Bengang Steel Plates Co., Ltd. Annual Report 2015 Bengang Steel Plates Co., Ltd. Annual Report 2015 April 2016 1 Bengang Steel Plates Co., Ltd. Annual Report 2015 Chapter I. Important Prompts, Table of Contents, and Definitions The Board of Directors, The Supervisory Committee, the supervisors 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. Mr.Zhao Zhongmin, The Company leader, Mr.Han Ge , Chief financial officer and the Mr.Wang Shaoyu, the person in charge of the accounting department (the person in charge of the accounting )hereby confirm the authenticity and completeness of the financial report enclosed in this annual report. All of the directors attended the board meeting on which this report was examined. The prospective statements contained in the annual report do not constitute any substantial commitment to the investors. Investors please be aware of the risks attached to investment decisions. In the fourth chapter of this report---”The Managements Discussion and Analysis--Expectation on the Companys Future Development”, it describes the risks the company may face in its future operation, so its advised that all investors should look it up. This report is prepared both in versions of Chinese and English. The Chinese version shall prevail when there are any controversial statements in the two versions. The Company will not distribute cash dividend or bonus shares, neither capitalizing of common reserves for the report period. 2 Bengang Steel Plates Co., Ltd. Annual Report 2015 Table of Contents I.Important Notice, Table of contents and Definitions II. Basic Information of the Company and Financial index III. Outline of Company Business IV.Managements Discussion and analysis V. Important Events VI. Change of share capital and shareholding of Principal Shareholders VII. Situation of the Preferred Shares VIII. Information about Directors, Supervisors and Senior Executives IX. Administrative structure X. Financial Report XI. Documents available for inspection 3 Bengang Steel Plates Co., Ltd. Annual Report 2015 Definition Refers Terms to be defined Definition to Bengang Bancai, Bengang Steel, the Company, Refers Bengang Steel Plates Co., Ltd. the Listed Company to Refers Bengang Group Bengang Group Co., Ltd. to Refers Bengang Co. Benxi Steel (Group) Co., Ltd. to Refers Liaoning Provincial State-asset Administration Liaoning State-owned Asset Supervisory and Management Committee to Refers SSE Shenzhen Stock Exchange to Refers Bengang Puxiang Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. to 4 Bengang Steel Plates Co., Ltd. Annual Report 2015 II. Basic Information of the Company and Financial index Ⅰ.Company Information Stock ID Bengang Bancai, Bengangban B Stock Code 000761、200761 Stock Exchange Listed in Shenzhen Stock Exchange Name in Chinese 本钢板材股份有限公司 Chinese abbreviation 本钢板材 English name (If any) BENGANG STEEL PLATES CO.,LTD. English abbreviation (If any) BSP Legal representative: Zhao Zhongmin Reg. Add. No.16, Renmin Road, Pingshan District, Benxi City, Liaoning Province Post Code 117000 Office address No.16, Renmin Road, Pingshan District, Benxi City, Liaoning Province Post Code: 117000 Web Address None Email. bgbc761@126.com Ⅱ.Contact person and contact manner Secretary of the Board Representative of Stock Affairs Name Sun Yanbin Tong Weigang No.16, Renmin Road, Pingshan District, No.16, Renmin Road, Pingshan District, Address Benxi City, Liaoning Province Benxi City, Liaoning Province Tel. 024-47828860 024-47827003 Fax. 024-47827004 024-47827004 Email. bgbcsyb@126.com bgbc761@126.com III. Place for information disclosure Press media for information disclosure China Securities Journal, Securities Times, Hong Kong Commercial Daily Web address for the annual report as assigned by CSRC. http://www.cninfo.com.cn Place for inquiry of the annual report Secretary Office of the Board, Bengang Steel Plate Co., Ltd. 5 Bengang Steel Plates Co., Ltd. Annual Report 2015 IV. Change of Business Registration Organization Code 24269024-3 Changes in principal business activities No change since listing (if any) Changes is the controlling shareholder in No change the past (is any) V. Miscellaneous information CPA hired by the Company Name of the CPA BDO China Shu Lun Pan Certified Public Accountants LLP Address of the CPA Address: 4/F 61 Nanjing Rd. East, Huangpu, Shanghai Name of CPA signed on the Wu Xue, Zhang Huice auditors report Sponsoring institution hired by the Company, which is responsible to overseeing the Companys operation on a continuous basis: [] Applicable; [V] Not applicable Financial consultancy institution hired by the Company, which is responsible to overseeing the Companys operation on a continuous basis: [] Applicable; [V] Not applicable Ⅵ.Summary of Accounting data and Financial index May the Company make retroactive adjustment or restatement of the accounting data of the previous years due to change of the accounting policy and correction of accounting errors. √Yes □ No Changed over last year 2015 2014 2013 (%) Operating Gross income(RMB) 29,253,638,605.80 41,422,088,025.70 -29.38% 40,329,344,514.29 Net profit attributable to the shareholders of the listed company -3,293,624,545.17 232,804,820.19 -1,514.76% 275,592,999.75 (RMB) Net profit after deducting of non-recurring gain/loss attributable -3,452,130,239.63 187,126,217.32 -1,944.81% 56,290,264.91 to the shareholders of listed company(RMB) Cash flow generated by business -2,305,005,968.10 2,868,140,094.86 -180.37% 2,687,944,078.48 operation, net(RMB) Basic earning per -1.050 0.074 -1,518.92% 0.088 6 Bengang Steel Plates Co., Ltd. Annual Report 2015 share(RMB/Share) Diluted gains per -1.050 0.074 -1,518.92% 0.088 share(RMB/Share)(RMB/Share) Net asset earning ratio(%) -24.11% 1.52% -25.63% 1.75% End of Changed over last year End of 2015 End of 2013 2014 (%) Gross assets(RMB) 44,461,643,345.33 49,170,603,030.67 -9.58% 43,050,307,324.66 Net assets attributable to shareholders of the listed company 11,934,100,372.02 15,384,562,323.08 -22.43% 15,308,337,697.63 (RMB) Ⅶ.The differences between domestic and international accounting standards 1.Simultaneously pursuant to both Chinese accounting standards and international accounting standards disclosed in the financial reports of differences in net income and net assets. √Applicable □ Not applicable Net profit attributable to the shareholders Net Assets attributable to the of the listed company shareholders of the listed company Amount in the Amount in the End of the reporting Beginning of the reporting period previous period period reporting period According to CAS -3,293,624,545.17 232,804,820.19 11,934,100,372.02 15,384,562,323.08 Items and amount adjusted according to IAS 2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards. √Applicable □ Not applicable □ Applicable √Not applicable Net profit attributable to the shareholders Net Assets attributable to the of the listed company shareholders of the listed company Amount in the End of the reporting End of the reporting Beginning of the previous period period period reporting period According to CAS -3,293,624,545.17 232,804,820.19 11,934,100,372.02 15,384,562,323.08 Items and amount adjusted according to IAS The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or Chinese GAAP(Generally Accepted Accounting Principles) in the period. 7 Bengang Steel Plates Co., Ltd. Annual Report 2015 3.Accounting data differences between domestic and foreign accounting standards □ Applicable √Not applicable Ⅷ.Main Financial Index by Quarters In RMB First quarter Second quarter Third quarter Fourth quarter Operating revenue 9,571,892,099.49 6,773,023,061.69 5,018,448,900.24 7,890,274,544.38 Net profit attributable to the 71,707,881.99 56,299,254.27 35,104,914.65 -3,456,736,596.08 shareholders of the listed company Net profit after deducting of non-recurring gain/loss attributable 52,169,643.70 53,111,615.06 35,098,170.03 -3,592,509,668.42 to the shareholders of listed company Net Cash flow generated by 601,173,782.82 -2,479,304,756.71 478,017,027.96 -904,892,022.17 business operation Whether significant variances exist between the above financial index or the index with its sum and the financial index of the quarterly report as well as semi-annual report index disclosed by the Company. □ Yes √No Ⅸ.Items and amount of non-current gains and losses √Applicable □Not applicable In RMB Items Amount (2015) Amount (2014) Amount (2013) Notes Non-current asset disposal gain/loss(including the write-off part for -2,918,523.73 -3,000,928.56 -12,804,674.19 which assets impairment provision is made) Govemment subsidy recognized in current gain and loss(excluding those closely related 136,992,233.61 18,722,224.00 159,439,621.71 to the Companys business and granted under the states policies) Gain/loss from commissioned investment or 7,226,589.08 20,845,473.00 12,600,032.95 assets Gain/loss from debt reorganization 12,200,032.42 5,940,400.95 17,709,392.13 Current net gain/loss of subsidiaries under same control from beginning of term till 33,226,800.18 date of consolidation Other non-business income and expenditures 5,644,831.10 5,156,149.77 9,465,980.04 8 Bengang Steel Plates Co., Ltd. Annual Report 2015 other than the above Less: Influenced amount of income tax 639,468.02 710,902.39 -624,726.31 Influence on minority shareholders 1,273,813.90 959,144.29 equity (after tax) Total 158,505,694.46 45,678,602.87 219,302,734.84 -- For the Companys non-recurring gain/loss items as defined in the Explanatory Announcement No.1 on information disclosure for Compaines Offering their Securities to the Public-Non-recurring Gains and Losses and its non-recurring gain/loss items as illustrated in the Explanatory Announcement No.1 on information Disclosure for Companies offering their securities to the public-non-recurring Gains and losses which have been defined as recurring gains and losses, it is necessary to explain the reason. □ Applicable√ Not applicable None of Non-recurring gain /loss items recorgnized as recurring gain /loss/items as defined by the information disclosure explanatory Announcement No.1- Non –recurring gain/loss in the report period. 9 Bengang Steel Plates Co., Ltd. Annual Report 2015 III. Outline of Company Business Ⅰ.Main Business the Company is Engaged in During the Report Period (I). During the reporting period, the main businesses of the company are as followings, iron and steel smelting, electricity generation, coal chemical industry, special steel profile, railway, import and export trade, research & development, product sales, etc.,. By introducing the world-advanced equipment technology, the company upgrades the equipments for main steel business and has basically built up a high-quality steel product base of 60 varies and 7,500-odd specifications. Wherein, high value-added and high-tech products take up more than 85%. Its leading products, such as automobile surface plate, household appliance, petroleum pipe line, container plate and boat deck, are widely applied in many fields, including automobile, household appliances, petrochemical engineering, machine manufacturing, energy transportation, architectural decoration, metal parts, etc., and they are exported to more than 60 countries and regions. During the reporting period, the company strengthens its innovation of marketing service, further matures its system of marketing, research and production, optimizes its regional distribution, stabilizes its distribution channel, and increases the profits generated from varieties, specifications and in different regions. By comparing the benchmark price, purchasing at an appropriate time, replacing the variety, adjusting the structure, infomationizing procurement and other measures, it serves the economic operation. Through a scientific adjustment of production organization model in different production lines and a guiding orientation of”economic operation, cost-reduction and profit-increment”, it promotes different working procedures and production to proceed in a stead and smooth manner, while the quality of economic operation is improving steadily. During the reporting period, the main performance-driving factors are: it deepens enterprise reform roundly, integrates energy medium system to establish a main energy plant, achieves a specialized management of energy medium and economic operation, and the product research institute sets up a broadband salary system which applies to the R&D staff group and uses ”Responsibility, technology, contribution ans such factors” to participate in the distribution of salary; it makes clear the guiding ideology, planning target, development principle, implementation approach, development direction, safeguard measures, etc., of the 13th five-year development plan; it quickens the construction of major technical improvement projects, cold-rolled high-strength steel project went into pilot production stage successively, and the 360 square-meter sintering machine is put into use; it improves its technology research and development system, builds a technological innovation platform, perfects its technological management system and incessantly enhances its core competitiveness. During the reporting period, the contents above had no major changes. (II) During the reporting period, the iron and steel industry the company is has over-excessive productivity, the overall demand size is shrinking continuously, the market price plunges into a bottom low, the price of rolled steel drops to a lowest point in recent 20 years, and the whole market is suffering losses; the iron and steel enterprises are facing a exacerbating environment. Through a deepening reform and management innovation, it narrows the economic benefit decline extent effectively, and the overall strength of the company maintains above the middle level in the whole industry. 10 Bengang Steel Plates Co., Ltd. Annual Report 2015 Ⅱ.Major Changes in Main Assets 1. Major Changes in Main Assets Main assets Major changes On December 31, 2015, the monetary funds were RMB 5140.4805 million, a decrease of 47.51% compared to the beginning balance of the period, which was mainly due to the Monetary funds increase of cash payments for the purchasing of fixed assets, intangible assets and other long-term assets. On December 31, 2015,the Prepayments were RMB569.852 million, a decrease of Prepayments 53.91% compared to the beginning balance of the period,Mainly due to the increase of the settlement of goods payment in advance in the current period On December 31, 2015,the Interest receivable were RMB 3.52 million , a decrease of Interest receivable 49.73%,Mainly due to the decrease of the certificates of deposit in the current period. On December 31, 2015,the other account receivable were RMB151.6689 million , a Other account receivable decrease of 41.15% compared to the beginning balance of the period,Due to the increase of the recovery of the accounts receivable in the current period. On December 31, 2015,the Engineering material were RMB 4.1529 million , decrease Engineering material of 95.4% compared to the beginning balance of the period,Due to the increase in the occupied use of the project materials in the current period. On December 31, 2015,the Deferred income tax asset were RMB641.9311 million, a Deferred income tax asset increase of 253.69%% compared to the beginning balance of the period,Due to the deferred deductible loss in the current period. 2. Main Conditions of Overseas Assets □ Applicable √Not applicable Ⅲ.Analysis On core Competitiveness By focusing on ”innovation-driving” orientation, the company puts more emphasis on variety R&D and structural adjustment, improves its technological R&D system, builds a technological innovation platform, perfects its technological management system and incessantly enhances its core competitiveness. 1. Reinforce the efforts on new product R&D. Intensify new product R&D, accelerate structural adjustment and product upgrading, research and develop 111 new products, including ultrahigh strength stamp steel(PH1500), high-strength wheel steel(RS590), gear steel(21NiCrMo5H), high-vanadium centrifugal roller and other products. Wherein, high value-added products take up more than 85%, thus its product structure is becoming streamlined and high-end. It has 35 various kinds of product certifications. 23 products can be supplied in bulk, while 7 products has passed the certifications by international well-known enterprises, such as GM and Toyta. 2. Actively conduct ”early involvement of strategic products”. With the construction of the third cold rolling factory as an opportunity, the company sets up special work team for tasks, such SMS technology, third cold 11 Bengang Steel Plates Co., Ltd. Annual Report 2015 rolling quality execution system and PetroChina, Sinopec pipeline engineering, etc. By applying an ”early involvement” of high-end automobile steel, household steel, pipeline steel and other strategic products, it ensures the systematicness and consistency of R&D relationship for major steel varieties, thus remarkably improving the efficiency of market development, scientific exploration and contract execution. 3. Accelerate the construction of industry chain-like technological innovation platform. ”Liaoning Automobile Steel Industry Technology Innovation Platform” is advancing now. ”Benxi Steel-Brillance-Dongbei University United Laboratory for auto steel” has officially been listed and went into operation. ”National and Regional United Engineering Laboratory for Advanced Auto Steel Development and Application Technology” has been upgraded to National Auto Plate engineering laboratory. 4. Strengthen the innovation of the supporting technology for R&D team construction. Replying on academician, expert workstations and post-doctoral R&D workstations, it focuses on national industrial revitalization planning, reinforces key, frontier and fundamental researches and R&D of new materials, and provides high-level external intellectual support.to enhance the product R&D and innovation ability, it further consolidates the internal R&D system construction that is centered on product R&D institute, additionally increases the construction of advanced high-strength product research institute, auto surface technology research institute, user service technology institute, cold rolling (plating) product technology research institute, etc., further refines the varieties of R&D, undertakes to develop high-end steel product and advanced steel manufacture technology and improve the market competitiveness of products. IV. Management’s Discussion and Analysis Ⅰ.General During the reporting period, the macroeconomic growth of china had been continuously slowing, so the business situation of the steel industry was very grim, that the entire industry had a large extent of loss, and the steel plates companies were faced with unprecedented challenges. The total production of pig iron in the year was 9.46 million tons,raw steel of 9.33 million tons, hot-rolled plated was 11.09 million tons, Cool-rolled plates 3.52 million tons , and special steel 680 thousand tons.Reviewing the work of the year, the company mainly focused on the following aspects: 1 . Enhanced the innovation of sales service, and the syntheses system of sales-R&D-production was further improved. The company persisted on the market-oriented strategy, focused on the efficiency, actively explored the market, increased the intensity to adjust the products structure, made innovations to the sales management mode, comprehensively explored and expanded the sales channel. Optimized the regional layout, striving to increase the product categories and the scale proportion of products which have profits, so as to adapt the market and meet customers requirements. 2. Implemented the delicacy management of the costs and comprehensively dug the potentials and increased the efficiency to reduce costs. Adhered to the principle of maximizing economic benefits, optimized procurement strategy and made innovations of production organization mode. Par with the domestic and foreign advanced steel enterprises, actively carried out the work of tapping potential of the key processes, pushed forward the costs control ability to further continuously enhanced. 12 Bengang Steel Plates Co., Ltd. Annual Report 2015 3. Scientifically and efficiently organized the production, the operation level of the production line was further stably enhanced. Focused on the economic operation and reduce costs by increasing efficiency, scientifically adjusted the organization mode of each production line, promoted the stable and smooth operation of each production line, thus the quality of the economic operation was steadily enhanced. 4. Adhered to making innovations for driving source, and the ability of making innovations and enhancing efficiency on the products was significantly improved. Sparing no efforts to carry out the R&D of the products, the product certification and the key technology breakthrough, actively sought the national policy, deepened the external cooperation, promoted the construction of the R&D platform and effectively raised the ability and the level of making technology innovations transferred into proceeds. 5. Efficiently implemented the transformation of the equipments, and continuously optimized the development layout of the companys strategy. Strictly controlled the investment in fixed assets and soundly and effectively carried out the optimization and transformation and upgrading of the key equipments. Based on the adjustment of the product structure, raised the products grade and impelled the energy conservation and emission reduction, so the energy projects and key energy-saving projects achieved remarkable results. 6. Strengthened the main body responsibility of safety and soundly improved the level of safety management in production. Comprehensively implemented the requirement of safety production as” Same responsibility for party and managing, dual responsibility of one post, jointly supervising and managing”, so as to strength the responsibility system of safety production. Comprehensively implemented the special inspection of the safety production, the overhaul of hidden hazards and so forth fundamental works, thus the company realized the goal of “Zero Accident” on big personnel accident, big fire accident and big equipment accident. 7. Implemented according to the environmental laws and regulations, the ecological civilization construction had achieved remarkable results. Fully implemented by conforming to the Law of Environmental Protection and the new standard of pollutant emission, greatly promoted the implementation of key environmental protection projects, actively carried out the comprehensive managing of the factory environments and fully completed the goal of pollutant emission reduction and the blue-sky project of the "Twelfth Five Year Plan". 8. Comprehensively deepened the enterprise reform and constantly consolidated the fundamental management of the company. Constantly optimized the institution and the mechanism on organization structure set-up, process improvement, adjustment of internal organization and so forth aspects, thus effectively improved and smoothed the management structure and raised the efficiency of the management. The company raised the operation efficiency by means of resources integration and organization structure optimization and so forth measures. Ⅱ.Main business analysis 1. General Change over Same period last This report term same period last Cause of change year year Turnover 29,253,638,605.80 41,422,088,025.70 -29.38% Operation cost 29,811,895,016.85 38,489,119,026.43 -22.54 13 Bengang Steel Plates Co., Ltd. Annual Report 2015 Sales expense 919,110,499.37 863,079,137.09 6.49 Administrative expense 733,933,299.88 899,624,299.29 -18.42 Financial expenses 1,063,317,455.47 717,292,853.39 48.24% Increase of exchange loss Due to the increase of cash payments for the Cash flow generated by -4, purchasing of fixed assets, intangible assets 4,874,611,555.66 -196.71% business operation, net 714,249,257.09 and other long-term assets in the current period. 2. Revenue and cost (1)Component of Business Income In RMB 2015 2014 Increase /decrease Amount Proportion Amount Proportion Total operating 29,253,638,605.80 100% 41,422,088,025.70 100% -29.38% revenue Industry Steel rolling business 29,253,638,605.80 100.00% 41,422,088,025.70 100.00% -29.38% Products Steel plate 27,063,270,882.63 92.51% 37,864,959,678.06 91.41% 1.10% Steel billet 10,347,159.33 0.02% -0.02% Other 2,190,367,723.17 7.49% 3,546,781,188.31 8.56% -1.08% Area Northeast 9,803,296,279.78 33.51% 12,713,075,400.88 30.69% 2.82% North 2,250,800,509.79 7.69% 4,280,717,411.13 10.33% -2.64% East 8,734,382,778.07 29.86% 12,613,036,561.55 30.45% -0.59% Northwest 11,624,769.33 0.04% 20,892,279.00 0.05% -0.01% Southwest 24,550,759.64 0.08% 42,004,974.77 0.10% -0.02% Mid-south 46,760,817.03 0.16% 1,062,573,192.15 2.57% -2.41% Export 8,382,222,692.16 28.65% 10,689,788,206.22 25.81% 2.85% (2)Situation of Industry, Product and District Occupying the Company’s Business Income and Operating Profit with Profit over 10% □Applicable □Not applicable In RMB (3)Whether the Company’s Physical Sales Income Exceeded Service Income √ Yes □ No Categories Items Unit 2015 2014 Change over same 14 Bengang Steel Plates Co., Ltd. Annual Report 2015 period last year Sales Ton 11,610,741.31 12,343,978.13 -5.94% Steel rolling business Output Ton 11,597,504.49 12,639,120.5 -8.24% Inventory Ton 786,842.86 800,079.68 -1.65% Explanation for a year-on –year change of over 30% □Applicable √Not applicable (4)Degree of Performance of the Significant Sales Contract Signed up to this Report Period □ Applicable √Not applicable (5)Component of business cost Industry and product classification In RMB 2015 2014 Proportion in the Proportion in the Increase/Decrease Industry Items Amount operating costs Amount operating costs (%) (%) (%) Steel rolling 12,942,748,210.3 17,944,675,875.3 Raw materials 43.41% 46.62% -2.32% business 9 7 Steel rolling Auxiliary 1,499,459,834.85 5.03% 1,894,098,710.57 4.92% 0.08% business material Steel rolling Spare parts and 400,614,031.86 1.34% 506,123,592.75 1.31% 0.02% business tools Steel rolling Fuel 7,709,142,042.53 25.86% 9,743,040,776.86 25.31% 0.82% business Steel rolling Power 2,729,440,767.73 9.16% 2,985,488,175.62 7.76% 1.38% business Steel rolling Wage and welfare 1,808,829,930.51 6.07% 2,029,415,195.35 5.27% 0.38% business Steel rolling Depreciation 1,824,882,394.51 6.12% 1,998,507,273.26 5.19% 0.22% business Steel rolling Others 896,777,804.48 3.01% 1,387,769,426.66 3.61% -0.59% business Steel rolling 29,811,895,016.8 38,489,119,026.4 Total 100.00% 100.00% 0.00% business 5 4 Notes (6)Whether Changes Occurred in Consolidation Scope in the Report Period √Yes □ No The scope of the consolidated financial statements of the current period has been added the newly established subsidiaries of Benxi Bengang Steel Sales Co., Ltd and Shenyang Bengang Metallurgy Technology Co., Ltd. 15 Bengang Steel Plates Co., Ltd. Annual Report 2015 (7)Relevant Situation of Significant Changes or Adjustment of the Business, Product or Service in the Company’s Report Period □ Applicable √Not applicable (8)Situation of Main Customers and Main Supplier Information of the Companys top 5 customers Total sales amount to top 5 customers (RMB) 3,366,288,172.64 Proportion of sales to top 5 customers in the 11.51% annual sales(%) Information about the top 5 suppliers No Name Amount9RMB) Pr 1 Hangzhou Hot Joint (Hongkang) Co., Ltd. 975,097,271.75 3.33% 2 Bengang Group Mineral Co., Ltd. 857,712,417.33 2.93% 3 Liaoning Benxi Iron & steel Trade Co., Ltd. 587,660,157.07 2.01% Benxi Iron & Steel (Group) steel 4 479,903,850.06 1.64% processingand distribution Co., Ltd. 5 Hengxing International Resources Co., Ltd. 465,914,476.43 1.59% Total -- 3,366,288,172.64 11.51% Other Notes: □ Applicable √Not applicable Principal suppliers Total purchase of top 5 Suppliers(RMB) 13,265,340,262.95 Percentage of total purchase of top 5 suppliers In total 44.50% annual purchase(%) Information about the top 5 suppliers No Name Amount(RMB) Proportion Benxi Beiying Steel & Iron (Group) Co., 1 4,864,114,258.45 16.32% Ltd. 2 Bengang Group Mineral Co., Ltd. 3,555,038,605.53 11.92% Liaoning Power Supply Co., Ltd. Benxi 3 2,272,870,547.82 7.62% Branch Heilongjiang Longmei Minning Group 4 2,066,833,891.89 6.93% Co., Ltd. 5 Jiaozuo Guolong Logistics Co., Ltd. 506,482,959.26 1.70% Total -- 13,265,340,262.95 44.50% Other notes : 16 Bengang Steel Plates Co., Ltd. Annual Report 2015 □ Applicable √Not applicable 3.Expenses In RMB Increase/Decrea 2015 2014 Notes se(%) Sale expenses 919,110,499.37 863,079,137.09 6.49% Administration 733,933,299.88 899,624,299.29 -18.42% expenses Financial expenses Due to the increase of exchange loss 1,063,317,455.47 717,292,853.39 48.24% caused by the devaluation of RMB in the current period. 4.R& D Expenses √Applicable □Not applicable Situation of Research and Development Input by the Company 2015 2014 Increase/Decrease(%) Number of Research and 1,502 1,571 -4.39% Development persons (persons) Proportion of Research and 6.98% 6.95% 0.03% Development persons Amount of Research and Development Investment (In 1,531,589,000.00 2,550,780,000.00 -39.96% RMB) Proportion of Research and 5.24% 6.16% -0.92% Development Investment Amount of Capitalization Research and Development 0.00 0.00 0.00% Investment of Research and Development Investment Proportion of Capitalization Research and Development 0.00% 0.00% 0.00% Investment of Research and Development Investment The Reason of the Prominent Change in Total Amount of Research and Development Input Occupying the Business Income Year on Year √Applicable □Not applicable Explanation of the Reason for Substantial Changes in the Research and Development Inputs Capitalization Rate 17 Bengang Steel Plates Co., Ltd. Annual Report 2015 and Its Reasonableness □ Applicable √ Not applicable 5.Cash Flow In RMB Items 2015 2014 Increase/Decrease(%) Subtotal of cash inflow received 24,571,589,646.08 27,563,063,923.62 -10.85% from operation activities Subtotal of cash outflow received from operation 26,876,595,614.18 24,694,923,828.76 8.83% activities Net cash flow arising from -2,305,005,968.10 2,868,140,094.86 -180.37% operating activities Subtotal of cash inflow received 1,775,980,060.32 8,239,533,447.80 -78.45% from investing activities Subtotal of cash outflow for 5,219,745,508.10 8,326,807,425.53 -37.31% investment activities Net cash flow arising from -3,443,765,447.78 -87,273,977.73 3,845.92% investment activities Subtotal cash inflow received 27,146,081,641.78 20,842,507,551.86 30.24% from financing activities Subtotal cash outflow for 26,180,913,966.24 18,728,415,564.97 39.79% financing activities Net cash flow arising from 965,167,675.54 2,114,091,986.89 -54.35% financing activities Net increase in cash and cash -4,714,251,257.09 4,874,611,555.66 -196.71% equivalents Notes to the year-on-year change of the relevant data √Applicable □ Not applicable (1) Net cash flow arising from operating activities has increased by 94.79% in the period than that of last year. The main reason was the decrease in cash received in the sale of goods and the rendering of service in the current period. (2)Subtotal of Cash inflow received from investing activities decreased by 78.45% in the period than that of last year, The main reason was the decrease of the purchase of bank financial products in the current period. (3)Subtotal of cash outflow for investment activities decreased by 37.72%% in the period than that of last year,The main reason was the decrease of the purchase of bank financial products in the current period. (4)Net cash flow arising from investment activities increased by 3807.22%% in the period than that of last year, The main reason was the increase of cash payments for the purchasing of fixed assets, intangible assets and other 18 Bengang Steel Plates Co., Ltd. Annual Report 2015 long-term assets in the current period (5)Subtotal cash inflow received from financing activities increased by 30.24% in the period than that of last year The main reason was the increase in cash received from the financing activities in the current period (6)Subtotal cash outflow for financing activities increased by 39.51% in the period than that of last year.,The main reason was the increase of loan repayment in the current period (7)Net cash flow arising from financing activities decreased by 51.85% in the period than that of last year,The main reason was the increase of loan repayment in the current period (8)Net increase in cash and cash equivalents decreased by196.71% in the period than that of last year.,The main reason was that the cash payments for the purchasing of fixed assets, intangible assets and other long-term assets increased and the net borrowing decreased in the current period compared with the last year. Notes to the big difference between cash flow from operating activities and net profit in the reporting year □Applicable √Not applicable Ⅲ.Analysis of Non-core Business √ Applicable □Not applicable Proportion in total Amount Explanation of cause Sustainable (yes or no) profit Investment incme 7,226,589.08 -0.20% Foreign financial revenue Yes Impairment of 514,276,448.24 -13.97% Inventor depreciation No assets Non-operating 176,054,356.57 0.60% income Non-operating 24,135,783.17 0.08% expenses Ⅳ.Condition of Asset and Liabilities 1.Condition of Asset Causing Significant Change In RMB End of 2015 End of 2014 Proportio Proportion in Proportion in n Notes to the significant change Amount the total Amount the total increase/d assets(%) assets(%) ecrease 5,140,480,509. 9,792,940,409. Monetary fund 11.56% 19.92% -8.36% 97 40 Accounts 488,584,624.7 1.10% 487,767,042.22 0.99% 0.11% receivable 2 8,601,734,442. 11,008,413,817 Inventories 19.35% 22.39% -3.04% 42 .92 19 Bengang Steel Plates Co., Ltd. Annual Report 2015 20,046,254,72 17,144,282,253 Fixed assets 45.09% 34.87% 10.22% 6.74 .99 Construction 5,646,624,293. 6,126,175,722. 12.70% 12.46% 0.24% inprocess 27 67 18,139,885,59 18,187,945,675 Short-term loans 40.80% 36.99% 3.81% 6.60 .93 1,005,919,974. Long-term loans 2.26% 814,627,465.85 1.66% 0.60% 09 2.Asset and Liabilities Measured by Fair Value √ Applicable □Not applicable Ⅴ.Investment situation 1. General □Applicable √Not applicable 2.Condition of Acquiring Significant Share Right Investment during the Report Period □Applicable √Not applicable 3.Situation of the Significant Non-equity Investment Undergoing in the Report Period □ Applicable √ Not applicable 4.Investment of Financial Asset (1)Securities investment □ Applicable √ Not applicable (2)Investment in Derivatives □ Applicable √ Not applicable 5.Application of the raised capital □ Applicable √ Not applicable 20 Bengang Steel Plates Co., Ltd. Annual Report 2015 Ⅵ.Significant Asset and Right Offering 1.Situation of Significant Asset Sale □ Applicable √ Not applicable 2.Situation of Substantial Stake Sale □ Applicable √ Not applicable Ⅶ.Analysis of the Main Share Holding Companies and Share Participating Companies √Applicable □Not applicable Situation of Main Subsidiaries and the Joint-stock Company with over 10% net profit influencing to the Company In RMB Company Sectors Registered Operating Company type Total assets Net assets Turnover Net Profit Name engaged in capital profit Guangzhou Bengang 184,322,884. 65,978,274.0 1,026,913,19 15,327,601.4 11,443,214.3 Subsidiaries Sales of steel 1,000,000.00 Trade Co., 81 9 4.98 6 2 Ltd. Shanghai Bengang 19,200,000.0 524,564,395. 142,197,800. 2,830,209,44 42,075,917.6 31,504,168.9 Subsidiaries Sales of steel Metallurgy 0 13 76 1.59 2 1 Tech. Ltd. Bengang Steel Plate Production of 10,000,000.0 704,270,149. 643,218,003. 247,265,566. Liaoyang Subsidiaries 662,331.08 474,453.21 pellet 0 68 20 19 Orel Ball Co., Ltd. Dalian Benruitong Processing Automobile 100,000,000. 360,429,186. 83,562,219.2 353,756,953. -13,876,589. -13,663,448. Subsidiaries and sales of Material 00 21 9 63 80 71 steel Technologies Co., Ltd. Bengang Processing Puxiang Cool 1,920,000,00 4,035,223,21 1,902,985,09 5,242,586,23 229,911,403. 229,913,579. Rolling Steel Subsidiaries and sales of Sheet Co., 0.00 3.72 0.80 7.97 35 94 steel Ltd. Changchun 86,204,135.8 13,723,478.5 500,145,430. Bengang Subsidiaries Sales of steel 500,000.00 3,773,373.02 2,810,282.53 1 4 88 Steel Sales 21 Bengang Steel Plates Co., Ltd. Annual Report 2015 Ltd. Haerbin Bengang 26,460,248.1 236,502,953. Subsidiaries Sales of steel 500,000.00 762,376.17 -552,833.37 -41,451.06 International 7 93 Trading Ltd. Nanjing Bengang 48,862,979.8 30,434,990.2 89,207,437.9 Steel Subsidiaries Sales of steel 1,150,000.00 1,391,811.18 1,043,274.68 4 5 3 Material Sales Ltd. Wuxi Bengang 111,644,855. 16,884,108.8 726,240,323. Subsidiaries Sales of steel 1,000,000.00 7,053,734.40 5,771,805.27 Steel Sales 82 7 25 Ltd. Xiamen Bengang 24,638,101.9 14,496,840.1 35,991,389.0 Subsidiaries Sales of steel 500,000.00 307,356.25 1,616,300.49 Steel Sales 1 1 4 Ltd. Yantai Bengang 231,927,467. 74,934,212.2 1,074,336,95 -2,630,634.1 -2,530,545.9 Subsidiaries Sales of steel 500,000.00 Steel Sales 00 1 9.68 8 8 Ltd. Tianjin Bengang 80,539,126.8 12,155,784.5 396,148,054. -29,707,169. -29,705,097. Subsidiaries Sales of steel 3,000,000.00 Steel Trading 5 6 47 06 04 Ltd. Shenyang Benxi Steel Metallurgy Subsidiaries Sales of steel 5,000,000.00 5,001,708.33 5,001,281.25 1,708.33 1,281.25 Technology Co., Ltd. Bengang Steel Sales Subsidiaries Sales of steel 5,000,000.00 5,001,056.57 5,000,792.43 1,056.57 792.43 Ltd. Suzhou Bengang Shareholding 20,000,000.0 43,180,021.0 20,039,616.7 278,913,744. Sales of steel 88,592.66 70,819.03 Industrial company 0 5 5 03 Co., Ltd. China Steel Shanghai 89,042,954.0 596,568,911. 713,850,328. -97,083,132. -96,927,543. Shareholding Steel Sales of steel 8,356,659.31 company 0 14 65 03 89 Processing Co., Ltd. Zhejiang Bengang 10,000,000.0 87,895,508.4 12,099,554.7 161,238,377. Shareholding Jingrui Steel Sales of steel 671,871.63 633,849.34 company 0 6 9 43 Processing Ltd. Acquirement and disposal of subsidiaries in the Reporting period □ Applicable √ Not applicable Notes 22 Bengang Steel Plates Co., Ltd. Annual Report 2015 Ⅷ.Special purpose vehicle controlled by the Company □ Applicable √ Not applicable Ⅸ.Prospect for future development of the Company 1. The Development Trend of the Industry The year 2016 will be a key year for the Steel Plates Companies to speed up the structure adjustment and upgrading while adhering to innovations for the driving source. The company still faces continuous grim operation situation. There are fierce competitions of the industry and the overall price of the steel will still remain low, thus the phenomenon of “Inverted” price that the costs is higher than the sales price will be hardly turn around in a short period, since the pollutant emission standard of the steel industry largely increased and the environmental protection continuously remained in a high-pressure situation, the companies of steel industry will continue the situation of loss at operation in a severer circumstance. At the same time, what we should see is the projects under the national strategy of “One belt and one road”, reinvigorating the old industrial base in northeast and the projects in the international capacity cooperation, which will significantly expand the development space of the steel industry. In recent years, the company relied on deepening the reform and innovation, actively seeking strategic breakthrough, thus the company effectively elevated its competitive advantage in the steel industry chain. 2.The companys development strategy The overall work routes of the company in 2016 was established as: deeply promoting the strategic transformation, strengthening the innovations for drive source and sparing no efforts to ensure the stable and smooth production operation to achieve sustained improvement on economic benefits. 3. Business plan Production: pig iron 10.05 million tons, raw steel 9.64 million tons, hot-rolled plate 9.07 million tons, cool-rolled plates 4.46 coil steel 36000 tons. The business plan does not constitute a commitment thousand tons, 5%. Stainless of the company, so please be aware of the risks arising from such item, and the investors should understand the differences between a business plan and the commitment of performance. In order to achieve the above-said goal, the company must try best to do the following key works: the first is to deepen the reform of the sales service mode, so as to improve product profitability; the second is to comprehensively enhance the operation quality and strongly implement the cost reduction by improving efficiency; the third is to adhere to the innovation-driving development strategy, so as to enhance the high-end products proportion; the fourth is to continuously promote the comprehensive reform and constantly enhance the vitality of enterprises; the fifth is to speed up the construction of environmental management system and strengthen the concept of green development; the sixth is to constantly improve security management system, so as to ensure the smooth and steady operation of the production; the seventh is to build the development atmosphere of overcoming the hard times by joint efforts, so as to shape the converging force of sound management and pragmatic operation. 4. Maintaining the current business and completing the required capital arrangements of invested 23 Bengang Steel Plates Co., Ltd. Annual Report 2015 projects under construction. The company will use its own funds and the bank loans to meet the funds demand required by the production and operation and the technical transformation. (5) Potential risks 1. Industry risk The Domestic iron and steel industry has serious overcapacity, while the downstream demand couldn’t be ameliorated in a short term, thus the situation of the oversupply in the iron and steel could be hardly turn around. The main countries which import iron and steel from China have constantly launched the anti-dumping investigation, which leads to a grimmer situation for exporting the iron and steel, thus further increased the burden on the domestic market. The state of iron and steel enterprises running in a low efficiency will become the industry normal for a long time. Countermeasures: The company will adhere to the market-oriented and focus on needs from the customers, actively develop the market, optimize regional layout, deepen the reform of the marketing service mode, strive to raise the proportion on the products having profits and the high-end products, improve the product efficiency; further strengthen the management, strength the costs-reduction by improving efficiency and continuously raise the company’s efficiency and the market competiveness under the new normal. 2. Operating risk Due to the overall economic growth in China will slow down for a comparatively long time in the future, the demand in the downstream industries such as real estate, machinery, home appliances will be weakened, the overall price of the iron and steel prices will remain at a low level, which will weaken the profitability of the iron and steel enterprises, further leads to a lack of self-funds source for the company; the country adopts credit restriction for the over-capacity industries such as the iron and steel industry, thus the financial strain and the financing difficulty will become the common problem for the iron and steel enterprises, which would make the iron and steel enterprises facing the operating risk on funds. Countermeasures: strengthen the management and control of the capital budget, strictly implement the cash budget; reduce the inventory funds occupancy, strengthen the management of the capital cost and strictly control the expenses; expand the financing channels, standardize the operation ability of the listed company, raise the company’s control ability on the capital market and its influence. Insist on promoting the company to realize the modernization on the governance concept and governance capacity, and promote the re-financing on the capital market. 3. Environmental risk With the implementation of the new Environmental Protection Law, new emissions standards and other relevant laws and regulations, the government regulation and enforcement is becoming increasingly strict, which further raised the requirements on environmental protection for enterprises, largely raised the pollutant emission standards for the iron and steel industry, and the environmental protection continues to maintain a high pressure situation, thus the iron and steel enterprises face great pressure on environmental protection. 