Bengang Steel Plates Co., Ltd. Annual Report 2021 Bengang Steel Plates Co., Ltd. Annual Report 2021 March, 2022 1 Bengang Steel Plates Co., Ltd. Annual Report 2021 Ⅰ. Important Notice, Table of Contents, and Definitions The Board of Directors, the Supervisory Committee and the Directors, members of the Supervisory Committee and senior management of the Company guarantee that there are no misrepresentations or misleading statements, or material omission in this report, and individually and collectively accept full responsibility for the authenticity, accuracy and integrity of the information contained in this report. Huo Gang, Legal representative, Wang Donghui, Chief financial officer, and Li Xiaowei, Chief accountant, (the person in charge of the accounting), make the pledge for the authenticity, accuracy and integrity of the attached financial statements. All the members of the Board of Directors attended the board meeting on which this report was examined. The prospective statements contained in this annual report do not constitute any substantial commitment to the investors. Investors should pay attention to the risks attached to investment decisions. This report is prepared in both of Chinese and English. The Chinese version shall prevail when there are any controversial statements in the two versions. The company has described the existing risks and countermeasures in detail in this report. Please refer to Section 3-11 “Prospects for the Future Development of the Company”. “China Securities Journal”, “Securities Times”, “Hong Kong Commercial Daily” and Juchao Information Network (www.cninfo.com.cn) are the company's selected information disclosure media. All information of the company is based on the information published in the above-mentioned designated media. Investors are advised to pay attention to investment risks. The company’s profit distribution plan is approved by the board of directors. Taking 4,108,191,379 shares as the base, a cash dividend of 6.0 yuan (tax included) will be distributed to all shareholders for every 10 shares, and stock dividend is 0 (tax included). The capital reserve will not be converted into share capital. 2 Bengang Steel Plates Co., Ltd. Annual Report 2021 Table of Contents Ⅰ. IMPORTANT NOTICE, TABLE OF CONTENTS, AND DEFINITIONS .................................... 2 II. COMPANY PROFILE AND MAIN FINANCIAL INDEX ........................................................... 6 III. MANAGEMENT DISCUSSION AND ANALYSIS ..................................................................... 9 Ⅳ. CORPORATE GOVERNANCE .................................................................................................. 29 V. ENVIRONMENTAL AND SOCIAL RESPONSIBILITY .......................................................... 49 VI. IMPORTANT EVENTS ................................................................................................................ 53 Ⅶ. STATUS OF SHARE CAPITAL CHANGES AND SHAREHOLDERS ................................ 85 Ⅷ. STATUS OF PREFERRED SHARES ...................................................................................... 91 Ⅸ. STATUS OF CONVERTIBLE CORPORATE BONDS ............................................................ 92 Ⅹ. FINANCIAL REPORT ................................................................................................................... 95 3 Bengang Steel Plates Co., Ltd. Annual Report 2021 Reference File Directory 1. Financial statements signed and sealed by Legal representative, Chief financial officer, Chief accountant, (the person in charge of the accounting. 2. The original audit report with the seal of the accounting firm and the signature and seal of the certified public accountant. 3. The originals of all company documents and announcements publicly disclosed during the reporting period. 4. Annual reports published in other securities markets. 4 Bengang Steel Plates Co., Ltd. Annual Report 2021 Definition Terms to be defined Refers to Definition Bengang Bancai, Bengang Steel, the Company, the Refers to Bengang Steel Plates Co., Ltd. Listed Company Ansteel Group Refers to Ansteel Group Co., Ltd. Bengang Group Refers to Bengang Group Co., Ltd. Benxi Steel & Iron CO., Bengang Co. Refers to Benxi Steel & Iron (Group) Co., Ltd. Liaoning Provincial State-asset Administration Refers to Liaoning State-owned Asset Supervisory and Management Committee SSE Refers to Shenzhen Stock Exchange Bengang Puxiang Refers to Bengang Puxiang Cool Rolling Steel Sheet Co., Ltd. 5 Bengang Steel Plates Co., Ltd. Annual Report 2021 II. Company Profile and Main Financial Index I. Company Information Stock abbreviation Bengang Bancai, Bengangban B Stock Code 000761, 200761 Stock exchange for listing Shenzhen Stock Exchange Company name in Chinese 本钢板材股份有限公司 Abbreviation of Company name in 本钢板材 Chinese Company name in English (If any) BENGANG STEEL PLATES CO., LTD. Abbreviation of Company name in BSP English (If any) Legal representative Huo Gang Registration Address No.16, Renmin Road, Pingshan District, Benxi City, Liaoning Province Post Code of registration Address 117000 Changes in the company's registered None address history Office address No.16, Renmin Road, Pingshan District, Benxi City, Liaoning Province Post Code of office address 117000 Web Address None Email bgbcdm@163.com II. Contact Information Secretary of Board of Directors Representative of Securities Affairs Name Gao Desheng Chen Liwen No.16, Renmin Road, Pingshan District, No.16, Renmin Road, Pingshan District, Address Benxi City, Liaoning Province Benxi City, Liaoning Province Tel 024-47827003 024-47828980 Fax 024-47827004 024-47827004 Email bgbcdm@163.com bgbcclw@126.com III. Information Disclosure and Place for Consulting Press media for information disclosure China Securities Journal, Securities Times, Hong Kong Commercial Daily Web address for the annual report as http://www.cninfo.com.cn assigned by CSRC Place for inquiry of the annual report Secretary Office of the Board, Bengang Steel Plate Co., Ltd. IV. Change of Business Registration Organization Code 91210000242690243E Changes of principal business No change activities since listing (if any) On August 20, 2021, the State-owned Assets Supervision and Administration Changes of the controlling Commission of the Liaoning Provincial People's Government which is the former shareholder in the past (if any) actual controller of the company, signed the “Free Transfer Agreement on the State- owned Equity of Bengang Group Co., Ltd.” with Ansteel Group Co., Ltd. Liaoning 6 Bengang Steel Plates Co., Ltd. Annual Report 2021 State-owned Assets Supervision and Administration Commission transfered its 51% stake of Bengang Group Co., Ltd. to Ansteel Group for free. On October 12, 2021, the industrial and commercial registration of change was completed, and Ansteel Group Co., Ltd. became the indirect controlling shareholder of the company. The direct controlling shareholder of the company remains unchanged, which is still Benxi Iron and Steel (Group) Co., Ltd. V. Other Information Accountants’ firm engaged by the Company: Name of the accountants’ firm BDO China Shu Lun Pan Certified Public Accountants LLP Address of the accountants’ firm Address: 4/F 61 Nanjing Rd. East, Huangpu, Shanghai Signing name of accountants Li Yongjiang, Li Guiying Sponsor engaged by the Company to conduct sustained supervision during the reporting period √ Applicable □ Not applicable Name of the sponsor Address of the sponsor Name of the sponsor Sustained supervision institution institution representative period Guotai Junan Securities No. 768, Nanjing West Road, August 5th, 2020 to Yuan Yechen, Yang Keyi Co., Ltd. Jingan District, Shanghai December 31st, 2021 Financial consultancy institution engaged by the Company to conduct sustained supervision during the reporting period □ Applicable √ Not applicable VI. Main Accounting Data and Financial Index Whether the company needs to retrospectively adjust or restate accounting data for previous years □ Yes √ No Changes over 2021 2020 2019 last year Operating income(RMB) 77,912,144,981.46 48,684,792,685.58 60.03% 52,741,353,582.28 Net profit attributable to the shareholders of the listed 2,500,582,902.58 384,252,740.78 550.77% 555,646,971.40 company(RMB) Net profit after deducting of non-recurring gain/loss attributable to the 2,517,758,656.14 381,469,784.99 560.02% 549,528,817.13 shareholders of listed company(RMB) Net Cash flow generated by 413,473,454.04 -2,039,000,213.29 120.28% 6,977,824,041.16 business operation(RMB) Basic earnings per share 0.60 0.10 500.00% 0.143 (RMB/Share) Diluted earnings per share 0.50 0.10 400.00% 0.143 (RMB/Share) Weighted average net assets 11.88% 1.90% 9.98% 2.88% yield Changes over 2021 2020 2019 last year Gross assets(RMB) 55,147,123,275.30 65,007,470,749.20 -15.17% 60,731,425,193.90 7 Bengang Steel Plates Co., Ltd. Annual Report 2021 Net assets attributable to shareholders of the listed 22,500,969,014.30 21,018,296,389.10 7.05% 19,487,665,261.17 company(RMB) The lower of the company’s net profit before and after deduction of non-recurring gains and losses in the most recent three fiscal years is negative, and the audit report of the most recent year shows that the company’s ability to continue operations is uncertain □ Yes √ No The lower of the net profit before and after deducting non-recurring gains and losses is negative □ Yes √ No VII. Differences between Domestic and Foreign Accounting Standards 1. Differences of net profit and net assets disclosed in financial reports prepared under IFRS and Chinese accounting standards. □ Applicable √ Not applicable There are no differences of net profit and net assets disclosed in financial reports prepared under IFRS and Chinese accounting standards during the reporting period. 2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards. □ Applicable √ Not applicable There are no differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards during the reporting period. VIII. Main Financial Index by Quarters Unit: Yuan First quarter Second quarter Third quarter Fourth quarter Operation income 15,252,265,770.99 23,335,862,441.15 22,839,272,300.53 16,484,744,468.79 Net profit attributable to the shareholders of the listed 686,599,759.65 1,522,198,408.26 1,568,670,728.28 -1,276,885,993.61 company Net profit after deducting non-recurring gain/loss attributable to the 678,208,256.33 1,520,934,306.97 1,564,674,812.54 -1,246,058,719.70 shareholders of listed company Net cash flows generated -966,470,265.23 2,491,386,485.26 18,904,467.35 -1,130,347,233.34 by operating activities 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-recurring Profits and Losses √ Applicable □ Not applicable Unit: Yuan Item 2021 2020 2019 Notes Gains and losses on disposal of non-current -60,100,706.71 -92,695,525.95 -77,292,030.26 assets (including the write off part of the 8 Bengang Steel Plates Co., Ltd. Annual Report 2021 provision for impairment) Government subsidy attributable to profit and loss of current period (except such government subsidy closely related to the company's normal business operation, 66,345,976.64 81,193,591.56 83,914,522.47 meeting the regulation of national policy and enjoyed constantly in certain quota or quantity according to a certain standard) Profit or loss from investment or 2,436,869.33 0.00 605,795.19 assets entrusted to others Gains and losses of debt restructuring 32,800.02 50,640.00 Profits excluded effective hedging business related to the company's normal business operations, from holding transactional financial assets, derivative financial assets, transactional financial liabilities, fair value changes in derivative financial liabilities, -37,205,991.34 13,500,000.00 and disposal of transactional financial assets and derivative financial assets, financial liabilities held for trading, derivative financial liabilities and other debt investments Other non-operating income and expenses 5,176,371.41 1,592,660.62 779,757.58 other than above Other profit and loss items that meet the 2,084.65 definition of non-recurring gains and losses Less: impact of income tax -5,969,319.73 786,094.20 1,818,703.48 impact of minority equity (after tax) -202,407.38 54,476.26 123,911.88 Total -17,175,753.56 2,782,955.79 6,118,154.27 -- Other profit and loss items that meet the definition of non-recurring profit and loss: □ Applicable√ Not applicable There exists no situation of other profit and loss items that meet the definition of non-recurring profit and loss. Explanation on defining the non-recurring profit and loss items listed in the "Explanatory Announcement No. 1 on Information Disclosure of Companies Offering Securities to the Public - Non-recurring Profit and Loss" as recurring profit and loss items. □ Applicable√ Not applicable The company does not define the non-recurring profit and loss items listed in the "Explanatory Announcement No. 1 on Information Disclosure of Companies Offering Securities to the Public - Non-recurring Profit and Loss" as recurring profit and loss items. 9 Bengang Steel Plates Co., Ltd. Annual Report 2021 III. Management Discussion and Analysis I. Industry situation of the company during the reporting period The industry to which the company belongs is the steel industry. The steel industry is a significant basic industry of country's national economy, a significant support for building a modern and powerful country, and a significant field for realizing green and low-carbon development. The national economy continued recovery in 2021, and provided a good environment for the development of the steel industry. With the continuous improvement of the new development pattern of "dual circulation" at domestic and abroad, the supply-side reform and demand-side management have formed a higher level of dynamic balance. The steel industry actively responds to changes in domestic and foreign demand situations, strives to overcome the impact of Various factors, such as a high price of raw materials and fuels, and a sharp rise in environmental protection costs. The industry is generally operating well and in line with policy guidance and market expectations. In the first half of the year, the steel industry worked hard to meet the strong demand for steel market brought about by the rapid growth of downstream industries, fully released production capacity, and formed a booming situation in both of production and sales. In the second half of the year, with the implementation of production restriction measures and the slowdown in demand growth in downstream industries, the steel industry timely controlled production capacity. Throughout the year, country's steel supply and demand were basically balanced and making outstanding contributions to meeting the steel demand of downstream industries and ensuring the sustained recovery of the national economy. The year 2022 is a crucial year for the country to implement the "14th Five-Year Plan", and it is also a crucial year for the steel industry to achieve high-quality development. From the perspective of the overall external environment, at the end of 2021, the shock wave of the new coronavirus variant strain Omicron swept the world, adding more variables to the world economic situation. Under the background of the national "dual carbon" goal, the steel industry has entered a critical period of high-quality development. Green and low-carbon, intelligent manufacturing, etc. have brought more severe challenges and disruptive changes, and market uncertainty has further increased. At the same time, China's economy has a solid foundation and strong resilience, and will remain a long-term improvement fundamental in the future. The National Development and Reform Commission and the Ministry of Industry and Information Technology issued the "Implementation Plan on Reinvigorating the Operation of the Industrial Economy and Promoting the High-quality Development of the Industry", which proposed policies and measures such as "vigorously increasing the effective supply of the bulk raw material market", "tapping the demand potential and expanding the market space of the industrial economy", which is conducive to guiding Market expectations and create new opportunities for the development of iron and steel enterprises. Currently, China has entered a critical stage of comprehensive and high-quality development. The country has clearly put forward the goal of striving to achieve carbon peaking by 2030 and carbon neutrality by 2060, which has put forward new requirements for the development of the iron and steel industry, and has also stimulated new momentum for the high-quality development of the steel industry. The steel industry is facing a series of changes in the domestic steel demand structure, steel product supply structure, steel production process structure, and steel production resource structure. II. The main business of the company during the reporting period 1. Main business, main products and their uses During the reporting period, the company’s main businesses include iron and steel smelting, rolling processing, power generation, coal chemical industry, special steel profiles, railways, import and export trade, scientific research, product sales, etc. The introduction of world advanced equipment and technology to implement equipment upgrades for the main iron and steel industry and have built a high-quality steel base, formed more than 60 varieties, more than 7,500 specifications of product series, the proportion of high value-added and high-tech products reached more than 80%. The leading products for automotive surface panels, home appliance panels, petroleum pipeline steel, container panels, shipboard, etc. are widely used in the fields of automobiles, home appliances, petrochemicals, aerospace, machinery manufacturing, energy and transportation, building decoration and metal products, and are exported to more than 60 countries and regions. 2. Business model Procurement model: The company's procurement model includes domestic procurement and foreign procurement. Domestic material procurement is carried out through centralized procurement, unified bidding, price comparison, 10 Bengang Steel Plates Co., Ltd. Annual Report 2021 and consultation. The procurement of foreign materials is carried out through long-term cooperative procurement, direct procurement, open and invitational bidding, inquiry and price comparison, competitive negotiation, negotiation procurement, etc., which mainly act by Bengang Steel Group International Economic and Trade Co., Ltd. Sales model: The company's sales are divided into domestic sales and export sales. Domestic sales mainly adopt the direct sales model. The company sells directly to large customers, and other small and medium customers sell to them through regional sales subsidiaries. Export sales mainly act through the strong marketing network accumulated in international trade by Bengang Steel Group International Economic and Trade Co., Ltd., which act as agent of the export sales and charge the agency fee. 3. Key drivers of performance The company seized the favorable opportunity of the reorganization between Ansteel Group Co., Ltd. and Bengang steel Group Co., Ltd., deeply carried out the three-year action of state-owned enterprise reform and three system reforms, with the goal of achieving "five promotions and two reductions", and earnestly implemented the "5+1" work pattern and "1+4" important mission. Implement the "General Plant System", continuously improve management efficiency and benefits, build a technological innovation system, create innovative platforms such as "Liaoning Bengang Iron and Steel Industry Industry-University-Research Alliance", and implement the "R&D personnel delisting system for scientific and technological projects" to achieve precise incentives. Continuing to carry out in-depth benchmarking exchanges, adhere to the direction of market-oriented reform, and continuously promote the high-quality development of diversified industries, various tasks have achieved relatively gratifying business performance. During the reporting period, the company's main business and business model remained unchanged. III. Analysis on Core Competitiveness The company adheres to the innovation-driven and "quality + service" development model, with the strategic goal of building an internationally competitive high-quality plate base, a domestic first-class special steel base and a comprehensive service provider, and exerts a strategic leading role, focusing on improving quality and efficiency, In terms of product upgrades, technological innovation, green and intelligent manufacturing, we will innovate management ideas, enhance the core competitiveness of enterprises, and promote enterprises to achieve high-quality, green and intelligent development. 1. Manufacturing capabilities. Innovate management ideas, strengthen professional management and control of the entire chain, and continuously improve corporate management efficiency. All departments and units interact with each other, continue to implement the concept of priority on output, adhere to the iron system as the core, focus on the process connection of iron and steel, and rationally match the production line and resource production organization principles of the steel post process, so that the production process and operation Continuously standardize and refine, make every effort to maximize quality, efficiency and production scale, and promote the entire production chain toward high-end manufacturing. 2. Equipment transformation and upgrading. In 2021, the company issued a fixed asset investment plan of 3.85 billion yuan. Implemented a new round of large-scale technological transformation and ultra-low emission transformation projects represented by key projects such as special steel electric furnace upgrading, special steel rolling mill renovation, CCPP power generation project, 220KVA substation project, Taizi River bridge renovation, 1700mm production line improvement, and coke oven flue gas desulfurization and denitrification. At present, the 1700mm production line has been improved, the CCPP power generation project and the 220KVA substation project will be put into operation one after another. The special steel electric furnace upgrade and transformation project will be commissioned and put a set of electric furnaces and supporting refining equipment, continuous casting equipment into production at the end of August 2022. 3. New product development capabilities. So far, 49 grades have been developed. Except for the pre-researched cold- rolled dual-phase steel DP1180, other new products have been sold in the market. Realized the full coverage of strength grade series of hot-rolled automobile structural steel represented by "automobile beam" and "steel for box body". Successfully developed dual-phase steel of 1180 strength level and hot-dip galvanized composite phase steel CR980T/700Y-MP, which are leading domestically. Developed hot-rolled anti-oxidation coating-free hot-formed steel CF-PHS1500 to achieve the world's first launch, reaching the international leading level. 4. Technological innovation ability. In terms of scientific and technological cooperation, to undertake meetings of the Expert Committee of the Metals, establish the strategic docking between Bengang group and China Iron and Steel Research Group, strengthen cooperation with Northeastern University and other universities and research institutes, and invite national academicians and authoritative experts to discuss the latest technological progress and industry development trends. , To direct and to promote the high-quality development of Benxi Iron and Steel Group. In terms of scientific and technological achievements, it has won 4 metallurgical science and technology awards and 3 scientific and technological progress awards in Liaoning Province. Among them, "the research and development of hot stamping steel with the highest strength and extra-thick specifications and its serial development" won the first prize in the metallurgical industry. The industry's highest award. In terms of intellectual property rights, 3 11 Bengang Steel Plates Co., Ltd. Annual Report 2021 national standards and 11 corporate standards were drafted; 211 patents were accepted by the National Bureau, a year-on-year increase of 21.2%; 108 patents were authorized by the National Bureau, including 16 inventions and 92 utility models. Bengang Steel Plate Co., Ltd. won the Quality Award from the Governor of Liaoning Province and was identified as "the first batch of high-value patent cultivation centers in Liaoning Province." 5. Green development capability. In combination with the steel industry and local ultra-low emission policy requirements, the company has the courage to assume social responsibilities, relying on professional planning and research institutions to prepare an environmental protection improvement plan and an annual implementation plan. A total of more than 40 ultra-low emission projects have been teased out, all of which have been included in the investment plan and are under construction or preliminary work. Through all-round green improvement such as cleaner production level, three waste management, environmental protection management, the company achieve community-based environmental quality, promote the integration of industry and city, strive to achieve ultra-low emission by the end of 2023, and build the company into an "ecological steel" that develops harmoniously with the city. At present, the two dust collectors of the second sintering product of the iron smelting plant have completed the transformation to meet the emission standards. The CCPP power generation project using surplus gas is expected to be completed and put into operation in the first quarter of 2022. 6. Intelligent manufacturing capabilities. The company has vigorously promoted the construction of intelligent manufacturing related projects such as informatization and intelligence. In 2021, investment has been made to carry out centralized control and intelligent manufacturing of iron, burning, coke, special steel processes, raw material management, energy management, etc. Carry out the improvement of the basic information platform, production and manufacturing management, intelligent equipment for cold rolling areas, and the upgrading and transformation of railway transportation dispatching and commanding information systems Intelligent transformation in other fields. keep up with the pace of enterprise development in the era of big data, and achieve high-quality development. IV. Management Discussion and Analysis 1. General During the reporting period, the company has always adhered to the new development concept, promoted efficient development, and fully implemented the spirit of General Secretary Xi Jinping's instructions on Northeast Revitalization and Liaoning Revitalization. It has carried out a series of fruitful work with the core of "refining and strengthening listed companies, and promoting high-quality development", overcoming the influence of unfavorable factors such as market shocks, and achieving a high starting point for the "14th Five-Year Plan". The annual sales revenue was 77.912 billion yuan, a year-on-year increase of 60%; the profit was 3.435 billion yuan, a year-on-year increase of 724%; pig iron completed 9.838 million tons, a year-on-year decrease of 2.3%; crude steel completed 10.438 million tons, a year- on-year increase of 1.24%; Plates completed 13.217 million tons, an increase of 8.02% year-on-year; cold-rolled sheets completed 6.1078 million tons, an increase of 8.1% year-on-year; special steel products completed 622,000 tons, a year-on-year decrease of 13.7%. Reviewing the work of the year, it is mainly reflected in the following aspects: 1. Strengthen process linkage to make production operation more efficient Among them, the steel plant has established a high-efficiency production model, and the monthly output has exceeded 1 million tons, which is the best level in history. The hot continuous rolling mill has continuously set new production records, and the production capacity has reached the level of 10 million tons. The cold rolling plant took multiple measures to break through the "bottleneck" of production. Each unit has set a record of 40 times of production capacity, and some units have exceeded the designed capacity by 120%. The steel rolling output of special steel mills has shown a good trend of increasing month by month, and the daily output has increased by 165 tons year-on-year. The scrap steel plant recovered 63,000 tons of non-production scrap, ensuring high production and consumption reduction. 2. Strict process control and more precise cost control Established the management and control concept of "low cost to win high efficiency", and various cost reduction measures have achieved remarkable results. The financial system refines capital management and saves interest expenses; the production system strictly controls the port transportation consumption ratio to reduce the cost of raw material loss; the equipment system strengthens the repair of spare parts by outsourcing, and reduces the purchase cost of new products; the energy system increases the proportion of self-generated electricity and avoids peak production, direct purchase of electricity and other measures to effectively reduce electricity costs. 3. Implement the innovation-driven strategy, and achieve new results in the field of scientific and 12 Bengang Steel Plates Co., Ltd. Annual Report 2021 technological research and development Adhere to the concept of "strengthening the enterprise with science and technology", carry out scientific research and research and development of new products, make every effort to achieve technological leadership, promote varieties and create benefits, and effectively improve the enterprise's ability to resist risks. Throughout the year, 20 grades of cold series products, 15 grades of thermal series products and 14 grades of special steel products were developed. Successfully developed domestic leading 1180- strength dual-phase steel and high-performance 50BW470 high-efficiency silicon steel for Ningde Tebo, as well as ultra-deep-drawn electro-galvanized automotive outer panels for Iran's Saipa Automobile. For the first time, it cooperated with foreign R&D institutions - General Automobile Research Institute of North America and Northeastern University to develop "coating-free hot-formed steel", breaking through barriers to technical cooperation, breaking through patent monopoly, and completing industrialization tests. In the whole year, 100 scientific research projects were established, an increase of 69.5% year-on- year, and the planned implementation rate reached over 90%. Successfully jointly applied for the "13th Five-Year" National Key R&D Program "Genetic Engineering and Artificial Intelligence Design of Aviation Key Materials" and was approved. The linkage of "sales, research and production" was achieved, and 20 certification and delisting projects were completed throughout the year, with a total of 47 brands. Mercedes-Benz certification has made a breakthrough. Users of pickling products have completed stamping certification and assembly, and are conducting road tests in Germany and Turkey. At the same time, it has passed the Japanese JIS certification, which provides a strong guarantee for the consolidation of overseas markets. 4. Consolidate the construction of the management system, and the level of enterprise management has climbed to a new level Based on the construction of six management systems of safety, quality, energy, environmental protection, integration of industrialization and informatization, and measurement, we constantly improve various management systems, so as to ensure that there is a basis for doing things, and there is evidence for investigations, so as to achieve closed-loop management. Adhere to safety first and build a "red line" awareness. Quickly implement the safety management requirements of "three managements and three musts", "five cleanups and five eliminations" and "four cannot be relaxed for a moment", and responsibilities are consolidated layer by layer. Vigorously promote consistent management and strengthen process compliance. Carry out research on energy conservation and consumption reduction, realize green and low-carbon operation, and make energy management more refined and professional. The investment in metering equipment was increased, and the integration and commissioning of the energy metering network was completed, laying the foundation for precise control of energy consumption. Continue to explore new paths for legal management of environmental protection work, establish and improve daily management and control and emergency management systems and measures, fully promote the construction of key low-carbon energy conservation projects, and promote green and low- carbon development of enterprises. Implement the new development concept and build a digital and intelligent enterprise. Taking solving practical production problems as the focus, sticking to the main direction of intelligence, taking the cold rolling production line with a high degree of automation as a pilot, vigorously promoting the application of innovative technologies such as unmanned driving and industrial robots, and effectively promoting the improvement of labor productivity. 5. Actively promote the deepening of reform, and make new progress in corporate governance In accordance with the goal of "becoming better and stronger to promote the high-quality development of listed companies", the key reform work has been determined, which has pointed out the direction for deepening the reform of Bengang Bancai and solving the problems of enterprise development. Reshape the organizational structure, achieve lean and efficient management, establish an authorization system, improve decision-making efficiency, and control decision-making risks; strengthen performance management, and promote precise incentives. In accordance with the principle of "complete undertaking, comprehensive decomposition, step-by-step pressure, and differentiated design", the company's operator performance and organizational performance indicators will be decomposed and implemented step by step, giving full play to the motivational role of performance appraisal, realizing the company's benefits and employees' benefits. Promote management innovation, improve management efficiency, establish a management mechanism centered on efficiency and follow the principle of process compliance, and continue to improve management effectiveness and efficiency. 6. Highlight the leading role of party building, and show new achievements in group organization work Thoroughly study and implement the spirit of the 19th National Congress of the Communist Party of China and all previous plenary sessions of the 19th National Congress of the Communist Party of China, as well as the spirit of the National Party Building Work Conference of State-owned Enterprises, give 13 Bengang Steel Plates Co., Ltd. Annual Report 2021 full play to the fighting fortress of the party organization and the vanguard and exemplary role of party members, strengthen cadre evaluation and echelon construction, and establish a leadership management and evaluation system, by adopting a multi-dimensional work performance evaluation method, and solidly carry out the selection and recruitment of leading cadres. Adhere to the tracking and training of young cadres, build a platform for talent growth in multiple directions, and create conditions for outstanding talents to stand out. Comprehensively and strictly manage the party to advance in depth, and create a clean and upright business environment; implement the study of the party's history and solve the people's worries, and actively do practical things and solve problems for the workers and the masses. 7. Multi-measures are taken at the same time and the organization is closely organized, and the epidemic prevention and control has become normalized Strictly implement the various epidemic prevention policies of Bengang Group, comprehensively consolidate the foundation of epidemic prevention and control, and ensure that the thinking is not loose and the standards are not lowered. Adhere to daily information control and supervision of epidemic prevention measures, and do a solid job in the reception of foreign personnel and the management of personnel going out, as well as disinfection and personal protection in public places. Establish an emergency response liaison mechanism with the Municipal Health Commission and the hospital, implement measures such as consultation on vaccination matters, and rapid response to emergencies. At present, 9 batches of vaccines have been organized for centralized vaccination, and the vaccination ratio has reached 98%, which has built a strong anti-epidemic barrier. 2. Income and Cost (1) Breakdown of Operating Income Unit: Yuan 2021 2020 Change over Amount Proportion Amount Proportion last year Total operating income 77,912,144,981.46 100% 48,684,792,685.58 100% 60.03% By industries Industry 77,912,144,981.46 100.00% 48,684,792,685.58 100.00% 60.03% By products Steel plate 69,992,675,798.60 89.84% 45,321,849,577.55 93.09% 54.43% Others 7,919,469,182.86 10.16% 3,362,943,108.03 6.91% 135.49% By regions Northeast 31,503,298,043.72 40.43% 20,420,940,894.42 41.95% 54.27% North China 3,199,355,088.45 4.11% 1,608,496,520.50 3.30% 98.90% East China 33,516,981,788.40 43.02% 21,783,663,312.31 44.74% 53.86% Northwest 68,888,026.23 0.09% 48,736,790.89 0.10% 41.35% Southwest 135,459,678.97 0.17% 241,981,145.95 0.50% -44.02% Central south 3,152,641,431.89 4.05% 25,508,604.19 0.05% 12,259.13% Export 6,335,520,923.80 8.13% 4,555,465,417.32 9.36% 39.08% By sales model Sales in domestic 71,576,624,057.66 91.87% 44,129,327,268.26 90.64% 1.23% market Sales in export market 6,335,520,923.80 8.13% 4,555,465,417.32 9.36% -1.23% (2) Industry, Product and Regions Accounting for the Company’s Operating Income or Profit over 10% √ Applicable □ Not applicable Unit: Yuan Operating income Operating costs Gross Operating Operating costs Gross margin 14 Bengang Steel Plates Co., Ltd. Annual Report 2021 margin income change change over last change over over last year year last year By industries Industry 77,912,144,981.46 71,891,598,336.96 7.73% 60.03% 54.96% 3.02% By products Steel plate 69,992,675,798.60 64,770,421,744.20 7.46% 54.43% 49.51% 3.05% Others 7,919,469,182.86 7,121,176,592.76 10.08% 135.49% 131.98% 1.36% By regions Northeast 31,503,298,043.72 28,935,779,253.16 8.15% 54.27% 49.04% 3.22% North China 3,199,355,088.45 2,932,208,938.56 8.35% 98.90% 92.03% 3.28% East China 33,516,981,788.40 31,078,317,077.55 7.28% 53.86% 49.47% 2.73% Northwest 68,888,026.23 63,948,754.75 7.17% 41.35% 37.41% 2.66% Southwest 135,459,678.97 126,180,690.96 6.85% -44.02% -45.55% 2.62% Central south 3,152,641,431.89 2,884,036,381.89 8.52% 12,259.13% 11,820.00% 3.37% Export 6,335,520,923.80 5,871,127,240.09 7.33% 39.08% 34.77% 2.96% By sales model Sales in 71,576,624,057.66 66,020,471,096.87 7.76% 62.20% 57.06% 3.02% domestic market Sales in export 6,335,520,923.80 5,871,127,240.09 7.33% 39.08% 34.77% 2.96% market Operating data of recent one year according to adjusted statistics caliber at the year-end in the case that the Company's main business statistics caliber has changed during the reporting period □ Applicable √ Not applicable (3) Whether the Company’s Physical Sales Income Exceeded Service Income √ Yes □ No Change over last Industry classification Item Unit 2021 20120 year Sales ton 13,883,661.11 12,968,385.12 7.06% Production ton 13,996,055.15 12,940,697.06 8.16% Inventory ton 601,916.23 489,522.19 22.96% Steel rolling processing industry Sales Production Inventory The main reasons that the relevant data changed more than 30% □ Applicable √ Not applicable (4) Performance of Significant Sales and Purchase Contract Signed-up in this Reporting Period □ Applicable √ Not applicable (5) Breakdown of Operating Cost Industry classification Unit: Yuan Industry 2021 2020 Change over Item classification Amount Proportion Amount Proportion last year 15 Bengang Steel Plates Co., Ltd. Annual Report 2021 Steel rolling Raw material 37,341,970,406.79 51.94% 23,138,475,447.81 49.88% 2.06% processing industry Steel rolling Supplementary 2,839,512,165.81 3.95% 2,089,395,547.62 4.50% -0.55% processing industry materials Steel rolling Spare parts and 785,960,965.25 1.09% 737,780,144.94 1.59% -0.50% processing industry tools Steel rolling 22,184,848,601.81 30.86% 12,727,140,058.39 27.43% 3.43% Fuel processing industry Steel rolling 3,182,838,986.67 4.43% 2,687,362,561.57 5.79% -1.36% Energy processing industry Steel rolling Salary and 2,582,531,198.03 3.59% 1,980,205,516.91 4.27% -0.68% processing industry benefits Steel rolling 2,333,028,229.90 3.25% 2,191,070,638.31 4.72% -1.47% Depreciation processing industry Steel rolling 640,907,782.70 0.89% 840,750,647.04 1.81% -0.92% Others processing industry Steel rolling 71,891,598,336.96 100.00% 46,392,180,562.59 100.00% 0.00% Total processing industry Instruction: None (6) Whether Changes Occurred in Consolidation Scope in the Reporting Period √ Yes □ No In this period, the wholly-owned subsidiary Xiamen Bengang Iron & Steel Sales Co., Ltd. was cancelled. (7) Relevant Information of Significant Changes or Adjustment of the Business, Product or Service in the Reporting Period □ Applicable √ Not applicable (8) Information of Main Customers and Main Suppliers Information of the Company’s main customers Total sales amount of the top five customers (Yuan) 17,086,188,258.07 Total sales amount of the top five customers accounted for the proportion of total 21.93% annual sales The proportion of the total sales of the related parties in the top five customers 7.17% Information of the top 5 customers No. Name Amount (Yuan) Proportion 1 Benxi Beiying Steel & Iron (Group) Co., Ltd. 5,584,776,929.07 7.17% 2 Ouyeel Cloud Trade Co., Ltd. 3,913,604,189.08 5.02% 3 Shanghai Ouyeel Supply Chain Co., Ltd. 2,637,122,244.90 3.38% 4 Xiamen Jian Fa Metal Co., Ltd. 2,554,449,548.71 3.28% 5 Ningbo AUX Trade Co., Ltd. 2,396,235,346.31 3.08% Total -- 17,086,188,258.07 21.93% Other information of principal customers □ Applicable √ Not applicable Information of the Company’s main suppliers Total purchase amount of the top five suppliers (Yuan) 33,829,243,762.16 Total purchase amount of the top five suppliers accounted for the proportion of 47.06% total purchase The proportion of the total purchase of the related parties in the top five suppliers 40.82% 16 Bengang Steel Plates Co., Ltd. Annual Report 2021 Information of the top 5 suppliers No. Name Amount (Yuan) Proportion Bengang Group International Economic and 1 17,309,186,976.50 24.08% Trading Co., Ltd. 2 Benxi Steel & Iron (Group) Mining Co., Ltd. 7,936,735,203.17 11.04% 3 Benxi Beiying Steel & Iron (Group) Co., Ltd. 4,095,327,573.23 5.70% 4 Heilongjiang Dragon Coal Group Co., Ltd. 2,294,033,830.68 3.19% Liaoning Electric Power Co., Ltd. Benxi Electric 5 2,193,960,178.58 3.05% Power Supply Company Total -- 33,829,243,762.16 47.06% Other information of principal suppliers □ Applicable √ Not applicable 3. Expenses Unit: Yuan Change over Notes to significant 2021 2020 last year change Increase in salary and Selling and distribution expenses 141,394,565.57 97,279,280.21 45.35% import and export agency fees Increase in salary, General and administrative expenses 1,187,239,442.10 792,826,294.81 49.75% heating costs, etc. Increase in foreign Financial expenses 536,593,635.06 364,775,155.62 47.10% exchange losses Increase in R&D Research and development expenses 56,401,594.44 37,989,623.28 48.47% investment 4. Research and Development Input √ Applicable □ Not applicable Main R&D project Expected impact on the future Project purpose Project Progress intended goal name development of the company In the first half of the The pass rate of high- year, a total of grade cold-rolled outer 1,724.2 tons of mid- sheet in 2020 is 70.6%. to-high-end cold- The current main defects rolled automotive and proportions are: outer sheets were 12.78% roll printing, produced, with a pass Stable and 6.79% inclusions, 2.27% rate of 73.8%, an improved quality of The mass production pass rate The annual profit is more than oblique printing, 1.9% increase of 6.9% over high-grade cold- reaches 80%. 1.5 million yuan. scratches, 1.72% rubber the same period in rolled outer sheet roll printing, rust 1.32%, 2020. In April, it other 2.66%. Special reached 95.1%, research is needed to creating the best level reduce the downgrade in history and rate and further improve ensuring the stable product quality. supply of downstream users. In today's increasingly Improve Bengang's auto steel It made up for the blank of homogeneous products, material selection data system, Bengang, and systematically Bengang the pursuit of The project and the database contains combined EVI with database Automotive Body- differentiated competition objectives have been 100% of auto steel grades. All establishment and application in-White Solution is the key for enterprises completed. body-in-white body materials technology testing for the first to get out of low-level are Benxi Steel's automotive time, which led to the overall homogeneous steel products, and high- improvement of Bengang's 17 Bengang Steel Plates Co., Ltd. Annual Report 2021 competition. Therefore, it strength and ultra-high- application technology. is necessary to carry out strength automotive steels EVI work to enhance the account for more than 65%. influence of enterprises. Using narrow The end hardenability meets In 2020, the output of hardenability belt the technical requirements, the gearbox gear steel control technology, J9 value of the key control FAS3420(R)H is more Research and non-metallic point is not less than 80% of than 1,000 tons Development of inclusion control the 4HC bandwidth; the (accounting for only 3% Steel FAS3420(R)H technology in oxygen content is not more of gear steel), and the The annual profit is more than for 12-speed vulcanized steel, and than 18ppm, and the technical quality level is 2 million yuan. Transmission Gears band structure control proportion below 12ppm is not relatively low. The grades of Heavy-Duty technology in heat more than 80%; Other have been stably Vehicles treatment state, the indicators such as inclusions controlled, and the quality product quality and low magnification of steel has reached the basically meets the structures meet the technical domestic advanced level. needs of users. requirements. The size of the continuous casting billet in the converter process of Benxi Steel is 350×470mm, and it can only produce the national standard high carbon bearing steel with the To achieve stable production specification ≤ Ф The product grade of of national standard materials Research on Process Bengang's bearing steel has 85mm. Specifications>Ф below Φ150mm, the central Technology of been improved, and the 85mm steel center porosity level is less than or Large Size High The end project goal specifications of the high- Carbon Chromium porosity level is too high, has been completed. equal to 1.0, and the residual quality national standard and even shrinkage holes shrinkage hole level is 0. Bearing Steel material of Bengang's bearing exist, which cannot be Ultrasonic flaw detection GCr15 steel have been further produced normally. At meets the requirements of expanded. present, the bearing GB/T 4162 standard B level. industry has a large demand for Ф 90 ~ Ф 150mm national standard materials, so it is necessary to study large- scale bearing steel to meet the market demand. Due to the existence of defects such as zinc slag, zinc ash and roll printing, Production it cannot meet the technology requirements of Completed 2 user integration of cold- automobile OEMs. hot-dip galvanized To achieve stable supply, the The annual profit is more than rolled hot-dip Through the research on outer plate pass rate is more than 70%. 2.8 million yuan. galvanized the key technology of hot- certification. automobile surface dip galvanized surface sheet plate, the stable supply of medium and high-end automobile OEMs is realized. Information of research and development personnel by the company 2021 2020 Change over last year Number of Research and 1,798 1,732 3.81% Development staff Proportion of number of Research and Development 9.53% 10.34% -0.81% staff Educational structure of —— —— —— research and development staff Bachelor 1,233 1,208 2.07% 18 Bengang Steel Plates Co., Ltd. Annual Report 2021 Master's degree 162 151 7.28% Age composition of research —— —— —— and development staff Under the age of 30 109 132 -17.40% 30 to 40 years old 586 487 20.30% Information of research and development input by the company 2021 2020 Change over last year Amount of Research and Development Investment (In 2,343,822,000.00 1,541,651,000.00 52.03% RMB) Proportion of Research and Development investment to 3.01% 3.17% -0.16% operating income Amount of capitalized Research 0.00 0.00 0.00% and Development investment Proportion of capitalized Research and Development investment accounted to total 0.00% 0.00% 0.00% Research and Development investment Illustrations of significant change in the composition of the company's Research and Development personnel □ Applicable √ Not applicable Illustrations of the prominent change in proportion of research and development input occupying the operating income over same period last year □ Applicable √ Not applicable Illustrations of significant change in the research and development input’s capitalization rate and its reasonableness □ Applicable √ Not applicable 5. Cash Flow Unit: Yuan Item 2021 2020 Change over last year Subtotal of cash inflows from 56,328,587,878.30 40,062,379,161.40 40.60% operating activities Subtotal of cash outflows from 55,915,114,424.26 42,101,379,374.69 32.81% operating activities Net cash flows from operating 413,473,454.04 -2,039,000,213.29 120.28% activities Subtotal of cash inflows from 11,402,720,358.72 14,037,738.77 81,129.04% investing activities Subtotal of cash outflows from 7,504,976,365.56 6,213,928,829.62 20.78% investing activities Net cash flows from investing 3,897,743,993.16 -6,199,891,090.85 162.87% activities Subtotal of cash inflows from 8,162,945,228.08 22,997,390,314.56 -64.50% financing activities Subtotal of cash outflows from 15,363,346,740.69 18,941,067,286.47 -18.89% financing activities Net cash flows from financing -7,200,401,512.61 4,056,323,028.09 -277.51% activities Net increase in cash and cash -2,930,318,531.64 -4,211,997,393.46 -30.43% equivalents Illustrations of key factors of significant changes over same period last year √ Applicable □ Not applicable (1) The subtotal of cash inflows from operating activities increased by 40.6% over the previous period, which was mainly due to the increase in the sales price of steel products and the substantial increase in income. 19 Bengang Steel Plates Co., Ltd. Annual Report 2021 (2) The net cash flow from operating activities increased by 120.28% over the previous period, which was mainly due to the increase in the sales price of steel and the substantial increase in income. (3) The subtotal of cash inflows from investing activities increased by 81,129.04% over the previous period, which was mainly due to the maturity and recovery of large-denomination time deposits. (4) The net cash flow from investing activities increased by 162.87% compared with the previous period, which was mainly due to the maturity and recovery of large term deposits. (5) The subtotal of cash inflows from financing activities decreased by 64.5% compared with the previous period, which was mainly due to the decrease in borrowings in the current period. (6) The net cash flow from financing activities decreased by 277.51% compared with the previous period, which was mainly due to the decrease in borrowings and the payment of dividends in the current period. (7) The net increase in cash and cash equivalents decreased by 30.43% over the previous period, which was due to the decrease in borrowings and the payment of dividends in the current period. Illustrations of significant difference between cash flow from operating activities and net profit during the reporting period □ Applicable √ Not applicable Ⅴ. Analysis of Non-core Business √ Applicable □ Not applicable Unit: yuan Proportion of Whether it is Amount Reason for formation total profit sustainable or not Due to investment income Investment income -120,519,309.82 -3.51% from disposal of financial No assets held for trading Due to the increase in the Asset impairment -113,671,335.02 -3.31% provision for inventory No impairment Non-operating Due to the income from 7,783,225.80 0.23% No income disposal of non-current assets Due to the disposal of assets in Operating expenses 64,272,629.43 1.87% No the current period Ⅵ. Assets and Liabilities 1. Significant Change of Assets Components Unit: Yuan Ending balance of 2021 Beginning balance of 2021 Notes to Proportion in Proportion in Proportion significant Amount the total assets Amount the total assets change change (%) (%) Cash at bank and on The company 8,831,095,737.85 16.01% 13,126,666,915.26 20.58% -4.57% hand repays the loan Accounts receivable 256,850,782.71 0.47% 245,217,182.66 0.38% 0.09% Inventories 10,190,166,138.98 18.48% 9,040,065,342.65 14.17% 4.31% Long-term equity 2,981,784.07 0.01% 2,742,064.73 0.00% 0.01% investment Fixed assets 25,480,674,048.94 46.20% 26,284,567,956.44 41.21% 4.99% Construction in 2,434,182,101.13 4.41% 1,839,933,715.58 2.88% 1.53% process Right-of-use assets 1,440,365,248.31 2.61% 1,500,739,782.73 2.35% 0.26% The company Short-term loans 4,053,088,140.00 7.35% 10,067,731,000.00 15.78% -8.43% repays the loan 20 Bengang Steel Plates Co., Ltd. Annual Report 2021 Contract liabilities 4,708,188,093.78 8.54% 4,458,671,819.90 6.99% 1.55% Long-term loans 4,222,821,771.74 7.66% 3,502,934,427.65 5.49% 2.17% Lease liabilities 1,424,667,169.15 2.58% 1,463,444,635.94 2.29% 0.29% High proportion of abroad assets □ Applicable √ Not applicable 2. Assets and Liabilities Measured at Fair Value □ Applicable √ Not applicable 3. Restricted Assets by the End of the Period Items Ending balance Reason Cash at bank and on hand 2,531,996,674.37 Deposit for notes and letter of credit Notes receivable that the company has endorsed and not yet matured Notes Receivable 1,133,932,188.36 on the balance sheet date were not derecognition at the end of period Other equity instrument investments 1,037,735,849.00 Pledged for loans Fixed assets 89,963,211.93 Mortgage for fund borrowing Intangible assets 36,188,476.93 Mortgage for fund borrowing Total 4,829,816,400.59 Ⅶ. Investment 1. General □ Applicable √ Not applicable 2. Acquiring Significant Equity Investment in the Reporting Period □ Applicable √ Not applicable 3. Undergoing Significant Non-Equity Investment in the Reporting Period □ Applicable √ Not applicable 4. Investment of Financial Assets (1) Investment in Securities □ Applicable √ Not applicable There was no investment in securities during the reporting period. (2) Investment in Derivatives □Applicable √ Not applicable There was no investment in derivatives during the reporting period. 5. Use of Raised Funds √ Applicable □ Not applicable 21 Bengang Steel Plates Co., Ltd. Annual Report 2021 (1) Use of Raised Funds √Applicable □ Not applicable Unit: 10 thousand yuan The total Cumulativ The Cumulativ Amount of amount of e purpose Used The total e total The total funds funds raised proportion and Method of Total amount of used amount of amount of raised after for change of total destination Year raising amount of raised amount of funds funds being idle of purpose raised of the funds raised funds fund this funds raised for raised not for more during the funds for raised period raised change of used than two reporting changes of funds not purpose years period purposes yet used Private placement 3,965,799,9 64,473,99 3,342,063 623,736,95 2018 Deposit to raise 88.19 2.52 ,034.97 3.22 funds Issue of 6,759,200,0 1,147,724 3,610,684 3,148,515, 2020 convertibl Deposit 00 ,418.83 ,085.61 914.39 e bonds 10,724,999, 1,212,198 6,952,747 3,772,252, Total -- 0 0 0.00% -- 0 988.19 ,411.35 ,120.58 867.61 Description of the overall use of raised funds 1.Status of use of funds for investment projects with raised funds For the actual use of the company's raised funds in 2021, please refer to the attached table for the use of the raised funds and the commitment projects of the raised funds. 2.Status of changes in the implementation location and implementation method of the projects invested by raised funds During the reporting period, there is no situation of change the investment projects of raised funds or their implementation locations and implementation methods. 3.Status of preliminary investment and replacement of raised funds for investment projects (1) Status of preliminary investment and replacement of funds raised from non-public offering of stocks At the 14th meeting of the 7th Board of Directors and the 10th meeting of the 7th Board of Supervisors of the Company, “t About the use of raised funds to replace pre-invested raised funds for investment projects “was reviewed and approved. Before the raised funds arrive in the account, in order to ensure the smooth implementation of the raised investment projects, the company uses self-raised funds for project construction. As of February 28, 2018, the pre-invested amount of self-raised funds replaced by raised funds was RMB 1,822,749,211.07, including RMB 1,484,133,089.39 for the cold-rolled high-strength steel reconstruction project and RMB 338,616,121.68 for the hot-dip galvanizing production line project of the third cold rolling plant. During the period from March 1, 2018 to February 28, 2019, the company paid RMB 88,296,207.56 for the construction of projects with self-raised funds, of which RMB 86,709,830.40 was invested in the cold-rolled high-strength steel reconstruction project, and the third cold-rolling plant was hot-dip galvanized. The zinc production line project is 1,586,377.16 yuan (not yet replaced from the special account of raised funds). The company has transferred 86,709,830.40 yuan from the fundraising account to the general deposit account in 2020. During the period from March 1, 2019 to May 31, 2021, the company paid RMB 62,608,242.01 for the construction of the project with self-raised funds, of which RMB 50,391,999.49 was invested in the cold-rolled high-strength steel reconstruction project, and the third cold-rolling plant was hot-dip galvanized. The zinc production line project is 12,216,242.52 yuan. The company has transferred the above amount from the fundraising account to the general deposit account in 2021. (2) Status of preliminary investment and replacement of funds raised from public issuance of convertible corporate bonds After the 13th meeting of the 8th Board of Directors and the 11th meeting of the 8th Board of Supervisors of the Company, the "Proposal on Using Raised Funds to Replacing Pre-invested Raised Funds for Investment Projects and Self-raised Funds for which Issuance Fees Have Been Paid" was reviewed and approved. The company used the raised funds to replace the self-raised funds that had been invested in the investment projects with raised funds and had paid the issuance fees, and the total replacement amount was 366,180,860.17 yuan. There is no disguised change in the use of the raised funds in this replacement, and it does not affect the normal progress of the investment projects with the raised funds. The replacement time is less than 6 months from the time when the raised funds arrive in the account, which is in line with the relevant laws and regulations. Before the raised funds arrive in the account, the company has used self-raised funds to pre-invest in the raised investment projects according to the progress of the project. As of May 31, 2020, the pre-invested amount of self-raised funds replaced by raised funds 22 Bengang Steel Plates Co., Ltd. Annual Report 2021 was 365,630,860.17 yuan, including 76,278,945.59 yuan for the No. 8 casting machine project of the steelmaking plant, 119,043,290.09 yuan for the No. 5 blast furnace capacity replacement project in the ironmaking plant, and special The steel electric furnace upgrade and reconstruction project is 59,948,807.90 yuan, the CCPP power generation project is 95,098,084.16 yuan, and the steel plant No. 4-6 converter environmental protection renovation project is 15,261,732.43 yuan. As of July 6, 2020, the above- mentioned issuance fee of RMB 550,00.00 paid by the company's own funds will be replaced with the raised funds. During the period from March 1, 2019 to May 31, 2021, the company used self-raised funds to pay the raised funds to invest in the project construction amount of RMB 1,082,356,809.47. The No. 5 casting machine project is 55,364,729.08 yuan, the No. 5 blast furnace capacity replacement project in the iron plant is 628,049,033.12 yuan, the special steel electric furnace upgrading project is 253,298,156.22 yuan, the CCPP power generation project is 115,353,050.36 yuan, and the No. 4-6 converter environmental protection renovation project in the steel plant Item 30,111,840.69 yuan. The company has transferred the above amount from the fundraising account to the general deposit account in 2021. 4. Status of temporary replenishment of working capital with idle raised funds During the reporting period, according to the construction progress of the company's raised funds investment projects and the use plan of the raised funds, part of the funds raised by the company's non-public offering was temporarily idle. In accordance with the provisions of the "Administrative Measures for the Raised Funds of Listed Companies in Shenzhen Stock Exchange" and other normative documents, in line with the principle of following the principle of maximizing the interests of shareholders, and on the premise of ensuring the capital needs of the raised funds investment projects and the normal progress of the raised funds investment projects, in order to improve the use efficiency of raised funds will further reduce the company's financial costs, reduce financial expenditures, and protect the interests of investors. The company plans to use idle raised funds to temporarily supplement working capital. The use period shall not exceed 12 months from the date of deliberation and approval by the board of directors. Liquidity will save the company financial expenses. (1) Temporary replenishment of working capital with funds raised from non-public offering of stocks 1) In March 2018, the funds raised by the non-public offering of shares temporarily supplemented the working capital In 2018, the company used 530,000,000.00 yuan of idle raised funds to temporarily supplement working capital, and the period of use shall not exceed 12 months from the date of approval by the board of directors (March 13, 2018). As of March 11, 2019, the company has returned all the above-mentioned idle raised funds of RMB 530,000,000.00 used to temporarily supplement working capital to the company's special account for raised funds. 2) In March 2019, the funds raised from the non-public offering of shares temporarily supplemented working capital In 2019, the company used idle raised funds of RMB 742,000,000.00 to temporarily supplement working capital, and the period of use shall not exceed 12 months from the date of approval by the board of directors (March 21, 2019). As of March 23, 2020, the company has returned all the above-mentioned idle raised funds of RMB 742,000,000.00 used to temporarily supplement working capital to the company's special account for raised funds. 