Beijing Shougang Co. Ltd Annual Report 2020
Beijing Shougang Company Limited
2020 Annual Report
28 April 2021
Beijing Shougang Co. Ltd Annual Report 2020
Section I. Important notice, Content, DefinitionsThe board of directors (the “Board”), the supervisory committee, all directors, supervisors and senior executivesof the Company warrant that there are no false representations, misleading statements or material omissions in thisannual report; and are jointly and individually responsible for the truthfulness, accuracy and completeness of theinformation contained in this annual report.Mr. Zhao Minge, representative of the Company, Mr. Liu Jianhui, general manager, Mr. Li Baizheng, personoverseeing the accounting operations, and Ms. Gong Juanjuan, head of Accounting Department, maderepresentations in respect of the truthfulness, accuracy and completeness of the financial report contained in theannual report.All directors have attended the board meeting to review of and deliberate on this annual report.Forward-looking statements contained in this annual report do not constitute any substantive commitments toinvestors by the Company. Investors should be aware of the relevant investment risks.Certain risks that may exist have been elaborated by the Company in this report. Please refer to Discussion andAnalysis of Business Operations for details.Proposal of profit distribution or capitalisation of capital reserve during the Reporting Period approved by theBoard:
On 21 April 2021, the event of "Share Issuing to Beijing Jingtou Investment Holding Co., Ltd. etc. for AssetsPurchase and Fundraising" has been approved by the CSRC (CSRC Permit No. [2021] 1400), and the Company isproceeding with this transaction in accordance with the regulations. In consideration of this matter, the Companyintends to review and arrange related profit distribution plan of 2020 in accordance with the provisions of relevantlaws, regulations, rules, normative documents and Articles of Association as soon as possible after theimplementation of this matter.
Beijing Shougang Co. Ltd Annual Report 2020
CONTENTS
SECTION I. IMPORTANT NOTICE, CONTENT, DEFINITIONS ................................................................................................................2
SECTION II. COMPANY PROFILE AND MAJOR FINANCIAL INDICATORS .............................................................................................5
SECTION III. OVERVIEW OF THE COMPANY’S BUSINESS .................................................................................................................8
SECTION IV. DISCUSSION AND ANALYSIS OF BUSINESS OPERATIONS ......................................................................................... 14
SECTION V. SIGNIFICANT EVENTS ................................................................................................................................................ 29
SECTION VI. MOVEMENTS IN SHARE CAPITAL AND SHAREHOLDERS ............................................................................................. 45
SECTION VII. PREFERRED SHARES ............................................................................................................................................... 49
SECTION VIII. CONVERTIBLE BONDS............................................................................................................................................ 50
SECTION IX. DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES ...................................................................... 51
SECTION X. CORPORATE GOVERNANCE ........................................................................................................................................ 59
SECTION XI. CORPORATE BOND ................................................................................................................................................... 66
SECTION XII. FINANCIAL REPORT................................................................................................................................................. 68
SECTION XIII. DOCUMENTS AVAILABLE FOR REFERENCE ............................................................................................................ 207
Beijing Shougang Co. Ltd Annual Report 2020
INTERPRETATION
| Items | Refers to | Contents |
| CSRC | Refers to | China Securities Regulatory Commission |
| SZSE | Refers to | Shenzhen Stock Exchange |
| Company, the Company or Shougang Co. | Refers to | Beijing Shougang Company Limited |
| Shougang or Shougang Group | Refers to | Shougang Group (Reforming from an enterprise owned by the whole people to exclusively state-owned companies, name of Shougang Group is changed from Shougang Corporation. The specific content is detailed in 15 June 2017 public announcement.) |
| Listing Rules of SZSE | Refers to | Listing Rules of Shenzhen Stock Exchange |
| The Articles of Association | Refers to | The Articles of Association of Beijing Shougang Company Limited |
| Board of Directors or the Board | Refers to | The board of directors of Beijing Shougang Company Limited |
| Supervisory Committee | Refers to | The supervisory committee of Beijing Shougang Company Limited |
| Shareholders’ General Meeting | Refers to | The Shareholders’ General Meeting of Beijing Shougang Company Limited |
| Qiangang Co. | Refers to | Shougang Qian'an Iron&Steel Co., Ltd. (Branch of the Company) |
| Cold-R Co. | Refers to | Beijing Shougang Cold Rolling Co., Ltd. (Holding subsidiary of the Company, holds 70.28%) |
| Zhixin Co. | Refers to | Shougang Zhixin Qian'an Electromagnetic Materials Co., Ltd. (Wholly-owned subsidiaries of the Company) |
| New-E Co. | Refers to | Beijing Shougang New Energy Automobile Material Technology Co., Ltd. (Holding subsidiary of the Company, holds 47.4%) |
| Steel Trading | Refers to | Beijing Shougang Steel Trading Investment Management Co., Ltd. (Holding subsidiary of the Company, holds 51%) |
| Qianshun Base | Refers to | Qiangang Co, Zhixin Co., located in Qian-an, Hebei province, and Cold-R Co., located in Shunyi District, Beijing, establishing an upstream and downstream integrate production management system and research and development system. |
| Jingtang Co. / Jingtang Base. | Refers to | Shougang Jingtang United Iron&Steel Co., Ltd. (Holding subsidiary of the Company, the Company holds 51%, Steel Trading Co. holds 29.8177%) |
| Major Assets Reorganization, First Reorganization, and Previous Major Assets Reorganization | Refers to | Since the shut down of the main process of iron and steel manufacturing in late 2010, which was operated in Shijingshan District, Beijing, a transaction between the Company and Shougang carried out. The transaction event was announced as "Related Party Transactions between Beijing Shougang Co., Ltd. and Shougang Corporation - Major Assets Swap and Asset Purchase through Issue of Shares". The event was unconditional approved by China Securities Regulatory Commission Restructuring Committee on 16 January 2013. On 29 January 2014, the Company received the approval document, named "The Approval of Related Party Transactions between Beijing Shougang Co., Ltd. and Shougang Corporation - Major Assets Reorganization and Asset Purchase through Issue of Shares", which was issued by China Securities Regulatory Commission. On 25 April 2014, the reorganization was accomplished. |
| Major Assets Swap, Second Reorganization | Refers to | On 23 April 2015, trading in the shares of the Company was suspended and the major assets swap launched. Main content of the swap is: 100% shareholding of Guizhou Investment Co., Ltd. was replaced with 51% shareholding of Jingtang Co., any insufficiency was paid in cash. This major assets swap was accomplished at the end of 2015. On 27 April 2016, re-election of the board of directors and amendment of Articles of Association of Jingtang Co. was accomplished and the Company was qualified to consolidate the financial statements of Jingtang Co. The second swap was then accomplished. |
| EVI | Refers to | Early Vendor Involvement means involving the downstream users at early stage of product development process and fully understanding users’ requirements for raw material so that high-performance materials and personalized services could be offered to users. |
| Reporting Period | Refers to | From 1 January 2020 to 31 December 2020 |
| Thousand, Million, Billion | Refers to | RMB Thousand, RMB Million, RMB Billion |
Beijing Shougang Co. Ltd Annual Report 2020
Section II. Company Profile and Major Financial IndicatorsI. Company information
| Short name of stock | Shougang Stock | Stock code | 000959 |
| Stock exchange for listing of shares | The Shenzhen Stock Exchange | ||
| Statutory Chinese name of the Company | Beijing Shougang Co., Ltd. | ||
| Statutory Chinese name of the Company | Shougang Co. | ||
| Legal representative of the Company | Zhao Minge | ||
| Registered address | Shijingshan Road, Shijingshan District, Beijing, PRC | ||
| Postal code of the registered address | 100041 | ||
| Office address | No. 99 Shijingshan Road, Shijingshan District, Beijing, PRC | ||
| Postal code of the office address | 100041 | ||
| The Company’s website | www.sggf.com.cn | ||
| Email address | sggf@sgqg.com | ||
II. Contact information
| Secretary of the board | |
| Name | Chen Yi |
| Correspondence address | No. 99 Shijingshan Road, Shijingshan District, Beijing, PRC |
| Telephone | 010-88293727 |
| Fax | 010-88292055 |
| Email address | Chenyi@shougang.com.cn |
III. Information disclosure and place for inspection
| Designated media for information disclosure | China Securities Journal, Securities Times, Shanghai Securities News, Securities Daily |
| Website designated by CSRC for annual report publication | http://www.cninfo.com.cn |
| Place for inspection of the annual report | Secretary office of the board of the Company, The Shenzhen Stock Exchange |
IV. Changes of registration
| Organization code | 911100007002343182 |
| Changes of the core business since listing (if any) | No changes |
| Changes of controlling shareholder (if any) | No changes |
V. Other relevant informationAccounting firm engaged by the company
| Name of accounting firm | Grant Thornton LLP |
| Address of accounting firm | 5th Floor of Scitech Plaza, No. 22 Jianguomenwai Avenue, Chaoyang District, Beijing |
| Signed CPA | Qian Bin, Li Dan |
Sponsor engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Non applicable
Financial consultant engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Non applicable
Beijing Shougang Co. Ltd Annual Report 2020
VI. Major accounting data and financial indicatorsWhether the Company has retroactive adjustment or re-statement on previous accounting data or not
√ YES □ NO
Reasons for retroactive adjustment or restatementBusiness combination under common control
| 2020 | 2019 | Changes over last year | 2018 | |||
| Pre-adjustment | Post-adjustment | Post- adjustment | Pre-adjustment | Post-adjustment | ||
| Operating revenue | 79,951,181,948.10 | 69,151,432,692.45 | 68,841,307,821.91 | 16.14% | 65,776,660,538.90 | 66,475,184,065.63 |
| Net profit attributable to shareholders of the listed company | 1,786,452,832.06 | 1,251,047,873.08 | 1,185,589,702.44 | 50.68% | 2,403,750,672.16 | 2,370,453,251.46 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring profit and loss | 1,714,439,720.83 | 1,237,189,576.69 | 1,237,189,576.69 | 38.58% | 2,370,753,271.57 | 2,370,753,271.57 |
| Net cash flows from operating activities | 10,274,678,796.19 | 3,318,628,938.53 | 3,415,002,015.35 | 200.87% | 12,459,389,585.17 | 12,389,358,915.24 |
| Basic earnings per share | 0.3377 | 0.2365 | 0.2241 | 50.69% | 0.4544 | 0.4482 |
| Diluted earnings per share | 0.3377 | 0.2365 | 0.2241 | 50.69% | 0.4544 | 0.4482 |
| Weighted average return on net assets | 6.40% | 4.77% | 4.52% | Increase 1.88% | 9.29% | 9.18% |
| 31 December 2020 | 31 December 2019 | Changes over end of last year | 31 December 2018 | |||
| Pre-adjustment | Post-adjustment | Post- adjustment | Pre-adjustment | Post-adjustment | ||
| Total assets | 144,367,221,971.10 | 141,370,925,410.35 | 146,872,471,898.20 | -1.71% | 135,204,153,025.76 | 140,144,000,775.49 |
| Net assets attributable to shareholders of the listed company | 28,959,395,268.02 | 27,028,680,992.20 | 26,881,935,733.01 | 7.73% | 25,431,045,600.77 | 25,267,927,428.37 |
The Company’s net profit before and after deducting non-recurring profit and loss in the last three fiscal years is negative, and theaudit profit of the last year presents that the Company’s ability of continuing operations is uncertain.
□ YES √ NO
The net profit before and after deducting non - recurring profit and loss is negative.
□ YES √ NO
VII. Difference of accounting data under accounting rules in and out of China
1. Differences of net profit and net assets in financial statements disclosed according to International Financial ReportingStandards and Chinese Accounting Standards
□ Applicable √ Non applicable
There is no difference between the net profit and net assets in the financial statements disclosed in accordance with InternationalFinancial Reporting Standards and Chinese Accounting Standards during the reporting period of the Company.
2. Difference of net profit and net assets in financial statements disclosed according to foreign accounting standards andChinese Accounting Standards
□ Applicable √ Non applicable
There is no difference between the net profit and net assets in the financial statements disclosed in accordance with foreignaccounting standards and Chinese Accounting Standards during the reporting period of the Company.VIII. Major financial indicators by quarter in 2020
Unit: RMB Yuan
| Q1 | Q2 | Q3 | Q4 | |
| Total revenue | 17,284,413,433.63 | 16,402,416,186.59 | 20,998,838,588.31 | 25,265,513,739.57 |
| Net profit attributable to shareholders of the listed company | 197,594,840.73 | 325,593,065.83 | 651,503,984.61 | 611,760,940.89 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring profit and loss | 189,019,530.01 | 286,879,833.47 | 645,106,468.50 | 593,433,888.85 |
| Net cash flows from operating activities | -184,708,264.66 | 2,928,254,168.49 | 2,127,819,976.80 | 5,403,312,915.56 |
Whether there are significant differences between the above-mentioned financial indicators or the sum and the relevant financial
Beijing Shougang Co. Ltd Annual Report 2020
indicators disclosed in the Company’s quarterly report and semi-annual report
□ YES √ NO
IX. Items and amounts of non-recurring profit and loss
√ Applicable □ Non applicable
Unit: RMB Yuan
| Item | 2020 | 2019 | 2018 | Note |
| Gains and losses on disposal of non-current assets (including the write-off that accrued for impairment of assets) | -633,491.79 | -7,684,491.35 | -7,363,775.54 | |
| Government grant included in the current profit and loss (except for the government grant which are closely related to the business of the company and are in accordance with the national unified standard quota) | 58,640,213.30 | 42,102,501.30 | 31,376,175.07 | |
| Current net profit and loss of subsidiaries from the beginning of the period to the date of business combination under the common control | 61,522,051.81 | 5,124,466.43 | 13,013,692.30 | |
| Profit and loss from external entrusted loans | 10,361,268.74 | 8,187,426.69 | 5,478,548.29 | |
| Other non-operating income and expenses except the above items | -289,865.40 | -18,673,930.68 | 22,350,838.71 | |
| Other profit and loss items conforming to the definition of non-recurring profit and loss | -6,922,580.64 | -66,820,816.33 | -42,242,680.81 | |
| Less: The impact of income tax | 7,022,263.80 | 4,039,236.83 | 2,779,669.43 | |
| The impact on non-controlling interests (post-tax) | 43,642,220.99 | 9,795,793.48 | 20,133,148.70 | |
| Total | 72,013,111.23 | -51,599,874.25 | -300,020.11 | -- |
The reasons shall be explained for the non-recurring profit and loss items defined by the company according to the definition of"explanatory Announcement No. 1 of information disclosure of companies offering securities to the public - non recurring profit andloss" and the items of non-recurring profit and loss listed in the explanatory announcement of information disclosure of companiesoffering securities to the public No. 1 - non recurring profit and loss as recurring profit and loss items.
□ Applicable √ Non applicable
During the reporting period, there are no non-recurring profit and loss items defined and listed in "explanatory Announcement No. 1of information disclosure of companies offering securities to the public non-recurring profit and loss" as recurring profit and lossitems.
Beijing Shougang Co. Ltd Annual Report 2020
Section III. Overview of the Company’s BusinessI. Main businesses during the reporting period
1. The Company runs the business in iron and steel industry, and main business range includes: iron and steel smelting, steel rollingprocessing, copper smelting, copper rolling processing and sales; manufacturing and sales of sinter, coke and chemical products;blast furnace residual pressure power generation and production and sales of gas; processing and sales of industrial waste; sales ofmetal materials, coke, chemical products, mechanical and electrical equipment, building materials, general equipment, hardware andelectrical equipment (excluding electronic bicycles), furniture and decorative materials; equipment leasing (excluding automobiles);loading, unloading and handling services; software delevopment; advertising design and agency; warehousing services; technologydevelopment, technical consultation, technology transfer, technical service and technical training; investment and investmentmanagement; telecommunications services; insurance agency services; insurance broker services.
2. Iron and steel products of Qianshun Base include hot and cold plates. The hot plates mainly contain: pickle sheet, weather-resistantsteel, automobile structure steel, high-strength steel, pipeline steel, saw steel, etc. The cold plates mainly contain: automobile sheet,electrical steel, home electrical appliances, special-use plate, etc.Iron and steel products of Jingtang Base include hot and cold plates. The hot plates mainly contain hot-rolled products, i.e.,automobile structure steel, pipeline steel, weather-resistant steel, high-strength steel, etc.; and also contain medium and thick platesproducts, such as bridge steel, shipbuilding steel, marine steel, wind power steel, high-performance construction steel, pipeline steel,etc. The cold plates mainly contain: automobile sheet, home electrical appliances, special-use plate, tin sheet, tin-free-steel,color-coated sheet, general sheet, etc. seven main products series.
3. Use of the main iron and steel products
(1) Hot Plates
The pickle sheets are mainly used in automobiles, compressor, motorcycle, machinery manufacturing, hardware accessories withfive metals (gold, silver, copper, iron and tin), etc.The automobile structure steels mainly include automobile wheel steel, and automobile beam steel, which mainly used to producewheel rim and spoke of car, coach, truck, engineering plant, agricultural vehicle, etc. and crossbeam, side beam and other structuralcomponents of all kinds of automobile frame.The pipeline steels are mainly used in transportation of oil, gas, etc.The weather-resistant steels mainly include container steel, railway weathering steel, stirred tank steel, electric power steel, etc.The high-strength steels mainly include high performance steel for engineering mechanism, explosion proof steel for the safe andATM machine, fan steel, auto-truck steel, etc. The high-strength steels are mainly used to manufacture lifting arm, body, and beam ofcranes, pump, special vehicle, etc., and also, the blade and other products of blower, mining fan and electric fan could bemanufactured.The special-use plates mainly include weld gas vessel steel, boiler, pressure vessel steel, which could be used to manufacturecontainers for liquefied petroleum gas, liquid nitrogen, etc., and also could be used to produce pressure equipment for special usedequipment.
(2) Cold Plates
The automobile sheets are mainly used to manufacture automobile body, structure, and partial chassis parts of commercial andpassenger vehicles of all kinds.The electrical steels include non-oriented electrical steel and oriented electrical steel, which mainly used in household electricalappliances, industrial motor, medium and small electric motor, new-energy cars, transformer, and other industries.The tin sheets are mainly used in packing of food, drink, and other products, and also could be used in packing of petrol, oil, paints,polishing compound, spray and other chemicals products.The tin-free-steels are mainly used in can cap, twist-off cap, dished lid, snap lids, drawn can.
Beijing Shougang Co. Ltd Annual Report 2020
The home electrical appliances are mainly used in fridges, washing machine, air-conditioning, television, and inner and outer plate,structure plates of small home appliances.The color-coated sheets are widely used in construction industry, shipbuilding industry, vehicle manufacturing industry, furnitureindustry, etc.The special-use plates are mainly used to manufacture chain, enamel, solder wire, tubbing, general motorcycle components, etc.II. Material Changes in Major Assets
1. Material Changes in Major Assets
| Major Assets | Notes for material changes |
| Equity Assets | Other equity instruments investments decreased by RMB4.08 billion, mainly due to the impact of asset replacement on the equity of BAIC Motor Co., Ltd. held by the company. |
| Fixed assets | Book value of fixed assets increased RMB12.93 billion compared to the beginning of the year. Mainly due to the transfer of fixed assets from construction in progress by RMB19.26 billion and depreciated by RMB6.41 billion. |
| Intangible assets | Book value of intangible assets increased RMB1.128 billion compared to the beginning of the year. Mainly due to the transfer of land-use right from construction in progress and software by RMB1. 23 billion and amortized by RMB0.11billion. |
| Construction in progress | Book value of construction in progress decreased by RMB17.13 billion compared to the beginning of the year. Mainly caused by the transfer of fixed assets from construction in progress of Jingtang Co. Phase-II project. |
2. Major overseas assets
□ Applicable √ Non applicable
III. Core Competitiveness Analysis
1. Capability of technical equipment
Qiangang Co. owns 2 blast furnaces with 2650m? each and 1 blast furnace with 4000m?, which adopt multiple internationaladvanced techniques such as distribution chute of larger blast, fully dry gas cleaning, pulverized coal injection by parallel tank, zerointerval iron production, etc., and main technical indicators, such as coke ratios, coal injection rate, using coefficient of the blastfurnace, etc. stand at the leading position in China. In addition, 5 converters with 210t each, 4 two-strand slab caster and corollaryequipment LF, CAS-OB, RH Vacuum Refining Furnace, 1 hot-rolling wide steel strip rolling mill with 2250mm, 1 hot-rolling widesteel strip rolling mill with 1580 are also owned by Qiangang Co.. Meanwhile, Qiangang Co. takes the lead to realize “One-stepSteelmaking”, “One-step Refining” and “Auto Steel-pouring of plate blank”. Furthermore, Qiangang Co. introduces artificialintelligence into steel production, and technical equipment, energy saving and environmental protection, independent integration,innovation, etc. of the Company have reached the leading level in China.Jingtang Co. owns 6 coke ovens with 7.63m in high each, 3 blast furnace with 5500m?each, 5 decarbonize converters with 300teach and 3 decarbonize converters with 200t each, 1 hot-rolling wide steel strip rolling mill with 2250mm, 1 hot-rolling wide steelstrip rolling mill with 1580mm, 1 medium and thick plates production line with 3500mm, 1 medium and thick plates production linewith 4300mm, 1 multi-mode continuous casting and rolling production line, 1 annealed cold rolling strips production line with1420mm, with 1700mm and with 2230mm respectively, 1 single stand mill production line with 1420mm, 1 single stand millproduction line with 1750mm, 1 turbulence pickling line, 1 push-pull pickling line, 7 galvanizing lines, 2 tinning lines, 1 colorcoating line and auxiliary and supporting facilities. Phase-I project of Jingtang Co. adopts 220 advanced technologies, among which,two-thirds of the advanced technologies are independent innovation and integrated innovation. The converter “One-step” technologyand “3-De” (desulphurize, dephosphorize, desilicification) steel making technology are researched and developed independently,which is the first clean steel production platform with high efficiency and low cost. Phase-II project of Jingtang Co. optimizes andimproves 54 technologies, develop and innovate 50 technologies on the basis of phase-I project. The technology, large-scale pelletironmaking uses pellets to replace sinter, leads the company to realize high efficiency, low energy, low emission with obviousenvironmental advantages; MCRR multi-code continuous casting-rolling line of Jingtang Co. is the first to delevop multi-codecontinuous casting and rolling method, which can realize single block, semi-endless rolling and endless rolling crossover switch of
Beijing Shougang Co. Ltd Annual Report 2020
multi-mode casting-rolling form. The MCRR multi-code continuous casting-rolling line can also achieve the rolling mill to replaceworking roll without picking billet to ensure the whole production process is complete, product yield rate can be improvedsubstantially, production mode is flexible, technology is advanced and innovative, and it will be the development trend of lowconsumption and high efficiency of thin slab production in the future.Zhixin Co. owns acid continuous rolling mills, continuous annealing line, acid pickling line, twenty high rolling mill and otherproduction lines and other public supporting facilities such as acid regeneration facility etc. The overall equipments of Zhixin Co.have achieved advanced world level. Zhixin Co. focuses on promoting the steel production, sale, research and development onelectric machinery in new energy cars, advanced inverter compressor, premium efficiency electric machinery, the first-level energyefficiency transformer, extra-high voltage and other aspects. Zhixin Co. is the second electrical steel production enterprise in Chinafor new energy car series production. Regarding to the orientation, Zhixin Co. self-develops the production technique in highgrain-oriented steel that prepared by low slab reheating temperature technique, which makes Zhixin Co. to become the fourthenterprise in the word that owns industrialization of fully low temperature process.Cold-R Co. integrates the most advanced manufacturing technique in the world, for example, the pickling line adopts full continuousproduction technology with continuous pickling line coupled to 5-stand 6-roll machine tandem cold mill, and adopts controltechnologies such as CVC shape control, AC-DC-AC frequency control etc. as well. Continuous annealing and galvanizing lineadopts a novel technology of rapid solidifying that suits for high strength steel and extra deep drawing sheet steel production. Thehighest strength level of the plates has achieved 1200MPa. The overall technical and equipment level of Cold-R Co. are among thefirst ranks in the world.
2. Scientific and technological innovation capabilities
Shougang Co. with its subsidiaries, Jingtang Co., Cold-R Co., Zhixin Co. are qualified national high-tech enterprise qualificationcertification approved by government.Intellectual property: The technology center of Shougang Co. has passed annual review of Beijing enterprise technology center. Inthe year of 2020, Qianshun Base and Jingtang Base gain 424 patent rights, among which, 148 invention patents and 276 utility modelpatents. Additionally, Cold-R Co. gains the title of Beijing Intellectual Property Pilot and Demonstration Unit. Zhixin Co. wins theintellectual property superiority enterprise of Hebei Province, national metallurgical industry quality leading enterprise and is alsoapproved as silicon steel technology innovation center of Hebei Province.Standards establishment: Participated in the formulation of 26 national, industrial and group standards, among which 2 wereawarded the title of "Leading Enterprise Standards in Hebei Province".Scientific and technological achievements: 4 projects of Qianshun Base are awarded for metallurgical science and technologyprize, and 4 rojects are awarded for Hebei Province science and technology prize. Among them, the project names as “Research andinnovation on key technology of ultra-low emission in whole steel process” awarded the first prize of metallurgical science andtechnology award, which signals Shougang Co. has taken the lead in the steel industry to achieve ultra-low emission technicalstandards. In addition, the project - key technology and equipment for manufacturing automotive exterior panels with high brightnessand non-middle coating wins the first prize of metallurgical science and technology award.Three achievements, including “Development and application of high-quality pellets for low-carbon smelting of large blast furnace”,jointly declared by Jingtang Co. and Shougang Group, and “Manufacturing and application of copper-and-steel composite coolingstave” jointly declared by Jingtang Co. and University of Science and Technology Beijing, win the first prize of metallurgical scienceand technology award; “Development and application of high efficiency double blowing technology for converter steelmaking inShougang”, jontly declared by Jingtang Co. and Shougang Group wins the second prize of metallurgical science and technologyaward; "High-efficiency steelmaking production with the temperature of steel reduction" and "Research and development of powergrid intelligent control system of large iron and steel enterprise” win the first prize of Hebei Province metallurgical science andtechnology award; five achievements, including “Research and application of green technology of large coke oven gas purificationsystem” and “Development and application of efficient slab continuous casting technology” win the second prize of Hebei Provincemetallurgical science and technology award; nine achievements, including “Quality optimization control of acid pellets based on
Beijing Shougang Co. Ltd Annual Report 2020
peruvian powder” and “Exploration and application of safe, efficient and eco-friendly opening technology of ultra-large blastfurnace” win the third prize of Hebei Province metallurgical science and technology award.
3. Products Market Competitiveness
6 products of the Company are first issued, including successful development of marble row saw steel, which breaks 30-year foreignmonopoly. The Company has been awarded many prizes, including Excellent Brand in Chinese Steel Market, 2020 GreenDevelopment Benchmark Enterprise, Leader of National Key Water Consumption Enterprise, Excellent Supplier Shortlisted Award(Shanghai Volkswagen), Strategic Cooperation Award (Haier) and Excellent Product Development (Dongfeng Commercial Vehicle).Procurement centre is awarded “Top 10 Centralized Procurement Organizations” in China.Jingtang Co. is awarded as “Best Supplier of 2019” (BMW Brilliance), “Outstanding Partner” (China Construction Science andIndustry Co. Ltd.), “Excellent Partner of 2020” (CIMC Raffles), be the finalist of “Best Supplier of 2019” (Shanghai Volkswagen)and wins Strategic Cooperation Award for 2020 (Haier).Cold rolled automobile sheet: Focusing on structural optimization and adjustment, promoting high-level joint venture brands suchas from Japan and Germany, as well as increasing certification of zinc, aluminum and magnesium, non-middle coating exteriorpanels and high-strength products, realizing full coverage of top 10 key vehicle enterprises; remaining steady increase of share ofproduct supply in the market; keeping the position of No. 1 supplier for BMW and Changcheng in China; doubling products suppliedto Japanese car year-over-year. Additonally, relazing full coverage of 1180MPa grade; relazing stable supply of non-middle coatingexterior panels, 590/780MPa high strength high extension DH steel and HC780/980CPD+Z galvanized duplex steel in batch.Amount of Zinc, aluminum, magnesium, DH steel, non-middle coating exterior panels and other characteristic products can increasedramatically.Cold rolled electrical steel: Including orientation and non-orientation electrical steel, and realizing first issue of 25SW1250Helectrical steel for premium new energy power generation; becoming the only supplier for Volkswagen MEB project; No. 1 of theGerman Siemens certification of global electrical steel enterprises. Materials for “Double million” large capacity transformer withultra-high voltage pass the examination; the main performance of product series of high magnetic, high strength and low loss newenergy car catches up with top- ranking enterprises in the world; obtaining 14 new energy power generation clients authentication,and becoming the supplier for 10 clients; overall pushing the client authentication for passenger car (Toyota, Nissan, General, etc.).The supply of electric steel for Baihetan hydropower station, the second largest hydropower station in China achieves to be morethan 50% and supply of electric steel for Wudongde hydroelectric power station, the fourth ten million kilowatt hydropower stationin China achieves to be more than 70%.Cold rolled tin sheet: Realizing stable supply of wide-width inverse red bull iron and products with high formability and easy-openfor the industry leading enterprises in batch. The proportion of thin products achieves 56.4% and the proportion of DR steel increases77% year on year.Other cold-rolled products: Keeping stable supply of home electrical appliances to Haier, Midea, Hisense and other top enterprises;realizing supply of special-used steel such as needle making steel and other 6 new products in batch; remaining market share ofdouble layers welded pipe ahead; realizing clean change over zinc-aluminium-magnesium products from color-coated sheet,supplying products in batch to the leading enterprises in animal husbandry, and developing 0.11mm steel for 5G base stationssuccessfully.Hot-rolled pickle sheet: (Automobile structure steel) Promoting update of lightweight vehicles, realizing first domestic issue of dualphase wheel steel of 800 MPa grade; realizing a breakthrough development of automobile structure steel in vehicle enterprises suchas BMW, Toyota, Honda, Nissan, etc and carrying out the certification of hot-rolled pickle sheet for chassis in BMW; and supplyingHuawei 5G base station of lightweight special-used pickle sheet.Other hot-rolled products: The development of 10 new grades such as SAE1528B etc. of fine drawing steel has completed;realizing the stable supply of 700MPa high strength automobile structure steel to Yutong, Beiqi FOTO and Sunhunk; dual phasewheel steel, the first issued product in China has become the main product which leading the industry lightweight upgrade;overcoming the integrate technology of fire and weathering resistant steel, and successful applies in construction of the diving
Beijing Shougang Co. Ltd Annual Report 2020
platform of 2022 Beijing Winter Olympic Games; producing premium coiled tubing (CT90) in batch. Medium plates complet thesupply of bridge steel for major national projects such as Hangzhou Bay Bridge and Qingdao Airport Line, win the bidding ofSinopec and CNPC tank steel projects, wind power steel achieves the historical breakthrough with annual output over one milliontons.
4. Management innovation ability
In 2020, the Company has won 1 national award and 15 provincial and ministerial awardsShougang Co. received 2019 Golden Bull Social Responsibility Award of the domestic listed companies, Qiangang Co. won 5management innovation awards in 2020, among them, “Exploration and practice of electrical steel intelligent factory management iniron and steel enterprises” and “Construction and implementation of accounting management system by units in iron and steelenterprises” won the first prize of Innovation and management achievements in metallurgical. Qiangang Co. has been assessed as theonly one “National Safety Culture Construction Demonstration Enterprise” in iron and steel industry.“Ultra-low emission management in large-scale iron and steel enterprises, which is based on synergistic promotion of environmentalprotection benefits and economic benefits” of Jingtang Co. wins the second prize of national enterprise management modernizationinnovation achievements. “Practice and application of optimizing the inventory structure of the whole process in iron andsteelenterprises to realize efficient operation”,“Innovation and practice of personnel migration and integration in trans-regionaloverall relocation and adjustment of iron and steel enterprises”, “Innovation and practice of LMSE in iron and steel enterprises” winthe third prize of modernization innovation achievement in metallurgical enterprise management. “Construction and implementationof risk control system for fixed assets investment projects” and “Practice of eco-friendly economic management based on ultra lowemission in iron and steel enterprises” win the first prize of Hebei Provincial Enterprise Management Modernization InnovationAchievement, “Exploration and practice of constructing ‘Multivariate, Collaborative and Sharing’ science and technology innovationmanagement system of coal coking industry” and “Establishment and application of the new mode of production and constructionintegrated management and control in metallurgical engineering construction” win the second prize of Hebei Provincial EnterpriseManagement Modernization Innovation Achievement, “Integration and exploration of process and informatization managementsystem in iron and steel enterprises” and Innovation practice of constructing ‘main responsibility management entity’- explorationand implementation of principal business responsibility system in coking enterprises” win the third prize of Hebei ProvincialEnterprise Management Modernization Innovation Achievement.
5. Personnel training ability
In accordance with the principle of appropriate personnel and posts, the Company continues to promote the construction of threetalent teams: administrative, technical and skilled, create the positive atmosphere for talent growth and a number of leading talents inskill operation have emerged. Rong Yanming is awarded “National Model Worker” and “Craftsman of National Machinery,Metallurgy and Building Materials Industry”, Zheng Tianran and Cheng Hong are awarded “Beijing Model Worker”, Wang Jianbininnovation studio is awarded “National Skill Master Studio”, Wang Baoyong innovation studio is awarded “National DemonstrationInnovation Studio of Machinery, Metallurgy and Building Materials Industry”.
6. Environmental protection ability
Qianshun Base upholds the idea of green development, continuously carrying out the environmental protection improvement andtransformation, and improving the ultra-low emission capacity. Qiangang Co. has awarded the title of A-level EnvironmentalAchievements Iron and Steel Enterprise in Tangshan for three successive years and autonomous emission reduction withoutproduction limit is executed during heavy pollution warning. In addition, Qiangang Co. is selected as "Green Factory" by theMinistry of Industry and Information Technology. In May 2020, Qiangang Co. was responsible for the training conference on theestablishment of Class A enterprises in iron and steel industry in Hebei Province, shared the experience in promoting ultra-lowemission transformation and carrying out ecological environment assessment and monitoring, promoted ultra-low emissiontechnologies in blast furnaces and other processes. According to the routine press conference of the Ministry of Ecology andEnvironment in July 2020, in terms of air pollution control in the steel industry, Qianan Co. of Shougang Co. is the first company inthe world to achieve ultra-low emissions throughout the entire process. Cold-R Co. is awarded as National Green Supply Chain
Beijing Shougang Co. Ltd Annual Report 2020
Management Enterprise.Jingtang Base adheres to the concept of green development and continues to carry out environmental improvement andtransformation. Jingtang Co. was awarded the title of A-level Environmental Achievements Iron and Steel Enterprise in 2020. Theproject, “Realizing ultra-low emission management in large-scale iron and steel enterprises based on synergistic promotion ofenvironmental protection benefits and economic benefits” wins the second prize of national enterprise management modernizationinnovation achievements; Jingtang Co. is awarded “2020 Green Development Benchmark Enterprise” and explores new paths forgreen development. Additionally, Jingtang No.2 decarburization furnace won the championship of 2019 energy-saving andconsumption-reducing benchmarking competition for national key large-scale energy-consuming steel production equipments. Thedomestic largest hydrothermal seawater desalination project with a daily output of 35000 tons and the first heat film couplingseawater desalination project in China have been built, which constructs the first "Combustion-Heat-Electricity-Water-Salt"five-effect integrated high-efficiency recycling system and has become the model project for green and low-carbon development ofsteel industry.
7. Marketing service system
The company insists the marketing strategic goal of "Variety premiumisation, Channel terminal, Strategic cooperation and Servicestandardization" and builds user-centric and market-oriented marketing service system. The centralized, unified, rapid-response andefficient marketing management network has been established through the management and control platform of the headquarters ofSteel Trading. Steel Trading owns five regional steel trading companies in Shanghai, Guangzhou, Shandong, Tianjin and Wuhan,thirteen steel processing and distribution centers in Suzhou, Ningbo, Shenyang, Foshan, Harbin, Chongqing, Zhuzhou and Liuzhouetc., two automobile-sheet trading companies and one shipping company. The marketing service system covers North China, EastChina, South China, Central China, Northeast China and Southwest China etc.The company insists on cooperating with first-class enterprises, continuously improving customer quality, and actively developingcore high-quality customers. Customers include leading enterprises in the automotive, electric power, transportation, householdappliances, energy and other industries. Moreover, the company establishes stable cooperation with twenty-three companies ofGlobal 500, including BMW, PetroChina, China Railway, China FAW, Midea Group and COFCO and realizes the long-term andstable cooperation with fifty-two companies of Top 500 in China, including SAIC, Guodian Electric Power, Haier, Gree and CIMC.The company continues to improve the construction of customer service system, optimize the allocation of service resources, andconstantly improve the marketing service ability. In view of key automobile enterprises, a number of automobile-sheet customerservice teams are established to enrich and strengthen the front-line service force, steadily promote the construction of "Shougang Co.- customer" ecosystem, and realize the four major self-services and customer demand reporting functions of intelligent marketingplatform. The company won 11 awards including "Excellent Supplier Shortlisted Award" (SAIC Volkswagen), "Golden CubeAward" (Haier), and "Excellent Supplier Award" (Hisense), and was awarded by China Metallurgical News as "InternationalInfluential Brand of China's Outstanding Iron and Steel Enterprises" and "Excellent brand of China's Steel Market" in 2020."Manufacturing + Service" capability has been more and more accepted by the market and customers.
Beijing Shougang Co. Ltd Annual Report 2020
Section IV. Discussion and Analysis of Business OperationsI. Overview
In 2020, when the COVID-19 pandemic struk and the world economy was in a downturn, China's economy turned from a downturnto a steady upturn, becoming the only major economy in the world with positive growth. China's iron and steel production continuedto run at a high level, and the steel market continued to be improved. The price of raw materials maintained an upward trend as awhole, and the price of iron ore continued to rise. The company adhered to the principle of "two hands, two correct" in epidemicprevention and control, operation and production, seized the market opportunity, overcame the impact of upstream price rise,continued to establish five advantages of "product, quality, cost, service and technology", overcame difficulties, elaborated theorganization, sought progress in stability, showed new atmosphere in all work, and achieved new results.The achievement of major accounting data and financial indicators:
Operating revenue is RMB79.951 billion (16.14% year on year increase); total profit is RMB2.778 billion (43.75% year on yearincrease); net profit attributable to shareholders of the listed company is RMB1.786 billion (year on year increase 50.68%); EPS isRMB0.34; total asset is RMB144.367 billion; equity attributable to shareholders of the listed company is RMB28.959 billion.The achievement of major products:
Qiangang Co.: iron 8.03 million ton, (4% year on year increase); steel 8.49 million ton (5% year on year increase); material 8.21million ton (include supply Cold-R Co. 1.92 million ton, Zhixin Co. 1.74 million ton), year on year increase by 5%. Jingtang Co.:
iron 12.87 million ton (65% year on year increase); steel 11.29 million ton (22% year on year increase); material 10.12 million ton(18% year on year increase). Zhixin Co.: electrical steel 1.54 million ton (6% year on year decrease). Cold-R Co.: Cold-rolled plate
1.84 million ton (8% year on year increase).
1. To fulfill the mission, a number of indicators to create a new record
Epidemic prevention and control to achieve the "three zero" goal. Scientific policy implementation, accurate prevention andcontrol, normalized management, improving various security mechanisms, and comprehensively building a grid-based,three-dimensional epidemic prevention and control system; carrying out joint prevention and control with all employees,consolidating territorial responsibilities, strictly implementing prevention and control measures, concentrating all efforts to weave theepidemic prevention network, so as to achieve the prevention and control goal of zero close connection, zero suspicion and zerodiagnosis and effectively guarantee the normal order of operation and productionRealize high level operation of production. The output of iron, steel and material completely broke historical records. The ironconsumption index and daily output of Qiangang Co. are the highest since the establishment of the company. As for Zhixin Co.,20-roller unit broke through the rolling bottleneck, 1# annular furnace kept going, high-end electrical steel products increased by
10.9% year-on-year. The output of galvanizing line of Cold-R Co. reached the best level since putting into operation. Jingtang Co.promoted the research and application of technologies such as iron tapping, high-oxygen-enriched coal injection, large ore batches,and large ball ratio smelting. The overall production level has been improved, and the output of molten iron has reached a new record.Efforts were made to organize the "Phase II new production line to reach production and efficiency" to tackle key problems, and allproduction lines have reached the production-rapid capacity and the key indicators have reached the expectations.
2. Strengthen the foundation and promote high-quality development
Continuous improvement of product quality. Qianshun base has implemented a solid and detailed "quality improvement year",focused on customer concern and production-line bottlenecks, 19 projects have achieved the expected targets; 72 projects were improvedon site and 23 key tasks were supervised. The quality inspection process independently develops the trace element inspection technologyfor automobile structure and non-oriented new energy products to realize the accurate guidance for technical production by theinspection information.Focusing on the quality difficulties that have plagued the production line for a long time, the research on theentire process of oxygen control and mold flow field was carried out; deepening the research on the micro morphology of automobile
Beijing Shougang Co. Ltd Annual Report 2020
plate surface, and reducing the PPM of defects by 74%, 35% and 51% for BMW, Volkswagen and Great Wall respectively. Jingtangbase carried out quality system training at different levels to promote the transformation of quality control from "results" to "results +process", 191 key problems were solved, 171 were completed, and quality was improved remarkably. Defects have been significantlyimproved through internally focusing on quality bottlenecks to break through, and carrying out the ten key defects research; externallyfocusing on user complaints to solve and implementing the "off- listing" mode. 407 key control points in 47 processes of iron and steelrolling were established.Innovation leads safety management. Qianshun Base deepened the construction of "double control" mechanism, the first independentresearch and development of "double control" system in the steel industry, formed 11 national patents, investigated and governed hiddendangers, reduced the total value of safety risk by 10% year on year, and promoted the management experience in Hebei Province.Qiangang Co. was awarded the "National Safety Culture Construction Demonstration Enterprise" with adherence of cultural guidance,and is the only enterprise in the iron and steel industry to win the honor throughout the entire process. Jingtang Base continued to carryout quantitative safety evaluation, and gradually extended to the operation area and maintenance inspection units. With the goal of "noone is safe, efficiency improvement and risk reduction, and danger isolation" as the goal, 80 essential promotion areas have been built,the company strengthened independent implementation in transportation, quality supervision, ironmaking and other areas, and achievedremarkable results. Jingtang Base simultaneously promoted the construction of "double control" mechanism, identified safety risks,formulated control measures, and eliminated and reduced safety risks.Create the benchmark for the green development industry. Qiangang Co. and Jingtang Co. were awarded the title of A-levelEnvironmental Achievements Iron and Steel Enterprise, implemented independent emission reduction, maintained a safe and stablesituation throughout the year, and presented the green and high-quality development image to the industry and society. Qiangang Co.undertook the benchmarking training for establishment of Class A enterprises in the iron and steel industry in Hebei Province, andthe national iron and steel industry ultra-low emission monitoring and evaluation monitoring seminar, and actively promotedultra-low emission technology and environmental protection management experience. Jingtang Co. has strengthened the awareness of"the beginning is the decisive battle", built the closed shed of the pellet yard with the largest single span in the world, continuouslyimproved the factory appearance and on-site environment, significantly improved the cleaner and transportation level, and achievedthe verdurization coverage rate of 41%; the largest single-scale heat film coupling seawater desalination project in China has becomea model project for the green and low-carbon development of the iron and steel industry.
3. Reduce cost, improve efficiency, increase income and achieve new breakthroughs in income generationNew breakthroughs through cost reduction and efficiency improvement. The cost reduction per ton of steel in Qianshun Basereached RMB 380 yuan. The production line continued to exploit potentialities, steelmaking processing fee (excluding alloy) was lessthan RMB 500 yuan per ton for two consecutive months, and the hot-rolling dual-line processing fee is catching up with thebenchmarking enterprises. The process is efficient and coordinated, the operation of torpedo tank is reduced by 8 sets, the temperaturedrop of molten iron is reduced by 11 ℃, and the proportion of hot charging and heat delivery is increased by 6.6%. The companycoordinated the purchase and sale business, recovered 300,000 tons of high-quality scrap steel, and significantly reduced the purchaseprice of scrap steel. Jingtang base has strengthened the management and control of the integration on iron, the energy balance of thefirst and second phases, the entire process equipment cost, logistics and transportation, etc., to achieve coordinated cost reduction, andkeep the iron cost at the leading level in the industry. Concentrating on key indicators such as iron consumption reduction in steelmaking,alloy substitution, etc., to achieve technological cost reduction. To realize management cost reduction, the company managed elaboratelythrough LPR replacement of stock loan, cash discount purchase, and logistics integration in the factory. Full implementation of "threewins" and closed-loop control in the company led to all prices won the markt.Develop revenue source to generate revenue and create new achievements. Qianshun Base made efforts to promote the construction,processing and recycling of solid secondary resources production line, and the annual efficiency increase of digesting secondaryresources exceeded 600 million yuan. The company strengthened the online bidding platform, with annual transaction volume exceeding
4.3 billion yuan, expanded e-commerce procurement channels, and reduced procurement prices by 14%. Jingtang Base established thecircular economy center, the zinc resource recycling production line and the homogenization production line were put into operation and
Beijing Shougang Co. Ltd Annual Report 2020
reached production capacity so as to realize 100% recycling of iron-containing sludge and primary and secondary steelmaking ash.Actively carrying out the export of surplus production capacity of panzer front to generate income and achieve market-orientedefficiency increase. Self-owned terminals strengthened rail-sea combined transportation, promoted the construction of advantageousroutes and realize the revenue generation and capital increase of ports
4. Strengthen "manufacturing + service" and enhance market competitiveness
Focusing on the needs of high-level customers, adhering to the purpose of differentiated and customized services, strengthening"manufacturing + service", promoting the refinement and strength of automobile plates, continuous leading of electrical steels,high-level tinplate and quality increment of pickling plate, and comprehensively improving the comprehensive competitiveness ofproductsRefining and strengthening automobile plates. Compared with the previous year, the supply of galvanized sheet, high-strength sheet,outer sheet and joint venture of automobile plate increased by 23%, 22%, 29% and 32% respectively, and presented the obvious benefitsupporting effect. The orders of main engine manufacturers increased to 41%, the share of BMW increased by 4 percentage points, thesupply volume of FAW-Volkswagen and SAIC-Volkswagen increased by more than 20 percentage points and the company has been thefirst domestic supplier of BMW Brilliance, Great Wall and BAIC for three consecutive years.Continuous leading of electrical steels. The sales volume of new energy automobile products increased by 2 times compared with thesame period last year, and the non oriented electrical steel 35sw300 and above super high grade products accounted for 47.2%, realizingbatch supply to Volvo, Volkswagen, Weilai and other automobile customers. The domestic market share of 0.20 mm and belowultra-thin oriented electrical steel was more than 70%, ranking first in domestic market for three consecutive years. The applicationperformance of transformers of 500kV and above added 88 units, with 70% and 50% supply share of Wudong de and Baihetan projectsrespectively, which promoted to the construction of “The Pillars of a Great Power”.Insist on high-level tinning sheet. The tinning sheet wide inverted crystal red bull iron and high-profile easy-opening products haveachieved stable supply in batches for leading companies in the industry. The proportion of thin specification products reached 56%, andDR material increased by 77% year on year. The proportion of high-level products such as milk powder iron, high sulfur resistance, andred bull iron reached more than 50%, covering all packaging plates such as beverage cans, food cans, and milk powder cans, realizing thefull coverage of domestic high-level customers such as Origin Agritech Limited and COFCO packaging, and stepping into the "firstteam" of brand influence.Increase amount and improve quality of pickling plates. Pickling automobile structural steel completed 750,000 tons in the wholeyear, with a year-on-year increase of 120%; seizing the opportunity of export demand growth of refrigerators and compressors, the salesvolume of compressors reached 680,000 tons, with a year-on-year increase of 42%. Qiangang Base realized the stable supply of enamelsteel, coiled tubing, garden tool steel and other small products to leading enterprises in the industry; Jingtang Base realized thedevelopment of advanced high-strength steels such as enamel steel, hot-forming steel, dual-phase steel, and multi-phase steel. Amongthem, hot-forming steel has been tested by users for stamping and forming, and the scale explosion resistance of double-sided enamel hasbeen fully recognized by users and realized batch supply.The customer-centered contract management and rapid response system is comprehensively constructed, and the intelligent marketingplatform covers all ordering users, so as to realize the flow of customer activity information within the system and the closed-loopmanagement of customer demands. The company implemented innovative technology marketing, opened new media online serviceexchanges and remote guidance, held the "Shougang Day" activities of SAIC Volkswagen and Dongfeng Nissan, carried out online livebroadcast of customer symposium on pickling plates, and provided technical support such as Gemake stamping and Geely EVI, with thesupply for EVI increased by 6% of total commodity materials. The company paid close attention to users’ demand for reproduction andsupply guarantee, broke the key bottlenecks of production logistics, and adopted personalized guarantee schemes for key users. With thecontinuous improvement of the level of the industrial chain, the service support role of the machining center has become increasinglysignificant. Wuzhong machining center of Chongqing Shougang has been highly recognized by Chongqing Great Wall, and NingboShougang machining center has become a first-class supplier of SAIC Volkswagen.
