financial assets(financial liabilities) at fair value through profit or loss includes:
The financial assets (financial liabilities) at fair value through profit or loss are recognized initially at
fair value (minus cash dividends declared but not received or bond interest matured but not drawn yet).
The relevant transaction cost is recognized in the income statement when occurred.
Interests or cash dividends during the period of holding are recognized as investment gains. The fair
value will be adjusted and accounted as current gain/loss.
When disposed, the differences between fair value and initial amount are recognized as investment gains,
and thus adjust the gain/loss of fair value.
(2) Held-to-maturity investment
The Held-to-maturity investments are recognized initially at fair value (minus bond interest matured but
not drawn yet). The relevant transaction cost is recognized in the income statement when occurred.
The held-to-maturity investments are measured at amortized cost using the effective interest rate. The
interest income is recognized as investment income. The effective interest will be determined at the
initial recognition and will not be changed in the holding period or within the applicable period.
When disposing the held-to-maturity investment, the difference between the investing proceeds and the
carrying value is recognized as investment income.
(3) Receivables
Receivables from selling products and rendering services or receivable of other company not including
the receivables with quoted price in the active market (Including: accounts receivable, other receivables,
bill receivables, prepayments, long-term receivables) are measured at contract price; if the receivables is
of financing nature, it shall be recognized at the present value initially.
When disposing the receivables, the difference between the proceeds and the carrying value is
recognized in the income statement.
(4) Available for sale financial assets
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 including 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 are measured at fair value and the fair value changes are
recognized in the capital reserve - other capital reserve.
The difference between the proceeds of the disposal and the carrying value 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) Other financial liabilities
For other financial liabilities, they are initially recognized at fair value plus any directly attributableBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
40
transaction costs. After the initial recognition, the other financial liabilities are measured at amortized
cost.
3. Basis of recognition and accounting of financial asset transferring
Where an enterprise has transferred nearly all of the risks and rewards related to the ownership of the
financial asset to the transferee, it shall stop recognizing the financial asset. If it retained nearly all of the
risks and rewards related to the ownership of the financial asset, it shall not stop recognizing the
financial asset.
To judge whether the transfer of a financial asset can satisfy the conditions as prescribed in these
Standards for stopping the recognition of a financial asset, the enterprise shall pay more attention to the
essential of the transfer of the financial asset.
(1) Book value of the financial asset to be transposed;
(2) The sum of price received due to the transposition, and the accumulation of change in fair value
originally accounted as owners’ equity (when the asset to be transposed is saleable financial asset).
If the transfer of partial financial asset satisfies the conditions to stop the recognition, the entire book
value of the transferred financial asset shall, between the portion whose recognition has been stopped
and the portion whose recognition has not been stopped, be apportioned according to their respective
relative fair value, and the difference between the amounts of the following 2 items shall be included
into the profits and losses of the current period :
(1) The book value of the portion whose recognition has been stopped;
(2) The sum of consideration of the portion whose recognition has been stopped, and the portion of the
accumulative amount of the changes in the fair value originally recorded in the owner's equities which is
corresponding to the portion whose recognition has been stopped (in the event that the financial asset
involved in the transfer is a financial asset available for sale).
If the transfer of financial assets does not satisfy the conditions to stop the recognition, it shall continue
to be recognized as financial assets and the consideration received shall be recognized as financial
liabilities.
4. Termination of recognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the
recognition of the financial liability be terminated in all or partly. Where an enterprise (debtor) enters
into an agreement with a creditor so as to substitute the existing financial liabilities by way of any new
financial liability, and if the contractual stipulations regarding the new financial liability is substantially
different from that regarding the existing financial liability, it shall terminate the recognition of the
existing financial liability, and shall at the same time recognize the new financial liability.
Where an enterprise makes substantial revisions to some or all of the contractual stipulations of the
existing financial liability, it shall terminated the recognition of the existing financial liability or part of
it, and at the same time recognize the financial liability after revising the contractual stipulations as a
new financial liability.
Where the recognition of a financial liability is totally or partially terminated, the enterprise concerned
shall include into the profits and losses of the current period the gap between the carrying amount which
has been terminated from recognition and the considerations it has paid (including the non-cash assets it
has transferred out and the new financial liabilities it has assumed).
Where an enterprise buys back part of its financial liabilities, it shall distribute, on the repo day, the
carrying amount of the whole financial liabilities in light of the comparatively fair value of the part that
continues to be recognized and the part whose recognition has already been terminated. The gap between
the carrying amount which is distributed to the part whose recognition has terminated and the
considerations it has paid (including the noncash assets it has transferred out and the new financial
liabilities it has assumed) shall be recorded into the profits and losses of the current period.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
41
5. Determination of the Fair Value
The fair values of the financial assets or financial liabilities measured at fair value shall be determined
by reference to the quoted prices in the active market.
6. Impairment provision of the financial assets (not including accounts receivables)
(1) Impairment of available-for-sale financial assets
An impairment provision shall be made where the fair value of the held-to-maturity financial assets drop
significantly at the balance sheet date or the trend of decrease is expected not to be temporary after
taking various factors into consideration. The accumulative losses arising from the decrease of the fair
value of the owner’s equity which was directly included shall be transferred out and recorded as
impairment loss.
(2) Impairment of held-to-maturity investment
Calculating of impairment loss of investment held till expiration will be with reference to the calculating
of account receivable impairment loss.
(10) Account receivable
1. The recognition and provision of bad debt for the individually significant receivable
The recognition standard of bad debt provision for the individually significant receivable:
Individually significant receivables refer to accounts receivable over RMB 10 million or other
receivables over RMB 5 million.
The provision of bad debt for the individually significant receivable:
The impairment test should be assessed individually for each individually significant receivable. If the
there is evidence indicating the receivables have been impaired, the difference between the present value
of the future cash flows and the book value of receivables shall be recognized as bad debt provision and
shall be recorded into the profits and losses at the current period.
2. The recognition and provision of bad debt for the individually significant receivable with high
credit risk in group assessment
Individually insignificant receivables with high credit risk in group assessment refer to the individually
insignificant receivables whose ageing is over 3 years.
The bad debt provision for the group of receivables with credit risk characteristics:
Percentage of bad debt provision for accounts receivables: 100%; Percentage of bad debt provision for
other receivables: 100%
3. Aging analysis method
Age Percentage of bad debt for
Accounts receivables (%)
Percentage of bad debt for Other
receivables (%)
Within 1 yr, (included)
1-2 yrs 5 5
2-3 yrs 20 20
Over 3 yrs 100 100Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
42
(11) Inventories
1. Categorizing of inventories
Inventories include material in transit, raw material, low-valued consumables, work in process, finished
goods, materials for consigned processing etc.
2. Pricing of delivering inventory
The weighted average method is used to confirm the actual cost of the inventories sending out.
3. Recognition of inventory realizable value and providing of impairment provision
At the year end, complete check of the inventories shall be carried out and on the date of balance sheet,
the inventories shall be measured whichever is lower in accordance with the cost and the net realizable
value.
The net realizable value of inventories (finished products, stock commodity, material etc.) held for direct
selling in the daily business activity shall be calculated by deducting the estimated sale expense and
relevant taxes from the estimated sale price of inventories. The net realizable value of inventories for
further processing in the daily business activity shall be calculated by deducting the estimated cost of
completion, estimated sale expense and relevant taxes from the estimated sale price of inventories. The
net realizable value of inventories held for the execution of sales contracts or labor contracts shall be
calculated on the ground of the contract price. If an enterprise holds more inventories than the quantities
subscribed in the sales contract, the net realizable value of the excessive part of the Inventories shall be
calculated on the ground of the general sales price.
The Company shall make provision for loss on decline in value of inventories on the ground of each
item of inventories at the year end. For inventories with large quantity and relatively low unit prices, the
provision for loss on decline in value of inventories shall be made on the ground of the categories of
inventories.
When the circumstances of deducting the inventory value have eliminated, the deducted amount should
be restored and written back within the original amount of impairment provision provided previously.
4. Inventory system
The Company use perpetual inventory system.
5. Amortizing of low-value consumables and packaging materials
(1)Low-valued consumables should be amortized in full amount on issuance.
(2)Packing materials should be amortized in full amount on issuance.
(12) Long-term equity investment
1) Initial measurement
(1) The initial cost of long-term equity investment from business acquisition:
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, bear its debts, or 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 difference between the initial cost of the
long-term equity investment and the payment 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. The direct
cost for the business combination of the combining party shall, including the expenses for audit,
assessment and legal services, be recorded into the profits and losses at the current period.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
43
For the combination not under the common control, the combination costs shall be the fair values, on the
acquisition date, of the assets paid, the liabilities incurred or assumed and the equity securities issued by
the acquirer in exchange for the control on the acquiree and all relevant direct costs incurred to the
acquirer for the business combination. For a business combination realized by two or more transactions
of exchange, the combination costs shall be the summation of the costs of all separate transactions.
Where any future event that is likely to affect the combination costs is stipulated in the combination
contract or agreement, if it is likely to occur and its effects on the combination costs can be measured
reliably, the acquirer shall record the said amount into the combination costs.
(2) The initial cost of the long-term equity investment other than from business acquisition:
The initial cost of a long-term equity investment obtained by making payment in cash shall be the
purchase cost which is actually paid.
The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall
be the fair value of the equity securities issued.
The initial cost of a long-term equity investment of an investor shall be the value stipulated in the
investment contract or agreement (minus cash dividend or profit declared but not paid) except the unfair
value stipulated in the contract or agreement.
If the exchange of non-monetary assets is commercial in nature and the fair values of both the assets
received and surrendered can be reliably measured, the fair value of the assets surrendered shall be the
basis for the determination of the cost of the assets received, unless there is any exact evidence showing
that the fair value of the assets received is more reliable. Where any non-monetary assets transaction
does not meet the conditions as prescribed above, the carrying value and relevant payable taxes of the
assets surrendered shall be the initial cost of the assets received.
The initial cost of a long-term equity investment obtained by Debt Restructuring shall be ascertained on
the basis of fair values.
Subsequent measurement and profit or loss recognition
2) Subsequent measurement
The Company adopts cost method for the long term investment in subsidiary company and shall make an
adjustment by employing the equity method when it prepares consolidated financial statements.
For a long-term equity investment for which there is no quoted price in the active market and of which
the fair value cannot be reliably measured, if the investing enterprise has not joint control or significant
influence over the invested entity, the cost method shall be employed in the measurement.
A long-term equity investment of the investing enterprise that does joint control or significant influences
over the invested entity shall be measured by employing the equity method.
If the initial cost of a long-term equity investment is more than the investing enterprise' attributable share
of the fair value of the invested entity's identifiable net assets for the investment, the initial cost of the
long-term equity investment may not be adjusted.
If the initial cost of a long-term equity investment is less than the investing enterprise' attributable share
of the fair value of the invested entity's identifiable net assets for the investment, the difference shall be
included in the current profits and losses
Where any change is made to the owner's equity other than the net profits and losses of the invested
entity and if the percentage of the share remains the same, the book value of the long-term equity
investment shall be adjusted in accordance with the attributable part calculated as per the proportion of
the shares and simultaneously capital reserves (other capital reserves) shall be increased or decreased
accordingly.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
44
3) Criteria for the determination of joint control and significant influence over invested enterprise
If an investing enterprise has the control over an economic activity in accordance with the contracts and
agreements, which does not exist unless the investing parties of the economic activity with an assent on
sharing the control power over the relevant important financial and operating decisions, the investing
enterprise and other parties are regarded to have joint control over an invested entity
If an investing enterprise has the power to participate in making decisions on the financial and operating
policies of an enterprise, but not to control or do joint control together with other parties over the
formulation of these policies, the investing enterprise is regarded to have significant influences on the
invested entity.
4) Impairment test and provision for impairment
For a long-term equity investment for which there is no quoted price in the active market and of which
the fair value cannot be reliably measured and the investing enterprise does not have significant
influence over the invested entity, the impairment shall be determined by the balance between its
carrying value and the present value of its future cash flows discounted by the present market rate of
return of the similar financial assets.
For other long-term equity investment other than goodwill arising from the business combination, if the
net realizable value shows the net realizable value of the long term equity investment is less than the
book value, the balance shall be recognized as an impairment loss.
The Company assesses the goodwill arising from the business combination every year regardless
whether there is indication of impairment.
Once any impairment loss of long-term equity investment is recognized, it shall not be switched back in
the future accounting periods.
(13) Investment real estates
The term "investment real estates" refers to the real estates held for generating rent and/or capital
appreciation. The investment real estates include:
(1) The right to use any land which has already been rented;
(2) The right to use any land which is held and prepared for transfer after appreciation; and
(3) The right to use any building which has already been rented.
The Investment real estates shall be measured by the cost model. For the investment real estates
measured at cost model, Building for rent shall adopt the same depreciation policy as that of fixed assets
and land use right shall adopt the same amortization policy as that of intangible assets
Where any evidence shows that there is possible investment real estates impairment, the recoverable
amount of the investment real estates shall be estimated. If the recoverable amount of the investment real
estates is lower than the book value, the impairment loss shall be recognized accordingly
Once any impairment loss of investment real estates is recognized, it shall not be switched back in the
future accounting periods
(14) Fixed assets
1. Recognition of Fixed assets
The term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows:Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
45
(1) They are held for the sake of producing commodities, rendering labor service, renting or business
management; and
(2) Their useful life is in excess of one fiscal year.
No fixed asset may be recognized unless it simultaneously meets the conditions as follows:
(1) The economic benefits pertinent to the fixed asset are likely to flow into the enterprise; and
(2) The cost of the fixed asset can be measured reliably.
2. Fixed assets depreciation
Fixed assets are depreciated under the straight line method. The depreciation rate is determined
according to the category of assets, the useful life and the expected salvage value.
Leased assets are depreciated over the useful life if it is reasonably certain that the ownership of the
leased assets will be acquired upon expiry of lease, or over the shorter of lease term and useful life if it is
not reasonably certain that the ownership of the leased assets will be acquired upon expiry of lease.
Details of classification, depreciation period, salvage value rate and annual depreciation rate are as
follows:
Classification Depreciation Period Salvage Value Rate (%) Depreciation Rate (%)
Plants and Buildings 8-30years 0.00 3.33-12.50
Machinery 4-15 years 3.00 6.47-24.30
Transportation and other 5-18 years 3.00 5.39-19.40
equipments
3. Impairment of fixed assets:
The Company shall, on the day of balance sheet, make a judgment on whether there is any sign of
possible fixed assets impairment. Where any evidence shows that there is possible fixed assets
impairment, the recoverable amount of the fixed assets shall be estimated. The recoverable amount shall
be determined in light of the higher one of the net amount of the fair value of the fixed assets minus the
disposal expenses and the current value of the expected future cash flow of the fixed assets.
Where the measurement result of the recoverable amount indicates that an fixed asset's recoverable
amount is lower than its carrying value, the carrying value of the fixed asset shall be recorded down to
the recoverable amount, and the reduced amount shall be recognized as the loss of fixed asset
impairment and be recorded as the profit or loss for the current period. Simultaneously, a provision for
the fixed asset impairment shall be made accordingly.
After the loss of fixed asset impairment has been recognized, the depreciation or amortization expenses
of the impaired fixed asset shall be adjusted accordingly in the future periods so as to amortize the
post-adjustment carrying value of the fixed asset systematically (deducting the expected net salvage
value) within the residual service life of the fixed asset.
Once any loss of fixed asset impairment is recognized, it shall not be switched back in the future
accounting periods.
Where there is any evidence indicating a possible impairment of fixed assets, the Company shall, on the
basis of single item assets, estimate the recoverable amount. Where it is difficult to do so, it shall
determine the recoverable amount of the group assets on the basis of the asset group to which the fixed
asset belongs.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
46
4. Recognition criteria for fixed asset leased in by finance lease and its valuation
Where a lease satisfies one or more of the following criteria, it shall be recognized as a finance lease:
(1) The ownership of the leased asset is transferred to the lessee when the term of lease expires;
(2) The lessee has the option to buy the leased asset at a price which is expected to be far lower than the
fair value of the leased asset at the date when the option becomes exercisable.
(3) The lease term covers the major part of the use life of the leased asset;
(4) The present value of the minimum lease payments on the lease beginning date amounts to
substantially all of the fair value of the leased asset on the lease beginning date;
On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset
and the present value of the minimum lease payments on the lease beginning date as the entering value
in an account, recognize the amount of the minimum lease payments as the entering value in an account
of long-term account payable, and treat the balance between the recorded amount of the leased asset and
the long-term account payable as unrecognized financing charges.
(15) Construction in process
1. Classification of Construction in Progress
Construction in progress is classified and measured by the specific project.
2. The criteria and time of transfer of construction in progress to fixed assets
The cost of fixed assets transferred from a construction in progress includes all the necessary expenses
incurred for bringing the asset to the expected conditions for use.