3) In March 2020, the funds raised by the non-public offering of stocks temporarily supplement the working capital The company used idle raised funds of RMB666,000,000.00 (RMB370,000,000.00 for the cold-rolled high-strength steel reconstruction project, and RMB296,000,000.00 for the hot-dip galvanizing production line project of the third cold rolling plant) to temporarily supplement the working capital. It was reviewed and approved at the ninth meeting and the eighth meeting of the eighth supervisory committee. The independent directors of the company issued a clear agreement, and the replenishment of working capital should not exceed 12 months. The sponsor of the company's non-public offering agreed to the company's use of idle raised funds to temporarily supplement working capital and issued "Guotai Junan Securities Co., Ltd.'s Verification Opinions on the Company's Use of Idle Raised Funds to Temporarily Supplement Working Capital". As of July 27, 2020, the company has returned all the above-mentioned idle raised funds of RMB 666,000,000.00 used to temporarily supplement working capital to the company's special account for raised funds. 4) In July 2020, the funds raised by the non-public offering of stocks temporarily supplement the working capital The company used idle raised funds of 666,000,000.00 yuan (370,000,000.00 yuan for the cold-rolled high-strength steel renovation project, and 296,000,000.00 yuan for the hot-dip galvanizing production line project of the third cold rolling plant) to temporarily supplement the working capital. The fourth meeting and the 12th meeting of the 8th Supervisory Committee have reviewed and approved, and the independent directors of the company have issued a clear agreement, and the time for replenishing working capital should not exceed 12 months. The sponsor of the company's non-public offering agreed to the company's use of idle raised funds to temporarily supplement working capital and issued "Guotai Junan Securities Co., Ltd.'s Verification Opinions on the Company's Use of Idle Raised Funds to Temporarily Supplement Working Capital". As of July 27, 2021, the company has returned all the above-mentioned idle raised funds of RMB 666,000,000.00 used to temporarily supplement working capital to the company's special account for raised funds. (5) In July 2021, the funds raised from the non-public offering of stocks will temporarily supplement working capital The company used idle raised funds of 604,000,000.00 yuan (320,000,000.00 yuan for the cold-rolled high-strength steel reconstruction project, and 284,000,000.00 yuan for the hot-dip galvanizing production line project of the third cold rolling plant) to 23 Bengang Steel Plates Co., Ltd. Annual Report 2021 temporarily supplement the working capital. The 19th meeting and the 17th meeting of the 8th Supervisory Committee reviewed and approved, and the independent directors of the company have expressed their clear consent, and the replenishment of working capital shall not exceed 12 months. The sponsor of the company's non-public offering agreed to the company's use of idle raised funds to temporarily supplement working capital and issued "Guotai Junan Securities Co., Ltd.'s Verification Opinions on the Company's Use of Idle Raised Funds to Temporarily Supplement Working Capital". As of December 31, 2021, the company used the idle funds raised from non-public issuance of stocks to temporarily supplement the balance of working capital of RMB 604,000,000.00. 2. Temporary replenishment of working capital with funds raised from public issuance of convertible corporate bonds (1) Public issuance of convertible corporate bonds in July 2020 to raise funds to temporarily supplement working capital The company used idle raised funds of RMB4,180,000,000.00 (RMB1,010,000,000.00 yuan for the high-grade high magnetic induction non-oriented silicon steel project, RMB220,000,000.00 for the No. 8 casting machine project of the steelmaking plant, RMB800,000,000.00 for the production capacity replacement project of the No. 5 blast furnace in the ironmaking plant, and RMB1,300,000,000.00 for special steel electric furnace upgrade and reconstruction project, RMB700,000,000.00 for CCPP power generation project, RMB150,000,000.00 for steel plant No. 4-6 converter environmental protection renovation project) Temporarily supplementing working capital matters was approved on the 14th meeting of the 8th Board of Directors of the company held on July 28, 2020, It was reviewed and approved at the 12th meeting of the 8th Supervisory Committee, and the independent directors of the company have issued a clear agreement, and the replenishment of working capital shall not exceed 12 months. The sponsor of the company's public offering of convertible corporate bonds agreed that the company will use idle raised funds to temporarily supplement working capital and issued the "Guotai Junan Securities Co., Ltd.'s Verification Opinions on the Company's Use of Idle Raised Funds to Temporarily Supplement Working Capital". As of July 27, 2021, the company has returned all the above-mentioned idle raised funds of RMB 4,180,000,000.00 used to temporarily supplement working capital to the company's special account for raised funds. (2) The public offering of convertible corporate bonds in July 2021 to raise funds to temporarily supplement working capital The company used idle raised funds of 3,030,000,000.00 yuan (1,010,000,000.00 yuan for the high-grade high magnetic induction non-oriented silicon steel project, 150,000,000.00 yuan for the No. 8 casting machine project of the steelmaking plant, 160,000,000.00 yuan for the production capacity replacement project of the No. 5 blast furnace in the ironmaking plant, and special steel electric furnace upgrade and reconstruction project. 1,000,000,000.00 yuan, CCPP power generation project 590,000,000.00 yuan, steel plant No. 4-6 converter environmental protection renovation project 120,000,000.00 yuan) Temporary replenishment of working capital The nineteenth meeting of the eighth board of directors of the company held on July 28, 2021 It was reviewed and approved at the 17th meeting of the 8th Supervisory Committee, and the independent directors of the company have issued a clear agreement, and the time for replenishing working capital should not exceed 12 months. The sponsor of the company's public offering of convertible corporate bonds agreed that the company will use idle raised funds to temporarily supplement working capital and issued the "Guotai Junan Securities Co., Ltd.'s Verification Opinions on the Company's Use of Idle Raised Funds to Temporarily Supplement Working Capital". As of December 31, 2021, the company used the idle funds raised from the public issuance of convertible corporate bonds to temporarily supplement the balance of working capital of RMB 3,030,000,000.00. 5. Cash management with idle raised funds The Company does not use idle raised funds for cash management. 6. Use of surplus raised funds The Company does not use the surplus funds of raised fund investment projects for other raised fund investment projects or non- raised fund investment projects. 7. Use of over-raised funds The company does not use over-raised funds. 8. Purpose and whereabouts of unused raised funds As of December 31, 2021, in addition to the above-mentioned "(3) Preliminary investment and replacement of raised funds investment projects", "(4) Temporary replenishment of working capital with idle raised funds", the company has raised funds. In addition to replacing and temporarily supplementing working capital with idle raised funds, the remaining raised funds are temporarily deposited in a special account for raised funds. 9. Other information on the use of raised funds There was no other situations about the use of raised funds of the company. 24 Bengang Steel Plates Co., Ltd. Annual Report 2021 (2) Fundraising commitments √Applicable □ Not applicable Whether Total Cumulativ Has the Amount Investment Benefits the item committe e Item Whether project Adjusted invested progress realized Commitment to has been d investment reaches the feasibilit total during by the end during investment projects and changed investme amount by scheduled expected y investme the of the the over-raised funds (includin nt of the end of availability benefit is changed nt (1) reporting period (3) reporting g some raised the period date achieved significa period = (2)/ (1) period changes) funds (2) ntly Commitment to Investment Projects Cold-rolled high- December strength steel No 226,580 226,580 5,225.78 192,692.07 85.04% 55,318.42 No No 31, 2017 renovation project Hot-dip galvanizing production line project December No 70,000 70,000 1,221.62 41,514.24 59.31% 18,241.1 Yes No of the third cold rolling 31, 2018 plant Not Not Repay bank loan No 100,000 100,000 0 100,000 No applicable applicable High grade high magnetic induction Not non-oriented silicon No 101,620 101,620 18 141 0.14% No applicable steel engineering project Steel Plant No. 8 October 31, Casting Machine No 33,500 33,500 6,483.67 16,348.11 48.80% 55,967.04 Yes No 2020 Project No. 5 blast furnace November capacity replacement No 96,000 96,000 63,370.81 76,693.55 79.89% 52,879.53 Yes No 30, 2020 project in ironworks Special Steel Electric Not Furnace Upgrade and No 141,600 141,600 30,018.62 41,721.96 29.46% No applicable Reconstruction Project CCPP power Not No 83,300 83,300 11,870.16 21,440.31 25.74% No generation project applicable Environmental protection renovation December Not project of converter No 19,900 19,900 3,011.18 4,723.48 23.74% No 31, 2020 applicable No. 4-6 in steelmaking plant Not Repay bank loan No 200,000 200,000 0 200,000 100.00% No applicable Subtotal of Committed 121,219.8 182,406.0 -- 1,072,500 1,072,500 695,274.72 -- -- -- -- Investment Projects 4 9 Over-raised funds are invested in Not None No applicable 121,219.8 182,406.0 Total -- 1,072,500 1,072,500 695,274.72 -- -- -- -- 4 9 Situations and reasons The market environment has undergone major changes. The cold-rolled high-strength steel reconstruction project for not reaching the and the hot-dip galvanizing production line project of the third cold rolling plant have basically reached their planned progress or production capacity. During the reporting period, other projects did not meet the planned progress or expected expected benefits (by income. specific projects) Status of description of material changes in project feasibility None Not applicable Status of amount, purpose and progress of use of over-raised funds 25 Bengang Steel Plates Co., Ltd. Annual Report 2021 Not applicable Status of changes in Implementation Locations of Raised Funds Investment Projects Not applicable A Status of adjustment of the Implementation Method of Raised Funds for Investment Projects Status of preliminary investment and replacement of raised funds for Applicable investment projects For details, please refer to the special report III. (3) Status of temporary replenishment of working capital with idle Applicable raised funds For details, please refer to the special report III. (4) Applicable Reasons and amount for the balance of raised funds in project implementation There was no balance of raised funds for project implementation this year. Use and whereabouts of unused raised funds For details, please refer to the special report III. (8) Problems or other situations in the use and disclosure of raised funds There is no problem or otherwise (3) The situation for raised funds change project □ Applicable √ Not applicable During the reporting period, the company did not have any changes in the fundraising project. Ⅷ. Significant Assets and Equity Sold in Reporting Period 1. Significant Assets Sold □ Applicable √ Not applicable There was no significant asset sold during the reporting period. 2. Substantial Equity Sold □ Applicable √ Not applicable Ⅸ. Analysis on Main Subsidiaries and Share Participating Companies √ Applicable □ Not applicable Main subsidiaries and the joint-stock companies influencing over 10% net profit of the Company Unit: Yuan Company Main Registered Operating Operating Company Name Total assets Net assets Net Profit type business capital income profit Bengang Processing Puxiang Cool 4,104,855,060 2,167,667,196 11,529,193,71 296,055,419.5 143,131,193.3 Subsidiary and sales 1,920,000,000 Rolling Steel .02 .95 5.01 9 9 of steel Sheet Co., Ltd. Acquirement and disposal of subsidiaries during the reporting period □ Applicable √ Not applicable Illustration of main joint-stock companies None Ⅹ. Structure Entities controlled by the Company □ Applicable √ Not applicable 26 Bengang Steel Plates Co., Ltd. Annual Report 2021 XI. Prospect for Future Development of the Company (1) The development trend of the industry and the market competition pattern the company faces The year 2022 is a crucial year for the country to implement the "14th Five-Year Plan", and it is also a crucial year for the steel industry to achieve high-quality development. From the perspective of the overall external environment, at the end of 2021, the shock wave of the new coronavirus variant strain Omicron swept the world, adding more variables to the world economic situation. Under the background of the national "dual carbon" goal, the steel industry has entered a critical period of high-quality development. Green and low-carbon, intelligent manufacturing, etc. have brought more severe challenges and disruptive changes, and market uncertainty has further increased. At the same time, China's economy has a solid foundation and strong resilience, and will remain a long-term improvement fundamental in the future. The National Development and Reform Commission and the Ministry of Industry and Information Technology issued the "Implementation Plan on Reinvigorating the Operation of the Industrial Economy and Promoting the High-quality Development of the Industry", which proposed policies and measures such as "vigorously increasing the effective supply of the bulk raw material market", "tapping the demand potential and expanding the market space of the industrial economy", which is conducive to guiding Market expectations and create new opportunities for the development of iron and steel enterprises. (2) Company development strategy The overall work idea for 2022: Guided by General Secretary Xi Jinping's new era of socialism with Chinese characteristics,study and implement the spirit of the 19th National Congress of the Communist Party of China and the previous 19th plenary sessions in-depth , adhere to the two "consistent" requirements, adhere to the focus on efficiency, committed to becoming a better and stronger listed company. On the basis of normalized epidemic prevention and control, we will make every effort to promote the key work of "1+2+3", lead development with reform, achieve the future with hard work, and make unremitting efforts to build a high-quality sheet metal base with high international competitiveness led by automobile sheets. (3) Business plan Production and operation goals in 2022: Strive to complete 10.71 million tons of pig iron, 11.47 million tons of crude steel, 14.78 million tons of hot-rolled sheets, 6.4 million tons of cold-rolled sheets, and 340,000 tons of special steel, and achieve "three zeros" in safety production. In order to achieve the above goals, we will focus on the following aspects: 1. Focus on efficiency and enhance the competitiveness of the industry 2. Strengthen safety management and realize energy-saving and green development 3. Deepen the linkage of "sales, research and production" and improve the ability of efficiency 4. Strengthen the leadership of the technical system and build a strong digital intelligent enterprise 5. Comprehensively deepen the reform and continuously improve the efficiency of governance 6. Strengthen the Communist Party's leadership over enterprises and provide a strong political guarantee (4) Maintain the current business and complete the funding arrangements required for the investment projects under construction The company will use its own funds and bank loans to meet the funds required for production and operation and technological transformation. (5) Possible risks 1. Environmental risks Risk: The state has continuously strengthened the supervision and enforcement of environmental pollution, and the pollutant discharge standards have been continuously improved. The public's awareness of environmental protection and the requirements of environmental protection for enterprises increase continuous. enterprises belong to Iron and steel industry are facing huge environmental protection pressure. Reduction of carbon is imperative for the steel industry, according to the goal of "emission peak" and "carbon neutrality" stated by The China Iron and Steel Association, and "14th Five-Year" Industrial Green Development Plan issued by Ministry of Industry and Information Technology. Response measures: Adhere to support Xi Jinping's thought on ecological civilization, focus on improving the quality of the ecological environment, conscientiously implement the decisions and arrangements of the Party Central Committee and the State Council, adhere to the concept of "ecological priority and green development", make every effort to promote pollution control, focus on source control, and consolidate the environment Protect the basic work, continue to improve the environmental protection management system, and continuously improve the company's environmental protection performance level. At the same time, optimize the process structure route, further improve the recycling rate of various resources, and increase the proportion of scrap steel; pay attention to various national environmental protection policies, improve enterprise environmental protection standards to meet and appropriately exceed national standards; strengthen the company's self-discharge of various pollution sources Supervision and 27 Bengang Steel Plates Co., Ltd. Annual Report 2021 inspection, strengthen the environmental protection awareness of all employees; accelerate the construction progress of the identified environmental protection projects to ensure that the national environmental protection requirements are met. 2. Energy Risk Risk: At present, the contradiction between global energy supply and demand has intensified, and prices of overseas fossil energy have risen sharply. With the implementation of this round of "double control of energy consumption", various provinces have cut off electricity, limited production, and staggered labor. Affected by the dual control of energy consumption and the shortage of power supply, the capacity utilization rate continued to decline, and the output declined. Due to the characteristics of high load capacity and high emissions, the iron and steel industry is superior to other companies in its power cutoff. Companies need to solve energy security urgently, reduce energy risks, and ensure normal production operations. Response measures: Continuously improve the production process, use off-peak electricity, reduce the energy consumption of main processes, improve production efficiency, and monitor key energy indicators in real time. Effectively use our own energy to improve the utilization rate of generator sets, and actively build a clean, low- carbon, safe and effective energy system, to help energy structure adjustment and high-quality development of carbon peak and carbon neutrality. Ensure energy security while further improving energy efficiency. 3. Market risk Risks: Affected by the repeated changes in the epidemic, high inflation, and the withdrawal of the Fed's loose monetary policy, the global economic operation is facing greater uncertainty. Coupled with the tightening of domestic policies such as "housing, not speculating," and under the multiple influences of shrinking market consumer demand and supply shocks, the growth momentum of consumption and investment has weakened, the supply chain has been blocked, and the operating rates of downstream infrastructure and real estate have fallen across the board. Steel market demand slowed down slightly. Response measures: The company will continue to consolidate the lean production system, focus on customers, adapt to and lead downstream demand, focus on product structure adjustment, focus on breaking through the production and sales of high-profitability and high-value-added steel varieties, and increase the proportion of strategic products and regional markets, Market segment pricing power to deal with the risk of industry homogeneous competition. 4. Foreign trade risk Risks: Affected by the aftermath of the century-old blockage of the Suez Canal, all ports were severely congested, and the cost of sea transportation increased significantly; secondly, the operation of sea transportation was not smooth, and there was a gap in transportation capacity, especially the tension between supply and demand of sea transportation; thirdly, all ports across the country implemented epidemic prevention and control measures. Controlling the whole process of closed-loop management, under strict epidemic prevention requirements, the cost of port epidemic prevention has suddenly increased, and the operating cost has increased significantly. The company still needs to actively respond to ensure that the imported ore is stored in a timely manner to prevent normal production and operation from being affected, resulting in economic losses and adverse effects on the company. Response measures: Continuously optimize the logistics system and management methods; at the same time optimize the raw material supply structure, strengthen resource utilization, comprehensively consider various factors affecting logistics costs, and make logistics route optimization decisions; build better cooperative relationships with upstream and downstream enterprises, Actively sign long-term transportation contracts with liner companies to ensure long- term and stable supply chain services. XII. Researches, visits and interviews received in this reporting period □ Applicable √ Not applicable During the reporting period, the Company did not receive any research, communication, interviews and other activities. 28 Bengang Steel Plates Co., Ltd. Annual Report 2021 Ⅳ. Corporate Governance I. Basic Situation of Corporate Governance During the reporting period, the Company has been following the laws, regulations and documents such as the Company Law, Securities Law, Governance Guidelines for Listed Companies, Guidelines for the Normative Operation of Listed Companies on the Shenzhen Stock Exchange and Articles of Association. Based on the actual situation of the company, the Company has been continuously improving the corporate governance structure and internal control system of the company, improves the governance level, and promotes the company's standardized operation. As of the end of the reporting period, the actual situation of corporate governance meets the requirements of the regulatory documents related to the governance of listed companies. 1. Shareholders and Shareholders' General Meeting: The company has formulated the "Rules of Procedures for General Meetings of Shareholders" in strict accordance with the "Company Law", "Rules for Shareholders' General Meetings of Listed Companies" and the company's "Articles of Association" to ensure the exercise of the rights of the company's shareholders and the standard operation of the shareholders' meeting. The company's previous shareholder meetings have provided two attendance channels, on-site voting and online voting, to facilitate shareholders. Involving major issues that affect the interests of small and medium investors, the company counts the votes of small and medium investors individually and discloses them in a timely manner to ensure that all shareholders enjoy equal status and fully exercise their rights. And by hiring lawyers to witness and ensure the legal compliance of the convening, convening and voting procedures of the meeting, the legitimate rights and interests of the company and shareholders have been safeguarded. 2. Directors and the board of directors: the company's board of directors has clear responsibilities, and the company's directors exercise their powers in strict accordance with the "Articles of Association", "Rules of Procedures of the Company's Board of Directors", "Company Independent Directors Work System" and other related systems, perform their duties with integrity and diligence, and safeguard the legitimate rights and interests of the company and shareholders. The company's board of directors has four special committees, namely audit, strategy, nomination, remuneration and assessment, each of which performs its own responsibilities and functions, and can carry out its work in accordance with the rules of procedure of each special committee. During the reporting period, the convening and holding procedures of the company's board of directors complied with the “Company Law”, “Articles of Association” and “Rules of Procedure of the Board of Directors” and other relevant laws and regulations. 3. Supervisors and Board of Supervisors: The company's supervisors can earnestly perform their duties, independently and effectively perform supervision and inspection functions. The company's supervisors attend shareholders' meetings, attend board meetings as non-voting delegates, regularly inspect the company's legal operations and financial conditions, and issue opinions from the board of supervisors. Supervise the company's finances, the performance of the company's directors and senior management personnel, and the capital exchanges with related parties, so as to safeguard the legal rights and interests of the company and shareholders. The number and structure of the board of supervisors meet the requirements of laws and regulations, and its convening and convening are strictly implemented in accordance with the "Articles of Association" and "Rules of Procedure of the Board of Supervisors" to ensure that the board of supervisors effectively performs its duties. 4. Controlling shareholders and the company: The company has independent and complete business and independent management capabilities, and is independent of the controlling shareholders and actual controllers in terms of business, personnel, assets, institutions, and finances; The company's board of directors, board of supervisors and other internal institutions operate independently; The company's major decisions are made by the board of directors or the general meeting of shareholders in accordance with the law. Controlling shareholders and actual controllers can strictly regulate their own behavior. There is no direct or indirect intervention in the company's decision-making and 29 Bengang Steel Plates Co., Ltd. Annual Report 2021 production and operation activities beyond the general meeting of shareholders, nor does it harm the interests of the company and other shareholders. 5. Information disclosure and transparency: The company strictly complies with the requirements of the "Shenzhen Stock Exchange Stock Listing Rules" and the "Information Disclosure Management System" and other requirements, truthful, accurate, and complete, without false records, misleading statements or major omissions in performing information disclosure obligation, "China Securities Journal", "Securities Times", "Hong Kong Commercial Daily" and www.cninfo.com.cn are the designated media for company information disclosure. The company publishes regular reports and temporary announcements through the above-mentioned information disclosure media to ensure that all shareholders of the company can obtain information with equal opportunities. 6. Investor relationship management: The company continues to strengthen communication with investors to deepen investors' understanding and recognition of the company. The company appoints the secretary of the board of directors as the person in charge of investor relations management, and the office of the board of directors is the organization that undertakes the daily work of investor relations management. The company makes full use of on-site meetings, dedicated telephone calls, investor interaction platforms and other methods to communicate with the company's shareholders, listens carefully to the opinions and suggestions of investors on the company's strategic development and production and operation, and has established a good communication mechanism with investors, which enhances investors' understanding and investment confidence in the company. Whether there exists any difference in compliance with corporate governance, PRC Company Law and relevant provisions of CSRC □ Yes √ No There exists no difference in compliance with corporate governance, PRC Company Law and relevant provisions of CSRC. II. Explanation on Structural Independence of the Company on Business, Personnel, Assets, Organization and Finance from the Controlling Shareholder and Actual Controller The Company is separated from the controlling shareholder in aspects of business, personnel, assets, organization and finance, 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, labor and 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 general manager, vice general manager, secretary of Board of Directors, etc. get salary from the Company, and none of them hold the important position other than a director in shareholder. (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 structure and working function are totally independent. (5) In finance: The company has independent financial management department, the accounting and financial management system where are complete and operated independently, and has bank account and pay taxes independently. III. Competition Situations of the Industry √ Applicable □ Not applicable Question Types of Compan Company Cause Solution Progress and follow-up 30 Bengang Steel Plates Co., Ltd. Annual Report 2021 type affiliations y name Type plans with listed companies Based on the principle of In 2021, the benefiting the company's original development of Bengang actual controller, Steel and safeguarding Liaoning State- the interests of owned Assets shareholders, especially Supervision and the interests of small and Ansteel Group Administration medium shareholders, has made AnSteel Commission, Ansteel Group will Industry Controlling commitments Co., Other transfered its 51% comprehensively use competition shareholder to avoid Ltd. stakes in Bengang various methods such as Industry Group to Ansteel asset restructuring, competition.. Group for free, business adjustment, and and Ansteel Group entrusted management to will become the steadily promote the company's indirect integration of related controlling businesses to solve the shareholder problem of horizontal competition. IV. Annual General Meeting and Extraordinary Shareholders’ Meetings in the Reporting Period 1. Annual General Meeting Investor Date of Index of information Sessions Type Meeting Date participation ratio disclosure disclosure Annual Annual Shareholders Announcement No.: General 80.56% May 27, 2021 May 28,2021 General Meeting of 2020 2020 Meeting Announcement on Resolutions of First First Extraordinary Extraordinary Extraordinary Shareholders General General 66.31% Sep 15,2021 Sep 16,2021 Shareholders Meeting of 2021 Meeting General Meeting of 2021 Announcement on Resolutions of Second Extraordinary Extraordinary Second Shareholders General General 63.36% Dec 07,2021 Dec 08,2021 Extraordinary Meeting of 2021 Meeting Shareholders General Meeting of 2021 Announcement on Resolutions of Third Third Extraordinary Extraordinary Extraordinary Shareholders General General 63.70% Dec 24,2021 Dec 25,2021 Shareholders Meeting of 2021 Meeting General Meeting of 2021 2. Request for Extraordinary General Meeting by Preferred Stockholders Whose Voting Rights Restore □ Applicable √ Not applicable Ⅴ. Status of Directors, Supervisors, Senior Executives and Employees 1. Basic situation Name Position Office Sex Age Starting Expiry Shares Shares Shares Other Shares Reasons 31 Bengang Steel Plates Co., Ltd. Annual Report 2021 status date date of held at increased decreased increase held at for of office office the during the during the / the increase term term year- reporting reporting decrease periodr- or begin period period end decrease of shares Dec 07, May 16, Huo Gang Chairman In office Male 48 2021 2022 Director, Wang Deputy Nov 18, May 16, In office Male 47 Shiyou General 2021 2022 Manager Dec 25, May 16, Niu Li Director In office Male 53 2021 2022 Director, Deputy May 27, May 16, Lin Dong In office Male 51 General 2021 2022 Manager May 27, May 16, Han Mei Director In office Female 52 2021 2022 Director, Gao Dec 07, May 16, Secretary of In office Male 47 Desheng 2021 2022 the Board Zhang Independent May 16, May 16, In office Female 66 Suxun Director 2019 2022 Yuan Independent May 20, May 16, In office Male 40 Zhizhu Director 2020 2022 Zhong Independent May 27, May 16, In office Female 65 Tianli Director 2021 2022 Chairman of May 27, May 16, Cheng Bin Supervisory In office Male 58 2021 2022 Committee Zhao May 27, May 16, Supervisor In office Female 37 Zhonghua 2021 2022 Dec 07, May 16, Lu Weijun Supervisor In office Male 46 2021 2022 Zhang Jan 26, May 16, Supervisor In office Male 49 Yanlong 2014 2022 Zhao Jun 26, May 16, Supervisor In office Male 44 Xingtao 2019 2022 Deputy Yang Apr 16, May 16, General In office Male 57 Xiaofang 2021 2022 Manager Wang Chief Nov 18, May 16, In office Male 52 Donghui accountant 2021 2022 Deputy Nov 18, May 16, Jin Tao General In office Male 51 2021 2022 Manager Leave Mar 14, Nov 18, Gao Lie Chairman Male 54 office 2019 2021 Jiang Deputy Leave May 27, Nov 18, Male 56 Guangwei Chairman office 2021 2021 Deputy Leave Jun 03, May 27, Cao Aimin Male 54 Chairman office 2010 2021 Director, Shen Leave May 16, May 27, General Male 53 Qiang office 2019 2021 Manager 32 Bengang Steel Plates Co., Ltd. Annual Report 2021 Huang Leave May 24, May 28, Director Male 58 Xinghua office 2018 2021 Zhao Independent Leave May 21, May 27, Male 61 Xinan Director office 2015 2021 Leave Feb 19, May 27, Li Lin Supervisor Female 53 office 2014 2021 Leave Mar 14, Sep 13, Li Xiaowei Supervisor Male 46 office 2019 2021 Deputy Leave Apr 26, Nov 18, Chen Xin General Male 51 office 2021 2021 Manager Deputy Bao Leave Dec 28, Apr 26, General Male 58 Mingwei office 2012 2021 Manager Deputy Wang Leave Jan 26, Apr 26, General Male 56 Fengmin office 2014 2021 Manager Chief Cong Leave Apr 26, Sep 13, Financial Female 51 Yajuan office 2021 2021 Officer During the reporting period, is there any resignation of directors and supervisors and dismissal of senior management personnel in the report period. □Yes √ No Changes in directors, supervisors and senior management of the company √Applicable □Not applicable Name Position Office status Date Reason Shen Qiang Director Leave office Apr 26, 2021 Voluntary turnover Bao Mingwei Deputy General Manager Leave office Apr 26, 2021 Job change Wang Fengmin Deputy General Manager Leave office Apr 26, 2021 Job change Zhao Xinan Independent Director Expiry of term May 27, 2021 Leaving office after expiry of term Cao Aimin Deputy Chairman Leave office May 27, 2021 Voluntary turnover Huang Xinghua Director Leave office May 27, 2021 Voluntary turnover Cong Yajuan Chief Financial Officer Leave office Sep 13, 2021 Job change Lin Dong General Manager Appoint and remove Nov 18, 2021 Job change Chen Xin Deputy General Manager Leave office Nov 18, 2021 Job change Han Mei Deputy Chairman Appoint and remove Nov 18, 2021 Voluntary turnover Gao Lie Chairman Leave office Nov 18, 2021 Voluntary turnover Jiang Guangwei Deputy Chairman Leave office Nov 18, 2021 Voluntary turnover Wang Donghui Director Appoint and remove Nov 18, 2021 Voluntary turnover Li Xiaowei Director Leave office Sep 13, 2021 Voluntary turnover Chairman of Supervisory Han Mei Appoint and remove Apr 26, 2021 Voluntary turnover Committee Li Lin supervisor Leave office Apr 26, 2021 Voluntary turnover Huo Gang Deputy General Manager Leave office Apr 26, 2021 Job change 2. Posts holding Work experience, professional background and currently mainly responsibilities of Directors, Supervisors and Senior Executives in current office Huo Gang, male, 48 years old, Ph. D., professor-researcher-level senior engineer. He successively served as the director of the steel rolling branch of Benxi Iron and Steel Cold Rolling Plant; the 33 Bengang Steel Plates Co., Ltd. Annual Report 2021 deputy director of the technology department of Benxi Iron and Steel No. 2 Cold Rolling Plant; the deputy director of the technology department and the director of the inspection laboratory, the director of the production department, the assistant to the general manager, the deputy general manager, General Manager; Secretary of the Party Committee and Executive Deputy Director and Director of the Third Cold Rolling Plant of Benxi Steel Plate Company; Deputy General Manager and Director of the Cold Rolling Plant of Bengang Steel Plate Co., Ltd.; Secretary of the Party Committee, Chairman and Chairman of the Labor Union of Benxi Iron and Steel International Trade Company. He is currently the Secretary of the Party Committee and Chairman of Bengang Steel Plate Co., ltd., and Chairman of Bengang Posco Co., ltd. Wang Shiyou, male, 47 years old, master, senior engineer. He successively served as the director of the thermal workshop and the secretary of the party branch of the iron-making plant of Bengang Steel Plate Company, the deputy director of the new No. 1 blast furnace workshop, the director of the fifth blast furnace workshop and the secretary of the party branch, the chief of the production section, the chief of the planning section, and the deputy director; Benxi Steel Director of Standard Management of the Manufacturing Department of the Plate Company; Director of the Iron-making Plant of Benxi Iron and Steel Beiying Company; Secretary of the Party Committee and Director of the Iron-making General Plant of Benxi Iron and Steel Plate Company. He is currently the deputy secretary of the party committee, director and deputy general manager of Bengang Steel Plate Co., Ltd. (temporarily responsible for overall production and operation). Niu Li, male, 54 years old, master, engineer. He successively served as the director of the office of Benxi Iron and Steel Group Corporation, the secretary of the Party Committee of the organization; the head of the Legal Affairs Department of Benxi Iron and Steel Group Corporation, the secretary of the Party Committee of the organization; the deputy secretary of the Disciplinary Committee of Benxi Iron and Steel Group Corporation, the director of the Supervision Department, the director of the Office of the Leading Group of the Party Committee Inspection Work, and the secretary of the Disciplinary Committee of Benxi Iron and Steel Company He is currently the deputy secretary of the party committee, employee director, head of the preparatory team of the Disciplinary Committee and chairman of the labor union of Bengang Steel Plate Co., Ltd.. Lin Dong, male, 51 years old, doctoral student, professor-researcher-level senior engineer. He successively served as deputy director and chief engineer, factory director and deputy secretary of the party committee of the steelmaking plant of Benxi Iron and Steel Sheets Co., Ltd.; deputy head of the steelmaking material improvement group of Benxi Iron and Steel; manager of the extension project department of the industrial chain of Benxi Iron and Steel; Benxi Iron and Steel Plate Co., Ltd. Director of the company's technology center; director of the quality management center of Bengang Steel Plate Co., Ltd.; director, deputy secretary of the party committee, general manager and director of the manufacturing department of Bengang Steel Plate Co., Ltd. He is currently the director and deputy general manager of Bengang Steel Plate Co., Ltd. Han Mei, female, 52 years old, Bachelor, senior accountant. She successively served as the deputy director of the finance department of Bengang Steel Plate Co., Ltd.; the deputy director of the audit department of Benxi Iron and Steel Group Co., Ltd. and the director of the supervisory board management department, the deputy chairman of the third board of supervisors, the supervisor of Benxi Iron and Steel Group Finance Company, and the auditor of Benxi Iron and Steel (Group) Co., Ltd. Director of the Department; Director of the Audit Department of Bengang Group Co., Ltd., Chairman and Vice Chairman of the Supervisory Committee of Bengang Steel Plate Co., Ltd. She is currently the Deputy Chief Accountant of Benxi Iron and Steel Group Corporation, General Manager of the Finance Department of Benxi Iron and Steel Group, and Director of Benxi Iron and Steel Plate Company. Gao Desheng, male, 47 years old, master, senior economist. He successively served as the acting director of the Business Planning Division of the Operation Improvement Department of Benxi Iron and Steel Group Corporation, the director of the Property Rights Management Division of the Operation Improvement Department of Benxi Iron and Steel Group Corporation, a director of the Automobile Transportation Company, the vice chairman of the First Supervisory Committee, and the secretary of the board of directors of the Benxi Iron and Steel Plate Company. He is currently 34 Bengang Steel Plates Co., Ltd. Annual Report 2021 the director and board secretary of Bengang Steel Plate Co., Ltd. Zhang Suxun Female, 66 years old, bachelor degree, professor. She has served as a teacher at the Business School of Liaoning University; now she is retired. Yuan Zhizhu, male, 40 years old, Ph.D., associate professor of accounting at Northeastern University, master tutor, non-practicing member of Chinese certified public accountants. He has served as a lecturer in the School of Business Administration of Northeastern University; he is currently the director of the Accounting Department of the School of Business Administration of Northeastern University, and serves as a director of the Liaoning Accounting and Abacus Mental Arithmetic Society and a director of the Liaoning Auditing Society. Zhong Tianli, Female, born in 1965, professor (doctoral supervisor) of Northeastern University. She successively served as the deputy dean of the School of Business Administration of Northeastern University; the dean of the School of Basic Studies of Northeastern University and the director of the Institute of Financial Management of the Business School of Northeastern University; she is currently a professor of the Accounting Department of the School of Business Administration of Northeastern University. Brief introduction of the members of the supervisory board: Cheng Bin, male, 58 years old, university degree, senior engineer. He successively served as the director of the material supply department of Benxi Iron and Steel; the vice chairman of the board, the secretary of the party committee and the chairman of the labor union, the secretary of the Disciplinary Committee, and the deputy manager of Bengang International Trade Co., Ltd.; the director of the customer service department of the sales department of Bengang Steel Plate Co., Ltd.; Secretary of the Party Committee and Manager of the Center; Secretary of the Party Committee and Deputy Director of the Hot Rolling Plant of Bengang Steel Plate Co., Ltd., Ltd.; Director of the Audit Department of Bengang Group; currently Chief Auditor of Bengang Group Corporation and Chairman of the Supervisory Board of Bengang Steel Plate Co., Ltd. Zhao Zhonghua, female, 37 years old, master, senior accountant. She successively served as the assistant to the director of the finance department of Bengang Group Co., Ltd.; the deputy manager of Bengang Group Finance Co., Ltd.; the director of the finance department of Bengang Steel Plate Co., Ltd.; and the deputy director of the finance department of Bengang Group Co., Ltd. She is currently the Supervisor and Deputy Manager of the Finance Department of Bengang Steel Plate Co., Ltd. Lu Weijun, male, 46 years old, master, senior accountant. He successively served as the chief of the cost section of the finance department of Benxi Iron and Steel (Group) Construction Co., Ltd.; the chief business engineer of the audit department of Benxi Iron and Steel Sheet Co., Ltd.; the chief business engineer of the audit department of Benxi Iron and Steel Group Corporation. He is currently the Supervisor and Deputy Manager of the Finance Department of Bengang Steel Plate Co., Ltd. Zhang Yanlong Male, 44 years old, university degree, senior engineer. He successively served as production director of steelmaking workshop of Bengang Steel Plate Co., Ltd. steelmaking plant; deputy section chief of technical quality section of Bengang Steel Plate Co., Ltd. steelmaking plant; director of steelmaking workshop of Bengang Steel Plate Co., Ltd. steelmaking plant; Bengang Steel Plate Co., Ltd. Chief of the production section of the company's steelmaking plant; assistant to the director of the steelmaking plant of Bengang Steel Plate Co., Ltd.; currently deputy director of the steelmaking plant of Bengang Steel Plate Co., Ltd.; supervisor of Bengang Steel Plate Co., Ltd. Zhao Xingtao Male, 50 years old, university degree, master of engineering, senior engineer. He has successively served as Deputy Chief Engineer of Bengang Posco Company; Deputy General Manager of Bengang Posco Company; Deputy Director of Cold Rolling Plant of Bengang Steel Sheet Co., Ltd.; Secretary of Party Committee and Chairman of Labor Union of Bengang Steel Sheet Co., Ltd. Cold Rolling Plant; currently Bengang Steel Co., Ltd. Deputy Secretary of the Party 35 Bengang Steel Plates Co., Ltd. Annual Report 2021 Committee of the Cold Rolling General Plant of Plate Co., Ltd., leader of the Disciplinary Committee Preparation Team, Chairman of the Labor Union, and Supervisor of Bengang Steel Plate Co., Ltd. Profile of non-director senior management: Yang Xiaofang, male, 58 years old, doctoral student, senior engineer. He successively served as deputy director of Bengang Cold Rolling Plant; deputy general manager of Bengang Posco Company; director of cold rolling plant of Bengang Steel Plate Co., Ltd.; manager of asset management company; chairman and manager of Liaoning Henderson asset management company; Executive Deputy Director of No. 3 Cold Rolling Plant of Plate Co., Ltd.; Deputy General Manager and Head of Equipment Department of Bengang Steel Plate Co., Ltd. He is currently the Deputy General Manager of Bengang Steel Plate Co., Ltd. Wang Donghui, male, 52 years old, bachelor's degree, senior accountant. He successively served as the director of the general division of the finance department of Benxi Iron and Steel Group; the director and chief financial officer of the Mechanism Company of Benxi Iron and Steel Company; the deputy general manager of the finance company of Benxi Iron and Steel Group; the deputy director of the operation and management department of Benxi Iron and Steel Group; , Director of Operation Improvement Department; Vice Minister of Finance Department of Benxi Iron and Steel Group Corporation and Chief Accountant of Beiying Company; Director of Finance Department of Benxi Iron and Steel Group Corporation; Director of Bengang Steel Plate Co., Ltd. He is currently the chief accountant of Bengang Steel Plate Co., Ltd. and director of Bengang Posco Company. Jing Tao, male, 51 years old, master, senior engineer. He successively served as the director of the finishing workshop and the deputy secretary of the Party branch, the chief of the technical quality section and the secretary of the Party branch, the assistant to the factory manager, and the deputy director of the hot rolling mill of Benxi Steel Sheet Company; Deputy Director, Manager of Packaging Project Department, Manager of Packaging Company; Director of Hot Rolling Plant of Bengang Steel Plate Co., Ltd. Secretary of Party Committee and Chairman of Labor Union and Vice President of Bengang Plate Company Technology Research Institute; Minister of Science and Technology Innovation Department of Benxi Iron and Steel Group Company. He is currently the Deputy General Manager of Bengang Steel Plate Co., Ltd. Positions in shareholder units √ Applicable □ Not applicable Does he /she Expiry receive Names of the Names of the Titles engaged in the Starting date of date of remuneration persons in office shareholders shareholders office term office or allowance term from the shareholder Han Mei Bengang Group Co., Deputy Chief Accountant, Feb 01, 2021 Yes Ltd General Manager of Finance Department Cheng Bin Bengang Group Co., Chief Auditor Feb 01, 2021 Yes Ltd Description of the position in the None shareholder Posts holding in other companies √Applicable □Not applicable Does he /she Titles engaged Expiry receive Names of the Names of the other Starting date of in other date of remuneration or persons in office companies office term companies office term allowance from the shareholder Bengang POSCO Cold- No Huo Gang Chairman Nov 01, 2021 rolled Sheet Co., Ltd. 36 Bengang Steel Plates Co., Ltd. Annual Report 2021 Chairman of the Dongbei Special Steel Han Mei Supervisory Feb 01, 2021 No Group Co., Ltd. Board Description of the position in other None companies Punishment by the security’s regulatory authorities in last three years □ Applicable √ Not applicable 3. Remuneration to Directors, Supervisors and Senior Executives Decision-making procedures, basis of recognition and actual payment of the remuneration to Directors, Supervisors and Senior Executives Decision making procedures 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. According to performance assessment criteria and procedures, the Remuneration and Assessment Committee undertakes assessment on the Directors and Senior Executives; 3. Remuneration amounts and ways of rewards will be proposed according to the assessment and remuneration policies for Directors, Supervisors and Senior 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. Remunerations are distributed based on the assessment results and remuneration policies. Actual payment of the remuneration Remuneration is paid on monthly basis according to the remuneration allocation policies. Remuneration of Directors, Supervisors and Senior Executives during the reporting period Unit: in the thousand yuan Total Whether receive remuneratio remuneration in Name Position Sex Age Office status n received the Company's from the related parties shareholder Huo Gang Chairman Male 48 In office 18.45 Yes Wang Shiyou Director, Deputy General Manager Male 47 In office 40.2 No Niu Li Director Male 53 In office 0.82 Yes Lin Dong Director, Deputy General Manager Male 51 In office 36.96 No Han Mei Director Female 52 In office Yes Gao Desheng Director, Secretary of the Board Male 47 In office 30.12 Yes Zhang Suxun Independent Director Female 66 In office 5 No Yuan Zhizhu Independent Director Male 40 In office 5 No Zhong Tianli Independent Director Female 65 In office No Cheng Bin Chairman of Supervisory Committee Male 58 In office Yes Zhao Zhonghua Supervisor Female 37 In office Yes Lu Weijun Supervisor Male 46 In office Yes Zhang Yanlong Supervisor Male 49 In office 34.92 No Zhao Xingtao Supervisor Male 44 In office 33 No Yang Xiaofang Deputy General Manager Male 57 In office 27.18 Yes Wang Donghui Chief accountant Male 52 In office 6.16 Yes Jin Tao Deputy General Manager Male 51 In office 6.18 Yes Gao Lie Chairman Male 54 Leaving office Yes Jiang Guangwei Deputy Chairman Male 56 Leaving office Yes Cao Aimin Deputy Chairman Male 54 Leaving office Yes 37 Bengang Steel Plates Co., Ltd. Annual Report 2021 Shen Qiang Director, General Manager Male 53 Leaving office 5.8 Yes Huang Xinghua Director Male 58 Leaving office Yes Zhao Xinan Independent Director Male 61 Leaving office 5 No Li Lin Supervisor Female 53 Leaving office 12 No Li Xiaowei Supervisor Male 46 Leaving office Yes Chen Xin Deputy General Manager Male 51 Leaving office 29.1 Yes Bao Mingwei Deputy General Manager Male 58 Leaving office 2.32 Yes Wang Fengmin Deputy General Manager Male 56 Leaving office 2.04 Yes Cong Yajuan Chief Financial Officer Female 51 Leaving office 21.84 Yes Total -- -- -- -- 322.09 -- Ⅵ. Duty fulfillment of directors during the reporting period 1. The situation of Board of Directors during the Reporting Period Sessions Meeting Date Date of disclosure Index of information disclosure Announcement on Resolutions 17th Eighth plenary session April 26, 2021 April 28, 2021 of 17th Eighth plenary session Announcement on Resolutions 18th Eighth plenary session May 27, 2021 May 28, 2021 of 18th Eighth plenary session Announcement on Resolutions 19th Eighth plenary session July 28, 2021 July 29, 2021 of 19th Eighth plenary session Announcement on Resolutions 20th Eighth plenary session August 25, 2021 August 26, 2021 of 20th Eighth plenary session Announcement on Resolutions 21st Eighth plenary session September 13, 2021 September 14, 2021 of 21st Eighth plenary session Announcement on Resolutions 22nd Eighth plenary session October 22, 2021 October 23, 2021 of 22nd Eighth plenary session Announcement on Resolutions 23rd Eighth plenary session November 18, 2021 November 19, 2021 of 23rd Eighth plenary session Announcement on Resolutions 24th Eighth plenary session December 7, 2021 December 7, 2021 of 24th Eighth plenary session 2. The situation of directors attending the BOD and shareholders meeting Attendance of Directors at Board of Directors and General Meetings of Shareholders Number of Board Failure to Number of Number meetings personally Number of meetings Number of of general necessary to be Number of attend board Director name spot attended by attendances by meetings attended absences meetings attendances Communicatio representative to be during the successively n attended reporting twice (Yes/No) period Huo Gang 1 1 0 0 0 No 2 Wang Shiyou 1 1 0 0 0 No 2 Niu Li 0 0 0 0 0 No 0 Lin Dong 7 2 5 0 0 No 4 Han Mei 7 2 5 0 0 No 4 Gao Desheng 1 1 0 0 0 No 2 38 Bengang Steel Plates Co., Ltd. Annual Report 2021 Zhang Suxun 8 3 5 0 0 No 4 Yuan Zhizhu 8 3 5 0 0 No 4 Zhong Tianli 7 2 5 0 0 No 4 Gao Lie 7 2 5 0 0 No 2 Jiang Guangwei 6 1 5 0 0 No 2 Cao Aimin 1 1 0 0 0 No 0 Shen Qiang 1 1 0 0 0 No 0 Huang Xinghua 1 1 0 0 0 No 0 Zhao Xinan 1 1 0 0 0 No 1 Wang Donghui 6 1 5 0 0 No 2 Explanation of two consecutive absences from attending the board of directors in person 3. Objection of Directors on Relevant Issues Objection of independent directors on some relevant issues □ Yes √ No Independent directors proposed no objection against the relevant matters during the reporting period. 4. Other Notes to Duty Fulfillment of Directors Whether any director’s advice to the company was accepted √ Yes □ No Illustration of acceptance of or failure to accept a director’s advice to the company Directors have not made recommendations during the reporting period. Ⅶ. Duty Fulfillment of the Special Committees under the Board during the reporting period Important Specific Number of Other Meeting comments and circumstances Committees Membership meetings Meeting content performance of date suggestions of the objection held duties raised (if any) 1. 2020 annual report and summary; 2. 2020 final financial report; 3. 2020 profit distribution plan; 4. 2021 first quarter report; 5. Proposal on the proposed re-appointment of accounting firms; 6. Proposal on the prediction of daily transactions of Zhang related parts in 2021;7. Fully Audit Suxun, Yuan April 16, Proposal on re-signing the 1 financial service Agree communicate No Committee Zhizhu, Cao 2021 agreement; 8. Risk with auditors Aimin disposal plan on handling deposit and loan business in Bengang Group Finance Co., Ltd.; 9. The proposal of framework agreement about financial leasing cooperation with Liaoning Hengyi Financial Leasing Co., Ltd. 10. The proposal on revising the raw material 39 Bengang Steel Plates Co., Ltd. Annual Report 2021 and service supply agreement; 11. The company's internal control evaluation report in 2020; 12. The proposal on the provision for asset impairment; 13. Proposal on the use of self-owned short-term idle funds for entrusted financial management; 14. Risk assessment report of Bengang Group Finance Co., Ltd.; 15. Special report on the deposit and use of raised funds in 2020 Proposal on using idle July 21, raised funds as working Agree Not applicable No 2021 capital temporarily 1. 2021 semi-annual report;2, Risk Assessment Report of Bengang Group August Finance Co., Ltd.; 3. Agree Not applicable No 16, 2021 Special report on the Deposit and Use of Raised Funds in the Semi-annual 2021 Zhang Audit Suxun, Yuan October 4 15, 2021 2021 third quarter report Agree Not applicable No Committee Zhizhu, Han Mei 1. Proposal on the new routine related party transaction; 2. Proposal on signing a financial service agreement with Ansteel Decemb Finance Co., Ltd.; 3. er 01, Agree Not applicable No Proposal on signing a 2021 supply chain financial service framework agreement with Ansteel Group Capital Holdings Co., Ltd. 1. Proposal on the nomination of candidates for directors; 2. Proposal on the nomination of candidates for independent directors; 3. April 16, Proposal on the Agree Not applicable No 2021 appointment of Mr. Lin Dong as the general Yuan manager of the company; Zhizhu, 4. Proposal on the Nomination appointment of senior Zhang 3 Committee management personnel of Suxun, Gao Lie the company Proposal on the Septemb appointment Chief er 08, Agree Not applicable No Financial Officer of 2021 company 1. Proposal on the Novemb appointment senior er 12, manager of the company; Agree Not applicable No 2021 2. Proposal on the nomination of director 40 Bengang Steel Plates Co., Ltd. Annual Report 2021 candidates 1. 2020 annual report of Gao Lie, Strategy April 16, the board of directors; Shen Qiang, 1 Agree Not applicable No Committee 2021 2. 2021 investment Zhao Xinan framework plan proposal Ⅷ. Duty Fulfillment of the Supervisory Committee Whether the supervisory board made any objection against the supervision issue during the reporting period □ Yes √ No The Supervisory Board made no objection against the supervision issue during the reporting period. Ⅸ. Staff Condition 1. Staff Population, Professional Structure and Education Level Population of in-service staff in parent company 18,232 Population of in-service staff in main subsidiaries 626 Total population of in-service staff 18,858 Total population of staff receiving remuneration in 18,858 the current period Population of retired staff whose expense was 23,608 borne by parent company and major subsidiary companies Professional Composition Type of Professional Composition Population Production Staff 15,083 Sales Staff 181 Technician Staff 1,480 Financial Staff 148 Administrative Staff 1,966 Total 18,858 Educational Degree Type of Educational Degree Population PhD. 13 Postgraduate 351 Undergraduate 4,238 Junior College 6,668 Technical secondary school 460 High School and Technical School 3,743 Middle School and others 3,385 Total 18,858 2. Remuneration Policies In 2021, the company establish a complete performance management system which based on the determined annual production and operation guidelines, policies and overall management goals. The company evaluate the operation indicators and work tasks of various functional departments, factories and mines, set key performance evaluation indicators, and implement monthly evaluations. Salary based on position, ability and performance. Salary is determined by post, and salary is changed by post, guide employees to improve their abilities, establish a salary distribution mechanism that relies on competition and income by contribution, and highlights the assessment of key performance indicators, so as to truly realize that income can be increased or decreased. Continue to promote the total salary contract, guide all units to rationally allocate human resources, optimize the allocation mechanism and improve labor productivity, and give full play to the role of salary incentives and constraints. 41 Bengang Steel Plates Co., Ltd. Annual Report 2021 3. Training Plan In 2021, the company aims to deeply implement the talent-first development strategy, significantly enhance the ability of talent training, take the overall improvement of the overall quality of employees as the ultimate goal, focus on meeting training needs, and focus on updating training concepts, innovating training methods, and improving training quality. The focus is to adhere to the principle of "controlling the total amount, optimizing the structure, and focusing on practical results", and while closely focusing on the production and operation center, comprehensively carry out systematic, modular, and precise education and training. Promote the development of training products that combine long and short, high and low matching, and parallel sizes, and strive to create characteristic high-quality training programs, effectively release training effectiveness, and further improve the overall quality of the workforce, laying a solid foundation for the high-quality development of the steel sheet. In 2021, the company completed 80 training projects throughout the year, training 14,474 person- times, the training rate of all employees reached 70%, and the implementation rate of the annual training plan will reach 85%. Achieving training objectives in full. 4. Outsourcing □ Applicable √ Not applicable Ⅹ. Profit Distribution or Capital Reserve Conversion Formulation, implementation and adjustment of profit distribution policy of common shares especially cash dividend policy during the reporting period √ Applicable □ Not applicable Interim profit distribution in 2021: Based on the total share capital of 3,885,060,605 shares at the end of June 2021, a cash dividend of RMB 5 (tax included) will be distributed to all shareholders for every 10 shares, with a total cash dividend of RMB 1,942,530,302.5. No capital reserve will be converted into share capital for this distribution. The company has completed the implementation on October 13, 2021. Profit distribution in 2021: As audited by BDO China Shu Lun Pan Certified Public Accountants LLP., the company's net profit attributable to the parent company in 2021 is RMB 2,500,582,902.58, plus the undistributed profit at the beginning of the year of RMB 2,692,018,405.40, and deducting the actual dividend of RMB 1,981,284,017.82 from the previous year and the statutory surplus reserve of RMB 234,010,992.52, and the undistributed profit at the end of the year is RMB2,977,306,297.64. Profits distribution plan of 2021: based on the company’s existing share capital of 4,108,191,379 shares, a cash dividend of 6.0 yuan (including tax) will be distributed to all shareholders for every 10 shares. The proposed distribution of ordinary share dividends is RMB 2,464,914,827.40, and the remaining RMB 512,391,470.24 will be carried forward to the next year’s undistributed profits. Special description of cash dividend policy Whether it meets the requirements of the company's articles of Yes association or the resolutions of the shareholders meeting: Whether the dividend standard and ratio are clear: Yes Whether the relevant decision-making procedures and Yes mechanisms are complete: Whether independent directors have performed their duties due Yes diligence and played their due role: Whether small and medium shareholders have sufficient opportunities to express their opinions and demands, and whether Yes their legitimate rights and interests are fully protected: 42 Bengang Steel Plates Co., Ltd. Annual Report 2021 If the cash dividend policy is adjusted or changed, whether the Yes conditions and procedures are compliant and transparent: Both the Company’s profit and the parent company’s retained earnings are positive however no proposal of cash dividend distribution was proposed during the reporting period □ Applicable √ Not applicable Profit Distribution or Capital Reserve Conversion Proposal in the Reporting Period √ Applicable □ Not applicable Number of bonus shares for every 10 shares 0 (shares) Dividend per 10 shares (yuan) (tax included) 6.00 The base of the share capital of the distribution 4,108,191,379.00 plan (shares) Cash dividend amount (yuan) (tax included) 2,464,914,827.40 Cash dividend amount in other ways (such as share 0.00 repurchase) (yuan) Total cash dividends (including other methods) 2,464,914,827.40 (yuan) Distributable profit (yuan) 2,977,306,297.64 The ratio of total cash dividends (including other 82.79% methods) to total profit distribution Cash dividend of the current period If the company's development stage is in the growth period and has major capital expenditure arrangements, when the profit distribution is carried out, the proportion of cash dividends in this profit distribution should be at least 20%. Notes to the profit distribution or capital reserve transfer plan The profit distribution plan or proposal and the plan or proposal of conversion of the capital reserve into share capital in recent three years (including the reporting period) 1.Profit distribution proposal of 2021 As audited by BDO China Shu Lun Pan Certified Public Accountants LLP., the company's net profit attributable to the parent company in 2021 is RMB 2,500,582,902.58, plus the undistributed profit at the beginning of the year of RMB 2,692,018,405.40, and deducting the actual dividend of RMB 1,981,284,017.82 from the previous year and the statutory surplus reserve of RMB 234,010,992.52, and the undistributed profit at the end of the year is RMB2,977,306,297.64. Profits distribution plan of 2021: based on the company’s existing share capital of 4,108,191,379 shares, a cash dividend of 6.0 yuan (including tax) will be distributed to all shareholders for every 10 shares. The proposed distribution of ordinary share dividends is RMB 2,464,914,827.40, and the remaining RMB 512,391,470.24 will be carried forward to the next year’s undistributed profits. 