24 Bengang Steel Plates Co., Ltd. Annual Report 2015 Countermeasures: according to the requirements of the new environmental protection standards, the company fully carries out the implementation on the transformation of projects for improvement. Based on the transformation for better environmental protection, dig the potential of reducing the emission and soundly execute the emission-reducing measures on pollution factors. Strengthen the control on the pollution source, implement the environmental-protection management responsibility, carry out the real-time monitoring for the company’s status on the environmental protection and strictly supervise the operation of environmental protection facilities Ⅹ.Particulars about researches, visits and interviews received in this reporting period 1.Particulars about researches, visits and interviews received in this reporting period √ Applicable □ Not applicable Reception time Way of reception Types of visitors Basic index To know more about the situation June 10,2015 Onsite investigation Organization Production and operation To know more about the situation August 27,2015 Onsite investigation Organization Production and operation Reception times 2 Reception agency amount 5 Reception personal number 0 Others 0 Whether to disclose, reveal or disclose non-public No material information 25 Bengang Steel Plates Co., Ltd. Annual Report 2015 V. Important Events ⅠSpecification of profit distribution of common shares and capitalizing of common reserves Formulation, implementation and adjustment of profit distribution policy of common shares especially cash dividend policy during the reporting period □ Applicable √ Not applicable The profit distribution preplan or proposal and the preplan or proposal of conversion of the capital reserve into share capital in the past three years(with the reporting period inclusive): 1,Dividend preplan of 2015 As audited by Shulun Pan Certified Public Accountants Co., Ltd., The 2015 annual realized net profits attributable to the parent company was RMB -3,293,624,545.17, plus the retained profit of RMB 2,172,180,473.24 at beginning of year, and deduct RMB156,800,000.00 of dividend distributed for the previous year, The Balance of undistributed profit is -1,278,244,071.93 and the 2015 annual profits distribution plan was: due to the company recorded a loss in 2015, according to the relevant Chinese regulations and laws and the company's Articles of Association, the company will not draw the surplus reserve. The company will not carry out profits distribution of year 2015 and will not carry out increasing capital by converting the reserve. 2. Dividend plan of 2014 As audited by Shulun Pan Certified Public Accountants Co., Ltd., the net profit of the year 2014 was RMB232,804,820.19, after providing of 10% statutory surplus reserves of RMB4,411,426.11, plus the retained profit of RMB 2,100,587,079.16 at beginning of year, and deduct RMB156,800,000.00 of dividend distributed for the previous year, the profit distributable to the shareholders is RMB2,172,180,473.24. The dividend plan for year 2014 is: upon the total capital shares amounted to 3,136,000,000 shares at December 31st 2014, RMB0.5 (tax included) of dividend will be distributed upon each 10 shares to the whole shareholders. The dividend for common shares is totaled to RMB156,800,000.00 this time. The remaining RMB2,016,529,239.22 will be carried over to the next fiscal year. This plan is subject to approval of the Shareholders Annual Meeting 2014. 2. Dividend plan of year 2013 As audited by Shulun Pan Certified Public Accountants Co., Ltd., the net profit of the year 2013 was RMB275,592,999.75, after providing of 10% statutory surplus reserves of RMB22,649,063.39, plus the retained profit of RMB1,910,363,142.80 at beginning of year, and deduct RMB62,720,000 of dividend distributed for the previous year, the profit distributable to the shareholders is RMB2,100,587,079.16. The dividend plan for year 2013 was: upon the total capital shares amounted to 3,136,000,000 shares at December 31st 2013, RMB0.5 (tax included) of dividend will be distributed upon each 10 shares to the whole shareholders. The dividend for common shares is totaled to RMB156,800,000.00 this time. The balance of RMB1,943,787,079.16 was carried over to the next fiscal year. Dividend distribution of the latest three years In RMB Net profit Ratio in net profit attributable to the Amount of cash Proportion of cash attributable to the Cash dividend over of the parent dividends from cash dividends from cash Year parent company in (Including Tax) company in the offer to repurchase offer to repurchase the consolidated consolidated shares of the funds shares of the funds financial statements financial statements 26 Bengang Steel Plates Co., Ltd. Annual Report 2015 2015 0.00 -3,293,624,545.17 0.00% 2014 156,800,000.00 232,804,820.19 67.35% 2013 156,800,000.00 275,592,999.75 56.90% In the reporting period, both the Companys profit and the parent companys retained earnings were positive however not cash dividend distribution proposal has been put forward. □ Applicable √ Not applicable II.Profit distribution plan and capitalizing of common reserves plan for the Period □ Applicable √ Not applicable The Company will not distribute cash dividend or bonus shares, neither capitalizing of common reserves for the report period. III.Commitments to fulfill the situation 1.The fulfilled commitments in the reporting period and under-fulfillment commitments by the end of the reporting period made by the company, shareholder, actual controller, acquirer, director, supervisor, senior management personnel and other related parities. □ Applicable √ Not applicable During the reporting period, there is no commitment that the company, shareholders, actual controller, offeror, directors, supervisors, senior management or other related parties have fulfilled during the reporting period and have not yet fulfilled by the end of reporting period. 2.The existence of the company's assets or projects earnings forecasts and earnings reporting period is still in the forecast period, the company has assets or projects meet the original profit forecast made and the reasons explained □Applicable √ Not applicable IV.Particulars about the non-operating occupation of funds by the controlling shareholder □ Applicable √ Not applicable There are no controlling shareholder and its related parties occupying non-business capital of the listed company in Period 27 Bengang Steel Plates Co., Ltd. Annual Report 2015 V.Explanation of the Supervisory Committee and Independent Directors (If applicable)on the Qualified Auditor’s Report Issued by the CPAs. □ Applicable √ Not applicable VI.Explain change of the accounting policy, accounting estimate and measurement methods as compared with the financial reporting of last year. □ Applicable √ Not applicable No particulars about the changes in aspect of accounting polcy, estimates or calculation method in the period. VII.Explain retrospective restatement due to correction of significant accounting errors in the reporting period □Applicable √ Not applicable No major accounting errors within reporting period that needs retrospective restatement for the Company in the period. VIII.Explain change of the consolidation scope as compared with the financial reporting of last year. □Applicable √ Not applicable The scope of the consolidated financial statements of the current period has been added the newly established subsidiaries of Benxi Bengang Steel Sales Co., Ltd and Shenyang Bengang Steel Metallurgy Technology Co., Ltd. IX. Engagement/Disengagement of CPAs CPAs currently engaged Name of the domestic CPAs BDO China Shu Lun Pan Certified Public Accountants LLP Reward for domestic CPA (RMB0000) 280 Successive years the domestic CPA has been 8 providing service to the Company Name of CPAs from the domestic CPA firm Wu Xue, Zhang Huice Title of overseas CPA (if any) None Reward to overseas CPA (RMB0000) (if any) 0 Number of successive years the overseas CPA has None provided service to the Company (if any) Name of the accoutants assigned by the overseas None CPA (if any) Was the CPA been changed in the report period [] Yes [V] No 28 Bengang Steel Plates Co., Ltd. Annual Report 2015 Engaging of CPA for internal auditing, financial consultants or sponsors [V] Applicable [ ]Not applicable The Company employs BDO China Shu Lun Pan Certified Public Accountants LLP as the auditor of internal control system with auditing fee of RMB600 thousand. X.Situation of Facing Listing Suspension and Listing Termination after the Disclosure of the Yearly Report □Applicable √ Not applicable XI.Bankruptcy reorganization □Applicable √ Not applicable No bankruptcy reorganization for the Company in reporting period. XII.Significant lawsuits and arbitrations of the Company □Applicable √ Not applicable No significant lawsuits and arbitrations occourred in the reporting period. XIII.Situation of Punishment and Rectification □Applicable √ Not applicable No penalty and rectification for the Company in reporting period. XIV.Credit Condition of the Company and its Controlling Shareholders and Actual Controllers √Applicable□Not applicable During reporting period, there was no effective judgment of a court and large amount of debt maturity that the company, its controlling shareholders and actual controller failed to perform or pay off. XV.Implementation Situation of Stock Incentive Plan of the Company, Employee Stock Ownership Plan or Other Employee Incentive Measures □Applicable √ Not applicable During the reporting period, the company has no stock incentive plan, employee stock ownership plan or other employee incentives that have not been implemented. XVI.Material related transactions 1. Related transactions in connection with daily operation √Applicable □ Not applicable 29 Bengang Steel Plates Co., Ltd. Annual Report 2015 Whethe Trading r over Principl limit the Market Index Subjects e of Amount price of of of the pricing Ratio in approve approve Way of Date of Related Relations Type of Price of of trade similar informa related the similar paymen disclosu parties hip trade trade RMB0 trade tion transacti related trades d d t re 000 availabl disclos ons transacti e ure ons (RMB limited 0000) or not (Y/N) Execute accordi Benxi Steel Parent Purchase Related of goods Maintainin Agreem 15,699. ng to (Group) Co., Compan and g agreeme 5.27% No No services ent 59 the Ltd. y nt price agreeme nt Execute Purchase accordi Benxi Steel Related Parent of goods Agreem ng to (Group) Co., Land rent agreeme 5,742.6 1.93% No No Company and ent the Ltd. nt price services agreeme nt Execute Bengang Purchase accordi Stainless Related Same of goods Products Agreem ng to Cool-rolling agreeme 30.11 0.01% No Yes controller and in stock ent the (Dandong) nt price services agreeme Co., Ltd. nt Execute Benxi Steel Purchase accordi Related (Group) Same of goods Labor Agreem 2,206.6 ng to service agreeme 0.74% No No Mining Co., controller and ent 2 the nt price Ltd. services agreeme nt Execute Benxi Steel Purchase accordi Related (Group) Same of goods Raw Agreem 352,968 118.40 ng to agreeme No Yes Mining Co., controller and materials ent .68 % the nt price Ltd. services agreeme nt Benxi Steel Purchase Related Execute Same Transporta Agreem (Group) of goods agreeme 328.55 0.11% No accordi Yes controller tion ent Mining Co., and nt price ng to 30 Bengang Steel Plates Co., Ltd. Annual Report 2015 Ltd. services the agreeme nt Execute Benxi Steel Purchase accordi (Group) Related Same of goods Raw Agreem 11,292. ng to Metallurgy agreeme 3.79% No No controller and materials ent 38 the Residues nt price services agreeme Co., Ltd. nt Benxi Steel Execute (Group) Purchase accordi Related Steel Process Same of goods Process Agreem ng to agreeme 235.46 0.08% No No and controller and fee ent the nt price Logistics services agreeme Co., Ltd. nt Benxi Steel Execute (Group) Purchase accordi Related Steel Process Same of goods Products Agreem ng to agreeme 0.00% No Yes and controller and in stock ent the nt price Logistics services agreeme Co., Ltd. nt Execute Benxi Steel Purchase accordi (Group) Related Same of goods Raw Agreem 6,841.8 ng to Real-estate agreeme 2.30% No Yes controller and materials ent 9 the Developmen nt price services agreeme t Co., Ltd. nt Execute Benxi Steel Purchase accordi Related (Group) Same of goods Agreem 14,345. ng to Spare parts agreeme 4.81% No Yes Machinery controller and ent 66 the nt price Co., Ltd. services agreeme nt Execute Benxi Steel Purchase accordi Related (Group) Same of goods Repairing Agreem 1,705.4 ng to agreeme 0.57% No No Machinery controller and services ent 5 the nt price Co., Ltd. services agreeme nt Benxi Steel Purchase Related Execute Same Agreem 1,702.9 (Group) of goods Spare parts agreeme 0.57% No accordi No controller ent 3 Construction and nt price ng to 31 Bengang Steel Plates Co., Ltd. Annual Report 2015 Co., Ltd. services the agreeme nt Execute Benxi Steel Purchase accordi Related (Group) Same of goods Engineerin Agreem 33,274. ng to agreeme 11.16% No No Construction controller and g fee ent 63 the nt price Co., Ltd. services agreeme nt Execute Benxi Steel Purchase accordi Related (Group) Same of goods Repairing Agreem 8,995.7 ng to agreeme 3.02% No No Construction controller and services ent 4 the nt price Co., Ltd. services agreeme nt Execute Benxi Steel Purchase accordi Related (Group) Same of goods Raw Agreem ng to materials agreeme 996.28 0.33% No No Construction controller and ent the nt price Co., Ltd. services agreeme nt Execute Benxi Steel Purchase accordi Related (Group) Same of goods Transporta Agreem ng to tion agreeme 375.35 0.13% No No Construction controller and ent the nt price Co., Ltd. services agreeme nt Execute Benxi Steel Purchase accordi (Group) Related Same of goods Agreem 4,081.9 ng to Industrial Spare parts agreeme 1.37% No No controller and ent 6 the Developmen nt price services agreeme t Co., Ltd. nt Execute Benxi Steel Purchase accordi (Group) Related Same of goods Raw Agreem 19,458. ng to Industrial agreeme 6.53% No No controller and materials ent 13 the Developmen nt price services agreeme t Co., Ltd. nt Benxi Steel Purchase Related Execute Same Repairing Agreem 1,135.9 (Group) of goods agreeme 0.38% No accordi No controller services ent 6 Industrial and nt price ng to 32 Bengang Steel Plates Co., Ltd. Annual Report 2015 Developmen services the t Co., Ltd. agreeme nt Execute Benxi Steel Purchase accordi (Group) Related Same of goods Transporta Agreem ng to Industrial tion agreeme 618.05 0.21% No No controller and ent the Developmen nt price services agreeme t Co., Ltd nt Execute Benxi Steel Purchase accordi (Group) Related Same of goods Project Agreem ng to Industrial payment agreeme 209.8 0.07% No No controller and ent the Developmen nt price services agreeme t Co., Ltd nt Execute Benxi Steel Purchase accordi (Group) Material Related Same of goods Agreem 1,276.7 ng to Construction and spare agreeme 0.43% No No controller and ent 4 the & Repairing parts nt price services agreeme Co., Ltd. nt Execute Benxi Steel Purchase accordi (Group) Related Same of goods Engineerin Agreem 11,717. ng to Construction g agreeme 3.93% No No controller and ent 68 the & Repairing nt price services agreeme Co., Ltd. nt Execute Benxi Steel Purchase accordi (Group) Related Same of goods Maintainin Agreem 9,254.4 ng to Construction g agreeme 3.10% No No controller and ent 1 the & Repairing nt price services agreeme Co., Ltd. nt Execute Purchase accordi Related Bengang Same of goods Raw Agreem 9,978.3 ng to Electronics agreeme 3.35% No No Co., Ltd. controller and materials ent 6 the nt price services agreeme nt Purchase Related Execute Bengang Same Engineerin Agreem Electronics of goods agreeme 537.07 0.18% No accordi No Co., Ltd. controller g ent and nt price ng to 33 Bengang Steel Plates Co., Ltd. Annual Report 2015 services the agreeme nt Execute Purchase accordi Bengang Related Same of goods Repairing Agreem 1,660.1 ng to Electronics agreeme 0.56% No No controller and services ent 6 the Co., Ltd. nt price services agreeme nt Execute Benxi Steel Purchase accordi (Group) Related Same of goods Agreem ng to Drilling Spare parts agreeme 100.96 0.03% No No controller and ent the Tools Co., nt price services agreeme Ltd. nt Execute Benxi Steel Purchase accordi New Related Same of goods Labour Agreem ng to Business security agreeme 849.12 0.28% No No controller and fee ent the Developmen nt price services agreeme t Co., Ltd. nt Execute Benxi Steel Purchase accordi New Related Same of goods Material Agreem ng to Business and dinner agreeme 167.65 0.06% No No controller and ent the Developmen nt price services agreeme t Co., Ltd. nt Execute Purchase accordi Liaoning Related Metallurgy Same of goods Training Agreem ng to Technician agreeme 82.48 0.03% No No College controller and fee ent the nt price services agreeme nt Execute Purchase accordi Liaoning Related Metallurgy Same of goods Agreem 1,692.0 ng to Technician Spare parts agreeme 0.57% No No College controller and ent 9 the nt price services agreeme nt Liaoning Purchase Related Execute Same Project Agreem Metallurgy of goods agreeme 602.25 0.20% No accordi No controller payment ent Technician and nt price ng to 34 Bengang Steel Plates Co., Ltd. Annual Report 2015 College services the agreeme nt Execute Liaoning Purchase accordi Related Metallurgy Same of goods Repairing Agreem ng to agreeme 241.04 0.08% No No Technician controller and services ent the nt price College services agreeme nt Execute Bengang Purchase accordi Related Group Same of goods Commissi Agreem 5,429.3 ng to on agreeme 1.82% No No International controller and ent 1 the nt price Trading Ltd. services agreeme nt Execute Bengang Purchase accordi Related Group Same of goods Agreem ng to Port fee agreeme 19,882 6.67% No No International controller and ent the nt price Trading Ltd. services agreeme nt Execute Benxi Steel Purchase accordi (Group) Related Information Same of goods Agreem 1,911.9 ng to & Automatic Spare parts agreeme 0.64% No No Tech. Co., controller and ent 3 the nt price Ltd. services agreeme nt Execute Benxi Steel Purchase accordi (Group) Related Information Same of goods Engineerin Agreem 3,007.5 ng to & Automatic g fee agreeme 1.01% No No Tech. Co., controller and ent 8 the nt price Ltd. services agreeme nt Benxi Steel Execute (Group) Purchase accordi Related Information Same of goods Repairing Agreem ng to agreeme 89.5 0.03% No No & Automatic controller and services ent the nt price Tech. Co., services agreeme Ltd. nt Benxi Steel (Group) Purchase Related Execute Thermal Same Heating Agreem 1,290.3 Power of goods fee agreeme 0.43% No accordi No Developmen controller ent 4 and nt price ng to t Co., Ltd. 35 Bengang Steel Plates Co., Ltd. Annual Report 2015 services the agreeme nt Execute Benxi Steel Purchase accordi (Group) Related Thermal Same of goods Raw Agreem ng to Power materials agreeme 9.18 0.00% No No Developmen controller and ent the nt price t Co., Ltd. services agreeme nt Execute Benxi Steel Purchase accordi Related (Group) Same of goods Agreem 1,365.9 ng to Design agreeme 0.46% No No Designing controller and ent 6 the nt price Institute services agreeme nt Execute Purchase accordi Benxi Related Beiying Same of goods Raw Agreem 434,677 145.81 ng to Steel & Iron materials agreeme No No (Group) Co., controller and ent .55 % the Ltd. nt price services agreeme nt Execute Purchase accordi Benxi Related Beiying Same of goods Power Agreem 43,620. ng to Steel & Iron supply agreeme 14.63% No No (Group) Co., controller and ent 86 the Ltd. nt price services agreeme nt Execute Purchase accordi Benxi Related Beiying Same of goods Transporta Agreem ng to Steel & Iron tion agreeme 702.77 0.24% No No (Group) Co., controller and ent the Ltd. nt price services agreeme nt Execute Purchase accordi Benxi Related Beiying Same of goods Labor Agreem 5,766.0 ng to Steel & Iron agreeme 1.93% No No (Group) Co., controller and service ent 7 the Ltd. nt price services agreeme nt Benxi Purchase Related Execute Beiying Same Agreem 1,644.1 Steel & Iron of goods Spare parts agreeme 0.55% No accordi No (Group) Co., controller ent 8 Ltd. and nt price ng to 36 Bengang Steel Plates Co., Ltd. Annual Report 2015 services the agreeme nt Execute Purchase accordi Liaoning Material Related Hengtong Same of goods Agreem 10,315. ng to Metallurgy and spare agreeme 3.46% No No Equipment controller and ent 47 the Co., Ltd. parts nt price services agreeme nt Execute Purchase accordi Liaoning Material Related Hengtai Same of goods Agreem 1,186.0 ng to Heavy and spare agreeme 0.40% No No Machine controller and ent 6 the Co., Ltd. parts nt price services agreeme nt Execute Purchase accordi Liaoning Related Hengtai Same of goods Repairing Agreem 2,670.6 ng to Heavy agreeme 0.90% No No Machine controller and services ent 1 the Co., Ltd. nt price services agreeme nt Execute Purchase accordi Bengang Related Controlle of goods Property Agreem ng to Group Co., manageme agreeme 84.55 0.03% No No r and nt fee ent the Ltd. nt price services agreeme nt Execute Sales of accordi Bengang Related Same goods Power Agreem ng to Electronics supply agreeme 0.00% No No controller and ent the Co., Ltd. nt price services agreeme nt Execute Sales of accordi Benxi Related Beiying Same goods Material Agreem 16,948. ng to Steel & Iron and spare agreeme 5.79% No No (Group) Co., controller and parts ent 08 the Ltd. nt price services agreeme nt Benxi Sales of Related Execute Beiying Same Agreem Steel & Iron goods Products agreeme 779.67 0.27% No accordi Yes (Group) Co., controller ent Ltd. and nt price ng to 37 Bengang Steel Plates Co., Ltd. Annual Report 2015 services the agreeme nt Execute Sales of accordi Benxi Related Beiying Same goods Commissi Agreem 6,787.2 ng to Steel & Iron on agreeme 2.32% No No (Group) Co., controller and ent 4 the Ltd. nt price services agreeme nt Execute Sales of accordi Benxi Steel Related (Group) Same goods Agreem ng to Power Real-estate supply agreeme 115.79 0.04% No No Developmen controller and ent the t Co., Ltd. nt price services agreeme nt Execute Sales of accordi Benxi Steel Related (Group) Same goods Material Agreem ng to Real-estate and spare agreeme 0.00% No No Developmen controller and parts ent the t Co., Ltd. nt price services agreeme nt Execute Benxi Steel Sales of accordi (Group) Related Steel Process Same goods Power Agreem ng to and supply agreeme 62.05 0.02% No No Logistics controller and ent the nt price Co., Ltd. services agreeme nt Execute Benxi Steel Sales of accordi (Group) Related Steel Process Same goods Agreem 47,928. ng to and Products agreeme 16.38% No Yes Logistics controller and ent 33 the nt price Co., Ltd. services agreeme nt Execute Sales of accordi Benxi Steel Related (Group) Same goods Agreem ng to Machinery Products agreeme 582.41 0.20% No Yes Co., Ltd. controller and ent the nt price services agreeme nt Benxi Steel Sales of Related Execute (Group) Same Power Agreem 1,890.3 Machinery goods agreeme 0.65% No accordi No Co., Ltd. controller supply ent 3 and nt price ng to 38 Bengang Steel Plates Co., Ltd. Annual Report 2015 services the agreeme nt Execute Sales of accordi Benxi Steel Material Related (Group) Same goods Agreem ng to Machinery and spare agreeme 555.35 0.19% No No Co., Ltd. controller and ent the parts nt price services agreeme nt Execute Sales of accordi Benxi Steel Related (Group) Same goods Power Agreem ng to Construction agreeme 457 0.16% No No Co., Ltd. controller and supply ent the nt price services agreeme nt Execute Sales of accordi Benxi Steel Material Related (Group) Same goods Agreem 12,409. ng to Construction and spare agreeme 4.24% No No Co., Ltd. controller and ent 23 the parts nt price services agreeme nt Execute Sales of accordi Benxi Steel Related (Group) Same goods Power Agreem 71,950. ng to Mining Co., agreeme 24.60% No No Ltd. controller and supply ent 34 the nt price services agreeme nt Execute Sales of accordi Benxi Steel Related Same goods Material Agreem 12,307. ng to (Group) Mining Co., and spare agreeme 4.21% No No Ltd. controller and parts ent 32 the nt price services agreeme nt Execute Sales of accordi Benxi Steel Related (Group) Same goods Freight Agreem ng to Mining Co., income agreeme 850.95 0.29% No No Ltd. controller and ent the nt price services agreeme nt Benxi Steel Sales of Related Execute (Group) Same Commissi Agreem Mining Co., goods agreeme 662.63 0.23% No accordi Yes Ltd. controller on ent and nt price ng to 39 Bengang Steel Plates Co., Ltd. Annual Report 2015 services the agreeme nt Execute Benxi Steel Sales of accordi (Group) Related Thermal Same goods Power Agreem 3,152.9 ng to Power agreeme 1.08% No No Developmen controller and supply ent 3 the nt price t Co., Ltd. services agreeme nt Execute Benxi Steel Sales of accordi (Group) Material Related Thermal Same goods Agreem 2,646.7 ng to Power and spare agreeme 0.90% No No Developmen controller and ent 3 the parts nt price t Co., Ltd. services agreeme nt Execute Benxi Steel Sales of accordi (Group) Related Thermal Same goods Freight Agreem ng to Power agreeme 0.00% No No Developmen controller and income ent the nt price t Co., Ltd. services agreeme nt Execute Sales of accordi Benxi Steel Related (Group) Same goods Power Agreem ng to Industrial agreeme 928.48 0.32% No No Developmen controller and supply ent the t Co., Ltd. nt price services agreeme nt Execute Sales of accordi Benxi Steel Related (Group) Same goods Commissi Agreem ng to Industrial agreeme 53.12 0.02% No Yes Developmen controller and on ent the t Co., Ltd. nt price services agreeme nt Execute Sales of accordi Benxi Steel Material Related (Group) Same goods Agreem 9,601.4 ng to Industrial and spare agreeme 3.28% No No Developmen controller and ent 2 the t Co., Ltd. parts nt price services agreeme nt Benxi Steel Sales of Related Execute Same Power Agreem (Group) goods agreeme 20.19 0.01% No accordi No controller supply ent Information and nt price ng to 40 Bengang Steel Plates Co., Ltd. Annual Report 2015 & Automatic services the Tech. Co., agreeme Ltd. nt Execute Benxi Steel Sales of accordi (Group) Related Same goods Power Agreem ng to Construction agreeme 102.17 0.03% No No controller and supply ent the & Repairing nt price services agreeme Co., Ltd. nt Execute Benxi Steel Sales of accordi (Group) Material Related Same goods Agreem ng to Construction and spare agreeme 420.32 0.14% No No controller and ent the & Repairing parts nt price services agreeme Co., Ltd. nt Execute Sales of accordi Benxi Steel Related (Group) Same goods Power Agreem ng to Metallurgy agreeme 420.88 0.14% No No Residues controller and supply ent the Co., Ltd. nt price services agreeme nt Execute Sales of accordi Benxi Steel Material Related (Group) Same goods Agreem 2,377.4 ng to Metallurgy and spare agreeme 0.81% No No Residues controller and ent 5 the Co., Ltd. parts nt price services agreeme nt Execute Sales of accordi Benxi Steel Related (Group) Same goods Freight Agreem ng to Metallurgy agreeme 0.00% No No Residues controller and income ent the Co., Ltd. nt price services agreeme nt Execute Sales of accordi Benxi Steel Related (Group) Same goods Commissi Agreem ng to Metallurgy agreeme 678.9 0.23% No Yes Residues controller and on ent the Co., Ltd. nt price services agreeme nt Parent Sales of Related Execute Benxi Steel Power Agreem 5,550.4 (Group) Co., Compan goods agreeme 1.90% No accordi No Ltd. supply ent 6 y and nt price ng to 41 Bengang Steel Plates Co., Ltd. Annual Report 2015 services the agreeme nt Execute Sales of accordi Parent Material Related Benxi Steel goods Agreem ng to (Group) Co., Compan and spare agreeme 896.16 0.31% No No Ltd. and ent the y parts nt price services agreeme nt Execute Sales of accordi Benxi Steel Related New Same goods Power Agreem ng to Business agreeme 41.12 0.01% No No Developmen controller and supply ent the t Co., Ltd. nt price services agreeme nt Execute Sales of accordi Benxi Steel Material Related New Same goods Agreem ng to Business and spare agreeme 0.00% No No Developmen controller and ent the t Co., Ltd. parts nt price services agreeme nt Execute Sales of accordi Dalian Related Boluole Same goods Commissi Agreem ng to Steel Tube agreeme 519.52 0.18% No Yes Ltd. controller and on ent the nt price services agreeme nt Execute Liaoning Sales of accordi Bengang Related Same goods Commissi Agreem 58,766. ng to Steel & Iron agreeme 20.09% No Yes controller and on ent 02 the Trading Co., nt price services agreeme Ltd. nt Execute Liaoning Sales of accordi Material Related Metallurgy Same goods Agreem ng to and spare agreeme 0.00% No No Technician controller and ent the parts nt price College services agreeme nt Tianjin Sales of Related Execute Same Commissi Agreem Bengang goods agreeme 0.00% No accordi Yes controller on ent Steel Plate and nt price ng to 42 Bengang Steel Plates Co., Ltd. Annual Report 2015 Processing services the and Delivery agreeme Co., Ltd. nt Execute Sales of accordi Benxi Steel Material Related & Iron Same goods Agreem ng to Group and spare agreeme 0.00% No No Hospital controller and ent the parts nt price services agreeme nt Execute Sales of accordi Benxi Steel Related & Iron Same goods Power Agreem ng to Group agreeme 13.4 0.00% No No Hospital controller and supply ent the nt price services agreeme nt Execute Benxi Steel Sales of accordi & Iron Material Related (Group) Same goods Agreem ng to Zhengtai and spare agreeme 0.00% No No Construction controller and ent the Materials parts nt price Co., Ltd. services agreeme nt Execute Benxi Steel Sales of accordi & Iron Related (Group) Same goods Power Agreem ng to Zhengtai agreeme 0.23 0.00% No No Construction controller and supply ent the Materials nt price Co., Ltd. services agreeme nt Execute Liaoning Sales of accordi Hengtong Related Same goods Power Agreem 1,518.1 ng to Metallurgy agreeme 0.52% No No controller and supply ent 6 the Equipment nt price services agreeme Co., Ltd. nt Execute Liaoning Sales of accordi Hengtong Material Related Same goods Agreem 1,439.3 ng to Metallurgy and spare agreeme 0.49% No No controller and ent 4 the Equipment parts nt price services agreeme Co., Ltd. nt Liaoning Sales of Related Execute Same Commissi Agreem Hengtong goods agreeme 359.13 0.12% No accordi Yes controller on ent Metallurgy and nt price ng to 43 Bengang Steel Plates Co., Ltd. Annual Report 2015 Equipment services the Co., Ltd. agreeme nt Execute Bengang Sales of accordi Stainless Material Related Same goods Agreem ng to Cool-rolling and spare agreeme 52.57 0.02% No No controller and ent the (Dandong) parts nt price services agreeme Co., Ltd. nt Execute Bengang Sales of accordi Stainless Related Same goods Commissi Agreem ng to Cool-rolling agreeme 121.71 0.04% No Yes controller and on ent the (Dandong) nt price services agreeme Co., Ltd. nt Execute Suzhou Sales of accordi Related Bengang Same goods Commissi Agreem 16,236. ng to agreeme 5.55% No Yes Industrial controller and on ent 92 the nt price Co., Ltd. services agreeme nt Execute Benxi Steel Sales of accordi Related Group Same goods Power Agreem ng to agreeme 1.48 0.00% No No Finance Co., controller and supply ent the nt price Ltd. services agreeme nt Execute Sales of accordi Benxi Steel Related Same goods Power Agreem 2,293,2 ng to (Group) Co., agreeme 11.9 0.00% No No controller and supply ent 00 the Ltd. nt price services agreeme nt 1,334,2 2,293,2 1,334,2 Total -- -- -- -- -- -- -- 77.18 00 77.18 Details of any sales return of a large None amount Give the actual situation in the report period where a forecast had been made for the total amounts of routine None related-party transactions by type to occur in the current period(if any) 44 Bengang Steel Plates Co., Ltd. Annual Report 2015 Reason for any significant difference between the transaction price and the None market refernce price (if applicable) 2. Related-party transactions arising from asset acquisition or sold □Applicable √ Not applicable No related transactions by assets acquisition and sold for the Company in reporting period. 3. Related-party transitions with joint investments □Applicable √ Not applicable No main related transactions of joint investment outside for the Company in reporting period. 4. Credits and liabilities with related parties √Applicable □Not applicable Was there any non-operating credit or liability with any related party? □Applicable √ Not applicable Non-existtencet 5. Other significant related-party transactions □Applicable √ Not applicable Non-existtencet XVII.Particulars about significant contracts and their fulfillment 1. Particulars about trusteeship, contract and lease (1) Trusteeship □Applicable √ Not applicable □Applicable √ Not applicable No trusteeship, contract or leasing for the Company in reporting period. (2) Contract □ Applicable √ Not applicable No any contract for the Company in the reporting period. 45 Bengang Steel Plates Co., Ltd. Annual Report 2015 (3) Lease □Applicable √ Not applicable No any lease for the Company in the reporting period.. 2.Guarantees □Applicable √ Not applicable No any guarantees for the Company in the reporting period.. 3.Situation of Entrusting Others for Managing Spot Asset (1)Situation of Entrusted Finance □ Applicable √ Not applicable In RMB0000 Impairment Actual Related Principal Title of Type of Amount Mean of provision Predicted gain/loss Relationship transaction Started on Expired on retrieved entrustee product entrusted reward provided (if income of the or not this period any) period ICBC Ltd. On Capital January February agreement Recove Benxi No 15,000 15,000 51.78 51.78 guaranteed 13,2015 17,2015 r Branch Shanghai Pudong On Developme Capital February February agreement Recove No 15,000 15,000 26.9 26.9 nt Bank guaranteed 11,2015 28,2015 r Benxi Branch Shengjing On Bank Capital February March agreement Recove No 40,000 40,000 166.58 166.58 Benxi guaranteed 15,2015 25,2015 r Branch Guangdong Developme On Capital April April agreement Recove nt Bank No 30,000 30,000 36.83 36.83 guaranteed 3,2015 16,2015 r Benxi Branch Guangdong Developme On Capital April April agreement Recove nt Bank No 15,000 15,000 31.14 31.14 guaranteed 3,2015 24,2015 r Benxi Branch On ICBC Ltd. No Capital 10,000 March April agreement 10,000 34.52 34.52 Recove 46 Bengang Steel Plates Co., Ltd. Annual Report 2015 Benxi guaranteed 6,2015 10,2015 r Branch ICBC Ltd. On Capital March June agreement Recove Benxi No 30,000 30,000 310.68 310.68 guaranteed 29,2015 29,2015 r Branch ICBC Ltd. On Capital June July agreement Recove Benxi No 19,700 19,700 64.23 64.23 guaranteed 25,2015 31,2015 r Branch Total 174,700 -- -- -- 174,700 722.66 722.66 Resource of capital trusted Idle capital under the Company possession Accumulated principal and gains overdue 0 Lawsuit (if any) None Date of announcement made by the Board about approval of trusted April 20,2015 financial service Date of announcement made by the Shareholders Meeting about approval of trusted financial service Whether there is a future trust Yes management plan (2)Situation of Entrusted Loans □ Applicable √ Not applicable No any Entrusted loans for the Company in the reporting period.. 4. Other significant contract □ Applicable √ Not applicable No other significant contracts for the Company in reporting period. XVIII.Explanation about other significant matters √Applicable□Not applicable The companys controlling shareholder, Benxi Steel (Group) Co., Ltd., increased its holding shares through the No.47 Excellence Assets Management Plan of Shenwan Hongyuan Securities Co., Ltd during the period from September 2, 2015 to October 13, 2015. Before increasing the holding shares, the controlling company holds a total of 2,417,768,374 shares of Bengang Steel Plates Co.,Ltd, taking 77.10% of the share capital of Bengang Steel Plates Co.,Ltd; after the increasing of the holding shares, the controlling company holds a total of 2,457,560,978 shares, taking 78.37% of the share capital of Bengang Steel Plates Co.,Ltd. 47 Bengang Steel Plates Co., Ltd. Annual Report 2015 XIX.Major issues of subsidiary □ Applicable √ Not applicable XX.Social responsibility √Applicable□Not applicable During the reporting period, the company conformed to the provisions stipulated by the relevant documents of social responsibility implementation, actively protected the legitimate rights and interests of the creditors and all the company staff, honestly treated the suppliers, customers and consumers and actively engaged in the public welfare undertakings such as environmental protection and community development, while pursuing the economic profits and protecting the interests of the shareholders. In the business activities, the company consciously complied with the principle of voluntariness, fairness, compensation of equal value and honesty and credibility, consciously abided by social morality, professional ethics, consciously accepted the supervision from the government and the public and actively performed the companys social responsibility. Whether the listed company and its subsidiaries belong to the heavy polluting industries regulated by the state environmental protection department. √Yes □ No □ Not applicable During the reporting period, the company fully implemented by conforming to the Law of Environmental Protection and the new standard of pollutant emission, greatly promoted the implementation of key environmental protection projects, actively carried out the comprehensive managing of the factory environments and fully completed the goal of pollutant emission reduction and blue-sky project of the "Twelfth Five Year Plan". The company has a total of 197 sets of environmental protection facilities and the running rate of the facilities reached up to 97%. The rate of the pollutant discharged conforming to the standard is 94.1%. Thus achieved the emission reduction of 2729.71 tons of sulfur dioxide, 562.83 tons nitrogen oxides and1391.84 tons of smoke dust. While strengthening the production and operation, the company highly emphasized the environmental protection work. In 2005, the company newly carried out 8 environmental protection projects fully according to the plan and the schedule. The company cumulatively invested RMB199.85 million on the environment protection, which were mainly for: the heat and power cogeneration renovation project of the third power workshop of the power plant, the renovation project of desulfurization and denitration of coal fired boiler in the high-pressure workshop, advanced treatment of carbon fiber wastewater in the coking plant, new dust-suppression net built in the raw materials plant, factory area greening and so on. According to the requirements of the environmental protection policy issued by the superior, the company and its subordinate factories completed the assessment works of the comprehensive, special and field handling of the contingency plan of Benxi City and filed for record. XXI.Information about the corporate bonds Whether the listed company failed to honor the corporate bonds public issued and listed on the Stock Exchange in 48 Bengang Steel Plates Co., Ltd. Annual Report 2015 due or undue at the approval date of the annual report Yes 1.Basic information of corporate bonds Bond short Bond balance Bond name Bond code Issue day Due day Interest rate Servicing way name 0000 Comporaton Due payments Bond 2015 15 Benxi Steel February February once a year, 112236 150,000 5.17% (The ist 01 9,2015 9,2018 maturing debt Phase) at a time. Corporate bonds listed or Shenzhen Stock Exchange trading places Investors appropriate The above mentioned bond trading will be implemented Investors Management arrangement The interests of the 2015-corporate bonds (first term) of Bengang Steel Plates Co., Ltd of the period from February 5, 2015 to February 4, 2016 were paid on February 5, 2016 as each bond During the reporting period, would gain RMB 5.17 (tax inclusive). The Record Day of the interest payment period of the bonds interest payment situation of the was February 4, 2016, thus any investor who buys and holds the bonds before or on the date of company bonds February 4, 2016 shall enjoy the right to receive the interest payments. The investors who sold out the bonds on the date of February 4, 2016 shall not enjoy the interests afore-said. If the corporate bonds attached to special clauses to the issuer or the investors such as option clause and exchangeable clause, Not applicable please specify the implementation status of the corresponding clauses. (If applicable) 2.Bond trustee and the credit rating agency information Bond trustee: A02 28/F, 35/F, Anlian Building , ESSENCE No.4018. Tian Zhu, Zhu Name Office address Contact Tel 010-83321219 Securities Jintian Road, Shuo Futian District, Shenzhen. 49 Bengang Steel Plates Co., Ltd. Annual Report 2015 The credit rating agencies which follow and rate the corporate bond during the reporting period 12/F, PICC Building, No.Jianguo Menwai Name United Ratings Co., Ltd. Office address Street, Chaoyang District, Beijing. During the report period, the bond trustee, credit rating agency employed by the company that have changed, reasons for Not applicable the change, performing procedures, relevant influence on investors,etc(If applicable). 3.The usage of corporate bonds to raise money After deducting corporate bond issuance costs, all the funds raised for debt restructurin The usage and performance of raised funds g, debt repayment, the amount of repayment of bank borrowings was 1.5 billion yuan, from Corporate bonds as of December 31, 2015, all the funds raised have been used up. At the end of balance (ten thousand) 0 Raise money for special account operation Normal Whether the usage of the raised money corresponding to the purposes of promise, Unanimous use plans , and other agreement 4. Corporate bond rating information According to the supervision department and united rating agencys relevant requirements on tracking rating, the united rating agency will, in the duration of this bond, exercise a regular tracking rating for the bonds 2015 (first session) of Benxi Iron& Steel (Group) Co., Ltd. in 2 months upon publication of its annual report and will process irregular tracking rating as appropriate. Investors, please pay attention to that. 5.Corporate bond credit mechanism, the debt repayment plans and other security measures During the reporting period, corporate bonds to increase trust mechanism, debt repayment plans and other safeguards has not change d. Bengang Group Co., Ltd. for the company's bond guarantor, as of the reporting period, Bengang Group's net assets 35.679 billion yuan, asset-liability ratio 74.27%, ROE -17.79% Current Ratio 0.51 Quick Ratio 0.28 (or more financial unaudited data). Bengangeel Group Joint Credit Rating Co. The rating is AAA. 6.During the reporting period the bondholder meeting During the reporting period, the company did not hold bondholders meeting. 7.During the reporting period the bond trustee perform his duties During the report period, the bond trustee performs its responsibilities in accordance with the regulations in Corporate Bond Issuance and Transaction Management Method and commitment in Bond Trustee Agreement: 50 Bengang Steel Plates Co., Ltd. Annual Report 2015 (I) Constantly pay attention to the credit status, execution of credit enhancement measurements and credit repayment safeguard measures of the guarantor and company; (II) Supervise the utilization of raised funds in the company during the duration of bond; (III) exercise a well-rounded investigation into and pay constant attention to the companys debt repayment ability and credit enhancement measures, and provide at least one trustee affair report for the market each year; (IV) constantly supervise the companys performance of information disclosure obligation during the duration of the bond. The trustee hasnt been confronted with conflict of interest in performing its responsibilities. The trustee is predicted to announce the trustee affair report 2015 on the website of Shenzhen Stock Exchange before June 30, 2016. 8.During the reporting period, the company's major accounting data and financial indicators for last 2 years In RMB0000 Items 2015 2014 At the same time rate of change EBITDA -115,704.04 309,014 -137.44% The net cash flow generated by -344,376.54 -8,727.4 3,845.92% investment activities The net cash flow generated by 96,516.77 211,409.2 -54.35% financing activities The final cash and balance of 461,278.28 932,703.4 -50.54% cash equivalents liquidity ratio 0.61% 0.79% -0.18% Asset-liability ratio 72.02% 67.79% 4.23% Quick action ratio 0.32% 0.45% -0.13% EBITDA total debt ratio -0.05% 0.15% -0.20% The multiple of interest -2.8 1.13 -347.79% safeguard The multiple of cash interest -1.57 4.01 -139.15% safeguard EBITDA multiple of interest -1.08 3.2 -133.75% safeguard loan payment rate 100.00% 100.00% 0.00% Interest rate of pay 100.00% 100.00% 0.00% The main reason that the accounting data and financial indicators yoy change more than 30% √Applicable □ Not applicable The main reasons for the above accounting data and financial indicators of the corporate bonds varied more than 30% year on year 1. EBITDA decreased by 137.44% in the period than that of last year,Mainly due to the company recorded a big loss in the current period. 2. The net cash flow generated by investment activities increased by 3845.92% in the period than that of last year, 51 Bengang Steel Plates Co., Ltd. Annual Report 2015 The main reason was the increase of cash payments for the purchasing of fixed assets, intangible assets and other long-term assets in the current period 3. The net cash flow generated by financing activities decreased by 54.35%% in the period than that of last year, The main reason was the increase of loan repayment in the current period. 