Construction in progress is transferred to fixed asset when it has reached its working condition for its
intended use. In case the final project accounts have not been completed or approved, the asset should be
transferred to fixed assets at an estimated value by considering project budget, cost or actual cost of the
project and etc., and the deprecation of the said fixed assets shall be provided in accordance with the
Company’s accounting policy since it has reached its working condition for its intended use. After the
project accounts have been approved, the estimated values should be adjusted based on the actual cost,
but those provided deprecation should not be adjusted.
3. Impairment of Construction in progress:
The Company shall, on the day of balance sheet, make a judgment on whether there is any sign of
possible Construction in progress impairment.
If there is evidence indicates that there is possible construction in progress impairment, the recoverable
amount of the construction in progress shall determined as higher of the net amount of the fair value of
the construction in progress less disposal expenses, and the current value of the expected future cash
flow of the construction in progress.
Where an fixed asset’s recoverable amount is lower than its carrying value, the carrying value of the
fixed asset shall be reduced to the recoverable amount, and the reduced amount shall be recognized as
fixed asset impairment loss and be recorded as the profit or loss for the current period. Simultaneously, a
provision for the fixed asset impairment shall be made accordingly.
After the impairment has been recognized, the depreciation of the impaired fixed asset shall be adjusted
accordingly in the future periods so as to depreciate the adjusted carrying value of the fixed asset
systematically (deducting the expected salvage value) over the remaining useful life of the fixed asset.
Impairment loss on construction in progress shall not be reversed in the future accounting periods.
Where there is any evidence indicating a possible impairment of construction in progress, the CompanyBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
47
shall, on the basis of single item assets, estimate the recoverable amount. If the recoverable amount of
the individual asset is undeterminable, the company shall determine the recoverable amount of the asset
group to which the fixed asset belongs.
(16) Borrowing expenses
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 term "assets eligible for capitalization" shall refer to the fixed assets, investment real estate,
inventories and other assets, of which the acquisition and construction or production may take quite a
long time to get ready for its intended use or for sale.
The borrowing costs shall not be capitalized unless they simultaneously meet the following
requirements:
(1) The asset disbursements have already incurred, which shall include cash, transferred non-cash assets
or interest bearing debts paid for the acquisition and construction or production activities for preparing
assets eligible for capitalization;
(2) The borrowing costs has already incurred; and
(3) The acquisition and construction or production activities which are necessary to prepare the asset for
its intended use or sale have already started.
2) The capitalization period of borrowing costs
The capitalization period shall refer to the period from the commencement to the cessation of
capitalization of the borrowing costs, excluding the period of suspension of capitalization of the
borrowing costs.
When the qualified asset under acquisition and construction or production is ready for the intended use
or sale, the capitalization of the borrowing costs shall be ceased.
Where each part of a qualified asset under acquisition and construction or production is completed
separately and is ready for use, the capitalization of the borrowing costs in relation to this part of asset
shall be ceased.
Where each part of a asset under acquisition and construction or production is completed separately and
is ready for use or sale during the continuing construction of other parts, but it can not be used or sold
until the asset is entirely completed, the capitalization of the borrowing costs shall be ceased when the
asset is completed entirely.
3) The Suspension of capitalization of borrowing costs
Where the acquisition and construction or production of a qualified asset is interrupted abnormally and
the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be
suspended. If the interruption is a necessary step for making the qualified asset under acquisition and
construction or production ready for the intended use or sale, the capitalization of the borrowing costs
shall continue. The borrowing costs incurred during such period shall be recognized as expenses, and
shall be recorded into the profits and losses of the current period, till the acquisition and construction or
production of the asset restarts.
4) Method of calculating the capitalized amount of borrowing costs
For interest expense (minus the income of interests earned on the unused borrowing loans as a deposit in
the bank or investment income earned on the loan as a temporary investment) and the ancillary expenseBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
48
incurred to a specifically borrowed loan, those incurred before a qualified asset under acquisition,
construction or production is ready for the intended use or sale shall be capitalized at the incurred
amount when they are incurred, and shall be recorded into the costs of the asset eligible for
capitalization;
The 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.
Where there is any discount or premium, the amount of discounts or premiums that shall be amortized
during each accounting period shall be determined by the real interest rate method, and an adjustment
shall be made to the amount of interests in each period.
(17) Intangible assets
1. Measurement of Intangible Assets
(1). Initial measurement is based on cost upon acquisition.
The intangible assets shall be recorded at initial cost.
The cost of an intangible asset on acquisition include the purchase price, relevant taxes and other
necessary disbursements which may be directly attributable to brining the intangible asset to the
conditions for the expected purpose. If the payment for an intangible asset is delayed beyond the normal
credit conditions and it is of the financing nature, the cost of the intangible asset shall be determined on
the basis of the current value of the purchase price.
For intangible assets obtained from debt restructuring as settlement of liabilities from debtors, initial
recognition is based on its fair value, and the difference between the debt restructured and the fair value
of the intangible assets are recognized in the current profit and loss.
For intangible assets obtained from non-monetary transactions with commercial substance, and the fair
value of the assets obtained or surrendered can be reliably measured, the initial recognition of the asset
obtained is based on the fair value of the asset surrendered, unless there is strong evidence that the fair
value of the asset obtained is more reliable. For intangible assets obtained through non-monetary
transactions which do not meet the above criteria, the initial recognition is based on the book value of
the assets surrendered and the relevant taxes payable. No gain or loss will be recognized.
For the intangible assets are obtained in a business combination under the same control, initial
recognition is based on the book value of the party being combined. If the intangible assets are obtained
in a business combination not under the same control, initial recognition is based on the fair value.
For self-developed intangible assets, the costs shall include the cost of material consumed in developing
the intangible assets, labor costs, registration cost, and amortization of other patents and royalty in the
developing process, the capitalized interest expense and other necessary expenditures directly
attributable to intangible assets for the expected purpose.
(2). Subsequent Measurement
The Company shall analyze and judge the beneficial period of intangible assets upon acquisition.
Intangible assets with finite beneficial period shall be amortized under the straight-line method during
the period when the intangible asset can bring economic benefits to the enterprise. If it is unable to
estimate the beneficial period of the intangible asset, it shall be regarded as an intangible asset with
uncertain service life and shall not be amortized.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
49
2. Impairment of intangible Assets
For intangible assets with finite beneficial period, impairment test shall be performed at end of the
period if there is strong evidence that impairment exists.
Impairment test shall be carried out for intangible assets with uncertain beneficial period at each end of
the period.
Impairment test shall be performed for intangible assets, for which the recoverable amount of the
intangible assets shall determined as higher of the net amount of the fair value of the intangible assets
less disposal expenses, and the current value of the expected future cash flow of the intangible assets.
Where an fixed asset’s recoverable amount is lower than its carrying value, the carrying value of the
fixed asset shall be reduced to the recoverable amount, and the reduced amount shall be recognized as
fixed asset impairment loss and be recorded as the profit or loss for the current period. Simultaneously, a
provision for the fixed asset impairment shall be made accordingly.
After the impairment has been recognized, the depreciation of the impaired fixed asset shall be adjusted
accordingly in the future periods so as to depreciate the adjusted carrying value of the fixed asset
systematically (deducting the expected salvage value) over the remaining useful life of the fixed asset.
Impairment loss on intangible assets shall not be reversed in the future accounting periods.
Where there is any evidence indicating a possible impairment of intangible assets, the Company shall,
on the basis of single item assets, estimate the recoverable amount. If the recoverable amount of the
individual asset is undeterminable, the company shall determine the recoverable amount of the asset
group to which the fixed asset belongs.
3. Classification criteria for internal research phase and development phase
Research phase refers to the phase of creative and planned investigation to acquire and study to acquire
and understand new scientific or technological knowledge.
Development phase refers to the phase during which the result of research phase or other knowledge is
applied into certain projects or designs for the manufacturing of new or substantially improved material,
device and product.
The expenditure of research phase of internal research and development projects shall be recorded into
the profit or loss of the current period.
4. Criteria of capitalization of development expenditure
Expenditures during the development phase of internal research and development projects shall be
recognized as intangible assets when they meet all the following criteria:
(1) It is feasible technically to complete the intangible assets for use or sale;
(2) The intention to complete and use or sell the intangible assets is present;
(3) The method of which the intangible assets 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) Sufficient technical, financial and other resources to complete the development of the intangible
assets, and ability to use or sell the intangible assets and
(5) The development expenditures of the intangible assets can be reliably measured.
(18) Contingent liabilities
When the Company is involved in litigation, guarantees provided for the debts of other enterprises, lossBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
50
contract, restructuring and these events will result in future assets transfer or rendering of services and
the amount of the obligation can be measured reliably, the contingent liabilities shall be recognized.
1. Recognition of contingent liabilities
The obligation pertinent to a Contingency shall be recognized as an estimated debt when the following
conditions are satisfied simultaneously:
(1) That obligation is a current obligation of the enterprise;
(2) It is likely to cause any economic benefit to flow out of the enterprise as a result of performance of
the obligation; and
(3) The amount of the obligation can be measured in a reliable way.
2. Measurement of contingent liabilities
The estimated debts shall be initially measured in accordance with the best estimate of the necessary
expenses for the performance of the current obligation.
To determine the best estimate, an enterprise shall take into full consideration of the risks, uncertainty,
time value of money, and other factors pertinent to the Contingencies. If the time value of money is of
great significance, the best estimate shall be determined after discounting the relevant future outflow of
cash.
The best estimate shall be conducted in accordance with the following situations, respectively:
If there is a sequent range for the necessary expenses and if all the outcomes within this range are
equally likely to occur, the best estimate shall be determined in accordance with the middle estimate
within the range.
If there is not a sequent range for the necessary expenses and if the outcomes within this range are not
equally likely to occur, the best estimate shall be determined as follows:
(1)If the Contingencies concern a single item, it shall be determined in the light of the most likely
outcome.
(2) If the Contingencies concern two or more items, the best estimate should be calculated and
determined in accordance with all possible outcomes and the relevant probabilities.
When all or some of the expenses necessary for the liquidation of an estimated debts of an enterprise is
expected to be compensated by a third party, the compensation should be separately recognized as an
asset only when it is virtually certain that the reimbursement will be obtained. The amount recognized
for the reimbursement should not exceed the book value of the estimated debts.
(19) Revenue
1. Recognition Criteria for the Revenue from sale of goods
The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
and retained neither continuing managerial involvement which usually relates to the ownership nor
exerts effective control over the goods sold. The relevant amount of revenue can be measured reliably,
the economic benefits related to the transaction will flow into the enterprise; and the relevant costs
incurred or to be incurred can be measured reliably. Revenue from the sale of goods may be recognized.
2. Recognition Criteria for the Revenue from alienating of Assets Use Rights
When it is probable that economic benefits in relation to the transaction will flow into the enterprise; and
the amount of revenues can be measured reliably. The Company shall ascertain the amount of revenues
from the transfer of Assets Use Right based on the following circumstances respectively:
(1) Interest income shall be calculated based on the duration of which the Company's cash is used byBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
51
others and the actual interest rate; or
(2) Royalty revenue shall be calculated based on the period and method of charging as stipulated in the
relevant contract or agreement.
3. Recognition Criteria for the Revenue from providing Labor Services and Construction
Contracts under percentage of completion method
Revenue from providing labor services are recognized under the percentage of completion method if the
outcome of the labor service provision transaction can be reliably measured. Percentage completed is
determined by measurement of work completed.
Total revenue from providing of labor services is determined based on the received or receivable amount
stipulated in the contract or agreement, unless the received or receivable amount as stipulated in the
contract or agreement is unfair.
The Company shall, on the date of the balance sheet, ascertain the current revenue from providing labor
services by multiplying the total amount of revenues from providing labor services with the percentage
completion, less cumulative revenues recognized in the previous accounting periods. At the same time,
the enterprise shall recognize current cost of labor services by multiplying the total estimated cost of
providing of labor services with percentage completion less cumulative costs recognized in the previous
accounting periods.
If the result of a transaction concerning the providing of labor services cannot be reliably measured at
the balance sheet date, it shall be measured as follows:
(1) If the cost of labor services incurred is expected to be compensated, the revenue from the providing
of labor services shall be recognized to the extent of the cost of labor services incurred, and the cost of
labor services shall be recognized; or
(2) If the cost of labor services incurred is not expected to compensate, the cost incurred should be
recognized in the current profit and loss, and no revenue from the providing of labor services shall be
recognized.
(20) Government Subsidies
1. Types of Government subsidies
A government subsidy means the monetary or non-monetary assets obtained free of charge by the
Company from the government. Government subsidies consist of the government subsidies pertinent to
assets and government subsidies pertinent to income.
2. Accounting treatment
The government subsidies pertinent to fixed assets and intangible assets shall be recognized as deferred
income and equally recognized over the useful lives of the relevant assets as non operating income;
The government subsidies pertinent to incomes to subsidize future expenses shall be recognized as
deferred income and transferred to non operating income in the period during which the expenses
subsidized is recognized. Government subsidies to subsidize past expenses or losses shall be recognized
in the income statement in the period during which the subsidy is received.
(21) Deferred income tax liabilities and assets
1. Recognition of deferred income tax assets
The Company shall recognize the deferred income tax assets arising from a deductible temporary
difference to the extent that it is probable that the deductible temporary differences will be utilized toBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
52
offset taxable income.
2. Recognition of deferred income tax liabilities
The Company shall recognize the accrued income tax of the taxable temporary differences arising from
current and prior periods as a deferred income tax liability. Recognition of deferred income tax liabilities
are exclusive of goodwill and temporary differences arising from transaction not resulted from business
combinations and such transaction will affect neither accounting profit nor taxable income of the period
during which it occurs.
(22) Operating lease and finance lease
1. Accounting treatment of Operating lease
(1).The rents paid for operating leases shall be recorded in the profits and losses of the current period by
using the straight-line method over each period of the lease term. The initial direct costs paid by the
Company shall be recorded into the profits and losses of the current period
If the lessor has shouldered any expense related to the lease which should have been borne by the
Company, the Company shall deduct these expenses from the total rental expense and the remaining
rental expense shall be allocated to each period during the lease term
(2). The rents collected from operating leases shall be recorded in the profits and losses of the current
period by using the straight-line method over each period of the whole lease term in which free lease
period is included. The initial direct costs paid by the Company shall be recorded into the profits and
losses of the current period. The initial direct costs shall be capitalized if it is material, and be allocated
to each period as per the basis for rental revenue recognition.
If the Company has shouldered any expense related to the lease which should have been borne by the
lessee, the company shall deduct these expenses from the total rental revenue and the remaining rental
revenue shall be allocated to each period during the lease term.
2. Accounting treatment of Finance lease
(1). Leased in asset
On the lease beginning date, a lessee shall record the lower one of the fair value of the leased asset and
the present value of the minimum lease payments on the lease beginning date as the entering value in an
account, recognize the amount of the minimum lease payments as the entering value in an account of
long-term account payable, and treat the balance between the recorded amount of the leased asset and
the long-term account payable as unrecognized financing charges.
The lessee shall adopt the effective interest rate method to calculate and recognize the financing charge
in the current period. The unrecognized financing charge shall be amortized to each period during the
lease term.
(2). Leased out asset
On the beginning date of the lease term, the balance between the sums of the financing lease values
receivable and the unguaranteed residual value, and the sum of their present values shall be recognized
as unrealized financing income. The unrealized financing income shall be allocated to each period
during the lease term. The initial direct costs directly attributable to the leased item shall be included in
the initial measurement of financing lease values receivable and reduce the profit recognized during the
lease period.
(23) Significant accounting policies and changes to accounting estimates
1) Changes to accounting policies
No accounting policy change with the Company.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
53
2) Changes to accounting estimates
As approved at the 1st meeting of the 5th term of Board, the Company will modify the depreciation ages
of some fixed assets since April 1, 2010. This change of accounting estimation makes no impact on the
main businesses. The depreciation amount of 2010 will be reduced by RMB350 million, and the net
profit and owners’ equity will be increased by RMB263 million.
(24) Correction of prior period errors
No prior period errors have been found.
(25) Other significant accounting policies, accounting estimates and the preparation
method of financial statements
None
III. Taxes
1. Major Taxes and Rates
1. Value added tax: the taxes should be paid by taxable sales at 17% to allow the deduction of input tax.
2. City maintenance and construction taxes: the tax should be paid at 7% of turnover tax actually paid.
3. Enterprise income tax: the tax should be paid at 25% of taxable profit
4. Housing property tax: the tax should be paid at 1.2% of the building’s original costs after deduction of
30% of that.
5. Other taxes: to be calculated and paid according to the relevant tax laws.
2. Tax Preference
1. According to the Cai Shui (2009) No. 43 “Notice of Ministry of Finance and State Administration of
Taxation on Raising the Export Tax Refund Rate for Textile, Electronics Information” issued by the
Finance Ministry and State Tax Bureau, from 1 April on, the tax refund rate for cold rolling plates, hot
rolling stainless steel, oriented silicon steel, alloy steel, seamless steel pipe and kitchen range steel
products will be increased from 5-13% to 9%-13%.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
54
IV.Business combination and consolidated financial statements
The figures in the following two tables are expressed in RMB 0,000.00 unless otherwise stated .