5. Deepening reform and improving efficiency, enabling technology and management innovation
Beijing Shougang Co. Ltd Annual Report 2020
Scientific and technological innovation keeps pace with the times. The company took advantages of "one institute, multiple centers"R&D system to develop a batch of high-level scientific and technological innovation achievements. 6 products of the Company are firstissued, including successful development of marble row saw steel, which breaks 30-year foreign monopoly.; the first in China to develophigh-strength enamel steel HC300EK, keep the strength above 300mpa and realize material thinning; the first to develop electrical steelproducts of 35SW1500H and 25SWYS480 with high strength and low iron loss, which could satisfy the demands of high rotation speeddevelopment for the next generation of new energy vehicles. The first to develop one technology- ultra low-carbon steel high-efficiencyRH refining technology, which can achieve 12 furnaces with one nozzle continuous pouring, and the cleanliness of molten steel andvacuum processing time have reached the international first-class level. The total carbon and oxygen accumulation of converter reached
0.00148, which is at the international leading level. Zhixin Co. challenged the limit of the rolling capacity of pickling-rolled high-siliconvarieties, realized the rolling of high silicon 30sw230 products, developed the control technology of the continuous annealing unitindependently and improved the magnetic capacity of products by 0.3W /kg. 19 scientific and technological achievements such as"Development and application of energy saving and environmental protection regenerative radiant tube combustion technology andequipment" have passed the acceptance evaluation, and 7 scientific and technological achievements such as "Research on carbon steelend / edge quality control technology" were rated as internationally advanced.Lean management empowers and improves efficiency. Qianshun Base promoted lean management and learning of organicintegration, exploration and practice from German Baden Steel Plant. The OEE management area was expanded to 15 units.Construction of Amoeba insisted on quality first and 152 amoebas were solidified and promoted throughout the year. Continuouslyupgrading and transforming existing production lines with low cost and new technology, improving efficiency and quality, andenhancing market competitiveness. For Zhixin Electromagnetic CA2 unit of high-grade production adaptability transformation project,the transformation reached production immediately after putting into operation, and monthly production capacity of non-orientedhigh-grade products will increase by 39%. The benchmarking system of Jingtang Base has been further improved and benchmarking hasbeen carried out in four dimensions of "quality, efficiency, benefit and cost". Among the 79 indicators, 50 have broken the historicalrecord, 51 have reached or exceeded the benchmarking enterprises, and 6 have been in the leading position in the industry for a long time,which realized the progress from "reaching the standard" to "creating the standard". The company insisted on the practice of QTImanagement, and strived to create an innovative brand with the characteristics of Jingtang Co. on-site independent management andcontinuous improvement managementIntelligent manufacturing improves quality and efficiency. Qianshun Base promoted the application of big data, explored theconstruction of 21 business decision models including POC intelligent management and control, performance risk management andcontrol, and realized one-click statistical analysis of business management and control. Two industrial robots have been applied in newscenarios, and eleven have been applied in mature applications. Focusing on business bottlenecks, the company created the first domesticautomatic intelligent testing production line for hot-rolled coils and the average inspection cycle was shortened by 40%. The companyimproved the level of automation with fully automatic tapping and stable operation over 10,000 furnaces and reached the leading level inthe industry. Jingtang Base has successfully completed the second phase of the new production line, which is informatization systemconstruction to guarantee the production and efficiency. Implementation of cost-themed data governance projects could improve dataapplication capabilities. Independent research and development of slab warehouse stacking intelligent recommendation system, andexploration of intelligent scheduling could improve the efficiency of production and operation. Moreover, the "5G Smart Iron and SteelTraining Base" was officially launched, becoming the first steel company to officially apply China Mobile's 5G technology in theindustrial field.
6. Strengthen the management and control of foreign investment, assist the development of iron and steel main businessInvestment continued to focus on the main business, continuously strengthened the management and control of investment andparticipating holding enterprises, built a solid foundation for investment risk prevention and control, and further improved theoperation quality of participating holding enterprises. In order to reduce related party transactions, optimize asset allocation andincrease the company's revenue, the company completed the replacement all domestic shares of BAIC Motor held by the companywith the 51% equity of the Steel Trading held by Shougang Group in June 2020, and the marketing system has been improved.
Beijing Shougang Co. Ltd Annual Report 2020
During the reporting period, the company obtained the income from investment dividends with RMB351.99 million.II. Analysis of principal business
1. Overview
Referring to I. Overview in Section IV. Discussion and Analysis of Business Operations.
2. Revenue and cost
(1) Composition of operating revenue
Unit：RMB Yuan
| 2020 | 2019 | Year-on-year Changes | |||
| Amount | Proportion of operating revenue | Amount | Proportion of operating revenue | ||
| Total operating revenue | 79,951,181,948.10 | 100% | 68,841,307,821.91 | 100% | 16.14% |
| According to industries | |||||
| Metallurgy | 79,951,181,948.10 | 100.00% | 68,841,307,821.91 | 100.00% | 16.14% |
| According to products | |||||
| Billet | 265,307,282.20 | 0.33% | 270,552,095.12 | 0.39% | -1.94% |
| Hot-rolled steel | 32,142,438,742.64 | 40.20% | 24,236,080,906.42 | 35.21% | 32.62% |
| Cold-rolled steel | 41,755,926,337.32 | 52.23% | 39,541,161,789.88 | 57.44% | 5.60% |
| Other steels | 2,040,682,356.91 | 2.55% | 1,849,671,725.92 | 2.69% | 10.33% |
| Other businesses | 3,746,827,229.03 | 4.69% | 2,943,841,304.57 | 4.28% | 27.28% |
| According to regions | |||||
| North China | 31,963,143,971.62 | 39.98% | 26,624,929,498.39 | 38.68% | 20.05% |
| Northeast China | 2,018,512,234.99 | 2.52% | 1,350,041,869.95 | 1.96% | 49.51% |
| East China | 26,099,070,246.72 | 32.64% | 22,545,371,093.67 | 32.75% | 15.76% |
| Mid-South China | 1,723,422,495.05 | 2.16% | 1,438,474,544.13 | 2.09% | 19.81% |
| South China | 12,862,722,449.82 | 16.09% | 12,137,368,834.48 | 17.63% | 5.98% |
| Southwest China | 1,147,368,135.20 | 1.44% | 806,904,623.65 | 1.17% | 42.19% |
| Northwest China | 310,725,864.94 | 0.39% | 279,209,962.95 | 0.41% | 11.29% |
| Export | 3,826,216,549.76 | 4.79% | 3,659,007,394.69 | 5.32% | 4.57% |
(2) Industries, products, or regions that generated operating revenue or operating profit that over 10% of the total operatingrevenue or operating profit of the Company
√ Applicable □ Non applicable
Unit: RMB Yuan
| Operating revenue | Costs of sales | Gross margin | Year-on-year change of operating revenue | Year-on-year change of costs of sales | Year-on-year change of gross margin | |
| According to industries | ||||||
| Metallurgy | 76,204,354,719.07 | 70,025,177,064.76 | 8.11% | 15.64% | 17.86% | -1.73% |
| According to products | ||||||
| Billet | 265,307,282.20 | 239,732,815.06 | 9.64% | -1.94% | 6.99% | -7.54% |
| Hot-rolled steel | 32,142,438,742.64 | 29,683,727,128.66 | 7.65% | 32.62% | 38.11% | -3.67% |
| Cold-rolled steel | 41,755,926,337.32 | 38,319,410,072.18 | 8.23% | 5.60% | 6.49% | -0.76% |
| Other steels | 2,040,682,356.91 | 1,782,307,048.86 | 12.66% | 10.33% | 4.28% | 5.06% |
| According to regions | ||||||
| North China | 28,216,316,742.59 | 26,447,659,793.91 | 6.27% | 19.15% | 24.56% | -4.07% |
| Northeast China | 2,018,512,234.99 | 1,732,046,191.68 | 14.19% | 49.51% | 41.49% | 4.87% |
| East China | 26,099,070,246.72 | 23,661,972,543.92 | 9.34% | 15.76% | 16.60% | -0.65% |
| Mid-South China | 1,723,422,495.05 | 1,591,863,013.60 | 7.63% | 19.81% | 20.99% | -0.90% |
| South China | 12,862,722,449.82 | 11,650,537,849.43 | 9.42% | 5.98% | 6.36% | -0.33% |
| Southwest China | 1,147,368,135.20 | 1,010,453,571.51 | 11.93% | 42.19% | 36.65% | 3.57% |
| Northwest China | 310,725,864.94 | 277,949,475.27 | 10.55% | 11.29% | 7.18% | 3.43% |
| Export | 3,826,216,549.76 | 3,652,694,625.44 | 4.54% | 4.57% | 7.69% | -2.76% |
The adjusted principal business data according to the financial report of the Company under the circumstances that the statisticalranges of the Company’s principal business data changed during the reporting period.
□Applicable √ Non applicable
(3) Whether revenue from sales of goods is more than from render of services
√ Yes □ No
| Industry | Item | Unit | 2020 | 2019 | Year-on-year change |
| Metallurgy | Sales | Ton | 18,102,879 | 16,271,856 | 11.25% |
| Output | Ton | 18,134,505 | 16,200,692 | 11.94% | |
| Storage | Ton | 827,462 | 795,836 | 3.97% |
Beijing Shougang Co. Ltd Annual Report 2020
Explanation in the year-on-year change more than 30% based on aboved data
□ Applicable √ Non applicable
(4) Fulfillment of the singed sales contracts during the reporting period
□ Applicable √ Non applicable
(5) Composition of costs of sales
Presented as industries
Unit: RMB Yuan
| Industry | Item | 2020 | 2019 | Year-on-year change | ||
| Amount | Proportion of costs of sales | Amount | Proportion of costs of sales | |||
| Metallurgy | Raw materials | 37,771,414,049.42 | 53.94% | 30,367,268,870.47 | 51.11% | 2.83% |
| Metallurgy | Fuels | 16,254,776,211.68 | 23.21% | 16,119,952,298.29 | 27.14% | -3.93% |
| Metallurgy | Power cost | 1,124,364,629.16 | 1.61% | 1,165,123,920.12 | 1.96% | -0.35% |
| Metallurgy | Staff cost | 2,130,681,593.97 | 3.04% | 2,101,300,181.70 | 3.54% | -0.50% |
| Metallurgy | Depreciation | 5,093,233,457.87 | 7.27% | 4,499,474,208.39 | 7.57% | -0.30% |
| Metallurgy | Manufacturing cost | 7,650,707,122.66 | 10.93% | 5,158,723,906.79 | 8.68% | 2.25% |
| Total | 70,025,177,064.76 | 100.00% | 59,411,843,385.76 | 100.00% | 0.00% | |
OthersNo
(6) Whether the scope of consolidation changes during the reporting period
√ Yes □ No
During the year, new subsidiary, Beijing Shougang Steel Trading Investment Management Co., Ltd. was incorporated throughbusiness combination under common control by the Company. The scope includes six subsidiaries, which are Shougang JingtangUnited Iron&Steel Co., Ltd., Beijing Shougang Cold Rolling Co., Ltd., Qian'an Shougang Metallurgical Technology Co., Ltd.,Shougang Zhixin Qian'an Electromagnetic Materials Co., Ltd., Beijing Shougang New Energy Automobile Material Technology Co.,Ltd., and Beijing Shougang Steel Trading Investment Management Co., Ltd.
(7) Significant adjustments or changes in businesses, products, or services during the reporting period
□ Applicable √ Non applicable
(8) Major clients and suppliers
Major clients of the Company
| Total top five clients in sales (RMB) | 10,022,974,512.41 |
| Proportion of total annual sales volume for top five clients | 12.53% |
| Proportion of the sales from related parties in total annual sales among the top five clients | 7.53% |
Information for top five clients of the Company
| Serial | Name | Sales (RMB Yuan) | Proportion of total annual sales |
| 1 | Client A | 3,952,279,733.34 | 4.94% |
| 2 | Client B | 2,069,337,536.26 | 2.59% |
| 3 | Client C | 1,398,308,268.81 | 1.75% |
| 4 | Client D | 1,344,613,844.31 | 1.68% |
| 5 | Client E | 1,258,435,129.69 | 1.57% |
| Total | -- | 10,022,974,512.41 | 12.53% |
Other information for the major customers of the Company
□ Applicable √ Non applicable
Major suppliers
Beijing Shougang Co. Ltd Annual Report 2020
| Total purchase amount from top five suppliers (RMB) | 60,638,126,165.57 |
| Proportion of total annual purchase amount for top five suppliers | 72.97% |
| Proportion of the purchase from related parties in total annual purchase among the top five suppliers | 70.13% |
Information for the top five suppliers of the Company
| Serial | Name | Procurement (RMB Yuan) | Proportion of total annual procurement |
| 1 | Supplier A | 42,512,000,946.08 | 51.16% |
| 2 | Supplier B | 9,778,610,619.59 | 11.77% |
| 3 | Supplier C | 5,986,604,581.70 | 7.20% |
| 4 | Supplier D | 2,006,920,232.82 | 2.41% |
| 5 | Supplier E | 353,989,785.38 | 0.43% |
| Total | -- | 60,638,126,165.57 | 72.97% |
Other information for the major suppliers of the Company
□ Applicable √ Non applicable
3. Expenses
Unit: RMB Yuan
| 2020 | 2019 | Year-on-year change | Notes of material changes | |
| Selling expenses | 167,040,690.13 | 1,265,562,681.41 | -86.80% | Adjust freight and export charges to costs of sales in accordance with the guidance of “Accounting Standard for Business Enterprises No. 14 – Revenue”. |
| Administrative expenses | 976,426,260.85 | 950,545,319.00 | 2.72% | |
| Finance expenses | 2,163,091,932.82 | 2,061,941,196.97 | 4.91% | |
| Research and development expenses | 480,487,074.39 | 385,796,835.08 | 24.54% | Mainly due to the increase in labor costs of research and development personnel |
4. Research and development investment
√ Applicable □ Non applicable
(1) Scientific and technological innovation capabilities
Shougang Co. with its subsidiaries, Jingtang Co., Cold-R Co., Zhixin Co. are qualified national high-tech enterprise qualificationcertification approved by government.Intellectual property: The technology center of Shougang Co. has passed annual review of Beijing enterprise technology center. Inthe year of 2020, Qianshun Base and Jingtang Base gain 424 patent rights, among which, 148 invention patents and 276 utility modelpatents. Additionally, Cold-R Co. gains the title of Beijing Intellectual Property Pilot and Demonstration Unit. Zhixin Co. wins theintellectual property superiority enterprise of Hebei Province, national metallurgical industry quality leading enterprise and is alsoapproved as silicon steel technology innovation center of Hebei Province.Standards establishment: Participated in the formulation of 26 national, industrial and group standards, among which 2 were awardedthe title of "Leading Enterprise Standards in Hebei Province".Scientific and technological achievements: 4 projects of Qianshun Base are awarded for metallurgical science and technology prize,and 4 rojects are awarded for Hebei Province science and technology prize. Among them, the project names as “Research andinnovation on key technology of ultra-low emission in whole steel process” awarded the first prize of metallurgical science andtechnology award, which signals Shougang Co. has taken the lead in the steel industry to achieve ultra-low emission technicalstandards. In addition, the project - key technology and equipment for manufacturing automotive exterior panels with high brightnessand non-middle coating wins the first prize of metallurgical science and technology award.Three achievements, including “Development and application of high-quality pellets for low-carbon smelting of large blast furnace”,jointly declared by Jingtang Co. and Shougang Group, and “Manufacturing and application of copper-and-steel composite coolingstave” jointly declared by Jingtang Co. and University of Science and Technology Beijing, win the first prize of metallurgical science
Beijing Shougang Co. Ltd Annual Report 2020
and technology award; “Development and application of high efficiency double blowing technology for converter steelmaking inShougang”, jontly declared by Jingtang Co. and Shougang Group wins the second prize of metallurgical science and technologyaward; "High-efficiency steelmaking production with the temperature of steel reduction" and "Research and development of powergrid intelligent control system of large iron and steel enterprise” win the first prize of Hebei Province metallurgical science andtechnology award; five achievements, including “Research and application of green technology of large coke oven gas purificationsystem” and “Development and application of efficient slab continuous casting technology” win the second prize of Hebei Provincemetallurgical science and technology award; nine achievements, including “Quality optimization control of acid pellets based onperuvian powder” and “Exploration and application of safe, efficient and eco-friendly opening technology of ultra-large blastfurnace” win the third prize of Hebei Province metallurgical science and technology award.
(2) Products Market Competitiveness
6 products of the Company are first issued, including successful development of marble row saw steel, which breaks 30-year foreignmonopoly. The Company has been awarded many prizes, including Excellent Brand in Chinese Steel Market, 2020 GreenDevelopment Benchmark Enterprise, Leader of National Key Water Consumption Enterprise, Excellent Supplier Shortlisted Award(Shanghai Volkswagen), Strategic Cooperation Award (Haier) and Excellent Product Development (Dongfeng Commercial Vehicle).Procurement centre is awarded “Top 10 Centralized Procurement Organizations” in China.Jingtang Co. is awarded as “Best Supplier of 2019” (BMW Brilliance), “Outstanding Partner” (China Construction Science andIndustry Co. Ltd.), “Excellent Partner of 2020” (CIMC Raffles), be the finalist of “Best Supplier of 2019” (Shanghai Volkswagen)and wins Strategic Cooperation Award for 2020 (Haier).Research and development investment
| 2020 | 2019 | Proportion of changes | |
| Number of R&D staff | 2,454 | 2,464 | -0.41% |
| Proportion of R&D staff | 13.51% | 13.87% | -0.36% |
| Investment amount (RMB) | 3,271,192,781.46 | 2,856,323,368.77 | 14.52% |
| Investment amount / Operating revenue | 4.09% | 4.15% | -0.06% |
| Capitalization amount of investment (RMB) | 0.00 | 0.00 | |
| Capitalization rate (%) | 0.00% | 0.00% | 0.00% |
Reason for the material changes of “Investment amount / operating revenue” compare to last year
□ Applicable √ Non applicable
Reason for the material changes of the capitalization ratio
□ Applicable √ Non applicable
5. Analysis of cash flow
Unit: RMB Yuan
| Item | 2020 | 2019 | Year-on-year changes |
| Cash inflow from operating activities | 46,210,312,179.99 | 32,951,739,286.78 | 40.24% |
| Cash outflow from operating activities | 35,935,633,383.80 | 29,536,737,271.43 | 21.66% |
| Net cash flow from operating activities | 10,274,678,796.19 | 3,415,002,015.35 | 200.87% |
| Cash inflow from investing activities | 796,378,617.06 | 332,363,748.71 | 139.61% |
| Cash outflow from investing activities | 3,561,628,500.42 | 5,639,457,638.95 | -36.84% |
| Net cash flow from investing activities | -2,765,249,883.36 | -5,307,093,890.24 | 47.90% |
| Cash inflow from financing activities | 38,819,178,840.00 | 46,148,588,155.85 | -15.88% |
| Cash outflow from financing activities | 45,772,207,230.67 | 44,345,143,928.80 | 3.22% |
| Net cash flow from financing activities | -6,953,028,390.67 | 1,803,444,227.05 | -485.54% |
| Net increase in cash and cash equivalents | 556,400,522.16 | -88,647,647.84 | 727.65% |
Main reasons for significant year-on-year changes in relevant data
Beijing Shougang Co. Ltd Annual Report 2020
√ Applicable □ Non Applicable
The increase in cash inflow from operating activities and net cash flow from operating activities was caused by the increase inrevenue from sales of goods due to the recovering market. The increase in cash inflow from investing activities was caused byreceiving investment deposit; decrease in cash outflow from investing activities was caused by the reduction of cash payment forinvestment in fixed assets; increase in cash inflow from investing activities and decrease in cash outflow from investing activities ledto the year-on-year increase of net cash flow from investing activities.Year-on year decrease in net cash flow from financing activitieswas mainly caused by reduction of bank loans and increase of loan repayment. Net increase in cash and cash equivalents was mainlycaused by the increase of net cash flow from operating activities and investing activitiesNotes for the significant difference between the net profit and net cash flows from operating activities during the reporting period
√ Applicable □ Non Applicable
During the reporting period, the difference between net cash flows from operating activities with the amount of RMB10.274 billionand net profit with the amount of RMB2.411 billion is RMB7.863 billion. Major reasons for the difference are: depreciation withRMB6.406 billion, financial expenses with RMB2.163 billion, increase in payables from operating activities with RMB3.404 billion,decrease in receivables from operating activities with RMB1.781 billion, decrease in inventories with RMB 1.956 billion.III. Non-principal business analysis
□ Applicable √ Non Applicable
IV. Assets and liabilities
1. Significant changes in the composition of assets
The company implemented the new revenue standard or the new lease standard for the first time since 2020 and adjusted the relevantitems of the financial statements at the beginning of the yearApplicable
Unit: RMB Yuan
| Year-end of 2020 | Year-begin of 2020 | Proportion changes | Notes | |||
| Amount | Proportion of total assets | Amount | Proportion of total assets | |||
| Cash and Cash equivalents | 6,292,499,840.73 | 4.36% | 5,735,118,932.92 | 3.90% | 0.46% | |
| Accounts receivable | 1,424,092,844.92 | 0.99% | 1,028,752,225.78 | 0.70% | 0.29% | |
| Inventories | 10,599,731,052.28 | 7.34% | 8,787,825,099.93 | 5.98% | 1.36% | |
| Investment properties | 0.00% | 0.00% | 0.00% | |||
| Long-term equity investments | 3,341,208,164.76 | 2.31% | 3,137,865,376.57 | 2.14% | 0.17% | |
| Fixed assets | 96,220,769,301.39 | 66.65% | 83,287,788,722.90 | 56.71% | 9.94% | |
| Construction in progress | 8,297,181,948.62 | 5.75% | 25,426,296,137.79 | 17.31% | -11.56% | |
| Short-term borrowings | 23,712,391,440.25 | 16.43% | 30,293,221,165.42 | 20.63% | -4.20% | |
| Long-term borrowings | 20,639,300,000.00 | 14.30% | 19,101,100,000.00 | 13.01% | 1.29% | |
2. Assets and liabilities measured at fair value
√ Applicable □ Non Applicable
Unit: RMB Yuan
| Item | Opening balance | Fair value changes in the period | Accumulated fair value changes in equity | Impairment accrual in the period | Amount of purchase in the period | Amount of sales in the period | Other changes | Closing balance |
| Financial assets | ||||||||
| 4. Other equity instruments investments | 4,357,517,927.34 | 290,706,499.08 | 4,371,977,739.86 | 276,246,686.56 | ||||
| Financing receivables | 4,031,364,764.55 | 4,532,592,689.43 | ||||||
| Total | 8,388,882,691.89 | 290,706,499.08 | 4,371,977,739.86 | 4,808,839,375.99 | ||||
| Financial liabilities | 0.00 | 0.00 | ||||||
Beijing Shougang Co. Ltd Annual Report 2020
Other changesWhether the company's main asset measurement attributes have changed significantly during the reporting period
□ YES √ NO
3. Major restricted assets at the end of the reporting period
| Item | Carrying amount at 31.12.2020(RMB) | Restriction reason |
| Cash and Cash equivalents | 1,332,152,161.49 | All kinds of deposits |
| Notes receivable | 650,054,514.79 | Pledged notes |
| Total | 1,982,206,676.28 |
(1) As of 31 December 2020, the cash and cash equivalents include various cash deposits of RMB 1,332,152,161.49.
(2) As of 31 December 2020, the restricted note receivables include pledged notes amounting to RMB 650,054,514.79.V. Investment analysis
1. Overall situation
√ Applicable □ Non Applicable
| Invested amount during the reporting period (RMB Yuan) | Investment amount during the previous reporting period (RMB Yuan) | Change |
| 5,650,066,189.27 | 11,053,416,832.92 | -48.88% |
2. Significant equity investment during the reporting period
□ Applicable √ Non Applicable
3. Significant non-equity investment during the reporting period
√ Applicable □ Non Applicable
Unit: RMB Yuan
| Project name | Investment method | Fixed asset investment or not (Y/N) | Related industries | Investment amount during the reporting period | Actual investment amount up to the end of reporting period | Capital source | Project schedule | Anticipated benefits | Realized income up to the end of reporting period | Reasons for non-achievement of planned schedule and anticipated income |
| Shougang Jingtang-Phase II | Self-built | Y | Iron and steel | 1,612,396,547.71 | 22,786,420,515.00 | Self-raised | 95.43% | 1,361,360,000.00 | 429,177,695.42 | Main production lines have completed and transferred to fixed assets, and the rests are supporting projects to complete |
| Total | -- | -- | -- | 1,612,396,547.71 | 22,786,420,515.00 | -- | -- | 1,361,360,000.00 | 429,177,695.42 | -- |
4. Financial assets investment
(1) Securities investment
□ Applicable √ Non Applicable
The Company has no securities investment during the reporting period.
(2) Derivatives investment
□ Applicable √ Non Applicable
The Company has no derivatives investment during the reporting period.
5. Application of raised proceeds
□ Applicable √ Non Applicable
The Company has no application of raised proceeds during the reporting period.VI. Material disposal of assets and equity
1. Material disposal of assets
□ Applicable √ Non Applicable
The Company has no disposal of assets during the reporting period.
Beijing Shougang Co. Ltd Annual Report 2020
2. Material disposal of equity
√ Applicable □ Non Applicable
| Counter party | Sold equity | Date of sale | Transaction price (ten-thousand Yuan) | Net profit of sold equity from the beginning of the current period to the selling date (ten thousand Yuan) | Impact of the sale | Proportion of net profit contributed by equity sale to the total net profit | Equity sale pricing principle | Related transaction or not (Y/N) | Relationship with the counterparty | Equity involved has been transferred or not (Y/N) | Sale as planned or not (Y/N) | Disclosure date | Disclosure reference |
| Shougang Group Co., Ltd. | Euqity of Baic Motor Co., Ltd | 2020/6/30 | 437,197.77 | 17,488.73 | Optimize asset allocation | 0.00% | Appraisal value | Y | Parent Company | Y | Y | 2020/6/13 | China Securities Journal, Securities Times, Shanghai Securities News, Securities Daily and cninfo (http://www.cninfo.com.cn) |
VII. Analysis of main holding companies and stock-jointly companies
√ Applicable □ Non Applicable
Main subsidiaries and stock-jointly companies that have an impact on the company's net profit of over 10%.
Unit: RMB Yuan
| Company Name | Type | Main business | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| Shougang Jingtang United Iron & Steel Co., Ltd. | Subsidiary | Iron and steel smelting, steel rolling, other metal smelting and its rolling processing and sales; production and sales of sintered ore, pellets, coke, and chemical products; power generation, power supply; production and sales of secondary and multiple energy and resource reuse products; production and sales of various industrial gases; import and export of goods and technologies (except for projects restricted or prohibited by the state); metallurgical technology research, technical consultation, technical services; equipment leasing, docks, storage, transportation, and material supply; wholesale and retail of iron and steel, other metals and their rolled products, as well as ore, coal, and chemical products; processing, utilization, and sales of wastes in industrial production; land reclamation from the sea; provision of dock facilities for ships; Provide cargo handling services in the port area. | 35,821,676,294 | 85,204,838,175.85 | 28,023,739,589.47 | 43,685,024,160.13 | 1,955,624,515.47 | 1,675,290,645.88 |
| Shougang Zhixin Qian'an Electromagnetic Materials Co., Ltd. | Subsidiary | Cold-rolled electrical steel strip manufacturing; metallurgical special equipment manufacturing; motor manufacturing; transmission and distribution and control equipment manufacturing; energy-saving technology promotion services; new material technology promotion services; enterprise management consulting services; industrial design services; product quality inspection services; building materials, Wholesale and retail of non-metallic minerals and products, metal materials, metal products, and chemical products (excluding hazardous chemicals). | 7,484,005,522.69 | 15,501,892,766.55 | 7,609,249,966.07 | 9,466,139,165.34 | 403,977,230.15 | 342,931,094.88 |
| Beijing Shougang Cold Rolling Co., Ltd. | Subsidiary | Production of cold-rolled sheets and hot-dip galvanized steel coils; general freight; design and sales of cold-rolled sheets and hot-dip galvanized steel coils; warehousing services; technology development, technical consulting | 2,600,000,000 | 5,758,967,187.02 | -1,457,321,839.97 | 8,721,456,245.22 | 40,753,262.67 | 40,753,262.67 |
| Beijing Shougang New Energy Automobile Material Technology Co., Ltd. | Subsidiary | Technology development, technical consulting, technology transfer, technical services; business management consulting; economic information consulting; sales of machinery and equipment, steel; machinery and equipment leasing (except cars); goods import and export; technology import and export; agent import and export. | 700000000 | 768,098,874.65 | 698,895,274.94 | 0.00 | -938,245.35 | -940,311.02 |
| Beijing Shougang Steel Trading Investment Management Co., Ltd. | Subsidiary | Trading | 700,961,500.00 | 16,668,962,056.72 | 9,362,795,683.80 | 870,677,653.85 | 465,768,103.05 | 450,137,492.87 |
| Qian'an Shougang Metallurgical Technology Co., Ltd. | Subsidiary | Metallurgical technology development and consulting services; environmental protection technology promotion services; business management consulting services; special equipment for environmental protection, steel slag, water slag, slag, dust removal ash, desulfurization ash, steel wholesale and retail; domestic advertising design, production, agency, and release; Non-self-owned housing rental services (within the scope of authorization of the housing owner); conference and exhibition services; hotels, bathrooms, indoor swimming pools; retail of daily necessities; production and sales of hot foods; production and sales of cold foods; production and sales of pastry foods; Pre-packaged food sales (including refrigerated and frozen food); fitness services. | 1900000 | 204,649,384.85 | -99,570,117.21 | 24,656,217.04 | 280,918.96 | 280,918.96 |
Beijing Shougang Co. Ltd Annual Report 2020
| Beijing Shouxin Jinyuan Management Consulting Center (Limited Partnership) | Joint stock | Manage equity investment funds; engage in investment management and related consulting services. | 10000000000 | 2,642,818,904.74 | 2,159,013,444.64 | 7,785,688.30 | 312,565,593.40 | 1,139,880,472.97 |
| Qian'an Shoujia Construction Material Co., Ltd. | Joint stock | Production and sales of slag powder; sales of water slag; provide technical consultation and services for the production and application of water slag and slag powder products. | 152442500 | 462,863,960.47 | 23,312,801.11 | 200,213,193.84 | -3,052,769.84 | -6,055,315.86 |
| Minmetals Tianwei Steel Co., Ltd. | Joint stock | Shearing, processing, distribution, warehousing and sales of steel; manufacturing and sales of transformer cores; sales of aluminum, copper, zinc and electronic products. | 75000000 | 135,241,649.18 | 119,016,376.72 | 158,871,307.38 | 2,621,901.47 | 1,916,823.94 |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | Joint stock | Coking; manufacturing of coke oven gas, tar, crude benzene, sulfur, ammonium sulfate, ammonium thiocyanate, and primary coal chemical products; waste heat utilization; hardware products, building materials, mining equipment and spare parts, construction machinery parts, rubber products , Plastic products, lubricating grease, pig iron, ferroalloys, iron ore powder, pelletized iron ore, sintered iron ore, iron ore, limestone, quartz stone, dolomite, charge, bentonite, coke, coke powder, steel billet, chemical products , Coal wholesale and retail; Coking technology consulting and services. | 992400000 | 4,047,302,324.93 | 1,903,089,820.03 | 6,567,974,662.78 | 302,773,278.50 | 222,110,549.04 |
| Qian'an PetroChina Kunlun Gas Co., Ltd | Joint stock | Sales natural gas; natural gas utilization technology development, technical consulting services; urban natural gas pipeline network and facility operation (within the permitted area of relevant departments); gas equipment leasing; wholesale and retail of hardware products, gas appliances, gas equipment materials, household appliances, water treatment equipment and spare parts; retail of tobacco products; food sales; road cargo transportation; road cargo transportation agency services. | 30000000 | 179,790,915.47 | 117,232,777.13 | 275,266,070.59 | 36,154,345.49 | 27,085,008.47 |
| Minmetals Special Steel (Dongguan) Co., Ltd. | Joint stock | R&D, production and sales: power transformer cores; sales: ferrous metals, non-ferrous metals, ore, building materials (excluding hazardous chemicals), mechanical and electrical equipment, electrical products, electrical equipment, electronic products sales, storage, loading and unloading, online sales And related information consulting services; steel cutting, processing, inspection and testing; goods import and export, technology import and export; general freight. | 50000000 | 188,152,077.87 | 34,428,627.51 | 195,403,459.72 | 109,304.86 | 81,969.44 |
| Beijing TIEKE Shougang RAILWAY-TECH Co., Ltd. | Joint stock | Technology promotion; sales of building materials; goods import and export; technology import and export; low-relaxation pre-stressed steel bars, pre-stressed steel wires, bridge supports; general freight; product quality inspection. | 210666700 | 2,958,439,200.00 | 2,178,125,600.00 | 1,229,446,500.00 | 231,789,000.00 | 148,727,900.00 |
| Beijing Dingshengcheng Packaging Materials Co., Ltd. | Joint stock | Accepting entrustment to provide labor services; sales of knitting textiles, plastic products, paper products, metal products, loading and unloading, etc. | 20000000 | 38,563,216.25 | 25,191,022.63 | 126,204,932.84 | 2,602,976.02 | 2,000,482.67 |
| Ningbo Shougang Zhejin Steel Co., Ltd. | Joint stock | Processing | 50000000 | 235,798,372.51 | 51,591,853.43 | 613,166,228.87 | 868,418.81 | 1,135,276.25 |
| Guangzhou Jinghai Shipping Co., Ltd. | Joint stock | Shipping | 130000000 | 371,528,282.54 | 152,774,903.73 | 370,066,624.14 | 3,546,782.96 | 2,281,797.32 |
| Shougang (Qingdao) Steel Industry Co., Ltd. | Joint stock | Processing | 100000000 | 1,638,048,606.40 | 132,216,350.89 | 3,246,715,627.42 | 4,588,621.72 | 5,552,427.38 |
| Guangdong Shougang Zhongshan Metal Steel Processing & Distribution Co., Ltd. | Joint stock | Processing | 60000000 | 87,159,175.85 | 85,494,379.81 | 386,720,915.92 | 19,994,404.84 | 15,041,982.67 |
| Ordos Baotou Steel Shourui Material Technology Co., Ltd. | Joint stock | Processing | 150000000 | 205,315,608.75 | 100,029,181.96 | 22,581,121.14 | -10,745,817.51 | -10,745,817.51 |
| Tianjin Shougang Steel Processing&Distribution Co., Ltd. | Joint stock | Processing | 107770000 | 132,244,433.74 | 65,797,909.99 | 199,067,365.79 | -20,092,335.50 | -20,540,195.86 |
| Hebei Jingji Industry & Trading Co., Ltd. | Joint stock | Trading | 7000000 | 462,256,519.94 | 17,855,028.43 | 997,686,775.77 | 5,531,850.75 | 3,914,732.40 |
| Tangshan Guoxing Industrial Co., Ltd. | Joint stock | Metal processing, machinery manufacturing, repair, steel wholesale and retail, building materials, etc. | 42000000 | 127,340,342.67 | 68,384,369.77 | 80,117,784.81 | 13,691,127.69 | 8,937,825.86 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Joint stock | Production and sales of coke, coal tar, benzene, sulfuric acid, etc. | 2000000000 | 4,308,015,745.97 | 2,175,072,729.92 | 7,350,697,535.09 | 80,410,402.91 | 80,485,168.88 |
| Tangshan Zhonghong Carbon Chemical Co., Ltd. | Joint stock | Import of technology, equipment and raw materials required for production | 300000000 | 786,452,732.10 | 254,581,659.13 | 0.00 | -21,274,355.01 | -21,274,355.01 |
| Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | Joint stock | Production, sales, general cargo transportation, load and unload of slag powder and by products, etc. | 200000000 | 367,055,612.28 | 333,982,009.52 | 464,761,681.90 | 50,446,874.69 | 37,856,751.55 |
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Non Applicable
Beijing Shougang Co. Ltd Annual Report 2020
| Name | Mode of acquisition and disposal of subsidiaries during the reporting period | Impact on overall production management and performance |
| Beijing Shougang Steel Trading Investment Management Co., Ltd. | By holding 1.029 billion domestic shares of BAIC and paying cash, the Company purchased 51% equity of Steel Trading, which is held by Shougang Group. | After completing the transaction, the Company holds 51% of the equity of Jingtang Co. directly and holds 29.8177% of the equity of Jingtang Co. through Steel Trading indirectly, which further increases the net profit attributable to shareholders of the listed company. |
Notes of major holding and joint stock companiesNone
VIII. Structured entity controlled by the Company
□ Applicable √ Non Applicable
IX. Future development prospects
1. Industry competition pattern and development trend
In 2021, there are still several uncertainties in the epidemic situation and international environment. Challenges and opportunitiescoexist in China's economic development, while the opportunities outweigh the challenges. From the perspective of iron and steelindustry, under the influence of macro-environmental changes, industrial policy adjustments, carbon peaking, carbon neutralizationand other factors, the crude steel production capacity will fluctuate slowly from the peak area and China's iron and steel industry willenter the era of reduction development. The characteristic of transformation to innovation-driven for China’s economic developmentis more obvious with higher demand for supply quality, and the homogenization competition of steel products, especially high-levelplate products, is becoming increasingly fierce. From the perspective of environmental protection, energy saving and low-carbonpolicies, green development will be the foundation for the healthy and sustainable development of enterprises. The legal bindingforce of energy conservation and low carbon is becoming stronger and stronger, the total energy consumption and intensity havebecome "red line", and the carbon trading system is becoming increasingly perfect. As a result, it is imperative to promote energyconservation and carbon reduction.
2. Corporate development strategy
With the theme of promoting high-quality development and innovative development, the company insisted the principle of keepingpace with the times, customers, shareholders and employees, and continuously deepened the reform of corporate governancestructure and market-oriented mechanism around the core task of "enhancing vitality, improving competitiveness, and winning thebattle of survival and development"; insisted the innovation-driven and "quality + service" development strategy, focused on "greenmanufacturing, intelligent manufacturing, quality manufacturing, lean manufacturing, and precise service", and continued to improvethe core competitiveness of "manufacturing + service"; inisited on accelerating the research and development of high-level productsfocusing on automotive plates, electrical steel, tin plate, etc., and realized the transformation from a product manufacturer to acomprehensive service provider; inisited on the overall improvement of profitability and capital operation capacity of the company,and strive to build the company into a large, comprehensive, related and diversified listed company with internationalcompetitiveness and influence in steel and iron industry.
3. Operating plans of 2021
(1) Capacity of main products
① Qiangang Co.: 7.85 million ton of iron, year-on-year decrease of 2.2%; 8.26 million ton of steel, year-on-year decrease of 2.7%;
8.01 million ton of steel products, year-on-year decrease of 1.41%.
② Jingtang Co.: 13.47 million ton of iron, year-on-year rise of 4.7%; 13.70 million ton of steel, year-on-year rise of 21.4%; 12.90million ton of steel products, year-on-year rise of 27.5%.
③ Zhixin Co.: 1.5 million ton of electric steel, year-on-year decrease of 2.6%. Including: 1.31 million ton of non-oriented electricsteel, year-on-year decrease of 3.0%; 0.19 million ton of oriented electric steel, basically equal on a year-on-year basis.
Beijing Shougang Co. Ltd Annual Report 2020
④ Cold-R Co.: 1.70 million ton of cold-rolled steel sheets, year-on-year decrease of 7.6%. Including: 0.85 million ton of continuousannealing line for cold-rolled steel sheets, year-on-year decrease of 6.6%; 0.85 million ton of galvanized sheet, year-on-year decreaseof 1.2%.
(2) Budget arrangement of financial indicators
RMB87.4 billion for operating revenue, year-on-year rise of 9.3%, including: RMB30.9billion for operating revenue of parentcompany, year-on-year decrease of 0.4%; RMB52.0 billion for operating revenue of Jingtang Co., year-on-year rise of 19%; RMB8.8billion for operating revenue of Zhixin Co., year-on-year decrease of 7.0%; RMB8.2 billion for operating revenue of Cold-R Co.,year-on-year decrease of 6.4%;
(3) Budget arrangement of capital flow for income and expenditure
RMB145.291 billion for capital inflows, including RMB100.275 billion for capital inflows from operating activities, RMB0.325billion for capital inflows from investing activities, RMB44.691 billion for capital inflows from financing activities.RMB147.518 billion for capital outflows, including RMB89.84 billion for capital outflows from operating activities, RMB5.96billion for capital outflows from investing activities, RMB51.718 billion for capital outflows from financing activities.
(4) Budget arrangement of fixed-assets project capital expenditure
Arrangement of fixed assets is RMB4.259 billion, including: RMB0.655 billion for Qiangang Co., RMB2.634 billion for JingtangCo., RMB0.092 billion for Zhixin Co., RMB0.032 billion for Cold-R Co., RMB0.831 billion for New-E Co. and RMB0.015 billionfor Steel Trading.
4. Potential risk
(1) Policy and industry risk
With the continuous advancement of high-quality development of the iron and steel industry, China's iron and steel industry willenter the era of reduction development. Under the background of carbon peaking and carbon neutrality goals, the development of thesteel industry will face new difficulties and challenges, combined with the impact of the post-epidemic era.In order to cope with the above-mentioned risks, first, actively adapt to the new development environment, follow the developmentlaws, strive to resist market risks with the internal extreme work, win the market with more efforts, and take the initiative in the newdevelopment pattern; second, improve competitiveness with innovative thinking, improve total factor productivity throughtechnological and management innovation, and achieve higher quality, more efficient and more sustainable development. The third isto enhance the awareness and concept of low-carbon development, strengthen industrial restructuring and energy structureoptimization, and actively promote environmental protection, energy conservation and carbon reduction work.
(2) Environmental risk
With the "implementation of ultra-low emissions in the iron and steel industry" becoming the norm, the concept of "green water andmountains are golden mountains and silver mountains" is deeply rooted in the hearts of the people, and the ecological environmentconstraints are more and more tight. The environmental protection cost and pressure faced by iron and steel enterprises areunprecedented.In response to the above risks, first, continue to implement the eco-friendly action plan, establish a linkage mechanism betweenenvironmental protection indicators and production control, and continue to promote the construction of environmental governanceprojects; second, build a green supply chain system, promote the selection of green materials, and promote the green process ofprocurement, production and transportation; third, actively carry out the whole life cycle (LCA) management of steel products, andcomplete the carbon emission assessment report of the life cycle for the two products, which were provided for BMW.
(3) Horizontal competition risk
Shougang Group and its affiliates have a certain degree of horizontal competition with the Company.In order to solve the horizontal competition, during the first restructuring, Shougang Group issued “the commitment on the settlementmeasures and avoidance of horizontal competition after the assets restructuring”. According to the iron and steel industrydevelopment plan of Shougang Group, Shougang Co. will be the only platform for the development and integration of the iron andsteel and upstream iron ore resources industry of Shougang Group in China, and eventually achieve the overall listing of Shougang
Beijing Shougang Co. Ltd Annual Report 2020
Group's iron and steel and upstream iron ore resources business in China. Since then, Shougang Group has made furthercommitments on the basis of the above-mentioned commitments of horizontal competition. These commitments are fulfilled onschedule and for details, please refer to “Corporate Governance” in the annual report.
(4) Marketing risk
From the perspective of market competition environment, steel replacement capacity has been put into production, high-level plateproduction capacity has increased, product structure adjustment direction has converged, and homogenization competition hasintensified; from the perspective of industry chain, the concentration of upstream and downstream industries of steel manufacturingindustry has been continuously improved. Therefore, the market for steel and iron products will face greater pressure.For the above risk response, first, give full play to the leading role of the market, continuously optimize the product and channelstructure, strengthen sales R&D and production line collaboration, exploit the demand potential of new materials for newtechnologies and new uses at the client end, and devote to promote the precise docking of high-quality supply and high-leveldownstream demand; second, actively respond to market challenges, pay attention to cooperation with industry advantagedenterprises, strive to establish product advantages, consolidate and enhance the market share of key industries, and ensure the leadingposition in market segments; third, actively adapt to the requirements of the new development pattern, promote the export of superiorproducts, strengthen cooperation with multinational enterprises and joint ventures, and expand the international influence of products.
(5) Related transactions risk
Related transactions exit among Shougang Co., Shougang Group and the affiliated companies, Shougang Co. and Shougang Groupsigned the framework agreement of related transactions in accordance with the stock listing rules and other provisions for regularrelated transactions. If the agreement cannot be strictly executed in the future, interests of the company will be damaged and also therisks of related transactions will emerge.The above-mentioned regular related transactions are the continuous related transactions in the ordinary operation and productionprocess of the Company, all of which are signed agreements in accordance with regulations and approved legally, and thetransactions will not affect the independence of the Company. The Company will strictly implement the provisions of relatedtransactions, perform the obligation of information disclosure in accordance with the requirements of the stock listing rules and theArticles of Association, ensure the openness, fairness and justice of related transactions, and protect the legitimate rights and interestsof the Company and all shareholders.X. Reception of research, communication and interview
1. The registration form of research, communication, interview etc. during the reporting period.
√ Applicable □ Non Applicable
| Time | Location | Method | Type | Counterparty | Main contents and provided material | Reference for basic information |
| 2020/4/24 | Conference room | Telephone Communication | Institution | Analysts from over 10 companies, including Changjiang Securities, Zhongtai Securities, Everbright Securities, Huatai Securities, Chuancai Securities |
| Hold meetings of 2019 annual report and 2020 Q1 performance disclosure. Disclosed on the interactive platform in detail on 27 April 2020. | |||||||
| 2020/9/8 | Conference room | Other | Individual | Individual investor | Answers questions that investors are concerned about | Overall Perspective – World of Road Show, 2020 reception day for Beijing investors (http://rs.p5w.net/html/123119.shtml) | |
| Number of reception | 2 | ||||||
| Number of institutions | 10 | ||||||
| Number of individuals | 11 | ||||||
| Number of others | 0 | ||||||
| Whether disclose, give, or reveal non-public material information (Y/N) | N | ||||||
Beijing Shougang Co. Ltd Annual Report 2020
Section V. Significant Events
I. Porposal for profit distribution and transfer of capital reserve to share capitalFormulation, Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividend policy duringthe reporting period
√Applicable □Not applicable
1. Since the establishment, the Company highly valued the investment return for shareholders, the protection for legitimate rights andinterests of all shareholders, especially for the small and medium shareholders. According to various regulations and relevantrequirements issued by the regulatory authority, the Company timely revised and improved the provisions of the profit distributionpolicy in the Articles of Association of the Company, and the standard and proportion of cash dividends shall be explicit and clarity.
2. During the reporting period, profit distribution proposal complied with the provision of profit distribution in the Articles ofAssociation of the Company, complied with the provisions of normative documents issued by CSRC and other regulatory agenciesand fulfilled the procedures for independent directors to issue independent opinions and legal approval.