4. The final cash and balance of cash equivalents decreased by50.54% in the period than that of last year,The main reason was due to the cash received in the sale of goods and the rendering of service decreased, the cash payments for the purchasing of fixed assets, intangible assets and other long-term assets increased and the net borrowing decreased in the current period compared with the last year. 5. The multiple of interest safeguard decreased by347.79%% in the period than that of last year,Mainly due to the company recorded a big loss in the current period. 6. The multiple of cash interest safeguard decreased by139.15% in the period than that of last year,Mainly due to net cash flows from operating activities of the company decreased during the current period 7. EBITDA multiple of interest safeguard decreased by133.75% in the period than that of last year,Mainly due to the company recorded a big loss in the current period. 9. Property rights limits by the end of report period Items Book balue at the end of this year Limited reason Monetary fund 527,695,736.99 For the issuance of notes payable and the purchase of foreign exchange Notes receivable 718,925,665.16 Notes payable Inventories Fixed assets 28,440,000.00 Mortgage loan Intangible assets Account receivable and Order 1,966,875,200.00 Loans Total 3,241,936,602.15 10.During the report period interest payment for other bonds and debt financing tool None 11.During the report period obtain bank credit, its use situation and repayment of bank loans During the report period, the total bank credit amount of the company is 37.69 billion yuan, and 25.36 billion yuan has been utilized, with the unused line of credit of 12.32 billion yuan. The total loan amount at the beginning is 19.594 billion yuan, and a loan of 25.869 billion yuan is added in this period. And the loan repaid is 24.883 billion yuan, with the loan balance at the ending of 20.58 billion yuan. 12.During the reporting period the situation of performing the related agreement or commitment in the corporate bond prospectus The company strictly observes the Bond Trustee Agreement and regulations as described in different bond terms and conditions, and fulfills its promises. 52 Bengang Steel Plates Co., Ltd. Annual Report 2015 13.Major events occurring in the period of report As for the major events that take place during the report period, please refer to the notices disclosed on the website of Shenzhen Stock Exchange respectively on January 29, March 1 and March 29, 2016, including the Indicative Notice on Possibly Implementing Investors Appropriate Management on Corporate Bonds in 2015, Second Indicative Notice on Possibly Implementing Investors Appropriate Management on Corporate Bonds in 2015, Third Indicative Notice on Possibly Implementing Investors Appropriate Management on Corporate Bonds in 2015(No.2016-005,2016-015 and 2016-016). 14.Whether there is a guarantor corporate bonds √ Yes □No The guarantor of the corporate bond is a legal person or othe rorganizations √ Yes □No Whether to disclosethe guarantors financial statements during the reporting period, including the balance sheet, income statement, the cash flow statement, statement of changes in owners equity(shareholders equity) and the notes to financial statements □ Yes √No The company shall provide the guarantors financial statement(mark whether it has been audited) during the report period. 53 Bengang Steel Plates Co., Ltd. Annual Report 2015 VI. Change of share capital and shareholding of Principal Shareholders Ⅰ.Changes in share capital 1. Changes in share capital In shares Before the change Increase/decrease(+,-) After the Change Amount Proportio Capitaliza n tion of Share Bonus Proportio common Other Subtotal Quantity allotment shares n reserve fund I. Shares with trade restriction 75,750 0.00% -75,750 -75,750 0 0.00% conditions 3. Other domestic shares 75,750 0.00% -75,750 -75,750 0 0.00% Domestic natural person shares 75,750 0.00% -75,750 -75,750 0 0.00% II. Shares without trading limited 3,135,924, 3,136,000 100.00% 75,750 75,750 100.00% conditions 250 ,000 2,735,924, 2,736,000 1. Common shares in RMB 87.24% 75,750 75,750 87.24% 250 ,000 2. Foreign shares in domestic 400,000,0 400,000,0 12.76% 12.76% market 00 00 3,136,000, 3,136,000 III. Total of capital shares 100.00% 100.00% 000 ,000 Causation of change in share equity [V] Applicable [ ]Not applicable During the reporting period, as some of the company's directors had left the posts and some of the supervisors decreased their holding shares, thus the number of corresponding shares under limited-conditions for sale was reduced. Approval of Change of Shares □Applicable √Not applicable Situation of registration process of transferred shares [] Applicable; [V] Not applicable nfluences of the change of share equity on financial indices such as basic earning per share, dilluted earning per share, and net asset per share attributed to common shareholders: 54 Bengang Steel Plates Co., Ltd. Annual Report 2015 [] Applicable; [V] Not applicable Other information the Company thinks necessary or required by the authority to be disclosed [] Applicable; [V] Not applicable 2. Change of shares with limited sales condition □Applicable √Not applicable Ⅱ.Issuing and listing 1.Explanation of the Situation of the Security Issue(No Preferred Shares) in the Report Period □Applicable √Not applicable 2.Change of asset and liability structure caused by change of total capital shares and structure □Applicable √Not applicable 3.About the existing employees’ shares □Applicable√Not applicable Ⅲ.Shareholders and actual controlling shareholder 1. Number of shareholders and shareholding In Share Total preferred shareh Total number Total The total number o olders at the end of common shareholders at f preferred shareho of the month shareholders at the end of the lders voting rights 72,207 56,985 0 from the date of 0 the end of the month from the restored at period-e disclosing the reporting date of disclosing nd(if any)(See annual report(if period the annual report Notes 8) any)(See Notes 8) Particulars about shares held above 5% by shareholders or top ten shareholders Number Amount Amount Number of share pledged/frozen Proportio Changes of shares of of Shareholders Nature of n of in held at restricted un-restrict shareholder shares reporting State of share Amount period shares ed shares held(%) period -end held held 55 Bengang Steel Plates Co., Ltd. Annual Report 2015 Benxi Steel (Group) State-owned legal 2,457,560 -106,869, 2,457,560, Ltd. person 78.37% ,978 022 978 GIC PRIVATE Overseas legal person 0.31% 9,754,211 LIMITED BBH A/C VANGUARD EMERGING Overseas legal person 0.26% 8,157,311 MARKETS STOCK INDEX FUND Domestic natural Li Jia 0.24% 7,642,251 person GSIC A/C MONETARY Overseas legal person 0.17% 5,486,354 AUTHORITY OF SINGAPORE Domestic natural Zhan Changcheng 0.15% 4,648,615 person VANGUARD TOTAL INTERNATIONA Overseas legal person 0.15% 4,606,141 L STOCK INDEX FUND Bank of China- Huaxia Securities Other 0.11% 3,424,700 Investment Fund Haitong International Securities Overseas legal person 0.10% 3,141,109 Company Limited-Account Client GUOTAI JUNAN SECURITIES(HO Overseas legal person 0.09% 2,876,904 NGKONG) LIMITED Strategy investors or general legal person becomes top 10 shareholders N/A due to rights issued (if any )(See Notes 3) Notes to relationship or “action in concert” It is unknown to the Company whether there is any related connection or Action in Concert as described by among the top ten shareholders. Rules of Information Disclosing Regarding Changing of Shareholding Status of Listed Companies existing 56 Bengang Steel Plates Co., Ltd. Annual Report 2015 among the above shareholders. Shareholding of top 10 shareholders of unrestricted shares Category of shares Quantity of unrestricted shares held at the end of the Name of the shareholder Category of shares Amount reporting period RMB Common Benxi Steel (Group) Co.,Ltd. 2,457,560,978 2,457,560,978 shares Foreign shares placed in GIC PRIVATE LIMITED 9,754,211 9,754,211 domestic exchange Foreign shares BBH A/C VANGUARD EMERGING placed in 8,157,311 8,157,311 MARKETS STOCK INDEX FUND domestic exchange RMB Common Li Jia 7,642,251 7,642,251 shares Foreign shares GSIC A/C MONETARY placed in 5,486,354 5,486,354 AUTHORITY OF SINGAPORE domestic exchange Foreign shares placed in Zhan Changcheng 4,648,615 4,648,615 domestic exchange Foreign shares VANGUARD TOTAL placed in INTERNATIONAL STOCK INDEX 4,606,141 4,606,141 domestic FUND exchange Bank of China-Huaxia Securities RMB Common 3,424,700 3,424,700 Investment Fund shares Foreign shares Haitong International Securities placed in 3,141,109 3,141,109 Company Limited-Account Client domestic exchange Foreign shares GUOTAI JUNAN placed in SECURITIES(HONGKONG) 2,876,904 2,876,904 domestic LIMITED exchange Benxi Steel & Iron (Group) Co., Ltd., the holding shareholder, has no relationship with any of the other shareholders among the top 10 shareholders, neither being regarded as action-in-concert parties by the Action-in-concert among top 10 non-restricted Information Disclosure Regulations for Change of Shareholding in PLC current share holders, top 10 non-restricted The Company is not aware of any relationship among the other shareholders, nor of any action-in-concert as current share holders and top 10 shareholders recognized according to the Information Disclosure Regulations for Change of Shareholding in PLC. The Company is not aware of any relationship among the top 10 shareholders, nor of any action-in-concert as 57 Bengang Steel Plates Co., Ltd. Annual Report 2015 recognized according to the Information Disclosure Regulations for Change of Shareholding in PLC. Shareholders among the top 10 participating in None securities margin trading (if any) (see Note 4) Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a buy-back agreement dealing in reporting period. □ Yes √ No The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Company have no buy –back agreement dealing in reporting period. 2.Controlling shareholder Nature of Controlling Shareholders: Local state holding Type of Controlling Shareholders:Legal person Legal Name of the Controlling representative/Leade Date of incorporation Organization code Principal business activities shareholder r Business scope: steel smelt, mine exploitation, panel rolling, oxygen manufacturing, pipe manufacturing, power generating, coal industry, special steel material manufacturing, heating, supply of the water, electricity, wind and gas, metal processing, electro mechanics builds, device manufacturing, architecture installation, railway, highway transportation, import and export trade, traveling industry, construction material , Benxi Steel (Group) Co., Ltd. Zhang Xiaofang July 10,1996 11972626-3 refractory material , measuring device instrument, goods and materials supply and marketing, development of real estate, scientific research, design , information service, property management, telecommunication, processing of waste iron, property leasing, exchange of steel material, and recycling of waste oils (to the extent of licensed to the subsidiary companies), property management; publishing of 58 Bengang Steel Plates Co., Ltd. Annual Report 2015 Bengang Daily (expire on December 31, 2013); designing and making of presswork and advertisement, releasing, producing of TV advertisements in the country and abroad. Equity of other domestic/foreign listed company with share controlling and share None participation by controlling shareholder in reporting period Change of holding shareholder [] Applicable; [V] Not applicable No change of holding shareholder in the report period. 3.Information about the controlling shareholder of the Company Actual controller nature:Local state owned assets management Actual controller type:Legal person Legal Name of the controlling Date of representative/per Organization code Principal business activities shareholder establishment son in charge Bengang Group Co., Ltd. Zhang Xiaofang November 25,2010 56462557-5 Asset management Equity of other domestic/foreign listed company with share controlling and share None participation by controlling shareholder in reporting period Change of substantial controller [] Applicable; [V] Not applicable No change of substantial controller in the report period. Chart of the controlling relationship between the practical controller and the Company 59 Bengang Steel Plates Co., Ltd. Annual Report 2015 Whether the substantial controller is controlling the Company through trusteship or other asset management service [] Applicable; [V] Not applicable 4. Corporation shareholders with over 10% of the Company’s shares [] Applicable; [V] Not applicable 5.Situation of Share Limitation Reduction of Controlling Shareholders, Actual Controllers, Restructuring Party and Other Commitment Subjects □Applicable √Not applicable 60 Bengang Steel Plates Co., Ltd. Annual Report 2015 VII. Situation of the Preferred Shares □ Applicable √Not applicable The Company had no preferred shares in the reporting period. 61 Bengang Steel Plates Co., Ltd. Annual Report 2015 VIII. Information about Directors, Supervisors and Senior Executives I. Change in shares held by directors, supervisors and senior executives Amount Amount Shares of shares of shares Shares Other Starting Expiry held at increased decreased held at Office changes Name Positions Sex Age date of date of the at the at the the status increase/d tenure tenure year-begi reporting reporting year-gegi ecrease n(share) period(sh period(sh n(share) are) are) Zhao Director, May May Zhongmi In office Male 49 Chairman 21,2015 17,2016 n Cao Director, October May In office Male 49 Aimin Chairman 26,2009 17,2016 Director, February May Han Ge GM In office Male 47 19,2014 17,2016 May May Zhao Wei Director In office Male 49 21,2015 17,2016 Independen May MAY t Director In office Male 58 Jin Yongli 17,2013 17,2016 Zhong Independen May May Tianli t Director In office Female 60 20,2014 17,2016 Zhao Independen May May In office Male 56 Xinan t Director 21,2015 17,2016 Supervisor, Chairman Feburuary May Dong Liju of In office Female 52 Supervisory 19,2014 17,2016 Committee Fubuary May Han Mei Supervisor In office Female 47 19,2014 17,2016 February May Li Lin Supervisor In office Female 48 375 375 0 19,2014 17,2016 Li April May Zhengchu Supervisor In office Male 43 1,2015 17,2016 n Zhang January May Supervisor In office Male 39 Yanlong 26,2014 17,2016 62 Bengang Steel Plates Co., Ltd. Annual Report 2015 Zhang Deputy June May In office Male 59 Jichen GM 26,2008 17,2016 Bao Deputy December May In office Male 53 Mingwei GM 28,2012 17,2016 Wang Deputy January May In office Male 51 Fengmin GM 26,2014 17,2016 Hu Deputy January May Guangyua In office Male 56 GM 26,2014 17,2016 n Wang Deputy October May In office Male 52 Shaoyu GM,CFO 28,2015 17,2016 Sun Secretary of August May In office Male 34 Yanbin the Board 3,2015 17,2016 Director, February May Wang Shu Resigned Male 45 75,375 18,844 56,531 Chairman 19,2014 21,2015 Independen May 11, May Li Kai Resigned Male 59 t Director 2009 21,2015 Li January April Supervisor Resigned Male 45 Naiming 26,2014 1,2015 Total -- -- -- -- -- -- 75,750 0 19,219 56,531 II. Change in shares held by directors, supervisors and senior executives Name Positions Types Date Reason Wang Shu Director, Chairman Resigned May 21,2015 Change of position Independent Expiration of the Li Kai May 21,2015 Expiration of the term of office Director term of office Li Naiming Supervisor Resigned April 1,2015 Change of position Secretary of the Zhang Jichen Resigned August 3,2015 Change of position Board III.Posts holding Work Experience in the past five years of Directors, supervisors and senior Executives in Current office Profiles of the members of the Board: Zhao Zhongmin, Male, 49 of age, Postgraduate degree, Senior Economist. He once was the Vice director of Unman resources Dept and director of Cadre assessment of Benxi Steel (Group) Co., Ltd.; Vice General Manger of Benxi Steel (Group) Co., Ltd.; He is now Chairman of the Board of tBengang Steel Plates Co., Ltd. Cao Aimin, male, 49 of age, postgraduate degree, senior accountant. Once head of capital division of finance 63 Bengang Steel Plates Co., Ltd. Annual Report 2015 department, and director of department, the head of financial department of Bengang Group. Chief Accountant and Head of Planning and Finance Division; The Chief Accountant of Bengang Group; Director of Bengang Group Co., Ltd; Hes now vice chairman of Board of Bengang Steel Plates Co., Ltd. Han Ge, male, 47 of age, college graduate, postgraduate in process, senior engineer. Once hes manager of hot-rolling factory of the Company; vice manager of iron-making factory; assistant of general manager of Bengang Group. At present hes the general manager of Bengang Steel Plates Co., Ltd. Zhao Wei, male, 49 of age, college graduate. once head of capital division of finance dept, director of Finance Dept of Bengang Mining Company, Director of Budget Dept of Bengang Group; Deputy General Manager of Bengang Steel Plates Co., Ltd.;Vice Chief accountant , Vice Director of Finance Dept , Director of Capital Business Dept of Bengang Group, Director , Deputy General Manager of Benxi Steel (Group) Co., Ltd., Hes now director of Bengang Steel Plates Co., Ltd. Jin Yongli, male, 58 of age, master degree, professor. Once hes the dean of engineering school of Shenyang University. At present hes the dean of Business School of Shenyang University, and independent director of the Company since may 2013. Ms. Zhong Tianli, 60 of age, professor and doctorial tutor of Northeast University. Once she was vice dean of Business School of Northeast University, dean of Fundamental Study School and Head of Accounting Institute of Northeast University. At present shes professor of Accounting Dept. of Business School of Northeast University. She has been independent director of the Company since May 2014. Zhao Xinan, male, 56 of age, professor and doctorial tutor of Northeast University. Once she was vice dean of Business School of Northeast University, member of the national Education Dept of Managem,ent science and Engineering Teaching steering Committee;At present hes the dean of Business School of Shenyang University. He has been independent director of the Company since May 2015. Profiles of the Supervisory Committee: Dong Liju, female, 52 of age, master degree, senior engineer. Once shes head of auditing department of the Company; the secondary Chairman of Supervisory Committee of the Company. At present shes the Chairwoman of the Supervisory Committee of the Company. Han Mei, female, 47 of age, college graduate, senior accountant. Once shes the vice head of financial department of the Company; vice head of auditing department and head of administration department of the supervisory committee of Bengang Group; Provincial Government Liaison in Bengang and the Tertiary Chairman of the Supervisory Committee. At present shes the supervisor of Bengang Steel Plates Co., Ltd. Li Lin, female, 48 of age, college graduate, engineer. Once shes the administrator of HR department of Bengang Group; vice chief engineer of Transportation Department of the Company; substitute chairman of the trade union of Transportation Department of the Company; Chairman of the trade union of Transportation Department of the Company. At present shes the supervisor of Bengang Steel Plates Co., Ltd. Li Zhengchun, male, 43 of age, college graduate, senior engineer .Onbce Hes the office ,assistant director and director of human resources management Dept of The Group;rector;Vice minister of Party work Dept of Bengang Steel Plates Co., Ltd. ;Vice chairman Labour Union and Vice Secretary of the Commission for discipline inspection of Bengang Steel Plates Co., Ltd.; At present shes the supervisor of Bengang Steel Plates Co., Ltd. Zhang Yanlong, 39 of age, college graduate, engineer. He once was the workshop manager of steel-making factory; vice chief of QC department of iron-making factory, manager of steel-making factory of the Company. Hes now the head of production division of iron-making factory of the Company. At present shes the supervisor of Bengang Steel Plates Co., Ltd. Executives other than directors: Zhang Jichen, male, 59 of age, postgraduate degree, senior engineer. Once the vide director of planning department of Benxi Steel & Iron (Group) Co., Ltd.; vice director of Strategy Dept. and director of Policy Dept. Secretary of the Board of Bengang Steel Plate Co., Ltd.; At present hes the secretary of Board and Vice General Manager of Bengang Steel Plates Co., Ltd. 64 Bengang Steel Plates Co., Ltd. Annual Report 2015 Bao Mingwei, male, 53 of age, university graduate, certified senior engineer. Once he was the vice manager of hot-rolling factory, CCP secretary and vice manager of hot-rolling factory. At present hes the vice general manager of the Company and manager of No.3 Cool Rolling Factory. Wang Fengmin, male, 51 of age, master degree, senior engineer, professor. Once he was the vice manager of iron-making factory of the Company. At present he is the head of production division and vice general manager of Bengang Steel Plates Co., Ltd. Hu Guangyuan, male, 56 of age, master degree, senior engineer, professor. Once he was the vice general manager and general manager of Bengang Puxiang Cool-rolling Plate Co., Ltd. the head of product R&D center , At present he is the vice general manager of Bengang Steel Plates Co., Ltd. and director of Cool-rolling Plate factory. Wang Shaoyu, male, 52 of age, college graduate,senior accountant .Once he was the vice director , Deputy director and director of finance Dept of Bengang Steel Plates Co., Ltd.. at present he is the vice general manager and CFO of Bengang Steel Plates Co., Ltd.. Sun Yanbin, male, 34 of age, college graduate, senior accountant.once he was the offcer and deputy director of budget finance Dept of Bengang Group;Manager of Finance Dept of hot rolling factory of Finance Dept of Bengang Steel Plates Co., Ltd.;the assistant minister of Finance Dept of Bengang Steel Plates Co., Ltd.. at present he is the vice general manager and CFO of Bengang Steel Plates Co., Ltd.. at present he is the Secretary of the Board of Bengang Steel Plates Co., Ltd.. Office taking in shareholder companies √Applicable □Not applicable Does he /she Titles Names of the receive engaged in Sharting date of Expiry date of persons in Names of the shareholders remuneration or the office term office term office allowance from the shareholders shareholder Zhao Vice General Bengang Group Co., Ltd. March 1,2014 Yes Zhongmin Manager November Cao Aimin Bengang Group Co., Ltd. Direcor Yes 1,2010 Vice Chief accountant , Vice Director of Finance Zhao Wei Bengang Group Co., Ltd. Dept, October 1,2014 Yes Director of Capital Business Dept Director of Dong Liju Bengang Group Co., Ltd. April 1,2011 Yes Audit Dept Vice Han Mei Bengang Group Co., Ltd. October 1,2012 Yes directorof 65 Bengang Steel Plates Co., Ltd. Annual Report 2015 Audit Dept Offices taken in other organizations □Applicable √Not applicable Punishments to the current and leaving board directors, supervisors and senior managers during the report period by securities regulators in the recent three years □ Applicable √Not applicable IV. Remuneration to directors, supervisors and senior executives Decision-making procedures, basis for determination and actual payment of the remuneration to directors , supervisors and senior executives Decision making process 1. The Remuneration and Assessment Committee will produce a plan or proposal, which will be implemented upon approval of the Board or the Shareholders Meeting; 2. Upon the performance assessment criteria and procedures, the Remuneration and Assessment Committee undertakes assessment on the directors and executives. 3. Specific amounts and ways of rewards will be proposed according to the assessment and remuneration policies for the directors, supervisors and executives, and adopted by voting; 4. To be implemented upon approval of the Board. Basis of recognition: Remuneration scheme for a particular position is recognized basing on the range of responsibilities, duties, importance, and with consideration of similar positions in other enterprises. Remunerations are distributed basing on the assessment results and remuneration policies. Particulars about the payment: Wage paid on monthly basis according to the remuneration policies Remuneration of directors, supervisors, and executives in the report period In RMB0000 Total Remuneration remuneration actually receivect Name Positions Sex Age Office status received from the at the end of the shareholder reporting period Zhao Zhongmin Director, Chairman Male 49 In Office Yes Director, Vice Cao Aimin Chairman Male 49 In office Yes Han Ge Director, GM Male 47 In Office 24.21 No Zhao Wei Director Male 49 In office 15.68 Yes Jin Yongli Independent Director Male 58 In Office 5 No Zhong Tianli Independent Director Male 60 In office 5 No Zhao Xinan Independent Director Male 56 In Office 5 No Supervisor, Chairman Dong Liju Female 52 In office Yes of Supervisory 66 Bengang Steel Plates Co., Ltd. Annual Report 2015 Committee Han Mei Supervisor Female 47 In Office Yes Li Lin Supervisor Female 48 In Office 13.23 No Li Zhengchun Supervisor Male 43 In office 11.85 No Zhang Yanlong Supervisor Male 39 In Office 16.88 No Vice General Zhang Jichen Manager Male 59 In Office 20.17 No Vice General Bao Mingwei Manager Male 53 In office 22.28 No Vice General Wang Fenmin Manager Male 51 In Office 22.01 No Vice General Hu Guangyuan Manager Male 56 In office 21.36 No Vice General Wang Shaoyu Manager Male 52 In Office 20.67 No Secretary of the Sun Yanbin Male 34 In Office 11.02 No Board Wang Shu Director, Chairman Male 45 Resigned Yes Li Kai Independent Director Male 59 Resigned 5 No Li Naiming Supervisor, Male 45 Resigned 3.44 No Total -- -- -- -- 222.8 -- Incentive equity to directors, supervisors or/and senior executives in the reporting period □Applicable√Not applicable V. Particulars about employees. 1. Staff jobs, education, job title number and proportion refer to the following pie chart: Number of in-service staff of the parent company(person) 20,866 Number of in-service staff of the main subsidiaries(person) 648 Total number of the in-service staff(person) 21,514 Total number of staff receiving remuneration in the current 21,514 period(person) The number of the parent company and the main subsidiarys 925 retired staffs who need to bear the cost(person) Professional Classified according by Professions Number of persons(person) Production 17,503 Sales 200 Technical 1,475 Financial 148 67 Bengang Steel Plates Co., Ltd. Annual Report 2015 Administrative 2,188 Total 21,514 Education Classified according by education background Number of persons(person) Postgraduate or above 375 Universities 3,546 Colleges 5,787 Secondary school ,high school, technical school 4,814 below middle school 6,992 Total 21,514 2. Remuneration policies In 2015, the company pushed forward the pilot works on distribution system reform, so as to realize income distribution by performance; attempted to carry out the allowance system for concurrently holding posts; established broadband salary system; deepened the internal distribution, invigorated the proportion of fluctuate salary and fixed salary, enhance the orientation of salary distribution; continuously deepened the allocation management of base layer and promoted the internal fairness and reasonableness. 3.Training pllan 137 training programs were provided to 18884 employees, which was 90% as scheduled and covered 70% of the whole employees. 4. Outsourcing situation □ Applicable √ Not applicable 68 Bengang Steel Plates Co., Ltd. Annual Report 2015 IX. Administrative structure I.Basic state of corporate governance Since listed in the stock exchange, the Company has been following the laws, regulations and documents such as the Company Law, Securities Law, Listed Company Administration Rules, Shareholders Meeting Criteria of Listed Companies, Guide of Lifting the Quality of Listed Company, and Instructions for Articles of Association of Listed Companies. The Company has been establishing and improving the administration structures to protect the interests of the Company and the investors. The Shareholders Meeting was working with clear responsibilities and decision making procedures. Arrangement were made to enable convenient During the participating of the public investors. Online voting system was introduced for material decision making processes. reporting period, according to the relevant laws and regulations, and combining with the actual situation of the company, the Articles of Association, the Rules of Procedure for General Shareholder Meeting, the Rules of Procedure for the Board Meeting, Job Specification for General Manager, Financial Management Rules for Short-term Idle Funds, Special Deposit and Use Management Rules for the Raised Funds, Management Rules for Related Transactions and so on were revised early or late. responsibility to return on investors, improved and enhanced the corporate governance standards. Does there exist any difference in compliance with the corporate governance , the PRC Company Law and the relevant provisions of CSRC, √Yes □No There exist no difference in compliance with the corporate governance , the PRC Company Law and the relevant provisions of CSRC. II. Particulars about the independency of the Company in aspects of business, personnel, asset, organization, and accounting The Company is separated from the controlling shareholder in aspects of personnel, assets, financial affairs, institution, business, etc. and has its own independent and complete business operation. (1) In business operation: the Company has its own production and business planning, financial affairs check and calculate, personnel, raw material supplies and products selling business system independently and completely, . (2) In personnel: The Company and controlling shareholder are separate in such aspects as labor, personnel and salary management. Such senior executives as company's chairman, general manager, vice general manager, secretary of Board of Directors, etc. get salary from the Company, and have not held the important position other than a director in shareholding party. (3) In Asset: The Company is separated from the controlling shareholder's clearly in asset. The Company has its own independent purchase, production, and marketing system. (4) In organization: The internal operations of the Company are independent; organization structuring and working function are totally independent. (5) In finance: The company has independent financial & accounting department, the accounting and financial management system were are complete and operated independently, and has bank account and pay taxes independently. 69 Bengang Steel Plates Co., Ltd. Annual Report 2015 III. Competition situations of the industry □ Applicable √ Not Applicable IV. Annual General Meeting and Extraordinary Shareholders’ Meetings in the Reporting Period 1.Annual General Meeting Investor Sessions Type Meeting Date Disclosure date Disclosure index participation ratio Announcement Annual Genral Annual General No.2015-021.http: 0.08% May 21,2015 May 22,2015 Meeting of 2014 Meeting //www.cninfo.com.c n The first provisional Announcement Provisional shareholders No.2015-052,http: shareholders 0.08% September 15,2015 September 16,2015 General meeting in //www.cninfo.com.c General Meeting 2015 n The Second Announcement provisional Provisional No.2015-067,http: shareholders shareholders 0.05% December 29,2015 December 30,2015 //www.cninfo.com.c General meeting in General Meeting n 2015 2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore □ Applicable √Not applicable V. Responsibility performance of independent directors in report period 1. The attending of independent directors to board meetings and shareholders’ general meeting The attending of independent directors Number of Failure to Number of Board meetings Number of personally attend Independent Number of spot meetings Number of necessary to be attendances by board meetings Directors attendances attended by absence attended in the representative successively Communication reporting period twice (Yes/No) Li Kai 1 1 0 0 0 No Jin Yongli 7 5 2 0 0 No Zhong Tianli 7 4 2 1 0 No Zhao Xinan 6 4 2 0 0 No 70 Bengang Steel Plates Co., Ltd. Annual Report 2015 Number of general meetings attended by independent directors as non-voting 3 delegates Notes to failure to personally attend Board Meetings Successively Twice 2.Objection of independent directors on some relevant issues Objection of independent directors on some relevant issues □ Yes √No Independent directors proposed no objection against the relevant matters in the reporting period. 3. Other notes to duty performance of independent directors Has an independent directors advice to the Company been accepted √Yes □No Explanation on acceptance of or failure to accept an independent directors advice to the Company. Independent directors have not made recommendations during the reporting period. VI. Fulfilling of duties by the Special Committees under the Board of Directors The Remuneration and Assessment Committee is responsible to inspect the assessment process of the executives in year 2015. The Development and Strategy Committee is responsible to examine the Board of Directors Work Report 2015 in advance and provide suggestions on the Companys long-term development basing on its researches. The Auditing Committee is responsible to inspect the operation of internal auditing system, to verify the financial information disclosure, to examine the Financial Report 2015, and the Internal Control Introspective Evaluation Report, etc. Nomination Committee provided opinions on the adjustment of executive positions. VII. Fulfilling of duties of the Supervisory Committee Is there any risk with the Company discovered by the Supervisory Committee in the report period [] Yes [V] No The Supervisory Committee hasnt issued any objection on inspection issues. VIII. Assessment and incentive scheme for executives The Companys performance assessment scheme for executives has become a regular mechanism. Annual business plans adopted by the shareholders meeting and the Board were assigned and authorized to the executive team of the Company and were used as basis of annual assessment. Operational targets were scheduled by the Board to the executives and were reviewed from time to time during the year and annual rewards or penalties were issued at end of year. The incentive scheme was working effectively to motivate the directors, supervisors and executives. 71 Bengang Steel Plates Co., Ltd. Annual Report 2015 IX. Internal control situations 1.Specific situations on major defects of internal control discovered during report period √Yes □ No About the significant Defects of the internal control found in the internal control self-assessment report in the reporting period No major defects within the reporting period 2.Self-evaluation report on internal control Disclosing date of internal control auditing April 29,2016 report full text Index of the internal control auditing report http//www.cninfo.com.cn full text Standards of Defects Evaluation Category Financial Report Non-financial Report 1. Material deficiencies: The frauds made by the directors, or supervisors, or senior management personnel that leads to 1. Material deficiencies: Major errors significant losses and adverse effects to the caused by decision-making procedure; company; the supervisions made by the the important business lacks institutional company's audit committee and the audit control or has a systematic failure while department on the companys external lacking effective compensatory control; financial report and the internal control of serious drain of senior and middle level the financial report are invalid. 2. Significant management personnel and senior deficiencies: Not in accordance with technical staff; serious drain of business generally accepted accounting standards personnel in key posts; the results of selection and application of accounting internal control evaluation, especially the Qualitative criteria policies; Not established anti-fraud significant deficiencies have not been procedures and control measures; Not corrected; other circumstances that have established the corresponding control big negative impact on the company. 3. mechanism or not implemented the General deficiencies: low-efficiency on corresponding compensatory control on the the decision-making process; existed accounting treatment of non conventional or defects in the ordinary business special deals; there are one or more defects institution or system; serious drain of in the process control of the final financial business personnel in general posts; report and which leads to cannot reasonably general deficiencies that have not been guaranteeing the financial report compiled to corrected. achieve the goal of being true and accurate. 3: General deficiencies: the internal control deficiencies except those constitute the 72 Bengang Steel Plates Co., Ltd. Annual Report 2015 material deficiencies and the significant deficiencies. 1: Material deficiencies: 1) 1: Material deficiencies: 1) misstatement≥5% of the total profits; 2) misstatement≥5% of the total profits; 2) misstatement≥3% of the total assets; 3) misstatement≥3% of the total assets; 3) misstatement≥1% of the total operating misstatement≥1% of the total operating income; 4) misstatement≥1% of the total income; 4) misstatement≥1% of the total amount of the owners equity. 2. amount of the owners equity. 2. Significant Significant deficiencies: 1)3% of the deficiencies: 1)3% of the total profits total profits ≤misstatement<5% of the ≤misstatement<5% of the total profits; 2) total profits; 2) 0.5% of the total assets 0.5% of the total assets ≤misstatement<3% ≤misstatement<3% of the total assets; of the total assets; 3) 0.5% of the total 3) 0.5% of the total operating income Quantitative criteria operating income ≤misstatement<1% of the ≤misstatement<1% of the total total operating income; 4) 0.5% of the total operating income; 4) 0.5% of the total amount of the owners equity ≤misstatement amount of the owners equity <1% of the total amount of the owners ≤misstatement<1% of the total amount equity. 3. General deficiencies: of the owners equity. 3. General 1)misstatement<3% of the total profits; 2) deficiencies: 1)misstatement<3% of the misstatement<0.5% of the total assets; 3) total profits; 2) misstatement<0.5% of misstatement<0.5% of the total operating the total assets; 3) misstatement<0.5% income; 4) misstatement<0.5% of the total of the total operating income; 4) amount of the owners equity. misstatement<0.5% of the total amount of the owners equity. Number of major defects in financial reporting(a) Number of major defects in non financial reporting (a) Number of important defects in financial reporting(a) Number of important defects in non financial reporting(a) X. Internal Control audit report √ Applicable □Not applicable Review opinions in the internal control audit report We acknowledge that Bengang Bancai has been conducting effective internal control in all material aspects complying with “Fundamental Rules of Enterprise Internal Control” up to December 31, 2015. Disclosure date of audit report Disclosure of internal control (full-text) 73 Bengang Steel Plates Co., Ltd. Annual Report 2015 Index of audit report of April 29,2016 internal control (full-text) Internal audit reports opinion http//www.cninfo.com.cn Type of audit report on internal Unqualified auditors report control Whether there is significant No defectin non-financial report Has the CPAs issued a qualified auditors report of internal control . □ Yes √No Does the internal control audit report issued by the CPAs agree with the self-assessment report of the Board of Directors √Yes □No X. Financial Report I. Audit report Type of auditing opinion Standard report without qualified opinion Date of issue of the auditors Report April 27,2016 Name of the CPA BDO China Shu Lun Pan Certified Public Accountants LLP Name of the certified accountants Wu Xue, Zhang Huice Auditors’ Report To all shareholders of Bengang Steel Plate Co., Ltd. We have audited the accompanying financial statements of Bengang Steel Plates Co., Ltd. (hereinafter referred to as “the Company”) which comprise the consolidated statement of financial position and statement of financial position as at 31 December 2015, the consolidated statement of comprehensive income and statement of comprehensive income, the consolidated statement of changes in equity and statement of changes in equity, the consolidated statement of cash flows and statement of cash flows for the year then ended, and notes to the financial statements. I. Executives’ responsibilities on the Financial Statements Preparing of the Financial Statements according to Enterprise Accounting Standard is the responsibility of the management of the Company. This responsibility is including: (1) to prepare the financial statements according to 74 Bengang Steel Plates Co., Ltd. Annual Report 2015 the accounting standard, and ensure its fair reflection of business position; (2) to design, implement and maintain the internal control system related to producing of the Financial Statements, to prevent the Financial Statements from major false presentation due to cheating or error II. Responsibilities of the CPA Our responsibilities are to issue auditing opinions on the Financial Statements basing on the auditing works weve done on them. We carried out the auditing works with compliance to Chinese CPA Auditing Standard, which requires us to plan and implement our works on the basis of professional ethic standards, and obtain reasonable guarantee that the Financial Statements are free of major false statements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider the internal control relevant to the entitys preparation of financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting polices used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. III. Auditors’ Opinions In our opinion, the financial statements of Bengang Steel Plates Co., Ltd. present fairly, in all material respects, the consolidated financial position and financial position of the Company as at 31 December 2015, and the consolidated results of operations and results of operations and the consolidated cash flows and cash flows of the Company for the year then ended in accordance with the requirements of Accounting standards for Business Enterprises. Shu Lun Pan Certified Public Accountant LLP CPA China: Wu Xue (Limited Liability Partnership) Shanghai. China CPA China: Zhang Huice April 27, 2016 II. Financial Statements Statement in Financial Notes are carried in RMB/CNY 75 Bengang Steel Plates Co., Ltd. Annual Report 2015 1.Consolidated Balance sheet Prepared by :Bengang Steel Plates Co., Ltd. In RMB Items Year-end balance Year-beginning balance Current asset: Monetary fund 5,140,480,509.97 9,792,940,409.40 Settlement provision Outgoing call loan Financial assets measured at fair value with variations accounted into current income account Derivative financial assets Bill receivable 2,449,682,561.16 2,089,039,261.13 Account receivable 488,584,624.72 487,767,042.22 Prepayments 569,851,950.69 1,236,314,004.73 Insurance receivable Reinsurance receivable Provisions of Reinsurance contracts receivable Interest receivable 3,524,615.12 7,011,095.89 Dividend receivable Other account receivable 151,668,877.26 257,708,098.03 Repurchasing of financial assets Inventories 8,601,734,442.42 11,008,413,817.92 Assets held for sales Non-current asset due in 1 year Other current asset 431,360,541.21 457,504,509.43 Total of current assets 17,836,888,122.55 25,336,698,238.75 Non-current assets: Loans and payment on others behalf disbursed Disposable financial asset 20,271,278.63 20,271,278.63 Expired investment in possess Long-term receivable Long term share equity investment 76 Bengang Steel Plates Co., Ltd. Annual Report 2015 Property investment Fixed assets 20,046,254,726.74 17,144,282,253.99 Construction in progress 5,646,624,293.27 6,126,175,722.67 Engineering material 4,152,880.79 90,221,101.46 Fixed asset disposal Production physical assets Gas & petrol Intangible assets 265,520,912.57 271,459,969.75 R & D petrol Goodwill Long-germ expenses to be amortized Differed income tax asset 641,931,130.78 181,494,465.42 Other non-current asset Total of non-current assets 26,624,755,222.78 23,833,904,791.92 Total of assets 44,461,643,345.33 49,170,603,030.67 Current liabilities Short-term loans 18,139,885,596.60 18,187,945,675.93 Loan from Central Bank Deposit received and hold for others Call loan received Financial liabilities measured at fair value with variations accounted into current income account Derivative financial liabilities Bill payable 2,110,511,950.79 822,581,591.46 Account payable 5,015,900,664.47 8,780,948,804.18 Advance payment 1,815,443,452.05 3,144,418,091.52 Selling of repurchased financial assets Fees and commissions receivable Employees wage payable 36,455,143.76 35,383,951.55 Tax payable 45,194,528.35 32,323,181.76 Interest payable 70,958,686.96 26,935,067.99 Dividend payable Other account payable 444,734,704.90 469,316,015.83 Reinsurance fee payable 77 Bengang Steel Plates Co., Ltd. Annual Report 2015 Insurance contract provision Entrusted trading of securities Entrusted selling of securities Liabilities held for sales Non-current liability due in 1 year 1,434,004,649.14 591,740,000.00 Other current liability Total of current liability 29,113,089,377.02 32,091,592,380.22 Non-current liabilities: Long-term loan 1,005,919,974.09 814,627,465.85 Bond payable 1,490,352,572.75 Including:preferred stock Sustainable debt Long-term payable Long-term payable employeess remuneration Special payable Expected liabilities Deferred income 413,188,000.00 427,524,000.00 Deferred income tax liability Other non-current liabilities Total non-current liabilities 2,909,460,546.84 1,242,151,465.85 Total of liability 32,022,549,923.86 33,333,743,846.07 Owners equity Share capital 3,136,000,000.00 3,136,000,000.00 Other equity instruments Including:preferred stock Sustainable debt Capital reserves 9,114,845,542.05 9,114,845,542.05 Less:Shares in stock Other comprehensive income Special reserves 393,372.05 430,777.94 Surplus reserves 961,105,529.85 961,105,529.85 Common risk provision Undistributed profit -1,278,244,071.93 2,172,180,473.24 78 Bengang Steel Plates Co., Ltd. Annual Report 2015 Total of owners equity belong to the 11,934,100,372.02 15,384,562,323.08 parent company Minority shareholders equity 504,993,049.45 452,296,861.52 Total of owners equity 12,439,093,421.47 15,836,859,184.60 Total of liabilities and owners equity 44,461,643,345.33 49,170,603,030.67 Legal Representative: Zhao Zhongmin Person in charge of accounting:Han Ge Accounting Dept Leader:Wang Shaoyu 2. Balance sheet of Parent Company In RMB Items Year-end balance Year-beginning balance Current asset: Monetary fund 4,921,089,319.57 9,530,304,140.51 Financial assets measured at fair value with variations accounted into current income account Derivative financial assets Bill receivable 2,298,691,410.40 1,863,613,673.54 Account receivable 449,193,422.02 388,842,194.63 Prepayments 549,553,039.03 1,126,416,683.45 Interest receivable 3,524,615.12 7,011,095.89 Dividend receivable Other account receivable 229,428,159.94 302,622,013.53 Inventories 7,452,873,949.34 9,215,120,654.72 Assets held for sales Non-current asset due in 1 year Other current asset 387,259,423.54 404,119,874.38 Total of current assets 16,291,613,338.96 22,838,050,330.65 Non-current assets: Disposable financial asset 18,303,673.00 18,303,673.00 Expired investment in possess Long-term receivable Long term share equity investment 1,700,981,902.16 1,690,981,902.16 Property investment 79 Bengang Steel Plates Co., Ltd. Annual Report 2015 Fixed assets 17,179,043,906.45 14,089,675,221.83 Construction in progress 5,646,077,292.11 6,074,588,463.12 Engineering material 4,134,138.91 90,221,101.46 Fixed asset disposal Production physical assets Gas & petrol Intangible assets 158,694,589.82 162,000,727.11 R & D petrol Goodwill Long-germ expenses to be amortized Deferred income tax asset 562,072,018.42 81,964,982.51 Other non-current asset Total of non-current assets 25,269,307,520.87 22,207,736,071.19 Total of assets 41,560,920,859.83 45,045,786,401.84 Current liabilities Short-term loans 16,798,213,600.00 16,028,552,000.00 Financial liabilities measured at fair value with variations accounted into current income account Derivative financial liabilities Bill payable 1,651,808,822.92 732,475,382.04 Account payable 5,263,012,477.37 8,914,580,556.14 Advance payment 1,957,484,054.73 2,639,010,215.36 Employees wage payable 34,194,188.88 32,213,350.61 Tax payable 9,986,022.56 7,979,826.50 Interest payable 70,113,698.63 5,080,000.00 Dividend payable Other account payable 324,906,037.82 327,382,843.61 Liabilities held for sales Non-current liability due in 1 year 1,434,004,649.14 308,740,000.00 Other current liability Total of current liability 27,543,723,552.05 28,996,014,174.26 Non-current liabilities: Long-term loan 1,005,919,974.09 814,627,465.85 Bond payable 1,490,352,572.75 80 Bengang Steel Plates Co., Ltd. Annual Report 2015 Including:preferred stock Sustainable debt Long-term payable Employees wage payable Special payable Expected liabilities Deferred income 413,188,000.00 427,524,000.00 Deferred income tax liability Other non-current liabilities Total of Non-current liabilities 2,909,460,546.84 1,242,151,465.85 Total of liability 30,453,184,098.89 30,238,165,640.11 Owners equity Share capital 3,136,000,000.00 3,136,000,000.00 Other equity instrument Including:preferred stock Sustainable debt Capital reserves 8,694,693,859.93 8,694,693,859.93 Less:Shares in stock Other comprehensive income Special reserves 393,372.05 430,777.94 Surplus reserves 961,105,529.85 961,105,529.85 Undistributed profit -1,684,456,000.89 2,015,390,594.01 Total of owners equity 11,107,736,760.94 14,807,620,761.73 Total of liabilities and owners equity 41,560,920,859.83 45,045,786,401.84 3.Consolidated Income Statement In RMB Items Report period Same period of the previous year I. Income from the key business 29,253,638,605.80 41,422,088,025.70 Incl:Business income 29,253,638,605.80 41,422,088,025.70 Interest income Insurance fee earned Fee and commission received II. Total business cost 33,094,102,341.68 41,115,934,904.54 81 Bengang Steel Plates Co., Ltd. Annual Report 2015 Incl:Business cost 29,811,895,016.85 38,489,119,026.43 Interest expense Fee and commission paid Insurance discharge payment Net claim amount paid Insurance policy dividend paid Insurance policy dividend paid Reinsurance expenses Business tax and surcharge 51,569,621.87 118,161,457.86 Sales expense 919,110,499.37 863,079,137.09 Administrative expense 733,933,299.88 899,624,299.29 Financial expenses 1,063,317,455.47 717,292,853.39 Asset impairment loss 514,276,448.24 28,658,130.48 Add:Gains from change of fir value (“-”for loss) Investment gain(“-”for loss) 7,226,589.08 20,845,473.00 Incl: investment gains from affiliates Gains from currency exchange(“-”for loss) III. Operational profit(“-”for loss) -3,833,237,146.80 326,998,594.16 Add :Non-operational income 176,054,356.57 37,115,131.68 Including:Income from disposal of 21,206,096.82 7,296,356.96 non-current assets Less:Non business expenses 24,135,783.17 10,297,285.52 Incl:Loss from disposal of non-current 24,124,620.55 10,297,285.52 assets IV.Total profit(“-”for loss) -3,681,318,573.40 353,816,440.32 Less:Income tax expenses -440,390,216.16 38,943,288.16 V. Net profit -3,240,928,357.24 314,873,152.16 Net profit attributable to the owners of -3,293,624,545.17 232,804,820.19 parent company Minority shareholders equity 52,696,187.93 82,068,331.97 VI. Other comprehensive income Net of profit of other comprehensive inco me attributable to owners of the parent co mpany. 