(1) Information of the subsidiaries
1、 The subsidiaries acquired through investment or establishment
Full name
of the
subsidiary
Ownership
of the
subsidiary
Reg. Add. Business
property
Registered
capital
Business
Scope
Actual
investment
at year end
Balance of
other items
actually
formed net
investment
in the
subsidiaries
Share
proportion
%
Voting
power
%
Consolidated?
Minor
shareholders’
equity
Amount for
deducting
minor
shareholder’s
equity in the
minor
shareholder’s
equity
Balance of
owners’
equity of
the parent
company
after
deducting
of the share
of loss of
current term
by minor
shareholder
over the
share of
owners’
equity in
the
subsidiary
at
beginning
of term
Guangzhou
Bengang
Trade Co.,
Ltd.
Limited Guangzhou Sales 100 Sales of
steel 100 100 100 Yes
Shanghai
Bengang
Metallurgy
Tech. Ltd.
Limited Shanghai Sales 500 Sales of
steel 500 100 100 Yes
Bengang Limited Liaoyuang Sales 1000 Production 47,760.76 100 100 YesBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
55
Steel Plate
Liaoyang
Orel Ball
Co., Ltd.
and sales
of ore ball
Bengang
Stainless
Cool-rolling
(Dandong)
Co., Ltd.
Limited
Dandong
Production
Sales
16000
Production
and sales
of
stainless
steel
16000
100 100 Yes
2. The subsidiaries acquired through business combination under common control
Full name of the subsidiary
Owners
hip of
the
subsidia
ry
Reg.
Add.
Business
property
Registere
d capital Business Scope
Actual
investmen
t at year
end
Balance of
other items
actually
formed net
investment
in the
subsidiaries
Shar
e
prop
ortio
n %
Voting
power
%
Consol
idated?
Minor
shareholders
’ equity
Amount for
deducting
minor
shareholder
’s equity in
the minor
shareholder
’s equity
Balance of owners’
equity of the parent
company after
deducting of the
share of loss of
current term by
minor shareholder
over the share of
owners’ equity in the
subsidiary at
beginning of term
Changchun Bengang Steel
Sales Ltd.
Limite
d
Changc
hun Sales 50 Sales of steel 50 100 100 Yes
Haerbin Bengang
International Trading Ltd.
Limite
d Harbin Sales 50 Sales of steel 50 100 100 Yes
Nanjing Bengang Steel Sales
Ltd.
Limite
d Nanjin Sales 115 Sales of steel 115 100 100 Yes
Wuxi Bengang Steel Sales
Ltd.
Limite
d Wuxi Sales 100 Sales of steel 100 100 100 Yes
Xiamen Bengang Steel Sales
Ltd.
Limite
d
Xiame
n Sales 50 Sales of steel 50 100 100 Yes
Yantai Bengang Steel Sales
Ltd.
Limite
d Yantai Sales 50 Sales of steel 50 100 100 Yes
Tianjin Bengang Steel
Trading Ltd.
Limite
d Tianjin Sales 300 Sales of steel 300 100 100 YesBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
56
(2) Special purpose entity or operational entity controlled through entrusted operation or
lease
None
(3) The change of consolidation scope
The consolidation scope has increase by one subsidiary compared with last year:
In December 2009, the Company invested to setup Bengang Stainless Cool Rolling Dandong Co., Ltd.
in Dandong. The company was licensed on January 5, 2010 with number 210600004056338. The
registered capital was RMB160 million, and was verified by Dandong Yalu River CPA by Verification
Report 丹鸭会验字（2010）2 号.
(4) 1. Subsidiaries being newly included and excluded in the consolidation scope this period
1. Subsidiaries newly included in the consolidated accounts
Name Net asset at end of term Net profit of the current term
Bengang Stainless Cool-rolling (Dandong) Co.,
Ltd.
160,000,000.00 0
2. Subsidiaries newly excluded from the consolidated accounts
(5) The business combination under the common control: None
(6) The business combination not under the common control: NoneBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
57
V. 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 2010, “End of term” refers to June 30 2010, “current term” refers to the
period between January 1 to June 30 of 2010. All of amounts are in RMB except for stated otherwise.
(1) Monetary capital
Balance at the end of term Balance at the beginning of term
Items Amount of
foreign currency
Exchange
rate
Amount RMB
Amount of
foreign currency
Exchange
rate
Amount RMB
Cash
RMB 219,342.29 51,602.24
Sub-total 219,342.29 51,602.24
Bank deposit
RMB 2,016,802,749.66 1,371,404,875.80
HKD 23,484.69 0.8724 20,488.05 23,482.32 0.8805 20,676.18
USD 98,363.06 6.7901 667,895.01 190,501.44 6.8283 1,300,800.99
EURO 13,268.84 8.3393 110,652.84 13,262.13 9.7836 129,751.38
Sub-total 2,017,601,785.56 1,372,856,104.35
Other
monetary
fund
RMB 552,696,222.97 1,470,053,344.01
Sub-total 552,696,222.97 1,470,053,344.01
Total 2,570,517,350.82 2,842,961,050.60
Including: Details of other monetary capital:
Items Balance at the end of term Balance at the beginning of term
Fixed deposit 50,000,000.00 286,119,000.00
Deposit of L/C 0.00 7,506,151.70
Deposit for bank accepted
drafts 502,696,222.97 1,176,428,192.31
Total 552,696,222.97 1,470,053,344.01Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
58
As of June 30, 2010, the Company has put RMB39,430,000 of fixed deposit into pledge to Bengang
Branch of Bank of China for the issuing of payable notes amounted to RMB196,768,766.18.
RMB64,464,225 of fixed deposit to Bengang Branch of Industrial & Commercial Bank for issuing of
payable notes of RMB322,171,370.68. RMB63,752,490.65 of fixed deposit to Bengang Branch of
Construction Bank for issuing of payable notes of RMB318,762,451.48. RMB185,049,507.32 of fixed
deposit to Benxi Xihua Branch of Agriculture Bank for issuing of payable notes of RMB926,890,857.36.
RMB150,000,000 of fixed deposit to Benxi Branch of Industrial Bank for payable notes of
RMB150,000,000.
(2) Notes receivable
1. Categories of notes receivable
Categories Balance at the end of term Balance at the beginning of term
Bank acceptance 3,019,989,658.02 1,758,593,662.55
Commercial acceptance
Total 3,019,989,658.02 1,758,593,662.55
2. No notes receivable in pledge at the year end.
3. No Notes receivable has been transferred into accounts receivable due to inability of drawer to meet
acceptance bill at the end year end.
4. No notes receivable from shareholders with 5% or over of the Company’s shares at year end.
5. No notes receivable from related parties at the end of the year.
(3) Account receivable
1. Accounts receivable by categories
Balance at the end of term Balance at the beginning of term
Items
Book balance
Percentage
of the total
receivable
%
Bad debt
provision
%
Bad debt
provision
Book balance
Percentage
of the total
receivable
%
Bad debt
provision
%
Bad debt
provision
within
1 yr
495,942,527.37 49.20 445,700,267.73 46.54
1-2
yrs
89,275,079.38 8.86 5 4,463,753.97 89,275,079.38 9.32 5.00 4,463,753.97
2-3
yrs
59,877,718.63 5.94 20 11,975,543.73 59,877,718.63 6.25 20.00 11,975,543.73
Over
3 yrs
362,952,022.65 36.01 100 362,952,022.65 362,952,022.65 37.89 100.00 362,952,022.65
Total 1,008,047,348.03 100 379,391,320.35 957,805,088.39 100.00 379,391,320.35
Balance at the end of term
Categories
Book value Portion in total % Bad debt provision Bad debt provision rateBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
59
Single receivable account with
mass amount
596,411,880.36 59.17 76,753,270.93 12.87
No major amount individually
but with great risk after
combined with others with
similar credit risk
293,659,161.94 29.13 293,659,161.94 100
Other non-material receivables 117,976,305.73 11.70 8,978,887.48 7.61
Total 1,008,047,348.03 100 379,391,320.35 37.64
Balance at the beginning of term
Categories
Book value Portion in total % Bad debt provision Bad debt provision rate %
Single receivable account with
mass amount
546,169,620.72 57.02 76,753,270.93 14.05
No major amount individually
but with great risk after
combined with others with
similar credit risk
293,659,161.94 30.66 293,659,161.94 100.00
Other non-material receivables 117,976,305.73 12.32 8,978,887.48 7.61
Total 957,805,088.39 100.00 379,391,320.35 39.61
2. Accounts receivables which are individually insignificant but with a material portfolio credit
risk are as follows:
Balance at the end of term Balance at the beginning of term
Book balance
Book balance
Age
Amount Proportion %
Bad debt provision
Amount Proportion %
Bad debt provision
Over 3
yrs
293,659,161.94 100 293,659,161.94 293,659,161.94 100 293,659,161.94
Total 293,659,161.94 100 293,659,161.94 293,659,161.94 100 293,659,161.94
The explanation for accounts receivables which are individually insignificant but with a material
portfolio credit risk: individually insignificant items with aging over 3 years.
3. Change of bad debt 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
2009 348,910,272.07 30,481,048.28 379,391,320.35Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
60
Jan-Jun 2010 379,391,320.35 379,391,320.35
4. No accounts receivable has been written off this year
5. The top five debtors at the year end
Name of companies Relation with the Company Amount Account age Portion in total receivables
Bengang Group
Machinery Ltd. Related parties 115,298,787.38 within 1 year 11.44
China Petrol Goods Co. Client 103,666,032.32 within 1 year 10.28
Bengang Fire-resistance
Material Co. Related parties 84,625,720.61 1-2 yrs 8.40
Benxi Steel (Group)
Construction Ltd. Related parties 83,722,159.47 within 1 year 8.31
Baoji Fast Gear Co., Ltd. Client 13,401,375.87 within 1 yr 1.33
6.The accounts receivables of related parties are disclosed in Note VI.
7. Within the aforesaid balance, there is no amount due from the shareholders that hold 5% or
more of the company’s voting shares.
(4) Prepayments
1. Prepayments presented by aging
Balance at the end of term Balance at the beginning of term
Amount Proportion % Amount Proportion %
within 1 yr 1,025,437,897.61 93.85 1,082,831,843.79 94.16
1-2 years 67,212,292.94 6.15 67,212,292.94 5.84
2-3 years
Over 3 yrs
Total 1,092,650,190.55 100 1,150,044,136.73 100
2.Top five companies of prepayments
Name of the companies
Relation
with the
Company
Amount Date
Reason of
unsettled
Bengang Group International Trading Ltd.
Related
parties
301,625,261.15 within 1 yr
Goods not
arrived
Liaoning Power Supply Co., Ltd. Benxi Suppliers 192,462,532.19 within 1 yr Prepaid forBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
61
Branch power supply
Shenyang Coking Coal Co., Ltd. Sales
Division
Suppliers 161,936,252.55 within 1 yr
Goods not
arrived
Linde Engineering (Hangzhou) Co., Ltd. Suppliers 111,448,848.00 1-2 yrs
Equipment
not arrived
Benxi Steel (Group) Construction Ltd.
Related
parties
78,243,089.61 within 1 yr
Prepaid for
project
Total 845,715,983.50
3. Within the aforesaid balance, there is no amount due from the shareholders that hold 5% or
more of the company’s voting shares.
4. As to the ending balance of prepayments with regard to related parties, please refer to the Note
6.
5. The explanation of prepayments: The balance of prepayments has reduced by RMB
57,393,946.18 at the year end compared with the beginning balance. The decrease rate is 4.99%
and is mainly caused by settlement of purchases.
(5) Other account receivable
1. Other receivables presented by categories:
Balance at the end of term Balance at the beginning of term
Items
Book balance
Percentage
of the total
receivable
%
Bad debt
provision
%
Bad debt
provision
Book balance
Percentage
of the total
receivable
%
Bad debt
provision
%
Bad debt
provision
within
1 yr
105,069,526.79 59.59 77,445,904.32 52.09
1-2
yrs
3,369,823.70 1.91 5 168,491.18 3,369,823.70 2.27 5.00 168,491.18
2-3
yrs
14,054,027.55 7.97 20 2,810,805.51 14,054,027.55 9.45 20.00 2,810,805.51
Over
3 yrs
53,813,495.20 30.52 96.77 52,073,495.20 53,813,495.20 36.19 96.77 52,073,495.20
Total 176,306,873.24 100 37.03 55,052,791.89 148,683,250.77 100.00 37.03 55,052,791.89
Balance at the end of term
Category
Book value Portion in total % Bad debt provision Bad debt provision rate %
Other receivable with major
individual amount
94,554,130.19 53.63 5,351,093.71 5.66
No major amount
individually but with great
risk after combined with
others with similar credit risk
46,703,585.66 26.49 46,703,585.66 100.00Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
62
Other minor other
receivables
35,049,157.39 19.88 2,998,112.52 8.55
Total 176,306,873.24 100 55,052,791.89 31.23
Balance at the beginning of term
Category
Book value
Portion in total
%
Bad debt
provision
Bad debt
provision rate
Other receivable with major individual
amount
66,930,507.72 45.02 5,351,093.71 7.99
No major amount individually but with great
risk after combined with others with similar
credit risk
46,703,585.66 31.41 46,703,585.66 100.00
Other minor other receivables 35,049,157.39 23.57 2,998,112.52 8.55
Total 148,683,250.77 100.00 55,052,791.89 37.03
2. Bad debt provision for individually significant other receivables and individually insignificant
other receivables for which impairment test has been carried out:
Name of the companies Book balance
Bad debt
provision
Providing rate % Reason
Japanese Loan Sinking
Fund of Finance Bureau
of Benxi 1,740,000.00 sinking fund
Total 1,740,000.00
The Finance Bureau of Benxi Japanese Loan Sinking fund is the deposit for paying back Janapese yuan
loan. The aging is over three years and no bad debt provision has been made
3. Other receivables which are individually insignificant but with a material portfolio credit risk
are as follows:
Balance at the end of term Balance at the beginning of term
Book balance Book balance
Age
Amount
Proportion %
Bad debt provision
Amount Proportion %
Bad debt provision
Over 3 yrs 46,703,585.66 26.49 46,703,585.66 46,703,585.66 31.41 46,703,585.66
Total 46,703,585.66 26.49 46,703,585.66 46,703,585.66 31.41 46,703,585.66
The explanation for accounts receivables which are individually insignificant but with a material
portfolio credit risk: individually insignificant items with aging over 3 years.
4. Change of bad debt 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
2009 49,576,136.76 5,484,315.55 7,660.42 55,052,791.89
Jan-Jun 2010 55,052,791.89 55,052,791.89Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
63
5. Top five debtors at the year end
Name of companies
Relation
with the
Company
Amount Account
age
Portion in
total other
receivables
(%)
Description
Dalian Benruitong Automobile Material
Technologies Co., Ltd. Subsidiary 65,000,000.00 within 1
year 36.87 Investment
China Metallurgy Southern Engineering &
Technologies Co., Ltd. Suppliers 22,974,815.08 within 1
year 13.03 Deposit
Freight for main clients Suppliers 19,692,650.29 within 1
year 11.17 Freight
Shenyang Zhanxiang Decoration Co., Ltd. Suppliers 3,824,589.76 Over 3
years 2.17
Payment
for
material
Benxi Steel (Group) Electronics Co., Ltd. Related
parties 2,872,197.62 within 1
year 1.63 Current
account
6. As to the ending balance of other receivables with regard to related parties, please refer to the
Note 6.
7. No other receivables have been written-off this year.
8. At end of the 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) Inventories
1. Categories of inventories
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
Raw
materials and
main
materials
5,300,216,804.21 22,659,881.77 5,277,556,922.44 5,315,883,785.06 22,659,881.77 5,293,223,903.29
Semi-finished
Product
382,271,811.34 56,804,949.29 325,466,862.05 372,869,345.07 56,804,949.29 316,064,395.78
Finished
products
2,792,361,621.14 12,207,523.62 2,780,154,097.52 2,478,593,460.18 12,207,523.62 2,466,385,936.56
Total 8,474,850,236.69 91,672,354.68 8,383,177,882.01 8,167,346,590.31 91,672,354.68 8,075,674,235.63
There are no inventories used as mortgage or guarantee at the end of the year.
