Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
本钢板材股份有限公司
BENGANG STEEL PLATES CO.,LTD.
Interim Report 2011
January 1 – June 30
(Prepared Under International Accounting Standard)
August 24, 2011
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Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
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 Wang Yiqiu was on business trip and empowered independent
director Tian bingfu to vote on her behalf.
Financial statements carried in this interim report are not audited.
Chairwoman of the Board – Ms. Zhang Xiaofang, Chief Financial Officer and
General Manager – Mr. Cao Aimin, and Head of Accounting Dept. – Mr. Wang Shaoyu
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.
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Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Table of Contents
I. Company Profile............................................................................................... 4
II. Major Financial Information ........................................................................... 5
III. Change of Capital Share and Top Ten Shareholders...................................... 6
IV. Particulars about the Directors, Supervisors and Senior Executives ............. 9
V. Report of the Board ....................................................................................... 10
VI. Significant Events........................................................................................ 12
VII. Financial Report ......................................................................................... 25
VIII. Documents for Inquiring........................................................................... 25
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Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
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: Zhang Xiaofang
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 7828734
Fax: 0414－7824158 7827004
Email: bgbczjc761@126.coom
4. Registered address: No.18 Guangtie Rd., Pingshan District, Benxi City, Liaoning
Office address: No.16, Renmin Road, Pingshan District, Benxi City, Liaoning
Post code: 117000
Email: 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: 210000004931633
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, Shanghai
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Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
II. Major Financial Information
1. Main indices
In RMB
Ended this report Ended previous Increase/decrease
term year (%)
Gross Assets (RMB) 39,294,043,312.71 35,871,741,948.24 9.54%
Owners’ equity attributable to the
15,292,215,422.32 15,010,359,312.05 1.88%
shareholders of the listed company (yuan)
Capital shares (shares) 3,136,000,000.00 3,136,000,000.00 0.00%
Net asset per share attributable to the
shareholders of the listed company 4.88 4.79 1.88%
(Yuan/share)
Report term Same period last Increase/decrease
(Jan-Jun) year (%)
Turnover (yuan) 24,050,256,657.14 22,354,385,410.54 7.59%
Business profit (RMB) 617,632,783.04 686,808,575.93 -10.07%
Gross profit (RMB) 628,365,457.52 693,493,263.72 -9.39%
Net profit attributable to shareholders of the
595,456,110.27 688,606,765.04 -13.53%
listed company (yuan)
Net profit after deducting of non-recurring
gain/loss attributable to the shareholders of 587,406,604.41 683,593,249.20 -14.07%
the listed company (RMB)
Basic earnings per share (Yuan/share) 0.19 0.22 -13.64%
Diluted earnings per share (Yuan/share) 0.19 0.22 -13.64%
Weighted average of ROE (%) 3.93% 4.77% -0.84%
Weighted average net
income/asset ratio less non-recurring 3.88% 4.73% -0.85%
gain/loss(%)
Net Cash flow generated by business
1,141,757,019.65 602,108,047.71 89.63%
operation (RMB)
Net Cash flow per share generated by
0.36 0.19 89.47%
business operation (yuan/share)
2. Non-recurring profit/loss items
In RMB
Note (if
Non-recurring gain and loss items Amount
applicable)
Gain/loss of non-current assets 105,882.56
Government subsidies accounted into current gain/loss account, other than
those closely related to the Company’s common business, comply with the 5,072,967.00
national policy and continues to enjoy at certain fixed rate or amount.
Gain/loss from debt reorganization 1,602,521.42
Other non-business income and expenditures other than the above 3,951,303.50
Influenced amount of income tax -2,683,168.62
Total 8,049,505.86 -
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Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
3. Diversity of domestic and international accounting standard
Net profit attributable to the shareholders of Owners’ equity to shareholders of the listed
the listed company company
Current term Amount of last term End of term Beginning of term
On IAS 595,456,110.27 688,606,765.04 15,292,215,422.32 15,010,359,312.05
On domestic accounting
595,456,110.27 688,606,765.04 15,292,215,422.32 15,010,359,312.05
standard
Individual and total of adjustment according to IAS
Total of differences
between the IAS and
0.00 0.00 0.00 0.00
domestic accounting
standard
Statement on differences
between the IAS and The differences between the new Chinese accounting standard and the international accounting
Chinese Accounting standard make no influence on the net profit and the net asset of the term.
Standard
III. Change of Capital Share and Top Ten Shareholders
1. Change of share equity
Before the change Changed (+,-) After the change
Issuing Transferred
Bonus
Amount Proportion of new from Others Sub-total Amount Proportion
shares
shares reserves
I. Shares with trading
2,038,413,400 65.00% 2,038,413,400 65.00%
limited conditions
1. State-owned
shares
2. State-owned legal
2,038,400,000 65.00% 2,038,400,000 65.00%
person shares
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
13,400 0.00% 13,400 0.00%
shares
II. Shares without
trading limited 1,097,586,600 35.00% 1,097,586,600 35.00%
conditions
1. Common shares in
697,586,600 22.24% 697,586,600 22.24%
RMB
2. Foreign shares in
400,000,000 12.76% 400,000,000 12.76%
domestic market
3. Foreign shares in
overseas market
4. Others
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Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
III. Total of capital
3,136,000,000 100.00% 3,136,000,000 100.00%
shares
2. Particulars about the top 10 shareholders and top 10 unconditional-share holders
in shares
Total of shareholders 58,211
Top 10 Shareholders
Properties of Share Conditional Pledged or
Name of the shareholder Total shares
shareholder proportion % shares frozen
State-owned
Benxi Steel (Group) Ltd. 82.07% 2,573,632,420
legal person
China Construction Bank
– Shangtou Morgan
Domestic
China Advantage 1.65% 51,760,321
natural person
Securities Investment
Fund
DREYFUS PREMIER
INVESTMENT FDS Overseas
1.54% 48,448,857
INC.-DREYFUS natural person
GREATER CHINA FD
GOVERNMENT OF
Overseas
SINGAPORE INV. 0.81% 25,259,648
natural person
CORP.- A/C "C"
NOMURA TST N BK
CO.,LTD ATTF ASIA Overseas
0.58% 18,049,086
ATTR DIV STK FD natural person
MTH FD
GSIC A/C MONETARY
Overseas
AUTHORITY OF 0.32% 10,154,817
natural person
SINGAPORE
RENAISSANCE CHINA Overseas
0.22% 6,986,716
PLUS FUND natural person
APS CHINA ALPHA Overseas
0.15% 4,616,701
FUND natural person
BOCHK INVESTMENT
FUNDS-BOCHK Overseas
0.14% 4,499,952
CHINA GOLDEN natural person
DRAGON FUND
LSV EMERGING
Overseas
MARKETS EQUITY 0.11% 3,385,700
natural person
FUND,L.P.
Top 10 holders of unconditional shares
Amount of shares without trade limited
Name of the shareholder Category of shares
conditions
Benxi Steel (Group) Ltd. 535,232,420 RMB common shares
China Construction Bank – Shangtou
Morgan China Advantage Securities 51,760,321 RMB common shares
Investment Fund
DREYFUS PREMIER INVESTMENT
Foreign shares placed
FDS INC.-DREYFUS GREATER CHINA 48,448,857
in domestic exchange
FD
GOVERNMENT OF SINGAPORE INV. Foreign shares placed
25,259,648
CORP.- A/C "C" in domestic exchange
NOMURA TST N BK CO.,LTD ATTF Foreign shares placed
18,049,086
ASIA ATTR DIV STK FD MTH FD in domestic exchange
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Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
GSIC A/C MONETARY AUTHORITY Foreign shares placed
10,154,817
OF SINGAPORE in domestic exchange
Foreign shares placed
RENAISSANCE CHINA PLUS FUND 6,986,716
in domestic exchange
Foreign shares placed
APS CHINA ALPHA FUND 4,616,701
in domestic exchange
BOCHK INVESTMENT
Foreign shares placed
FUNDS-BOCHK CHINA GOLDEN 4,499,952
in domestic exchange
DRAGON FUND
LSV EMERGING MARKETS EQUITY Foreign shares placed
3,385,700
FUND,L.P. in domestic exchange
Notes to relationship or It is unknown to the Company whether there is any related connection or
“action in concert” ‘Action in Concert’ as described by Rules of Information Disclosing Regarding
among the top ten Changing of Shareholding Status of Listed Companies existing among the
shareholders. above shareholders.
3. Profile of the controlling shareholder
Liaoning State Asset Committee
100%
Bengang Group Ltd.
100%
Benxi Steel & Iron (Group) Ltd.
82.07%
Bengang Steel Plates Co., Ltd.
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Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
IV. Particulars about the Directors, Supervisors and Senior Executives
1. Shareholding position of the directors, supervisors and senior executives in the
current term.
Shares held at Amount of Amount of shares Shares held
Cause of
Name Position the beginning shares increased decreased in the at the end
change
of term in the report term report term of term
Zhang
Chairman 0 0 0 0
Xiaofang
Cao Aimin Director, GM 0 0 0 0
Director,
Zhang
Secretary of the 0 0 0 0
Jichen
Board
Tang
Director 0 0 0 0
Chaosheng
Independent
Tian Binfu 0 0 0 0
Director
Independent
Li Kai 0 0 0 0
Director
Independent
Wang Yiqiu 0 0 0 0
Director
Chairman of the
Liu Junyou supervisory 0 0 0 0
committee
Zhao Wei Supervisor 0 0 0 0
Liu
Supervisor 0 0 0 0
Engquan
Wang Pu Supervisor 0 0 0 0
Zhang
Supervisor 0 0 0 0
Chuang
Zhang Vice General
0 0 0 0
guohua Manager
Zhang Vice General
0 0 0 0
Guiyu Manager
Xie Vice General
0 0 0 0
Huaidang Manager
(Note: Mr. Yu Tianchen, formal Chairman of the Board is holding 13400 shares
of the Company which are constrained to sale until July 2011.
2. Engaging and dismissing of directors, supervisors and executives.
(1) Mr. Yu Tianchen, former director and Chairman of Board, resigned from the
positions due to change of job. As approved by the 4th meeting of the 5th term
of Board held on January 20, 2011, Ms. Zhang Xiaofang, former Vice Chairwoman
of Board was elected Chairwoman of the 5th term of Board. The resolutions are
released by China Securities Journal, Securities Times, and Hong Kong
Commercial Daily dated January 21, 2011.
(2) As approved at the 5th meeting of the 5th term of Board held on April 18,
2011, Mr. Nai Zuoxin resigned from the position of Vice General Manager. The
resolutions are released by China Securities Journal, Securities Times, and
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Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Hong Kong Commercial Daily dated April 20, 2011
(3) As approved at the Shareholders’ Annual Meeting 2010 held on May 17, 2011,
Mr. Tang Chaosheng was elected director of the 5th term of Board. The resolutions
are released by China Securities Journal, Securities Times, and Hong Kong
Commercial Daily dated May 18, 2011.
(4) As approved at the 6th meeting of the 5th term of Board held on May 17,
2011, Mr. Xie Huaidang was engaged Vice General Manager of the Company. The
resolutions are released by China Securities Journal, Securities Times, and
Hong Kong Commercial Daily dated May 18, 2011.
V. Report of the Board
1. Business Overview
In the first half of 2011, along with continuous increasing of raw materials
and energy prices, the cost has been going up constantly and profitability was
under great pressure. As the countermeasures, the Company kept improving its
business operation, upgrading equipment and product lines. In the report term,
the Company has been in a positive economical situation and laid a solid
foundation for achieving of the annual goals.
For the period of January to June, the Company realized iron output of 4.7253
million ton, decreased by 2.12% from the same period of last year; steel output
of 4.8845 million ton, decreased by 0.12%; hot-rolled plate of 4.3517 million
ton, decreased by 5.53%; cool-rolled plate of 934.3 thousand ton, increased
by 9.01%; 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
Increase/decrease Increase/decrease
On Gross Increase/decrease
of operation cost of gross profit ratio
industry Operation profit of turnover over
Turnover over the same over the same
or cost ratio the same period of
period of last year period of last year
product (%) last year (%)
(%) (%)
Industry 2,207,961.34 1,965,485.95 10.98% 11.56% 13.44% -11.86%
Segments on products
Steel
2,168,383.11 1,930,381.11 10.98% 11.41% 13.28% -11.78%
plate
Steel
392.89 323.56 17.65% 270.13% 317.61% -34.66%
billet
Others 39,185.33 34,781.28 11.24% 19.47% 22.58% -16.66%
Total 2,207,961.34 1,965,485.95 10.98% 11.56% 13.44% -11.86%
B. Distribution of main business in territories
In RMB 10 thousand Yuan
Regions Turnover Change of income over last year %
North east 840,444.96 20.29%
North 317,571.01 7.65%
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Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
East 511,802.93 15.53%
Northwest 27,084.37 287.89%
Mid-south 239,189.26 31.75%
Export 271,868.81 -23.18%
Total 2,207,961.34 11.56%
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.
In the report term, using of non-financing funds were as the followings:
In the first half of 2011, the Company has accomplished technical reconstruction
investment of RMB610.65 million in total.
1. IT project: planned for RMB274.44 million of investment, started in 2005.
RMB11.92 million invested in first half of 2011. Accumulated to RMB195.91
million at the end of report period (including: RMB159.55 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. RMB11.39 million invested the 1st half
of 2011. Accumulated to RMB1027.44 million at the end of June 2011 (including
RMB970.36 million of construction in process transferred to fixed assets).
Scheduled to be completed in 2011.
3. Energy saving and environmental reengineering project of 180 ton converter
system: planned for RMB1.37584 billion, started in 2007. RMB105.51 million was
invested in 2011. Accumulated to RMB741.39 million at the end of June 2011
(including RMB533.99 million transferred from construction in process to fixed
asset). Scheduled to be completed in 2012.
4. Dandong stainless steel cool rolling project: planned with investment of
RMB2230 million, started in 2008. RMB283.79 million invested in the 1st half
of 2011. Accumulated to RMB1008.48 million at end of June 2011. Scheduled to
complete in 2011.
5. Cool rolled silicon steel project: planned with RMB603.35 million, started
in 2009. RMB14.81 million invested in the first half of 2011 and accumulated
to RMB396.11 million at the end of June 2011. Scheduled to be completed in 2011.
6. Plate billet flare clearing project: planned for RMB207.63 million of
investment, started in 2010. RMB55.10 million invested in the first half of
2011, accumulated to RMB142.70 million at end of June 2011. (including RMB0.44
million of construction in process transferred to fixed assets). Scheduled to
be completed in 2011.
7. Construction of 2250mm skin pass mill project: planned for RMB96.88 million,
started in 2011. RMB7.43 million was invested in first half of 2011. Accumulated
to RMB7.43 million at the end of June 2011. Scheduled to be completed in 2012.
8. Electro Galvanize project: planned for RMB700 million of investment, started
in 2011. RMB64.19 million invested in the first half of 2011. Accumulated to
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Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
RMB64.19 million at the end of June 2011. Scheduled to be completed in 2012.
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 2010 was as: upon the total capital share
of 3,136,000,000, cash dividend of RMB1.00 (tax included) to be distributed
to each 10 shares. The registration date of the distribution was July 4, 2011,
the final trading date for B shares was July 4, 2011, and the ex-dividend date
was July 5, 2011.
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.
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Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
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.
5. Material Events about Related Transactions
(1) Parent company of the Company (RMB100 million)
Name of the Ownership Reg. Legal Business Registered
Relationship
parent co. type Add. representative property capital
Benxi Steel Parent Fully
Benxi Zhang Xiaofang Production 53.69
(Group) Co., Ltd. company state-owned
(Continued)
Name of the Shareholding portion of Voting power of Substantial holder of the Organization
parent co. the parent co. the parent co. Company code
Benxi Steel Liaoning Provincial
82.07 82.07 11972626-3
(Group) Co., Ltd. State-asset Administration
(2) Subsidiaries of the Company
In RMB 10 thousand
Ownership of the Ownership Reg. Legal Business
Name of the subsidiaries
subsidiary type Add. representative property
Fully-owned Limited
Xiamen Bengang Steel Sales Ltd. Xiamen Zhang Guoming Sales
subsidiary liability
Fully-owned Limited
Wuxi Bengang Steel Sales Ltd. Wuxi Wen Yonggang Sales
subsidiary liability
Fully-owned Limited
Tianjin Bengang Steel Trading Ltd. Tianjin Liu Chuang Sales
subsidiary liability
Nanjing Bengang Material Sales Fully-owned Limited
Nanjin Pang Zonghua Sales
Ltd. subsidiary liability
Fully-owned Limited
Yantai Bengang Steel Sales Ltd. Yantai Wang Lixin Sales
subsidiary liability
Harbin Bengang Steel & Iron Fully-owned Limited
Harbin Fei Jixi Sales
Sales Ltd. subsidiary liability
Changchun Bengang Steel Sales Fully-owned Limited Chang
Wang Jun Sales
Ltd. subsidiary liability Chun
Guangzhou Bengang Trade Co., Fully-owned Limited
Guangzhou Wu Shaogang Sales
Ltd. subsidiary liability
Shanghai Metallurgy Tech Co., Fully-owned Limited
Shanghai Fei Jixi Sales
Ltd. subsidiary liability
Bengang Steel Plate Liaoyang Fully-owned Limited
Liaoyuang Wang Zhengzhi Production
Orel Ball Co., Ltd. subsidiary liability
Dalian Benruitong Automobile Controlled Limited
Dalian Wang Shu Production
Material Technologies Co., Ltd. subsidiaries liability
Bengang Stainless Cool-rolling Fully-owned Limited
Dandong Yu Tianchen Production
(Dandong) Co., Ltd. subsidiary liability
13
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
(Continued)
Registered Share Voting power Organization
Name of the subsidiaries
capital portion % % 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
Dalian Benruitong Automobile Material Technologies
10,000.00 65.00 65.00 55498444-3
Co., Ltd.