82 Bengang Steel Plates Co., Ltd. Annual Report 2015 (I)Other comprehensive income items that will not be reclassified into gains/losses in the subsequent accounting period 1.Re-measurement of defined benefit pla ns of changes in net debt or net assets 2.Other comprehensive income under the equity method investee can not be reclass ified into profit or loss. (II) Other comprehensive income that will b e reclassified into profit or loss. 1.Other comprehensive income under the equity method investee can be reclassifie d into profit or loss. 2.Gains and losses from changes in fair v alue available for sale financial assets 3.Held-to-maturity investments reclassifi ed to gains and losses of available for sal e financial assets 4.The effective portion of cash flow hedg es and losses 5.Translation differences in currency fina ncial statements 6.Other 7.Net of profit of other comprehensive i ncome attributable to Minority shareholders equity VII. Total comprehensive income -3,240,928,357.24 314,873,152.16 Total comprehensive income attributable -3,293,624,545.17 232,804,820.19 to the owner of the parent company Total comprehensive income attributable 52,696,187.93 82,068,331.97 minority shareholders VIII. Earnings per share (I)Basic earnings per share -1.050 0.074 (II)Diluted earnings per share -1.050 0.074 The current business combination under common control, the net profits of the combined party before achieved ne t profit of RMB 0, last period the combined party realized RMB 0. Legal Representative:Zhao Zhongmin Person in charge of accounting:Han Ge Accounting Dept Leader: Wang Shaoyu 83 Bengang Steel Plates Co., Ltd. Annual Report 2015 4. Income statement of the Parent Company In RMB Items Amount in this period Amount in last period I. Income from the key business 28,523,101,618.99 41,634,258,361.21 Incl:Business cost 29,769,289,938.38 39,551,413,702.03 Business tax and surcharge 25,627,202.18 92,196,044.43 Sales expense 730,692,018.11 679,034,187.84 Administrative expense 675,861,313.03 833,935,376.24 Financial expenses 986,248,046.33 596,662,880.18 Asset impairment loss 514,222,418.93 28,039,768.05 Add:Gains from change of fir value (“-”for loss) Investment gain(“-”for loss) 7,226,589.08 172,968,147.30 Incl: investment gains from affiliates II. Operational profit(“-”for loss) -4,171,612,728.89 25,944,549.74 Add :Non-operational income 172,498,611.64 33,814,507.51 Including:Income from disposal of 19,820,758.05 7,287,133.61 non-current assets Less:Non business expenses 24,039,513.56 10,297,285.52 Incl:Loss from disposal of non-current 24,039,513.56 10,297,285.52 assets III.Total profit(“-”for loss) -4,023,153,630.81 49,461,771.73 Less:Income tax expenses -480,107,035.91 5,347,510.63 IV. Net profit(“-”for net loss) -3,543,046,594.90 44,114,261.10 V.Net of profit of other comprehensive i ncome (I)Other comprehensive income items that will not be reclassified into gains/losses in the subsequent accounting period 1.Re-measurement of defined benefit pl ans of changes in net debt or net assets 2.Other comprehensive income under th e equity method investee can not be recl assified into profit or loss. (II) 84 Bengang Steel Plates Co., Ltd. Annual Report 2015 Other comprehensive income that will b e reclassified into profit or loss. 1.Other comprehensive income under th e equity method investee can be reclassi fied into profit or loss. 2.Gains and losses from changes in fair value available for sale financial assets 3.Held-to-maturity investments reclassif ied to gains and losses of available for s ale financial assets 4.The effective portion of cash flow hed ges and losses 5.Translation differences in currency fin ancial statements 6.Other VI. Total comprehensive income -3,543,046,594.90 44,114,261.10 VII. Earnings per share: (I)Basic earnings per share (II)Diluted earnings per share 5. Consolidated Cash flow statement In RMB Items Amount in this period Amount in last period I.Cash flows from operating activities Cash received from sales of goods or 23,411,443,776.75 27,081,903,407.76 rending of services Net increase of customer deposits and capital kept for brother company Net increase of loans from central bank Net increase of inter-bank loans from other financial bodies Cash received against original insurance contract Net cash received from reinsurance business Net increase of client deposit and investment 85 Bengang Steel Plates Co., Ltd. Annual Report 2015 Net increase of amount from disposal financial assets that measured by fair value and with variation reckoned into current gains/losses Net increase of inter-bank fund received Net increase of trade financial asset disposal Net increase of repurchasing business Tax returned 797,597,007.61 125,801,169.55 Other cash received from business 362,548,861.72 355,359,346.31 operation Sub-total of cash inflow 24,571,589,646.08 27,563,063,923.62 Cash paid for purchasing of 24,253,340,775.32 21,366,796,915.86 merchandise and services Net increase of client trade and advance Net increase of savings n central bank and brother company Cash paid for original contract claim Cash paid for interest, processing fee and commission Cash paid for policy dividend Cash paid to staffs or paid for staffs 1,927,960,219.83 2,256,955,412.05 Taxes paid 343,995,637.61 527,920,890.61 Other cash paid for business activities 351,298,981.42 543,250,610.24 Sub-total of cash outflow from business 26,876,595,614.18 24,694,923,828.76 activities Cash flow generated by business -2,305,005,968.10 2,868,140,094.86 operation, net II.Cash flow generated by investing Cash received from investment 1,747,000,000.00 8,214,370,000.00 retrieving Cash received as investment gains 7,226,589.08 20,845,473.00 Net cash retrieved from disposal of fixed assets, intangible assets, and other 21,753,471.24 4,317,974.80 long-term assets Net cash received from disposal of subsidiaries or other operational units 86 Bengang Steel Plates Co., Ltd. Annual Report 2015 Other investment-related cash received Sub-total of cash inflow due to 1,775,980,060.32 8,239,533,447.80 investment activities Cash paid for construction of fixed assets, intangible assets 3,472,745,508.10 642,437,425.53 and other long-term assets Cash paid as investment 1,747,000,000.00 7,684,370,000.00 Net increase of loan against pledge Net cash received from subsidiaries and other operational units Other cash paid for investment activities Sub-total of cash outflow due to 5,219,745,508.10 8,326,807,425.53 investment activities Net cash flow generated by investment -3,443,765,447.78 -87,273,977.73 III.Cash flow generated by financing Cash received as investment Incl: Cash received as investment from minor shareholders Cash received as loans 24,859,581,641.78 20,842,507,551.86 Cash received from bond placing 1,486,500,000.00 Other financing –related ash received 800,000,000.00 Sub-total of cash inflow from financing 27,146,081,641.78 20,842,507,551.86 activities Cash to repay debts 24,800,789,257.57 17,417,163,487.98 Cash paid as dividend, profit, or 980,727,660.92 965,170,022.92 interests Incl: Dividend and profit paid by subsidiaries to minor shareholders Other cash paid for financing activities 399,397,047.75 346,082,054.07 Sub-total of cash outflow due to 26,180,913,966.24 18,728,415,564.97 financing activities Net cash flow generated by financing 965,167,675.54 2,114,091,986.89 IV. Influence of exchange rate 69,352,483.25 -20,346,548.36 alternation on cash and cash equivalents V.Net increase of cash and cash -4,714,251,257.09 4,874,611,555.66 equivalents 87 Bengang Steel Plates Co., Ltd. Annual Report 2015 Add: balance of cash and cash 9,327,034,030.07 4,452,422,474.41 equivalents at the beginning of term VI ..Balance of cash and cash 4,612,782,772.98 9,327,034,030.07 equivalents at the end of term 6. Cash flow statement of the Parent Company In RMB Items Amount in this period Amount in last period I.Cash flows from operating activities Cash received from sales of goods or 23,427,109,010.65 29,100,336,040.94 rending of services Tax returned 711,467,848.16 98,742,453.92 Other cash received from business 210,299,707.85 438,335,184.14 operation Sub-total of cash inflow 24,348,876,566.66 29,637,413,679.00 Cash paid for purchasing of 25,774,210,167.57 23,773,038,481.99 merchandise and services Cash paid to staffs or paid for staffs 1,817,930,712.94 2,139,961,256.89 Taxes paid 154,610,526.07 327,014,362.65 Other cash paid for business activities 60,248,461.32 480,494,224.57 Sub-total of cash outflow from business 27,806,999,867.90 26,720,508,326.10 activities Cash flow generated by business -3,458,123,301.24 2,916,905,352.90 operation, net II.Cash flow generated by investing Cash received from investment 1,747,000,000.00 7,440,000,000.00 retrieving Cash received as investment gains 7,226,589.08 16,389,712.34 Net cash retrieved from disposal of fixed assets, intangible assets, and other 21,713,471.24 4,317,974.80 long-term assets Net cash received from disposal of subsidiaries or other operational units Other investment-related cash received Sub-total of cash inflow due to 1,775,940,060.32 7,460,707,687.14 investment activities Cash paid for construction of 3,446,420,670.56 636,628,096.53 88 Bengang Steel Plates Co., Ltd. Annual Report 2015 fixed assets, intangible assets and other long-term assets Cash paid as investment 1,757,000,000.00 6,910,000,000.00 Net cash received from subsidiaries and other operational units Other cash paid for investment activities Sub-total of cash outflow due to 5,203,420,670.56 7,546,628,096.53 investment activities Net cash flow generated by investment -3,427,480,610.24 -85,920,409.39 III.Cash flow generated by financing Cash received as investment Cash received as loans 23,419,954,378.62 18,594,014,000.00 Cash received from bond placing 1,486,500,000.00 Other financing –related ash received 800,000,000.00 Sub-total of cash inflow from financing 25,706,454,378.62 18,594,014,000.00 activities Cash to repay debts 22,260,440,315.08 15,336,096,665.14 Cash paid as dividend, profit, or 901,348,956.26 856,130,197.71 interests Other cash paid for financing activities 329,226,064.22 310,194,469.10 Sub-total of cash outflow due to 23,491,015,335.56 16,502,421,331.95 financing activities Net cash flow generated by financing 2,215,439,043.06 2,091,592,668.05 IV. Influence of exchange rate 69,329,673.35 -17,606,654.45 alternation on cash and cash equivalents V.Net increase of cash and cash -4,600,835,195.07 4,904,970,957.11 equivalents Add: balance of cash and cash 9,090,466,146.15 4,185,495,189.04 equivalents at the beginning of term VI ..Balance of cash and cash 4,489,630,951.08 9,090,466,146.15 equivalents at the end of term 7. Consolidated Statement on Change in Owners’ Equity Amount in this period In RMB Items Amount in this period 89 Bengang Steel Plates Co., Ltd. Annual Report 2015 Owners equity Attributable to the Parent Company Other Equity Minor instrusment Other Commo Total of Share Less: Speciali Attribut shareho Capital Compre Surplus n risk owners Capita prefer Shares zed able lders reserves hensive reserves provisio equity Sustai l red Other in stock reserve profit equity nable Income n stock debt 3,136, 9,114,8 2,172,1 15,836, I.Balance at the 430,777 961,105 452,296 000,00 45,542. 80,473. 859,184 end of last year .94 ,529.85 ,861.52 0.00 05 24 .60 Add: Change of accounting policy Correcting of previous errors Merger of entities under common control Other II.Balance at the 3,136, 9,114,8 2,172,1 15,836, 430,777 961,105 452,296 beginning of 000,00 45,542. 80,473. 859,184 .94 ,529.85 ,861.52 current year 0.00 05 24 .60 -3,450,4 -3,397,7 III.Changed in the -37,405. 52,696, 24,545. 65,763. current year 89 187.93 17 13 (1)Total -3,293,6 -3,240,9 52,696, comprehensive 24,545. 28,357. 187.93 income 17 24 (II)Investment or decreasing of capital by owners 1.Ordinary Share s invested by hare holders 2 . Holders of oth er equity instrume nts invested capital 3.Amount of shares paid and accounted as 90 Bengang Steel Plates Co., Ltd. Annual Report 2015 owners equity 4.Other -156,80 -156,80 (III)Profit 0,000.0 0,000.0 allotment 0 0 1.Providing of surplus reserves 2.Providing of common risk provisions 3.Allotment to the -156,80 -156,80 owners (or 0,000.0 0,000.0 shareholders) 0 0 4.Other (IV) 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. Other (V). Special -37,405. -37,405. reserves 89 89 1. Provided this 34,967, 34,967, year 129.18 129.18 35,004, 35,004, 2.Used this term 535.07 535.07 (VI)Other 0.00 3,136, 9,114,8 -1,278,2 12,439, IV. Balance at the 393,372 961,105 504,993 000,00 45,542. 44,071. 093,421 end of this term .05 ,529.85 ,049.45 0.00 05 93 .47 Amount in last year 91 Bengang Steel Plates Co., Ltd. Annual Report 2015 In RMB Amount in last year Owners equity Attributable to the Parent Company Other Equity Minor instrusment Total of Items Other Commo Share Less: Speciali Attribut shareho Capital Compre Surplus n risk owners Capita prefer Shares zed able lders Sustai reserves hensive reserves provisio equity l red Other in stock reserve profit equity nable Income n stock debt 3,136, 9,114,8 2,100,5 15,678, I.Balance at the 210,972 956,694 370,228 000,00 45,542. 87,079. 566,227 end of last year .68 ,103.74 ,529.55 0.00 05 16 .18 Add: Change of accounting policy Correcting of previous errors Merger of entities under common control Other II.Balance at the 3,136, 9,114,8 2,100,5 15,678, 210,972 956,694 370,228 beginning of 000,00 45,542. 87,079. 566,227 .68 ,103.74 ,529.55 current year 0.00 05 16 .18 III.Changed in the 219,805 4,411,4 71,593, 82,068, 158,292 current year .26 26.11 394.08 331.97 ,957.42 (1)Total 232,804 82,068, 314,873 comprehensive ,820.19 331.97 ,152.16 income (II)Investment or decreasing of capital by owners 1.Ordinary Share s invested by hare holders 2 . Holders of oth er equity instrume nts invested capital 3.Allotment to the 92 Bengang Steel Plates Co., Ltd. Annual Report 2015 owners (or shareholders) 4.Other -161,21 -156,80 (III)Profit 4,411,4 1,426.1 0,000.0 allotment 26.11 1 0 1.Providing of 4,411,4 -4,411,4 surplus reserves 26.11 26.11 2.Providing of common risk provisions 3.Allotment to the -156,80 -156,80 owners (or 0,000.0 0,000.0 shareholders) 0 0 4.Other (IV) 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. Other (V) Special 219,805 219,805 reserves .26 .26 1. Provided this 35,149, 35,149, year 380.86 380.86 34,929, 34,929, 2.Used this term 575.60 575.60 (VI)Other 3,136, 9,114,8 2,172,1 15,836, IV. Balance at the 430,777 961,105 452,296 000,00 45,542. 80,473. 859,184 end of this term .94 ,529.85 ,861.52 0.00 05 24 .60 93 Bengang Steel Plates Co., Ltd. Annual Report 2015 8. Statement of change in owner’s Equity of the Parent Company Amount in this period In RMB Amount in this period Other Equity instrusment Other Less: Total of Items Share Capital Compreh Specialize Surplus Attribut preferre Sustain Shares in able owners Capital Other reserves ensive d reserve reserves profit d stock able stock equity Income debt 2,015,3 3,136,00 8,694,693 430,777.9 961,105,5 14,807,62 90,594. I.Balance at the 0,000.00 ,859.93 4 29.85 0,761.73 end of last year 01 Add: Change of accounting policy Correcting of previous errors Other II.Balance at the 2,015,3 3,136,00 8,694,693 430,777.9 961,105,5 14,807,62 beginning of 90,594. 0,000.00 ,859.93 4 29.85 0,761.73 current year 01 -3,699,8 III.Changed in the -37,405.8 -3,699,88 46,594. current year 9 4,000.79 90 (1)Total -3,543,0 -3,543,04 comprehensive 46,594. 6,594.90 income 90 (II)Investment or decreasing of capital by owners 1.Ordinary Share s invested by hareh olders 2 . Holders of oth er equity instrume nts invested capital 3.Allotment to the owners (or shareholders) 94 Bengang Steel Plates Co., Ltd. Annual Report 2015 4.Other -156,80 (III)Profit -156,800, 0,000.0 allotment 000.00 0 1.Providing of surplus reserves 2.Allotment to the -156,80 -156,800, owners (or 0,000.0 000.00 shareholders) 0 3.Other (IV)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. Other (V) Special -37,405.8 -37,405.8 reserves 9 9 1. Provided this 34,967,12 34,967,12 year 9.18 9.18 35,004,53 35,004,53 2.Used this term 5.07 5.07 (VI)Other -1,684,4 IV. Balance at the 3,136,00 8,694,693 393,372.0 961,105,5 11,107,73 56,000. end of this term 0,000.00 ,859.93 5 29.85 6,760.94 89 Amount in last year In RMB Amount in last year Items Share Other Equity instrusment Capital Less: Other Specialize Surplus Attribut Total of 95 Bengang Steel Plates Co., Ltd. Annual Report 2015 Capital reserves Shares in Compreh d reserve reserves able owners profit preferre Sustain stock ensive equity Other d stock able Income debt 2,132,4 3,136,00 8,694,693 210,972.6 956,694,1 14,920,08 87,759. I.Balance at the 0,000.00 ,859.93 8 03.74 6,695.37 end of last year 02 Add: Change of accounting policy Correcting of previous errors Other II.Balance at the 2,132,4 3,136,00 8,694,693 210,972.6 956,694,1 14,920,08 beginning of 87,759. 0,000.00 ,859.93 8 03.74 6,695.37 current year 02 -117,09 III.Changed in the 219,805.2 4,411,426 -112,465, 7,165.0 current year 6 .11 933.64 1 (1)Total 44,114, 44,114,26 comprehensive 261.10 1.10 income (II)Investment or decreasing of capital by owners 1.Ordinary Share s invested by hareh olders 2 . Holders of oth er equity instrume nts invested capital 3.Allotment to the owners (or shareholders) 4.Other -161,21 (III)Profit 4,411,426 -156,800, 1,426.1 allotment .11 000.00 1 1.Providing of 4,411,426 -4,411,4 surplus reserves .11 26.11 96 Bengang Steel Plates Co., Ltd. Annual Report 2015 2.Allotment to the -156,80 -156,800, owners (or 0,000.0 000.00 shareholders) 0 3.Other (IV)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. Other (V) Special 219,805.2 219,805.2 reserves 6 6 1. Provided this 35,149,38 35,149,38 year 0.86 0.86 34,929,57 34,929,57 2.Used this term 5.60 5.60 (VI)Other 2,015,3 IV. Balance at the 3,136,00 8,694,693 430,777.9 961,105,5 14,807,62 90,594. end of this term 0,000.00 ,859.93 4 29.85 0,761.73 01 III. Company Profiles Bengang Steel Plates Co., Ltd. (hereinafter referred to as “the Company”), as approved in Liao-Zheng (1997) No. 57 by Liaoning Peoples Government on 27 March 1997, was incorporated as a joint stock limited company through public share offer of domestic listed foreign currency denominated shares (B shares) in the Peoples Republic of China (the “PRC”) on 27 June 1997 by Benxi Iron and Steel (Group) Co., Ltd. (“Bengang Group”), through reorganization of operations, assets and liabilities of its plants, namely, Steel Smelting Plant, Primary Rolling Plant and Continuous Hot Rolling Plant. As approved by China Securities Regulatory Commission, the Company issued 400,000,000 B-shares at RMB2.38 each in Shenzhen Stock Exchange on 10 June 1997. On 3 November 1997, the Company issued another 120,000,000 A-shares (Renminbi Common Shares) at RMB5.40 each, and listed in Shenzhen Stock Exchange since 15 January 1998. The capital shares were totalled to 1,136,000,000 shares including 616,000,000 shares held by the promoter. 97 Bengang Steel Plates Co., Ltd. Annual Report 2015 As approved by China Securities Regulatory Commission, the Company issued 400,000,000 B-shares at RMB2.38 each in Shenzhen Stock Exchange on 10 June 1997. On 3 November 1997, the Company issued another 120,000,000 A-shares (Renminbi Common Shares) at RMB5.40 each, and listed in Shenzhen Stock Exchange since 15 January 1998. The capital shares were totalled to 1,136,000,000 shares including 616,000,000 shares held by the promoter. On March 14 2006, according to the resolutions of the Shareholders Meeting regarding share equity relocation, the Share Equity Relocation Scheme, Response to Bengang Steel Plate Co., Ltd. about Share Equity Relocation issued by Liaoning Provincial Government State-owned Asset Administrative Committee, Bengang Group – the only holder of non-negotiable state-owned legal person shares paid the consideration to the current shareholders to obtain the current option for the 40,800,000 shares of the total 616,000,000 shares it was holding. 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. Up to December 31, 2015, the capital shares of Bengang Steel Plates Co., Ltd were amounted to 3,136,000,000 shares. The business license was numbered 210000004931633. The registered address is: 18th Gangtie Road, Pingshan, Benxi, Liaoning Province. The registered capital is RMB3,136,000,000. The legal representative is Zhao Zhongmin. The parent company of Bengang Steel Plates Co., Ltd is Benxi Iron and Steel (Group) Co., Ltd. and the actual controller is the State-owned Assets Supervision and Administration Commission of the State Council of Liaoning province. The company belongs to the ferrous metal smelting and rolling processing industry sectors. The main business activities of production and sales of ferrous metal products. The above financial accounts were approved by the Board of Directors on April 27, 2016. As of December 31, 2015, the consolidating range of the consolidated accounts is covering the following subsidiaries: Name of the subsidiaries Guangzhou Bengang Trade Co., Ltd. Shanghai Bengang Metallurgy Tech. Ltd. Bengang Steel Plate Liaoyang Orel Ball Co., Ltd. 98 Bengang Steel Plates Co., Ltd. Annual Report 2015 Dalian Benruitong Automobile Material Technologies Co., Ltd. Changchun Bengang Steel Sales Ltd. Haerbin Bengang International Trading Ltd. Nanjing Bengang Steel Material Sales Ltd. Wuxi Bengang Steel Sales Ltd. Xiamen Bengang Steel Sales Ltd. Yantai Bengang Steel Sales Ltd. Tianjin Bengang Steel Trading Ltd. Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. Benxi Bengang Steel Sales Ltd. Shenyang Bengang Metallurgical Technology Co., Ltd. The scope of the consolidated financial statements of the current period has been added the newly established subsidiaries of Benxi Bengang Steel Sales Co., Ltd and Shenyang Bengang Metallurgy Technology Co., Ltd. IV. Basis of Preparation 1. Basis of preparation The Company prepares its financial statements on perpetual basis and accrual basis, with accordance with the Enterprise Accounting Standard issued by the Department of Finance – the basic rules and multiple principles, as well as the proceeding instructions, interpretations, and other rules (regarded collectively as “The Enterprise Accounting Standard”, and also the Information Disclosure Rules No.15 – General rules of financial statements issued by China Securities Regulatory Commission. 2. Perpetual operation The Company is in normal and healthy operation , 12 months have since continued viability of the reporting period. V. Material Accounting Policies and Accounting Estimations Note to detailed accounting policies and estimations: The following contents are covering the detailed accounting policies and estimations made in accordance with the business practice of the Company. 1. 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. 99 Bengang Steel Plates Co., Ltd. Annual Report 2015 2. Accounting period A fiscal year starts from January 1 and ends at December 31 of a calendar year. 3. Business circle The Companys business circle covers 12 months. 4. Standard currency for bookkeeping The Company uses Renminbi (RMB) as the standard currency for book keeping. 5. Accounting treatment of the merging entities under common control and different control 1. Business combination under common control The assets and liabilities that the Company acquired in a business combination shall be measured on the basis of their carrying amount of aquirees assets, liabilities (as well as the goodwill arising from the business combination) in the consolidated financial statement of the ultimate controller on the combining date. As for the balance between the carrying amount of the net assets obtained by the Company and the carrying amount of the consideration paid by it (or the total par value of the shares issued), capital reserve needs to be adjusted. If the capital reserve is not sufficient, any excess shall be adjusted against retained earnings. Business combination involving entities not under common control The Company shall, on the acquisition date, measure the assets given and liabilities incurred or assumed by an enterprise for a business combination in light of their fair values, and shall record the balances between them and their carrying amounts into the profits and losses at the current period. The Company shall recognize the positive balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree as goodwill. The Company shall treat the negative balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree into the profits and losses of the current period. The intermediary costs and relevant management fee for the business combination now under same control paid by the acquirer, including the expenses for audit, assessment and legal services, shall be recorded into the profits and losses at the current period. The transaction expenses for the issuance of equity securities for the business combination shall be recorded into the initial recognition amount of equity securities. 6. Preparing method of consolidated financial statements 1. Consolidation range 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. 2. Procedure of consolidation The consolidated financial statements shall be presented by the parent based on the financial statements of the parent and its subsidiaries, and using other related information. When preparing consolidated financial statements, the parent shall consider the entire group as an accounting entity, adopt uniform accounting policies and apply the requirements of Accounting Standard for Business Enterprises related to recognition, measurement and presentation. The consolidated financial statements shall reflect the overall financial position, operating results and cash flows of the group. 100 Bengang Steel Plates Co., Ltd. Annual Report 2015 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 Companys accounting policies and accounting period when preparing the consolidated financial statements. For subsidiaries through acquisition that are now under common control, the financial statements are adjusted according to fair value of identifiable net assets on the acquisition date. For subsidiaries through acquisition that are under common control, the assets, liabilities (as well as the goodwill arising from purchasing the subsidiary by the ultimate controller) are adjusted according to book value of net assets in the financial statements of the ultimate controller. The owners interests, profit or loss, and comprehensive income of the subsidiary attributable to the non-controlling shareholders shall be presented separately in the shareholders equity of the consolidated balance sheet and under the item of net profit of the consolidated statement of comprehensive income and under the item of total comprehensive income. Where losses assumed by the minority exceed the minoritys interests in the beginning equity of a subsidiary, the excess shall be charged against the minoritys interests. (1) Increase of new subsidiary and business If the Company has a new subsidiary due to business combination under common control during a reporting period, it shall adjust the beginning balance in the consolidated statement of financial position when preparing consolidated statement of financial position. The revenue, expenses and profits of the subsidiaries from the acquisition date to the end of the reporting period are included in the Companys consolidated statement of comprehensive income. The cash flow of the subsidiaries from the acquisition date to the end of the reporting period is included in the Companys consolidated statement of cash flows. And meanwhile the Company shall adjust the relevant items of the comparative financial statements as if the reporting entity for the purpose of consolidation has been in existence since the date the ultimate controlling party first obtained control. When the Company becomes capable of exercising control over an investee under common control due to additional investment or other reasons, Adjustment shall be made as if the reporting entity after the combination has been in existence since the date the ultimate controlling party first obtained control. The investment income recognized between date of previously obtaining equity investment and the date the acquiree and acquirer are under common control, which is later, and the combining date, other comprehensive income and other changes of net assets arising from the equity investment previously-held before obtaining the control the acquiree shall be adjusted against the prior retained earnings of the comparative financial statements and the current profit or loss respectively. If it is now under common control, the Company shall not adjust the beginning balance in the consolidated statement of financial position when preparing consolidated statement of financial position. The revenue, expenses and profits of the subsidiaries from the acquisition date to the end of the reporting period are included in the parent companys consolidated statement of comprehensive income. The cash flow of the subsidiaries from the acquisition date to the end of the reporting period is included in the Companys consolidated statement of cash flows. When the Company becomes capable of exercising control over an investee now under common control due to additional investment or other reasons, the acquirer shall remeasure its previously held equity interest in the acquiree to its fair value at the acquisition date. The difference between the fair value and the carrying amount shall be recognized as investment income for the period when the acquisition takes place. When the previously-held equity investment is accounted for under the equity method, any other comprehensive income previously recognized in relation to the acquirees equity changes shall be transferred to profit or loss for the current period when the acquisition takes place. Other comprehensive income arising from remeasurement of defined benefit plan is excluded. (2) Disposing subsidiary or business 1. General treatment If the Company disposes a subsidiary during a reporting period, the revenue, expenses and profits of the subsidiary from the beginning of the reporting period to disposal date are included in the Companys consolidated statement of comprehensive income. The cash flow of the subsidiaries from the beginning of the reporting period to disposal date is included in the Companys consolidated statement of cash flows. 101 Bengang Steel Plates Co., Ltd. Annual Report 2015 When the Company loses control over an investee due to partial disposal or other reasons, the acquirer shall remeasure the remaining equity interests in the acquiree to its fair value at the acquisition date. The difference, between sums of consideration received for disposal equity shares and fair value of the remaining shares, and sums of share of net assets of the subsidiary calculated continuously from the acquisition date or the combination date based on the previous shareholding proportion and goodwill, shall be recognized as investment income for the period when the Company loses control over acquiree. When the previously-held equity investment is accounted for under the equity method, any other comprehensive income previously recognized in relation to the acquirees equity changes, and other equity changes rather than changes from net profit, other comprehensive income and profit distribution, shall be transferred to investment income for the current period when the Company loses control over acquiree. Other comprehensive income arising from remeasurement of defined benefit plan is excluded. 2. Disposing the subsidiary by multiple transactions Where the Company loses control of a subsidiary in multiple transactions in which it disposes of its subsidiary in stages, in determining whether to account for the multiple transactions as a single transaction, the Company shall consider all of the terms and conditions of the transactions and their economic effects. One or more of the following may indicate that the Company shall account for the multiple arrangements as a single transaction: (a) Arrangements are entered into at the same time or in contemplation of each other; (b) Arrangements work together to achieve an overall commercial effect; (c) The occurrence of one arrangement is dependent on the occurrence of at least one other arrangement; and (d) One arrangement considered on its own is not economically justified, but it is economically justified when considered together with other arrangements. If each of the multiple transactions forms part of a bundled transaction which eventually results in loss of control of the subsidiary, these multiple transactions shall be accounted for as a single transaction. In the consolidated financial statements, the difference between the consideration received and the corresponding proportion of the subsidiarys net assets in each transaction prior to the loss of control shall be recognized in other comprehensive income and transferred to the profit or loss when the Company eventually loses control of the subsidiary. If each of the multiple transactions which eventually results in loss of control of the subsidiary do not form part of a bundled transaction, apply the treatment of disposing partial long-term equity investments in a subsidiary without loss of control prior to the loss of control. After the loss of control, apply the treatment of disposing the subsidiary in common cases. (3) Acquiring the subsidiary’s equity interest held by non-controlling shareholders Where the Company has acquired a subsidiarys equity interest held by non-controlling shareholders, the difference between the increase in the cost of long-term investments as a result of acquisition of non-controlling interests and the share of net assets of the subsidiary calculated continuously from the acquisition date or the combination date based on the new shareholding proportion shall be adjusted to the capital reserve( capital premium or share premium) in the consolidated financial statements. If the balance of the capital reserve is not sufficient, any excess shall be adjusted against retained earnings. (4) Disposing partial long-term equity investments in a subsidiary without loss of control When the Company disposes of a portion of the long-term equity investments in a subsidiary without loss of control, the difference between the amount of the consideration received and the corresponding portion of the nest assets of the subsidiary calculated continuously from the acquisition date or the combination date related to the disposal of the long-term equity investments shall be adjusted to the capital reserve (capital premium or share premium) in the consolidated financial statements. If the balance of the capital reserve is not sufficient, any excess shall be adjusted against retained earnings. 7. Joint arrangement classification and accounting treatment A joint arrangement is classified as either a joint operation or joint venture. 102 Bengang Steel Plates Co., Ltd. Annual Report 2015 When the Company is joint operator of joint arrangement and has rights to the assets, and obligations for the liabilities, relating to the arrangement, it is classified as joint operation. A joint operator shall recognize the following items in relation to its interest in a joint operation, and account for them in accordance with relevant accounting standards: (1) Its solely-held assets, and its share of any assets held jointly; (2) Its solely-assumed liabilities, and its share of any liabilities incurred jointly; (3) Its revenue from sales of its share of the output arising from the joint operation; (4) Its share of the revenue from the sale of the output by the joint operation; and (5) Its solely-incurred expenses and its share of any expenses incurred jointly. 8. Recognition basis 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. 9. Translation of businesses and accounts in foreign currency 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, except those arising from the raising of special foreign debt for the purchase or construction of capitalizable assets thus shall be capitalized according to the borrowing costs capitalization principle, shall be recorded into the profits and losses at the current period. The foreign currency non-monetary items measured at the historical cost shall still be translated at the spot exchange rate on the transaction date, of which the amount of functional currency shall not be changed. The foreign currency non-monetary items measured at the fair value shall still be translated at the spot exchange rate on the date of confirming the fair value and the balance of exchange arising from it shall be recorded into profits and losses at the current period of disposal or capital reserves. 2. Translation of foreign currency financial statements The asset and liability items in the statement of financial position shall be translated at a spot exchange rate on the balance sheet date. Among the owner's equity items, except the ones as "undistributed profits", others shall be translated at the spot exchange rate at the time when they are incurred. The income and expense items in the statement of comprehensive income shall be translated at the spot exchange rate of the transaction date. When disposing an overseas business, the Company shall shift the balance, which is presented under the items of the owner's equities in the statement of financial position and arises from the translation of foreign currency financial statements related to this oversea business, into the disposal profits and losses of the current period. If the overseas business is disposed of partially, the Company shall calculate the balance arising from the translation of foreign currency statements of the part of disposal based on the disposal rate and shall shift them into the profits and losses of the current period. 10. Financial instruments Financial instruments include financial assets, financial liabilities and equity instruments. 1. Categorizing of financial instruments The classification of financial assets and financial liabilities at initial recognition are as follows: financial assets or financial liabilities designated at fair value through current profit and loss, including: trading financial investment, held-to-maturity investment, loans and receivables, available-for-sale investment and other financial liabilities. 