The increase of the finished products is caused by the increase of manufacturing capacity.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
64
2.Inventory impairment provision
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
22,659,881.77 22,659,881.77
Semi-finished Product 56,804,949.29 56,804,949.29
Finished products 12,207,523.62 12,207,523.62
Total 91,672,354.68 91,672,354.68
3.Inventory impairment provision
Items
Basis of providing impairment
provision
The reason for the
write-back of
impairment
The percentage of
write-back against
the ending balance
of inventory
Raw materials and main
materials
Net realizable value is lower than
cost at the year end
Semi-finished Product
Net realizable value is lower than
cost at the year end
Finished products
Net realizable value is lower than
cost at the year end
(7) Other current asset
Items Balance at the end of term Balance at the beginning of term
Prepaid income tax 182,211,823.73 182,211,823.73
Total 182,211,823.73 182,211,823.73
(8) Fixed Assets and accumulated depreciation
1. Fixed assets
Items
Balance of book
value at beginning
of term
Increased this term Decreased this
term
Balance of book
value at end of term
I. Total of original book value 34,393,425,732.21 15,229,351.28 2,096,992.68 34,406,558,090.81
Incl. House & Buildings 8,444,656,063.60 8,444,656,063.60
Equipment & machinery 25,197,300,177.29 13,866,103.42 543,990.00 25,210,622,290.71
Transportation facilities 751,469,491.32 1,363,247.86 1,553,002.68 751,279,736.50
II. Total of accumulative
depreciation 16,422,698,979.35 1,046,845,092.26 2,042,046.76 17,467,502,024.85Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
65
Items
Balance of book
value at beginning
of term
Increased this term Decreased this
term
Balance of book
value at end of term
Incl. House & Buildings 1,888,837,377.52 200,104,281.41 2,088,941,658.93
Equipment & machinery 14,081,025,243.26 836,661,821.77 527,670.30 14,917,159,394.73
Transportation facilities 452,836,358.57 10,078,989.08 1,514,376.46 461,400,971.19
III. Total of net book value of
fixed assets 17,970,726,752.86 15,229,351.28 1,046,900,038.18 16,939,056,065.96
Incl. House & Buildings 6,555,818,686.08 0.00 200,104,281.41 6,355,714,404.67
Equipment & machinery 11,116,274,934.03 13,866,103.42 836,678,141.47 10,293,462,895.98
Transportation facilities 298,633,132.75 1,363,247.86 10,117,615.30 289,878,765.31
IV. Total of impairment
provisions 8,237,689.11 8,237,689.11
Incl. House & Buildings 8,208,087.85 8,208,087.85
Equipment & machinery 29,601.26 29,601.26
Transportation facilities
V. Total of fixed asset book
value 17,962,489,063.75 15,229,351.28 1,046,900,038.18 16,930,818,376.85
Incl. House & Buildings 6,547,610,598.23 0.00 200,104,281.41 6,347,506,316.82
Equipment & machinery 11,116,245,332.77 13,866,103.42 836,678,141.47 10,293,433,294.72
Transportation facilities 298,633,132.75 1,363,247.86 10,117,615.30 289,878,765.31
The amount of depreciation is RMB1,046,845,092.26 this period.
The original value of the fixed assets transferred from construction in progress is RMB6,861,108.02.
The Company has no guaranteed or mortgaged fixed assets at the year end.
2.Fixed assets leased out by operating lease
Items Book value
Houses & buildings 12,195,047.58
Equipment & machinery 41,240.73
Total 12,236,288.31
3.Fixed assets without property rights certificates at the year end
Items Book value Reason Expected date of grant
Houses & buildings 2,610,984,350.51 Newly built construction Will be handled in 2010
Total 2,610,984,350.51Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
66
(9) 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
Super thin cool
rolling plate
reformation
38,164,260.43 38,164,260.43 38,064,980.39 38,064,980.39
IT project of the
Company 132,612,650.27 132,612,650.27 124,396,841.97 124,396,841.97
Replacing and
relocating of coke
furnace
12,276,536.00 12,276,536.00 12,276,536.00 12,276,536.00
Energy saving
reconstruction and
180t
dephosphorization
converter
519,751,239.46 519,751,239.46 296,497,595.87 296,497,595.87
Plate-billet
continuous casting
machine
reformation
414,735,827.18 414,735,827.18 350,979,705.03 350,979,705.03
Energy saving
reconstruction of
special steel factory
192,029,901.57 192,029,901.57 169,994,167.25 169,994,167.25
Upgrading of
continuous casting 91,000,419.34 91,000,419.34 66,116,583.13 66,116,583.13
Environmental
reengineering 114,502,543.47 114,502,543.47 72,443,997.84 72,443,997.84
stainless steel cool
rolling 323,056,491.74 323,056,491.74 169,177,238.11 169,177,238.11
Taizi river
transformer
substation 66KV
line
82,131,088.85 82,131,088.85 56,244,279.85 56,244,279.85
Recycling steel
plant phase
Reforming
101,442,886.20 101,442,886.20 92,524,211.85 92,524,211.85
60000 cubic meter
oxygen generator 265,486,472.46 265,486,472.46 122,375,900.82 122,375,900.82
Other small projects 61,917,347.64 61,917,347.64 51,893,537.39 51,893,537.39
Silicon steel project 248,244,714.61 248,244,714.61 59,709,125.65 59,709,125.65
Capacity expansion
and reform of steel
tank
46,680,627.78 46,680,627.78 46,429,345.65 46,429,345.65
Two
tacker-Reclaimers
in Sawo Coal yard
51,024,513.98 51,024,513.98 47,791,242.85 47,791,242.85
Ancillary facilities
reconstruction for
iron-making,
transportation and
logistics
58,081,113.08 58,081,113.08 49,265,648.48 49,265,648.48
Total 2,753,138,634.06 0.00 2,753,138,634.06 1,826,180,938.13 0.00 1,826,180,938.13
The explanation of CIP: The ending balance of CIP has increased by RMB926,957,695.93 and 50.75%,
which was caused by resuming of unfinished projects.
No impairment provision provided on CIP as of the end of report term.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
67
The change of important construction in progress
Name of projects Budget Balance at the Increased this term Transferred into Other decreases Balance at the end
Super thin cool rolling plate reformation 1,126,190,000.00 38,064,980.39 99,280.04 38,164,260.43
IT project of the Company 274,640,000.00 124,396,841.97 8,215,808.30 132,612,650.27
Replacing and relocating of coke furnace 1,415,341,917.35 12,276,536.00 12,276,536.00
Energy saving reconstruction and 180t 1,277,300,000.00 296,497,595.87 223,253,643.59 519,751,239.46
Plate-billet continuous casting machine 1,997,400,000.00 350,979,705.03 63,756,122.15 414,735,827.18
Energy saving reconstruction of special steel 245,890,000.00 169,994,167.25 22,035,734.32 192,029,901.57
Upgrading of continuous casting 110,260,000.00 66,116,583.13 24,883,836.21 91,000,419.34
Environmental reengineering 108,673,600.00 72,443,997.84 48,919,653.65 6,861,108.02 114,502,543.47
stainless steel cool rolling 1,514,700,000.00 169,177,238.11 153,879,253.63 323,056,491.74
Taizi river transformer substation 66KV line 120,000,000.00 56,244,279.85 25,886,809.00 82,131,088.85
Recycling steel plant phase Reforming 182,800,000.00 92,524,211.85 8,918,674.35 101,442,886.20
60000 cubic meter oxygen generator 673,230,000.00 122,375,900.82 143,110,571.64 265,486,472.46
Other small projects 69,075,000.00 51,893,537.39 10,023,810.25 61,917,347.64
Silicon steel project 526,320,000.00 59,709,125.65 188,535,588.96 248,244,714.61
Capacity expansion and reform of steel tank 62,490,000.00 46,429,345.65 251,282.13 46,680,627.78
Two tacker-Reclaimers in Sawo Coal yard 47,050,000.00 47,791,242.85 3,233,271.13 51,024,513.98
Ancillary facilities reconstruction for 95,120,000.00 49,265,648.48 8,815,464.60 58,081,113.08
Total 15,355,975,538.66 1,826,180,938.13 933,818,803.95 6,861,108.02 0.00 2,753,138,634.06Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
68
Name of projects Investment on budget (%) Progress (%)
Accumulate of interest
capitalized
Including: interest capitalized this
term
Fund
recourse
Super thin cool rolling plate reformation 95% 97% 0.00 Independent
IT project of the Company 48% 55% 952,997.50 Independent
Discarding of old coke furnace and
reconstruction
100% 100% 102,911,570.12 Independent
Energy saving reconstruction and 180t
dephosphorization converter
39% 50% 7,907,437.09 Independent
Plate-billet continuous casting machine
reformation
100% 98% 194,903,803.13 29,455,966.50 Independent
Energy saving reconstruction of special steel
factory
78% 95% 1,833,303.32 Independent
Upgrading of continuous casting 83% 97% 140,683.65 Independent
Environmental reengineering 68% 70% 973,745.76 Independent
stainless steel cool rolling 21% 30% 4,851,495.00 4,851,495.00 Independent
Taizi river transformer substation 66KV line 88% 95% 578,725.04 Independent
Recycling steel plant phase Reforming 54% 60% 2,602,840.52 Independent
60000 cubic meter oxygen generator 39% 60% 4,119,513.73 Independent
Other small projects
Silicon steel project 41% 60% 3,105,113.40 Independent
Capacity expansion and reform of steel tank 75% 97% 1,133,241.35 Independent
Two tacker-Reclaimers in Sawo Coal yard 100% 97% 1,168,606.27 Independent
Ancillary facilities reconstruction for
iron-making, transportation and logistics
61% 90% 283,688.07 Independent
Total 327,466,763.95 34,307,461.50Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
69
(10) Engineering goods
Items Beginning of term Increased this term Decreased this term Balance at the end of term
Special equipment 137,969,772.11 370,758,722.47 482,153,562.47 26,574,932.11
Total 137,969,772.11 370,758,722.47 482,153,562.47 26,574,932.11
The explanation of project material: the ending balance of project material has decreased by
RMB111,394,840 and 80.74%, which was caused by delivery of the equipments purchased for the
projects.
(11) Deferred income tax asset and deferred income tax liability
1.Recognized deferred tax asset
Items End of term Beginning of term
Differed income tax assets:
Impairment provision 133,588,539.01 133,588,539.01
Welfare for retired employee 38,346,962.04 38,346,962.04
Unrealized profit in
inter company sales
465,805.21 465,805.21
Employee wages payable 13,609,876.69 13,609,876.69
Reserved expenses 25,662,573.93 25,662,573.93
Total 211,673,756.88 211,673,756.88
2. The breakdown of temporary difference
Items Balance at the end of term Balance at the beginning of term
Impairment provision 534,354,156.03 534,354,156.03
Welfare for retired employee 153,387,848.15 153,387,848.15
Unrealized profit in inter-company sales 1,863,220.85 1,863,220.85
Employee wages payable 54,439,506.75 54,439,506.75
Reserved expenses 102,650,295.73 102,650,295.73
Total 846,695,027.51 846,695,027.51
(12) Asset impairment provision
Decreased this term
Items
Balance at the
beginning of
term
Increased this
term Written
back
Written
off
Balance at the end of
term
1. Bad debt provision 434,444,112.24 434,444,112.24
2. Inventory impairment
provisions 91,672,354.68 91,672,354.68
3. Fixed assets impairment
provision 8,237,689.11 8,237,689.11
Total 534,354,156.03 534,354,156.03
(13) Short-term loans
1.Categories of short-term loansBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
70
Items Balance at the end of term Balance at the beginning of term
Credit loan 2,523,081,400.00 2,500,850,700.00
Guarantee loan 610,000,000.00 345,000,000.00
Total 3,133,081,400.00 2,845,850,700.00
2. There is no overdue short-term loan outstanding at the end of term.
3. Details of short-term loans
Loan
provided by Currency Original
currency
Annual
interest rate
Commence
date
Terminate
date
Translated
to RMB Means
Industry
Bank
Bengang
Branch
RMB 130,000,000.00 5.04% 2010.05.08 2011.05.06 130,000,000.00 Credit
Industry
Bank
Bengang
Branch
RMB 150,000,000.00 5.04% 2010.04.29 2011.04.27 150,000,000.00 Credit
Industry
Bank
Bengang
Branch
RMB 130,000,000.00 4.62% 2010.05.12 2010.11.11 130,000,000.00 Credit
Industry
Bank
Bengang
Branch
RMB 200,000,000.00 4.62% 2010.05.27 2010.11.24 200,000,000.00 Credit
Industry
Bank
Bengang
Branch
RMB 200,000,000.00 4.62% 2010.05.10 2010.10.27 200,000,000.00 Credit
Construction
Bank
Bengang
Branch
RMB 110,000,000.00 4.62% 2010.02.09 2010.08.08 110,000,000.00 Guaranteed
Construction
Bank
Bengang
Branch
RMB 500,000,000.00 4.62% 2010.02.02 2010.08.01 500,000,000.00 Guaranteed
Shenzhen
Development
Bank Dalian
Branch
RMB 10,000,000.00 4.62% 2010.02.23 2010.08.23 10,000,000.00 Credit
Agriculture
Bank Xinhua
Branch
RMB 250,000,000.00 4.62% 2010.05.19 2010.11.19 250,000,000.00 Credit
CITIC Bank
Shenyang
Branch
USD 15,000,000.00 3 Months
LIBOR+230BP 2010.03.31 2010.09.30 101,851,500.00 Credit
CITIC Bank
Shenyang
Branch
USD 65,000,000.00 3 Months
LIBOR+240BP 2010.04.22 2010.10.22 441,356,500.00 Credit
Agriculture
Bank Benxi
Branch
USD 29,000,000.00 1 Year
LIBOR+70BP 2009.07.28 2010.07.26 196,912,900.00 Credit
Agriculture
Bank Benxi
Branch
USD 25,000,000.00 1 Year
LIBOR+200BP 2010.03.06 2011.03.01 169,752,500.00 Credit
Agriculture
Bank Benxi
Branch
USD 25,000,000.00 1 Year
LIBOR+200BP 2010.03.07 2011.03.24 169,752,500.00 CreditBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
71
Agriculture
Bank Benxi
Branch
USD 20,000,000.00 1 Year
LIBOR+200BP 2010.03.08 2011.02.24 135,802,000.00 Credit
Industrial &
Commercial
Bank Benxi
Branch
USD 35,000,000.00 6 Months
LIBOR+200BP 2010.02.09 2011.01.25 237,653,500.00 Credit
Total 3,133,081,400.00
(14) Notes payable
Category Balance at the end of term Balance at the beginning of term
Bank acceptance 1,914,593,445.70 4,232,186,393.71
Commercial acceptance 5,890,000.00
Total 1,914,593,445.70 4,238,076,393.71
1.There is no notes 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 Note 6.
3. The explanation of notes payable: the ending balance of notes payable has decreased by
RMB2,323,482,948.01 and 54.82% from the beginning of term, which was mainly caused by settlement
of due payable notes.
(15) Account payable
1. Categories of accounts payable
Items Balance at the end of term Balance at the beginning of term
within 1 yr 5,788,216,204.36 5,793,598,983.82
1-2 yrs 303,183,911.62 303,183,911.62
2-3 yrs 123,125,601.44 123,125,601.44
Over 3 yrs 41,099,182.06 41,099,182.06
Total 6,255,624,899.48 6,261,007,678.94
2. There is no payable owed to shareholders who hold 5% or above voting shares at the end of this year.
3. As to the ending balance of accounts payable with regard to related parties, please refer to the details
in Note 6.
4. The top 5 accounts payables:
Name of the companies Relation with the
Company Amount Ages % in total
payables
Benxi Steel (Group) Construction Ltd. Related parties 234,054,457.36 within 1
year 3.74
Bengang Fire-resistance Material Co. Related parties 163,259,929.83 within 1
year 2.61
China Mining Co., Ltd. Suppliers 159,142,714.45 within 1
year 2.54
Benxi Steel (Group) Repairing &
Building Ltd. Related parties 155,063,092.19 within 1
year 2.48
Bengang Group Mineral Co., Ltd. Related parties 125,051,484.92 within 1
year 2.00
Total 836,571,678.75 13.37Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
72
5. Statement on payable accounts: payable account decreased by RMB5,382,779.46 and 0.09% from the
beginning of year, which was a minor amount of change.
(16) Account received in advance
1. Categories of advance from customers
Items Balance at the end of term Balance at the beginning of term
within 1 yr 3,082,571,285.69 2,483,918,216.27
1-2 yrs 38,821,035.65 38,821,035.65
2-3 yrs 8,850,227.45 8,850,227.45
Over 3 yrs 6,976,257.23 6,976,257.23
Total 3,137,218,806.02 2,538,565,736.60
2.As to the ending balance of Advance from customers with regard to related parties, please refer to the
details in Note 6.
3. Within the aforesaid balance, there is no amount due from the shareholders that hold 5% or more of
the company’s voting shares.