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 736708677
(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 product sales and providing of services
14
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
In RMB 10 thousand
Amount of the Previous
Amount of the Current Term
Term
Subjects of the
Related parties Amount Portion in Amount Portion in
related transactions
similar trade similar trade
RMB0’000 RMB0’000
% %
Benxi Steel & Iron (Group)
Ltd. Material and parts 525.77 0.02 19,269.33 0.86
Benxi Steel & Iron (Group)
Ltd. Power supply 477.77 0.02 62.39 0
Dalian Boluole Steel Tube Ltd. Products 3,418.00 0.14 2,234.11 0.1
Guangshou Free Trade Zone
Bengang Sales Co., Ltd. Products 0.00 0.00 2,265.29 0.1
Liaoning Bengang Steel &
Iron Trading Co., Ltd. Products 13,002.13 0.54 17,095.78 0.76
Benxi Steel (Group) Steel
Process & Logistics Ltd. Products 17,807.54 0.74 15,127.06 0.68
Benxi Steel (Group) Steel
Process & Logistics Ltd. Power supply 48.26 0.00 56.23 0
Bengang Group Dahe Industry
Co., Ltd. Power supply 49.68 0.00 18.17 0
Benxi Steel (Group) Industrial
Development Ltd. Material and parts 4,244.18 0.18 3,654.62 0.16
Benxi Steel (Group) Industrial
Development Ltd. Power supply 120.79 0.01 111.95 0.01
Benxi Steel (Group)
Construction Ltd. Material and parts 5,058.73 0.21 14.63 0
Benxi Steel (Group)
Construction Ltd. Power supply 401.68 0.02 447.73 0.02
Bengang Group Machinery
Ltd. Power supply 1,339.91 0.06 1,807.37 0.08
Bengang Group Mineral Co.,
Ltd. Material and parts 55,517.41 2.31 83,266.60 3.72
Bengang Group Mineral Co.,
Ltd. Power supply 39,370.62 1.64 21,102.64 0.94
Bengang Group Mineral Co.,
Ltd. Freight income 459.91 0.02 499.76 0.02
Bengang Group New Industry
Development Co., Ltd. Power supply 45.51 0.00 32.95 0
Benxi Steel (Group) Repairing
& Building Ltd. Material and parts 87.76 0.00 169.73 0.01
Benxi Steel (Group) Repairing
& Building Ltd. Power supply 61.30 0.00 112.26 0.01
Bengang Group Metallurgy
Residue Ltd. Material and parts 8,999.65 0.37 6,808.84 0.3
Bengang Group Metallurgy
Residue Ltd. Power supply 280.37 0.01 3,637.7 0.16
Bengang Electronics Co., Ltd. Power supply 33.25 0.00 137.98 0.01
Bengang Puxiang Cool
Rolling Steel Sheet Co., Ltd. Products 378,172.84 15.72 322,960.34 14.45
Bengang Puxiang Cool
Rolling Steel Sheet Co., Ltd. Material and parts 23,385.46 0.97 25,427.75 1.14
Bengang Puxiang Cool
Rolling Steel Sheet Co., Ltd. Power supply 19,266.90 0.80 19,211.78 0.86
Bengang Group Thermal
Power Development Co., Ltd. Power supply 4,245.53 0.18 5,274.33 0.24
Bengang Group Thermal
Power Development Co., Ltd. Material and parts 2,976.63 0.12 4,036.66 0.18
Bengang Group Property Co.,
Ltd. Power supply 264.35 0.01 227.22 0.01
Bengang Fire-resistance
Material Co. Material and parts 2,322.33 0.10
Bengang Fire-resistance Power supply 0.03 3,825.04 0.17
15
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Amount of the Previous
Amount of the Current Term
Term
Amount Amount
Material Co. 672.60
Bengang Fire-resistance
Material Co. Freight income 68.52 0.00 1,334.8 0.06
Tianjin Bengang Steel Plate
Processing and Delivery Co.,
112.37
Ltd. Products 0.00 0.00 0.00
Total 582,837.74 24.23 560,231.01 25.06
3. Related transactions of purchasing of products and accepting of services
In RMB 10 thousand
Amount of the Previous
Amount of the Current Term
Term
Subjects of the related
Related parties Amount Portion in Amount Portion in
transactions
annual trade annual trade
RMB0’000 RMB0’000
% %
Benxi Steel & Iron (Group) Ltd. Raw materials 18.92 0.00 128.12 0.01
Benxi Steel & Iron (Group) Ltd. Land using rights 2,871.30 0.13 0.00 0.00
Benxi Steel & Iron (Group) Ltd. Maintaining 12,443.89 0.58 7356.52 0.37
Bengang Puxiang Cool Rolling
194,583.46 9.02
Steel Sheet Co., Ltd. Raw materials 124,100.99 6.32
Bengang Group Mineral Co.,
94.18 0.00
Ltd. Repairing services 176.31 0.01
Bengang Group Mineral Co.,
244,431.62 11.33
Ltd. Raw materials 181,706.58 9.25
Bengang Group Mineral Co.,
0.00 0.00
Ltd. Transportation 3.59 0.00
Bengang Group Metallurgy
4,247.47 0.20
Residue Ltd. Raw materials 4,360.01 0.22
Bengang Group Steel Process &
56.65 0.00
Logistics Ltd. Process fee 220.74 0.01
Bengang Group Property
2,040.83 0.09
Development Ltd. Raw materials 3217.25 0.16
Bengang Group Property Co.,
0.00 0.00
Ltd. Rental 3.76 0.00
Bengang Group Property Co., Property management
8.72 0.00
Ltd. fee 164.73 0.01
Bengang Group Property Property management
61.66 0.00
Management Center fee 0.00 0.00
Bengang Group Machinery Ltd. Spare parts 15,785.40 0.73 16,767.73 0.85
Bengang Group Machinery Ltd. Repairing services 2,579.39 0.12 518.55 0.03
Bengang Group Machinery Ltd. Raw materials 92.69 0.00 132.29 0.01
Bengang Group Construction
4,498.07 0.21
Ltd. Spare parts 547.32 0.03
Bengang Group Construction
28,081.12 1.30
Ltd. Repairing services 22,163.08 1.13
Bengang Group Construction
139.46 0.01
Ltd. Raw materials 527.88 0.03
Bengang Group Construction
102.35 0.00
Ltd. Transportation 214.25 0.01
Benxi Steel (Group) Industrial
18.47 0.00
Development Ltd. Spare parts 26.26 0.00
Benxi Steel (Group) Industrial
14,189.66 0.66
Development Ltd. Raw materials 7,099.90 0.36
Benxi Steel (Group) Industrial
898.15 0.04
Development Ltd. Repairing services 656.02 0.03
Benxi Steel (Group) Industrial
264.20 0.01
Development Ltd. Transportation 585.3 0.03
Benxi Steel (Group)
277.03 0.01
Construction Ltd. Material and parts 1272.22 0.06
Benxi Steel (Group) Maintaining 4,884.46 0.23 7,501.75 0.38
16
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Amount of the Previous
Amount of the Current Term
Term
Amount Amount
Construction Ltd.
Bengang Electronics Co., Ltd. Raw materials 6,516.22 0.30 4779.39 0.24
Bengang Electronics Co., Ltd. Repairing services 447.64 0.02 1022.71 0.05
Benxi Steel (Group) Drilling
982.03 0.05
Tools Co., Ltd. Spare parts 926.69 0.05
Bengang Group New Industry
59.89 0.00
Development Co., Ltd. Labour security fee 103.92 0.01
Liaoning Metallurgy Technician
544.49 0.03
College Spare parts 837.69 0.04
Benxi Steel (Group) Information
52.97 0.00
and Automatic Tech. Ltd. Spare parts 349.45 0.02
Benxi Steel (Group) Information
3,129.27 0.15
and Automatic Tech. Ltd. Repairing services 2268.76 0.12
Bengang Group Thermal Power
100.16 0.00
Development Co., Ltd. Heating fee 11.74 0.00
Bengang Fire-resistance
14,521.98 0.67
Material Co. Raw materials 18,277.22 0.93
Bengang Designing &
204.60 0.01
Researching Institute Ltd. Repairing services 846.1 0.04
Benxi Steel (Group) Trucking
2,663.85 0.12
Ltd. Freight 0.00 0.00
Total 561,892.25 26.05 408,874.82 20.81
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”
on April 18, 2011 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 prices for steel billet are on current market price. In case of no market
price available, the full cost plus tax and reasonable profit will be adopted.
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 (tax excluded) per ton for 2011.
Cool plate and galvanized sheet are on market prices.
Fine iron ore supplied by the subsidiary of the Group located in HK to the Company
17
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
are priced as sum of purchase price of the subsidiary of the Group and the
financial expenses occurred during the credit period.Such prices shall not
higher than the average price of fine iron ore in similar quality the Company
could purchase from the market plus the interest paid for domestic loans at
the same period.
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.
For the hot plate processing services provided by Bengang Group to the Company,
the price is fixed to RMB73 per ton, which is the practical processing cost
18
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
of Bengang Group. The price will be reconsidered once a year.
For the low-grade ore powder processing service provided by the Group to the
Company, the price is fixed to RMB50 per ton, which is the practical processing
cost of Bengang Group. The price will be reconsidered once a year.
For the iron resource (for instance steel residue or residue mud) processing
service provided by the Group to the Company, the price is decided according
to the practical processing cost of Bengang Group as the followings:
Refined steel residue powder: RMB325 per ton;
Dried residue mud: RMB154 per ton;
Minor type combined materials: RMB64 per ton;
Processing fees are reconsidered once a year.
Steel materials: For steel products provided by Bengang Group to the Company
(including but not limited to plates, long steels, and cast pipes), the prices
shall be the weighted average of prices sold by the Group to the 3rd parties
in the previous month
Fuel and energy, supporting materials, equipment, spare parts: For the raw
materials, fuel, supplementing materials, equipment, and spare parts provided
by Bengang Group to the Company, the prices will be decided by the purchasing
prices of the Group plus 0.5-1.5% of purchasing expenses.
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, ore ball, and chemical products manufactured by Bengang Steel Plates and
provided to Bengang Group are on market prices.
For steel billet provided by the Company to the Group, prices shall be decided
by the market price of the same month.
If no current market price available, the price shall be decided upon the
complete cost of the month plus national taxes and reasonable profit.
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.
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.
19
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
4. Leasing to and from 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. During Jan – Jun 2011, the
2300mm hot rolling line has primarily contributed profit of RMB500 million.
RMB150 million of rental provided in advance.
5. Guarantees provided amongst related parties
The guarantor The beneficiary Amount guaranteed Start date Due date Completed or not
Guarantees for bank
loans
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥100,000,000.00 2011-3-4 2012-3-3 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥100,000,000.00 2007-12-3 2012-7-25 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥70,000,000.00 2007-4-30 2014-4-29 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥130,000,000.00 2007-4-30 2014-4-29 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥100,000,000.00 2007-12-3 2012-7-25 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥400,000,000.00 2008-4-29 2013-4-15 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥100,000,000.00 2010-7-1 2013-6-30 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥300,000,000.00 2010-7-2 2013-6-1 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥310,000,000.00 2010-7-2 2013-7-1 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥100,000,000.00 2010-4-29 2013-4-28 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. $60,000,000.00 2009-9-11 2012-9-10 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. $20,000,000.00 2009-9-25 2012-9-24 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. $20,000,000.00 2009-10-12 2012-8-24 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. $24,000,000.00 2009-10-20 2012-10-18 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. $20,000,000.00 2009-10-21 2012-10-5 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. JPY 382,423,928.57 1997-9-10 2027-9-10 No
Notes to guarantees amongst related parties: Benxi Steel & Iron (Group) Co.,
Ltd. provides guarantees for long-term and short-term loans.
6. Receivable and payables due with related parties
Receivable accounts due from related parties
End of term RMB0’000 Beginning of term RMB0’000
Related parties Book Bad debt Book Bad debt
balance provision balance provision
Account receivable
Bengang Group Machinery Ltd. 9,469.11 698.83 8,729.28 698.83
Bengang Group Thermal Power Development Co., Ltd. 1,111.65 1,650.90
Benxi Steel (Group) Repairing & Building Ltd. 1,519.99 1754.4
Benxi Steel (Group) Construction Ltd. 669.53 13.00 1,691.40 13.00
Benxi Steel (Group) Industrial Development Ltd. 4,653.99 24.54 6,540.99 24.54
Bengang Group New Industry Development Co., Ltd. 387.46 282.76 651.91 282.76
Bengang Group Metallurgy Residue Ltd. 1,422.27 2,176.32
Benxi Steel (Group) Medical Co. Ltd. 54.72 2.28 54.72 2.28
Sub-total 19,288.72 1,021.41 23,249.92 1021.41
Prepayments
Benxi Steel (Group) Repairing & Building Ltd. 901.21 0.00
Benxi Steel (Group) Construction Ltd. 6,287.17 2,295.51
Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. 0.00 516.94
20
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
End of term RMB0’000 Beginning of term RMB0’000
Related parties Book Bad debt Book Bad debt
balance provision balance provision
Sub-total 7,188.38 0.00 2,812.45 0.00
Other account receivable
Bengang Group Inspection Co., Ltd. 25.00 25.00 25.00 25.00
Benxi Steel (Group) Information and Automatic Tech.
106.87 14.54 -
Ltd.
Benxi Steel (Group) Real-estate Development Co., Ltd. 571.21 11.15 700.4 11.15
Benxi Steel (Group) Electronics Co., Ltd. 230.76 163.63
Benxi Steel (Group) Education Center 27.1 27.1
Benxi Steel (Group) Co., Ltd. 195.43 52.2
Sub-total 1,156.36 36.15 982.87 36.15
Account payable due to related parties
Beginning of term
Related parties End of term RMB0’000
RMB0’000
Account payable
Bengang Group International Trading Ltd. 117,774.78 183,896.93
Bengang Fire-resistance Material Co. 9,579.67 9,844.87
Liaoning Bengang Steel & Iron Trading Co., Ltd. 283.66 457.33
Liaoning Metallurgy Technician College 323.51 979.03
Benxi Steel (Group) Drilling Tools Co., Ltd. 209.34 280.13
Bengang Group New Industry Development Co., Ltd. 3.86 775.14
Bengang Group Property Co., Ltd. 413.33 921.53
Bengang Group Construction Inspection Co., Ltd. 0.00 8.80
Bengang Group Machinery Ltd. 7,750.30 3,849.04
Benxi Steel (Group) Construction Ltd. 29,901.85 52,105.38
Bengang Group Mineral Co., Ltd. 59,279.62 45,136.74
Benxi Steel (Group) Industrial Development Ltd. 9,121.28 12,418.05
Benxi Steel (Group) Repairing & Building Ltd. 9,073.85 16,682.52
Bengang Group Metallurgy Residue Ltd. 889.49 2,118.73
Benxi Steel (Group) Information and Automatic Tech. Ltd. 4,143.85 3,436.69
Bengang Group Electronics Co., Ltd. 613.32 1,811.18
Benxi Steel (Group) Designing Institute 2,763.02 5,784.26
Benxi Steel (Group) Education Center 34.15 372.47
Benxi Steel (Group) Thermal Power Development Co., Ltd. 319.56 115.29
Sub-total 252,478.44 340,994.11
Notes payable
Benxi Steel (Group) Construction Ltd. 87.76 69.60
Benxi Steel (Group) Industrial Development Ltd. 286.57 994.69
Benxi Steel (Group) Drilling Tools Co., Ltd. 0.00 59.98
Liaoning Bengang Steel & Iron Trading Co., Ltd. 0.00 123.84
Bengang Group New Industry Development Co., Ltd. 0.00 16.63
Benxi Steel (Group) Information and Automatic Tech. Ltd. 96.18 14.50
Bengang Group Machinery Ltd. 0.00 15.04
Bengang Group Property Co., Ltd. 0.00 21.45
Bengang Electronics Co., Ltd. 15.41 32.00
Bengang Group Construction and Repairing Co., Ltd. 14.20 35.50
Liaoning Metallurgy Technician College 0.00 34.56
Sub-total 500.11 1,417.79
Other account payable
Bengang Group Machinery Ltd. 120.55 4.53
Benxi Steel (Group) Repairing & Building Ltd. 8.00 56.69
Benxi Steel (Group) Industrial Development Ltd. 185.47 354.13
Benxi Steel (Group) Construction Ltd. 523.01 783.98
Benxi Steel (Group) Information and Automatic Tech. Ltd. 49.45 87.54
Bengang Group New Industry Development Co., Ltd. 282.28 1.00
21
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Beginning of term
Related parties End of term RMB0’000
RMB0’000
Benxi Electronics Co., Ltd. 21.23 1.00
Bengang Group Training Center 2.78 2.78
Bengang Group Mineral Co., Ltd. 82.97 3.54
Benxi Steel (Group) Ltd. 18,280.01 28,125.70
Benxi Steel (Group) News Center 216.79 422.69
Bengang Trucking & Transportation Co., Ltd. 2,019.48 2,047.21
Bengang Group Thermal Power Development Co., Ltd. 1,431.21 1,438.56
Sub-total 23,223.22 33,329.35
Advances received
Dalian Boluole Steel Tube Ltd. 702.14 1,146.25
Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. 37,838.87
Benxi Steel (Group) Steel Process & Logistics Ltd. 1,810.54 634.04
Benxi Steel (Group) Construction Ltd. 17.58 17.58
Benxi Steel (Group) Industrial Development Ltd. 17.86 1.85
Guangshou Free Trade Zone Bengang Sales Co., Ltd. 2,354.58 2,745.58
Benxi Steel (Group) Drilling Tools Co., Ltd. 1.02 120.18
Liaoning Bengang Steel & Iron Trading Co., Ltd. 5,057.01 3,932.11
Shanghai Bengang Steel & Iron Trading Co., Ltd. 1,848.13 548.13
Tianjin Bengang Steel Plate Processing and Delivery Co., Ltd. 2,024.36 2,386.46
Benxi Steel (Group) Machinery Co., Ltd. 57.17 233.05
Tianjin Bengang Longxing Steel Processing Co., Ltd. 1,599.14 300.00
Sub-total 53,328.38 12,065.23
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
22
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
object that is closed to the public.
Main content involved and
Time/date Place Way Visitors
material provided
January 17, Office of the secretary Field Fuda Foundation Production and operation
2011 of Board research HK situation
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,
23
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
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.The internal control system has been established and improved to
cover production, finance, information disclosure, and risk prevention. This
system has been effectively operated in the Company’s business practice and
working effectively in administration, controlling and monitoring of the
production process.
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.The
Company has been fully accelerating developing of productivity and energy
saving, reinforcing investment, undertaking special managerial operations,
discarding of old equipment, and promoting environmental protection. The
Company has devoted itself into public services and supported education,
culture, and science activities in the community.
11. Auditing issues and change of CPA
The Interim Financial Report was not audited.
No replacing of CPA occurred in the report term.
12. In the report term, any 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.
No such issue occurred.
24
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
13. Other material issues occurred in the report term or carried down to
the report term from previous term.
No such issue occurred.
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 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.
Chairwoman of the Board: Zhang Xiaofang
August 24, 2011
25
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Bengang Steel Plates Co., Ltd.
Financial Report
(January 1 – June 30 2011)
(Not Audited)
August 24, 2011
26
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Table of Contents
I. Company Profile........................................................................................................................................ 1
II. Main Accounting Policies, Accounting Estimations and Retrospective Correcting of Previous Errors... 2
III. Taxations ............................................................................................................................................... 21
IV. Enterprise consolidation and consolidated financial statements ........................................................... 22
V. Notes to the Consolidated Financial Statements..................................................................................... 24
VI. Related parties and transactions............................................................................................................ 54
VII. Contingent Events ............................................................................................................................... 63
VIII. Commitment Events........................................................................................................................... 63
IX. Post-balance sheet issues ...................................................................................................................... 63
X. Other Material Statements...................................................................................................................... 63
XI. Notes to the main items of the financial statements of the parent company ......................................... 64
XII. Supplementary Info. ........................................................................................................................... 70
XIII. Approval and releasing of the financial statements ............................................................... 71
27
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Balance Sheet
Prepared by: Bengang Steel Plates Co., Ltd. Ended June 30 2011 RMB Yuan
End of term Beginning of term
Items
Notes Consolidated Parent company Consolidated Parent company
Current asset:
Monetary capital V(I) 2,991,857,388.66 2,879,761,948.09 1,475,045,148.55 1,358,651,762.79
Settlement provision
Outgoing call loan
Transactional financial assets
Notes receivable V(II) 2,520,421,814.29 2,374,987,948.96 1,900,062,739.70 1,822,459,543.49
Account receivable V(III) 325,640,391.22 380,914,428.57 344,857,035.57 400,131,072.92
Prepayment V(IV) 820,367,082.47 790,581,649.91 810,851,238.27 744,919,442.64
Insurance receivable
Interest receivable
Other account receivable V(V) 201,096,671.93 296,669,286.29 106,040,016.05 220,725,711.61
Repurchasing of financial assets
Inventories V(VI) 11,813,388,757.76 11,300,192,717.96 10,297,600,688.08 9,814,369,793.69
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 18,854,983,930.06 18,205,319,803.51 15,116,668,689.95 14,543,469,150.87
Non-current assets
Loans and payment on other’s
behalf disbursed
Available-for-sale financial
asset
Expired investment in possess
Long-term receivable
Long-term share equity V(VIII) 15,791,030.00 1,008,655,407.17 15,791,030.00 878,655,407.17
investment
Investment properties
Fixed assets V(IX) 17,900,000,742.23 17,494,482,815.57 18,856,618,212.00 18,438,736,612.00
Construction in process V(X) 2,226,326,260.22 1,212,496,964.98 1,619,227,102.66 889,881,763.38
Engineering goods V(XI) 49,606,825.75 49,606,825.75 15,638,434.32 15,638,434.32
Fixed asset disposal
Intangible assets V(XII) 45,931,528.94 46,395,483.80
R&D expense
Goodwill
Long-term amortizable
expenses
Differed income tax asset V(XIII) 201,402,995.51 189,470,501.84 201,402,995.51 189,470,501.84
Other non-current asset
Total of non-current assets 20,439,059,382.65 19,954,712,515.31 20,755,073,258.29 20,412,382,718.71
Total of assets 39,294,043,312.71 38,160,032,318.82 35,871,741,948.24 34,955,851,869.58
The Notes to the Financial Statements attached hereafter are the essential parts of the Financial Statements.