2. Recognition and measurement of financial instruments 103 Bengang Steel Plates Co., Ltd. Annual Report 2015 (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, notes receivable, prepayments, long-term receivables) are measured at contract price; if the receivables is of financing nature, it shall be recognized at the present value initially. When disposing the receivables, the difference between the proceeds and the carrying value is recognized in 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 shall be recognized as investment income. And the related fair value change in the shareholders equity shall be transferred out, and recorded as investment income. (5) Other financial liabilities For other financial liabilities, they are initially recognized at fair value plus any directly attributable transaction costs. After the initial recognition, the other financial liabilities are measured at amortized cost. 3. 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 104 Bengang Steel Plates Co., Ltd. Annual Report 2015 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 noncash assets it has transferred out and the new financial liabilities it has assumed) shall be recorded into the profits and losses of the current period. 5. Determination of the fair value The fair values of the financial assets or financial liabilities measured at fair value shall be determined by reference to the quoted prices in the active market. 6. Impairment provision of the financial assets (not including accounts receivables) The Company shall carry out impairment review for the financial assets at the balance sheet date except for the financial assets at fair value through profit or loss. Where there is any objective evidence proving that such financial asset has been impaired, an impairment provision shall be made. (1) Impairment of available-for-sale financial assets An impairment provision shall be made where the fair value of the held-to-maturity financial assets drops significantly at the balance sheet date or the trend of decrease is expected not to be temporary after taking various factors into consideration. The accumulative losses arising from the decrease of the fair value of the owners equity which was directly included shall be transferred out and recorded as impairment loss. Where any available-for-sale debt instruments is recognized as having suffered from any impairment loss, if there is any objective evidence proving that the value of the said debt instruments has been restored, and it is objectively related to the events that occur after such loss is recognized, the impairment-related losses as originally recognized shall be reversed and be recorded into the profits and losses of the current period. Impairment losses incurred by investment transactions of available-for-sale equity instruments shall not be reversed through profits and losses. 105 Bengang Steel Plates Co., Ltd. Annual Report 2015 The criteria for “serious” level of the decrease of fair value of available-for-sale financial instruments are as follows: the decrease of fair value for the equity investment with the active transaction in a market of good liquidity is normally 50%. The decrease of fair value of the equity investment without good market liquidity is normally 30%; the criteria for “non-temporary” decrease of fair value is continuous decrease over 12 months; the cost of investment is based on the purchase price. (2) Impairment of held-to-maturity investment The impairment of the held-to-maturity investment can be measured by reference to the measurement of the impairment of accounts receivables. 11. Account receivable (1) Bad debt provision on receivable accounts with major amount individually Basis of recognition or standard amount of individual account Balance of account receivable RMB10 million; other account with large amount receivable RMB5 million or over. 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 Basis of bad debt provision 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) Receivable accounts on which bad debt provisions are provided as groups Name of the portfolio Basis of providing bad debt provisions Receivable account with minor amount and tested individually Age analysis method and not impaired Accounts on age basis in the portfolio: √ Applicable □ Not applicable Rate of provision on other receivable Age Rate of provision on receivable accounts accounts 1-2 years 5.00% 5.00% 2-3 years 20.00% 20.00% Over 3 years 100.00% 100.00% Accounts on percentage basis in the portfolio in the group: □ Applicable √ Not applicable Accounts on other basis in the portfolio in the group: □ Applicable √ Not applicable (3) Receivable accounts with minor amount but bad debt provisions are provided individually Basis of providing bad debt individually When there is solid evidence showing that it is not retrievable. 106 Bengang Steel Plates Co., Ltd. Annual Report 2015 When there is solid evidence showing that the possibility of retrieving is minor, the account shall be tested for impairment Basis of bad debt provision individually and bad debt provision shall be provided at the estimated unrecoverable amount. 12. 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 inventory on delivery When inventories are delivered, the effective costs are recognized by weighted average method. 3. Recognition of realizable net value of inventory and providing of inventory impairment provision The net realizable value of inventories (finished products, stock commodity, material etc.) held for direct selling in the daily business activity shall be calculated by deducting the estimated sale expense and relevant taxes from the estimated sale price of inventories. The net realizable value of inventories for further processing in the daily business activity shall be calculated by deducting the estimated cost of completion, estimated sale expense and relevant taxes from the estimated sale price of inventories. The net realizable value of inventories held for the execution of sales contracts or labor contracts shall be calculated on the ground of the contract price. If an enterprise holds more inventories than the quantities subscribed in the sales contract, the net realizable value of the excessive part of the inventories shall be calculated on the ground of the general sales price. The Company shall make provision for loss on decline in value of inventories on the ground of each item of inventories at the year end. For inventories with large quantity and relatively low unit prices, the provision for loss on decline in value of inventories shall be made on the ground of the categories of inventories. Net realizable value of inventories are market price at balance date unless any indication that the market price at balance date appears abnormally. The net realizable value of inventory at the year-end is based on the market price at the balance sheet date. 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. 13.Categorizing of asset held for sale The Companys component(or non-current asset) will recognize as held-for-sale while satisfied the followed conditions simultaneously: (1)The component can be promptly sold at its existing status only according to the practice terms in connection with disposal of this kind of assets; (2)The Company has already made resolution on disposal of such component, such as approved by shareholders in line with regulations, have already approved by general meeting or relevant authority; (3)The Company entered into irrevocable transfer agreement with the transferee; (4)This transfer will be completed within one year. 107 Bengang Steel Plates Co., Ltd. Annual Report 2015 14. Long-term equity investment 1. Criteria of join control and significant influence Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or join control of those policies. If the Company could exert significant influence over the investee, the investee is the associate of the Company. 2. The initial cost of long-term equity investment from business acquisition (1) Long-term equity investment formed by merger For the acquisition under the common control, if the consideration of the acquiring enterprise is that it makes payment in cash, transfers non-cash assets, bears 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, including the expenses for audit, assessment and legal services, shall 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. Agency fees incurred for business combination by the acquirer, including audit fee, legal services, evaluation and consultation fee, shall be recorded in current profits and losses when incurred. Trading costs of issuance cost of equity securities or debt securities as the consideration for business combination by the acquirer shall be recorded in initial cost of such equity securities or debt securities. For a business combination realized by two or more transactions of exchange, the combination costs shall be the sum 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. If the exchange of non-monetary assets is commercial in nature and the fair values of both the assets received and surrendered can be reliably measured, the fair value of the assets surrendered shall be used as the basis for determining the cost of the assets received, unless there is any exact evidence showing that the fair value of the assets received is more reliable. Where any non-monetary assets transaction does not meet the conditions as prescribed above, the carrying value and relevant payable taxes of the assets surrendered shall be the initial cost of the assets received. Long-term equity investment obtained through debt reorganizing is recognized for initial investment cost at fair value. 3. Subsequent measurement and profit or loss recognition (1) Cost method The Company adopts cost method for the long term investment in subsidiary company. Under the cost method, an investing enterprise shall, in accordance with the attributable share of the net profits or losses of the invested entity, recognize the investment profits or losses except the dividend declared but unpaid, which is included in the payment when acquiring the investment. (2) Equity method A long-term equity investment in an associate or a joint venture shall be accounted for using the equity method. Where the initial investment cost of a long-term equity investment exceeds tan investors interest in the fair values of an investees identifiable net assets at the acquisition date, no adjustment shall be made to the initial investment cost. Where the initial cost is less than the investors interest in the fair values of the investees identifiable net assets at the acquisition date, the difference shall be credited to profit or loss for the current period, and the cost of the long-term equity investment shall be adjusted accordingly. The Company shall recognize its share of the investees net profits or losses, as well as its share of the investees other comprehensive income, as investment income or losses and other comprehensive income, and adjust the carrying amount of the investment accordingly. The carrying amount of the investment shall be reduced by the portion of any profit distributions or cash dividends declared by the investee that is attributable to the investor. The investors share of the investees owners equity changes, other than those arising from the investees net profit or loss, other comprehensive income or profit distribution, and the carrying amount of the long-term equity investment shall be adjusted accordingly. The investor shall recognize its share of the investees net profits or losses after making appropriate adjustments based on the fair values of the investees identifiable net assets at the acquisition date. The unrealized profits or losses resulting from transactions between the investor and its associate or joint venture shall be eliminated in proportion to the investors equity interest in the investee, based on which investment income or losses shall be recognized. Any 108 Bengang Steel Plates Co., Ltd. Annual Report 2015 losses resulting from transactions between the investor and investee which are attributable to asset impairment shall be recognized in full. If the transaction of investment or sale of assets among the Company and associate and joint venture and the assets is a business, it shall apply the treatment mentioned in Note 2 (5) “The accounting treatment for Business combination under/now under common control” and Note 2 (6) “Consolidation of Financial Statements”. When the Company recognizes the losses of invested enterprise, it shall follow the following sequence: First of all, offset the book value of long term equity investment. If the book value of long term equity is insufficient to dilute, the investing enterprise shall recognize the net losses of the invested enterprise until the book value of the long-term equity investment and other long-term rights and interests which substantially form the net investment made to the invested entity are reduced to zero. If the company still has the obligation to undertake extra losses per contract, and then estimated liabilities shall be recognized into current profit and loss accordingly to the estimated obligation. (3) Disposal of long-term equity investment On disposal of a long-term equity investment, the difference between the proceeds actually received and the carrying amount shall be recognized in profit or loss for the current period. When the previously-held equity investment is accounted for under the equity method, any other comprehensive income previously recognized shall be accounted for on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities. Those owner's equity recognized other than the change of net profits or loss, other comprehensive income, profit distribution of the invested entity shall be transferred proportionally into profit or loss of current period, other comprehensive income arising from the remeasurement of defined benefit plan is excluded. When an investor can no longer exercise joint control of or significant influence over an investee due to partial disposal of equity investment or other reasons, the remaining equity investment shall be accounted for in accordance with “Accounting Standard for Business Enterprises No. 22-Financial instruments: recognition and measurement”. The difference between the fair value and the carrying amount at the date of the loss of join control or significant influence shall be charged to profit or loss for the current period. When the previously-held equity investment is accounted for under the equity method, any other comprehensive income previously recognized shall be accounted for on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities for the current period upon discontinuation of the equity method. Those owner's equity recognized other than the change of net profits or loss, other comprehensive income, profit distribution of the invested entity shall be transferred into profit or loss of current period in full when the Company cease to adopt the equity method. When the Company can no longer exercise control over an investee due to partial disposal of equity investment or other reasons, and with the retained interest, still has joint control of, or significant influence over, the investee, when preparing the individual financial statements, the investor shall change to the equity method and adjust the remaining equity investment as if the equity method had been applied from the date of the first acquisition. If the investor cannot exercise joint control of or significant influence over the investee after partial disposal of equity investment, the remaining equity investment shall be accounted for in accordance with “Accounting Standard for Business Enterprises No.22-Financial instruments: Recognition and Measurement”, and the difference between the fair value and carrying amount at the date of the loss of control shall be charged to profit or loss for the current period. When the equity investment disposed is acquired through business combination due to additional investment or other reasons, in stand-alone financial statement, the remaining equity investment shall adopt cost method or equity method, any other comprehensive income and other owners interests previously recognized of the previously-held equity investment under the equity method shall be transferred proportionally. For those remaining equity investment accounted for in accordance with “Accounting Standard for Business Enterprises No.22-Financial instruments: Recognition and Measurement” after disposal, other comprehensive income and other owners interests previously recognized shall be transferred to profit or loss in full. 15. Investment property Measurement mode Measured by cost method Depreciation or amortization method The term "investment properties" refers to the real estate held for generating rent and/or capital appreciation. The investment properties include: 109 Bengang Steel Plates Co., Ltd. Annual Report 2015 (1) The land use right which has already been rented; (2) The land use right which is held and prepared for transfer after appreciation; and (3) The building which has already been rented (including buildings self-constructed or developed for rent after completion or buildings being built or developed for future rent). The investment properties shall be measured by the cost model. For the investment properties measured at cost model and building for rent, the same depreciation policy shall be adopted as that of fixed assets; for land use right, the same amortization policy shall be adopted as that of intangible assets. 16. Fixed assets (1) Basis of recognition 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. (2) Depreciation Categories Basis of depreciation Depreciation Period Retain value rate Annual depreciation ratio Straight average on Houses & buildings 8-40 years 0 2.50%-12.50% period Straight average on Equipment & machinery 4-18 years 3 5.39%-24.25% period Vehicle and other Straight average on 5-18 years 3 5.39%-19.40% equipment period (3) Recognition and pricing of fixed asset leased by financing When one of the following conditions was satisfied, it will be recognized as asset leased by financing: (1) The ownership will be under the possession of the Company upon expiration of leasing period; (2) The option to acquire the asset is open to the Company, and with a price far lower than the fair value of the asset on execution of the option. (3) The leasing period is taking the majority part of its useful life; (4) There is no material difference between the current value of the lowest rental at the starting date and the fair value of the asset. At the starting date, the Company recorded the lower one of fair value and the current value of the lowest rental as the book value of the leased asset, the lowest rental payment as the book value of long term payable, and the difference was recorded as unrecognized financing expenses. 17. Construction-in-process The cost of fixed assets transferred from a construction in progress includes all the necessary expenses incurred for bringing the asset to the expected conditions for use. Construction in progress is transferred to fixed asset when it has reached its working condition for its intended use. In case the final project accounts have not been completed or approved, the asset shall be transferred to fixed assets at an estimated value by considering project budget, cost or actual cost of the project and etc., and the deprecation of the said fixed assets shall be provided in accordance with the Companys accounting policy since it has reached its working condition for its intended use. After the project accounts have been approved, the estimated values shall be adjusted based on the actual cost, but those 110 Bengang Steel Plates Co., Ltd. Annual Report 2015 provided deprecation shall not be adjusted. 18. Borrowing expenses 1. Recognition principles for capitalizing of borrowing expenses The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. Borrowing expenses occurred to the Company that can be accounted as purchasing or production of asset satisfying the conditions of capitalizing, are capitalized and accounted as cost of related asset. Other borrowing expenses are recognized as expenses according to the occurred amount, and accounted into gain/loss of current term. 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. When a borrowing expense satisfies all of the following conditions, it is capitalized: (1) Asset expense has already occurred. Asset expenses include cash payment, non-cash asset transferring, or undertaking of debt with interest done for purchasing or producing of assets. (2) The borrowing expense has already occurred. (3) Purchasing or production activity, which is necessary for the asset to reach the useful status, has already started. 2. Capitalizing period of borrowing expenses The capitalization period shall refer to the period from the commencement to the cessation of capitalization of the borrowing costs, excluding the period of suspension of capitalization of the borrowing costs. Capitalizing of borrowing expenses terminates when the purchased or produced asset reaches the supposed useful or saleable status. When purchasing or producing of part of the asset, which satisfies the capitalizing conditions, has finished and could be used separately, capitalizing of borrowing expenses for this part of asset is terminated. Where each part of an asset under acquisition and construction or production is completed separately and is ready for use or sale during the continuing construction of other parts, but it cannot be used or sold until the asset is entirely completed, the capitalization of the borrowing costs shall be ceased when the asset is completed entirely. 3. The suspension of capitalization of borrowing costs If the construction or production of assets satisfying the capitalizing conditions is suspended abnormally for over 3 months, capitalizing of borrowing expenses shall be suspended. Borrowing expenses occurred in the suspension period are recognized as expenses and recorded to current income account, until the construction or production is resumed. If the suspension is an essential process to make the asset usable or sellable, capitalizing of borrowing expenses shall be carried forward. 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. 111 Bengang Steel Plates Co., Ltd. Annual Report 2015 19. Intangible assets (1) Price, useful age, and impairment test 1. Evaluating of intangible assets (1) Initial measurement is based on cost upon acquisition The cost of an intangible asset on acquisition include the purchase price, relevant taxes and other necessary disbursements which may be directly attributable to bringing the intangible asset to the conditions for the expected purpose. If the payment for an intangible asset is delayed beyond the normal credit conditions and it is of the financing nature, the cost of the intangible asset shall be determined on the basis of the present value of the purchase price. For intangible assets obtained from debt restructuring as settlement of liabilities from debtors, initial recognition is based on its fair value, and the difference between the debt restructured and the fair value of the intangible assets are recognized in the current profit and loss. For intangible assets obtained from non-monetary transactions with commercial substance, and the fair value of the assets obtained or surrendered can be reliably measured, the initial recognition of the asset obtained is based on the fair value of the asset surrendered, unless there is strong evidence that the fair value of the asset obtained is more reliable. For intangible assets obtained through non-monetary transactions which do not meet the above criteria, the initial recognition is based on the book value of the assets surrendered and the relevant taxes payable. No gain or loss will be recognized. (2) Subsequent Measurement The Company shall analyze and judge the beneficial period of intangible assets upon acquisition. Intangible assets with finite beneficial period shall be amortized under the straight-line method during the period when the intangible asset can bring economic benefits to the enterprise. If it is unable to estimate the beneficial period of the intangible asset, it shall be regarded as an intangible asset with uncertain service life and shall not be amortized. 2. Estimated useful lives of intangible assets with limited useful lives Item Estimated useful life Criteria Land use right 50 years Land use right certificate At the end of the year, review the amortization method and finite useful life of intangible life. There is no difference of amortization method and useful life as expected. 3. Determination of intangible assets with uncertain useful lives As of the balance sheet date, , the useful life of the intangible assets is still uncertain. (2) Accounting policies for expenses of internal research 1. Classification criteria for internal research phase and development phase The specific standards of differentiating research stage and development stage of internal R&D projects: Research stage is the planned research for obtaining knowledge of new technology, the preparation for further development. Development stage is applying specific researching results and other technologies to some plans or designs to produce new material, devices and products. 2. 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; 112 Bengang Steel Plates Co., Ltd. Annual Report 2015 (4) It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources; and (5) The development expenditures of the intangible assets can be reliably measured. The development expenditures for its internal research and development projects of the Company shall be recorded into the profit or loss for the current period if the above said conditions are not satisfied simultaneously. The research expenditures for its internal research and development projects of an enterprise shall be recorded into the profit or loss for the current period when incurred. 20. Impairment of long-term assets For long-term assets under the cost model such as fixed assets, construction in progress, intangible assets etc., the Company shall perform impairment tests at the period end if there is clear indication of impairment. If the recoverable amounts of long-term assets are less than their carrying amounts, the carrying amounts of the assets shall be written down to their recoverable amounts. The write-downs are recognized as impairment losses and charged to current profit and loss. The recoverable amounts of long-term assets are the higher of their fair values less costs to sell and the present values of the future cash flows expected to be derived from the assets. The Company shall estimate its recoverable amount on an individual basis. Where it is difficult to do so, it shall determine the recoverable amount of the group assets on the basis of the asset group to which the asset belongs. The term "group assets” refers to a minimum combination of assets by which the cash flows could be generated independently The goodwill shall be subject to an impairment test at least at the end of each year. When the Company makes an impairment test of assets, it shall, as of the purchasing day, apportion the carrying value of the business reputation formed by merger of enterprises to the relevant asset groups by a reasonable method. Where it is difficult to do so, it shall be apportioned to the relevant combinations of asset groups. When apportioning the carrying value of the business reputation to the relevant asset groups or combinations of asset groups, it shall be apportioned on the basis of the proportion of the fair value of each asset group or combination of asset groups to the total fair value of the relevant asset groups or combinations of asset groups. Where it is difficult to measure the fair value reliably, it shall be apportioned on the basis of the proportion of the carrying value of each asset group or combination of asset groups to the total carrying value of the relevant asset groups or combinations of asset groups. When making an impairment test on the relevant asset groups or combination of asset groups containing business reputation, if any evidence shows that the impairment of asset groups or combinations of asset groups is possible, the Company shall first make an impairment test on the asset groups or combinations of asset groups not containing business reputation, calculate the recoverable amount, compare it with the relevant carrying value and recognize the corresponding impairment loss. Then the Company shall make an impairment test of the asset groups or combinations of asset groups containing business reputation, and compare the carrying value of these asset groups or combinations of asset groups (including the carrying value of the business reputation apportioned thereto) with the recoverable amount. Where the recoverable amount of the relevant assets or combinations of the asset groups is lower than the carrying value thereof, it shall recognize the impairment loss of the business reputation. Impairment losses on long-term assets shall not be reversed in subsequent accounting periods once recognized. 21. Long-term expenses to be amortized Long-term expenses are those which already occurred and amortizable to the current period and proceeding periods for over one year. 113 Bengang Steel Plates Co., Ltd. Annual Report 2015 Long-term expenses are amortized straightly to the beneficiary period. 22. Employee wages (1) Accounting treatment for short employee benefit The Company shall recognized , in the accounting period in which an employee provides service, actually occurred short-term employee benefits as a liability, with a corresponding charge to the profit or loss or cost of an asset for the current period. Payments made by an enterprise of social security contributions for employees, payments of housing funds, and union running costs employee education costs provided in accordance with relevant requirements shall, in the accounting period in which employees provide services, be calculated according to prescribed bases and percentages in determining the amount of employee benefits. The employee benefits which are non-monetary benefits shall be measured at fair value if it could be measured reliably. (2) Accounting treatment of post-employment benefits 1) Defined contribution plan The Company shall recognize, in the accounting period in which an employee provides service, pension fund and unemployment fund for employees as a liability according to the local government regulations. The amount shall be calculated according to local prescribed bases and percentages in determining the amount of employee benefits, with a corresponding charge to the profit or loss or cost of an asset for the current period. 2) Defined benefit plan None (3) Accounting treatment of termination benefits When the Company cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal, When the Company recognizes costs or expenses related to a restructuring that involves the payment of termination benefits. (4) Accounting treatment of other long-term employee benefits payable None 23. Anticipated liabilities 1) Recognition Criteria of estimated liabilities The obligation pertinent to a Contingency (litigation, guarantees, loss contract, restructuring) shall be recognized as an estimated liabilities when the following conditions are satisfied simultaneously: (1) That obligation is a current obligation of the enterprise; (2) It is likely to cause any economic benefit to flow out of the enterprise as a result of performance of the obligation; and (3) The amount of the obligation can be measured in a reliable way. 2) Measurement of estimated liabilities The estimated debts shall be initially measured in accordance with the best estimate of the necessary expenses for the performance of the current obligation. To determine the best estimate, an enterprise shall take into full consideration of the risks, uncertainty, time value of money, and other factors pertinent to the Contingencies. If the time value of money is of great significance, the best estimate shall be determined 114 Bengang Steel Plates Co., Ltd. Annual Report 2015 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 continuous range for the necessary expenses and if all the outcomes within this range are equally likely to occur, the best estimate shall be determined in accordance with the average estimate within the range, that is, the average of the upper and lower limit. If there is not a sequent range for the necessary expenses and if the outcomes within this range are not equally likely to occur, the best estimate shall be determined as follows: (1) If the Contingencies concern a single item, it shall be determined in the light of the most likely outcome. (2) If the Contingencies concern two or more items, the best estimate shall be calculated and determined in accordance with all possible outcomes and the relevant probabilities. When all or some of the expenses necessary for the liquidation of an estimated debts of an enterprise is expected to be compensated by a third party, the compensation shall be separately recognized as an asset only when it is virtually certain that the reimbursement will be obtained. The amount recognized for the reimbursement shall not exceed the book value of the estimated debts. 24. Revenue 1. Recognition Criteria for the Revenue from sale of goods (1) The general principle of revenue recognition and measurement The Company has transferred to the buyer the significant risks and rewards of ownership of the goods; and retained neither continuing managerial involvement which usually relates to the ownership nor exerts effective control over the goods sold. The relevant amount of revenue can be measured reliably, the economic benefits related to the transaction will flow into the enterprise; and the relevant costs incurred or to be incurred can be measured reliably. Revenue from the sale of goods may be recognized. (2) The specific criteria of revenue recognition and measurement The amount of sale of goods is recognized according to the contract or agreement terms. The company mainly sells products such as steel. Domestic revenue is recognized need to meet the following criteria: The company has agreed to deliver the product to the buyer under the contract, the amount of revenue and product sales has been determined, the money has been recovered or made payment vouchers and related economic benefits are likely to flow, product-related the cost can be measured reliably. Export revenue is recognized must meet the following conditions: According to the contract the company has a product declaration, departure, made the bill of lading, and the sales revenue amount has been determined, the money has been recovered or made payment vouchers and related economic benefits are likely to flow, costs associated with the product can be measured reliably. 2. Recognition Criteria for the Revenue from alienating of Assets Use Rights (1) The general principle 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. (2) The evidence of recognition of Revenue from alienating of Assets Use Rights (1) The agreement alienating of Assets Use Rights of has been signed and provided to users; and (2) The timing for collecting the fee is due. 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 115 Bengang Steel Plates Co., Ltd. Annual Report 2015 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 shall be recognized in the current profit and loss, and no revenue from the providing of labor services shall be recognized. 25.Government Subsidies (1) Determination basis and accounting for government grants related to assets 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. If clear evidence shows that conditions for granting the finance support fund can be met and the finance support fund is supposed to be received, the amount of receivable can be recognized. (2) Determination basis and accounting for government grants related to income The government subsidies pertinent to fixed assets and intangible assets acquired and constructed shall be recognized as deferred income and equally recognized over the useful lives of the relevant assets as non-operating income. The government subsidies pertinent to incomes to subsidize future expenses shall be recognized as deferred income and transferred to non-operating income in the period during which the expenses subsidized is recognized. Government subsidies to subsidize past expenses or losses shall be recognized in the statement of comprehensive income in the period during which the subsidy is received. 26. Deferred income tax assets/ deferred income tax liabilities The Company shall recognize the deferred income tax liabilities arising from a deductible temporary difference to the extent of the amount of the taxable income which it is most likely to obtain and which can be deducted from the deductible temporary difference. As for any deductible loss or tax deduction that can be carried forward to the next year, the corresponding deferred income tax assets shall be determined to the extent that the amount of future taxable income to be offset by the deductible loss or tax deduction to be likely obtained. All taxable temporary differences shall be recognized as deferred tax liabilities with certain limited exceptions. Exceptions when deferred tax assets and deferred tax liabilities are not recognized include: initial recognition of goodwill; initial recognition of an asset or liability in a transaction or event that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss) The Company shall offset deferred tax assets and deferred tax liabilities if, and only if: (a) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and (b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:(i) the same taxable entity; or (ii) different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. 27. Leasing (1) Accounting treatment of operating lease 1) The rents paid for operating leases shall be recorded in the profits and losses of the current period by using the straight-line method over each period of the lease term. The initial direct costs paid by the Company shall be recorded into the profits and losses of the current period If the lessor has shouldered any expense related to the lease which shall have been borne by the Company, the Company shall deduct these expenses from the total rental expense and the remaining rental expense shall be allocated to each period during the lease term 2) The rents collected from operating leases shall be recorded in the profits and losses of the current period by using the straight-line method over each period of the whole lease term in which free lease period is included. The initial direct costs paid by the Company shall be recorded into the profits and losses of the current period. The initial direct costs shall be capitalized if it is material, and be allocated to each period as per the basis for rental revenue recognition. 116 Bengang Steel Plates Co., Ltd. Annual Report 2015 If the Company has shouldered any expense related to the lease which shall have been borne by the lessee, the company shall deduct these expenses from the total rental revenue and the remaining rental revenue shall be allocated to each period during the lease term. (2) Accounting treatment of Financial leasing 1) Leased in asset On the lease beginning date, a lessee shall record the lower one of the fair value of the leased asset and the present value of the minimum lease payments on the lease beginning date as the initial book value, recognize the amount of the minimum lease payments as the initial book value of long-term account payable, and treat the balance between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges. The lessee shall adopt the effective interest rate method to calculate and recognize the financing charge in the current period. The unrecognized financing charge shall be amortized to each period during the lease term. 28. Other significant accounting policies and change of accounting estimate Has been discontinued operations of the Company is to meet the Company disposed of or classified as held for sale, at the time of operation and preparation of financial statements can be separately identified part of the following conditions: (1)This part represents the composition of a separate major business or a major business area; (2)This part is a part intended for an independent or a major business areas mainly engaged in the disposal program; (3)This part is just to re-sell the subsidiary acquired 29. Change of material accounting policies and estimations (1) Material accounting policies [] Applicable; [V] Not applicable (2) Material estimations [] Applicable; [V] Not applicable VI. Taxation 1. Types and rates of taxes Taxes Tax references Applicable tax rates Calculated on tax law from selling goods and taxable services based on the VAT calculation of output tax, after deduction of 17%、11%、6% input tax deductibility of the current period, the balance part of VAT payable Operational tax Revenue of leasing and taxable services 5% Paid upon actual amount of operational tax City maintenance and construction tax 7%、5% and VAT 117 Bengang Steel Plates Co., Ltd. Annual Report 2015 Enterprise income tax Taxable income 25% The balance of the buildings original costs Property tax 1.2% minus 30% of original costs Paid upon actual amount of operational tax Education surcharge 3%、2% and VAT Statement on different taxpayers within the Company Name of the taxpayer Tax rate 2. Preference tax rate None VII. Notes to Consolidated Financial Statements 1. Monetary fund In RMB Items Closing balance Opening balance Cash in stock 72,220.66 14,168.01 Bank deposit 4,612,384,032.13 9,283,113,740.33 Other monetary fund 528,024,257.18 509,812,501.06 Total 5,140,480,509.97 9,792,940,409.40 Other statements Notes: No funds are deposited abroad at the year-end. The details of restricted monetary funds Items Closing balance Opening balance Margin for bank acceptance bill 508,347,736.99 155,906,379.33 Guarantee for Yield Enhancement Products 310,000,000.00 Foreign exchange deposit 19,350,000.00 Total 527,695,736.99 465,906,379.33 2. Derivate financial assets [] Applicable; [V] Not applicable 118 Bengang Steel Plates Co., Ltd. Annual Report 2015 3. Notes receivable 1) Notes receivable disclosed by category In RMB Items Closing balance Opening balance Bank acceptance bill 2,446,693,577.16 2,045,638,618.35 Commercial acceptance bill 2,988,984.00 43,400,642.78 Total 2,449,682,561.16 2,089,039,261.13 2) The pledged acceptance bill at the year-end In RMB Items Amount on pledge Bank acceptance bill 718,925,665.16 Total 718,925,665.16 3) The amount of Notes receivable endorsed over but not yet matured at the year-end. In RMB Amount of terminate recognition at year Items Unrecognized ending balance end Bank acceptance bill 3,453,866,361.89 Total 3,453,866,361.89 4) Notes receivable has been transferred into accounts receivable due to inability of drawer to meet acceptance bill at the year-end. In RMB Items Amount transferred to receivable accounts at year end Other notes 4. Account receivable (1) Accounts receivable disclosed by category In RMB Closing balance Opening balance Categories Book balance Bad debt provision Book Book balance Bad debt provision Book value Amount Proportio Amount Proportio value Amount Proportio Amount Proportion 119 Bengang Steel Plates Co., Ltd. Annual Report 2015 n n n Account receivable withdrawal bad debt 642,517, 153,932, 488,584,6 630,346 142,579,0 487,767,04 provision by group of 100.00% 23.96% 100.00% 22.62% 001.01 376.29 24.72 ,107.53 65.31 2.22 credit risk characterstics 642,517, 153,932, 488,584,6 630,346 142,579,0 487,767,04 Total 100.00% 23.96% 100.00% 22.62% 001.01 376.29 24.72 ,107.53 65.31 2.22 Receivable accounts with large amount individually and bad debt provisions were provided [] Applicable; [V] Not applicable Account receivables on which bad debt provisions are provided on age basis in the group: [V] Applicable [] Not applicable In RMB Closing balance Age Account receivable Bad debt provision Rate Segments within 1 year within 1 year 404,591,894.02 Subtotal of within 1 year 404,591,894.02 1-2 years 37,248,268.67 1,862,413.43 5.00% 2-3 years 60,758,594.33 12,151,718.87 20.00% Over 3 yrs 139,918,243.99 139,918,243.99 100.00% Total 642,517,001.01 153,932,376.29 23.96% Remarks on categories of receivable account 1. Providing of bad debt provision on single receivable account with major amount Standard for recognition of major amount single account: Balance of account receivable RMB10 million; other account receivable RMB5 million or over. Providing method of bad debt provisions on single receivable account with major amount 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 .Account receivable withdrawal bad debt provision by group of credit risk characterstics: Basis of recognition for portfolios The portfolio: Receivable account with minor amount and tested individually and not impaired Basis of bad debt provision 120 Bengang Steel Plates Co., Ltd. Annual Report 2015 The portfolio: Age analysis method Accounts on age basis in the portfolio in the Group: Age Rate for receivables (%) Rate for other receivables (%) Within 1 year, (included) 1-2 years (included) 5 5 2-3 years (included) 20 20 Over 3 years 100 100 3、 Receivable accounts with minor amount but bad debt provision provided individually upon (1) Reason of providing bad debt individually: concrete evidence showing that the account is irretrievable (2) Basis of providing bad debt provisions: When there is solid evidence showing that the possibility of retrieving is minor, the account shall be tested for impairment individually and bad debt provision shall be provided at the estimated unrecoverable amount. Receivable accounts on which bad debt provisions are provided on percentage analyze basis in a portfolio [] Applicable; [V] Not applicable Receivable accounts on which bad debt provisions are provided by other ways in the portfolio (2) Receivable accounts written back or retrieved in the report period Bad debt provision provided this period was RMB11,353,310.98. Bad debt provision written back was RMB0.00 in the period. Significant items of retrieving or writing back of bad debt provisions: In RMB Name of the companies Amount retrieved or written back way of retrieving (3) Receivable accounts actually written off in the report period In RMB Items Amount written off Significant amount written off: In RMB Name of the Property of the Reason of writing Written off Created by related Amount written off companies receivable account off procedures transaction or not Statement on writing off of receivable accounts. 