4. Top 5 advances at end of term
Name of the companies Relation with
the Company Amount Account age % in total advances
Bengang Puxiang Cool Rolling Steel
Sheet Co., Ltd. Related parties 432,251,280.92 within 1 year 13.78
Wukuang Steel & Iron Co., Ltd. Client 85,617,747.87 within 1 year 2.73
Shanghai Baoshan Taiping Container Co.,
Ltd. Client 59,618,111.59 within 1 year 1.90
China Railway Materials Shanghai Co. Client 42,844,979.06 within 1 year 1.37
Xiamen Jianfa Co., Ltd. Client 42,827,229.19 within 1 year 1.37
Total 663,159,348.63 21.14
5. Advance increased by RMB598,653,069.42 and 23.58% comparing with the beginning of year, which
was caused by increase of contracts in the report term.
(17) Employees’ wage payable
Items Balance at the
beginning of term
Increased this
term
Decreased this
term
Balance at the end
of term
(1)Salary, bonus, allowance and
subsidy 54,439,506.75 610,060,226.78 613,977,880.34 50,521,853.19
(2)Employee welfare 16,403,401.24 16,403,401.24 0.00
(3)Social Insurance 545,335.87 257,865,574.48 258,410,910.35 0.00
Incl. A. Pension fund 157,997,302.31 157,997,302.31 0.00
B. Supplementary pension 17,523,661.20 17,523,661.20 0.00
C. Basic medical insurance 17,518.00 51,484,954.34 51,502,472.34 0.00
D. Supplementary medical
insurance 1,266,222.00 1,266,222.00 0.00
E. Unemployment insurance 102.9 16,307,405.85 16,307,508.75 0.00
F. Labor safety insurance 527,714.97 13,286,028.78 13,813,743.75 0.00
G. Maternity insurance 0.00
(4) Housing fund 6,751,033.00 38,071,780.00 37,364,806.00 7,458,007.00
(5) Trade union and education fee 30,004,525.32 12,842,512.64 13,236,889.72 29,610,148.24
(6) Non-monetary welfare 0.00Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
73
(7) Dismissing compensation 153,387,848.15 44,671,883.01 108,715,965.14
(8) Employees’ bonus and welfare
fund 0.00
(9) Others 0.00
Incl. Share payment in cash 0.00
Total 245,128,249.09 935,243,495.14 984,065,770.66 196,305,973.57
(18) Tax payable
Tax items Balance at the end of term Balance at the beginning of term
VAT -6,315,295.98 -123,359,734.30
Business tax 71,140.49 63,871.90
City construction tax 14,139,633.23 58,767.29
Enterprise income tax 5,574,028.07 2,988,719.59
Property tax 60,942.94 1,908,333.28
Education surtax 8,077,042.02 25,186.01
Others 358,681.47 1,063,586.50
Total 21,966,172.24 -117,251,269.73
Tax payable has increased by RMB139,217,441.97 and 118.73% over the beginning of term, which was
caused by decrease of deductible input tax of VAT.
(19) Dividend payable
Items Balance at the end of term Balance at the beginning of term
Dividend payable 94,080,000.00 0.00
Total 94,080,000.00 0.00
As approved by the Annual General Meeting 2009 on June 3, 2010: upon the total capital share of
3,136,000,000 at present, cash dividend of RMB0.3 (tax included) was distributed to each 10 shares.
Dividend was totaled to RMB94,080,000.00, and was implemented on July 20.
(20) Other account payable
1. Categories of other payables
Items Balance at the end of term Balance at the beginning of term
within 1 yr 814,602,018.35 781,464,197.16
1-2 yrs 34,417,310.38 34,417,310.38
2-3 yrs 7,195,420.48 7,195,420.48
Over 3 yrs 26,798,023.97 26,798,023.97
Total 883,012,773.18 849,874,951.99
2.There are other payables amounting to RMB180,647,424.88 owed to Benxi Steel (Group) Co., Ltd.
who hold 5% or more voting shares at the end of this year.
3.Please refer to the Note 6 for details of other payables with regard to related parties.
4. The top 5 other payables
Name of the companies Relation with the
Company Amount Ages % in total of other
payables
Benxi Steel (Group) Ltd. Related parties 180,647,424.88 within 1 year 20.46
Goods payment deposit in foreign currency Suppliers 101,962,920.17 within 1 year 11.55Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
74
Zhongye Saidi Engineering Co., Ltd. Suppliers 98,656,004.00 within 1 year 11.17
Benxi Steel (Group) Construction Ltd. Related parties 85,744,958.79 within 1 year 9.71
Benxi Steel (Group) Industrial Development
Ltd. Related parties 8,897,245.12 within 1 year 1.01
Total 475,908,552.96 53.90
5. Other payable increased by RMB33,137,821.19 and 3.9% over the beginning of term, which was
caused by increasing of delayed payment of repairing fees.
(21) Non-current liability due in 1 year
Items Balance at the end of term Balance at the beginning of term
Long-term borrowings 183,540,085.42 960,040,053.18
Total 183,540,085.42 960,040,053.18
(1) Long-term loans due in one year
Items Balance at the end of term Balance at the beginning of term
Credit loan 20,040,085.42 447,000,000.00
Guarantee loan 163,500,000.00 1,753,264.40
Total 183,540,085.42 448,753,264.40
(2) Details of long-term loans due in one year
Loan provided
by Currency Original
currency
Annual
interest
rate
Commence
date
Terminate
date
Translated to
RMB Means
Industry Bank
Bengang
Branch
RMB 19,160,000.00 5.94% 2008.01.26 2011.01.20 19,160,000.00 Credit
Construction
Bank Bengang
Branch
RMB 100,000,000.00 6.75% 2007.11.23 2010.11.22 100,000,000.00 Guaranteed
Bank of China
Bengang
Branch
RMB 63,500,000.00 5.94% 2004.05.20 2010.12.20 63,500,000.00 Guaranteed
Benxi Bureau
of Finance JPY 11,588,000.00 1.75% 1999.10.10 2027.09.10 880,085.42 Credit
Total 183,540,085.42
(22) Long-term borrowings
1. Categories of long-term borrowings
Categories Balance at the end of term Balance at the beginning of term
Credit loan 3,110,217,304.42 1,056,520,000.00
Guarantee loan 2,129,000,000.00 1,812,516,104.26
Total 5,239,217,304.42 2,869,036,104.26Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
75
2. Details of long-term borrowings
Loan provided
by Currency Original
currency
Annual interest
rate
Commence
date
Terminate
date
Translated to
RMB Means
Industry Bank
Bengang
Branch
RMB 15,000,000.00 5.94% 2010.03.12 2010.09.10 15,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 15,000,000.00 5.94% 2010.03.12 2011.03.11 15,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2010.09.10 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2011.03.11 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2010.09.10 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2011.03.11 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2010.09.10 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2011.03.11 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 19,160,000.00 5.94% 2008.01.25 2010.07.20 19,160,000.00 Credit
Industry Bank
Bengang
Branch
RMB 15,000,000.00 5.94% 2010.03.12 2011.09.12 15,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 15,000,000.00 5.94% 2010.03.12 2012.03.12 15,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 15,000,000.00 5.94% 2010.03.12 2012.09.12 15,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 15,000,000.00 5.94% 2010.03.12 2013.03.12 15,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 15,000,000.00 5.94% 2010.03.12 2013.09.12 15,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 15,000,000.00 5.94% 2010.03.12 2014.03.12 15,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2011.09.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2012.03.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2012.09.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2013.03.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2013.09.12 25,000,000.00 Credit
Industry Bank
Bengang RMB 25,000,000.00 5.94% 2010.03.12 2014.03.12 25,000,000.00 CreditBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
76
Loan provided
by Currency Original
currency
Annual interest
rate
Commence
date
Terminate
date
Translated to
RMB Means
Branch
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2011.09.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2012.03.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2012.09.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2013.03.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2013.09.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2014.03.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2011.09.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2012.03.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2012.09.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2013.03.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2013.09.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 25,000,000.00 5.94% 2010.03.12 2014.03.12 25,000,000.00 Credit
Industry Bank
Bengang
Branch
RMB 19,160,000.00 5.94% 2008.01.27 2011.07.20 19,160,000.00 Credit
Industry Bank
Bengang
Branch
RMB 19,160,000.00 5.94% 2008.01.28 2012.01.20 19,160,000.00 Credit
Industry Bank
Bengang
Branch
RMB 19,160,000.00 5.94% 2008.01.29 2012.07.20 19,160,000.00 Credit
Industry Bank
Bengang
Branch
RMB 19,160,000.00 5.94% 2008.01.30 2013.01.21 19,160,000.00 Credit
Industry Bank
Bengang
Branch
RMB 19,160,000.00 5.94% 2008.01.31 2013.07.19 19,160,000.00 Credit
Industry Bank
Bengang
Branch
RMB 19,160,000.00 5.94% 2008.01.32 2014.01.20 19,160,000.00 Credit
Industry Bank
Bengang
Branch
RMB 19,160,000.00 5.94% 2008.01.33 2014.07.21 19,160,000.00 Credit
Industry Bank
Bengang
Branch
RMB 19,240,000.00 5.94% 2008.01.34 2015.01.20 19,240,000.00 CreditBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
77
Loan provided
by Currency Original
currency
Annual interest
rate
Commence
date
Terminate
date
Translated to
RMB Means
Agriculture
Bank Xinhua
Branch
RMB 200,000,000.00 4.86% 2010.1.22 2012.1.21 200,000,000.00 Credit
Agriculture
Bank Xinhua
Branch
RMB 100,000,000.00 4.86% 2010.1.25 2012.1.24 100,000,000.00 Credit
Agriculture
Bank Xinhua
Branch
RMB 200,000,000.00 4.86% 2010.02.04 2012.02.03 200,000,000.00 Credit
Agriculture
Bank Xinhua
Branch
RMB 200,000,000.00 4.86% 2010.03.12 2012.03.10 200,000,000.00 Credit
Construction
Bank Bengang
Branch
RMB 70,000,000.00 5.94% 2007.04.30 2014.04.29 70,000,000.00 Guaranteed
Construction
Bank Bengang
Branch
RMB 130,000,000.00 5.94% 2007.05.06 2014.04.29 130,000,000.00 Guaranteed
Construction
Bank Bengang
Branch
RMB 200,000,000.00 5.76% 2007.12.03 2012.07.25 200,000,000.00 Guaranteed
Construction
Bank Bengang
Branch
RMB 400,000,000.00 5.76% 2008.04.29 2013.04.15 400,000,000.00 Guaranteed
Construction
Bank Bengang
Branch
RMB 37,000,000.00 6.75% 2008.11.18 2011.11.17 37,000,000.00 Guaranteed
Construction
Bank Bengang
Branch
RMB 300,000,000.00 4.86% 2009.09.11 2011.09.10 300,000,000.00 Guaranteed
Construction
Bank Bengang
Branch
RMB 177,000,000.00 4.86% 2009.09.08 2011.07.07 177,000,000.00 Guaranteed
Construction
Bank Bengang
Branch
RMB 170,000,000.00 4.86% 2009.09.09 2011.08.08 170,000,000.00 Guaranteed
Construction
Bank Bengang
Branch
RMB 200,000,000.00 4.86% 2009.09.22 2011.09.21 200,000,000.00 Guaranteed
Bank of China
Bengang
Branch
RMB 100,000,000.00 4.94% 2010.04.29 2013.04.28 100,000,000.00 Guaranteed
Bank of China
Bengang
Branch
RMB 145,000,000.00 4.94% 2010.04.14 2012.04.13 145,000,000.00 Guaranteed
Bank of China
Bengang
Branch
RMB 200,000,000.00 4.94% 2010.04.14 2012.04.13 200,000,000.00 Guaranteed
Communication
Bank Dandong
Branch
RMB 510,000,000.00 5.35% 2010.02.03 2021.11.05 510,000,000.00 Credit
Benxi Bureau
of Finance JPY 499,000,000.00 2.10% 1995.09.10 2027.09.10 29,922,904.42 Credit
Bank of China
Benxi Branch USD 30,000,000.00 3.17% 2009.09.11 2012.08.10 203,703,000.00 Credit
Bank of China
Benxi Branch USD 30,000,000.00 3.17% 2009.09.11 2012.09.10 203,703,000.00 Credit
Bank of China
Benxi Branch USD 20,000,000.00 3 months
LIBOR+130BP 2009.09.25 2012.09.24 135,802,000.00 Credit
Bank of China
Benxi Branch USD 20,000,000.00 3 months
LIBOR+130BP 2009.10.12 2012.08.24 135,802,000.00 Credit
Bank of China
Benxi Branch USD 24,000,000.00 3.30% 2009.10.20 2012.10.18 162,962,400.00 CreditBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
78
Loan provided
by Currency Original
currency
Annual interest
rate
Commence
date
Terminate
date
Translated to
RMB Means
Bank of China
Benxi Branch USD 20,000,000.00 3.30% 2009.10.25 2012.10.05 135,802,000.00 Credit
Total 5,239,217,304.42
(23) Special payable
Items
Balance at the
beginning of
term
Increased this
term
Decreased
this term
Balance at the end
of term Note
6#7#coke oven of dry Quenching
coke
5,666,666.67 5,666,666.67
Award from central government for
discarding of disadvantage
production
34,800,000.00 34,800,000.00
Government subsidy for energy
management center 11,600,000.00 11,600,000.00
Subsidy for automobile Zinc-coated
sheet production line 41,040,000.00 41,040,000.00
Total 5,666,666.67 87,440,000.00 0.00 93,106,666.67
Remarks on special payables:
1. 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.
2. Award from central government for discarding of disadvantage production was the fund received in
2010 according to the document of Liaoning Finance Bureau.
3. Government subsidy for energy management center was the fund received in 2010 from Liaoning
Finance Bureau for the construction of energy saving center.
4. Subsidy for automobile Zinc-coated sheet production line was the subsidy received in 2010 according
to the document of Liaoning Finance Bureau.
(24) Other non-recurring liabilities
Items Balance of book value at end of
term
Balance of book value at
beginning of term
3 government technology financing funds 1,048,650.00 1,048,650.00
Total 1,048,650.00 1,048,650.00
“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.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
79
(25) Share capital
The paid-in share capital of the company is as follows:
Balance at the end of term Balance at the beginning of term
Items
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
Total 3,136,000,000.00 3,136,000,000.00 3,136,000,000.00 3,136,000,000.00Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
80
Changed this term (+,-)
Items Balance at the
beginning of term
Issuing
of new
shares
Bonus
shares
Transferred
from reserves Others Sub-total
Balance at the end
of term
1. Shares with
restricted sales
condition
(1).
State-owned
shares
(2). National
legal person
shares
2,038,400,000.00 2,038,400,000.00
(3). Other
domestic shares
10,050.00 10,050.00
In which:
Domestic legal
person shares
Domestic
natural person
shares
10,050.00 10,050.00
(4). Foreign
shares
In which:
Foreign legal
person shares
Foreign natural
person shares
Total of
conditional
shares
2,038,410,050.00 2,038,410,050.00
2. Shares
without sales
restriction
(1). RMB
common shares
697,589,950.00 697,589,950.00
(2). Foreign
shares listed at
home
400,000,000.00 400,000,000.00
(3). Foreign
shares placed
abroad
(4). Others
Total of
unrestricted
current shares
1,097,589,950.00 1,097,589,950.00
Total 3,136,000,000.00 3,136,000,000.00Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
81
(26) Capital reserves
Items Balance at the beginning of term Increased this term Decreased this term Balance at the end of term
1.