Legal Representative: Zhang Xiaofang, CFO: Cao Aimin, Accounting Manager: Wang Shaoyu
28
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Balance Sheet (Cont.)
Prepared by: Bengang Steel Plates Co., Ltd. Ended June 30 2011 RMB Yuan
End of term Beginning of term
Items Notes
Consolidated Parent company Consolidated Parent company
Current liabilities
Short-term loans V(XV) 3,861,573,000.00 3,861,573,000.00 2,295,236,500.00 2,295,236,500.00
Trade off financial liabilities
Notes payable V(XVI) 1,748,231,397.35 1,736,239,397.35 1,260,376,722.11 1,260,376,722.11
Account payable V(XVII) 7,237,771,917.67 7,310,564,711.21 7,993,191,216.38 8,189,917,528.20
Prepayment received V(XVIII) 3,540,877,787.77 3,345,910,193.18 3,118,780,973.56 2,831,031,113.85
Selling of repurchased financial
assets
Fees and commissions
receivable
Employees’ wage payable V(XIX) 139,646,673.69 139,480,600.61 184,769,139.84 184,669,271.84
Tax payable X(XX) -222,515,488.09 -160,680,608.99 -704,770,343.24 -651,410,574.54
Interest payable
Dividend payable V(XXI)) 313,600,000.00 313,600,000.00
Other account payable V(XXII) 824,883,512.62 746,909,082.14 721,086,330.41 631,026,887.30
Non-current liability due in 1 V(XXIII) 1,603,160,000.00 1,603,160,000.00 1,013,263,228.43 1,013,263,228.43
year
Other current liability
Total of current liability 19,047,228,801.01 18,896,756,375.50 15,881,933,767.49 15,754,110,677.19
Non-current liabilities
Long-term borrowings V(XXIV) 4,756,848,843.30 4,156,848,843.30 4,824,024,138.39 4,314,024,138.39
Bond payable
Long-term payable
Special payable
Anticipated liabilities
Differed income tax liability
Other non-recurring liabilities V(XXV) 162,894,446.22 160,834,446.22 120,469,446.22 120,469,446.22
Total of non-current liabilities 4,919,743,289.52 4,317,683,289.52 4,944,493,584.61 4,434,493,584.61
Total of liability 23,966,972,090.53 23,214,439,665.02 20,826,427,352.10 20,188,604,261.80
Owners’ equity (or shareholders’
equity)
Capital paid in (or share capital) V(XXVI) 3,136,000,000.00 3,136,000,000.00 3,136,000,000.00 3,136,000,000.00
Capital reserves V(XXVII) 8,790,691,134.76 8,790,691,134.76 8,790,691,134.76 8,790,691,134.76
Less: Shares in stock
Surplus reserves V(XXVIII) 921,277,509.22 921,277,509.22 921,277,509.22 921,277,509.22
Common risk provision
Retained profit V(XXIX) 2,444,246,778.34 2,097,624,009.82 2,162,390,668.07 1,919,278,963.80
Different of foreign currency
translation
Total of owner’ equity belong to
15,292,215,422.32 14,945,592,653.80 15,010,359,312.05 14,767,247,607.78
the parent company
Minor shareholders’ equity 34,855,799.86 34,955,284.09
Total of owners’ equity 15,327,071,222.18 14,945,592,653.80 15,045,314,596.14 14,767,247,607.78
Total of liabilities and owners’
equity 39,294,043,312.71 38,160,032,318.82 35,871,741,948.24 34,955,851,869.58
The Notes to the Financial Statements attached hereafter are the essential parts of the Financial Statements.
Legal Representative: Zhang Xiaofang, CFO: Cao Aimin, Accounting Manager: Wang Shaoyu
29
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Income Statement
Prepared by: Bengang Steel Plates Co., Ltd. Jan-Jun 2011 RMB Yuan
Current term Same period last year
Items Notes
Consolidated Parent company Consolidated Parent company
I. Turnover V(XXX) 24,050,256,657.14 23,470,730,563.17 22,354,385,410.54 21,088,872,060.37
II. Total business cost 23,432,623,874.10 22,988,484,070.03 21,667,576,834.61 20,409,841,097.26
Incl. Business cost 21,573,460,001.27 21,218,162,916.22 19,639,448,948.70 18,444,526,168.35
Business tax and surcharge V(XXXI) 3,307,222.35 667,938.31 88,875,246.52 87,819,905.91
Sales expense V(XXXII) 249,672,077.79 194,662,367.06 232,468,074.79 189,455,641.04
Administrative expense V(XXXIII) 1,461,168,367.44 1,429,428,964.65 1,588,857,380.97 1,569,917,072.92
Financial expenses V(XXXIV) 145,016,205.25 145,561,883.79 117,927,183.63 118,122,309.04
Asset impairment loss V(XXXV)
Plus: Gains from change of fair
value (“-“ for loss)
Investment gain
(“-“ for loss)
Incl. Investment gains from
affiliates
III. Operational profit (“-“ for loss) 617,632,783.04 482,246,493.14 686,808,575.93 679,030,963.11
Plus: Non business income V(36) 10,846,574.48 9,812,452.88 6,695,012.42 6,470,969.57
Less: Non-business expenses V(37) 113,900.00 113,900.00 10,324.63
Incl. Loss from disposal of
non-current assets
IV. Gross profit (“-“ for loss) 628,365,457.52 491,945,046.02 693,493,263.72 685,501,932.68
Less: Income tax expenses V(38) 33,008,831.48 4,886,498.68
V. Net profit (“-“ for net loss) 595,356,626.04 491,945,046.02 688,606,765.04 685,501,932.68
Net profit attributable to the
595,456,110.27 491,945,046.02 688,606,765.04 685,501,932.68
owners of parent company
Minor shareholders’ equity -99,484.23
VI. Earnings per share: V(39)
(I) Basic earnings per share 0.19 0.16 0.22 0.22
(II) Diluted earnings per share 0.19 0.16 0.22 0.22
VII. Other misc. incomes
VIII. Total of misc. incomes 595,356,626.04 491,945,046.02 688,606,765.04 685,501,932.68
Total of misc. incomes attributable
to the owners of the parent 595,456,110.27 491,945,046.02 688,606,765.04 685,501,932.68
company
Total misc gains attributable to the
-99,484.23
minor shareholders
The Notes to the Financial Statements attached hereafter are the essential parts of the Financial Statements.
Legal Representative: Zhang Xiaofang, CFO: Cao Aimin, Accounting Manager: Wang Shaoyu
30
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Cash Flow Statement
Prepared by: Bengang Steel Plates Co., Ltd. Jan-Jun 2011 RMB Yuan
Current term Same period last year
Notes
Items Consolidated Parent company Consolidated Parent company
I. Net cash flow from business operation
Cash received from sales of products and
15,361,368,132.67 15,099,184,619.55 14,762,247,471.37 14,600,827,028.72
providing of services
Net increase of trade financial asset
disposal
Tax returned 204,484,229.75 203,476,262.75 83,873,824.81 80,970,050.35
Other cash received from business V(XXXX) 58,724,812.38 51,687,615.48 16,154,358.56 15,478,322.37
operation
Sub-total of cash inflow from business
15,624,577,174.80 15,354,348,497.78 14,862,275,654.74 14,697,275,401.44
activities
Cash paid for purchasing of merchandise
13,081,503,904.31 13,061,983,992.15 12,667,550,050.98 12,667,550,050.98
and services
Cash paid to staffs or paid for staffs 609,514,629.37 603,756,362.61 574,115,193.91 569,463,180.14
Taxes paid 162,626,078.15 85,520,031.12 454,263,009.67 433,824,484.04
Other cash paid for business activities V(XXXX) 629,175,543.32 583,730,813.62 564,239,352.47 431,501,248.39
Sub-total of cash outflow from business
14,482,820,155.15 14,334,991,199.50 14,260,167,607.03 14,102,338,963.55
activities
Cash flow generated by business
1,141,757,019.65 1,019,357,298.28 602,108,047.71 594,936,437.89
operation, net
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 307,991.00 307,991.00
assets
Net cash received from disposal of
subsidiaries or other operational units
Other investment-related cash received
Sub-total of cash inflow due to
0.00 0.00 307,991.00 307,991.00
investment activities
Cash paid for construction of fixed assets,
1,365,888,762.43 1,119,447,497.00 2,689,301,949.00 2,138,959,118.00
intangible assets and other long-term assets
Cash paid as investment 130,000,000.00 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
1,365,888,762.43 1,249,447,497.00 2,758,190,929.00 2,467,848,098.00
investment activities
Net cash flow generated by
-1,365,888,762.43 -1,249,447,497.00 -2,757,882,938.00 -2,467,540,107.00
investment
III. Cash flow generated by financing
Cash received as investment
Incl. Cash received as investment from minor
shareholders
Cash received as loans 5,415,903,248.87 5,325,854,700.00 5,325,370,214.03 4,815,370,214.03
Other financing-related cash received
Subtotal of cash inflow from financing
5,415,903,248.87 5,325,854,700.00 5,325,370,214.03 4,815,370,214.03
activities
31
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Cash Flow Statement (Cont.)
Prepared by: Bengang Steel Plates Co., Ltd. Jan-Jun 2011 RMB Yuan
Current term Same period last year
Items Notes
Parent Parent
Consolidated company Consolidated company
3,360,701,271.34 3,269,701,271.34 3,274,231,276.00 3,274,231,276.00
Cash to repay debts
312,913,952.32 303,609,002.32 167,758,690.74 167,758,690.74
Cash paid as dividend, profit, or interests
Subtotal of cash outflow due to 3,673,615,223.66 3,573,310,273.66 3,441,989,966.74 3,441,989,966.74
financing activities
Net cash flow generated by 1,742,288,025.21 1,752,544,426.34 1,883,380,247.29 1,373,380,247.29
financing
IV. Influence of exchange rate -1,344,042.32 -1,344,042.32 -49,056.78 -49,056.78
alternation on cash and cash equivalents
V. Net increase of cash and cash 1,516,812,240.11 1,521,110,185.30 -272,443,699.78 -499,272,478.60
equivalents
Plus: Balance of cash and cash 1,475,045,148.55 1,358,651,762.79 2,842,961,050.60 2,795,043,926.41
equivalents at the beginning of term
VI. Balance of cash and cash 2,991,857,388.66 2,879,761,948.09 2,570,517,350.82 2,295,771,447.81
equivalents at the end of term
The Notes to the Financial Statements attached hereafter are the essential parts of the Financial Statements.
Legal Representative: Zhang Xiaofang, CFO: Cao Aimin, Accounting Manager: Wang Shaoyu
32
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Detailed Table of Asset Impairment Provisions
Bengang Steel Plate Co., Ltd. June 30, 2011 In RMB Yuan
Decreased this term
Balance of book value at Provided Balance of book value
Items Written
beginning of term this term at end of term
back Transferred
484,737,809.81 484,737,809.81
I. Bad debt provision
101,064,897.91 101,064,897.91
II. Inventory impairment provision
III. Disposable financial asset 0.00 0.00
impairment provision
IV. Investment equity hold till 0.00 0.00
expiring impairment provision
V. Long-term equity investment 0.00 0.00
impairment provision
VI. Property investment 0.00 0.00
impairment provision
VII. Fixed asset impairment 8,237,689.11 8,237,689.11
provision
VIII. Project material impairment 0.00 0.00
provision
IX. Construction in process 0.00 0.00
impairment provision
X. Production biological material 0.00 0.00
asset impairment provision
Incl. Mature production
biological material asset 0.00 0.00
impairment provision
XI. Gas & oil asset impairment 0.00 0.00
provision
XII. Intangible asset impairment 0.00 0.00
provision
XIII. Goodwill impairment 0.00 0.00
provision
0.00 0.00
XIV. Other
594,040,396.83 0.00 0.00 0.00 594,040,396.83
Total
Legal Representative: Zhang Xiaofang, CFO: Cao Aimin, Accounting Manager: Wang Shaoyu
33
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Bengang Steel Plates Co., Ltd.
Change in Owners’ Equities
Jan-Jun 2011
(In RMB Yuan except for otherwise specified)
Amount of the Current Term
Items
Share capital Capital reserves Less: Special Surplus Common risk Retained profit Total of owners’
I. Balance at the end of last year 3,136,000,000.00 8,790,691,134.76 921,277,509.22 1,919,278,963.80 14,767,247,607.78
Plus: Change of accounting policy
Correcting of previous errors
Others
II. Balance at the beginning of current year 3,136,000,000.00 8,790,691,134.76 921,277,509.22 1,919,278,963.80 14,767,247,607.78
III. Changed in the report term (“-“ for 178,345,046.02 178,345,046.02
(I) Net profit 491,945,046.02 491,945,046.02
(II) Other misc. income
Total of (I) and (II)
(III) Investment or decreasing of capital by
1. Capital inputted by owners
2. Amount of shares paid and accounted as -
3. Others
(IV) Profit allotment -313,600,000.00 -313,600,000.00
1. Providing of surplus reserves
2. Common risk provision
3. Allotment to the owners (or shareholders) -313,600,000.00 -313,600,000.00
4. Others
(V) Internal transferring of owners’ equity
1. Capitalizing of capital reserves (or to capital
2. Capitalizing of surplus reserves (or to
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 2,097,624,009.82 14,945,592,653.80
The Notes to the Financial Statements attached hereafter are the essential parts of the Financial Statements.
Legal Representative: Zhang Xiaofang, CFO: Cao Aimin, Accounting Manager: Wang Shaoyu
34
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Bengang Steel Plates Co., Ltd.
Change in Owners’ Equities (Cont.)
Jan-Jun 2011
(In RMB Yuan except for otherwise specified)
Amount of Last Year
Items
Share capital Capital reserves Less: Shares Special Surplus reserves Common risk Retained profit Total of owners’
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 54,430,000.00 661,044,301.63 715,474,301.63
(I) Net profit 755,124,301.63 755,124,301.63
(II) Other misc. income
Total of (I) and (II) 755,124,301.63 755,124,301.63
(III) Investment or decreasing of capital by 54,430,000.00 54,430,000.00
1. Capital inputted by owners
2. Amount of shares paid and accounted as
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
2. Capitalizing of surplus reserves (or to
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 1,919,278,963.80 14,767,247,607.78
The Notes to the Financial Statements attached hereafter are the essential parts of the Financial Statements.
Legal Representative: Zhang Xiaofang, CFO: Cao Aimin, Accounting Manager: Wang Shaoyu
35
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Bengang Steel Plates Co., Ltd.
Consolidated Statement of Change in Owners’ Equity
Jan-Jun 2011
(In RMB Yuan except for otherwise specified)
Amount of the Current Term
Owners’ Equity Attributable to the Parent Company
Items Less: Minor shareholders’ Total of owners’
Special Common risk
Share capital Capital reserves Shares in Surplus reserves Retained profit Others equity equity
reserves provision
stock
I. Balance at the end of last
3,136,000,000.00 8,790,691,134.76 921,277,509.22 2,162,390,668.07 34,955,284.09 15,045,314,596.14
year
Plus: Change of
accounting policy
Correcting of
previous errors
Others
II. Balance at the beginning
3,136,000,000.00 8,790,691,134.76 921,277,509.22 2,162,390,668.07 34,955,284.09 15,045,314,596.14
of current year
III. Changed in the report
281,856,110.27 -99,484.23 281,756,626.04
term (“-“ for decrease)
(I) Net profit 595,456,110.27 -99,484.23 595,356,626.04
(II) Other misc. income
Total of (I) and (II) 595,456,110.27 -99,484.23 595,356,626.04
(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 -313,600,000.00 -313,600,000.00
1. Providing of surplus
reserves
2. Common risk provision
3. Allotment to the owners
-313,600,000.00 -313,600,000.00
(or shareholders)
36
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
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
3,136,000,000.00 8,790,691,134.76 921,277,509.22 2,444,246,778.34 34,855,799.86 15,327,071,222.18
term
The Notes to the Financial Statements attached hereafter are the essential parts of the Financial Statements.
Legal Representative: Zhang Xiaofang, CFO: Cao Aimin, Accounting Manager: Wang Shaoyu
37
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
Bengang Steel Plates Co., Ltd.
Consolidated Change in Owners’ Equities (Cont.)
Jan-Jun 2011
(In RMB Yuan except for otherwise specified)
Amount of Last Year
Owners’ Equity Attributable to the Parent Company
Items Less: Minor shareholders’ Total of owners’
Special Common risk
Share capital Capital reserves Shares in Surplus reserves Retained profit Others equity equity
reserves provision
stock
I. Balance at the end of last
3,136,000,000.00 8,736,261,134.76 921,277,509.22 1,331,103,908.34 14,124,642,552.32
year
Plus: Change of
accounting policy
Correcting of
previous errors
Others
II. Balance at the beginning
3,136,000,000.00 8,736,261,134.76 921,277,509.22 1,331,103,908.34 14,124,642,552.32
of current year
III. Changed in the report
54,430,000.00 831,286,759.73 34,955,284.09 920,672,043.82
term (“-“ for decrease)
(I) Net profit 925,366,759.73 -44,715.91 925,322,043.82
(II) Other misc. income
Total of (I) and (II) 925,366,759.73 -44,715.91 925,322,043.82
(III) Investment or
decreasing of capital by 54,430,000.00 35,000,000.00 89,430,000.00
owners
1. Capital inputted by
35,000,000.00 35,000,000.00
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
-94,080,000.00 -94,080,000.00
(or shareholders)
38
Bengang Steel Plates Co., Ltd. Interim Financial Report 2011
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
3,136,000,000.00 8,790,691,134.76 921,277,509.22 2,162,390,668.07 34,955,284.09 15,045,314,596.14
term
The Notes to the Financial Statements attached hereafter are the essential parts of the Financial Statements.