2. The company's 2021 interim profit distribution plan Based on the total share capital of 3,885,060,605 shares at the end of June 2021, a cash dividend of RMB 5 (tax included) will be distributed to all shareholders for every 10 shares, with a total cash dividend of RMB 1,942,530,302.5. No capital reserve will be converted into share capital for this distribution. 3. Profit distribution proposal of 2020 As audited by BDO China Shu Lun Pan Certified Public Accountants LLP., the company's net profit attributable to the parent company in 2020 is RMB 384,252,740.78, plus the undistributed profit at the beginning of the year of RMB 2,307,765,664.62, and the undistributed profit at the end of the year is RMB 2,692,018,405.40. Profits distribution plan of 2020: based on the company’s existing share capital of 3,875,371,532 shares, a cash dividend of 0.1 yuan (including tax) will be distributed to all shareholders for every 10 43 Bengang Steel Plates Co., Ltd. Annual Report 2021 shares. The proposed distribution of ordinary share dividends is RMB 38,753,715.32, and the remaining RMB 2,653,264,690.08 will be carried forward to the next year’s undistributed profits. 4. Profit distribution proposal of 2019 As audited by BDO China Shu Lun Pan Certified Public Accountants LLP., the net profit attributable to the parent company of the year 2019 was RMB 555,646,971.40. After adding the retained profit of RMB 1,945,887,269.82 at the beginning of the year, and deducting the actual dividend of RMB 193,768,576.6 from the previous year, the balance of undistributed profit was RMB 2,307,765,664.62. Profits distribution plan of 2019: Considering the uncertainty of the Coronavirus on the economy, the company did not make profit distribution or convert the provident fund into capital in 2019. XI. Implementation of company equity incentive plans, employee stock ownership plans or other employee incentives □ Applicable √ Not applicable During the reporting period, the company had no equity incentive plan, employee stock ownership plan or other employee incentive measures and their implementation. XII. Construction and implementation of internal control system during the reporting period 1. Construction and implementation of internal control system In order to further improve the internal management level of the enterprise, standardize the internal control and the orderly operation of various business activities of the enterprise's production and operation, and strengthen the construction of the risk prevention and control mechanism, the company has carried out the construction of internal control in an all-round way. The business process and other aspects have been further sorted out and established and improved the relevant systems of internal control, and a relatively complete internal control system has been constructed. On the basis of daily supervision and special supervision of internal control, the soundness and effectiveness of the construction and supervision of the company's internal control system Evaluate. 2. Significant defects of the internal control found in the internal control self-assessment report in the reporting period □ Yes √ No XIII. The company's management and control of subsidiaries during the reporting period Problems Integration Solutions Solutions follow-up Name Integration plan encountered in progress implemented progress resolution plan integration Xiamen Bengang Has been Steel & Iron Deregistration Not applicable Not applicable Not applicable Not applicable cancelled Sales Co., Ltd. XIV. Internal control self-evaluation report or internal control audit report 1. Self-Evaluation Report on Internal Control Disclosing date of internal control auditing March 24, 2022 report full text Index of the internal control auditing report http://www.cninfo.com.cn full text Proportion of total assets of subsidiaries 97.07% belong to the scope of self-evaluation 44 Bengang Steel Plates Co., Ltd. Annual Report 2021 report in the total assets of the Company’s consolidated financial statements Proportion of operation income of subsidiaries belong to the scope of self- evaluation report in the operation income 89.49% of the Company’s consolidated financial statements Standards of Defects Evaluation Category Financial Report Non-financial Report 1. The company's daily operation internal control defect identification standards: 1) Material deficiencies: have a materrial impact on the normal operation of the company: affect most of the main business types/main functional areas of the company; have a significant impact on the overall operation of the company and are difficult to recover in the long run. 2) Significant deficiencies: have a greater impact on the 1. Material deficiencies: fraud of directors, normal operation of the supervisors and senior management; the company: affect some of company corrects its published financial the company's main statements; there is a material misstatement in business types/main the financial statements, and the internal functional areas; have a control fails to detect the misstatement during greater impact on the the operation; the corporate audit committee company's overall and the internal audit institution have no operations, and require a effect on the supervision of internal control. greater price to recover Qualitative criteria 2. Significant deficiencies: the seriousness in a long period of time. and economic consequences of accounting 3) General deficiencies: policies, accounting and financial reporting Moderate or below are lower than material deficiencies, but there impact on the normal are still internal control defects that may operation of the cause the company to deviate from the control company: Affects a objectives. certain main business 3. General deficiencies: other than material type/main functional and significant deficiencies, other internal area or general business control deficiencies in financial reporting. type/general functional area of the company; Moderate or below impact on the overall operation of the company, requiring a certain amount of effort within a certain period of time cost recovery. 2. The company's business objectives to achieve internal control defects identification standards: 1) Material deficiencies: have a significant impact on the company's business objectives: have a significant impact on any type of budget indicators of the 45 Bengang Steel Plates Co., Ltd. Annual Report 2021 company; affect most of the company's important management objectives; have a significant impact on liquidity (0.8 times ≤ current asset turnover rate < 1 time ); have a significant impact on any type of budget indicators of the company (profit ≥ 800 million yuan). 2) Significant deficiencies: have a greater impact on the company's business objectives: have a greater impact on any type of budget indicators of the company; affect some important management objectives of the company; have a greater impact on the working capital (0.5 times ≤ current asset turnover rate ﹤ 0.8 times); have a greater impact on any type of budget indicators of the company (400 million yuan ≤ profit ﹤ 800 million yuan). 3) General deficiencies: Moderate or below impact on the company’s business objectives: Moderate or below impact on any type of budget indicators of the company; Affects one important management target or some general management targets of the company; Moderate impact on working capital and below (current asset turnover rate ﹤ 0.5 times); moderate or below impact on any type of budget indicators of the company (profit ﹤ 400 million yuan). 3. The company's safety internal control defect identification standards: 1) Material deficiencies: affecting a certain number of employees/public health/safety, especially major accidents. 2) Significant 46 Bengang Steel Plates Co., Ltd. Annual Report 2021 deficiencies: affecting some employees/public health/safety, major accidents. 3) General deficiencies: affecting a small number of employees/public health/safety, major accidents. 4. The company's environmental protection internal control defects identification standards: 1) Material deficiencies: serious environmental damage, occurrence of major environmental incidents (national level II) or above environmental protection accidents. 2) Significant deficiencies: large environmental damage and large environmental incidents (national level III). 3) General deficiencies: moderate and below environmental impact, general environmental incidents (national level IV). 1. Material deficiencies:1) misstatement≥5% of the total profits; 2) misstatement≥3% of the total assets; 3) misstatement≥1% of the total operating income; 4)misstatement≥1% of the total amount of the owner’s equity. 2. Significant deficiencies:1) 3% of the total profits ≤misstatement<5% of the total profits;2) 0.5% of the total assets ≤misstatement<3% of the total assets;3)0.5% of the total Quantitative criteria operating income ≤misstatement<1% of the None total operating income; 4)0.5% of the total amount of the owner’s equity ≤misstatement<1% of the total amount of the owner’s equity。3. General deficiencies:1)misstatement<3% of the total profits;2)misstatement<0.5% of the total assets;3)misstatement<0.5% of the total operating income;4)misstatement< 0.5% of the total amount of the owner’s equity。 Number of material deficiencies in 0 financial reporting(a) Number of material deficiencies in non- 0 financial reporting (a) Number of significant deficiencies in 0 financial reporting(a) Number of significant deficiencies in non- 0 financial reporting(a) 47 Bengang Steel Plates Co., Ltd. Annual Report 2021 2. Internal Control Audit Report √√ Applicable □ Not applicable Opinion in the internal control audit report We acknowledge that internal control of Bengang Bancai is effective in all material respects and is compliance with ‘Fundamental Rules of Enterprise Internal Control’ up to December 31, 2021. Internal Control Audit Report Disclosure Status Disclosure date of audit report of March 31, 2022 internal control (full-text) Index of audit report of internal http://www.cninfo.com.cn control (full-text) Internal audit report’s opinion Standard unqualified opinion Whether there is significant defect No in non-financial report Whether the accountants’ firm issued a qualified opinion on report of internal control audit □ Yes √ No Whether the internal control audit report issued by the accountants’ firm agree with the self- assessment report of the Board of Directors √ Yes □ No XV. Self-examination and rectification of listed company governance special actions During the reporting period, the company actively implemented the directive spirit of the "Opinions of the State Council on Further Improving the Quality of Listed Companies". According to the requirements of China Securities Regulatory Commission [2020] No. 69 "Announcement on Carrying out Special Actions on Corporate Governance of Listed Companies”, the principle of self-examination and self-correction of listed companies' governance has been carried out, and the "Special Self-examination List of Listed Company Governance" has been compiled, which truly, accurately and completely reflects the legal problems of listed companies and the rectification of relevant norms. Drive, improve the corporate governance system and rules, build a good corporate governance ecology, etc., further improve the listed company governance structure in which each performs its own duties and responsibilities, coordinates operations, and effectively checks and balances, consolidates the foundation for the high-quality development of listed companies, and improves the governance level of listed companies. 48 Bengang Steel Plates Co., Ltd. Annual Report 2021 V. Environmental and Social Responsibility I. Major environmental issues Whether the listed company and its subsidiaries belong to the key pollutant discharge units announced by the environmental protection department √ Yes □ No Names of Emission Number of Distribution Emission Implemente Total Total Excessive major method discharge of discharge concentratio d pollutant emissions approved emissions Company or pollutants outlets outlets n discharge emissions subsidiary and standards name characteristi c pollutants Bengang COD Continuous 1 Energy 25.3 50 228.11 Not None Steel Plates General approved by Co.,Ltd. Plant the Sewage government Treatment Plant Bengang Ammonia Continuous 1 Energy 0.96 8 3.16 Not None Steel Plates nitrogen General approved by Co.,Ltd. Plant the Sewage government Treatment Plant Bengang Particulate Continuous 183 Raw Raw Raw Particulate Not None Steel Plates matter and material material 14- material 25; matter : approved by Co.,Ltd. intermittent dumper, 23; sintering sintering 13569 the transfer 8-40; iron 50-30; iron government station, making 7- making 25; receiving 35; steel steel tank, pre- making 20- making 20- batching; 50; special 50; special iron-making steel 7-15; steel 20; casting coking 5- coking 10- yard, 50; power 50; power furnace generation generation roof, fuel, 3-30; cold 5-30; cold solvent, rolling 4-18; rolling 20- granulation, hot rolling 30; hot ore coke 6-15. rolling 20- tank, 30. sintering head dust removal, desulfurizati on, machine tail dust removal; iron and steel water pretreatmen t , north- south pouring station, tundish, primary dust removal, secondary 49 Bengang Steel Plates Co., Ltd. Annual Report 2021 dust removal, refining dust removal; special steel electric furnace, refining furnace; coking coal addition, coke pushing, dry quenching, chimney desulfurizati on and denitrificati on; power boiler dust removal, desulfurizati on and denitrificati on; cold rolling acid regeneration , pickling, straightenin g, welding, leveling, annealing, roasting; hot rolling furnace. Bengang Sulphur Continuous 64 Sintering Sintering Sintering 4720 Not None Steel Plates dioxide and head; coke head 12-40; head 200; approved by Co.,Ltd. intermittent oven coke oven coke oven the chimney; 30-100; 30-100; government power power power generation generation generation boiler 5-70; cold 35-200 cold desulfurizati rolling 25- rolling 100; on; cold 98; hot hot rolling rolling rolling 48- 150. roasting and 128. annealing; hot rolling heating furnace. Bengang Nitrogen Continuous 57 Sintering Sintering Sintering 12242 Not None Steel Plates oxides and head; head 100- head 300; approved by Co.,Ltd. intermittent coking 230; coking coking the chimney; chimney chimney government power 150-268; 150-500; generation power power boiler; cold generation generation rolling 30-140; 50-200; roasting, cold rolling cold rolling annealing; 60-170; hot 200; hot hot rolling rolling 83.5- rolling 300. heating 124. furnace. Construction and operation of pollution prevention facilities Bengang Bancai has a total of 202 sets of environmental pollution prevention and control facilities, and each process 50 Bengang Steel Plates Co., Ltd. Annual Report 2021 is equipped with dust removal, desulfurization and denitrification, and online facilities in accordance with pollutant discharge standards. Wet desulfurization of sintering machine head, dry desulfurization and denitrification of coke oven chimney, wet desulfurization and SCR denitration of power generation, etc. The 2300mm production line of the hot rolling plant is designed for use in the production of stainless steel, and the environmental protection facilities are normally put into use. Environmental impact assessment of construction projects and other environmental protection administrative licenses In 2021, the EIA registration and filing work of 18 projects including the coke oven flue gas desulfurization and denitrification transformation project of the iron smelting plant will be completed; 7 EIA report forms including the 220KV substation project will be submitted for approval. The environmental protection acceptance work of 8 projects including the No. 7 coke oven desulfurization and denitrification project and the No. 5 blast furnace capacity replacement project of the iron smelting plant was carried out. In 2021, the company completed the renewal of pollutant discharge licenses for 9 units of the company. Emergency plan for environmental emergencies The company and its 14 subordinate units strictly follow the "Emergency Response Law of the People's Republic of China", the "Notice on Printing and Distributing the "Guidelines for Risk Assessment of Environmental Emergencies for Enterprises (Trial)", and "Enterprise and Institutional Emergency Response Plans for Environmental Emergencies." Management Measures (for Trial Implementation)” and other existing laws and regulations to carry out environmental emergency management work. In 2021, entrust a third-party unit to revise the emergency plan for environmental emergencies, carry out risk assessment and emergency resource investigation again, and conduct assessments according to the management requirements of the Municipal Bureau., for the record. At the same time, each unit of the company formulates a drill plan according to the pre-plan and carries out the corresponding pre-plan drill work. Environmental Self-Monitoring Program The 2021 self-monitoring plan is carried out in accordance with the requirements of the discharge permit. Pollution source monitoring points: 185 flue gas monitoring points, 10 wastewater monitoring points, 13 boundary noise points, 27 atmospheric dust reduction points, and 71 unorganized monitoring points. Monitoring is carried out on a quarterly, semi-annual and annual frequency. There are 27 atmospheric dust fall points distributed in the factory area, and 162 monitoring data have been obtained; the routine monitoring tasks of flue gas and atmospheric unorganized monitoring have been completed, and a total of 1286 monitoring data have been obtained throughout the year; the noise monitoring points at the factory boundary 13 monitoring data, 208 monitoring data; 10 wastewater monitoring points, 1983 monitoring data. There are 541 temporary monitoring data, and the monitoring station reports a total of 4180 monitoring data, forming monthly reports, quarterly reports and separate monitoring reports for each factory and mine. Administrative penalties for environmental issues during the reporting period Influence on the Company or Reason for The company's Violations Penalty result production and operation subsidiary name punishment rectification measures of listed companies None None None None None None Other environmental information that should be disclosed In 2021, according to the list of key pollutant discharging enterprises issued by the Municipal Environmental Protection Bureau, the environmental information disclosure of 12 units of the company will be completed. The contents of the announcement include basic information, pollution discharge information, construction and operation of pollution prevention and control facilities, environmental impact assessment of construction projects and other environmental protection administrative licenses, emergency plans for environmental emergencies, environmental self-monitoring plans, and other environmental information that should be disclosed. Measures taken to reduce carbon emissions during the reporting period and their effects √ Applicable □ Not applicable In 2021, the company will invest 44.18 million yuan to implement 6 energy-saving and carbon-reducing projects, including the transformation of high-energy-consuming motors in the coking branch of the iron smelting plant, and the nitrogen production increase of the pre-cooling system of the No. 8 oxygen generator in the energy management and control center. The 2021 carbon emission accounting is expected to be completed in June 2022, and the carbon emission reduction amount has not yet been determined. Other environmental protection related information 51 Bengang Steel Plates Co., Ltd. Annual Report 2021 None. Ⅱ. Social responsibility situation The company actively fulfills its social responsibilities, and has publicly disclosed the 2021 Corporate Social Responsibility Report of Bengang Steel Plates Co., Ltd. For the full text of the report, please refer to http://www.cninfo.com.cn on March 26, 2022. Ⅲ. Consolidate and expand the achievements of poverty alleviation and rural revitalization The company has selected 8 outstanding cadres to participate in the rural revitalization work, and there are still 4 people who serve as the first secretary in the village. During the special period of normal epidemic prevention and control, the cadres in the village did not forget their original aspirations, kept their mission in mind, strengthened their confidence, and worked tenaciously. The company provides growth points for the rural collective economy through direct investment in the construction of mushroom greenhouses, employee welfare procurement of agricultural and sideline products in rural areas, etc., effectively increasing per capita income, and completing poverty alleviation work for more than 800 people. The company has been rated as "Advanced Unit for Fixed-point Poverty Alleviation in Liaoning Province" for many consecutive years. 52 Bengang Steel Plates Co., Ltd. Annual Report 2021 VI. Important Events I. Performance of Committed Issues 1. The fulfilled commitments during the reporting period and under-fulfillment commitments by the end of the period made by actual controller, acquirer, director, supervisor, senior management personnel and other related parties. Commitment Type of Commitment Commitment Commitments Contents Performance party commitment time period Commitment of shares reform In order to maintain the independence of Bengang Steel, Ansteel Group undertakes the following: 1. Ansteel Group guarantees to keep separate from Bengang Steel in terms of assets, personnel, finance, organization and business, and strictly abides by the China Securities Regulatory Commission's regulations on the independence of listed companies It does not use its controlling position to interfere with the standard operation of Bengang Steel, interfere Commitment made in the with Bengang Steel's Ansteel Group Other business decisions, or August Under normal acquisition report or the Long term Co., Ltd. commitment damage the legitimate 20,2021 fulfillment equity change report rights and interests of Bengang Steel and other shareholders. Ansteel Group and other subsidiaries controlled by it promise not to illegally occupy the funds of Bengang Plate and its controlled subsidiaries in any way. 2. The above commitments will continue to be effective during the period when Ansteel Group has control over Bengang Steel Sheets. If Ansteel Group fails to fulfill the above-mentioned commitments and causes losses to Bengang Steel Sheets, Ansteel Group 53 Bengang Steel Plates Co., Ltd. Annual Report 2021 will bear the corresponding liability for compensation. In order to avoid horizontal competition matters, Ansteel Group undertakes the following: (1) In view of the overlapping business between Ansteel Group and Bengang Steel after the completion of the acquisition, according to the requirements of existing laws, regulations and relevant policies, Ansteel Group will issue a letter of commitment from this letter of commitment. Within 5 years from the date of issue, and strive to use a shorter time, in accordance with the requirements of the relevant securities regulatory authorities, under the premise of complying with the applicable laws and regulations and relevant regulatory rules at that time, in order to facilitate the development of Ansteel Group Other Bengang Steel Sheets August Under normal Long term Co., Ltd. commitment and safeguard the 20,2021 fulfillment interests of shareholders, especially It is the principle of the interests of small and medium shareholders, and comprehensively uses various methods such as asset restructuring, business adjustment, and entrusted management to steadily promote the integration of relevant businesses to solve the problem of horizontal competition. The aforesaid solutions include but are not limited to: 1) Asset reorganization: purchase assets, asset replacement, asset transfer or other feasible reorganization methods in different ways permitted by relevant laws and regulations, such as cash consideration or issue share consideration, and gradually reorganize Anshan Iron and Steel 54 Bengang Steel Plates Co., Ltd. Annual Report 2021 Group and Benxi Iron and Steel Group. Sort out and reorganize the assets of the overlapping parts of the business of the sheet metal to eliminate the overlapping of some businesses; 2) Business adjustment: Sort out the business boundaries and try our best to achieve differentiated operations, such as through asset transactions, business division and other different methods. Business distinction, including but not limited to business composition, product grade, application field and customer groups, etc.; 3) Entrusted management: by signing an entrustment agreement, one party will make decisions related to the operation of some related assets with overlapping businesses 4) Other feasible solutions within the scope permitted by laws, regulations and relevant policies. The implementation of the above-mentioned solutions is premised on performing the necessary deliberation procedures for listed companies and the approval procedures of securities regulatory authorities and relevant competent authorities in accordance with relevant laws and regulations. (2) Anshan Iron and Steel Group has not yet formulated a specific implementation plan and time arrangement for solving the problem of partial business overlap between Anshan Iron and Steel Group and Bengang Steel. (3) In addition to the above circumstances, when Ansteel Group or other subsidiaries obtain business opportunities that may compete with the business of Bengang Steel, Ansteel Group will do its best to give Bengang Steel the 55 Bengang Steel Plates Co., Ltd. Annual Report 2021 priority to develop such opportunities and The right of first refusal to purchase the project makes the price of the relevant transaction fair and reasonable, and will be based on the business practices followed in normal commercial transactions with independent third parties; (4) Ansteel Group guarantees that it will strictly abide by laws, regulations and According to the Articles of Association of Bengang Plate Co., Ltd. and its relevant management system, the company shall not use its position as an indirect controlling shareholder of Bengang Plate to seek illegitimate interests, thereby impairing the rights and interests of other shareholders of Bengang Plate; During the period of control over the steel sheet, the above commitments made by Ansteel Group are all valid. In the event of violation of the above commitments, resulting in damage to the rights and interests of Bengang Steel, Ansteel Group is willing to assume the corresponding liability for damages. In order to standardize and reduce the related transactions between Ansteel Group and listed companies, Ansteel Group has made commitments: 1. Ansteel Group will ensure that Bengang Steel’s business is independent, its assets are complete, Ansteel Group Other and it has independent August Under normal Long term Co., Ltd. commitment and complete 20,2021 fulfillment production, supply, sales and other auxiliary facilities. system. 2. Ansteel Group and other enterprises controlled by Ansteel Group will not take advantage of the control over Bengang Steel Sheets to seek preferential transactions with Bengang Steel 56 Bengang Steel Plates Co., Ltd. Annual Report 2021 Sheets and its subordinate enterprises. 3. Ansteel Group and other enterprises controlled by Ansteel Group will avoid and reduce unnecessary transactions with Bengang Steel Sheets and its subordinate enterprises. If there is a truly necessary and unavoidable transaction, Ansteel Group and other enterprises controlled by Ansteel Group will sign an agreement with Bengang Steel Sheets and its subordinate enterprises in accordance with the principles of fairness, fairness, and compensation for equal value, perform legal procedures, and will comply with the law. According to the requirements of relevant laws, regulations and normative documents and the "Articles of Association of Bengang Plate Co., Ltd.", perform information disclosure obligations and perform relevant internal decision-making and approval procedures in accordance with the law, and ensure that no price is unfair compared with market prices. conditions and conduct transactions with Bengang Steel and its subordinate enterprises, and do not use such transactions to engage in any behavior that damages the legitimate rights and interests of Bengang Steel and other shareholders of Bengang Steel. 4. In the event of violation of the above commitments, resulting in damage to the legitimate rights and interests of Bengang Steel, Ansteel Group will compensate for the losses caused to Bengang according to law. Commitment made during asset restructuring 57 Bengang Steel Plates Co., Ltd. Annual Report 2021 According to the relevant regulations of the China Securities Regulatory Commission, all directors and senior management of the Company have made the following commitments to the Company’s fulfillment of the diluted immediate return measures: 1. I promise to perform my duties faithfully and diligently, and safeguard the legitimate rights and interests of the Company and all shareholders. 2. I promise not to deliver benefits to other units or individuals without compensation or under unfair conditions, nor to use other means to damage the Company's interests. 3. I promise to restrict the position- related consumption behavior of company directors and senior management personnel. 4. I promise not to use Company the Company’s assets to Commitment made during directors, Other do investment and May 22, 2019 Long term Under normal initial public offering or senior commitment consumption activities fulfillment refinancing management that are not related to the performance of my duties. 5. Within the scope of my responsibilities and authority, I promise to make every effort to promote the company's board of directors or the remuneration system established by the remuneration and appraisal committee to be linked to the implementation of the company's compensation measures, and vote in favor of the relevant proposals reviewed by the company's board of directors and general meeting (If I have voting rights). 6. If the company intends to implement equity incentives, I promise to, within my own responsibilities and jurisdiction, make every effort to promote the Company’s proposed equity incentive exercise conditions to be linked to 58 Bengang Steel Plates Co., Ltd. Annual Report 2021 the Company’s implementation of the return measures, and to review the Company’s board of directors and shareholders’ general meetings and vote in favor of the relevant proposals reviewed by the company's board of directors and general meeting (If I have voting rights). 7. If the future issuance of this commitment and the implementation of the Company’s public issuance of convertible corporate bonds are completed, if the China Securities Regulatory Commission makes other new regulatory provisions on the measures for filling returns and their commitments, and the above commitments cannot meet the requirements of the China Securities Regulatory Commission When other regulations are stipulated, a commitment will be issued in accordance with the latest regulations of the China Securities Regulatory Commission. The company's controlling shareholder, Benxi Iron and Steel (Group) Co., Ltd., promised not to interfere with the company's operation and management activities beyond its authority and not to infringe on the Company's interests. The sales companies of Bengang International Trade Co., Ltd. and Bengang Steel plates in the same region Benxi Steel & guarantee independent Iron (Group) personnel, independent Co., Ltd. and Other business, independent Under normal Bengang Commitment finance, and independent July 24,2019 Long term fulfillment Group Co., assets, and are Ltd. guaranteed not to be in the same registration place or in the same office; The filing of foreign economic and trade operators, taking into account the need to 59 Bengang Steel Plates Co., Ltd. Annual Report 2021 gradually improve the qualification certification of raw material suppliers, customs import and export qualification certification, etc. In the short term, the actual conditions and capabilities for independent import and export business are still lacking. In order to ensure the normal business development of Benxi Steel Plate, the Group agrees that within the period of not more than 5 years from the date of issuance of this commitment, the main import and export business of Benxi Steel Plate will still be represented by Bengang International Trade until Bengang Steel Plates can be independently developed Import and export business, and during this period, Bengang International Trade will provide the necessary support for the establishment and improvement of Bengang's import and export business. In addition, the sales company under Bengang International Trade is only responsible for selling the products of Beiying Iron and Steel Group, and never sells third-party steel products. 3. The three sales companies under the Group, Shanghai Bengang Iron and Steel Sales Co., Ltd., Shanghai Bengang Iron and Steel Materials Co., Ltd., and Guangzhou Free Trade Zone Bengang Sales Co., Ltd., are currently no longer actually engaged in any business activities, as follows: (1 ) Shanghai Bengang Iron & Steel Sales Co., Ltd. filed for bankruptcy in 2014, and the Shanghai Changning District People's Court issued an announcement to appoint Guohao Lawyer (Shanghai) Office as the 60 Bengang Steel Plates Co., Ltd. Annual Report 2021 bankruptcy administrator. After communication with the bankruptcy administrator, it is expected that the bankruptcy and liquidation of Shanghai Bengang Iron and Steel Sales Co., Ltd. will be completed by the end of 2020. Upon completion of the aforementioned bankruptcy liquidation procedures, the relevant procedures for cancellation of Shanghai Bengang Iron and Steel Sales Co., Ltd. will be handled immediately. (2) Shanghai Bengang Iron & Steel Materials Co., Ltd. is a holding subsidiary of Shanghai Bengang Iron & Steel Sales Co., Ltd., and its business license has been revoked. As the shareholder Shanghai Bengang Iron & Steel Sales Co., Ltd. is in the process of bankruptcy and liquidation, Shanghai Bengang Iron & Steel Materials Co., Ltd. was unable to convene a shareholders' meeting to cancel the company and establish a liquidation group according to law. Therefore, the cancellation has not yet been completed. After the aforementioned bankruptcy and liquidation procedures of Shanghai Bengang Iron & Steel Sales Co., Ltd. are completed, the relevant procedures for cancellation of Shanghai Bengang Iron & Steel Materials Co., Ltd. will be processed immediately. (3) Guangzhou Free Trade Zone Bengang Sales Co., Ltd. has a contract arrears dispute with Jiedong County Trading Corporation. According to the Civil Judgment ((1999) Ben Jing No. 116), Guangzhou Free Trade Zone Bengang Sales Co., Ltd. applied to the court to seal 62 61 Bengang Steel Plates Co., Ltd. Annual Report 2021 properties under the name of Jiedong County Trading Corporation. However, due to serious local protection, property rights and other factors, the content of the judgment has not been enforceable. Later, after applying again from Guangzhou Free Trade Zone Bengang Sales Co., Ltd., the Intermediate People's Court of Benxi City, Liaoning Province issued an execution ruling again, and 62 properties of Jiedong County Trading Corporation were re- sealed. As of February 4, 2022. Except for participating in the litigation activities for the purpose of realizing creditor's rights, Guangzhou Free Trade Zone Bengang Sales Co., Ltd has not carried out other business activities. After the litigation is completed, the relevant procedures for the cancellation of Guangzhou Free Trade Zone Bengang Sales Co., Ltd. will be handled immediately. The Group's horizontal competition with Benxi Steel Plates and the measures and commitments to avoid inter-industry competition 1. During the period when the Group is the controlling shareholder of Bengang Steel Plates, in addition Bengang to the matters listed in Group Co., Article 1 of this Ltd. & Benxi Other Commitment Letter, the Normal Under normal Steel & Iron Commitment Group and other July 24,2019 execution fulfillment (Group) Co., enterprises controlled by Ltd. the Group other than Bengang Steel Plates no longer produce or develop any products that compete or may compete with the products produced by Bengang Steel Plates and its subsidiaries at home and abroad, and do not directly or indirectly operate any business that competes with Bengang 62 Bengang Steel Plates Co., Ltd. Annual Report 2021 Steel Plates and its subsidiaries. Businesses that may constitute competition, nor are they involved in investing in any other enterprise that competes with or may compete with products or businesses produced by Bengang Steel Plates and its subsidiaries. 2. If Bengang Steel Plates and its subsidiaries further expand their business scope, the Group and other enterprises controlled by the Group will not compete with the expanded business of Bengang Steel Plates and its subsidiaries; they may compete with Bengang Steel Plates and its subsidiaries If the company's expanded business produces competition, it will withdraw from the competition with Bengang Steel Plates as follows: (1) Stop business that may or may compete with Bengang Steel Plates and its subsidiaries; (2) Will compete The business is incorporated into Bengang Steel Plates and its subsidiaries in a legal and compliant manner; (3) Competitive business is transferred to unrelated third parties. 3. If the Group has any business opportunities to engage in or participate in the competition with Bengang Steel Plates’ operations, the Group shall immediately notify Bengang Steel Plates of the above commercial opportunities. Within a reasonable period specified in the notice, Bengang Steel Plates If an affirmative answer is made to take advantage of the business opportunity, the Group will endeavor to give the business opportunity to Bengang Steel Plates on terms not less than that provided to any independent third party. 4. If the above commitments are 63 Bengang Steel Plates Co., Ltd. Annual Report 2021 violated, the Group is willing to bear all the responsibilities arising therefrom, and fully compensate or compensate for all direct or indirect losses caused to Bengang Steel Plates. 5. This letter of commitment continues to be effective during the period of the Group as the controlling shareholder of Bengang Steel Plates and cannot be changed or withdrawn In order to regulate and reduce the Company ’s transactions with controlling shareholders and other related parties, and to protect the interests of the Company and small and medium shareholders, Benxi Iron and Steel (Group) Co., Ltd. and Bengang Group Co., Ltd. have issued the following commitments: "Benxi Iron and Steel (Group) Co., Ltd. and Bengang Group Co., Ltd. (hereinafter collectively referred to as the "Group"), as a direct controlling shareholder and an indirect controlling Benxi Steel & shareholder of Bengang Iron (Group) Steel Plates Co., Ltd. Co., Ltd. and Other (hereinafter referred to Under normal Bengang Commitment as "Bengang Steel July 24,2019 Long term fulfillment Group Co., Plates"), in order to Ltd. protect the interests of Bengang Steel Plates and other shareholders of Bengang Steel Plates, regulate The Group's related transaction with Bengang Steel Plates hereby promises: 1. The Group will fully respect the independent legal person status of Bengang Steel Plates, ensure the independent operation and independent decision-making of Bengang Steel Plates, ensure the independence of Bengang Steel Plates’ business, asset integrity and personnel Independence and financial independence to avoid and reduce unnecessary related 64 Bengang Steel Plates Co., Ltd. Annual Report 2021 transactions; the Group will strictly control related transactions with Bengang Steel Plates and its subsidiaries. 2. The Group and other controlled companies promise not to use loans or occupy or misappropriate the funds of Bengang Steel Plates and its subsidiaries to repay debts, substitute funds or otherwise, nor We ask Bengang Steel Plates and its subsidiaries to provide illegal guarantees for the Group and other companies under its control. 3. The Group and other controlled companies and Bengang Steel Plates will minimize related transactions. It is indeed necessary and unavoidable to carry out in the related party transactions, strictly implement the decision- making authority, decision-making procedures, avoidance system and other contents stipulated in Bengang's "Articles of Association" and related party transaction decision-making system, give full play to the role of the board of supervisors and independent directors, and earnestly fulfill the obligation of information disclosure To ensure that transactions are conducted in accordance with the open, fair, and fair principles of market transactions and normal commercial terms, the Group and other companies under control will not require or accept Bengang Steel Sheets to give preferential treatment to third parties in any fair market transaction Conditions to protect other shareholders of Benxi Steel Plates and the interests of Benxi Steel Plates from damage. 4. The Group guarantees 65 Bengang Steel Plates Co., Ltd. Annual Report 2021 that the above commitments are continuously effective and irrevocable as long as Bengang Steel Plates is listed on the domestic stock exchange and the Group acts as its direct and indirect controlling shareholder. If any violation of the above commitments occurs, the Group therefore bear all the losses caused to Bengang Steel Plates. Stock option incentive commitment Other commitments to the company's minority shareholders Whether Commitment No fulfilled on time or not 2. The Company made illustrations that there are assets or projects which meet the original profit forecast and the reasons when there are assets or projects profit forecast of the Company and the reporting period is still in the forecast period □ Applicable √ Not applicable II. Non-operating capital occupation of listed companies by controlling shareholders and other related parties □ Applicable √ Not applicable There was no non-operating occupation of funds by the controlling shareholder and related parties III. Non-compliance with external guarantees □ Applicable √ Not applicable There was no non-operating occupation of funds by the controlling shareholder and related parties IV. Note by the Board of Directors on the latest "Non-Standard Audit Report" □ Applicable √ Not applicable V. Notes by the Board of Directors, the Supervisory Committee and the Independent Directors (if any) on the "non-standard audit report" of the accounting firm for the current reporting period □ Applicable √ Not applicable VI. Illustrations of Changes in the Accounting Policy, Accounting Estimate and Measurement Methods as Compared with the Financial Report of Last Year √Applicable □ Not applicable 66 Bengang Steel Plates Co., Ltd. Annual Report 2021 (1) Implementation of CAS 21 - Leases (revised in 2018) The Ministry of Finance revised AS 21 - Leases (the "New Lease Standard") in fiscal 2018. The Company implemented the New Lease Standard effective January 1, 2021. Under the revised standard, the Company has elected not to reassess whether a contract that existed prior to the date of first-time implementation is a lease or contains a lease at the date of first-time implementation. (2) Implementation of ASBE Interpretation No. 14 On 2 February 2021, the Ministry of Finance issued Interpretation No. 14 of Accounting Standards for Business Enterprises (Caihui [2021] No. 1, hereinafter referred to as "Interpretation No. 14"), which is effective from the date of its issuance. relevant operations added from 1 January 2021 to the date of implementation are adjusted in accordance with Interpretation No. 14. (3) Implementation of the Circular on Adjustment of the Scope of Application of the Regulations on Accounting for Rent Concessions Related to the New Crown Pneumonia Epidemic The Ministry of Finance issued the "Regulations on Accounting for Rent Concessions Related to the New Crown Pneumonia Epidemic" (Caihui [2020] No. 10) on 19 June 2020, under which enterprises may choose to adopt the simplified method of accounting for rent concessions such as rent reductions and deferred rent payments that meet the conditions directly arising from the New Crown Pneumonia Epidemic. VII. Illustrations of Changes of the Consolidation Scope as Compared with the Financial Report of Last Year √Applicable □ Not applicable Xiamen Bengang Steel & Iron Sales Co., Ltd. was written off during the reporting period. VIII. Appointment and Dismiss of Certified Accountant’s Firm Accountant’s firm currently appointed Name of the domestic accountant’s firm BDO China Shu Lun Pan Certified Public Accountants LLP Payment to the domestic accountant’s firm (in 10 280 thousand yuan) Service life of domestic accountant’s firm providing 14 audit service Name of CPAs from the domestic accountant’s firm Li Yongjiang, Li Guiying Service life of domestic accountants’ providing audit 0 service Name of the overseas accountant’s firm (if any) None Payment to overseas accountant’s firm (in 10 0 thousand yuan) (if any) Service life of overseas accountant’s firm providing None audit service (if any) Name of CPAs from the overseas accountant’s firm None (if any) Whether the accountant’s firm was changed during the reporting period □ Yes √ No Engagement of accountant’s firms, financial consultants or sponsors for internal control auditing √ Applicable □ Not applicable The Company appointed BDO China Shu Lun Pan Certified Public Accountants LLP as the auditor of internal control auditing at RMB 600,000. IX. Risk of Suspension or Termination of Listing after the Disclosure of Annual Report □ Applicable √ Not applicable 67 Bengang Steel Plates Co., Ltd. Annual Report 2021 X. Bankrupt and Reforming Events □ Applicable √ Not applicable There was no bankrupt and reforming event during the reporting period. XI. Significant Lawsuits and Arbitrations □ Applicable √ Not applicable There was no significant lawsuit or arbitrations during the reporting period. XII. Punishment and Rectification □ Applicable √ Not applicable There was no punishment or rectification during the reporting period. XIII. Credit Status of the Company and its Controlling Shareholders and Actual Controllers □ Applicable √ Not applicable XIV. Major Related Party Transactions 1. Related party transactions relevant to daily operations √ Applicable □ Not applicable The Amount approve Means Pricing of Whethe Availab Content d of Type of principl Price of related Proporti r exceed le of trading paymen Index related e of related party on of the market Date of Related Relation related limit of t of of party related party transacti similar approve price of disclosu parties ship party transacti related disclos transacti party transacti ons (in transacti d similar re transacti ons (in party ure ons transacti ons 10 ons limited transacti ons 10 transacti ons thousan (Y/N) ons thousan ons d) d) Benxi Purchasi Execute Iron and ng accordi parent on Related Steel goods / repair 30,456. ng to 2021/4/ compan agreeme agreeme 0.00% 40,000 No Yes (Group) receivin cost 09 the 28 y nt nt price Co. g labor agreeme services nt Benxi Purchasi Execute Iron and ng Raw and accordi parent on Related Steel goods / auxiliary ng to 2021/4/ compan agreeme agreeme 18.13 No Yes (Group) receivin material the 28 y nt nt price Co. g labor s agreeme services nt Bensteel Purchasi Execute Stainless ng accordi Steel same on Related goods / Stock ng to 2021/4/ Cold controll agreeme agreeme 83.1 30 No Yes receivin goods the 28 Rolled er nt nt price g labor agreeme Dandong services nt Co. Benxi same Purchasi on Related Execute Iron and Labor 3,882.3 controll ng accordi Yes 2021/4/ agreeme agreeme 0.00% 900,000 No Steel er goods / cost nt nt price 8 ng to 28 (Group) receivin the 68 Bengang Steel Plates Co., Ltd. Annual Report 2021 Mining g labor agreeme Co. services nt Benxi Purchasi Execute Iron and ng Raw and accordi same on Related Steel goods / auxiliary 789,791 ng to 2021/4/ controll agreeme agreeme 0.11% No Yes (Group) receivin material .14 the 28 er nt nt price Mining g labor s agreeme Co. services nt Benxi Purchasi Execute Iron and ng accordi same on Related Steel goods / ng to 2021/4/ controll freight agreeme agreeme No Yes (Group) receivin the 28 er nt nt price Mining g labor agreeme Co. services nt Benxi Purchasi Execute Iron and ng Raw and accordi Steel same on Related goods / auxiliary 48,914. ng to 2021/4/ (Group) controll agreeme agreeme 0.01% 40,000 No Yes receivin material 81 the 28 Metallurg er nt nt price g labor s agreeme ical Slag services nt Co. Benxi Iron and Purchasi Execute Steel ng accordi (Group) same on Related goods / process ng to 2021/4/ Steel controll agreeme agreeme 9.75 70 No Yes receivin cost the 28 Processin er nt nt price g labor agreeme g and services nt Distributi on Co. Benxi Iron and Purchasi Execute Steel ng accordi same on Related (Group) goods / spare 7,430.2 ng to 2021/4/ controll agreeme agreeme 0.00% 10,000 No Yes Machiner receivin part 4 the 28 er nt nt price y g labor agreeme Manufact services nt uring Co. Benxi Iron and Purchasi Execute Steel ng accordi same on Related (Group) goods / Repair 7,183.4 ng to 2021/4/ controll agreeme agreeme 0.00% No Yes Machiner receivin labor 9 the 28 er nt nt price y g labor agreeme Manufact services nt uring Co. Benxi Purchasi Execute Iron and ng accordi same on Related Steel goods / spare 2,177.7 ng to 2021/4/ controll agreeme agreeme 0.00% 50,000 No Yes (Group) receivin part 2 the 28 er nt nt price Construct g labor agreeme ion Co. services nt Benxi Purchasi Execute Iron and ng accordi same on Related Steel goods / Enginee 34,708. ng to 2021/4/ controll agreeme agreeme 0.00% No Yes (Group) receivin ring cost 5 the 28 er nt nt price Construct g labor agreeme ion Co. services nt Benxi Purchasi Execute Iron and ng accordi same on Related Steel goods / Repair 27,810. ng to 2021/4/ controll agreeme agreeme 0.00% No Yes (Group) receivin labor 4 the 28 er nt nt price Construct g labor agreeme ion Co. services nt 69 Bengang Steel Plates Co., Ltd. Annual Report 2021 Benxi Purchasi Execute Iron and ng Raw and accordi same on Related Steel goods / auxiliary 1,609.7 ng to 2021/4/ controll agreeme agreeme 0.00% No Yes (Group) receivin material 9 the 28 er nt nt price Construct g labor s agreeme ion Co. services nt Benxi Purchasi Execute Iron and ng accordi same on Related Steel goods / ng to 2021/4/ controll freight agreeme agreeme 414.09 0.00% No Yes (Group) receivin the 28 er nt nt price Construct g labor agreeme ion Co. services nt Benxi Purchasi Execute Iron and ng Raw and accordi Steel same on Related goods / auxiliary 19,531. ng to 2021/4/ (Group) controll agreeme agreeme 0.00% 30,000 No Yes receivin material 75 the 28 Industrial er nt nt price g labor s agreeme Develop services nt ment Co. Benxi Purchasi Execute Iron and ng accordi Steel same on Related goods / Repair ng to 2021/4/ (Group) controll agreeme agreeme 1,489.9 0.00% No Yes receivin labor the 28 Industrial er nt nt price g labor agreeme Develop services nt ment Co. Benxi Purchasi Execute Iron and ng accordi Steel same on Related goods / ng to 2021/4/ (Group) controll freight agreeme agreeme 118.49 No Yes receivin the 28 Industrial er nt nt price g labor agreeme Develop services nt ment Co. Benxi Purchasi Execute Iron and ng accordi Steel same engineer on Related goods / ng to 2021/4/ (Group) controll ing agreeme agreeme 141.29 No Yes receivin the 28 Industrial er funds nt nt price g labor agreeme Develop services nt ment Co. Benxi Purchasi Raw and Execute Iron and ng auxiliary accordi same on Related Steel goods / material ng to 2021/4/ controll agreeme agreeme 314.15 20,000 No Yes (Group) receivin s and the 28 er nt nt price Construct g labor spare agreeme ion Co. services parts nt Benxi Purchasi Execute Iron and ng accordi same on Related Steel goods / Enginee 1,222.3 ng to 2021/4/ controll agreeme agreeme 0.00% No Yes (Group) receivin ring cost 3 the 28 er nt nt price Construct g labor agreeme ion Co. services nt Benxi Purchasi Execute Iron and ng accordi same on Related Steel goods / repair 17,249. ng to 2021/4/ controll agreeme agreeme 0.00% No Yes (Group) receivin cost 62 the 28 er nt nt price Construct g labor agreeme ion Co. services nt Bensteel Associat Purchasi Execute Raw and Electric es of the ng on Related accordi auxiliary 14,466. 