3. The cash dividend policy in Articles of Association has been amendand as follows: Article 191 (2), the provision of "theaccumulated distributed cash profit for the recent three years is no less than 50% of the lower of the annual average profit of theparent company for recent three years or the attributeable profit on consolidated financial statements" is amendand as "theaccumulated distributed cash profit for the recent three years is no less than 30% of the lower of the annual average profit of theparent company for recent three years or the attributeable profit on consolidated financial statements". The details of above refers toevents disclosed in the 2019 resolution of general meeting of shareholders which issued on 14 June 2020.
| Special description on cash dividend policy | |
| Whether it meets the requirements of the Article of Association or the Resolution of the General Meeting (Y/N): | Y |
| Whether the bonus standards and proportion is clear and well-defined (Y/N): | Y |
| Whether has a completed relevant decision-making procedures and mechanism (Y/N): | Y |
| Whether independent directors fulfill duties and play a due role (Y/N): | Y |
| Minority shareholders whether has opportunity of full expression and appeals, the legal interest of the minority are being protected totally (Y/N): | Y |
| As for the adjustment and change of cash bonus policy, the condition and procedures whether meets regulations and transparent (Y/N): | Y |
Distribution plan (pre-plan) for common stock dividends, capitalization scheme of capital reserve (pre-plan) in latest three years(including current period)
1. The profit distribution scheme and related arrangement of the Company in 2020
Audited by Grant Thornton LLP, in 2020, the consolidated net profit attributable to the shareholders of parent company is RMB1,786,452,832.06, withdrawaling of statutory surplus reserve of RMB 99,168,790.71, the consolidated profit available fordistribution for the year is RMB 1,687,284,041.35 and the consolidated retained earnings of the Company is RMB 1,865,280,919.23.For the parent company, the net profit of the year is RMB 991,687,907.11. After the withdrawal of 10% statutory surplus reserve ofRMB 99,168,790.71, the profit available for distribution of parent company is RMB 892,519,116.40 and the retained earnings ofparent company is RMB 8,856,123,340.12.In consideration of the matter that the Company is currently promoting the events of related party transaction on share issuing topurchase assets and fundraising, the Company intends to review and arrange related profit distribution plan of 2020 in accordancewith the provisions of relevant laws, regulations, rules, normative documents and Articles of Association as soon as possible after theimplementation of this matter. The proposal is subject to the approval of the shareholders' meeting.
Beijing Shougang Co. Ltd Annual Report 2020
2. The scheme of the Company for profit distribution or for transfer of capital reserve to the share capital in 2019Audited by Grant Thornton LLP, the consolidated net profit attributable to shareholders of parent company in 2019 is RMB1,251,047,873.08, the achieved net profit of parent company is RMB 416,816,074.79, the attributable profit of the parent company isRMB 5,605,709,861.57 and the consolidated attributale profit is RMB -2,051,598,102.14. The consolidated attributable profit islower than the attributable profit of the parent company with a negative amount, therefore, in accordance with the provisions of theArticles of Association of the Company “the profit shall be distributed to the shareholders in proportion to the lower of thedistributable profits of parent company and the consolidated statements recognized in the year”, the Company does not distributecash dividends or transfer capital reserve into share capital for current year.During the reporting period, the profit recognized by the parent company is mainly used for repaying the loan for acquisition andfixed asset project investment. Among them, the budget repayment of acquisition loan is RMB 1,300 million, and the intendedinvestment for fixed assets project is RMB 700 million.
3. The scheme of the Company for profit distribution or for transfer of capital reserve to the share capital in 2018Audited by Grant Thornton LLP, the consolidated net profit attributable to shareholders of the parent company in 2018 is RMB2,403,750,672.16, the achieved net profit of parent company is RMB 1,404,376,673.49, the attributable profit of the parent companyis RMB5,189,366,782.39 and the consolidated attributale profit is RMB-3,260,964,367.74. The consolidated attributable profit islower than the attributable profit of parent company with a negative amount. Therefore, in accordance with the provisions of theArticles of Association of the Company, which states “the profit shall be distributed to the shareholders in proportion to the lower ofthe distributable profits of parent company and the consolidated statements recognized in the year”, the Company does not distributecash dividends or transfer capital reserve into share capital for current year.During the reporting period, the profit recognized by the parent company is mainly for repaying the loan for acquisition and fixedasset project investment. Among them, the budget repayment of acquisition loan is RMB 600 million, and the intended investmentfor fixed assets project is RMB 700 million.Cash dividends of common shares of the Company for the last three years (the reporting period inclusive)
Unit: RMB Yuan
| Year of distribution | Amount of cash dividends (tax included) | Net profit attributable to ordinary shareholders of the listed company in consolidated financial statements in the year of distribution | Ratio of cash dividends to net profits attributable to ordinary shareholders of the listed company in consolidated financial statements | Proportion for cash dividends by other ways (i.e. share buy-backs) | Ratio of cash dividends in other ways to net profits attributable to ordinary shareholders of the listed company in consolidated financial statements | Total cash dividends (including other ways) | Ratio of total cash dividends (including in other ways) to net profits attributable to ordinary shareholders of the listed company in consolidated financial statements |
| 2020 | 0.00 | 1,786,452,832.06 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
| 2019 | 0.00 | 1,185,589,702.44 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
| 2018 | 0.00 | 2,370,453,251.46 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
The Company achieves positive profits in reporting period and the attributable profit for common stock shareholders of the parentcompany is positive but no proposal of cash dividend for common stock shareholders is proposed.
√Applicable □Not applicable
| Reasons for no resolution for cash dividend the Company achieves positive profits in reporting period and the attributable profit for common stock shareholders of the parent company is positive | Purpose and use plan for the undistributed profits of the Company |
Beijing Shougang Co. Ltd Annual Report 2020
| Audited by Grant Thornton LLP, in 2020, the consolidated net profit attributable to the shareholders of parent company is RMB 1,786,452,832.06, withdrawaling of statutory surplus reserve of RMB 99,168,790.71, the consolidated profit available for distribution for the year is RMB 1,687,284,041.35 and the consolidated retained earnings of the Company is RMB 1,865,280,919.23. For the parent company, the net profit of the year is RMB 991,687,907.11. After the withdrawal of 10% statutory surplus reserve of RMB 99,168,790.71, the profit available for distribution of parent company is RMB 892,519,116.40 and the retained earnings of parent company is RMB 8,856,123,340.12. In consideration of the matter that the Company is currently promoting the events of related party transaction on share issuing to purchase assets and fundraising, the Company intends to review and arrange related profit distribution plan of 2020 in accordance with the provisions of relevant laws, regulations, rules, normative documents and Articles of Association as soon as possible after the implementation of this matter. | In consideration of the matter that the Company is currently promoting the events of related party transaction on share issuing to purchase assets and fundraising, the Company intends to review and arrange related profit distribution plan of 2020 in accordance with the provisions of relevant laws, regulations, rules, normative documents and Articles of Association as soon as possible after the implementation of this matter. |
II. Profit distribution plan and capitalizing of common reserves plan during the reportingperiod
□Applicable √Not applicable
In consideration of the matter that the Company is currently promoting the events of related party transaction on share issuing topurchase assets and fundraising, the Company intends to review and arrange related profit distribution plan of 2020 in accordancewith the provisions of relevant laws, regulations, rules, normative documents and Articles of Association as soon as possible after theimplementation of this matter.
III. Implementation of commitment
1. Commitment of de facto controller, shareholders, related parties, acquirer and the Company during or sustained to the reportingperiod
√Applicable □Not applicable
| Commitment | Commitment party | Type | Contents | Commitment date | Commitment term | Implementation |
| Commitments to share reform | ||||||
| Commitments made in a statement of acquisition or equity change |
Beijing Shougang Co. Ltd Annual Report 2020
| Commitment in assets restructuring | Shougang Group Co., Ltd. | 1.According to the iron and steel industry development plan of Shougang Group, Shougang Co. will be the only platform for the development and integration of the iron and steel and upstream iron ore resources industry of Shougang Group in China, and eventually achieve the overall listing of Shougang Group's iron and steel and upstream iron ore resources business in China 2. As for the other companies engaged in iron and steel production business included in Shougang Group, if the profits could be achieved for three consecutive years through optimizing and adjusting the product structure and actively implementing national industrial policies and environmental protection requirements, and the overall situation of the industry does not appear large fluctuation, Shougang Group will activate the manners in line with the interests of shareholders of listed companies, including but not limited to acquisition, merger, reorganization, etc. to invest relevant high-quality assets in Shougang Co. in accordance with the requirements of securities laws, regulations and industrial policies, and will complete the investment within 36 months after start-up. | 27 Dec. 2018 | Refer to contents of commitment | Implementing. In December 2018, Shougang Co. and Jingtang Co. jointly with Shougang Group signed “the management service agreement among Shougang Group, Beijing Shougang Co., Ltd. and Shougang Jingtang United Iron&Steel Co., Ltd.”, Shougang Co. and Jingtang Co. jointly provided management services for 17 target enterprises, which are involved in the steel sector assets and businesses of Shougang Group. Among them, Shougang Mining Corporation and other thirteen companies are in the charge of Shougang Co., and Shougang Casey Steel Co., Ltd. and other two companies are uner the charge of Jingtang Co. | |
| Shougang Group Co., Ltd. (Formerly known as Shougang Corporation) | If the market improves in the future, Shougang Mining Corporation achieves stable profits for two consecutive years, and the overall situation of the industry will not fluctuate greatly, Shougang Corporation will start the injection of Shougang Mining Corporation in Shougang Co. and complete it within 36 months. Before the injection of Shougang Mining Corporation in Shougang Co., Shougang Corporation will urge Shougang Mining Corporation to conduct relevant transactions with Shougang Co. in accordance with fair and reasonable market price, strictly conform to the requirements of laws and regulations, normative documents, the articles of association of Shougang Co. and related transaction management system, and perform the corresponding review, approval and information disclosure procedures for the necessary related transactions between Shougang Co. and Shougang Mining Corporation. | 20 April 2017 | Refer to contents of commitment | Implementing. | ||
| Shougang Group Co., Ltd. (Formerly known as Shougang Corporation) | The company will not damage the independence of Shougang Co. due to the increase of the proportion of shares held by Shougang Co. after the completion of the reorganization. The company will maintain “the five-aspect separation principle”, which means assets, personnel, financial affairs, institution and business should be independent of Shougang Co., strictly conform to relevant provisions of the CSRC on the independence of listed companies, not illegally utilize Shougang Co. to provide guarantees, not illegally occupy the assets of Shougang Co. and keep and maintain the independence of Shougang Co. | 20 July 2012 | After the completion of assets reorganization (completion date: 25 April 2014) | Implementing of the long-term commitment. |
Beijing Shougang Co. Ltd Annual Report 2020
| Shougang Group Co., Ltd. (Formerly known as Shougang Corporation) | The company is the largest shareholder and controlling shareholder of Shougang Co. On July 17, 2012, the Company issued “the commitment letter of Shougang Corporation on reducing and standardizing related transactions” (namely the commitments listed above, hereinafter referred to as the "original commitment letter"), and promised to take measures including the injection of Shougang Mining Corporation in Shougang Co. and other relevant measures to reduce and regulate the related transactions with Shougang Co. after the completion of major assets replacement and assets purchase through issue of shares between the company and Shougang Co. (Hereinafter referred to as "previous major assets restructuring (completed on 25 April 2014)"). In order to reduce and standardize the related transactions after this major assets replacement and related transaction project between the company and Beijing Shougang Co., Ltd., protect legitimate rights and interests of Shougang Co. and its public shareholders, the company promise to continue to fulfill the contents of original commitment letter after the completion of this major assets replacement, and further commits as follows: | 29 Sep. 2015 | During and after the assets replacement | Implementing |
Beijing Shougang Co. Ltd Annual Report 2020
| Shougang Group Co., Ltd. (Formerly known as Shougang Corporation) | 1. The company will perform its obligations as the controlling shareholder of Shougang Co. in good faith, try to avoid and reduce the related transactions with Shougang Co. (including the enterprises it controls); as for the related transactions, which are unavoidable or occur for reasonable reasons between the company and other enterprises under the control of the company, and Shougang Co. and the enterprises it controls, the company will not require or accept the more favorable conditions provided by Shougang Co. than the conditions to an independent third party in any fair market transaction. The company and other enterprises under the control of the company will sign a standardized related party transaction agreement with Shougang Co. in accordance with the law, follow the market principles of openness, fairness and justice, in accordance with fair and reasonable market price, conform to relevant provisions of laws, regulations and normative documents in the decision-making procedures of related transactions and disclose information in accordance with the law. 2. The company and other enterprises under the control of the company shall not obtain any improper benefits or cause Shougang Co. undertaking any improper obligation though related transactions with Shougang Co. and the other enterprises controlled by Shougang Co. 3. The company shall be liable for the losses to Shougang Co. and the enterprise under the control of Shougang Co. due to the related transactions with them in violation of the above commitments. | 29 Sep. 2015 | During and after the assets replacement | Implementing |
Beijing Shougang Co. Ltd Annual Report 2020
| Shougang Group Co., Ltd. (Formerly known as Shougang Corporation) | In respect of the purchase of 51% of the equity of Jingtang Co. by Shougang Co., the company made the following commitments in urging Jingtang Co. and its holding subsidiary, Tangshan Shougang Jingtang Caofeidian Port Co., Ltd. (hereinafter referred to as Port Company) to complete relevant matters: 1. The company promises to urge Jingtang Co. not to actually carry out port operation business of general bulk cargo berth project (552-meter shoreline wharf project) without obtaining formal or temporary port operation license. 2. The company promises to urge Port Company not to actually carry out port operation business of general wharf project (1600-meter shoreline wharf project) without obtaining formal or temporary port operation license. | 29 Sep. 2015 | Refer to contents of commitment | Implementing | ||
| Shougang Group Co., Ltd. (Formerly known as Shougang Corporation) | In respect of the purchase of 51% of the equity of Jingtang Co. by Shougang Co., Shougang Group made the following commitments in urging Jingtang Co. and its holding subsidiary, Tangshan Shougang Jingtang Caofeidian Port Co., Ltd. (hereinafter referred to as Port Company) to complete relevant matters: 1. Shougang Group promises to urge Jingtang Co. to complete the overall acceptance procedures of supporting wharf project (1240-meter shoreline wharf project) and obtain the formal port operation license before 31 December 2022, and carry out port operation business in accordance with the requirements of relevant competent departments 2. Shougang Group promises to urge Jingtang Co. to complete the application of ownership certificate of all self-built houses of Jingtang Co. before 31 December 2022. | 18 Dec. 2020 | 31 Dec. 2022 | Implementing | ||
| Shougang Group Co., Ltd. (Formerly known as Shougang Corporation) | In respect of the purchase of 51% of the equity of Jingtang Co. by Shougang Co., the company made the following commitments in urging Jingtang Co. and its holding subsidiary, Port Company, to complete the relevant matters of obtaining land use right certificate: The company promises to urge Jingtang Co. to obtain state-owned land use right certificate of all the land used before 31 December 2022, including but not limited to the land used by Jingtang Co. Phase I project, Jingtang Co. supporting wharf project (1240-meter shoreline wharf project), general bulk cargo berth project (552-meter shoreline wharf project) and Jingtang Co. Phase II project. | 18 Dec. 2020 | 31 Dec. 2022 | Implementing | ||
| Commitments made in IPO or refinancing | ||||||
| Equity incentive commitment | ||||||
| Other commitments to small and medium shareholders of the company | ||||||
| Completed on time | Yes | |||||
Beijing Shougang Co. Ltd Annual Report 2020
2. Concerning assets or project of the Company, which has profit forecast, and reporting period still in forecasting period, explainreasons of reaching the original profit forecast
□Applicable √Not applicable
IV. Non-operational fund occupation from controlling shareholders and its related party
□Applicable √Not applicable
No non-operational fund occupation from controlling shareholders and its related party during the reporting period.
V. Explanation from Board of Directors, Supervisory Committee and Independent Directors(if applicable) for “Qualified Opinion” that issued by CPA
□Applicable √Not applicable
VI. Notes to changes in aspect of accounting policy, estimates and calculation methodcompared to financial report of previous year.
√Applicable □Not applicable
Details of change in accounting policy, estimates and calculation method of the Company compare to financial report of previousyear refer to Section XII. V. 30. Changes in accounting policies and estimatesVII. Material accounting errors within reporting period that needs retrospective restatement
□Applicable √Not applicable
No major accounting errors within reporting period that needs retrospective restatement for the Company during the reporting period.
VIII. Explanation on the change in the scope of consolidated financial statements during thereporting period as compared to financial report of the previous year
√Applicable □Not applicable
For the year ended 31 December 2020, the Company set up a new subsidiary, Beijing Shougang Steel Trading InvestmentManagement Co., Ltd. and there are 6 subsidiaries in the scope of consolidation, which are: Shougang Jingtang United Iron & SteelCo., Ltd., Beijing Shougang Cold Rolling Co., Ltd., Qian'an Shougang Metallurgical Technology Co., Ltd., Shougang Zhixin Qian'anElectromagnetic Materials Co., Ltd., Beijing Shougang New Energy Automobile Material Technology Co., Ltd., and BeijingShougang Steel Trading Investment Management Co., Ltd.
IX. Appointment and non-reappointment (dismissal) of CPACurrent CPA
| Name of domestic accounting firm | Grant Thornton LLP. |
| Remuneration for domestic accounting firm (RMB 0,000) | 180 |
| Continuous life of auditing service for domestic accounting firm (year) | 21 |
| Name of domestic CPA | Qian Bin, Li Dan |
| Continuous life of auditing service for domestic accounting firm (year) | 5 |
Whether to change the accounting firm during the audit period
□Yes √No
Appointment of internal control auditing accounting firm, financial consultant or sponsor
□Applicable √Not applicable
X. Suspension and termination of listing after disclosure of annual report
□Applicable √Not applicable
XI. Insolvency or restructuring related matters
□Applicable √Not applicable
No insolvency or restructuring related matters during the reporting period
Beijing Shougang Co. Ltd Annual Report 2020
XII. Material litigation or arbitration cases
□Applicable √Not applicable
No material litigation or arbitration cases during the reporting period.XIII. Punishment or rectification
□Applicable √Not applicable
No punishment or rectification during the reporting period.
XIV. Integrity of the Company and its controlling shareholders and actual controllers duringthe reporting period
□Applicable √Not applicable
XV. Implementation of the Company’s equity incentive plan, employee stock ownership planor other employee incentive measures
□Applicable √Not applicable
No implementation of the company's equity incentive plan, employee stock ownership plan or other employee incentive measuresduring the reporting period.XVI. Substantial related party transactions
1. Related transaction with routine operation concerned
√Applicable □Not applicable
Unit: 10’000 RMB
| Related parties | Relationship | Transaction type | Transaction content | Pricing principle of transaction | Transaction price | Related transaction price | Proportion in similar transactions | Approved transaction quota | Whether it exceeds the approved quota(Y/N) | Related transaction settlement methods | Available market prices for similar transactions | Date of disclosure | Disclosure index |
| Shougang Group and its subsidiaries | Parent company | Related purchase | Raw material | Market price | Market price | 4,251,201 | 3,876,060 | Y | Cash at bank and on hand | Market price | 24 April 2020 | "China Securities Journal" ,"Securities Times" ,"Shanghai Securities News", Juchao Information Network (http://www.cninfo.com.cn) | |
| Shougang Group and its subsidiaries | Parent company | Related sales | Steel | Market price | Market price | 395,229 | 4,547,437 | N | Cash at bank and on hand | Market price | 24 April 2020 | Ditto | |
| Other related parties | Joint venture and associates | Related purchase | Raw fuel material and energy | Market price | Market price | 1,633,345 | 1,808,942 | N | Cash at bank and on hand | Market price | 24 April 2020 | Ditto | |
| Other related parties | Joint venture and associates | Related sales | Energy | Market price | Market price | 411,545 | 409,513 | Y | Cash at bank and on hand | Market price | 24 April 2020 | Ditto | |
| Total | -- | -- | 6,691,320 | -- | 10,641,952 | -- | -- | -- | -- | -- | |||
| Details of large sales returns | No | ||||||||||||
| The Company classifies the daily related transactions by category, estimates the transaction amount that will take place in the current period, and discloses the actual transaction amount (if any) | The Company estimates the total amount of daily related transactions that will be approved by the general meeting of shareholders, considered and approved by the second session of the seventh board of directors of the Company on 22 April 2020 and submitted to the 2019 annual general meeting of the Company on 23 June 2020 for consideration and approval.The total amount of transactions approved in the current period was RMB 106,419.52 million, and the actual occurrence of this period was RMB 66,913.20 million, which did not exceed the approved quota. For details of the related parties and related party transactions, please refer to Item XII in Section XII. The reason of greatly reduction of actual related sales than the annual budget is that: The steel products of Shougang Co. is sold through Beijing Shougang Steel Trading Investment Management Co., Ltd.to each bases. Taking into consideration of optimizing of assets and reducing the related transactions between the Company and the controlling shareholder, the Company acquired 51% shareholding of Beijing Shougang Steel Trading Investment Management Co., Ltd. by mean of assets swap in June 2020 (details information refers to the disclosure on 13 June 2020) and therefore the financial statements of Beijing Shougang Steel Trading Investment Management Co., Ltd. is consolidated in the financial statements of Shougang Co. The related party transaction is therefore ultimately largely reduced. | ||||||||||||
| The reason for the material difference between the transaction price and the market reference price (if applicable) | Not Applicable | ||||||||||||
2. Related transactions by assets or equity acquisition and sold
√Applicable □Not applicable
| Related parties | Relationship | Transaction type | Transaction content | Pricing principle of transaction | Carry value of assets transferred (0,000) | Evaluation value of assets transferred (0,000) | Tranfer price (0,000) | Related transaction settlement methods | Profit or loss of the transaction (0,000) | Date of disclosure | Disclosure index |
| Shougang Group Co., Ltd. | Parent company | Equity acquisition | Equity purchase of Beijing Shougang Steel Trading Investment Management Co., Ltd. | Evaluation price | 445,913.52 | 489,363.46 | 489,363.46 | Assets swap | 0 | 13 June 2020 | "China Securities Journal" ,"Securities Times" ,"Shanghai Securities News", Juchao Information Network (http://www.cninfo.com.cn) |
| Shougang Group Co., Ltd. | Parent company | Equity transfer | Equity transfer of BAIC Motor Corporation | Evaluation price | 404,298.24 | 454,686.5 | 437,197.77 | Assets swap | 0 | 13 June 2020 | Ditto |
| The reason for the material difference between the transfer price and the carrying value or evluation value (if applicable) | Not applicable | ||||||||||
Beijing Shougang Co. Ltd Annual Report 2020
| Impact on the operation results and financial position of the Company | Increase the net profit attributable to shareholders of listed company |
| Performance achievement during the reporting period if thtere is any performance agreement attached in related transaction | Not applicable |
3. Related transactions of mutual investment outside
□Applicable √Not applicable
No related party transactions in respect of jointly investment during the reporting period.
4. Contact of related credit and debt
√Applicable □Not applicable
Whether the Company had non-operating contact of related credit and debt
□Yes √No
5. Other material related party transactions
√Applicable □Not applicable
| On 22 April 2020，the second meeting of the seventh session of the Board of Directors of the Company approved the " Proposal of Financial Transactions between Shougang Co., and Shougang Group Finance Co., Ltd." and the "Agreement of Financial Services between Shougang Co., and Shougang Group Finance Co., Ltd." on 23 June 2020, which has been approved at the Annual General Meeting of Shareholders in 2019 held on 23 June 2020. (Unit: RMB) | |||||
| Item | As at 31.12.2019 | Addition | Reduction | As at 31.12.2020 | Charge or pay interest and handling fees |
| 1. Deposit in Shougang Group Finance Co., Ltd. | 5,617,655,130.21 | 134,699,426,153.32 | 134,477,027,744.51 | 5,840,053,539.02 | 108,641,085.66 |
| 2. Loan offers to the Finance Co. | 16,095,277,337.48 | 23,657,522,078.12 | 25,097,941,699.85 | 14,654,857,715.75 | 261,805,906.55 |
| (1) Short-term loans | 9,621,643,833.33 | 8,939,538,947.15 | 9,877,243,228.29 | 8,683,939,552.19 | |
| (2) Notes payable | 6,464,964,570.54 | 14,712,862,200.00 | 15,213,776,770.54 | 5,964,050,000.00 | |
| (3) Entrusted Loan | 8,668,933.61 | 5,120,930.97 | 6,921,701.02 | 6,868,163.56 | |
Website for disclosure of interim report of materil related party transactions
| Name | Disclosure date | Name of the website |
| Disclosure on related party transactions of financial transaction with Shougang Group Finance Co., Ltd. | 24 April 2020 | China Securities Journal, Securities Times, Shanghai Securities News and Juchao Information Network (http://www.cninfo.com.cn) |
XVII. Material contracts and implementations
1. Entrustment, contract and leasing
(1) Entrustment
□Applicable√Not applicable
No entrustment during the reporting period.
(2) Contract
□Applicable√Not applicable
No contract during the reporting period.
(3) Leasing
□Applicable√Not applicable
No leasing during the reporting period.
2. Material guarantees
□Applicable√Not applicable
No guarantees during the reporting period.
3. Entrusted asset management, entrusted loans and other wealth management and derivatives investment
(1) Entrusted asset management and other wealth management and derivatives investment
□Applicable√Not applicable
Beijing Shougang Co. Ltd Annual Report 2020
No entrusted asset management and other wealth management and derivatives investment during the reporting period.
(2) Entrusted loans
□Applicable√Not applicable
No entrusted loan during the reporting period.
4. Material contracts for routine operation
□Applicable√Not applicable
No material contracts for routine operation during the reporting period.
5. Other material contracts
□Applicable√Not applicable
No other material contracts during the reporting period.XVIII. Fulfillment of Social Responsibility
1. Fulfill social responsibility
Detailed information refers to 2020 corporate social responsibility report of the Company.
2. Performance of taking targeted measures in poverty alleviation
Detailed information refers to 2020 corporate social responsibility report of the Company.
3. Environmental protection
Whether the Company and its subsidiaries belongs to the key pollutant released entities that published by the environmentalprotection department.Yes
| Name of Company or Subsidiary | Names of major pollutants and characteristic contaminants | Way of Discharge | No. of drains | Distribution of emission drains | Emission concentration | Implemented pollutant emission standards | Total emissions (tons) | Total approved emissions (tons) | Emissions exceed the standard |
| Qiangang Co. | COD (Chemical Oxygen Demand) | organized | 1 | Wastewater discharge port | 15-30mg/L | 50mg/L | 48.6 | 103 | No |
| Qiangang Co. | Ammonia Nitrogen | organized | 1 | Wastewater discharge port | 0.5-1mg/L | 5mg/L | 3.625 | 8.2 | No |
| Qiangang Co. | Sulfur Dioxide | Organized | 69 | 5 in energy generation, 3 in iron-smelting, 3 in steelmaking, 8 in hot rolling,50 in cold rolling | 1-20mg/m3 | Energy, iron-smelting, steelmaking, hot rolling 35mg/m3, cold rolling 50mg/m3 | 694.8 | 695 | No |
| Qiangang Co. | Nitrogen Oxides | organized | 69 | 5 in energy generation, 3 in iron-smelting, 3 in steelmaking, 8 in hot rolling,50 in cold rolling | 5-35mg/m3 | Energy, iron-smelting, steelmaking, hot rolling 50mg/m3, cold rolling 150mg/m3 | 1705 | 1720 | No |
| Qiangang Co. | Particulate Matter | organized | 153 | 5 in energy generation, 29 in iron-smelting, 33 in steelmaking, 20 in hot rolling, 66 in cold rolling | 1-3mg/m3 | Energy, iron-smelting, steelmaking, hot rolling 5mg/m3, cold rolling 10mg/m3 | 872.7 | 1227 | No |
| Jingtang Co. | Sulfur Dioxide | organized | 42 | Coke oven chimney, coke pushing、coke outlet, CDQ outlet, outlet of baghouse system after desulphurization of sintering machine, outlet of hot blast stove of no.1 and no.2 bf, lime kiln roasting, heat treatment furnace, 2 × 300mw generating units chimney exit, gas boiler chimney exit. | Coke oven chimney :<10 mg/m3；Coke pushing :<30 mg/m3、Coke outlet :<70 mg/m3；CDQ outlet :<80 mg/m3；Sintering desulfurization:<30 mg/m3；hot blast stove :<50 mg/m3；heat treatment furnace:<50 mg/m3；Coal-fired and gas-fired generating units:<20 mg/m3；Gas boiler:<30 mg/m3。 | Coke oven chimney:30 mg/m3；Coke pushing :30 mg/m3、Coke outlet :70 mg/m3；CDQ outlet :80 mg/m3；Sintering desulfurization:35 mg/m3；hot blast stove:50 mg/m3；Lime kiln roasting:35 mg/m3；heating furnace of hot rolling mill:50 mg/m3；continuous annealing line of cold rolling mill、annealing furnace of HDG line:50mg/m3；Coal-fired and gas-fired generating units :35mg/m3；Gas boiler: 50 mg/m3. | 862 | 5210 | No |
| Jingtang Co. | Nitrogen Oxides | organized | 38 | Coke oven chimney, outlet of baghouse system after desulphurization of sintering machine, outlet of hot blast stove of no.1 and no.2 bf, lime kiln roasting, heat treatment furnace, 2 × 300mw generating units chimney exit, gas boiler chimney exit. | Coke oven chimney :<100 mg/m3；Sintering desulfurization :<50mg/m3；Outlet of hot blast stove of No.1 and No.2 BF :<150mg/m3； continuous annealing line of cold rolling mill and hot rolling mill、annealing furnace of HDG line :<150 mg/m3；Coal-fired and gas-fired generating units :<40 mg/m3；Gas boiler : <150mg/m3. | Coke oven chimney :130mg/m3；Sintering desulfurization :50 mg/m3； Outlet of hot blast stove of No.1 and No.2 BF、heating furnace of hot rolling mill、continuous annealing line、annealing furnace of HDG line、Roasting device of waste acid regeneration station:150mg/m3；Lime kiln roasting:150mg/m3；Coal-fired and gas-fired generating units:50 mg/m3；Gas boiler: 150 mg/m3. | 3536 | 11667 | No |
Beijing Shougang Co. Ltd Annual Report 2020
| Jingtang Co. | Particulate Matter | organized | 176 | Coke pushing、coke outlet, CDQ outlet, coke oven chimney, dust removal outlet of stock ground transfer station, dust removal outlet of sintering machine batching, crushing, finished products screening, dust removal outlet of sintering machine tail and ring cooler, dust removal outlet of primary flue gas of bf tapping field, secondary flue gas of bf tapping field、dust removal outlet below the blast furnace bunker, dust removal outlet of cast iron machine, dust removal outlet of blast furnace pulverized coal production, dust removal outlet of hot blast stove of bf, steelmaking electric dust removal、steelmaking secondary dedusting outlet, dust removal outlet of flame descaling, lime kiln top dust collector outlet, heat treatment furnace、dust removal of finishing mill, dust removal exit of tension leveller and welder of PLTCM, dust removal exit of iron powder warehouse, 2 × 300mw generating units chimney exit, gas boiler chimney exit. | Coke pushing、Coke outlet、CDQ outlet、Coke oven chimney:<10 mg/m3；The transter point of stock ground:<10 mg/m3；Sintering machine batching, crushing, finished products screening、sintering machine tail and ring cooler:<10 mg/m3； primary flue gas and Secondary flue gas of BF tapping field:<10 mg/m3； below the blast furnace bunker、cast iron machine、blast furnace pulverized coal production、hot blast stove of BF:<10mg/m3；Steelmaking electric dust removal:<20mg/m3；Steelmaking secondary dedusting、flame descaling、Lime kiln top dust collector:<10mg/m3；heat treatment furnace、finishing mill、tension leveller and welder of PLTCM:<10 mg/m3；iron powder warehouse:<10mg/m3；Coal-fired and gas-fired generating units:<10 mg/m3；Gas boiler:<10 mg/m3。 | Coke pushing、Coke outlet、CDQ outlet、Coke oven chimney:10 mg/m3；The transter point of stock ground:10mg/m3；Sintering machine batching, crushing, finished products screening、sintering machine tail and ring cooler :10mg/m3；primary flue gas and Secondary flue gas of BF tapping field:10 mg/m3；below the blast furnace bunker、cast iron machine、blast furnace pulverized coal production、：10mg/m3；hot blast stove of BF :10mg/m3；Steelmaking electric dust removal :50 mg/m3；Steelmaking secondary dedusting :10mg/m3；dust removal of Lime kiln top and flame descaling:10mg/m3；heat treatment furnace :10mg/m3；finishing mill :10mg/m3；tension leveller and welder of PLTCM :10mg/m3；iron powder warehouse :10mg/m3；Coal-fired and gas-fired generating units :10mg/m3；Gas boiler:10mg/m3。 | 5955 | 6604 | No |
| Cold-R Co. | COD | organized | 1 | Wastewater stations | 5.09-27.09 mg/m3 | 30mg/m3 | 16.412 | 67.5 | No |
| Cold-R Co. | Ammonia Nitrogen | organized | 1 | Wastewater stations | 0.01-1.34 mg/m3 | 1.5(2.5) mg/m3 | 0.318 | 3.937 | No |
| Cold-R Co. | Sulfur Dioxide | organized | 8 | Continuous annealing furnace, annealing furnace of 1# HDG line, annealing furnace of 2# HDG line, roaster of acid regeneration station, hydrogen production generator,1# boiler room, 2# boiler room, 3# boiler room. | 3 mg/m3 | Continuous annealing furnace, annealing furnace of 1# HDG line, annealing furnace of 2# HDG line, Roaster of acid regeneration station, Hydrogen production generator:20 mg/m3；1# boiler room, 2# boiler room, 3# boiler room:10 mg/m3 | 3.922 | 18 | No |
| Cold-R Co. | Nitrogen Oxides | organized | 8 | Continuous annealing furnace, annealing furnace of 1# HDG line, annealing furnace of 2# HDG line, roaster of acid regeneration station, hydrogen production generator,1# boiler room, 2# boiler room, 3# boiler room. | Continuous annealing furnace, annealing furnace of 1# HDG line, annealing furnace of 2# HDG line:38-97 mg/m3；Roaster of acid regeneration station :59-73 mg/m3；2# boiler room :23 mg/m3；1# boiler room, Hydrogen production generator, 3# boiler room :24-54 mg/m3 | Continuous annealing furnace, annealing furnace of 1# HDG line, annealing furnace of 2# HDG line, Roaster of acid regeneration station, Hydrogen production generator :100 mg/m3；1# boiler room, 2# boiler room, 3# boiler room :80 mg/m3 | 53.335 | 148.184 | No |
| Cold-R Co. | Particulate Matter | organized | 10 | Exhaust gas of tension leveler, continuous annealing furnace, annealing furnace of 1# HDG line, annealing furnace of 2# HDG line, roaster of acid regeneration station, hydrogen production generator, iron powder warehouse at acid regeneration station, 1# boiler room, 2# boiler room, 3# boiler room. | Exhaust gas of tension leveler :4.3 mg/m3；continuous annealing furnace, annealing furnace of 1# HDG line, annealing furnace of 2# HDG line, Roaster of acid regeneration station, Hydrogen production generator :2.3-8.7 mg/m3; iron powder warehouse at acid regeneration station:4.1-4.3 mg/m3；1# boiler room, 2# boiler room, 3# boiler room:2.4-4.6 mg/m3 | Exhaust gas of tension leveler, continuous annealing furnace, annealing furnace of 1# HDG line, annealing furnace of 2# HDG line, Roaster of acid regeneration station, Hydrogen production generator, iron powder warehouse at acid regeneration station :10 mg/m3；1# boiler room, 2# boiler room, 3# boiler room ：5 mg/m3 | 17.185 | 18.75 | No |
Beijing Shougang Co. Ltd Annual Report 2020
Construction and operation of pollution prevention facilitiesAccording to the ultra-low emission standards for pollutants from the iron and steel industry in the nation and Hebei Province, theCompany has completed the "2020 Green Action Plan", actively adapt various new environmental protection technologies totransform environmental protection facilities, initiated 10 environmental protection projects, set up a project leadership group, heldregular project promotion meetings, coordinated and resolved existing problems, and promoted the progress of green projects. By theend of the reporting period, 9 projects had been completed and the remaining 1 project had been set up and is in the process ofdemonstrating the programme.Through a series of measures such as improving the environmental protection management system, insisting on daily inspection andimplementing problem rectification, the daily production operation and operational control of environmental protection facilities arecontinuously strengthened, and the environmental protection facilities and production facilities operate synchronously and stably. TheCompany strengthens the maintenance and management of environmental protection facilities, and conducts simultaneousmaintenance of main production facilities and environmental protection facilities such as desulfurization, denitrification, dustremoval, wastewater treatment and so on. After self-monitoring and supervision by the environmental protection department, allkinds of pollutants 100% reach the pollution standard.Jingtang Co. has built a total of 200 waste gas treatment facilities to effectively treat all kinds of waste gas. Dust is treated in twoways: bag dust removal and electric dust removal; coke oven flue gas adopts ammonia desulphurisation + medium and lowtemperature SCR denitrification process; sintering and pellet adopts circulating fluidised bed desulphurisation + medium and lowtemperature SCR denitrification process; self-provided power plant desulphurisation adopts seawater desulphurisation + SCRdenitrification process. A total of 14 sets of major wastewater treatment facilities were built, including coking phenol cyanidewastewater treatment system, continuous casting wastewater treatment system, hot rolling, cold rolling, medium thickness plate, steelrolling wastewater treatment system and comprehensive wastewater treatment station, etc. After treatment, clean water is reused incombination with rich seawater desalination water to achieve zero wastewater discharge in a coupled manner. A total of 7 sets ofsolid waste treatment facilities were constructed. Construction of comprehensive utilization facilities for coal, construction of 6 x600,000 tonnes/year slag fine grinding cement production line, transforming blast furnace water slag from the steel mill into highquality cement raw material by adopting new processing technology. Construction of 250,000 tonnes/year of steelmaking primarydust ash pellet making project to be utilised as steelmaking slag coolant. At present, all environmental protection facilities in Jingtangare running well and all processes of the whole process have reached ultra-low emission standards.The Cold-R Co. constructs annealing furnaces and gas boilers that use natural gas as fuel，and reduces waste gas pollution from thesource, constructes 11 sets of waste gas treatment facilities such as oil mist purification system, acid mist purification system, bagdust removal system and alkali mist treatment system, and all waste gas meets the standard; The Company constructs one wastewaterstation, through four systems including acid-containing wastewater treatment system, dilute alkali wastewater treatment system andoil-bearing and liquid finishing wastewater treatment system, all the wastewater are discharged after reaching the standard. In termsof noise prevention and control, low-noise equipment and vibration reduction measures were adopted. Silencers are installed at theoutlets of the iron oxide powder depot; air compressors, nitrogen compressors and other equipment are installed inside of the factory,and soundproof covers are settled, and noise reduction tower is constructed at the outlet of nitrogen generators; vibration and noisereduction and sound insulation measures are used in the boiler room; Three silencers are installed at the outlet to minimize noisepollution. The above environmental protection facilities are operating well, and all pollutants are discharged up to the standard.Zhixin Co. has dealt with waste gas, odor, noise control, soil pollution prevention, dust emission and other aspects. It has carried out2 key environmental protection transformation projects such as acid regeneration water washing tower transformation, dust collectorcloth bag change to high-efficiency filters cartridge transformation and various maintenance projects. The Company's existingenvironmental protection facilities are all in stable operation, and pollutants are discharged to the standard.Construction of environmental impact assessment of projects and other environmental protection administrative permitsIn order to further implement energy conservation and emission reduction, enhance the corporate environmental image, the Company
Beijing Shougang Co. Ltd Annual Report 2020
invested projects such as Qiangang Co. Project of Comprehensive Re-use of Slag and Qiangang Co. Project of Continuous PicklingLine. The Project of Comprehensive Re-use of Slag has been registered on the registration form of construction projectenvironmental impacts, and the report of the Project of Continuous Pickling Line has been approved. In September 2017, thecompany obtained a new version of the sewage permit issued by the Tangshan Environmental Protection Bureau. The renewal of thedischarge permit will be completed in August 2020 and its validity will be extended to 2025.Jingtang Co. adheres to the equally importance principle of production development and environmental protection, evaluates theenvironmental impact assessment project strictly in accordance with the Environment Impact Assessment Act of China, Constructsstrictly in accordance with the EIA approval during the implementation of the project. All construction projects are supported byconstruction of environmental protection facilities, to meet the “Three Simultaneous” management requirements for environmentalprotection. In April 2006, Jingtang Co. obtained the Reply on Environmental Impact Assessment (Environmental Audit [2006] No.
181) from the Ministry of Environmental Protection (the former State Environmental Protection Agency); In May 2010, it obtainedthe Reply on Changes of Environmental Impact Assessment (Environmental Audit Change Office [2010] No. 11) by the Ministry ofEnvironmental Protection; In January 2012, it obtained the Reply on Trial Production (Hebei Environment [2012] No. 17) fromHebei Ministry of Environmental Protection; In January 2014, the Reply on the Completed Environmental Protection of Phase IProject (Environmental Assessment [2014] No.4) was obtained from the Ministry of Environmental Protection; In December 2014,the Permit for the Discharge of Pollutants was obtained from the Environmental Protection Department of Hebei Province; InOctober 2015, the Reply on Environmental Impact Assessment of Phase II Project (Hebei Environmental Assessment [2015] no.359)was obtained from Hebei Ministry of Environmental Protection; In August 2017, the New Pollution Discharge Permit issued byTangshan Ministry of Environmental Protection was obtained, and combining with the phase II construction project, the change forsewage permit was completed in April 2019, and the second phase of the one-step project sewage outlet was incorporated into thestandardized management. In April 2019, the Reply Letter on the Opinions on the Changes of the One Step of the Second Phase ofJingtang Co. (Hebei Environmental Assessment Letter [2019] No.465) was obtained from Hebei Provincial Department of Ecologyand Environment. The renewal of the discharge permit will be completed in August 2020 and its validity will be extended to 2025.In October 2017, Cold-R Co. obtained the first permit of the discharge of pollutants for important companies in Shunyi District,Beijing, the application for renewal of the discharge permit will be submitted in September 2020 in accordance with the relevantregulations and will be approved by the government at the end of October, with the validity period extended to 2025.Zhixin Co. has no significant construction project in 2020 and therefore no environmental assessment is necessary.Emergency plans for environmental emergenciesIn accordance with the Law of the People's Republic of China on Environmental Protection and other laws and regulations andnormative documents, Qiangang Co. has formulated the Emergency Plan for Environmental Emergencies. The plan focuses onstrengthening the daily management and safety prevention of production, strictly prevents all kinds of sudden environmental events,regulates and strengthens the abilities to deal with environmental emergencies, focuses on preventing the occurrence of suddenenvironmental events, gradually improves the mechanism of early warning, disposal and rehabilitation of environmental emergencies,and establishes emergency disposal system of the Company, which would be strong, orderly, efficient, unified and coordinated, foremergency environmental emergencies. On this basis, Qiangang Co. also formulated 3 special plans: Sudden Environmental EventEmergency Plan Special for Atmospheric, Sudden Environmental Event Emergency Plan Special for Water, and SuddenEnvironmental Event Emergency Plan Special for hazardous wastes to further improve the air pollution and water pollutionemergency response capacities.According to the requirements of the Emergency Treatment Plan for Environmental Emergencies (Third Edition), Jingtang Co.identifies gas storage tanks, pipelines and benzene tanks, acid storage tanks, liquid ammonia storage tanks and other dangerouschemicals and toxic and harmful substances production, storage areas as dangerous target for emergency rescue, implements 13emergency drills including wastewater over the standard, waste acid leakage, waste oil leakage, radioactive source loss and so on,ensures effective implementation of rescue under emergency, in accordance with the requirements of the Plan, and improves the
Beijing Shougang Co. Ltd Annual Report 2020
prevention and treatment skills of sudden environmental pollution events.Cold-R Co. drawn the Emergency Treatment Plan for Environmental Emergencies in accordance with related laws and regulations,and in 2020, in accordance with the Emergency Plan for Environmental Emergencies requirements, organized to carry out planningexercises in acid rolling, heat treatment work area and public auxiliary areas, timely rectified when found problems, enhances thecompany's emergency response capacity of environmental emergencies.Zhixin Co. continued to implement the Emergency Plan for Environmental Incidents prepared and filed in 2018. During the year, theCompany organized all departments to carry out 29 emergency drills for environmental emergencies, covering water, gas, sound, slag,radiation and other projects.Environmental self-monitoring programIn accordance with the relevant provisions of the National Key Monitoring Enterprises Self-Monitoring and Information DisclosureMeasures (Trial) and National Key Monitoring Enterprises Pollution Source Supervision and Information Disclosure Measures (Trial)and other relevant regulations, Qiangang Co. establishes and improves the pollution source monitoring and information disclosuresystem, formulates the Pollutant Emission Monitoring Plan 2020, and strictly implements it strictly. Qiangang Co. organizes andimplements self-monitoring activities 1288 times in the whole year, covering all pollution factors such as wastewater and waste gas.The monitoring results showed that 100% of the pollutants are up to the standard.The environmental monitoring system of Jingtang Co. consists of two parts: automatic monitoring and manual monitoring. Themanual monitoring system delegates the monitoring activities to a third-party testing agency Beijing Shougang EnvironmentalMonitoring Center to regularly conduct environmental monitoring on the waste gas, wastewater, etc. in the factory according to themonitoring plan. Monitoring data and reports are formed, and all pollutants are discharged up to standard throughout the year.Cold-R Co. establishes self-monitoring plan accouding to the requirement of pollutant discharge permit and supervises and tests eachdischarge point on a daily, monthly, and quarterly basis. In 2020, all emission indicators of pollution sources of the Company reachthe standard.According to the requirements of relevant national regulations, Zhixin Co. has formulated the 2020 Self-Monitoring Plan, theCompany entrusts qualified third-party testing agencies to carry out environmental monitoring monthly and quarterly in accordancewith the monitoring plan.Other environmental information that shall be disclosedOn the basis of adhering to the environmental protection work, Qiangang Co., Jingtang Co., Cold-R Co., and Zhixin Co. use thenational key monitoring enterprises’ self-monitoring information disclosure platform, website of government environmentalprotection department and self-established information disclosure platform, to publicize and display the environmental protectionprojects, operation of environmental protection facilities, names and emissions of major pollution sources, monitoring methods,monitoring indicator names, solid waste comprehensive utilization, etc. and actively accepts social supervision.Other environmental related informationIn order to develop circular economy and low-carbon economy, build resource-saving, environment-friendly and low-carbon orientedcompany, and also achieve a good and rapid development of the Company, Shougang Co. launched the preparation of environmentalresponsibility report at the end of 2016. The scope of the environmental responsibility report includes Qiangang Co., Jingtang Co.,Cold-R Co., and other subsidiaries. In April 2020, the 2019 Environmental Responsibility Report of Beijing Shougang Co., Ltd. wasreleased on the website of Shougang Co. (http://www.sggf.com.cn).During the reporting period, the Company and its subsidiaries have not been punished by any regulator in aspect of environmentalprotection. Meanwhile, the Company supervising and urging related shareholding companies to operates in an environmentallyfriendly way and in compliance with the Law of the People's Republic of China on Environmental Protection and other related laws,regulations, rules and normative documents.XIX. Other material events
√Applicable□Not applicable
Beijing Shougang Co. Ltd Annual Report 2020
On 21 April 2021, the event of "Share Issuing to Beijing Jingtou Investment Holding Co., Ltd. etc. for Assets Purchase andFundraising" has been approved by the CSRC (CSRC Permit No. [2021] 1400), and the Company is proceeding with this transactionin accordance with the regulations.XX. Material events of subsidiaries of the Company
□Applicable√Not applicable
Beijing Shougang Co. Ltd Annual Report 2020
Section VI. Movements in share capital and shareholdersI. Share movement
1. Share movement
Unit: share
| Before change | Increase (/decrease) during the year | After change | |||||||
| Amount | Ratio | New shares issued | Bonus shares | Capitalization of public reserve | Others | Subtotal | Amount | Ratio | |
| I. Restricted shares | 232,286,354 | 4.39% | 232,286,354 | 4.39% | |||||
| 2. State-owned corporation shares | 232,286,354 | 4.39% | 232,286,354 | 4.39% | |||||
| II. Un-restricted shares | 5,057,103,246 | 95.61% | 5,057,103,246 | 95.61% | |||||
| 1. RMB ordinary shares | 5,057,103,246 | 95.61% | 5,057,103,246 | 95.61% | |||||
| III. Total shares | 5,289,389,600 | 100.00% | 5,289,389,600 | 100.00% | |||||
Reasons of shares movements
□Applicable √Not applicable
Approval of share movements
□Applicable √Not applicable
Ownership movements of shares
□Applicable √Not applicable
Progress of share repurchase
□Applicable √Not applicable
Progress of the reduction in share repurchase through centralized bidding
□Applicable √Not applicable
Influences of shares movements on basic EPS, diluted EPS, net assets per share attributable to common shareholders of the companyand other financial indicators for both the latest year and the latest period
□Applicable √Not applicable
Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators
□Applicable √Not applicable
2. Movements of restricted shares
□Applicable √Not applicable
II. Securities issuance and listing
1. Security offering (without preferred stock) in reporting period
□Applicable √Not applicable
2. Changes of total shares and shareholders structure as well as explanation on changes of assets and liability structure
□Applicable √Not applicable
3. Current internal staff shares
□Applicable √Not applicable
III. Shareholders and the actual controller
1. Amount of shareholders and shareholding
Beijing Shougang Co. Ltd Annual Report 2020
Unit: Share
| Total common stock shareholders in reporting period-end | 93,464 | Total common stock shareholders at end of last month before annual report disclosed | 94224 | Total preference shareholders with voting rights recovered at end of reporting period (if applicable) (found in note 8) | 0 | Total preference shareholders with voting rights recovered at end of last month before annual report disclosed (if applicable) (found in note 8) | 0 | |||||||||||
| Shareholders holding above 5% or top 10 shareholders | ||||||||||||||||||
| Name of shareholder | Nature of shareholder | Proportion of shares held | Total shareholders at the end of report period | Changes in report period | Amount of restricted shares held | Amount of unrestricted shares held | Shares pledged or frozen | |||||||||||
| Status | Amount | |||||||||||||||||
| Shougang Group | State-owned corporation | 64.38% | 3,405,352,431 | 0 | 232,286,354 | 3,173,066,077 | ||||||||||||
| Baowu Group | State-owned corporation | 15.00% | 793,408,440 | 0 | ||||||||||||||
| Beijing Yizhen Technology Development Co., Ltd | 159,790,000 | |||||||||||||||||
| Beijing Namunani Asset Management Co., Ltd | 79,900,000 | |||||||||||||||||
| Beijing Shiliugang Business Management Co., Ltd | 58,590,000 | |||||||||||||||||
| Liu Wei | 55,285,701 | |||||||||||||||||
| Beijing Xiaojian Technology Development Co., Ltd | 49,270,000 | |||||||||||||||||
| Hong Kong Exchanges and Clearing Limited | 43,311,794 | |||||||||||||||||
| Beijing Saina Investment Development Co., Ltd | 26,475,500 | |||||||||||||||||
| Beijing Andes Investment Development Co., Ltd | 18,650,000 | |||||||||||||||||
| The associated relationship or concerted action of the above shareholders | Shougang Group holds 2.19% of Baosteel Co., Baowu Group Co., Ltd. and its persons acting in concert hold 61.93% of Baosteel Co. In addition, Shougang Group has no relationship or concerted acting relationship with other top 10 shareholders; Beijing Yizhen Technology Development Co., Ltd., Beijing Namunani Asset Management Co., Ltd. and Beijing Shiliugang Business Management Co., Ltd , Beijing Xiaojian Technology Development Co., Ltd., Beijing Saina Investment Development Co., Ltd. and Beijing Andes Investment Development Co., Ltd. Are persons act in concert. | |||||||||||||||||
| Shareholding of the top 10 shareholders unrestricted shares held | ||||||||||||||||||
| Name of shareholders | Amount of unrestricted shares held at period-end | Type of shares | ||||||||||||||||
| Type | Amount | |||||||||||||||||
| Shougang Group | 3,173,066,077 | |||||||||||||||||
| Baowu Group | 793,408,440 | |||||||||||||||||
| Beijing Yizhen Technology Development Co., Ltd | 159,790,000 | |||||||||||||||||
| Beijing Namunani Asset Management Co., Ltd | 79,900,000 | |||||||||||||||||
| Beijing Shiliugang Business Management Co., Ltd | 58,590,000 | |||||||||||||||||
| Liu Wei | 55,285,701 | |||||||||||||||||
| Beijing Xiaojian Technology Development Co., Ltd | 49,270,000 | |||||||||||||||||
| Hong Kong Exchanges and Clearing Limited | 43,311,794 | |||||||||||||||||
| Beijing Saina Investment Development Co., Ltd | 26,475,500 | |||||||||||||||||
| Beijing Andes Investment Development Co., Ltd | 18,650,000 | |||||||||||||||||
| Connected associated relationship or acting in concert among the top 10 shareholders holding tradable shares without selling restrictions, and between the top 10 shareholders holding tradable shares without selling restrictions and the top 10 shareholders | Shougang Group holds 2.19% of Baosteel Co., Baowu Group Co., Ltd. and its persons acting in concert hold 61.93% of Baosteel Co. In addition, Shougang Group has no relationship or concerted acting relationship with other top 10 shareholders; Beijing Yizhen Technology Development Co., Ltd., Beijing Namunani Asset Management Co., Ltd. and Beijing Shiliugang Business Management Co., Ltd , Beijing Xiaojian Technology Development Co., Ltd., Beijing Saina Investment Development Co., Ltd. and Beijing Andes Investment Development Co., Ltd. Are persons act in concert. | |||||||||||||||||
Whether top ten common stock shareholders or top ten common stock shareholders with unrestricted shares have a buy-backagreement dealing during the reporting period
□Yes √No
The top ten common stock shareholders or top ten common stock shareholders with unrestricted shares of the Company have nobuy-back agreement dealing during the reporting period.