Legal Representative: Zhang Xiaofang, CFO: Cao Aimin, Accounting Manager: Wang Shaoyu
39
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
Bengang Steel Plates Co., Ltd.
Notes to Financial Statements
(January 1 – June 30 2011)
(Amount are in RMB Yuan except for stated particularly)
I. Company Profile
Bengang Steel Plates Co., Ltd. (the “Company”) was incorporated as a joint stock limited company in
the People’s Republic of China on June 27 1997 by Benxi Iron and Steel (Group) Limited “Bengang
Group”, through reorganization of operations, assets and liabilities of its plants, namely, Steel
Smelting plant, Primary Rolling Plant and Continuous Hot Rolling Plant. Establishing of the Company
was approved by Liaoning People’s Government on March 27 1997 with Liao-Zheng (1997)57.
As approved by China Securities Regulatory Commission, the Company issued 400,000,000 B-shares
at RMB2.38 each in Shenzhen Stock Exchange on 10 June 1997. On 3 November 1997, the Company
issued another 120,000,000 A-shares (Renminbi Common Shares) at RMB5.40 each, and listed in
Shenzhen Stock Exchange since 15 January 1998. The capital shares were totaled 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.
1
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
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 Zhang Xiaofang.
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 hazardous materials), production of
hazardous chemical materials, trade of coal, process of furnace material, trade of waste materials.
II. Main Accounting Policies, Accounting Estimations and Retrospective
Correcting of Previous Errors
(I) 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).
(II) 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.
(III)Fiscal period
A fiscal year starts from January 1 and ends at December 31 of a calendar year.
(IV)Standard currency for bookkeeping
The Company uses Renminbi (RMB) as the standard currency for book keeping.
(V)Accounting treatment of the entities under common control and different control
as well
1. Merger of entities 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.
2
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
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. Merger of enterprises 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.
(VI) 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 minority’s interests.
If the parent company has a new subsidiary due to business combination under a same control during a
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
3
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
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.
(VII) 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.
(VIII) Foreign currency transaction and translation of foreign currency financial
statements
1. Trade in 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.
4
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(IX) Financial instrument
Financial instruments include financial assets, financial liabilities and equity instruments.
1. Categorizing 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
5
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
For other financial liabilities, they are initially recognized at fair value plus any directly attributable
transaction costs. After the initial recognition, the other financial liabilities are measured at amortized
cost.
3. 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 financial liability recognition
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 non-cash assets it has transferred out and the new financial
6
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
liabilities it has assumed) shall be recorded into the profits and losses of the current period.
5. Determination of the Fair Value
The fair values of the financial assets or financial liabilities measured at fair value shall be determined
by reference to the quoted prices in the active market.
6. Impairment provision of the financial assets (not including accounts receivables)
(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.
(X)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:
Basis of recognition for groups
The portfolio Receivable account with minor amount and tested individually and not impaired
Bad debt provision provided in groups (age group, balance percentage, or else)
The portfolio: Age analysis method
Bad debt provisions provided on age groups
Account age Percentage of bad debt for Accounts receivables (%) Percentage of bad debt for Other receivables (%)
Within 1 yr, (included)
1-2 yrs (included) 5 5
2-3 yrs (included) 2 0 2 0
Over 3 yrs 1 0 0 1 0 0
3. Receivable accounts with minor amounts but provided bad debt provisions individually
(1) Reason of providing bad debt individually: concrete evidence showing that the account is
7
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
irretrievable
(2) Basis of providing bad debt provisions:
When concrete evidence showing that the possibility of retrieving is very little, it will be examined
individually, and bad debt provision shall be provided according to the future irretrievable amount
predicted.
(XI) Inventories
1. Categories of inventory
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
theInventories 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 basis
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.
(XII) Long-term equity investment
1. Initial measurement
(1) Long-term equity investment formed by merger
For the acquisition under the common control, if the consideration of the acquiring enterprise is that it
8
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
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.
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. 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) Long-term equity investment obtained by other ways
The initial cost of a long-term equity investment obtained by making payment in cash shall be the
purchase cost which is actually paid.
Long-term equity investment obtained by placing of equity stocks is recognized for initial investment
cost at the fair value of the stock.
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.
Long-term equity investment obtained through debt reorganizing is recognized for initial investment
cost at fair value.
2. Subsequent measurement and profit or loss recognition
(1) 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
9
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
accordingly.
(2) Recognition of profit and loss
Under the cost method, an investing enterprise shall, in accordance with the attributable share of the
net profits or losses of the invested entity, recognize the investment profits or losses except the
dividend declared but unpaid, which is included in the payment when acquiring the investment.
Under the equity method, the following factors shall be taken into consideration: if the accounting
policies and accounting periods adopted by the invested entity are different from those adopted by the
investing enterprise, an adjustment shall be made to the financial statements of the invested entity in
accordance with the accounting policies and accounting periods of the investing enterprise. the impact
of the depreciation and amortization based on the fair value of fixed assets and intangible assets
acquired at the time of investment and related assets impairment for the net profit; the offset of the
unrealized intercompany transaction profits between the parent company and the jointly controlled
enterprises and associates. After considering the adjustments above, it shall, in accordance with the
attributable share of the net profits or losses of the invested entity, recognize the investment profits or
losses.
When the invested enterprise realize any net profit in the future period, the company shall reduce the
unrecognised loss first and then make the reverse accounting treatment as above , reduce the book
value of recognized contingent liabilities , recover the book value of the long-term equity investment
and other long-term right and interests which substantially form the net investment made to the
invested entity and at the same time, recognized the income on investment
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.
(XIII)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.
10
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
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.
(XIV)Fixed assets
1. Recognition of fixed assets
The term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows:
(1) They are held for the sake of producing commodities, rendering labor service, renting or business
management; and (2) Their useful life is in excess of one fiscal year.
(1) Financial benefits attached to the fixed asset is possibly inflowing to the Company;
(2) The cost of the fixed asset can be reliably measured.
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.
Fixed assets rented in by finance, if it is reasonably predictable that the property rights can be acquired
when the rental period is expired, depreciation will be upon the retained useful life. If it can’t be
reasonably predictable that the property rights can be acquired when the rent period is expired,
depreciation will be upon the shorter one of the rental period and the retained useful life.
Depreciation ages and ratios of fixed assets:
Categories Depreciation Period Salvage Value Rate (%) Annual depreciation rate (%)
Houses & buildings 8-30 years 0 3.33-12.5
Equipment & machinery 4-18 years 3 5.39-24.3
Vehicle and other
equipment 5-18 years 3 5.39-19.4
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.
11
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
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.
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.
(XV)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:
12
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
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
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.
(XVI) Borrowing Costs
1) Principle of the recognition of capitalized borrowing costs
Where the borrowing costs incurred to an enterprise can be directly attributable to the acquisition and
construction or production of assets eligible for capitalization, it shall be capitalized and recorded into
the costs of relevant assets. Other borrowing costs shall be recognized as expenses on the basis of the
actual amount incurred, and shall be recorded into the current profits and losses.
The 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
13
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
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
expense incurred to a specifically borrowed loan, those incurred before a qualified asset under
acquisition, construction or production is ready for the intended use or sale shall be capitalized at the
incurred amount when they are incurred, and shall be recorded into the costs of the asset eligible for
capitalization;
The 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.
(XVII) 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.
14
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
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.
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.
15
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
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.
16
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(XVIII) Contingent liabilities
When the Company is involved in litigation, guarantees provided for the debts of other enterprises,
loss 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.
(XIX) Revenue
17
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
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 by
others and the actual interest rate; or
(2) Royalty revenue shall be calculated based on the period and method of charging as stipulated in
the relevant contract or agreement.
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.
18
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(XX) 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
(XXI) 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 to
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.
(XXII) 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 leaser 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
19
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(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.
(XXIII)Change of main accounting policies and estimations
1. Changes to accounting policies
No accounting policy change with the Company.
2. Changes to accounting estimates
No accounting estimates change with the Company.
(XXIV)Correction of previous accounting faults
None
(XXV)Other significant accounting policies, accounting estimates and the preparation
method of financial statements
None
20
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
III. Taxations
(I) 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.
21
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
IV. Enterprise consolidation and consolidated financial statements
The figures in the following two tables are expressed in RMB 0,000.00 unless otherwise stated .
(I) Profiles of subsidiaries
Subsidiaries acquired through incorporation or investment
Balance of owners’
equity of the parent
Balance of Amount for
company after
other items deducting minor
Ownership of Share Minor deducting of the share
Full name of Business Registered Business Actual actually Voting shareholder’s
the Reg. Add. proportion of loss of current term
the subsidiary property capital Scope investment formed net power Consolidated? shareholders’ equity in the
subsidiary % by minor shareholder
at year end investment in % equity minor
over the share of
the subsidiaries shareholder’s
owners’ equity in the
equity
subsidiary at beginning
of term
Guangzhou
Bengang Sales of
Fully-owned Guangzhou Sales 100.00 100.00 100 100 Yes
Trade Co., steel
Ltd.
Shanghai
Bengang Sales of
Fully-owned Shanghai Sales 500.00 500.00 100 100 Yes
Metallurgy steel
Tech. Ltd.
Bengang Steel
Production
Plate
Fully-owned Liaoyuang Production 1,000.00 and sales of 47,760.76 100 100 Yes
Liaoyang Orel
ore ball
Ball Co., Ltd.
Dalian
Benruitong
Automobile Sales of
Holding Dalian Production 10,000.00 6,500.00 65 65 Yes
Material steel plates
Technologies
Co., Ltd.
Bengang
Stainless Production
Cool-rolling Fully-owned Dandong Production 39,000.00 and sales of 39,000.00 100 100 Yes
(Dandong) Co., steel
Ltd.
22
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
2. The subsidiaries acquired through business combination under common control
Balance of owners’
Amount for
equity of the parent
Balance of deducting
company after deducting
Ownershi other items Share minor
Actual Minor of the share of loss of
p of the Business Registered actually formed propo Voting Consolid shareholder’s
Full name of the subsidiary Reg. Add. Business Scope investment shareholders’ current term by minor
subsidiar property capital net investment rtion power % ated? equity in the
at year end equity shareholder over the
y in the % minor
share of owners’ equity
subsidiaries shareholder’s
in the subsidiary at
equity
beginning of term
Changchun Bengang Steel Sales Fully-o Changch
Sales 50 Sales of steel -135.51 100 100 Yes
Ltd. wned un
Haerbin Bengang International Fully-o
Harbin Sales 50 Sales of steel 42.34 100 100 Yes
Trading Ltd. wned
Fully-o
Nanjing Bengang Steel Sales Ltd. Nanjin Sales 115 Sales of steel 208.14 100 100 Yes
wned
Fully-o
Wuxi Bengang Steel Sales Ltd. Wuxi Sales 100 Sales of steel 93.67 100 100 Yes
wned
Fully-o
Xiamen Bengang Steel Sales Ltd. Xiamen Sales 50 Sales of steel 109.57 100 100 Yes
wned
Fully-o
Yantai Bengang Steel Sales Ltd. Yantai Sales 50 Sales of steel 1,960.03 100 100 Yes
wned
Fully-o
Tianjin Bengang Steel Trading Ltd. Tianjin Sales 300 Sales of steel 3,331.81 100 100 Yes
wned
23
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(II) Special purpose entity or operational entity controlled through entrusted
operation or lease
None
(III) Change on scope of consolidated finance statements.
No change.
(IV) Entities newly included and excluded in the consolidated accounts
1. Subsidiaries being newly included in the consolidation scope this period
None
2. The subsidiaries which have not been consolidated this period
None
(V) The business combination under the common control: None
(VI) The business combination under the different control: None
V. Notes to the Consolidated Financial Statements
As below, The “beginning balance” means January 1, 2011, “Ending balance” means June 30, 2011,
“This period” means from 1 January 2011 to June 30, 2011. The following amount is expressed in
Reminbi unless otherwise stated.
(I) Monetary capital
Ending balance Beginning balance
Items Amount of
Amount of Exchange Exchange
Amount RMB foreign Amount RMB
foreign currency rate rate
currency
Cash
RMB 177,127.95 122,226.22
Sub-total 177,127.95 122,226.22
Bank
deposit
RMB 2,883,132,112.32 1,259,264,621.17
HKD 860,276.01 0.8327 716,385.69 860,172.87 0.8509 731,921.10
USD 4,281,387.05 6.4716 27,707,424.43 32,264.82 6.6229 213,686.68
EURO 13,282.30 9.3612 124,338.27 13,275.59 8.7677 116,396.39
Sub-total 2,911,680,260.71 1,260,326,625.34
Other
monetary
fund
RMB 80,000,000.00 214,596,296.99
Sub-total 80,000,000.00 214,596,296.99
Total 2,991,857,388.66 1,475,045,148.55
24
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
Including: Details of other monetary capital:
Items Ending balance Beginning balance
Fixed deposit 80,000,000.00 4,367,126.26
Deposit of L/C 0 0
Deposit for bank accepted drafts 0.00 210,229,170.73
Total 80,000,000.00 214,596,296.99
Notes on monetary capital: Ending balance increased by RMB1,516,812,240.11, which was caused by
increase of reserved capital.
(II) Notes receivable
1. Categories of notes receivable
Categories Ending balance Beginning balance
Bank acceptance 2,520,421,814.29 1,900,062,739.70
Commercial acceptance
Total 2,520,421,814.29 1,900,062,739.70
2. The Company put notes receivable of RMB150,791,144.31 under pledge to Industrial Bank Benxi
Branch for issuing of notes payable with small amount.
3. No Notes receivable has been transferred into accounts receivable due to inability of drawer to meet
acceptance bill at the end year.
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.
(III) Accounts receivable
1. Accounts receivable by categories
Ending balance Beginning balance
Category Bad debt Bad debt
Percentage Bad debt Percentage Bad debt
Book balance provision Book balance provision
in total % provision in total % provision
rate % rate %
Receivables with
major individual
amount and bad debt
provision provided
individually
Receivables
provided bad debt 735,951,411.27 410,311,020.05 55.75 755,168,055.62 100.00 410,311,020.05 54.33
provision in groups
Account receivable
with minor
individual amount
but bad debt
provision is provided
Total 735,951,411.27 410,311,020.05 55.75 755,168,055.62 100.00 410,311,020.05 54.33
25
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
2. Bad debt provisions provided on receivable accounts in groups
Ending balance Beginning balance
Items
Percentage of the total Bad debt Percentage of the total Bad debt
Book balance Book balance
receivable % provision receivable % provision
within 1
yr 255,239,295.39 34.68 273,980,909.25 36.28
1-2 yrs
44,910,871.40 6.10 1,952,646.58 39,052,931.65 5.17 1,952,646.58
2-3 yrs
35,886,831.33 4.88 8,443,960.32 42,219,801.57 5.59 8,443,960.32
Over 3
yrs 399,914,413.15 54.34 399,914,413.15 399,914,413.15 52.96 399,914,413.15
Total
735,951,411.27 100.00 410,311,020.05 755,168,055.62 100.00 410,311,020.05
3. No accounts receivable, which had been fully impaired or made a large proportion of bad debt
provision last year, has been fully recovered or taken back a huge proportion this year.
4. No accounts receivable has been written off this year
5. The top five debtors at the year end
Relation with Portion in total
Name of the companies Amount Ages
the Company receivables
Bengang Group Machinery Ltd. Related parties 94,691,055.23 within 2 yrs 12.87
Benxi Steel (Group) Industrial
Related parties 46,539,875.31 within 1 yr 6.32
Development Ltd.
China Petrol Goods Co. Client 17,514,730.46 within 1 yr 2.38
No.1 Tractor Factory Ltd. Forge Branch Client 17,255,614.26 within 1 yr 2.34
Benxi Steel (Group) Repairing &
Related parties 15,199,930.94 within 1 yr 2.07
Building Ltd.
Total 191,201,206.20 25.98
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.
(IV) Prepayment
1. Prepayments presented by aging
Ending balance Beginning balance
Amount Proportion % Amount Proportion %
within 1 yr 768,647,773.21 93.70 757,568,718.76 93.43
1-2 years 51,719,309.26 6.30 53,282,519.51 6.57
2-3 years
Over 3 yrs
Total 820,367,082.47 100.00 810,851,238.27 100.00
26
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
2.Top five companies of prepayments
Relation with the Reason of
Name of the companies Amount Date
Company unsettled
within 1 Prepaid for
Supplier 255,574,206.07
Liaoning Power Supply Co., Ltd. Benxi Branch yr power supply
Jiangyin Xiagang Yangtze Ship Disassembling within 1
Supplier 84,598,296.25 Prepayment
Factory yr
within 1
Related parties 62,871,674.38 Prepayment
Benxi Steel (Group) Construction Ltd. yr
Dalian Zhongtie Foreign Service Cargo Agency within 1
Supplier 53,243,583.18 Prepayment
Co., Ltd. Bayuquan Branch yr
within 1
Supplier 48,193,648.00 Prepayment
Shanxi Xishan Powerplant Co., Ltd. yr
Total 504,481,407.88
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. Notes to prepayment: Ending balance increased by RMB9,515,844.20 and 1.17%, which was
caused by increase of prepayment for purchasing.
(V) Other receivables
1. Other receivables presented by categories:
Ending balance Beginning balance
Category Percenta Bad debt Percenta Bad debt
Bad debt Bad debt
Book balance ge in provisio Book balance ge in provision
provision provision
total % n rate % total % rate %
Other receivables
with major
individual amount
and bad debt
provision provided
individually
Other receivables
provided bad debt
273,783,461.69 99.37 74,426,789.76 27.18 178,726,805.81 99.04 74,426,789.76 41.64
provision in
groups
Other account
receivable with
minor individual
1,740,000.00 0.63 1,740,000.00 0.96
amount but bad
debt provision is
provided
Total 275,523,461.69 100.00 74,426,789.76 27.18 180,466,805.81 100.00 74,426,789.76 41.64
2. Other receivables tested for impairment by portfolio:
Ending balance Beginning balance
Items
Percentage of the total Bad debt Percentage of the total Bad debt
Book balance Book balance
receivable % provision receivable % provision
within 1
yr 182,015,062.41 66.48 86,637,953.98 48.48
1-2 yrs
10,483,388.04 3.83 455,799.48 9,115,989.60 5.10 455,799.48
2-3 yrs
9,564,488.94 3.49 2,250,467.98 11,252,339.93 6.30 2,250,467.98
Over 3
yrs 71,720,522.30 26.20 71,720,522.30 71,720,522.30 40.13 71,720,522.30
Total
273,783,461.69 100.00 74,426,789.76 178,726,805.81 100.00 74,426,789.76
27
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
3. Bad debt provision for individually significant other receivables and individually insignificant other
receivables for which impairment test has been carried out:
Bad debt
Name of the companies Book balance Providing rate % Reason
provision
Japanese Loan Sinking
Fund of Finance Bureau 1,740,000.00 sinking fund
of Benxi
1,740,000.00
Total
The Finance Bureau of Benxi Japanese Loan Sinking fund is the deposit for paying back Japanese Yan
loan. The aging is over three years and no bad debt provision has been made
4. Change of the bad debt provision
Balance of book Decreased this term
value at Written back Transferred Balance of book value
Items Provided this term
beginning of at end of term
term
2010 55,052,791.89 19,374,137.87 140.00 - 74,426,789.76
Jan-Jun 2011 74,426,789.76 74,426,789.76
No other receivables, which had been fully impaired or made a large proportion of bad debt provision
last year, has been fully recovered or taken back a large proportion this year.