121 Bengang Steel Plates Co., Ltd. Annual Report 2015 (4) Top 5 debtors in the receivable accounts Name of the companies Closing balance Account receivable Proportion in the Bad debt provision total receivable account % Benxi North Iron Industry Co., Ltd. 107,133,739.89 16.67 Benxi Nanfen Xinhe metallurgical furnace 87,379,647.78 13.60 Co Ltd Liaoyang Petroleum Tube Co., Ltd. 35,689,868.98 5.55 3,341,228.18 Bengang B refractory material Co., 33,705,712.51 5.25 Ltd. Huayou Steel Tube Co., Ltd. 32,873,213.55 5.12 5,891,750.53 Total 296,782,182.71 46.19 9,232,978.71 (5) Recognition of receivable accounts terminated 5. Prepayment (1) Prepayment presented by ages: In RMB Closing balance Opening balance Age Amount Proportion Amount Proportion within 1 year 423,542,198.08 74.32% 1,127,829,597.09 91.23% 1-2 years 139,209,276.37 24.43% 49,267,318.09 3.99% 2-3 years 7,100,476.24 1.25% 47,476,893.75 3.84% Over 3 years 11,740,195.80 0.94% Total 569,851,950.69 -- 1,236,314,004.73 -- Remarks on the unsettled prepayment due over 1 year: Mainly prepayment for goods not mature yet according to the agreement. (2) Top 5 prepayment categorized upon objects Objects Closing balance Percentage in total prepayment at year end Benxi Beiying Steel & Iron (Group) Co., Ltd. 183,337,641.74 32.17 Changzhou Baoling Heavy Machinery Co., Ltd. 56,217,782.56 9.87 Zhongye Shanya Heavy Industry 52,720,022.00 9.25 122 Bengang Steel Plates Co., Ltd. Annual Report 2015 Wuhan Dushi Environmental protection 50,515,000.00 8.86 Engineering Technology Co., Ltd. Jiangsu Kexing Industrial Equipment 36,992,022.40 6.49 Manufacturing Co., Ltd. Total 379,782,468.70 66.64 Other notes 6. Interest receivable (1) Categorized on interests receivable In RMB Items Closing balance Opening balance Fixed deposit 3,073,233.31 7,011,095.89 Interest on bond 451,381.81 Total 3,524,615.12 7,011,095.89 7. Other account receivable. (1) Other receivables disclosed by category In RMB Closing balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Categories Book Proportio Proportio Book value Amount Amount Amount value Amount Amount Proportion n n Other Account receivable withdrawal bad debt 216,153, 66,224,8 149,928,8 318,333 62,365,43 255,968,09 99.20% 30.64% 99.46% 19.59% provision by group of 715.77 38.51 77.26 ,531.48 3.45 8.03 credit risk characterstics Other Account receivable with no large amount and 1,740,00 1,740,000 1,740,0 1,740,000.0 0.80% 0.54% withdrawal bad debt 0.00 .00 00.00 0 provision for single item Total 217,893, 100.00% 66,224,8 30.39% 151,668,8 320,073 100.00% 62,365,43 19.48% 257,708,09 123 Bengang Steel Plates Co., Ltd. Annual Report 2015 715.77 38.51 77.26 ,531.48 3.45 8.03 Other receivable accounts with large amount and were provided bad debt provisions individually at end of period. [] Applicable; [V] Not applicable Other account receivables on which bad debt provisions are provided on age basis in the group: [V] applicable[]Not Applicable In RMB Closing balance Age Other account receivable Bad debt provision Rate Segments within 1 year 135,062,001.55 Subtotal of within 1 year 135,062,001.55 1-2 years 12,543,045.74 627,152.29 5.00% 2-3 years 3,688,727.82 737,745.56 20.00% Over 3 yrs 64,859,940.66 64,859,940.66 100.00% Total 216,153,715.77 66,224,838.51 30.64% Remarks on categories of receivable account 1. Providing of bad debt provision on single receivable account with major amount Standard for recognition of major amount single account: Balance of account receivable RMB10 million; other account receivable RMB 5 million or over. Providing method of bad debt provisions on single receivable account with major amount 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. 2. Receivables tested by portfolio: Basis of recognition for portfolios The portfolio: Receivable account with minor amount and tested individually and not impaired Basis of bad debt provision The portfolio: Age analysis method Accounts on age basis in the portfolio: Age Rate for receivables (%) Rate for other receivables (%) Within 1 year, (included) 124 Bengang Steel Plates Co., Ltd. Annual Report 2015 1-2 years (inclusive) 5 5 2-3 years (inclusive) 20 20 Over 3 years 100 100 3、 Receivable accounts with minor amount but bad debt provision provided individually upon (1) Reason of providing bad debt individually: concrete evidence showing that the account is irretrievable (2) Basis of providing bad debt provisions: When there is solid evidence showing that the possibility of retrieving is minor, the account shall be tested for impairment individually and bad debt provision shall be provided at the estimated unrecoverable amount. Other receivable accounts in the portfolio on which bad debt provisions were provided on percentage basis [] Applicable; [V] Not applicable Other receivable accounts in the portfolio on which bad debt provisions were provided on other basis [] Applicable; [V] Not applicable (2) Receivable accounts written back or retrieved in the report period Bad debt provision provided this period was RMB3,859,405.06. Bad debt provision written back was RMB0.00 in the period. Significant items of retrieving or writing back of bad debt provisions: In RMB Name of the companies Amount written back or retrieved way of retrieving None (3) Writing off of other receivable accounts in the period In RMB Items Amount written off Writing off of material other receivable accounts in the period In RMB Name of the Reason of writing Written off Created by related Property of account Amount written off companies off procedures transaction or not Statements on writing off of other receivable accounts. (4) Other receivables disclosed by nature In RMB Account property Closing balance of book value Opening balance of book value Accounts 151,337,358.60 121,294,479.69 125 Bengang Steel Plates Co., Ltd. Annual Report 2015 Export tax rebate 32,772,729.71 130,825,472.18 Margin and deposit 3,571,060.87 4,598,002.52 Others 8,296,700.68 6,609,889.80 Input tax to be deducted 21,915,865.91 56,745,687.29 Total 217,893,715.77 320,073,531.48 (5) Top five debtors at the year-end In RMB Name of the Percentage of total Provision for bad Nature of account Closing balance Age companies other receivables debts Tax bureau Export tax refund 21,915,865.91 Within 1 year 10.06% Bengang Group International Trading Current account 14,007,043.70 Within 1 year 6.43% Co., Ltd. Huozhou Coal & Electricity Group Current account 4,341,257.18 Over 3 years 1.99% 4,341,257.18 Co., Ltd. Zhejiang Sunon Furniture Current account 2,785,401.00 1-2 years 1.28% 139,270.05 Manufacturing Co., Ltd. Liaoning Huaweixuan coal Current account 2,261,360.00 Over 3 years 1.04% 2,261,360.00 Co., Ltd. Total -- 45,310,927.79 -- 20.80% 6,741,887.23 (6) Receivable accounts involving the government In RMB Predicted time and Name of the companies Title of the projects Closing balance Age at end of period amount of receiving None 126 Bengang Steel Plates Co., Ltd. Annual Report 2015 10. Inventories (1) Categories of inventory In RMB Closing balance Opening balance Items Impairment Impairment Book balance Book value Book balance Book value provision provision Raw materials 5,527,236,707.17 4,894,918.76 5,522,341,788.41 6,399,017,393.13 4,894,918.76 6,394,122,474.37 Product in 1,011,630,448.37 192,850,188.37 818,780,260.00 1,194,892,927.05 44,360,110.69 1,150,532,816.36 process Products in stock 2,566,825,937.84 306,213,543.83 2,260,612,394.01 3,510,656,117.98 46,897,590.79 3,463,758,527.19 11,104,566,438.1 11,008,413,817.9 Total 9,105,693,093.38 503,958,650.96 8,601,734,442.42 96,152,620.24 6 2 (2) Inventory impairment provision In RMB Increased current period Decreased current period Items Opening balance Written back or Closing balance Provided Others Others off Raw materials 4,894,918.76 4,894,918.76 Product in 44,360,110.69 192,850,188.37 44,360,110.69 192,850,188.37 process Products in stock 46,897,590.79 306,213,543.83 46,897,590.79 306,213,543.83 Total 96,152,620.24 499,063,732.20 91,257,701.48 503,958,650.96 (3) Statement on part of the inventory balance which was the capitalized borrowing expenses 9. Non-current asset due in 1 year In RMB Items Closing balance Opening balance Other notes 10. Other current assets In RMB 127 Bengang Steel Plates Co., Ltd. Annual Report 2015 Items Closing balance Opening balance Prepaid income tax 225,000,858.03 226,679,352.76 VAT and input tax to be deducted 206,359,683.18 230,825,156.67 Total 431,360,541.21 457,504,509.43 Other Notes 11. Disposable financial asset (1) Sellable financial assets In RMB Closing balance Opening balance Items Impairment Impairment Book balance Book value Book balance Book value provision provision Sellable equity 20,271,278.63 20,271,278.63 20,271,278.63 20,271,278.63 instruments: On cost basis 20,271,278.63 20,271,278.63 20,271,278.63 20,271,278.63 Total 20,271,278.63 20,271,278.63 20,271,278.63 20,271,278.63 (2) Sellable financial assets on fair value at end of period In RMB Categories of sellable Available-for-sale equity Debit instruments Total financial assets instruments sellable (3) Sellable financial assets on cost at end of period In RMB Book balance Impairment provision Cash Percentage dividend Company At At Increased Increased Decreased At end of of share in of the invested in beginning beginning this period this period this period term the firm % current of term of term term Zhejiang Bengang Jingrui 1,967,605. 1,967,605. 20.00% Steel 63 63 Processing Ltd. Suzhou 3,888,980. 3,888,980. 20.00% 128 Bengang Steel Plates Co., Ltd. Annual Report 2015 Bengang 00 00 Industrial Co., Ltd. China Steel Shanghai 14,414,693 14,414,693 15.00% Steel .00 .00 Processing Co., Ltd. 20,271,278 20,271,278 Total -- .63 .63 (4) Change of impairment of sellable financial assets in the report period In RMB Categories of sellable Available-for-sale equity Debit instruments Total financial assets instruments sellable 12. Fixed assets (1) Particulars of fixed assets In RMB Transportation Items Houses & buildings Equipment & machinery Total equipment I.Original value 1.Opening balance 10,224,039,014.58 33,098,746,490.42 773,132,017.21 44,095,917,522.21 2.Increased amount of 371,113,704.05 4,312,915,260.75 71,926,666.66 4,755,955,631.46 the period (1)Outsourcing 5,018,594.77 10,541,500.17 816,274.43 16,376,369.37 (2) Transferred in from 366,095,109.28 4,302,373,760.58 71,110,392.23 4,739,579,262.09 construction in process (3) Increased by merger 3. Decreased this period 19,604,190.88 266,419,500.67 8,242,111.52 294,265,803.07 (1) Disposed 19,604,190.88 266,419,500.67 8,242,111.52 294,265,803.07 4. Closing balance 10,575,548,527.75 37,145,242,250.50 836,816,572.35 48,557,607,350.60 II. Accumulative 129 Bengang Steel Plates Co., Ltd. Annual Report 2015 depreciation 1. Opening balance 4,216,854,550.82 22,179,825,053.52 544,196,523.38 26,940,876,127.72 2. Increased this period 493,877,936.59 1,323,685,256.12 7,319,201.80 1,824,882,394.51 (1) Provision 493,877,936.59 1,323,685,256.12 7,319,201.80 1,824,882,394.51 3. Decreased this 11,248,910.51 245,820,206.26 8,095,922.10 265,165,038.87 period (1) Disposed 11,248,910.51 245,820,206.26 8,095,922.10 265,165,038.87 4. Closing balance 4,699,483,576.90 23,257,690,103.38 543,419,803.08 28,500,593,483.36 III. Impairment provision 1. Opening balance 8,208,087.85 2,551,052.65 10,759,140.50 2. Increased this period (1) Provision 3. Decreased this period (1) Disposed 4. Closing balance 8,208,087.85 2,551,052.65 10,759,140.50 IV. Book value 1. Book value at end 5,867,856,863.00 13,885,001,094.47 293,396,769.27 20,046,254,726.74 of period 2. Book value at 5,998,976,375.91 10,916,370,384.25 228,935,493.83 17,144,282,253.99 beginning of period (2) Fixed assets temporarily in idle status In RMB Accumulated Impairment Items Original book value Book value Note depreciation: provision (3) Fixed asset by financial leasing In RMB Accumulated Items Original book value Impairment provision Book value depreciation: (4) Fixed assets leased out on finance In RMB 130 Bengang Steel Plates Co., Ltd. Annual Report 2015 Items Closing book value Houses & buildings 58,903,607.19 Equipment & machinery 192,341.83 Transportation equipment 377,447.55 Total 59,473,396.57 (5) Fixed assets not granted certificate of property In RMB Items Book value Reason for certificate not granted Other Notes 13. Construction-in-process (1) Particulars of construction-in-process In RMB Closing balance Opening balance Items Impairment Impairment Book balance Book value Book balance Book value provision provision Cool rolling high strength steel 3,451,712,764.91 3,451,712,764.91 1,925,107,936.24 1,925,107,936.24 rebuilding hot galvanizing project of No.3 335,752,700.00 335,752,700.00 hot rolling factory Reconstruction project of coke dry cooling of 1,163,586,592.69 1,163,586,592.69 No.2 Coke Workshop Production line of electro-galvanize 1,090,509,377.96 1,090,509,377.96 d steel plates for automobile Environmental reconstruction of converter and the 153,224,111.93 153,224,111.93 581,647,629.27 581,647,629.27 180t dephosphorizatio n converter 131 Bengang Steel Plates Co., Ltd. Annual Report 2015 360 M2 sintering 973,980,424.51 973,980,424.51 466,556,730.02 466,556,730.02 machine Reconstruction of hot-rolling 4,230,929.56 4,230,929.56 279,613,089.64 279,613,089.64 equipment The new energy control center 226,586,153.73 226,586,153.73 218,595,249.81 218,595,249.81 project Information 223,389,048.63 223,389,048.63 183,662,781.72 183,662,781.72 system project Softening water 62,631,414.86 62,631,414.86 supplying project Upgrade the surface quality of Benxi Steel 50,023,398.37 50,023,398.37 Poxiang strip detector Department of transportation passenger dedicated to 47,995,690.74 47,995,690.74 41,847,818.94 41,847,818.94 supporting the transformation of the South Silicon steel engineering Other 229,752,469.26 229,752,469.26 62,393,703.15 62,393,703.15 Total 5,646,624,293.27 5,646,624,293.27 6,126,175,722.67 6,126,175,722.67 (2) Material change in construction-in-progress In RMB Amount Ratio of Accumulat Including: Capitalizat Increased Opening transferred Other Closing accumulati e of interest ion ratio of Fund Projects Budget current Progress balance to fixed deduction balance ve input on interest capitalized current recourse period asset budget capitalized this term period Cool rolling high 6,100,00 1,925,10 1,526,60 3,451,71 305,147, 224,111, strength 56.59% 60% 5.10% Other steel 0,000.00 7,936.24 4,828.67 2,764.91 840.47 638.71 rebuilding hot galvanizin g project 869,180, 335,752, 335,752, of No.3 38.63% 40% Other hot rolling 000.00 700.00 700.00 factory 132 Bengang Steel Plates Co., Ltd. Annual Report 2015 Reconstruc tion project of 1,354,13 1,163,58 117,935, 1,281,52 106,875, 45,989,6 coke dry 95.01% 100% 5.10% Other 2,000.00 6,592.69 327.78 1,920.47 819.78 16.80 cooling of No.2 Coke Workshop Production line of electro-gal 1,244,50 1,090,50 145,892, 1,236,40 183,155, 30,883,8 vanized 99.78% 100% 5.10% Other steel plates 0,000.00 9,377.96 272.15 1,650.11 876.21 43.16 for automobile Environme ntal reconstruct ion of converter 1,778,64 581,647, 22,834,2 451,257, 153,224, 127,847, 22,583,3 and the 84.32% 90% 5.10% Other 180t 4,000.00 629.27 48.54 765.88 111.93 567.31 29.89 dephospho rization converter 360 M2 1,277,73 466,556, 554,105, 46,681,5 973,980, 35,595,2 25,132,7 sintering 80.15% 85% 5.10% Other 8,000.00 730.02 269.43 74.94 424.51 90.38 88.66 machine Reconstruc tion of 332,870, 279,613, 4,230,92 279,613, 4,230,92 85.27% 90% Other hot-rolling 000.00 089.64 9.56 089.64 9.56 equipment The new energy 284,100, 218,595, 26,468,6 18,477,7 226,586, 35,162,6 10,896,5 control 86.26% 90% 5.10% Other 000.00 249.81 27.93 24.01 153.73 07.14 90.68 center project Informatiz 390,380, 183,662, 39,726,2 223,389, 34,177,9 9,174,54 ation 90.00% 96% 5.10% Other 000.00 781.72 66.91 048.63 72.63 0.49 project Softening water 75,540,0 62,631,4 3,259,48 65,890,8 2,918,15 87.23% 100% Other supplying 00.00 14.86 0.98 95.84 0.76 project Upgrade the surface 58,500,0 50,023,3 50,023,3 quality 87.00% 100% Other 00.00 98.37 98.37 of Benxi Steel Poxiang 133 Bengang Steel Plates Co., Ltd. Annual Report 2015 strip detector Benxi Puxiang enhance product 111,650, 80,122,2 80,122,2 quality 72.00% 100% Other 000.00 49.90 49.90 equipme nt upgrade project Departm ent of transport ation passenge r dedicate 55,980,0 41,847,8 6,147,87 47,995,6 2,670,86 1,219,97 85.74% 90% 5.10% Other d to 00.00 18.94 1.80 90.74 2.49 1.88 supporti ng the transfor mation of the South Silicon steel 934,450, 26,313,6 26,313,6 16,197,7 88.00% 100% Other engineeri 000.00 18.46 18.46 45.48 ng 62,393,7 1,371,18 1,203,27 555,281. 229,752, 4,345,16 3,660,15 Other 0.00 5.10% Other 03.15 9,422.43 5,374.47 85 469.26 4.93 0.53 14,867,6 6,126,17 4,260,58 4,739,57 555,281. 5,646,62 854,094, 373,652, Total 64,000.0 -- -- -- 5,722.67 3,114.54 9,262.09 85 4,293.27 897.58 470.80 0 Notes: The mortgage loan at the year-end is the mortgage loan of RMB 14,220 thousand provided from Bengang Group Finance Co., Ltd. to subsidiary Dalian Benruitong Automobile Material Technology Co., Ltd (hereinafter referred to as Dalian Benruitong). Collateral for the mortgage is Dalian Benruitongs manufacturing equipment and the highest mortgage balance is RMB 110,000 thousand. From the financial company to obtain 100 million yuan credit. The pledge loan at the year-end includes domestic orders financing short-term loan RMB 1,396,740,000.00 acquired from Industrial & Commercial Bank of China Benxi Branch, export commercial bill financing 134 Bengang Steel Plates Co., Ltd. Annual Report 2015 short-term loan USD 370,135,200.00 acquired from Agricultural Bank of China Benxi Branch, and receivable factor short-term loan RMB 200,000,000.00 acquired from Agricultural Bank of China Benxi Branch. (3) Impairment provision provided on construction in process In RMB Items Provided this period Reason to provide Other notes 14. Project material In RMB Items Closing balance Opening balance Special equipment 4,152,880.79 90,221,101.46 Total 4,152,880.79 90,221,101.46 Other notes Balance of project goods decreased by RMB886,068,220.67 (95.40%) from the opening balance, which was caused by increasing of delivery of equipment purchased for reconstruction project of high strength steel production. 15. Intangible assets (1) Profiles of intangible assets In RMB Non-patent Items Land using right Patent Computer software Total technologies I. Original book value 1. Opening 296,245,314.76 141,509.43 296,386,824.19 balance 2. Increased this period (1) Purchase (2) Internal R&D (3) Increased by merger 3. Decreased this period (1) Disposal 4. Closing 296,245,314.76 141,509.43 296,386,824.19 balance II. Accumulative amortizing 135 Bengang Steel Plates Co., Ltd. Annual Report 2015 1. Opening 24,913,882.78 12,971.66 24,926,854.44 balance 2. Increased this 5,924,906.29 14,150.89 5,939,057.18 period (1) Provision 5,924,906.29 14,150.89 5,939,057.18 3. Decreased this period (1) Disposal 4. Closing 30,838,789.07 27,122.55 30,865,911.62 balance III. Impairment provision 1. Opening balance 2. Increased this period (1) Provision 3. Decreased this period (1) Disposal 4. Closing balance IV. Book value 1. Book value 265,406,525.69 114,386.88 265,520,912.57 at end of period 2. Book value at beginning of 271,331,431.98 128,537.77 271,459,969.75 period There isnt any intangible asset constituted by internal R&D in the period. (2) Property certificate not granted yet: In RMB Items Book value Reason for certificate not granted Other notes 16. Deferred income tax assets/ deferred income tax liabilities (1) Deferred income tax asset not deducted In RMB Closing balance Opening balance Items Deductible provisional Deferred income tax Deductible provisional Deferred income tax differences asset differences asset 136 Bengang Steel Plates Co., Ltd. Annual Report 2015 Asset impairment 734,875,006.26 183,718,751.57 311,856,259.50 77,964,064.88 provision Internal trade profit not -20,995,185.07 -5,248,796.27 57,740,326.46 14,435,081.62 realized Deductible loss 1,494,830,936.71 373,707,734.18 Depreciation or 333,978,859.03 83,494,714.76 333,978,859.03 83,494,714.76 amortization difference Welfare for retired 6,946,500.22 1,736,625.06 8,513,359.96 2,128,339.99 employee Employee wages payable 18,088,405.91 4,522,101.48 13,889,056.69 3,472,264.17 Total 2,567,724,523.06 641,931,130.78 725,977,861.64 181,494,465.42 (2) Deferred income tax liabilities not deducted In RMB Closing balance Opening balance Items Taxable provisional Deferred income tax Taxable provisional Deferred income tax difference liability difference liability (3) Deferred income tax asset or liability at net amount after deduction In RMB Amount neutralized Closing balance of Amount neutralized Opening balance of between deferred income deferred income tax asset between deferred income deferred income tax asset Items tax asset and liability at or liability after tax asset and liabilities at or liability after end of period deduction opening of period deduction Deferred income tax 641,931,130.78 181,494,465.42 asset (4) Details of unrecognized deferred income tax asset In RMB Items Closing balance Opening balance Deductible loss 2,912,363,442.38 476,157,419.26 Total 2,912,363,442.38 476,157,419.26 (5) Deductible losses of unrecognized deferred income tax asset due in next period In RMB Year Amount at end of term Initial amount Note 137 Bengang Steel Plates Co., Ltd. Annual Report 2015 2016 796,317.70 2017 405,383,631.05 405,183,089.47 2018 267,988,139.50 70,178,012.09 2019 179,596,211.65 2020 2,059,395,460.18 Total 2,912,363,442.38 476,157,419.26 -- Other notes: 17. Short-term loans (1) Categories of short-term loans In RMB Items Closing balance Opening balance Pledge loan 1,966,875,200.00 Mortgage loan 14,220,000.00 Guarantee loan 10,586,898,400.00 10,609,754,000.00 Credit loan 5,571,891,996.60 7,578,191,675.93 Total 18,139,885,596.60 18,187,945,675.93 Statement on categories of short-term loans. The closing pledge loan includes the domestic order financing short-term loan, 1,396,740,000 yuan, borrowed from ICBC Benxi Branch, exporter bill financing short-term US dollar loan, amounting to 370,135,200 yuan, borrowed from business department of ABC Benxi Branch, and accounts payable factoring, 200,000,000 yuan, acquired from business department of ABC Benxi Branch. The closing mortgage loan is that Benxi Iron& Steel Group Financial Co., Ltd. Provides a mortgage loan of 14,220,000 yuan for its subsidiary Dalian Benruitong Automobile Material Technolgoy Co., Ltd. (hereinafter referred to as ”Dalian Benruitong”), with the production equipment of Dalian Benruitong as the guarantee, and the highest blanace of security guarantee is 110,000,000 yuan. Short-term loans expired but not repaid was RMB0.00 at end of period, including material amounts as following: In RMB Loans from Closing balance Interest rate Date of mature Overdue interest Other notes: 18. Notes payable In RMB Categories Closing balance Opening balance Bank acceptance 2,110,511,950.79 822,581,591.46 138 Bengang Steel Plates Co., Ltd. Annual Report 2015 Total 2,110,511,950.79 822,581,591.46 Notes payable mature as of end of period was RMB0.00. 19. Account payable (1) Payables In RMB Items Closing balance Opening balance Trade payable 4,045,710,114.68 7,845,961,373.04 Labour service 47,556,941.28 24,340,661.56 Project and equipment accounts payable 455,338,318.37 501,029,342.01 Maintaining 464,461,747.57 407,080,221.51 Others 2,833,542.57 2,537,206.06 Total 5,015,900,664.47 8,780,948,804.18 (2) Material payable aged over 1 year In RMB Items Closing balance Reason of not paid or transferred Benxi Iron steel (Group)Mining Co., Ltd. 675,232,923.26 Not cleared yet Zhongye Jiaonai Engineering Technology 77,144,807.61 Not cleared yet Co., Ltd. Jixi Huasheng Fengyuaxuan Coal Co., Ltd. 66,005,916.07 Not cleared yet Hangzhou Tianshen Material Co., Ltd. 21,330,633.40 Not cleared yet Total 839,714,280.34 -- Other notes: 20. Account received in advance (1) Advances received In RMB Items Closing balance Opening balance Trade collected in advance 1,815,443,452.05 3,144,418,091.52 Total 1,815,443,452.05 3,144,418,091.52 139 Bengang Steel Plates Co., Ltd. Annual Report 2015 (2) Material advances received for over 1 year In RMB Items Closing balance The reason for not repaid or carried forward 21. Wage payable (1) Wage payable In RMB Items Opening balance Increased this period Decreased this period Closing balance I. Short-term wages 26,870,591.59 1,646,064,041.64 1,643,425,989.69 29,508,643.54 II. Post-job welfare – 261,368,947.32 261,368,947.32 provision plan III. Dismissing 8,513,359.96 49,910.91 1,616,770.65 6,946,500.22 compensation Total 35,383,951.55 1,907,482,899.87 1,906,411,707.66 36,455,143.76 (2) Short-term wages In RMB Items Opening balance Increased this period Decreased this period Closing balance (1) Salary, bonus, 16,980,558.52 1,325,523,468.43 1,322,213,535.48 20,290,491.47 allowance and subsidy (2) Employee welfare 26,364,154.99 26,364,154.99 (3) Social Insurance 666,677.44 121,228,999.24 121,242,204.74 653,471.94 Including: Medical 89,315,611.21 89,315,611.21 insurance Work injury 666,677.44 31,909,377.38 31,922,582.88 653,471.94 insurance Maternity 4,010.65 4,010.65 insurance (4) Housing 6,853,473.00 132,967,780.72 132,971,620.72 6,849,633.00 (5) Union funds and staff 2,367,273.37 38,975,393.60 39,630,229.10 1,712,437.87 education fee Others 2,609.26 1,004,244.66 1,004,244.66 2,609.26 Total 26,870,591.59 1,646,064,041.64 1,643,425,989.69 29,508,643.54 (3) Defined contribution plans In RMB 140 Bengang Steel Plates Co., Ltd. Annual Report 2015 Items Opening balance Increased this period Decreased this period Closing balance Basic pension fund 249,181,176.27 249,181,176.27 Unemployment insurance 12,187,771.05 12,187,771.05 Total 261,368,947.32 261,368,947.32 Other notes: 22. Tax payable In RMB Items Closing balance Opening balance VAT 23,631,817.37 9,556,213.59 Operational tax -47,954.05 246,231.69 Enterprise income tax 6,788,181.39 12,951,594.58 City maintenance and construction tax 2,015,344.46 302,020.62 Property tax 1,475,601.50 246,528.48 Education surtax 10,211,765.05 7,953,883.39 Others 1,119,772.63 1,066,709.41 Total 45,194,528.35 32,323,181.76 Other notes: 23. Interest payable In RMB Items Closing balance Opening balance Long-term loan interest with installments 5,080,000.00 Interest of corporation bond 70,113,698.63 Short-term borrowing interests payable 844,988.33 21,855,067.99 Total 70,958,686.96 26,935,067.99 Material overdue interest payments: In RMB Loans from Amount overdue Causation of overdue Other notes: 141 Bengang Steel Plates Co., Ltd. Annual Report 2015 24. Other account payable. (1) Other payables disclosed by nature In RMB Items Closing balance Opening balance Deposit 3,280,020.39 3,698,444.41 Deposit 128,048,589.14 121,211,291.67 Current account 270,090,696.48 295,686,710.10 Others 43,315,398.89 48,719,569.65 Total 444,734,704.90 469,316,015.83 (2) Significant other payables ageing over one year In RMB Items Closing balance Unpaid/un-carry over reason Benxi Steel (Group) Ltd. 179,539,999.52 Not cleared yet Guangzhou Benjin Electronic & 10,088,825.00 Not cleared yet Machinery Equipment Co., Ltd. Total 189,628,824.52 -- Other notes: 25. Non-current liabilities due in one year In RMB Items Closing balance Opening balance Long-term loans due in 1 year 944,004,649.14 591,740,000.00 Long-term account payable due in 1 year 490,000,000.00 Total 1,434,004,649.14 591,740,000.00 Other explanation: On December 30, 2015, the company signed a Financing After-sales Leaseback Contract with Liaoning Hengyi Financing Leasing Co., Ltd. (hereinafter referred to as ”Hengyi Leasing”), with the purchasing price of leasing assets of 490,000,000 and the leasing term from December 30, 2015 to December 30, 2016. 26. Long-term loans (1) Categories of long-term loans In RMB 142 Bengang Steel Plates Co., Ltd. Annual Report 2015 Items Closing balance Opening balance Guarantee loan 995,919,974.09 642,377,465.85 Credit loan 10,000,000.00 172,250,000.00 Total 1,005,919,974.09 814,627,465.85 Statement on categories of long-term loans: Other statements, including interest scales: 27. Bond payable (1) Bond payable In RMB Items Closing balance Opening balance Corporate bond 1,490,352,572.75 Total 1,490,352,572.75 (2) Change of bond payable (exclude other financial instruments such as preference shares or perpetual liabilities) In RMB 15 1,500,000 February 1,500,000 1,500,000 9,647,427 1,490,352 Bengang 3 years ,000.00 5,2015 ,000.00 ,000.00 .25 ,572.75 01 1,500,000 1,500,000 9,647,427 1,490,352 Total -- -- -- ,000.00 ,000.00 .25 ,572.75 (3) Statement on conditions and date of corporation bond converting to shares (4) Statement on other financial instruments categorized as financial liabilities Particulars about other financial instruments issued externally such as preference shares or perpetual bonds. Change of financial instruments issued externally such as preference shares or perpetual bonds In RMB Financial At beginning of term Increased this period Decreased this period At end of term instruments issued Amount Book value Amount Book value Amount Book value Amount Book value externally Statements on basis of categorizing of other financial instruments as financial liabilities. Other statements 143 Bengang Steel Plates Co., Ltd. Annual Report 2015 Statement about bonds payable: The company issued bonds publicly on February 5, 2015. The face value was 1,500,000,000 yuan, and there were 1500 million shares, with the face value per share of 100 yuan. The issuance price was 100 yuan/ share, with a period of 3 years and the nominal interest rate of 5.17%. The value date was February 5, 2015 and the interest payment date is February 5 in three consecutive years, ranging from 2016 to 2018. The interest is paid annually and the principal shall be paid at a time upon the expiration. Benxi Iron& Steel Group Co., Ltd. provides a joint liability guarantee for the corporate bond publicly issued this time in full, unconditionally and irrevocably. The scope of guarantee includes the principle, interest, liquidated damage, damage awards, expenses spent on actualization of creditors rights of the bonds. The term of guarantee commences on the bond issuance date and ends in 12 months after the expiry of bonds. 28. Deferred income In RMB Decreased this Items Opening balance Increased this period Closing balance Cause period Government subsidy 427,524,000.00 10,700,000.00 25,036,000.00 413,188,000.00 Total 427,524,000.00 10,700,000.00 25,036,000.00 413,188,000.00 -- Government subsidy items involved: In RMB Amount New subsidy in transferred to Asset-related or Liability projects Opening balance Other changes Closing balance current period non-operational income-related income Desulfuration project of 220t/h 1,600,000.00 800,000.00 800,000.00 Related to assets furnace MES project fund 8,600,000.00 1,720,000.00 6,880,000.00 Related to assets Environment treatment project 1,080,000.00 540,000.00 540,000.00 Related to assets of Benxi City Second batch of Funding for National Cleaned 2,400,000.00 800,000.00 1,600,000.00 Related to assets Manufacture Demonstration Project Subsidiary for industrial energy control center 11,600,000.00 11,600,000.00 Related to assets demonstration project Environment 22,942,000.00 5,234,000.00 17,708,000.00 Related to assets 144 Bengang Steel Plates Co., Ltd. Annual Report 2015 Pollution Renovation Project Environment Renovation Project and 2,180,000.00 500,000.00 1,680,000.00 Related to assets Regional Basin Environment Protection Project Energy-saving Technological Transformation 8,862,000.00 2,954,000.00 5,908,000.00 Related to assets Fiscal Reward Project Cool rolling high strength steel 250,000,000.00 250,000,000.00 Related to assets rebuilding desulfuration project of 2*265 2,000,000.00 1,000,000.00 1,000,000.00 Related to assets square meter burnning line Water treatment project of 2*265 6,760,000.00 3,380,000.00 3,380,000.00 Related to assets square meter burnning line Reconstruction of dust remover of 120,000.00 60,000.00 60,000.00 Related to assets the 360m3 burnning line Automobile High-class Electrolytic Zinc 41,040,000.00 41,040,000.00 Related to assets Steel Plate Production Line Project Heat recycling and disulfuration 21,020,000.00 4,204,000.00 16,816,000.00 Related to assets project of the burnning line Water treatment factory 4,500,000.00 1,500,000.00 3,000,000.00 Related to assets reconstruction project Fund for introducing of 4,000,000.00 4,000,000.00 Related to assets overseas R&D team Disulfuration project of the 7 24,000,000.00 24,000,000.00 Related to assets boilers of the Power Plant 145 Bengang Steel Plates Co., Ltd. Annual Report 2015 Waste liquid processing 400,000.00 100,000.00 300,000.00 Related to assets project of Coke Factory Special fund for importing of 14,420,000.00 884,000.00 13,536,000.00 Related to assets overseas technologies Benggang Automobile sheet engineering 1,000,000.00 1,000,000.00 Related to assets laboratory of Engineering Research and development of high strength 2,900,000.00 2,900,000.00 Related to assets steel for third generation automobile Flue gas desulfurization 1,000,000.00 200,000.00 800,000.00 Related to assets project of the 360 burnning line Special funds for environmental 5,800,000.00 1,160,000.00 4,640,000.00 Related to assets protection Total 427,524,000.00 10,700,000.00 25,036,000.00 413,188,000.00 -- Other statements 1. 220t/h Boiler Desulfurization: According to “Notice about the first batch of Provincial Environmental Protection Special Funding Project of 2006” (Liao Huan Fa 2006 No. 65) and “Notice about the first batch of Provincial Environmental Protection Special Funding Project of 2008” (Liao Huan Fa 2008 No. 29) issued by Department of Environmental Protection of Liaoning Province and Liaoning Provincial Finance Department, RMB 4 million was received for this project. The project was completed in December 2011 and the funding was to be amortized in the next 5 years from 2012. 2. MES Project Special Fund: According to “Notice about National Budget Investment Plan of 2010 of Key Industry Development and Technology Innovation (3rd batch) and Industrial SMEs Technology Innovation of Benxi” (Ben Fa Gai Fa 2010 No. 285) issued by Benxi Development and Reform Commission, Benxi Economy and Informatization Commission and Benxi SME Bureau, RMB 8.6 million was received for this project. The project was completed in December 2014 and the funding was to be amortized in the next 5 years from 2015. 3. Municipal Environmental Pollution Renovation Project: According to “Notice about Benxi Environmental Pollution Renovation Project of 2011” (Ben Huan Fa 2011 No. 53) issued by Bureau of Environmental Protection of Benxi and Bureau of Finance of Benxi, RMB 2.7 million was received and used for the reform of 265 square meters sinter machine tail ESP and the reform of three car tipplers dumpers with new spray and dust catcher facilities in raw material plant 2. The project was completed and the funding was to be amortized in the next 5 years from 2012. 4. Second batch of Funding for National Cleaned Manufacturing Demonstration Project: According to “Notice about the second batch of Funding for National Cleaned Manufacturing Demonstration of 2013” (Cai Jian 2013 No. 681) issued by Ministry of Finance of PRC, RMB 4 million was received and used for the reform of the phenol cyanide sewage treatment system in coking plant. The project was completed in 2013 and the funding was to be amortized in the next 5 years from 2013. 5. Industrial Enterprise Energy Management Center Construction Demonstration Project: According to “Notice about Appropriation of Governmental Subsidy of Industrial Enterprise Energy Management Center Construction Demonstration 146 Bengang Steel Plates Co., Ltd. Annual Report 2015 Project of 2009” (Liao Cai Zhi Qi 2009 No. 868) issued by Liaoning Provincial Finance Department, RMB 11.6 million was received for this project for the construction of new energy controlling center. The project is under implementation. 6. Environment Pollution Renovation Project: According to “Notice about Appropriation of Funding Plan of Benxi Environment Pollution Renovation Project” (Ben Huan Fa 2012 No. 78) issued by Bureau of Environmental Protection of Benxi, RMB 12.07 million was received and used for the reform of environmental protection facilities in coking plant and iron making plant. The project was completed in 2013 and the funding is amortized in the next 5 years from 2013. In 2014, according to “Notice about the first batch of Benxi Environmental Protection Special Funding Project of 2013” (Ben Huan Fa 2013 No. 85) issued by Bureau of Environmental Protection of Benxi, another RMB 14.10 million was received and used for the one 360 Square meter mesintering machine desulfurization project in iron works. The project was completed in 2014 and the funding was to be amortized in the next 5 years from 2015. 7. Environment Renovation Project and Regional Basin Environment Protection Project: According to “Notice about the second batch of Funding Plan of Benxi Environment Renovation Project and Regional Basin Environment Protection Project” (Ben Huan Fa 2012 No. 81) issued by Bureau of Environmental Protection of Benxi, RMB 2 million was received. Among the received funding, 1.7 million was used for one 265 Square meter mesintering machine desulfurization project. This project was completed in 2014 and the funding was to be amortized in the next 5 years. The other 0.3 million was used for the renovation of batching and dust eliminating of the second sintering plant of iron making plant. This project was completed in 2013 and the funding was to be amortized in the next 5 years. In 2014, according to “Notice about the Funding Plan of The Blue Sky Project 0f 2013” (Ben Cai Fa 2014 No. 52), RMB 0.4 million was received and used for the renovation of dust elimination project of the iron making plant. The project was completed in 2013 and the funding was to be amortized in the next years. 8. Energy-saving Technological Reform Fiscal Reward Project: According to “Notice about the first batch of Implementation Plan of Energy-saving Technological Reform Fiscal Reward Project” (Fa Gai Huan Zi 2009 No. 2483) issued by National Development and Reform Commission, RMB 14.77 million was received and used for the Boiler Reform Project of CCPP in power plant. The project was completed in 2013 and the funding was to be amortized in the next 5 years from 2013. 9. High Strength Cool-rolling Renovation Project: According to “Notice about Appropriation of Enterprise Technology Reform Loan Fiscal Subsidy of 2012” (Liao Cai Zhi Qi 2012 No. 715) issued by Liaoning Provincial Finance Department, RMB 50 million was first received. Then in 2013 another RMB 50 million was received according to “Notice about Appropriation of the forth Fiscal Subsidy Plan for Enterprise Technology Reform” (Liao Jing Xin Tou Zi 2013 No. 241) issued by Liaoning Provincial Economy and Informatization Commission and Liaoning Provincial Finance Department, and RMB 100 million was received according to “Notice about National Budget Investment Project Subsidy for Technology Reform of 2012” (Fa Gai Ban Chan Ye 2012 No. 1642) issued by Office of National Development and Reform Commission and Office of Ministry of Industry and Details Technology of PRC in current period. In 2014, 50 million was received according to the “Notice about Appropriation of the second batch of Discount Interest Funds for the Loans for Enterprise Technical Reformation of 2014” (Liao Cai Zhi Qi 2014 No. 289) issued by Liaoning Provincial Finance Department. The project is expected to be completed in 2016. 10. 2*265 Square Meter Sintering Machine Desulfurization Project: According to “Notice about the second batch of Budget of Environmental Protection Special Funding Project of 2009 in Liaoning Province” (Liao Cai Zhi Jing 2009 No. 1076) issued by Liaoning Provincial Finance Department, RMB 5 million was received for this project. The project was completed in December 2011 and the funding was to be amortized in the next 5 years from 2012. In 2014, according to “Notice about the Funding Plan of The Blue Sky Project 0f 2013” (Ben Cai Fa 2014 No. 52), another RMB 0.6 million was received and the fund was transferred into profit and loss of current period. 11. 2*265 Square Meter Sintering Machine Polluted Water Project: According to “Notice about Budget of National Pollution Discharge Special Funding Project of 2009” (Liao Cai Zhi Jing 2009 No. 1153) issued by Liaoning Provincial Finance Department, RMB 16.90 million was received for this project. The project was completed in December 2011 and the funding was to be amortized in the next 5 years from 2012. 12. Automobile High-class Electrolytic Zinc Steel Plate Production Line Project : According to “Notice about Key Industry Revitalization and First Technology Reform Project Construction Expansion and National Debt Investment Budget” issued by Liaoning Provincial Development and Reform Commission, RMB 41.04 million was received for this project. The project was completed in December 2015 and the funding was to be amortized in the next 5 years from 2016. 13. Sintering Machine Residue Heat Usage and Desulfurization Project: According to “Notice about the third batch of National Budget of Investment Plan for Key Industrial and Technology Reform Project of 2011” (Liao Fa Gai Tou Zi 2011 No. 1319) issued by Liaoning Provincial Development and Reform Commission, a total amount of RMB 21.02 was to be appropriated. First RMB 17.86 million was received for this project in 2012. In 2014, another RMB3.16 million was received. The project was completed in 2014 and the funding was to be amortized in the next 5 years from 2015. 14. Polluted Water Treatment Project: According to “Notice about the third batch of National Funding for Environmental Pollution Renovation Project of Liaohe Basin” (Liao Cai Zhi Jing 2010 No. 1072) issued by Liaoning Provincial Finance Department, RMB 7.5 million was received for this project. The project was completed in December 2013 and the funding was to be amortized in the next 5 years from 2013. 147 Bengang Steel Plates Co., Ltd. Annual Report 2015 15. Overseas R&D Team Introduction Fund: 1) According to “Notice about Appropriation for Overseas R&D Team Introduction Funding Supported by The Government of 2008” (Liao Wai Zhuan 2008 No. 71) issued by Liaoning Provincial Administration of Foreign Experts Affairs, RMB 1 million was received for overseas R&D team introduction of cold-rolling grain-oriented silicon steel project. This project is now under implementation. 2)According to “Notes about Project of Overseas R&D Team Introduction in Liaoning Province” (Liao Wai Zhuan Han 2012 No. 47) issued by Liaoning Provincial Administration of Foreign Experts Affairs, RMB 0.5 million was received for overseas R&D team introduction of the manufacture technology of electro-galvanizing plate used in automobile. This project is now under implementation. 3)According to “Notice about Project of Overseas R&D Team Introduction in Liaoning Province” (Liao Wai Zhuan Han 2012 No. 48) issued by Liaoning Provincial Administration of Foreign Experts Affairs, RMB 0.5 million was received for overseas R&D team introduction of the manufacture technology of cold-rolling steel with high strength used in automobile. This project is now under implementation. 4)According to “Notice about Project of Overseas R&D Team Introduction in Liaoning Province” (Liao Wai Zhuan Han 2013 No. 46) issued by Liaoning Provincial Administration of Foreign Experts Affairs, RMB 0.5 million was received for overseas R&D team introduction of the manufacture technology of 300 series stainless steel cold-rolling. This project is now under implementation. 5) According to “Notice about Project of Overseas R&D Team Introduction in Liaoning Province” (Liao Wai Zhuan Han 2013 No. 47) issued by Liaoning Provincial Administration of Foreign Experts Affairs, RMB 0.5 million was received for overseas R&D team introduction of the reform of the cooling equipment used in 2300 series hot-rolling line. This project is now under implementation. 