2. Controlling shareholders
Nature of controlling shareholders: local state-owned holdingType of controlling shareholders: legal person
Beijing Shougang Co. Ltd Annual Report 2020
| Name of controlling shareholders | Legal representative / person in charge of the company | Date of establishment | Organization code | Main businesses |
| Shougang Group | Zhang Gongyan | 13 May 1981 | 911100001011200015 | Industry, construction, geological examination, transportation, foreign trade, post and telecommunications, finance and insurance, scientific research and comprehensive technical services, domestic commerce, public catering, material supply and marketing, warehousing, real estate, residential services, consulting services, leasing, agriculture, forestry, animal husbandry and fishery (excluding business without special permission); authorized operation and management of state-owned assets; hosted Shougang Daily newspaper; design and production of TV advertisements; use of self-owned TV stations to publish advertisements; design and production of print advertising; use of self-owned Shougang Daily to publish advertisements; sewage treatment and recycling; seawater desalination; literary and artistic creation and performance: sports project management (excluding high-risk sports projects); stadium management; Internet information services; Municipal solid waste treatment. (enterprises shall independently choose business projects and carry out business activities in accordance with the law; municipal solid waste treatment, Internet information services and projects subject to approval in accordance with the law after licensing; they shall not engage in business projects prohibited or restricted by local policies) |
| Domestic and foreign shares held by the controlling shareholders | 1. Domestic: (1) Huaxia Bank, 16.90%；(2) Foton Motor, 1.22%；(3) Shanxi Coking, 2.79%；(4) Haohua Energy Resource, 1.86%；(5) Qinhuangdao Port, 0.74%; (6) Bank of Communications, 0.01%; (7) China Galaxy Securities 0.02%; (8) Baosteel Co., 2.19%. 2. Overseas: (1) Chief Sifang Group, 60.88%; (2) BeijingWestIndustriesInternational, 52.55%; (3) Shougang Holding, 34.91%; (4) Shougang Fushan Resources Group, 33.09%; (5) Shougang Concord Century Holdings, 47.15%; (6) Global Digital Creative Holdings Ltd. , 41%. | |||
Controlling shareholders turnover during the reporting period
□Applicable √Not applicable
There was no changes of controlling shareholders during the reporting period.
3. Actual controller of the company and persons acting in concert
Nature of actual controller: local management agency of state-owned assetsType of actual controller:
Actual controller turnover during the reporting period
□Applicable √Not applicable
The actual controller of the company was not changed during the reporting period.Block diagram of property rights and controlling relations between the Company and actual controllers
Beijing Shougang Co. Ltd Annual Report 2020
Actual controller controlling the company through trust or other asset management methods
□Applicable √Not applicable
4. Other legal person shareholders with over 10% shares held
√Applicable □Not applicable
| Name of legal person shareholders | Legal representative / person in charge of the company | Date of establishment | Registered capital | Main businesses |
| China Baowu Steel Group Corporation Ltd. | Chen Derong | 1 Jan. 1992 | RMB 52,791,101,000 | State-owned assets operation within the scope authorized by the State Council and investment and operation of state-owned capital. (if necessary, carrying out business activities only after approval of government agencies) |
5. Limitation on reducing the holdings of shares of controlling shareholders, actual controllers, restructuring side and othercommitment subjects
□Applicable √Not applicable
Beijing Shougang Co. Ltd Annual Report 2020
Section VII. Preferred Shares
□Applicable √Not applicable
No preferred shares issued by the company during the reporting period.
Beijing Shougang Co. Ltd Annual Report 2020
Section VIII. Convertible Bonds
□Applicable √Not applicable
No convertible bonds issued by the company during the reporting period.
Beijing Shougang Co. Ltd Annual Report 2020
Section IX. Directors, Supervisors, Senior Management and EmployeesI. Changes in shares held by directors, supervisors and senior management
| Name | Post | Status of employment | Gender | Age | Start date of term | End date of term | Number of shares held at the beginning of the period | Number of shares increased in the current period | Number of shares reduced in the current period (shares) | Other changes | Number of shares held at the end of the period |
| Zhao Minge | Chairman | Incumbent | Male | 54 | 2013/05/16 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Liu Jianhui | Director | Incumbent | Male | 56 | 2014/09/19 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Qiu Yinfu | Director | Incumbent | Male | 53 | 2014/09/19 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Wu Dongying | Director | Incumbent | Male | 57 | 2019/12/23 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Yin Tian | Independent director | Incumbent | Male | 66 | 2016/01/07 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Ye Lin | Independent director | Incumbent | Male | 57 | 2017/12/26 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Yang Guipeng | Independent director | Incumbent | Male | 48 | 2016/01/07 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Liu Shen | Independent director | Incumbent | Male | 45 | 2020/06/23 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Peng Feng | Independent director | Incumbent | Male | 41 | 2020/06/23 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Shao Wence | Supervisory board chairman | Incumbent | Male | 57 | 2019/12/23 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Guo Liyan | Supervisory | Incumbent | Female | 45 | 2016/01/07 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Yang Mulin | Supervisory | Incumbent | Male | 49 | 2019/12/23 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Chen Xiaowei | Employee representative supervisor | Incumbent | Female | 47 | 2019/12/23 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Guo Yuming | Employee representative supervisor | Incumbent | Male | 53 | 2019/12/23 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Liu Jianhui | General manager | Incumbent | Male | 56 | 2014/08/29 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Peng Kaiyu | Vice general manager | Incumbent | Male | 40 | 2019/04/24 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Li Ming | Vice general manager | Incumbent | Male | 46 | 2015/01/27 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Li Baizheng | Chief accountant | Incumbent | Male | 55 | 2015/10/28 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Sun Maolin | Vice general manager | Incumbent | Male | 44 | 2017/10/25 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Li Jingchao | Vice general manager | Incumbent | Male | 54 | 2017/10/25 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Ma Jiaji | Chief engineer | Incumbent | Male | 57 | 2019/12/23 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Chen Yi | Vice general manager | Incumbent | Male | 53 | 2019/04/24 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Chen Yi | Company secretary | Incumbent | Male | 53 | 2015/08/26 | 2022/12/22 | 0 | 0 | 0 | 0 | 0 |
| Tang Di | Independent director | Retired | Male | 65 | 2014/06/27 | 2020/06/23 | 0 | 0 | 0 | 0 | 0 |
| Zhang Bin | Independent director | Retired | Male | 47 | 2014/09/19 | 2020/06/23 | 0 | 0 | 0 | 0 | 0 |
| Total | -- | -- | -- | -- | -- | -- | 0 | 0 | 0 | 0 | 0 |
II. Changes in directors, supervisors and senior manager
√Applicable □Not applicable
| Name | Post | Type | Date | Reason of changes |
| Di Tang | Independent director | End of term | 2020/06/23 | The six-year term has expired. |
| Bin Zhang | Independent director | End of term | 2020/06/23 | The six-year term has expired. |
III. Current position
Professional background, main work experience and main responsibilities of the current board members, supervisors, and senior managerof the Company.A. Board members
1. Zhao Minge: Chairman, professor-level senior engineer, postgraduate education, Ph.D of Engineering. The major employment historyof Mr. Zhao is as follows: a teacher of mining and metallurgy department of Beijing Iron and Steel College; a deputy director of teachingsection of educational division, a deputy director (in charge of daily routine) of educational division, the vice president of the college; adeputy director of Shougang Training Centre; a deputy director of Shougang Ironmaking Factory; a deputy director of the No.2Ironmaking Plant of Shougang Co.; the secretary of CPC Committee of Beijing Shougang Oxygen Factory; a director of ShougangTraining Center (Training Department); the head (first vice president of the Institute) of Technical Quality Department (TechnicalResearch Institute, Xingang Technical Quality Department); a deputy secretary of CPC Committee and deputy general manager ofXingang Co.; a member of the board and general manager of Shougang Changzhi Steel&Iron Co., Ltd.; a director and general manager ofShougang Changzhi Steel&Iron Co., Ltd. (assistant level of the headquarter); the assistant of general manager of Shougang Corporation,the deputy chief engineer and president of Shougang Technology Research Institute; later, concurrently, the deputy secretary of the CPCCommittee and executive deputy general manager of Shougang Jingtang United Iron&Steel Co., Ltd.; a standing member of CPCCommittee, director, vice general manager of Shougang Co., at the same time, appointed as the director of Beijing Shougang Co., Ltd.
Beijing Shougang Co. Ltd Annual Report 2020
and Shougang Jingtang United Iron & Steel Co., Ltd. In addition, Mr. Zhao also is a standing member of CPC Committee, director, vicegeneral manager of Shougang Group. Mr. Zhao served as Chairman of Beijing Shougang Co., Ltd. Also, Mr. Zhao is the deputy secretaryof the Party, the director and the general manager of Shougang Group.
2. Liu Jianhui: director and general manager, professor-level senior engineer, postgraduate education, master of engineering. The majoremployment history of Mr. Liu is as follows: a professional in the steel-making section of Beigang Technology Office and deputy directorof the steel-making inspection station; a student of Lugou Engineering School of Shougang; a deputy director of the No.1 Steel-makingPlant of Shougang and director of the Shougang’ Research Institute; the chief engineer, technical assistant of factory manager andtechnical section director of the No.2 Steelmaking Plant of Shougang and director of the Research Institute; a technical assistant of thefactory manager and director of the technical section and technical deputy director of the No.2 Steel-making Plant of ShougangCorporation; a deputy director of the No.2 Steelmaking Plant of Beijing Shougang Co., Ltd.; the assistant of general manager and head ofsteelmaking department of Shouqin Co.; the assistant of general manager and deputy general manager of Qiangang Co.; the deputygeneral manager (acting general manager) and general manager of sales company of Shougang Corporation; the deputy secretary of CPCCommittee, general manager and director of marketing management department of Shougang Co.; the deputy secretary of CPCCommittee of Shougang Co., director, general manager and director of marketing management department; the deputy secretary of CPCCommittee, director and general manager of Shougang Co., concurrently served as secretary of CPC Committee and director for JingtangCo. At present, he is the secretary of CPC Committee, director and general manager of Beijing Shougang Co., Ltd.
3. Qiu Yinfu: director, senior engineer, university education. The major employment history of Mr. Qiu is as follows: a professional andperson in charge of the mobile section of Shougang’ Medium and Heavy Plate Plant; the deputy director, director, or director andsecretary of CPC Branch of mobile division of the Shougang’s No.2 Steelmaking Plant; a director and secretary of CPC Committee of theNo.2 Steelmaking Plant of Beijing Shougang Co., Ltd.; the deputy director to director of Shougang Oxygen Factory; the director andsecretary of CPC Branch of Oxygen Production Division and director of the Oxygen Factory of Shougang; the director of the OxygenFactory of Shougang and head of Jingtang Integration Project; the director of the Oxygen Factory of Shougang and head of JingtangIntegration Project, director of Oxygen Production Branch of Tangshan Shougang Baoye Steel & Iron Co., Ltd.; the director of coldrolling operation department and assistant to general manager in Qiangang Co.; director and secretary of CPC Committee of cold rollingoperation department, and assistant to general manager of Qiangang Co.; the director and secretary of CPC Committee of cold rollingoperation department, and deputy general manager of Qiangang Co.; the deputy secretary of CPC Committee, director of the board andgeneral manager of Cold-R Co.; deputy secretary of CPC Committee, chairman and general manager of Cold-R Co.,; deputy secretary ofCPC Committee, chairman and general manager of Cold-R Co., and deputy general manager of Shougang Co.; the deputy secretary of theCPC Committee, chairman of labor union, deputy general manager of Shougang Co., and secretary of CPC Committee of Qiangang Co.;the deputy secretary of the CPC Committee, chairman of labor union, deputy general manager of Shougang Co., secretary of CPCCommittee of Qiangang Co., director of BAIC Motor Corporation., Ltd., director of Beijing Automobile Investment Co., Ltd.; Atpresent, he is the secretary of CPC Committee and chairman of Jingtang Co., director of Shougang Co., and director of BAIC Motor Co.,Ltd.
4. Wu Dongying: director, senior engineer, PhD candidate. The major employment history of Mr. Wu is as follows: a teacher of HefeiUniversity of Technology; a researcher, person in charge and deputy director of strategic research agency of Baosteel; the director ofstrategic section under planning & development department of Baosteel Group; the director of strategic development department ofBaosteel Group; the director of economy and management institute of Baosteel Group; the general manager of planning & developmentdepartment and director of economy & planning institute of Baosteel Group; the general manager of planning & development departmentand director of economy & planning institute of Baowu Group. At present, he is the general manager (president) of strategic planningdepartment (economic & planning institute) of Baowu Group and director of Shougang Co.
5. Yin Tian: independent director, university education, professor, Ph.D supervisor. Once served as assistant professor, lecturer andassociate professor of Southwest University of political science and law, and visiting scholar sent by the State Education Commission toToulouse University of Social Sciences, director and professor of French law research center of Southwest University of political scienceand law, and director, professor and doctoral supervisor of Law Department of Southwest University of political science and law. Now Mr.Yin is a professor, doctoral supervisor and director of the civil law research center of Peking University, and also serves as the director ofChina law society, vice president of China Civil Law Research Association, President of China Insurance Law Research Association,special supervisor of the Supreme People's court, consulting expert of the Supreme People's Procuratorate, and independent director ofSkyworth Digital Co., Ltd. On 7 January 2016, Mr. Yin served as an independent director of Beijing Shougang Co., Ltd.
6. Ye Lin: independent director, professor and doctoral supervisor, doctor in law, Ye Lin was serving Law School of Renmin University ofChina (hereinafter “RUC”) as an assistant, lecturer, associate professor and professor, successively. At present, he is the director, professorand doctoral supervisor of Civil & Commercial Law Teaching and Research Agency of RUC Law School. He is also an independentdirector of China Life Asset Management Co., Ltd., an independent director of Founder Securities Co., Ltd., and a part-time lawyer ofBeijing Shengang Law Firm. Major part-time jobs include: the vice president of China Commercial Law Society under China LawSociety, the vice president of Civil and Commercial Law Society under Beijing Law Society, the president of Beijing Consumer RightsProtection Law Society; a legislative consultant of Financial and Economic Affairs Committee of the National People's Congress of PRC,a consultant of drafting group to Futures Law, a consultant of Administrative Punishment Committee of CSRC, a consumer rightsprotection social supervisor of China Insurance Regulatory Commission, a consultant of the Legal Professional Committee of theInsurance Society of China, a member of the Advisory Committee of Beijing High People’s Court, a consultant of the Company LawCommittee of China Lawyers Association, a consultant of the Company Law Committee of Beijing Lawyers Association, a member ofthe Professional Committee of Shanghai Stock Exchange and China Financial Futures Exchange, a arbitrator and expert of the AdvisoryCommittee of China International Economic and Trade Arbitration Commission. Ye Lin serves Shougang Co. as an independent director
Beijing Shougang Co. Ltd Annual Report 2020
from 26 December, 2017.
7. Yang guipeng: independent director, university education and CICPA. The major employment history of Mr. Yang is as follows: theproject manager of Beijing Wangda Certified Public Accountants Firm., the department manager of Zhongzhou Certified PublicAccountants Firm, the senior manager of Zhongtianxin Certified Public Accountants Firm, the partner of Tianhua Certified PublicAccountants Firm, the managing partner of Grant Thornton China LLP, the member of the third CSRC Public Offering ReviewCommittee of Growth Enterprise Board, and the partner of BDO China Shu Lun Pan Certified Public Accountants LLP. Mr. Yang wasappointed as the independent director of Shougang Co. on 7 January, 2016. And he also is an independent director of Tangshan SanyouChemical Co., Ltd. and Rizhao Port Co., Ltd.
8. Liu Shen: independent director, Ph.D. Once served as an employee of the real estate credit department of Shanghai Branch of ChinaConstruction Bank, assistant manager, manager and senior manager of the listed company Department of Shanghai Stock Exchange,executive manager and assistant director of the office of Shanghai Stock Exchange, assistant director of the second SupervisionDepartment of listed company of Shanghai Stock Exchange, deputy director of the issuance and listing business center of Shanghai StockExchange and member Department of Shanghai Stock Exchange Deputy director. During the period, Mr.Liu worked in the issuanceSupervision Department of China Securities Regulatory Commission (CSRC), and is a member of the 16th main board stock issuanceexamination committee of CSRC. At present, Mr.Liu is the vice general manager of Shanghai Xinfugang Real Estate Development Co.,Ltd., an independent director of Shanghai Kangheng environment Co., Ltd. (unlisted company) and an independent director of GuizhouGuotai Liquor Co., Ltd. (unlisted company). Mr. Liu serves as an independent director of Beijing Shougang Co., Ltd. since 23 June 2020.
9. Peng Feng: independent director, master degree, professor level senior engineer. Mr. Peng once served as assistant engineer, engineerand deputy director of Smelting raw materials department of Metallurgical Industry Planning and Research Institute, chief designer andvice director of smelting raw materials department of Metallurgical Industry Planning and Research Institute, chief designer and directorof smelting raw materials department of Metallurgical Industry Planning and Research Institute. At present, Mr. Peng is vice chiefengineer and chief designer of Metallurgical Industry Planning and Research Institute, director of smelting raw materials department, vicechairman of ferroalloy branch of China Society for metals, and executive deputy secretary of Zhongguancun Stainless Steel and SpecialAlloy New Material Industry Technology Innovation Alliance. Mr. Peng serves as an independent director of Beijing Shougang Co., Ltd.since 23 June 2020.B. Supervisors
1. Shao Wence: Chairman of the supervisory committee, master degree, senior engineer. The major employment history of Mr. Shao isas follows: a professional in the mobile division of Shougang Oxygen Factory; the person in charge and deputy secretary of CPC Branchin repair plant of Shougang Oxygen Factory; the professional (assisting roles of sections or equivalents) and deputy director of the powersection under Beigang mobile division; the secretary (assistant level) of the Beigang’s mobile division; the deputy director in charge ofthe equipment and director of Shougang Oxygen Factory; the director of the Oxygen Factory of Shougang Corporation; the director of theOxygen Factory of Shougang Co.; the director and secretary of CPC Committee of the mobile department of Shougang Corporation(Xingang Company); the director and secretary of CPC Committee of the equipment department of Shougang Corporation (XingangCompany); the director and secretary of CPC Committee of the Equipment Department of Shougang Corporation (Xingang Company),and the director of the equipment department of Jingtang Co.; the director of the energy department of Jingtang Co.; the director of theenergy and environment department; the director and secretary of CPC Committee of the energy and environment department of JingtangCo.; the secretary of CPC Committee, the secretary of Commission for Discipline Inspection (hereinafter “CDI” in Section 9), and thechairman of labor union of the energy and evironment department of Jingtang Co.; the director of the equitpment department of JingtangCo.; the director of the engineering department of Jingtang Co.; the secretary of CDI of Jingtang Co.; the executive deputy director of thework administration of supervisory committee of Shougang Corporation. At present, he is the executive deputy director of the work officeof supervisory committee of Shougang Corporation. and the chairman of the supervisory committee of Shougang Co.
2. Guo Liyan: Supervisor, university education, MBA, senior accountant. The major employment history of Mrs. Guo is as follows: amember of the financial section of the Mechanical Factory of Beijing Shougang Machinery& Electric Co., Ltd.; an auditor of the auditadministration of Beijing Shougang Machinery& Electric Co., Ltd., the director of the accounting section under the Hydraulic Center ofBeijing Shougang Machinery& Electric Co., Ltd., the deputy director of the finance division under Shougang Corporation finance &accounting department; the deputy director of the cost division under Shougang Corporation finance & accounting department; thedeputy director of the financial station of the Technical Research Institute under Shougang Corporation finance & accounting department;the executive deputy director of the first division under audit department of Shougang Corporation; an assistant to the director and deputydirector of Shougang Corporation audit department; the director of Shougang Corporation audit department and supervisor of ShougangCo. Mrs. Guo is the current director of audit department of Shougang Group and the current supervisor of Shougang Co.,.
3. Yang Mulin: Supervisor, university education, master of engineering, senior economist. The major employment history of Mr. Yang isas follows: the dispatcher and production planner of production department of Qinhuangdao Shougang Plate Mill Co., Ltd. (hereinafter“Qinhuangdao Plate Co.”) the production manager of comprehensive department of Qinhuangdao Branch of Zhongshou, the secretary anddeputy director of factory affairs office of Qinhuangdao Plate Co.; the executive deputy director of human resources department and thedeputy director of factory affairs office of Qinhuangdao Plate Co.; the director of human resources department and the director of factoryaffairs office of Qinhuangdao Plate Co.; assistant to the general manager of Qinhuangdao Plate Co.; the director of human resourcesdepartment of Qinhuangdao Plate Co.; assistant to the director and duty director of human resources department of Jingtang Co.; thesecretary of CPC Committee, secretary of CDI and chairman of labor union of cold-rolled operation department of Jingtang Co.; thedirector of organization department and human resources department under CPC Committee of Jingtang Co.; the deputy director of labor& salary department of Shougang Corporation; the deputy director of labor & salary department of Shougang Corporation; the director of
Beijing Shougang Co. Ltd Annual Report 2020
system optimization department of Shougang Corporation. Besides serving Shougang Co. as a supervisor, Yang Mulin is the head ofsystem optimization department of Shougang Group Co., Ltd
4. Chen Xiaowei: supervisor from the staff, master degree, senior political engineer. The major employment history of Mrs. Guo is asfollows: the administrator of the comprehensive section under the commerce division of Shougang Mining Corporation; the administratorand director of the comprehensive section under the commerce division, and the manager of material distribution department of ShougangMining Corporation; the director of operating & management section under commerce division of Shougang Mining Corporation; theworker of the information section under the operation department of Qiangang Co.; the deputy director (temporary training) and then thedeputy director of secretariat section of Qiangang Co.; and the assistant to the secretary of CPC Committee and director of comprehensiveoffice under hot-rolled operation department of Qiangang Co.; the deputy secretary of hot-rolled operation department of Qiangang Co.;the deputy secretary of CPC Committee, the secretary of CDI, and the chairman of labor union under hot-rolled operation department ofQiangang Co.; the deputy chairman of labor union, the secretary of authority CPC Committee, the secretary of CDI, the chairman of laborunion, the deputy director of CPC affairs department of Shougang Co.; the deputy chairman of labor union, the secretary of Official CPCCommittee, the deputy director of CPC affairs department of Shougang Co.; the chairman of Shougang Co. labor union. Currently, ChenXiaowei is the supervisor from the staff, the member of CPC Committee, and the chairman of labor union, in Shougang Co.
5. Guo Yuming: supervisor from the staff, university education, senior technician. The major employment history of Mr. Guo is asfollows: a steelmaker in Shougang No.2 Steelmaking Factory, the head of steelmaking plant of Steelmaking Branch of Qiangang Co.; thehead of steelmaking operation plant 1 under steelmaking operation department of Qiangang Co. At present, he is the chief steelmakingoperator of No.1 steelmaking operation area under steelmaking operation department of Shougang Co. and the supervisor from the staff ofShougang Co.C. Senior manager
1. Liu Jianhui: director and general manager, professor-level senior engineer, postgraduate education, master of engineering. The majoremployment history of Mr. Liu is as follows: a professional in the steel-making section of Beigang Technology Office and deputy directorof the steel-making inspection station; a student of Lugou Engineering School of Shougang; a deputy director of the No.1 Steel-makingPlant of Shougang and director of the Shougang’ Research Institute; the chief engineer, technical assistant of factory manager andtechnical section director of the No.2 Steelmaking Plant of Shougang and director of the Research Institute; a technical assistant of thefactory manager and director of the technical section and technical deputy director of the No.2 Steel-making Plant of ShougangCorporation; a deputy director of the No.2 Steelmaking Plant of Beijing Shougang Co., Ltd.; the assistant of general manager and head ofsteelmaking department of Shouqin Co.; the assistant of general manager and deputy general manager of Qiangang Co.; the deputygeneral manager (acting general manager) and general manager of sales company of Shougang Corporation; the deputy secretary of CPCCommittee, general manager and director of marketing management department of Shougang Co.; the deputy secretary of CPCCommittee of Shougang Co., director, general manager and director of marketing management department; the deputy secretary of CPCCommittee, director and general manager of Shougang Co., concurrently served as secretary of CPC Committee and director for JingtangCo. At present, he is the secretary of CPC Committee, director and general manager of Beijing Shougang Co., Ltd.
2. Peng Kaiyu: vice general manager, postgraduate education, master of engineering, MBA, senior engineer. The major employmenthistory of Mr. Peng is as follows: a technician in the production technology office of the Qiangang Co. Steelmaking Branch; the chiefdeputy operator (training on duty), the chief deputy operator and the chief operator, in No.1 steelmaking refining operation area understeelmaking operation department of Shougang Co.; the assistant to the director under the steelmaking operation department of QiangangCo.; the assistant to the director and the deputy director of steelmaking operation department of Qiangang Co.; the deputy director(presiding over work) and director of steelmaking operation department of Shougang Co.; the secretary of CPC Committee, the ecretaryof CDI, chairman in labor union and director of steelmaking operation department of Shougang Co.; the secretary of CPC Committee, thesecretary of CDI and the chairman in labor union, under steelmaking operation department of Shougang Co.; the deputy secretary of CPCCommittee of Shougang Co. Mr. Peng is the current deputy secretary of CPC Committee and the deputy general manager of ShougangCo.
3. Li Ming: deputy general manager, university education, doctoral candidate, professor level senior engineer. The major employmenthistory of Mr. Li is as follows: a technician, person in charge of refining workshop, the deputy director of refining workshop, theexecutive deputy director of refining workshop, the director of refining workshop, the deputy director (leading roles of sections orequivalents) of technical research section; an assistant to the director of the technical quality division and the director of the technicalsection under technical quality division, the deputy director of technical quality division, in Qiangang Co.; an assistant to the manager andthen the deputy manager of Qiangang Co.; the deputy manager of Qiangang Co.; the deputy secretary of CPC Committee and director ofmarketing management department of Shougang Co.; the deputy secretary of CPC Committee and director of Marketing ManagementDepartment, and the deputy general manager of Shougang Co.; the deputy secretary of CPC Committee and director of marketingmanagement department, and the deputy general manager and director of Shougang Co. At present, he is the deputy secretary of CPCCommittee and director of marketing management department, and the deputy general manager and director of Shougang Co. Executivedirector and general manager of Beijing Shougang Steel Trading Investment Management Co., Ltd.
4. Li Baizheng: university education, chief accountant, accountant, economist. The major employment history of Mr. Li is as follows: theplanning controller of No.1 Steelmaking Factory; the dispatcher of production setion, the planning controller of steelmaking workshop,the planning controller of production section, the chief controller of production section, the planner of production section, the director ofbillet area, the deputy director of production section, the director of finance and accounting section, planning person in charge ofproduction and planning section, in No. 2 Steelmaking Factory; the deputy director and then director of finance and accountingdepartment of Qiangang Co.; the director of finance and accounting department of Qiangang Co.; the chief accountant of Shougang Co.
Beijing Shougang Co. Ltd Annual Report 2020
Li Baizheng is the current chief accountant of Shougang Co., the board member of Beijing Shougang Cold Rolling Co., Ltd. andShougang Jingtang United Iron & Steel Co., Ltd.
5. Sun Maolin: deputy general manager, university education, MBA, engineer. The major employment history of Mr. Sun is as follows:
when serving Shougang Medium and Heavy Plate Factory, a professional in the technical section, the deputy secretary of CPC Branchand deputy director of hot rolling section, the secretary of CPC Branch of operation zone B, the deputy director of technical researchsection; the deputy director of technical section under technical quality division, an assistant to the director of technical quality division,the executive deputy director of silicon steel department, the standing deputy director of silicon steel department in Qiangang Co.; theexecutive deputy director and then director of silicon steel business department of Shougang Co.; the director of Silicon Steel EngineeringResearch Center; the secretary of CPC Committee and director of silicon steel business department, and an assistant to the generalmanager of Shougang Co.; the director of silicon steel business department. Sun is the current deputy general manager of Shougang Co.and director of Silicon Steel Engineering Research Center. He also serves Zhixin Co. as the executive director, Minmetals Special Steel(Dongguan) Co., Ltd. as the vice chairman of the board, and Minmetals Tianwei Steel Co., Ltd. as a director.
6. Li Jingchao: deputy general manager, university education, engineer. The major employment history of Mr. Li is as follows: a millingworker of rail workshop in Shougang Middle-sized Factory; an electrician of electrical apparatus workshop in Shougang Power Factory;the person in charge of the Youth League Committee of Shougang Testing Branch; in Shougang No. 3 Steel Mill, the worker ofsteelmaking workshop, the administrative person in charge of the billet cast machine workshop, the production deputy director of powerworkshop, the director (leading roles of sections or equivalents) of power workshop, the director (leading roles of sections or equivalents)of spare parts section, the deputy director (leading roles of sections or equivalents) of mobile section, the deputy director (leading roles ofsections or equivalents) of equipment section, the deputy director (leading roles of sections or equivalents) of equipment section anddirector (leading roles of sections or equivalents) of power workshop, the deputy director (leading roles of sections or equivalents) ofequipment section; an assistant to the director, the deputy director, the director of equipment division and the director of equipmentdepartment of Qiangang Co.; an assistant to the general manager and the director of equipment department of Qiangang Co.; an assistantto the general manager of Qiangang Co.; an assistant to the general manager of Qiangang Co., and the secretary of CPC Committee andthe director of equipment department of Shougang Co.; an assistant to the general manager of Qiangang Co.; an assistant to the generalmanager of Qiangang Co., and the secretary of CPC Committee and the director of equipment department of Shougang Co., the directorof intelligent application department of Shougang Co.; an assistant to the general manager of Qiangang Co., and secretary of CPCCommittee and the director of equipment department of Shougang Co. At present, Li Jingchao is the deputy general manager ofShougang Co., and concurrently vice chairman of Qian'an Sinochem Coal Chemical Industrial Co., Ltd. and the director of Qian'an ChinaPetroleum Kunlun Gas Co., Ltd.
7. Ma Jiaji: master degree, chief engineer, professor level senior engineer. The major employment history of Mr. Ma is as follows: aprofessional in the technical section of Shougang No.2 Wire Rod Coil Factory; a professional in the steel rolling section under thetechnical division of Shougang Beigang Co., a designer in the rolling process section of Shougang Design Institute, a deputy group leaderand group leader of the first group of the rolling section under steel rolling division of Shougang Design Institute; the deputy director ofthe steel rolling section under steel rolling department of Shougang Design Institute; a deputy chief in the steel rolling design office ofBeijing Shougang Design Institute; a production deputy director in Shougang Small-sized Factory; the production deputy director of No.1 Plate Factory of Shougang Corporation. The director of Shougang No.2 Wire Rod Coil Factory; the director of Beijing Shougang FuluShicai Coated Plate Co., Ltd.; the leader of cold-rolled preparation group, the general manager of Beijing Shougang Fulu Shicai CoatedPlate Co., Ltd.; the leader of cold-rolled preparation group, the director and general manager of Beijing Shougang Fulu Shicai CoatedPlate Co., Ltd., and the deputy general manager of Shougang Co.; leader of cold-rolled preparation group, the director and generalmanager of Beijing Shougang Fulu Shicai Coated Plate Co., Ltd., and the director of Cold Rolled Sheet Steel Department and the deputygeneral manager of Shougang Co.; the manager of Shunyi Cold Rolled Branch and the deputy general manager of Shougang Co.; themanager and board member of Cold-R Co. and the deputy general manager of Shougang Co.; the deputy general manager of ShougangCo.; the deputy chief engineer of Qiangang Co. Ma is the current deputy chief engineer of Shougang Co.
8. Chen Yi: deputy general manager, board secretary, postgraduate education, doctor of management, senior economist. The majoremployment history of Mr. Chen is as follows: a professional in the mobile section, an assistant to the director of the maintenanceworkshop, the deputy director of the mobile section of Shougang Medium-sized Rolling Mill; the secretary of the CPC Committee office;a trainee of the overseas training course of Shougang University; the deputy director of the engineering division of the Jichai technicaltransformation leading group of Shougang; the deputy director of the Office (CPC Office) under the Shougang Economy & TradeDepartment; the deputy director of the board secretary office of Beijing Shougang Xinganglian Technology&Trade Co., Ltd.; the deputymanager of Shougang Marketing Co.; the deputy director of marketing management department, the deputy director of marketingmanagement department and the person in charge of the board secretary office, in Shougang Co.; the board secretary and the director ofthe board secretary office of Shougang Co.; the general counsel, board secretary and director of the board secretary office of ShougangCo., and director of Cold-R Co. and Jingtang Co. At the end of the reporting report, Chen Yi was the deputy general manager, boardsecretary, general counsel of Shougang Co., and director of Cold-R Co. and Jingtang Co.Position in related entity
√Applicable □Not applicable
Beijing Shougang Co. Ltd Annual Report 2020
| Name | Entity | Position in shareholder company | Start date of term | End date of term | Received remuneration from other entity (Y/N) |
| Zhao Minge | Shougang Group Co., Ltd. | Deputy secretary of the Party Committee, Director and General Manager | 2020.07.01 | Y | |
| Shao Wence | Shougang Group Co., Ltd. | Executive deputy director of the office of the board of supervisors | 2017.06.01 | Y | |
| Guo Liyan | Shougang Group Co., Ltd. | Director of audit department | 2017.06.01 | Y | |
| Yang Mulin | Shougang Group Co., Ltd. | Head of system optimization department | 2017.06.01 | Y | |
| Wu Dongying | China Baowu Steel Group Corporation Ltd. | General manager (president) of strategic planning department (Institute of economics and planning) | 2019.12.01 | Y |
Position in other entity
□ Applicable √ Not applicable
Notes for any punishment from securities review and management authorities, on resigned or current directors, supervisors, and seniormanagers within the three years
□ Applicable √ Not applicable
IV. Remuneration of directors, supervisors and senior managementDecision making procedure, determination basis and actual payment of remuneration for directors, supervisors and seniormanagers：
Remuneration for directors: the independent directors of the Company collect the allowance of independent directors, and theallowance standard of independent directors is determined by the general meeting of shareholders; the director who concurrently serves asthe general manager does not collect the remuneration of directors; director Qiu Yinfu collects remuneration in Jingtang Co., which is notthe director remuneration; other directors do not collects remuneration from the Company.Remuneration for supervisors: employee representative supervisors collect remuneration from the Company, while other supervisors donot collect remuneration from the Company. The employee representative supervisor shall be remunerated according to the position ofnon-supervisor in the Company.Remuneration for senior management: the remuneration committee under the board of directors is responsible for organizing theperformance assessment to the general manager and proposes remuneration, in terms of the Annual Measures for Assessment andDistribution of General Manager Salary, and reports the performance and deserved remuneration of general manger to the board. After theconsideration and approval from the board of directors, the company actually affords the remuneration. Other senior managementremuneration is afforded monthly, in accordance with performing duties assessed by the general manager and director under the Board’sauthorization.Remuneration of directors, supervisors and senior management during the reporting period
Unit：RMB 0,000
| Name | Position | Gender | Age | Status of employment | Total pretax remuneration received from the company | Whether to get remuneration from related parties of the company |
| Zhao Minge | Chairman | Male | 54 | Incumbent | 0 | Yes |
| Liu Jianhui | Director | Male | 56 | Incumbent | 0 | No |
| Qiu Yinfu | Director | Male | 53 | Incumbent | 67.65 | No |
| Wu Dongying | Director | Male | 57 | Incumbent | 0 | Yes |
| Yin Tian | Independent director | Male | 66 | Incumbent | 10.5 | No |
| Ye Lin | Independent director | Male | 57 | Incumbent | 10.5 | No |
| Yang Guipeng | Independent director | Male | 48 | Incumbent | 10.5 | No |
| Liu Shen | Independent director | Male | 45 | Incumbent | 6 | No |
| Peng Feng | Independent director | Male | 41 | Incumbent | 0 | No |
| Shao Wence | Supervisory board chairman | Male | 57 | Incumbent | 0 | Yes |
| Guo Liyan | Supervisory | Female | 45 | Incumbent | 0 | Yes |
| Yang Mulin | Supervisory | Male | 49 | Incumbent | 0 | Yes |
| Chen Xiaowei | Employee Representative Supervisor | Female | 47 | Incumbent | 45.11 | No |
| Guo Yuming | Employee Representative Supervisor | Male | 53 | Incumbent | 43.81 | No |
| Liu Jianhui | General manager | Male | 56 | Incumbent | 62.33 | No |
Beijing Shougang Co. Ltd Annual Report 2020
| Peng Kaiyu | Vice General Manager | Male | 40 | Incumbent | 58.24 | No |
| Li Ming | Vice General Manager | Male | 46 | Incumbent | 57.45 | No |
| Li Baizheng | Chief accountant | Male | 55 | Incumbent | 55.91 | No |
| Sun Maolin | Vice General Manager | Male | 44 | Incumbent | 58.21 | No |
| Li Jingchao | Vice General Manager | Male | 54 | Incumbent | 58.57 | No |
| Ma Jiaji | Chief engineer | Male | 57 | Incumbent | 57.31 | No |
| Chen Yi | Vice General Manager Company secretary | Male | 53 | Incumbent | 51.45 | No |
| Tang Di | Independent director | Male | 66 | Retired | 4.5 | No |
| Zhang Bin | Independent director | Male | 48 | Retired | 0 | No |
| Total | -- | -- | -- | -- | 658.04 | -- |
Information on share option scheme provided to directors and senior management during the reporting period
□ Applicable √ Not applicable
V. Company employees
1. Number of employees, professional composition and education background
| Number of employees in the parent company | 5,779 |
| Number of employees in the main subsidiary | 12,387 |
| Total number of employees | 18,166 |
| Total number of employees receiving salary in the current period | 18,166 |
| Number of retired employees to be borne by parent company and main subsidiary | 393 |
| Professional composition | |
| Professional composition category | Number of professional composition |
| Production | 12,778 |
| Salesman | 616 |
| Technician | 2,433 |
| Finance | 270 |
| Administrative | 1,758 |
| Services and other | 311 |
| Total | 18,166 |
| Education background | |
| Type | Quantity |
| Master degree or above | 1,528 |
| Bachelor's degree | 6,743 |
| College | 6,283 |
| Vocational secondary and below | 3,612 |
| Total | 18,166 |
2. Remuneration policy
The middle-level employees of the company implement the annual salary system, and the annual salary structure includes three parts:
basic annual salary, performance annual salary and term incentive. The basic salary is paid monthly. The performance bonus links to theperforming duty monthly or annually, and is distributed monthly and annually in terms of the Responsible Agreement of BusinessObjectives. After performance appraisal at the end of employment term according to the Responsible Agreement of Objective during TheEmployment Term, the incentives bonuses to employment term will be afforded flowing the assessment results.The salary system of front-line and blow staff is composed of occupation salary and benefit salary. The occupation salary is influenced bythe attendance, and the benefit salary is distributed as the monthly performance on the duty.
3. Training program
Based on the national and Beijing vocational skills upgrading action plan, combined with the company's overall requirements onaccelerating the construction of the first workforce, Qiangang Base focuses on quality improvement, ability training and talentvalue-added, with a focus on relevance, practicality and value, insists on combining theory and practice, learning and summarizing,
Beijing Shougang Co. Ltd Annual Report 2020
strengthens talent-driven, innovation-driven and lean-driven, cultivates problem culture, execution culture and struggle culture, andcontinuously enhances the cohesion of the enterprise and the heart of the workforce to build a moral and talented, well-qualifiedworkforce, and continuously enhance the cohesion of the enterprise and the centripetal force of the workforce. Throughout the year, theCompany overcoming the impact of unfavourable factors such as the COVID-19, optimizing the management mechanism of internal andexternal training, actively exploring the combination of online and offline training, and organizing and completing more than 160 trainingprojects of various types and ultimately providing strong support for the high-quality development of the company.Jingtang Base takes the development strategic plan as the guide and continuously strengthens the construction of talent team.Systematically planning to establish a training management system to adapt to the construction of talent echelon. Focusing on the goal ofcultivating leaders who are "loyal, clean and responsible", the Company carrying out training and education such as lectures for leadersand qualification training to enhance the ability to perform duties and comprehensive quality. The training of staff is strengthened byusing various forms such as posting and training outside the company and innovation studio projects. The team leaders are trained in ahierarchical manner, the "Gold Team Leader" competition is carried out, and the "examination for learning" of job regulations is promotedon a pilot basis to consolidate the construction of grass-roots teams. The Company has innovated and implemented the "three-tier skillscompetition" model, and has been granted the qualification of independent evaluation for 54 trades in Hebei Province, and is qualified toconduct independent skills appraisal. By the end of 2020, the company had trained 37 technicians at the level of senior director and above,and 21 operators at the level of skill expert and above. Rong Yanming was awarded the title of "National Model Worker", Wang JianbinInnovation Studio was awarded "National Skill Master Studio" and Wang Baoyong Innovation Studio was awarded "National ModelInnovation Studio of Machinery, Metallurgy and Building Materials Industry The workshop was awarded the title of "National SkillMaster Studio" and Wang Baoyong Innovation Studio was awarded the title of "National Model Innovation Studio of Machinery,Metallurgy and Building Materials Industry".
4. Outsourcing of labor source
□ Applicable √ Not applicable
Beijing Shougang Co. Ltd Annual Report 2020
Section X. Corporate Governance
I. Information of corporate governanceBased on the requirements of the Company Law of People’s Republic of China, the Securities Law of People’s Republic of China, theCode of Corporate Governance for Listed Companies, the Listing Rules of Shenzhen Stock Exchange,the Guidelines for StandardizedOperation of Listed Companies of Shenzhen Stock Exchange, the Articles of Association and other applicable regulations and laws，theCompany actively promote the improvement of governance structure, continuously optimizing corporate governance, improving the leveland quality of corporate governance, standardizing the company operation, protecting legal rights belongs to the company and the wholeshareholders.According to the Articles of Association and Rules of Procedures of the General Shareholders Meeting, the Board of Directors, theSupervisory Committee, the company organizes the General Shareholders Meeting, the meeting of director board, and the meeting ofsupervisory committee. Directors and supervisors are assiduous and dutiful, complying with the applicable rules and regulations,diligently safeguarding the lawful rights and interests of the company and its all shareholders. The management regularly operates thecompany, and faithfully abide by the rules of internal system. In accordance with the relevant regulations such as the Listing Rules ofShenzhen Stock Exchange, the Company perform the duty of information disclosure, and guarantee the truthiness, accuracy andcompleteness of the prepared information, without any false record, misleading or major omission.During the reporting period, the Company did its corporate governance work in the following aspects: firstly, in accordance with the newSecurities Law and the Guidelines on the Standardized Operation of Municipal Companies revised by the Shenzhen Stock Exchange andcombined with the actual operation situation, the Company amended 6 rules and regulations and established Management System forSubsidiaries. Secondly, in accordance with the operational request of the Company, 31 systems are formulated, including the ManagementSystem for the Quality of Steel Products and the Management System for Accountability for Non-compliance in Operation, and 49systems are revised, including the Management System for Bidding and Tendering and the Management System for Scientific andTechnological Confidentiality. Thirdly, in response to business adjustments and system updates, the Company organised internal controlself-evaluation in conjunction with the Risk Control Process Manual and the Risk Control Evaluation Manual. Fourthly, in accordancewith the Articles of Association, the Rules of Procedure for General Meetings and relevant regulations, the General Meetings were heldby way of "on-site + online voting" to ensure that the matters submitted to the General Meetings for consideration and approval were incompliance with the law.As at the end of the reporting period, the Company has a total of 517 internal control systems, of which 493 systems are formulated andimplemented by the Company and 24 systems are forwarded to the government and regulatory authorities.Whether there are material differences between the actual state of corporate governance and the regulatory documents issued by theCSRC on the governance of listed companies.
□ Yes √ No
There is no material difference between the fact of corporate governance and the regulations for listing companies required by the CSRC.
II. Independence of the Company from the controlling shareholder in terms of business,personnel, assets, organization and financeThe Company operates in strict accordance with the requirements of the Company Law, the Securities Law and other laws, regulations,rules and normative documents, and maintains full independence from the controlling shareholder in terms of business, personnel, assets,institutions and finance. The Company has a complete procurement, production, marketing and operation management system, a soundproduct development organization and personnel, and the ability to produce and operate independently.