5. Top five debtors at the year end
Portion in total
Relation with the Account
Name of companies Amount other receivables Description
Company age
(%)
China Securities
within 1
Registration and Clearance Agency 105,943,574.68
yr
38.45 Dividend
Co., Ltd. Shenzhen Branch
National Tax Bureau Bengang within 1
Tax bureau 40,941,936.61 14.86 Tax refunding
Office yr
Transportation within 1
Freight for main clients 7,316,834.00 2.66 Freight
Co. yr
Benxi Steel (Group)
within 1 Payment for
Real-estate Development Co., Related parties 5,712,079.22 2.07
yr energy agent
Ltd.
Benxi Steel & Iron Co. No.2 Payment for
Supplier 4,198,316.69 over 1 yr 1.52
Steel Rolling Factory energy agent
Total 164,112,741.20 59.56
6. As to the ending balance of other receivables with regard to related parties, please refer to the
Note VI.
7. No other receivable has been written-off this year.
8. At end of report period, within the aforesaid balance, the amount due from Benxi Steel (Group) Co.,
Ltd. who holds 5% or more the voting shares of the Company is RMB1,954,283.85
(VI) Inventories
1. Categories of inventories
28
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
Ending balance Beginning balance
Items Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Raw materials
8,013,823,647.91 22,659,881.77 7,991,163,766.14 7,248,284,410.99 22,659,881.77 7,225,624,529.22
and main
materials
Semi-finished 1,495,468,678.92 66,531,714.03 1,428,936,964.89 1,167,538,162.85 66,531,714.03 1,101,006,448.82
Product
Finished 2,405,161,328.84 11,873,302.11 2,393,288,026.73 1,982,843,012.15 11,873,302.11 1,970,969,710.04
products
11,914,453,655.67 101,064,897.91 11,813,388,757.76 10,398,665,585.99 101,064,897.91 10,297,600,688.08
Total
There are no inventories used as mortgage or guarantee at the end of the year.
Increase of finished products was caused by increase of production and unit cost.
2. Inventory impairment provisions
Decreased this term
Balance of book value at Provided this Balance of book value at
Categories
beginning of term term Written end of term
Transferred
back
Raw materials and main 22,659,881.77 22,659,881.77
materials
Semi-finished Product 66,531,714.03 66,531,714.03
Finished products 11,873,302.11 11,873,302.11
Total 101,064,897.91 101,064,897.91
3. Inventory impairment provision
The percentage of
Basis of providing impairment write-back against
Items Reason of written back
provision the ending balance
of inventory
Raw materials and main Net realizable value is lower than
materials cost at the ear end
Net realizable value is lower than
Semi-finished Product
t t th d
Net realizable value is lower than
Finished products
t t th d
(VII) Other current assets
Items Ending balance Beginning balance
Prepaid income tax 182,211,823.73 182,211,823.73
Total 182,211,823.73 182,211,823.73
29
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(VIII) Long-term equity investment
Impairment
Percentage of Statement on differences
Calculati Beginning Voting power in Impairmen provision Cash dividend of
Company invested in Investment cost Changed by Ending balance share in the firm between the shareholding
ng basis balance the firm % t provision provided the current term
% and voting rights
this term
Tianjin Bengang Longxing Steel Cost
3,888,980.00 3,888,980.00 3,888,980.00 20 20
Processing Co., Ltd. basis
China Steel Shanghai Steel Cost
10,058,250.00 10,058,250.00 10,058,250.00 15 15
Processing Co., Ltd. basis
Zhejiang Bengang Jingrui Steel Cost
1,843,800.00 1,843,800.00 1,843,800.00 20 20
Processing Ltd. basis
Subtotal on cost basis 15,791,030.00 15,791,030.00 15,791,030.00
Total 15,791,030.00 15,791,030.00 15,791,030.00
30
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(IX) Original value and accumulated depreciation of fixed assets
1. Fixed assets
Items Balance of book value Increased this term Decreased this Balance of book
at beginning of term term value at end of term
I. Total of original
36,476,598,054.78 10,168,121.67 517,318.01 36,486,248,858.44
book value
Incl. House &
8,754,129,609.73 3,546,398.00 8,757,676,007.73
Buildings
Equipment &
26,956,814,829.76 6,621,723.67 26,963,436,553.43
machinery
Transportation
765,653,615.29 517,318.01 765,136,297.28
facilities
Increased
Provided this term
this term
II. Total of
accumulative 17,611,742,153.67 966,751,736.07 483,462.64 18,578,010,427.10
Incl. House &
2,287,616,152.72 210,126,480.27 2,497,742,632.99
Buildings
Equipment &
14,859,750,892.80 745,352,578.00 15,605,103,470.80
machinery
Transportation
464,375,108.15 11,272,677.80 483,462.64 475,164,323.31
facilities
III. Total of net
book value of 18,864,855,901.11 17,908,238,431.34
Incl. House &
6,466,513,457.01 6,259,933,374.74
Buildings
Equipment &
12,097,063,936.96 11,358,333,082.63
machinery
Transportation
301,278,507.14 289,971,973.97
facilities
IV. Total of
impairment 8,237,689.11 8,237,689.11
Incl. House &
8,208,087.85 8,208,087.85
Buildings
Equipment &
29,601.26 29,601.26
machinery
Transportation
facilities
V. Total of fixed
18,856,618,212.00 17,900,000,742.23
asset book value
Incl. House &
6,458,305,369.16 6,251,725,286.89
Buildings
Equipment &
12,097,034,335.70 11,358,303,481.37
machinery
Transportation
301,278,507.14 289,971,973.97
facilities
The original value of construction-in-process transferred to fixed assets was RMB3,546,398.00.
The Company has no guaranteed or mortgaged fixed assets at the year end.
31
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
2. Fixed leased out
Items Book value
Houses & buildings 11,692,025.14
Equipment & machinery 39,712.41
Total 11,731,737.55
3. Fixed asset not granted property license yet
Items Book value Reason Expected date of grant
Houses & buildings 3,143,557,993.14 Newly built construction Not applied
Transportation
1,659,076.93 Newly purchased and not applied yet Not applied
equipment
Total 3,145,217,070.07
(X)Construction in process
Ending balance Beginning balance
Items Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Super thin cool rolling plate
57,083,558.27 57,083,558.27 45,694,370.32 45,694,370.32
reformation
IT project of the Company 36,361,417.97 36,361,417.97 24,436,789.73 24,436,789.73
Energy saving reconstruction and
207,396,339.44 207,396,339.44 101,889,969.96 101,889,969.96
180t dephosphorization converter
Environmental reengineering 72,487,680.18 72,487,680.18 47,986,839.61 47,986,839.61
Taizihe Transformation Station 66KV
30,287,014.00 30,287,014.00 30,095,814.00 30,095,814.00
cable
Recycling steel plant phase
112,518,052.83 112,518,052.83 111,699,762.22 111,699,762.22
Reforming
Other small projects 84,585,729.59 84,585,729.59 57,839,443.47 57,839,443.47
Silicon steel project 396,116,804.10 396,116,804.10 381,305,058.86 381,305,058.86
Ancillary facilities reconstruction for
iron-making, transportation and 1,770,975.94 1,770,975.94 1,770,975.94 1,770,975.94
logistics
Plate flare clearing 142,264,163.09 142,264,163.09 87,162,739.27 87,162,739.27
2250 mm skin pass mill 7,434,740.86 7,434,740.86 0.00 0.00
electrolytic zinc 64,190,488.71 64,190,488.71 0.00 0.00
Dalian Benruitong 5,347,326.85 5,347,326.85 1,101,007.30 1,101,007.30
Dandong Stainless 1,008,481,968.39 1,008,481,968.39 724,697,933.98 724,697,933.98
Ha’erbin Office 0.00 0.00 3,546,398.00 3,546,398.00
Total: 2,226,326,260.22 2,226,326,260.22 1,619,227,102.66 1,619,227,102.66
Note to change of construction-in-process: ending balance of construction-in-process has increased by
RMB607,099,157.5 (37.49%) over the beginning balance, which was caused by proceeding of
projects not completed yet.
No impairment provision provided on construction-in-process at end of report period.
32
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
The change of important construction in progress
Increased this Transferred into fixed Other
Name of projects Budget Beginning balance Ending balance
term assets decreases
Super thin cool rolling plate reformation 1,126,190,000.00 45,694,370.32 11,389,187.95 0.00 0.00 57,083,558.27
IT project of the Company 274,440,000.00 24,436,789.73 11,924,628.24 0.00 0.00 36,361,417.97
Energy saving reconstruction and 180t dephosphorization
1,375,840,000.00 101,889,969.96 105,506,369.48 0.00 0.00 207,396,339.44
converter
Environmental reengineering 150,000,000.00 47,986,839.61 24,500,840.57 0.00 0.00 72,487,680.18
Taizihe Transformation Station 66KV cable 92,950,000.00 30,095,814.00 191,200.00 0.00 0.00 30,287,014.00
Recycling steel plant phase Reforming 188,340,000.00 111,699,762.22 818,290.61 0.00 0.00 112,518,052.83
Other small projects 200,000,000.00 57,839,443.47 26,746,286.12 0.00 0.00 84,585,729.59
Silicon steel project 603,350,000.00 381,305,058.86 14,811,745.24 0.00 0.00 396,116,804.10
Ancillary facilities reconstruction for iron-making,
95,120,000.00 1,770,975.94 0.00 0.00 0.00 1,770,975.94
transportation and logistics
Plate flare clearing 207,630,000.00 87,162,739.27 55,101,423.82 0.00 0.00 142,264,163.09
2250 mm skin pass mill 96,880,000.00 0.00 7,434,740.86 0.00 0.00 7,434,740.86
electrolytic zinc 700,000,000.00 0.00 64,190,488.71 0.00 0.00 64,190,488.71
Dalian Benruitong 205,487,800.00 1,101,007.30 4,246,319.55 0.00 0.00 5,347,326.85
Dandong Stainless 2,230,000,000.00 724,697,933.98 283,784,034.41 0.00 0.00 1,008,481,968.39
Ha’erbin Office 3,994,000.00 3,546,398.00 0.00 3,546,398.00 0.00 0.00
Total: 7,550,221,800.00 1,619,227,102.66 610,645,555.56 3,546,398.00 0.00 2,226,326,260.22
33
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
Investment on Progress Accumulate of interest Including: interest Capitalizing rate
Name of projects Fund recourse
budget (%) (%) capitalized capitalized this term of interest %
Super thin cool rolling plate reformation 91 97 881,573.20 0.00 0% Independent
IT project of the Company 65 70 3,234,400.75 0.00 0% Independent
Energy saving reconstruction and 180t
55 65 23,578,505.39 0.00 0% Independent
dephosphorization converter
Environmental reengineering 50 50 2,491,450.89 0.00 0% Independent
Taizihe Transformation Station 66KV cable 95 95 1,589,149.75 0.00 0% Independent
Recycling steel plant phase Reforming 65 65 7,180,154.25 0.00 0% Independent
Other small projects 826,550.83 0.00 0% Independent
Silicon steel project 65 85 14,360,945.48 0.00 0% Independent
Ancillary facilities reconstruction for
90 95 1,140,607.31 0.00 0% Independent
iron-making, transportation and logistics
Plate flare clearing 70 70 1,044,913.81 0.00 0% Independent
2250 mm skin pass mill 8 10 0.00 0.00 0% Independent
electrolytic zinc 9 10 1,860,995.27 1,034,444.44 6.65% Independent
Dalian Benruitong 3 15 0.00 0.00 0% Independent
Dandong Stainless 65 80 29,245,950.00 17,426,835.00 5.94% Independent
Ha’erbin Office 89 100 0.00 0.00 0% Independent
Total: 87,435,196.93 18,461,279.44
34
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(XI) Project materials
Items Beginning of term Increased this term Decreased this term Ending balance
Special equipment 15,638,434.32 169,506,414.10 135,538,022.67 49,606,825.75
Total 15,638,434.32 169,506,414.10 135,538,022.67 49,606,825.75
Notes to project materials: project materials increased by RMB33,968,391.43 and 217.21% over the
beginning balance, which was caused by in-stock materials purchased for project were not delivered.
(XII) Intangible assets
1. Particulars about intangible assets
Book balance at Increased this Decreased this Balance at end
Items
beginning of period period period of period
1. Total of original book value 46,395,483.80 463,954.86 45,931,528.94
(1) Land using rights 46,395,483.80 463,954.86 45,931,528.94
2. Total of amortizing
(1) Land using rights
3. Total of net book value of
46,395,483.80 463,954.86 45,931,528.94
intangible assets
(1) Land using rights 46,395,483.80 463,954.86 45,931,528.94
4. Total of impairment provision
(1) Land using rights
Total of book value of intangible
46,395,483.80 463,954.86 45,931,528.94
assets
(1) Land using rights 46,395,483.80 463,954.86 45,931,528.94
No intangible assets was on pledge at end of report period
(XIII) Deferred income tax asset and deferred income tax liability
1. Recognized deferred tax asset
End of term Beginning of term
Items
Differed income tax assets:
Impairment provision 148,510,099.21 148,510,099.21
Welfare for retired employee 23,404,564.45 23,404,564.45
Unrealized profit in inter-company sales 11,257,733.24 11,257,733.24
Employee wages payable 16,151,581.65 16,151,581.65
Reserved expenses 2,079,016.96 2,079,016.96
Total 201,402,995.51 201,402,995.51
35
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
2. Breakdown of unrecognized deferred tax asset
Items Ending balance Beginning balance
Impairment provision 594,040,396.83 594,040,396.83
Welfare for retired employee 93,618,257.80 93,618,257.80
Unrealized profit in inter-company sales 45,030,932.95 45,030,932.95
Employee wages payable 64,606,326.58 64,606,326.58
Reserved expenses 8,316,067.83 8,316,067.83
Total 805,611,981.99 805,611,981.99
(XIV) Asset impairment provision
Decreased this term Ending balance
Items Beginning balance Increased this term
Written back Written off
1. Bad debt provision 484,737,809.81 484,737,809.81
2. Inventory
101,064,897.91 101,064,897.91
impairment provisions
3 . Fixed assets and
8,237,689.11 8,237,689.11
impairment provision
Total 594,040,396.83 594,040,396.83
(XV) Short term loans
1. Categorizing of short term loans
Items Ending balance Beginning balance
Credit loan 3,761,573,000.00 2,295,236,500.00
Guarantee loan 100,000,000.00
Total 3,861,573,000.00 2,295,236,500.00
For details of guarantees involved by related parties please see Note VI.
2. There is no overdue short-term loan outstanding at the end of term.
3. Ending balance is RMB1,566,336,500 and 68.24% higher than the beginning balance, which was
caused by increase of reserved capital.
(XVI)Notes payable
Category Ending balance Beginning balance
Bank acceptance 1,748,231,397.35 1,260,376,722.11
Commercial acceptance
Total 1,748,231,397.35 1,260,376,722.11
1. There is no notes payable owed to shareholders who hold 5% or above voting shares at the end of
36
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
this year.
2. As to the ending balance of notes payable with regard to related parties, please see details in Note 6.
3. Ending balance is RMB487,854,675.24 and 38.71% higher than the beginning balance, which was
caused by increase of financing activities by means of notes payable.
(XVII) Account payable
1. Categories of accounts payable
Items Ending balance Beginning balance
within 1 yr 6,209,221,324.52 6,991,708,726.60
1-2 yrs 842,723,168.89 730,769,310.52
2-3 yrs 132,206,763.86 143,469,087.21
Over 3 yrs 53,620,660.39 127,244,092.05
Total 7,237,771,917.67 7,993,191,216.38
2. Within the above balance, there is no amount due to shareholders who hold 5% or more 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 significant accounts payables with aging over one year:
Reason of not Notes(those paid back after
Name of the companies Amount
transferred balance sheet date)
Benxi Steel (Group) Construction Ltd. 199,516,453.16 Not settled
Project budget and settlement 98,836,023.58 Not settled
5. Ending balance of account payable decreased by RMB755,419,298.71 and 9.45% from the
beginning balance, which was caused by decreasing of settlement payment period.
(XVIII) Advance from customers
1. Categories of advance from customers
Items Ending balance Beginning balance
3,465,773,363.81 3,042,512,439.12
within 1 yr
59,438,467.10 61,594,266.42
1-2 yrs
8,342,469.21 7,254,321.05
2-3 yrs
7,323,487.66 7,419,946.97
Over 3 yrs
Total 3,540,877,787.77 3,118,780,973.56
2. Advances from related parties are detailed in Note VI.
3. Within the aforesaid balance, there is no amount due to the shareholders that hold 5% or more of
the company’s voting shares.
4. The significant advance from customers with aging above one year
37
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
Notes(those paid back after
Name of the companies Amount Reason of not transferred balance sheet date shall be
marked)
Guangshou Free Trade
Zone Bengang Sales 22,228,324.44 Postpone of purchasing
Co., Ltd.
Other advance aged over one year are mainly deposits paid by agreement accounts.
5. Ending balance of advance from customers increased by RMB422,096,814.21 and 13.53%, which
was caused by increase of contracts and sales prices.
(XIX) Remunerations payable
Beginning Increased this Decreased this
Items Ending balance
balance term term
(1)Salary, bonus, allowance and
64,706,194.58 651,861,248.00 667,070,236.19 49,497,206.39
subsidy
(2)Employee welfare 18,890,964.86 18,890,964.86 0.00
(3)Social Insurance 683,419.34 259,388,755.93 260,072,175.27 0.00
Incl. A. Pension fund 133,245,713.70 133,245,713.70 0.00
B. Supplementary pension 18,646,424.10 18,646,424.10 0.00
C. Basic medical insurance -31,430.00 47,419,080.82 47,387,650.82 0.00
D. Supplementary medical
0.00
insurance
E. Unemployment insurance 102.9 47,419,080.82 47,419,183.72 0.00
F. Labor safety insurance 714,746.44 12,658,456.49 13,373,202.93 0.00
G. Maternity insurance 0.00
(4) Housing fund 6,851,033.00 57,239,179.61 57,639,179.61 6,451,033.00
(5) Trade union and education fee 18,910,235.12 13,323,686.18 15,167,121.02 17,066,800.28
(6) Non-monetary welfare 0.00
(7) Dismissing compensation 93,618,257.80 26,986,623.78 66,631,634.02
(8) Employees’ bonus and welfare
0.00
fund
(9) Others 0.00
Incl. Share payment in cash 0.00
Total 184,769,139.84 981,812,869.72 1,026,935,335.87 139,646,673.69
(XX) Tax payable
Tax items Ending balance Beginning balance
VAT -238,908,785.58 -727,562,244.94
Business tax 48,590.77 143,127.71
City construction tax 74,888.32 888,707.60
Enterprise income tax 15,801,440.05 15,386,332.04
Property tax 60,942.94 5,314,042.13
Education surtax 38,651.39 521,852.85
Others 368,784.02 537,839.37
Total -222,515,488.09 -704,770,343.24
Ending balance of tax payable has increased by RMB482,254,855.15 and 68.43%, which was caused
by decrease of input tax not deducted from the VAT.
38
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(XXI) Dividend payable
Items Ending balance Beginning balance
Dividend payable 313,600,000.00 0.00
Total 313,600,000.00 0.00
As approved by the Annual General Meeting 2010 on May 17, 2011: upon the total capital share of
3,136,000,000 at present, cash dividend of RMB1.00 (tax included) was distributed to each 10 shares.