Additional
paid-in
capital
(1) Capital
input by
investors
8,706,903,665.94 8,706,903,665.94
Sub-total 8,706,903,665.94 8,706,903,665.94
2. Other
capital
reserves
0.00
(1)
Government
award for
energy
saving tech
29,357,468.82 54,430,000.00 83,787,468.82
Sub-total 29,357,468.82 54,430,000.00 83,787,468.82
Total 8,736,261,134.76 54,430,000.00 0.00 8,790,691,134.76
(27) Surplus reserves
Items Balance at the beginning of term Increased this term Decreased this term Balance at the end of term
Statutory
surplus
reserves
921,277,509.22 921,277,509.22
Total 921,277,509.22 921,277,509.22
(28) Retained profit
Items Amount Percentage of drawing or allocation
Undistributed profits of last year before adjustment 1,331,103,908.34
Total amount of adjustment of beginning undistributed
profits (increase+, decrease -)
After adjusted beginning undistributed profits 1,331,103,908.34
Add: undistributed profit belongs to parent
company
688,606,765.04
Less: Statutory surplus reserves
Optional surplus reserves
Reserves
Enterprise development fund
Providing of employees’ bonus and welfare fund
Common risk provisionsBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
82
Items Amount Percentage of drawing or allocation
Common share dividend payable 94,080,000.00
Retained profit at the end of term 1,925,630,673.38
(29) Operating income and operating cost
1. Operation income
Items Occurred current term Occurred in previous term
Major business turnover 19,791,554,636.00 14,524,523,361.97
Other business income 2,562,830,774.54 1,937,104,455.81
Total 22,354,385,410.54 16,461,627,817.78
2. Operation costs
Items Occurred current term Occurred in previous term
Major business cost 17,325,653,039.19 13,666,345,819.82
Other business cost 2,313,795,909.51 1,919,128,408.00
Total 19,639,448,948.70 15,585,474,227.82
3. Main business (industry segment)
Name of Occurred current term Occurred in previous term
industry Turnover Operation cost Turnover Operation cost
(1) Industry 19,791,554,636.00 17,325,653,039.19 14,524,523,361.97 13,666,345,819.82
Total 19,791,554,636.00 17,325,653,039.19 14,524,523,361.97 13,666,345,819.82
4. Main business (product segment)
Products or Occurred current term Occurred in previous term
services Turnover Operation cost Turnover Operation cost
Steel plate 19,462,509,782.00 17,041,124,716.21 12,172,830,766.82 12,054,798,105.54
Steel billet 1,061,485.60 774,784.32 2,164,192,270.68 1,356,573,735.54
Others 327,983,368.40 283,753,538.66 187,500,324.47 254,973,978.74
Total 19,791,554,636.00 17,325,653,039.19 14,524,523,361.97 13,666,345,819.82
5. Main business (geographic segment)
Name of Occurred current term Occurred in previous term
districts Turnover Operation cost Turnover Operation cost
North-east 6,986,800,199.95 6,116,289,414.59 5,871,470,108.94 5,524,555,882.48
North 2,950,157,361.71 2,582,586,552.70 3,153,303,535.00 2,966,991,446.83
East 4,430,136,638.33 3,878,169,841.81 3,922,601,644.32 3,690,835,785.02
Northwest 69,825,217.73 61,125,440.52 16,362,452.39 15,395,681.31
Mid-south 1,815,448,967.06 1,589,255,593.72 1,373,312,100.10 1,292,170,325.37
Export 3,539,186,251.22 3,098,226,195.84 187,473,521.22 176,396,698.82
Total 19,791,554,636.00 17,325,653,039.19 14,524,523,361.97 13,666,345,819.82Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
83
6. Main business income from top 5 clients
Name of clients Total of principal turnover % in total main business income
Bengang Group International Trading
Ltd. 3,539,186,251.22 17.88
Bengang Puxiang Cool Rolling Steel Sheet
Co., Ltd. 3,229,603,415.26 16.32
Wukuang Steel & Iron Co., Ltd. 300,993,773.37 1.52
Xiamen Jianfa Co., Ltd. 282,622,859.73 1.43
Shanghai Gangyu Trade Co., Ltd. 247,088,010.86 1.25
Total of sales to top 5 clients
Items Current term Previous term
Total of sales to top 5 clients 7,599,494,310.44 5,913,850,877.55
Percentage in principal turnover 38.40 40.72
7. Sales income of the report term has increased by RMB5,892,757,592.76 and 35.79% over
the previous period, which was caused by significant increasing of sales prices.
(30) Business tax and surcharge
Items Occurred current term Occurred in previous term Rate
Business tax 600,867.18 547,610.47 5%
City construction tax 56,240,531.58 6,630,940.41 7%
Education surtax 24,052,591.14 2,849,382.18 3%
Local education charge 7,981,256.62 937,765.12 1%
Total 88,875,246.52 10,965,698.18
The explanation of business tax and surcharges: The amount of business tax and surcharge in the report
term have increased by RMB77,909,548.34 compared with last year. The decrease rate is 710.48%,
which is mainly caused by the increase of tax payable of VAT.
(31) Sales expenses
Sales income of the report term was RMB232,468,074.79, an increase of RMB104,164,326.27 and
81.19% over the same period of last year, which was caused by increase of export and port fees, freights,
and tariffs.
(32) Administrative expense
Administrative expense was RMB1,588,857,380.97 in the report term, which has increased by
RMB45,052,543.75 and 2.92% over the same period of last year, which was caused by increase of wage
and insurance expenses.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
84
(33) Financial expenses
Categories Occurred current term Occurred in previous term
Interest expense 141,268,903.08 124,456,938.41
Less: Incoming interests 12,570,931.29 12,897,614.41
Exchange gains/losses -12,737,169.34 -1,808,850.60
Others 1,966,381.18 2,673,052.33
Total 117,927,183.63 112,423,525.73
Financial expenses has increased by RMB5,503,657.90 and 4.90% over the previous term, which was
caused by increase of loan amount.
(34) Asset impairment loss
Items Occurred current term Occurred in previous term
1. Bad debt loss 0.00 0.00
2. Inventory impairment losses 0.00 -20,644,654.62
3. Fixed asset impairment 0.00 0.00
Total 0.00 -20,644,654.62
(35) Non-operational income
Details
Items Occurred current term Occurred in previous term
1. Total of gains from disposal of non-current assets 723,293.15 4,120.00
Incl. Gains from disposal of fixed assets 723,293.15 4,120.00
Gains from disposal of intangible assets
2. Gains from non-monetary capital exchange
3. Gains from debt reorganizing 5,595,455.72 1,303,133.52
4. Government subsidies 317,493.00 50,000.00
5. Gains from inventory overage
6. Gains from donation
7. Payable account practically not payable
8. Gains from penalties
9. Others 58,770.55 -885,623.87
Total 6,695,012.42 471,629.65
Non-operational income has increased by RMB6,223,382.77 and 1,319.55% over the previous term,
which was caused by increasing of gains from fixed asset disposal and debt reorganizing.
(36) Non-operational expenditure
Items Occurred current term Occurred in previous term
1. Total of loss from disposal of non-current assets 994.85
Incl. Loss from disposal of fixed assets 994.85
Loss from disposal of intangible assets
2. Loss from non-monetary capital exchange
3. Loss from debt reorganizing 15,656.24Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
85
Items Occurred current term Occurred in previous term
4. Donations paid 1,000.00
5. Non-recurring losses
6. Penalties paid 9,329.78 112,750.00
7. Compensation paid
8. Breach of faith
9. Loss from inventory shortage
10. Others
Total 10,324.63 129,406.24
(37) Income tax expenses
Items Occurred current term Occurred in previous term
Income tax calculated according to the law and
regulations of current term
4,886,498.68 11,529,058.73
Adjustment of differed income tax
Total 4,886,498.68 11,529,058.73
Income tax has decreased by RMB6,642,560.05 and 57.62% from the previous term, which was caused
by significant decrease of profit realized by subsidiaries.
(38) Calculation formula of basic earnings per share and diluted earnings per share
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;Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
86
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 event
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.
(39) Notes to Cash Flow Statements
1. Other cash inflow related to operationBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
87
Other cash inflow related to operation was RMB16,154,358.56, with details as following:
Items Amount of the Current Term Amount of the Previous Term
1. Retrieving of current accounts,
advance money for another
3,265,934.27 2,844,126.92
2. Interest income 12,570,931.29 12,897,614.41
3. Special subsidy and allowance 317,493.00 50,000.00
Total 16,154,358.56 15,791,741.33
2.Other cash paid related to operation
Items Amount of the Current Term Amount of the Previous Term
1. Freight 150,250,677.93 49,912,862.20
2. Ports fee 39,286,754.53 13,369,990.48
3. Land using rights 30,000,000.00 57,426,000.00
4. Labor service 2,447,183.22 1,076,557.57
5. Processing fee 404,450.68 54,141.31
6. Packaging fee 28,389,347.95 24,384,070.75
7. Quality warranty 8,752,176.43 5,464,852.37
8. Water resource fee 3,000,000.00 0.00
9. Other current accounts 301,708,761.73 747,132,396.15
Total 564,239,352.47 898,820,870.83
(39) Appendix of Cash Flow Statement
1. Appendix of Cash Flow Statement
Items Amount of the Current Term Amount of the Previous Term
1. Net profit adjusted to cash flow of business operation
Net profit 688,606,765.04 -909,886,400.39
Plus: Asset impairment provision
Fixed asset depreciation, gas and petrol depreciation,
production goods depreciation
1,046,845,092.26 1,177,117,974.31
Amortizing of intangible assets
Amortizing of long-term expenses
Loss from disposal of fixed assets, intangible assets, and
other long-term assets (“-“ for gains)
Loss from fixed asset discard (“-“ for gains)
Loss from fair value fluctuation (“-“ for gains)
Financial expenses (“-“ for gains) 117,927,183.63 112,423,525.73
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) -307,503,646.38 1,413,266,384.48
Decrease of operational receivable items (“-“ for
increase)
-20,471,935.93 -789,888,473.00
Increase of operational payable items (“-“ for decrease) -923,295,410.91 650,418,152.35
Others 119,089,135.90
Cash flow generated by business operation, net 602,108,047.71 1,772,540,299.38
2. Payments of investment and fund-raising activities doBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
88
Items Amount of the Current Term Amount of the Previous Term
not involve cash：
Liabilities converted to capital
Convertible bond expire in 1 year
Fixed assets leased through financing
3. Net change of cash and cash equivalents
Balance of cash at period end
Less: Balance of cash at beginning of year 2,570,517,350.82 1,989,090,469.75
Plus: Balance of cash equivalents at the period end 2,842,961,050.60 2,220,835,995.51
Less: Balance of cash equivalents at beginning of term
Net increasing of cash and cash equivalents -272,443,699.78 -231,745,525.76Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
89
VI. Related parties and related transactions
(1) Parent company of the Company (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.
Shareholding
portion of the parent
co.
Voting power of the
parent co.
Substantial holder
of the Company Organization code
Benxi Steel (Group)
Co., Ltd. 82.12 82.12
Liaoning Provincial
State-asset
Administration
11972626-3
(2) 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 Pang Zonghua 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 Metallurgy Tech Co., Ltd. Fully-owned
subsidiary
Limited
liability Shanghai Fei Jixi Sales
Bengang Steel Plate Liaoyang Orel Ball Co.,
Ltd.
Fully-owned
subsidiary
Limited
liability Liaoyuang Zhang
Shiming
Production
Bengang Stainless Cool-rolling (Dandong) Co.,
Ltd.
Fully-owned
subsidiary
Limited
liability Dandong Yu Tianchen ProductionBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
90
(Continued)
Name of the subsidiaries
Registered
capital
Share
portion %
Voting power
%
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 Metallurgy Tech Co., Ltd. 500.00 100.00 100.00 68408762-8
Bengang Steel Plate Liaoyang Orel Ball Co., Ltd. 1,000.00 100.00 100.00 68968094-9
Bengang Stainless Cool-rolling (Dandong) Co., Ltd. 16,000.00 100.00 100.00 69941004-5
(3) Other related parties
Name of the related parties Relationship with the Company Organization code
Benxi Steel (Group) Machinery Co., Ltd. Same parent 701577718
Bengang Group International Trading Ltd. Same parent 701581055
Benxi Steel (Group) Tengda Holdings Ltd. Same parent 11968922-0
Guangshou Free Trade Zone Bengang Sales Co., Ltd. Same parent 231289622
Shanghai Bengang Steel & Iron Trading Co., Ltd. Same parent 784796085
Liaoning Bengang Steel & Iron Trading Co., Ltd. Same parent 78458403-1
Dalian Boluole Steel Tube Ltd. Same parent 60480260-2
Benxi Steel (Group) Steel Process and Logistics Co., Ltd. Same parent 752795993
Benxi Steel (Group) Construction & Repairing Co., Ltd. Same parent 701578219
Bengang Fire-resistance Material Co. Same parent 78124925-8
Benxi Steel (Group) Metallurgy Residues Co., Ltd. Same parent 701578155
Liaoning Metallurgy Technician College Same parent 463564144
Benxi Steel (Group) Industrial Development Co., Ltd. Same parent 701578120
Benxi Steel (Group) Construction Co., Ltd. Same parent 119726538
Yinkou Bengang International Logistics Co., Ltd. Same parent 74712716-5
Benxi Steel (Group) Real-estate Development Co., Ltd. Same parent 819664921
Benxi Steel (Group) Education Center Same parent 463567636
Benxi Steel (Group) Drilling Tools Co., Ltd. Same parent 74710835-1
Benxi Steel (Group) Designing Institute Same parent 78510290-3
Benxi Steel (Group) Information and Automatic Tech. Ltd. Same parent 752798182
Benxi Steel (Group) News Center Same parent 774640431
Benxi Steel (Group) New Industrial Development Co., Ltd. Same parent 701578198
Benxi Steel (Group) Mining Co., Ltd. Same parent 701577726
Benxi Steel (Group) Electronics Co., Ltd. Same parent 781648511
Benxi Steel (Group) Thermal Power Development Co., Ltd. Same parent 701579297
Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. Same parent 717851072
Benxi Steel & Iron (Group) Inspection Co., Ltd. Same parent 736708677Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
91
(4) Related party transactions
1.For those subsidiaries with holding relationship have been included in the consolidated financial
statement, thus the trade among them and with the parent company have been neutralized.
2.Related transactions of sales of goods and providing of services
In RMB 10 thousand
Amount of the Current
Term
Amount of the Previous
Term
Related parties Amount Amount
Subjects of
the related
transactions
RMB0’000
Portion in
similar
trade % RMB0’000
Portion in
similar
trade %
Benxi Steel & Iron (Group) Ltd. Products 0.00 - 216,419.23 13.15
Benxi Steel & Iron (Group) Ltd.
Material and
parts 19,269.33 0.86 33,208.73 2.02
Benxi Steel & Iron (Group) Ltd. Power supply 62.39 0.00 9,649.98 0.59
Dalian Boluole Steel Tube Ltd. Products 2,234.11 0.10 2,272.32 0.14
Guangshou Free Trade Zone Bengang Sales Co.,
Ltd. Products 2,265.29 0.10 19,803.08 1.2
Shanghai Bengang Steel & Iron Trading Co., Ltd. Products 0.00 - 41,149.38 2.5
Liaoning Bengang Steel & Iron Trading Co., Ltd. Products 17,095.78 0.76 20,875.55 1.27
Benxi Steel (Group) Steel Process & Logistics Ltd. Products 15,127.06 0.68 15,435.71 0.94
Benxi Steel (Group) Steel Process & Logistics Ltd. Power supply 56.23 0.00 41.39 0.003
Bengang Group Dahe Industry Co., Ltd. Power supply 18.17 0.00 11.41 0.001
Benxi Steel (Group) Industrial Development Ltd.
Material and
parts 3,654.62 0.16 1,961.72 0.12
Benxi Steel (Group) Industrial Development Ltd. Power supply 111.95 0.01 41.03 -
Benxi Steel (Group) Construction Ltd.
Material and
parts 14.63 0.00 391.58 0.02
Benxi Steel (Group) Construction Ltd. Power supply 447.73 0.02 365.66 0.02
Benxi Steel (Group) Machinery Ltd. Power supply 1,807.37 0.08 1,344.59 0.08
Bengang Group Mineral Co., Ltd.
Material and
parts 83,266.60 3.72 45,197.73 2.75
Bengang Group Mineral Co., Ltd. Power supply 21,102.64 0.94 31,332.66 1.9
Bengang Group Mineral Co., Ltd. Freight income 499.76 0.02 502.02 0.03
Bengang Group New Industry Development Co.,
Ltd. Power supply 32.95 0.00 19.23 -
Benxi Steel (Group) Construction Ltd.
Material and
parts 169.73 0.01 56.13 -
Benxi Steel (Group) Construction Ltd. Power supply 112.26 0.01 869.76 0.05
Bengang Group Metallurgy Residue Ltd.
Material and
parts 6,808.84 0.30 5,378.55 0.33
Bengang Group Metallurgy Residue Ltd. Power supply 3,637.70 0.16 191.97 0.01
Bengang Electronics Co., Ltd. Power supply 137.98 0.01 95.05 0.01
Bengang Puxiang Cool Rolling Steel Sheet Co.,
Ltd. Products 322,960.34 14.45 240,207.78 14.59
Bengang Puxiang Cool Rolling Steel Sheet Co.,
Ltd.
Material and
parts 25,427.75 1.14 16,905.00 1.03
Bengang Puxiang Cool Rolling Steel Sheet Co.,
Ltd. Power supply 19,211.78 0.86 16,643.48 1.01Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
92
Amount of the Current
Term
Amount of the Previous
Term
Amount Amount
Bengang Group Thermal Power Development Co.,
Ltd. Power supply 5,274.33 0.24 3,427.28 0.21
Bengang Group Thermal Power Development Co.,
Ltd.
Material and
parts 4,036.66 0.18 1,401.97 0.09
Bengang Group Property Co., Ltd. Power supply 227.22 0.01 202.21 0.01
Bengang Fire-resistance Material Co. Power supply 3,825.04 0.17 2,346.53 0.14
Bengang Fire-resistance Material Co. Freight income 1,334.80 0.06 254.71 0.02
Total 560,231.01 25.06 728,003.42 44.23
3. Related transactions of purchasing of products and accepting of services
In RMB 10 thousand
Amount of the Current Term
Amount of the Previous
Term
Related parties Subjects of the Amount Amount
related
transactions RMB0’000
Portion in
annual trade
% RMB0’000
Portion in
annual
trade %
Benxi Steel & Iron (Group) Ltd. Raw materials 128.12 0.01 14.83 0.001
Benxi Steel & Iron (Group) Ltd. Maintaining 7,356.52 0.37 9921.58 0.57
Bengang Puxiang Cool Rolling Steel
Sheet Co., Ltd. Raw materials 124,100.99 6.32 31,059.98 1.79
Bengang Group Mineral Co., Ltd.