2021/4/ Limited parent goods / agreeme agreeme 0.00% 20,000 No ng to Yes material 12 28 Liability compan receivin nt nt price the s Company y g labor agreeme 70 Bengang Steel Plates Co., Ltd. Annual Report 2021 services nt Bensteel Purchasi Execute Associat Electric ng accordi es of the on Related Co. goods / Repair 3,076.6 ng to 2021/4/ parent agreeme agreeme 0.00% No Yes receivin labor 4 the 28 compan nt nt price g labor agreeme y services nt Benxi It Purchasi Execute High-tech belongs ng accordi on Related Drilling to Benxi goods / spare ng to 2021/4/ agreeme agreeme 35.5 50 No Yes Tools Iron and receivin part the 28 nt nt price Manufact steel g labor agreeme uring Co. group services nt Benxi Purchasi Execute New ng accordi same on Related Business goods / Repair ng to 2021/4/ controll agreeme agreeme 22.74 21,500 No Yes Develop receivin labor the 28 er nt nt price ment Co. g labor agreeme services nt Benxi Purchasi Execute Raw and New ng accordi same auxiliary on Related Business goods / ng to 2021/4/ controll material agreeme agreeme 599.56 0.00% No Yes Develop receivin the 28 er s and nt nt price ment Co. g labor agreeme meals services nt Liaoning Purchasi Execute Metallurg ng accordi same on Related ical goods / spare ng to 2021/4/ controll agreeme agreeme 0.32 1,000 No Yes Technicia receivin part the 28 er nt nt price n College g labor agreeme services nt Liaoning Purchasi Execute Metallurg ng accordi ical same engineer on Related goods / ng to 2021/4/ Vocationa controll ing agreeme agreeme 700 No Yes receivin the 28 l and er funds nt nt price g labor agreeme Technical services nt College Liaoning Purchasi Execute Metallurg ng accordi ical same on Related goods / Repair 2,084.8 ng to 2021/4/ Vocationa controll agreeme agreeme 0.00% No Yes receivin labor 2 the 28 l and er nt nt price g labor agreeme Technical services nt College Bensteel It Purchasi Execute Group belongs ng Raw and accordi Internatio on Related to Benxi goods / auxiliary 1,683,6 1,750,0 ng to 2021/4/ nal agreeme agreeme 0.23% No Yes Iron and receivin material 63.51 00 the 28 Economic nt nt price steel g labor s agreeme and Trade group services nt Co. Bensteel It Purchasi Execute Group belongs ng accordi Internatio on Related to Benxi goods / Agency 7,140.1 ng to 2021/4/ nal agreeme agreeme 0.00% No Yes Iron and receivin fee 2 the 28 Economic nt nt price steel g labor agreeme and Trade group services nt Co. Bensteel It Purchasi Port Execute on Related Group belongs ng miscella 40,115. accordi Yes 2021/4/ agreeme agreeme 0.01% No Internatio to Benxi goods / neous 06 ng to 28 nt nt price nal Iron and receivin charges the 71 Bengang Steel Plates Co., Ltd. Annual Report 2021 Economic steel g labor agreeme and Trade group services nt Co. Benxi Iron and Purchasi Execute Steel ng accordi same on Related (Group) goods / spare ng to 2021/4/ controll agreeme agreeme 238.24 4,000 No Yes Informati receivin part the 28 er nt nt price on g labor agreeme Automati services nt on Co. Benxi Iron and Purchasi Execute Steel ng accordi same on Related (Group) goods / Enginee ng to 2021/4/ controll agreeme agreeme 773.19 0.00% No Yes Informati receivin ring cost the 28 er nt nt price on g labor agreeme Automati services nt on Co. Benxi Iron and Purchasi Execute Steel ng accordi same on Related (Group) goods / Repair 5,828.8 ng to 2021/4/ controll agreeme agreeme 0.00% No Yes Informati receivin labor 9 the 28 er nt nt price on g labor agreeme Automati services nt on Co. Benxi Purchasi Execute Iron and ng accordi Steel same on Related goods / Heating ng to 2021/4/ (Group) controll agreeme agreeme 193.57 200 No Yes receivin cost the 28 Thermal er nt nt price g labor agreeme Develop services nt ment Co. Benxi Purchasi Execute Iron and ng Raw and accordi Steel same on Related goods / auxiliary ng to 2021/4/ (Group) controll agreeme agreeme 431.58 0.00% No Yes receivin material the 28 Thermal er nt nt price g labor s agreeme Develop services nt ment Co. Benxi Iron and Purchasi Execute Steel ng accordi same on Related (Group) goods / Design ng to 2021/4/ controll agreeme agreeme 37.08 200 No Yes Design receivin fee the 28 er nt nt price and g labor agreeme Research services nt Institute Benxi Purchasi Execute Beiping ng Raw and accordi same on Related Iron and goods / auxiliary 341,396 ng to 2021/4/ controll agreeme agreeme 0.05% 350,000 No Yes Steel receivin material .62 the 28 er nt nt price (Group) g labor s agreeme Co. services nt Benxi Purchasi Execute Beiping ng accordi same on Related Iron and goods / Energy 57,415. ng to 2021/4/ controll agreeme agreeme 0.01% No Yes Steel receivin power 98 the 28 er nt nt price (Group) g labor agreeme Co. services nt Benxi same Purchasi on Related Execute 2021/4/ Beiying controll ng freight agreeme agreeme 503.57 0.00% No accordi Yes 28 Iron and er goods / nt nt price ng to 72 Bengang Steel Plates Co., Ltd. Annual Report 2021 Steel receivin the (Group) g labor agreeme Co. services nt Benxi Purchasi Execute Beiying ng accordi same on Related Iron and goods / Labor 8,366.9 ng to 2021/4/ controll agreeme agreeme 0.00% No Yes Steel receivin cost 2 the 28 er nt nt price (Group) g labor agreeme Co. services nt Benxi Purchasi Execute Beiying ng accordi same on Related Iron and goods / spare 1,609.0 ng to 2021/4/ controll agreeme agreeme 0.00% No Yes Steel receivin part 4 the 28 er nt nt price (Group) g labor agreeme Co. services nt Benxi Purchasi Execute Beiying ng accordi same on Related Iron and goods / Agency ng to 2021/4/ controll agreeme agreeme 240.64 No Yes Steel receivin fee the 28 er nt nt price (Group) g labor agreeme Co. services nt Liaoning Hengtong Purchasi Execute Raw Metallurg ng accordi same material on Related ical goods / 6,772.4 ng to 2021/4/ controll s and agreeme agreeme 0.00% 10,000 No Yes Equipmen receivin 7 the 28 er spare nt nt price t g labor agreeme parts Manufact services nt uring Co. Liaoning Hengtong Purchasi Execute Metallurg ng accordi same Repair on Related ical goods / ng to 2021/4/ controll and agreeme agreeme 921.44 0.00% No Yes Equipmen receivin the 28 er labor nt nt price t g labor agreeme Manufact services nt uring Co. Liaoning Purchasi Execute Raw Hengtai ng accordi same material on Related Heavy goods / ng to 2021/4/ controll s and agreeme agreeme 177.97 1,000 No Yes Machiner receivin the 28 er spare nt nt price y Co. g labor agreeme parts services nt Liaoning Purchasi Execute Hengtai ng accordi same Repair on Related Heavy goods / 2,565.2 ng to 2021/4/ controll and agreeme agreeme 0.00% No Yes Machiner receivin 7 the 28 er labor nt nt price y Co. g labor agreeme services nt Bensteel Purchasi Execute Group ng accordi Property on Related Co. Controll goods / ng to 2021/4/ manage agreeme agreeme 20,000 No Yes er receivin the 28 ment fee nt nt price g labor agreeme services nt Bensteel Purchasi Execute Group ng accordi on Related Co. Controll goods / Labor 10,326. ng to 2021/4/ agreeme agreeme 0.14% No Yes er receivin cost 61 the 28 nt nt price g labor agreeme services nt Anshan It Purchasi Repair on Related Execute Yes 2021/4/ 109 No Steel belongs ng labor agreeme agreeme accordi 28 73 Bengang Steel Plates Co., Ltd. Annual Report 2021 Electric to goods / nt nt price ng to Co. Angang receivin the Group g labor agreeme services nt Anshan Purchasi Execute Iron and It ng Raw and accordi Steel belongs on Related goods / auxiliary 1,066.4 ng to 2021/4/ Scrap to agreeme agreeme 0.00% 0 No Yes receivin material 3 the 28 Resources Angang nt nt price g labor s agreeme (Anshan) Group services nt Co. Anshan Iron and Purchasi Execute Steel It ng Raw and accordi Scrap belongs on Related goods / auxiliary ng to 2021/4/ Resources to agreeme agreeme 605.2 0.00% No Yes receivin material the 28 (Anshan) Angang nt nt price g labor s agreeme Co Ltd Group services nt Chaoyang Branch Anshan Purchasi Execute It Steel ng Raw and accordi belongs on Related Rope Co. goods / auxiliary ng to 2021/4/ to agreeme agreeme 1.64 No Yes receivin material the 28 Angang nt nt price g labor s agreeme Group services nt Anshan Iron and Purchasi Execute It Steel ng accordi belongs on Related Group goods / Enginee ng to 2021/4/ to agreeme agreeme 415.65 0.00% No Yes Engineeri receivin ring cost the 28 Angang nt nt price ng and g labor agreeme Group Technolo services nt gy Co. Anshan Iron and Purchasi Execute Steel It ng Raw and accordi Group belongs on Related goods / auxiliary 15,892. ng to 2021/4/ Internatio to agreeme agreeme 0.00% No Yes receivin material 03 the 28 nal Angang nt nt price g labor s agreeme Economic Group services nt and Trade Co. Anshan Purchasi Execute It Steel ng accordi belongs on Related Construct goods / Enginee ng to 2021/4/ to agreeme agreeme 138 No Yes ion Group receivin ring cost the 28 Angang nt nt price Co. g labor agreeme Group services nt Anshan Steel Purchasi Execute It Industrial ng accordi belongs on Related Group goods / Repair ng to 2021/4/ to agreeme agreeme 62.12 No Yes Metallurg receivin labor the 28 Angang nt nt price ical g labor agreeme Group Machiner services nt y Co. Anshan Purchasi Execute Steel It ng accordi Steel belongs on Related goods / Labor ng to 2021/4/ Processin to agreeme agreeme 1.23 No Yes receivin cost the 28 g and Angang nt nt price g labor agreeme Distributi Group services nt on 74 Bengang Steel Plates Co., Ltd. Annual Report 2021 (Dalian) Co. Anshan Iron and Steel Purchasi Execute It Group ng accordi belongs on Related Engineeri goods / Enginee ng to 2021/4/ to agreeme agreeme 6.64 No Yes ng and receivin ring cost the 28 Angang nt nt price Technolo g labor agreeme Group gy services nt Develop ment Co. Bensteel Execute Associat Selling Electric accordi es of the goods / on Related Limited Energy ng to 2021/4/ parent providin agreeme agreeme 94.22 100 No Yes Liability power the 28 compan g labor nt nt price Company agreeme y services nt Benxi Raw and Execute Selling Beiying auxiliary accordi same goods / on Related Iron and material 536,149 ng to 2021/4/ controll providin agreeme agreeme 0.07% 240,000 No Yes Steel s and .62 the 28 er g labor nt nt price (Group) spare agreeme services Co. parts nt Benxi Execute Selling Beiping accordi same goods / on Related Iron and commod 3,228.6 ng to 2021/4/ controll providin agreeme agreeme 0.00% No Yes Steel ity 7 the 28 er g labor nt nt price (Group) agreeme services Co. nt Benxi Execute Selling Beiying accordi same goods / on Related Iron and Energy 19,099. ng to 2021/4/ controll providin agreeme agreeme 0.00% No Yes Steel power 4 the 28 er g labor nt nt price (Group) agreeme services Co. nt Benxi Iron and Execute Selling Steel accordi same goods / on Related (Group) Energy ng to 2021/4/ controll providin agreeme agreeme 3.68 10 No Yes Real power the 28 er g labor nt nt price Estate agreeme services Develop nt ment Co. Benxi Iron and Execute Steel Selling accordi (Group) same goods / on Related Energy ng to 2021/4/ Steel controll providin agreeme agreeme 0.46 30 No Yes power the 28 Processin er g labor nt nt price agreeme g and services nt Distributi on Co. Benxi Iron and Execute Selling Steel accordi same goods / on Related (Group) commod 2,699.7 ng to 2021/4/ controll providin agreeme agreeme 0.03% 5,000 No Yes Machiner ity 3 the 28 er g labor nt nt price y agreeme services Manufact nt uring Co. Benxi same Selling Energy on Related Execute 2021/4/ Iron and controll goods / agreeme agreeme 2,213 0.00% No accordi Yes power 28 Steel er providin nt nt price ng to 75 Bengang Steel Plates Co., Ltd. Annual Report 2021 (Group) g labor the Machiner services agreeme y nt Manufact uring Co. Benxi Iron and Raw and Execute Selling Steel auxiliary accordi same goods / on Related (Group) material ng to 2021/4/ controll providin agreeme agreeme 112.95 No Yes Machiner s and the 28 er g labor nt nt price y spare agreeme services Manufact parts nt uring Co. Benxi Execute Selling Iron and accordi same goods / on Related Steel Energy ng to 2021/4/ controll providin agreeme agreeme 783.21 0.00% 8,000 No Yes (Group) power the 28 er g labor nt nt price Construct agreeme services ion Co. nt Benxi Raw and Execute Selling Iron and auxiliary accordi same goods / on Related Steel material 16,451. ng to 2021/4/ controll providin agreeme agreeme 0.00% No Yes (Group) s and 31 the 28 er g labor nt nt price Construct spare agreeme services ion Co. parts nt Benxi Execute Selling Iron and accordi same goods / on Related Steel Energy 71,376. ng to 2021/4/ controll providin agreeme agreeme 0.01% 100,000 No Yes (Group) power 36 the 28 er g labor nt nt price Mining agreeme services Co. nt Benxi Raw and Execute Selling Iron and auxiliary accordi same goods / on Related Steel material 11,481. ng to 2021/4/ controll providin agreeme agreeme 0.00% No Yes (Group) s and 75 the 28 er g labor nt nt price Mining spare agreeme services Co. parts nt Benxi Execute Selling Iron and accordi same goods / on Related Steel Freight ng to 2021/4/ controll providin agreeme agreeme 963.5 0.00% No Yes (Group) income the 28 er g labor nt nt price Mining agreeme services Co. nt Benxi Execute Selling Iron and accordi same goods / on Related Steel commod ng to 2021/4/ controll providin agreeme agreeme 955.33 0.00% No Yes (Group) ity the 28 er g labor nt nt price Mining agreeme services Co. nt Benxi Execute Iron and Selling accordi Steel same goods / on Related Energy 4,649.9 ng to 2021/4/ (Group) controll providin agreeme agreeme 0.00% 5,000 No Yes power 3 the 28 Thermal er g labor nt nt price agreeme Develop services nt ment Co. Benxi Raw and Execute Iron and Selling auxiliary accordi Steel same goods / on Related material 3,595.8 ng to 2021/4/ (Group) controll providin agreeme agreeme 0.00% No Yes s and 4 the 28 Thermal er g labor nt nt price spare agreeme Develop services parts nt ment Co. 76 Bengang Steel Plates Co., Ltd. Annual Report 2021 Benxi Execute Iron and Selling accordi Steel same goods / on Related Energy ng to 2021/4/ (Group) controll providin agreeme agreeme 972.98 0.00% 3,000 No Yes power the 28 Industrial er g labor nt nt price agreeme Develop services nt ment Co. Benxi Execute Iron and Selling accordi Steel same goods / on Related commod 2,506.4 ng to 2021/4/ (Group) controll providin agreeme agreeme 0.00% No Yes ity 3 the 28 Industrial er g labor nt nt price agreeme Develop services nt ment Co. Benxi Raw and Execute Iron and Selling auxiliary accordi Steel same goods / on Related material 1,206.9 ng to 2021/4/ (Group) controll providin agreeme agreeme 0.00% No Yes s and 2 the 28 Industrial er g labor nt nt price spare agreeme Develop services parts nt ment Co. Benxi Iron and Execute Selling Steel accordi same goods / on Related (Group) Energy ng to 2021/4/ controll providin agreeme agreeme 12.73 20 No Yes Informati power the 28 er g labor nt nt price on agreeme services Automati nt on Co. Benxi Execute Selling Iron and accordi same goods / on Related Steel Energy ng to 2021/4/ controll providin agreeme agreeme 123.95 500 No Yes (Group) power the 28 er g labor nt nt price Construct agreeme services ion Co. nt Benxi Raw and Execute Selling Iron and auxiliary accordi same goods / on Related Steel material ng to 2021/4/ controll providin agreeme agreeme 346.39 No Yes (Group) s and the 28 er g labor nt nt price Construct spare agreeme services ion Co. parts nt Benxi Execute Iron and Selling accordi Steel same goods / on Related Energy ng to 2021/4/ (Group) controll providin agreeme agreeme 565.72 0.00% 30,000 No Yes power the 28 Metallurg er g labor nt nt price agreeme ical Slag services nt Co. Benxi Raw and Execute Iron and Selling auxiliary accordi Steel same goods / on Related material 48,920. ng to 2021/4/ (Group) controll providin agreeme agreeme 0.01% No Yes s and 96 the 28 Metallurg er g labor nt nt price spare agreeme ical Slag services parts nt Co. Benxi Iron and Execute Steel Selling accordi (Group) same goods / on Related commod 3,047.7 ng to 2021/4/ Metallurg controll providin agreeme agreeme 0.00% No Yes ity 3 the 28 ical Slag er g labor nt nt price agreeme Limited services nt Liability Company 77 Bengang Steel Plates Co., Ltd. Annual Report 2021 Benxi Execute Iron and Selling accordi Steel parent goods / on Related Energy ng to 2021/4/ (Group) compan providin agreeme agreeme 241.94 2,000 No Yes power the 28 Limited y g labor nt nt price agreeme Liability services nt Company Benxi Raw and Execute Iron and Selling auxiliary accordi Steel parent goods / on Related material ng to 2021/4/ (Group) compan providin agreeme agreeme 599.48 0.00% No Yes s and the 28 Limited y g labor nt nt price spare agreeme Liability services parts nt Company Benxi Execute Selling New accordi same goods / on Related Business Energy ng to 2021/4/ controll providin agreeme agreeme 22.43 50 No Yes Develop power the 28 er g labor nt nt price ment Co. agreeme services nt Dalian It Execute Polole belongs Selling accordi Steel Pipe to Benxi goods / on Related commod 1,381.9 ng to 2021/4/ Co. Iron and providin agreeme agreeme 0.00% 2,000 No Yes ity 2 the 28 Steel g labor nt nt price agreeme Group services nt Co., Ltd Benxi Iron and Execute Selling Steel accordi same goods / on Related (Group) Energy ng to 2021/4/ controll providin agreeme agreeme 10 No Yes Zhengtai power the 28 er g labor nt nt price Building agreeme services Materials nt Co. Liaoning Hengtong Execute Selling Metallurg accordi same goods / on Related ical Energy ng to 2021/4/ controll providin agreeme agreeme 0.03 2,000 No Yes Equipmen power the 28 er g labor nt nt price t agreeme services Manufact nt uring Co. Liaoning Hengtong Raw and Execute Selling Metallurg auxiliary accordi same goods / on Related ical material ng to 2021/4/ controll providin agreeme agreeme 302.02 No Yes Equipmen s and the 28 er g labor nt nt price t spare agreeme services Manufact parts nt uring Co. Liaoning Hengtong Execute Selling Metallurg accordi same goods / on Related ical commod 2,591.9 ng to 2021/4/ controll providin agreeme agreeme 0.00% No Yes Equipmen ity 1 the 28 er g labor nt nt price t agreeme services Manufact nt uring Co. Bensteel Selling Execute Stainless same goods / on Related accordi commod 2021/4/ Steel controll providin agreeme agreeme 295.41 3,000 No ng to Yes ity 28 Cold er g labor nt nt price the Rolled services agreeme 78 Bengang Steel Plates Co., Ltd. Annual Report 2021 Dandong nt Co. Suzhou Execute Selling Bensteel Joint accordi goods / on Related Industrial stock commod 66,835. ng to 2021/4/ providin agreeme agreeme 0.01% 55,000 No Yes Co. compan ity 91 the 28 g labor nt nt price y agreeme services nt Bensteel It Execute Selling Group belongs accordi goods / on Related Finance to Benxi Energy ng to 2021/4/ providin agreeme agreeme 1.39 2 No Yes Co. Iron and power the 28 g labor nt nt price steel agreeme services group nt Bensteel Execute Selling Group accordi goods / on Related Co. Controll Energy ng to 2021/4/ providin agreeme agreeme 12.45 2,000 No Yes er power the 28 g labor nt nt price agreeme services nt Bensteel Raw and Execute Selling Group auxiliary accordi goods / on Related Co. Controll material 1,282.0 ng to 2021/4/ providin agreeme agreeme 0.00% No Yes er s and 8 the 28 g labor nt nt price spare agreeme services parts nt Bensteel Execute Selling Group accordi goods / on Related Co. Controll Labor 7,542.3 ng to 2021/4/ providin agreeme agreeme 0.00% No Yes er cost 2 the 28 g labor nt nt price agreeme services nt Bensteel Execute Selling Group accordi goods / on Related Co. Controll commod 12,781. ng to 2021/4/ providin agreeme agreeme 0.00% No Yes er ity 64 the 28 g labor nt nt price agreeme services nt Liaoning Execute Selling Hengtai accordi same goods / on Related Heavy Energy ng to 2021/4/ controll providin agreeme agreeme 50 No Yes Machiner power the 28 er g labor nt nt price y Co. agreeme services nt Liaoning Execute Selling Hengtai accordi same goods / on Related Heavy commod ng to 2021/4/ controll providin agreeme agreeme 38.97 No Yes Machiner ity the 28 er g labor nt nt price y Co. agreeme services nt Ansteel Execute It Selling Chemical accordi belongs goods / on Related Technolo commod ng to 2021/4/ to providin agreeme agreeme 1,032.8 0.00% No Yes gy Co. ity the 28 Angang g labor nt nt price agreeme Group services nt Ansteel Raw and Execute It Selling Energy auxiliary accordi belongs goods / on Related Technolo material ng to 2021/4/ to providin agreeme agreeme 79.62 15,000 No Yes gy Co. s and the 28 Angang g labor nt nt price spare agreeme Group services parts nt Ansteel It Selling Energy on Related 0.01 No Execute Yes 2021/4/ 79 Bengang Steel Plates Co., Ltd. Annual Report 2021 Electric belongs goods / power agreeme agreeme accordi 28 Co. to providin nt nt price ng to Angang g labor the Group services agreeme nt Panzhong Execute It Selling Yihong accordi belongs goods / on Related Metal commod ng to 2021/4/ to providin agreeme agreeme 806.99 0.00% No Yes Products ity the 28 Angang g labor nt nt price (Chongqi agreeme Group services ng) Co. nt Deyin Execute It Selling Landport accordi belongs goods / on Related Supply commod 9,987.2 ng to 2021/4/ to providin agreeme agreeme 0.00 No Yes Chain ity 6 the 28 Angang g labor nt nt price Services agreeme Group services Co. nt Bensteel It Raw and Execute Bidding belongs Selling auxiliary accordi Co. to Benxi goods / on Related material ng to 2021/4/ Iron and providin agreeme agreeme 10.8 No Yes s and the 28 Steel g labor nt nt price spare agreeme Group services parts nt Co., Ltd 4,039,2 3,741,5 Total -- -- -- -- -- -- -- -- 68.72 22 Details of any sales return of a large No applicable amount Give the actual situation during the reporting period where a forecast had been made for the total amounts of No applicable routine related-party transactions,by type to occur in the current period(if any) Reason for any significant difference between the transaction price and the No applicable Market price for reference (if applicable) 2. Related transactions relevant to asset acquisition or sold □ Applicable √ Not applicable There was no related transaction relevant to asset acquisition or sold during the reporting period. 3. Related transactions relevant to joint investments □ Applicable √ Not applicable There was no related transaction relevant to joint investments during the reporting period. 4. Credits and liabilities with related parties □ Applicable √ Not applicable Whether there are non-operating related creditor's rights and debts 5. Transactions with related financial companies √Applicable □ Not applicable Deposit business 80 Bengang Steel Plates Co., Ltd. Annual Report 2021 Amount for this period Maximum The total Beginning Total deposit Closing Connection daily deposit deposit rate amount Related party balance (10 amount for the withdrawn in balance (ten relation limit (10 range thousand yuan) current period the current thousand yuan) thousand yuan) (10 thousand period (10 yuan) thousand yuan) Ansteel Group Both belong to Finance Co., 450,000 1.725% 0 467,965.63 25,000 442,965.63 Ansteel Group Ltd. Bengang Both belong to Group Finance 1,100,000 3.0%~3.5% 1,332,199.78 20,900,552.77 22,232,752.56 0 Bengang Group Co., Ltd. Loan business Amount for this period Total Loan Amount Beginning Total loan Closing Connection Loan Interest repayment Related party (10 thousand balance (10 amount for the relation Rate Range amount for the balance (10 yuan) thousand yuan) current period current period thousand yuan) (10 thousand (10 thousand yuan) yuan) Credit or other financial business Actual amount (ten Related party Connection relation Business type Total (ten thousand yuan) thousand yuan) 6. Other significant related transactions □Applicable √ Not applicable There is no deposit, loan, credit or other financial business between the financial company controlled by the company and its related parties. 7. Transactions between financial companies controlled by the company and related parties □Applicable √ Not applicable During the reporting period, the company had no other significant related transactions. XV. Major Contracts and Their Performance 1. Trusteeship, contracting and lease (1) Trusteeship □ Applicable √ Not applicable There was no trusteeship during the reporting period. (2) Contracting □ Applicable √ Not applicable There was no contracting during the reporting period. (3) Lease √Applicable □ Not applicable Description of lease Company as the lessor 81 Bengang Steel Plates Co., Ltd. Annual Report 2021 Currency unit: Yuan Lessee Lease capital category Lease income of 2021 Lease income of 2020 Benxi Steel & Iron (Group) Warehouse and ancillary Steel & Iron Process and facilities 500,000.00 Logistics Co., Ltd. Benxi Iron and Steel Tendering Plants and ancillary 480,000.00 Co., Ltd. facilities Company as the lessee Currency unit: Yuan Rent paid Rental expense for short-term leases and leases of low-value Lessor Lease capital category Assume interest assets and variable Increased right-of- Confirmed rental expense on lease lease payments not use assets of 2021 fee of 2020 liability of 2021 included in the measurement of lease liabilities Land use right Benxi Steel & Iron 7,669,068.17 square meter. 1,060,272,624.21 39,600,209.28 57,383,355.31 (Group) Co., Ltd Land use right 42,920.00 square meter Benxi Steel & Iron 2300 Hot rolling product 208,155,611.73 7,982,648.96 16,711,424.34 (Group) Co., Ltd line, related real estate Benxi Beiying 1780 Hot rolling product Steel & Iron 160,309,755.83 6,147,787.68 15,578,677.65 (Group) Co., Ltd. line, related real estate Bengang Group Land use right 72,001,790.96 2,666,923.92 9,945,423.08 Co., Ltd. 728,282.30 square meter. Notes: 1. According to the "Land Use Right Leasing Contract" and subsequent supplementary agreements signed between the Company and Bengang Steel (Group)on April 7, 1997, December 30, 2005 and subsequent, the Company leases land from Benxi Steel (Group), with a monthly rent of 0.594 yuan per square meter. The leased land is 7,669,068.17 square meters and the annual rent is 54,665.10 thousand yuan. 2. On August 14, 2019, the Company signed the "House Lease Agreement" with Benxi Steel (Group) and Beiying Iron and Steel Company, and leased the houses and auxiliary facilities occupied by the 2300 hot rolling mill production line and the 1780 hot rolling mill production line. The lease term of the houses and ancillary facilities is until December 31, 2038. 3. On July 15, 2019, the Company signed "Land Lease Agreement" with Bengang Group and Bengang Steel (Group) respectively, leased and used a total of 8 pieces of land from Bengang Group and Bengang Group Company, with leased areas of 42,920.00 square meters and 728,282.30 square meters. The lease term is 20 years, the rental price is 1.138 yuan per square meter per month. Projects that bring profits and losses to the company reaching more than 10% of the company's total profit during the reporting period □ Applicable √ Not applicable 82 Bengang Steel Plates Co., Ltd. Annual Report 2021 During the reporting period of the company, there was no leasing project that brought the company's profit and loss to more than 10% of the company's total profit during the reporting period. 2. Guarantee □ Applicable √ Not applicable There was no guarantee during the reporting period. 3. Entrusting Others for Managing Cash Asset (1) Entrusted Finance √Applicable □ Not applicable Overview of entrusted wealth management during the reporting period Unit: In ten thousand yuan Overdue but The source of funds Amount not uncollected Amount of entrusted Outstanding Specific type for entrusted wealth collected after amount has been wealth management balance management the due date accrued for impairment Bank financial products self - owned 95,000 Bank financial products self - owned 85,000 Bank financial products self - owned 430,000 Bank financial products self - owned 10,000 Total 620,000 Specific circumstances of high-risk entrusted wealth management with a single large amount or low security and low liquidity □ Applicable √ Not applicable Entrusted wealth management is expected to be unable to recover the principal or there are other circumstances that may lead to impairment □ Applicable √ Not applicable (2) Entrusted Loans □ Applicable √ Not applicable There was no entrusted loan during the reporting period. 4. Other Major Contracts □ Applicable √ Not applicable There was no other major contract during the reporting period. XVI. Description of other major events √ Applicable □ Not applicable On April 15, 2021, the company received the notice from the indirect controlling shareholder Benxi Iron and Steel Group Co., Ltd. and known that Angang Group Co., Ltd. was planning to restructure Benxi Iron and Steel Group, which may lead to the change of control of the company. The reorganization is still in the planning stage, and the plan needs to be approved by relevant departments after being determined. For details, see the suggestive 83 Bengang Steel Plates Co., Ltd. Annual Report 2021 announcement on the strategic restructuring of indirect controlling shareholder Benxi Iron and Steel Group Co., Ltd. published on the designated information disclosure media on April 15, 2021. On July 15, 2021, Benxi Steel Group Co., Ltd., the indirect controlling shareholder of the company, signed the agreement on free transfer of trust beneficial rights with Liaoning Engineering Consulting Group Co., Ltd., Liaoning urban and Rural Construction Group Co., Ltd. and Liaoning Rongda Investment Co., Ltd. respectively. The provincial engineering consulting group, Liaoning urban and rural construction group and Liaoning Rongda transferred their relevant trust beneficial rights to Benxi Steel Group free of charge. For details, please refer to the prompt announcement of Benxi steel plate Co., Ltd. on the change of shareholders' equity (2021-039), the simplified report on the change of shareholders' equity of Benxi steel plate Co., Ltd. and the legal opinion on the exemption from the offer of Benxi Steel Group Co., Ltd. for the increase of shares of Benxi steel plate Co., Ltd. published on the designated information disclosure media on July 17, 2021. On July 30, 2021, the state-owned assets supervision and Administration Commission of Liaoning Provincial People's government agreed that Liaoning Communications Investment Co., Ltd. would transfer its 182842883 shares of the company to Benxi Iron and Steel Group for free. For details, please refer to the prompt announcement of Benxi steel plate Co., Ltd. on the free transfer of some state-owned equity and the change of shareholders' equity (2021-044), the report on the change of simplified equity of Benxi steel plate Co., Ltd. and the legal opinion on the exemption of Benxi Steel Group Co., Ltd. from issuing an offer for the increase of shares of Benxi steel plate Co., Ltd. published on the designated information disclosure media on July 31, 2021. On August 18, 2021, the State-owned Assets Supervision and Administration Commission of the State Council and the people's Government of Liaoning Province jointly issued a notice agreeing that Anshan Iron and Steel Group Co., Ltd. would restructure Benxi Iron and Steel Group Co., Ltd. and the Liaoning SASAC would transfer 51% of the equity of Benxi Iron and Steel Group to Anshan Iron and Steel Group free of charge. Due to necessary procedures need to be performed for this transfer have not been completed, there is still uncertainty whether it can obtain relevant approval and whether the transfer can be implemented smoothly. For details, please refer to the Company's publication on 19 August 2021 in the designated information disclosure media” Announcement on the Gratis-free Transfer of 51% Equity Interest in Bensteel Group, the Indirect Controlling Shareholder, Approved by the State- owned Assets Supervision and Administration Commission of the State Council and the People's Government of Liaoning Province”. On August 20, 2021, the State-owned Assets Supervision and Administration Commission of Liaoning Provincial People's government, the actual controller of the company, and Anshan Iron and Steel Group Co., Ltd. signed the free transfer agreement between the State-owned Assets Supervision and Administration Commission of Liaoning Provincial People's government and Anshan Iron and Steel Group Co., Ltd. on the state-owned equity of Benxi Iron and Steel Group Co., Ltd. According to the free transfer agreement, “Liaoning SASAC will transfer its 51% equity of Benxi Iron and Steel Group Co., Ltd. to Angang Group free of charge.” After the completion of this transfer, Angang Group will hold 51% equity of Benxi Iron and Steel Group, and Benxi Iron and Steel Group will become a holding subsidiary of Angang Group. Angang Group indirectly controls 81.07% of the shares of the company through Benxi Iron and Steel Group, Benxi Iron and steel (Group) Co., Ltd. and Angang Group Capital Holding Co., Ltd. The direct controlling shareholder of the company remains unchanged and remains Benxi Iron and steel (Group) Co., Ltd. The actual controller of the company is changed to SASAC of the State Council. For details, please refer to the suggestive announcement on the free transfer of 51% equity of Benxi Iron and Steel Group Co., Ltd. by the state owned assets supervision and Administration Commission of Liaoning Provincial People's government to 84 Bengang Steel Plates Co., Ltd. Annual Report 2021 Anshan Iron and Steel Group Co., Ltd. and Anshan Iron and Steel Group Co., Ltd. becoming the indirect controlling shareholder of the company published on the designated information disclosure media on August 21 and August 24, 2021, as well as the short form equity change statement and acquisition report. On October 12, 2021, the industrial and commercial change registration procedures for free equity transfer were completed. For details, please refer to “the announcement on the free transfer of 51% equity of Benxi Iron and Steel Group Co., Ltd. by the state-owned assets supervision and Administration Commission of Liaoning Provincial People's government to Anshan Iron and Steel Group Co., Ltd. and the industrial and commercial change registration and change of indirect controlling shareholder” published on the designated information disclosure media on October 13, 2021. XVII. Major events of subsidiaries of the company □ Applicable √ Not applicable Ⅶ. Status of Share Capital Changes and Shareholders I. Share Capital Changes 1. Share capital changes Unit: Share Before the change Increase/decrease(+,-) After the Change Capitaliz ation of Percenta Issuing of Bonus Percenta Quantity common Others Subtotal Quantity ge new share shares ge reserve fund I. Restricted Shares 1. State shareholdings 2. State-own Legal- person Shareholding 3. Other domestic shareholdings Including: Domestic legal person holding Domestic person holding 3. Foreign shareholding Including: Foreign legal person Foreign nature person II. Non-restricted Shares 3,875,371,532 100.00% 232,819,847 232,819,847 4,108,191,379 100.00% 1. Common shares in 3,475,371,532 89.68% 232,819,847 232,819,847 3,708,191,379 90.26% RMB 2. Foreign shares in 400,000,000 10.32% 400,000,000 9.74% domestic market 3. Foreign shares in foreign market 4.Other III. Total shares 3,875,371,532 100.00% 232,819,847 232,819,847 4,108,191,379 100.00% Causation of share capital changes √ Applicable □ Not applicable During the reporting period, 11,688,554 convertible corporate bonds issued by the company were converted into 85 Bengang Steel Plates Co., Ltd. Annual Report 2021 shares, and the total share capital of the company increased by 232,819,847 shares. Status of approval of share capital changes □Applicable √Not applicable Status of registration process of transferred shares □Applicable √Not applicable Influences of share capital changes on financial indices such as basic earnings per share, diluted earnings per share, and net asset per share attributed to common shareholders in the most recent year and the most recent period □Applicable √Not applicable Other information that the Company deems necessary to be disclosed or required by the authority □Applicable √Not applicable 2. Changes of Restricted Shares □ Applicable √ Not applicable II. Securities Issuance and Listing 1. Status of Security Issuance (Excluding Preferred Shares) in the Reporting Period □ Applicable √ Not applicable 2. Status of total Share and Shareholder Change and Asset and Liability Structure Change □ Applicable √ Not applicable 3. Status of existing internal employee shares □ Applicable √ Not applicable Ⅲ. Shareholders and actual controllers 1. Status of number of shareholders and shareholding of the company Unit: shares Total The total number of Total preferred shareholders at shareholders at the Total number of the end of the preferred shareholders end of the previous common shareholders previous voting rights restored at 0 69,162 67,655 month from the date 0 at the end of the month from the end of the reporting of disclosing the reporting period the date of period (if any) (refer to annual report (refer to disclosing the Notes 8) Notes 8) annual report Shareholding of shareholders holding more than 5% or top 10 shareholders Holding Number of Changes in Restricted Number of pledged or Name of the Nature of Un-restricted frozen shares Percentage shares held at reporting shares shareholder shareholder shares held (%) period-end period held Status Number Benxi Steel & Iron State-owned Pledged 360,000,000 58.65% 2,409,628,094 2,409,628,094 (Group) Co., Ltd. legal person Frozen 108,326,179 Bengang steel Group State-owned 17.95% 737,371,532 737,371,532 737,371,532 Co., Ltd. legal person Hong Kong Securities Foreign legal Clearing Company 0.78% 32,029,801 32,029,801 32,029,801 person Ltd. Domestic Lyv Ruijun 0.48% 19,832,700 14,823,100 19,832,700 natural person 86 Bengang Steel Plates Co., Ltd. Annual Report 2021 Domestic Zhang Wenyou 0.47% 19,149,967 19,149,967 19,149,967 natural person MORGAN STANLEY & CO. Foreign legal 0.30% 12,136,919 12,136,919 12,136,919 INTERNATIONAL person PLC Huatai Securities CO., State-owned 0.21% 8,805,038 8,805,038 8,805,038 LTD legal person Domestic Zhou Wei 0.19% 7,632,931 7,632,931 7,632,931 natural person Guosen Securities Co., State-owned 0.18% 7,500,000 7,500,000 7,500,000 Ltd. legal person CHINA INTERNATIONAL CAPITAL Foreign legal 0.17% 6,999,972 6,999,972 6,999,972 CORPORATION person HONG KONG SECURITIES LTD Strategy investors or general legal person becomes top 10 shareholders None due to rights issued (if any) (See Notes 3) Benxi Iron and Steel (Group) Co., Ltd. has an associated relationship with Benxi Iron and Steel Explanation of relationship or ‘action Group Co., Ltd., and is a person acting in concert as stipulated in the "Administrative Measures in concert’ among the top 10 for the Acquisition of Listed Companies". The company is not aware of whether there is an shareholders. associated relationship between other shareholders or whether they are persons acting in concert as stipulated in the "Administrative Measures for the Acquisition of Listed Companies". Explanation of the above-mentioned shareholders involving The above shareholders do not involve entrustment, entrusted voting rights or abstention from entrusted/entrusted voting rights and voting rights. abstention from voting rights Shareholding of top 10 unrestricted shareholders Un-restricted shares held at Category of shares Name of the shareholder the end of the reporting period Category of shares Quantity Benxi Steel & Iron (Group) Co., Ltd. 2,409,628,094 Common shares in RMB 2,409,628,094 Bengang steel Group Co., Ltd. 737,371,532 Common shares in RMB 737,371,532 Hong Kong Securities Clearing Company Ltd. 32,029,801 Common shares in RMB 32,029,801 Common shares in RMB 14,022,700 Lyv Ruijun 19,832,700 Domestic listed foreign shares 5,810,000 Zhang Wenyou 19,149,967 Common shares in RMB 19,149,967 MORGAN STANLEY & CO. 12,136,919 Domestic listed foreign shares 12,136,919 INTERNATIONAL PLC Huatai Securities CO., LTD 8,805,038 Common shares in RMB 8,805,038 Zhou Wei 7,632,931 Common shares in RMB 7,632,931 Guosen Securities Co., Ltd. 7,500,000 Common shares in RMB 7,500,000 CHINA INTERNATIONAL CAPITAL CORPORATION HONG KONG 6,999,972 Domestic listed foreign shares 6,999,972 SECURITIES LTD Benxi Steel & Iron (Group) Co., Ltd. has an associated relationship with Bengang steel Notes to relationship or ‘action in concert’ Group Co., Ltd., and is a person acting in concert as stipulated in the "Administrative among the top 10 non-restricted shareholders, Measures for the Acquisition of Listed Companies". The company is not aware of and among the top 10 non-restricted whether there is an associated relationship among the remaining shareholders or shareholders and top 10 shareholders whether they are parties acting in concert as prescribed in the Measures for the Administration of Acquisitions of Listed Companies. Shareholders among the top 10 participating Benxi Steel & Iron (Group) Co., Ltd. Holds182,842,833 shares of the Company’s stock in securities margin trading (if any) (see Note through security account and holds 554,528,649 shares of the Company’s stock through 4) the asset management plan, totaling 737,371,532 shares. Lyv Ruijun holds 5,832,900 87 Bengang Steel Plates Co., Ltd. Annual Report 2021 shares of the company's stock through security account and holds 13,999,800shares through investor credit securities account. Zhang Wenyou holds 19,149,967 shares through investor credit securities account. Zhou Wei holds 7,632,931 shares through investor credit securities account. Whether top 10 common shareholders and top 10 un-restricted common shareholders have a buy- back agreement dealing in reporting period □ Yes √ No Top 10 common shareholders and top 10 un-restricted common shareholders had no buy-back agreement dealing in reporting period. 2. Controlling Shareholder Nature of Controlling Shareholders: Central state-owned holdings Type of Controlling Shareholders: Legal person Name of the Legal representative Date of Organization Controlling Principal business activities / person in charge incorporation Code shareholder 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, refractory material, measuring Benxi Steel & 9121050011972 device instrument, goods and materials Iron (Group) Zhai Hongwei July 10,1996 6263U supply and marketing, development of real Co., Ltd. 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 Bengang Daily; designing and making of presswork and advertisement, releasing, producing of TV advertisements in the country and abroad. Equity of other domestic/forei gn listed company with share controlling None and share participation by controlling shareholder in reporting period Changes of controlling shareholders during the reporting period □Applicable√ Not applicable The controlling shareholder of the company did not change during the reporting period. 3. Actual Controller Actual controller nature: Central State-owned Assets Management Agency Actual controller type: Legal person Name of the controlling Legal representative Date of Organization Principal business activities shareholder / Person in charge incorporation Code 88 Bengang Steel Plates Co., Ltd. Annual Report 2021 Steel, iron, vanadium, titanium, stainless steel, special steel production and manufacturing, non- ferrous metal production and manufacturing, steel rolling processing, iron, vanadium, titanium and other non-ferrous metal, non- metallic mining and comprehensive utilization, mining auxiliary industry, cleaning Energy power generation, sales of coal and products, chemical products and gases (excluding hazardous chemicals), production and sales of refractory materials, industrial and mining engineering, metallurgical engineering construction, engineering and technical services, equipment manufacturing, Internet of Things information services, energy conservation, environmental protection technical services , R&D of new materials, development of renewable resources, mechanical 91210000558 processing, technology development, Ansteel Group Co., Ltd. Tan Chengxu July 28, 2010 190456G transfer and services, transportation services, real estate development, urban energy supply, software and information technology services, intelligent manufacturing and services, domestic and foreign trade, financial management, bidding Services, medical and health care services, vocational skills training, economic information consulting services, enterprise management, hotel catering services, operating other state-owned assets and investments within the scope authorized by the State-owned Assets Supervision and Administration Commission of the State Council; branch operations are limited to the following: newspaper distribution, publication printing, Packaging decoration and other print printing. (For projects subject to approval according to law, business activities can only be carried out after approval by relevant departments) Equity of other domestic/foreign listed company with share During the reporting period, Ansteel Group Co., Ltd. indirectly held 53.33% of the shares controlling and share of Ansteel and indirectly held 58.68% of the shares of Pansteel Vanadium and Titanium. participation by controlling shareholder in reporting period Change of actual controller during the reporting period √ Applicable □Not applicable Liaoning Provincial State-owned Assets Name of the original actual controller: Supervision and Administration Commission Name of the new actual controller Ansteel Group Co., Ltd. Change date October 12, 2021 Query index in Specify the website Announcement number:2021-063 Disclosure date in Specify the website October 13, 2021 89 Bengang Steel Plates Co., Ltd. Annual Report 2021 Block diagram of the ownership and control relations between the Company and the actual controller Whether the actual controller is controlling the Company through trusteeship or other asset management service □ Applicable √ Not applicable 4. The company's controlling shareholder or the largest shareholder and its concerted action person's cumulative pledged shares account for 80% of the company's shares held by them □ Applicable √ Not applicable 5. Shareholders holding More than 10% of the Shares □ Applicable √ Not applicable 6. Status of Share Reduction Limitation of Controlling Shareholders, Actual Controller, Restructuring Party and Other Commitment Subjects □ Applicable √ Not applicable IV. The specific implementation of share repurchase during the reporting period Implementation progress of share repurchase □ Applicable √ Not applicable Implementation progress of reducing share repurchased by centralized bidding □ Applicable √ Not applicable 90 Bengang Steel Plates Co., Ltd. Annual Report 2021 Ⅷ. Status of Preferred Shares □ Applicable √ Not applicable There was no preferred stock in the company during the reporting period. 91 Bengang Steel Plates Co., Ltd. Annual Report 2021 Ⅸ. Status of Convertible Corporate Bonds √ Applicable □ Not applicable Ⅰ. corporate bonds □ Applicable √ Not applicable There were no corporate bonds in the company during the reporting period. Ⅱ. company bonds □ Applicable √ Not applicable There were no company bonds in the company during the reporting period. Ⅲ. Non-financial corporate debt financing instruments □ Applicable √ Not applicable There were no non-financial corporate debt financing instruments in the company during the reporting period. Ⅳ. Convertible corporate bonds √Applicable □ Not applicable 1. Previous adjustment of conversion price (1) The initial conversion price of "Bengang Convertible Bonds" is RMB 5.03 per share. (2) Due to the company's implementation of the 2020 equity distribution plan, the conversion price of "Bengang Convertible Bonds" will be adjusted to 5.02 yuan per share on July 19, 2021. (3) Due to the company's implementation of the 2021 mid-term equity distribution plan, the conversion price of "Bengang Convertible Bonds" will be adjusted to 4.55 yuan per share on October 13, 2021. 2. Status of cumulative share transfer √Applicable □ Not applicable Proportion of Cumulative Cumulative the number Proportion of Total Convertible Conversion Total share number of of converted Amount not unconverted amount bond starts and amount conversion shares shares to the yet converted amount to issued abbreviation end date issued amount converted total issued (RMB) total issued (bonds) (RMB) (shares) shares before amount conversion Bengang Convertible 2021-01-04 68,000,000 6,800,000,000.00 1,168,855,400.00 232,819,847 6.01% 5,631,144,600.00 82.81% Bonds 92 Bengang Steel Plates Co., Ltd. Annual Report 2021 3. Top ten holders of convertible bonds Unit: shares Number of Amount of Percentage of Nature of convertible bonds convertible bonds Convertible bond convertible bonds No. convertible held at the end of the held at the end of the holders held at the end of the bond holders reporting period reporting period reporting period (bonds) (yuan) China CITIC Group Corporation Limited 1 Enterprise Annuity Plan Other 2,330,006 233,000,600.00 4.14% - China CITIC Bank Corporation Limited Foreign legal 2 UBS AG 1,738,753 173,875,300.00 3.09% person Industrial Bank Co., Ltd. - Tianhong Yongli Bond 3 Other 1,399,381 139,938,100.00 2.49% Securities Investment Fund China Construction Bank Corporation - China Merchants Stable 4 Other 1,352,501 135,250,100.00 2.40% Profit Increase Bond Securities Investment Fund China Huaneng Group Corporation Enterprise Annuity Plan - 5 Other 1,244,595 124,459,500.00 2.21% Industrial and Commercial Bank of China Limited China Construction Bank Corporation - Huashang Credit 6 Other 1,076,193 107,619,300.00 1.91% Enhanced Bond Securities Investment Fund China AMC Yannian Yishou No. 9 Fixed 7 Income Pension Product Other 995,917 99,591,700.00 1.77% - China Merchants Bank Co., Ltd. Shanghai Pudong Development Bank Co., 8 Ltd. - E Fund Yuxiang Other 991,760 99,176,000.00 1.76% Return Bond Securities Investment Fund Basic Pension Insurance 9 Other 963,240 96,324,000.00 1.71% Fund 107 Portfolio Industrial and Commercial Bank of China Limited - 10 Other 903,820 90,382,000.00 1.61% Huashang Convertible Bond Bond Securities Investment Fund 4. Significant changes in the guarantor's profitability, asset condition and credit standing □ Applicable √ Not applicable 93 Bengang Steel Plates Co., Ltd. Annual Report 2021 5. At the end of the reporting period, the company's liabilities, changes in credit and cash arrangements and debt repayment in future years At the end of the reporting period, the company's major accounting data and financial indicators and the company's credit rating of convertible bonds in the past two years have not changed this year. Ⅴ. The loss in the consolidated statement during the reporting period exceeded 10% of the net assets at the end of the previous year □ Applicable √ Not applicable Ⅵ. Overdue Interest-bearing debts except bonds at the end of the reporting period □ Applicable √ Not applicable Ⅶ. Status of violation of rules and regulations during the period reporting period □ Yes √ No Ⅷ. The main accounting data and financial indicators of the company in the past two years at the end of the reporting period Item At the end of this period At the end of last period Change Current ratio 113.99% 104.00% 9.61% Liabilities to Assets Ratio 58.17% 66.85% -8.68% Quick ratio 66.12% 77.00% -14.13% At the end of this period At the end of last period Change Net profit after deducting non- 2,517,758,656.14 381,469,784.99 560.02% recurring gains and losses (RMB) EBITDA total liabilities ratio 19.23% 7.00% 12.23% Interest coverage ratio 4.37 1.4 212.14% Cash interest coverage ratio 2.35 -0.96 -344.42% EBITDA interest coverage ratio 6.12 7.91 -22.63% Loan repayment rate 100.00% 100.00% 0.00% Interest repayment rate 100.00% 100.00% 0.00% 94 Bengang Steel Plates Co., Ltd. Annual Report 2021 Ⅹ. Financial Report Opinion of audit report Unqualified audit opinion Date of audit report 24th March 2022 Name of CPA Firm BDO China Shu Lun Pan CPAs LLP Audit report number Xin Kuai Shi Bao Zi [2022] No. ZB10094 Name of CPA Li Yongjiang; Li Guiying Auditor’s Report (English Translation for Reference Only) Xin Kuai Shi Bao Zi [2022] No. ZB10094 To the Shareholders of Bengang Steel Plates Co., Ltd.: Auditor’s Opinion We have audited the accompanying financial statements of Bengang Steel Plates Co., Ltd. (hereinafter referred to as “the Company” or “Bengang Steel Plates”) which comprise the consolidated and company’s statements of financial position as at 31 December 2021, the consolidated and company’s statements of comprehensive income, the consolidated and company’s statements of cash flows, and the consolidated and company’s statements of changes in shareholders’ equity, for the year then ended, and notes to the financial statements. In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and company’s financial position as at 31 December 2021, and the consolidated and company’s financial performance and cash flows for the year then ended in accordance with the requirements of Accounting Standards for Business Enterprises. Basis for Opinion We conducted our audit in accordance with China Standards on Auditing (“CSAs”). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified Public Accountants (“CICPA Code”), and we have fulfilled our other ethical responsibilities in accordance with the CICPA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon and we do not provide a separate opinion on these matters. 95 Bengang Steel Plates Co., Ltd. Annual Report 2021 We identified the following key audit matters in our audit. Key Audit Matters Audit Procedure 1. Revenue recognition Refer to Note (24) Revenue under “3. Our audit procedures to evaluate revenue Significant accounting policies and accounting recognition included the following: estimates” and Note (37) Operating income and operating cost under “5. Notes to consolidated 1. Understanding and evaluating the design financial statements”. and operating effectiveness of key internal controls related to revenue recognition. For the year ended 31 December 2021, the Company and its subsidiaries generated revenue 2. Checking sales contracts, on sample totaling RMB 77,912,144,981.46, with an basis, to identify terms and conditions increase of 60.03% compared with that of 2020. related to transfer of control of goods, and evaluating whether the Company's revenue We identified revenue recognition as a key audit recognition policy is in compliance with matter because revenue is the key performance the relevant requirements of the indicator for the Company, and there may exists Accounting Standards for Business risk of material misstatement in revenue Enterprises. recognition. 3. Selecting revenues from sales details recorded during the year, on sample basis, to check corresponding sales contracts, invoices, goods delivery notice, acceptance notice, customs declaration, ocean bills of lading and other supporting documents, in order to evaluate whether the relevant revenue was recognized in accordance with the Company's accounting policies on revenue recognition. 4. Performing analytical procedures on revenue in terms of gross profit in main products by comparing with that in previous year and within industry, and performing fluctuation analysis, so as to 96 Bengang Steel Plates Co., Ltd. Annual Report 2021 identify any unusual trend. 5. Confirming revenue recognized in current year by including revenue amount in confirmations sent to selected customers with balance of accounts receivable. 6. Checking sales to related parties to evaluate whether the transactions were conducted at arm’s length. 7. Selecting revenue transactions recorded before and after the balance sheet date, inspecting supporting documents related to revenue recognition, and evaluating whether the relevant revenue was recorded in proper accounting period. 8. Checking presentation of operating income in the financial statements for a proper disclosure. 2. Inventory provision Refer to Note ( 11 ) Inventory under “ 3. Our audit procedures to evaluate Significant accounting policies and accounting impairment of inventory include: estimates ” and (7) Inventory under “ 5. 1. Evaluating the design and operation of Notes to consolidated financial statements”. internal control related to provision for decline in the value of inventories; As at 31 December 2021, the Company and its subsidiaries had a balance of inventory of RMB 2. Observing inventory count by checking 10,275,974,432.07 (before provision) with a the quantity and status of inventories, provision for decline in value of inventory of especially the long-aging ones; RMB 85,808,293.09, so that the balance of inventory was RMB 10,190,166,138.98 after 3. Obtaining the calculation of provision provision. Inventory is measured at the lower of for decline in the value of inventories to cost and net realizable value. The financial check whether the calculation is in 97 Bengang Steel Plates Co., Ltd. Annual Report 2021 statements would be greatly impacted if accordance with the related accounting inventory provision was not sufficiently policies of the Company, and to check provided. changes during current year regarding inventory provision made in prior years so The net realizable value of inventories is as to analyze whether the provision is calculated by estimated sale price of inventories sufficient; less estimated sale expense and relevant taxes. 4. For inventories with selling price in Management determines the estimated selling active market, inquiring the price price of the inventories based on their status, information independently and comparing which involved significant judgement. that with estimated selling price applied in the calculation of inventory provision. For We identified inventory provision as a key audit those without selling price in active matter because balance of inventory was market, comparing the estimated selling significant as at 31 December 2021, which price with the latest actual selling price or involves estimate for net realizable value. selling price after the reporting period. 5. Comparing the estimated sales expenses and related taxes and fees with historical data of similar products and with the actual costs incurred after the balance sheet date. Other Information Management of the Company (“Management”) is responsible for the other information. The other information comprises all of the information included in the 2021 annual report of the Company, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. 98 Bengang Steel Plates Co., Ltd. Annual Report 2021 Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with the requirements of Accounting Standards for Business Enterprises, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, Management is responsible for assessing the Company's ability to continue as a going concern, disclosing, if applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: (1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. (2) Obtain an understand of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. (3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. (4) Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Bengang Steel Plate’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause Bengang Steel Plates to cease to continue as a going concern. (5) Evaluate the overall presentation (including the disclosures), structure and contents of the financial statements, and whether the financial statements represent the underlying transactions 99 Bengang Steel Plates Co., Ltd. Annual Report 2021 and events in a manner that achieves fair presentation. (6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within Bengang Steel Plates to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. BDO CHINA SHU LUN PAN CERTIFIED Certified Public Accountants of China PUBLIC ACCOUNTANTS LLP (Engagement Partner) Certified Public Accountants of China Shanghai, the People’s Republic of China 24 March 2022 100 Bengang Steel Plates Co., Ltd. Annual Report 2021 BENGANG STEEL PLATES CO., LTD. CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2021 (Expressed in Renminbi unless otherwise indicated) (English Translation for Reference Only) Assets Notes 5 31 Dec, 2021 31 Dec, 2020 Current assets Cash at bank and on hand (1) 8,831,095,737.85 13,126,666,915.26 Settlement provisions Capital lent Financial assets held for trading Derivative financial assets Notes receivable (2) 1,540,482,182.07 Accounts receivable (3) 256,850,782.71 245,217,182.66 Accounts receivable financing (4) 1,530,735,647.38 4,189,977,871.92 Prepayments (5) 994,370,345.64 2,108,044,777.65 Premium receivable Reinsurance accounts receivable Receivable deposit for reinsurance contract Other receivables (6) 165,937,280.41 142,101,351.27 Redemptory financial assets for sale Inventories (7) 10,190,166,138.98 9,040,065,342.65 Contract assets Assets held for sale Non-current assets due within one year Other current assets (8) 754,948,193.56 5,523,646,836.01 Total current assets 24,264,586,308.60 34,375,720,277.42 Non-current assets Loan and advances issued Debt Investments Other debt investments Long-term receivables Long-term equity investments (9) 2,981,784.07 2,742,064.73 Other equity instrument investments (10) 1,042,024,829.00 1,042,024,829.00 Other non-current financial assets Investment property Fixed assets (11) 25,480,674,048.94 26,284,567,956.44 Construction in progress (12) 2,434,182,101.13 1,839,933,715.58 Productive biological assets Oil and gas assets Right-of-use assets (13) 1,440,365,248.31 Intangible assets (14) 297,921,548.81 264,932,652.54 Development expenditure Goodwill Long-term deferred expenses Deferred tax assets (15) 153,756,548.31 201,708,932.84 Other non-current assets (16) 30,630,858.13 995,840,320.65 Total non-current assets 30,882,536,966.70 30,631,750,471.78 Total assets 55,147,123,275.30 65,007,470,749.20 The notes to the financial statements attached form part of these financial statements. Legal Representative: Chief Financial Officer: Chief Accountant: 101 Bengang Steel Plates Co., Ltd. Annual Report 2021 BENGANG STEEL PLATES CO., LTD. CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued) As at 31 December 2021 (Expressed in Renminbi unless otherwise indicated) (English Translation for Reference Only) Liabilities and equities Notes 5 31 Dec, 2021 31 Dec, 2020 Current Liabilities Short-term loans (17) 4,053,088,140.00 10,067,731,000.00 Loan from central bank Loan from other banks Financial liability held for trading Derivative financial liabilities Notes payable (18) 4,635,083,376.48 9,814,149,348.42 Accounts payable (19) 5,352,272,685.89 5,914,228,256.82 Advance from customers Contract liabilities (20) 4,708,188,093.78 4,458,671,819.90 Financial assets sold for repurchase Deposits from customers and interbank Receipt from vicariously traded securities Receipt from vicariously underwriting securities Employee benefits payable (21) 152,095,376.49 25,749,485.25 Taxes payable (22) 114,267,988.70 55,302,080.96 Other payables (23) 1,348,025,731.98 709,448,301.92 Handling charges and commission payable Reinsurance accounts payable Liabilities held for sale Non-current liabilities due within one year (24) 310,780,518.14 1,308,030,361.43 Other current liabilities (25) 612,064,452.20 579,627,336.58 Total current liabilities 21,285,866,363.66 32,932,937,991.28 Non-current liabilities Provision for insurance contract Long-term loans (26) 4,222,821,771.74 3,502,934,427.65 Bonds payable (27) 5,054,251,668.83 5,752,229,339.52 Including: Preferred stock Perpetual bond Leasing liabilities (28) 1,424,667,169.15 Long-term payables (29) 1,114,232,362.74 Long-term employee benefits payable Estimated liabilities Deferred income (30) 93,106,285.89 154,451,833.23 Deferred tax liabilities Other non-current liabilities Total non-current liabilities 10,794,846,895.61 10,523,847,963.14 Total liabilities 32,080,713,259.27 43,456,785,954.42 Shareholders' equity: Share capital (31) 4,108,191,379.00 3,875,371,532.00 Other equity instruments (32) 947,882,663.63 1,146,290,662.42 Including: Preferred stock Perpetual bond Capital reserves (33) 13,272,134,173.09 12,343,209,847.29 Less: treasury shares Other comprehensive income Special reserves (34) 337,978.57 300,412.14 Surplus reserves (35) 1,195,116,522.37 961,105,529.85 General risk reserve Undistributed profits (36) 2,977,306,297.64 2,692,018,405.40 Total equity attributable to equity holders of the parent company 22,500,969,014.30 21,018,296,389.10 Non-controlling interests 565,441,001.73 532,388,405.68 Total shareholder's equity 23,066,410,016.03 21,550,684,794.78 Total of liabilities and owners’ equity 55,147,123,275.30 65,007,470,749.20 The notes to the financial statements attached form part of these financial statements. Legal Representative: Chief Financial Officer: Chief Accountant: 102 Bengang Steel Plates Co., Ltd. Annual Report 2021 BENGANG STEEL PLATES CO., LTD. COMPANY’S STATEMENT OF FINANCIAL POSITION As at 31 December 2021 (Expressed in Renminbi unless otherwise indicated) (English Translation for Reference Only) Assets Notes 14 31 Dec, 2021 31 Dec, 2020 Current assets Cash at bank and on hand 7,580,872,007.38 11,808,618,300.87 Financial assets held for trading Derivative financial assets Notes receivable (1) 1,514,416,395.80 Accounts receivable (2) 353,631,563.42 289,865,462.20 Accounts receivable financing (3) 1,504,640,362.79 4,143,431,412.08 Prepayments 1,004,241,075.82 2,117,204,935.75 Other receivables (4) 268,606,048.52 228,180,190.02 Inventories 8,289,784,141.78 7,420,499,172.20 Contract assets Assets held for sale Non-current assets due within one year Other current assets 670,787,069.41 5,437,282,088.94 Total current assets 21,186,978,664.92 31,445,081,562.06 Non-current assets Debt investments Other debt investments Long-term receivables Long-term equity investments (5) 2,015,186,190.50 2,016,281,902.16 Other equity instrument investments 1,041,624,829.00 1,041,624,829.00 Other non-current financial assets Investment property Fixed assets 24,110,222,815.60 24,755,665,765.30 Construction in progress 2,401,120,232.45 1,798,639,941.58 Productive biological assets Oil and gas assets Right-of-use assets 1,440,365,248.31 Intangible assets 178,414,033.19 142,163,903.40 Development expenditure Goodwill Long-term deferred expenses Deferred tax assets 124,046,003.13 98,480,706.23 Other non-current assets 22,010,941.60 988,475,426.53 Total non-current assets 31,332,990,293.78 30,841,332,474.20 Total assets 52,519,968,958.70 62,286,414,036.26 The notes to the financial statements attached form part of these financial statements. Legal Representative: Chief Financial Officer: Chief Accountant: 103 Bengang Steel Plates Co., Ltd. Annual Report 2021 BENGANG STEEL PLATES CO., LTD. COMPANY’S STATEMENT OF FINANCIAL POSITION (Continued) As at 31 December 2021 (Expressed in Renminbi unless otherwise indicated) (English Translation for Reference Only) Liabilities and shareholders' equities Notes 14 31 Dec, 2021 31 Dec, 2020 Current liabilities Short-term loans 3,353,088,140.00 9,107,731,000.00 Financial liability held for trading Derivative financial liabilities Notes payable 4,650,517,420.18 8,348,607,405.21 Accounts payable 5,674,841,169.66 6,280,468,684.34 Advance from customers Contract liabilities 4,660,051,055.89 5,324,357,761.83 Employee benefits payable 151,595,453.62 23,981,010.53 Taxes payable 40,949,825.13 42,514,891.31 Other payables 683,141,570.83 368,374,954.61 Liabilities held for sale Non-current liabilities due within one year 310,780,518.14 1,308,030,361.43 Other current liabilities 605,806,637.27 692,166,509.04 Total current liabilities 20,130,771,790.72 31,496,232,578.30 Non-current liabilities Long term loans 4,222,821,771.74 3,502,934,427.65 Bonds payable 5,054,251,668.83 5,752,229,339.52 Including: Preferred stock Perpetual bond Lease liabilities 1,424,667,169.15 Long-term payables 1,108,412,163.50 Long-term employee benefits payable Estimated liabilities Deferred income 93,106,285.89 154,451,833.23 Deferred tax liabilities Other non-current liabilities Total non-current liabilities 10,794,846,895.61 10,518,027,763.90 Total liabilities 30,925,618,686.33 42,014,260,342.20 Shareholder’s equity: Share capital 4,108,191,379.00 3,875,371,532.00 Other equity instruments 947,882,663.63 1,146,290,662.42 Including: Preferred stock Perpetual bond Capital reserves 12,851,982,490.97 11,923,058,165.17 Less: Treasury shares Other comprehensive income Special reserves 155,469.58 120,972.62 Surplus reserves 1,195,116,522.37 961,105,529.85 Undistributed Profits 2,491,021,746.82 2,366,206,832.00 Total shareholder's equity 21,594,350,272.37 20,272,153,694.06 Total liabilities and shareholder’s equity 52,519,968,958.70 62,286,414,036.26 The notes to the financial statements attached form part of these financial statements. Legal Representative: Chief Financial Officer: Chief Accountant: 104 Bengang Steel Plates Co., Ltd. Annual Report 2021 BENGANG STEEL PLATES CO., LTD. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2021 (Expressed in Renminbi unless otherwise indicated) (English Translation for Reference Only) Items Notes 5 Current period Previous period 1. Total operating income 77,912,144,981.46 48,684,792,685.58 Including: Operating income (37) 77,912,144,981.46 48,684,792,685.58 Interest income Premium earned Income from handling charges and commission 2. Total operating cost 74,244,688,137.82 47,900,922,736.61 Including: Operating cost (37) 71,891,598,336.96 46,392,180,562.59 Interest expense Expenditure for handling charges and commission Surrender value Net expenditure for compensation Net provision for insurance contract appropriated Bonus payment for policy Reinsurance premium Tax and surcharges (38) 431,460,563.69 215,871,820.10 Selling and distribution expenses (39) 141,394,565.57 97,279,280.21 General and administrative expenses (40) 1,187,239,442.10 792,826,294.81 Research and development expenses (41) 56,401,594.44 37,989,623.28 Financial expenses (42) 536,593,635.06 364,775,155.62 Including: Interest expense 1,007,595,231.75 1,028,857,436.14 Interest income 393,818,460.36 378,523,984.03 Add: Other income (43) 66,345,976.64 81,305,181.92 Income on investment(“-” for loss) (44) -120,519,309.82 13,951,362.33 Including: Income from associates and joint ventures 520,432.46 374,119.86 Income from derecognition of financial assets measured at amortized cost Exchange gains(“-” for loss) Net exposure hedge income(“-” for loss) Gains from change of fair value (“-” for loss) Credit impairment loss (“-” for loss) (45) -7,754,375.77 -304,019,761.75 Assets impairment loss (“-” for loss) (46) -113,671,335.02 -67,185,869.37 Assets disposal gains(“-” for loss) (47) 130,675.05 325,651.61 3. Operational profit(“-” for loss) 3,491,988,474.72 508,246,513.71 Add: Non-operating income (48) 7,783,225.80 4,328,563.52 Less: Non-operating expenses (49) 64,272,629.43 95,724,280.44 4. Total profit (“-” for loss) 3,435,499,071.09 416,850,796.79 Less: Income tax expenses (50) 901,863,572.46 25,371,230.56 5. Net profit(“-” for loss) 2,533,635,498.63 391,479,566.23 1.Classification by continuing operating 1.Net profit from continuing operation(“-” for loss) 2,533,635,498.63 391,479,566.23 2.Net profit from discontinued operation(“-” for loss) 2.Classification by ownership 1. Net profit attributable to the owners of parent company (“-” for loss) 2,500,582,902.58 384,252,740.78 2. Net profit attributable to non-controlling shareholders (“-” for loss) 33,052,596.05 7,226,825.45 6.Other comprehensive income Other comprehensive income attributable to owners of the parent company after tax 1.Other comprehensive income items that will not be reclassified into gains/losses 1) Re-measurement of defined benefit plans of changes in net debt or net assets 2) Other comprehensive income under the equity method cannot be reclassified into profit or loss 3) Changes in fair value of investments in other equity instruments 4) Changes in fair value of company's credit risk 2.Other comprehensive income that will be reclassified into profit or loss. 1) Other comprehensive income under the equity method which can be reclassified into profit or loss 2) Changes in fair value of other debt investments 3) Amount of financial assets reclassified into other comprehensive income 4) Credit impairment provision of other debt investments 5) Cash flow hedges reserve 6) Translation differences in foreign currency financial statements 7) Others Other comprehensive income attributable to non-controlling shareholders’ equity after tax 7. Total comprehensive income 2,533,635,498.63 391,479,566.23 Total comprehensive income attributable to the owner of the parent company 2,500,582,902.58 384,252,740.78 Total comprehensive income attributable to non-controlling shareholders 33,052,596.05 7,226,825.45 8. Earnings per share 1)Basic earnings per share (51) 0.600 0.099 2)Diluted earnings per share (51) 0.496 0.099 The notes to the financial statements attached form part of these financial statements. Legal Representative: Chief Financial Officer: Chief Accountant: 105 Bengang Steel Plates Co., Ltd. Annual Report 2021 BENGANG STEEL PLATES CO., LTD. COMPANY’S STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2021 (Expressed in Renminbi unless otherwise indicated) (English Translation for Reference Only) Items Notes 14 Current period Previous period 1. Total operating income (6) 78,721,461,725.71 48,811,106,474.73 Less: Operating cost (6) 73,203,463,475.56 46,742,700,421.70 Tax and surcharges 381,385,801.80 182,486,280.99 Selling and distribution expenses 122,357,594.15 86,927,530.44 General and administrative expenses 1,123,575,016.51 738,689,535.43 Research and development expenses 56,401,594.44 37,989,623.28 Financial expenses 521,028,798.20 339,059,288.37 Including: Interest expense 971,156,413.61 973,520,152.09 Interest income 372,598,200.22 348,394,576.76 Add: Other income 65,897,317.34 80,671,964.84 Income on investment(“-” for loss) (7) -123,815,558.88 13,577,242.47 Including: Income from associates and joint ventures Income from derecognition of financial assets measured at amortized cost Net exposure hedge income(“-” for loss) Gains from change of fair value (“-” for loss) Credit impairment loss(“-” for loss) -8,563,525.91 1,333,341.31 Assets impairment loss(“-” for loss) -113,671,335.02 -67,185,869.37 Assets disposal gains(“-” for loss) 130,675.05 325,651.61 2. Operational profit(“-” for loss) 3,133,227,017.63 711,976,125.38 Add: Non-operating income 3,831,724.04 3,588,687.69 Less: Non-operating expenses 62,183,332.01 95,171,437.11 3. Total profit (“-” for loss) 3,074,875,409.66 620,393,375.96 Less: Income tax expenses 734,765,484.50 -3,562,037.01 4. Net profit(“-” for loss) 2,340,109,925.16 623,955,412.97 1.Net profit from continuing operation (“-” for loss) 2,340,109,925.16 623,955,412.97 2.Net profit from discontinued operation (“-” for loss) 5.Other comprehensive income 1.Other comprehensive income items that will not be reclassified into gains/losses 1) Re-measurement of defined benefit plans of changes 2) Other comprehensive income under the equity method cannot be reclassified into profit or loss 3) Changes in fair value of investments in other equity instruments 4) Changes in fair value of company's credit risk 2.Other comprehensive income that will be reclassified into profit or loss. 1) Other comprehensive income under the equity method investee can be reclassified into profit or loss 2) Changes in fair value of other debt investments 3) Amount of financial assets reclassified into other comprehensive income 4) Credit impairment provision of other debt investments 5) Cash flow hedges reserve 6) Translation differences in foreign currency financial statements 7) Others 6. Total comprehensive income 2,340,109,925.16 623,955,412.97 7. Earnings per share 1)Basic earnings per share 2)Diluted earnings per share The notes to the financial statements attached form part of these financial statements. Legal Representative: Chief Financial Officer: Chief Accountant: 106 Bengang Steel Plates Co., Ltd. Annual Report 2021 BENGANG STEEL PLATES CO., LTD. CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2021 (Expressed in Renminbi unless otherwise indicated) (English Translation for Reference Only) Items Notes 5 Current period Previous period 1.Cash flow from operating activities Cash received from sale of goods or rendering of services 55,748,897,664.65 38,849,024,657.06 Net increase of customers’ deposit and interbank deposit Net increase of loan from central bank Net increase of loans from other financial institutions Cash received for premium of original insurance contract Net cash received for reinsurance business Net increase of deposit and investment of the insured Cash from receiving interest, handling charge and commission Net increase of loans from borrowing funds Net increase of fund for repurchase business Net cash received from traded securities Tax rebate received 78,323,445.53 396,399,799.91 Other cash received relating to operating activities (52) 501,366,768.12 816,954,704.43 Subtotal of cash inflows from operating activities 56,328,587,878.30 40,062,379,161.40 Cash paid for goods and services 50,647,643,333.57 38,688,312,946.57 Net increase of customer’ s loan and advances Net increase of deposit in central bank and interbank deposit Cash for payment of compensation for original insurance contract Net increase in capital lent Cash for payment of interest, handling charge and commission Cash for payment of policy bonus Cash paid to and on behalf of employees 2,451,084,010.00 1,973,351,870.94 Cash paid for all types of taxes 2,673,210,895.18 952,434,837.20 Other cash paid relating to operating activities (52) 143,176,185.51 487,279,719.98 Subtotal of cash outflows from operating activities 55,915,114,424.26 42,101,379,374.69 Net cash flows from operating activities 413,473,454.04 -2,039,000,213.29 2. Cash flows from investing activities Cash received from disposal of investments 11,400,000,000.00 Cash received from return on investments 2,717,582.45 13,852,296.30 Net cash received from disposal of fixed assets, intangible assets and other 2,776.27 185,442.47 long-term assets Net cash received from disposal of subsidiary and other operating units Other cash paid relating to investing activities Subtotal of cash inflows from investing activities 11,402,720,358.72 14,037,738.77 Cash paid for acquisition of fixed assets, intangible assets and other long- 1,304,976,365.56 1,013,928,829.62 term assets Cash paid for investments 6,200,000,000.00 5,200,000,000.00 Net increase of mortgage loan Net cash received from subsidiary and other operating unit Other cash paid relating to investing activities Subtotal of cash outflows from investing activities 7,504,976,365.56 6,213,928,829.62 Net cash flows from investing activities 3,897,743,993.16 -6,199,891,090.85 3. Cash flows from financing activities Proceeds from investment Including: Proceeds from investment of non-controlling shareholders of subsidiary Proceeds from borrowings 5,801,673,020.00 21,667,514,000.00 Other proceeds relating to financing activities (52) 2,361,272,208.08 1,329,876,314.56 Subtotal of cash inflows from financing activities 8,162,945,228.08 22,997,390,314.56 Cash repayments of borrowings 12,072,544,553.18 18,115,736,896.61 Cash payments for distribution of dividends, profit or interest expenses 2,550,802,187.51 749,821,254.37 Including: Cash paid to non-controlling shareholders as dividend and profit by subsidiaries Other cash payments relating to financing activities (52) 740,000,000.00 75,509,135.49 Subtotal of cash outflows from financing activities 15,363,346,740.69 18,941,067,286.47 Net cash flows from financing activities -7,200,401,512.61 4,056,323,028.09 4. Effect of foreign exchange rate changes on cash and cash equivalents -41,134,466.23 -29,429,117.41 5. Net increase in cash and cash equivalents -2,930,318,531.64 -4,211,997,393.46 Add: Cash and cash equivalents at the beginning of the period 9,229,417,595.12 13,441,414,988.58 6. Cash and cash equivalents at the ending of the period 6,299,099,063.48 9,229,417,595.12 The notes to the financial statements attached form part of these financial statements. Legal Representative: Chief Financial Officer: Chief Accountant: 107 Bengang Steel Plates Co., Ltd. Annual Report 2021 BENGANG STEEL PLATES CO., LTD. COMPANY’S STATEMENT OF CASH FLOWS For the year ended 31 December 2021 (Expressed in Renminbi unless otherwise indicated) (English Translation for Reference Only) Items Notes 14 Current period Previous period 1. Cash flow from operating activities Cash received from sale of goods or rendering of services 60,408,664,898.10 43,332,373,821.90 Tax rebate received 21,209,047.83 324,045,932.64 Other cash received relating to operating activities 461,672,257.35 786,085,304.22 Subtotal of cash inflows from operating activities 60,891,546,203.28 44,442,505,058.76 Cash paid for goods and services 55,735,903,034.60 43,585,984,954.05 Cash paid to and on behalf of employees 2,345,338,852.62 1,870,605,772.33 Cash paid for all types of taxes 2,498,120,146.95 824,396,654.24 Other cash paid relating to operating activities 123,901,730.49 476,274,984.82 Subtotal of cash outflows from operating activities 60,703,263,764.66 46,757,262,365.44 Net cash flows from operating activities 188,282,438.62 -2,314,757,306.68 2. Cash flows from investing activities Cash received from disposal of investments 11,400,000,000.00 Cash received from return on investments 2,436,869.33 13,577,242.47 Net cash received from disposal of fixed assets, intangible 1,637.16 assets and other long-term assets Net cash received from disposal of subsidiary and other operating units Other cash received relating to investing activities Subtotal of cash inflows from investing activities 11,402,436,869.33 13,578,879.63 Cash paid for acquisition of fixed assets, intangible assets and 1,304,157,060.45 1,013,911,078.29 other long-term assets Cash paid for investments 6,200,000,000.00 5,200,000,000.00 Net cash paid for acquisition of subsidiary and other operating unit Other cash paid relating to investing activities Subtotal of cash outflows paid for investing activities 7,504,157,060.45 6,213,911,078.29 Net cash flows from investing activities 3,898,279,808.88 -6,200,332,198.66 3. Cash flows from financing activities Proceeds from investment Cash received from borrowings 5,101,673,020.00 20,607,514,000.00 Other cash received relating to financing activities 1,374,782,185.21 1,294,921,225.43 Subtotal of cash inflows from financing activities 6,476,455,205.21 21,902,435,225.43 Cash repayments of borrowings 11,112,544,553.18 16,715,736,896.61 Cash payments for distribution of dividends, profit or interest 2,518,311,312.47 701,262,726.60 Other cash payments relating to financing activities 740,000,000.00 72,689,078.37 Subtotal of cash outflows from financing activities 14,370,855,865.65 17,489,688,701.58 Net cash flows from financing activities -7,894,400,660.44 4,412,746,523.85 4. Effect of foreign exchange rate changes on cash and -41,145,257.65 -29,414,313.38 cash equivalents 5. Net increase in cash and cash equivalents -3,848,983,670.59 -4,131,757,294.87 Add: Cash and cash equivalents at the beginning of the period 8,897,859,003.60 13,029,616,298.47 6. Cash and cash equivalents at the ending of the period 5,048,875,333.01 8,897,859,003.60 The notes to the financial statements attached form part of these financial statements. Legal Representative: Chief Financial Officer: Chief Accountant: 108 Bengang Steel Plates Co., Ltd. Annual Report 2021 BENGANG STEEL PLATES CO., LTD. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY For the year ended 31 December 2021 (Expressed in Renminbi unless otherwise indicated) (English Translation for Reference Only) Current period Owner's equity attributable to parent company Total of Items Other equity instruments Less: Other General Non-controlling shareholders’ Share capital Preference Perpetual Capital reserves Treasury comprehensive Special reserves Surplus reserves risk Undistributed profit Subtotal interest Others equity shares bond shares income reserve 1. Ending balance of last year 3,875,371,532.00 1,146,290,662.42 12,343,209,847.29 300,412.14 961,105,529.85 2,692,018,405.40 21,018,296,389.10 532,388,405.68 21,550,684,794.78 Add: Change of accounting policies Correction of errors for last period Business consolidation under common control Others 2. Beginning balance of current year 3,875,371,532.00 1,146,290,662.42 12,343,209,847.29 300,412.14 961,105,529.85 2,692,018,405.40 21,018,296,389.10 532,388,405.68 21,550,684,794.78 3. Changes in current year (“-” for decrease) 232,819,847.00 -198,407,998.79 928,924,325.80 37,566.43 234,010,992.52 285,287,892.24 1,482,672,625.20 33,052,596.05 1,515,725,221.25 1) Total comprehensive income 2,500,582,902.58 2,500,582,902.58 33,052,596.05 2,533,635,498.63 2) Capital increase and decrease by 232,819,847.00 -198,407,998.79 928,924,325.80 963,336,174.01 963,336,174.01 shareholders (1) Common share invested by shareholders (2) Capital input by the holder of other equity instruments (3) Share-based payment attributable to owners’ equity (4) Others 232,819,847.00 -198,407,998.79 928,924,325.80 963,336,174.01 963,336,174.01 3) Profit distribution 234,010,992.52 -2,215,295,010.34 -1,981,284,017.82 -1,981,284,017.82 (1) Appropriation to surplus reserves 234,010,992.52 -234,010,992.52 (2) Appropriation to general risk reserve (3) Profit distribution to shareholders -1,981,284,017.82 -1,981,284,017.82 -1,981,284,017.82 (4) Others 4) Transfers within shareholders’ equity (1) Capital reserves transferred into paid-in capital (or stock) (2) Surplus reserves transferred into paid-in capital (or stock) (3) Surplus reserves to recover loss’ (4) Net changes of defined contribution plans transferred into Retained Earnings (5) Other comprehensive income transferred into Retained Earnings (6) Others 5) Special reserves 37,566.43 37,566.43 37,566.43 (1) Provision of special reserves 63,036,424.58 63,036,424.58 63,036,424.58 (2) Use of special reserves 62,998,858.15 62,998,858.15 62,998,858.15 6) Others 4. Ending balance of current year 4,108,191,379.00 947,882,663.63 13,272,134,173.09 337,978.57 1,195,116,522.37 2,977,306,297.64 22,500,969,014.30 565,441,001.73 23,066,410,016.03 The notes to the financial statements attached form part of these financial statements Legal Representative: Chief Financial Officer: Chief Accountant: 109 Bengang Steel Plates Co., Ltd. Annual Report 2021 BENGANG STEEL PLATES CO., LTD. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued) For the year ended 31 December 2021 (Expressed in Renminbi unless otherwise indicated) (English Translation for Reference Only) Previous period Owner's equity attributable to parent company Items Other equity instruments Less: Other General Non-controlling Total of shareholders’ Undistributed Share capital Preference Perpetual Capital reserves Treasury comprehensive Special reserves Surplus reserves risk Subtotal interest equity Others profit shares bond shares income reserve 1. Ending balance of last year 3,875,371,532.00 12,343,209,847.29 212,687.41 961,105,529.85 2,307,765,664.62 19,487,665,261.17 525,161,580.23 20,012,826,841.40 Add: Change of accounting policies Correction of errors for last period Business consolidation under common control Others 2. Beginning balance of current year 3,875,371,532.00 12,343,209,847.29 212,687.41 961,105,529.85 2,307,765,664.62 19,487,665,261.17 525,161,580.23 20,012,826,841.40 3. Changes in current year (“-” for decrease) 1,146,290,662.42 87,724.73 384,252,740.78 1,530,631,127.93 7,226,825.45 1,537,857,953.38 1) Total comprehensive income 384,252,740.78 384,252,740.78 7,226,825.45 391,479,566.23 2) Capital increase and decrease by 1,146,290,662.42 1,146,290,662.42 1,146,290,662.42 shareholders (1) Common share invested by shareholders (2) Capital input by the holder of other equity 1,146,290,662.42 1,146,290,662.42 1,146,290,662.42 instruments (3) Share-based payment attributable to owners' equity (4) Others 3) Profit distribution (1) Appropriation to surplus reserves (2) Appropriation to general risk reserve (3) Profit distribution to shareholders (4) Others 4) Transfers within shareholders’ equity (1) Capital reserves transferred into paid-in capital (or stock) (2) Surplus reserves transferred into paid-in capital (or stock) (3) Surplus reserves to recover loss (4) Net changes of defined contribution plans transferred into Retained Earnings (5) Other comprehensive income transferred into Retained Earnings (6) Others 5) Special reserves 87,724.73 87,724.73 87,724.73 (1) Provision of special reserves 54,000,536.58 54,000,536.58 54,000,536.58 (2) Use of special reserves 53,912,811.85 53,912,811.85 53,912,811.85 6) Others 4. Ending balance of current year 3,875,371,532.00 1,146,290,662.42 12,343,209,847.29 300,412.14 961,105,529.85 2,692,018,405.40 21,018,296,389.10 532,388,405.68 21,550,684,794.78 The notes to the financial statements attached form part of these financial statements Legal Representative: Chief Financial Officer: Chief Accountant: 110 Bengang Steel Plates Co., Ltd. Annual Report 2021 BENGANG STEEL PLATES CO., LTD. COMPANY’S STATEMENT OF CHANGES IN OWNERS’ EQUITY For the year ended 31 December 2021 (Expressed in Renminbi unless otherwise indicated) (English Translation for Reference Only) Current period Other equity instruments Less: Other Items Special Undistributed Share capital Preference Perpetual Capital reserves Treasury comprehensi Surplus reserves Total owners’ equity Others reserves profits shares bond shares ve income 1. Ending balance of last year 3,875,371,532.00 1,146,290,662.42 11,923,058,165.17 120,972.62 961,105,529.85 2,366,206,832.00 20,272,153,694.06 Add: Change of accounting policies Correction of errors for last period Others 2. Beginning balance of current year 3,875,371,532.00 1,146,290,662.42 11,923,058,165.17 120,972.62 961,105,529.85 2,366,206,832.00 20,272,153,694.06 3. Changes in current year (“-” for decrease) 232,819,847.00 -198,407,998.79 928,924,325.80 34,496.96 234,010,992.52 124,814,914.82 1,322,196,578.31 1) Total comprehensive income 2,340,109,925.16 2,340,109,925.16 2) Capital increase and decrease by shareholders 232,819,847.00 -198,407,998.79 928,924,325.80 963,336,174.01 (1) Common share invested by shareholders (2) Capital input by the holder of other equity instruments (3) Share-based payment attributable to shareholders’ equity (4) Others 232,819,847.00 -198,407,998.79 928,924,325.80 963,336,174.01 3) Profit distribution 234,010,992.52 -2,215,295,010.34 -1,981,284,017.82 (1) Appropriation of surplus reserves 234,010,992.52 -234,010,992.52 (2) Profit distribution to shareholders -1,981,284,017.82 -1,981,284,017.82 (3) Others 4) Transfers within shareholders’ equity (1) Capital reserves transferred into paid-in capital (or stock) (2) Surplus reserves transferred into paid-in capital (or stock) (3) Surplus reserves to recover loss (4) Net changes of defined contribution plans transferred into Retained Earnings (5) Other comprehensive income transferred into retained earnings (6) Others 5) Special reserves 34,496.96 34,496.96 (1) Provision of special reserves 43,962,017.71 43,962,017.71 (2) Use of special reserves 43,927,520.75 43,927,520.75 6) Others 4. Ending balance of current year 4,108,191,379.00 947,882,663.63 12,851,982,490.97 155,469.58 1,195,116,522.37 2,491,021,746.82 21,594,350,272.37 The notes to the financial statements attached form part of these financial statements Legal Representative: Chief Financial Officer: Chief Accountant: 111 Bengang Steel Plates Co., Ltd. Annual Report 2021 BENGANG STEEL PLATES CO., LTD. COMPANY’S STATEMENT OF CHANGES IN OWNERS’ EQUITY (Continued) For the year ended 31 December 2021 (Expressed in Renminbi unless otherwise indicated) (English Translation for Reference Only) Previous period Other equity instruments Less: Other Items Special Undistributed Share capital Preference Perpetual Capital reserves Treasury comprehensi Surplus reserves Total owners’ equity Others reserves profits shares bond shares ve income 1. Ending balance of last year 3,875,371,532.00 11,923,058,165.17 53,330.99 961,105,529.85 1,742,251,419.03 18,501,839,977.04 Add: Change of accounting policies Correction of errors for last period Others 2. Beginning balance of current year 3,875,371,532.00 11,923,058,165.17 53,330.99 961,105,529.85 1,742,251,419.03 18,501,839,977.04 3. Changes in current year (“-” for decrease) 1,146,290,662.42 67,641.63 623,955,412.97 1,770,313,717.02 1) Total comprehensive income 623,955,412.97 623,955,412.97 2) Capital increase and decrease by shareholders 1,146,290,662.42 1,146,290,662.42 (1) Common share invested by shareholders (2) Capital input by the holder of other equity instruments 1,146,290,662.42 1,146,290,662.42 (3) Share-based payment attributable to shareholders’ equity (4) Others 3) Profit distribution (1) Appropriation of surplus reserves (2) Profit distribution to shareholders (3) Others 4) Transfers within shareholders' equity (1) Capital reserves transferred into paid-in capital (or stock) (2) Surplus reserves transferred into paid-in capital (or stock) (3) Surplus reserves to recover loss’ (4) Net changes of defined contribution plans transferred into Retained Earnings (5) Other comprehensive income transferred into retained earnings (6) Others 5) Special reserves 67,641.63 67,641.63 (1) Provision of special reserves 47,926,472.22 47,926,472.22 (2) Use of special reserves 47,858,830.59 47,858,830.59 6) Others 4. Ending balance of current year 3,875,371,532.00 1,146,290,662.42 11,923,058,165.17 120,972.62 961,105,529.85 2,366,206,832.00 20,272,153,694.06 The notes to the financial statements attached form part of these financial statements Legal Representative: Chief Financial Officer: Chief Accountant: 112 Bengang Steel Plates Co., Ltd. Annual Report 2021 Bengang Steel Plates Co., Ltd. Notes to the financial statements For the year ended 31 December 2021 (Expressed in Renminbi unless otherwise indicated) (English Translation for Reference Only) 1. Basic Information of the Company (1) Company profile Bengang Steel Plates Co., Ltd. (hereinafter referred to as “Bengang Steel Plates” or “the Company”), as approved in Liao-Zheng (1997) No. 57 by Liaoning People’s 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 People’s Republic of China (the “PRC”) on 27 June 1997 by Benxi Steel and Iron (Group) Co., Ltd. (“Benxi Iron and Steel 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 (hereinafter referred to as “the CSRC”), the Company issued 400,000,000 B-shares at HKD 2.38 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 RMB 5.40 each, and listed in Shenzhen Stock Exchange since 15 January 1998. The capital shares were totaled to 1,136,000,000 shares. On 14 March 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(hereinafter referred to as the Liaoning SASAC), Benxi Iron and Steel Group – the only holder of non-negotiable state-owned legal person shares paid the consideration to the current shareholders to obtain the current option for the 40,800,000 shares of the total 616,000,000 shares it was holding. Shareholding positions have been registered with China Securities Depository & Clearing Corporation Ltd. Shenzhen Office. However, the total amount of capital shares of Bengang Steel Plates Co., Ltd. was not changed through the share equity relocation action. According to the approval document “Zheng-Jian-Gong-Si-Zi [2006] No. 126” by China Securities Regulatory Commission on 30 June 2006, the Company was approved to place 2 billion Renminbi common shares particularly to Benxi Iron and Steel Group and the proceeds would be used to purchase the related assets of the Benxi Iron and Steel Group. On the same day, Benxi Iron and Steel Group received circular Zheng-Jian-Gong-Si-Zi [2006] No. 127 113 Bengang Steel Plates Co., Ltd. Annual Report 2021 issued by China Securities Regulatory Committee, On the same day, Benxi Iron and Steel Group obtained the document "Zheng Jian Company Zi (2006) No. 127" issued by the China Securities Regulatory Commission, which agreed to exempt Benxi Iron and Steel Group from the acquisition of 2 billion new shares issued by the company, resulting in the number of shares held by the company reaching 2.5752 billion shares (accounting for the company's 82.12% of the total share capital) to fulfill the tender offer obligation. On 28 August 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 28 September 2006, the privately placed shares were approved by Shenzhen Stock Exchange to be placed in the stock market. The placing price was RMB4.6733 per share. Approved by the China Securities Regulatory Commission [2017] No. 1476, Bengang Steel Plate Co., Ltd. privately placed no more than 739,371,534 RMB ordinary shares (A shares) to no more than 10 issuers. The non-public offering was completed on 9 February 2018, and 739,371,532 shares were actually issued. The placing price was RMB5.41 per share. On August 20, 2021, Liaoning Provincial State-owned Assets Supervision and Administration Commission (hereinafter referred to as the Liaoning SASAC) and Ansteel Group Co., Ltd. (hereinafter referred to as Ansteel Group) signed the "Liaoning Provincial People's Government State-owned Assets Supervision and Administration Commission and Ansteel Group Co., Ltd. on Free Transfer Agreement on the State-owned Equity of Bengang Group Co., Ltd. According to the agreement, Liaoning State-owned Assets Supervision and Administration Commission will transfer its 51% shares of Bengang Group Co., Ltd. (hereinafter referred to as Bengang Group) to Angang Group for free. After the completion of the free transfer, Ansteel Group will become the controlling shareholder of Bengang Group, and Ansteel Group will hold 81.07% of the total share capital of Bengang Group Co., Ltd. indirectly. As at 31 December 2021, the capital shares were totaled to 4,108,191,379 shares. The Company’s uniform social credit code: 91210000242690243E. The Company’s registered address: 16th Renmin Road, Pingshan District, Benxi, Liaoning Province. The Company’s legal representative: Huo Gang. The parent company of Bengang Steel Plates Co., Ltd is Benxi Steel and Iron (Group) Co., Ltd. and the actual controller is Ansteel Group Co., Ltd. Bengang Steel Plates Co., Ltd. belongs to ferrous metal smelting and rolling processing industry and is mainly involved in producing and trading of ferrous metal products. 114 Bengang Steel Plates Co., Ltd. Annual Report 2021 The financial statements have been approved for reporting by the board of directors of the Company on 24 March 2022. (2) Consolidation scope Please refer to “7. Equity in other entities” in this note for the relevant information of the Company's subsidiaries. Please refer to “6. Changes in the scope of consolidation” in this note for the changes in the scope of consolidation during the reporting period. 2. Basis of preparation (1) Basis of preparation The financial statements have been prepared on the going concern basis of actual trading and events in accordance with “Accounting Standards for Business Enterprises – Basic Standard” and relevant specific standards, application materials, interpretations (together hereinafter referred to as “Accounting Standards for Business Enterprises”) issued by the Ministry of Finance, and “Information Disclosure Rules for Companies of securities for public issuance No. 15 – General Regulations for Financial Statements” issued by the China Securities Regulatory Commission. (2) Going concern The Company is operating normally and in a good condition, and thus has the capability to continue to operate in the next twelve months from the end of reporting period. 3. Significant accounting policies and accounting estimates Notes for specific accounting policies and accounting estimates: The following disclosed content covers the specific accounting policies and accounting estimates that are adopted by the Company based on the actual production and operation characteristics. Please see Note (10) Financial instruments, (11) Inventory, (15) Fixed assets, (18) Intangible assets, (24) Revenue under “3. Significant accounting policies and accounting estimates” for details. (1) Statement of compliance with China Accounting Standards for Business Enterprises 115 Bengang Steel Plates Co., Ltd. Annual Report 2021 The financial statements present truly and completely the financial position, operation results and cash flows of the Company during the reporting period in accordance with China Accounting Standards for Business Enterprises. (2) Accounting year The Accounting year is from 1 January to 31 December. (3) Operating period The operating period is twelve months. (4) Functional currency The Company’s functional currency is RMB. (5) The accounting treatment for Business combination under/not under common control 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 acquiree’s 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 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 fees for the business combination 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 116 Bengang Steel Plates Co., Ltd. Annual Report 2021 for the business combination shall be recorded into the initial recognition amount of equity securities. (6) Consolidation of Financial Statements 1. Scope of consolidation The scope of consolidation of consolidated financial statements is determined based on control. All the subsidies (including separable sections of the investees controlled by the Company) 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. The accounting policy and accounting period of the subsidiaries within the consolidation scope shall be in accordance with those of the Company. If not, it is necessary to make the adjustment according to the Company’s accounting policies and accounting period when preparing the consolidated financial statements. 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 minority’s interests in the beginning equity of a subsidiary, the excess shall be charged against the minority’s interests. (1) Increasing new subsidiaries and businesses If the Company has a new subsidiary due to business combination under common control 117 Bengang Steel Plates Co., Ltd. Annual Report 2021 during the 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 Company’s 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 Company’s 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 company’s 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 Company’s 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 acquiree’s 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. 118 Bengang Steel Plates Co., Ltd. Annual Report 2021 (2) Disposing subsidiaries or businesses 1. General treatment If the Company disposes a subsidiary during the reporting period, the revenue, expenses and profits of the subsidiary from the beginning of the reporting period to disposal date are included in the Company’s 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 Company’s consolidated statement of cash flows. When the Company loses control over an investee due to partial disposal or other reasons, the acquirer shall re-measure 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 acquiree’s 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 re-measurement of defined benefit plan is excluded. When the Company loses control over a subsidiary due to the increase of capital from other investors and thus the shareholding ratio of the Company declines, accounting treatment shall be in accordance with the above-mentioned principles. 2. Disposing subsidiaries 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 119 Bengang Steel Plates Co., Ltd. Annual Report 2021 as a single transaction. In the consolidated financial statements, the difference between the consideration received and the corresponding proportion of the subsidiary’s 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 subsidiaries’ equity interest held by non-controlling shareholders Where the Company has acquired a subsidiary’s 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 portion of equity investments in subsidiaries without losing 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) Classification of joint venture arrangements and accounting treatment Joint venture arrangements are divided into joint operations and joint ventures. When the Company is a joint venture party of a joint venture arrangement and have the assets related to the arrangement and assumes the liabilities related to the arrangement, it is a joint operation. 120 Bengang Steel Plates Co., Ltd. Annual Report 2021 The Company confirms the following items related to the share of interest in the joint operation and performs accounting treatment in accordance with the relevant enterprise accounting standards: a. Confirm the assets held by the company separately, and confirm the assets held jointly by the Company's share; b. Recognize the liabilities assumed by the Company separately and the liabilities jointly assumed by the company's share; c. Recognize the income generated by the sale of the Company’s share of common operating output; d. Recognize the revenue generated from the sale of joint operations based on the Company's share; e. Confirm the expenses incurred separately and the expenses incurred in the joint operation according to the Company's share. (8) Recognition of cash and cash equivalents The term “cash” refers to the cash on hand and the unrestricted deposit. And the term “cash equivalents” refers to short-term (maturing within three months from acquisition) and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. (9) Foreign currency transaction and translation of foreign currency financial statements 1. Foreign currency transaction 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. 2. Translation of foreign currency financial statements 121 Bengang Steel Plates Co., Ltd. Annual Report 2021 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 income statement shall be translated using an exchange rate that is determined in a systematic and reasonable manner and approximates the spot exchange rate on 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. (10) Financial instruments Financial instruments include financial assets, financial liabilities and equity instruments 1. Classification of financial instruments The Company shall classify financial assets on the basis of both the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset as: financial assets measured at amortized cost, financial assets measured at fair value through other comprehensive income and financial assets measured at fair value through profit or loss at initial measurement. A financial asset shall be measured at amortized cost if both of the following conditions are met. The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. A financial asset shall be measured at fair value through other comprehensive income if both of the following conditions are met. The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company may make an election at initial recognition for non-trading equity instrument 122 Bengang Steel Plates Co., Ltd. Annual Report 2021 investments whether it is designated as a financial asset (equity instrument) that is measured at fair value through other comprehensive income. The designation is made on the basis of a single investment, and the related investment meets the definition of an equity instrument from the issuer's perspective. Other financial assets other than these are classified as financial assets measured at fair value through profit or loss. At the initial recognition, in order to eliminate or significantly reduce accounting mismatches, financial assets that should be classified as measured at amortized value or financial assets measured at fair value through other comprehensive income can be designated as financial assets measured at fair value through profit or loss. The Company shall classify financial liabilities as financial liabilities measured at amortized cost and financial liabilities measured at fair value through profit or loss at initial measurement. In the initial recognition, in order to eliminate or significantly reduce accounting mismatches, financial assets can be designated as financial assets measured at fair value and their changes included in the current profit and loss. According to the above conditions, the Company does not have such designated financial assets. The Company may, at initial recognition, designate a financial liability as measured at fair value through profit or loss because either: (a) it eliminates or significantly reduces an accounting mismatch; (b) a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the entity’s key management personnel; (c) the financial liability contains embedded derivatives that need to be separated. 2. Recognition and measurement of financial instruments (1) Financial assets measured at amortized cost Financial assets measured at amortized cost include notes receivables, accounts receivables, other receivables, long-term receivables, debt investments, etc. At initial recognition, the Company shall measure a financial asset at its fair value plus or minus transaction costs that are 123 Bengang Steel Plates Co., Ltd. Annual Report 2021 directly attributable to the acquisition or issue of the financial asset. The Company shall measure account receivables at their transaction price if the account receivables do not contain a significant financing component and accounts receivables that the company has decided not to consider for a financing component of no more than one year. Interests calculated by using the effective interest method during the holding period shall be. recognized in profit or loss. When recovering or disposing the receivables, the difference between the price obtained and. the carrying value shall be recognized in current profit or loss. (2) Financial assets measured at fair value through other comprehensive income (debt instruments) Financial assets measured at fair value through other comprehensive income (debt instruments) include receivables financing, other debt investments, etc. At initial recognition, the Company shall measure a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition or issuance of the financial asset. The financial assets are subsequently measured at fair value. Changes in fair value are included in other comprehensive income except for interest calculated using the effective interest method, impairment losses or gains and exchange gains and losses. When the financial assets are derecognized, the accumulated gain or loss previously recognized in other comprehensive income is transferred from other comprehensive income and recognized in profit or loss. (3) Financial assets at fair value through other comprehensive income (equity instruments) Financial assets at fair value through other comprehensive income (equity instruments). include other equity instrument investments, etc. At initial recognition, the Company shall measure a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset. The financial assets are subsequently measured at fair value. Changes in fair value are included in other comprehensive income. The dividends obtained are recognized in profit and loss. 124 Bengang Steel Plates Co., Ltd. Annual Report 2021 When the financial assets are derecognized, the accumulated gain or loss previously. recognized in other comprehensive income is transferred from other comprehensive income and recognized in retained earnings. (4) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include transactional financial assets, derivative financial assets, other non-current financial assets, etc. The Company shall measure the financial assets at fair value at initial recognition. Transaction costs are recognized in profit or loss. Changes in fair value are included in profit or loss. When the financial assets are derecognized, the difference between the fair value and the. initially recorded amount is recognized as investment income, and the gains and losses from changes in fair value are adjusted. (5) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include current financial liabilities, derivative financial liabilities, etc. The Company shall measure the financial assets at fair value at initial recognition. Transaction costs are recognized in profit or loss. Changes in fair value are included in profit or loss. When the financial liabilities are derecognized, the difference between the fair value and the. initially recorded amount is recognized as investment income, and the gains and losses from changes in fair value are adjusted. (6) Financial liabilities measured at amortized cost Financial liabilities measured at amortized cost include short-term borrowings, notes. payables, accounts payables, other payables, long-term borrowings, bonds payables, long-term payables. At initial recognition, the Company shall measure a financial liability at its fair value plus. 125 Bengang Steel Plates Co., Ltd. Annual Report 2021 transaction costs that are directly attributable to the acquisition or issue of the financial asset. Interests calculated by using the effective interest method during the holding period shall be. recognized in profit or loss. When the financial liabilities are derecognized, the difference between the price obtained and. the carrying value shall be recognized in profit and loss. 3. Termination of recognition of financial assets and financial assets transfer When one of the following conditions is met, the company terminates the recognition of financial assets. - Termination of contractual rights to receive cash flows from financial assets; - The financial assets have been transferred, and almost all the risks and rewards in the ownership of the financial assets have been transferred to the transferee; - The financial assets have been transferred. Although the company has neither transferred nor retained almost all the risks and rewards of the ownership of the financial assets, it has not retained control of the financial assets. 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 Company shall follow the principle of the substance over form. Transfer of an entire financial asset can be divided into partial financial assets transfer and entire financial asset transfer. If the transfer of an entire financial asset satisfies the conditions for de-recognition, the difference between the amounts of the following 2 items shall be recorded in the profits and losses of the current period: (1) The book value of the transferred financial asset; and (2) The sum of consideration received from the transfer, and the accumulative amount of the changes of the fair value originally recorded in the owners' equities (in the event that the financial asset involved in the transfer is a financial asset Available-for-sale). If the transfer of partial financial asset satisfies the conditions to derecognize, the entire book value of the transferred financial asset shall, between the portion whose recognition has been stopped and the portion whose recognition has not been stopped (under such circumstance, the service asset retained shall be deemed as a portion of financial asset whose recognition 126 Bengang Steel Plates Co., Ltd. Annual Report 2021 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; and (2) The sum of consideration of the portion whose recognition has been stopped, and the portion of the accumulative amount of the changes in the fair value originally recorded in the owner's equities which is corresponding to the portion whose recognition has been stopped (in the event that the financial asset involved in the transfer is a financial asset Available-for-sale). If the transfer of financial assets does not satisfy the conditions to stop the recognition, it shall continue to be recognized as financial assets and the consideration received shall be recognized as financial liabilities. 4. Termination of recognition of financial liabilities Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly. Where the Company (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 the Company makes substantial revisions to part or all of the contractual stipulations of the existing financial liability, it shall terminate 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 Company shall include into the profits and losses of the current period the difference 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). 127 Bengang Steel Plates Co., Ltd. Annual Report 2021 Where the Company buys back part of its financial liabilities, it shall distribute, on the date of repurchase, 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 of the financial assets (liabilities) If active markets for the financial instruments exist, the fair value shall be measured by quoted prices in the active markets. If active markets for the financial instruments do not exist, valuation techniques shall be applied for the measurement. The Company uses valuation techniques appropriate in the circumstances and for which sufficient data are available to measure fair value. The Company chooses relevant observable inputs for identical or similar assets or liabilities. Only when relevant observable inputs are unavailable or should the Company use unobservable inputs for the asset or liability. 6. Impairment provision of the financial assets The Company recognize the expected credit loss on financial assets measured at amortized cost, financial assets measured at fair value through other comprehensive income (debt instruments), financial guarantee contract, and so on, on the individual or portfolio basis. The Company considers all reasonable and relevant information, including past events, current conditions, and forecasts of future economic conditions, and uses the risk of default as the weight to calculate the probability-weighted amount of present value of difference between the cash flow receivable from the contract and the cash flow expected to be received to confirm the expected credit loss. If the credit risk of the financial instrument has increased significantly since the initial confirmation, the Company shall measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company shall measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. The increase or reversal amount of loss allowance thus formed shall be included in the current profits and losses as impairment losses or gains. 128 Bengang Steel Plates Co., Ltd. Annual Report 2021 The measurement of expected credit loss depends on whether there is a significant increase in credit risk of financial assets since the initial recognition. The company compares the risk of default on the balance sheet date of financial instruments with the risk of default on the date of initial recognition to determine the relative change in the risk of default during the expected life of the financial instrument to assess whether there is a significant increase in credit risk of financial assets since the initial recognition. Generally, the Company believes that the credit risk of the financial instrument has significantly increased over 30 days after the due date, unless there is solid evidence that the credit risk of the financial instrument has not increased significantly since initial recognition. If the credit risk of a financial instrument at the reporting date is relatively low, the Company considers that the credit risk of the financial instrument has not increased significantly since the initial recognition. If there is objective evidence indicating that a certain financial asset has been impaired, the Company shall recognize provision for impairment of the financial asset individually. For account receivables and contract assets recognized according to Accounting Standards for Business Enterprises No. 14 Revenue (2017), whether a significant financing component is contained or not, the Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses. For lease receivables, the Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses. (11) Inventory 1. Inventory classification Inventories include material in transit, raw material, turnover materials, finished goods, work in process, issue commodity, materials for consigned processing, etc. Inventory is initially measured at cost. Inventory cost includes purchase cost, processing cost and other expenditures incurred to bring inventory to its current location and state. 2. Valuation method for inventory dispatched The weighted average method is used to confirm the actual cost of the inventories dispatched. 129 Bengang Steel Plates Co., Ltd. Annual Report 2021 3. The basis for confirming the net realizable value of inventories and the methods to make provision for the inventory impairment loss On the balance sheet date, inventories shall be measured at the lower of cost and net realizable value. When the cost of inventories is higher than its net realizable value, provision for inventory impairment loss shall be made. The net realizable value refers to the amount of the estimated selling price of the inventory minus the estimated costs that will occur at the time of completion, estimated selling expenses, and relevant taxes in daily activities. 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 the Company 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. After the inventory impairment is withdrawn, if the factors that previously affected the write- down of the inventory value have disappeared, causing the net realizable value of the inventory to be higher than its book value, it shall be reversed within the amount of the inventory impairment that has been withdrawn, and the reverted amount shall be included in the current profit and loss. 4. Inventory system The Company uses perpetual inventory system. 5. Amortization of low-valued consumables and packing materials (1) Low-valued consumables shall be amortized in full amount on issuance. (2) Packing materials shall be amortized in full amount on issuance. (12) Contract asset 1. Recognition methods and criteria of contract assets When either party to a contract has performed, the Company shall present the contract in the statement of financial position as a contract asset or a contract liability, depending on the relationship between the Company’s performance and the customer’s payment. If the Company have the rights to receive consideration (the right is conditioned on factors other 130 Bengang Steel Plates Co., Ltd. Annual Report 2021 than the passage of time) by transferring goods or services to a customer, the entity shall present the contract as a contract asset. Contract assets and contract liabilities under the same contract are disclosed in net amount. An entity shall present any unconditional rights to consideration (only the passage of time is required) separately as a receivable. 2. Expected credit loss of contract assets For the accounting policy of the expected credit loss of contract assets, please refer to Note (10) 6. Impairment provision of the financial assets under “3. Significant accounting policies and accounting estimates”. (13) Long-term equity investment 1. Criteria of joint 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. If the Company and other joint venture have joint control of the investee and have rights to the net assets of the investee, the investee is a joint venture of the Company. 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 from business acquisition For a business combination under common control, if the consideration of the combination is satisfied by paying cash, transfer of non-cash assets or assumption of liabilities and issue of equity securities, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity of the party being absorbed in the consolidated financial statements of the ultimate controlling party at combination date. When an investor becomes capable of exercising control over an investee under common control due to additional investment or other reasons, the initial investment cost shall be the absorbing party’s share of the carrying amount of the owner’s equity of the party being absorbed in the consolidated financial statements of the ultimate controlling party at combination date. The difference between the initial investment cost and the carrying amount of the previously- held equity investment, together with the additional investment cost for new shares at combination date, shall be adjusted to the capital reserve. If the balance of capital reserve is not sufficient, any excess shall be adjusted to retained earnings. 131 Bengang Steel Plates Co., Ltd. Annual Report 2021 For a business combination not under common control, the initial investment cost of the long- term equity investment shall be the acquisition cost at the acquisition date. When an investor becomes capable of exercising control over an investee due to additional investment or other reasons, the initial investment cost under the cost method shall be the carrying amount of previously-held equity investment together with the additional investment cost. (2) The initial cost of the long-term equity investment other than from business acquisition The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost which is actually paid. The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair value of the equity securities issued. 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 investor’s interest in the fair values of an investee’s 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 investor’s interest in the fair values of the investee’s identifiable net assets at the acquisition date, the difference shall be credited to profit or loss for the current period, and the cost of long- term equity investment shall be adjusted accordingly. The Company shall recognize its share of the investee’s net profits or losses, as well as its share of the investee’s 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 investor’s share of the investee’s owners’ equity changes, other than those arising from the investee’s net profit or loss, other comprehensive income or profit distribution, and the carrying amount of the long- term equity investment shall be adjusted accordingly. 132 Bengang Steel Plates Co., Ltd. Annual Report 2021 The investor shall recognize its share of the investee’s net profits or losses after making appropriate adjustments according to the Company’s accounting principles and operating period based on the fair values of the investee’s identifiable net assets at the acquisition date. During the holding period, if the investee makes consolidated financial statements, the Company shall calculate its share based on the investee’s net profit, other comprehensive income and the amount of other owners' equity attribute to the investee in the consolidated financial statements. The unrealized profits or losses resulting from transactions between the investor and its associate or joint venture shall be eliminated in proportion to the investor’s equity interest in the investee, based on which investment income or losses shall be recognized, except the transaction of investment or sale of assets is a business. Any losses resulting from transactions between the investor and investee which are attributable to asset impairment shall be recognized in full. The company’s net losses incurred by joint ventures or associates, in addition to assuming additional loss obligations, are limited to the book value of long-term equity investments and other long-term equity that essentially constitutes net investment in joint ventures or associates. If a joint venture or associated enterprise realizes net profits in the future, the company resumes recognizing its share of profits after the share of profits makes up for the share of unrecognized losses. (3) Disposal of long-term equity investment When disposing 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. Partial disposal of long-term equity investments accounted for by the equity method, and the remaining equity is still accounted for by the equity method, the other comprehensive income recognized by the original equity method shall be carried forward according to the same basis as the direct disposal of related assets or liabilities by the investee. All other changes in the interests of the holders are carried forward to the current profit and loss on a pro rata basis. 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, 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. Other owner's equity change shall be 133 Bengang Steel Plates Co., Ltd. Annual Report 2021 transferred into profit or loss of current period in full when the Company cease to adopt the equity method. When an investor can no longer control the investee due to partial disposal, when the individual financial statements are prepared, the remaining equity can exercise joint control or significant influence on the investee, the equity method shall be used to account for the remaining equity. It is deemed that the equity method is adopted for adjustment since the acquisition, and the other comprehensive income recognized before the control of the investee is obtained is carried forward on the same basis as the direct disposal of related assets or liabilities by the investee, because the equity method is used for accounting. The confirmed changes in other owners’ equity are carried forward to the current profit and loss on a pro rata basis. If the remaining equity cannot exercise joint control or exert significant influence on the investee, it shall be recognized as a financial asset, and the difference between its fair value and book value on the date when control is lost shall be included in the current profit and loss, and other comprehensive income and other owner’s interests previously recognized shall be transferred to profit or loss in full. If the equity investment of a subsidiary is disposed through multiple transactions until it loses control, which is a package transaction, each transaction shall be accounted as a transaction that disposes of the equity investment of the subsidiary and loses control. Each transaction before the loss of control, the difference between the disposal price and the book value of the corresponding disposed part of long-term equity investment is firstly recognized as other comprehensive income in individual financial statements, and then transferred to the current profit and loss when the control is lost. If it is not a package transaction, each transaction shall be accounted separately. (14) Investment property Investment property refers to real estate held for the purpose of earning rent or capital appreciation, or both, including leased land use rights, land use rights held and prepared for transfer after appreciation, and leased buildings (Buildings that are leased after completion of self-construction or development activities and buildings that are being used for rental in the future during construction or development). Subsequent expenditures related to investment property are included in the cost of investment property when the relevant economic benefits are likely to flow in and their costs can be reliably measured. Otherwise, they are included in the current profit and loss when incurred. 134 Bengang Steel Plates Co., Ltd. Annual Report 2021 The company uses the cost model to measure the existing investment property. For investment property measured according to the cost model - the rental building adopts the same depreciation policy as the fixed assets of the company, and the land use right for rental is amortized according to the same amortization policy as the intangible assets. (15) Fixed assets 1. Recognition of Fixed assets The term "fixed assets" refers to the tangible assets held for the sake of producing commodities, rendering labor service, renting or business management and of which useful life is in excess of one fiscal year. No fixed asset may be recognized unless it simultaneously meets the conditions as follows: (1) The economic benefits pertinent to the fixed asset are likely to flow into the enterprise; and (2) The cost of the fixed asset can be measured reliably. Fixed assets are initially measured at cost (and considering the impact of expected dismantling cost factors). Subsequent expenditures related to fixed assets are included in the cost of fixed assets when the related economic benefits are likely to flow in and their costs can be reliably measured; the book value of the replaced part is derecognized; all other subsequent expenditures are incurred shall be included in the current profit and loss. 2. Fixed assets depreciation Fixed assets are depreciated under the straight-line method. The depreciation rate is determined according to the category of assets, the useful life and the expected residual rate. If the components of the fixed assets have different useful lives or provide the economic benefits in a different way, then different depreciation rate or method shall be applied and the depreciation of the components shall be calculated separately. Fixed assets acquired under financial leasing is depreciated over the useful life if it is reasonably certain that the ownership of the leased assets will be acquired upon expiry of lease, or over the shorter of lease term and useful life if it is not reasonably certain that the ownership of the leased assets will be acquired upon expiry of lease. Details of classification, depreciation period, residual value rate and annual depreciation rate are as follows: Depreciation Residual Value Depreciation Rate Category Depreciation method Period Rate (%) (%) 135 Bengang Steel Plates Co., Ltd. Annual Report 2021 Plants and Buildings straight line method 10-45 years 0.00 2.22-10.00 Machinery straight line method 10-28 years 3.00 3.46-9.70 Transportation and straight line method 8-22 years 3.00 4.41-12.13 other equipment 3. Disposal of fixed assets When a fixed asset is disposed, or it is expected that no economic benefits will be generated through use or disposal, the recognition of fixed asset shall be de terminated. The amount of disposal income of fixed assets raising from sell, transfer, scrapping or damage shall be included in the current profit and loss after deducting its book value and related taxes. (16) Construction in progress Construction in progress is measured at the actual cost incurred. The actual cost includes construction costs, installation costs, borrowing costs that meet the capitalization conditions, and other necessary expenditures incurred before the construction in progress reaches its intended use status. Construction in progress is transferred to fixed asset when it has reached its working condition for its intended use and depreciation will be accrued from the next month. (17) Borrowing costs 1. Principle of the recognition of capitalized borrowing costs Where the borrowing costs incurred to an enterprise can be directly attributable to the acquisition and construction or production of assets eligible for capitalization, it shall be capitalized and recorded into the costs of relevant assets. Other borrowing costs shall be recognized as expenses on the basis of the actual amount incurred, and shall be recorded into the current profits and losses. Assets eligible for capitalization refer to the fixed assets, investment property, 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. 2. The capitalization period of borrowing costs The capitalization period shall refer to the period from the commencement to the cessation of capitalization of the borrowing costs, excluding the period of suspension of capitalization of the borrowing costs. The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements: 136 Bengang Steel Plates Co., Ltd. Annual Report 2021 (1) The asset disbursements have already incurred, which shall include cash, transferred non- cash assets or interest bearing debts paid for the acquisition and construction or production activities for preparing assets eligible for capitalization; (2) The borrowing costs has already incurred; and (3) The acquisition and construction or production activities which are necessary to prepare the asset for its intended use or sale have already started. When the qualified asset under acquisition and construction or production is ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased. 3. The suspension of capitalization of borrowing costs Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended. If the interruption is a necessary step for making the qualified asset under acquisition and construction or production ready for the intended use or sale, the capitalization of the borrowing costs shall continue. The borrowing costs incurred during such period shall be recognized as expenses, and shall be recorded into the profits and losses of the current period, till the acquisition and construction or production of the asset restarts. 