Dividend was totaled to RMB313,600,000.00, and was implemented on July 5.
(XXII) Other payables
1. Categories of other payables
Items Ending balance Beginning balance
within 1 yr 628,341,756.96 538,476,810.76
1-2 yrs 146,794,559.97 127,647,443.45
2-3 yrs 19,334,503.55 21,724,161.29
Over 3 yrs 30,412,692.14 33,237,914.91
Total 824,883,512.62 721,086,330.41
2. There is other payables amounting to RMB182,800,091.00 owed to Benxi Steel (Group) Co., Ltd.
who hold 5% or more voting shares at the end of this period.
3. As to the ending balance of accounts payable with regard to related parties, please refer to the
details in Note 6.
4. No significant other payables with aging over one year.
5. The details of significant other payables
Name of the companies Amount Description Note
Benxi Steel (Group) Co., Ltd. 182,800,091.00 Current account
Bengang Trucking & Transportation Co., Ltd. 20,194,837.84 Freight
Bengang Group Thermal Power Development Co.,
14,312,056.92 Heating
Ltd.
Benxi Steel & Iron Co. Steel Rolling Factory 10,856,896.89
6. Other payables increased by RMB103,797,182.21 and 14.39%, which was caused by increase of
rental of No.3 hot rolling provided in advance and overdue reparing fee.
(XXIII) Non-current liability due in 1 year
Items Ending balance Beginning balance
Long-term borrowings 1,603,160,000.00 1,013,263,228.43
Total 1,603,160,000.00 1,013,263,228.43
1. Long-term loans due in one year
39
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
Items Ending balance Beginning balance
Credit loan 1,603,160,000.00 1,012,320,000.00
Guaranteed loans 943,228.43
Total 1,603,160,000.00 1,013,263,228.43
2. Breakdown of long-term loans due in one year
Amount at end
Loan provided by Commence date Terminate date Currency Interest rates %
of term
Industry Bank
2008.01.27 2011.07.20 RMB 5.94 19,160,000.00
Bengang Branch
Agriculture Bank
2010.1.22 2012.1.21 RMB 5.1 200,000,000.00
Xinhua Branch
Agriculture Bank
2010.1.25 2012.1.24 RMB 5.1 100,000,000.00
Xinhua Branch
Agriculture Bank
2010.02.04 2012.02.03 RMB 5.1 200,000,000.00
Xinhua Branch
Agriculture Bank
2010.03.12 2012.03.10 RMB 5.1 200,000,000.00
Xinhua Branch
Construction
Bank Bengang 2008.11.18 2011.11.17 RMB 6.75 37,000,000.00
Branch
Construction
Bank Bengang 2009.09.11 2011.09.10 RMB 4.86 300,000,000.00
Branch
Construction
Bank Bengang 2009.09.08 2011.07.07 RMB 4.86 177,000,000.00
Branch
Construction
Bank Bengang 2009.09.09 2011.08.08 RMB 4.86 170,000,000.00
Branch
Construction
Bank Bengang 2009.09.22 2011.09.21 RMB 4.86 200,000,000.00
Branch
Total 1,603,160,000.00
(XXIV) Long-term loans
1. Categories of long-term borrowings
Categories Ending balance Beginning balance
Credit loan 2,184,251,600.00 1,884,200,000.00
Guarantee loan 2,572,597,243.30 2,939,824,138.39
Total 4,756,848,843.30 4,824,024,138.39
Please refer to the Note 6 for the details of the guarantee loan
40
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
2. Details of long-term borrowings
Annual
Loan provided Original Commence Terminate Translated to
Currency interest Means
by currency date date RMB
rate
Industry Bank
Bengang RMB 90,000,000.00 5.94 2010.03.12 2013.03.12 90,000,000.00 Credit
Branch
Industry Bank
Bengang RMB 90,000,000.00 5.94 2010.03.12 2013.09.12 90,000,000.00 Credit
Branch
Industry Bank
Bengang RMB 90,000,000.00 5.94 2010.03.12 2014.03.12 90,000,000.00 Credit
Branch
Industry Bank
Bengang RMB 19,160,000.00 5.94 2008.01.31 2013.07.19 19,160,000.00 Credit
Branch
Industry Bank
Bengang RMB 19,160,000.00 5.94 2008.01.32 2014.01.20 19,160,000.00 Credit
Branch
Industry Bank
Bengang RMB 19,160,000.00 5.94 2008.01.33 2014.07.21 19,160,000.00 Credit
Branch
Industry Bank
Bengang RMB 19,240,000.00 5.94 2008.01.34 2015.01.20 19,240,000.00 Credit
Branch
Industry Bank
Bengang RMB 290,000,000.00 5.18 2011.01.21 2015.07.20 290,000,000.00 Credit
Branch
Industry Bank
Bengang RMB 127,000,000.00 6.65 2011.05.24 2014.09.24 127,000,000.00 Credit
Branch
Industry Bank
Bengang RMB 73,000,000.00 6.65 2011.05.24 2015.09.24 73,000,000.00 Credit
Branch
Industry Bank
Bengang RMB 417,480,000.00 6.10 2011.03.11 2013.03.08 417,480,000.00 Credit
Branch
Construction
Bank Bengang RMB 70,000,000.00 5.94 2007.04.30 2014.04.29 70,000,000.00 Guaranteed
Branch
Construction
Bank Bengang RMB 130,000,000.00 5.94 2007.05.06 2014.04.29 130,000,000.00 Guaranteed
Branch
Construction
Bank Bengang RMB 200,000,000.00 5.76 2007.12.03 2012.07.25 200,000,000.00 Guaranteed
Branch
Construction
Bank Bengang RMB 400,000,000.00 5.76 2008.04.29 2013.04.15 400,000,000.00 Guaranteed
Branch
Construction
Bank Bengang RMB 100,000,000.00 5.02 2010.07.01 2013.06.30 100,000,000.00 Guaranteed
Branch
Construction
Bank Bengang RMB 310,000,000.00 5.02 2010.07.02 2013.07.01 310,000,000.00 Guaranteed
Branch
Construction
Bank Bengang RMB 300,000,000.00 5.02 2010.07.02 2013.06.01 300,000,000.00 Guaranteed
Branch
Bank of China
Bengang RMB 100,000,000.00 5.40 2010.04.29 2013.04.28 100,000,000.00 Guaranteed
Branch
Bank of China
Bengang USD 30,000,000.00 3.10 2009.09.11 2012.09.10 194,148,000.00 Guaranteed
Branch
41
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
Bank of China
Bengang USD 30,000,000.00 3.17 2009.09.11 2012.09.10 194,148,000.00 Guaranteed
Branch
Bank of China
Bengang USD 20,000,000.00 2.30 2009.09.25 2012.09.24 129,432,000.00 Guaranteed
Branch
Bank of China
Bengang USD 20,000,000.00 2.30 2009.10.12 2012.08.24 129,432,000.00 Guaranteed
Branch
Bank of China
Bengang USD 24,000,000.00 3.30 2009.10.20 2012.10.18 155,318,400.00 Guaranteed
Branch
Bank of China
Bengang USD 20,000,000.00 3.30 2009.10.25 2012.10.05 129,432,000.00 Guaranteed
Branch
National
Development
USD 5,000,000.00 3.51 2011.04.07 2014.03.19 32,358,000.00 Credit
Bank Liaoning
Branch
National
Development
USD 25,000,000.00 3.51 2011.04.26 2014.03.19 161,790,000.00 Credit
Bank Liaoning
Branch
National
Development
USD 21,000,000.00 3.51 2011.05.26 2014.03.19 135,903,600.00 Credit
Bank Liaoning
Branch
Finance Bureau JPY 382,423,928.57 1.75 1999.10.10 2027.09.10 30,686,843.30 Guaranteed
Communication
Bank Dandong RMB 600,000,000.00 4.46 2010.02.03 2021.11.05 600,000,000.00 Credit
Branch
Total 4,756,848,843.30
(XXV)Other non-recurring liabilities
Beginning Increased this Decreased
Items Ending balance Remarks
balance term this term
3 government technology financing
929,224.00 65,000.00 864,224.00 Note 1
funds
6#7#coke oven of dry Quenching coke 5,972,222.22 5,972,222.22 Note 2
Discarding of out-of-date production 34,800,000.00 34,800,000.00 Note 3
Industrial energy management center
11,600,000.00 11,600,000.00 Note 4
demonstrative project
Automobile zinc plate production line 41,040,000.00 41,040,000.00 Note 5
Restoring of Bengang No.2 Power
14,128,000.00 14,128,000.00 Note 6
Plant
Iron Factory 2*265 square meter
Sintering Flue Gas Desulphurization 5,000,000.00 5,000,000.00 Note 7
Project
Iron Factory 2*265 square meter
Sintering Flue Gas Desulphurization 3,000,000.00 3,000,000.00 Note 8
Project
Provincial environmental protection
4,000,000.00 4,000,000.00 0.00 Note 9
fund project
Special fund for furnace reconstruction 23,630,000.00 23,630,000.00 Note 10
Environment treatment project fund 8,400,000.00 8,400,000.00 Note 11
Special fund for auto plate lab 300,000.00 300,000.00 Note 12
Fund for introducing of overseas R&D
3,500,000.00 3,500,000.00 Note 13
team
MES project fund 8,600,000.00 8,600,000.00 Note 14
Government subsidy for Dandong
2,060,000.00 2,060,000.00 Note 15
Stainless Steel Project
Total 120,469,446.22 46,490,000.00 4,065,000.00 162,894,446.22
1. The “3 government technology financing funds” was the fund granted by Liaoning Provincial
42
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
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”.
2. 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.
3. According to Liao Cai Zi Qi (2008) No.1079 and Cai Jian(2008) 904 “2008 The contral finance
award fund for eliminating outdated industrial capacity”, 34.80 million award has been received in
January 2010 for eliminating three coke furnaces and a ferroalloy furnace of Iron-making plant
project and build a new No. 8 Coke Furnace.
4. According to Liao Cai Zi Qi (2009) No.868“The notice for the distribution of finance subsidy fund
for the 2009 Industrial enterprise energy management center construction demonstration project”, 11.6
million finance subsidy fund has been received in March 2010 for the 2009 Industrial enterprise
energy management center construction demonstration project. The project has not started yet.
5. According to “The notice for key industry revitalization and first technology transformation project
contraction expansion and national debt investment budget”, 41.04 million subsidy fund has been
received in June 2010 for automobile high-class electrolytic zinc steel plate production line project .
The project has just started.
6. According to “The reply for resuming the heat source production of the Second power plant of
Bengang Group”, 16 million is the compensation for the resuming of the hear source production of
second power plant and operating heating cost. The relevant expenses of second power plant will be
paid from the special accounts payables, and till the year end the total amount of RMB 1,872,000.00
has been paid.
7. According to “The notice of second environmental protection special fund project of 2009 in
Liaolin province ”, 5 million will be distributed to Bengang Steel Plates Co., Ltd. for environmental
protection project of the 2*265 Square meter Sintering machine desulfuration project of blast furnace
plant
8. According to “The notice of central pollution discharge special fund project of 2009 ”, 16.9 million
will be distributed to Bengang Steel Plates Co., Ltd. for pollution discharge project of the 2*265
Square meter Sintering machine desulfuration project of blast furnace plant. 3 million has been
received up to the report period.
9. According to “The notice of first environmental protection special fund project of 2008 in Liaolin
province”, 4 million will be distributed to Bengang Steel Plates Co., Ltd. for the 220t/h boiler
desulfuration of the power plant. This project has been completed, thus transferred to non-operational
income.
10. According to “Notice of government award for energy saving technical reconstruction of
2007-2009 and 2010”, the Company has received RMB23.63 million for furnace reconstruction
project in this period.
According to “Response to construction of provincial engineering center and lab of 2007, the
Company received RMB300 thousand this period.
12. According to “Notice on special fund for introducing of overseas R&D team for year 2010”,
RMB3.5 million was received this period.
13. According to “Notice for national budget for key industrial reconstruction (the 3rd batch) of 2010”,
the Company received RMB8.60 million for the EMS project.
14. In March 2011, Bengang Stainless Steel Dandong Co., Ltd. received RMB2.06 million of
government subsidy from the local authority.
43
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(XXVI)Share capital
The paid-in share capital of the company is as follows:
Ending balance Beginning balance
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 3,136,000,000.00
44
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
Changed this term (+,-)
Items Beginning balance Ending balance
Issuing of new shares Bonus shares Transferred from reserves Others Sub-total
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 3,136,000,000.00
45
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(XXVII)Capital reserves
Items Beginning balance Increased this term Decreased this term Ending balance
1. Additional paid-in capital
(1) Capital input by
8,706,903,665.94 8,706,903,665.94
investors
Sub-total 8,706,903,665.94 8,706,903,665.94
2. Other capital reserves
(1) Government award for 83,787,468.82 83,787,468.82
energy saving tech
Sub-total 83,787,468.82 83,787,468.82
Total 8,790,691,134.76 8,790,691,134.76
(XXVIII) Surplus reserves
Items Beginning balance Increased this term Decreased this term Ending balance
Statutory surplus reserves 921,277,509.22 921,277,509.22
Total 921,277,509.22 921,277,509.22
(XXIX) Undistributed profit
Items Amount Percentage of drawing or allocation
Undistributed profits of last year before adjustment 2,162,390,668.07
Total amount of adjustment of beginning undistributed
profits (increase+, decrease -)
After adjusted beginning undistributed profits
Add: undistributed profit belongs to parent company 595,456,110.27
Less: Statutory surplus reserves
Optional surplus reserves
Reserves
Enterprise development fund
Providing of employees’ bonus and welfare fund
Common risk provisions
Common share dividend payable 313,600,000.00
Retained profit at the end of term 2,444,246,778.34
46
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(XXX)Operating income and operating cost
1. Turnover
Items Occurred current term Occurred in previous term
Major business turnover 22,079,613,372.50 19,791,554,636.00
Other business income 1,970,643,284.64 2,562,830,774.54
Total 24,050,256,657.14 22,354,385,410.54
Operation cost 21,573,460,001.27 19,639,448,948.70
2. Main business (industry segment)
Name of Occurred current term Occurred in previous term
industry Turnover Operation cost Turnover Operation cost
Industry 22,079,613,372.50 19,654,859,481.73 19,791,554,636.00 17,325,653,039.19
Total 22,079,613,372.50 19,654,859,481.73 19,791,554,636.00 17,325,653,039.19
3. Main business (product segment)
Occurred current term Occurred in previous term
Products or
services
Turnover Operation cost Turnover Operation cost
Steel plate 21,683,831,120.93 19,303,811,124.86 19,462,509,782.00 17,041,124,716.21
Steel billet 3,928,917.19 3,235,556.50 1,061,485.60 774,784.32
Others 391,853,334.38 347,812,800.37 327,983,368.40 283,753,538.66
Total 22,079,613,372.50 19,654,859,481.73 19,791,554,636.00 17,325,653,039.19
4. Main business (geographic segment)
Occurred current term Occurred in previous term
Name of
districts
Turnover Operation cost Turnover Operation cost
North-east 8,404,449,601.30 7,481,484,079.82 6,986,800,199.95 6,116,289,414.59
North 3,175,710,110.63 2,826,957,833.28 2,950,157,361.71 2,582,586,552.70
East 5,118,029,315.56 4,555,974,116.20 4,430,136,638.33 3,878,169,841.81
Northwest 270,843,737.15 241,100,036.73 69,825,217.73 61,125,440.52
Mid-south 2,391,892,555.51 2,129,218,083.71 1,815,448,967.06 1,589,255,593.72
Export 2,718,688,052.35 2,420,125,332.00 3,539,186,251.22 3,098,226,195.84
Total 22,079,613,372.50 19,654,859,481.73 19,791,554,636.00 17,325,653,039.19
47
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
5. Top five clients’ principal operating revenue is as follows
Name of clients Total of principal turnover % in total main business income
Bengang Puxiang Cool Rolling Steel
3,758,411,808.87 17.02
Sheet Co., Ltd.
Hengxin National Resources Co.,
582,860,642.00 2.64%
Ltd.
STEMCOR (UK) 325,344,337.50 1.47
DUFERCO SA 322,484,097.00 1.46
Wukuang Steel & Iron Co., Ltd. 299,778,504.03 1.36
Total 5,288,879,389.40 23.95
6. Business revenue is RMB1,695,871,246.60 and 7.59% higher than the previous term, which was
mainly caused by increase of sales price.
(XXXI)Business tax and surcharge
Items Occurred current term Occurred in previous term Rate
Business tax 597,152.46 600,867.18 5%
City construction tax 1,396,236.50 56,240,531.58 7%
Education surtax 759,182.03 24,052,591.14 3%
Local education charge 554,651.36 7,981,256.62 1%
Total 3,307,222.35 88,875,246.52
The explanation of business tax and surcharges: The amount of business tax and surcharge has
decreased by RMB85,568,024.17 compared with last period. The increase rate is 96.28%, which is
mainly caused by the decrease of tax payable of VAT.
(XXXII) Sales expenses
Items Occurred current term Occurred in previous term
Outsourced transportation 152,292,977.09 132,941,156.61
Port fee 24,070,088.99 39,286,754.53
Import & export agency fee 30,000,000.00 18,000,000.00
Packaging 26,035,802.26 28,389,347.95
Wage 8,330,566.49 7,622,758.80
Internal transportation 4,112,008.77 2,641,521.72
Others 4,830,634.19 3,586,535.18
Total 249,672,077.79 232,468,074.79
Sales expenses of the period was RMB249,672,077.79, which increased by RMB17,204,003 and 7.4%
over the same period of last year, which was caused by increase of freight and import & export agency
expenses.
48
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(XXXIII)Administrative expense
Items Occurred current term Occurred in previous term
Maintaining 695,836,796.17 1,074,569,856.12
Social insurance 205,435,696.80 187,654,790.83
Wage and remuneration 86,704,145.32 75,034,065.05
Rental 150,922,531.20 785,666.93
Repairing fee 124,438,900.00 73,565,200.00
Taxes 36,322,896.79 27,759,364.62
Land using rights 28,713,000.00 30,000,000.00
Heating 7,051,377.51 18,722,262.86
Transportation 15,477,621.19 14,667,999.60
Sewage expense 10,474,625.00 11,057,708.00
Depreciation 24,484,378.75 7,392,319.97
Water resource fee 3,000,000.00 3,000,000.00
Business reception expenses 3,695,339.78 3,112,026.56
Housing fund 4,794,760.00 3,221,830.00
Technical development fee 2,178,727.64 1,904,022.67
Others 61,637,571.29 56,410,267.76
Total 1,461,168,367.44 1,588,857,380.97
Administrative expense was RMB1,461,168,367.44 in the report term, which has decreased by
RMB127,689,013.53 and 8.04% over the same period of last year, which was caused by decrease of
repairing expenses.
(XXXIV)Financial expenses
Category Occurred current term Occurred in previous term
Interest expense 206,753,289.08 141,268,903.08
Less: Incoming interests 7,357,205.07 12,570,931.29
Exchange gains/losses -55,842,800.09 -12,737,169.34
Others 1,462,921.33 1,966,381.18
Total 145,016,205.25 117,927,183.63
Financial expenses increased by RMB27,089,021.62 and 22.97% comparing with previous period,
which was caused by increase of loans and loan interests.