1. Business: The Company has a complete business management system, an independent business system, conducts its businessindependently, operates independently and bears its own risks.
2. Personnel: The Company has a complete human resources management system, which operates independently and has a sound andeffective system. The directors and supervisors of the Company are elected in accordance with the statutory approval procedures such asshareholders' meetings or corresponding democratic elections; senior management personnel are appointed or dismissed by the Board ofDirectors, and there are no irregularities in their concurrent positions with controlling shareholders and related parties. All levels performtheir duties and responsibilities in accordance with their duties and responsibilities.
3. Assets: The Company has a production system and its supporting facilities that are independent of the controlling shareholder and itsrelated parties. The Company's assets are independent and complete, with clear ownership.
4. Institutions: The Company's general meeting, board of directors, supervisory committee, management and its internal bodies are soundand independent, and exercise their powers independently. The organisational structure is sound and complete, and there is no subordinaterelationship with the controlling shareholder and its related parties.
5. Financial: The Company has an independent financial accounting system and financial accounting system. The financial managementsystem is sound and capable of making independent financial decisions and the Company is independently and legally subject to taxation.III. Horizontal competition
√ Applicable □ Not applicable
Beijing Shougang Co. Ltd Annual Report 2020
| Type | Name of controlling shareholder | Nature of controlling shareholder | Causes | Solutions | Work progress and follow-up plan |
| Competition in the same industry | Shougang Group Co., Ltd. | Local SASAC | Since the listing of the Company, there has been inter-sector competition and connected transactions resulting from the partial conversion to listing. | 1. Shougang Group undertakes in respect of measures to resolve inter-sector competition and avoid inter-sector competition after the First Reorganisation (1) Except for the situation of inter-sector competition existing prior to the date of this Letter of Undertaking, if the Company obtains opportunities for acquisition, development and investment in the same or similar business as Shougang Co, the Company will immediately notify Shougang Co and offer them to Shougang Co for selection on a priority basis and make its best efforts to make such business opportunities available for transfer to Shougang Co. (2) In integrating and operating existing steel assets not yet transferred to Shougang Co., the Company will select the appropriate platform and means to achieve resource integration in a manner that is conducive to the future transfer to Shougang,Co. and will not include provisions in the relevant agreements or arrangements with partners or third parties that restrict or prohibit the injection of such assets or businesses into Shougang. (3) The Company shall, as far as possible, safeguard the normal operation and profitability of the existing steel assets not injected into Shougang Co. and ensure that the aforesaid assets and businesses do not fall into operational difficulties due to the Company or other circumstances that prevent the ultimate injection into Shougang Co. or render such injection legally impeded. (4) Each commitments made by the Company in eliminating or avoiding competition in the same line of business shall also apply to other enterprises under the direct or indirect control of the Company other than Shougang Co. and its subsidiaries, and the Company shall be obliged to supervise and ensure that the other subsidiaries of the Company shall implement the arrangements for each of the matters described in this document and strictly comply with all the commitments. 2. As approved by the second extraordinary general meeting of the Company for 2018 on 27 December 2018, Shougang Group undertakes to. (1) According to the development plan of Shougang's steel industry, Shougang shares will serve as the sole platform for the development and integration of Shougang Group's steel and upstream iron ore resources industries in the PRC, and ultimately realise the overall listing of Shougang Group's steel and upstream iron ore resources businesses in the PRC. (2) In the event that Shougang Group's other companies engaged in steel operations and production further optimise and adjust their product structure through active implementation of national industrial policies and environmental protection requirements, and achieve profits for three consecutive years, and that the overall situation of the industry does not fluctuate significantly, Shougang Group will, in accordance with the requirements of securities laws and regulations and industry policies, initiate a process including but not limited to acquisition, merger, restructuring and other means in the interests of shareholders of the listed company The injection of relevant high-quality assets into Shougang will be completed within 36 months after the commencement of the relevant matters. | In December 2018, Shougang Co. and Jingtang Co. jointly signed the "Management Service Agreement between Shougang Group Company Limited and Beijing Shougang Co. and Shougang Jingtang Iron and Steel United Limited Liability Company" with Shougang Group, whereby Shougang Co. and Jingtang Co. jointly provided management services for a total of 17 subject enterprises in the steel segment assets and businesses belonging to Shougang Group. Shougang Mining Company and 14 other companies are under the responsibility of Shougang Corporation and Shougang Kaishi Steel Company and 3 other companies are under the responsibility of Jingtang Company. Shougang shares will continue to negotiate with Shougang Group and actively promote the follow-up work in accordance with Shougang Group's commitment to resolve inter-sector competition.In December 2018, Shougang Co. and Jingtang Co. jointly signed the "Management Service Agreement between Shougang Group Company Limited and Beijing Shougang Co. and Shougang Jingtang Iron and Steel United Limited Liability Company" with Shougang Group, whereby Shougang Co. and Jingtang Co. jointly provided management services for a total of 17 subject enterprises in the steel segment assets and businesses belonging to Shougang Group. Shougang Mining Company and 14 other companies are under the responsibility of Shougang Corporation and Shougang Kaishi Steel Company and 3 other companies are under the responsibility of Jingtang Company. Shougang shares will continue to negotiate with Shougang Group and actively promote the follow-up work in accordance with Shougang Group's commitment to resolve inter-sector competition. |
Beijing Shougang Co. Ltd Annual Report 2020
IV. General shareholders meetings and extraordinary shareholders’ general meeting during thereporting period
1. Information on the general shareholders meeting
| Sessions | Type | Investor participation ratio | Date | Date of Disclosure | Disclosure Index |
| 2019 Annual General Meeting | Annual General Shareholders Meeting | 79.98% | 23 June 2020 | 24 June 2020 | China Securities Journal, Securities Times, Shanghai Securities News and Juchao Information Website (http://www.cninfo.com.cn) |
| 2020 First Extraordinary General Meeting | Extraordinary General Shareholders Meeting | 79.98% | 18 December 2020 | 19 December 2020 | China Securities Journal, Securities Times, Shanghai Securities News and Juchao Information Website (http://www.cninfo.com.cn) |
2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore
□ Applicable √ Not applicable
V. Responsibility performance of independent directors
1. Information on independent directors attending the board meeting and the general shareholder meeting
| Attendance of Independent Directors at Board Meetings and General Meetings | |||||||
| Name | Number of board meetings to be attended during the reporting period | Number of board meetings attended on site | Number of board meetings attended by correspondence | Number of board meetings attended by proxy | Number of board meetings missed | Absent the meeting for the second time in a row (Y/N) | Number of general meetings attended |
| Yin Tian | 8 | 3 | 0 | 0 | N | ||
| Ye Lin | 8 | 3 | 0 | 0 | N | ||
| Yang Guipeng | 8 | 3 | 0 | 0 | N | ||
| Liu Shen | 8 | 3 | 0 | 0 | N | ||
| Peng Feng | 8 | 3 | 0 | 0 | N | ||
| N | |||||||
Notes for absence in successively twiceNot applicable
2. Objection for relevant events from independent directors
Independent directors come up with objection about Company’s relevant matters
□ Yes √ No
Independent directors has no objections for relevant events in reporting period.
3. Other explanation about responsibility performance of independent directors
Whether the proposals from independent directors are accepted by the company
√ Yes □ No
The explanation about the proposals from independent directors are accepted or rejected by the company.
(1) Situation of attendance of and discussion on the meeting
In 2020, the independent directors attended the Company's shareholders' meetings, board of directors' meetings and meetings of thespecial committee of the board of directors (independent directors' reporting sessions) as scheduled. We listened carefully to the views ofshareholders, paid attention to the reasonable demands of public shareholders and exchanged views on relevant matters in theshareholders' meetings. All board meeting and the general meeting of shareholders held in 2020 are in compliance with legal procedures,and procedures and contents of voting items submitted to the meetings for deliberation are all legal and valid. Proposals proposed by eachboard meetings are seriously considered, reviewed and commented, and ultimately all votes are in favour of the proposals.
(2) Situation of issuing independent opinions
A. Comment on matters considered at board meetingsIn 2020, the Company is able to submit meeting documents to the directors within the prescribed time before the board meetings, andarranged special reports on important matters to provide basic conditions for independent directors to review and issue independentopinions in a timely manner in accordance with relevant regulations. Independent opinions issued in 2020 are as follows:
① Independent opinions are issued on proposals proposed on the second meeting of the seventh board of directors: "Proposal on ProfitDistribution of Shougang Co. 2019", "Self-evaluation Report on Internal Control of Shougang Co. 2019", "Proposal on GeneralManager's Remuneration for 2019 and Remuneration and Appraisal Allocation for 2020", "Proposal on Renewal of Appointment of
Beijing Shougang Co. Ltd Annual Report 2020
Accounting Firm of Shougang Co.", "Proposal on Re-signing of "Shougang Group Co. Ltd. on the Framework Agreement on RelatedParty Transactions between Shougang Group Co., Ltd. and Beijing Shougang Co. Ltd.", "Budget of Routine Related Party Transactionsfor 2020", "Proposal of Financial Transactions between Shougang Co., and Shougang Group Finance Co., Ltd.", "Agreement of FinancialServices between Shougang Co., and Shougang Group Finance Co., Ltd.", "Risk Assessment Audit Report for Shougang Group FinanceCo., Ltd. 2019", "Risk Emergency Response Plan for Deposit and Loan Business of Shougang Group Finance Co., Ltd.", "Shougang Co.'sProposal to Adjust the Independent Directors" and "Proposal of Amend the Articles of Association of Shougang Co., Ltd.". The Companyheld a special briefing meeting for the independent directors to report the relevant situation in detail prior to the meeting. The independentdirectors agreed with the matters contained in the above proposals and the procedures for review and discussion of the proposals at themeeting are legal and valid.
② Independent opinions are issued on proposals proposed on the third meeting of the seventh board of directors: "Proposal on theCompany's Compliance with the Conditions for Public Issuance of Corporate Bonds and Renewable Corporate Bonds for ProfessionalInvestors and Compliance with the Conditions for Issuance of Ultra-Short-Term Financing Bonds". The Company held a special briefingmeeting for the independent directors to report the relevant situation in detail prior to the meeting. The independent directors agreed withthe matters contained in the above proposals and the procedures for review and discussion of the proposals at the meeting are legal andvalid.
③ Independent opinions are issued on proposals proposed on the forth meeting of the seventh board of directors: " Proposal of RelatedParty Transaction between Beijing Shougang Co., Ltd. and Shougang Group Co., Ltd. on the Asset Swap and the Signing of the AssetSwap Agreement". The Company held a special briefing meeting for the independent directors to report the relevant situation in detailprior to the meeting. The independent directors agreed with the matters contained in the above proposals and the procedures for reviewand discussion of the proposals at the meeting are legal and valid.
④ Independent opinions are issued on proposals proposed on the fifth meeting of the seventh board of directors: "Proposal for RelatedParty Transaction of Share issuing to Purchase Assets and Raising Funds and Other Related Events" and "Proposal of Related PartyTransaction between Shougang Group Co. Ltd. and Shougang Jingtang United Iron & Steel Co., Ltd. on the Asset Recycling" and"Proposal of Related Party Transaction between Shougang Group Co. Ltd. and Shougang Jingtang United Iron & Steel Co., Ltd. on AssetEntrusted Management and Compensated Use of Assets". The Company held a special briefing meeting for the independent directors toreport the relevant situation in detail prior to the meeting. The independent directors agreed with the matters contained in the aboveproposals and the procedures for review and discussion of the proposals at the meeting are legal and valid.
⑤ Independent opinions are issued on proposals proposed on the sixth meeting of the seventh board of directors: "Proposal for RelatedParty Transaction of Share issuing to Purchase Assets and Raising Funds and Other Related Events" The Company held a special briefingmeeting for the independent directors to report the relevant situation in detail prior to the meeting. The independent directors agreed withthe matters contained in the above proposals and the procedures for review and discussion of the proposals at the meeting are legal andvalid.B. Commenting on periodic reports, external guarantees and other matters
① In accordance with the Rules Governing the Listing of Stocks on the Shenzhen Stock Exchange and other regulations, the Companysigns a written confirmation of the Company's 2019 annual report, 2020 first quarterly report, 2020 half-yearly report and 2020 thirdquarterly report.
② Making special notes and issuing independent opinions on the appropriation of the Company's funds by the Company's controllingshareholder and other related parties as well as external guarantees. In view of the fact that the financial transactions between theCompany and the related parties (the controlling shareholder ---- Shougang Group Co., Ltd. and its subsidiaries) are all settlementpayments arising from substantive related transactions such as purchase and sale of goods and provision of labour services in the normalproduction and operation activities, there is no irregular appropriation of the Company's funds by the controlling shareholder and otherrelated parties. During the reporting period, the Company has no external guarantees.
③ Signing a written declaration and committing to the truthfulness, accuracy and completeness of the Prospectus for the Issue ofCorporate Bonds and Renewable Corporate Bonds by Shougang Co. and the contents of all documents submitted.
④ Signing a written declaration and committing that the "Report on Related Party Transaction of Shares Issuing to Purchase Assets andRaising Supporting Funds in by Shougang Co. (Draft)"and the contents of all documents submitted are true, accurate and complete.C. Independent opinion issued on Shougang Group's "Proposal to adjust certain commitments" to be submitted for considerationat the Company's first extraordinary general meeting of 2020Some of the commitments adjusted in the proposal are made in response to the actual situation, and the matter falls within the terms ofreference of the general meeting of shareholders as stipulated in laws, regulations and the Articles of Association of the Company, and isin compliance with the provisions of the "Guidelines for the Supervision of Listed Companies No. 4 - Effective Controllers, Shareholders,Related Parties, Purchasers of Listed Companies and Undertakings and Performance of Listed Companies", and will have no adverseimpact on the Company. The proposal will not adversely affect the operation of the Company and will not be detrimental to the interestsof the Company and its shareholders. The proposal is agreed to be submitted to the extraordinary general meeting of the Company forconsideration.
③ Routine work of the Board of Directors
In 2020, the independent directors actively participated in the day-to-day work of the Board. Continuously pay attention to the state of theindustry in which the Company operates and provide expert advice on the Company's business development. 1. Listen to the report of the
Beijing Shougang Co. Ltd Annual Report 2020
management of the Company on matters such as the production and operation of the Company and the financial accounts. 2. Listen to thereport of the Company's annual auditor on the Company's annual audit. 3. Pay close attention to the relevant policies issued by thesecurities regulators.VI. Performance of duties of special committees under the Board during the reporting period
1. Strategy and Risk Management Committee of the Board of Directors
During the reporting period, the Strategy and Risk Management Committee of the Board of Directors did not hold any meeting.
2. Audit Committee of the Board of Directors
In accordance with the relevant regulations of the CSRC and the Shenzhen Stock Exchange, as well as the Regulations on the Work of theAudit Committee of the Board of Directors and the Regulations on the Annual Report of the Audit Committee of the Board of Directors,the Audit Committee of the Board of Directors has conscientiously performed its duties to communicate, supervise and verify the internaland external audits of the Company. The performance of its duties is as follows.
(1). In accordance with the disclosure schedule of the Company's 2020 annual report, the Audit Committee of the Board of Directors, inconsultation with Grant Thornton, determined the schedule for the audit of the financial report for current year.
(2).Prior to the entry of the annual audit certified public accountants, the Audit Committee of the Board of Directors reviewed theconsolidated and company balance sheets as at 31 December 2020, the consolidated and company income statements, the consolidatedand company cash flow statements and the consolidated and company statements of changes in shareholders' equity for the year 2020 andcertain notes to the financial statements prepared by the Company. The financial accounting statements of the Company are considered tobe prepared in accordance with the accounting policies of the Company, with proper application of accounting policies and reasonableaccounting estimates, and in compliance with the requirements of the new accounting standards for enterprises, the accounting system ofthe Company and the relevant regulations issued by the Ministry of Finance; the units and statements included in the scope ofconsolidation were complete and the basis of consolidation of the statements was accurate; the accounting statements were true, objective,accurate and complete, and no material misstatement or omission was found. Therefore, the Audit Committee of the Board of Directorsconsidered that the financial and accounting statements prepared by the Company could be submitted to the annual auditing certifiedpublic accountants for audit.
(3).Upon the arrival of the annual audit CPA, the Audit Committee of the Board of Directors actively communicated and communicatedwith the annual audit CPA and urged them to submit the audit report within the agreed time frame.
(4). Following the preliminary audit opinion issued by the annual auditing certified public accountants, the Audit Committee of the Boardof Directors has again reviewed the financial statements after the preliminary audit opinion issued by the annual auditing certified publicaccountants. The Audit Committee of the Board of Directors is of the opinion that the Company has dealt with post balance sheet datematters in accordance with the new ASBE and that the financial statements of the Company have been prepared in accordance with thenew ASBE and the provisions of the relevant financial system of the Company, and the financial position of the Company as at 31December 2020 and the results of operations and cash flows for the year 2020 show a true and fair view in all material aspects.
(5). The Audit Committee of the Board of Directors is of the opinion that in providing audit services to the Company, Grant Thornton hasperformed its duties in compliance with the practice standards of independence, objectivity and impartiality and has completed the auditof the Company for the year 2020.
(6). The Audit Committee of the Board of Directors held a meeting. The following matters are considered and approved: (i) the financialreport of Shougang Co., Ltd. for the year 2020 (draft); and (ii) the proposal on the renewal of the appointment of the accounting firm(draft). The Audit Committee of the Board of Directors agreed to submit the above matters to the Board of Directors for consideration.
3. Board Remuneration and Appraisal Committee
During the reporting period, according to the Regulations of the Remuneration and Evaluation Committee of the Board of Directors andother relevant regulations, the Remuneration and Evaluation Committee reviewed the remuneration of the senior management of theCompany for the year 2020 in accordance with the "Proposal on the General Manager's Remuneration for the Year 2019 and theDistribution of Remuneration and Evaluation for the Year 2020", which is reviewed and approved by the Second Meeting of the SeventhBoard of Directors. All the reviewed remuneration for above personal are in compliance with all relevant regulations of the Company.
4. Board Nomination Committee
During the reporting period, the Company reported to the independent directors on the proposed nomination of Liu Shen and Peng Fengas new independent directors by Tang Di and Zhang Bin, the former independent directors, due to the expiry of their six-year terms ofoffice. The independent directors all agreed to the aforesaid nominations and agreed to submit them to the Board meeting forconsideration and fulfillment of the approval of the general meeting, and the independent directors issued their independent opinions asrequired. The Nomination Committee of the Board considered and approved the above matters.VII. Situations of the Supervisory Board
Whether the Supervisory Board has identified any risks to the company in its supervisory activities during the reporting period
□ Yes √ No
Beijing Shougang Co. Ltd Annual Report 2020
The Supervisory Board has no objection to the supervision of matters during the reporting period.VIII. Assessment and Incentive on the Senior ManagementGeneral Manager Appraisal: the general manager implements an annual salary system consisting of base salary, annual performancesalary and tenure incentive. Among them: the proportion of base salary is 30%, which is monthly paid; the proportion of annualperformance salary is 70%, and 50% of which is paid in advance on a monthly basis. According to relevant regulations, the Remunerationand Appraisal Committee of the Board of Directors establishing Annual General Manager Remuneration Assessment and DistributionPlan and issuing the distribution opinion annually. All the performance annual remuneration will be settled once the remunerationproposal approved by the annual board meeting. The term incentive is calculated at 30% of annual remuneration and the incentive will beassessed and settled in accordance with the Term Target Responsibility Statement at the end of the term.Appraisal of other senior management personnel: the remuneration for other senior management personnel, such as vice generalmanagers, are subject to an annual salary system and are assessed and remunerated by the directors and general manager in accordancewith the authorization of the Board of Directors and in accordance with the completion of the work tasks of the vice general managers andother senior management personnel.During the reporting period, the Company had no share incentive scheme.IX. Internal control
1. Details of significant deficiencies in internal control identified during the reporting period
□ Yes √ No
2. Appraisal Report of Internal Control
| Disclosure date of full internal control evaluation report | 29 April 2021 |
| Disclosure index of full internal control evaluation report |
| Proportion of total assets included in internal control evaluation report accounting for the total assets in the consolidated financial statements | 99.86% | |
| Proportion of operating revenue included in internal control evaluation report accounting for operating revenue in the consolidated financial statements | 99.95% | |
| Defect identification criteria | ||
| Type | Financial Reports | Non-financial reporting |
| Qualitative criteria | 1. General deficiency: it may or has caused slight impact on business activities, which is not an objective reason and has exceeded the budget by 1% - 5% in terms of time, manpower or cost without proper approval; 2. Significant deficiency: it may or has slowed down the business operation, or unable to achieve some business objectives, or not exceeding the budget by 6% - 20% in terms of time, manpower or cost for non-objective reasons and without proper approval; 3. Material deficiency: (1) it may or has made the company unable to achieve all operating objectives, resulting in business suspension. It is not an objective reason and has exceeded the budget by more than 20% in terms of time, manpower or cost without proper approval, and has exceeded the level of importance; (2) The company has financial related fraud, which affects the accuracy of financial statements. | 1. General deficiency: it may or has temporarily affected the health of employees or the public; the negative news may or has caused slight impact on the company, spreading within the company or locally, and will not attract the attention of stakeholders; violation of the company or relevant rules and regulations or conflict with self-made rules and regulations may have caused slight social impact, basically will not lead to the attention of regulators. 2. Significant deficiency: it may or has had a negative impact; it may or has seriously affected the health of many employees or the public, or caused general environmental damage, and the situation needs external support to be controlled; the negative news may or has caused a greater impact on the company, and disseminates in a certain region It has attracted the attention of relevant stakeholders, such as the suspension of cooperation by partners, low efficiency of employees, reduction of customer loyalty, etc.; it has violated national and regional laws and regulations or industry norms, faced with legal proceedings, economic compensation, which may or has caused general social impact, attracted the attention of regulatory agencies, and required regular rectification. 3. Material deficiency: there is causing casualties of many employees and local residents, causing serious damage to the environment and out of control of the situation; the negative information may or has caused significant impact on the company, which is widely spread, causing significant damage to the reputation of the enterprise. The government or regulatory |
Beijing Shougang Co. Ltd Annual Report 2020
| authorities conduct investigation, causing public concern and irreparable damage to the reputation of the enterprise; violating laws and regulations, in the face of business suspension, legal proceedings or economic compensation,; it may or has caused serious social impact; it has been notified or publicly condemned by regulatory authorities, or even ordered to suspend business for rectification. | ||
| Quantitative criteria | 1. General misstatement: amount of misstatement < 0.5% of total assets 2. Significant misstatement: 0.5% of total assets≤amount of misstatement < 1% of total assets 3. Material misstatement: 1% of total assets≤amount of misstatement | 1. General misstatement: RMB 100,000≤amount of loss < RMB 5,000,000 2. Significant misstatement: RMB 5,000,000≤ amount of loss < RMB 10,000,000 3. Material misstatement: RMB 10,000,000≤ amount of loss |
| Number of material defects in financial reports | 0 | |
| Number of material defects in non-financial reports | 0 | |
| Number of significant defects in financial reports | 0 | |
| Number of significant defects in non-financial reports | 0 | |
X. Audit report for internal control
√ Applicable □ Not applicable
| Audit opinion on internal control | |
| Shougang Co. has kept the effective internal control over financial reporting in all material matters on 31 December 2020, in accordance with the “Basic Standards for Internal Control of Enterprises” and other relevant regulations. | |
| Whether disclosing the internal control audit report | Disclosed |
| Date of disclosure of the internal control audit report | 29 April 2021 |
| Source for the internal control audit report | Searching for: http://www.cninfo.com.cn/. |
| Audit opinion on internal control | Standard unqualified opinion |
| Whether material deficiency over non-financial reporting | Negative |
Whether non-standard unqualified opinion from independent auditors in the audit report on internal control
□ Yes √ No
Whether there is consistent opinion between the audit report on internal control and the self-assessment report on internal control
√ Yes □ No
Beijing Shougang Co. Ltd Annual Report 2020
Section XI. Corporate BondWhether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date whenannual report approved for released or fail to cash in full on dueYes
I. Overview
| Name | Abbreviation | Bond code | Issuing date | Date of expiry | Balance of Bonds (ten thousand yuan) | Interest rate | Method of capital repayment with interest |
| Beijing Shougang Co., Ltd. Publicly Issued Corporate Bonds to Professional Investors in 2020 (first tranche) | 20 Shouqian 01 | 149236 | 2020/9/17 | 2024/9/17 | 250,000 | 3.98% | Adopt single interest on annual basis with no compound interest counted. Interest will be paid once a year and the capital will be returned in a lump sum at the date of expiry. Interest of the last period will be paid together with the capital. |
| Location for listing or transfer | Shenzhen Stock Exchange | ||||||
| Arrangements of investor suitability | Public offering to professional investors | ||||||
| Interest payment during the reporting period | The first coupon date of “20 Shouqian 01” has not yet arrived | ||||||
| Special clauses including option clauses, exchangeable clauses, etc. for issuer or investor and the implementation situation (if applicable). | “20 Shouqian 01” bond has a five-year maturity with an issuer option to adjust the coupon rate at the end of the third year and an investor option to put it back. Exercise period has not yet arrived at present. | ||||||
II. Contact persons and methods of corporate bonds trustee
| Bonds trustee manager: | |||||||
| Name | Huatai United Securities | Address | 3F, Tower A, Pacific Insurance Building, 28 Fengsheng Hutong, Xicheng District, Beijing | Contact persons | Liang Shulin Jiang Jiaxiang | Tel | 010-56839491 |
| Credit rating agencies of tracking ratings on corporate bonds during the reporting period: | |||||||
| Name | Dagong Global Credit Rating Co. Ltd | Address | 3 / F, China Foreign Languages Building, 89 Xisanhuan North Road, Haidian District, Beijing, China | ||||
III. Use of proceeds raised from public issuance of the company bonds
| The use of the funds raised by the company's bonds and the procedures for their fulfillment | All the raised funds of “20 Shouqian 01”have been used to repay the company's matured debts. By the end of the reporting period, all raised funds have been used up.In the process of using the raised funds, the company strictly complied with the relevant procedures of the Company's "Management System for Raised Funds", and there was no violation of regulations. |
| Closing balance (ten thousand yuan) | 0 |
| Operation of the specific account for raised funds | Standard and Normative |
| Whether the use of raised funds is consistent with the purpose, use plan and | Y |
Beijing Shougang Co. Ltd Annual Report 2020
VI. Brief introduction to corporate bonds credit rating agencyAccording to the Credit Rating Report of Publicly Issued Corporate Bonds to Professional Investors in 2020 (first tranche) issued byDagong Global Credit Rating Co., Ltd on September 8, 2020, the credit rating of the Company is AAA, and the credit rating of “20Shouqian 01" was AAA with stable outlook. No credit rating changes have taken place since the IPO.
V. Corporate bonds credit enhancement mechanism, solvency plan and others“20 Shouqian 01” is unsecured bond. The debt repayment plan and other debt repayment guarantee measures are detailed in theprospectus. During the reporting period, there is no change on the above bond credit enhancement mechanism, debt repayment plan andother debt repayment guarantee measures.VI. Meeting of corporate bondholdersThere is no meeting of corporate bondholders during the reporting period.VII. Duty fulfillment of corporate bonds trustee managers during the reporting period
During the reporting period, the bond trustee Huatai United Securities strictly complied with the agreement to the Bonds TrusteeManagement Agreement, paid attention to operating status and risk factors continuously, and urged the company to perform theobligations agreed upon in the prospectus, actively exercised the bond trustee responsibilities, and safeguarded the legitimate rights andinterests of bond holders.During the reporting period, Huatai United Securities issued the Interim Report of Huatai United Securities on the Entrusted Managementof Major Matters of Beijing Shougang Co., Ltd., at the Shenzhen Stock Exchange on December 10, 2020.It was also disclosed on thewebsite www.cninfo.com.cn on December 10, 2020VIII. Accounting data and financial indicators of the company in the latest two years as at theend of the reporting period
Unit: RMB Ten Thousand Yuan
other agreements promised in theprospectus (Y/N)Item
| Item | 2020 | 2019 | Year-on-Year Changes |
| EBITDA | 1,172,474 | 1,007,035 | 16.43% |
| Liquidity ratio | 39.00% | 35.00% | 4% increase year-on-year |
| Gearing ratio | 73.10% | 72.65% | 0.45% increase year-on-year |
| Quick ratio | 25.00% | 24.00% | 1% increase year-on-year |
| EBITDA ratio | 11.11% | 9.44% | 1.67% increase year-on-year |
| Times interest earned | 1.8 | 1.49 | 20.81% |
| Cash interest coverage ratio | 4.87 | 2.45 | 98.78% |
| EBITDA times interest earned | 4.1 | 3.62 | 13.26% |
| Loan repayment rate (%) | 100.00% | 100.00% | 0.00% |
| Interest payment rate (%) | 95.00% | 98.00% | 3% decrease year-on-year |
Main reasons for the above accounting data and financial indicators year-on-year change of more than 30%.
√ Applicable □ Non Applicable
Year-on-year changes of 98.78% for cash interest coverage ratio is caused by the increase of net cash flows from operating activities.
IX. Interest payment of other bonds and debt financing instruments within the reporting period.During the reporting period, the company's other bonds and debt financing instruments paid the principal and interest on schedule, and nooverdue default occurred.X. Bank credit business, the use of bank loans and the repayment of bank loans within in thereporting period.By the end of the reporting period, the company had obtained bank credit of RMB96.539 billion and used RMB58.806 billion. During thereporting period, the Company repaid the principal and interest of the bank loans on time and in full.XI. Fulfillment of commitment in the prospectus within the reporting periodThe Company strictly complied with and fulfilled the relevant commitments in the prospectus within the reporting period.
XII. Major events within the reporting period
No
XIII. Guarantor for corporate bonds
□ YES √ NO
Beijing Shougang Co. Ltd Annual Report 2020
Section XII. Financial Report(This section is translated based on the Chinese version of the full audit report of the Company. Immaterial difference may existbeween this section in Chinese version annual report and English version annual report. The difference is due to the specific template
required by the Shenzhen Stock Exchange in Chinese version which is not applied in English version.)
I. Auditor’s Report
| Type of audit opinion | Standard unqualified opinion |
| Date of signing of audit report | 28 April 2021 |
| Name of audit institution | Grant Thornton LLP |
| Number of audit report | GTSZ (2021) No.110A013948 |
| Chinese Certified Public Accountant | Qian Bin, Li Dan |
Main Body of Audit ReportTo the Shareholders of Beijing Shougang Company Limited:
I. Audit OpinionWe have audited the financial statements of Beijing Shougang Company Limited (the Company),which are comprised of the consolidated and company statements of financial position as of 31December 2020, and the consolidated and company income statements, statements of changes inequity and statements of cash flows for the year then ended, and notes to the financial statements.In our opinion, the accompanying financial statements present fairly, in all material respects, theconsolidated and company financial position of the Company as of 31 December 2020, and theconsolidated and company’s financial performance and cash flows for the year then ended inaccordance with Accounting Standards for Business Enterprises.II. Basis for Audit OpinionWe conducted our audit in accordance with China Standards on Auditing. Our responsibilitiesunder those standards are further described in the Auditor’s Responsibilities for the Audit of thefinancial statements section of our report. We are independent of the Company in accordancewith the Code of Ethics for Chinese Certified Public Accountants, and we fulfilled our otherethical responsibilities. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of mostsignificance in our audit of the financial statements of the current period. These matters wereaddressed in the context of our audit of the financial statements as a whole, and in forming ouropinion thereon, and we do not provide a separate opinion on these matters.(I) Provision for inventory impairmentsThe disclosures related to the impairment of inventories are disclosed in Notes III.11 and V.7 tothe financial statements.
1. Descriptions of the matter
Beijing Shougang Co. Ltd Annual Report 2020
As of 31 December 2020, the carry value of inventory of the Company amounted to RMB
10.708 billion with an impairment of RMB 108 million in the consolidated financial statements.Inventory had been regarded as the material part of the current assets of the Company at the endof the period, and the provision for inventory impairment referred to the application ofmanagement’s accounting estimates. Hence, we have identified the provision for inventoryimpairments as a key audit matter.According to the accounting policy of the Company, if the cost is in excess of the net realizablevalue, impairment of inventories is recognized on the date of balance sheet. Net realizable valueis determined based on the estimated selling price on normal business terms deducted by theestimated costs to completion and the related expenses.
2. How our audit addressed the Key Audit Matter
Our procedures in relation to provision for inventory impairment included:
(1) Understanding and assessing the management’s internal controls related to impairmenttesting of inventories, and testing the effectiveness of key control executions.
(2) Testing, on a sample basis during the inventory monitoring procedure, observing theinventory status and checking the inventory age.
(3) Recalculating the impairment of inventories at the end of the reporting period.
(4) Implementing the analysis procedure to determine whether there is a significant differencebetween the estimated selling price and the market price, and examining whether there is asignificant difference between the post-period selling price and the estimated price inconjunction with a subsequent-event audit.
(5) Evaluating the reasonableness of carrying value of the inventory as at 31 December 2020 byanalyzing manufacturing costs of current inventories.(II) Recognition of RevenueThe disclosures related to the recognition of revenue are disclosed in Notes III.24 and V.38 tothe financial statements.
1. Descriptions of the matter
In 2020, the revenue was RMB 79.951 billion in the consolidated financial statements.Considering that the revenue has a significant impacted on the financial statements of theCompany and steel price could exert a great influence on the profits of the Company since thesteel industry is a cyclical industry, we regarded the recognition of revenue as a key auditmatter.
2. How our audit addressed the Key Audit Matter
Our procedures in relation to recognition of revenue included:
(1) Understanding and assessing the management’s internal controls related to recognition ofrevenue, and testing the effectiveness of key control executions.
(2) Assessing whether the revenue recognition conditions, methods and time complied with therelated standards in Accounting Standards for Business Enterprises.
(3) Selecting revenue transaction samples, checking the supporting documents of revenuerecognition such as sales contracts, orders, delivery records, etc. to evaluate the authenticity of
Beijing Shougang Co. Ltd Annual Report 2020
revenue recognition.
(4) Selecting major customers to perform the confirmation procedures on annual sales toevaluate the completeness of revenue recognition.
(5) Implementing cut-off tests to the sales transactions before and after balance sheet date.
(6) Checking the adequacy and appropriateness of disclosures in relation to revenue in thefinancial statements.
IV. Other InformationThe management of the Company is responsible for the other information. The otherinformation comprises the information included in the Annual Report of 2020, other than thefinancial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do notexpress any form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistentwith the financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.If, based on the work we have performed, we conclude that there is material misstatement ofthis other information, we are required to report that fact. We have nothing to report in thisregard.
V. Responsibilities of the Management and Those Charged with Governance forthe Financial StatementsManagement of the Company is responsible for the preparation and fair presentation of thefinancial statements in accordance with Accounting Standards for Business Enterprises, anddesigning, implementing and maintaining internal control as management determines isnecessary to enable the preparation of financial statements that are free from materialmisstatement, whether due to fraud or error.In preparing the financial statements, the management is responsible for assessing theCompany’s ability to continue as a going concern, disclosing, as applicable, matters related togoing concern and using the going concern basis of accounting unless the management eitherintends to liquidate the Company or to cease operations, or has no realistic alternative but to doso.Those charged with governance are responsible for overseeing the Company’s financialreporting process.
VI. Auditor’s Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, butis not a guarantee that an audit conducted in accordance with China Standards on Auditing willalways detect a material misstatement when it exists. Misstatements can arise from fraud orerror and are generally considered material if, individually or in the aggregate, they couldreasonably be expected to influence the economic decisions of users taken on the basis of these
Beijing Shougang Co. Ltd Annual Report 2020
financial statements.As part of an audit in accordance with China Standards on Auditing, we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whetherdue to fraud or error, design and perform audit procedures responsive to those risks, and obtainaudit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk ofnot detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.
(4) Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty existsrelated to events or conditions that may cast significant doubt on the Company’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required todraw attention in our auditor’s report to the related disclosures in the financial statements or, ifsuch disclosures are inadequate, to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor’s report. However, further events or conditionsmay cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, andwhether the financial statements represent the underlying transactions and events in a mannerthat achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of theentities or business activities within the Company to express an opinion on the financialstatements. 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, theplanned scope and timing of the audit and significant audit findings, including any significantdeficiencies in internal control that we identify during our audit.We also provide the governance with a statement that we have complied with relevant ethicalrequirements regarding independence and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable,related safeguards.From the matters communicated with the governance, we determine those matters that were ofmost significance in the audit of the financial statements of the current period and are thereforethe key audit matters. We describe these matters in our auditor’s report unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interest benefitsof such communication.