Repairing
services 176.31 0.01 731.63 0.04
Bengang Group Mineral Co., Ltd. Raw materials 181,706.58 9.25 182,138.76 10.49
Bengang Group Mineral Co., Ltd. Transportation 3.59 0.00 5.84 0.0003
Bengang Group Metallurgy Residue Ltd.
Residue
treatment 0 0.00 5.1 0.0003
Bengang Group Metallurgy Residue Ltd. Raw materials 4,360.01 0.22 5,433.95 0.31
Bengang Group Steel Process & Logistics
Ltd. Process fee 220.74 0.01 28.03 0.002
Bengang Group Property Development
Ltd. Raw materials 3,217.25 0.16 2372.88 0.14
Bengang Group Property Co., Ltd. Rental 3.76 0.00 13.65 0.001
Bengang Group Property Co., Ltd.
Property
management fee 164.73 0.01 39.02 0.002
Bengang Group Machinery Ltd. Spare parts 16,767.73 0.85 17,859.74 1.03
Bengang Group Machinery Ltd.
Repairing
services 518.55 0.03 662.53 0.04
Bengang Group Machinery Ltd. Raw materials 132.29 0.01 148.14 0.01
Bengang Group Construction Ltd. Spare parts 547.32 0.03 259.48 0.01
Bengang Group Construction Ltd.
Repairing
services 22,163.08 1.13 7,676.82 0.44
Bengang Group Construction Ltd. Raw materials 527.88 0.03 356.83 0.02
Bengang Group Construction Ltd. Transportation 214.25 0.01 1176.08 0.07
Benxi Steel (Group) Industrial
Development Ltd. Spare parts 26.26 0.00 43.4 0.002Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
93
Amount of the Current Term
Amount of the Previous
Term
Amount Amount
Benxi Steel (Group) Industrial
Development Ltd. Raw materials 7,099.90 0.36 5,569.06 0.32
Benxi Steel (Group) Industrial
Development Ltd.
Repairing
services 656.02 0.03 831.07 0.05
Benxi Steel (Group) Industrial
Development Ltd. Transportation 585.30 0.03 634.59 0.04
Benxi Steel (Group) Construction Ltd.
Material and
parts
1,272.22 0.06 64.68 0.004
Benxi Steel (Group) Construction Ltd. Maintaining 7,501.75 0.38 4704.56 0.27
Bengang Electronics Co., Ltd. Raw materials 4,779.39 0.24 2995.16 0.17
Bengang Electronics Co., Ltd.
Repairing
services 1,022.71 0.05 490.89 0.03
Bengang Electronics Co., Ltd. Heating 0 0.00 59.31 -
Benxi Steel (Group) Drilling Tools Co.,
Ltd. Spare parts 926.69 0.05 804.45 0.05
Bengang Group New Industry
Development Co., Ltd.
Labour security
fee 103.92 0.01 77.76 0.004
Liaoning Metallurgy Technician College Spare parts 837.69 0.04 895.00 0.05
Benxi Steel (Group) Information and
Automatic Tech. Ltd. Spare parts 349.45 0.02 68.34 0.004
Benxi Steel (Group) Information and
Automatic Tech. Ltd.
Repairing
services 2,268.76 0.12 288 0.02
Bengang Group Thermal Power
Development Co., Ltd. Heating fee 11.74 0.00 1594.5 0.09
Bengang Fire-resistance Material Co. Raw materials 18,277.22 0.93 25,545.57 1.47
Benxi Steel (Group) Designing Institute
Repairing
services 846.10 0.04 63.64 0.004
Total 408,874.80 20.82 304,634.85 17.54
Pricing policies at trading with related parties:
(1) On December 28, 2005 and June 26, 2008, and April 15, 2009, the Company entered the “Land
Rent Contract”, “Land Rent Contract Supplementary”, “Land Rent Contract Supplementary II” and
“Material and Service Providing Agreement” with Bengang Group, which setout the providing of raw
materials, supplementary materials, supporting serves, trade mark, patent, and land renting by the Group
to the Company; as well as sales of products, supplementary materials, power, spare parts, and waste
materials to the Group.
A: The pricing of subjects purchased from Bengang Group:
Pricing of raw materials:
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.
The price for iron ore pellets is according to the market price at same quality.
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.
The price for cool hard plate is decided at the weighted average of the hot rolled plate the Company sold
to the independent 3rd parties in the previous month plus processing fee, the processing fee is revisedBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
94
once a year, which is RMB363 per ton for 2010.
Cool plate and galvanized sheet are on market prices.
Pricing of auxiliary materials: limestone, fire resistance material and auxiliary materials provided by
Bengang Group will be at market price.
Pricing of spare parts: the spare parts manufactured by the Group itself will be at market price.
Rental for the 2300mm hot rolling line is decided by the “Lease Agreement”.
Trucking service: on market price.
Pricing of the heating service of the dwelling house for staff and workers: carried out according to the
price set forth by the national government.
Workshop and equipment maintaining services: maintaining services are priced upon negotiation.
Designing and engineering service will be at national government price.
Construction service: construction services provided by Bengang Group to the Company will be at
market price.
Printing, newspapers, media and other publications: on national government price.
Education facilities and services: education facilities, vocational education programs, and onsite training
courses provided by Bengang Group are at market price.
Agent service: 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
beforehand 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.
Pricing of telephone, fax and the TV service: carried out according to the price set forth by the national
government.
Office spaces: on market price during the effective period of this agreement.
Car service: on market price during the effective period of this agreement.
Property management: on market price during the effective period of this agreement.
Packing service: on market price during the effective period of this agreement.
Labor safety services: on market price during the effective period of this agreement.
Pricing of trademark: Bengang Group allows the Company to use “Bengang” trademark by free.
However the Company can’t allow any other parties to use it. The Company has the right to register its
own trademark at any time.
B: Pricing of sales to Bengang Group:
Hot-rolled steel sheet: carried out according to the weighting average price of the same quality products
which our company sold to the independent third party in the previous month.
Coke and chemical products are on market prices.
Steel and iron residue is on market price.
Pricing of public service: Power supply to the Group was on the market price plus transferring cost. 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.
Railway transportation, quality test, measuring, weighting: at national price.
Iron and steel scrap, including the iron material: carried out according to the market price.
Raw material, supplementary material and spare parts: based on purchase price of the Company plusBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
95
0.5%-1.5% purchasing fee.
R&D service: R&D that Bengang Group can’t do by itself are provided by the Company. The expenses
shall be the national price.
② Land rent from Bengang Group to the Company, it was agreed to carry forward the Land Using
Right Rent Agreement” which is effective at present. Namely the price is RMB6.24 /m2/year.
4.Rental with related parties
Remarks on the rental with related party:
In 2009, the Company leased 2300mm hot rolling mill production line from shareholder Benxi Steel
(Group) Co., Ltd. The value of the whole line amounts to 5 billion RMB. The stage from the effective
date of the lease contract to December 31st, 2009 is a testing period. Benxi Steel (Group) Co., Ltd
charged no rent and any loss related to the lease subject is borne by Benxi Steel (Group) Co., Ltd and the
profit belongs to the company if there is any. The second stage: From January 1st 2010 to the end of the
lease period, the company will pay 30% of the profit to Benxi Steel (Group) Co., Ltd as rent, and the
annual rent will be no more than 5%(excluding 5%) of the audited net assets, and any loss related to the
lease subject will be borne by the company.
5. Receivable and payables due with related parties
End of term RMB0’000 Beginning of term 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. 11,529.88 18.34 11,168.18 11.66
Bengang Group Thermal Power Development
Co., Ltd. 1,109.91 1.77 2396.92 2.5
Benxi Steel (Group) Construction Ltd. 8,372.22 13.32 7909.86 8.26
Benxi Steel (Group) Industrial Development Ltd. 459.74 0.73 1,803.36 1.88
Bengang Group New Industry Development Co.,
Ltd. 494.35 0.79 573.29 0.6
Bengang Fire-resistance Material Co. 8,462.57 13.46 6,631.10 6.92
Bengang Group Metallurgy Residue Ltd. 1,323.41 2.11 5,601.76 5.85
Shanghai Bengang Steel & Iron Trading Co.,
Ltd. 339.07 0.54 0.00 0.00
Benxi Steel (Group) Real-estate Development
Co., Ltd. 292.58 0.47 0.75 0.00
Sub-total 32,383.73 51.51 36,085.22 37.67
Prepayments
Bengang Group International Trading Ltd. 30,162.53 27.60 17,668.27 15.36
Benxi Steel (Group) Repairing & Building Ltd. 934.89 0.86 46.19 0.04
Benxi Steel (Group) Construction Ltd. 7,824.31 7.16 4,369.49 3.8
Benxi Steel (Group) Industrial Development Ltd. 315.73 0.29 17.19 0.01
Bengang Puxiang Cool Rolling Steel Sheet Co.,
Ltd. 0.00 0.00 1,604.02 1.39
Benxi Steel (Group) Machinery Co., Ltd. 1,748.66 1.60 2,253.13 1.96
Sub-total 40,986.11 37.51 25,958.30 22.56
Account payable
Bengang Fire-resistance Material Co. 16,325.99 2.61 12,012.00 1.92Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
96
End of term RMB0’000 Beginning of term RMB0’000
Related parties
Book
balance
Portion
in the
category
%
Bad debt
provision
Book
balance
Portion
in the
category
%
Bad debt
provision
Liaoning Bengang Steel & Iron Trading Co., Ltd. 197.57 0.03 281.88 0.05
Liaoning Metallurgy Technician College 826.15 0.13 1,424.11 0.23
Benxi Steel (Group) Ltd. 189.83 0.03 274.56 0.04
Benxi Steel (Group) Drilling Tools Co., Ltd. 385.71 0.06 803.79 0.13
Bengang Group New Industry Development Co.,
Ltd. 0.00 0.00 1.35 0.00
Bengang Group Property Co., Ltd. 270.89 0.04 594.82 0.1
Bengang Group Construction Inspection Co.,
Ltd. 24.43 0.00 39.48 0.01
Benxi Xingye Therapy and Sanitary Co., Ltd. 41.23 0.01 83.74 0.01
Benxi Yitong Pipe Co., Ltd. 86.30 0.01 205.36 0.03
Bengang Group Machinery Ltd. 2,648.01 0.42 2,709.88 0.43
Benxi Steel (Group) Construction Ltd. 23,405.45 3.74 1089.45 0.17
Bengang Group Mineral Co., Ltd. 12,505.15 2.00 74,957.52 11.97
Benxi Steel (Group) Industrial Development Ltd. 4,070.89 0.65 3,961.86 0.63
Benxi Steel (Group) Repairing & Building Ltd. 15,506.31 2.48 0.00 0.00
Bengang Group Metallurgy Residue Ltd. 758.48 0.12 4,898.44 0.78
Benxi Steel (Group) Information and Automatic
Tech. Ltd. 1,574.43 0.25 1,601.62 0.26
Bengang Group Electronics Co., Ltd. 911.90 0.15 1005.12 0.16
Benxi Steel (Group) Designing Institute 0.00 0.00 1,529.72 0.24
Benxi Steel (Group) Education Center 148.98 0.02 329.5 0.05
Benxi Steel (Group) Thermal Power
Development Co., Ltd. 8.25 0.00 10.32 0
Sub-total 79,885.95 12.77 107,814.50 17.21
Other account payable 0
Bengang Group Machinery Ltd. 421.26 0.48 382.7 0.45
Benxi Steel (Group) Repairing & Building Ltd. 468.26 0.53 513.48 0.6
Benxi Steel (Group) Industrial Development Ltd. 889.72 1.01 1,052.63 1.24
Benxi Steel (Group) Construction Ltd. 8,574.50 9.71 8,944.11 10.52
Bengang Group Property Co., Ltd. 17.46 0.02 25 0.03
Benxi Steel (Group) Information and Automatic
Tech. Ltd. 854.95 0.97 949.67 1.12
Bengang Group New Industry Development Co.,
Ltd. 18.56 0.02 252.14 0.3
Benxi Electronics Co., Ltd. 247.96 0.28 303.47 0.36
Bengang Group Training Center 9.55 0.01 395.32 0.47
Bengang Fire-resistance Material Co. 17.85 0.02 45.99 0.05
Benxi Steel (Group) Designing Institute 79.64 0.09 135.01 0.16
Liaoning Metallurgy Technician College 258.74 0.29 412.57 0.49
Benxi Steel (Group) Steel Process & Logistics
Ltd. 48.26 0.05 24.7 0.03Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
97
End of term RMB0’000 Beginning of term RMB0’000
Related parties
Book
balance
Portion
in the
category
%
Bad debt
provision
Book
balance
Portion
in the
category
%
Bad debt
provision
Benxi Steel (Group) Ltd. 18,064.74 20.46 14,460.68 17.02
Benxi Steel (Group) News Center 0.00 0.00 386.84 0.46
Bengang Puxiang Cool Rolling Steel Sheet Co.,
Ltd. 178.26 0.20 94.79 0.11
Bengang Group Thermal Power Development
Co., Ltd. 3.75 0.00 1416.77 1.67
Bengang Group Metallurgy Residue Ltd. 28.04 0.03 45.09 0.05
Sub-total 30,181.51 34.18 29,840.96 35.13
Account received in advance
Dalian Boluole Steel Tube Ltd. 604.18 0.19 843.93 0.33
Benxi Steel (Group) Steel Process & Logistics
Ltd. 2,553.98 0.81 3,796.53 1.5
Benxi Steel (Group) Construction Ltd. 0.00 0.00 17.58 0.01
Benxi Steel (Group) Industrial Development Ltd. 0.00 0.00 640.29 0.25
Guangshou Free Trade Zone Bengang Sales Co.,
Ltd. 2,753.02 0.88 4,934.74 1.94
Liaoning Bengang Steel & Iron Trading Co., Ltd. 2,206.97 0.70 2,403.13 0.95
Shanghai Bengang Steel & Iron Trading Co.,
Ltd. 0.00 0.00 1.91 0.00
Tianjin Bengang Steel Plate Processing and
Delivery Co., Ltd. 1,917.38 0.61 2,050.00 0.81
Bengang Puxiang Cool Rolling Steel Sheet Co.,
Ltd. 43,225.13 13.78 0.00 0.00
Bengang Group New Industry Development Co.,
Ltd. 0.00 0.00 0.07 0
Liaoning Metallurgy Technician College 0.00 0.00 29.33 0.01
Benxi Steel (Group) Medical Co. Ltd. 0.00 0.00 1.21 0.00
Bengang Group Metallurgy Residue Ltd. 0.00 0.00 0.1 0.00
Benxi Steel (Group) Machinery Co., Ltd. 0.00 0.00 38.26 0.02
Benxi Steel (Group) Culture Center 0.00 0.00 0.42 0.00
Benxi Steel (Group) Tengda Holdings Ltd. 0.00 0.00 0.27 0.00
Sub-total 53,260.65 16.98 14,757.78 5.82
Notes payable
Benxi Steel (Group) Construction Ltd. 179.65 0.09 864.03 0.2
Benxi Steel (Group) Industrial Development Ltd. 693.39 0.36 2137.34 0.5
Liaoning Bengang Steel & Iron Trading Co., Ltd. 174.77 0.09 210 0.05
Bengang Group New Industry Development Co.,
Ltd. 0.00 0.00 10 0.00
Bengang Fire-resistance Material Co., Ltd. 1,023.12 0.53 2,100.00 0.5
Benxi Steel (Group) Information and Automatic
Tech. Ltd. 236.89 0.12 475.09 0.11
Bengang Group Machinery Ltd. 115.30 0.06 2,388.61 0.56
Bengang Group Property Co., Ltd. 0.00 0.00 367.9 0.09
Bengang Electronics Co., Ltd. 0.00 0.00 881.00 0.21
Benxi Steel (Group) Drilling Tools Co., Ltd. 485.28 0.25 0.00 0.00Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
98
End of term RMB0’000 Beginning of term RMB0’000
Related parties
Book
balance
Portion
in the
category
%
Bad debt
provision
Book
balance
Portion
in the
category
%
Bad debt
provision
Bengang Group Construction and Repairing Co.,
Ltd. 0.00 0.00 330.6 0.08
Liaoning Metallurgy Technician College 0.00 0.00 786.3 0.19
Sub-total 2,908.40 1.52 10,550.87 2.49
Other account receivable
Bengang Group Inspection Co., Ltd. 25.05 0.21 25 0.17
Benxi Steel (Group) Industrial Development Ltd. 27.50 0.23 41.62 0.28
Benxi Steel (Group) Real-estate Development
Co., Ltd. 240.26 1.98 222.18 1.49
Benxi Steel (Group) Electronics Co., Ltd. 287.22 2.37 147.63 0.99
Sub-total 580.03 4.78 436.43 2.93
VII. Contingent issues
No contingent event to be disclosed up to the date of this report.