4. Method of calculating the capitalization rate and 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 Company shall calculate and determine the to-be-capitalized number 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. During the capitalization period, the exchange difference between the principal and interest of the foreign currency special loan is capitalized and included in the cost of the assets that meet the capitalization conditions. Exchange differences arising from the principal and interest of 137 Bengang Steel Plates Co., Ltd. Annual Report 2021 foreign currency borrowings other than foreign currency special borrowings are included in the current profits and losses. (18) Intangible Assets 1. Measurement 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. (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 3. Determination of intangible assets with uncertain useful lives As at the balance sheet date, the Company has no intangible assets with uncertain useful lives. 4. Classification criteria for internal research phase and development phase The expenditures for its internal research and development projects of an enterprise shall be classified into research expenditures and development expenditures. Research phase refers to the phase of creative and planned investigation to acquire and study to acquire and understand new scientific or technological knowledge. Development phase refers to the phase during which the result of research phase or other knowledge is applied into certain projects or designs for the manufacturing of new or substantially improved material, device and product before commercial manufacturing and use. (19) Impairment of long-term assets For long-term assets such as long-term equity investments, Investment property under the cost 138 Bengang Steel Plates Co., Ltd. Annual Report 2021 model, fixed assets, construction in progress, intangible assets with limited useful lives 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 assets on the basis of the asset group to which the asset belongs. The term "assets group” refers to a minimum combination of assets by which the cash flows could be generated independently The goodwill, intangible assets with uncertain useful life and intangible assets not meeting the expected condition for use they 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. 139 Bengang Steel Plates Co., Ltd. Annual Report 2021 Impairment losses on long-term assets shall not be reversed in subsequent accounting periods once recognized. (20) Long-term deferred expense The long-term deferred expense refers to the expenses incurred but shall be borne by current and subsequent accounting period, which is more than one year. The long-term deferred expense shall be amortized over its beneficiary period evenly. (21) Contract liability When either party to a contract has performed, the Company shall present the contract in the statement of financial position as a contract asset or a contract liability, depending on the relationship between the Company’s performance and the customer’s payment. If a customer pays consideration, or the Company has a right to an amount of consideration before the Company transfers a good or service to the customer, the Company shall present the contract as a contract liability. Contract assets and contract liabilities under the same contract are disclosed in net amount. (22) Employee benefits 1. Accounting treatment for short employee benefit The Company shall recognize, 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 welfare expenses incurred by the company are included in the current profit and loss or related asset costs based on the actual amount when they actually occur. Among them, non-monetary benefits are measured at fair value. 2. Accounting treatment of post-employment benefits (1) Defined contribution plan The Company shall recognize, in the accounting period in which an employee provides 140 Bengang Steel Plates Co., Ltd. Annual Report 2021 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 The Company shall recognize an employee benefits liability for termination benefits, with a corresponding charge to the profit or loss for the current period, at the earlier of the following dates: when the Company cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal; or when the Company recognizes costs or expenses related to a restructuring that involves the payment of termination benefits. (23) Estimated liabilities The obligation pertinent to a contingency shall be recognized as an estimated liability 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. The estimated debts shall be initially measured in accordance with the best estimate of the necessary expenses for the performance of the current obligation. To determine the best estimate, an enterprise shall take into full consideration of the risks, uncertainty, time value of money, and other factors pertinent to the Contingencies. If the time value of money is of great significance, the best estimate shall be determined after discounting the relevant future outflow of cash. The best estimate shall be conducted in accordance with the following situations, respectively: If there is a 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: 141 Bengang Steel Plates Co., Ltd. Annual Report 2021 (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. The company reviews the book value of the estimated liabilities on the balance sheet date. If there is conclusive evidence that the book value does not reflect the current best estimate, the book value will be adjusted according to the current best estimate. (24) Revenue 1.The general principle of revenue recognition and measurement The company shall recognize revenue when (or as) the company satisfies a performance obligation when (or as) the customer obtains control of a promised good or service. Control of a promised good or service refers to the ability to direct the use of, and obtain substantially all of the remaining benefits from it. If the contract contains two or more performance obligations, the company shall allocate the transaction price to each individual performance obligation based on the relative proportion of the stand-alone selling price of the goods or services promised by each individual performance obligation on the date of the contract. The company measures revenue based on the transaction price allocated to each individual performance obligation. The transaction price is the amount of consideration to which the company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties or amounts expected to be returned to customers. The company shall consider the terms of the contract and its customary business practices to determine the transaction price. When determining the transaction price, the company shall consider the effects of all of the following: variable consideration, the existence of a significant financing component in the contract, non-cash consideration, and consideration payable to a customer. The company determines the transaction price that includes variable consideration at an amount that does not exceed the amount of accumulated recognized revenue that is unlikely to be materially reversed when the relevant uncertainty is eliminated. If there is a significant 142 Bengang Steel Plates Co., Ltd. Annual Report 2021 financing component in the contract, the company shall recognize revenue at an amount that reflects the price that a customer would have paid for the promised goods or services if the customer had paid cash for those goods or services when (or as) they transfer to the customer, and use the effective interest method to amortize the difference between the transaction price and the contract consideration during the contract period. If the interval between the transfer of control and the payment by the customer does not exceed one year, the financing component will not be considered. The company transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognizes revenue over time, if one of the following criteria is met. Otherwise, the company satisfies the performance obligation at a point in time. (a) the customer simultaneously receives and consumes the benefits provided by the company’s performance as the company performs; (b) the company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or (c) the company’s performance does not create an asset with an alternative use to the company and the company has an enforceable right to payment for performance completed to date. The company shall recognize revenue over time by measuring the progress towards complete satisfaction of that performance obligation, except where the performance progress cannot be reasonably determined. The company considers the nature of the goods or services and adopts the output method or the input method to determine the progress of performance. Where the performance progress cannot be reasonable determined, but the company expects to recover the costs incurred in satisfying the performance obligation, the company shall recognize revenue only to the extent of the costs incurred until such time that it can reasonably measure the outcome of the performance obligation. For performance obligations satisfied at a certain point in time, the company shall recognize revenue at the point when the customer obtains control of the relevant goods or services. To determine the point in time at which a customer obtains control of a promised goods or services, the company shall consider requirements as follows: (a) The company has a present right to payment for the promised goods or services and the customer is presently obliged to pay for that; (b) The company has transferred the legal title of the goods to the customer, that is, the customer has the legal title to the goods; (c) The company has transferred physical possession of the goods to the customer, that is, the customer has taken possession of the goods; (d) The company has transferred the significant risks and rewards of ownership of the goods to the customer, that is, the customer has the significant risks and rewards of ownership of the goods; 143 Bengang Steel Plates Co., Ltd. Annual Report 2021 (e) The customer has accepted the promised goods or services. 2.The specific criteria of revenue recognition and measurement Commodity sales contracts between companies and customers usually only include performance obligations for the transfer of steel and other commodities or service. This type of performance obligation is a performance obligation performed at a certain point in time. The company recognizes revenue when the customer obtains control of the relevant goods or services. When judging whether the customer has obtained control of goods or services, the company considers the following signs: The company obtains the present right of collection of receivables, the legal ownership of the goods is transferred to the customer, the physical assets of the goods are transferred to the customer, the company transfers the main risks and rewards of the ownership of the goods to the customer, and the customer has accepted the goods. (25) Contract costs Contract costs include costs to fulfill a contract and incremental costs of obtaining a contract. If the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard, for example, Inventories, Property, Plant and Equipment or Intangible Assets, the company shall recognize an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria: (a) the costs relate directly to a contract or to an expected contract; (b) the costs generate or enhance resources of the Company that will be used in satisfying performance obligations in the future; and (c) the costs are expected to be recovered. The company shall recognize as an asset the incremental costs of obtaining a contract with a customer if the company expects to recover those costs. An asset recognized in accordance with contract costs shall be amortized in consistent with the transfer to the customer of the goods or services to which the asset relates. The company may recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset is one year or less. 144 Bengang Steel Plates Co., Ltd. Annual Report 2021 The company shall recognize an impairment loss in profit or loss to the extent that the carrying amount of an asset related to contract assets exceeds: (a) the remaining amount of consideration that the company expects to receive in exchange for the goods or services to which the asset relates; less (b) the costs that relate directly to providing those goods or services and that have not been recognized as expenses. The company shall recognize in profit or loss a reversal of some or all of an impairment loss previously recognized when the impairment conditions no longer exist or have improved. The increased carrying amount of the asset shall not exceed the carrying amount that if no impairment loss had been recognized previously. (26) Government Subsidies 1. Types 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. Government subsidies related to assets are government subsidies whose primary condition is that an entity qualifying for them should purchase, construct or otherwise acquire long-term assets. The government subsidies related to incomes refers to government subsidies other than those related to assets. The standard of the Company recognizing the government subsidies related to assets is: an entity qualifying for them should purchase, construct or otherwise acquire long-term assets. The standard of the Company recognizing the government subsidies related to income is: In addition to government subsidies related to assets, government subsidies that have been clearly targeted for subsidies. 145 Bengang Steel Plates Co., Ltd. Annual Report 2021 For the the government subsidy which does not specify the subsidy object in government document will be classified as asset-related or income-related judgment basis: if a long- term asset can be formed, the government subsidy part corresponding to the asset value shall be regarded as an asset-related subsidy, the rest are regarded as government subsidies related to income; if it is difficult to distinguish, the whole government subsidies are regarded as government subsidies related to income. 2. Recognition Government subsidies related to assets are recognized when it actually received, and transferred the deferred income to the current profit and loss according to the estimated using period of the long-term assets from when the long-term assets are available. Government subsidies related to income are recognized when it actually received. Which to compensate the relevant expenses or losses in subsequent periods shall be included in the current non-operating income during the period when the relevant expenses are recognized. Which to compensate expenses or losses already incurred shall be recognized in current non-operating income. 3. Accounting treatment Government subsidies related to assets shall be recognized by deducting the subsidies at the caring amount of the assets or recognized as deferred income. Subsidies that recognized as deferred income shall be recognized in profit or loss on a systematic basis over the periods during the useful lives of the relevant assets (Subsidies related to daily activities should be recorded in Other Income. Subsidies that unrelated to daily activities should be recorded in Non-operating Income). The government subsidies related to incomes to compensate future expenses, shall be recognized as deferred income and transferred to current profit or loss (Subsidies related to daily activities should be recorded in Other Income. Subsidies that unrelated to daily activities should be recorded in Non-operating Income) in the period during which the expenses compensation is recognized or deduct relevant cost or loss. Government subsidies to compensate expenses or losses already incurred shall be recognized in current profit and loss (Subsidies related to daily activities should be recorded in Other Income. Subsidies unrelated to daily activities should be recorded in Non-operating Income) or deduct relevant cost or loss. 146 Bengang Steel Plates Co., Ltd. Annual Report 2021 The policy discount loans obtained by the company are divided into the following two situations and are separately accounted for: (a) If the government allocates discounted funds to the loan bank and the loan bank provides loans to the company at a policy preferential interest rate, the company will take the actual amount of the loan received as the entry value of the loan and calculate the relevant borrowing costs based on the loan principal and the policy preferential interest rate. (b) If the government directly allocates the discounted funds to the company, the company will offset the relevant borrowing costs with the corresponding discounts. (27) Deferred tax assets and deferred tax liabilities Income tax includes current income tax and deferred income tax. Except for income tax arising from business mergers and transactions or events that are directly included in owner's equity (including other comprehensive income), the company will include current income tax and deferred income tax in current profit and loss. Deferred income tax assets and deferred income tax liabilities are calculated and confirmed based on the difference (temporary difference) between the tax base of assets and liabilities and their book value. An enterprise shall recognize the deferred income tax assets arising from a deductible temporary difference to the extent of the amount of the taxable income which it is most likely to be obtained 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). 147 Bengang Steel Plates Co., Ltd. Annual Report 2021 For taxable temporary differences related to investments in subsidiaries, associates and joint ventures, deferred income tax liabilities are recognized, unless the company can control the timing of the reversal of the temporary differences and the temporary differences are likely not to be transferred back in the foreseeable future. For deductible temporary differences related to investments in subsidiaries, associates and joint ventures, when the temporary differences are likely to be reversed in the foreseeable future and are likely to be used to deduct the taxable income of deductible temporary differences in the future, income tax assets are recognized. On the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured at the applicable tax rate during the period when the relevant assets are expected to be recovered or the relevant liabilities are expected to be recovered in accordance with the provisions of the tax law. On the balance sheet date, the company reviews the book value of deferred income tax assets. If it is probable that sufficient taxable income cannot be obtained in the future to offset the benefits of deferred income tax assets, the book value of the deferred income tax assets shall be written down. When it is possible to obtain sufficient taxable income, the reduced amount shall be reversed. When the Company has the statutory right to offset and intend to offset or obtain assets and pay off liabilities at the same time, the current income tax assets and current income tax liabilities are presented at the net amount after offsetting. An entity 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. (28) Leases Accounting policy from January 1, 2021 A lease is a contract whereby the lessor transfers the right of usage on asset to the lessee for consideration within a certain period of time. 148 Bengang Steel Plates Co., Ltd. Annual Report 2021 On the contract commencement date, the company evaluates whether the contract is a lease or includes a lease. If one party in the contract transfers the right to control the use of one or more identified assets within a certain period in exchange for consideration, the contract is a lease or includes a lease. If the contract contains multiple separate leases at the same time, the company will split the contract and conduct accounting treatment for each separate lease. If the contract includes both lease and non-lease parts, the company, as the lessor and lessee, will split the lease and non- lease parts for accounting treatment. For rent reductions, exemptions, deferred payments and other rental reductions directly caused by the COVID-19 epidemic and reached on existing lease contracts, if the following conditions are met at the same time, the company adopts a simplified method for all lease selections, and does not evaluate whether there is a lease change. Lease classification is not reassessed: The lease consideration after the concession is reduced or basically unchanged from that before the concession. The lease consideration may be undiscounted or discounted at the discount rate before the concession; The concession is only for lease payments payable before June 30, 2022, an increase in lease payments payable after June 30, 2022 does not affect meeting this condition, and a decrease in lease payments payable after June 30, 2022 does not satisfy this condition; The other terms and conditions of the lease have not changed significantly after taking into account both qualitative and quantitative factors. 1. The company as lessee (1) Right-of-use assets On the beginning date of the lease term, the Group recognizes the right to use assets for leases other than short-term leases and low value asset leases. The right of use assets are initially measured at cost. This cost includes: 1) Initial measurement amount of lease liabilities; 2) For the lease payment paid on or before the beginning of the lease term, if there is lease incentive, the relevant amount of lease incentive enjoyed shall be deducted; 3) Initial direct costs incurred; 149 Bengang Steel Plates Co., Ltd. Annual Report 2021 4) The estimated costs incurred for dismantling and removing the leased assets, restoring the site where the leased assets are located or restoring the leased assets to the state agreed in the lease terms. Depreciation method of right of use assets the company adopts the straight-line method for depreciation. If it can be reasonably determined that the ownership of the leased asset will be obtained at the expiration of the lease term, the company shall accrue depreciation within the remaining useful life of the leased asset; otherwise, the leased asset shall be depreciated within the shorter of the lease term and the remaining useful life of the leased asset. For the principles which company determines whether the right-of-use asset has been impaired, please refer to Note (19) Impairment of long-term assets under “3. Significant accounting policies and accounting estimates”. (2) Lease liabilities At the beginning of the lease term, the company recognizes the present value of the unpaid lease payments as lease liabilities, except for short-term leases and low value asset leases. The lease liability is initially measured at the present value of outstanding lease payments. Lease payments include: 1) Fixed payments (including actual fixed payments), if there is a lease incentive, deduct the relevant amount of the lease incentive; 2) Variable lease payments that depend on an index or ratio; 3) The expected payment according to the residual value of the guarantee provided by the company; 4) The exercise price of the purchase option, provided that the company is reasonably certain that the option will be exercised; 5) Payments for exercising the option to terminate the lease, provided that the lease term reflects that the company will exercise the option to terminate the lease. The company uses the interest rate implicit in the lease as the discount rate, but if the interest rate implicit in the lease cannot be reasonably determined, the company's incremental borrowing rate is used as the discount rate. The company calculates the interest expense of the lease liability in each period of the lease term according to the fixed periodic interest rate, and includes it into the current profit and loss or the cost of related assets. 150 Bengang Steel Plates Co., Ltd. Annual Report 2021 Variable lease payments that are not included in the measurement of lease liabilities are included in the current profit and loss or the cost of related assets when they are actually incurred. After the commencement date of the lease term, the Company shall re-measure the lease liabilities and adjust the corresponding right-of-use assets under the following circumstances. If the book value of the right-of-use assets has been reduced to zero, but the lease liabilities still need to be further reduced, the difference is included in the current profit and loss: When there is a change in the evaluation results of the purchase option, lease renewal option or termination option, or the actual exercise of the aforementioned options is inconsistent with the original evaluation result, the Company shall calculate the lease payment amount after the change and the revised discounted value. Remeasure the lease liability at the present value of the rate calculation; When the actual fixed payment changes, the estimated payable amount of the residual value guarantee changes, or the index or ratio used to determine the lease payment changes, the company calculates the present value based on the changed lease payment and the original discount rate Remeasure the lease liability. However, where changes in lease payments result from changes in floating interest rates, a revised discount rate is used to calculate the present value. (3) Short-term leases and low-value asset leases The company chooses not to recognize right-of-use assets and lease liabilities for short-term leases and low-value asset leases, and includes the relevant lease payments in the current profit and loss or related asset costs on a straight-line basis over each period of the lease term. Short- term leases refer to leases with a lease term of not more than 12 months and excluding purchase options on the commencement date of the lease term. A low-value asset lease refers to a lease with a lower value when a single leased asset is a brand-new asset. If the company subleases or expects to sublease the leased assets, the original lease is not a low-value asset lease. (4) Lease change If the lease changes and the following conditions are met at the same time, the company will account for the lease change as a separate lease: The lease modification expands the scope of the lease by adding the right to use one or more leased assets; 151 Bengang Steel Plates Co., Ltd. Annual Report 2021 The increased consideration is equivalent to the amount adjusted by the individual price of the expanded part of the lease scope according to the contract. If the lease change is not accounted for as a separate lease, on the effective date of the lease change, the company re-allocates the consideration of the contract after the change, re- determines the lease term, and calculates the current value based on the lease payment after the change and the revised discount rate. value to remeasure the lease liability. If the lease change leads to the narrowing of the lease scope or the shortening of the lease term, the company will reduce the book value of the right-of-use asset accordingly, and include the relevant gains or losses on partial or complete termination of the lease into the current profit and loss. If other lease changes result in re-measurement of lease liabilities, the Company adjusts the book value of the right-of-use asset accordingly. (5) Rent concessions related to COVID-19 For those adopting the simplified method of rent reduction related to the new crown pneumonia epidemic, the company does not assess whether there is a lease change, and continues to calculate the interest expense of the lease liability at the same discount rate as before the reduction and include it in the current profit and loss, and continue to use the same discount rate as before the reduction. The right-of-use asset is depreciated using the same method as before. In the event of rent reduction or exemption, the company will treat the reduced rent as the variable lease payment amount. When the original rent payment obligation is relieved by reaching a concession agreement, the discounted amount at the undiscounted or pre-discount discount rate will be used to offset the cost of relevant assets. or expenses, and adjust the lease liabilities accordingly; if the rent payment is delayed, the company offsets the lease liabilities recognized in the previous period when the actual payment is made. For short-term leases and low-value asset leases, the company continues to include the original contract rent in the cost or expense of the relevant assets in the same way as before the concession. In the event of rent reduction or exemption, the company will take the reduced rent as the variable lease payment, and write down the relevant asset costs or expenses during the reduction or exemption period; if the rent payment is delayed, the company will recognize the rent payable as payable during the original payment period. When the actual payment is made, the payables recognized in the previous period are offset. 2. The company as lessor 152 Bengang Steel Plates Co., Ltd. Annual Report 2021 On the lease commencement date, the Company classifies leases into finance leases and operating leases. A financial lease is a lease that essentially transfers almost all the risks and rewards associated with the ownership of the leased asset, regardless of whether the ownership is ultimately transferred. Operating leases refer to leases other than finance leases. When the company acts as a sublease lessor, it classifies the sublease based on the right-of-use asset arising from the original lease. (1) Accounting treatment of operating leases Lease receipts from operating leases are recognized as rental income on a straight-line basis over each period of the lease term. The Company capitalizes the initial direct expenses incurred in relation to operating leases, and is amortized and included in the current profit and loss on the same basis as the rental income is recognized during the lease term. Variable lease payments not included in lease receipts are included in profit or loss for the period when they are actually incurred. If the operating lease is changed, the company will account for it as a new lease from the effective date of the change, and the advance receipts or lease receivables related to the lease before the change are regarded as the receipts of the new lease. (2) Accounting treatment of financial lease On the lease commencement date, the Company recognizes the finance lease receivables for the finance lease and derecognizes the finance lease assets. When the Company initially measures the finance lease receivables, the net investment in the lease is regarded as the entry value of the finance lease receivables. The net lease investment is the sum of the unguaranteed residual value and the present value of the lease receipts not yet received at the commencement date of the lease term, discounted at the interest rate implicit in the lease. The company calculates and recognizes the interest income in each period of the lease period according to the fixed periodic interest rate. For the derecognition and impairment of finance lease receivables, please refer to Note (10) Financial instruments under “3. Significant accounting policies and accounting estimates”. Variable lease payments that are not included in the net lease investment measurement are included in the current profit and loss when they are actually incurred. If the financial lease is changed and the following conditions are met at the same time, the company will account for the change as a separate lease: The change expands the scope of the lease by increasing the right to use one or more of the leased assets; 153 Bengang Steel Plates Co., Ltd. Annual Report 2021 The increased consideration is equivalent to the stand-alone price of the expanded lease area, adjusted for the contract. If the modification of a financial lease is not accounted for as a separate lease, the Company shall deal with the modified lease under the following circumstances: If the change takes effect on the lease inception date, the lease will be classified as an operating lease, and the company will account for it as a new lease from the effective date of the lease change, and use the net lease investment before the effective date of the lease change as the book value of the leased asset; If the change takes effect on the lease commencement date, the lease will be classified as a financial lease, and the Company will conduct accounting treatment in accordance with the policy on revising or renegotiating contracts in Note (10) Financial instruments under “3. Significant accounting policies and accounting estimates”. (3) Rent concessions related to COVID-19 For operating leases that adopt the simplified method of rent reduction related to the new crown pneumonia epidemic, the company continues to recognize the original contract rent as rental income in the same way as before the reduction; if rent reduction or exemption occurs, the company treats the reduced rent as a variable lease The payment amount shall be offset from the lease income during the reduction or exemption period; if the rental collection is delayed, the company shall recognize the receivable rent as an account receivable during the original collection period, and offset the receivable recognized in the previous period when it is actually received. For financial leases that adopt the simplified method of rent reduction related to the new crown pneumonia epidemic, the company continues to calculate the interest at the same discount rate as before the reduction and recognize it as lease income. In the event of rent reduction or exemption, the company will treat the reduced rent as variable lease payments, and when a concession agreement is reached, etc. to waive the right to receive the original rent, the discounted amount at the undiscounted or pre-discount discount rate will be used to offset the originally recognized amount. For lease income, the part that is not enough to be written off is included in investment income, and the finance lease receivables are adjusted accordingly; if the rent is delayed, the company offsets the finance lease receivables recognized in the previous period when it is actually received. Accounting policies before January 1, 2021 154 Bengang Steel Plates Co., Ltd. Annual Report 2021 Leases are classified into finance leases and operating leases. A finance lease is a lease that transfers substantially all the risks and rewards associated with ownership of an asset. Operating leases refer to leases other than finance leases. For rent reductions, exemptions, deferred payments and other rental reductions directly caused by the COVID-19 epidemic and reached on existing lease contracts, if the following conditions are met at the same time, the company adopts a simplified method for all lease options. Reassess the lease classification: The lease consideration after the concession is reduced or basically unchanged from that before the concession. The lease consideration may be undiscounted or discounted at the discount rate before the concession; The concession is only for lease payments payable before June 30, 2021, an increase in lease payments payable after June 30, 2021 does not affect the satisfaction of this condition, and a decrease in lease payments payable after June 30, 2021 does not satisfy this condition; The other terms and conditions of the lease have not changed significantly after taking into account both qualitative and quantitative factors. 1. Accounting treatment of operating lease (1) The lease fee paid by the company for renting assets shall be apportioned on a straight- line basis over the entire lease period without deducting the rent-free period, and shall be included in the current expenses. The initial direct expenses related to leasing transactions paid by the company are included in the current expenses. When the asset lessor bears the lease-related expenses that should be borne by the company, the company deducts the part of the expenses from the total rent, and the deducted rental expenses are apportioned during the lease period and included in the current expenses. For operating leases that adopt the simplified method of rent reduction related to the new crown pneumonia epidemic, the company continues to include the original contract rent in the cost or expense of the relevant assets in accordance with the same method as before the reduction. In the event of rent reduction or exemption, the company will treat the reduced rent as contingent rent, which will be included in profit or loss during the period of reduction or exemption; if the rent payment is delayed, the company will recognize the rent payable as payable during the original payment period, and offset the previous period when the actual payment is made. Confirmed payables. 155 Bengang Steel Plates Co., Ltd. Annual Report 2021 (2) The lease fee charged by the company for leasing assets shall be apportioned on a straight- line basis over the entire lease term without deducting the rent-free period, and recognized as lease-related income. The initial direct expenses related to leasing transactions paid by the company are included in the current expenses; if the amount is larger, they shall be capitalized and included in the current income in installments on the same basis as the lease-related income recognition during the entire lease period. When the company bears the lease-related expenses that should be borne by the lessee, the company deducts the part of the expenses from the total rental income, and distributes the deducted rental expenses within the lease term. For operating leases that adopt the simplified method of rent reduction related to the new crown pneumonia epidemic, the company continues to recognize the original contract rent as rental income in the same way as before the reduction; if there is rent reduction or exemption, the company will treat the reduced rent as contingent rent , and offset the lease income during the reduction or exemption period; if the rental collection is delayed, the company recognizes the rent receivable as an account receivable during the original collection period, and offsets the account receivable recognized in the previous period when it is actually received. 2. Accounting treatment of financial leasing (1) Financial leased assets: On the lease start date, the company takes the lower of the fair value of the leased asset and the present value of the minimum lease payment as the entry value of the leased asset, and the minimum lease payment as the long-term payable. The recorded value, and the difference is regarded as unrecognized financing expense. The company adopts the effective interest rate method to amortize the unrecognized financing expenses during the asset lease period and include them in the financial expenses. The initial direct costs incurred by the company are included in the value of the leased assets. For the financing leases that adopt the simplified method of rent reduction related to the new crown pneumonia epidemic, the company will continue to recognize the unrecognized financing expenses as the current financing expenses at the same discount rate as before the reduction, and continue to use the same method as before the reduction. The leased assets are accrued for depreciation. For the rent reduction or exemption that occurs, the company regards the reduced rent as contingent rent, and when a concession agreement is reached to release the original rent payment obligation, it is included in the current profit and loss, and the long-term payables are adjusted accordingly. Or discounted at the discount rate before the discount and 156 Bengang Steel Plates Co., Ltd. Annual Report 2021 included in the current profit and loss and adjusted the unrecognized financing expenses; if the rent payment is delayed, the company will offset the long-term payables recognized in the previous period when the actual payment is made. (2) Assets leased out by financing: On the lease start date, the company recognizes the difference between the sum of the financial lease receivables, the sum of the unguaranteed residual value and its present value as unrealized financing income, and it is recognized as an unrealized financing income in each period when the rent is received in the future. rental income. The initial direct expenses related to the lease transaction incurred by the company are included in the initial measurement of the finance lease receivables, and the amount of income recognized during the lease period is reduced. For finance leases that adopt the simplified method of rent reduction related to the new crown pneumonia epidemic, the Company continues to recognize unrealized financing gains as lease income at the same interest rate embedded in the lease as before the reduction. In the event of rent reduction or exemption, the company will treat the reduced rent as contingent rent. When a concession agreement is reached, etc., when the original rent collection right is waived, the originally recognized lease income will be offset, and the insufficient offset will be included in investment income, and adjusted accordingly. Long-term receivables, or discounted at the discount rate before discount and included in the current profit and loss and adjusted for unrealized financing income; if the rental collection is delayed, the company will offset the long-term receivables recognized in the previous period when it is actually received. (29) Discontinuing operation Discontinuing operation is a component that has been disposed or classified as held for sale by the Company, and can be distinguished separately in operating and preparing financial statements when one of the following conditions is met: (1) The component stands for an independent main business or a major business area; (2) The component is a part of disposal plan of an independent main business or a major business area; (3) The component is a subsidiary which is acquired only for sale again. The profit and loss from continuing operations and the profit and loss from discontinued operations are separately listed in the income statement. Operational gains and losses such as impairment losses and reversal amount and disposal gains and losses from discontinued operations are reported as discontinued operation gains and losses. For the discontinued 157 Bengang Steel Plates Co., Ltd. Annual Report 2021 operations reported in the current period, the Company adjusts the information previously disclosed as continuing operations profits and losses in the current financial statements as the discontinued operations profits and losses for the comparable accounting period. (30) Major accounting estimates and judgments When preparing financial statements, the Company's management needs to use estimates and assumptions, which will affect the application of accounting policies and the amount of assets, liabilities, income and expenses. Actual conditions may differ from these estimates. The management of the company continuously evaluates the judgment of key assumptions and uncertainties involved in the estimation, and the impact of changes in accounting estimates will be recognized in the current and future periods. The main uncertainties in the estimated amount are as follows: (1) Measurement of expected credit losses The company calculates the expected credit loss through the default risk exposure and the expected credit loss rate, and determines the expected credit loss rate based on the default probability and the default loss rate. When determining the expected credit loss rate, the company uses internal historical credit loss experience and other data, and adjusts the historical data in combination with current conditions and forward-looking information. When considering forward-looking information, the indicators used by the Company include the risk of economic downturn, the expected increase in unemployment rate, changes in the external market environment, technological environment and customer conditions. The Company regularly monitors and reviews assumptions related to the calculation of expected credit losses. (2) Inventory Impairment As mentioned in note (11) Inventory under “3 Significant accounting policies and accounting estimates”, the Company regularly estimates the net realizable value of the inventory, and recognizes the difference in inventory cost higher than the net realizable value. When estimating the net realizable value of inventory, the Company considers the purpose of holding the inventory and uses the available information as the basis for estimation, including the market price of the inventory and the Company's past operating costs. The actual selling price, completion cost, sales expenses and taxes of the inventory may change according to changes in market sales conditions, production technology, or the actual use of the inventory. Therefore, the amount of inventory depreciation reserve may change according to the above reasons. Adjustments to the inventory impairment will affect the current profit and loss. 158 Bengang Steel Plates Co., Ltd. Annual Report 2021 (3) Impairment of other assets except inventory and financial assets As mentioned in note (19) Long-term Asset Impairment under “3 Significant accounting policies and accounting estimates”, the company performs an impairment assessment on assets other than inventory and financial assets on the balance sheet date to determine whether the recoverable amount of the asset has fallen to a lower level than its book value. If the situation shows that the book value of the long-term assets may not be fully recovered, the relevant assets will be deemed to be impaired and the impairment loss will be recognized accordingly. The recoverable amount is the higher of the net value of the fair value of the asset (or asset group) minus the disposal expenses and the present value of the asset (or asset group) 's expected future cash flow. Because the Company cannot reliably obtain the public market price of assets (or asset groups), and cannot reliably and accurately estimate the fair value of assets. Therefore, the Company regards the present value of the expected future cash flow as the recoverable amount. When estimating the present value of future cash flows, it is necessary to make a significant judgment on the output, selling price, related operating costs of the products produced by the asset (or asset group), and the discount rate used in calculating the present value. The Company will use all available relevant information when estimating the recoverable amount, including the prediction of output, selling price and related operating costs based on reasonable and supportable assumptions. (4) Depreciation and amortization of assets such as fixed assets and intangible assets As described in note (15) Fixed Assets and note (18) Intangible Assets under “3 Significant accounting policies and accounting estimates”, the company shall accrue depreciation for the fixed assets and amortization for intangible assets within the useful life after considering their residual value. The company regularly reviews the useful life of related assets to determine the amount of depreciation and amortization expenses to be included in each reporting period. The useful life of assets is determined by the company based on past experience with similar assets and in combination with anticipated technological changes. If the previous estimates change significantly, the depreciation and amortization expenses will be adjusted in the future. (5) Deferred tax assets When it is estimated that sufficient taxable income can be obtained in the future to use the unrecovered tax losses and deductible temporary differences, the relevant deferred tax assets are calculated and confirmed on the basis of the applicable income tax rate during the period when the asset is expected to be recovered and the amount of taxable income is limited to deductible tax losses and deductible temporary differences likely to be obtained by the Company. The Company needs to use judgment to estimate the time and amount of future 159 Bengang Steel Plates Co., Ltd. Annual Report 2021 taxable income, and make reasonable estimates and judgments on the future applicable income tax rate according to the current tax policy and other related policies to determine the deferred tax assets that should be recognized. If the time and amount of profits actually generated in the future period or the actual applicable income tax rate are different from the management's estimate, the difference will have an impact on the amount of deferred tax assets. (31) Change of significant accounting policy and accounting estimate A. Change of major accounting policy during this reporting period (1) Implementation of “Accounting Standards for Business Enterprises No. 21-Lease” (revised in 2018) The Ministry of Finance revised the "Accounting Standards for Business Enterprises No. 21- Lease" in 2018. The Company implemented the new lease standard from January 1, 2021. According to the revised standard, for contracts that existed before the date of initial application, the company chooses not to reassess whether it is a lease or contains a lease on the date of initial application. The company as lessee The company chooses to adjust the amount of retained earnings and other related items in the financial statements at the beginning of the year in which the new lease standards are implemented for the first time according to the cumulative impact of the first implementation of the new lease standards, and does not adjust the comparable period information. For operating leases that existed before the date of initial application, the Company measures the lease liability on the date of initial application based on the present value of the remaining lease payments discounted at the company's incremental borrowing rate on the date of initial application, and for each lease, choose one of the following two methods to measure right-of- use assets. - Assuming that the book value of the new lease standard is adopted from the commencement date of the lease term, the Company's incremental borrowing rate on the date of initial application is used as the discount rate. - An amount equal to the lease liability, adjusted as necessary for prepaid rent. For operating leases prior to the date of initial application, the Company applies one or more of the following simplified treatments for each lease while applying the above method: 1) Leases that will be completed within 12 months of the date of initial execution are treated as short-term leases; 2) When measuring lease liabilities, the same discount rate is used for leases with similar characteristics; 3) The measurement of the right-of-use asset excludes initial direct costs; 160 Bengang Steel Plates Co., Ltd. Annual Report 2021 4) If there is an option to renew the lease or to terminate the lease, the lease term shall be determined according to the actual exercise of the option and other latest information before the date of initial execution; 5) As an alternative to the right-of-use asset impairment test, assess whether a contract involving a lease is a onerous contract before the date of initial application and adjust the right-of-use asset based on the amount of the loss allowance recorded on the balance sheet at the date of initial application; 6) For lease changes that occurred before the date of initial implementation, no retrospective adjustment will be made, and accounting treatment will be carried out in accordance with the new lease standards according to the final arrangements for lease changes. In measuring the lease liability, the Company discounts the lease payments using the lessee incremental borrowing rate (weighted average: 3.93%) at 1 January 2021. Outstanding minimum lease payments for significant operating leases 2,473,024,885.15 disclosed in the financial statements at December 31, 2020 Present value discounted at the company's incremental borrowing rate as 1,500,739,782.73 of January 1, 2021 Lease liabilities under the new lease standard 1 January 2021 1,500,739,782.73 The difference between the discounted present value of the above and the 972,285,102.42 lease liability For the financial leases that existed before the date of initial application, the Company shall measure the right-of-use assets and lease liabilities according to the original book values of the assets under the financial lease and the financial lease payments payable on the date of initial application. The company as lessor For sub-leases classified as operating leases before the date of initial application and subsistence after the date of initial application, the Company re-evaluates on the date of initial application based on the remaining contract terms and terms of the original lease and sub- lease, and classifies them in accordance with the provisions of the new lease standards. If it is reclassified as a finance lease, the Company will account for it as a new finance lease. Except for sub-lease, the Company does not need to adjust its lease as a lessor in accordance with the new lease standards. The Company conducts accounting treatment in accordance with the new lease standards from the date of initial implementation. The main impacts of the Company's implementation of the new lease standards on the financial statements are as follows: 161 Bengang Steel Plates Co., Ltd. Annual Report 2021 Amount of impact on the balance on Jan Change of accounting Affected items 1, 2021 policy content and reason Consolidated Parent Company Adjustments made by the Right-of-use assets 1,500,739,782.73 1,500,739,782.73 company as a lessee to Lease liability 1,463,444,635.94 1,463,444,635.94 operating leases that Non-current existed before the date of liabilities due within 37,295,146.79 37,295,146.79 initial application one year (2) Implementation of “Interpretation of Accounting Standards for Business Enterprises No. 14” The Ministry of Finance issued the “Interpretation of Accounting Standards for Business Enterprises No. 14” (Caikuai (2021) No.1, hereinafter referred to as “Interpretation No. 14”) at February 2, 2021, which be effective from the date of publication. The relevant business newly added from January 1, 2021 to the implementation date shall be adjusted according to Interpretation No. 14. a. Government-Private Partnership (PPP) project contract Interpretation No. 14 is applicable to PPP project contracts that meet both the "dual characteristics" and "dual control" described in the Interpretation. Retrospective adjustments should be made to relevant PPP project contracts that have been implemented before December 31, 2020 and have not been completed by the implementation date. If retrospective adjustment is not practical, the application shall be applied from the beginning of the earliest period of retrospective adjustment, and the cumulative impact adjustment shall be made in the current year of the implementation date. The retained earnings at the beginning of the year and other related items in the financial statements shall not be adjusted for the comparable period information. The implementation of this provision has not had a significant impact on the financial position and operating results of the Company. b. Reform of base rate Interpretation No. 14 simplifies the accounting treatment for situations in which the reform of base rate leads to changes in the basis for determining cash flows related to financial instrument contracts and lease contracts. According to the provisions of the Interpretation, the business related to the base rate reform that occurred before December 31, 2020 should be adjusted retrospectively, except where retrospective adjustment is not practical, and there is no need to adjust the data in the comparative financial statements of the previous period. On the implementation date of the interpretation, the difference between the original book value 162 Bengang Steel Plates Co., Ltd. Annual Report 2021 and the new book value of financial assets, financial liabilities, etc., is included in the retained earnings or other comprehensive income at the beginning of the annual reporting period in which the interpretation is implemented. The implementation of this provision has not had a significant impact on the financial position and operating results of the Company. (3) Implement the “Notice on Adjusting the Scope of Application of the Regulations on the Accounting Treatment of Rent Concessions Related to the New Coronary Pneumonia Epidemic” On June 19, 2020, the Ministry of Finance issued the "Regulations on the Accounting Treatment of Rent Reductions Related to the New Coronary Pneumonia Epidemic" (Cai Kuai [2020] No. 10), for rent concessions directly caused by the New Coronary Pneumonia epidemic, such as rent reduction or exemption and deferral of payments, etc, businesses can choose to simplify accounting treatment. On May 26, 2021, the Ministry of Finance issued the "Notice on Adjusting the Application Scope of the Regulations on the Accounting Treatment of Rent Concessions Related to the New Coronary Pneumonia Epidemic" (Cai Kuai [2021] No. 9), which will be implemented on May 26, 2021. Adjusted the scope of application from “Concessions are only for lease payments payable before 30 June 2021” to “Concessions are only for lease payments payable up to 30 June 2022”, with other applicable conditions unchanged. The company has chosen to adopt the simplified method for accounting treatment of all lease contracts that meet the conditions before the adjustment of the scope of application, and also adopts the simplified method for accounting treatment of all similar lease contracts that meet the requirements after the adjustment of the scope of application. Retrospective adjustments will be made to the relevant lease contracts for which the accounting treatment is changed, but the comparative financial statement data of the previous period will not be adjusted; the relevant rental concessions that have occurred between January 1, 2021 and the implementation date of the notice that have not been accounted for in accordance with the notice, make adjustments based on the notification. The implementation of this provision has not had a significant impact on the financial position and operating results of the Company. (4) Implementation of “Interpretation of Accounting Standards for Business Enterprises No. 15”-Presentations related to centralized management of funds The Ministry of Finance issued the “Interpretation of Accounting Standards for Business Enterprises No. 15” (Cai Kuai (2021) No.35, hereinafter referred to as “Interpretation No. 15”) at December 30, 2021, which be effective from the date of publication and the financial statement data of the comparable period shall be adjusted accordingly. 163 Bengang Steel Plates Co., Ltd. Annual Report 2021 Interpretation No. 15 clearly stipulates how the balance involved in the centralized and unified management of the funds of the parent company and member units through internal settlement centers, financial companies, etc., should be presented and disclosed in the balance sheet. The implementation of this provision has not had a significant impact on the financial position and operating results of the Company. B. Change of accounting estimate during the reporting period None. C. The Adjustment of relevant items in the financial statements at the beginning of the year in which the new lease standards are implemented for the first time Consolidated Statement of Financial Position Ending Beginning Adjusted amounts It balance of the last balance of the Reclassif Remeasur ems Total period current period ication ement Ri Not 1,500,739 1,500,739 1,500,739 ght-of-use applicable ,782.73 ,782.73 ,782.73 assets L 1,308,030 1,345,325 37,295,1 37,295,14 ease ,361.43 ,508.22 46.79 6.79 liability N on- current Not 1,463,444 1,463,444 1,463,444 liabilities applicable ,635.94 ,635.94 ,635.94 due within one year Statement of Financial Position of the Parent Company Beginning Adjusted amounts Ending balance Items balance of the current of the last period Reclassification Remeasurement period Right- Not applicable 1,500,739,782.73 1,500,739,782.73 1,500, of-use assets Lease 1,308,030,361.43 1,345,325,508.22 37,295,146.79 37, liability Non- Not applicable 1,463,444,635.94 1,463,444,635.94 1,463, 164 Bengang Steel Plates Co., Ltd. Annual Report 2021 Beginning Adjusted amounts Ending balance Items balance of the current of the last period Reclassification Remeasurement period current liabilities due within one year 4. Taxes (1) Major type of taxes and corresponding tax rates Tax Taxation Method Tax Rate The balance of output VAT calculated based on product sales and taxable Value-added Tax (VAT) services revenue in accordance with the 6%, 9%, 13% tax laws after subtracting the deductible input VAT of the period City maintenance and construction tax Based on VAT actually paid 7%, 5% Enterprise income tax Based on taxable profit 25% (2) Tax Preference None. 5. Notes to the consolidated financial statements (3) Cash at bank and on hand Items 20211231 201201231 Cash on hand 24,334.93 3,026.68 Cash at bank 6,299,074,728.55 9,229,414,568.44 Including:Deposited with finance company 4,429,656,296.13 5,712,508,430.36 Other monetary funds 2,531,996,674.37 3,897,249,320.14 Total 8,831,095,737.85 13,126,666,915.26 Including: Total amount deposited abroad The details of restricted funds resulted from mortgage, pledge or freezing, restrictions on withdrawals due to centralized management of funds, and monetary funds abroad which restricted from repatriation are as follows: 165 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items 20211231 20201231 Margin for bank acceptance bill 1,492,236,674.37 3,306,509,320.14 Margin for letter of credit 125,000,000.00 78,000,000.00 Time deposit or notice deposit 174,000,000.00 512,000,000.00 for guarantee Loan deposit 760,000.00 740,000.00 Restricted deposit 740,000,000.00 Total 2,531,996,674.37 3,897,249,320.14 (4) Notes receivable 1. Notes receivable disclosed by category Items 20211231 20201231 Bank acceptance bill Commercial acceptance bill 1,540,482,182.07 Total 1,540,482,182.07 2. The company has no pledged notes receivable at the end of period 3. Notes receivable which has been endorsed or discounted by the company and have not yet matured at the end of period Amount confirmed at the end of Amount not confirmed at the Items the period end of the period Bank acceptance bill Commercial acceptance bill 1,133,932,188.36 Total 1,133,932,188.36 4. No Notes receivable has been transferred into accounts receivable due to inability of drawer to meet acceptance bill at the end of period (5) Accounts receivable 1. Accounts receivable disclosed by aging analysis Items 20211231 20201231 Within 1 year (inclusive) 256,620,123.38 245,084,695.28 1-2 years (inclusive) 6,224,788.02 57,537,987.36 166 Bengang Steel Plates Co., Ltd. Annual Report 2021 2-3 years (inclusive) 57,059,913.27 251,762,129.07 Over 3 years 427,997,121.96 179,465,975.74 Sub-total 747,901,946.63 733,850,787.45 Less: Provision for bad 491,051,163.92 488,633,604.79 debts Total 256,850,782.71 245,217,182.66 2. Accounts receivable disclosed by bad debt accrual method 20211231 Carrying amount Provision for bad debts Items Bad Percentage Book value Amount Amount debts (%) ratio (%) Provision for bad debts 352,985,418.30 47.20 352,985,418.30 100.00 individually Provision for bad debts 394,916,528.33 52.80 138,065,745.62 34.96 256,850,782.71 based on portfolio Include: Portfolio 1: Aging 394,916,528.33 52.80 138,065,745.62 34.96 256,850,782.71 portfolio Total 747,901,946.63 100.00 491,051,163.92 256,850,782.71 20201231 Carrying amount Provision for bad debts Items Bad Percentage Book value Amount Amount debts (%) ratio (%) Provision for bad debts 352,985,418.30 48.10 352,985,418.30 100.00 individually Provision for bad debts 380,865,369.15 51.90 135,648,186.49 35.62 245,217,182.66 based on portfolio Include: Portfolio 1: Aging 380,865,369.15 51.90 135,648,186.49 35.62 245,217,182.66 portfolio 167 Bengang Steel Plates Co., Ltd. Annual Report 2021 Total 733,850,787.45 100.00 488,633,604.79 245,217,182.66 Accounts receivables tested for impairment individually: 20211231 Items Carrying Provision for Bad debts ratio (%) Reason amount bad debts Brilliance Bankruptcy Automotive Group 305,223,081.12 305,223,081.12 100.00 Holdings Co., Ltd. reorganization Benxi Nanfen Xinhe Metallurgical 47,762,337.18 47,762,337.18 100.00 Discontinued Furnace Material Co., Ltd Total 352,985,418.30 352,985,418.30 Provision for bad debts by portfolio: Aging analysis Portfolio accrual item: Aging portfolio 20201231 Items Account Provision for Bad debt Receivable bad debts ratio(%) Within 1 256,620,123.38 2,566,201.23 1.00 year (inclusive) 1-2 years 1,380,656.01 138,065.60 10.00 (inclusive) 2-3 years 1,942,837.68 388,567.53 20.00 (inclusive) Over 3 134,972,911.26 134,972,911.26 100.00 years Total 394,916,528.33 138,065,745.62 3. The provision for bad debts accrued, reversed or recovered in the current period The amount of bad debt provision accrued in the current period is RMB 2,417,959.10. 