Beijing Shougang Co. Ltd Annual Report 2020
| Consolidated and Parent Company Statement of Financial Position | ||||
| Beijing Shougang Co., Ltd. as at 31 December 2020 | ||||
| Unit: RMB Yuan | ||||
| Item | Notes | 31 December 2020 | 31 December 2019 | ||
| Consolidated | Company | Consolidated | Company | ||
| Current assets: | |||||
| Cash and Cash equivalents | V. 1 | 6,292,499,840.73 | 1,087,088,671.35 | 5,735,118,932.92 | 2,100,647,913.85 |
| Financial assets held for trading | |||||
| Notes receivable | V. 2 | 6,119,547,878.33 | 2,837,221,424.75 | 5,339,326,922.25 | 2,492,497,587.89 |
| Accounts receivable | V. 3 | 1,424,092,844.92 | 1,615,425,644.29 | 1,028,752,225.78 | 1,180,114,403.06 |
| Financing receivables | V. 4 | 4,532,592,689.43 | 1,199,574,277.29 | 4,031,364,764.55 | 1,825,294,953.86 |
| Prepayments | V. 5 | 352,355,542.50 | 195,404,837.38 | 2,116,776,879.80 | 201,462,809.27 |
| Other receivables | V. 6 | 21,895,246.57 | 1,618,249,934.67 | 24,029,674.84 | 1,673,247.41 |
| Including: Interest receivable | |||||
| Dividends receivable | 4,892,288.48 | 600,000,000.00 | 2,754,886.56 | ||
| Inventories | V. 7 | 10,599,731,052.28 | 1,538,862,616.03 | 8,787,825,099.93 | 1,294,056,715.06 |
| Contract assets | —— | —— | |||
| Assets classified as held for sale | |||||
| Current portion of non-current assets | |||||
| Other current assets | V. 8 | 719,079,065.59 | 1,812,574,287.01 | 584,135,586.47 | 3,453,190,809.55 |
| Total current assets | 30,061,794,160.35 | 11,904,401,692.77 | 27,647,330,086.54 | 12,548,938,439.95 | |
| Non-current assets: | |||||
| Long-term equity investments | V. 9 | 3,341,208,164.76 | 26,337,249,446.06 | 3,137,865,376.57 | 18,893,930,958.80 |
| Other equity instruments investments | V. 10 | 276,246,686.56 | 276,246,686.56 | 4,357,517,927.34 | 4,357,517,927.34 |
| Other non-current financial assets | |||||
| Investment properties | |||||
| Fixed assets | V. 11 | 96,220,769,301.39 | 18,771,870,988.72 | 83,287,788,722.90 | 21,144,600,686.04 |
| Construction in progress | V. 12 | 8,297,181,948.62 | 1,976,744,021.21 | 25,426,296,137.79 | 3,678,076,181.04 |
| Intangible assets | V. 13 | 4,055,279,867.49 | 1,743,860,610.95 | 2,927,126,059.29 | 875,411,256.49 |
| Development expenditures | |||||
| Goodwill | |||||
| Long-term prepaid expenses | V. 14 | 1,122,060.45 | 1,100,021.04 | ||
| Deferred tax assets | V. 15 | 147,902,371.10 | 27,925,001.56 | 87,447,566.73 | 29,098,335.72 |
| Other non-current assets | V. 16 | 1,965,717,410.38 | 1,130,014,156.73 | 1,134,117,184.62 | |
| Total non-current assets | 114,305,427,810.75 | 50,263,910,911.79 | 119,225,141,811.66 | 50,112,752,530.05 | |
| Total assets | 144,367,221,971.10 | 62,168,312,604.56 | 146,872,471,898.20 | 62,661,690,970.00 | |
－73－Consolidated and Parent Company Statement of Financial Position (Continued)
| Consolidated and Parent Company Statement of Financial Position (Continued) | ||||
| Beijing Shougang Co., Ltd. as at 31 December 2020 | ||||
| Unit: RMB Yuan | ||||
| Item | Notes | 31 December 2020 | 31 December 2019 | ||
| Consolidated | Company | Consolidated | Company | ||
| Current liabilities: | |||||
| Short-term borrowings | V. 17 | 23,712,391,440.25 | 11,100,674,376.49 | 30,293,221,165.42 | 11,853,249,166.67 |
| Financial liabilities held for trading | |||||
| Notes payable | V. 18 | 6,804,810,000.00 | 784,260,000.00 | 6,930,274,570.54 | 1,038,827,684.61 |
| Accounts payable | V. 19 | 26,539,354,380.68 | 11,218,645,086.80 | 24,086,162,808.87 | 11,497,447,540.23 |
| Receipts in advance | V. 20 | 4,461,511,152.40 | 916,868,636.47 | ||
| Contract liabilities | V. 21 | 4,659,444,741.25 | 1,049,617,570.23 | —— | —— |
| Payroll and employee benefits | V. 22 | 466,319,382.02 | 140,481,468.09 | 377,891,381.66 | 101,792,194.59 |
| Taxes payable | V. 23 | 572,640,856.00 | 115,612,678.08 | 114,401,695.84 | 34,900,717.12 |
| Other payables | V. 24 | 2,104,822,314.59 | 1,010,689,017.67 | 2,271,088,907.26 | 1,122,685,701.59 |
| Including: Interest payable | |||||
| Dividend payable | |||||
| Liabilities classified as held for sale | |||||
| Current portion of non-current liabilities | V. 25 | 11,273,123,385.05 | 4,075,978,467.70 | 9,400,574,401.68 | 4,406,150,284.44 |
| Other current liabilities | V. 26 | 1,106,922,816.36 | 637,645,284.13 | ||
| Total current liabilities | 77,239,829,316.20 | 30,133,603,949.19 | 77,935,126,083.67 | 30,971,921,925.72 | |
| Non-current liabilities: | |||||
| Long-term borrowings | V. 27 | 20,639,300,000.00 | 883,210,000.00 | 19,101,100,000.00 | 610,000.00 |
| Bonds payable | V. 28 | 2,500,000,000.00 | 2,500,000,000.00 | 4,026,866,666.72 | 4,026,866,666.72 |
| Long-term payable | V. 29 | 8,941,452.29 | 8,941,452.29 | 2,100,000.00 | 2,100,000.00 |
| Provisions | |||||
| Deferred income | V. 30 | 398,098,805.65 | 85,344,005.30 | 328,422,670.27 | 90,085,674.14 |
| Deferred tax liabilities | V. 15 | 258,248,672.58 | 258,248,672.58 | 600,631,873.94 | 577,852,101.66 |
| Other non-current liabilities | V. 31 | 4,491,623,817.41 | 4,711,490,199.06 | ||
| Total non-current liabilities | 28,296,212,747.93 | 3,735,744,130.17 | 28,770,611,409.99 | 4,697,514,442.52 | |
| Total liabilities | 105,536,042,064.13 | 33,869,348,079.36 | 106,705,737,493.66 | 35,669,436,368.24 | |
| Shareholders’equity： | |||||
| Share capital | V. 32 | 5,289,389,600.00 | 5,289,389,600.00 | 5,289,389,600.00 | 5,289,389,600.00 |
| Capital reserve | V. 33 | 19,759,259,120.40 | 12,129,563,493.89 | 20,074,865,467.56 | 12,415,326,156.11 |
| Other comprehensive income | V. 34 | 195,210,244.82 | 195,210,244.82 | 1,952,319,928.42 | 1,952,319,928.42 |
| Special reserve | V. 35 | 21,577,537.20 | 15,749,165.64 | ||
| Surplus reserve | V. 36 | 1,828,677,846.37 | 1,828,677,846.37 | 1,729,509,055.66 | 1,729,509,055.66 |
| Retained earnings | V. 37 | 1,865,280,919.23 | 8,856,123,340.12 | -2,179,897,484.27 | 5,605,709,861.57 |
| Equity attributable to shareholders of the Company | 28,959,395,268.02 | 28,298,964,525.20 | 26,881,935,733.01 | 26,992,254,601.76 | |
| Non-controlling interests | 9,871,784,638.95 | 13,284,798,671.53 | |||
| Total shareholders' equity | 38,831,179,906.97 | 28,298,964,525.20 | 40,166,734,404.54 | 26,992,254,601.76 | |
| Total liabilities and shareholders' equity | 144,367,221,971.10 | 62,168,312,604.56 | 146,872,471,898.20 | 62,661,690,970.00 | |
－74－Consolidated and Parent Company Income Statement
| Consolidated and Parent Company Income Statement | |||||
| Beijing Shougang Co., Ltd. for the year ended 31 December 2020 | |||||
| Unit: RMB Yuan | |||||
| Item | Notes | 2020 | 2019 | ||
| Consolidated | Company | Consolidated | Company | ||
| I. Operating revenue | V. 38 | 79,951,181,948.10 | 30,977,295,936.58 | 68,841,307,821.91 | 28,855,288,539.61 |
| Less: Cost of sales | V. 38 | 73,072,708,322.14 | 29,451,902,404.58 | 61,777,897,342.66 | 26,930,263,991.36 |
| Taxes and surcharges | V. 39 | 774,074,513.76 | 292,475,174.88 | 699,601,104.81 | 244,518,928.69 |
| Selling expenses | V. 40 | 167,040,690.13 | 117,875,525.89 | 1,265,562,681.41 | 385,991,602.97 |
| General and administrative expenses | V. 41 | 976,426,260.85 | 398,756,799.72 | 950,545,319.00 | 338,153,410.90 |
| R&D expenses | V. 42 | 480,487,074.39 | 148,097,166.55 | 385,796,835.08 | 164,988,750.36 |
| Financial expenses | V. 43 | 2,163,091,932.82 | 775,191,836.71 | 2,061,941,196.97 | 775,056,552.24 |
| Including: Interest expense | 2,361,047,341.52 | 845,716,781.33 | 2,203,818,488.37 | 810,726,999.08 | |
| Interest income | 133,289,009.17 | 47,733,269.34 | 91,721,455.32 | 28,498,411.11 | |
| Add: Other income | V. 44 | 61,194,281.43 | 6,705,258.54 | 52,289,419.63 | 7,650,282.88 |
| Investment income/ (loss) | V. 45 | 567,720,738.87 | 1,226,651,114.41 | 292,022,135.30 | 374,873,910.07 |
| Including: Share of profits or loss of associates and joint ventures | 379,578,180.14 | 339,539,916.15 | 81,800,924.01 | 74,820,864.46 | |
| Gain/ (loss) on the changes in fair value | |||||
| Credit impairment losses | V. 46 | -11,350,686.26 | 5,222,959.55 | 12,056,424.33 | 31,730,066.82 |
| Assets impairment losses | V. 47 | -156,492,924.46 | -22,707,758.30 | -98,182,828.73 | -12,759,741.10 |
| Gain/ (loss) from disposal of assets | V. 48 | 75,385.37 | 1,165,254.29 | 773,665.71 | 544,066.24 |
| II. Operating profit/ (loss) | 2,778,499,948.96 | 1,010,033,856.74 | 1,958,922,158.22 | 418,353,888.00 | |
| Add: Non-operating income | V. 49 | 1,999,362.24 | 397,904.00 | 5,733,264.78 | 205,998.33 |
| Less: Non-operating expenses | V. 50 | 2,546,940.80 | 282,294.54 | 32,133,344.19 | 11,469,122.79 |
| III. Profit/ (loss) before tax | 2,777,952,370.40 | 1,010,149,466.20 | 1,932,522,078.81 | 407,090,763.54 | |
| Less: Income tax expense | V. 51 | 366,809,564.93 | 18,461,559.09 | 240,151,811.99 | -9,725,311.25 |
| IV. Net profit / (loss) | 2,411,142,805.47 | 991,687,907.11 | 1,692,370,266.82 | 416,816,074.79 | |
| (1) Categorized by operation continuity: | |||||
| Including: Net profit/ (loss) from continuing operations | 2,411,142,805.47 | 991,687,907.11 | 1,692,370,266.82 | 416,816,074.79 | |
| Net profit/ (loss) from discontinuing operations | |||||
| (2) Categorized by ownership: | |||||
| Including: Net profit/ (loss) attributable to shareholders of the Company | 1,786,452,832.06 | 1,185,589,702.44 | |||
| Net profit/ (loss) attributable to non-controlling interests | 624,689,973.41 | 506,780,564.38 | |||
| V. Other comprehensive income, net of tax | 247,100,524.21 | 247,100,524.21 | 336,938,022.41 | 336,938,022.41 | |
| Other comprehensive income, net of tax, attributable to shareholders of the company | 247,100,524.21 | 247,100,524.21 | 336,938,022.41 | 336,938,022.41 | |
| (1) Other comprehensive income that will not be reclassified to profit or loss | 247,100,524.21 | 247,100,524.21 | 336,938,022.41 | 336,938,022.41 | |
| Changes in fair value of other equity instrument investments | 247,100,524.21 | 247,100,524.21 | 336,938,022.41 | 336,938,022.41 | |
| (2) Other comprehensive income to be reclassified to profit or loss | |||||
| Other comprehensive income, net of tax, attributable to non-controlling interests | |||||
| VI. Total comprehensive income | 2,658,243,329.68 | 1,238,788,431.32 | 2,029,308,289.23 | 753,754,097.20 | |
| Total comprehensive income attributable to shareholders of the company | 2,033,553,356.27 | 1,522,527,724.85 | |||
| Total comprehensive income attributable to non-controlling interests | 624,689,973.41 | 506,780,564.38 | |||
| VII. Earnings per share | |||||
| (1) Basic earnings per share | 0.3377 | 0.2241 | |||
| (2) Diluted earnings per share | |||||
－75－Consolidated and Parent Company Statement of Cash Flows
| Consolidated and Parent Company Statement of Cash Flows | |||||
| Beijing Shougang Co., Ltd. for the year ended 31 December 2020 | |||||
| Unit: RMB Yuan | |||||
| Items | Note | 2020 | 2019 | ||
| Consolidated | Company | Consolidated | Company | ||
| I. Cash flows from operating activities | |||||
| Cash receipts from the sale of goods and the rendering of services | 45,987,505,850.26 | 14,409,246,784.43 | 32,196,170,847.61 | 10,278,095,378.97 | |
| Tax refunds received | 90,640,776.86 | 14,213,134.10 | 657,924,349.01 | ||
| Cash received relating to other operating activities | V. 52 | 132,165,552.87 | 152,964,143.22 | 97,644,090.16 | 137,606,351.19 |
| Sub-total of cash inflows | 46,210,312,179.99 | 14,576,424,061.75 | 32,951,739,286.78 | 10,415,701,730.16 | |
| Cash paid for purchase of goods and services | 29,466,850,532.83 | 9,739,289,081.03 | 22,051,192,224.03 | 8,063,310,012.77 | |
| Cash paid to and on behalf of employee | 3,528,273,379.46 | 1,094,840,587.78 | 3,643,832,639.99 | 1,168,538,163.50 | |
| Cash paid for taxes | 2,333,221,933.94 | 866,247,125.28 | 1,964,326,445.77 | 830,689,198.50 | |
| Cash paid relating to other operating activities | V. 52 | 607,287,537.57 | 241,961,081.41 | 1,877,385,961.64 | 525,790,115.89 |
| Sub-total of cash outflows | 35,935,633,383.80 | 11,942,337,875.50 | 29,536,737,271.43 | 10,588,327,490.66 | |
| Net cash flows from operating activities | 10,274,678,796.19 | 2,634,086,186.25 | 3,415,002,015.35 | -172,625,760.50 | |
| II. Cash flows from investing activities | |||||
| Cash received from disposal of investments | 0.00 | 500,000,000.00 | 0.00 | 1,500,000,000.00 | |
| Cash received from investment income | 362,658,569.01 | 433,865,503.86 | 236,996,978.97 | 300,053,045.61 | |
| Net proceeds from disposal of property, plant and equipment, intangible assets and other long-term assets | 339,801.76 | 180,825.40 | 3,645,314.42 | 1,784,737.33 | |
| Cash received from disposal of subsidiaries and other business units | 0.00 | 0.00 | 0.00 | 0.00 | |
| Cash received relating to other investing activities | V. 52 | 433,380,246.29 | 47,624,492.20 | 91,721,455.32 | 28,498,411.11 |
| Sub-total of cash inflows | 796,378,617.06 | 981,670,821.46 | 332,363,748.71 | 1,830,336,194.05 | |
| Purchase of property, plant and equipment, intangible assets and other non-current assets | 3,032,549,847.59 | 733,618,776.68 | 5,574,697,638.95 | 731,440,424.44 | |
| Cash paid for investments | 16,145,000.00 | 315,000,000.00 | 64,760,000.00 | 4,166,054,910.00 | |
| Net cash paid for acquisition of a subsidiary and other operating units | 512,933,652.83 | 521,656,810.78 | |||
| Cash paid relating to other investing activities | |||||
| Sub-total of cash outflows | 3,561,628,500.42 | 1,570,275,587.46 | 5,639,457,638.95 | 4,897,495,334.44 | |
| Net cash flows from investing activities | -2,765,249,883.36 | -588,604,766.00 | -5,307,093,890.24 | -3,067,159,140.39 | |
| III. Cash flows from financing activities | |||||
| Cash received from investment | 100,000,000.00 | 0.00 | 155,600,000.00 | 0.00 | |
| Including: Cash receipts from capital contributions from non-controlling interests of subsidiaries | |||||
| Proceeds from borrowings | 38,570,540,000.00 | 15,589,030,000.00 | 45,302,050,000.00 | 13,152,530,000.00 | |
| Cash receipts relating to other financing activities | V. 52 | 148,638,840.00 | 148,638,840.00 | 690,938,155.85 | 690,938,155.85 |
| Sub-total of cash inflows | 38,819,178,840.00 | 15,737,668,840.00 | 46,148,588,155.85 | 13,843,468,155.85 | |
| Repayments for debts | 42,806,970,000.00 | 16,857,920,000.00 | 40,787,490,000.00 | 9,511,920,000.00 | |
| Cash payments for distribution of dividends or profit and interest expenses | 2,654,054,934.85 | 783,654,392.12 | 2,565,119,061.13 | 791,776,057.80 | |
| Including: Dividends and profits paid to non-controlling shareholders of subsidiaries | |||||
| Cash payments relating to other financing activities | V. 52 | 311,182,295.82 | 1,009,464,211.36 | 992,534,867.67 | 11,125,939.11 |
| Sub-total of cash outflows | 45,772,207,230.67 | 18,651,038,603.48 | 44,345,143,928.80 | 10,314,821,996.91 | |
| Net cash flows from financing activities | -6,953,028,390.67 | -2,913,369,763.48 | 1,803,444,227.05 | 3,528,646,158.94 | |
| IV. Effect of exchange rate changes on cash and cash equivalents | |||||
| V. Net increase in cash and cash equivalents | 556,400,522.16 | -867,888,343.23 | -88,647,647.84 | 288,861,258.05 | |
| Add: Cash and cash equivalents as at 01/01/2020 | 4,403,513,394.20 | 1,754,642,513.64 | 4,492,161,042.04 | 1,465,781,255.59 | |
| VI. Cash and cash equivalent as at 31/12/2020 | 4,959,913,916.36 | 886,754,170.41 | 4,403,513,394.20 | 1,754,642,513.64 | |
－76－
Consolidated Statement of Changes in Equity
| Consolidated Statement of Changes in Equity | |||||||||||||
| Beijing Shougang Co., Ltd. for the year ended 31 December 2020 | |||||||||||||
| Unit: RMB Yuan | |||||||||||||
| Item | 2020 | ||||||||||||
| Equity attributable to shareholders of the parent | Non-controlling interests | Total shareholders’ equity | |||||||||||
| Share capital | Capital reserve | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | ||||||||
| I. Balance at the end of previous year | 5,289,389,600.00 | 20,074,865,467.56 | 1,952,319,928.42 | 15,749,165.64 | 1,729,509,055.66 | -2,179,897,484.27 | 13,284,798,671.53 | 40,166,734,404.54 | |||||
| Add：Changes in accounting policies | |||||||||||||
| Correction of prior period errors | |||||||||||||
| Business combination under common control | |||||||||||||
| Others | |||||||||||||
| II. Balance at the beginning of the year | 5,289,389,600.00 | 20,074,865,467.56 | 1,952,319,928.42 | 15,749,165.64 | 1,729,509,055.66 | -2,179,897,484.27 | 13,284,798,671.53 | 40,166,734,404.54 | |||||
| III. Increase/(decrease) during the period | -315,606,347.16 | -1,757,109,683.60 | 5,828,371.56 | 99,168,790.71 | 4,045,178,403.50 | -3,413,014,032.58 | -1,335,554,497.57 | ||||||
| (1)Total comprehensive income | 247,100,524.21 | 1,786,452,832.06 | 624,689,973.41 | 2,658,243,329.68 | |||||||||
| (2)Shareholders' contributions and reduction | -285,762,662.22 | -4,038,902,019.61 | -4,324,664,681.83 | ||||||||||
| (i) Shareholders’ contributions in ordinary share | |||||||||||||
| (ii) Amount of share-based payments recognized in equity | |||||||||||||
| (iii) Others | -285,762,662.22 | -4,038,902,019.61 | -4,324,664,681.83 | ||||||||||
| (3) Profit distribution | 99,168,790.71 | -99,168,790.71 | |||||||||||
| (i) Transfer to surplus reserve | 99,168,790.71 | -99,168,790.71 | |||||||||||
| (ii) Distribution to shareholders | |||||||||||||
| (iii) Others | |||||||||||||
| (4) Transfer within equity | -2,004,210,207.81 | 2,357,894,362.15 | 353,684,154.34 | ||||||||||
| (i) Capital reserves converted to share capital | |||||||||||||
| (ii) Surplus reserves converted to share capital | |||||||||||||
| (iii) Loss made up by surplus reserves | |||||||||||||
| (iv) Other comprehensive income transferred to retained earnings | -2,004,210,207.81 | 2,357,894,362.15 | 353,684,154.34 | ||||||||||
| (v) Others | |||||||||||||
| (5) Specific Reserve | 1,979,013.15 | 5,828,371.56 | 1,198,013.62 | 9,005,398.33 | |||||||||
| (i) Additions | 1,979,013.15 | 5,828,371.56 | 1,198,013.62 | 9,005,398.33 | |||||||||
| (ii) Utilisation | |||||||||||||
| (6) Others | -31,822,698.09 | -31,822,698.09 | |||||||||||
| IV. Balance at the end of the period | 5,289,389,600.00 | 19,759,259,120.40 | 195,210,244.82 | 21,577,537.20 | 1,828,677,846.37 | 1,865,280,919.23 | 9,871,784,638.95 | 38,831,179,906.97 | |||||
－77－
Consolidated Statement of Changes in Equity
| Consolidated Statement of Changes in Equity | ||||||||||||
| Beijing Shougang Co., Ltd. for the year ended 31 December 2020 | ||||||||||||
| Unit: RMB Yuan | ||||||||||||
| Item | 2019 | |||||||||||
| Equity attributable to shareholders of the parent | Non-controlling interests | Total shareholders’ equity | ||||||||||
| Share capital | Capital reserve | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | |||||||
| I. Balance at the end of previous year | 5,289,389,600.00 | 20,091,435,081.71 | 1,532,188,176.47 | 7,975,932.61 | 1,687,827,448.18 | -3,260,964,367.74 | 11,024,822,961.68 | 36,372,674,832.91 | ||||
| Add：Changes in accounting policies | 83,193,729.54 | 83,193,729.54 | ||||||||||
| Correction of prior period errors | ||||||||||||
| Business combination under common control | -17,083,231.37 | -62,841,211.49 | 608,022,052.14 | 528,097,609.28 | ||||||||
| Others | ||||||||||||
| II. Balance at the beginning of the year | 5,289,389,600.00 | 20,074,351,850.34 | 1,615,381,906.01 | 7,975,932.61 | 1,687,827,448.18 | -3,323,805,579.23 | 11,632,845,013.82 | 36,983,966,171.73 | ||||
| III. Increase/(decrease) during the period | 513,617.22 | 336,938,022.41 | 7,773,233.03 | 41,681,607.48 | 1,143,908,094.96 | 1,651,953,657.71 | 3,182,768,232.81 | |||||
| (1)Total comprehensive income | 336,938,022.41 | 1,185,589,702.44 | 506,780,564.38 | 2,029,308,289.23 | ||||||||
| (2)Shareholders' contributions and reduction | 1,140,621,384.00 | 1,140,621,384.00 | ||||||||||
| (i) Shareholders’ contributions in ordinary share | 1,140,621,384.00 | 1,140,621,384.00 | ||||||||||
| (ii) Amount of share-based payments recognized in equity | ||||||||||||
| (iii) Others | ||||||||||||
| (3) Profit distribution | 41,681,607.48 | -41,681,607.48 | ||||||||||
| (i) Transfer to surplus reserve | 41,681,607.48 | -41,681,607.48 | ||||||||||
| (ii) Distribution to shareholders | ||||||||||||
| (iii) Others | ||||||||||||
| (4) Transfer within equity | ||||||||||||
| (i) Capital reserves converted to share capital | ||||||||||||
| (ii) Surplus reserves converted to share capital | ||||||||||||
| (iii) Loss made up by surplus reserves | ||||||||||||
| (iv) Other comprehensive income transferred to retained earnings | ||||||||||||
| (v) Others | ||||||||||||
| (5) Specific Reserve | 1,876,262.91 | 7,773,233.03 | 1,916,247.66 | 11,565,743.60 | ||||||||
| (i) Additions | 1,876,262.91 | 7,773,233.03 | 1,916,247.66 | 11,565,743.60 | ||||||||
| (ii) Utilisation | ||||||||||||
| (6) Others | -1,362,645.69 | 2,635,461.67 | 1,272,815.98 | |||||||||
| IV. Balance at the end of the period | 5,289,389,600.00 | 20,074,865,467.56 | 1,952,319,928.42 | 15,749,165.64 | 1,729,509,055.66 | -2,179,897,484.27 | 13,284,798,671.53 | 40,166,734,404.54 | ||||
－78－
Parent Company Statement of Changes in Shareholders’ Equity
| Parent Company Statement of Changes in Shareholders’ Equity | ||||||||
| Beijing Shougang Co., Ltd. for the year ended 31 December 2020 | ||||||||
| Unit: RMB Yuan | ||||||||
| Item | 2020 | |||||||
| Share capital | Capital reserve | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | Total shareholders’ equity | ||
| I. Balance at the end of previous year | 5,289,389,600.00 | 12,415,326,156.11 | 1,952,319,928.42 | 1,729,509,055.66 | 5,605,709,861.57 | 26,992,254,601.76 | ||
| Add：Changes in accounting policies | ||||||||
| Correction of prior period errors | ||||||||
| Others | ||||||||
| II. Balance at the beginning of the year | 5,289,389,600.00 | 12,415,326,156.11 | 1,952,319,928.42 | 1,729,509,055.66 | 5,605,709,861.57 | 26,992,254,601.76 | ||
| III. Increase/(decrease) during the period | -285,762,662.22 | -1,757,109,683.60 | 99,168,790.71 | 3,250,413,478.55 | 1,306,709,923.44 | |||
| (1) Total comprehensive income | 247,100,524.21 | 991,687,907.11 | 1,238,788,431.32 | |||||
| (2) Shareholders' contributions and reduction | -285,762,662.22 | -285,762,662.22 | ||||||
| (i) Shareholders’ contributions in ordinary share | ||||||||
| (ii) Amount of share-based payments recognized in equity | ||||||||
| (iii) Others | -285,762,662.22 | -285,762,662.22 | ||||||
| (3) Profit distribution | 99,168,790.71 | -99,168,790.71 | ||||||
| (i) Transfer to surplus reserve | 99,168,790.71 | -99,168,790.71 | ||||||
| (ii) Distribution to shareholders | ||||||||
| (iii) Others | ||||||||
| (4) Transfer within equity | -2,004,210,207.81 | 2,357,894,362.15 | 353,684,154.34 | |||||
| (i) Capital reserves converted to share capital | ||||||||
| (ii) Surplus reserves converted to share capital | ||||||||
| (iii) Loss made up by surplus reserves | ||||||||
| (iv) Other comprehensive income transferred to retained earnings | -2,004,210,207.81 | 2,357,894,362.15 | 353,684,154.34 | |||||
| (v) Others | ||||||||
| (5) Special reserve | ||||||||
| (i) Additions | ||||||||
| (ii) Utilisation | ||||||||
| (6) Others | ||||||||
| IV. Balance at the end of the period | 5,289,389,600.00 | 12,129,563,493.89 | 195,210,244.82 | 1,828,677,846.37 | 8,856,123,340.12 | 28,298,964,525.20 | ||
－79－
Parent Company Statement of Changes in Shareholders’ Equity
| Parent Company Statement of Changes in Shareholders’ Equity | |||||||||
| Beijing Shougang Co., Ltd. for the year ended 31 December 2020 | |||||||||
| Unit: RMB Yuan | |||||||||
| Item | 2019 | ||||||||
| Share capital | Capital reserve | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | Total shareholders’ equity | |||
| I. Balance at the end of previous year | 5,289,389,600.00 | 12,415,326,156.11 | 1,532,188,176.47 | 1,687,827,448.18 | 5,189,366,782.39 | 26,114,098,163.15 | |||
| Add：Changes in accounting policies | 83,193,729.54 | 41,208,611.87 | 124,402,341.41 | ||||||
| Correction of prior period errors | |||||||||
| Others | |||||||||
| II. Balance at the beginning of the year | 5,289,389,600.00 | 12,415,326,156.11 | 1,615,381,906.01 | 1,687,827,448.18 | 5,230,575,394.26 | 26,238,500,504.56 | |||
| III. Increase/(decrease) during the period | 336,938,022.41 | 41,681,607.48 | 375,134,467.31 | 753,754,097.20 | |||||
| (1) Total comprehensive income | 336,938,022.41 | 416,816,074.79 | 753,754,097.20 | ||||||
| (2) Shareholders' contributions and reduction | |||||||||
| (i) Shareholders’ contributions in ordinary share | |||||||||
| (ii) Amount of share-based payments recognized in equity | |||||||||
| (iii) Others | |||||||||
| (3) Profit distribution | 41,681,607.48 | -41,681,607.48 | |||||||
| (i) Transfer to surplus reserve | 41,681,607.48 | -41,681,607.48 | |||||||
| (ii) Distribution to shareholders | |||||||||
| (iii) Others | |||||||||
| (4) Transfer within equity | |||||||||
| (i) Capital reserves converted to share capital | |||||||||
| (ii) Surplus reserves converted to share capital | |||||||||
| (iii) Loss made up by surplus reserves | |||||||||
| (iv) Other comprehensive income transferred to retained earnings | |||||||||
| (v) Others | |||||||||
| (5) Special reserve | |||||||||
| (i) Additions | |||||||||
| (ii) Utilisation | |||||||||
| (6) Others | |||||||||
| IV. Balance at the end of the period | 5,289,389,600.00 | 12,415,326,156.11 | 1,952,319,928.42 | 1,729,509,055.66 | 5,605,709,861.57 | 26,992,254,601.76 | |||
Notes to the Financial StatementsI. General Informantion of the Company
1. Company profile
Beijing Shougang Company Limited (hereinafter referred to as the Company) is a joint stocklimited company established by means of raising, which is approved by Beijing Municipal People'sGovernment Jingzhenghan [1998] No. 34 and exclusively initiated by Shougang Group Co., Ltd.With the approval of zjxz [1999] No. 91 document issued by China Securities RegulatoryCommission, the Company was the first to issue 350,000.00 thousand ordinary shares (A shares) tothe public in Shenzhen Stock Exchange from 21 to 27 September, 1999 by the combination of legalperson placement and online issuance, with par value of RMB 1 per share and issue price of RMB
5.15 per share, with the stock code of 000959. The Company registered with approval of BeijingAdministration for Industry and Commerce on 15 October, 1999. The Company holds the businesslicense with unified social credit code of 1100001028663 (1-1), with the registered capital of RMB2,310,000,000.00.The Company issued the convertible corporate bonds worthed RMB 2,000,000 thousand on 16December, 2003 upon the approval of zjfxz [2003] No. 107 document issued by China SecuritiesRegulatory Commission. On 31 December, 2003, the convertible bond was listed and traded inShenzhen Stock Exchange. The bond is abbreviated as “Shougang Convertible Bond” with the bondcode of “125959”. The convertible bonds were converted into shares since June 16, 2004, and metthe redemption conditions until 26 February 2007. Accordingly, the board of directors of thecompany issued the redemption announcement. As of 6 April, 2007, the date of convertible bondredemption, the total amount of Shougang convertible bonds was RMB1,950,217,500.00, whichwas converted into the Company's shares, with an accumulated increase of RMB 656,526,057.00 inshare capital. The Company obtained a new business license of legal entity on November 20, 2008,with the registration number 110000000286633 (1-1), and the registered capital changed to RMB2,966,526,057.00.On 16 January, 2013, the Company's material assets reorganization was reviewed by thereorganization committee of CSRC and passed unconditionally. On 29 January, 2014, ChinaSecurities Regulatory Commission issued “Reply on approving material assets reorganization ofBeijing Shougang Co., Ltd. and shares issuance to Shougang Group to purchase assets”. As of 25April, 2014, the implementation of material assets reorganization of the Company has beencompleted. In the material assets reorganization, the private placement to Shougang Group was2,322,863,543 shares, with par value of RMB 1 each and issue price of RMB 4.29 each. TheCompany obtained the new business license of legal entity after capital increment on 9 July, 2014,with the registration number of 110000000286633, and the registered capital changed to RMB5,289,389,600.The Company obtained the new business license of legal entity on 22 December, 2016 after theintegration of five certificates, with the unified social credit code 911100007002343182.The statutory address is Shijingshan Road, Shijingshan District, Beijing.The Company has established the corporate governance structure of the general meeting ofshareholders, the board of directors and the board of supervisors. At present, the Company sets upserval functional departments, for instance, secretary office of the board of directors, the planningand financing department, the manufacturing department, the marketing center, the purchasing
center, the human resources department, the equipment department, the energy department, theenvironmental protection department, the quality inspection department, the office, etc, as well asthe subordinate factories such as Shougang Qian'an Iron&Steel Co., Ltd. and auxiliary productiondepartment, like the technical center. The Company, together with its six subsidiaries, which areShougang Jingtang United Iron&Steel Co., Ltd., Beijing Shougang Cold Rolling Co., Ltd., Qian'anShougang Metallurgical Technology Co., Ltd., Shougang Zhixin Qian'an Electromagnetic MaterialsCo., Ltd., Beijing Shougang New Energy Automobile Material Technology Co., Ltd., and BeijingShougang Steel Trade Investment Management Co., Ltd., is principally engaged in the manufactureand sale of iron and steel products and related by-products.The business scope of the Company includes iron and steel smelting, steel calendering processing,copper smelting and calendering processing and sales; manufacturing and sales of sinter, coke andchemical products; blast furnace residual pressure power generation and production and sales of gas;processing and sales of industrial waste; sales of metal materials, coke, chemical products,mechanical and electrical equipment, building materials, general equipment, hardware, furnitureand decorative materials; equipment leasing (excluding automobiles); telecommunications services;insurance agency services; insurance broker services; loading, unloading and handling services;software delevopment; advertising design and agency; warehousing services; technologydevelopment, technical consultation, technology transfer, technical service and technical training;investment and investment management.The financial statements and notes were approved by the seventh meeting of the seventh Board ofDirectors on 26 April 2021.
2. Scope of consolidated financial statements
The scope of the consolidated financial statements is determined on the control basic, the scopeincludes six subsidiaries, which are Shougang Jingtang United Iron&Steel Co., Ltd., BeijingShougang Cold Rolling Co., Ltd., Qian'an Shougang Metallurgical Technology Co., Ltd., ShougangZhixin Qian'an Electromagnetic Materials Co., Ltd., Beijing Shougang New Energy AutomobileMaterial Technology Co., Ltd., and Beijing Shougang Steel Trade Investment Management Co.,Ltd..During the year, new subsidiary, Beijing Shougang Steel Trade Investment Management Co., Ltd.was incorporated through business combination under common control by the Company.The details refer to Note VI Change in the scope of consolidation and Note VII Interests in otherentities.II. Basis of preparationThe financial statements are prepared in accordance with the latest “China Accounting Standardsfor Business Enterprises” and other issued application guidance, interpretations and other relatedregulations (collectively known as the “CASBE”) issued by the Ministry of Finance of the PRC(MOF). Additionally, the Company discloses relevant financial information in accordance withrequirements in the “Preparation Convention of Information Disclosure by Companies OfferingSecurities to the Public No.15—General Rules on Financial Reporting” (2014 revised) issued by theChina Securities Regulatory Commission.The financial statements are prepared on a going concern basis.
The Company adopts the accrual basis of accounting. The financial statements have been preparedunder the historical cost convention, except for certain financial instruments. If the assets areimpaired, corresponding provisions for impairment shall be made in accordance with relatedregulations.III. Significant accounting policies and estimatesThe Company has determined the accounting policies and accounting estimates based on thecharacteristics of the operation, especially those related to depreciation of fixed assets, amortizationof intangible assets, capitalization conditions of R&D expenses and revenue recognition policies,the detailed accounting policies refer to Note III, 14, Note III, 18, Note III, 19 and Note III, 24.
1. Statement of compliance with the CAS
The financial statements have been prepared in accordance with CAS, and present truly andcompletely the financial position of the consolidated and the Company as at 31 December 2020,and the financial performance and cash flows for the year ended 31 December 2020.
2. Accounting period
The accounting year of the Company is from 1 January to 31 Decemeber of each calendar year.
3. Operating cycle
The operating cycle of the Company is 12 months.
4. Functional currency
The Company and domestic subsidiaries use Renminbi (“RMB”) as their functional currency.The financial statements of the Company have been prepared in RMB.
5. Accounting treatments for business combination involving entities under common control andbusiness combination involving entities not under common control.
(1) Business combination involving entities under common control
For the business combination involving entities under common control, the assets and liabilities thatare obtained in the business combination shall be measured at their original carrying amounts at thecombination date as recorded by the party being combined, except for the adjustments of differentaccounting policies. The difference between the carrying amount of the net assets obtained and thecarrying amount of consideration paid for the combination shall be adjusted to capital reserve(equity premium), if the capital reserve (equity premium) is not sufficient to absorb the difference,any excess shall be adjusted to retained earnings.Business combinations involving entities under common control through multiple transactions toachieve in stagesIn the separate financial statements, the initial investment cost is calculated based on theshareholding portion of net assets of the consolidated party in the carrying amount of the ultimatecontrolling party’s consolidated financial statement at the acquisition date. The difference betweenthe initial investment cost and the sum of the carrying amount of the original investment cost andthe carrying amount of consideration paid for the combination is adjusted to the capital reserve
(equity premium), if the capital reserve is not sufficient to absorb the difference, the excess shall beadjusted to retained earning.In the consolidated financial statements, the assets and liabilities obtained at the combination shallbe measured at the carrying value as recorded by the ultimate controlling party at the acquisitiondate, except for adjustments of different accounting policies. The difference between the sum of thecarrying value from original shareholding portion and the new consideration incurred at theacquisition date and the carrying value of net assets obtained at acquisition date shall be adjusted tocapital reserve (equity premium), if the balance of capital reserve is not sufficient to absorb thedifferences, any excess is adjusted to retained earnings. The long-term investment held bycombining party before acquisition of control, the profit or loss, comprehensive income and otherchange of shareholder’s equity recongnized at the closer date of the acquisition date andcombination date under common control shall separately offset the opening balance of retainedearnings and profit or loss during comparative statements.
(2) Business combinations involving entities not under common controlFor business combinations involving entities not under common control, the consideration costsinclude acquisition-date fair value of assets transferred, liabilities incurred or assumed and equitysecurities issued by the acquirer in exchange for control of the acquiree. The acquirer shallrecognize the acquiree’s identifiable asset, liabilities and contingent liabilities that satisfy therecognition criteria at their fair values at the date of acquisition.The excess of combination costs and the acquirer’s interest in the fair value of the acquiree’sidentifiable net assets is recognized as goodwill, which is measured at cost less any accumulatedimpairment losses subsequently. If the acquirer’s interest in the net fair value of the acquiree’sidentifiable net assets exceeds the combination costs, the acquirer shall reassess the measurementand recognize any excess remaining in profit or loss after reassessment.Business combinations involving entities not under common control through multiple transactionsto achieve in stagesIn the separate financial statements, the initial investment cost is the sum of the carrying amount ofthe equity investment held by the entity prior to the acquisition date and the additional investmentcost at the acquisition date. The disposal accounting policy of other comprehensive income relatedwith equity investment prior to the purchase date recognized under equity method shall becompliance with the method when the acquire disposes the related assets or liabilities.Shareholder’s equity due to the changes of other shareholder’s equity other than the changes of netprofit, other comprehensive income and profit distribution shall be transferred to profit or lose forcurrent period when disposed. If the equity investment held by the entity prior to the acquisitiondate is measured at fair value, the cumulative change in fair value recognized in othercomprehensive income shall be transferred to profit or loss for current period under cost accountingmethod.In the consolidated financial statements, the combination cost is the sum of consideration paid atacquisition date and fair value of the acquiree’s equity held prior to acquisition date; the equity ofthe acquiree held prior to acquisition date shall be re-measured at the fair value at acquisition date,the difference between the fair value and book value shall be recognized as profit or loss for thecurrent period. Other comprehensive income and changes of other shareholder’s equity related withacquiree’s equity held prior to acquisition date shall be transferred to profit or loss for currentperiod at acquisition date, besides the other comprehensive income incurred by the changes of net
assets or net liabilities due to the re-measurement of defined benefit plan.
(3) Transaction costs for business combination
The overheads for the business combination, including the expenses of audit, legal services,valuation advisory, and other related administrative expenses, are recorded in profit or loss for thecurrent period when expenditure incurred. The transaction costs of equity or debt securities issuedas the considerations of business combination are included in the initial recognition amount of theequity or debt securities.
6. Consolidated financial statements
(1) Scope of consolidated financial statements
The scope of consolidated financial statements is determined on the control basis. Control existswhen the Company has power over the investee, rights to variable returns from involvement withrelated activities of investee and has the ability to affect its returns through its power over theinvestee. A subsidiary is an entity that is controlled by the Company (including separable parts of anenterprise or investee and structured entities controlled by the Company, etc).
(2) Method of preparing consolidated financial statements
The consolidated financial statements are based on the financial statements of the Company and itssubsidiaries, and are prepared by the Company in accordance with other relevant information. Inpreparing the consolidated financial statements, the Company and its subsidiaries are required toapply consistent accounting policy and accounting period, intra-group transactions and balancesshall be offset.The subsidiary acquired through a business combination involving entities under common controlin the reporting period shall be included in the scope of the consolidation from the beginning of thecombination date, the subsidiary’s income, expenses and profits should be included in theconsolidated results of operations and cash flows from the acquisition date respectively.The subsidiary acquired through a business combination involving entities not under commoncontrol in the reporting period, the subsidiary’s income, expenses and profits are included in theconsolidated results of operations, and cash flows are included in the consolidated cash flowstatement from the acquisition date to the end of the reporting date.The portion of the subsidiary’s equity that is not attributable to the Company is treated asnon-controlling interests and separately presented in the consolidated balance sheet withinshareholders’ equity. The portion of a subsidiary’s profit or loss that is attributable tonon-controlling interests presented in the consolidated income statement of net profit or loss as “netprofit attributable to non-controlling interests”. Where the amout of losses of a subsidiaryattributable to the non-controlling shareholders in the current period exceeds their share of theopening balance of owner’s equity of the subsidiary, the excess shall offset non-controllinginterests.
(3) Purchase of the minority equity in the subsidiary
The difference between the long-term equity investments costs acquired by the purchase of minorityequity and the share of the net assets that the subsidiaries have to continue to calculate from the dateof purchase or the date of consolidation in proportion to the new shareholding ratio is adjusted tothe capital reserve (equity premium), if the capital reserve is not sufficient, any excess is adjusted toretained earning. The difference between disposal of partial equity investment without losingcontrol over its subsidiary and the disposal of long-term equity investment corresponding to theshare of the net assets of the subsidiaries from the date of purchase or the date of consolidation is aswell.
(4) Loss of control of subsidiaries
If the control right is lost due to disposal of partial equity investment or other reasons, theremaining equity shall be re-measured according to its fair value on the date of losing control. Thedifference between the summary of consideration obtained from the disposal of the equity and thefair value of the remaining equity, less the difference between the share of the original assets andthe share of the net assets that have been continuously calculated from the date of purchase from thedate of the original shareholding, is included in the current period profit or loss and; if there is agoodwill for the subsidiary, the amount of the goodwill also shall be deducted.The other comprehensive income related to the original subsidiary’s equity investment shall betransferred to current period profit and loss when control is lost, except for the other comprehensiveincome arising from the movement of net liabilities or assets investee’s re-measurement of definedbenefit plan.
(5) Treatment of step disposal until the loss of control of subsidiaries
By stepping through multiple transactions to dispose of the equity investment in the subsidiary untilit loses control, if the clauses, conditions and economic impacts of the transaction satisfy one ormore of the following criteria, the Company will consider the transactions as a package transactionfor the accounting treatment:
①The transactions are entered simultaneously or in consideration of the mutual influence;
②Only the transactions as a whole can achieve one complete business outcome;
③The occurrence of a transaction is depending on the occurance of at least one of othertransactions;
④The transaction alone is not economical, however, it becomes economical to consider the othertransactions together.In the separate financial statements, by stepping through multiple transactions to dispose of theequity investment in the subsidiary until it loses control, when it is not a package transaction,carrying forward the book value of each disposal of equity relative to the corresponding long-termequity investment, and the difference between the considerations and the book value of the disposalof long-term equity investment is recognized in the current period investment income or loss. Whenit is a package transaction, the price difference between the disposal price and the disposalinvestment before the loss of control is recognized as other comprehensive income in theconsolidated financial statements, and is transferred to the current period profit or loss of controlwhen the control is lost。In the consolidated financial statements, the measurement of the remaining equity and treatment of
the loss of disposal is in accordance to “Treatment of loss of control of subsidiaries” as describedabove. The difference between the disposal consideration and the related share of net assets of thesubsidiaries, which has been continuously calculated since the purchase date corresponding to theequity disposal should be treated as follows:
①When it is a package transaction, the difference shall be recognized as the other comprehensiveincome and transferred to the current period profit or loss of control when the control is lost
②When it is not a package transaction, the difference shall be recorded to capital reserve (sharepremium) as equity transaction and could not be transferred to the current period profit or loss ofcontrol when the control is lost.
7. Joint arrangement and joint operations
Joint arrangement refers to an arrangement under the joint control of two or more entities. The jointarrangement of the Company is classified as either a joint operation or a joint venture.
(1) Joint operation
Joint operation is a joint arrangement whereby the Company have rights to the assets, andobligations for the liabilities, relating to the arrangement.The Company recognizes the following items in relation to its interest in a joint operation inaccordance with CAS:
A. its solely-held assets, and its share of any assets held jointly;B. its solely-assumed liabilities, and its share of any liabilities incurred jointly;C. its revenue from the sale of its share of the output arising from the joint operation;D. its share of the revenue from the sale of the output by the joint operation;E. its solely-incurred expenses, and its share of any expenses incurred jointly.
(2) Joint venture
A joint venture is a type of joint arrangement whereby the Company that has joint control of thearrangement has rights to the net assets of the joint venture.
8. Cash and cash equivalents
Cash represents the cash on hand and deposits which are readily available for payment. Cashequivalents represent the Company’s short-term highly liquid investments which are readilyconvertible into known amounts of cash and subject to an insignificant risk of changes in value.
9. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financialliability or equity instrument of another entity.
(1) Recognition and derecognition of financial instruments
The Company recognises a financial asset or a financial liability when, and only when, it becomes a
party to the contractual provisions of the instrument.A financial asset will be derecognized when it satisfies one or more of the following conditions:
① The contractual rights to receive cash flows from the financial asset expire;
② The financial asset has been transferred, and it satisfies the following conditions forderecognition.The financial liability (or part of it) is derecognized when its contractual rights (or part of it) expire.If the Company (as a debtor) makes an agreement with the creditor to replace the current financialliability with assuming a new financial liability, and contractual provisions are different insubstance, the current financial liability shall be derecognized and a new financial liability shall berecognized.All financial assets purchased or sold in regular way are recognised or derecognised on the tradingdate when the Company commits to purchase or sell the asset.
(2) Classification and measurement of financial assets
The Company classifies its financial assets, based on the entity's business model for managing thefinancial assets and the contractual cash flow characteristics of the financial assets, as financialassets at amortized cost, financial assets at fair value through other comprehensive income andfinancial assets at fair value through profit or loss.Financial assets measured at amortized costThe Company shall classify financial assets that meet the following conditions and are notdesignated as financial assets at fair value through profit or loss as financial assets measured atamortized cost:
? The financial asset is held whose objective is to collect contractual cash flows;? 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.After initial recognition, this type of financial asset using effective interest rate method to bemeasured at amortized cost. The gain or loss generated by the financial assets measured atamortized cost and not part of any hedging relationship shall be accounted in the profit or loss forthe year when the financial assets are derecognized, amortized by effective interest method orrecognized impairment.Financial assets measured at fair value through other comprehensive incomeThe Company shall classify financial assets that meet the following conditions and are notdesignated as financial assets at fair value through profit or loss as financial assets measured at fairvalue through other comprehensive income:
? The financial asset is held within a business model whose objective will be achieved by both
collecting contractual cash flows and trading financial assets;? 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.
After initial recognition, the financial assets are subsequently measured at fair value. Interest,impairment loss/gain and exchange loss/gain calculated by the effective interest rate method arerecognised in profit or loss, while other profit or loss shall be recognised in other comprehensiveincome. When derecognized, the accumulated profit or loss previously recognised in othercomprehensive gains shall be transferred to current profit or loss.Financial assets measured at fair value through profit or lossIn addition to the aboving financial assets which are measured at amortized cost or at fair valuethrough other comprehensive income, the Company classifies all other financial assets as financialassets measured at fair value through profit or loss. In order to eliminate and significantly reduceaccounting mismatches, the Company irrevocably designates some financial assets that should bemeasured at amortized cost or at fair value through other comprehensive income as financial assetsat fair value through profit or loss during the initial recognition.After initial recognition, the financial assets are subsequently measured at fair value, and the profitor loss (including interest and dividend income) generated shall be recognised in current profit orloss, unless the financial assets are part of the hedging relationship.However, for non-tradable equity instrument investment, when initially recognized, the Companyirrevocably designates it as financial asset at fair value through other comprehensive income. Thedesignation is based on independent investment, and the relevant investment conforms to thedefinition of equity instruments from the issuer’s point of view.After initial recognition, financial assets are subsequently measured at fair value. Qualifieddividend income is recognised in profit and loss, and other profit or loss and change in fair value arerecognised in other comprehensive income. When derecognized, the accumulated profit or losspreviously recognised in other comprehensive income shall be transferred to retained earnings.The business model of managing financial assets refers to how the Company manages financialassets to generate cash flow. The business model determines if the source of cash flow for financialassets managed by the Company is collecting contract cash flow, selling financial assets or both ofthem. The Company determines the business model of financial assets management on the basis ofobjective facts and the specific business goals of financial assets management decided by keymanagers.The Company evaluates the characteristics of the contract cash flow of financial assets to determinewhether the contract cash flow generated by the relevant financial assets on a specific date is only topay principal and the interest, which is based on the amount of unpaid principal. Among them,principal refers to the fair value of financial assets at initial recognition; interest includes theconsideration of time value of money, credit risk related to the unpaid principal in a specific period,and other basic credit risks, costs and profits. Additionally, the Company evaluates the terms andconditions of the contracts that may alter time distribution or amount of cash flow in financial assetcontracts to determine whether they satisfy the requirements of the aboving contract cash flow’scharacteristics.Only when the Company changes its business model of managing financial assets, all the financialassets affected shall be reclassified on the first day of the first reporting period after the businessmodel alteration, otherwise, financial assets shall not be reclassified after initial recognition.A financial asset is measured at its fair value at initial recognition. For financial assets measured atfair value thorugh profit or loss, the relevant transaction costs are charged to profit or loss; for other
financial assets, the relevant transaction costs are recognized as initial investment costs. For thetrade receivables arising from the sale of goods or services provided do not contain or take intoaccount significant financing components, the initial investment costs shall be the consideration,which the Company is entitled to receive with the expectation.
(3) Classification and measurement of financial liabilities
The Company classifies its financial liabilities at initial recognition as financial liabilities measuredat fair value through profit or loss and financial liabilities at amortized cost. With respect tofinancial liabilities not classified as at fair value through profit or loss, transactions costs arecharged to initial recognition cost.Financial liabilities measured at fair value through profit or lossFinancial liabilities at fair value through profit or loss, including financial liabilities held for tradingand those are designated as at fair value through profit or loss at initial recognition. For thesefinancial liabilities, they are subsequently measured at fair value and gains or lossess from thechange of fair value and related dividend and interest expense are recognized in profit or loss for theyear.Financial liabilities measured at amortized costOther financial liabilities are subsequently measured at amortized cost using the effective interestmethod, the gains and losses arising from derecognition or amortization is recognised in profit orloss for the year.Distinction between financial liabilities and equity instrumentsThe financial liability is the liability that satisfies one of following cateria:
① Contractual obligation to deliver cash or other financial instruments to another entity.
② Under potential adverse conditions, contractual obligation to exchange financial assets orfinancial liabilities with other entity.
③ The contract that will or may be settled in the entity’s own equity instruments and is anon-derivative for which the entity is or may be obliged to deliver a variable number of the entity’sown equity instruments.
④ The derivative contract that will or may be settled in the entity’s own equity instruments otherthan by the exchange of a fixed number of the entity’s own equity instruments for a fixed amount ofcash or other financial assets.Equity instrument is the contract that evidences the residual equity in the assets of an entity afterdeducting all of its liabilities.If the Company cannot unconditionally avoid fulfilling a contractual obligation by delivering cashor other financial assets, the contractual obligation satisfies the definition of financial liability.If the financial instrument must or could be settled by the Company’s own equity instrument, theCompany should consider whether the Company’s equity instrument as the settlement instrument isa substitute of cash or other financial assets or the residual equity in the assets of an entity afterdeducting all of its liabilities. If it is the former one, the financial instrument is the Company’s
financial liability; if it is the latter one, the tool is the equity instrument of the Company.
(5) Fair value of financial instruments
Recognization of fair value of financial assets and financial liabilities please refers to Note III, 10.
(6) Impairment of financial assets
The Company performs impairment assessment and recognizes loss allowance for the followingfinancial assets based on their expected credit losses.? Financial assets measured at amortized cost;? Debt investment and trade receivables measured at fair value through other comprehensiveincome;? Lease receivables;? Financial guarantee contracts (expect for the contracts measured at fair value through profit or
loss, financial assets transformation not qualify for derecognition and continuing involvementof transferred financial assets).Measurement of expected credit lossThe expected credit loss refers to the weighted average of the credit loss of financial instrumentsthat are weighted by the risk of default. Credit loss refers to the difference between all contractualcash flows receivable from the contracts and all cash flows expected to be received, that is, thepresent value of all cash shortages.The Company considers the reasonable and basis information about past events, current situationand forecast of future economic situation, calculates the probability weighted amount of the presentvalue of the difference between the receivable cash flow of the contract and the expected cash flowwith the risk of default as the weight, and confirms the expected credit loss.The Company separately measures the expected credit losses of financial instruments at differentstages. The credit risk on a financial instrument has not increased significantly since initialrecognition, which is in Stage I. The Company measures the loss provision in accordance withexpected credit losses for the next 12 months. If the credit risk of financial instruments hasincreased significantly since the initial recognition, but no credit impairment has occurred, which isin Stage II. The Company measures the loss provision in accordance with the expected credit lossesfor the whole lifetime of the financial instrument. If the financial instrument has occurred creditimpairment since initial recognition, which is in Stage III, and the Company measures the lossprovision in accordance with the expected credit losses for the whole lifetime of the financialinstrument.For the financial instruments with lower credit risk at the balance sheet date, the Company assumesthat their credit risk has not increased significantly since the initial recognition, and measures theloss provision in accordance with expected credit losses for the next 12 months.The whole lifetime expected credit loss, refers to the expected credit loss caused by all possibledefaults during the whole expected lifetime. The 12-month expected credit losses, refer to theexpected credit loss caused by all possible defaults during the next 12 months after balance sheetdate (if the expected duration of financial instrument is less than 12 months, then for the expected
duration),which is part of the whole lifetime expected credit losses.When measuring the expected credit loss, the maximum maturity period that the Company needs toconsider is the maximum contract maturity period (including the consideration of option of renewal)the enterprise facing credit risk.For financial instruments in Stage I, Stage II and with lower credit risk, the Company calculatesinterest income on the basis of the book balances without deduction of impairment provisions andwith effective interest rates. For financial instruments in Stage III, the Company calculates interestincome on the basis of the book balances minus the impairment provision and with effective interestrate.For notes receivable and accounts receivable, whether or not there are significant financingelements, the Company always measures the loss provision in accordance with the whole lifetimeexpected credit losses.If the expected credit loss information of the the independent financial asset cannot be evaluated bya reasonable cost, the Company divides and combines notes receivable and accounts receivableaccording to the characteristics of credit risk. On the basis of the combination, the Companycalculates the expected credit losses. The basis of determining combination is as follows:
A. Notes receivable and Financing receivables? Portfolio 1: Bank acceptances? Portfolio 2: Bank acceptances with lower credit rating and Commercial acceptancesB. Accounts receivable: Accounts of receivable-tradeOther receivablesAccording to the characteristics of credit risk, the Company divides other receivables into servalcombinations. On the basis of the combination, the Company calculates the expected credit losses.The basis of determining the combination is as follows:
? Other receivables Combination 1: Imprest and deposit, etc.? Other receivables Combination 2: Other current accountFor the other receivables combination, the Company calculates the expected credit losses throughthe exposure on default and the next 12-month or the whole lifetime expected credit loss rate.Debt investments and other debt investmentsFor debt investments and other debt investments, the Company calculates the expected credit lossesthrough the exposure on default and the next 12-month or the whole lifetime expected credit lossrate, according to the nature of the investment, the types of counterparty and risk exposure.Assessment of Significant Increase in Credit RiskBy comparing the default risk of financial instruments on balance sheet date with the default risk oninitial recognition date, the Company determines the relative change of default risk of financialinstruments during the expected lifetime of financial instruments to evaluate whether the credit riskof financial instruments has increased significantly since the initial recognition.
When determining whether credit risk has increased significantly since the initial recognition, theCompany considers reasonable and valid information, including forward-looking information,which can be obtained without unnecessary additional costs or efforts. Information considered bythe Company includes:
? The debtor cannot pay principal and interest on the expiration date of the contract;? Serious deterioration of external or internal credit ratings (if any) of financial instruments thathave occurred or are expected to occur;? Serious deterioration of the debtor’s operating results that have occurred or are expected tooccur;? Changes in the existing or anticipated technological, market, economic or legal environmentwill have the significant negative impact on the debtor’s repayment capacity.According to the nature of financial instruments, the Company evaluates whether credit risk hasincreased significantly on the basis of an independent financial instrument or a combination offinancial instruments. When assessing on the basis of the combination of financial instruments, theCompany can classify financial instruments based on common credit risk characteristics, such asoverdue information and credit risk rating.If the delay exceeds 30 days, the Company determines that the credit risk of financial instrumentshas increased significantly.Financial assets that have occured credit impairmentOn the balance sheet date, the Company assesses whether credit impairment has occurred infinancial assets measured at amortized cost and debt investments measured at fair value throughother comprehensive income. When one or more events adversely affect the expected future cashflow of the financial assets occur, the financial assets transfer to the financial assets with creditimpairment. Evidence of credit impairment of financial assets includes the following observableinformation:
? Issuer or debtor suffer from significant financial difficulties;? Debtor breaches any of the contractual stipulations, for example, fails to pay or delays thepayment of interests or the principal, etc.;? In consideration of economic situationand contract related to the financial difficulties of the
debtor, the Company grants concessions to the debtor that will not be made under any othercircumstances.? Debtor is probable to go bankrupt or undergo other financial restructuring.? Financial difficulties of issuer or debtor lead to the disappearance of financial assets active
market.Presentation of expected credit loss reserveIn order to reflect the changes happened to the credit risk of financial instruments since the initialrecognition, the Company recalculates the expected credit loss on each balance sheet date. Theincrease or reversal of the loss provision resulting therefrom is recognised as an impairment loss or
gain in the current profit or loss.For financial assets measured at amortized cost, loss provisionoffsets the carrying amount of the financial assets presentated on the balance sheet; for debtinvestments measured at fair value through other comprehensive income, the Company recognizesits loss provision through other comprehensive income and does not offset the financial assets’carrying amount.Write offIf the Company no longer reasonably expects that the financial assets contract cash flow can berecovered fully or partially, the financial assets book balance will be reduced directly. Suchreduction constitutes derecognition of the financial assets. The situation usually occurs when theCompany determines that the debtor has no assets or income to generate sufficient cash flows topay the amount to be reduced. However, in accordance with the Company’s procedures forrecovering due payment, the financial assets reduced may still be affected by enforcement activities.If the reduced financial assets can be recovered later, the returns as impairment losses shall berecorded in the profit or loss.