6) According to “Notes about Project of Overseas R&D Team Introduction in Liaoning Province” (Liao Wai Zhuan Han 2013 No. 137) issued by Liaoning Provincial Administration of Foreign Experts Affairs, RMB 0.5 million was received for the production of automobile cold rolled dual phase steels. This project is now under implementation. 7) According to “Notes about Project of Overseas R&D Team Introduction in Liaoning Province” (Liao Wai Zhuan Han 2014 No. 54) issued by Liaoning Provincial Administration of Foreign Experts Affairs, RMB 0.5 million was received the production of hot dip galvanized sheet of high surface quality for automobile. This project is now under implementation. 16. 7 Boilers Flue Gas Desulfurization Renovation Project: According to “Notice about the Budget Index of the second batch of Provincial Environmental Protection Special Funding Project of 2014” (Liao Cai Zhi Jing 2014 No. 338) issued by RMB 2.4 million was received. The Company implemented the flue gas desulfurization renovation of three 240t/h boilers, two coal-fired high pressure boilers and one gas fired high pressure boiler. The project is under implementation. 17. Management and Salt Extracting of Desulfurization Waste Project: According to “Notice about the first batch of Benxi Environmental Protection Special Funding Project of 2013” (Ben Huan Fa 2013 No. 85) issued by Bureau of Environmental Protection of Benxi, RMB 0.5 million was received. The project was completed in December 2013, and the funding was to be amortized in the next 5 years from 2014. 18. Overseas Advanced Technology Introduction Funding: 1) According to “Note about the Appropriation of the Provincial Special Funding for Introduction of Overseas Advanced Technology of 2013” (Liao Cai Zhi Qi 2013 No. 1084) issued by Liaoning Provincial Finance Department, RMB 10 million was received and used for the production technology progress of high-grade electro galvanized sheet. This project is now under implementation. 2) According to “Note about the Appropriation of the Provincial Special Funding for Introduction of Overseas Advanced Technology of 2013” (Liao Cai Zhi Qi 2013 No. 1084) issued by Liaoning Provincial Finance Department, RMB 4.42 million was received and used for the technology progress of 1700MM unit. The project was completed in December 2014 and the funding was to be amortized in the next 5 years from 2015. 19. In accordance with the Issuance of Notice on the Basic Construction of the Third Batch of Project Investment Plan in Benxi 2014 (No. 339 of BFG[2014]), Benxi auto sheet engineering labaratory project was applied and the company received a subsidy of 1 million yuan from Benxi Bureau of Finance, This project is now under implementation. 20. In accordance with the Notice on Project Approval of of the First Batch of Scientific Technology Plan in Liaoning 2015(Liaoning Scientific Technology Office), the R&D project of third-generation auto high-strength steel was submitted and the company received a subsidy of 2.9 million yuan from Liaoning Finance Department, This project is now under implementation. 21. In accordance with the Issuance of Notice on Blue Sky Engineering Project Capital Plan 2014 (No.20 of BCF[2015]), the 360 sintering machine flue gas desulfurization project in iron works was submitted and the company received the project asset of 1 million yuan from Benxi Bureau of Finance. The project was completed in December 2014 and the funding was to be amortized in the next 5 years from 2015. 22. In accordance with the Special Environmental Protection Funds in Benxi 2014(No. 104 of BHF[2014]) special environmental protection funds were applied, and the company received a subsidy of 5.8 million yuan from Benxi Bureau of Finance. Wherein, 1 million was used for disposing the smoke dust produced from 3 sets of 220 T/H coal-fired boilers in the power station, and the project was completed in 2014 and since 2015, it was transformed 148 Bengang Steel Plates Co., Ltd. Annual Report 2015 into profit and loss in 5 years; 1.8 million yuan was used for the low-nitrogen combustion transformation for one set of 220 T/H coal-fired boiler, The project was completed in December 2014 and the funding was to be amortized in the next 5 years from 2015.while the rest 3 million yuan was used for transforming the fuel dust remover in the second sintering plant. The project was completed in December 2014 and the funding was to be amortized in the next 5 years from 2015. 29. Share capital In RMB Changed(+,-) Balance in Capitalization Balance in Issuance of year-begin Bonus shares of public Other Subtotal year-end new share reserve Total of capital 3,136,000,000. 3,136,000,000. shares 00 00 Other notes: 30. Capital reserves In RMB Items Opening balance Increase Decrease Closing balance Capital premium 8,998,928,073.23 8,998,928,073.23 Other capital reserves 115,917,468.82 115,917,468.82 Total 9,114,845,542.05 9,114,845,542.05 Notes: 31. Other comprehensive income In RMB Reporting period Less:Amount transferred into profit and loss in the Amount current period After-tax After-tax Opening Less: Closing Items s incurred urrent period attribute to attribute to balance Inomce tax balance before that the parent minority expense income tax recognized compaqny shareholder into other comprehensive income in prior period Other notes: 149 Bengang Steel Plates Co., Ltd. Annual Report 2015 32. Special reserves In RMB Items Opening balance Increase Decrease Closing balance Safety production cost 430,777.94 35,035,241.18 35,072,647.07 393,372.05 Total 430,777.94 35,035,241.18 35,072,647.07 393,372.05 Notes: 33. Surplus reserves In RMB Items Opening balance Increase Decrease Closing balance Statutory surplus 961,105,529.85 961,105,529.85 reserves Total 961,105,529.85 961,105,529.85 Notes : 34. Retained profits In RMB Items Reporting period Last period Opening balance of retained profits before 2,172,180,473.24 2,100,587,079.16 adjustments Opening balance of retained profits after 2,172,180,473.24 2,100,587,079.16 adjustments Add: Net profit attributable to owners of the -3,293,624,545.17 232,804,820.19 Company Less: Withdrawal of statutory surplus reserves 4,411,426.11 Dividend of common stock payable 156,800,000.00 156,800,000.00 Closing retained profits -1,278,244,071.93 2,172,180,473.24 List of adjustment of opening retained profits: 1) RMB0.00 opening retained profits was affected by retrospective adjustment conducted according to the Accounting Standards for Business Enterprises and relevant new regulations. 2) RMB0.00 opening retained profits was affected by changes on accounting policies. 3) RMB0.00 opening retained profits was affected by correction of significant accounting errors. 4) RMB0.00 opening retained profits was affected by changes in combination scope arising from same control. 5) RMB0.00 opening retained profits was affected totally by other adjustments. 35. Operating income and operating cost In RMB Items 2015 2014 150 Bengang Steel Plates Co., Ltd. Annual Report 2015 Revenue Cost Revenue Cost Principal business 27,452,962,527.12 28,154,149,434.65 39,041,774,116.14 36,352,691,545.89 Other business 1,800,676,078.68 1,657,745,582.20 2,380,313,909.56 2,136,427,480.54 Total 29,253,638,605.80 29,811,895,016.85 41,422,088,025.70 38,489,119,026.43 36. Business tax and surcharges In RMB Items 2015 2014 Business tax 274,427.66 458,953.40 City maintenance and construction tax 29,657,164.15 68,223,587.42 Educational surcharge 21,638,030.06 49,478,917.04 Total 51,569,621.87 118,161,457.86 Other notes: 37. Sales expenses In RMB Items 2015 2014 Freight 609,808,842.96 529,994,866.92 Port surcharges 199,336,639.67 144,715,016.86 Agency fee 54,293,066.93 76,696,525.74 Package fee 17,287,739.31 70,689,568.13 Salary and benefits 20,904,851.21 23,644,577.77 Other 17,479,359.29 17,338,581.67 Total 919,110,499.37 863,079,137.09 Other notes: Sales expenses have increased by RMB 56,031,362.28 compared with last year at the rate of 6.49%. Its mainly because of the increased external transportation expenditure which is caused by the increased settlement of CIF paid by our company. 38. Administrative expenses In RMB Items 2015 2014 Salary and benefits 233,971,706.69 261,461,752.56 Repair Fee 150,013,456.13 238,256,015.21 Taxes 92,514,576.97 97,438,517.02 151 Bengang Steel Plates Co., Ltd. Annual Report 2015 Land use right fee 57,426,000.00 57,426,000.00 Depreciation 24,380,562.83 56,582,336.18 Social security expense 45,336,211.03 53,094,382.15 Pollution discharge fee 28,607,476.00 27,492,350.00 Water resources fee 17,001,160.00 17,063,680.00 Housing fund 10,146,420.00 11,427,050.00 Heating fee 6,809,717.20 10,801,016.24 Entertainment expense 4,226,627.81 5,342,597.66 Amortization of intangible assets 4,248,197.90 4,248,197.90 Freight 2,762,637.66 2,467,196.26 Lease expense 1,822,459.28 1,768,910.14 Other 54,666,090.38 54,754,297.97 Total 733,933,299.88 899,624,299.29 Other notes: Administrative expenses have decreased by RMB 165,690,999.41 compared with last year at the rate of 18.42%,Its mainly because our company has strengthened the budget index on the basis of market changes by taking measures to dramatically squeeze costs. 39. Financial expenses In RMB Items 2015 2014 Interest expenses 693,469,408.37 731,877,272.55 Less: Interest income 34,026,570.83 38,738,942.33 Exchange loss 376,746,455.44 -16,374,043.45 Other 27,128,162.49 40,528,566.62 1,063,317,455.47 717,292,853.39 Total 1,063,317,455.47 717,292,853.39 Other notes: Financial expenses have increased by RMB 346,024,602.08 compared with last year at the rate of 48.24%. Its mainly because of the increased exchange loss of foreign currency loans. 40. Asset impairment loss In RMB Items 2015 2014 1. Loss for bad debts 15,212,716.04 7,622,281.44 2. Impairment of investories 499,063,732.20 21,035,849.04 152 Bengang Steel Plates Co., Ltd. Annual Report 2015 Total 514,276,448.24 28,658,130.48 Other notes: 41. Investment income In RMB Items 2015 2014 Bank short-term financial products revenue 7,226,589.08 20,845,473.00 Total 7,226,589.08 20,845,473.00 Other notes: The yield of banks financial products is actually the revenue earned by companies through buying the preservation-based financial products. 42. Non-operating income In RMB The amount recognized in Items 2015 2014 non-operating profit Total of Non-current assets 19,820,758.05 7,296,356.96 21,206,096.82 disposal income Including: Fixed assets disposal 21,206,096.82 7,296,356.96 21,206,096.82 income Debt restructuring gain 12,200,032.42 5,940,400.95 12,200,032.42 Government subsidies 136,992,233.61 18,722,224.00 136,992,233.61 Fines and the penalty income 661,135.12 2,417,393.48 661,135.12 Other 4,994,858.60 2,738,756.29 4,994,858.60 Total 176,054,356.57 37,115,131.68 176,054,356.57 Government subsidies recorded into current profits and losses: In RMB Whether Whether influence the Related to the Distribution Distribution Special Reporting Same period Items Nuture type profits or assets/ entity reason subsidy or period of last year losses of the income not year or not Deferred 25,036,000.0 17,372,224.0 revenue 0 0 transfer Special fund for bringing 500,000.00 in R&D 153 Bengang Steel Plates Co., Ltd. Annual Report 2015 teams outside China Award fund for closing down 19,500,000.0 outdated 0 production facilities and saving energy Special assistance 91,456,233.6 fund for 1 environmenta l protection Government 50,000.00 financing Tax returns 1,300,000.00 Enterprise development 500,000.00 fund 136,992,233. 18,722,224.0 Total -- -- -- -- -- -- 61 0 Other notes: (1)Accroding to the Circular of the Shenyang Huali Energy Equipment Manufacturing Co., Ltd. Concerning the Close the 86 Projects of Bring in R&D Teams Exampled by “72.5KV and 126KV New Environmentally Friendly Gas Insulated Metal Enclosed Switchgear” (Department of Labor and Social Security of Liaoning Province, No. 243, [2014] ), our company has received 500,000 yuan as assistance fund from the Bureau of Foreign Experts Affairs of Benxi city. The fund will be used to develop the project of the hot rolling thicker high-end pipeline steel which has been finished in May, 2014. In 2015, the project has transfer profit and loss. (2)Award fund for closing down outdated production facilities and saving energy. According to the Circular of Issuing the Central-government Budget Index of Energy-saving Special Funds (Award for Closing Outdated Production Facilities) in 2014 (Financial Index Enterprises in Liaoning province, No. 1075, [2014]), our company has received 19,500,000 yuan as assistance fund from Department of Finance of Liaoning province for awarding our demolition of two 4.3-meter coke ovens. The demolition work has been finished in 2014. In 2015, the project has transfer profit and loss . (3)The special assistance fund for environmental protection. According to the Circular of Special Assistance Fund for Environmental Protection (Local Bureau of Finance, No. 174, [2014]), our company has received 91,456,200 yuan as the special fund from the Bureau of Finance of Benxi city for the environmental protection cost. In 2015, the project has transfer profit and loss. (4)Enterprise development fund. We have received the enterprise development fund from the Bureau of Finance of Dalian Bonded Area. 43.Non-operating expense In RMB Items 2015 2014 The amount recognized in 154 Bengang Steel Plates Co., Ltd. Annual Report 2015 non-operating profit Non-current assets disposal loss 24,039,513.56 10,297,285.52 24,124,620.55 Including: Fixed assets disposal 24,124,620.55 10,297,285.52 24,124,620.55 loss Fines and overdue paymen 11,162.62 11,162.62 Total 24,135,783.17 10,297,285.52 24,135,783.17 Notes : 44. Income tax expense (1) Lists of income tax expense In RMB Items Reporting period Same period of last year year Current income tax expense 20,638,504.62 35,650,711.67 Deferred income tax expense -461,028,720.78 3,292,576.49 Total -440,390,216.16 38,943,288.16 (2) Adjustment process of accounting profit and income tax expense In RMB Items Reporting period Total profits -3,681,318,573.40 Current income tax expense accounted by tax and relevant -920,329,643.34 regulations Influence of income tax before adjustment 298,204.39 Influence of not deductible costs, expenses and losses 577,750.30 Influence of deductible losses of deferred income tax assets -57,646,882.53 derecognized used in previous period Influence of deductible temporary difference or deductible losses 536,710,355.02 of deferred income tax assets derecognized in reporting period. Income tax expense -440,390,216.16 Other notes 45.Notes of statement of cash flows 1. Cash received related to other operating activities In RMB Items Reporting period Same period of last year Withdraw of current accounts, advance for 205,201,226.09 202,468,658.12 155 Bengang Steel Plates Co., Ltd. Annual Report 2015 another Interest income 34,026,570.83 38,738,942.33 Special subsidy income 122,656,233.61 108,680,000.00 Non-operating income 633,960.32 2,671,341.33 Other 30,870.87 2,800,404.53 Total 362,548,861.72 355,359,346.31 Notes : (2) Other cash paid relevant to operating activities In RMB Items Reporting period Same period of last year Of which:Current account and advance 230,339,040.56 149,809,671.15 foranother Administrative expenses 60,477,057.28 292,747,521.57 Sales expenses 56,331,692.81 91,416,865.68 Bank charges 3,807,258.40 6,460,084.12 Other 343,932.37 2,816,467.72 Total 351,298,981.42 543,250,610.24 Notes : (3) Other cash received relevant to investment activity In RMB Items Reporting period Same period of last year Notes : (4) Other cash paid relevant to investment activity In RMB Items Reporting period Same period of last year Notes : (5) Other cash received relevant to financing activities In RMB Items Reporting period Same period of last year 156 Bengang Steel Plates Co., Ltd. Annual Report 2015 Of which:Note , letter of guarantee and 310,000,000.00 credit Financing lease 490,000,000.00 Total 800,000,000.00 Notes : (6) Other cash paid relevant to financing activitie In RMB Items Reporting period Same period of last year Of which:Note , letter of guarantee and 371,791,357.66 338,513,571.57 credit Financing service fee 27,605,690.09 7,568,482.50 Total 399,397,047.75 346,082,054.07 Notes : 46. Supplementary information to cash flow statement (1)Supplementary information to cash flow statement In RMB Supplementary materials Reporting period Last period 1. Reconciliation of net profit to net cash -- -- flows generated from operating activities Net profit -3,240,928,357.24 314,873,152.16 Add: Provision for impairment of assets 514,276,448.24 28,658,130.48 Depreciation of fixed assets, of oil-gas 1,824,882,394.51 1,998,507,273.26 assets, of productive biological assets Amortization of intangible assets 5,939,057.18 5,939,057.18 Losses on disposal of fixed assets, intangible assets and other long-term assets (gains: 2,918,523.73 3,000,928.56 negative) Financial cost (gains: negative) 1,070,215,863.81 749,571,711.60 Investment loss (gains: negative) -7,226,589.08 -20,845,473.00 Decrease in deferred income tax assets -460,436,665.36 3,292,576.49 (gains: negative) Decrease in inventory (gains: negative) 1,998,873,344.78 522,343,929.65 Decrease in accounts receivable from 395,827,676.24 -45,175,455.87 157 Bengang Steel Plates Co., Ltd. Annual Report 2015 operating activities (gains: negative) Increase in payables from operating -4,409,347,664.91 -692,025,735.65 activities (decrease: negative) Net cash flows generated from operating -2,305,005,968.10 2,868,140,094.86 activities 2. Investing and financing activities that do -- -- not involving cash receipts and payment: 3. Net increase in cash and cash equivalents -- -- Closing balance of cash 4,612,782,772.98 9,327,034,030.07 Less: Opening balance of cash 9,327,034,030.07 4,452,422,474.41 Net increase in cash and cash equivalents -4,714,251,257.09 4,874,611,555.66 (2) Net Cash paid of obtaining the subsidiary In RMB Amount Of which: -- Of which: -- Of which: -- Other notes: (3) Net Cash receive of disposal of the subsidiary In RMB Amount Of which: -- Of which: -- Of which: -- Other notes: (4)The structure of cash and cash equivalents In RMB Items Ending balance Beginning balance 1. Cash 4,612,782,772.98 9,327,034,030.07 Including: Cash on hand 72,220.66 14,168.01 Bank deposits available on 4,612,384,032.13 9,327,019,862.06 demand Other monetary funds available 326,520.19 on demand 3. Ending balance of cash and cash 4,612,782,772.98 9,327,034,030.07 158 Bengang Steel Plates Co., Ltd. Annual Report 2015 equivalents Other notes: 47. The assets with the ownership or use right restricted In RMB Items Closing book value Restricted reason Notes payab Its used to issue notes Monetary capital 527,695,736.99 payable and purchase foreign exchange Notes receivable 718,925,665.16 Issue notes payable Fixed assets 28,440,000.00 Mortgage loans Account receivable and order 1,966,875,200.00 Loans Total 3,241,936,602.15 -- Other notes: 48.Foreign currency monetary items 1. Foreign currency monetary items In RMB Ending balance in foreign Ending balance translated to Items Exchange rate at the year-end currency RMB Of which:USD 114,132,557.29 6.4936 741,131,173.99 EUR 27,790,063.04 7.0952 197,176,055.26 HKD 969,716.09 0.8378 812,428.14 EUR 106,577,023.48 7.0952 756,185,297.09 JPY 278,112,000.00 0.0539 14,983,284.00 Non-current liabilities due 780,506,042.14 within1 year Of which:USD Loans 100,000,000.00 6.4936 649,360,000.00 Euro loans 18,483,769.61 7.0952 131,146,042.14 Short term loans 7,636,473,600.00 Of which:USD Loans 1,176,000,000.00 6.4936 7,636,473,600.00 Other notes: (2) Note to oversea entities including: for significant oversea entities, shall disclose main operating place, recording currency and selection basis, if there are changes into recording currency, shall also disclose the reason. □ Applicable √Not applicable 159 Bengang Steel Plates Co., Ltd. Annual Report 2015 VIII. Changes of merge scope 1. Business merger not under same control (1) Business merger not under same control in reporting period In RMB Income of Net profits of Time and Cost of Way to gain Recognition acquiree acquiree Name of place of Proportion of gaining the the stock Purchase date basis of during the during the acquiree gaining the stock rights stock rights rights purchase date purchase date purchase date stock rights to period-end to period-end Other notes: (2) Combined cost and goodwill In RMB Combination cost Note to determination method, consideration and changes of fair value of combined cost: The main formation reason for the large goodwill: Other notes: (3) The identifiable assets and liabilities of acquiree at purchase date In RMB Fair value on purchase date Book value on purchase date The recognition method of the fair value of identifiable assets and liabilities: Contingent liability of acquiree undertaken by business merger: Other notes: (4) The profit or loss from equity held by the date before acquisition in accordance with the fair value measured again 160 Bengang Steel Plates Co., Ltd. Annual Report 2015 Whether there is a transaction that through multiple transaction step by step to realize enterprises merger and gaining the control during the reporting period □ Yes √ No (5) Note to merger could not be determined reasonable consideration or Identifiable assets, Fair value of liabilities of the acquiree at acquisition date or closing period of the merge (6) Other notes 2. Business combination under the same control (1) Business combination under the same control during the reporting period In RMB Income from Net profits the from the Recognition Income Net profits period-begin reporting Combined Proportion of Combination basis of during the during the Basis to the period to the party the profits date combination period of period of combination combination date comparison comparison date of the date of the combination combination Other notes: (2)Combination cost In RMB Combination cost Note to contingent consideration or other changes: Notes: (3) The book value of the assets and liabilities of the combined party at combining date In RMB Combination date Period-end of last period Contingent liabilities of the combined party undertaken in combination Notes: 161 Bengang Steel Plates Co., Ltd. Annual Report 2015 3. Counter purchase Basic information of trading, the basis of transactions constitute counter purchase, the retain assets , liabilities of the listed companies whether constituted a business and its basis, the determination of the combination costs, the amount and calculation of adjusted rights and interests in accordance with the equity transaction process. 4. The disposal of subsidiary Whether there is a single disposal of the investment to subsidiary and lost control □ Yes √ No Whether there are multiple transactions step by step dispose the investment to subsidiary and lost control in reporting period □ Yes √ No 5. Other reasons for the changes in combination scope Notes to reasons for the changes in combination scope (Newly established subsidiary and subsidiary of liquidation) and relevant information: The scope of the consolidated financial statements of the current period has been added the newly established subsidiaries of Benxi Bengang Iron and Steel Sales Co., Ltd and Shenyang Bengang Metallurgy Technology Co., Ltd. 6.Other IX. Equity in other entities (1) Equity in subsidiaries 1. Constitution of enterprise group Name of the Principal place Registered Nature of Shareholding ratio Acquiring subsidiaries of business address business Direct Indirect method Business Xiamen Bengang combination Steel Sales Co., Xiamen Xiamen Sales 100.00% under common Ltd. control Business Wuxi Bengang combination Steel Sales Co., Wuxi Wuxi Sales 100.00% Ltd. under common control 162 Bengang Steel Plates Co., Ltd. Annual Report 2015 Business Tianjin Bengang combination Steel Trading Co., Tianjin Tianjin Sales 100.00% Ltd. under common control Business Nanjing Bengang combination Material Sales Co., Nanjing Nanjing Sales 100.00% Ltd. under common control Business Yantai Bengang combination Steel Sales Co., Yantai Yantai Sales 100.00% Ltd. under common control Business Harbin Bengang combination Steel & Iron Sales Harbin Harbin Sales 100.00% Co., Ltd. under common control Business Changchun Bengang Steel combination Changchun Changchun Sales 100.00% &Iron Sales Co., under common Ltd. control Guangzhou Benxi Iron & Steel Guangzhou Guangzhou Sales 100.00% Establishment Trading Co., Ltd Shanghai Bengang Metallurgy Shanghai Shanghai Sales 100.00% Establishment Science and Technology Co., Ltd. Bengang Steel Plates Liaoyang Liaoyang Liaoyang Manufacturing 100.00% Establishment Pellet Co., Ltd. Dalian Benruitong Automobile Danlian Dalian Manufacturing 65.00% Establishment Material Eechnology Co., Ltd. Business Bengang Puxing combination Cold-rolled Sheet Benxi Benxi Manufacturing 75.00% under common Co., Ltd. control 163 Bengang Steel Plates Co., Ltd. Annual Report 2015 Benxi Bengang Steel Sale Co., Benxi Benxi Sales 100.00% Establishment Ltd. Shenyang Bengang Metallurgy Shenyang Shenyang Sales 100.00% Establishment Technology Co., Ltd. Notes: other non-current liabilities shall belong to equity of SIH Divestiture Assets. Through the above Contract on Entrusted Management of Divestiture Assets and Liabilities, the Company has actually controlled SX Companys Divestiture Assets which become a business entity with control rights by entrusted business mode. Basis of determine whether the Company is the agent or the principal:: Other notes: (2) Significant not wholly owned subsidiary In RMB The profits and losses Declaring dividends Balance of minority Shareholding proportion Name of the subsidiary arbitrate to the minority distribute to minority shareholder at closing of minority shareholder shareholders shareholder period Bengang Puxiang 25.00% 57,478,394.98 475,746,272.70 Cold-rolled Sheet Co., Ltd. Dalian Benruitong Automobile Material 35.00% -4,782,207.05 29,246,776.75 Eechnology Co., Ltd. Holding proportion of minority shareholder in subsidiary different from voting proportion: Other notes: (3) The main financial information of significant not wholly owned subsidiary In RMB Name of Closing balance Opening balance the Non-curr Non-cur Non-curr Non-cure Current Total Current Total Current Total Current Total subsidiar ent ent ent nt assets assets liabilities liabilities assets assets liabilities liabilities y assets liability assets liability Bengang Puxiang 1,467,41 2,567,81 4,035,22 2,132,23 2,132,23 1,804,90 2,768,70 4,573,61 2,900,54 2,900,54 Cold-roll 1,809.82 1,403.90 3,213.72 8,122.92 8,122.92 8,327.93 7,380.04 5,707.97 4,197.11 4,197.11 ed Sheet Co., Ltd. Dalian 191,638, 168,790, 360,429, 276,866, 276,866, 522,882, 175,596, 698,479, 601,253, 601,253, 164 Bengang Steel Plates Co., Ltd. Annual Report 2015 Benruito 815.72 370.49 186.21 966.92 966.92 668.78 493.34 162.12 494.12 494.12 ng Automob ile Material Eechnolo gy Co., Ltd. In RMB Reporting period Same period of last year Name of the Total Total Operation Operating Operation Operating subsidiary Net profit comprehensi Net profit comprehensi revenue cash flow revenue cash flow ve income ve income Bengang Puxiang 5,239,528,44 229,913,579. 229,913,579. 1,135,756,08 7,637,854,20 313,362,749. 313,362,749. -59,710,793.0 Cold-rolled 3.20 94 94 7.02 6.21 40 40 5 Sheet Co., Ltd. Dalian Benruitong Automobile 352,172,227. -13,663,448.7 -13,663,448.7 16,246,522.9 364,867,029. 10,650,413.1 10,650,413.1 12,972,741.5 Material 41 1 1 0 36 8 8 3 Eechnology Co., Ltd. Other notes: (4) Significant restrictions of using enterprise group assets and pay off enterprise group debt (5) Provide financial support or other support for structure entities incorporate into the scope of consolidated financial statements Other notes: 2. The transaction of the Company with its owner’s equity share changed but still controlling the subsidiary (1) Note to owner’s equity share changed in subsidiary (2) The transaction’s influence to equity of minority shareholders and attributable to the owner's equity of the parent company In RMB Other notes 165 Bengang Steel Plates Co., Ltd. Annual Report 2015 3. Equity in joint venture arrangement or associated enterprise (1) Significant joint venture arrangement or associated enterprise Holding percentage(%) Accounting treatment of the Main operating Nature of investment of Name Registration place place business Directly Indirectly joint venture or associated enterprise Notes to holding proportion of joint venture or associated enterprise different from voting proportion: Basis of holding less than 20% of the voting rights but has a significant impact or holding 20% or more voting rights but does not have a significant impact: (2) Main financial information of significant joint venture In RMB Closing balance/ reporting period Opening balance /last period Other notes (3) Main financial information of significant associated enterprise In RMB Closing balance/ reporting period Opening balance /last period Other notes (4) Summary financial information of insignificant joint venture or associated enterprise In RMB Closing balance/ reporting period Opening balance /last period Joint venture: -- -- The total of following items according to the -- -- shareholding proportions Associated enterprise: -- -- The total of following items according to the -- -- shareholding proportions Other notes 166 Bengang Steel Plates Co., Ltd. Annual Report 2015 (5) Note to the significant restrictions of the ability of joint venture or associated enterprise transfer funds to the Company (6) The excess loss of joint venture or associated enterprise In RMB The cumulative recognized The derecognized losses or the The noncumulative Name losses in previous share of net profit in reporting unrecognized losses in reporting accumulatively derecognized period period Other notes (7) The unrecognized commitment related to joint venture investment (8) Contingent liabilities related to joint venture or associated enterprise investment 4. Significant common operation Proportion /share portion Name Main operating place Registration place Nature of business Directly Indirectly Notes to holding proportion or share portion in common operation different from voting proportion: Naught Basis of common operation as a single entity, classify as common operation Naught Other notes: 5. Equity of structure entity not including in the scope of consolidated financial statements Related notes to structure entity not including in the scope of consolidated financial statements 6.Other X. The risk related financial instruments (1) Credit risk Credit risk refers to a financial loss to a party due to failure to discharge an obligation by the counterparties. The Company is exposed to credit risk arising from customers failure to discharge an obligation in sales on credit. In order to minimize the credit risk, the management of the Company is responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up actions are taken to recover overdue debts. In addition, the Company strictly approves the line of credit, and only sells on credit to important customers for newly-developed products. In the monitoring of credit risk of customers, the Company sorts customers into groups by their credit characteristics. Those customers which are rated as “high risk” will be put in the restricted client list. The Company can only sell to these customers on credit with additional approval; otherwise the Company must ask for a corresponding deposit in advance. 167 Bengang Steel Plates Co., Ltd. Annual Report 2015 (2) Market risk Market risk of financial instruments refers to fluctuations of fair value or future cash flows due to market price changes, including currency risk, interest rate risk, and other price risk. 1. Interest rate risk Interest rate risk refers to fluctuations of fair value or future cash flows due to market rate changes. The Companys exposure to currency risk is primarily arising from variable-rate bank balances and variable-rate borrowings. Currently, the Company does not have a specific policy to manage its interest rate risk. The management will carefully choose financing methods, and combine fixed interest rate with variable interest rate, short-term obligations with long-term obligations. By using effective interest rate risk management methods, the Company closely monitors interest rate risk and will consider interest-rate swaps to acquire an expected structure of interest rates shall the need arise. Although these measures may not ensures that the Company completely avoids the risk of paying at a risk higher than market risk, or that the cash flow risk relevant to interest income fluctuations is completely eliminated, in the opinion of the management, these measures could achieve a reasonable balance among these risks. 2. Currency risk Currency risk refers to fluctuations of fair value or future cash flows due to exchange rate changes. The Company has been constantly working on the adjustment of the organizational framework of risk management and optimization of debt structures to lower the currency risk. (3) Liquidity risk Liquidity risk refers to the risk of shortage of funds which occurs in fulfilling the obligation of settlement in a manner of delivering cash or other financial assets. The Companys policy is to maintain sufficient cash to meet maturing obligations. Liquidity risk is centralized controlled by the Companys finance department. Through the monitoring of unrestricted cash and cash equivalents, bank acceptance bills due in short time and the continues forecasting of cash flow in the next 12 months, the finance department ensures that the Company has sufficient cash to meet obligations in all predicted reasonable circumstances. The following table details the Companys mature date of residual contract value of underivative financial liabilities to repay according to the contract terms. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows. In RMB’0000 Items Closing balance Within 1 year 1-2 years 2-5 years Over 5 years Total Trade and other account payable Loans Total 168 Bengang Steel Plates Co., Ltd. Annual Report 2015 XI. The disclosure of the fair value 1. Closing fair value of assets and liabilities calculated by fair value In RMB Closing fair value Items Fair value measurement Fair value measurement Fair value measurement Total items at level 1 items at level 2 items at level 3 I. Consistent fair value -- -- -- -- measurement II. Inconsistent fair value -- -- -- -- measurement 2. Market price recognition basis for consistent and inconsistent fair value measurement items at level 1 3. Valuation technique adopted and nature and amount determination of important parameters for consistent and inconsistent fair value measurement items at level 2 4. Valuation technique adopted and nature and amount determination of important parameters for consistent and inconsistent fair value measurement items at level 5. Sensitiveness analysis on unobservable parameters and adjustment information between opening and closing book value of consistent fair value measurement items at level 3 6. Explain the reason for conversion and the policy governing when the conversion happens if conversion happens among consistent fair value measurement items at different levels 7. Changes in the valuation technique in the current period and the reason for change 8. Fair value of financial assets and liabilities not measured at fair value 9.Other XII. Related party transactions (1) Details of parent company In RMB Name of parent Registered Share proportion Place of Registry Nature of Business Voting rights (%) company capital (%) Benxi Steel (Group) Benxi Manufacturing 53.69 78.37% 78.37% Co., Ltd. 169 Bengang Steel Plates Co., Ltd. Annual Report 2015 Bengang Group Co., Benxi Manufacturing 180.00 78.37% 78.37% Ltd. Notes: The ultimate controlling party of the Company is the State-owned Assets Supervision and Administration Commission of Liaoning Province. 2. Subsidiaries of the Company For details of subsidiaries of the Company please refer to Note 7 “Equity in other entities”. 3. Information on the joint ventures and associated enterprises of the Company See details to Notes. Information on other joint venture and associated enterprise of occurring related party transactions with the Company in reporting period, or form balance due to related party transactions in previous period: Name Relationship Notes 4.Information on other related parties of lthe company Name Relationship Bengang Group International Trading Co., Ltd. Same parent company Bengang Group Hong Kong Co., Ltd. Both belong to Benxi Iron and Steel (Group) Co., Ltd. Bengang Cold-rolled Stainless Steel Dandong Co., Ltd. Same parent company Benxi Beiying Steel and Iron (Group) Co., Ltd. Both belong to Bengang Group Co., Ltd. Benxi Beiying Steel and Iron Import and Export Co., Ltd. Both belong to Bengang Group Co., Ltd. Bengang Electronics and Gas Co., Ltd. Same parent company Benxi Steel (Group) Real-estate Development Co., Ltd. Same parent company Benxi Steel (Group) Steel Process and Logistics Co., Ltd. Same parent company Benxi Steel (Group) Engineering Inspection Co., Ltd. Same parent company Benxi Steel (Group) Machinery Co., Ltd. Same parent company Benxi Steel (Group) Construction Co., Ltd. Same parent company Benxi Steel (Group) Mining Co., Ltd. Same parent company Benxi Steel (Group) Thermal Power Development Co., Ltd. Same parent company Benxi Steel (Group) Designing Institute Same parent company Benxi Steel (Group) Industrial Development Co., Ltd. Same parent company Benxi Steel (Group) Details and Automatic Tech. Co., Ltd. Same parent company Benxi Steel (Group) Construction & Repairing Co., Ltd. Same parent company Benxi Steel (Group) Metallurgy Residues Co., Ltd Same parent company 170 Bengang Steel Plates Co., Ltd. Annual Report 2015 Benxi Steel (Group) Medical Co., Ltd. Same parent company Benxi Steel (Group) News Center Same parent company Benxi Steel and Iron (Group) Zhengtai Construction Materials Same parent company Co., Ltd. Benxi Steel (Group) Drilling Tools Co., Ltd. Same parent company Benxi New Career Development Co., Ltd. Same parent company Dalian Boluole Steel Tube Co., Ltd. Same parent company Guangzhou Free Trade Zone Bengang Sales Co., Ltd. Both belong to Benxi Iron and Steel (Group) Co., Ltd. Liaoning Bengang Steel & Iron Trading Co., Ltd Both belong to Benxi Iron and Steel (Group) Co., Ltd. Liaoning Hengtai Heavy Machinery Co., Ltd. Both belong to Bengang Group Co., Ltd. Liaoning Hengtong Metallurgical Equipment Manufacturing Co., Both belong to Bengang Group Co., Ltd. Ltd. Liaoning Metallurgy Technician College Same parent company Liaoning Metallurgy Technician College Same parent company Shanghai Bengang Steel & Iron Trading Co., Ltd. Both belong to Benxi Iron and Steel (Group) Co., Ltd. Tianjin Bengang Steel Plates Process and Logistics Co., Ltd. Both belong to Benxi Iron and Steel (Group) Co., Ltd. Suzhou Bengang Industrial Co., Ltd. Sharing company Shanghai Bengang Steel Sale Co., Ltd. Both belong to Benxi Iron and Steel (Group) Co., Ltd. Shanghai Bengang Iron&Steel Trading Co., Ltd. Both belong to Benxi Iron and Steel (Group) Co., Ltd. Bengang Group Finance Co., Ltd. Same parent company Liaoning Hengyi Financing Leasing Co., ltd. Same parent company Other notes 5. List of related-party transactions (1) Information on acquisition of goods and reception of labor service) Information on acquisition of goods and reception of labor service In RMB The approvl trade Whether exceed trade Same period of last Related party Content Reporting period credit credit or not year Benxi Steel (Group) Repair fee 156,995,932.00 No 242,612,000.00 Co., Ltd. Benxi Steel (Group) Land leasing fee 57,426,000.00 No 57,426,000.00 Co., Ltd. Bengang Products 301,149.02 No 2,700,852.96 Cold-rolled 171 Bengang Steel Plates Co., Ltd. Annual Report 2015 Stainless Steel Dandong Co., Ltd. Benxi Steel (Group) Labor cost 22,066,231.92 No 23,975,366.26 Mining Co., Ltd. Benxi Steel (Group) Raw material 3,529,686,845.22 No 4,960,292,952.48 Mining Co., Ltd. Benxi Steel (Group) Freight 3,285,528.39 No 7,078,380.11 Mining Co., Ltd. Benxi Steel (Group) Metallurgy Raw material 112,923,767.84 No 202,309,450.59 Residues Co., Ltd. Benxi Steel (Group) Steel Process and Processing fee 2,354,615.81 No 5,649,998.15 Logistics Co., Ltd. Benxi Steel (Group) Steel Process and Products No Logistics Co., Ltd. Benxi Steel (Group) Real-estate Raw material 68,418,889.13 No 75,908,131.46 Development Co., Ltd Benxi Steel (Group) Spare parts 143,456,620.55 No 184,943,074.58 Machinery Co., Ltd. Benxi Steel (Group) Repair services 17,054,485.17 No 18,200,854.49 Machinery Co., Ltd. Benxi Steel (Group) Construction Co., Spare parts 17,029,336.27 No 13,238,023.74 Ltd. Benxi Steel (Group) Construction Co., Engineerng fee 332,746,256.10 No 327,804,663.06 Ltd. Benxi Steel (Group) Construction Co., Repair services 89,957,365.25 No 148,737,386.73 Ltd. Benxi Steel (Group) Construction Co., Raw material 9,962,827.47 No 11,368,797.87 Ltd. Benxi Steel (Group) Construction Co., Freight 3,753,482.85 No Ltd. 172 Bengang Steel Plates Co., Ltd. Annual Report 2015 Benxi Steel (Group) Industrial Spare parts 40,819,559.76 No 39,990,571.27 Development Co., Ltd. Benxi Steel (Group) Industrial Raw material 194,581,308.15 No 310,169,440.85 Development Co., Ltd. Benxi Steel (Group) Industrial Repair services 11,359,570.02 No 11,694,340.32 Development Co., Ltd. Benxi Steel (Group) Industrial Freight 6,180,532.47 No 7,404,777.74 Development Co., Ltd. Benxi Steel (Group) Industrial Engineerng fee 2,098,041.03 No 860,556.76 Development Co., Ltd. Benxi Steel (Group) Raw material and Construction & 12,767,449.91 No 6,954,598.56 spare part Repairing Co., Ltd. Benxi Steel (Group) Construction & Engineerng fee 117,176,790.75 No 103,089,546.01 Repairing Co., Ltd. Benxi Steel (Group) Construction & Repair fee 92,544,131.55 No 113,504,562.26 Repairing Co., Ltd. Bengang Electronics and Gas Raw material 99,783,576.65 No 120,658,677.32 Co., Ltd. Bengang Electronics and Gas Engineerng fee 5,370,735.62 No Co., Ltd. Repair services 16,601,553.00 No 13,924,881.00 Benxi High-tech Drilling Tools Spare parts 1,009,624.60 No 1,321,877.59 Manufacturing Co., Ltd. 173 Bengang Steel Plates Co., Ltd. Annual Report 2015 Benxi New Career Labor protection Development Co., 8,491,191.16 No 8,532,675.66 fee Ltd. Benxi New Career Raw material and Development Co., supplementary 1,676,502.22 No 475,998.01 Ltd. material Liaoning Metallurgy Training fee 824,826.00 No 4,160.00 Technician College Liaoning Metallurgy Spare parts 16,920,934.56 No 13,251,551.18 Technician College Liaoning Metallurgy Raw material No Technician College Liaoning Bengang Steel & Iron Trading Raw material No Co., Ltd Liaoning Metallurgy Engineerng fee 6,022,457.96 No 2,624,073.74 Technician College Liaoning Metallurgy Repair services 2,410,382.44 No 1,865,579.10 Technician College Bengang Group International Agency fee 54,293,066.92 No 76,696,525.74 Trading Co., Ltd. Bengang Group International Port surcharges 198,820,038.51 No 191,969,393.41 Trading Co., Ltd. Benxi Steel (Group) Details and Repair services 19,119,302.07 No 11,406,015.70 Automatic Tech. Co., Ltd. Benxi Steel (Group) Details and Engineerng fee 30,075,834.95 No 14,583,119.65 Automatic Tech. Co., Ltd. Benxi Steel (Group) Details and Repair services 895,000.00 No 2,526,435.90 Automatic Tech. 174 Bengang Steel Plates Co., Ltd. Annual Report 2015 Co., Ltd. Benxi Steel (Group) Thermal Power Heating costs 12,903,359.25 No 12,075,111.45 Development Co., Ltd. Benxi Steel (Group) Thermal Power Raw material 91,819.00 No 101,090.00 Development Co., Ltd. Benxi Steel (Group) Project fee No Designing Institute Benxi Steel (Group) Design fees 13,659,630.09 No 659,433.97 Designing Institute Benxi Beiying Steel & Iron (Group) Co., Raw material 4,346,775,459.27 No 6,028,843,984.85 Ltd Benxi Beiying Steel & Iron (Group) Co., Energy & Power 436,208,616.25 No 380,323,917.23 Ltd Benxi Beiying Steel & Iron (Group) Co., Freight 7,027,658.79 No 9,546,982.92 Ltd Benxi Beiying Steel & Iron (Group) Co., Labor cost 57,660,744.70 No 67,224,247.20 Ltd Benxi Beiying Steel & Iron (Group) Co., Spare parts 16,441,779.44 No 72,997,642.11 Ltd Liaoning Hengtong Metallurgical Raw material and Equipment 103,154,730.62 No 82,005,850.02 Manufacturing Co., spare part Ltd. Liaoning Hengtong Metallurgical Raw material and Equipment 11,860,625.86 No 5,474,547.03 Manufacturing Co., spare part Ltd. Liaoning Hengtai Heavy Machinery Repair services 26,706,131.29 No 15,019,391.00 Co. Ltd Bengang Group Co., Property 845,519.59 No 845,519.59 Ltd. management fee Total 10,540,597,817.44 14,010,873,007.62 Information of sales of goods and provision of labor service In RMB 175 Bengang Steel Plates Co., Ltd. Annual Report 2015 Related party Content reporting period Same period of last year Benxi Steel (Group) Electronics Energy&Power 1,486,244.49 and Gas Co., Ltd. Raw material & Bengang Cold-rolled Stainless supplementary materials & 525,654.68 12,252,752.21 Steel Dandong Co., Ltd. spare parts Bengang Cold-rolled Stainless Products 1,217,061.50 Steel Dandong Co., Ltd. Bengang