4. The amount of accounts receivable has been written off in the current period is RMB 399.97. 5. Top five debtors at the end of period 168 Bengang Steel Plates Co., Ltd. Annual Report 2021 20211231 Company Percentage of total Accounts Provision for Amount receivable (%) bad debts The first 305,223,081.12 40.81 305,223,081.12 The second 99,222,882.66 13.27 992,228.83 The third 80,584,547.00 10.77 805,845.47 The fourth 47,762,337.18 6.39 47,762,337.18 The fifth 30,777,943.03 4.12 307,779.43 Total 563,570,790.99 75.36 355,091,272.03 6. Accounts receivable derecognized due to the transfer of financial assets None. 7. The amount of assets and liabilities formed by transferring accounts receivable and continuing to be involved None. (6) Accounts receivable financing 1. Details of accounts receivable financing Items 20211231 20201231 Notes Receivable 1,530,735,647.38 4,189,977,871.92 Including: Bank acceptance 1,530,735,647.38 1,875,594,439.85 bill Commercial acceptance 2,314,383,432.07 bill Accounts receivable Total 1,530,735,647.38 4,189,977,871.92 Notes: Accounts receivable financing reflects notes receivable and accounts receivable that are measured at fair value through other comprehensive income on the balance sheet date. 2. At the end of the period, the company has no commercial bills pledged in accounts receivable financing 3. At the end of the period, the company's endorsed or discounted commercial bills in accounts receivable financing accounting and not yet matured on the balance sheet date are as follows 169 Bengang Steel Plates Co., Ltd. Annual Report 2021 Amount Amount not Item confirmed at the end of confirmed at the end of the period the period Bank acceptance bill 20,681,484,641.73 Commercial acceptance bill Total 20,681,484,641.73 4. No Notes receivable has been transferred into accounts receivable due to inability of drawer to meet acceptance bill at the end of period (7) Prepayments 1. Prepayments disclosed by aging 20211231 20201231 Aging Amount Percentage (%) Amount Percentage (%) Within 1 year 977,541,107.55 98.31 2,096,232,640.14 99.44 1-2 years 16,681,487.73 1.68 11,812,137.51 0.56 2-3 years 147,750.36 0.01 Over 3 years Total 994,370,345.64 100.00 2,108,044,777.65 100.00 Notes: As of December 31, 2021, there were no outstanding prepayments over 1 year. 2. Top five prepaid companies at the end of period Name of the company Amount Percentage (%) The First 562,083,080.63 56.53 The Second 107,790,801.73 10.84 The Third 46,820,475.20 4.71 The Fourth 46,764,418.62 4.70 The Fifth 39,448,845.58 3.97 Total 802,907,621.76 80.75 (8) Other receivables Items 20211231 20201231 Interest receivables 2,523,993.39 33,685,359.01 Dividend receivables Other receivables 163,413,287.02 108,415,992.26 170 Bengang Steel Plates Co., Ltd. Annual Report 2021 Total 165,937,280.41 142,101,351.27 1.Interest receivable (1) Interest receivable disclosed by category Items 20211231 20201231 Deposit interest 2,523,993.39 33,685,359.01 Subtotal 2,523,993.39 33,685,359.01 Less: provision for bad debts Total 2,523,993.39 33,685,359.01 (2) The company has no significant provision for overdue interest and bad debts. 2.Other receivables (1) Other receivables disclosed by aging Items 20211231 20201231 Within 1 year (inclusive) 153,188,899.24 53,420,775.41 1-2 years (inclusive) 4,959,792.25 42,323,476.43 2-3 years (inclusive) 3,778,131.84 12,988,305.06 Over 3 years 74,186,274.07 68,267,923.76 Sub-total 236,113,097.40 177,000,480.66 Less: Provision for bad 72,699,810.38 68,584,488.40 debts Total: 163,413,287.02 108,415,992.26 (2)Information of provision for bad debts Stage one Stage two Stage three lifetime lifetime Provision for 12-month expected credit losses expected credit losses Total bad debts expected credit (Credit (Credit losses impairment has not impairment has occurred) already occurred) Beginning 352,376.05 9,566,849.71 58,665,262.64 68,584,488.40 balance Beginning balance in the current 171 Bengang Steel Plates Co., Ltd. Annual Report 2021 Stage one Stage two Stage three lifetime lifetime Provision for 12-month expected credit losses expected credit losses Total bad debts expected credit (Credit (Credit losses impairment has not impairment has occurred) already occurred) period --Transfer to -3,525.58 3,525.58 the second stage --Transfer to - 3,048,177.80 the third stage 3,048,177.80 --Write-back to the second stage --Write-back to the first stage Accrual for the 494,264.90 1,021,959.28 6,040,356.18 7,556,580.36 current period Reversal during the current period Write-back of 316,314.67 1,238,763.21 1,886,180.50 3,441,258.38 the current period Write-off during the current period Other changes Ending balance 526,800.70 6,305,393.56 65,867,616.12 72,699,810.38 Changes in the book value of other receivables are as follows: Stage one Stage two Stage three lifetime lifetime expected credit expected credit Book value 12-month losses losses Total expected credit losses (Credit (Credit impairment has not impairment has occurred) already occurred) Beginning 97,730,535.73 20,604,580.70 58,665,364.23 177,000,480.66 balance Beginning balance in the 172 Bengang Steel Plates Co., Ltd. Annual Report 2021 Stage one Stage two Stage three lifetime lifetime expected credit expected credit Book value 12-month losses losses Total expected credit losses (Credit (Credit impairment has not impairment has occurred) already occurred) current period --Transfer -316,691.48 316,691.48 to the second stage --Transfer -8,964,690.04 8,964,690.04 to the third stage --Write- back to the second stage --Write- back to the first stage Increase 462,627,944.95 3,469,155.79 123,742.35 466,220,843.09 Termination 400,030,603.31 5,191,442.54 1,886,180.50 407,108,226.35 of confirmation Other changes Ending 160,011,185.89 10,234,295.39 65,867,616.12 236,113,097.40 balance (3) The amount of other accounts receivable actually written off in the current period is RMB 1,221,094.69. (4) Other receivables disclosed by nature Nature 20211231 20201231 Receivable and payable 224,540,231.45 167,775,115.62 Others 11,572,865.95 9,225,365.04 Total 236,113,097.40 177,000,480.66 (5) Top five debtors at the end of period 173 Bengang Steel Plates Co., Ltd. Annual Report 2021 Percentage of total Provision for Company Nature Amount Aging other receivables bad debts (%) The First Accounts 2,819,946.26 within 1 year 1.19 The Second Accounts 2,798,975.71 within 1 year to over 3 years 1.19 2,585,594.69 The Third Accounts 2,261,360.00 over 3 years 0.96 2,261,360.00 The Fourth Accounts 1,908,708.06 over 3 years 0.81 1,908,708.06 The Fifth Accounts 1,740,000.00 over 3 years 0.74 Total 11,528,990.03 4.89 6,755,662.75 (6) There are no other receivables relates to any government subsidies in the reporting period. (7) There are no other receivables derecognized due to the transfer of financial assets in the reporting period (8) There no assets and liabilities formed by transfer of other receivables and continued involvement in the reporting period (9) Inventories 1. Inventories disclosed by category 20211231 20201231 Items Carrying amount Impairment Book value Carrying amount Impairment Book value Raw material 4,730,515,761.34 26,986,533.69 4,703,529,227.65 4,535,270,857.67 26,986,533.69 4,508,284,323.98 and main material Work in process and self- 2,105,832,905.07 25,390,821.52 2,080,442,083.55 1,732,705,334.71 1,946,088.69 1,730,759,246.02 made semi-finished product Finished goods 3,439,625,765.66 33,430,937.88 3,406,194,827.78 2,805,646,918.75 4,625,146.10 2,801,021,772.65 Total 10,275,974,432.07 85,808,293.09 10,190,166,138.98 9,073,623,111.13 33,557,768.48 9,040,065,342.65 2. Provision for inventory impairment and provision for impairment of contract performance costs Increase Decrease Category 20211231 Write-back 20201231 Provision Others Others or write-off 174 Bengang Steel Plates Co., Ltd. Annual Report 2021 Raw material 26,986,533.69 26,986,533.69 and main material Work in process and 1,946,088.69 25,390,821.52 1,946,088.69 25,390,821.52 self-made semi-finished product Finished goods 4,625,146.10 33,430,937.88 4,625,146.10 33,430,937.88 Total 33,557,768.48 58,821,759.40 6,571,234.79 85,808,293.09 3. Descriptions on closing balance of inventories containing capitalized amount of borrowing costs None 4. Descriptions on current amortization amount of contract performance costs None (10) Other current assets Items 20211231 20201231 Prepaid tax 444,009,128.46 183,320,437.20 VAT input tax 310,939,065.10 86,091,954.53 Time deposit 5,254,234,444.28 Total 754,948,193.56 5,523,646,836.01 175 Bengang Steel Plates Co., Ltd. Annual Report 2021 (11) Long-term equity investment Increase/decrease Total Investment Gains Other Investees Add Reduce Other Declaration of Impairme 20201231 and Losses Comprehen Provision 20211231 Invest Investme Equity Cash Dividends Others nt Ending Recognized under sive Income ment nt Changes or Profit Balance the Equity Method Adjustment Joint Venture Zhejiang Bengang Jingrui 2,742,064.73 520,432.46 -280,713.12 2,981,784.07 Steel Processing Co., Ltd.. Subtotal 2,742,064.73 520,432.46 -280,713.12 2,981,784.07 Total 2,742,064.73 520,432.46 -280,713.12 2,981,784.07 176 Bengang Steel Plates Co., Ltd. Annual Report 2021 (12) Other equity instrument investments Item 20201231 20211231 Equity of Suzhou Bengang 3,888,980.00 3,888,980.00 Industrial Co., Ltd. Equity of Zhonggang Shanghai Steel Processing Co., Ltd. Equity of Northeast Special 1,037,735,849.00 1,037,735,849.00 Steel Group Co., Ltd. Equity of Guangzhou Benpu 200,000.00 200,000.00 Automobile Panel Sales Co., Ltd. Equity of Wuhan Bengang 200,000.00 200,000.00 Yuanhong Trading Co., Ltd. Total 1,042,024,829.00 1,042,024,829.00 Notes: The Company holds 15% equity of Zhonggang Shanghai Steel Processing Co., Ltd. 9.93% equity of Northeast Special Steel Group Co., Ltd. held by the Company has been pledged to Bank of Dalian, Shenyang branch. (13) Fixed assets 1. Fixed assets and Disposal of fixed assets Items 20211231 20201231 Fixed assets 25,480,674,048.94 26,284,567,956.44 Disposal of fixed assets Total 25,480,674,048.94 26,284,567,956.44 2. Details of fixed assets Transportation Houses and Mechanical Items and other Total buildings equipment equipment 1. Total original value 20201231 12,992,173,762.87 48,920,259,525.40 912,920,312.85 62,825,353,601.12 Increase in current period 335,742,397.75 1,299,099,252.52 13,828,051.62 1,648,669,701.89 Including: Purchase 21,261,478.78 13,462,077.65 34,723,556.43 Transferred from construction in progress 335,742,397.75 1,277,837,773.74 365,973.97 1,613,946,145.46 Merging 177 Bengang Steel Plates Co., Ltd. Annual Report 2021 Transportation Houses and Mechanical Items and other Total buildings equipment equipment Decrease in current period 83,262,784.29 737,609,827.88 5,789,627.60 826,662,239.77 Including: Disposal or scrapping 83,262,784.29 737,609,827.88 5,789,627.60 826,662,239.77 Others 20211231 13,244,653,376.33 49,481,748,950.04 920,958,736.87 63,647,361,063.24 2.Total accumulated depreciation 20201231 6,133,288,869.64 29,679,421,087.16 629,132,131.82 36,441,842,088.62 Increase in current period 325,467,326.07 1,985,674,168.41 21,886,735.42 2,333,028,229.90 Including: Provision 325,467,326.07 1,985,674,168.41 21,886,735.42 2,333,028,229.90 Decrease in current period 47,133,558.25 648,898,692.49 5,629,149.44 701,661,400.18 Including: Disposal or scrapping 47,133,558.25 648,898,692.49 5,629,149.44 701,661,400.18 20211231 6,411,622,637.46 31,016,196,563.08 645,389,717.80 38,073,208,918.34 3. Total impairment 20201231 36,963,620.92 61,979,935.14 98,943,556.06 Increase in current period 48,396,211.92 6,453,363.70 54,849,575.62 Including: accrued 48,396,211.92 6,453,363.70 54,849,575.62 Others Decrease in current period 1,261,418.52 59,053,617.20 60,315,035.72 Including: Disposal or scrapping 1,261,418.52 59,053,617.20 60,315,035.72 20211231 84,098,414.32 9,379,681.64 93,478,095.96 4. Total net book value of Fixed assets 20211231 6,748,932,324.55 18,456,172,705.32 275,569,019.07 25,480,674,048.94 20201231 6,821,921,272.31 19,178,858,503.10 283,788,181.03 26,284,567,956.44 3. Fixed assets idled temporarily Accumulated Net book Items Gross value Impairment Notes depreciation value Houses and buildings 223,416,300.48 139,189,651.03 84,098,414.32 128,235.13 Mechanical equipment 100,086,005.34 89,198,289.39 9,379,681.64 1,508,034.31 Transportation and 1,042,125.89 1,042,125.89 Other equipment Total 324,544,431.71 229,430,066.31 93,478,095.96 1,636,269.44 178 Bengang Steel Plates Co., Ltd. Annual Report 2021 4. Fixed assets leased in through financial leasing As of the end of last reporting period, the value of the fixed assets leased in through financial leasing was RMB 1,114,232,362.74, all of which were leased from the related party Liaoning Hengyi Financial Leasing Co., Ltd. In this period, the company terminated the financial leasing business with Liaoning Hengyi Financial Leasing Co., Ltd., and pay the full amount. 5. Fixed assets leased out through financial leasing Item Ending balance Houses and buildings 1,239,002.14 Total 1,239,002.14 6. Fixed assets without property rights certificates at the year-end Items Book value Reason Houses and buildings 1,062,356,103.50 Being processed (14) Construction in progress 1. Construction in progress and Construction materials Items 20211231 20201231 Construction in progress 2,431,761,889.08 1,837,160,389.66 Project materials 2,420,212.05 2,773,325.92 Total 2,434,182,101.13 1,839,933,715.58 2. Details of construction in progress 20211231 20201231 Items Total Total Gross value Net book value Gross value Net book value impairment impairment Cold-rolled high-strength steel 23,961,023.15 23,961,023.15 renovation project CCPP power generation 662,907,316.06 662,907,316.06 300,907,874.71 300,907,874.71 project Special steel rolling mill renovation 225,662,005.25 225,662,005.25 151,433,585.06 151,433,585.06 project 360 square meter sintering 88,340,997.99 88,340,997.99 82,878,409.99 82,878,409.99 machine Chemical Coke Oven Gas Project – Bengang 21,840,791.70 21,840,791.70 transferred to Liaoning Coal No. 7 blast furnace dry dust removal and 70,402,228.77 70,402,228.77 energy-saving 179 Bengang Steel Plates Co., Ltd. Annual Report 2021 20211231 20201231 Items Total Total Gross value Net book value Gross value Net book value impairment impairment Environmental protection overhaul project 66,322,604.36 66,322,604.36 of No. 6 blast furnace Flue gas desulfurization and denitrification 28,774,283.25 28,774,283.25 of No. 7 coke oven in the plate coking plant Special Steel Electric Furnace Capacity 975,649,876.97 975,649,876.97 358,101,195.01 358,101,195.01 Replacement Project 220kV Substation Project of 23,302,571.03 23,302,571.03 General Energy Plant Advanced Treatment and Reuse Project of Reclaimed 98,563,871.96 98,563,871.96 Water in General Energy Plant One-tower desulfurization revamp in the 31,893,853.65 31,893,853.65 coking plant The overall improvement of Benxi Steel's 36,748,743.10 36,748,743.10 29,824,289.00 29,824,289.00 manufacturing Energy General Plant No. 1 Converter Gas Tank System 66,477,477.13 66,477,477.13 24,008,553.86 24,008,553.86 Transformation Project Caixi Special Steel Feeding Station of Steel 38,375,436.67 38,375,436.67 1,231,879.70 1,231,879.70 Plate Scrap Plant Coking Plant No. 8 and No. 9 Coke Oven Flue Gas 12,708,765.66 12,708,765.66 Desulfurization and Denitrification Electrostatic precipitator for sintering system in ironworks 14,956,633.00 14,956,633.00 renovation project Manufacturing Management System 16,091,178.68 16,091,178.68 Improvement (2020) Casting of the new No. 1 blast furnace hearth in the Plate Ironworks Benxi Steel Baojin Processing and 22,088,294.34 22,088,294.34 15,998,341.25 15,998,341.25 Distribution Project 180 Bengang Steel Plates Co., Ltd. Annual Report 2021 20211231 20201231 Items Total Total Gross value Net book value Gross value Net book value impairment impairment Renovation of Desulfurization System in Purification 17,588,986.17 17,588,986.17 Zone 2 of Coking Plant Improvement of Environmental Protection and Efficiency of 19,034,328.00 19,034,328.00 360M2 Sintering Machine in Steel Plate Other 315,511,741.57 315,511,741.57 427,335,141.70 427,335,141.70 Total 2,431,761,889.08 2,431,761,889.08 1,837,160,389.66 1,837,160,389.66 181 Bengang Steel Plates Co., Ltd. Annual Report 2021 3. The change of major construction in progress Budget (in Input Accumulated Including: Capi Other 10 of Progre amount of capitalized taliza Source of Project 20201231 Increase Transfer to FA decrea 20211231 thousand se Budget ss (%) capitalized interest of tion fund yuan) (%) interest current period rate Cold-rolled high- Self- strength steel 701,535.00 23,961,023.15 67,964,463.27 91,925,486.42 85.00 100.00 857,867,059.71 raised & renovation Other project Self- CCPP power raised generation 106,000.00 300,907,874.71 361,999,441.35 662,907,316.06 63.00 65.00 14,497,562.06 8,138,558.77 3.93 &Loans project &Other Special steel rolling mill Loans 82,386.00 151,433,585.06 173,423,847.58 99,195,427.39 225,662,005.25 40.00 40.00 6,770,232.91 2,864,335.85 3.93 renovation &Other project 360 square meter Loans sintering 137,723.00 82,878,409.99 23,551,905.29 18,089,317.29 88,340,997.99 92.00 95.00 68,627,433.26 &Other machine Chemical Coke Oven Gas Project – Bengang 2,557.00 21,840,791.70 21,840,791.70 85.00 95.00 Other transferred to Liaoning Coal No. 7 blast furnace dry dust 9,267.00 70,402,228.77 1,590,550.81 71,992,779.58 78.00 95.00 455,304.64 161,324.57 3.93 Loans removal and &Other energy-saving Environmental protection 25,225.00 66,322,604.36 188,679.25 66,511,283.61 76.00 100.00 Other overhaul project 182 Bengang Steel Plates Co., Ltd. Annual Report 2021 Budget (in Input Accumulated Including: Capi Other 10 of Progre amount of capitalized taliza Source of Project 20201231 Increase Transfer to FA decrea 20211231 thousand se Budget ss (%) capitalized interest of tion fund yuan) (%) interest current period rate of No. 6 blast furnace Flue gas desulfurization and denitrification of 5,337.38 28,774,283.25 5,104,951.95 33,879,235.20 63.00 65.00 Other No. 7 coke oven in the plate coking plant Special Steel Electric Furnace Self- Capacity 192,343.00 358,101,195.01 617,548,681.96 975,649,876.97 51.00 55.00 raised & Replacement Other Project 220kV Substation Project of 31,500.00 23,302,571.03 135,130,101.16 158,432,672.19 50.00 80.00 Other General Energy Plant Advanced Treatment and Reuse Project of 17,570.00 98,563,871.96 15,375,754.95 113,939,626.91 65.00 85.00 Other Reclaimed Water in General Energy Plant One-tower desulfurization 9,174.00 31,893,853.65 22,991,749.16 54,885,602.81 60.00 100.00 Other revamp in the coking plant 183 Bengang Steel Plates Co., Ltd. Annual Report 2021 Budget (in Input Accumulated Including: Capi Other 10 of Progre amount of capitalized taliza Source of Project 20201231 Increase Transfer to FA decrea 20211231 thousand se Budget ss (%) capitalized interest of tion fund yuan) (%) interest current period rate The overall improvement of 5,600.00 29,824,289.00 6,924,454.10 36,748,743.10 66.00 80.00 Other Benxi Steel's manufacturing Energy General Plant No. 1 Converter Gas 16,086.00 24,008,553.86 42,468,923.27 66,477,477.13 41.00 60.00 Other Tank System Transformation Project Caixi Special Steel Feeding 12,114.00 1,231,879.70 38,839,910.07 1,696,353.10 38,375,436.67 33.00 60.00 Other Station of Steel Plate Scrap Plant Coking Plant No. 8 and No. 9 Coke Oven Flue Gas 9,898.00 12,708,765.66 59,675,758.76 72,384,524.42 73.00 100.00 Other Desulfurization and Denitrification Electrostatic precipitator for sintering system 4,500.00 14,956,633.00 9,507,953.00 24,464,586.00 54.00 100.00 Other in ironworks renovation project Manufacturing Management 2,639.00 16,091,178.68 6,718,790.00 22,809,968.68 86.00 100.00 Other System 184 Bengang Steel Plates Co., Ltd. Annual Report 2021 Budget (in Input Accumulated Including: Capi Other 10 of Progre amount of capitalized taliza Source of Project 20201231 Increase Transfer to FA decrea 20211231 thousand se Budget ss (%) capitalized interest of tion fund yuan) (%) interest current period rate Improvement (2020) Casting of the new No. 1 blast furnace hearth in 8,200.00 47,485,826.92 47,485,826.92 58.00 95.00 Other the Plate Ironworks New construction 8# single-strand Self-raised & 64,341.00 103,473,209.19 103,473,209.19 70.00 80.00 slab casting Other machine project 5# blast furnace ex-situ overhaul Self-raised & 124,087.00 51,731,262.32 51,731,262.32 72.00 90.00 31,410,224.05 (new 2# blast Other furnace) 1700 Hot Rolling Improvement 25,000.00 21,789,258.69 21,789,258.69 80.00 90.00 Other Transformation Environmental protection Self-raised & 27,000.00 25,042,287.39 25,042,287.39 70.00 95.00 2,799,798.26 Other renovation of No. 4-6 converters Renovation of Desulfurization System in 6,000.00 17,588,986.17 13,012,782.04 30,601,768.21 51.00 80.00 Other Purification Zone 2 of Coking Plant Improvement of Environmental Protection and 5,573.00 19,034,328.00 14,047,395.24 33,081,723.24 59.00 80.00 Other Efficiency of 360M2 Sintering 185 Bengang Steel Plates Co., Ltd. Annual Report 2021 Budget (in Input Accumulated Including: Capi Other 10 of Progre amount of capitalized taliza Source of Project 20201231 Increase Transfer to FA decrea 20211231 thousand se Budget ss (%) capitalized interest of tion fund yuan) (%) interest current period rate Machine in Steel Plate Benxi Steel Baojin Processing and 31,037.39 15,998,341.25 6,089,953.09 22,088,294.34 7.00 10.00 Other Distribution Project Total 1,409,825,247.96 1,871,677,890.81 1,165,252,991.26 2,116,250,147.51 982,427,614.89 11,164,219.19 The main projects that Cold-rolled high-strength steel renovation project and 360 square meter sintering machine and5# blast furnace ex-situ overhaul (new 2# blast furnace) had been transferred to fixed assets in previous years 186 Bengang Steel Plates Co., Ltd. Annual Report 2021 4. There is no impairment of construction in progress during the current period. 5. Construction materials 20211231 20201231 Items Net Book Net Book Gross value Impairment Gross value Impairment Value Value Construction 2,420,212.05 2,420,212.05 2,773,325.92 2,773,325.92 materials Total 2,420,212.05 2,420,212.05 2,773,325.92 2,773,325.92 (15) Right-of-use assets Items Land Houses and buildings Total 1.Total gross value 20201231 1,132,274,415.17 368,465,367.56 1,500,739,782.73 Increase Including: New lease Merger Revaluation adjustment Decrease Including: Transfer to fixed assets Disposal 20211231 1,132,274,415.17 368,465,367.56 1,500,739,782.73 2. Total of Accumulated Amortization 20201231 Increase 39,904,236.22 20,470,298.20 60,374,534.42 Including: Accrued 39,904,236.22 20,470,298.20 60,374,534.42 Decrease Including: Transfer to fixed assets Disposal 20211231 39,904,236.22 20,470,298.20 60,374,534.42 3. Total Impairment 20201231 Increase Including: Accrued 187 Bengang Steel Plates Co., Ltd. Annual Report 2021 Decrease Including: Transfer to fixed assets Disposal 20211231 4. Total Net value 20211231 1,092,370,178.95 347,995,069.36 1,440,365,248.31 20201231 1,132,274,415.17 368,465,367.56 1,500,739,782.73 (16) Intangible assets 1. Details of intangible assets Items Land use right Software Total 1.Total gross value 20201231 327,028,797.84 310,401.55 327,339,199.39 Increase 40,640,000.00 40,640,000.00 Including: Purchase 40,640,000.00 40,640,000.00 Internal Research and Development Merger Decrease Including: Disposal Invalid and terminated confirmation 20211231 367,668,797.84 310,401.55 367,979,199.39 2. Total of Accumulated Amortization 20201231 62,257,844.20 148,702.65 62,406,546.85 Increase 7,624,308.81 26,794.92 7,651,103.73 Including: Accrued 7,624,308.81 26,794.92 7,651,103.73 Decrease Including: Disposal Invalid and terminated confirmation 20211231 69,882,153.01 175,497.57 70,057,650.58 3. Total Impairment 2020231 Increase Including: Accrued Decrease 188 Bengang Steel Plates Co., Ltd. Annual Report 2021 Including: Disposal Invalid and terminated confirmation 20211231 4. Total Net value 20211231 297,786,644.83 134,903.98 297,921,548.81 20201231 264,770,953.64 161,698.90 264,932,652.54 2. Land use right without Certificate of Land use right at the end of period Items Book value Reason Land use right 39,556,267.07 Being processed Total 39,556,267.07 (17) Deferred tax asset and deferred tax liability 1. Undedicated deferred tax asset 20211231 20201231 Deductible Deductible Items temporary Deferred tax asset temporary Deferred tax asset differences differences Impairment of assets 451,808,313.33 112,952,078.33 398,431,973.43 99,607,993.35 Internal unrealized 93,178,777.44 23,294,694.36 74,424,898.92 18,606,224.73 profit Depreciation of fixed 21,906,259.43 5,476,564.86 333,978,859.03 83,494,714.76 assets Other 48,132,843.04 12,033,210.76 Total 615,026,193.24 153,756,548.31 806,835,731.38 201,708,932.84 2. Unrecognized deferred tax assets Items 20211231 20201231 Deductible temporary differences 305,643,743.02 305,702,137.30 Deductible losses 45,093,302.90 54,629,940.42 Total 350,737,045.92 360,332,077.72 3. The deductible loss of unrecognized deferred tax assets due in the following period Items 20211231 20201231 Notes 189 Bengang Steel Plates Co., Ltd. Annual Report 2021 Year 2021 10,945,961.04 Year 2022 1,001,166.72 1,001,166.72 Year 2023 10,336,118.65 14,114,953.21 Year 2024 13,696,334.51 17,910,573.13 Year 2025 10,723,063.42 10,657,286.32 Year 2026 9,336,619.60 Total 45,093,302.90 54,629,940.42 (18) Other non-current assets 20211231 2020123 Items Net book Gross value Impairment Gross value Impairm value Prepaid long-term 30,630,858.13 30,630,858.13 995,840,320.65 assets Total 30,630,858.13 30,630,858.13 995,840,320.65 (19) Short-term loans 1. Short-term loan disclosed by type Items 20211231 20201231 Pledge loans Mortgage loans Guaranteed loans 3,823,088,140.00 9,687,731,000.00 Credit loans 230,000,000.00 380,000,000.00 Total 4,053,088,140.00 10,067,731,000.00 2.There is no short-term loans that were overdue at the end of the reporting period (20) Notes payable Items 20211231 20201231 Bank acceptance bill 2,286,000,000.00 7,747,043,186.29 Commercial acceptance bill 1,724,083,376.48 857,106,162.13 Domestic letter of credit 625,000,000.00 1,210,000,000.00 Total 4,635,083,376.48 9,814,149,348.42 190 Bengang Steel Plates Co., Ltd. Annual Report 2021 At the end of the reporting period, there is no notes payable due and unpaid. (21) Accounts payable (1) Accounts payable disclosed by category Items 20211231 20201231 Accounts payable for goods 4,272,890,365.57 5,122,416,750.84 Accounts payable for labor 51,392,037.81 18,697,483.74 Accounts payable for project and equipment 557,316,885.80 513,842,739.32 Repair expense and others 470,673,396.71 259,271,282.92 Total 5,352,272,685.89 5,914,228,256.82 (2) Significant accounts payable aging over one year Of which: Items Ending balance more than one year Company 1 20,685,977.47 16,579,573.22 Company 2 14,200,000.00 14,200,000.00 Company 3 14,519,435.78 13,946,435.78 Company 4 227,930,805.86 10,163,913.21 Total 277,336,219.11 54,889,922.21 Other notes: The above significant accounts payable aged over one year have not yet reached the settlement conditions. (22) Contract liabilities 1. Details of contract liabilities Items 20211231 20201231 Advance for goods 4,708,188,093.78 4,458,671,819.90 Total 4,708,188,093.78 4,458,671,819.90 As at December 31, 2021, the value-added tax received in advance from customers was RMB 612,064,452.20 (December 31, 2020: RMB 579,627,336.58) and disclosed as other current liabilities. (23) Employee benefits payable 1. Employee benefits payable 191 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items 20201231 Increase Decrease 20211231 Short-term employee 25,748,902.30 2,356,609,073.18 2,230,262,598.99 152,095,376.49 benefits Post-employment benefits - defined contribution 582.95 221,340,145.12 221,340,728.07 plans Termination benefits 25,981.50 25,981.50 Other benefits due within one year Total 25,749,485.25 2,577,975,199.80 2,451,629,308.56 152,095,376.49 2. Short-term employee benefits Items 20201231 Increase Decrease 20211231 (1) Salary, bonus, 16,591,117.11 1,860,128,031.35 1,737,972,314.57 138,746,833.89 allowance and subsidy (2) Employee welfare 147,741,924.10 147,741,924.10 (3) Social Insurance 653,712.74 146,522,560.74 147,176,273.48 Including: Medical 3,683.11 112,150,597.68 112,154,280.79 insurance Work injury 650,029.63 34,351,650.00 35,001,679.63 insurance Maternity 20,313.06 20,313.06 insurance (4) Housing funds 6,859,195.00 131,612,225.64 131,608,625.64 6,862,795.00 (5) Union funds and staff 1,644,877.45 48,124,295.36 43,283,425.21 6,485,747.60 education fee (6) Short-term compensated absences (7) Short-term profit - sharing scheme (8) Other 22,480,035.99 22,480,035.99 Total 25,748,902.30 2,356,609,073.18 2,230,262,598.99 152,095,376.49 3. Defined contribution plans 192 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items 20201231 Increase Decrease 20211231 Basic pension fund 565.28 213,156,905.63 213,157,470.91 Unemployment insurance 17.67 8,183,239.49 8,183,257.16 Total 582.95 221,340,145.12 221,340,728.07 (24) Taxes payable Items 20211231 20201231 Value-added tax 29,696,795.33 22,541,925.74 Corporate income tax 35,810,190.67 9,589,798.62 City maintenance and construction tax 2,362,795.25 4,490,656.56 House property tax 16,819,232.89 3,661,600.13 Educational surcharges 1,710,729.40 3,211,296.48 Land holding tax 2,878,545.36 1,180,402.66 Environmental tax 9,935,977.17 8,398,902.77 Others 15,053,722.63 2,227,498.00 Total 114,267,988.70 55,302,080.96 (25) Other payables Items 20211231 20201231 Interest payables Dividend payables Other payables 1,348,025,731.98 709,448,301.92 Total 1,348,025,731.98 709,448,301.92 1. Other payables (1) Other payables disclosed by nature Items 20211231 20201231 Deposit 1,556,363.89 1,713,563.89 Margin 127,642,584.79 98,316,454.89 Accounts 1,133,934,695.19 525,775,209.97 Others 84,892,088.11 83,643,073.17 193 Bengang Steel Plates Co., Ltd. Annual Report 2021 Total 1,348,025,731.98 709,448,301.92 (2) At the end of period, no significant other payables aged over one year (26) Non-current liabilities due within one year Items 20211231 20201231 Long-term loans due within one year 246,949,595.95 1,287,630,361.43 Bond payables due within one year 25,053,455.40 20,400,000.00 Lease liabilities due within one year 38,777,466.79 Total 310,780,518.14 1,308,030,361.43 (27) Other current liabilities Items 20211231 20201231 Output tax to be transferred 612,064,452.20 579,627,336.58 Total 612,064,452.20 579,627,336.58 (28) Long-term loans Long-term loans disclosed by category Categories 20211231 20201231 Pledged loans 622,600,000.00 622,600,000.00 Mortgage loan Guaranteed loans 595,921,771.74 798,714,362.65 Credit loans 3,004,300,000.00 2,081,620,065.00 Total 4,222,821,771.74 3,502,934,427.65 (29) Bonds payables 1.Bonds payables disclosed by category Items 20211231 20201231 Convertible Bond 5,054,251,668.83 5,752,229,339.52 Total 5,054,251,668.83 5,752,229,339.52 194 Bengang Steel Plates Co., Ltd. Annual Report 2021 2. Changes in Bonds payables (Excluding other financial instruments such as preferred stocks and perpetual bonds classified as financial liabilities) Premium and Issue Term to Issuance Balance at the end of the Current Interest accrued at Repayment Convert to stock this Balance at the end of the Items Book value discount date maturity amount previous year issue face value this period period current year amortization Convertible Jun 2 Bond (Bond 6,800,000,000.00 9, 20 6 years 6,800,000,000.00 5,752,229,339.52 45,161,128.80 516,038,858.11 1,168,855,400.00 5,054,251,668.83 code:127018) 20 Total 6,800,000,000.00 5,752,229,339.52 45,161,128.80 516,038,858.11 1,168,855,400.00 5,054,251,668.83 3.Description of the conditions and time for conversion of convertible corporate bonds Approved by Shenzhen Stock Exchange "Shen Zheng Shang [2020] No. 656", the Company’s RMB 6.80 billion convertible corporate bonds were listed on the Shenzhen Stock Exchange on August 4, 2020, and the abbreviation is "Bengang Convertible Bonds". The bond code is "127018". The conversion period of the convertible corporate bonds issued this time is from the first trading day after six months of the issuance of the convertible corporate bonds (July 3, 2020) to the maturity date of the convertible corporate bonds, that is, from January 4, 2021 to June 28, 2026. The initial conversion price of the convertible bonds is RMB 5.03 per share. During the period from January 1, 2021 to December 31, 2021, the Company's A-share convertible bonds of RMB 1,168,855,400.00 were converted into the Company's A-share ordinary shares, and the number of converted shares was 232,819,847 shares. Of which: In the first quarter of 2021, Bengang's convertible bonds decreased by RMB 2,656,000.00 (26,560 bonds) due to share conversion, the number of shares converted 195 Bengang Steel Plates Co., Ltd. Annual Report 2021 was 527,021 shares, and the conversion price was RMB 5.03 per share; In the second quarter of 2021, Bengang's convertible bonds decreased by RMB 46,087,200.00 (460,872 bonds) due to share conversion, the number of shares converted was 9,162,052 shares, and the conversion price was RMB 5.03 per share; In the third quarter of 2021, Bengang's convertible bonds decreased by RMB 1,119,957,200.00 (11,199,572 bonds) due to share conversion, the number of shares converted was 223,096,752 shares, and the conversion price was RMB 5.02 per share; In the fourth quarter of 2021, Bengang's convertible bonds decreased by RMB 155,000.00 (1,550 bonds) due to share conversion, the number of shares converted was 34,022 shares, and the conversion price was RMB 4.55 per share; As at December 31, 2021, the company's remaining balance of convertible bonds was RMB 5,631,144,600.00 (56,311,446 bonds). 196 Bengang Steel Plates Co., Ltd. Annual Report 2021 4.Notes to other financial instruments classified as financial liabilities (30) Lease liabilities Items 20211231 Lease liabilities 1,463,444,635.94 Include: lease liabilities due within 1 year 38,777,466.79 Lease liabilities ending balance 1,424,667,169.15 (31) Long-term payables Items 20211231 20201231 Long-term payables 1,114,232,362.74 Special payables Total 1,114,232,362.74 Notes:At the end of the reporting period, the company has repaid all the financial lease payments 1.long-term payables Items 20211231 20201231 Financing lease payments 1,114,232,362.74 Including: unrealized financing 779,232,152.85 expenses Total 1,114,232,362.74 Notes: At the end of the reporting period, the amount of financing lease payment and the amount of unrealized financing expenses and the minimum amount of financial lease payment to be paid after the balance sheet date was zero. (32) Deferred income Items 20201231 Increase Decrease 20211231 Reason Government 154,451,833.23 3,793,520.00 65,139,067.34 93,106,285.89 Subsidy Total 154,451,833.23 3,793,520.00 65,139,067.34 93,106,285.89 197 Bengang Steel Plates Co., Ltd. Annual Report 2021 Projects of government subsidies: Related to Transfer to current Other Items 20201231 Increase 20211231 assets or profit and loss decrease income Liaoning Province "Hundred, Thousand, Thousand, 250,000.00 30,000.00 220,000.00 Assets Thousand Talents Project" funding project in 2018 2018 Municipal Skill Master Workstation Fee 66,616.34 7,850.00 58,766.34 Assets 2019 Municipal Skill Master Workstation Fee 180,000.00 81,915.84 98,084.16 Assets 2020 Ecological Civilization Construction Project 20,000,000.00 20,000,000.0 Assets (Special Steel Electric Furnace Upgrade Project) Advanced Treatment Project of Carbon Fiber 9,500,000.00 1,900,000.00 7,600,000.00 Assets Wastewater in Dongfeng Plant Area of Plate Coking Plant Desulfurization and Denitrification Project of Coal- 3,600,000.00 600,000.00 3,000,000.00 fired Boiler in High-pressure Workshop of Bengang Assets Power Plant Research and development of high-strength steel for the 2,320,000.00 580,000.00 1,740,000.00 Assets third generation of automobiles 198 Bengang Steel Plates Co., Ltd. Annual Report 2021 Related to Transfer to current Other Items 20201231 Increase 20211231 assets or profit and loss decrease income 7 sets of 130 tons combustion boiler flue gas 9,600,000.00 4,800,000.00 4,800,000.00 Assets desulfurization project in power plant Power plant three power plant cogeneration reform 4,000,000.00 2,000,000.00 2,000,000.00 Assets project Industrial enterprise energy management center 2,320,000.00 2,320,000.00 Assets construction demonstration project Automatic air quality monitoring system 35,000.00 35,000.00 Assets Cold-rolled high-strength steel renovation project 100,000,000.00 50,000,000.00 50,000,000.00 Assets Liaoning Artisan Subsidy 21.89 21.89 Assets Construction of professional technology innovation 200,000.00 200,000.00 Assets platform for automobile steel industry Research on the Influence Mechanism and Control of Rare Earth Oxide Sulfide on Automobile Steel 349,517.26 189,520.00 81,623.76 457,413.50 Assets Plasticity Introduce special funds for overseas advanced and 2,000,000.00 2,000,000.00 Assets applicable technologies 199 Bengang Steel Plates Co., Ltd. Annual Report 2021 Related to Transfer to current Other Items 20201231 Increase 20211231 assets or profit and loss decrease income “Steel for high-strength pipelines under low- temperature and high-pressure service conditions” 30,677.74 62,000.00 92,677.74 Assets Project national support funds Design of metallurgical slag system of rare earth steel 340,000.00 340,000.00 Income and research on its chemical properties Provincial Science and Technology Department National Natural Science Foundation of China- 334,000.00 334,000.00 Income Liaoning Provincial Government Joint Fund Project 2019 Provincial Skilled Master Workstation Fee 200,000.00 200,000.00 Income 2020 Provincial Skilled Master Workstation Fee 100,000.00 100,000.00 Income Basic research on new technology of composite iron 168,000.00 168,000.00 Income coke low carbon ironmaking charge The second batch of planned projects of the 2020 Liaoning Provincial Central Government to guide local 300,000.00 300,000.00 Income science and technology development funds 200 Bengang Steel Plates Co., Ltd. Annual Report 2021 Related to Transfer to current Other Items 20201231 Increase 20211231 assets or profit and loss decrease income 2020 Liaoning Province "Hundreds of Thousands of 50,000.00 50,000.00 Income Talents Project" Funding Project Air Pollution Prevention and Control Fund-Second Burning Finishing Dust Removal Ultra-Low Emission 2,050,000.00 410,000.00 1,640,000.00 Assets Transformation Project Total 154,451,833.23 3,793,520.00 65,139,067.34 93,106,285.89 201 Bengang Steel Plates Co., Ltd. Annual Report 2021 (33) Share capital Increase/decrease (+, -) Items 20201231 Bonus Transferred Issuing of new share Others Subtotal 20211231 shares from reserves Capital shares 3,875,371,532.00 232,819,847.00 232,819,847.00 4,108,191,379.00 Notes: The increase in the current period was due to the conversion of the A-share convertible bonds issued by the company into 232,819,847 A-share ordinary shares in the current period. For details, please refer to “Note 5 (27) Bonds Payable”. (34) Other equity instruments 1. Information of other financial instruments such as preferred stocks and perpetual bonds issued at the end of the period The Company’s other equity instruments at the end of the period are the equity part of convertible corporate bonds. For details, please refer to “Note 5 (27) Bonds payable”. 2. Changes in financial instruments such as preferred stocks and perpetual bonds issued at the end of the period 20201231 Increase Decrease 20211231 Items Numb Bo Book Book Number Book value Number Number er ok value value value Converti 68,000,000 1,146,290,66 11,688,554 198,407,99 56,311,446 947,882,66 ble corporate .00 2.42 .00 8.79 .00 3.63 202 Bengang Steel Plates Co., Ltd. Annual Report 2021 20201231 Increase Decrease 20211231 Items Numb Bo Book Book Number Book value Number Number er ok value value value bonds 68,000,000 1,146,290,66 - - 11,688,554 198,407,99 56,311,446 947,882,66 Total .00 2.42 .00 8.79 .00 3.63 Notes: The decrease in the current period is due to the accumulative amount of RMB 1,168,855,400.00 (11,688,554 bonds) of A-share convertible bonds issued by the company being converted into the company’s A-share ordinary shares. As at December 31 2021, the remaining convertible bond balance of the company is RMB5,631,144,600.00(56,311,446 bonds). For details, please refer to “Note 5. (27) Bonds Payable”. 203 Bengang Steel Plates Co., Ltd. Annual Report 2021 (35) Capital reserves Items 20201231 Increase Decrease 20211231 Capital premium 12,227,292,378.47 928,924,325.80 13,156,216,704.27 Other capital reserves 115,917,468.82 115,917,468.82 Total 12,343,209,847.29 928,924,325.80 13,272,134,173.09 Notes: The increase in the current period is due to the conversion of the A-share convertible bonds issued by the company into A-share ordinary shares in the current period. For details, please refer to “Note 5. (27) Bonds Payable”. (36) Special Reserves Items 20201231 Increase Decrease 20211231 Safety production cost 300,412.14 63,036,424.58 62,998,858.15 337,978.57 Total 300,412.14 63,036,424.58 62,998,858.15 337,978.57 (37) Surplus Reserves Items 20201231 20210101 Increase Decrease 20211231 Statutory 961,105,529.85 961,105,529.85 234,010,992.52 1,195,116,522.37 surplus reserves Total 961,105,529.85 961,105,529.85 234,010,992.52 1,195,116,522.37 (38) Undistributed Profits Items 2021 2020 Before adjustments: undistributed profits at last year- 2,692,018,405.40 2,307,765,664.62 end Adjustments of the beginning distributed profits (increase + / decease -) After adjustments: undistributed profit at this year- 2,692,018,405.40 2,307,765,664.62 beginning Add: undistributed profit belonging to parent company 2,500,582,902.58 384,252,740.78 Less: Statutory surplus reserves 234,010,992.52 Discretionary reserves General risk reserves 204 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items 2021 2020 Common shares dividend payable 1,981,284,017.82 Common shares dividend transferred to paid-in capital Ending balance of undistributed profits 2,977,306,297.64 2,692,018,405.40 (39) Operating income and operating cost 2021 2020 Items Revenue Cost Revenue Cost Principal business 69,992,675,798.60 64,770,421,744.20 45,321,849,577.55 43,322,474,075.93 Other business 7,919,469,182.86 7,121,176,592.76 3,362,943,108.03 3,069,706,486.66 Total 77,912,144,981.46 71,891,598,336.96 48,684,792,685.58 46,392,180,562.59 Details for operating income: Principal Other Item business business Classified by business area 69,992,675,798.60 7,919,469,182.86 Including:Domestic 63,657,154,874.80 7,919,469,182.86 Abroad 6,335,520,923.80 - Classified by the time of commodity 69,992,675,798.60 7,919,469,182.86 transfer Including: recognize at a certain point in 69,992,675,798.60 7,916,590,751.39 time recognize over a certain period of 2,878,431.47 time Total 69,992,675,798.60 7,919,469,182.86 (40) Tax and surcharges Items 2021 2020 City maintenance and construction tax 123,495,868.43 39,002,807.95 Educational surcharge 88,373,442.32 28,155,477.26 Housing property tax 81,377,911.78 79,753,764.80 Land use right tax 13,696,962.53 13,090,099.93 Environmental tax 41,124,449.80 28,417,193.46 Stamp duty 82,245,033.15 26,523,801.64 Others 1,146,895.68 928,675.06 Total 431,460,563.69 215,871,820.10 (41) Selling and distribution expenses 205 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items 2021 2020 Import and export agency fee 73,807,602.10 55,316,442.53 Salary and benefits 35,270,978.16 25,955,134.20 Package fee 6,901,048.55 6,179,183.22 Others 25,414,936..76 9,828,520.26 Total 141,394,565.57 97,279,280.21 (42) General and administrative expenses Items 2021 2020 Salary and benefits 656,796,852.87 368,149,507.51 Repair expense 249,469,415.56 216,309,807.28 Land use right fee 39,930,546.94 65,600,418.40 Depreciation 42,367,710.99 39,060,982.28 Heating fee 91,825,534.38 25,929,633.73 Water resources fee 7,059,455.17 18,956,412.81 Sewage charges 14,522,765.23 13,186,781.11 Others 85,267,160.96 45,632,751.69 Total 1,187,239,442.10 792,826,294.81 (43) Research and development expenses Items 2021 2020 Depreciation, materials and compensation, etc. 56,401,594.44 37,989,623.28 Total 56,401,594.44 37,989,623.28 (44) Financial expenses Items 2021 2020 Interest expenditure 1,007,595,231.75 1,028,857,436.14 Including:Lease liability interest expense 56,397,569.84 Less: Interest income 393,818,460.36 378,523,984.03 Exchange loss -86,313,266.83 -307,919,937.19 Others 9,130,130.50 22,361,640.70 Total 536,593,635.06 364,775,155.62 206 Bengang Steel Plates Co., Ltd. Annual Report 2021 (45) Other income Items 2021 2020 Government subsidy 66,345,976.64 81,193,591.56 Others 111,590.36 Total 66,345,976.64 81,305,181.92 (46) Income on investment Items 2021 2020 Income on long-term equity investment by equity method 520,432.46 374,119.86 Income from disposal of long-term equity investment 1,434,393.28 Income on disposal of financial assets holding for trading -124,911,004.89 13,500,000.00 Dividend income obtained during the holding period of other 77,242.47 equity instrument investments Other 2,436,869.33 Total -120,519,309.82 13,951,362.33 (47) Credit impairment losses Items 2021 2020 Loss from bad debts of account 2,417,959.10 302,302,638.01 receivable Loss from bad debts of other 5,336,416.67 1,717,123.74 receivables Total 7,754,375.77 304,019,761.75 Note: Loss is shown as positive figures (48) Assets impairment loss Items 2021 2020 Impairment of inventory 58,821,759.40 6,571,234.79 and contract performance costs Impairment of fixed assets 54,849,575.62 60,614,634.58 Total 113,671,335.02 67,185,869.37 Note: Loss is shown as positive figures (49) Asset disposal income The amount Items 2021 2020 recognized in non- recurring profit Disposal gains or losses arising from 130,675.05 325,651.61 130,675.05 disposal of fixed assets 207 Bengang Steel Plates Co., Ltd. Annual Report 2021 The amount Items 2021 2020 recognized in non- recurring profit not held for sale Total 130,675.05 325,651.61 130,675.05 Note: Loss is shown as positive figures (50) Non-operating income The amount Items 2021 2020 recognized in non- recurring profit Non-current assets scrapped gains 2,606,854.39 2,703,102.88 2,606,854.39 Debt restructuring gain 32,800.02 Others 5,176,371.41 1,592,660.62 5,176,371.41 Total 7,783,225.80 4,328,563.52 7,783,225.80 (51) Non-operating expense The amount Items 2021 2020 recognized in non- recurring profit Donations Non-current assets scrapped loss 64,272,629.43 95,724,280.44 64,272,629.43 Others Total 64,272,629.43 95,724,280.44 64,272,629.43 (52) Income tax expenses 1. Income tax expenses Items 2021 2020 Income tax payable for the current year 853,911,187.93 35,594,567.91 Adjustment of deferred income tax 47,952,384.53 -10,223,337.35 Total 901,863,572.46 25,371,230.56 2. Accounting profit and income tax expense adjustment process Items 2021 Total profit 3,435,499,071.09 Income tax expense calculate according to the official or applicable tax rate 858,874,767.77 Effect of different tax rates applied by subsidiaries 208 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items 2021 5,955,617.82 Effect of adjustment of the income tax expense of prior period Effect of non-taxable income -824,062.27 Effect of undeductible costs, expenses or losses 130,996.77 Effect of use of deductible losses of unrecognized deferred tax asset of prior period Effect of deductible temporary differences or deductible losses of unrecognized 163,459.93 deferred tax asset of current period Changes in the balance of deferred income tax assets and liabilities at the beginning of the period due to the additional deductible expenses and tax rate adjustments required by the tax law Others 37,562,792.44 Income tax expenses 901,863,572.46 (53) Earnings per share 1. Basic earnings per share The basic earnings per share is calculated by dividing the consolidated net profit attributable to the common stock shareholders of the parent company by the weighted average number of common stocks issued by the company: Items 2021 2020 Consolidated net profit attributable to ordinary 2,500,582,902.58 384,252,740.78 shareholders of parent company The weighted average number of common shares issued 4,168,950,364.25 3,875,371,532.00 by the company Basic earnings per share 0.600 0.099 Including: basic earnings per share for continuing 0.600 0.099 operations Basic earnings per share for discontinued operations 2. Diluted earnings per share Diluted earnings per share is calculated by dividing the consolidated net profit attributable. to the common shareholders of the parent company (diluted) by the weighted average number of ordinary shares issued by the company (diluted): Items 2021 2020 Consolidated net profit 2,735,242,850.60 384,252,740.78 attributable to ordinary 209 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items 2021 2020 shareholders of parent company (diluted) The weighted average number of common shares issued 5,509,699,078.54 3,875,371,532.00 by the company (diluted) Diluted earnings per share 0.496 0.099 Including: Diluted earnings per share for continuing 0.496 0.099 operations Diluted earnings per share for discontinued operations Other instructions: Since convertible bonds have caused anti-dilution in previous period, diluted earnings per share are disclosed in accordance with basic earnings per share. (54) Notes of statement of cash flows 1. Cash received related to other operating activities Items 2021 2020 Withdraw of current accounts, advance for another 4,269,927.26 415,131,996.05 Interest income 424,979,825.98 365,343,047.49 Special subsidy income 3,752,120.00 27,624,696.63 Non-operating income 3,029,073.33 673,106.88 Others 65,335,821.55 8,181,857.38 Total 501,366,768.12 816,954,704.43 2. Cash paid related to other operating activities Items 2021 2020 19,482,383.93 347,552,655.29 Current accounts, advance for another 14,638,578.99 72,862,184.48 Sales expenses 86,597,752.51 44,664,338.51 Administrative expenses 22,157,726.11 20,710,711.34 Charges 299,743.97 1,489,830.36 Others 143,176,185.51 487,279,719.98 Total 3. Cash received related to other financing activities Items 2021 2020 Margin for bill, letter of guarantee and letter of credit 2,105,252,645.77 1,076,807,422.35 Proceeds from negotiation 41,310,294.37 253,068,892.21 210 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items 2021 2020 Others 214,709,267.94 Total 2,361,272,208.08 1,329,876,314.56 4. Cash paid related to other financing activities Items 2021 2020 34,424,434.31 Margin for bill, letter of guarantee and letter of credit 41,084,701.18 Convertible bond issuance fees 740,000,000.00 Targeted Payment to short-term borrowing 740,000,000.00 75,509,135.49 Total (55) Supplementary details of statement of cash flows 1. Supplementary details for statement of cash flows Items 2021 2020 1. A reconciliation of net profit to cash flows from operating activities: Net profit 2,533,635,498.63 391,479,566.23 Add: Credit impairment loss 7,754,375.77 304,019,761.75 Impairment of assets 113,671,335.02 67,185,869.37 Depreciation of fixed assets 2,333,028,229.90 2,191,070,638.31 Depreciation of productive biological assets Depletion of oil and gas properties Depreciation of right-of-use assets 60,374,534.42 Amortization of intangible assets 7,651,103.73 6,567,370.80 Amortization of long-term deferred expenses Losses proceeds from disposal of fixed assets, intangible -130,675.05 -325,651.61 assets and other long-term assets (Earnings marked“-”) Scrapped losses from fixed assets (Earnings 61,665,775.04 93,021,177.56 marked“-”) Loss from changes in fair value (Earnings marked“-”) Financial expenses (Earnings marked“-”) 921,281,964.92 720,937,498.95 Investment losses (Earnings marked“-”) 120,519,309.82 -13,951,362.33 Deferred tax assets reduction (Addition marked“-”) 47,952,384.53 -10,223,337.35 Deferred tax liabilities increased (Reduction marked“-”) Reduction of inventory (Addition marked“-”) -1,202,351,320.94 -1,302,981,909.11 Operating receivable items reduction (Addition 2,159,270,698.56 -2,847,086,786.29 marked“-”) Operating payable items increase (Less marked"-") -6,750,849,760.31 -1,638,713,049.57 Others Net cash flows generated from operating activities 413,473,454.04 -2,039,000,213.29 211 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items 2021 2020 2. Payments of investing and financing activities not involving cash: Liabilities transferred to capital Convertible corporate bonds due within one year Fixed assets financed by leasing 3. The net increase in cash and cash equivalents: Ending balance of cash 6,299,099,063.48 9,229,417,595.12 Less: Beginning balance of cash 9,229,417,595.12 13,441,414,988.58 Add: Ending balance of cash equivalents Less: Opening balance of cash equivalents The net increase in cash and cash equivalents -2,930,318,531.64 -4,211,997,393.46 2. The structure of cash and cash equivalents Items 20211231 20201231 6,299,099,063.48 9,229,417,595.12 1. Cash 24,334.93 3,026.68 Including: Cash on hand 6,299,074,728.55 9,229,414,568.44 Bank deposits available on demand Other monetary funds available on demand Central bank deposits available on demand Balances with other financial institutions Loans to other financial institutions 2. Cash equivalents Including: Investment of securities due within 3 months 6,299,099,063.48 9,229,417,595.12 3. Ending balance of cash and cash equivalents Including: Cash and cash equivalents limited to use by the parent company of another subsidiary in the group (56) Assets of which ownership or right to use are restricted Items Ending balance Reason Cash at bank and on hand 2,531,996,674.37 Deposit for notes and letter of credit Notes receivable that the company has endorsed and not yet matured on the Notes Receivable 1,133,932,188.36 balance sheet date were not derecognition at the end of period Other equity instrument 1,037,735,849.00 Pledged for loans investments Fixed assets 89,963,211.93 Mortgage for fund borrowing Intangible assets 36,188,476.93 Mortgage for fund borrowing 212 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items Ending balance Reason Total 4,829,816,400.59 (57) Foreign currency monetary items 1. Foreign currency monetary items Ending balance in Exchange rate at Ending balance Items foreign currency the year-end translated to RMB Cash at bank and on hand 21,926,797.58 Including: USD 2,815,562.23 6.3757 17,951,179.87 EUR 15,038.78 7.2197 108,575.47 HKD 4,729,748.36 0.8176 3,867,042.24 Short-term loans 575,088,140.00 Including: USD 90,200,000.00 6.3757 575,088,140.00 EUR JPY Non-current liabilities due 99,549,595.95 within one year Including: USD 4,700,000.00 6.3757 29,965,790.00 EUR 9,460,158.72 7.2197 68,299,507.91 JPY 23,176,000.00 0.0554 1,284,298.04 Long-term loans 354,971,367.69 Including: USD 11,850,000.00 6.3757 75,552,045.00 EUR 37,635,017.31 7.2197 271,713,534.45 JPY 139,056,000.00 0.0554 7,705,788.24 213 Bengang Steel Plates Co., Ltd. Annual Report 2021 2. The Company has no overseas operating entities. (58) Government subsidies 1. Government subsidies related to assets The amount included in the Items current profit or loss or offsetting the loss included in of related costs the current Items profit or Item Amount listed on the loss or balance sheet offsetting 2021 2020 the loss of related costs Liaoning Province "Hundred, Thousand, Thousand, Deferred Other 250,000.00 30,000.00 Thousand Talents Income income Project" funding project in 2018 2018 Municipal Skill Deferred Other 240,000.00 7,850.00 120,423.00 Master Workstation Income income Fee 2019 Municipal Skill Deferred Other 180,000.00 81,915.84 Master Workstation Income income Fee Advanced Treatment Project of Carbon Fiber Deferred Other 9,500,000.00 1,900,000.00 Wastewater in Income income Dongfeng Plant Area of Plate Coking Plant Desulfurization and Denitrification Project of Coal-fired Deferred Other 6,000,000.00 600,000.00 600,000.00 Boiler in High- Income income pressure Workshop of Bengang Power Plant Research and Deferred Other 2,900,000.00 580,000.00 580,000.00 development of high- Income income 214 Bengang Steel Plates Co., Ltd. Annual Report 2021 The amount included in the Items current profit or loss or offsetting the loss included in of related costs the current Items profit or Item Amount listed on the loss or balance sheet offsetting 2021 2020 the loss of related costs strength steel for the third generation of automobiles 7 sets of 130 tons combustion Deferred Other boiler flue gas 24,000,000.00 4,800,000.00 4,800,000.00 Income income desulfurization project in power plant Power plant three power plant Deferred Other 10,000,000.00 2,000,000.00 2,000,000.00 cogeneration Income income renovation project Industrial Deferred Other enterprise energy 11,600,000.00 2,320,000.00 2,320,000.00 Income income management center Research and development of anti- Deferred Other 250,000.00 84,847.73 oxidation hot forming Income income steel PHS1500A Automatic air Deferred Other quality monitoring 350,000.00 35,000.00 70,000.00 Income income system Cold-rolled Deferred Other high-strength steel 250,000,000.00 50,000,000.00 50,000,000.00 Income income renovation project Liaoning Deferred Other 100,002.97 99,981.08 Artisan Subsidy Income income Construction of professional technology Deferred Other 1,000,000.00 200,000.00 800,000.00 innovation platform Income income for automobile steel industry Research on Deferred Other 547,040.00 81,623.76 the Influence Income income 215 Bengang Steel Plates Co., Ltd. Annual Report 2021 The amount included in the Items current profit or loss or offsetting the loss included in of related costs the current Items profit or Item Amount listed on the loss or balance sheet offsetting 2021 2020 the loss of related costs Mechanism and Control of Rare Earth Oxide Sulfide on Automobile Steel Plasticity Introduce special funds for Deferred Other overseas advanced 14,420,000.00 2,000,000.00 2,000,000.00 Income income and applicable technologies Steel for high- strength pipelines under low- temperature and high- Deferred Other 188,000.00 92,677.74 90,322.26 pressure service Income income conditions Project national support funds Finishing Dust Removal Ultra-Low Deferred Other Emission 2,050,000.00 410,000.00 Income income Transformation Project High-grade electro-galvanized Deferred Other sheet production line 41,040,000.00 8,208,000.00 Income income project for automobiles Energy saving and environmental Deferred Other protection project of 5,800,000.00 1,160,000.00 Income income sintering machine in ironworks Benxi Iron and Deferred Other 1,000,000.00 1,000,000.00 Steel Group Co., Ltd. Income income 216 Bengang Steel Plates Co., Ltd. Annual Report 2021 The amount included in the Items current profit or loss or offsetting the loss included in of related costs the current Items profit or Item Amount listed on the loss or balance sheet offsetting 2021 2020 the loss of related costs Auto Sheet Engineering Laboratory Engineering Construction 2. Government subsidies related to income The amount included in the Items current profit or loss or offsetting included in the the loss of related costs current profit Amount or loss or Items offsetting the 2021 2020 loss of related costs Addition al tax relief for 758,250. 758,250. 758,250.00 retired soldiers 00 00 in 2021 Tax 440,059. 440,059. 569,547.42 569,547.42 refund 30 30 work- for-training 44,400.00 8,600.00 44,400.00 8,600.00 grants Relocati 1,626,919. 1,626,919. - on 00 00 compensation of railway company Liaoning 5,000,000. 5,000,000. - Provincial 00 00 Local Financial Supervision and Administration Bureau 217 Bengang Steel Plates Co., Ltd. Annual Report 2021 The amount included in the Items current profit or loss or offsetting included in the the loss of related costs current profit Amount or loss or Items offsetting the 2021 2020 loss of related costs supports special funds for the development of enterprises listed on the market Stable 19,151.07 19,151.07 - Job Subsidy 3. Return of government subsidies during the reporting period None (59) Lease As a lessee Item 2021 Interest expense from lease liability 56,397,569.84 Short-term lease expenses from simplified treatment included in the cost of related assets or the 1,919,704.52 current profit and loss Low-value asset lease expenses from simplified treatment included in the cost of related assets or the current profit and loss (Except short- term lease expenses from low-value asset) Variable lease payments without including in the measurement of the lease liability included in the cost of related assets or the current profit and loss Including:sale-leaseback transaction generation part Income from subletting the right-of-use assets Total cashflow out related to leasing 1,919,704.52 Profit and loss from sale-leaseback transactions Cash inflows from sale-leaseback transactions Cash outflows from leaseback 218 Bengang Steel Plates Co., Ltd. Annual Report 2021 6. Changes in the scope of consolidation There was no changes to the scope of consolidation during the current period. 