(7) Transfer of financial assets
Transfer of financial assets is the transfer or delivery of financial assets to another entity (thetransferee) other than the issuer of financial assets.A financial asset is derecognised when the Company has transferred substantially all the risks andrewards of the asset to the transferee. A financial asset is not derecognised when the Companyretains substantially all the risks and rewards of the financial asset.When the Company has neither transferred nor retained substantially all the risks and rewards of thefinancial asset, it either (i) derecognises the financial asset and recognises the assets and liabilitiescreated in the transfer when it has not retained control of the asset; or (ii) continues to recognise thetransferred asset to the extent of the Company’s continuing involvement, in which case, theCompany also recognises an associated liability.
(8) Offsetting of financial assets and financial liabilities
When the Company has currently enforceable legal rights to offset the recognized financial assetsand financial liabilities, and there is an intention to settle on a net basis or to realize the financialassets and settle the financial liabilities, the financial assets and financial liabilities shall bepresented in balance sheet with the amount after offsets. Besides, the financial assets and financialliabilities shall be presented separately in balance sheet and are not allowed to be offset.
10. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date.The Company measures related assets or liabilities at fair value and assumes that selling assets ortransferring liabilities in an orderly transaction in the principal market of related assets or liabilities;in the absence of a principal market, the Company assumes the transaction in the mostadvantageous market. Principal market (or the most advantageous market) is the market that theCompany can enter into on measurement date. The Company adopts the presumptions used bymarket participants in achieving the maximum economic value of pricing the assets or liabilities.
For financial assets or financial liabilities in the active market, the Company uses the quoted pricein active market as their fair value. Otherwise, the Company uses valuation technique to determinethe fair value.Fair value measurement of non-financial assets consider market participants’ ability to generateeconomic benefits by using the assets in its highest and best use or by selling it to another marketparticipant that would use the asset in its highest and best use.The Company adopts the valuation techniques that are appropriate under current circumstances andfor which sufficient data and other supporting information are available to measure fair value,giving priority to the use of relevant observable inputs, and using unobservable inputs only if theobservable inputs are unavailable or not feasible to obtain.All assets and liabilities for which fair value is measured or disclosed in the financial statements arecategorized within the fair value hierarchy, described as follows, based on the lowest level inputthat is significant to the fair value measurement as a whole: Level 1 inputs are quoted (unadjusted)market prices in active markets for identical assets or liabilities; Level 2 inputs are observableinputs for related assets or liabilities, either directly or indirectly other than the inputs within Level1; Level 3 inputs are unobservable inputs for related assets or liabilities.For assets and liabilities that are recognized in the financial statements on a recurring basis, theCompany determines whether transfers have occurred between levels in the hierarchy byreassessing categorization at the end of each reporting period.
11. Inventories
(1) Classification
Inventories of the Company include raw materials, finished goods, lower-valued consumables andself-made semi-finished goods
(2) Mesurement method of cost of delivered inventories
Inventories are quoted at actual costs when acquired. Raw materials, finished goods and self-madesemi-finished goods are determined on the weighted average basis.
(3) Basis for determining the net realisable value and method for inventories provisionNet realisable value is the estimated selling price deducted by the estimated costs to completion, theestimated selling expenses and related taxes. The net realisable value is measured on the basis ofobtained verified evidences and considerations for the purpose of holding inventories and the effectof post balance sheet events.At the end of each reporting period, if the cost is in excess of net realisable value, provision forinventories is recognized in profit or loss. The Company usually recognizes provision according tothe independent inventory item. When the circumstances that previously caused inventories to bewritten down below cost no longer exist, the original amount of the write-down is reversed.
(4) Inventory system
Inventories are accounted for using the perpetual inventory system.
(5) Amortization method for consumables and packing materials
Low-valued consumables are charged with the one-off amortization method and multi-stageamortization method at consumption.
12. Assets classified as held for sale and discontinued operations
(1) Classification and measurement of non-current assets or disposal groups held for sale
The Company classifies the non-current asset or disposal group as held for sale when the carryingamount of the non-current asset or disposal group will be recovered through sale (includingexchange transactions of non-monetary assets with commercial substance) rather than throughcontinuing use.Above mentioned non-current assets not include investment properties subsequently measured withthe fair value model, biological assets measured at fair value less cost of sales, assets arising fromemployee benefits, financial assets, deferred tax assets and contractual rights under insurancecontracts.The disposal group is the group of assets to be disposed of, by sale or otherwise, together as a wholein a single transaction, and liabilities directly associated with those assets that will be transferred inthe transaction. Under certain circumstances, disposal group included goodwill acquired in thebusiness combination.The non-current asset or disposal group is classified as held for sale when all the following criteriaare satisfied: According to the trading routine of selling such asset or disposal group in similartransactions, the non-current asset or disposal group is available for immediate sale in currentcircumstance; the sale is highly probable to occur, that is, the Company has made a resolution on asale plan and obtained the assured purchase agreement. The sale is expected to be completed withinone year. If the control of the subsidiary is lost due to the sale of investment on the subsidiary andthe investment intended to be sold satisfies all conditions for the classification of assets held for sale,the Company classifies all the investment in that subsidiary as held for sale in separate financialstatements, and classifies all the assets and liabilities of that subsidiary as held for sale inconsolidated financial statements no matter whether the Company will keep part of the equityinvestment.Excess of the carrying amount over the fair value less costs to sell is recognized as assetsimpairment losses in the initial recognition or remeasurement on balance sheet date of non-currentasset or disposal group. The carrying amount of goodwill allocated to the disposal group shall bededucted firstly by the impairment loss recognized for the disposal group, and then the carryingamount of each non-current asset in the disposal group shall be proportionately deducted inaccordance with the proportion of the carrying value of the non-current assets in the disposal group.If net amount of fair value of the non-current asset or disposal group less costs to sell increases, theamount of the write-down will be recovered but not in excess of the cumulative impairment lossthat has been recognised after classified as held for sale. The reverse amount is recorded in the
current profit or loss. Additionally, the reduced carrying amount of goodwill could not be recovered.The Company does not depreciate (or amortise) the non-current assets classified as held for sale orassets of the disposal group classified as held for sale. Interest and other expenses attributable to theliabilities of the disposal group classified as held for sale continue to be recognised. If aninvestment or a part of the investment in an associate or a joint venture is classified as held for sale,equity method is not used for the part classified as held for sale, while equity method is used for therest part (the part not classified as held for sale) continuely. When the Company does not havematerial impact on an associate or a joint venture due to the sale transaction, equity method will bediscontinued.The Company measures a non-current asset that ceases to be classified as held for sale at the lowerof:
① The carrying amount of the asset and disposal group before classification as held for sale,adjusted for any depreciation, amortisation or impairment recognised under the assumption that theasset or disposal group has not been classified as held for sale;
② Recoverable amount
(2) Discontinued operations
Discontinued operation refers to the separately identifiable component that has been disposed orbeen classified as held for sale and satisfies one of the follwing conditions:
① It represents am independent major business line or a separate geographical area of operations;
② It is part of a single co-ordinated plan to dispose of an independent major business or a separategeographical area of operations;
③ It is a subsidiary acquired exclusively with a view to resale.
(3) Presentation
The Comapany presents the non-current assets classified as held for sale and the assets of disposalgroup classified as held for sale as “Assets classified as held for sale” in balance sheet. Theliabilities of disposal group classified as held for sale is presented as “Liabilities classified as heldfor sale” in balance sheet.The Company presents profit or loss from discontinued operations separately from profit or lossfrom continuing operations in income statement. Impairment loss and reversal amount and anydisposal gain or loss of the non-current asset or disposal group classified as held for sale that doesnot satisfy the definition of a discontinued operation is presented in profit or loss from continuingoperations. Any impairment loss and reversal amount belongs to discontinued operations, anddisposal gain or loss is presented in profit or loss from discontinued operations.The disposal group which is planned to cease use rather than for sale, and satisfies the conditions ofcomponents of discontinued operation, the Company presents it as discontinued operation from thedate of cessation.
For the discontinued operation presented in the current period, former profit or loss of continuingoperations will be presented as discontinued operations for comparative accounting period in thecurrent financial statements. If the discontinued operations no longer satisfy the conditions to beclassified as held for sale, former profit or loss of discontinued operations will be presented ascontinuing operations for comparative accounting period in the current financial statements.
13. Long-term equity investments
Long-term equity investments consist of equity investments in subsidiaries, joint ventures andassociates. An associate is an enterprise over which the Company has significant influence.
(1) Recognition of initial investment cost
Long-term equity investment from the business combination: For a long-term equity investmentacquired through a business combination under common control, the initial investment cost of thelong-term equity investment shall be the absorbing party’s share of the carrying amount of theowners’ equity of the party being absorbed in the consolidated financial statements of the ultimatecontrolling party at combination date. For business combination involving entities not undercommon control, the initial investment cost of long-term equity should be the cost of acquisition.Long-term equity investment from other methods：for a long-term equity investment acquired bypaying cash, the initial investment cost shall be the actual purchase price paid; for those acquired bythe issue of equity securities, the initial investment cost shall be the fair value of the equitysecurities issued.
(2) Subsequent measurement and recognition of profit or loss
The cost method is applied for the investment of subsidiaries unless the investment satisfies theconditions of held for sale; the equity method is applied for the investment of joint ventures andassociates.When the cost method is adopted in long-term equity investments, except for cash dividends orprofit distributions declared but not yet distributed in the purchase price or consideration ofobtaining the investment, profits or cash dividends declared to be distributed by the investee shouldbe recognised as investment income in the current period.When the equity method is adopted in long-term equity investments, the initial cost of aninvestment in excess of the share of investee’s fair value on identifiable net assets remainsunchanged; the initial cost of the investment that falls short of the share of investee’s fair value onidentifiable net assets shall be adjusted, for the difference which had been charged to current profitor loss.When the equity method is adopted, the Company recognises its share of the investee’s profit orloss, as well as its share of the investee’s other comprehensive income, as investment income or lossand other comprehensive income, and adjusts the carrying amount of the investment accordingly;the investor’s share of profit distributions or cash dividends declared by the investee is deductedfrom the carrying amount of the investment. For the changes of equity in an investee other thanprofit or loss, the investor adjusts the carrying amount of the investment and recognised it in capitalreserve (other capital reserves). The recognition of the investee’s results should be based on the fairvalues of the individual identifiable assets of the investee according to the Company’s accountingpolicies and accounting period. Additionally, the recognition should be based on the adjusted net profitof the investee.
If the Company has significant influences or can implement joint control over investees due toadditional investment, the initial investment cost is recognized as the sum of the fair value of theoriginal portion of equity investment and the additional investment cost under equity method on thetransformation date. The difference between the fair value and carrying amount of original equityand cumulative changes in fair value recognized as other comprehensive income shall berecognized as current profit of loss under equity method.If the Company loses control of an investee with joint control or significant influence retained afterpartial disposal of its shares, the remaining equity after disposal should be accounted in accordancewith the rules“CASBE 22-Recognition and Measurement of Financial Instruments” and thedifference between the fair value on the day of losing control and the book value is recognised inprofit or loss. For the other comprehensive income recognized by equity investment under theequity method, the basis of the accounting treatment is the same as that on disposal of related assetsor liabilities by the investee, the amount recognised in the equity on the changes in other equitymovements should be all charged to the profit or loss for the year.If the Company loses control of an investee after partial disposal of its shares, the remaining equityafter disposal has joint control or significant influence over the investee, the equity method shall beadopted and the remaining equity shall be deemed to be recognized under equity method since theacquisition date; if the remaining equity has no joint control or significant influence over theinvestee, the remaining equity after disposal should be accounted in accordance with therules“CASBE 22-Recognition and Measurement of Financial Instruments” and the differencebetween the fair value on the day of losing control and the book value is recognised in profit or loss.If the shareholding ratio of the Company is reduced due to the increase of investments of otherinvestors and thus the control is lost, but the joint control or significant influence can be exerted onthe investee, the Company should recognize the incremental shares of net assets according to thenew investments. The difference between the original book value of the long-term equityinvestment corresponding to the decrease in the shareholding ratio should be included in the currentprofit or loss; then, the equity shall be deemed to be recognized under equity method since theinvestment date and adjusted according to the new shareholding ratio.Unrealised profit or loss resulting from transactions between the Company and its associates orjoint ventures shall be calculated according to the proportion of its shareholding, which isattributable to the Company, and then to be recognized in investment income after offset. Whileunrealised profit or loss resulting from transactions between the Company and investee belongs toimpairment loss of transferred assets cannot be offset.
(3) Basis of determining the existence of joint control or significant influence over an investeeJoint control is the agreed sharing of control of an arrangement, which exists only when decisionsabout the relevant activities require unanimous consent of the parties sharing control. Indetermining whether there is a joint control, the first judge is determining whether the relevantarrangement is controlled collectively by all the participants involved or the group of theparticipants involved and then to determine whether the decisions related to the basic operatingactivities should require the unanimous consent of the participants involved. If all participants or thegroup of the participants involved must act consistently to determine the relevant arrangement, it isconsidered that all participants or the group of the participants control the arrangement. If two ormore participants in the collectively control of certain arrangement, it shall not be considered asjoint control. Protection of rights shall not be considered in determining whether there is jointcontrol.
Significant influence is the power to participate in the financial and operating policy decisions ofthe investee but is not control or joint control over those policies. When determining whether thereis the significant influence over the investee, the voting rights held by the investors or the otherentites and the effect of potential voting rights if it can be converted into the equity of investee,including the effect of current convertible warrants, security option and convertible bonds.When the Company, directly or indirectly through subsidiaries, owns 20% of the investee (including20% ) or more but less than 50% of the voting shares, it has significant impact on the investeeunless there is clear evidence to show that in this case the Company cannot participate in theproduction and business decisions of the investee, and has no significant influence; when theCompany owns 20% (excluding) or less of the voting shares, it is not considered to have significantimpacts on the investee in general, unless there is clear evidence to show that in this case theCompany can participate in the production and business decisions of the investee so as to have thesignificant influence.
(4) Held-for-sale equity investments
Accounting treatment for the entity investment, or a portion of an equity investment, in associatesor joint ventures that is classified as held for sale refers to Note III, 12.Any remaining equity investment that has not been classified as held for sale shall be accountedunder the equity method.When the equity investment in associates or joint ventures previously classified as held for sale andno longer satisfies the conditions to be classified as held for sale, it will be adjusted under equitymethod retrospectively as from the date of classification as held for sale.
(5) Method of impairment testing and impairment provision
For investment in subsidiaries, associates and joint ventures, refers to Note III, 20 for the method ofasset impairment provision.
14. Fixed assets
(1) Recognition of fixed assets
Fixed assets represent the tangible assets held by the Company for use in production of goods, usein supply of services, rental or for administrative purposes with useful lives over one accountingyear.Fixed assets are recognised when it is probable that their related future economic benefits will flowinto the company, and their cost can be measured reliably.Fixed assets of the Company are initially measured at actual costs in acquisition.
(2) Depreciation of fixed assets
Depreciation of the fixed assets is calculated on the straight-line basis. The fixed asset isdepreciated since the state of intended use and no longer depreciated when recognition is terminatedor being classified as non-current assets held for sale. Without considering impairment provision,the estimated useful lifetime, estimated residual values, and the annual depreciation rates of each
category of fixed assets are as follows:
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Category
| Category | Estimated useful life | Estimated residual value | Annual depreciation rate |
| Pant and buildings | 25-43 years | 5% | 3.80-2.21% |
| Machinery and equipment | 12-28 years | 5% | 7.92-3.39% |
| Vehicles | 10 years | 5% | 9.50% |
| Electronic equipment | 10 years | 5% | 9.50% |
| Industrial furnace | 13 years | 5% | 7.31% |
| Metallurgical equipment | 19 years | 5% | 5.00% |
| Others | 14-22 years | 5% | 6.79-4.32% |
The fixed assets that have been withdrawn for impairment provision shall also be deducted from theaccumulative amount of impairment provision to recognize depreciation rate.
(3) Impaitment test and impairment provision of fixed assets refer to Note III, 20.
(4) Recognition basis, valuation method and depreciation method of fixed assets financed by leasingThe leased fixed assets are recognized as fixed assets acquired under finance leases if the followingone or more criteria can be satisfied:
① The ownership of leased assets can be transferred to the Company at the end of lease period
② The Company has the option of buying leased assets and the purchase price is estimated to befar less than the fair value of leased assets when exercising the option. So at the beginning date oflease period it is reasonably recognized that the Company will exercise the option.
③ Even if the ownership of assets is not transferred, lease period accounts for most leased assets’useful life.
④ The present value of minimum lease payment almost equals to the fair value of leased asset atthe beginning date of lease period.
⑤ Leased assets are special and only can be used for the Company if not reconstructed largely.At the beginning date of lease period, the Company will recognize the lower one between the fairvalue of leased assets and the present value of minimum lease payments as the recorded value ofleased assets, and the difference is recorded as unrecognized financing charges. Initial direct costssuch as charges, legal fee, travelling expenses and stamp taxes of the lease incurred during leasingnegotiation and contract signment can be recognized in the value of leased assets. Unrecognizedfinancing charges are amortized undet the effective interest method in each period of leasing.Fixed assets financed by leasing are depreciated with similar depreciation policy of owned fixassets. If it can be reasonably determined that the ownership of the leased assets can be obtained atthe end of lease period, the leased assets are depreciated over the useful lifetime; otherwise, theleased assets are depreciated with the shorter period between the lease period and useful lifetime ofthe leased assets.
(5) Useful lives, residual values and the depreciation method are reviewed by the Company at least ateach financial year endUseful lives are adjusted if the expected useful lives are different from the original estimates; theestimated net residual values are adjusted if they are different from the original estimates.
(6) Overhaul costs
The overhaul costs occurred in regular inspection of fixed assets are recognised in the cost of fixedassets if there is undoubted evidence to confirm that the costs satisfy the recognition criteria offixed assets, otherwise, the overhaul costs are recognised in profit or loss for the current period.Fixed assets are depreciated normally during the intervals of the regular overhaul.
15. Construction in progress
Cost comprises the direct costs of construction and capitalised borrowing costs on related borrowedfunds during the period of construction.Construction in progress is reclassified to the appropriate category of fixed assets when completedand ready for use.Impairment provision of construction in progress refers to Note III, 20.
16. Materials for construction of fixed assets
The materials for construction of fixed assets of the Company refers to the material prepared forconstruction in progress, including engineering materials, equipments not yet installed and toolsprepared for production, etc.Purchase measured at cost, the recipients transfer to construction in progree, and the remainingtransfer to inventory after the completion of construction.Impairment provision of materials for construction of fixed assets refers to Note III, 20.Closing balance of materials for construction of fixed assets is presented in “Construction inprogress” in balance sheet.
17. Borrowing costs
(1) Principles of capitalising borrowing costs
All the borrowing costs that are directly attributable to construction or production of all qualifyingassets are capitalized and recorded in relevant assets costs. Other borrowing costs are treated as anexpense and recorded in the profit or loss. The capitalization of borrowing costs commences when:
① Expenditures for the assets are incurred, including paying cash, transferring non-cash assets orundertaking interest-bearing debt for acquisition or construction of the assets, which could becapitalized;
② Borrowing costs are incurred; or
③ The acquisition and construction activities that are necessary to bring the assets to get ready fortheir intended use or sale have commenced.
（2）Capitalization period of borrowing costs
The capitalization of borrowing costs ceases when the asset being acquired or constructed issubstantially ready for its intended use or sale and borrowing costs incurred thereafter are treated asan expense to be recorded in the profit or loss.Capitalization of borrowing costs is suspended during extended periods in which the acquisition orconstruction of a fixed asset is interrupted abnormally and the interruption lasts for more than threemonths until the acquisition or construction is resumed; borrowing costs in normal interruptionperiod continue to be capitalized.
（3）Calculation of capitalization rate and amount of borrowing costs.For specific borrowings, the borrowing costs eligible for capitalization are the actual borrowingcosts incurred during the current period deducted by any temporary interest or investment income;for general borrowings, the borrowing costs eligible for capitalization are determined by applying acapitalization rate to the weighted average of capital expenditure that exceeds the specificborrowings. The capitalization rate is calculated based on the weighted average interest rate ofgeneral borrowings.During the capitalization period, exchange differences on foreign currency specific borrowings shallbe capitalized; exchange differences on foreign currency general borrowings shall be recognized ascurrent profit or loss.
18. Intangible assets
Intangible assets include software and land use rights.Intangible assets are measured at cost initially and its useful lifetime shall be analyzed andrecognized when obtained. An intangible asset with finite useful lifetime shall be amortized over theexpected useful life using method which can reflect the expected recognition of economic benefitsrelated to the assets when the intangible asset is available for use; an intangible asset whoseexpected recognition cannot be reliably determined is amortized at straight-line amortizationmethod; an intangible asset with indefinite useful lifetime shall not be amortized.The Company reviews the useful lives and amortization method of intangible assets with finiteuseful lifetime, adjusts original estimated amount and processes according to the accountingestimate change if there are any differences with original estimated, at least at the end of eachreporting period.Intangible assets with finite useful lives are amortized over the useful lives on the straight-line basisaccording to the category, expected useful lifetime and estimated residual value. The annualamortization rates of each category of intangible assets are as follows:
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Category
| Category | Useful lifetime | Residuals rate | Annual amortization rate |
| Software | 5-10 years | -- | 10.00-20.00% |
| Land use rights | 40-50 years | -- | 2.00-2.50% |
The Company estimates an intangible asset can no longer bring future economic benefits at thebalance sheet date, and then the carrying amount of the intangible asset should be reversed to thecurrent profit or loss.For the impairment provision of intangible assets, refers to Note III, 20.
19. Development expenditures
Expenditure on internal research and development projects is classified into expenditure on theresearch stage and expenditure on the development stage.Expenditure on the research stage is recognised in the profit or loss when incurred.Expenditure on the development stage is capitalized only when: the technical feasibility ofcompleting the intangible asset so that it is available for use or sale; the intention to complete theintangible asset is to use or sell it; the method of generating economic benefits by the intangibleassets, including that the intangible asset can be proved that the output or the intangible asset itselfhas market or, if it is to be used internally, the usefulness of the intangible asset also need to beproved; the availability of adequate technical, financial and other resources to complete thedevelopment and the ability to use or sell the intangible asset; the expenditure attributable to thedevelopment stage can be measured reliably. Otherwise, it shall be presented in the profit or loss.The research and development projects of the Company will enter into the development stage aftermeeting the above conditions and passing through the studies of technical feasibility and economicfeasibility, and the projects approval.Capitalized expenditure on the development stage is presented as “Development expenditures” inthe balance sheet and shall be transferred to intangible assets when the project is completed to itsintended use state.
20. Impairment of assets
The impairment for the long-term equity investments, fixed assets, construction in progress,intangible assets, goodwill, etc. (excluding inventories, deferred income tax assets and financialassets) of subsidiaries, associates and joint ventures are determined as follows:
The Company assesses whether any indicator of impairment exists as of the end of each reportingperiod, and, if yes, performs impairment test by estimation of the asset’s recoverable amount. Forgoodwill acquired in business combinations, intangible assets with indefinite lives and intangibleassets without intended use state, an annual impairment test is performed no matter whether there isany indicator of impairment.An asset’s recoverable amount is calculated as the higher of the asset’s fair value less costs to selland the present value of estimated future cash flows generated from the use of assets. Therecoverable amount is calculated on individual basis unless it is not applicable, in which case therecoverable amount is determined for the asset group to which the asset belongs. An asset group isrecognized based on whether the cash inflows generated by the asset group are largely independentto those of other assets or asset groups.When the recoverable amount of an asset or an asset group is less than its carrying amount, thecarrying amount is reduced to its recoverable amount. The reduction amount is charged to profit orloss and an impairment allowance is provided.
In terms of impairment test of the goodwill, the carrying amount of the goodwill arising frombusiness combination shall be allocated to the related asset group in accordance with a reasonablebasis at acquisition date. Those that are difficult to be allocated to relevant assets shall be allocatedto relevant assets groups. Relevant assets or assets groups refer to those that can benefit from thesynergies of business combination and are not larger than the Company’s recognized reportingsegment.When there is an indication that the goodwill related asset and asset group are prone to impair, theCompany should execute impairment test for the asset and asset group excluding goodwill,calculate the recoverable amount and recognize the corresponding impairment loss. The Companyshould execute impairment test for the asset or asset group including goodwill and compare therecoverable amount with carrying amount, provision for impairment of assets shall be recognizedwhen the recoverable amount of assets is lower than its carrying amount.Impairment losses cannot be reversed in subsequent accounting periods after recognition.
21. Long-term prepaid expenses
The long-term prepaid expenses of the Company are recorded as the actual cost and evenlyamortized on straight-line basis over the expected beneficial period. For the long-term prepaidexpense items that cannot benefit the later accounting period, the amortized value is recognized inthe profit or loss.
22. Payroll and employee benefits payable
(1) Scope of payroll and employee benefits payable
Payroll and employee benefits payable are all forms of consideration given by an entity in exchangefor service rendered by employees or the termination of employment, including short-termemployee benefits, post-employment benefits, termination benefits and other long-term employeebenefits. The benefits that the Company provides to the spouses, children and dependents ofemployees, the late employees’ family and other beneficiaries also shall be deemed as payroll andemployee benefits payable.According to liquidity, employment benefits are presented separately as “Payroll and employeebenefits payable” and “Long-term payroll and employee benefits payable” in the balance sheet.
(2) Short-term employee benefits payable
A liability when an employee has provided service in exchange for employee benefits, such aswages, bonuses, social security contributions (including medical insurance, injury insurance,maternity insurance, etc.) and house funding to be paid is recognized as the current profit or loss orcosts of related assets. If the short-term employee benefits are expected to be settled wholly beforetwelve months after the end of the annual reporting period in which the employees render therelated service and have significant financial impact, the liability shall be measured as thediscounted amounts.
(3) Post-employment benefits
Post-employment benefit plan includes defined contribution plan and defined benefit plan. Definedcontribution plan is the post-employment benefit plan under which the Company pays fixedcontributions into a separate fund and will have no future obligations to pay the contributions.
Defined benefit plan is the post-employment benefit plan other than defined contribution plan.Defined contribution planDefined contribution plan includes basic pension insurance, unemployment insurance, etc.During the accounting period of service provided by the employee, the Company shall recognise thecontribution payable according to the defined contribution plan as the liability and record thecorresponding amount in the current profit or loss or the cost of the relevant asset.
(4) Termination benefits
The Company is required to recognize termination benefits with a corresponding charge to profit orloss at the earlier of when the entity can no longer withdraw an offer of those benefits and when itrecognizes any related restructuring costs.For implementing the internal retirement plan, the economic compensation before the officialretirement date belongs to termination benefits. From the date of ceasing service to the normalretirement date, the wages of the internally retired employees and the social insurance premiums tobe paid are included in the current profit or loss one time. Economic compensation after the officialretirement date (such as normal pension) should be treated as post-employment benefits.
23. Provisions
If the contingent considerations or contingent liabilities satisfy the following conditionssimultaneously, a provision will be recognized by the Company:
(1) The obligation is a present obligation assumed by the Company; and
(2) It is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation; and
(3) A reliable estimate can be made of the amount of the obligation.
Provisions are initially measured at the best estimate of the expenditure required to settle the presentobligation, after considering risks, uncertainties, present value, etc. If the impact of time value ofmoney is significant, the best estimate is determined as its present value of future cash outflow.Provisions shall be reviewed at the end of each reporting period and adjusted to reflect the currentbest estimate.If the settlement of provision is fully or partially compensated by a third party or the others, and thecompensated amount can be definitely received, then the provision can be recognised as assetseparately. The compensated amount shall not be greater than the carrying amount of the recognizedliability.
24. Revenue
(1) General principle
Revenue is recognized when the Company has satisfied its performance obligations in the contract,
that is, when the customer obtains control of the relevant goods or services.Where a contract has two or more performance obligations, the Company determines thestand-alone selling price at contract inception of the distinct good or service underlying eachperformance obligation in the contract and allocates the transaction price in proportion to thosestand-alone selling prices. The Company recognises as revenue the amount of the transaction pricethat is allocated to each performance obligation.The Company satisfies a performance obligation over time if one of the following criteria is met; orotherwise, a performance obligation is satisfied at a point in time:
① The customer simultaneously receives and consumes the benefits provided by the Company’sperformance as the Company performs;
② The customer can control the asset created or enhanced during the Group’s performance;
③ The Company’s performance does not create an asset with an alternative use to it and theCompany has an enforceable right to payment for performance completed to date.For performance obligation satisfied over time, the Company recognises revenue over time bymeasuring the progress towards complete satisfaction of that performance obligation. When theoutcome of that performance obligation cannot be measured reasonably, but the Company expectsto recover the costs incurred in satisfying the performance obligation, the Company recognisesrevenue only to the extent of the costs incurred until such time that it can reasonably measure theoutcome of the performance obligation.For performance obligation satisfied at a point in time, the Company recognises revenue at the pointin time at which the customer obtains control of relevant goods or services. To determine whether acustomer has obtained control of goods or services, the Company considers the followingindicators:
① The Company has a present right to payment for the goods or services, as the customer obtainsthe current payment obligation for the goods.
② The Company has transferred the legal title of the goods, as the customer has obtained the legaltitle of the goods.
③ The Company has transferred physical possession of the goods to the customer, as the customer
has obtained the physical possession of the goods.
④ The Company has transferred the significant risks and rewards of legal title of the goods to thecustomer, as the customer has obtained the significant risks and rewards of legal title of the goods.
⑤ The customer has accepted the goods or services.
⑥ Other indications that the customer has obtained control of goods.A contract asset is the Company’s right to consideration in exchange for goods or services that it hastransferred to a customer when that right is conditional on factors other than the passage of time.The Company recognises loss allowances for expected credit loss on contract assets. TheCompany’s right to consideration that is unconditional (only the passage of time is required) shallbe presented as accounts receivable. The Company’s obligation to transfer goods or services to a
customer for which the Company has received consideration (or an amount of consideration is due)from the customer shall be presented as the contract liability.The Company offsets the contract assets and contract liabilities under the same contract andpresents the net amount. If the net amount is the debit balance, it is presented under “contractassets” or “other non-current assets” according to its liquidity; if the net amount is the creditbalance, it is presented under “contract liabilities” or “other non-current liabilities” according to itsliquidity.
(2) Specific recognition methods
The specific revenue recognition methods of the company are as follows:
Contracts for the sale of goodsContracts for the sale of goods between the Company and its customers usually only involves theperformance obligations of the transferring of the goods. The Company generally recognizesrevenue based on the following considerations, taking into account the timing of control transfer.This includes obtaining the current collection rights of the goods, the transfer of the main risks andrewards of the ownership of the goods, the transfer of the legal ownership of the goods, the transferof the physical assets of the goods, and the acceptance of the goods by the customer.Contracts for rendering of servicesThe service contract between the Company and its customers usually includes performanceobligations for labor services, technical consulting or technical services. As a result of thesatisfaction of the performance obligation the Company, the customers obtain and consume theeconomic benefits of the service while the Company provides the service simultaneously. TheCompany is entitled to recover from the accumulative performance of the contract that has beencompleted to date, except when progress of the performance cannot be reasonably determined. TheCompany determines the progress of the performance of the services provided in accordance withthe input method. When the progress of the performance cannot be reasonably determined, and thecosts incurred by the Company are expected to be compensated, the revenue will be recognizedbased on the amount of costs incurred, until the progress of the performance can be reasonablydetermined.
25. Contract cost
Contract costs are either the incremental costs of obtaining a contract with a customer or the costs tofulfil a contract with a customer.Incremental costs of obtaining a contract are those costs that the Group incurs to obtain a contractwith a customer that it would not have incurred if the contract had not been obtained e.g. anincremental sales commission. The Company recognises as an asset the incremental costs ofobtaining a contract with a customer if it expects to recover those costs. Other costs of obtaining acontract are expensed when incurred.If the costs to fulfil a contract with a customer are not within the scope of inventories or otheraccounting standards, the Company recognises an asset from the costs incurred to fulfil a contractonly if those costs meet all of the following criteria:
① The costs relate directly to an existing contract or to a specifically identifiable anticipated
contract, including direct labour, direct materials, allocations of overheads (or similar costs), coststhat are explicitly chargeable to the customer and other costs that are incurred only because theGroup entered into the contract;
② The costs generate or enhance resources of the Group that will be used in satisfying (or incontinuing to satisfy) performance obligations in the future;
③ The costs are expected to be recovered.
Assets recognised for the incremental costs of obtaining a contract and assets recognised for thecosts to fulfill a contract (the “assets related to contract costs”) are amortised on a systematic basisthat is consistent with the transfer to the customer of the goods or services to which the assets relateand recognised in profit or loss for the current period.The Company recognises an impairment loss in profit or loss to the extent that the carrying amountof an asset related to contract costs exceeds:
① Remaining amount of consideration that the Company expects to receive in exchange for thegoods or services to which the asset relates; less
② The costs that relate directly to providing those goods or services that have not yet beenrecognised as expenses.The contract performance cost recognized as an asset shall be shown in the "Inventories" item withan amortization period of no more than one year or one normal operating cycle at the time of initialrecognition, while the amortization period exceeding one year or one normal operating cycle at thetime of initial recognition shall be shown in the item of "Other non-current assets".The contract acquisition cost recognized as an asset shall be listed in the item of "Other currentassets" when the amortization period does not exceed one year or one normal operating cycle at thetime of initial recognition, and listed in the item of "other non-current assets" when the amortizationperiod exceeds one year or one normal operating cycle at the time of initial recognition.
26. Government grants
Government grants are recognized in profit or loss, when they are highly probable to be receivedand all conditions are fulfilled.If a government grant is in form of monetary asset, it is measured at the amount received orreceivable. If a government grant is in form of nonmonetary asset, it is measured at fair value of theasset. If the fair value cannot be reliably determined, it is measured at the nominal amount as RMB1.Asset-related government grants are recognized when the government document designates that thegovernment grants are used for constructing or forming long-term assets. Otherwise, thegovernment grants should be income-related.If the government document is inexplicit, the Company should recognize the part corresponding toassets value of government grants as asset-related government grants if the conditions are to formlong-term assets and the remaining part as income-related grants. As for indistinguishablegovernment grants, the whole should be recognized as income-related grants.
Asset-related government grants can be accounted by offsetting the carrying amout of related assetsor being recognized as deferred income, and amortized systematically and reasonably to profit orloss over the useful life of the related asset. If the income-related grant is a compensation for relatedincurred expenses or losses, the grant shall be recognized in the current pofit or loss or offset relatedcosts immediately; if the grant is a compensation for related expensesor losses in future period, thegrant is recognized as deferred income and should be recognized in profit or loss for the periodwhen the expenses or losses are incurred. For the government grant measured at the nominalamount, it should be recognized in profit or loss immediately for the period. The Company adopts aconsistent approach to the same or similar government grants.The government grants related to daily activities shall be recognized in other income or offsetrelated expenses. Otherwise, it shall be recognized in non-operating income and expenses.When the recognized government grants need to be returned, the carrying amount of the assets shallbe adjusted if the carrying amount of related assets is written down during the initial recognition; ifthere is the balance of related deferred income, the book balance of related deferred income shall bewritten off, and the excess part shall be recognized in the current profit or loss; for the othercircumstances, the government grants shall be recognized in the current profit or loss directly.
27. Deferred tax assets and deferred tax liabilities
Income tax comprises current tax and deferred tax, and is normally recognized as income taxexpense in profit or loss, except for goodwill generated in a business combination or relateddeferred tax items that have been recognized directly in equity.Based on the differences between the carrying amount of an asset or liability in the statement offinancial position and its tax base, the Company adopts the liability method for the provision ofdeferred tax.A deferred tax liability is recognized in respect of all taxable temporary differences except thosearising from the following transactions:
(1) The initial recognition of goodwill; or the initial recognition of an asset or liability in atransaction which is not a business combination, and at the time of the transaction, affects neitheraccounting profit nor taxable profit; and
(2) As for the temporary differences associated with subsidiaries, joint ventures and associates: theCompany is able to control the timing of the reversal of the temporary difference and it is probablethat the temporary difference will not reverse in the foreseeable future.A deferred tax asset is recognized in respect of all deductible temporary differences to the extentthat it is probable that taxable profit will be available against which the deductible temporarydifference will be utilized except those arising from the initial recognition of an asset or liability ina transaction which:
(1) The transaction is not a business combination, and at the time of the transaction, affects neitheraccounting profit nor taxable profit; and
(2) As for deductible temporary differences associated with subsidiaries, joint ventures andassociates: a deferred tax asset is recognized to the extent that it is probable that the temporarydifference will reverse in the foreseeable future, and taxable profit will be available against whichthe temporary difference can be utilized.
At the end of each reporting period, deferred tax assets and liabilities are measured at the tax ratesthat are expected to apply to the period when the asset is realized or the liability is settled, takinginto account the income tax effect of expected asset realization or liability settlement at the end ofeach reporting period.The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and isreduced to the extent that it is no longer probable that sufficient taxable profits will be available toallow the related tax benefit to be utilized. Any such reduction is reversed to the extent that itbecomes probable that sufficient taxable profits will be available.
28. Operating lease and financing lease
A lease is classified by the Company as a finance lease if it transfers substantially all the risks andrewards incidental to ownership of an underlying asset. Otherwise, a lease is classified as anoperating lease.
(1) As a lessor
In financing lease, at the beginning date of lease period, the Company recognizes the sum ofminimum lease collections and initial direct costs as the recorded value of finance leases receivableand meanwhile recorded unguaranteed residual value; the difference between the sum of minimumlease collection, initial direct costs and unguaranteed residual value and the sum of their presentvalue is recorded as unrealized financing income. Unrealized financing income is measured ateffective interest method in the periods of leasing and recognized in financing income for thecurrent period.Rentals receivable under operating leases are credited to profit or loss on the straight-line basis overthe lease terms, and initial costs are charged to the profit or loss when it is incurred.
(2) As a lessee
In financing lease, at the beginning date of lease period, the Company recognizes the lower onebetween the fair value of leased asset and the present value of minimum lease payment as therecorded value of the leased asset, and recognize the minimum lease payment as the recorded valueof long-term payables, and their difference is recorded as unrecognized financing charges. Initialdirect costs are recognized in the value of leased assets. Unrecognized financing charges aremeasured at effective interest method in the period of leasing in financing charges for the currentperiod. The Company depreciates the leased assets by adopting the depreciation policy, which isconsistent with self-owned fixed assets.Rentals payable under operating leases are charged to profit or loss or capitalized on thestraight-line basis over the lease terms, and initial costs are charged to the profit or loss when it isincurred.
29. Safety fund and maintenance fee
According to the relevant provisions of CQ [2012] No. 16 document issued by Ministry of Finance,National Development and Reform Commission, State Administration of Work Safety, the actualoperating income of metallurgical enterprises in the preceding year is the basis for the provision ofsafety fund and maintenance fee of the Company, and the method of excess retirement shall beadopted for the provision.
Safety funds and maintenance fees are included in the cost of relevant products or recognized in thecurrent profit or loss for the related products, and credited to the special reserve at the same time.When safety funds and maintenance fees are utilized in compliance with relevant regulations, if thecosts incurred can be categorized as expenditure, the costs incurred should be charged against thespecial reserve; if the reserve is used to build up fixed assets, the costs should be charged toconstruction in progress, and reclassified to fixed assets when the projects reach the status ready forintended use. Meantime, expenditures in building up fixed assets are directly charged against thespecial reserve with the accumulated depreciation recognized at the same amount and the fixedassets will not be depreciated in the future.
30. Significant accounting judgments and estimates
The Company provides continuous assessment of the reasonable expectations of future events, thecritical accounting estimates and key assumptions based on the historical experience and otherfactors. The critical accounting estimates and key assumptions that are likely to lead to significantadjustment risks of the carrying amount of assets and liabilities for the next accounting period arelisted as follows:
Classification of financial assetsThe major judgments of the Company involved in determining the classification of financial assetsincludes the analysis of business models and the characteristics of contract cash flows, etc.At the level of financial assets portfolio, the Company determines the business model for managingfinancial assets, taking into account factors such as methods of evaluating and reporting financialassets performance to key managers, the risks of affecting financial assets performance and riskmanagement methods, and the way in which relevant business managers are paid.In assessing whether the contract cash flow of financial assets is consistent with the basic lendingarrangements, the Company has the following judgments: whether the principal’s time distributionor amount may change during the lifetime for early repayment and other reasons; whether theinterest only includes the time value of money, credit risk, other basic lending risks and theconsideration with cost and profit. For example, whether the advance payment only reflects theunpaid principals and interests based on the unpaid principal, and reasonable compensation paid forthe early termination of the contract.Measurement of expected credit loss of account receivablesThe Company calculates the expected credit losses of accounts receivable through default riskexposure and expected credit losses rate, and determines the expected credit losses rate on the basisof default probability and default loss rate. In determining the expected credit losses rate, theCompany uses the experience of internal historical credit loss, and adjusts the historical data withcurrent situation and forward-looking information. In considering forward-looking information, theindicators include the risks of economic downturn, external market environment, technologicalenvironment and changes of customer conditions. The Company monitors and reviews regularly theassumptions related to the calculation of expected credit losses.Deferred tax assetsDeferred tax assets are recognized to the extent that it is probable that taxable profit will beavailable against which the deductible temporary difference and unused tax credit can be utilized.
Significant management judgement is required to determine the amount of deferred tax assets thatcan be recognized, based upon the likely timing and level of future taxable profits together with taxplanning strategies.Determination of unlisted equity investment fair valueThe fair value of unlisted equity investment is the estimated future cash flow discounted by thecurrent discount rate of the project with similar terms and risk characteristics. The valuationrequires the Company to estimate the expected future cash flow and discount rate and is thereforeuncertain. Under limited circumstances, if the information used to determine the fair value isinsufficient, or the possible estimates of the fair value are widely distributed, and the cost representsthe best estimate of the fair value within the range, the cost could represent the appropriate estimateof the fair value within the distribution range.
31. Changes in accounting policies and estimates
(1) Changes in accounting policies
① New Revenue Standard
In 2017, the Ministry of Finance has promulgated the revised “Accounting Standard for BusinessEnterprises No. 14 – Revenue” (“New Revenue Standard”), the Company has adopted theaccounting standards from 1 January 2020, and adjusted relevant items according to the accoutingpolicy.Revenue is recognized when the Company has satisfied its performance obligations in the contract,that is, when the customer obtains control of the relevant goods or services. The Company satisfiesa performance obligation over time under certain conditions, or otherwise, a performance obligationis satisfied at a point in time. Where a contract has two or more performance obligations, theCompany determines the stand-alone selling price at contract inception of the distinct good orservice underlying each performance obligation in the contract and allocates the transaction price inproportion to those stand-alone selling prices. The Company recognises as revenue the amount ofthe transaction price that is allocated to each performance obligation.The Company adjusted the relevant accounting policies in accordance with the specific provisionsof the new revenue standards relating to specific events or transactionsThe contract asset is the Company’s right to consideration in exchange for goods that it hastransferred to a customer when that right is conditional on factors other than the passage of time.The Company’s obligation to transfer goods to a customer for which the Company has receivedconsideration from the customer shall be presented as the contract liability.The Company adjusted retained earnings and other related items in the financial statements at thebeginning of 2020 in accordance with the accumulative affected amount of the first implementationof new revenue standard. Additionally, the comparative information is not adjusted. The Companyonly adjusted the retained earnings and other related items in the financial statements at thebeginning of 2020 according to the accumulative affected amount of unfinished contracts onJanuary 1, 2020
－112－
Reasons and contents of accounting policy change
| Reasons and contents of accounting policy change | Affected items | Effect 1 January 2020 |
| The Company has reclassified the receipts in advance | Contract liabilities | 3,948,239,957.88 |
－113－related to sale of goods and rendering of services tocontract liabilities due to the implementation of newrevenue standard.
| related to sale of goods and rendering of services to contract liabilities due to the implementation of new revenue standard. | Other current liabilities | 513,271,194.52 |
| Receipts in advance | -4,461,511,152.40 |
The effect of the implementation of new revenue standard on the items related to the 2020 financialstatements in comparison with original revenue standard:
| Affected items | Effect 31 December 2020 |
| Contract liabilities | 4,659,444,741.25 |
| Other current liabilities | 605,727,816.36 |
| Receipts in advance | -5,265,172,557.61 |
| Affected items | Effect 2020 |
| Cost of sales | 1,499,245,398.29 |
| Selling expenses | -1,499,245,398.29 |
② Interpretation No. 13 of ASBE
In December 2019, the Ministry of Finance has issued “Interpretation No. 13 on AccountingStandards for Business Enterprises” (Cai Kuai [2019] No. 21) (“Interpretation No. 13” for short)Interpretation No. 13 revised the three elements of business composition and refined the judgmentconditions of business. When the acquirer of a business combination not under common controldetermines whether the acquired business activity or asset combination constitutes a business, theoption of “concentration test” is introduced.In addition, Interpretation No. 13 further clarifies that the related parties of an enterprise alsoinclude joint ventures or associates of other member units (including parent companies andsubsidiaries) of the enterprise group to which the enterprise belongs, and other joint ventures orassociates of investors who exercise joint control over the enterprise.Interpretation No. 13 has been implemented since 1 January 2020. The Company adopts theprospective application method to account for the above mentioned accounting policy changes.The adoption of interpretation No. 13 does not have significant impacts on the Company’sdisclosures on financial position, operating results and related parties.
③ In December 2019, the Ministry of Finance has issued “Regulations on Accounting Treatmentof Carbon Emission Trading” (Cai Kuai [2019] No.22) (“Interim Provision on Carbon EmissionRights”)for short, which defines the measurement of carbon emission rights and related accountingtreatment and improves presentation and disclosure requirements related to carbon emissionpermits.According to the above regulations on carbon emission rights, the carbon emission allowancesobtained through allocating free of charge by government shall have no accounting treatment forthe key emission enterprises; as for the carbon emission allowances obtained through purchase, the
allowances shall be recognized as carbon emission assets and measured at cost method. When usingor selling carbon emission allowances purchased to fulfill the agreement (to fulfill the emissionreduction obligation), the carbon emission assets will be transferred into the current profit or loss.Interim provision on carbon emission rights has been implemented since1 January 2020. TheCompany adopts the prospective application method to account for the above mentioned accountingpolicy change.The adoption of interim provision on carbon emission rights does not have significant impacts onthe Company’s disclosures on financial position and operating results.
④ In June 2020, the Ministry of Finance has issued “Regulations on Accounting Treatment ofCOVID-19 – Related Rent Concessions” (Cai Kuai [2020] No.10), which provides a simplifiedmethod for rental concessions directly caused by COVID-19.The simplified method is not applicable for rent concessions of the Company incurred beforJanuary 1, 2020.
(2) Changes in accounting estimates
The Company has no significant changes in accounting estimates during the reporting period.