(XXXV) 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 0.00
3. Fixed asset impairment
Total 0.00 0.00
49
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(XXXVI) Non-operational income
1. Details
Occurred current Occurred in previous Carried to current contingent
Items
term term gain/loss
1. Total of gains from disposal of
105,882.56 723,293.15 105,882.56
non-current assets
Incl. Gains from disposal of fixed assets 105,882.56 723,293.15 105,882.56
Gains from disposal of intangible assets
2. Gains from non-monetary capital
exchange
3. Gains from debt reorganizing 1,602,521.42 5,595,455.72 1,602,521.42
4. Government subsidies 5,072,967.00 317,493.00 5,072,967.00
5. Gains from inventory overage
6. Gains from donation
7. Payable account practically not
3,840,143.50 3,840,143.5
payable
8. Gains from penalties
9. Others 225,060.00 58,770.55 225,060.00
Total 10,846,574.48 6,695,012.42 10,846,574.48
None operational income increased by RMB4,151,562.06 and 62.01% comparing with previous
period, which was caused by increase of government subsidy and payable accounts practically not
able to be disbursed.
(XXXVII) Non-operational expenditure
Occurred current Occurred in previous Carried to current contingent
Items
term term gain/loss
1. Total of loss from disposal of
994.85
non-current assets
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
4. Donations paid
5. Non-recurring losses
6. Penalties paid 9,329.78
7. Compensation paid 113,900.00 113,900.00
8. Breach of faith
9. Loss from inventory shortage
10. Others
Total 113,900.00 10,324.63 113,900.00
50
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(XXXVIII) Income tax expenses
Occurred current Occurred in previous
Items
term term
Income tax calculated according to the law and regulations of 33,008,831.48 4,886,498.68
current term
Adjustment of differed income tax
Total 33,008,831.48 4,886,498.68
Income tax has increased by RMB28,122,332.80 and 575.51% from the previous term, which was
caused by increase of profit realized by subsidiaries.
(XXXIX) Calculation formula of basic earnings per share and diluted earnings per
share
Formula of weighted average net income on asset:
Weighted average income on net asset ratio =P0/（E0 ＋ NP÷2 ＋ Ei×Mi÷M0 － Ej×Mj÷M0
±Ek×Mk÷M0）
P0 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 at the beginning of term attributable to common share holders
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 is calculated as following:
Basic earnings per share = P0÷S S= S0＋S1＋Si×Mi÷M0– Sj×Mj÷M0-Sk, in which:
P0 = 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 placed in the market
S0 = Total shares at the beginning of term
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 = accumulative number of months from the next month of share increasing to the end of report
term;
Mj = accumulative number of months from the next month of share decreasing to the end of report
51
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
term.
Diluted earning per share=P1/（S0＋S1＋Si×Mi÷M0–Sj×Mj÷M0–Sk+ weighted average of common
shares increased by means of subscription certificates, share future options, or convertible bonds）
P1 = net profit attributable to common shareholders of the Company, or net profit attributable to
common shareholders after deducting of non-recurring gain/loss, with considering the influences of
diluting potential common shares, and adjusted according to Enterprise Accounting Standard and
related regulations. 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.
(XXXX) Notes to Cash Flow Statements
1. Other cash inflow related to operation
Other cash inflow related to operation was RMB58,724,812.38, with details as following:
Items Amount of the Current Term Amount of the Previous Term
1. Retrieving of current accounts, advance 4,877,607.31 3,265,934.27
money for another
7,357,205.07 12,570,931.29
2. Interest income
46,490,000.00 317,493.00
3. Special subsidy and allowance
Total 58,724,812.38 16,154,358.56
2. Other cash paid related to operation
Other cash paid related to operation was RMB629,175,543.32
Items Amount of the Current Term Amount of the Previous Term
171,882,607.05 150,250,677.93
1. Freight
24,070,088.99 39,286,754.53
2. Ports fee
28,713,000.00 30,000,000.00
3. Land using rights
3,166,796.52 2,447,183.22
4. Labor service
662,205.85 404,450.68
5. Processing fee
26,035,802.26 28,389,347.95
6. Packaging fee
12,441,745.21 8,752,176.43
7. Quality warranty
3,000,000.00 3,000,000.00
8. Water resource fee
359,203,297.44 301,708,761.73
9. Other current accounts
629,175,543.32 564,239,352.47
Total
52
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(XXXXI) Appendix of Cash Flow Statement
1. Supplementary data 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 595,356,626.04 688,606,765.04
Plus: Asset impairment provision
Fixed asset depreciation, gas and petrol depreciation, 966,751,736.07 1,046,845,092.26
production goods depreciation
Amortizing of intangible assets 463,954.86
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) 145,016,205.25 117,927,183.63
Investment losses (“-“ for gains)
Decrease of deferred income tax asset (“-“ for increase)
Increase of deferred income tax liability (“-“ for
decrease)
Decrease of inventory (“-“ for increase) -1,515,788,069.68 -307,503,646.38
Decrease of operational receivable items (“-“ for -499,297,855.44 -20,471,935.93
increase)
Increase of operational payable items (“-“ for decrease) 1,449,254,422.55 -923,295,410.91
Others
Cash flow generated by business operation, net 1,141,757,019.65 602,108,047.71
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 2,991,857,388.66 2,570,517,350.82
Less: Balance of cash at beginning of year 1,475,045,148.55 2,842,961,050.60
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 1,516,812,240.11 -272,443,699.78
53
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
VI. Related parties and transactions
(1) Parent company of the Company (RMB100 million)
Name of the Ownership Reg. Legal Business Registered
Relationship
parent co. type Add. representative property capital
Benxi Steel Parent Fully
Benxi Zhang Xiaofang Production 53.69
(Group) Co., Ltd. company state-owned
(Continued)
Name of the Shareholding portion of Voting power of Substantial holder of the Organization
parent co. the parent co. the parent co. Company code
Benxi Steel Liaoning Provincial
82.07 82.07 11972626-3
(Group) Co., Ltd. State-asset Administration
(2) Subsidiaries of the Company In RMB 10 thousand
Ownership of the Ownership Reg. Legal Business
Name of the subsidiaries
subsidiary type Add. representative property
Fully-owned Limited
Xiamen Bengang Steel Sales Ltd. Xiamen Zhang Guoming Sales
subsidiary liability
Fully-owned Limited
Wuxi Bengang Steel Sales Ltd. Wuxi Wen Yonggang Sales
subsidiary liability
Fully-owned Limited
Tianjin Bengang Steel Trading Ltd. Tianjin Liu Chuang Sales
subsidiary liability
Fully-owned Limited
Nanjing Bengang Material Sales Ltd. Nanjin Pang Zonghua Sales
subsidiary liability
Fully-owned Limited
Yantai Bengang Steel Sales Ltd. Yantai Wang Lixin Sales
subsidiary liability
Harbin Bengang Steel & Iron Sales Fully-owned Limited
Harbin Fei Jixi Sales
Ltd. subsidiary liability
Fully-owned Limited
Changchun Bengang Steel Sales Ltd. Changchun Wang Jun Sales
subsidiary liability
Fully-owned Limited
Guangzhou Bengang Trade Co., Ltd. Guangzhou Wu Shaogang Sales
subsidiary liability
Fully-owned Limited
Shanghai Metallurgy Tech Co., Ltd. Shanghai Fei Jixi Sales
subsidiary liability
Bengang Steel Plate Liaoyang Orel Fully-owned Limited
Liaoyuang Wang Zhengzhi Production
Ball Co., Ltd. subsidiary liability
Dalian Benruitong Automobile Controlled Limited
Dalian Wang Shu Production
Material Technologies Co., Ltd. subsidiaries liability
Bengang Stainless Cool-rolling Fully-owned Limited
Dandong Yu Tianchen Production
(Dandong) Co., Ltd. subsidiary liability
(Continued)
Registered Share portion Voting Organization
Name of the subsidiaries
capital % power % 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
Dalian Benruitong Automobile Material Technologies
10000.00 65.00 65.00 55498444-3
Co., Ltd.
Bengang Stainless Cool-rolling (Dandong) Co., Ltd. 16,000.00 100.00 100.00 69941004-5
54
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(3) Other related parties
Relationship with the
Name of the related parties Organization code
Company
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
(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.
55
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
2. Related transactions of product sales and providing of services In RMB 10 thousand
Amount of the Previous
Amount of the Current Term
Term
Subjects of the
Related parties Amount Portion in Amount
related transactions Portion in
similar trade %
RMB0’000 RMB0’000 similar trade %
Benxi Steel & Iron (Group) Ltd. Material and parts 525.77 0.02 19,269.33 0.86
Benxi Steel & Iron (Group) Ltd. Power supply 477.77 0.02 62.39 0
Dalian Boluole Steel Tube Ltd. Products 3,418.00 0.14 2,234.11 0.1
Guangshou Free Trade Zone
0.00
Bengang Sales Co., Ltd. Products 0.00 2,265.29 0.1
Liaoning Bengang Steel & Iron
13,002.13
Trading Co., Ltd. Products 0.54 17,095.78 0.76
Benxi Steel (Group) Steel Process
17,807.54
& Logistics Ltd. Products 0.74 15,127.06 0.68
Benxi Steel (Group) Steel Process
48.26
& Logistics Ltd. Power supply 0.00 56.23 0
Bengang Group Dahe Industry
49.68
Co., Ltd. Power supply 0.00 18.17 0
Benxi Steel (Group) Industrial
4,244.18
Development Ltd. Material and parts 0.18 3,654.62 0.16
Benxi Steel (Group) Industrial
120.79
Development Ltd. Power supply 0.01 111.95 0.01
Benxi Steel (Group) Construction
5,058.73
Ltd. Material and parts 0.21 14.63 0
Benxi Steel (Group) Construction
401.68
Ltd. Power supply 0.02 447.73 0.02
Bengang Group Machinery Ltd. Power supply 1,339.91 0.06 1,807.37 0.08
Bengang Group Mineral Co., Ltd. Material and parts 55,517.41 2.31 83,266.60 3.72
Bengang Group Mineral Co., Ltd. Power supply 39,370.62 1.64 21,102.64 0.94
Bengang Group Mineral Co., Ltd. Freight income 459.91 0.02 499.76 0.02
Bengang Group New Industry
45.51
Development Co., Ltd. Power supply 0.00 32.95 0
Benxi Steel (Group) Repairing &
87.76
Building Ltd. Material and parts 0.00 169.73 0.01
Benxi Steel (Group) Repairing &
61.30
Building Ltd. Power supply 0.00 112.26 0.01
Bengang Group Metallurgy
8,999.65
Residue Ltd. Material and parts 0.37 6,808.84 0.3
Bengang Group Metallurgy
280.37
Residue Ltd. Power supply 0.01 3,637.7 0.16
Bengang Electronics Co., Ltd. Power supply 33.25 0.00 137.98 0.01
Bengang Puxiang Cool Rolling
378,172.84
Steel Sheet Co., Ltd. Products 15.72 322,960.34 14.45
Bengang Puxiang Cool Rolling
23,385.46
Steel Sheet Co., Ltd. Material and parts 0.97 25,427.75 1.14
Bengang Puxiang Cool Rolling
19,266.90
Steel Sheet Co., Ltd. Power supply 0.80 19,211.78 0.86
Bengang Group Thermal Power
4,245.53
Development Co., Ltd. Power supply 0.18 5,274.33 0.24
Bengang Group Thermal Power
2,976.63
Development Co., Ltd. Material and parts 0.12 4,036.66 0.18
Bengang Group Property Co., Ltd. Power supply 264.35 0.01 227.22 0.01
Bengang Fire-resistance Material
2,322.33
Co. Material and parts 0.10
Bengang Fire-resistance Material
672.60
Co. Power supply 0.03 3,825.04 0.17
Bengang Fire-resistance Material
68.52
Co. Freight income 0.00 1,334.8 0.06
Tianjin Bengang Steel Plate
112.37
Processing and Delivery Co., Ltd. Products 0.00 0.00 0.00
Total 582,837.74 24.23 560,231.01 25.06
56
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
3. Related transactions of purchasing of products and accepting of services In RMB 10
thousand
Amount of the Previous
Amount of the Current Term
Term
Subjects of the
Related parties Portion in Amount-{}- Portion in
related transactions Amount
annual trade annual trade
RMB0’000 % RMB0’000 %
Benxi Steel & Iron (Group) Ltd. Raw materials 18.92 0.00 128.12 0.01
Benxi Steel & Iron (Group) Ltd. Land using rights 2,871.30 0.13 0.00 0.00
Benxi Steel & Iron (Group) Ltd. Maintaining 12,443.89 0.58 7356.52 0.37
Bengang Puxiang Cool Rolling Steel
194,583.46 9.02
Sheet Co., Ltd. Raw materials 124,100.99 6.32
Bengang Group Mineral Co., Ltd. Repairing services 94.18 0.00 176.31 0.01
Bengang Group Mineral Co., Ltd. Raw materials 244,431.62 11.33 181,706.58 9.25
Bengang Group Mineral Co., Ltd. Transportation 0.00 0.00 3.59 0.00
Bengang Group Metallurgy Residue
4,247.47 0.20
Ltd. Raw materials 4,360.01 0.22
Bengang Group Steel Process &
56.65 0.00
Logistics Ltd. Process fee 220.74 0.01
Bengang Group Property
2,040.83 0.09
Development Ltd. Raw materials 3217.25 0.16
Bengang Group Property Co., Ltd. Rental 0.00 0.00 3.76 0.00
Property
8.72 0.00
Bengang Group Property Co., Ltd. management fee 164.73 0.01
Bengang Group Property Property
61.66 0.00
Management Center management fee 0.00 0.00
Bengang Group Machinery Ltd. Spare parts 15,785.40 0.73 16,767.73 0.85
Bengang Group Machinery Ltd. Repairing services 2,579.39 0.12 518.55 0.03
Bengang Group Machinery Ltd. Raw materials 92.69 0.00 132.29 0.01
Bengang Group Construction Ltd. Spare parts 4,498.07 0.21 547.32 0.03
Bengang Group Construction Ltd. Repairing services 28,081.12 1.30 22,163.08 1.13
Bengang Group Construction Ltd. Raw materials 139.46 0.01 527.88 0.03
Bengang Group Construction Ltd. Transportation 102.35 0.00 214.25 0.01
Benxi Steel (Group) Industrial
18.47 0.00
Development Ltd. Spare parts 26.26 0.00
Benxi Steel (Group) Industrial
14,189.66 0.66
Development Ltd. Raw materials 7,099.90 0.36
Benxi Steel (Group) Industrial
898.15 0.04
Development Ltd. Repairing services 656.02 0.03
Benxi Steel (Group) Industrial
264.20 0.01
Development Ltd. Transportation 585.3 0.03
Benxi Steel (Group) Construction
277.03 0.01
Ltd. Material and parts 1272.22 0.06
Benxi Steel (Group) Construction
4,884.46 0.23 7,501.75 0.38
Ltd. Maintaining
Bengang Electronics Co., Ltd. Raw materials 6,516.22 0.30 4779.39 0.24
Bengang Electronics Co., Ltd. Repairing services 447.64 0.02 1022.71 0.05
Benxi Steel (Group) Drilling Tools
982.03 0.05
Co., Ltd. Spare parts 926.69 0.05
Bengang Group New Industry
59.89 0.00
Development Co., Ltd. Labour security fee 103.92 0.01
Liaoning Metallurgy Technician
544.49 0.03
College Spare parts 837.69 0.04
Benxi Steel (Group) Information and
52.97 0.00
Automatic Tech. Ltd. Spare parts 349.45 0.02
Benxi Steel (Group) Information and
3,129.27 0.15
Automatic Tech. Ltd. Repairing services 2268.76 0.12
Bengang Group Thermal Power
100.16 0.00
Development Co., Ltd. Heating fee 11.74 0.00
Bengang Fire-resistance Material
14,521.98 0.67
Co. Raw materials 18,277.22 0.93
Bengang Designing & Researching
204.60 0.01
Institute Ltd. Repairing services 846.1 0.04
Benxi Steel (Group) Trucking Ltd. Freight 2,663.85 0.12 0.00 0.00
57
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
Amount of the Previous
Amount of the Current Term
Term
Amount-{}-
Amount
Total 561,892.25 26.05 408,874.82 20.81
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” on April 18, 2011 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 prices for steel billet are on current market price. In case of no market price available, the full
cost plus tax and reasonable profit will be adopted.
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 (tax excluded) per ton for 2011.
Cool plate and galvanized sheet are on market prices.
Fine iron ore supplied by the subsidiary of the Group located in HK to the Company are priced as sum
of purchase price of the subsidiary of the Group and the financial expenses occurred during the credit
period.Such prices shall not higher than the average price of fine iron ore in similar quality the
Company could purchase from the market plus the interest paid for domestic loans at the same period.
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.
58
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
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.
For the hot plate processing services provided by Bengang Group to the Company, the price is fixed to
RMB73 per ton, which is the practical processing cost of Bengang Group. The price will be
reconsidered once a year.
For the low-grade ore powder processing service provided by the Group to the Company, the price is
fixed to RMB50 per ton, which is the practical processing cost of Bengang Group. The price will be
reconsidered once a year.
For the iron resource (for instance steel residue or residue mud) processing service provided by the
Group to the Company, the price is decided according to the practical processing cost of Bengang
Group as the followings:
Refined steel residue powder: RMB325 per ton;
Dried residue mud: RMB154 per ton;
Minor type combined materials: RMB64 per ton;
Processing fees are reconsidered once a year.
Steel materials: For steel products provided by Bengang Group to the Company (including but not
limited to plates, long steels, and cast pipes), the prices shall be the weighted average of prices sold by
the Group to the 3rd parties in the previous month
Fuel and energy, supporting materials, equipment, spare parts: For the raw materials, fuel,
supplementing materials, equipment, and spare parts provided by Bengang Group to the Company, the
prices will be decided by the purchasing prices of the Group plus 0.5-1.5% of purchasing expenses.
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, ore ball, and chemical products manufactured by Bengang Steel Plates and provided to
Bengang Group are on market prices.
For steel billet provided by the Company to the Group, prices shall be decided by the market price of
the same month.
If no current market price available, the price shall be decided upon the complete cost of the month
plus national taxes and reasonable profit.
Steel and iron residue is on market price.
59
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
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.
4. Leasing to and from 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. During Jan – Jun 2011, the 2300mm hot
rolling line has primarily contributed profit of RMB500 million. RMB150 million of rental provided
in advance.
5. Guarantees provided amongst related parties
The guarantor The beneficiary Amount guaranteed Start date Due date Completed or not
Guarantees for bank
loans
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥100,000,000.00 2011-3-4 2012-3-3 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥100,000,000.00 2007-12-3 2012-7-25 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥70,000,000.00 2007-4-30 2014-4-29 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥130,000,000.00 2007-4-30 2014-4-29 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥100,000,000.00 2007-12-3 2012-7-25 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥400,000,000.00 2008-4-29 2013-4-15 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥100,000,000.00 2010-7-1 2013-6-30 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥300,000,000.00 2010-7-2 2013-6-1 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥310,000,000.00 2010-7-2 2013-7-1 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. ￥100,000,000.00 2010-4-29 2013-4-28 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. $60,000,000.00 2009-9-11 2012-9-10 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. $20,000,000.00 2009-9-25 2012-9-24 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. $20,000,000.00 2009-10-12 2012-8-24 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. $24,000,000.00 2009-10-20 2012-10-18 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. $20,000,000.00 2009-10-21 2012-10-5 No
Benxi Steel (Group) Ltd. Bengang Steel Plates Co., Ltd. JPY 382,423,928.57 1997-9-10 2027-9-10 No
Notes to guarantees amongst related parties: Benxi Steel & Iron (Group) Co., Ltd. provides guarantees
for long-term and short-term loans.