7. Equity in other entities (1) Equity in subsidiaries 1. Constitution of enterprise group Principal Shareholding ratio Registered Notes of Name of the subsidiaries place of Acquiring method address business Direct Indirect business Wuxi Bengang Steel & Iron Sales Business combination Wuxi Wuxi Sales 100.00 Co., Ltd. under common control Tianjin Bengang Steel & Iron Trading Business combination Tianjin Tianjin Sales 100.00 Co., Ltd. under common control Nanjing Bengang Materials Sales Co., Business combination Nanjing Nanjing Sales 100.00 Ltd. under common control Yantai Bengang Steel & Iron Sales Business combination Yantai Yantai Sales 100.00 Co., Ltd. under common control Harbin Bengang Economic and Business combination Harbin Harbin Sales 100.00 Trading Co., Ltd. under common control Changchun Bengang Steel & Iron Business combination Changchun Changchun Sales 100.00 Sales Co., Ltd. under common control Guangzhou Bengang Steel & Iron 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 Pellet Liaoyang Liaoyang Manufacturing 100.00 Establishment Co., Ltd. Dalian Benruitong Automobile Dalian Dalian Manufacturing 65.00 Establishment Material Technology Co., Ltd. Bengang POSCO Cold-rolled Sheet Business combination Benxi Benxi Manufacturing 75.00 Co., Ltd. under common control Benxi Bengang Steel Sales Co., Ltd Benxi Benxi Sales 100.00 Establishment Shenyang Bengang Metallurgical Shenyang Shenyang Sales 100.00 Establishment Science and Technology Co., Ltd. 219 Bengang Steel Plates Co., Ltd. Annual Report 2021 Principal Shareholding ratio Registered Notes of Name of the subsidiaries place of Acquiring method address business Direct Indirect business Chongqing Liaoben Steel & Iron Chongqing Chongqing Sales 100.00 Establishment Trading Co., Ltd. Bengang Baojin (Shenyang) auto new Business combination Shenyang Shenyang Manufacturing 85.00 material technology Co., Ltd. under common control 2. Significant but not wholly-owned subsidiaries Profits and Dividend Ending Proportion of losses declared to balance of non- Name of the subsidiaries attributing to distribute to non- controlling non-controlling non-controlling controlling interests (%) shareholders shareholders interests Bengang POSCO Cold- 25.00 35,782,798.35 541,916,799.24 rolled Sheet Co., Ltd. 3. Financial information of significant but not wholly-owned subsidiaries 20211231 Non- Name of the Non-current Current current subsidiaries Current assets Total assets Total liabilities assets liabilities liabilitie s Bengang POSCO 2,969,950,327.43 1,134,904,732.59 4,104,855,060.02 1,937,187,863.07 1,937,187,863.07 Cold-rolled Sheet Co., Ltd. 20201231 Non- Name of the Current Non-current Current Total assets current Total liabilities subsidiaries assets assets liabilities liabilities Bengang 3,799,519,376.39 1,384,600,108.47 5,184,119,484.86 3,159,583,481.30 3,159,583,481.30 POSCO Cold- 220 Bengang Steel Plates Co., Ltd. Annual Report 2021 20201231 rolled Sheet Co., Ltd. 2021 Total Net cash flows Name of the subsidiaries Operating Net profit comprehensive from operating income income activities Bengang POSCO Cold-rolled 11,529,193,715.01 143,131,193.39 143,131,193.39 205,955,801.18 Sheet Co., Ltd. 2020 Total Name of the subsidiaries Operating Net cash flows from Net profit comprehensiv income operating activities e income Bengang POSCO Cold-rolled 7,327,060,880.66 42,005,550.17 42,005,550.17 301,022,342.34 Sheet Co., Ltd. 4. Significant restrictions on the use of enterprise group assets and the settlement of enterprise group debts None. 5. Financial or other support provided to structured entities included in the scope of consolidated financial statements None. (2) The shareholder's equity in the subsidiary has changed and still control the subsidiary's transactions The Company does not exist such matters. (3) Equity in joint venture or associates 1. Important joint ventures and associates The Company has no important joint ventures or associates 221 Bengang Steel Plates Co., Ltd. Annual Report 2021 2. Summary of financial information of unimportant joint ventures and associates 20211231/2021 20201231/2020 Joint ventures: Total book value of investment: 2,981,784.07 2,742,064.73 The total amount of the following items calculated according to the shareholding ratio —Net profit 520,432.46 374,119.86 —Other comprehensive income —Total comprehensive income 520,432.46 374,119.86 3. Explanation on the significant limitation of the ability of the joint venture or associate to transfer funds to the company The Company does not exist such matters. 4. Excess losses incurred by joint ventures or associates The Company does not exist such matters. 5. Unconfirmed commitments related to joint venture investment The Company does not exist such matters. 6. Contingent liabilities related to joint venture or associate investment The Company does not exist such matters. (4) Important joint operations The Company does not exist such matters. (5) Equity in structured entities that not included in the scope of consolidated financial statements The Company does not exist such matters. 222 Bengang Steel Plates Co., Ltd. Annual Report 2021 8. Risks associated with financial instruments The company faces various financial risks in its operation: credit risk, market risk and liquidity risk. The company's board of directors is fully responsible for the determination of risk management objectives and policies, and assumes ultimate responsibility for the risk management objectives and policies. However, the board of directors has authorized the company's planning and development department to design and implement procedures that ensure the effective implementation of risk management objectives and policies. The board of directors reviews the effectiveness of the implemented procedures and the rationality of risk management objectives and policies through reports submitted by the planning and development department. The company's internal auditors also audit risk management policies and procedures, and report relevant findings to the audit committee. The overall goal of the company's risk management is to formulate a risk management policy that minimizes risks without excessively affecting the company's competitiveness and resilience. (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. Before signing a new contract, the company will assess the credit risk of new customers, including external credit ratings and bank credit certificates in certain cases (when this information is available). The company has set a credit limit for each customer, which is the maximum amount that does not require additional approval. The Company ensures that the company's overall credit risk is within a controllable range through regular monitoring of existing customers' credit ratings and periodic review of aging analysis of accounts receivable. 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. (2) Liquidity risk Liquidity risk refers to the risk of a shortage of funds when an enterprise fulfills its obligation to settle by delivering cash or other financial assets. It is the Company's policy to ensure that sufficient cash is available to meet debt obligations as they fall due. Liquidity risk is centrally controlled by the Company's financial department. The finance department ensures that the company has sufficient funds to repay its debts under all reasonable forecasts by monitoring 223 Bengang Steel Plates Co., Ltd. Annual Report 2021 unrestricted monetary fund balances, bank acceptance bills that will be realized when due, and rolling forecasts of cash flows for the next 12 months. The following table sets forth the remaining contractual maturity dates of the Company's non- derivative financial liabilities that should be repaid in accordance with the terms of the agreement. The table has been prepared based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. Cash flow including interest and principal: (In 10 thousand Yuan) 20211231 Items Instant Over 5 Within 1 year 1-2years 2-5years Total repayment years Trade and other payables 1,133,538.18 1,133,538.18 Borrowing and Interest 441,115.83 226,971.68 832,756.07 1,500,843.58 Total 1,574,654.01 226,971.68 832,756.07 2,634,381.76 20201231 Items Instant Over 5 Within 1 year 1-2years 2-5years Total repayment years Trade and other payables 1,643,593.66 111,423.24 1,755,016.90 Borrowing and Interest 1,137,576.14 25,647.04 321,586.21 3,060.20 1,487,869.59 Total 2,781,169.80 25,647.04 321,586.21 114,483.44 3,242,886.49 (3) 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 Company’s 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. 224 Bengang Steel Plates Co., Ltd. Annual Report 2021 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. The currency risk facing the Company originates from the assets and liabilities measured by US dollars, Euro, Hongkong dollars and Japanese Yen. The ending balance of the assets and liabilities after converted in RMB is shown as below: (In 10 thousand Yuan) 20211231 Items USD Others Total Assets 1,795.12 397.56 2,192.68 Liabilities 68,060.60 34,900.31 102,960.91 Total 69,855.72 35,297.87 105,153.59 20201231 Items USD Others Total Assets 46,968.50 63.75 47,032.25 Liabilities 134,771.81 38,819.77 173,591.58 Total 181,740.31 38,883.52 220,623.83 On December 31, 2021, with all other variables held constant, if the relevant currency appreciates or depreciates against RMB by 5%, the company will decrease or increase the net profit of RMB 3,778.81 in 10 thousand (On December 31, 2020: RMB 4,745.98 in 10 thousand). Management believes that 5% reasonably reflects the reasonable range of possible currency-to- renminbi changes in the next year. 9. Disclosure of fair value The input value used in fair value measurement is divided into three levels: The input value of the first level is the unadjusted quotation of the same asset or liability that can be obtained on the measurement date in an active market. The input value of the second level is the input value of the related assets or liabilities that is directly or indirectly observable except the input value of the first level. The third level of input value is the unobservable input value of related assets or liabilities. The level to which the fair value measurement result belongs is determined by the lowest level to which the input value that is important to the fair value measurement as a whole belongs. (1) Fair value of assets and liabilities measured at fair value 225 Bengang Steel Plates Co., Ltd. Annual Report 2021 Fair value at the end of the period Fair Fair value value Fair value Item measureme measureme measurement in the Total nt in the nt in the third level first level second level 1. Continuous fair value measurement ◆ Financial assets held for trading (1) Financial assets measured at fair value and whose changes are included in the current profit and loss (a) Investment in debt instruments (b) Investment in equity instruments (c) Derivative financial assets (d) Others (2) Designated as a financial asset measured at fair value and its changes are included in the current profit 226 Bengang Steel Plates Co., Ltd. Annual Report 2021 Fair value at the end of the period Fair Fair value value Fair value Item measureme measureme measurement in the Total nt in the nt in the third level first level second level and loss (1) Investment in debt instruments (2) Others ◆ Accounts 1,530,735,647. 1,530,735,647. receivable 38 38 financing ◆ Other debt investments ◆ Investment in 1,042,024,829. 1,042,024,829. other equity 00 00 instruments ◆ Other non- current financial assets (1) Financial assets measured at fair value and whose changes are included in the current profit and loss (a) Investment in debt instruments (b) Investment in equity 227 Bengang Steel Plates Co., Ltd. Annual Report 2021 Fair value at the end of the period Fair Fair value value Fair value Item measureme measureme measurement in the Total nt in the nt in the third level first level second level instruments (c) Derivative financial assets (d) Others (2) Designated as a financial asset measured at fair value and its changes are included in the current profit and loss (a) Investment in debt instruments (b) Others Total assets 2,572,760,476. 2,572,760,476. continuously 38 38 measured at fair value ◆ Financial liabilities held for trading Including: Issued trading bonds Derivati ve financial liabilities Others 228 Bengang Steel Plates Co., Ltd. Annual Report 2021 Fair value at the end of the period Fair Fair value value Fair value Item measureme measureme measurement in the Total nt in the nt in the third level first level second level ◆ Designated as a financial liability measured at fair value and its changes included in the current profit and loss Total liabilities continuously measured at fair value 2. Non- continuous fair value measurement (1) Assets held for sale Total assets not measured continuously at fair value For example: Liabilities held for sale Total liabilities not measured continuously at fair value 229 Bengang Steel Plates Co., Ltd. Annual Report 2021 (2) The basis for determining the market value of the continuous and non-continuous first- level fair value measurement projects The Company has no first level fair value measurement project. (3) Continuous and non-continuous second-level fair value measurement items, using valuation techniques and qualitative and quantitative information on important parameters The Company has no second level fair value measurement items. (4) Continuous and non-continuous third-level fair value measurement items, using valuation techniques and qualitative and quantitative information on important parameters Other equity instrument investments that are continuously measured at level 3 fair value are unlisted equity investments held by the Company. Receivable financing with continuous third- level fair value measurement is the bank acceptance bill held by the company, and its fair value is confirmed with reference to the par value. The Company adopted valuation techniques for fair value measurement, mainly using the valuation technique of the listed company comparison method, referring to the stock prices of similar securities and taking into account liquidity discounts. (5) For continuous fair value measurement projects, where conversion between various levels occurs during the period, the reason for the conversion and the policy for determining the timing of conversion During the current period, there was no conversion between various levels. (6) Changes in valuation techniques and reasons for changes during the period No changes during the period. (7) Fair value of financial assets and financial liabilities not measured at fair value No 10. Related party transactions (1) Details of parent company Registered Share Voting Name of parent Place of Notes of Capital proportion rights company Registry Business (billion) (%) (%) 230 Bengang Steel Plates Co., Ltd. Annual Report 2021 Benxi Steel & Iron Benxi, Manufacturing 6.292 58.65 58.65 (Group) Co., Ltd. Liaoning Note: The ultimate controlling party of the Company is Ansteel Group Co., Ltd. (2) Details of the subsidiaries For details of subsidiaries of the company please refer to Note 7 “Equity in other entities”. (3) The company's joint ventures and associates For details of significant joint ventures and associates of the company please refer to Note 7 “Equity in other entities”. Other joint ventures or associates that have related party transactions with the company in the current period, or have related party transactions with the company in the previous period and formed a balance are as follows: Name of joint ventures and associates Relationship Zhejiang Bengang Jingrui Steel Processing Associate Co., Ltd. (4) Details of other related parties Name of other related parties Relationship Bengang Group Co., Ltd. (hereinafter Parent company &controlling referred to as “Bengang Group”) shareholder Benxi Steel Stainless Steel Cold Rolling same parent company Dandong Co., Ltd. Benxi Iron and Steel (Group) Mining same parent company Co., Ltd. Benxi Iron and Steel (Group) same parent company Metallurgical Slag Co., Ltd. Benxi Iron and Steel (Group) Steel same parent company Processing and Distribution Co., Ltd. Benxi Iron and Steel (Group) Real Estate same parent company Development Co., Ltd. Benxi Iron and Steel (Group) Machinery same parent company Manufacturing Co., Ltd. Benxi Iron and Steel (Group) same parent company Construction Co., Ltd. 231 Bengang Steel Plates Co., Ltd. Annual Report 2021 Name of other related parties Relationship Benxi Iron and Steel (Group) Industrial same parent company Development Co., Ltd. Benxi Iron and Steel (Group) same parent company Construction Co., Ltd. Associates of the parent Bengang Electric Co., Ltd. company Benxi High-tech Drilling Tools Both belong to Bengang Manufacturing Co., Ltd. Group Benxi New Business Development Co., same parent company Ltd. Liaoning Metallurgical Technician same parent company College Liaoning Metallurgical Vocational and same parent company Technical College Benxi Iron and Steel Group International Both belong to Bengang Economic and Trade Co., Ltd. Group Benxi Iron and Steel (Group) same parent company Information Automation Co., Ltd. Benxi Iron and Steel (Group) Thermal same parent company Development Co., Ltd. Benxi Iron and Steel (Group) Design and same parent company Research Institute Benxi Beiying Iron and Steel (Group) Both belong to Bengang Co., Ltd. Group Liaoning Hengtong Metallurgical same parent company Equipment Manufacturing Co., Ltd. Liaoning Hengtai Heavy Machinery Co., same parent company Ltd. Angang Electric Co., Ltd. Both belong to Ansteel Group Ansteel Scrap Resources (Anshan) Co., Both belong to Ansteel Group Ltd. Chaoyang Branch of Ansteel Scrap Both belong to Ansteel Group Resources (Anshan) Co., Ltd. Angang Steel Rope Co., Ltd. Both belong to Ansteel Group Ansteel Group Engineering Technology Both belong to Ansteel Group Co., Ltd. Ansteel Group International Economic Both belong to Ansteel Group and Trade Co., Ltd. Ansteel Construction Group Co., Ltd. Both belong to Ansteel Group Ansteel Industrial Group Metallurgical Both belong to Ansteel Group Machinery Co., Ltd. Ansteel Steel Processing and Both belong to Ansteel Group 232 Bengang Steel Plates Co., Ltd. Annual Report 2021 Name of other related parties Relationship Distribution (Dalian) Co., Ltd. Ansteel Group Engineering Technology Both belong to Ansteel Group Development Co., Ltd. Dalian Boroller Steel Pipe Co., Ltd. Same parent company Liaoning Benxi Iron and Steel Trading Same parent company Co., Ltd. Benxi Iron and Steel (Group) Chint Same parent company Building Materials Co., Ltd. Suzhou Bengang Industrial Co., Ltd. Shareholding company Benxi Iron and Steel Group Finance Co., Both belong to Bengang Ltd. Group Ansteel Chemical Technology Co., Ltd. Both belong to Ansteel Group Ansteel Energy Technology Co., Ltd. Both belong to Ansteel Group Panzhong Yihong Metal Products Both belong to Ansteel Group (Chongqing) Co., Ltd. Delin Land Port Supply Chain Service Both belong to Ansteel Group Co., Ltd. Both belong to Bengang Benxi Iron and Steel Tendering Co., Ltd. Group Anshan Iron and Steel Co., Ltd. Both belong to Ansteel Group Liaoning Hengyi Financial Leasing Co., Both belong to Bengang Ltd. Group Ansteel Group Finance Co., Ltd. Both belong to Ansteel Group Ansteel Scrap Resources (Anshan) Co., Both belong to Ansteel Group Ltd. Ansteel Heavy Machinery Co., Ltd. Both belong to Ansteel Group Ansteel Mining Machinery Both belong to Ansteel Group Manufacturing Co., Ltd. Benxi Iron and Steel (Group) Same parent company Engineering Construction Supervision Co., Ltd. Tianjin Angang Steel Processing and Both belong to Ansteel Group Distribution Co., Ltd. Guangzhou Free Trade Zone Benxi Steel Same parent company Sales Co., Ltd. (5) Related Party Transactions 1. Related party transactions of purchasing goods and services Company as the purchaser (In 10 thousand Yuan) 233 Bengang Steel Plates Co., Ltd. Annual Report 2021 The content of related Name 2021 2020 party transactions Benxi Steel & Iron (Group) Co., Ltd. Repair expense 30,456.09 30,206.47 Raw material and Benxi Steel & Iron (Group) Co., Ltd. 18.13 2,121.13 supplementary material Bengang Cold-rolled Stainless Steel Dandong Co., Ltd. Products 83.10 22.39 Benxi Steel & Iron (Group) Mining Co., Ltd. Labor cost 3,882.38 3,213.23 Raw material and Benxi Steel & Iron (Group) Mining Co., Ltd. 789,791.14 514,193.50 supplementary material Benxi Steel & Iron (Group) Mining Co., Ltd. Freight 1,227.47 Benxi Steel & Iron (Group) Metallurgy Residues Co., Raw material and 48,914.81 34,303.84 Ltd. supplementary material Benxi Steel & Iron (Group) Steel & Iron Process and Processing fee 9.75 63.22 Logistics Co., Ltd. Benxi Steel & Iron (Group) Machinery Manufacture Spare parts 7,430.24 5,984.04 Co., Ltd. Benxi Steel & Iron (Group) Machinery Manufacture Repair services 7,183.49 2,773.62 Co., Ltd. Benxi Steel & Iron (Group) Construction Co., Ltd. Spare parts 2,177.72 1,624.97 Benxi Steel & Iron (Group) Construction Co., Ltd. Project fee 34,708.50 20,274.33 Benxi Steel & Iron (Group) Construction Co., Ltd. Repair services 27,810.40 18,022.98 Raw material and Benxi Steel & Iron (Group) Construction Co., Ltd. 1,609.79 1,241.22 supplementary material Benxi Steel & Iron (Group) Construction Co., Ltd. Freight 414.09 51.39 Benxi Steel & Iron (Group) Industrial Development Raw material and 19,531.75 21,095.06 Co., Ltd. supplementary material Benxi Steel & Iron (Group) Industrial Development Repair services 1,489.90 1,537.66 Co., Ltd. Benxi Steel & Iron (Group) Industrial Development Freight 118.49 Co., Ltd. Benxi Steel & Iron (Group) Industrial Development Project fee 141.29 107.01 Co., Ltd. 234 Bengang Steel Plates Co., Ltd. Annual Report 2021 The content of related Name 2021 2020 party transactions Raw material & Benxi Steel & Iron (Group) Construction and supplementary 314.15 228.18 Repairing Co., Ltd. materials & spare parts Benxi Steel & Iron (Group) Construction and Project fee 1,222.33 1,911.38 Repairing Co., Ltd. Benxi Steel & Iron (Group) Construction and Repair expense 17,249.62 17,475.94 Repairing Co., Ltd. Raw material and Bengang Electronics and Gas Co., Ltd. 14,466.12 13,856.30 supplementary material Bengang Electronics and Gas Co., Ltd. Repair services 3,076.64 3,063.31 Benxi High-tech Drilling Tools Manufacture Co., Ltd. Spare parts 35.50 39.00 Benxi New Career Development Co., Ltd. Repair services 22.74 Raw material and Benxi New Career Development Co., Ltd. supplementary material 599.56 1,028.90 and food Liaoning Metallurgy Technician College Spare parts 0.32 933.26 Liaoning Metallurgy Vocational Technical College Repair services 2,084.82 648.24 Bengang Group International Economic and Trading Raw material and 1,683,663.51 508,961.39 Co., Ltd. supplementary material Bengang Group International Economic and Trading Agency fee 7,140.12 5,531.64 Co., Ltd. Bengang Group International Economic and Trading Port surcharges 40,115.06 9,279.98 Co., Ltd. Benxi Steel & Iron (Group) Information and Automatic Spare parts 238.24 850.35 Tech Co., Ltd. Benxi Steel & Iron (Group) Information and Automatic Project fee 773.19 1,121.38 Tech Co., Ltd. Benxi Steel & Iron (Group) Information and Automatic Repair services 5,828.89 1,732.50 Tech Co., Ltd. Benxi Steel & Iron (Group) Thermal Power Heating costs 193.57 119.00 Development Co., Ltd. 235 Bengang Steel Plates Co., Ltd. Annual Report 2021 The content of related Name 2021 2020 party transactions Benxi Steel & Iron (Group) Thermal Power Raw material and 431.58 71.04 Development Co., Ltd. supplementary material Benxi Steel & Iron (Group) Designing Institute Design fees 37.08 125.98 Raw material and Benxi Beiying Steel & Iron (Group) Co., Ltd. 341,396.62 492,390.02 supplementary material Benxi Beiying Steel & Iron (Group) Co., Ltd. Energy & Power 57,415.98 46,589.86 Benxi Beiying Steel & Iron (Group) Co., Ltd. Freight 503.57 407.53 Benxi Beiying Steel & Iron (Group) Co., Ltd. Labor cost 8,366.92 7,190.62 Benxi Beiying Steel & Iron (Group) Co., Ltd. Spare parts 1,609.04 1,710.81 Benxi Beiying Steel & Iron (Group) Co., Ltd. Agency fee 240.64 Liaoning Hengtong Metallurgical Equipment Raw material and spare 6,772.47 8,336.02 Manufacture Co., Ltd. parts Liaoning Hengtong Metallurgical Equipment Repair services 921.44 661.14 Manufacture Co., Ltd. Raw material and spare Liaoning Hengtai Heavy Machinery Co., Ltd. 177.97 138.59 parts Liaoning Hengtai Heavy Machinery Co., Ltd. Repair and labor cost 2,565.27 716.99 Bengang Group Co., Ltd. Labor cost 10,326.61 18,876.38 Angang Electric Co., Ltd. Repair labor 109.00 Ansteel Scrap Resources (Anshan) Co., Ltd. Raw materials 1,066.43 Chaoyang Branch of Ansteel Scrap Resources Raw materials 605.20 (Anshan) Co., Ltd. Angang Steel Rope Co., Ltd. Raw materials 1.64 Ansteel Group Engineering Technology Co., Ltd. Project costs 415.65 Ansteel Group International Economic and Trade Co., Raw materials 15,892.03 Ltd. Ansteel Construction Group Co., Ltd. Project costs 138.00 Ansteel Industrial Group Metallurgical Machinery Co., Repair labor 62.12 Ltd. Ansteel Steel Processing and Distribution (Dalian) Co., labor fee 1.23 Ltd. 236 Bengang Steel Plates Co., Ltd. Annual Report 2021 The content of related Name 2021 2020 party transactions Ansteel Group Engineering Technology Development Project costs 6.64 Co., Ltd. Company as the seller (In 10 thousand Yuan) The content of related Name 2021 2020 party transactions Bengang Electronics and Gas Co., Ltd. Energy & Power 94.22 72.4 Raw material & Benxi Beiying Steel & Iron (Group) Co., Ltd. supplementary materials 536,149.62 138,409.84 & spare parts Benxi Beiying Steel & Iron (Group) Co., Ltd. Products 3,228.67 2,150.96 Benxi Beiying Steel & Iron (Group) Co., Ltd. Energy & Power 19,099.40 22,602.26 Benxi Steel & Iron (Group) Real-estate Energy & Power 3.68 8.65 Development Co., Ltd. Benxi Steel & Iron (Group) Steel & Iron Energy & Power 0.46 25.88 Process and Logistics Co., Ltd. Benxi Steel & Iron (Group) Machinery Products 2,699.73 1,898.85 Manufacture Co., Ltd. Benxi Steel & Iron (Group) Machinery Energy & Power 2,213.00 2,088.72 Manufacture Co., Ltd. Raw material & Benxi Steel & Iron (Group) Machinery supplementary materials 112.95 338.56 Manufacture Co., Ltd. & spare parts Benxi Steel & Iron (Group) Construction Co., Energy & Power 783.21 699.16 Ltd. Raw material & Benxi Steel & Iron (Group) Construction Co., supplementary materials 16,451.31 6,452.06 Ltd. & spare parts Benxi Steel & Iron (Group) Mining Co., Ltd. Energy & Power 71,376.36 62,020.89 237 Bengang Steel Plates Co., Ltd. Annual Report 2021 The content of related Name 2021 2020 party transactions Raw material & Benxi Steel & Iron (Group) Mining Co., Ltd. supplementary materials 11,481.75 9,678.23 & spare parts Benxi Steel & Iron (Group) Mining Co., Ltd. Freight revenue 963.50 743.9 Benxi Steel & Iron (Group) Mining Co., Ltd. Products 955.33 1,107.48 Benxi Steel & Iron (Group) Thermal Power Energy & Power 4,649.93 2,995.62 Development Co., Ltd. Raw material & Benxi Steel & Iron (Group) Thermal Power supplementary materials 3,595.84 1,750.62 Development Co., Ltd. & spare parts Benxi Steel & Iron (Group) Industrial Energy & Power 972.98 824.47 Development Co., Ltd. Benxi Steel & Iron (Group) Industrial Products 2,506.43 3.97 Development Co., Ltd. Raw material & Benxi Steel & Iron (Group) Industrial supplementary materials 1,206.92 1,914.44 Development Co., Ltd. & spare parts Benxi Steel & Iron (Group) Information and Energy & Power 12.73 14.64 Automatic Tech Co., Ltd. Benxi Steel & Iron (Group) Construction and Energy & Power 123.95 125.15 Repairing Co., Ltd. Raw material & Benxi Steel & Iron (Group) Construction and supplementary materials 346.39 368.03 Repairing Co., Ltd. & spare parts Benxi Steel & Iron (Group) Metallurgy Energy & Power 565.72 659.84 Residues Co., Ltd. Raw material & Benxi Steel & Iron (Group) Metallurgy supplementary materials 48,920.96 26,839.91 Residues Co., Ltd. & spare parts Benxi Steel & Iron (Group) Metallurgy 3,047.73 423.53 Products Residues Co., Ltd. Benxi Steel & Iron (Group) Co., Ltd. Energy & Power 241.94 205.47 238 Bengang Steel Plates Co., Ltd. Annual Report 2021 The content of related Name 2021 2020 party transactions Raw material & Benxi Steel & Iron (Group) Co., Ltd. supplementary materials 599.48 1,013.53 & spare parts Benxi New Career Development Co., Ltd. Energy & Power 22.43 38.37 Dalian Boluole Steel Tube Co., Ltd. Products 1,381.92 1,136.33 Benxi Steel & Iron (Group) Zhengtai Energy & Power 2.16 Construction Materials Co., Ltd. Liaoning Hengtong Metallurgical Equipment 0.03 Energy & Power Manufacture Co., Ltd. Raw material & Liaoning Hengtong Metallurgical Equipment supplementary materials 302.02 731.86 Manufacture Co., Ltd. & spare parts Liaoning Hengtong Metallurgical Equipment Products 2,591.91 908.89 Manufacture Co., Ltd. Raw material & Bengang Cold-rolled Stainless Steel Dandong supplementary materials Co., Ltd. & spare parts Bengang Cold-rolled Stainless Steel Dandong Products 295.41 2,716.09 Co., Ltd. Suzhou Bengang Industrial Co., Ltd. Products 66,835.91 49,983.82 Bengang Group Finance Co., Ltd. Energy & Power 1.39 1.3 Bengang Group Co., Ltd. Energy & Power 12.45 7.33 Raw material & Bengang Group Co., Ltd. supplementary materials 1,282.08 1,539.32 & spare parts Bengang Group Co., Ltd. labor fee 7,542.32 Bengang Group Co., Ltd. products 12,781.64 Liaoning Hengtai Heavy Machinery Co., Ltd. products 38.97 29.54 Ansteel Chemical Technology Co., Ltd. commodity 1,032.80 Ansteel Energy Technology Co., Ltd. Raw materials and 79.62 spare parts Angang Electric Co., Ltd. energy power 0.01 239 Bengang Steel Plates Co., Ltd. Annual Report 2021 The content of related Name 2021 2020 party transactions Panzhong Yihong Metal Products commodity 806.99 (Chongqing) Co., Ltd. Delin Land Port Supply Chain Service Co., commodity 9,987.26 Ltd. Benxi Iron and Steel Tendering Co., Ltd. Raw materials and 10.80 spare parts 2. Lease information of related parties Company as the lessor Currency unit: Yuan Lease capital Lease income Lease income Lessee category of 2021 of 2020 Benxi Steel & Iron (Group) Steel & Warehouse and 500,000.00 Iron Process and Logistics Co., Ltd. ancillary facilities Benxi Iron and Steel Tendering Co., Plants and ancillary 480,000.00 Ltd. facilities 240 Bengang Steel Plates Co., Ltd. Annual Report 2021 Company as the lessee Currency unit: Yuan Rental expense for Rent short-term leases paid and leases of low- Interest value assets and Increased right-of-use expense on Lessor Lease capital category variable lease Rental fee of 2020 assets of 2021 lease liability of payments not 2021 included in the measurement of lease liabilities Land use right Benxi Steel & Iron 7,669,068.17 square meter. 1,060,272,624.21 39,600,209.28 57,383,355.31 (Group) Co., Ltd Land use right 42,920.00 square meter Benxi Steel & Iron 2300 Hot rolling product 208,155,611.73 7,982,648.96 16,711,424.34 (Group) Co., Ltd line, related real estate 241 Bengang Steel Plates Co., Ltd. Annual Report 2021 Benxi Beiying Steel 1780 Hot rolling product & Iron (Group) Co., 160,309,755.83 6,147,787.68 15,578,677.65 line, related real estate Ltd. Bengang Group Land use right 72,001,790.96 2,666,923.92 9,945,423.08 Co., Ltd. 728,282.30 square meter. Notes: 1. According to the "Land Use Right Leasing Contract" and subsequent supplementary agreements signed between the Company and Bengang Steel (Group)on April 7, 1997, December 30, 2005 and subsequent, the Company leases land from Benxi Steel (Group), with a monthly rent of 0.594 yuan per square meter. The leased land is 7,669,068.17 square meters and the annual rent is 54,665.10 thousand yuan. 2. On August 14, 2019, the Company signed the "House Lease Agreement" with Benxi Steel (Group) and Beiying Iron and Steel Company, and leased the houses and auxiliary facilities occupied by the 2300 hot rolling mill production line and the 1780 hot rolling mill production line. The lease term of the houses and ancillary facilities is until December 31, 2038. 3. On July 15, 2019, the Company signed "Land Lease Agreement" with Bengang Group and Bengang Steel (Group) respectively, leased and used a total of 8 pieces of land from Bengang Group and Bengang Group Company, with leased areas of 42,920.00 square meters and 728,282.30 square meters. The lease term is 20 years, the rental price is 1.138 yuan per square meter per month. 242 Bengang Steel Plates Co., Ltd. Annual Report 2021 3. Information of Guarantee among related parties Company as a guarantor: None Company as the warrantee Starting date Ending date of Has the guarantee Warrantor Amount of guarantee of Guarantee Guarantee been fulfilled Benxi Iron and Steel Group Co., Ltd., Benxi Iron CNY 588,000,000.00 2021/9/30 2022/9/15 not fulfilled and Steel (Group) Co., Ltd. Benxi Iron and Steel Group Co., Ltd., Benxi Iron CNY 200,000,000.00 2021/10/15 2022/10/14 not fulfilled and Steel (Group) Co., Ltd. Benxi Iron and Steel Group Co., Ltd., Benxi Iron CNY 200,000,000.00 2021/10/21 2022/10/20 not fulfilled and Steel (Group) Co., Ltd. Benxi Iron and Steel Group Co., Ltd., Benxi Iron CNY 200,000,000.00 2021/10/20 2022/10/19 not fulfilled and Steel (Group) Co., Ltd. Benxi Iron and Steel Group Co., CNY 420,000,000.00 2021/11/29 2022/11/29 not fulfilled Ltd. Benxi Iron and Steel Group Co., CNY 200,000,000.00 2021/12/3 2022/12/3 not fulfilled Ltd. 243 Bengang Steel Plates Co., Ltd. Annual Report 2021 Starting date Ending date of Has the guarantee Warrantor Amount of guarantee of Guarantee Guarantee been fulfilled Benxi Iron and Steel Group Co., CNY 490,000,000.00 2021/12/30 2022/12/30 not fulfilled Ltd. Benxi Iron and Steel Group Co., CNY 250,000,000.00 2021/12/30 2022/12/30 not fulfilled Ltd. Benxi Iron and Steel Group Co., USD 90,000,000.00 2021/2/1 2022/2/19 not fulfilled Ltd. Benxi Iron and Steel Group Co., USD 200,000.00 2021/7/30 2022/7/31 not fulfilled Ltd. Benxi Iron and Steel Group Co., CNY 11,700,000.00 2015/3/26 2022/3/21 not fulfilled Ltd. Benxi Iron and Steel Group Co., CNY 76,200,000.00 2016/12/27 2024/6/21 not fulfilled Ltd. Benxi Iron and Steel Group Co., Ltd., Benxi Iron CNY 60,000,000.00 2016/3/30 2025/3/20 not fulfilled and Steel (Group) Co., Ltd. Benxi Iron and Steel Group Co., Ltd., Benxi Iron CNY 340,000,000.00 2017/2/27 2025/2/20 not fulfilled and Steel (Group) Co., Ltd. Benxi Iron and Steel Group Co., EUR 4,686,195.91 2015/3/12 2025/9/30 not fulfilled Ltd. 244 Bengang Steel Plates Co., Ltd. Annual Report 2021 Starting date Ending date of Has the guarantee Warrantor Amount of guarantee of Guarantee Guarantee been fulfilled Benxi Iron and Steel Group Co., EUR 8,356,120.03 2015/3/12 2026/4/30 not fulfilled Ltd. Benxi Iron and Steel Group Co., EUR 9,309,597.54 2015/3/12 2025/10/30 not fulfilled Ltd. Benxi Iron and Steel Group Co., EUR 7,938,531.19 2015/3/12 2025/6/30 not fulfilled Ltd. Benxi Iron and Steel Group Co., EUR 7,344,572.64 2015/3/12 2025/8/29 not fulfilled Ltd. Benxi Iron and Steel Group Co., USD 11,850,000.00 2016/12/27 2024/6/21 not fulfilled Ltd. Benxi Iron and Steel Group Co., JPY 139,056,000.00 1999/10/10 2027/9/10 not fulfilled Ltd. Benxi Iron and Steel Group Co., CNY 100,000,000.00 2021/2/1 2022/2/1 not fulfilled Ltd. Benxi Iron and Steel Group Co., Ltd., Benxi Iron CNY 200,000,000.00 2021/7/9 2022/7/8 not fulfilled and Steel (Group) Co., Ltd. Benxi Iron and Steel Group Co., Ltd., Benxi Iron CNY 200,000,000.00 2021/7/13 2022/7/12 not fulfilled and Steel (Group) Co., Ltd. 245 Bengang Steel Plates Co., Ltd. Annual Report 2021 Starting date Ending date of Has the guarantee Warrantor Amount of guarantee of Guarantee Guarantee been fulfilled Benxi Iron and Steel Group Co., Ltd., Benxi Iron CNY 200,000,000.00 2021/10/13 2022/8/10 not fulfilled and Steel (Group) Co., Ltd. 4. Remuneration of key management personnel (In 10 thousand Yuan) Name 2021 2020 Remuneration of key management 322.09 309.04 personnel 5. Receivables and payables of the related parties 1、Receivables of the Company (In 10 thousand yuan) 20211231 20201231 Provision Provision Items Name Carrying Carrying for bad for bad amount amount debts debts Notes Benxi Beiying Iron and Steel 114,601.96 230,217.55 receivable (Group) Co., Ltd. Notes Benxi Iron and Steel (Group) 690.65 receivable Mining Co., Ltd. Notes Benxi Steel & Iron (Group) 81.99 receivable Co., Ltd. Notes Suzhou Bengang Industrial Co., 658.00 receivable Ltd. Receivables Benxi Beiying Steel & Iron 230.00 Financing (Group) Co., Ltd. Receivables Benxi Iron and Steel (Group) 50.00 Financing Co., Ltd. 246 Bengang Steel Plates Co., Ltd. Annual Report 2021 20211231 20201231 Provision Provision Items Name Carrying Carrying for bad for bad amount amount debts debts Accounts Benxi Iron and Steel Group receivable International Economic and 3,077.79 30.78 10,463.45 104.63 Trade Co., Ltd. Accounts Benxi Iron and Steel (Group) 700.71 7.01 2,692.94 26.93 receivable Thermal Development Co., Ltd. Accounts Benxi Steel Stainless Steel Cold 188.46 1.88 receivable Rolling Dandong Co., Ltd. Accounts Benxi Iron and Steel (Group) 0.10 receivable Metallurgical Slag Co., Ltd. Benxi Iron and Steel Group Prepayments International Economic and 56,208.31 114,662.12 Trade Co., Ltd. Benxi Iron and Steel (Group) Prepayments Machinery Manufacturing Co., 4,676.44 6,470.61 Ltd. Benxi New Business Prepayments 252.52 Development Co., Ltd. Liaoning Hengtong Prepayments Metallurgical Equipment 36.50 Manufacturing Co., Ltd. Benxi Iron and Steel (Group) Other Real Estate Development Co., 279.90 258.56 278.31 253.84 receivables Ltd. Other Benxi Iron and Steel Group Co., 140.35 receivables Ltd. Other Benxi Iron and Steel Tendering 60.20 0.60 receivables Co., Ltd. Other Anshan Iron and Steel Co., Ltd. 42.11 42.11 receivables 247 Bengang Steel Plates Co., Ltd. Annual Report 2021 20211231 20201231 Provision Provision Items Name Carrying Carrying for bad for bad amount amount debts debts Benxi Iron and Steel (Group) Other Chint Building Materials Co., 27.05 21.12 27.05 19.96 receivables Ltd. Other Liaoning Metallurgical 5.80 5.80 5.80 5.80 receivables Technician College Benxi Iron and Steel Group Other non- International Economic and 601.21 current assets Trade Co., Ltd. Other Ansteel Construction Group Co., 922.21 receivables Ltd. Other non- Liaoning Hengyi Financial 86,459.06 current assets Leasing Co., Ltd. 2、 Payables of the Company (In 10 thousand yuan) Items Name 2021.12.31 2020.12.31 Benxi Iron and Steel Group Notes payable International Economic and Trade Co., 259,100.00 345,103.76 Ltd. Benxi Iron and Steel (Group) Industrial Notes payable 2,732.32 5,253.76 Development Co., Ltd. Liaoning Metallurgical Vocational and Notes payable 289.19 47.90 Technical College Benxi Iron and Steel (Group) Notes payable 244.15 Construction Co., Ltd. Liaoning Metallurgical Technician Notes payable 108.72 133.27 College Ansteel Industrial Group Metallurgical Notes payable 61.63 Machinery Co., Ltd. 248 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items Name 2021.12.31 2020.12.31 Liaoning Hengtai Heavy Machinery Notes payable 53.26 84.78 Co., Ltd. Notes payable Bengang Electric Co., Ltd. 37.13 6,414.33 Liaoning Hengtong Metallurgical Notes payable 6.37 868.28 Equipment Manufacturing Co., Ltd. Benxi Iron and Steel (Group) Mining Notes payable 3.09 91,857.00 Co., Ltd. Benxi Iron and Steel (Group) Notes payable 1.55 255.94 Machinery Manufacturing Co., Ltd. Liaoning Hengyi Financial Leasing Co., Notes payable 4,602.43 Ltd. Benxi Steel & Iron (Group) Notes payable 16.62 Metallurgy Residues Co., Ltd. Benxi Iron and Steel (Group) Mining Accounts payable 22,793.08 20,807.68 Co., Ltd. Liaoning Hengyi Financial Leasing Co., Accounts payable 24,364.64 5,799.10 Ltd. Benxi Iron and Steel (Group) Accounts payable 17,733.28 5,182.75 Construction Co., Ltd. Benxi Iron and Steel (Group) Accounts payable 12,738.21 2,394.63 Construction Co., Ltd. Benxi Beiying Iron and Steel (Group) Accounts payable 15,853.11 3,172.95 Co., Ltd. Benxi Iron and Steel (Group) Accounts payable 8,511.25 1,645.14 Metallurgical Slag Co., Ltd. Benxi Iron and Steel (Group) Industrial Accounts payable 6,550.57 385.20 Development Co., Ltd. Benxi Iron and Steel (Group) Accounts payable 6,447.06 1,852.50 Information Automation Co., Ltd. Accounts payable Bengang Electric Co., Ltd. 1,862.72 1,500.74 Liaoning Hengtai Heavy Machinery Accounts payable 1,736.69 2,171.25 Co., Ltd. Accounts payable Benxi Iron and Steel Group Co., Ltd. 1,626.00 1,246.38 249 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items Name 2021.12.31 2020.12.31 Benxi Iron and Steel Group Accounts payable International Economic and Trade Co., 1,168.49 579.53 Ltd. Liaoning Metallurgical Technician Accounts payable 1,129.01 1,388.84 College Benxi Iron and Steel (Group) Accounts payable 686.96 964.33 Machinery Manufacturing Co., Ltd. Benxi Steel Stainless Steel Cold Accounts payable 610.83 616.72 Rolling Dandong Co., Ltd. Ansteel Scrap Resources (Anshan) Co., Accounts payable 425.75 Ltd. Liaoning Metallurgical Vocational and Accounts payable 350.93 746.81 Technical College Liaoning Hengtong Metallurgical Accounts payable 252.71 1,297.91 Equipment Manufacturing Co., Ltd. Benxi Iron and Steel (Group) Thermal Accounts payable 243.04 178.73 Development Co., Ltd. Accounts payable Ansteel Heavy Machinery Co., Ltd. 157.25 Accounts payable Angang Electric Co., Ltd. 123.17 Ansteel Industrial Group Metallurgical Accounts payable 112.51 Machinery Co., Ltd. Accounts payable Angang Steel Rope Co., Ltd. 91.35 Benxi Iron and Steel (Group) Real Accounts payable 61.52 61.52 Estate Development Co., Ltd. Ansteel Mining Machinery Accounts payable 30.45 Manufacturing Co., Ltd. Benxi High-tech Drilling Tools Accounts payable 22.12 38.60 Manufacturing Co., Ltd. Benxi New Business Development Co., Accounts payable 6.76 415.37 Ltd. Benxi Iron and Steel (Group) Accounts payable Engineering Construction Supervision 3.91 65.51 Co., Ltd. 250 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items Name 2021.12.31 2020.12.31 Benxi Iron and Steel (Group) Chint Accounts payable 0.24 0.24 Building Materials Co., Ltd. Contract liabilities/other Suzhou Bengang Industrial Co., Ltd. 2,350.61 5,374.03 current liabilities Contract Delin Land Port Supply Chain Service liabilities/other 2,039.21 Co., Ltd. current liabilities Contract liabilities/other Benxi Iron and Steel Group Co., Ltd. 1,567.51 current liabilities Contract Panzhong Yihong Metal Products liabilities/other 722.78 (Chongqing) Co., Ltd. current liabilities Contract liabilities/other Dalian Boroller Steel Pipe Co., Ltd. 236.19 181.60 current liabilities Contract Benxi Iron and Steel (Group) liabilities/other 112.40 161.66 Metallurgical Slag Co., Ltd. current liabilities Contract Benxi Iron and Steel (Group) Industrial liabilities/other 74.55 55.77 Development Co., Ltd. current liabilities Contract liabilities/other Ansteel Energy Technology Co., Ltd. 44.52 current liabilities Contract Benxi Steel Stainless Steel Cold liabilities/other 37.73 Rolling Dandong Co., Ltd. current liabilities Contract Tianjin Angang Steel Processing and liabilities/other 26.00 Distribution Co., Ltd. current liabilities 251 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items Name 2021.12.31 2020.12.31 Contract Liaoning Hengtong Metallurgical liabilities/other 19.99 52.81 Equipment Manufacturing Co., Ltd. current liabilities Contract liabilities/other Ansteel Chemical Technology Co., Ltd. 12.74 current liabilities Contract Benxi Iron and Steel Group liabilities/other International Economic and Trade Co., 43.70 current liabilities Ltd. Other payables Benxi Iron and Steel (Group) Co., Ltd. 24,973.92 13,013.80 Benxi Iron and Steel Group Other payables International Economic and Trade Co., 2,808.40 1,277.85 Ltd. Benxi Iron and Steel (Group) Other payables 2,483.47 436.25 Construction Co., Ltd. Benxi Iron and Steel (Group) Industrial Other payables 1,828.37 31.33 Development Co., Ltd. Benxi Iron and Steel (Group) Steel Other payables 1,686.92 1,681.17 Processing and Distribution Co., Ltd. Guangzhou Free Trade Zone Benxi Other payables 267.44 267.44 Steel Sales Co., Ltd. Benxi Iron and Steel (Group) Thermal Other payables 218.75 561.73 Development Co., Ltd. Benxi New Business Development Co., Other payables 206.91 197.61 Ltd. Benxi Iron and Steel (Group) Real Other payables 143.59 143.59 Estate Development Co., Ltd. Ansteel Scrap Resources (Anshan) Co., Other payables 50.00 Ltd. Liaoning Metallurgical Technician Other payables 19.05 1.34 College Other payables Benxi Iron and Steel Group Co., Ltd. 15.57 252 Bengang Steel Plates Co., Ltd. Annual Report 2021 Items Name 2021.12.31 2020.12.31 Benxi Iron and Steel (Group) Other payables 1.01 1.01 Machinery Manufacturing Co., Ltd. Liaoning Hengyi Financial Leasing Co., Other payables 208.60 Ltd. Benxi Iron and Steel Group Finance Other payables 0.98 Co., Ltd. Liaoning Hengyi Financial Leasing Co., Other payables 111,423.24 Ltd. 6. Centralized management of funds 1、 The main contents of the centralized management of funds that the company participates in and implements are as follows: In April 2021, after negotiation with Bengang Group Finance Co., Ltd. (hereinafter referred to as Bengang Finance Co., Ltd.), the Financial Services Agreement was signed to stipulate the relevant financial business terms and related transactions between the company and its subsidiaries and Bengang Finance Co., Ltd. Amount cap. The agreement stipulates that the maximum daily deposit balance of the company and its controlled subsidiaries in the next twelve months will be 11 billion yuan, the maximum loan and other credit business will be 8 billion yuan, and the maximum credit line will be 8 billion yuan. In December 2021, after negotiation with Ansteel Group Finance Co., Ltd. (hereinafter referred to as Ansteel Finance Co., Ltd.), the Financial Services Agreement (2022-2024) was signed to agree on the agreement between the company and its subsidiaries and Ansteel in 2022, 2023, and 2024. Relevant financial business terms and relevant transaction amount caps between financial companies. The agreement stipulates that the maximum daily deposit balance of the company and its holding subsidiaries in Ansteel Finance Company in the next twelve months is 4.5 billion yuan, and the maximum credit limit of loans, bills and other forms is 5 billion yuan, and Ansteel Finance Company provides entrusted loans to the company. The maximum limit is 2 billion yuan. 253 Bengang Steel Plates Co., Ltd. Annual Report 2021 2、 Funds collected by the company to the group Funds deposited by the company directly into the finance company without being collected into the account of the parent company of the group Items 20211231 20201231 Amount Provision Amount Provision Cash at bank (deposited in Ansteel 442,965.63 Group Finance Co., Ltd.) Cash at bank (deposited in Bengang 1,332,199.78 Group Finance Co., Ltd.) Total 442,965.63 1,332,199.78 Including:Restricted funds due to 240,882.28 centralized management of funds Notes: The company will transfer funds to Ansteel Group Finance Co., Ltd. at the end of 2021 3、 Funds collected by the company to the group Items 20211231 20201231 Other payables 82,081,562.50 78,545,625.00 Total 82,081,562.50 78,545,625.00 Dalian Benruitong Automotive Materials Technology Co., Ltd., a subsidiary of the company, borrowed RMB 75,000,000.00 from Benxi Iron and Steel (Group) Co., Ltd. As of December 31, 2021, the company's unpaid interest was RMB7,081,562.50 (as of December 31, 2020, the company's unpaid interest was RMB3,535,937.50). 11. Commitments and Contingencies (1) Commitments 1. Lease contracts in progress or to be performed and their financial impacts (1) According to the "Land Use Right Leasing Contract" and subsequent supplementary agreements signed by the company and Benxi Steel (Group) on April 7, 1997, December 30, 2005, the Company leased land from Benxi Steel (Group). The monthly rent is 0.594 yuan 254 Bengang Steel Plates Co., Ltd. Annual Report 2021 per square meters, the leased land area is 7,669,068.17 square meters, and the annual rent is 54,665,100 yuan. (2)On August 14, 2019, the Company signed the "House Lease Agreement" with Benxi Steel (Group) and Beiying Steel respectively, leasing the houses and auxiliary facilities occupied by 2300 and 1780 hot rolling mill production lines, and the lease term ends on December 31, 2038. The rental fee is based on the depreciation of the original rent value and the national additional tax, plus reasonable profit negotiation. The estimated annual rent is not more than 20 million yuan and 18 million yuan respectively. The rental fee is settled and paid monthly. This related party transaction has been reviewed and approved at the fourth meeting of the eighth board of directors of the Company. (3) On July 15, 2019, the Company signed "Land Lease Agreement" with Bengang Group and Benxi Steel (Group) respectively, and leased and used a total of 8 pieces of land of the two companies. The lease areas are 42,920.00 square meters and 728,282.30 square meters respectively, with a lease term of 20 years, and a rental price of 1.138 yuan per square meter per month. After the agreement comes into effect, considering the national law and policy adjustments every five years, both parties should determine whether the rent needs to be adjusted according to the pricing basis stipulated in Article 2 of this agreement. This related party transaction has been reviewed and approved at the third meeting of the eighth board of directors of the company. 2. Irrevocable letter of credit As at December 31, 2021, the amount of irrevocable letter of credit that was not fulfilled was 0.625 billion yuan. (2) Contingencies As at December 31, 2021, no significant contingencies need to be disclosed. 12. Subsequent events (1) Important non-adjustment matters None (2) Profit Distribution 255 Bengang Steel Plates Co., Ltd. Annual Report 2021 On March 24, 2022, the 2021 annual dividend distribution plan was approved by the resolution of the 27th meeting of the company’s 8th board of directors. It is planned to distribute cash dividends of RMB6.00 (tax included) to all shareholders for Profit every 10 shares based on 4,108,191,379 shares at the end of or dividend to 2021. A total of common stock dividends distribution of be distributed RMB2,464,914,827.40, this distribution will not be converted into share capital from capital reserves. The above profit distribution plan still needs to be reviewed and approved by the general meeting of shareholders. (3) Sales Return Not applicable. (4) Divided into assets held for sale and disposal portfolio Not applicable. (5) Other subsequent events Not applicable. 13. Other significant events (1) Correction of previous accounting errors None (2) Debt restructuring None (3) Asset replacement None (4) Annuity plan None 256 Bengang Steel Plates Co., Ltd. Annual Report 2021 (5) Termination of business None (6) Segment information Since the Company's main product is steel, other products account have a small proportion of sales, the main production base is in Liaoning, and the disclosure of the segment report is not applicable. (7) Other important matters that have an impact on investor decisions 1. The controlling shareholder pledges the Company's shares As of the balance sheet date, the Company's controlling shareholder Benxi Iron and Steel (Group) Co., Ltd. held 2,409,628,094 shares of the Company, of which 360,000,000 shares were in pledged status and 108,326,179 shares were in restricted sales and frozen status. 14. Notes to the financial statements of parent company (1) Notes receivable 1. Notes receivable disclosed by category Items 20211231 20201231 Bank acceptance bill Commercial acceptance bill 1,514,416,395.80 Total 1,514,416,395.80 2.The company has no pledged notes receivable at the end of period 3.Notes receivable which have been endorsed or discounted by the company and have not yet matured at the end of period Derecognition amount at the end of Amount not derecognition amount Items period at the end of period Bank acceptance bill Commercial acceptance bill 1,107,866,402.09 Total 1,107,866,402.09 4. No Notes receivable has been transferred into accounts receivable due to inability of drawer to meet acceptance bill at the end of period 257 Bengang Steel Plates Co., Ltd. Annual Report 2021 (2) Accounts receivable 1.Accounts receivable disclosed by aging Items 20211231 20201231 Within 1 year (inclusive) 352,756,383.14 283,561,303.90 1-2 years (inclusive) 1,380,655.78 2,420,511.80 2-3 years (inclusive) 1,942,837.68 6,500,255.55 Over 3 years 180,383,550.49 177,111,797.34 Sub-total 536,463,427.09 469,593,868.59 Less: Provision for bad 182,831,863.67 179,728,406.39 debts Total 353,631,563.42 289,865,462.20 2. Accounts receivable disclosed by category 258 Bengang Steel Plates Co., Ltd. Annual Report 2021 20211231 20201231 Provision for Carrying Provision for Carrying amount bad debts amount bad debts Items Ba Book B Book Pe P Amou Amou d debts value Amou Amo ad debts value rcentage ercenta nt nt ratio nt unt ratio (%) ge (%) (%) (%) Provisio 47,762, 8.9 47,762,3 1 47,762, 1 47,762, 1 n for Bad Dept 337.18 0 37.18 00.00 337.18 0.17 337.18 00.00 individually Provisio 488,701 91. 135,069, 2 353,631, 421,831 8 131,966 3 289,865, n for Bad Dept ,089.91 10 526.49 7.64 563.42 ,531.41 9.83 ,069.21 1.28 462.20 by portfolio Include: Portfolio 328,112 61. 135,069, 4 193,043, 245,720 5 131,966 5 113,754, 1: Aging ,713.51 16 526.49 1.17 187.02 ,903.60 2.33 ,069.21 3.71 834.39 Portfolio 160,588 29. 160,588, 176,110 3 176,110, 2: Combined ,376.40 93 376.40 ,627.81 7.50 627.81 related party 536,463 100 182,831, 353,631, 469,593 1 179,728 289,865, Total ,427.09 .00 863.67 563.42 ,868.59 00.00 ,406.39 462.20 259 Bengang Steel Plates Co., Ltd. Annual Report 2021 20211231 Bad Items Accounts Provision for debts Reason receivable bad debts ratio (%) Benxi Nanfen Benxi Nanfen Xinhe 47,762,337.18 47,762,337.18 100.00 Xinhe has halt Metallurgical Co., Ltd. operation. Total 47,762,337.18 47,762,337.18 Accounts receivable tested for impairment by portfolio: Portfolio tested by aging 20211231 Items Carrying amount Provision for bad debts Bad debts ratio (%) Within 1 year 192,168,006.74 1,921,680.07 1.00 1-2 years 1,380,655.78 138,065.58 10.00 2-3 years 1,942,837.68 388,567.53 20.00 Over 3 years 132,621,213.31 132,621,213.31 100.00 Total 328,112,713.51 135,069,526.49 (3) Information of provision, reversal or recovery of bad debts of current period. The amount of bad debt provision reversed in the current period is RMB3,103,457.28 (4) No accounts receivable has been written off this year. (5) Top five debtors at the year-end 20211231 Company Percentage of total Provision for Amount accounts receivable (%) bad debts The first 160,588,376.40 29.93 The second 99,222,882.66 18.50 992,228.83 The third 80,584,547.00 15.02 805,845.47 The fourth 47,762,337.18 8.90 47,762,337.18 The fifth 9,008,967.00 1.68 9,008,967.00 260 Bengang Steel Plates Co., Ltd. Annual Report 2021 20211231 Company Percentage of total Provision for Amount accounts receivable (%) bad debts Total 397,167,110.24 74.03 58,569,378.48 (6) There are no accounts receivable derecognized due to the transfer of financial assets in the current period. (7) There is no assets and liabilities formed by continued involvement due to the transfer of Account receivables. (3) Accounts receivable financing 1. Details of accounts receivable financing Items 20211231 20201231 Notes receivable 1,504,640,362.79 4,143,431,412.08 Include: Bank acceptance bill 1,504,640,362.79 1,876,753,316.46 Commercial acceptance bill 2,266,678,095.62 Total 1,504,640,362.79 4,143,431,412.08 Other information: The "receivable financing" item reflects the notes and accounts receivable that are measured at fair value at the balance sheet date and whose changes are included in other comprehensive income. 2. At the end of the period, the company has no commercial bills pledged in accounts receivable financing 3. At the end of the period, the company's endorsed or discounted commercial bills in accounts receivable financing accounting and not yet matured on the balance sheet date are as follows Items Derecognized amount Not derecognized amount Bank acceptance bill 17,940,518,873.62 Commercial acceptance bill Total 17,940,518,873.62 261 Bengang Steel Plates Co., Ltd. Annual Report 2021 4.No Notes receivable has been transferred into accounts receivable due to inability of drawer to meet acceptance bill at the end of period (4) Other receivables Item 20211231 20201231 Interest receivables 2,014,931.61 23,028,942.73 Dividend receivables Other receivables 266,591,116.91 205,151,247.29 Total 268,606,048.52 228,180,190.02 1. Interest receivables (1) Interest receivable disclosed by category Items 20211231 20201231 Deposit interest 2,014,931.61 23,028,942.73 Subtotal 2,014,931.61 23,028,942.73 Less: provision for bad debt Total 2,014,931.61 23,028,942.73 (2) There is no significant provision for overdue interest and bad debt provision. (3) There is no provisions for interest receivable 2. Other receivables disclosed by aging Items 20211231 20201231 Within 1 year (inclusive) 144,080,381.27 35,550,478.46 1-2 years (inclusive) 4,002,692.25 42,319,451.22 2-3 years (inclusive) 3,776,577.88 13,842,023.46 Over 3 years 186,249,689.29 180,717,695.14 Sub-total 338,109,340.69 272,429,648.28 Less: Provision for bad 71,518,223.78 67,278,400.99 debts Total 266,591,116.91 205,151,247.29 (1) Provision for bad debt provision 262 Bengang Steel Plates Co., Ltd. Annual Report 2021 Stage Stage two Stage three one Provisio Lifetime Lifetime Total n for bad debts 12- expected credit expected credit month expected losses (credit losses (no credit credit losses impairment impairment) occurred) Beginni 352,376. 9,475,267. 57,450,757. 67,278,400. ng balance 05 75 19 99 Beginni ng balance in current period -- - 3,525.58 Transfer to 3,525.58 Stage two -- - 3,036,762.8 Transfer to 3,036,762.80 0 Stage three -- Reversal to Stage two -- Reversal to Stage one Current 494,264. 1,021,959. 6,028,941.1 7,545,165.3 period 90 28 8 6 provision Current period reversal Current 316,314. 1,158,596. 1,830,431.6 3,305,342.5 period write- 67 25 5 7 back Current period write- off Other change Ending 526,800. 6,305,393. 64,686,029. 71,518,223. balance 70 56 52 78 263 Bengang Steel Plates Co., Ltd. Annual Report 2021 (2) Changes of other receivables Stage Stage one Stage two three Provisi Lifetime on for bad Lifetime Total 12-month expected credit debts expected credit expected credit losses (credit losses (no credit losses impairment impairment) occurred) Beginn 194,557,37 20,421,41 57,450,85 272,429,64 ing balance 2.69 6.81 8.78 8.28 Beginn ing balance in current period -- - 316,691.4 Transfer to 316,691.48 8 Stage two -- - 8,941,860. Transfer to 8,941,860.04 04 Stage three -- Reversal to Stage two -- Reversal to Stage one Curren 312,200,67 3,469,155. 123,742.3 315,793,57 t period 8.92 79 5 7.06 increase Curren 243,252,34 5,031,108. 1,830,431. 250,113,88 t period 4.35 65 65 4.65 derecognition Other change Ending 263,189,01 10,234,29 64,686,02 338,109,34 balance 5.78 5.39 9.52 0.69 (3) The amount of other accounts receivable actually written off in the current period is RMB 1,220,245.84. 264 Bengang Steel Plates Co., Ltd. Annual Report 2021 (4) Other receivables disclosed by nature Nature 20211231 20201231 Receivable and payable 327,876,947.80 264,617,899.56 Other 10,232,392.89 7,811,748.72 Total 338,109,340.69 272,429,648.28 (5) Top five debtors at the year-end Percentage of Provision for Company Nature or content Amount Aging total other bad debts receivables (%) The First Receivable and payable 2,462,794.16 Within 1 year to 3 years 0.73 2,249,413.14 The Second Receivable and payable 2,261,360.00 Over 3 years 0.67 2,261,360.00 The Third Receivable and payable 1,908,708.06 Over 3 years 0.56 1,908,708.06 The Fourth Receivable and payable 1,740,000.00 Over 3 years 0.51 The Fifth Receivable and payable 1,503,037.23 Within 1 year to 3 years 0.44 1,202,429.78 Total 9,875,899.45 2.91 7,621,910.98 (6)No other receivables involving government subsidies in the current period. (7)There are no other receivables derecognized due to the transfer of financial assets in the current period. (8)No assets and liabilities formed by continued involvement due to the transfer of other receivables in the current period. (5) Long-term equity investment Ending balance Beginning balance I I Items Carryin Book Carrying Book mpairm mpair g amount value amount value ent ment Subsi 2,015,186, 2,015,186, 2,016,281, 2,016,281, diaries 190.50 190.50 902.16 902.16 Joint Venture 2,015,186, 2,015,186, 2,016,281, 2,016,281, Total 190.50 190.50 902.16 902.16 265 Bengang Steel Plates Co., Ltd. Annual Report 2021 Details of investment in subsidiaries E I nding mpairm Name of Beginning In Decre Ending balance ent of entity balance crease ase balance of current impair period ment Guangzhou Bengang Steel & 30,000,00 30,000,000. Iron Trading Co., 0.00 00 Ltd. Shanghai Bengang Metallurgy 30,000,00 30,000,000. Science and 0.00 00 Technology Co., Ltd. Bengang Steel Plates 529,899,8 529,899,80 Liaoyang Pellet 01.38 1.38 Co., Ltd. Dalian Benruitong Automobile 65,000,00 65,000,000. Material 0.00 00 Technology Co., Ltd. Bengang POSCO Cold- 1,019,781, 1,019,781,5 rolled Sheet Co., 571.10 71.10 Ltd. Changchun Bengang Steel & 28,144,87 28,144,875. Iron Sales Co., 5.36 36 Ltd. Harbin Bengang 29,923,39 29,923,398. Economic and 8.23 23 Trading Co., Ltd. Nanjing 2,081,400. 2,081,400.6 Bengang Materials 65 5 Sales Co., Ltd. 266 Bengang Steel Plates Co., Ltd. Annual Report 2021 E I nding mpairm Name of Beginning In Decre Ending balance ent of entity balance crease ase balance of current impair period ment Wuxi Bengang Steel & 29,936,71 29,936,718. Iron Sales Co., 8.57 57 Ltd. Xiamen Bengang Steel & 1,095,711. 1,095, Iron Sales Co., 66 711.66 Ltd. Yantai Bengang Steel & 49,100,32 49,100,329. Iron Sales Co., 9.41 41 Ltd. Tianjin Bengang Steel & 60,318,09 60,318,095. Iron Trading Co., 5.80 80 Ltd. Benxi 30,000,00 30,000,000. Bengang Steel 0.00 00 Sales Co., Ltd Shenyang Bengang Metallurgical 30,000,00 30,000,000. Science and 0.00 00 Technology Co., Ltd. Chongqing Liaoben Steel & 30,000,00 30,000,000. Iron Trade Co., 0.00 00 Ltd. Bengang Baojin (Shenyang) Automobile New 51,000,00 51,000,000. Materials 0.00 00 Technology Co., Ltd. 2,016,281, 1,095, 2,015,186,1 Total 902.16 711.66 90.50 267 Bengang Steel Plates Co., Ltd. Annual Report 2021 (6) Operating Income and Operating Cost Operating income and operating cost Ite 2021 2020 ms Revenue Cost Revenue Cost Princ 69,727,193, 65,005,072, 44,436,384, 42,659,983, ipal 761.59 705.35 616.09 317.54 business Oth 8,994,267,9 8,198,390,7 4,374,721,8 4,082,717,1 er business 64.12 70.21 58.64 04.16 Tota 78,721,461, 73,203,463, 48,811,106, 46,742,700, l 725.71 475.56 474.73 421.70 Details for operating income: Items Principal Business Other Business Classified by business 69,727,193,761.59 8,994,267,964.12 area Including:Domestic 64,316,404,987.60 8,994,267,964.12 Abroad 5,410,788,773.99 Classified by the time of 69,727,193,761.59 8,994,267,964.12 commodity transfer Including: recognize at a 69,727,193,761.59 8,991,389,532.65 certain point in time recognize over a certain 2,878,431.47 period of time Total 69,727,193,761.59 8,994,267,964.12 (7) Income on investment Items 2021 2020 Income from disposal of long-term equity -1,341,423.32 investment Income on disposal of financial assets -124,911,004.89 13,500,000.00 holding for trading Dividend income obtained during the 77,242.47 holding period of other equity instrument investments Other 2,436,869.33 Total -123,815,558.88 13,577,242.47 268 Bengang Steel Plates Co., Ltd. Annual Report 2021 15. Supplementary information (1) Details of non-recurring profit and loss Items Amount Notes Profit or loss from disposal of non-current assets -60,100,706.71 Tax refund, reduction or exemption of unauthorized approval or no formal approval document Government subsidy attributable to profit and loss of current period (except such government subsidy closely related to the company's normal business operation, meeting the 66,345,976.64 regulation of national policy and enjoyed constantly in certain quota or quantity according to a certain standard) Fund occupation fee charged to non-financial enterprises 2,436,869.33 included in current profit and loss Except for the effective hedging business related to the normal operation of the company, the fair value changes arising from the holding of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities, and derivative financial liabilities, and the disposal -37,205,991.34 of held-for-trading financial assets, derivative financial Investment income from assets, held-for-trading financial liabilities, derivative financial liabilities and other debt investments Other non-operating revenue and expenditure other than 5,176,371.41 above items Subtotal -23,347,480.67 Impact of income tax 5,969,319.73 Impact of minority interests 202,407.38 Total -17,175,753.56 (2) Net asset yield and earnings per share Weighted average Earnings per share (Yuan) Profit in the Reporting Period net assets yield (%) Basic EPS Diluted EPS Net profit attributable to ordinary shareholders 11.88 0.600 0.496 269 Bengang Steel Plates Co., Ltd. Annual Report 2021 Net profit attributable to ordinary shareholders 11.96 0.604 0.500 after deducting non-recurring profit and loss Bengang Steel Plates Co., Ltd. 24 March 2022 270