VIII. Commitments
No commitment issues to be disclosed up to the date of this report.
IX. Post-balance-sheet issues
No post balance sheet non-adjustment issues to be disclosed up to the date of this report.
X.Other material issues
(I) Non-monetary asset exchange
No such non-monetary asset exchange to be disclosed up to the date of this report.
(II) Other material issues to be disclosed
No such other material issues to be disclosed up to the date of this report.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
99
XI. Notes to the main items of the financial statements of the
parent company
(1) Account receivable
1.Account receivable
Balance at the end of term Balance at the beginning of term
Items
Book balance
Percentage
of the total
receivable
%
Bad debt
provision
%
Bad debt
provision Book balance
Percentage
of the total
receivable
%
Bad debt
provision
%
Bad debt
provision
within
1 yr 654,023,540.99 56.19 603,876,063.14 54.22
1-2
yrs 89,189,801.88 7.66 5 4,459,490.09 89,189,801.88 8.01 5 4,459,490.09
2-3
yrs 59,877,718.63 5.14 20 11,975,543.73 59,877,718.63 5.38 20 11,975,543.73
Over
3 yrs 360,763,094.63 31.01 100 360,763,094.63 360,763,094.63 32.39 100 360,763,094.63
Total 1,163,854,156.13 100.00 377,198,128.45 1,113,706,678.28 100 377,198,128.45
Categories Balance at the end of term
Book value Portion in total % Bad debt provision Bad debt provision rate %
Single receivable account
with mass amount
754,905,677.24 64.86 76,753,270.91 10.17
No major amount
individually but with great
risk after combined with
others with similar credit risk
291,470,233.92 25.04 291,470,233.92 100
Other non-material
receivables
117,478,244.97 10.10 8,974,623.62 7.64
Total 1,163,854,156.13 100.00 377,198,128.45 32.41
Categories Balance at the beginning of term
Book value Portion in total % Bad debt provision Bad debt provision rate %
Single receivable account
with mass amount
704,905,677.24 63.29 76,753,270.91 10.89
No major amount
individually but with great
risk after combined with
others with similar credit risk
291,470,233.92 26.17 291,470,233.92 100.00
Other non-material
receivables
117,330,767.12 10.54 8,974,623.62 7.65
Total 1,113,706,678.28 100.00 377,198,128.45 33.87Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
100
2.Accounts receivables which are individually insignificant but with a material portfolio credit
risk are as follows
Balance at the end of term Balance at the beginning of term
Age Book balance Book balance
Amount Proportion %
Bad debt provision
Amount Proportion %
Bad debt provision
Over
3 yrs 291,470,233.92 25.04 291,470,233.92 291,470,233.92 26.17 291,470,233.92
Total 291,470,233.92 25.04 291,470,233.92 291,470,233.92 26.17 291,470,233.92
3.At end of the 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.
4. Change of the bad debt 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
2009 346,808,407.34 30,389,721.11 377,198,128.45
Jan-Jun 2010 377,198,128.45 377,198,128.45
5.The top five debtors at the year end
Name of the companies
Relation
with the
Company
Amount Ages Portion in total
receivables
Bengang Group Machinery Ltd. Related
parties 115,298,787.38 within 1
year 9.91
China Petrol Goods Co. Client 103,666,032.32 within 1
year 8.91
Bengang Fire-resistance Material Co. Related
parties 84,625,720.61 1-2 yrs 7.27
Benxi Steel (Group) Construction Ltd. Related
parties 83,722,159.47 within 1
year 7.19
Baoji Fast Gear Co., Ltd. Client 13,401,375.87 within 1 yr 1.15
6. The accounts receivables of related parties are disclosed in Note 6 .
(2) Other account receivable
1.Other account receivable
Balance at the end of term Balance at the beginning of term
Items
Book balance
Percentage
of the total
receivable
%
Bad debt
provision
%
Bad debt
provision Book balance
Percentage
of the total
receivable
%
Bad debt
provision
%
Bad debt
provision
within
1 yr 207,938,901.57 74.66 194,395,933.32 73.37
1-2
yrs 3,184,114.22 1.14 5 159,205.71 3,184,114.22 1.2 5 159,205.71
2-3
yrs 13,893,672.55 4.99 20 2,778,734.51 13,893,672.55 5.24 20 2,778,734.51
Over
3 yrs 53,511,523.75 19.21 97.00 51,771,523.75 53,511,523.75 20.19 96.75 51,771,523.75
Total 278,528,212.09 100.00 54,709,463.97 264,985,243.84 100 54,709,463.97Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
101
Balance at the end of term
Categories
Book value Portion in total % Bad debt provision Bad debt provision rate %
Other receivable with major
individual amount 196,599,472.88 70.59 5,351,093.71 2.72
No major amount individually
but with great risk after
combined with others with
similar credit risk
46,420,430.04 16.67 46,420,430.04 100
Other minor other receivables 35,508,309.17 12.74 2,937,940.22 8.27
Total 278,528,212.09 100.00 54,709,463.97 19.64
Balance at the beginning of term
Categories
Book value Portion in total % Bad debt provision Bad debt provision rate %
Other receivable with major
individual amount 183,056,504.63 69.08 5,351,093.71 2.92
No major amount individually
but with great risk after
combined with others with
similar credit risk
46,420,430.04 17.52 46,420,430.04 100.00
Other minor other receivables 35,508,309.17 13.40 2,937,940.22 8.27
Total 264,985,243.84 100.00 54,709,463.97 20.65
2. Bad debt provision for individually significant other receivables and individually insignificant
other receivables for which impairment test has been carried out:
Name of the
companies
Book balance Bad debt provision Providing rate % Reason
Japanese Loan
Sinking Fund of
Finance Bureau of
Benxi
1,740,000.00 sinking fund
Total 1,740,000.00
3. Other receivables which are individually insignificant but with a material portfolio credit risk
are as follows:
Balance at the end of term Balance at the beginning of term
Age Book balance Book balance
Amount Proportion %
Bad debt provision
Amount Proportion %
Bad debt provision
Over
3 yrs 46,420,430.04 16.67 46,420,430.04 46,420,430.04 17.52 46,420,430.04
Total 46,420,430.04 16.67 46,420,430.04 46,420,430.04 17.52 46,420,430.04
The explanation for accounts receivables which are individually insignificant but with a material
portfolio credit risk: individually insignificant items with aging over 3 years.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
102
4. Change of the bad debt 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
2009 49,433,793.58 5,275,670.39 54,709,463.97
Jan-Jun
2010 54,709,463.97 54,709,463.97
5. On 31 December 2009, within the aforesaid balance, there is no amount due from the
shareholders who holds 5% or more the voting shares of the Company.
6.Top five debtors at the year end
Name of the companies Relation with
the Company Description Amount Ages
Portion in total
other receivables
(%)
Dalian Benruitong Automobile
Material Technologies Co., Ltd. Subsidiary Investment 65,000,000.00 within
1 yr 23.34
China Metallurgy Southern
Engineering & Technologies
Co., Ltd.
Suppliers Deposit 22,974,815.08 within
1 yr 8.25
Freight for main clients Suppliers Freight 19,692,650.29 within
1 yr 7.07
Shenyang Zhanxiang
Decoration Co., Ltd. Suppliers Payment for
material 3,824,589.76 Over 3
yrs 1.37
Benxi Steel (Group) Electronics
Co., Ltd. Related parties Current
account 2,872,197.62 within
1 yr 1.03
7.As to the ending balance of other receivables with regard to related parties, please refer to the
Note 6.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
103
(3) Long-term share equity investment
In RMB
Company invested in Calculating
basis Initial costs
Balance at the
beginning of
term
Changed by Balance at the
end of term
Percentage
of share in
the firm %
Voting
power in
the firm
%
Statement on
differences
between the
shareholding
and voting
rights
Impairment
provision
Impairment
provision
provided
this term
Cash
dividend
of the
current
term
Haerbin Bengang International
Trading Ltd. Cost basis 500,000.00 423,398.23 423,398.23 100 100
Changchun Bengang Steel
Sales Ltd. Cost basis 500,000.00 -1,355,124.64 -1,355,124.64 100 100
Tianjin Bengang Steel Trading
Ltd. Cost basis 3,000,000.00 33,318,095.80 33,318,095.80 100 100
Yantai Bengang Steel Sales
Ltd. Cost basis 500,000.00 19,600,329.41 19,600,329.41 100 100
Nanjing Bengang Steel Sales
Ltd. Cost basis 1,150,000.00 2,081,400.65 2,081,400.65 100 100
Wuxi Bengang Steel Sales Ltd. Cost basis 1,000,000.00 936,718.57 936,718.57 100 100
Xiamen Bengang Steel Sales
Ltd. Cost basis 500,000.00 1,095,711.66 1,095,711.66 100 100
Guangzhou Bengang Trade
Co., Ltd. Cost basis 1,000,000.00 1,000,000.00 1,000,000.00 100 100
Shanghai Bengang
Metallurgy Tech. Ltd. Cost basis 5,000,000.00 5,000,000.00 5,000,000.00 100 100
Bengang Steel Plate
Liaoyang Orel Ball Co.,
Ltd.
Cost basis 477,607,647.49 477,607,647.49 477,607,647.49 100 100
Bengang Stainless Cool-rolling
(Dandong) Co., Ltd. Cost basis 160,000,000.00 160,000,000.00 160,000,000.00 100 100
Tianjin Bengang Longxing
Steel Processing Co., Ltd.
Equity
basis 3,888,980.00 3,888,980.00 3,888,980.00
Total
654,646,627.49 539,708,177.17 163,888,980.00 703,597,157.17
Remarks about long-term equity investment: In the report term, the Company invested to setup Bengang Stainless Steel Cool-rolling Co., Ltd. – a fully-ownedBengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
104
subsidiary; invested RMB3.88898 million to purchase the 10% share equity of Tianjin Longxing Steel Processing Co., Ltd. held by Suzhou Longxing Logistics Co.,
Ltd. and Shanghai Yegang Industry Co., Ltd.Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
102
(4) Operating income and operating cost
1. Turnover
Items Occurred current term Occurred in previous term
Major business turnover 18,526,041,285.83 14,077,654,529.87
Other business income 2,562,830,774.54 1,937,104,455.81
Total 21,088,872,060.37 16,014,758,985.68
2. Operation cost
Items Occurred current term Occurred in previous term
Major business cost 16,130,730,258.84 13,298,526,898.75
Other business cost 2,313,795,909.51 1,919,128,408.00
Total 18,444,526,168.35 15,217,655,306.75
3. Main Business (Industry segment)
Items Occurred current term Occurred in previous term
Turnover Operation cost Turnover Operation cost
(1) Industry 18,526,041,285.83 16,130,730,258.84 14,077,654,529.87 13,298,526,898.75
Total 18,526,041,285.83 16,130,730,258.84 14,077,654,529.87 13,298,526,898.75
4. Main business (product segment)
Items Occurred current term Occurred in previous term
Turnover Operation cost Turnover Operation cost
1. Steel plate 18,196,996,431.83 15,846,201,935.86 11,725,961,934.72 11,686,979,184.47
2. Steel billet 1,061,485.60 774,784.32 2,164,192,270.68 1,356,573,735.54
3. Others 327,983,368.40 283,753,538.66 187,500,324.47 254,973,978.74
Total 18,526,041,285.83 16,130,730,258.84 14,077,654,529.87 13,298,526,898.75
5. Main business (geographic segment)
Areas Occurred current term Occurred in previous term
Turnover Operation cost Turnover Operation cost
North-east 5,721,286,849.78 4,921,366,634.24 5,424,601,276.84 5,124,376,780.38
North 2,950,157,361.71 2,582,586,552.70 3,153,303,535.00 2,978,783,986.44
East 4,430,136,638.33 3,878,169,841.81 3,922,601,644.32 3,705,505,300.57
Northwest 69,825,217.73 61,125,440.52 16,362,452.39 15,456,872.65
Mid-south 1,815,448,967.06 1,589,255,593.72 1,373,312,100.10 1,297,306,157.41
Export 3,539,186,251.22 3,098,226,195.84 187,473,521.22 177,097,801.30
Total 18,526,041,285.83 16,130,730,258.84 14,077,654,529.87 13,298,526,898.75
6. Main business income from top 5 clients
Name of clients Total of principal turnover % in total main business income
Bengang Group International Trading
Ltd. 3,539,186,251.22 19.1
Bengang Puxiang Cool Rolling Steel
Sheet Co., Ltd. 3,229,603,415.26 17.43
Yantai Bengang Steel Sales Ltd. 701,150,161.16 3.78
Shanghai Bengang Metallurgy Tech.
Ltd. 549,254,466.14 2.96
Tianjin Bengang Steel Trading Ltd. 371,890,913.12 2.01Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
103
(5) Appendix of Cash Flow Statement
Items Amount of the Current Term Amount of the Previous Term
1. Net profit adjusted to cash flow of business operation
Net profit 685,501,932.68 -958,211,755.08
Plus: Asset impairment provision
Fixed asset depreciation, gas and petrol depreciation,
production goods depreciation
1,027,830,862.93 1,177,117,974.31
Amortizing of intangible assets
Amortizing of long-term expenses
Loss from disposal of fixed assets, intangible assets, and
other long-term assets (“-“ for gains)
Loss from fixed asset discard (“-“ for gains)
Loss from fair value fluctuation (“-“ for gains)
Financial expenses (“-“ for gains) 118,122,309.04 112,593,335.72
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) -198,655,504.01 1,331,099,633.87
Decrease of operational receivable items (“-“ for
increase)
-6,296,499.92 -666,689,123.88
Increase of operational payable items (“-“ for decrease) -1,031,566,662.83 643,401,574.09
Others 50,672,154.77
Cash flow generated by business operation, net 594,936,437.89 1,689,983,793.80
2. Payments of investment and fund-raising activities do
not involve cash：
Liabilities converted to capital
Convertible bond expire in 1 year
Fixed assets leased through financing
3. Net change of cash and cash equivalents
Balance of cash at period end 2,295,771,447.81 1,895,522,396.90
Less: Balance of cash at beginning of year 2,795,043,926.41 2,209,824,428.24
Plus: Balance of cash equivalents at the period end
Less: Balance of cash equivalents at beginning of term
Net increasing of cash and cash equivalents -499,272,478.60 -314,302,031.34Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
104
XII.Supplementary Info.
(1) Details of non-recurring gain/loss of current term
Items Amount Remarks
Gain/loss of non-current assets 722,298.30
Tax refunding or exemption without official certification or exceeded authority
Gains and losses included in the current period of government subsidies,
excluding those government grants which are closely related to normal business
and in line with national policy , or in accordance with fixed standards or
quantities
317,493.00
Capital adoption fee collected from non-financial organizations and accounted into current
gain/loss
Gain/loss from differences between the cost of enterprise merger and the fair value of
recognizable net asset of the invested entities
Gain/loss from non-monetary assets
Gain/loss from commissioned investment or assets
Asset impairment provisions provided for force-majeur
Gain/loss from debt reorganization 5,595,455.72
Enterprise reorganizing expenses, such as employee placement fee and integration fee
Gain/loss from trade departing from fair value
Current net gain/loss of subsidiaries under same control from beginning of term till date of
consolidation
Gain/loss generated by contingent liabilities without connection with main businesses
Gain/loss from change of fair value of transactional asset and liabilities, and investment gains
from disposal of transactional financial assets and liabilities and sellable financial assets,
other than valid period value instruments related to the Company’s common businesses
Restoring of receivable account impairment provision tested individually
Gain/loss from commissioned loans
Gain/loss from change of fair value of investment property measured at fair value in
follow-up measurement
Influence of one-time adjustment made on current gain/loss account according to the laws
and regulations regarding tax and accounting
Consigning fee received for cosigned operation
Other non-business income and expenditures other than the above 49,440.77
Other gain/loss items satisfying the definition of non-recurring gain/loss account
Influenced amount of income tax -1,671,171.95
Total 5,013,515.84Bengang Steel Plates Co., Ltd. Notes to Financial Statements Interim 2010
105
(2) Net asset yield and Earnings per Share
Profit of the report period Earnings per share
Weighted average net
income/asset ratio (%)
Basic earnings per share Diluted earnings per share
Net profit attributable to
common shareholders of the
Company
4.77 0.2196 0.2196
Net profit attributable to the
common owners of the PLC
after deducting of non-recurring
gains/losses
4.73 0.2180 0.2180
XIII.Approval and releasing of the financial statements
The Financial Statements were approved to be released by all of the directors of the Company on August
20, 2010.
Bengang Steel Plates Co., Ltd.
August 20, 2010