Cold-rolled Stainless Equipment Steel Dandong Co., Ltd. Raw material & Benxi Beiying Steel & Iron supplementary materials & 169,480,778.72 457,680,890.78 (Group) Co., Ltd spare parts Benxi Beiying Steel & Iron Products 7,796,704.77 381,370,255.97 (Group) Co., Ltd Benxi Beiying Steel & Iron Energy&Power 67,872,442.47 381,370,255.97 (Group) Co., Ltd Benxi Beiying Steel & Iron Agency fees (Group) Co., Ltd Benxi Steel (Group) Real-estate Energy&Power 1,157,857.73 2,289,678.98 Development Co., Ltd. Raw material & Benxi Steel (Group) Real-estate supplementary materials & 964,418.84 Development Co., Ltd. spare parts Benxi Steel (Group) Steel Energy&Power 620,542.93 745,176.05 Process and Logistics Co., Ltd. Benxi Steel (Group) Steel Products 479,283,307.13 620,145,123.90 Process and Logistics Co., Ltd. Benxi Steel (Group) Machinery Products 5,824,073.17 5,878,316.87 Co., Ltd. Benxi Steel (Group) Machinery Energy&Power 18,903,308.87 18,249,215.95 Co., Ltd. Raw material & Benxi Steel (Group) Machinery supplementary materials & 5,553,512.07 61,273,746.94 Co., Ltd. spare parts Benxi Steel (Group) Machinery Agency fees Co., Ltd. Benxi Steel (Group) Energy&Power 4,570,010.42 3,400,641.32 Construction Co., Ltd. 176 Bengang Steel Plates Co., Ltd. Annual Report 2015 Raw material & Benxi Steel (Group) supplementary materials & 124,092,277.20 167,615,132.67 Construction Co., Ltd. spare parts Benxi Steel (Group) Agency fees Construction Co., Ltd. Benxi Steel (Group)Mining Energy&Power 719,503,408.46 752,161,271.76 Co.,Ltd. Raw material & Benxi Steel (Group)Mining supplementary materials & 123,073,209.81 111,696,319.30 Co.,Ltd. spare parts Benxi Steel (Group)Mining Freight income 8,509,546.19 10,296,907.09 Co.,Ltd. Benxi Steel (Group)Mining Agency fees Co.,Ltd. Benxi Steel (Group)Mining Products 6,626,252.87 5,174,274.31 Co.,Ltd. Benxi Steel (Group) Thermal Energy&Power 31,529,338.29 30,071,359.53 Power Development Co., Ltd. Raw material & Benxi Steel (Group) Thermal supplementary materials & 26,467,318.81 39,516,557.61 Power Development Co., Ltd. spare parts Benxi Steel (Group) Thermal Freight income 850,386.17 Power Development Co., Ltd. Benxi Steel (Group) Thermal Agency fees Power Development Co., Ltd. Benxi Steel (Group) Industrial Energy&Power 9,284,767.55 8,490,290.46 Development Co., Ltd. Benxi Steel (Group) Industrial Products 531,180.84 8,052,351.24 Development Co., Ltd. Raw material & Benxi Steel (Group) Industrial supplementary materials & 96,014,167.53 127,354,046.44 Development Co., Ltd. spare parts Benxi Steel (Group) Details and Energy&Power 201,887.98 134,283.47 Automatic Tech. Ltd. Benxi Steel (Group) Construction & Repairing Co., Energy&Power 1,021,735.33 1,212,897.70 Ltd. Benxi Steel (Group) Raw material & 4,203,216.71 4,183,020.79 Construction & Repairing Co., supplementary materials & 177 Bengang Steel Plates Co., Ltd. Annual Report 2015 Ltd. spare parts Benxi Steel (Group) Metallurgy Energy&Power 4,208,751.57 3,680,220.58 Residues Co., Ltd., Ltd. Raw material & Benxi Steel (Group) Metallurgy supplementary materials & 23,774,531.92 70,034,697.50 Residues Co., Ltd., Ltd. spare parts Benxi Steel (Group) Metallurgy Freight income 181,550.34 Residues Co., Ltd., Ltd. Benxi Steel (Group) Metallurgy Agency fees Residues Co., Ltd., Ltd. Benxi Steel (Group) Metallurgy Products 6,789,036.68 5,225,685.17 Residues Co., Ltd., Ltd. Benxi Steel & Iron (Group) Co., Energy&Power 55,504,627.45 80,875,223.56 Ltd Raw material & Benxi Steel & Iron (Group) Co., supplementary materials & 8,961,629.82 12,158,411.92 Ltd spare parts Benxi Steel & Iron (Group) Co., Agency fees Ltd Benxi New Career Energy&Power 411,176.39 415,956.94 Development Co., Ltd. Raw material & Benxi New Career supplementary materials & 569,949.90 Development Co., Ltd. spare parts Dalian Boluole Steel Tube Co., Products 5,195,152.00 8,560,250.35 Ltd. Liaoning Bengang Steel & Iron Products 587,660,157.07 748,646,488.28 Trading Co., Ltd Raw material & Liaoning Metallurgy Technician supplementary materials & 350.00 College spare parts Benxi Steel (Group) Steel Products 56,231,682.62 Process and Logistics Co., Ltd. Tianjing Bengang Longxing Products Steel Process Co., Ltd. Raw material & Benxi Steel (Group) Medical supplementary materials & 605,123.03 Co., Ltd. spare parts Benxi Steel (Group) Medical Energy&Power 133,971.12 185,122.94 178 Bengang Steel Plates Co., Ltd. Annual Report 2015 Co., Ltd. Benxi Steel and Iron (Group) Raw material & Zhengtai Construction Materials supplementary materials & 12,306.67 Co., Ltd. spare parts Benxi Steel and Iron (Group) Zhengtai Construction Materials Energy&Power 2,282.28 45,906.57 Co., Ltd. Liaoning Hengtong Metallurgical Equipment Energy&Power 15,181,630.22 14,907,614.46 Manufacturing Co., Ltd Liaoning Hengtong Raw material & Metallurgical Equipment supplementary materials & 14,393,413.36 36,272,604.41 Manufacturing Co., Ltd spare parts Liaoning Hengtong Metallurgical Equipment Products 3,591,259.99 36,272,604.41 Manufacturing Co., Ltd Liaoning Hengtong Metallurgical Equipment Agency fees Manufacturing Co., Ltd Suzhou Bengang Industrial Co., Products 162,369,246.20 317,411,901.89 Ltd. Bengang Group Finance Co., Energy&Power 14,792.38 Ltd. Benxi Steel (Group) Co., Ltd. Energy&Power 119,041.45 Total 2,802,174,261.93 4,606,209,468.35 Notes (2) Related trusteeship/contract Lists of related trusteeship/contract: In RMB Name of the Income Name of the entrustee/contract Type Initial date Due date Pricing basis recognized in the entruster/contract or reporting period Notes: Lists of entrust/contractee In RMB Name of the Name of the Change Type Initial date Due date Pricing basis entruster/contract enrtrustee/contrac recognized in the 179 Bengang Steel Plates Co., Ltd. Annual Report 2015 ee tor reporting period Notes s (3) Information of related lease The company was lessor: In RMB The lease income confirmed in The lease income confirmed in Name of lessee Category of leased assets this year last year Benxi Steel (Group) Steel Warehouse and other 475,500.00 500,000.00 Process and Logistics Co., Ltd. The company was lessee: In RMB Lessor Lease capital category Lease charges of 2015 Lease charges of 2014 Benxi Iron & Steel (Group) Co., 2300 Hot rolling product line 243,576,194.11 243,853,012.45 Ltd Benxi Iron & Steel (Group) Co., Land use right 57,426,000.00 57,426,000.00 Ltd Benxi Beiying Steel & Iron 1780 Hot rolling product line 137,619,792.50 131,897,500.00 (Group) Co., Ltd. Notes: (1) The Company leases 2300 hot rolling product line from the Group. Lease period lasts from 1 January 2012 to 31 December 2014. Lease charges are negotiated between the lessor and the lessee based on the original cost, depreciation, and national taxation of the product line, with consideration of conditions of production and equipment performance. (2) The Company leases land use right from the Group. Lease period lasts from 15 April 2009. The leasing fee is determined by the area of the land which is 7,669,068.17 square meters. Average price is RMB 0.624 per Square meter per month; hence annual rent is RMB 57,426,000.00. (3) The Company leases 1780 hot rolling product line from Benxi Beiying Steel & Iron (Group) Co., Ltd. The lease term lasts from1 January 2014 to 31 December 2016. Lease charges are negotiated between the lessor and the lessee based on the original cost, depreciation, and national taxation of the product line, with consideration of conditions of production and equipment performance. The annual rent shall not exceed RMB 150,000,000.00. (4) Related-party guarantee The Company was guarantor: In RMB Execution accomplished Secured party Guarantee amount Start date End date or not The company was secured party In RMB Execution accomplished Guarantor Guarantee amount Start date End date or not 180 Bengang Steel Plates Co., Ltd. Annual Report 2015 Bengang Group Co., Ltd, 45,000,000.00 July 30,2015 July 1,2016 No Bengang Group Co., Ltd, 250,000,000.00 January 9,2015 January 9,2016 No Bengang Group Co., Ltd, 200,000,000.00 January 23,2015 January 23,2016 No Bengang Group Co., Ltd, 140,000,000.00 May 14,2015 May 14,2016 No Bengang Group Co., Ltd, 200,000,000.00 May 14,2015 May 14,2016 No Bengang Group Co., Ltd, 160,000,000.00 May 28,2015 May 28,2016 No Bengang Group Co., Ltd, 200,000,000.00 May 28,2015 May 28,2016 No Bengang Group Co., Ltd, 300,000,000.00 July 17,2015 July 17,2016 No Bengang Group Co., Ltd, 250,000,000.00 October 30,2015 October 30,2016 No Bengang Group Co., Ltd, 250,000,000.00 October 30,2015 October 30,2016 No Bengang Group Co., Ltd, 230,000,000.00 November 20,2015 November 20,2016 No Bengang Group Co., Ltd, 250,000,000.00 November 20,2015 November 20,2016 No Bengang Group Co., Ltd, 240,000,000.00 November 20,2015 November 20,2016 No Bengang Group Co., Ltd, 220,000,000.00 November 20,2015 November 20,2016 No Bengang Group Co., Ltd, 200,000,000.00 November 20,2015 November 20,2016 No Bengang Group Co., Ltd, 180,000,000.00 November 20,2015 November 20,2016 No Bengang Group Co., Ltd, 170,000,000.00 November 20,2015 November 20,2016 No Bengang Group Co., Ltd, Benxi Iron and Steel 150,000,000.00 November 11, 2015 November 10,2016 No (Group) Co., Ltd. Bengang Group Co., Ltd, Benxi Iron and Steel 100,000,000.00 November 11, 2015 November 8,2016 No (Group) Co., Ltd. Bengang Group Co., Ltd, Benxi Iron and Steel 200,000,000.00 November 19,2015 November 16,2016 No (Group) Co., Ltd. Bengang Group Co., Ltd, Benxi Iron and Steel 200,000,000.00 November 19,2015 November 18,2016 No (Group) Co., Ltd. Bengang Group Co., Ltd, Benxi Iron and Steel 80,000,000.00 December 8,2015 December 6,2016 No (Group) Co., Ltd. Bengang Group Co., Ltd, Benxi Iron and Steel 200,000,000.00 December 8,2015 December 7,2016 No (Group) Co., Ltd. Bengang Group Co., Ltd, 200,000,000.00 December 31,2015 December 8,2016 No Benxi Iron and Steel 181 Bengang Steel Plates Co., Ltd. Annual Report 2015 (Group) Co., Ltd. Bengang Group Co., Ltd, 130,000,000.00 June 30,2015 June 28,2016 No Bengang Group Co., Ltd, 130,000,000.00 June 30,2015 June 29,2016 No Bengang Group Co., Ltd, 649,360,000.00 August 21,2015 August 15,2016 No Bengang Group Co., Ltd, 519,488,000.00 May 29,2015 May 18,2016 No Bengang Group Co., Ltd, 324,680,000.00 July 28,2015 June 15,2016 No Bengang Group Co., Ltd, 324,680,000.00 July 28,2015 July 15,2016 No Bengang Group Co., Ltd, 649,360,000.00 November 30,2015 November 29,2016 No Bengang Group Co., Ltd, Benxi Iron and Steel 207,795,200.00 September 17,2015 March 15,2016 No (Group) Co., Ltd. Bengang Group Co., Ltd, Benxi Iron and Steel 162,340,000.00 September 24,2015 March 22, 2016 No (Group) Co., Ltd. Benxi Iron and Steel 584,424,000.00 May 14,2015 May 13,2016 No (Group) Co., Ltd. Benxi Iron and Steel 974,040,000.00 December 8,2015 December 7,2016 No (Group) Co., Ltd. Benxi Iron and Steel 642,866,400.00 December 8,2015 December 7,2016 No (Group) Co., Ltd. Benxi Iron and Steel 83,000,000.00 July 30,2015 July 2,2016 No (Group) Co., Ltd. Bengang Group Co., Ltd, Benxi Iron and Steel 100,000,000.00 February 10,2015 January 27,2016 No (Group) Co., Ltd. Bengang Group Co., Ltd, Benxi Iron and Steel 200,000,000.00 June 30,2015 June 29,2016 No (Group) Co., Ltd. Bengang Group Co., Ltd, Benxi Iron and Steel 200,000,000.00 July 31,2015 June 30,2016 No (Group) Co., Ltd. Bengang Group Co., Ltd, Benxi Iron and Steel 100,000,000.00 October 21,2015 October 20,2016 No (Group) Co., Ltd. Bengang Group Co., Ltd 220,000,000.00 October 30,2015 October 30,2016 No Bengang Group Co., Ltd 180,000,000.00 November 11,2015 November 11,2016 No Bengang Group Co., Ltd 160,000,000.00 December 28,2015 December 28,2016 No Benxi Iron and Steel 14,983,284.00 October 10,1999 September 10,2027 No 182 Bengang Steel Plates Co., Ltd. Annual Report 2015 (Group) Co., Ltd. Benxi Iron and Steel 649,360,000.00 August 20,2014 May 2,2016 No (Group) Co., Ltd. Bengang Group Co., Ltd. 15,000,000.00 December 29,2014 March 21,2017 No Bengang Group Co., Ltd. 87,000,000.00 March 26,2015 March 21, 2019 No Bengang Group Co., Ltd. 100,000,000.00 June 25,2015 September 21,2021 No Bengang Group Co., Ltd. 24,000,000.00 December 9,2015 March 21,2022 No Bengang Group Co., Ltd. 2,363,834.49 June 25,2015 September 30,2025 No Bengang Group Co., Ltd. 80,759,907.82 August 20,2015 September 30,2025 No Bengang Group Co., Ltd. 16,948,659.00 August 20,2015 September 30,2019 No Bengang Group Co., Ltd. 43,724.03 June 25,2015 April 30,2026 No Bengang Group Co., Ltd. 5,288,302.03 June 25,2015 April 30,2026 No Bengang Group Co., Ltd. 28,871.15 December 28,2015 April 30,2026 No Bengang Group Co., Ltd. 64,328,730.70 December 28,2015 April 30,2026 No Bengang Group Co., Ltd. 36,858,219.46 June 25,2015 April 30,2020 No Bengang Group Co., Ltd. 13,181,490.94 December 28,2015 April 30,2020 No Bengang Group Co., Ltd. 5,017,002.51 June 25,2015 June 30,2025 No Bengang Group Co., Ltd. 143,462,446.56 June 25,2015 June 30,2025 No Bengang Group Co., Ltd. 4,635,745.98 December 27,2015 June 30,2025 No Bengang Group Co., Ltd. 47,711,087.05 June 25,2015 June 30,2019 No Bengang Group Co., Ltd. 39,025,541.32 December 28,2015 June 30,2019 No Bengang Group Co., Ltd. 5,101,985.76 June 25,2015 October 31,2025 No Bengang Group Co., Ltd. 102,545,570.06 June 25,2015 October 31,2025 No Bengang Group Co., Ltd. 46,421,327.98 December 28,2015 October 31,2025 No Bengang Group Co., Ltd. 65,605,445.03 June 25,2015 October 31,2019 No Bengang Group Co., Ltd. 1,258,865.86 December 28,2015 October 31,2019 No Bengang Group Co., Ltd. 4,323,079.89 June 25,2015 August 31,2025 No Bengang Group Co., Ltd. 123,389,325.28 June 25,2015 August 31,2025 No Bengang Group Co., Ltd. 2,565,624.32 December 28,2015 August 31,2025 No Bengang Group Co., Ltd. 51,455,798.09 June 25,2015 August 31,2019 No Bengang Group Co., Ltd. 6,787,938.82 December 28,2015 August 31,2019 No Bengang Group Co., Ltd. 18,222,815.02 December 28,2015 July 30,2019 No Notes 183 Bengang Steel Plates Co., Ltd. Annual Report 2015 (5) Inter-bank lending of capital of related parties In RMB Amount borrowed and Related party Initial date Due date Notes loaned Borrowed Benxi Steel (Group) 18,263,032.96 April 28,2015 April 27,2016 Co.,Ltd. Benxi Steel (Group) 11,369,384.16 June 4,2015 June 3,2016 Co.,Ltd. Benxi Steel (Group) 32,699,579.48 October 12,2015 October 11, 2016 Co.,Ltd. Benxi Steel (Group) 22,120,000.00 November 14,2015 November 13,2016 Co.,Ltd. Bengang Group Finance 14,220,000.00 December 25,2015 December 24,2016 Co., Ltd. Total 98,671,996.60 Loaned (6) Related party asset transfer and debt restructuring In RMB Related party Content Reporting period Same period of last year (7) Rewards for the key management personnel In RMB Items Reporting period Same period of last year Rewards for the key management 2,228,000.00 2,506,100.00 personnel (8)Other related party transactions Our situation of loan from, interest payment and deposit in Finance Co., Ltd. of Benxi Iron and Steel Group In RMB0000 Items Beginning Increase Decrease End balance Notes balance Deposit 109,766.10 1. Loan 1,422.00 1,422.00 2. 1. The interest income of our deposit in the Finance Co., Ltd. of Benxi Iron and Steel Group(hereinafter referred to as the Finance 184 Bengang Steel Plates Co., Ltd. Annual Report 2015 Co., Ltd.) in 2015 was 741,700 yuan. 2. Our subsidiary corporation, the Dalian Benruitong Automotive Materials Co., Ltd. (hereinafter referred to as the Dalian Benruitong) got 100 million yuan as credit granting from Finance Co., Ltd. by pledging its machines worthy 110 million yuan which was also the value of highest principle balance of guaranteed creditors right. The Dalian Benruitong borrowed 14.22 million yuan from the Finance Co., Ltd. within the credit. In 2015, the loan interest paid was 12,700 yuan. By the end of 2015, there was still 12,700 yuan as interest needed to be paid to the Finance Co., Ltd (2)Our situation of interest payment to and loan from Benxi Iron and Steel (Group) Co., Ltd. In RMB0000 Items Beginning balance Increase Decrease End balance Loan 9,259.17 9,795.20 10,609.17 8,445.20 The details of borrowing balance by the end of 2015 are as follows: In RMB Related-party Borrowing Loan amount Starting date Due date Benxi Steel (Group) Entrust loans through 18,263,032.96 2015/4/28 2016/4/27 Co.,Ltd. ChinaGuangfa Bank.Benxi Branch Benxi Steel (Group) Entrust loans through 11,369,384.16 2015/6/4 2016/6/3 Co.,Ltd. ChinaGuangfa Bank.Benxi Branch Benxi Steel (Group) Entrust loans through Bengang 32,699,579.48 2015/10/12 2016/10/11 Co.,Ltd. Group Finance Co., Ltd. Benxi Steel (Group) Entrust loans through Bengang 22,120,000.00 2015/11/13 2016/11/12 Co.,Ltd. Group Finance Co., Ltd. Total 84,451,996.60 In the 2015, the loan interest paid is 5.7856 million. By the end of 2015, there was still 832,300 yuan as interest needed to be paid to Benxi Iron and Steel (Group) Co., Ltd. 6. Receivables and payables of the related parties (1)Receivables of the Company In RMB Ending balance Beginning balance Items Related party Book balance Bad debts provision Book balance Bad debts provision Benxi Beiying Steel Notes receivable & Iron (Group) Co., 50,380,000.00 Ltd Benxi Steel (Group) Notes receivable 2,120,000.00 Machinery Co., Ltd. Benxi Steel (Group) Notes receivable 41,778.50 Construction Co., 185 Bengang Steel Plates Co., Ltd. Annual Report 2015 Ltd. Benxi Steel Notes receivable (Group)Mining Co., 350,000.00 Ltd. Benxi Steel (Group) Industrial Notes receivable 300,000.00 Development Co., Ltd. Benxi Steel Notes receivable 200,000.00 (Group)Co., Ltd. Liaoning Hengtai Notes receivable Heavy Machinery 500,000.00 Co., Ltd. Subtotal: 53,891,778.50 Benxi Beiying Steel Accounts receivable & Iron (Group) Co., 107,133,739.89 Ltd Bengang Electronics Accounts receivable 2,585,049.23 191,538.38 2,832,523.83 137,573.58 and Gas Co., Ltd. Benxi Steel (Group) Accounts receivable 54,698,244.18 1,553,819.73 24,275,958.45 406,446.86 Machinery Co., Ltd. Benxi Steel (Group) Accounts receivable Construction Co., 14,262,384.92 5,167,326.30 34,403,576.39 4,618,071.06 Ltd. Benxi Steel (Group) Industrial Accounts receivable 46,221,815.16 493,841.63 32,701,472.77 26,327.90 Development Co., Ltd. Benxi New Career Accounts receivable Development Co., 5,677,734.02 3,879,011.35 5,307,512.50 2,624,507.53 Ltd. Accounts receivable Benxi Steel (Group) Accounts receivable Medical Co., Ltd. Benxi Steel (Group) Thermal Power Accounts receivable 7,861,215.02 1,899,538.46 Development Co., Ltd. Benxi Steel (Group) Accounts receivable Steel Process and 499,988.31 499,126.96 Logistics Co., Ltd. Bengang Cold-rolled Accounts receivable Stainless Steel 205,478.22 1,472,716.21 Dandong Co., Ltd. 186 Bengang Steel Plates Co., Ltd. Annual Report 2015 Liaoning Hengtong Metallurgical Accounts receivable Equipment 7,756,906.34 23,474,655.50 Manufacturing Co., Ltd. Bengang Group Accounts receivable International Trading Co., Ltd. Subtotal: 246,902,555.29 11,285,537.40 126,867,081.07 7,812,926.93 Benxi Beiying Steel Prepayments & Iron (Group) Co., 183,337,641.74 439,245,300.00 Ltd. Benxi Steel (Group) Prepayments Construction & Repairing Co., Ltd. Liaoning Hengtai Prepayments Heavy Machinery 62,303,551.36 Co., Ltd. Benxi Steel (Group) Prepayments 8,865,659.53 25,526,881.70 Machinery Co., Ltd. Bengang Group Prepayments International Trading 108,915,901.27 Co., Ltd. Bengang Cold-rolled Prepayments Stainless Steel 161,293.67 Dandong Co., Ltd. Benxi Steel and Iron (Group) Zhengtai Prepayments Building Materials Co., Ltd. Subtotal: 192,203,301.27 636,152,928.00 Benxi Steel (Group) Real-estate Other receivables 2,102,965.57 24,708.37 7,632,946.72 191,498.33 Development Co., Ltd. Benxi Steel (Group)Engineerin Other receivables g Construction Supervision Co., Ltd. Benxi Steel (Group) Other receivables Construction & Repairing Co., Ltd. Liaoning Metallurgy Other receivables 156,265.86 72,847.64 156,265.86 15,612.26 Technician College Other receivables Bengang Cold-rolled 187 Bengang Steel Plates Co., Ltd. Annual Report 2015 Stainless Steel Dandong Co., Ltd. Benxi Steel (Group) Other receivables 1,089,395.92 863,481.15 881,046.71 873,336.57 Construction Co., Ltd. Bengang Group Other receivables International Trading 14,007,043.70 5,206,671.93 6,717.52 Co., Ltd. Benxi Steel (Group) Other receivables 148,094.33 11.02 239,275.00 Machinery Co., Ltd. Benxi Steel (Group) Industrial Other receivables 1,285,203.78 286,932.09 1,110,481.08 56,594.36 Development Co., Ltd. Benxi Steel and Iron (Group) Zhengtai Other receivables 199,757.10 29,239.19 200,111.37 6,606.76 Building Materials Co., Ltd. Benxi Steel (Group) Other receivables 919,870.98 464,382.35 924,587.78 528,954.42 Medical Co., Ltd. Subtotal 19,908,597.24 1,741,601.81 16,351,386.45 1,679,320.21 2. Payables of the Company In RMB Name Related party End balance Beginning balance Benxi Beiying Steel & Iron Accounts payable 0.00 145,203,134.23 (Group) Co., Ltd. Bengang Electronics and Gas Accounts payable 8,233,491.05 11,639,049.30 Co., Ltd. Benxi Steel (Group) Real-estate Accounts payable 1,464,449.10 2,017,985.89 Development Co., Ltd Bengang Group International Accounts payable 719,162,306.66 4,169,986,544.24 Trading Co., Ltd. Benxi Steel (Group) Machinery Accounts payable 90,101,633.02 7,050,135.96 Co., Ltd. Benxi Steel (Group) Accounts payable 155,223,262.33 150,369,442.01 Construction Co., Ltd. Benxi Steel (Group) Mining Accounts payable 675,232,923.26 1,412,235,381.68 Co., Ltd. Benxi Steel (Group) Industrial Accounts payable 96,527,699.13 41,805,616.64 Development Co., Ltd. Benxi New Career Accounts payable 12,543,185.57 19,708,255.84 Development Co., Ltd. Accounts payable Benxi Steel (Group) 103,863,602.27 84,945,497.19 188 Bengang Steel Plates Co., Ltd. Annual Report 2015 Construction & Repairing Co., Ltd. Benxi Steel (Group) Designing Accounts payable 14,484,121.51 6,820,799.97 Institute Benxi Steel (Group) Metallurgy Accounts payable 28,716,474.82 24,273,907.10 Residues Co., Ltd. Benxi Steel (Group) Medical Accounts payable 20,440.35 20,440.35 Co., Ltd. Benxi Steel (Group) Accounts payable Information and Automatic 60,551,446.09 49,194,667.86 Tech. Ltd. Benxi High-tech Drilling Tools Accounts payable 954,411.03 257,832.31 Manufacturing Co., Ltd. Liaoning Metallurgy Technician Accounts payable 12,864,720.30 6,378,792.36 College Liaoning Bengang Steel & Iron Accounts payable 53,000,000.00 30,000,000.00 Trading Co., Ltd Benxi Steel (Group) Thermal Accounts payable 274,295.62 148,068.39 Power Development Co., Ltd. Benxi Steel and Iron (Group) Accounts payable Zhengtai Building Materials Co., 396,000.00 380,918.20 Ltd. Liaoning Hengtong Accounts payable Metallurgical Equipment 1,122,557.73 Manufacturing Co., Ltd. Liaoning Metallurgy Technician Accounts payable 3,948,513.34 2,004,256.02 College. Bengang Cold-rolled Stainless Accounts payable 197,900.00 863,535.50 Steel Dandong Co., Ltd. Liaoning Hengtai Heavy Accounts payable 28,380,631.99 7,153,224.06 Machinery Co., Ltd. Subtotal 2,067,264,065.17 6,172,457,485.10 Benxi Steel Notes payable 152,482.03 562,465.47 (Group)Construction Co., Ltd. Benxi Steel (Group) Industrial Notes payable 20,058,008.27 1,813,417.63 Development Co., Ltd. Benxi Steel (Group) Machinery Notes payable 4,743,944.99 Co., Ltd. Benxi Steel (Group) Real-estate Notes payable Development Co., Ltd. Bengang Electronics and Gas Notes payable 401,369.25 Co., Ltd. Benxi Steel (Group) Notes payable 1,381,574.71 Construction & Repairing Co., 189 Bengang Steel Plates Co., Ltd. Annual Report 2015 Ltd. Liaoning Metallurgy Technician Notes payable 1,517,733.78 51,601.41 College. Benxi Steel (Group) Mining Co., Notes payable 186,844,809.83 46,465,334.09 Ltd. Benxi Steel (Group) Notes payable Information and Automatic 323,783.90 477,255.62 Tech. Ltd. Benxi Beiying Steel & Iron Notes payable 167,288,198.59 (Group) Co., Ltd Liaoning Hengtai Heavy Notes payable 777,369.98 Machinery Co. Ltd Liaoning metallurgical Notes payable 221,269.29 Technician College Liaoning Hengtai Heavy Notes payable 365,849.75 Machinery Co., Ltd. Subtotal 383,675,025.12 49,771,443.47 Bengang Electronics and Gas Co., Other payables Ltd. Benxi Steel (Group) Real-estate Other payables 2,311,747.28 4,887,294.88 Development Co., Ltd Bengang Group International Other payables 10,165,172.85 3,067,964.46 Trading Co., Ltd. Benxi Steel (Group) Machinery Other payables 70,796.80 10,082.30 Co., Ltd. Benxi Steel (Group) Other payables 4,824,388.79 4,292,774.73 Construction Co., Ltd. Benxi Steel (Group) Industrial Other payables 1,419,241.27 950,411.36 Development Co., Ltd. Benxi New Career Other payables 816,990.96 846,071.42 Development Co., Ltd. Benxi Steel (Group) Other payables Construction & Repairing Co., Ltd. Benxi steel (Group) design Other payables Research Institute Benxi Steel (Group) Metallurgy Other payables 1,000,000.00 Residues Co., Ltd. Benxi Steel (Group) Medical Other payables 12,056.00 174,219.95 Co., Ltd. Benxi Steel (Group) Other payables 105,000.00 105,000.00 Information and Automatic 190 Bengang Steel Plates Co., Ltd. Annual Report 2015 Tech Co., Ltd. Benxi Steel (Group) Steel Other payables 5,972,325.96 3,277,425.46 Process and Logistics Co., Ltd. Other payables Benxi Steel (Group) Co., Ltd. 179,539,999.52 158,643,367.61 Benxi Steel (Group) News Other payables 1,722,726.76 Center Liaoning metallurgical Other payables Technician College Benxi Steel (Group) Thermal Other payables 2,373,050.76 1,779,806.08 Power Development Co., Ltd. Liaoning Hengtai Heavy Other payables Machinery Co. Ltd Benxi Beiying Steel & Iron Other payables (Group) Co., Ltd Guangzhou Free Trade Zone Other payables 2,674,436.85 2,674,436.85 Bengang Sales Co., Ltd Shanghai Bengang steel Sale Other payables 863,797.83 Co., Ltd. Bengang Cold-rolled Stainless Other payables 96,596.40 Steel Dandong Co., Ltd. Subtotal: 211,285,207.04 183,391,976.09 Benxi Steel (Group) Machinery Advance from costomer 268,726.35 392,380.53 Co., Ltd. Tianjin Bengang Longxing Advance from costomer Steel Process Co., Ltd. Benxi Steel (Group) Industrial Advance from costomer 1,534,119.77 1,800,534.80 Development Co., Ltd. Benxi Steel (Group) Metallurgy Advance from costomer 1,669.48 548,762.37 Residues Co., Ltd. Benxi Steel (Group) Steel Advance from costomer 62,631,155.58 96,764,509.78 Process and Logistics Co., Ltd. Dalian Boluole Steel Tube Co., Advance from costomer 1,838,120.74 Ltd. Guangzhou Free Trade Zone, Advance from costomer Bengang Steel Sales Co. Ltd. Liaoning Bengang Steel & Iron Advance from costomer 31,798,368.79 22,728,533.19 Trading Co., Ltd Advance from costomer Liaoning Hengtong 94,299.22 323,523.72 191 Bengang Steel Plates Co., Ltd. Annual Report 2015 Metallurgical Equipment Manufacturing Co., Ltd. Shanghai Bengang steel Advance from costomer TradeCo., Ltd. Tianjin Bengang Steel Plates Advance from costomer Process and Logistics Co., Ltd Liaoning Hengtai Heavy Advance from costomer 184,695.93 184,695.93 Machinery Co., Ltd. Benxi Steel (Group) Thermal Advance from costomer 3,100,209.92 Power Development Co., Ltd. Bengang Group International Advance from costomer 17,824,227.63 46,086,929.33 Trading Co., Ltd. Significant commitments at Advance from costomer 10,985,007.76 37,105,578.38 balance sheet date Subtotal: 125,322,270.51 210,873,778.69 XIII. Commitments and Contingencies (1) Significant commitments Significant commitments at balance sheet date Investment contracts not yet performed or in progress and their relevant financial expenditures (1) For the land leased from the Company to the Group, price is RMB 0.624 per Square meter per month, and the area of the land is 7,669,068.17 square meters; hence annual rent is RMB 57.426 million. (2) For the 2300 hot rolling product line leased from the Group to the Company, lease period lasts from 1 January 2015 to 31 December 2015. Lease charges are negotiated between the lessor and the lessee based on the original cost, depreciation, and national taxation of the product line, with consideration of conditions of production and equipment performance. (3) For the 1780 hot rolling product line leased from Benxi Beiying Steel & Iron (Group) Co., Ltd. to the Company, the lease period lasts from 1 January 2014 to 31 December 2016. Lease charges are negotiated between the lessor and the lessee based on the original cost, depreciation, and national taxation of the product line, with consideration of conditions of production and equipment performance. The annual rent shall not exceed RMB 150,000,000.00. Details of the above lease are shown in Note IX, (IV) 2 2. Contingency (1) Significant contingency at balance sheet date None 192 Bengang Steel Plates Co., Ltd. Annual Report 2015 (2) The Company have no significant contingency to disclose, also should be stated There was no significant contingency in the Company. 3.Other XIV. Events after balance sheet date 1. Significant events had not adjusted In RMB Influence number to the Reason of unable to estimate Items Content financial position and operating influence number results 2. Profit distribution In RMB 3. Sales return None 4. Notes of other significant events None XV. Other significant events 1. The accounting errors correction in previous period (1)Retrospective restatement In RMB Name of the influenced report Content Processing program Cumulative impact items during comparison period (2)Prospective application Content Prpcessing program Reason of adopting prospective application 193 Bengang Steel Plates Co., Ltd. Annual Report 2015 2. Debt restructuting 3. Replacement of assets (1)Non-monetary assets exchange (2)Other assets replacement 4. Pension plan 5. Discontinuing operation In RMB Termination of the business Income tax profits Items Revenue Expense Total profit Net profit ecpense attributable to the parent company owner Notes 6. Segment information (1) Recognition basis and accounting policies of reportable segment Our major production is steel and other productions play very small role in our sales. The main production base is in Liaoning province. For this reason, reports of other branches are not available. (2) The financial information of reportable segment In RMB Items Offset in segment Total (3) There was no reportable segment, or the total amount of assets and liabilities of each part of reportable segment, shall disclose the reason. (4)Other notes 7. Other important transactions and events have an impact on investors decision-making 8.Other (2)Finance Lease 194 Bengang Steel Plates Co., Ltd. Annual Report 2015 In order to optimize the debt structure and broaden the financing channels, our company has signed the Cooperation Framework Agreement of Finance Lease with the Liaoning Hengyi Lease Finance Co., Ltd. (hereinafter referred to as Hengyi Lease) on April 20, 2015. The amount of fund should be limited in 5 billion yuan. We got the fund in the form of financing leaseback. The lease rate shouldnt be more than the coterminous benchmark loan rate released by Peoples Bank of China. The lease rate should be adjusted dynamically in line with the changeable benchmark interest rate released by Peoples Bank of China in the lease term. The finance lease term shouldnt be more than 36 months. Our company signed the Financing Leaseback contract (No. 2015HYZL0006-ZL-04) with the Hengyi Lease on December 30, 2015. The purchase price of leased assets is 490,000,000.00 yuan. The lease term is from December 30, 2015 to December 30, 2016. The lease expense rate was 4.35% when the contract was signed. (3)The 14th session of the 6th board meeting passed the Proposal of Companys Project to Issue A-shares by Non-public Offering on July 20, 2015. Our company decided to raise 4 billion yuan by issuing shares to specific people by non-public offering. The raised money is mainly to support the reconstruction project of cold rolling high-strength steel, to support the production-line project of hot galvanizing in the third cold rolling company and to repay the bank loan. These projects are till in the process of examination and approval under legal procedures. XVI. Notes to the Financial Statements of the Parent Company 1. Account receivable (1) Categorized receivable accounts In RMB Closing balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Categories Book Proportio Proportio Book value Amount Amount Rate value Amount Amount Rate n n Receivables on which impairment 600,793, 151,599, 449,193,4 529,111 140,268,8 388,842,19 provisions are 100.00% 25.23% 100.00% 26.51% 311.03 889.01 22.02 ,083.61 88.98 4.63 provided by risk groups 600,793, 151,599, 449,193,4 529,111 140,268,8 388,842,19 Total 100.00% 25.23% 100.00% 26.51% 311.03 889.01 22.02 ,083.61 88.98 4.63 Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end: □ Applicable √Not applicable In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □Not applicable In RMB Aging Closing balance 195 Bengang Steel Plates Co., Ltd. Annual Report 2015 Account receivable Bad debt provision Withdrawal proportion Subentry within 1 year 365,509,828.01 Subtotal of within 1 year 365,509,828.01 1-2 years 36,969,642.36 1,848,482.12 5.00% 2-3 years 60,703,042.21 12,140,608.44 20.00% Over 3 years 137,610,798.45 137,610,798.45 100.00% Total 600,793,311.03 151,599,889.01 25.23% Notes : In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision: □ Applicable √ Inapplicable □ Applicable √Not applicable In the groups, accounts receivable adopting other methods to withdraw bad debt provision: (2) Bad debt provision withdrawal, reversed or recovered in the report period The withdrawal amount of the bad debt provision during the reporting period was of RMB11,331,000.03; the amount of the reversed or collected part during the reporting period was of RMB0. Significant amount of reversed or recovered bad debt provision: In RMB Name Amount Metod (3) Particulars of the actual verification of accounts receivable during the reporting period In RMB Items Amount Of which: significant actual verification of accounts receivable: In RMB Whether occurred Name Nature Amount Reason Procedure because of related party transactions Notes: (4) Top five of account receivable of closing balance collected by arrears party Name Year-end balance Account receivable Proportion(%) Bad debt provision Benxi North Iron Industry Co.,Ltd. 107,133,739.89 17.83 Benxi Nanfenxinhe MetallurgicalFurnace 87,379,647.78 14.54 196 Bengang Steel Plates Co., Ltd. Annual Report 2015 Co., Ltd. Liaoyang Petroleum Steel Pipe 35,689,868.98 5.94 3,341,228.18 Manufacturing Co., Ltd. Bengang Refractory Material Co.,Ltd. 33,705,712.51 5.61 China Oil steel pipe Co., Ltd. 32,873,213.55 5.47 5,891,750.53 Total 296,782,182.71 49.39 9,232,978.71 (5) Derecogniziton of account receivable due to the transfer of financial assets (6) The amount of the assets and liabilities formed by the transfer and the continues involvement of accounts receivable Other notes: 2.Other receivables (1)Other receivables disclosed by category In RMB Year-end balance Year –beginning balance Provision for bad Provision for bad Book balance Book balance Category debts Book debts Book value value Amoun Proporti Amount Proporti Amount Proporti Amount Proportion on(%) on(%) t on(%) (%) Other Accounts receivable subject to impairment 289,792, 62,104,5 227,688,1 359,158 58,276,86 300,882,01 99.40% 21.43% 99.52% 16.23% assessment by credit 710.30 50.36 59.94 ,877.19 3.66 3.53 risk characteristics of a portfolio Other Accounts receivable of individual 1,740,00 1,740,000 1,740,0 1,740,000.0 insignificance but 0.60% 0.48% 0.00 .00 00.00 0 subject to individual impairment assessment 291,532, 62,104,5 229,428,1 360,898 58,276,86 302,622,01 Total 100.00% 21.30% 100.00% 16.15% 710.30 50.36 59.94 ,877.19 3.66 3.53 Other accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end: □ Applicable √Not applicable 197 Bengang Steel Plates Co., Ltd. Annual Report 2015 In the groups, other accounts receivable adopting ager methods to withdraw bad debt provision:√ Applicable □Not applicable In RMB Year-end balance Age Other receivable Bad debt provision Withdrawal proportion Subentry within 1 year 213,745,667.36 Subtotal of Within 1 year 213,745,667.36 1-2 years 11,621,507.60 581,075.38 5.00% 2-3 years 3,627,575.45 725,515.09 20.00% Over 3 years 60,797,959.89 60,797,959.89 100.00% Total 289,792,710.30 62,104,550.36 21.43% Notes: 1. Providing of bad debt provision on single receivable account with major amount Standard for recognition of major amount single account: Balance of account receivable RMB10 million; other account receivable RMB5 million or over. Providing method of bad debt provisions on single receivable account with major amount 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 an 2.Receivables tested by portfolio: Basis of recognition for portfolios The portfolio: Receivable account with minor amount and tested individually and not impaired Basis of bad debt provision The portfolio: Age analysis method Accounts on age basis in the portfolio: Age Rate for receivables (%) Rate for other receivables (%) Within 1 year, (included) 1-2 years (inclusive) 5 5 2-3 years (inclusive) 20 20 Over 3 years 100 100 3.Receivable accounts with minor amount but bad debt provision provided individually upon (1) Reason of providing bad debt individually: concrete evidence showing that the account is irretrievable 198 Bengang Steel Plates Co., Ltd. Annual Report 2015 (2) Basis of providing bad debt provisions: When there is solid evidence showing that the possibility of retrieving is minor, the account shall be tested for impairment individually and bad debt provision shall be provided at the estimated unrecoverable amount. (2) Bad debt provision withdrawal, reversed or recovered in the report period The withdrawal amount of the bad debt provision during the reporting period was of RMB3,827,686.70; the amount of the reversed or collected part during the reporting period was of RMB0. Significant amount of reversed or recovered bad debt provision: In RMB Name Reversed or collected amount Method (3) Particulars of the actual verification of other accounts receivable during the reporting period In RMB Items Amount Of which: significant actual verification of other accounts receivable: In RMB Whether occurred Name Nature Amount Reason Procedure because of related party trnsactions Notes of write-off other accounts receivable: (4)Other accounts receivable classified by the nature of accounts In RMB Category Year-end balance Year-beginning balance Accounts 255,674,062.26 225,819,363.05 Export tax rebate 30,841,071.89 130,788,172.89 Other 5,017,576.15 4,291,341.25 Total 291,532,710.30 360,898,877.19 (5)The ending balance of other receivables owed by the imputation of the top five parties In RMB Portion in total other Name Nature Year-end balance Age Bad debt provision receivables(%) 4,341,257.18 Zhejiang Sunon Account 2,785,401.00 1-2 years 0.96% 139,270.05 199 Bengang Steel Plates Co., Ltd. Annual Report 2015 Furniture Manufacturing Co., Ltd. Bengang Group International Trade Account 2,279,847.47 Within 1 year 0.78% Co.,Ltd. Liaoning Huaweixuan Account 2,261,360.00 Over 3 years 0.78% 2,261,360.00 Coal Co., Ltd. Benxi Steel Within 1 year (Group)Real Estate Account 2,102,965.57 1,608,798.19,1-2 0.72% 24,708.37 Development Co., year 494,167.38 Ltd. Total -- 13,770,831.22 -- 4.72% 6,766,595.60 (6) Account receivable involving government subsidies In RMB Project of govemment Estimated recovering Name Closing balance Clsing aging subsidies time, amount and basis (7) Other account receivable derecognized due to the transfer of financial assets (8) Amount of transfer other account receivable and assets and liabilities formed by its continuous involvement Other notes: 3.Long-term equity investment In RMB Year-end balance Year-beginning balance Items Bad debt Bad debt Book balance Book value Book balance Book value provision provision Investment to the 1,700,981,902.16 1,700,981,902.16 1,690,981,902.16 1,690,981,902.16 subsidiary Total 1,700,981,902.16 1,700,981,902.16 1,690,981,902.16 1,690,981,902.16 (1)Investment to the subsidiary In RMB Name Opening balance Increase Decrease Closing balance Withdrawn Closing balance 200 Bengang Steel Plates Co., Ltd. Annual Report 2015 impairment of impairment provision in the provision reporting period Guangzhou Benxi Iron & Steel Trading 1,000,000.00 1,000,000.00 Co., Ltd Shanghai Bengang Metallurgy Science 19,200,000.00 19,200,000.00 and Technology Co., Ltd. Bengang Steel Plates Liaoyang Pellet Co., 529,899,801.38 529,899,801.38 Ltd. Dalian Benruitong Automobile Material 65,000,000.00 65,000,000.00 Eechnology Co., Ltd. Bengang Puxiang Cold-rolled Sheet 1,019,781,571.10 1,019,781,571.10 Co., Ltd. Changchun Bengang Steel &Iron Sales -1,355,124.64 -1,355,124.64 Co., Ltd. Harbin Bengang Economic Trade 423,398.23 423,398.23 Co., Ltd. Nanjing Bengang Material Sales Co., 2,081,400.65 2,081,400.65 Ltd. Wuxi Bengang Steel 936,718.57 936,718.57 Sales Co., Ltd. Xiamen Bengang 1,095,711.66 1,095,711.66 Steel Sales Co., Ltd. Yantai Bengang Steel Sales Co., Ltd. 19,600,329.41 19,600,329.41 Tianjin Bengang Steel Trading Co., 33,318,095.80 33,318,095.80 Ltd. Benxi Bengang Steel Sale Co., 5,000,000.00 5,000,000.00 Ltd. Shenyang Bengang 5,000,000.00 5,000,000.00 metallurgical 201 Bengang Steel Plates Co., Ltd. Annual Report 2015 Technology Co., ltd. Total l 1,690,981,902.16 10,000,000.00 1,700,981,902.16 (2)Investment to joint ventures and associated enterprises In RMB Increase /decrease in reporting period Closing Adjustme Withdraw balance nt of Declarati Opening Add Other n Closing of Name other on of cash balance investmen equity impairme Other balance impairme comprehe dividends t changes nt nt nsive or profit provision provision income I.Joint ventures II.Associated enterprises (3)Other Notes 4.Operating income and operating cost In RMB 2015 2014 Items Revenue Cost Revenue Cost Principal business 25,840,994,498.57 27,226,906,929.92 38,330,544,333.50 36,488,199,649.65 Other business 2,682,107,120.42 2,542,383,008.46 3,303,714,027.71 3,063,214,052.38 Total 28,523,101,618.99 29,769,289,938.38 41,634,258,361.21 39,551,413,702.03 Other explanation: 5.Investemnt income In RMB Items 2015 2014 Income from long-term cost method 156,578,434.96 investment Income from bank short-term financial 7,226,589.08 16,389,712.34 products Total 7,226,589.08 172,968,147.30 202 Bengang Steel Plates Co., Ltd. Annual Report 2015 6.Other XVII. Supplementary materials 1. Items and amounts of extraordinary gains and losses √ Applicable □Not applicable In RMB Items Amount Notes Non-current asset disposal gain/loss -2,918,523.73 Govemment subsidy recognized in current gain and loss(excluding those closely related 136,992,233.61 to the Companys business and granted under the states policies) Gain/loss from commissioned investment or 7,226,589.08 assets Gain/loss from debt reorganization 12,200,032.42 Other non-business income and expenditures 5,644,831.10 other than the above Less: Influenced amount of income tax 639,468.02 Total 158,505,694.46 -- For the Companys non-recurring gain/loss items as defined in the Explanatory Announcement No.1 on information disclosure for Compaines Offering their Securities to the Public-Non-recurring Gains and Losses and its non-recurring gain/loss items as illustrated in the Explanatory Announcement No.1 on information Disclosure for Companies offering their securities to the public-non-recurring Gains and losses which have been defined as recurring gains and losses, it is necessary to explain the reason. □ Applicable √Not applicable 2. Return on net asset and earnings per share EPS Profit as of reporting period Weighted average ROE (%) EPS-basic EPS-diluted Net profit attributable to the Common stock shareholders of -24.11% -1.05 -1.05 Company. Net profit attributable to the Common stock shareholders of -25.42% -1.05 -1.10 Company after deducting of non-recurring gain/loss. 203 Bengang Steel Plates Co., Ltd. Annual Report 2015 3. Differences between accounting data under domestic and overseas accounting standards (1) Differences of net profit and net assets disclosed in financial reports prepared under international and Chinese accounting standards √ Applicable □Not applicable In RMB Net profit Net assets Reporting period Same period of last year Closing balance Opening balance According to CAS -3,293,624,545.17 232,804,820.19 11,934,100,372.02 15,384,562,323.08 According to international accounting standards (2) Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards √ Applicable □ Not applicable Name of foreign accounting standard In RMB Net profit Net assets Reporting period Same period of last year Closing balance Opening balance According to CAS -3,293,624,545.17 232,804,820.19 11,934,100,372.02 15,384,562,323.08 According to international accounting standard (3) Explain reasons for the differences between accounting data under domestic and overseas accounting standards, for audit data adjusting differences had been foreign audited, should indicate the name of the foreign institutions 4.Other 204 Bengang Steel Plates Co., Ltd. Annual Report 2015 XI. Documents available for inspection 1. Financial Statements signed and stamped by the legal representative, CFO, and accounting manager; 2. All of the original copies of documents and announcements that have been published on China Securities Journal, Securities Times, and Hong Kong Commercial Daily. 3. Original copy of the Auditors Report under the seal of the CPA and signed by and under the seal of certified accountants. 205