60
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
6. Receivable and payables due with related parties
Receivable accounts due from related parties
End of term RMB0’000 Beginning of term RMB0’000
Related parties Book Bad debt Book Bad debt
balance provision balance provision
Account receivable
Bengang Group Machinery Ltd. 9,469.11 698.83 8,729.28 698.83
Bengang Group Thermal Power Development
1,111.65 1,650.90
Co., Ltd.
Benxi Steel (Group) Repairing & Building Ltd. 1,519.99 1754.4
Benxi Steel (Group) Construction Ltd. 669.53 13.00 1,691.40 13.00
Benxi Steel (Group) Industrial Development
4,653.99 24.54 6,540.99 24.54
Ltd.
Bengang Group New Industry Development
387.46 282.76 651.91 282.76
Co., Ltd.
Bengang Group Metallurgy Residue Ltd. 1,422.27 2,176.32
Benxi Steel (Group) Medical Co. Ltd. 54.72 2.28 54.72 2.28
Sub-total 19,288.72 1,021.41 23,249.92 1021.41
Prepayments
Benxi Steel (Group) Repairing & Building Ltd. 901.21 0.00
Benxi Steel (Group) Construction Ltd. 6,287.17 2,295.51
Bengang Puxiang Cool Rolling Steel Sheet Co.,
0.00 516.94
Ltd.
Sub-total 7,188.38 0.00 2,812.45 0.00
Other account receivable
Bengang Group Inspection Co., Ltd. 25.00 25.00 25.00 25.00
Benxi Steel (Group) Information and Automatic
106.87 14.54 -
Tech. Ltd.
Benxi Steel (Group) Real-estate Development
571.21 11.15 700.4 11.15
Co., Ltd.
Benxi Steel (Group) Electronics Co., Ltd. 230.76 163.63
Benxi Steel (Group) Education Center 27.1 27.1
Benxi Steel (Group) Co., Ltd. 195.43 52.2
Sub-total 1,156.36 36.15 982.87 36.15
61
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
Account payable due to related parties
End of term Beginning of term
Related parties
RMB0’000 RMB0’000
Account payable
Bengang Group International Trading Ltd. 117,774.78 183,896.93
Bengang Fire-resistance Material Co. 9,579.67 9,844.87
Liaoning Bengang Steel & Iron Trading Co., Ltd. 283.66 457.33
Liaoning Metallurgy Technician College 323.51 979.03
Benxi Steel (Group) Drilling Tools Co., Ltd. 209.34 280.13
Bengang Group New Industry Development Co., Ltd. 3.86 775.14
Bengang Group Property Co., Ltd. 413.33 921.53
Bengang Group Construction Inspection Co., Ltd. 0.00 8.80
Bengang Group Machinery Ltd. 7,750.30 3,849.04
Benxi Steel (Group) Construction Ltd. 29,901.85 52,105.38
Bengang Group Mineral Co., Ltd. 59,279.62 45,136.74
Benxi Steel (Group) Industrial Development Ltd. 9,121.28 12,418.05
Benxi Steel (Group) Repairing & Building Ltd. 9,073.85 16,682.52
Bengang Group Metallurgy Residue Ltd. 889.49 2,118.73
Benxi Steel (Group) Information and Automatic Tech. Ltd. 4,143.85 3,436.69
Bengang Group Electronics Co., Ltd. 613.32 1,811.18
Benxi Steel (Group) Designing Institute 2,763.02 5,784.26
Benxi Steel (Group) Education Center 34.15 372.47
Benxi Steel (Group) Thermal Power Development Co., Ltd. 319.56 115.29
Sub-total 252,478.44 340,994.11
Notes payable
Benxi Steel (Group) Construction Ltd. 87.76 69.60
Benxi Steel (Group) Industrial Development Ltd. 286.57 994.69
Benxi Steel (Group) Drilling Tools Co., Ltd. 0.00 59.98
Liaoning Bengang Steel & Iron Trading Co., Ltd. 0.00 123.84
Bengang Group New Industry Development Co., Ltd. 0.00 16.63
Benxi Steel (Group) Information and Automatic Tech. Ltd. 96.18 14.50
Bengang Group Machinery Ltd. 0.00 15.04
Bengang Group Property Co., Ltd. 0.00 21.45
Bengang Electronics Co., Ltd. 15.41 32.00
Bengang Group Construction and Repairing Co., Ltd. 14.20 35.50
Liaoning Metallurgy Technician College 0.00 34.56
Sub-total 500.11 1,417.79
Other account payable
Bengang Group Machinery Ltd. 120.55 4.53
Benxi Steel (Group) Repairing & Building Ltd. 8.00 56.69
Benxi Steel (Group) Industrial Development Ltd. 185.47 354.13
Benxi Steel (Group) Construction Ltd. 523.01 783.98
Benxi Steel (Group) Information and Automatic Tech. Ltd. 49.45 87.54
Bengang Group New Industry Development Co., Ltd. 282.28 1.00
Benxi Electronics Co., Ltd. 21.23 1.00
Bengang Group Training Center 2.78 2.78
Bengang Group Mineral Co., Ltd. 82.97 3.54
Benxi Steel (Group) Ltd. 18,280.01 28,125.70
Benxi Steel (Group) News Center 216.79 422.69
Bengang Trucking & Transportation Co., Ltd. 2,019.48 2,047.21
Bengang Group Thermal Power Development Co., Ltd. 1,431.21 1,438.56
Sub-total 23,223.22 33,329.35
Advances received
Dalian Boluole Steel Tube Ltd. 702.14 1,146.25
Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. 37,838.87
Benxi Steel (Group) Steel Process & Logistics Ltd. 1,810.54 634.04
Benxi Steel (Group) Construction Ltd. 17.58 17.58
Benxi Steel (Group) Industrial Development Ltd. 17.86 1.85
Guangshou Free Trade Zone Bengang Sales Co., Ltd. 2,354.58 2,745.58
Benxi Steel (Group) Drilling Tools Co., Ltd. 1.02 120.18
Liaoning Bengang Steel & Iron Trading Co., Ltd. 5,057.01 3,932.11
Shanghai Bengang Steel & Iron Trading Co., Ltd. 1,848.13 548.13
Tianjin Bengang Steel Plate Processing and Delivery Co., 2,024.36 2,386.46
62
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
End of term Beginning of term
Related parties
RMB0’000 RMB0’000
Ltd.
Benxi Steel (Group) Machinery Co., Ltd. 57.17 233.05
Tianjin Bengang Longxing Steel Processing Co., Ltd. 1,599.14 300.00
Sub-total 53,328.38 12,065.23
VII. Contingent Events
No contingent event to be disclosed up to the date of this report.
VIII. Commitment Events
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 Statements
(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.
63
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
XI. Notes to the main items of the financial statements of the parent
company
(I) Account receivable
1. Account receivable
Ending balance Beginning balance
Category Bad debt Bad debt
Percentage Percentage
Book balance Bad debt provision provision Book balance Bad debt provision provision
in total % in total %
rate % rate %
Receivables with
major individual
amount and bad
debt provision
provided
individually
Receivables
provided bad
789,019,703.33 100.00 408,105,274.76 51.72 808,236,347.68 100.00 408,105,274.76 50.49
debt provision in
groups
Account
receivable with
minor individual
amount but bad
debt provision is
provided
Total 789,019,703.33 100.00 408,105,274.76 51.72 808,236,347.68 100.00 408,105,274.76 50.49
2. Bad debt provisions provided on receivable accounts in groups
Ending balance Beginning balance
Items Percentage of Percentage of
Book balance the total Bad debt provision Book balance the total Bad debt provision
receivable % receivable %
within 1 yr 309,072,834.17 39.17 329,323,169.55 40.75
1-2 yrs 35,030,478.79 4.44 1,952,646.53 39,052,930.65 4.83 1,952,646.53
2-3 yrs 47,190,666.96 5.98 8,426,904.82 42,134,524.07 5.21 8,426,904.82
Over 3 yrs 397,725,723.41 50.41 397,725,723.41 397,725,723.41 49.21 397,725,723.41
Total 789,019,703.33 100 408,105,274.76 808,236,347.68 100 408,105,274.76
3. No accounts receivable, which had been fully impaired or made a large proportion of bad debt
provision last year, has been fully recovered or taken back a huge proportion this year.
4. No accounts receivable has been written off this year
5. Top five receivable accounts
Relation
Portion in total
Name of the companies with the Amount Ages
receivables
Company
Bengang Stainless Cool-rolling (Dandong) Subsidiar
119,331,577.67 within 1 yr 15.12
Co., Ltd. y
Related
Bengang Group Machinery Ltd. parties
94,691,055.23 within 2 yrs 12.00
Benxi Steel (Group) Industrial Related
46,539,875.31 within 1 yr 5.90
Development Ltd. parties
China Petrol Goods Co. Supplier 17,514,730.46 within 1 yr 2.22
No.1 Tractor Factory Ltd. Forge Branch Supplier 17,255,614.26 within 1 yr 2.19
Total 295,332,852.93 37.43
64
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
6. Within the aforesaid balance, there is no amount due from the shareholders that hold 5% or more of
the company’s voting shares.
7. For accounts receivable due from related parties please go to Note VI.
(II) Other receivables
1. Other account receivable.
Ending balance Beginning balance
Category Percentag Bad debt Percentag Bad debt
Bad debt Bad debt
Book balance e in total provision Book balance e in total provision
provision provision
% rate % % rate %
Other receivables with
major individual
amount and bad debt
provision provided
individually
Other receivables
provided bad debt 368,862,779.64 99.53 73,933,493.35 20.04 292,919,204.96 99.41 73,933,493.35 25.24
provision in groups
Other account
receivable with minor
individual amount but 1,740,000.00 0.47 1,740,000.00 0.59
bad debt provision is
provided
Total 370,602,779.64 100.00 73,933,493.35 20.04 294,659,204.96 100 73,933,493.35 25.24
2. Bad debt provision provided upon other receivables in portfolios
Ending balance Beginning balance
Items Percentage of Percentage of
Bad debt Bad debt
Book balance the total Book balance the total
provision provision
receivable % receivable %
within 1 yr 278,143,663.03 75.05 201,454,501.88 68.77
1-2 yrs 10,248,029.57 2.77 455,467.98 9,109,359.62 3.11 455,467.98
2-3 yrs 10,952,391.19 2.96 2,219,329.52 11,096,647.61 3.79 2,219,329.52
Over 3 yrs 71,258,695.85 19.23 71,258,695.85 71,258,695.85 24.33 71,258,695.85
Total 370,602,779.64 100.00 73,933,493.35 292,919,204.96 100.00 73,933,493.35
3. Other receivables with insignificant amount but bad debt provision provided individually
Name of the
Book balance Bad debt provision Providing rate % Reason
companies
Japanese Loan
1,740,000.00 sinking fund
Sinking Fund of
Total 1,740,000.00
4. No other receivable account which has been fully provided of bad debt provision or in great portion
in previous period, whereas retrieved or written back in full or in great portion in current period.
5. No other receivable account practically deducted at end of period.
65
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
6. Top five debtors of other receivable accounts
Relation Portion in total
Descripti
Name of the companies with the Amount Ages other
on
Company receivables (%)
China Securities Depository &
Current within 1
Clearing Corporation Ltd. Shenzhen Agency
account
105,943,574.68
yr
28.59
Branch
Current within 1
Subsidiary 58,127,128.68 15.68
Yantai Bengang Steel Sales Ltd. account yr
within 1
Tax bureau Tax 40,941,936.61 11.05
National Tax Bureau Bengang Office yr
Current within 1
Subsidiary 15,225,999.59 4.11
Nanjing Bengang Steel Material Sales Ltd. account yr
Current within 1
Subsidiary 12,078,102.02 3.26
Changchun Bengang Steel Sales Ltd. account yr
232,316,741.58 62.69
Total
7. As of end of period, within the aforesaid balance, there is no amount due from the shareholders who
holds 5% or more the voting shares of the Company.
8. Please see Note VI for other account due from related parties.
66
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(III) Long-term equity investment
Statement on
Impairment Cash
Percentage of Voting differences
Calculating Beginning Balance at the end Impairment provision dividend of
Company invested in Investment cost Changed by share in the power in between the
basis balance of year provision provided this the current
firm % the firm % shareholding and
term term
voting rights
Haerbin Bengang
International Trading Cost basis 423,398.23 423,398.23 423,398.23 100.00 100.00
Ltd.
Changchun Bengang
Cost basis -1,355,124.64 -1,355,124.64 -1,355,124.64 100.00 100.00
Steel Sales Ltd.
Tianjin Bengang
Cost basis 33,318,095.80 33,318,095.80 33,318,095.80 100.00 100.00
Steel Trading Ltd.
Yantai Bengang Steel
Cost basis 19,600,329.41 19,600,329.41 19,600,329.41 100.00 100.00
Sales Ltd.
Nanjing Bengang
Steel Material Sales Cost basis 2,081,400.65 2,081,400.65 2,081,400.65 100.00 100.00
Ltd.
Wuxi Bengang Steel
Cost basis 936,718.57 936,718.57 936,718.57 100.00 100.00
Sales Ltd.
Xiamen Bengang
Cost basis 1,095,711.66 1,095,711.66 1,095,711.66 100.00 100.00
Steel Sales Ltd.
Guangzhou Bengang
Cost basis 1,000,000.00 1,000,000.00 1,000,000.00 100.00 100.00
Trade Co., Ltd.
Shanghai Bengang
Cost basis 5,000,000.00 5,000,000.00 5,000,000.00 100.00 100.00
Metallurgy Tech. Ltd.
Bengang Steel Plate
Liaoyang Orel Ball Cost basis 477,607,647.49 477,607,647.49 477,607,647.49 100.00 100.00
Co., Ltd.
Bengang Stainless
Cool-rolling Cost basis 390,000,000.00 260,000,000.00 130,000,000.00 390,000,000.00 100.00 100.00
(Dandong) Co., Ltd.
Dalian Benruitong
Automobile Material
Cost basis 65,000,000.00 65,000,000.00 65,000,000.00 65.00 65.00
Technologies Co.,
Ltd.
Tianjin Bengang
Longxing Steel Cost basis 3,888,980.00 3,888,980.00 3,888,980.00 20.00 20.00
Processing Co., Ltd.
China Steel Shanghai
Steel Processing Co., Cost basis 10,058,250.00 10,058,250.00 10,058,250.00 15.00 15.00
Ltd.
Total 1,008,655,407.17 878,655,407.17 130,000,000.00 1,008,655,407.17
67
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(IV) Operating income and operating cost
1. Operation income
Items Occurred current term Occurred in previous term
Major business turnover 20,722,113,757.54 18,526,041,285.83
Other business income 2,748,616,805.63 2,562,830,774.54
Total 23,470,730,563.17 21,088,872,060.37
Operation cost 21,218,162,916.22 18,444,526,168.35
2. Main business (industry segment)
Occurred current term Occurred in previous term
Items
Turnover Operation cost Turnover Operation cost
Industry 20,722,113,757.54 18,521,588,875.69 18,526,041,285.83 16,130,730,258.84
Total 20,722,113,757.54 18,521,588,875.69 18,526,041,285.83 16,130,730,258.84
3. Main business (product segment)
Occurred current term Occurred in previous term
Items
Turnover Operation cost Turnover Operation cost
Steel plate 20,326,331,505.97 18,170,540,518.82 18,196,996,431.83 15,846,201,935.86
Steel billet 3,928,917.19 3,235,556.50 1,061,485.60 774,784.32
Others 391,853,334.38 347,812,800.37 327,983,368.40 283,753,538.66
Total 20,722,113,757.54 18,521,588,875.69 18,526,041,285.83 16,130,730,258.84
4. Main business (geographic segment)
Occurred current term Occurred in previous term
Areas
Turnover Operation cost Turnover Operation cost
North east 7,046,949,986.34 6,298,619,532.82 5,721,286,849.78 4,921,366,634.24
North 3,175,710,110.63 2,838,474,768.82 2,950,157,361.71 2,582,586,552.70
East 5,118,029,315.56 4,574,535,008.62 4,430,136,638.33 3,878,169,841.81
Northwest 270,843,737.15 242,082,270.55 69,825,217.73 61,125,440.52
Mid-south 2,391,892,555.51 2,137,892,449.89 1,815,448,967.06 1,589,255,593.72
Export 2,718,688,052.35 2,429,984,844.98 3,539,186,251.22 3,098,226,195.84
Total 20,722,113,757.54 18,521,588,875.69 18,526,041,285.83 16,130,730,258.83
5. Top five clients’ principal operating revenue is as follows
Name of clients Total of principal turnover % in total main business income
Bengang Puxiang Cool Rolling Steel Sheet Co.,
3,758,411,808.87 18.14
Ltd.
Shanghai Bengang Metallurgy Tech. Ltd. 823,795,055.56 3.98
Hengxin National Resources Co., Ltd. 582,860,642.00 2.81
Yantai Bengang Steel Sales Ltd. 554,121,572.19 2.67
Tianjin Bengang Steel Trading Ltd. 461,416,320.07 2.23
Total 11,706,698,226.21 56.49
68
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(V) 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 491,945,046.02 685,501,932.68
Plus: Asset impairment provision
Fixed asset depreciation, gas and petrol depreciation, 950,754,929.64 1,027,830,862.93
production goods depreciation
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) 145,561,883.79 118,122,309.04
Investment losses (“-“ for gains)
Decrease of deferred income tax asset (“-“ for
increase)
Increase of deferred income tax liability (“-“ for
decrease)
Decrease of inventory (“-“ for increase) -1,485,822,924.27 -198,655,504.01
Decrease of operational receivable items (“-“ for -102,389,137.60 -6,296,499.92
increase)
Increase of operational payable items (“-“ for 1,019,307,500.70 -1,031,566,662.83
decrease)
Others
Cash flow generated by business operation, net 1,019,357,298.28 594,936,437.89
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 3,861,573,000.00 2,295,771,447.81
Less: Balance of cash at beginning of year 2,295,236,500.00 2,795,043,926.41
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 1,566,336,500.00 -499,272,478.60
69
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
XII.Supplementary Info.
(I) Details of non-recurring profit and loss of current term
Items Amount Remarks
Gain/loss of non-current assets 105,882.56
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 5,072,967.00
national policy , or in accordance with fixed standards or quantities
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 1,602,521.42
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 3,951,303.50
Other gain/loss items satisfying the definition of non-recurring gain/loss account
Influenced amount of income tax -2,683,168.62
Total 8,049,505.86
70
Bengang Steel Plates Co., Ltd. Notes to Interim Financial Statements 2011
(II)Net asset yield and Earnings per Share
Weighted Earnings per share
Profit of the report period average net
income/asset
ratio (%) Basic earnings per share Diluted earnings per share
Net profit attributable to common 3.93 0.190 0.190
shareholders of the Company
Net profit attributable to the common
owners of the PLC after deducting of 3.88 0.187 0.187
non-recurring gains/losses
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 22, 2011.
Bengang Steel Plates Co., Ltd.
August 24, 2011
71