(3) The adjustment of related items in financial statements at the beginning of the first implementationyear due to the first implementation of new revenue standard
Consolidated Statement of Financial Position
－114－Item
| Item | 2019.12.31 | 2020.01.01 | Adjustment |
| Current assets： | |||
| Cash and Cash equivalents | 5,735,118,932.92 | 5,735,118,932.92 | -- |
| Financial assets held for trading | -- | -- | -- |
| Notes receivable | 5,339,326,922.25 | 5,339,326,922.25 | -- |
| Accounts receivable | 1,028,752,225.78 | 1,028,752,225.78 | -- |
| Financing receivables | 4,031,364,764.55 | 4,031,364,764.55 | -- |
| Prepayments | 2,116,776,879.80 | 2,116,776,879.80 | -- |
| Other receivables | 24,029,674.84 | 24,029,674.84 | -- |
| Including: Interest receivable | -- | -- | -- |
| Dividends receivable | 2,754,886.56 | 2,754,886.56 | -- |
| Inventories | 8,787,825,099.93 | 8,787,825,099.93 | -- |
| Assets classified as held for sale | -- | -- | -- |
| Current portion of non-current assets | -- | -- | -- |
| Other current assets | 584,135,586.47 | 584,135,586.47 | -- |
| Total current assets | 27,647,330,086.54 | 27,647,330,086.54 | -- |
| Non-current assets： | |||
| Long-term equity investments | 3,137,865,376.57 | 3,137,865,376.57 | -- |
| Other equity instruments investments | 4,357,517,927.34 | 4,357,517,927.34 | -- |
| Other non-current financial assets | -- | -- | -- |
－115－Item
| Item | 2019.12.31 | 2020.01.01 | Adjustment |
| Investment properties | -- | -- | -- |
| Fixed assets | 83,287,788,722.90 | 83,287,788,722.90 | -- |
| Construction in progress | 25,426,296,137.79 | 25,426,296,137.79 | -- |
| Intangible assets | 2,927,126,059.29 | 2,927,126,059.29 | -- |
| Development expenditures | -- | -- | -- |
| Long-term prepaid expenses | 1,100,021.04 | 1,100,021.04 | |
| Deferred tax assets | 87,447,566.73 | 87,447,566.73 | -- |
| Other non-current assets | -- | -- | -- |
| Total non-current assets | 119,225,141,811.66 | 119,225,141,811.66 | -- |
| Total assets | 146,872,471,898.20 | 146,872,471,898.20 | -- |
| Current liabilities: | |||
| Short-term borrowings | 30,293,221,165.42 | 30,293,221,165.42 | -- |
| Financial liabilities held for trading | -- | -- | -- |
| Notes payable | 6,930,274,570.54 | 6,930,274,570.54 | -- |
| Accounts payable | 24,086,162,808.87 | 24,086,162,808.87 | -- |
| Receipts in advance | 4,461,511,152.40 | -- | -4,461,511,152.40 |
| Contract liabilities | -- | 3,948,239,957.88 | 3,948,239,957.88 |
| Payroll and employee benefits | 377,891,381.66 | 377,891,381.66 | -- |
| Taxes payable | 114,401,695.84 | 114,401,695.84 | -- |
| Other payables | 2,271,088,907.26 | 2,271,088,907.26 | -- |
| Including: Interest payable | -- | -- | -- |
| Dividend payable | -- | -- | -- |
| Liabilities classified as held for sale | -- | -- | -- |
| Current portion of non-current liabilities | 9,400,574,401.68 | 9,400,574,401.68 | -- |
| Other current liabilities | -- | 513,271,194.52 | 513,271,194.52 |
| Total current liabilities | 77,935,126,083.67 | 77,935,126,083.67 | -- |
| Non-current liabilities: | |||
| Long-term borrowings | 19,101,100,000.00 | 19,101,100,000.00 | -- |
| Bonds payable | 4,026,866,666.72 | 4,026,866,666.72 | -- |
| Long-term Payable | 2,100,000.00 | 2,100,000.00 | -- |
| Provisions | -- | -- | -- |
| Deferred income | 328,422,670.27 | 328,422,670.27 | -- |
| Deferred tax liabilities | 600,631,873.94 | 600,631,873.94 | -- |
| Other non-current liabilities | 4,711,490,199.06 | 4,711,490,199.06 | -- |
| Total non-current liabilities | 28,770,611,409.99 | 28,770,611,409.99 | -- |
| Total liabilities | 106,705,737,493.66 | 106,705,737,493.66 | -- |
| Shareholders’ equity: | |||
| Share capital | 5,289,389,600.00 | 5,289,389,600.00 | -- |
| Capital reserve | 20,074,865,467.56 | 20,074,865,467.56 | -- |
－116－Item
| Item | 2019.12.31 | 2020.01.01 | Adjustment |
| Other comprehensive income | 1,952,319,928.42 | 1,952,319,928.42 | -- |
| Special reserve | 15,749,165.64 | 15,749,165.64 | -- |
| Surplus reserve | 1,729,509,055.66 | 1,729,509,055.66 | -- |
| Retained earnings | -2,179,897,484.27 | -2,179,897,484.27 | -- |
| Equity attributable to shareholders of the parent | 26,881,935,733.01 | 26,881,935,733.01 | -- |
| Non-controlling interests | 13,284,798,671.53 | 13,284,798,671.53 | -- |
| Total shareholders’ equity | 40,166,734,404.54 | 40,166,734,404.54 | -- |
| Total liabilities and shareholders’ equity | 146,872,471,898.20 | 146,872,471,898.20 | -- |
Company Statement of Financial Position
| Item | 2019.12.31 | 2020.01.01 | Adjustment |
| Current assets: | |||
| Cash and Cash equivalents | 2,100,647,913.85 | 2,100,647,913.85 | -- |
| Financial assets held for trading | -- | -- | -- |
| Notes receivable | 2,492,497,587.89 | 2,492,497,587.89 | -- |
| Accounts receivable | 1,180,114,403.06 | 1,180,114,403.06 | -- |
| Financing receivables | 1,825,294,953.86 | 1,825,294,953.86 | -- |
| Prepayments | 201,462,809.27 | 201,462,809.27 | -- |
| Other receivables | 1,673,247.41 | 1,673,247.41 | -- |
| Including: Interest receivable | -- | -- | -- |
| Dividends receivable | -- | -- | -- |
| Inventories | 1,294,056,715.06 | 1,294,056,715.06 | -- |
| Assets classified as held for sale | -- | -- | -- |
| Current portion of non-current assets | -- | -- | -- |
| Other current assets | 3,453,190,809.55 | 3,453,190,809.55 | -- |
| Total current assets | 12,548,938,439.95 | 12,548,938,439.95 | -- |
| Non-current assets: | |||
| Long-term equity investments | 18,893,930,958.80 | 18,893,930,958.80 | -- |
| Other equity instruments investments | 4,357,517,927.34 | 4,357,517,927.34 | -- |
| Other non-current financial assets | -- | -- | -- |
| Investment properties | -- | -- | -- |
| Fixed assets | 21,144,600,686.04 | 21,144,600,686.04 | -- |
| Construction in progress | 3,678,076,181.04 | 3,678,076,181.04 | -- |
| Intangible assets | 875,411,256.49 | 875,411,256.49 | -- |
| Development expenditures | -- | -- | -- |
| Long-term prepaid expenses | -- | -- | -- |
| Deferred tax assets | 29,098,335.72 | 29,098,335.72 | -- |
| Other non-current assets | 1,134,117,184.62 | 1,134,117,184.62 | -- |
| Total non-current assets | 50,112,752,530.05 | 50,112,752,530.05 | -- |
－117－Item
| Item | 2019.12.31 | 2020.01.01 | Adjustment |
| Total assets | 62,661,690,970.00 | 62,661,690,970.00 | -- |
| Current liabilities: | |||
| Short-term borrowings | 11,853,249,166.67 | 11,853,249,166.67 | -- |
| Financial liabilities held for trading | -- | -- | -- |
| Notes payable | 1,038,827,684.61 | 1,038,827,684.61 | -- |
| Accounts payable | 11,497,447,540.23 | 11,497,447,540.23 | -- |
| Receipts in advance | 916,868,636.47 | -- | -916,868,636.47 |
| Contract liabilities | -- | 811,388,173.87 | 811,388,173.87 |
| Payroll and employee benefits payable | 101,792,194.59 | 101,792,194.59 | -- |
| Taxes payable | 34,900,717.12 | 34,900,717.12 | -- |
| Other payables | 1,122,685,701.59 | 1,122,685,701.59 | -- |
| Including: Interest payable | -- | -- | -- |
| Dividend payable | -- | -- | -- |
| Liabilities classified as held for sale | -- | -- | -- |
| Current portion of non-current liabilities | 4,406,150,284.44 | 4,406,150,284.44 | -- |
| Other current liabilities | -- | 105,480,462.60 | 105,480,462.60 |
| Total current liabilities | 30,971,921,925.72 | 30,971,921,925.72 | -- |
| Non-current liabilities: | |||
| Long-term borrowings | 610,000.00 | 610,000.00 | -- |
| Bonds payable | 4,026,866,666.72 | 4,026,866,666.72 | -- |
| Long-term payable | 2,100,000.00 | 2,100,000.00 | -- |
| Long-term payroll and employee benefits payable | -- | -- | -- |
| Provisions | 90,085,674.14 | 90,085,674.14 | -- |
| Deferred income | 577,852,101.66 | 577,852,101.66 | -- |
| Deferred tax liabilities | -- | -- | -- |
| Other non-current liabilities | -- | -- | -- |
| Total non-current liabilities | 4,697,514,442.52 | 4,697,514,442.52 | -- |
| Total liabilities | 35,669,436,368.24 | 35,669,436,368.24 | -- |
| Shareholders’ equity: | |||
| Share capital | 5,289,389,600.00 | 5,289,389,600.00 | -- |
| Capital reserve | 12,415,326,156.11 | 12,415,326,156.11 | -- |
| Other comprehensive income | 1,952,319,928.42 | 1,952,319,928.42 | -- |
| Special reserve | -- | -- | -- |
| Surplus reserve | 1,729,509,055.66 | 1,729,509,055.66 | -- |
| Retained earnings | 5,605,709,861.57 | 5,605,709,861.57 | -- |
| Total shareholders’ equity | 26,992,254,601.76 | 26,992,254,601.76 | -- |
| Total liabilities and shareholders’ equity | 62,661,690,970.00 | 62,661,690,970.00 | -- |
IV. Tax
1. Main types of taxes and corresponding tax rates
－118－Tax type
| Tax type | Tax basis | Tax rate% |
| Value-added tax | Taxable Revenue | 16, 13, 10, 9, 6, 5 |
| City construction and maintenance tax | Turnover tax payable | 7, 5 |
| Education surcharge | Turnover tax payable | 3 |
| Local education surcharge | Turnover tax payable | 2 |
| Income tax | Taxable Income | 25 |
2. Tax preferential benefits and approvals
On July 19, 2018, the Company obtained the high-tech enterprise certificate issued by BeijingMunicipal Science and Technology Commission with the certificate number of G201811000105and the certificate is valid for three years.On July 19, 2018, Beijing Shougang Cold Rolling Co., Ltd., a subsidiary of the company obtainedthe high-tech enterprise certificate issued by Beijing Municipal Science and TechnologyCommission with the certificate number of G201811000419 and the certificate is valid for threeyears.On November 12, 2018, Shougang Jingtang United Iron&Steel Co., Ltd., a subsidiary of thecompany, obtained the high-tech enterprise certificate issued by Hebei Science and TechnologyCommission with the certificate number of GR201813001783 and the certificate is valid for threeyears.On October 30, 2019, Shougang Zhixin Qian'an Electromagnetic Materials Co., Ltd., a subsidiaryof the company, obtained the high-tech enterprise certificate issued by Hebei Science andTechnology Commission with the certificate number of GR201913001665 and the certificate isvalid for three years.In accordance to relevant provisions, above company could enjoy a preferential income tax rate at15% in 2020.Since January 1, 2019, according to Cai Shui [2019] No.13 “Notice of the State Administration ofTaxation on implementing policy of tax reduction for small and low-profit enterprises”, for the partof annual taxable income less than RMB 1 million of small and low-profit enterprises, tax reductionof 25% shall be included, and then income tax shall be paid at 20%. Liuzhou Shougang AutomobileMaterial Co., Ltd., Wuhan Shougang Automobile Material Co., Ltd., Shenyang Shougang SteelProcessing and Distribution Co., Ltd., sub-subsidiary of the Company, satisfy the requirements ofsmall and low-profit enterprise declaration and their income taxes have been declared as the policyof small and low-profit enterprise in 2019 and 2020.
V. Notes to consolidated financial statements
1. Cash and Cash equivalents
－119－
Items
| Items | 2020.12.31 | 2019.12.31 |
| Cash on hand | 35,022.81 | 33,137.77 |
| Bank deposits | 4,960,312,643.69 | 4,403,480,243.69 |
| Including: financial companies deposited | 4,951,388,949.60 | 4,380,537,299.65 |
| Other monetary assets | 1,332,152,174.23 | 1,331,605,551.46 |
| Including: financial companies deposited | 888,664,589.42 | 1,258,520,905.21 |
| Total | 6,292,499,840.73 | 5,735,118,932.92 |
Others: (1) At year ended 2020, except for RMB 1,332,152,161.49 of security deposit, theCompany has no balance of cash and cash equivalents that are pledged, guaranteed or blockedfrozen or overseas balances that restricted to remittance back.
(2) Bank deposits include interest receivable from deposits of RMB 433,762.88. This part ofinterest does not belong to "cash and cash equivalents."
2. Notes receivable
| Items | 2020.12.31 | ||
| Book balance | Bad debt provision | Carrying value | |
| Bank acceptance notes | 475,034,038.19 | 475,034.04 | 474,559,004.15 |
| Commercial acceptance notes | 5,650,637,578.99 | 5,648,704.81 | 5,644,988,874.18 |
| Total | 6,125,671,617.18 | 6,123,738.85 | 6,119,547,878.33 |
| Items | 2019.12.31 | ||
| Book balance | Bad debt provision | Carrying value | |
| Bank acceptance notes | 9,904,600.00 | 9,904.60 | 9,894,695.40 |
| Commercial acceptance notes | 5,334,766,593.45 | 5,334,366.60 | 5,329,432,226.85 |
| Total | 5,344,671,193.45 | 5,344,271.20 | 5,339,326,922.25 |
(1) The pledged notes receivable of the Company at the end of the year
| Items | Pledged amount at the end of the year |
| Bank acceptance notes | -- |
| Commercial acceptance notes | 243,600,000.00 |
| Total | 243,600,000.00 |
(2) Outstanding endorsed or discounted notes that have not matured at the end of the year
－120－
Items
| Items | Amount derecognized at year end | Amount not-derecognized at year end |
| Bank acceptance notes | -- | 154,838,877.28 |
| Commercial acceptance notes | -- | 5,193,523,382.84 |
| Total | -- | 5,348,362,260.12 |
(3) Notes transferred to accounts receivable due to non-performance of the issuers at the end of the year
| Items | Amount transferred to accounts receivable at the end of the year |
| Commercial acceptance notes | 11,225,502.54 |
(4) Classified by bad debt provision method
| Category | 2020.12.31 | ||||
| Book balance | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 6,125,671,617.18 | 100.00 | 6,123,738.85 | 0.10 | 6,119,547,878.33 |
| Portfolio 1 | -- | -- | -- | -- | -- |
| Portfolio 2 | 6,125,671,617.18 | 100.00 | 6,123,738.85 | 0.10 | 6,119,547,878.33 |
| Total | 6,125,671,617.18 | 100.00 | 6,123,738.85 | 0.10 | 6,119,547,878.33 |
| Category | 2019.12.31 | ||||
| Book balance | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 5,344,671,193.45 | 100.00 | 5,344,271.20 | 0.10 | 5,339,326,922.25 |
| Portfolio 1 | -- | -- | -- | -- | -- |
| Portfolio 2 | 5,344,671,193.45 | 100.00 | 5,344,271.20 | 0.10 | 5,339,326,922.25 |
| Total | 5,344,671,193.45 | 100.00 | 5,344,271.20 | 0.10 | 5,339,326,922.25 |
(5) Provision, recovery or reversal of bad debt
－121－Items
| Items | Bad debt provision |
| As at 31 December 2019 | 5,344,271.20 |
| Provision | 772,467.65 |
| Other increases | 7,000.00 |
| Recovery or reversal | -- |
| Written-off | -- |
| As at 31 December 2020 | 6,123,738.85 |
(6) There is no notes receivable written off during the reporting period.
3. Accounts receivable
(1) Disclosed by the ageing
| Ageing | 2020.12.31 | 2019.12.31 |
| Within 1 year | 1,468,820,426.92 | 1,057,829,329.64 |
| 1 – 2 years | 7,459,500.63 | 21,641,493.60 |
| 2 – 3 years | 11,835,039.58 | 200,000.00 |
| 3 – 4 years | -- | 378,403.36 |
| 4 – 5 years | -- | 3,068,583.70 |
| Over 5 years | 5,092,031.82 | 4,332,428.12 |
| Subtotal | 1,493,206,998.95 | 1,087,450,238.42 |
| Less: provision for bad debts | 69,114,154.03 | 58,698,012.64 |
| Total | 1,424,092,844.92 | 1,028,752,225.78 |
(2) Disclosed by bad debt provision
| Category | 2020.12.31 | ||||
| Book balance | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | 16,317,534.36 | 1.09 | 16,317,534.36 | 100.00 | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 1,476,889,464.59 | 98.91 | 52,796,619.67 | 3.57 | 1,424,092,844.92 |
| Total | 1,493,206,998.95 | 100.00 | 69,114,154.03 | 4.63 | 1,424,092,844.92 |
Disclosed by bad debt provision (continued)：
－122－Category
| Category | 2019.12.31 | ||||
| Book balance | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | 20,829,415.18 | 1.92 | 20,829,415.18 | 100.00 | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 1,066,620,823.24 | 98.08 | 37,868,597.46 | 3.55 | 1,028,752,225.78 |
| Total | 1,087,450,238.42 | 100.00 | 58,698,012.64 | 5.40 | 1,028,752,225.78 |
Assessed bad debt provision individually:
| Accounts receivable (by debtor) | 2020.12.31 | |||
| Book balance | Bad debt provision | Expected credit loss (%) | Reason for bad debts | |
| Accounts receivable over 3 years | 5,092,031.82 | 5,092,031.82 | 100.00 | Long aging |
| Overdue recourse notes | 11,225,502.54 | 11,225,502.54 | 100.00 | Overdue recourse notes |
| Total | 16,317,534.36 | 16,317,534.36 | 100.00 | |
| Accounts receivable (by debtor) | 2019.12.31 | |||
| Book balance | Bad debt provision | Expected credit loss (%) | Reason for bad debts | |
| Accounts receivable over 3 years | 7,779,415.18 | 7,779,415.18 | 100.00 | Long aging |
| Overdue recourse notes | 13,050,000.00 | 13,050,000.00 | 100.00 | Overdue recourse notes |
| Total | 20,829,415.18 | 20,829,415.18 | 100.00 | |
Assessed bad debt provision in portfolios:
| Items | 2020.12.31 | ||
| Accounts receivable | Bad debt provision | Expected credit loss (%) | |
| Within 1 year | 1,468,820,426.92 | 49,938,177.48 | 3.40 |
| 1 – 2 years | 6,459,500.63 | 1,750,200.39 | 27.09 |
| 2 – 3 years | 1,609,537.04 | 1,108,241.80 | 68.85 |
| Over 3 years | -- | -- | -- |
| Total | 1,476,889,464.59 | 52,796,619.67 | 3.57 |
－123－Items
| Items | 2019.12.31 | ||
| Accounts receivable | Bad debt provision | Expected credit loss (%) | |
| Within 1 year | 1,056,829,329.64 | 35,199,577.66 | 3.33 |
| 1 – 2 years | 9,591,493.60 | 2,534,056.76 | 26.42 |
| 2 – 3 years | 200,000.00 | 134,963.04 | 67.48 |
| Over 3 years | -- | -- | -- |
| Total | 1,066,620,823.24 | 37,868,597.46 | 3.55 |
(3) Provision, recovery or reversal of bad debt
| Items | Bad debt provision |
| As at 31 December 2019 | 58,698,012.64 |
| Adjustment amount for the first implementation of the new revenue standards | -- |
| As at 1 January 2020 | 58,698,012.64 |
| Provision | 9,291,195.46 |
| Other increases | 1,124,945.93 |
| Recovery or reversal | -- |
| Written-off | -- |
| As at 31 December 2020 | 69,114,154.03 |
(4) There is no accounts receivable write-off during reporting period.
(5) The top five accounts receivable classified by debtors are as follows:
During the year, the total amount of the top five accounts receivable collected by debtors at the endof the period is RMB 630,698,400.23, accounting for 42.24% of the total amount of accountsreceivable at the end of the period, and the total amount of the corresponding bad debt provision atthe end of the period is RMB 21,443,008.33.
| Company Name | Closing balance | Percentage of total accounts receivable % | Closing balance of bad debt provision |
| China FAW Group Co., Ltd. | 161,838,470.78 | 10.84 | 5,502,318.82 |
| Shougang Casey Steel Co., Ltd. | 154,836,520.71 | 10.37 | 5,264,260.70 |
| Chongqing Yongchuan Great Wall Auto Parts Co., Ltd. | 154,294,684.95 | 10.33 | 5,245,838.92 |
| Tonghua Iron and Steel Co., Ltd. | 95,230,146.73 | 6.38 | 3,237,713.67 |
| Qian'an Shoujia Construction Material Co., Ltd. | 64,498,577.06 | 4.32 | 2,192,876.22 |
| Total | 630,698,400.23 | 42.24 | 21,443,008.33 |
4. Financing receivable
－124－
Items
| Items | 2020.12.31 | 2019.12.31 |
| Notes receivable | 4,532,592,689.43 | 4,031,364,764.55 |
| Less：Other comprehensive income - fair value changes | -- | -- |
| Closing balance of fair value | 4,532,592,689.43 | 4,031,364,764.55 |
The Company discounts and endorses most bank acceptance notes in accordance with routine fundmanagement, therefore the bank acceptance notes are classified as financial assets at fair valuethrough other comprehensive income.
(1) Classified by bad debt provision method
| Category | 2020.12.31 | ||||
| Book balance | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 4,533,499,199.26 | 100.00 | 906,509.83 | 0.02 | 4,532,592,689.43 |
| Portfolio 1 | 4,533,499,199.26 | 100.00 | 906,509.83 | 0.02 | 4,532,592,689.43 |
| Portfolio 2 | -- | -- | -- | -- | -- |
| Total | 4,533,499,199.26 | 100.00 | 906,509.83 | 0.02 | 4,532,592,689.43 |
| Category | 2019.12.31 | ||||
| Book balance | Bad debt provision | Carrying value | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 4,032,171,198.78 | 100.00 | 806,434.23 | 0.02 | 4,031,364,764.55 |
| Portfolio 1 | 4,032,171,198.78 | 100.00 | 806,434.23 | 0.02 | 4,031,364,764.55 |
| Portfolio 2 | -- | -- | -- | -- | -- |
| Total | 4,032,171,198.78 | 100.00 | 806,434.23 | 0.02 | 4,031,364,764.55 |
(2) The pledged notes receivable of the Company at the end of the year
－125－
Items
| Items | Pledged amount at the end of the year |
| Bank acceptance notes | 347,194,514.79 |
| Commercial acceptance notes | -- |
| Total | 347,194,514.79 |
(3) Outstanding endorsed or discounted notes that have not matured at the end of the year
| Items | Amount derecognized at year end | Amount not-derecognized at year end |
| Bank acceptance notes | 21,355,756,712.24 | -- |
| Commercial acceptance notes | -- | -- |
| Total | 21,355,756,712.24 | -- |
(4) Provision, recovery or reversal of bad debt
| Items | Bad debt provision |
| As at 31 December 2019 | 806,434.23 |
| Adjustment amount for the first implementation of the new revenue standards | -- |
| As at 1 January 2020 | 806,434.23 |
| Provision | 95,952.27 |
| Other increases | 4,123.33 |
| Recovery or reversal | -- |
| Written-off | -- |
| As at 31 December 2020 | 906,509.83 |
5. Prepayments
(1) Disclosed by the ageing of prepayments
| Ageing | 2020.12.31 | 2019.12.31 | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1 year | 334,913,340.57 | 95.05 | 2,084,377,177.59 | 98.46 |
| 1 – 2 years | 14,309,245.03 | 4.06 | 11,584,402.81 | 0.55 |
| 2 – 3 years | 90,350.00 | 0.03 | 18,527,338.18 | 0.88 |
| Over 3 years | 3,042,606.90 | 0.86 | 2,287,961.22 | 0.11 |
| Total | 352,355,542.50 | 100.00 | 2,116,776,879.80 | 100.00 |
(2) The top five prepayments classified by debtors are as follows:
During the year, the total amount of the top five prepayments classified by debtors at the end of theperiod is RMB 214,789,838.66, accounting for 60.97% of the total amount of prepayments at theend of the period.
－126－Company Name
| Company Name | Closing balance | Percentage of total prepayments % |
| Tangshan Caofeidian Ganglian Logistics Co., Ltd. | 78,104,980.76 | 22.17 |
| Tianjin Jintie Xincheng Freight Forwarding Co., Ltd. | 38,851,194.40 | 11.03 |
| Tangshan Freight Center of China Railway Beijing Bureau Group Co., Ltd. | 37,695,772.20 | 10.70 |
| HBIS Beijing International Trade Co., Ltd. | 35,591,893.20 | 10.10 |
| Hangzhou Steam Turbine Co., Ltd. | 24,545,998.10 | 6.97 |
| Total | 214,789,838.66 | 60.97 |
6. Other receivables
| Items | 2020.12.31 | 2019.12.31 |
| Interest receivable | -- | -- |
| Dividends receivable | 4,892,288.48 | 2,754,886.56 |
| Other receivables | 17,002,958.09 | 21,274,788.28 |
| Total | 21,895,246.57 | 24,029,674.84 |
(1) Dividends receivable
| Items | 2020.12.31 | 2019.12.31 |
| Hebei Jingji Industry & Trading Co., Ltd. | 4,892,288.48 | 2,754,886.56 |
| Less: bad debt provision | -- | -- |
| Total | 4,892,288.48 | 2,754,886.56 |
Significant dividends receivable aged over 1 year：
| Item | Closing balance | Aging | Reason for not receivable | Any impairment and basis of judgement? |
| Hebei Jingji Industry & Trading Co., Ltd. | 2,754,886.56 | 2 – 3 years | financial constraint | No |
(2) Other receivables
①Disclosed by the ageing of other receivables
－127－Ageing
| Ageing | 2020.12.31 | 2019.12.31 |
| Within 1 year | 12,915,931.37 | 19,331,650.24 |
| 1 – 2 years | 1,922,905.13 | 2,169,797.28 |
| 2 – 3 years | 2,883,929.31 | 657,701.80 |
| 3 – 4 years | 722,708.47 | 2,705,793.91 |
| 4 – 5 years | 2,705,793.91 | 1,400.00 |
| Over 5 years | 3,916,737.20 | 1,272,979.79 |
| Subtotal | 25,068,005.39 | 26,139,323.02 |
| Less: provision for bad debts | 8,065,047.30 | 4,864,534.74 |
| Total | 17,002,958.09 | 21,274,788.28 |
②Disclosed by nature of other receivables
| Items | 2020.12.31 | 2019.12.31 | ||||
| Closing balance | Provision for bad debts | Carrying value | Closing balance | Provision for bad debts | Carrying value | |
| Petty cash | 4,090,770.93 | 1,118,251.50 | 2,972,519.43 | 11,148,267.69 | 1,798,253.00 | 9,350,014.69 |
| Deposits | 12,043,324.63 | 760,547.45 | 11,282,777.18 | 5,538,381.40 | 306,040.00 | 5,232,341.40 |
| Due from other companies | 6,112,572.23 | 3,364,910.75 | 2,747,661.48 | 7,147,624.33 | 455,192.14 | 6,692,432.19 |
| Court debit | 2,821,337.60 | 2,821,337.60 | -- | 2,305,049.60 | 2,305,049.60 | -- |
| Total | 25,068,005.39 | 8,065,047.30 | 17,002,958.09 | 26,139,323.02 | 4,864,534.74 | 21,274,788.28 |
③Provision for bad debts
As at 31.12.2020, Phase I bad debts provision:
| Category | Book balance | Expected credit loss within 12 months (%) | Provision for bad debts | Carrying value | Reason for bad debts |
| Assessed bad debt provision individually | -- | -- | -- | -- | |
| Assessed bad debt provision in portfolios | 12,399,643.37 | 5.00 | 619,982.18 | 11,779,661.19 | |
| Petty cash and deposits | 11,001,515.86 | 5.00 | 550,075.80 | 10,451,440.06 | |
| Due from other companies | 1,398,127.51 | 5.00 | 69,906.38 | 1,328,221.13 | |
| Total | 12,399,643.37 | 5.00 | 619,982.18 | 11,779,661.19 |
As at 31.12.2020, Phase II bad debts provision:
－128－
Category
| Category | Book balance | Expected credit loss within the lifetime (%) | Provision for bad debts | Carrying value | Reason for bad debts |
| Assessed bad debt provision individually | -- | -- | -- | -- | |
| Assessed bad debt provision in portfolios | 5,930,287.22 | 11.92 | 706,990.32 | 5,223,296.90 | |
| Petty cash and deposits | 4,261,523.91 | 10.74 | 457,667.37 | 3,803,856.54 | |
| Due from other companies | 1,668,763.31 | 14.94 | 249,322.95 | 1,419,440.36 | |
| Total | 5,930,287.22 | 11.92 | 706,990.32 | 5,223,296.90 |
As at 31.12.2020，Phase III bad debts provision:
| Category | Book balance | Expected credit loss over the lifetime (%) | Provision for bad debts | Carrying value | Reason for bad debts |
| Assessed bad debt provision individually | |||||
| Yinchuan Intermediate People's Court | 516,288.00 | 100.00 | 516,288.00 | -- | |
| People's Court of Muye District, Xinxiang City, Henan Province | 2,305,049.60 | 100.00 | 2,305,049.60 | -- | |
| Petty cash over 5 years | 871,055.79 | 100.00 | 871,055.79 | -- | |
| Due from other companies over 5 years | 3,045,681.41 | 100.00 | 3,045,681.41 | -- | |
| Total | 6,738,074.80 | 100.00 | 6,738,074.80 | -- |
④Provision, recovery or reversal of bad debt
| Provision for bad debts | Phase I | Phase II | Phase III | Total |
| Expected credit loss within 12 months | Expected credit loss over the lifetime (no credit impairment) | Expected credit loss over the lifetime (credit impairment occurred) | ||
| As at 31 December 2019 | 966,582.52 | 319,922.83 | 3,578,029.39 | 4,864,534.74 |
| Changes during the year | -- | -- | -- | -- |
| -- Shift to Phase II | -- | -- | -- | -- |
| -- Shift to Phase III | -- | -- | -- | -- |
| -- Back to Phase II | -- | -- | -- | -- |
| -- Back to Phase I | -- | -- | -- | -- |
| Provision | -- | 381,565.39 | 1,160,045.41 | 1,541,610.80 |
| Reversal | 350,539.92 | -- | -- | 350,539.92 |
| Converse | -- | -- | -- | -- |
| Written-off | -- | -- | -- | -- |
| Other movements | 3,939.58 | 5,502.10 | 2,000,000.00 | 2,009,441.68 |
| As at 31 December 2020 | 619,982.18 | 706,990.32 | 6,738,074.80 | 8,065,047.30 |
⑤There is no write-off of provision for bad debts during reporting period.
⑥The top five other receivables classified by debtors are as follows:
－129－Company Name
| Company Name | Nature | Closing balance | Ageing | Percentage of total other receivable (%) | Closing balance of bad debt provision |
| BMW Brilliance Automobile Co. Ltd | Security fund | 6,000,000.00 | Within 1 year | 23.93 | 300,000.00 |
| Petty cash | Petty cash | 4,090,770.93 | 1-5 years | 16.32 | 1,118,251.50 |
| People's Court of Muye District, Xinxiang City, Henan Province | Court debit | 2,305,049.60 | 4-5 years | 9.20 | 2,305,049.60 |
| Due from other companies over 5 years | Due from trading | 2,000,000.00 | over 5 years | 7.98 | 2,000,000.00 |
| Hangzhou Bay New District Investment and Cooperation Bureau | Security fund | 1,750,000.00 | 2-3 years | 6.98 | 175,000.00 |
| Total | 16,145,820.53 | 64.41 | 5,898,301.10 |
7. Inventories
(1) Classification of inventories
| Items | 2020.12.31 | 2019.12.31 | ||||
| Book balance | Provision for impairment | Carrying value | Book balance | Provision for impairment | Carrying value | |
| Raw materials | 3,086,100,265.11 | 61,148,560.44 | 3,024,951,704.67 | 2,328,192,464.30 | 59,379,927.89 | 2,268,812,536.41 |
| Finished goods | 3,697,587,429.50 | 47,273,967.29 | 3,650,313,462.21 | 3,092,680,122.49 | 19,597,406.71 | 3,073,082,715.78 |
| Consumables | 792,185,183.43 | -- | 792,185,183.43 | 689,138,709.15 | -- | 689,138,709.15 |
| Self-made semi-finished goods | 3,132,280,701.97 | -- | 3,132,280,701.97 | 2,756,791,138.59 | -- | 2,756,791,138.59 |
| Total | 10,708,153,580.01 | 108,422,527.73 | 10,599,731,052.28 | 8,866,802,434.53 | 78,977,334.60 | 8,787,825,099.93 |
(2) Provision for impairment
| Items | 2020.01.01 | Increase | Decrease | 2020.12.31 | ||
| Provision | Others | Reversal or Write-off | Others | |||
| Raw materials | 59,379,927.89 | -- | 2,392,418.96 | 623,786.41 | -- | 61,148,560.44 |
| Finished goods | 19,597,406.71 | 156,492,924.46 | -- | 128,816,363.88 | -- | 47,273,967.29 |
| Total | 78,977,334.60 | 156,492,924.46 | 2,392,418.96 | 129,440,150.29 | -- | 108,422,527.73 |
Note：
①Net realizable value of inventories is the estimated selling price under normal business termsdeducted by the estimated costs to completion, the estimated selling expenses and related taxes.
②Due to the recovery of realizable value and the cost of product sales transferred into profit andloss, the reversal or write-off of impairment provision is recognized during reporting period.
8. Other current assets
－130－
Items
| Items | 2020.12.31 | 2019.12.31 |
| Input value added tax | 128,761,143.08 | 95,559,782.81 |
| Input value added tax to be certified | 329,157,513.74 | 225,075,333.39 |
| Prepaid income tax | 15,705,110.79 | 34,487,970.27 |
| Entrusted Loans | 245,455,297.98 | 229,012,500.00 |
| Total | 719,079,065.59 | 584,135,586.47 |
9. Long-term equity investments
－131－
Company Nmae
| Company Nmae | 2019.12.31 | Movements during the year | 2020.12.31 | Impairment at the end of the year | |||||||
| Additional investment | Reduce investment | Investment gains and losses confirmed under the equity method | Adjustment of other comprehensive income | Other equity movement | Cash dividend or profit declared | Provision for impairment | Others | ||||
| ①Joint ventures | |||||||||||
| Tangshan Guoxing Industrial Co., Ltd. | 28,715,716.25 | -- | -- | 4,195,288.69 | -- | -- | -- | -- | -- | 32,911,004.94 | -- |
| Tangshan Zhonghong Carbon Chemical Co., Ltd. | 119,388,108.81 | -- | -- | -10,637,177.51 | -- | -- | -- | -- | -- | 108,750,931.30 | -- |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | 1,067,180,716.78 | -- | -- | 40,242,584.44 | -- | 113,063.75 | 20,000,000.00 | -- | -- | 1,087,536,364.97 | -- |
| Subtotal | 1,215,284,541.84 | -- | -- | 33,800,695.62 | -- | 113,063.75 | 20,000,000.00 | -- | -- | 1,229,198,301.21 | -- |
| ②Associates | |||||||||||
| Tangshan Tangcao Railway Co., Ltd. | 450,000,000.00 | -- | -- | -- | -- | -- | -- | -- | -- | 450,000,000.00 | -- |
| Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | 77,781,314.51 | -- | -- | 9,464,187.90 | -- | -- | 3,750,000.00 | -- | -- | 83,495,502.41 | -- |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | 991,143,793.18 | -- | -- | 110,663,604.37 | -- | -- | 149,460,000.00 | -- | -- | 952,347,397.55 | -- |
| Beijing Shouxin Jinyuan Management Consulting Center (Limited Partnership) | 203,826,594.33 | -- | -- | 227,976,094.59 | -- | -- | -- | -- | -- | 431,802,688.92 | -- |
| Beijing Dingshengcheng Packaging Materials Co., Ltd. | 10,480,287.86 | -- | -- | 900,217.19 | -- | -- | -- | -- | -- | 11,380,505.05 | -- |
－132－Ningbo ShougangZhejin Steel Co., Ltd.
| Ningbo Shougang Zhejin Steel Co., Ltd. | 20,182,630.87 | -- | -- | 454,110.50 | -- | -- | -- | -- | -- | 20,636,741.37 | -- |
| Guangzhou Jinghai Shipping Co., Ltd. | 31,099,675.06 | -- | -- | 456,359.47 | -- | -1,053.78 | 1,000,000.00 | -- | -- | 30,554,980.75 | -- |
| Shougang (Qingdao) Steel Industry Co., Ltd. | 44,332,373.23 | -- | -- | 1,943,349.58 | -- | -- | -- | -- | -- | 46,275,722.81 | -- |
| Guangdong Shougang Zhongshan Metal Steel Processing&Distribution Co., Ltd. | 14,090,479.43 | -- | -- | 3,008,396.53 | -- | -- | -- | -- | -- | 17,098,875.96 | -- |
| Ordos Baotou Steel Shourui Material Technology Co., Ltd. | 42,309,267.30 | -- | -- | -3,297,886.33 | -- | -- | -- | -- | -- | 39,011,380.97 | -- |
| Tianjin Shougang Steel Processing&Distribution Co., Ltd. | 30,218,337.05 | -- | -- | -7,189,068.55 | -- | -- | -- | -- | -- | 23,029,268.50 | -- |
| Hebei Jingji Industry & Trading Co., Ltd. | 7,116,081.91 | -- | -- | 1,398,119.27 | -- | -- | 2,137,401.92 | -- | -- | 6,376,799.26 | -- |
| Subtotal | 1,922,580,834.73 | -- | -- | 345,777,484.52 | -- | -1,053.78 | 156,347,401.92 | -- | -- | 2,112,009,863.55 | -- |
| Total | 3,137,865,376.57 | -- | -- | 379,578,180.14 | -- | 112,009.97 | 176,347,401.92 | -- | -- | 3,341,208,164.76 | -- |
10. Other equity instrument investments
| Items | 2020.12.31 | 2019.12.31 |
| BAIC Motor Corporation | -- | 4,197,294,724.56 |
| Beijing TIEKE Shougang RAILWAY-TECH Co., Ltd. | 245,378,470.24 | 104,600,000.00 |
| Minmetals Special Steel (Dongguan) Co., Ltd. | 3,442,862.75 | 3,603,144.85 |
| Qian'an Shoujia Construction Material Co., Ltd. | 10,923,584.79 | 36,270,355.98 |
| Qian'an PetroChina Kunlun Gas Co., Ltd | 10,550,949.94 | 9,882,348.98 |
| Minmetals Tianwei Steel Co., Ltd. | 5,950,818.84 | 5,867,352.97 |
| Total | 276,246,686.56 | 4,357,517,927.34 |
| Items | Dividend recognized during the year | Accumulated gain | Accumulated loss | Other comprehensive income transferred to retained earnings | Reasons |
| BAIC Motor Corporation | 174,887,280.19 | -- | -- | 2,004,210,207.82 | |
| Beijing TIEKE Shougang RAILWAY-TECH Co., Ltd. | 1,124,960.00 | 235,677,270.24 | -- | -- | |
| Minmetals Special Steel (Dongguan) Co., Ltd. | -- | -- | 1,557,137.25 | -- | |
| Qian'an Shoujia Construction Material Co., Ltd. | -- | -- | 11,942,790.21 | -- | |
| Qian'an PetroChina Kunlun Gas Co., Ltd | 1,769,049.80 | 8,750,949.94 | -- | -- | |
| Minmetals Tianwei Steel Co., Ltd. | -- | -- | 1,269,181.16 | -- | |
| Total | 177,781,289.99 | 244,428,220.18 | 14,769,108.62 | 2,004,210,207.82 |
11. Fixed assets
| Items | 2020.12.31 | 2019.12.31 |
| Fixed assets | 96,220,769,301.39 | 83,287,788,722.90 |
| Fixed assets to be disposed | -- | -- |
| Total | 96,220,769,301.39 | 83,287,788,722.90 |
Fixed assets
①Details of fixed assets
| Items | Plant and buildings | Machinery and equipment | Motor vechiles | Electronic equipment | Industrial furnace | Metallurgical equipment | Other tools | Total |
| Cost： | ||||||||
| 1. At 31 December 2019 | 29,515,263,731.98 | 24,337,126,503.27 | 1,813,929,908.64 | 5,815,964,526.42 | 479,457,407.73 | 70,184,082,097.46 | 292,924,362.63 | 132,438,748,538.13 |
| 2. Increase | 5,776,467,873.94 | 14,281,984,650.05 | 474,992,827.84 | 2,682,226,067.15 | 121,213,670.23 | -4,779,561,250.43 | 810,500,228.01 | 19,367,824,066.79 |
| (1) Purchase | 46,381,681.33 | 23,863,687.12 | 6,464,914.34 | 4,027,831.00 | -- | 20,284,872.64 | 3,598,354.31 | 104,621,340.74 |
| (2) Transferred from construction in progress | 5,516,842,307.16 | 9,905,865,890.68 | 408,059,645.90 | 1,016,575,558.32 | 121,213,670.23 | 2,166,851,345.08 | 126,757,560.85 | 19,262,165,978.22 |
| (3) Increase from business combination | -- | 34,395.58 | 748,863.44 | -- | -- | -- | 253,488.81 | 1,036,747.83 |
| (4) Other increase | 213,243,885.45 | 4,352,220,676.67 | 59,719,404.16 | 1,661,622,677.83 | -- | -6,966,697,468.15 | 679,890,824.04 | -- |
| 3. Decrease | -- | 42,179,852.60 | 9,921,944.83 | 5,334,752.31 | -- | -- | 216,625.35 | 57,653,175.09 |
| (1) Disposal or retirement | -- | 135,068.87 | 9,921,944.83 | 5,334,752.31 | -- | -- | 216,625.35 | 15,608,391.36 |
| (2) Other decrease | -- | 42,044,783.73 | -- | -- | -- | -- | -- | 42,044,783.73 |
| 4. At 31 December 2020 | 35,291,731,605.92 | 38,576,931,300.72 | 2,279,000,791.65 | 8,492,855,841.26 | 600,671,077.96 | 65,404,520,847.03 | 1,103,207,965.29 | 151,748,919,429.83 |
| Accumulated depreciation: | ||||||||
| 1. At 31 December 2019 | 7,463,293,552.89 | 10,378,282,315.44 | 1,326,237,077.25 | 3,094,935,638.98 | 309,694,325.37 | 26,482,548,620.93 | 95,968,284.37 | 49,150,959,815.23 |
| 2. Increase | 1,067,837,374.83 | 2,351,651,059.92 | 110,988,659.15 | 1,360,335,580.00 | 21,980,989.47 | 1,295,972,331.00 | 197,666,074.19 | 6,406,432,068.56 |
| (1) Depreciation | 945,702,608.91 | 1,535,273,675.83 | 93,552,020.56 | 504,479,723.46 | 21,980,989.47 | 3,286,284,275.70 | 19,158,774.63 | 6,406,432,068.56 |
| (2) Other increase | 122,134,765.92 | 816,377,384.09 | 17,436,638.59 | 855,855,856.54 | -- | -1,990,311,944.70 | 178,507,299.56 | -- |
| Items | Plant and buildings | Machinery and equipment | Motor vechiles | Electronic equipment | Industrial furnace | Metallurgical equipment | Other tools | Total |
| 3. Decrease | -- | 14,704,463.78 | 9,376,046.27 | 4,956,894.64 | -- | -- | 204,350.66 | 29,241,755.35 |
| (1) Disposal or retirement | -- | 45,585.90 | 9,376,046.27 | 4,956,894.64 | -- | -- | 204,350.66 | 14,582,877.47 |
| (2) Other decrease | -- | 14,658,877.88 | -- | -- | -- | -- | -- | 14,658,877.88 |
| 4. At 31 December 2020 | 8,531,130,927.72 | 12,715,228,911.58 | 1,427,849,690.13 | 4,450,314,324.34 | 331,675,314.84 | 27,778,520,951.93 | 293,430,007.90 | 55,528,150,128.44 |
| Impaiment | ||||||||
| 1. At 31 December 2019 | -- | -- | -- | -- | -- | -- | -- | -- |
| 2. Increase | -- | -- | -- | -- | -- | -- | -- | -- |
| 3. Decrease | -- | -- | -- | -- | -- | -- | -- | -- |
| 4. At 31 December 2020 | -- | -- | -- | -- | -- | -- | -- | -- |
| Carrying value | ||||||||
| 1. 31 December 2020 | 26,760,600,678.20 | 25,861,702,389.14 | 851,151,101.52 | 4,042,541,516.92 | 268,995,763.12 | 37,625,999,895.10 | 809,777,957.39 | 96,220,769,301.39 |
| 2. 31 December 2019 | 22,051,970,179.09 | 13,958,844,187.83 | 487,692,831.39 | 2,721,028,887.44 | 169,763,082.36 | 43,701,533,476.53 | 196,956,078.26 | 83,287,788,722.90 |
②As of 31 December 2020, there is no temporarily idle fixed asset.
③As of 31 December 2020, there is no fixed asset acquired under finance lease.
④As of 31 December 2020, there is no fixed asset leased out under operating lease.
⑤Fixed assets pending certificates of ownership
| Items | Carrying value | Reasons for pending certificates |
| Building of Beijing Shougang Cold Rolling Co., Ltd. | 34,888,371.00 | Property certificate is in the process |
| Building of Shougang Jingtang United Iron & Steel Co., Ltd. | 10,517,585,211.34 | To be handled after completing the relevant procedures of the occupied phase I project land |
| Building of Beijing Shougang Steel Trading Investment Management Co., Ltd. | 138,218,907.26 | Property certificate is in the process |
12. Construction in progress
| Items | 2020.12.31 | 2019.12.31 |
| Construction in progress | 7,895,623,444.81 | 24,632,761,905.24 |
| Construction materials | 401,558,503.81 | 793,534,232.55 |
| Total | 8,297,181,948.62 | 25,426,296,137.79 |
(1) Construction in progress
①Details of construction in progress
| Items | 2020.12.31 | 2019.12.31 | ||||
| Book balance | Provision for impairment | Carrying value | Book balance | Provision for impairment | Carrying value | |
| Jingtang Co. Phase-I project | 2,408,662,882.37 | -- | 2,408,662,882.37 | 2,757,346,793.01 | -- | 2,757,346,793.01 |
| Jingtang Co. Phase-II project | 1,366,399,728.62 | -- | 1,366,399,728.62 | 16,800,493,905.29 | -- | 16,800,493,905.29 |
| Qiangang Co. auxiliary project | -- | -- | -- | 1,103,301,808.22 | -- | 1,103,301,808.22 |
| Other projects | 4,120,560,833.82 | -- | 4,120,560,833.82 | 3,971,619,398.72 | -- | 3,971,619,398.72 |
| Total | 7,895,623,444.81 | -- | 7,895,623,444.81 | 24,632,761,905.24 | -- | 24,632,761,905.24 |
②The major construction projects in progress are as follows (in RMB 0’000):
| Project name | 2019.12.31 | Additions | Transferred to fixed assets | Other deduction | Accumulated interest capitalization | Capitalized Interest during reporting year | % of interest capitalization | 2020.12.31 |
| Jingtang Co. Phase-II project | 1,680,049.39 | 161,239.65 | 1,508,077.33 | 196,571.74 | -- | 49,910.04 | 4.62 | 136,639.97 |
The major construction projects in progress are as follows (continued): (Unit: RMB hundredmillion)
| Project name | Budget | The propotion of projects investment account for budget % | Progress (%) | Source of fund |
| Jingtang Co.- Phase-II project | 238.77 | 95.43 | Main production line has been transferred to fixed assets, others are under commissioning | Selfraised |
③As of 31 December 2020, there is no provision for impairment of construction in progress.
(2) Construction materials
| Items | 2020.12.31 | 2019.12.31 |
| Specific materials | 45,008,729.80 | 190,995,418.57 |
| Specific equipments | 356,549,774.01 | 602,538,813.98 |
| Subtotal | 401,558,503.81 | 793,534,232.55 |
| Provision for impairment of construction materials | -- | -- |
| Total | 401,558,503.81 | 793,534,232.55 |
13. Intangible assets
Details of intangible assets
| Items | Software | Land use rights | Total |
| Cost | |||
| 1. At 31 December 2019 | 123,666,818.21 | 3,501,841,639.42 | 3,625,508,457.63 |
| 2. Increase | 252,492,688.75 | 987,159,762.69 | 1,239,652,451.44 |
| (1) Purchase | 11,825,471.70 | -- | 11,825,471.70 |
| (2) Transferred from construction in progress | 240,481,567.26 | 987,159,762.69 | 1,227,641,329.95 |
| (3) Increase from business combination | 185,649.79 | -- | 185,649.79 |
| 3. Decrease | 14,782.91 | -- | 14,782.91 |
| Disposal | 14,782.91 | -- | 14,782.91 |
| 4. At 31 December 2020 | 376,144,724.05 | 4,489,001,402.11 | 4,865,146,126.16 |
| Accumulated amortization | |||
| 1. At 31 December 2019 | 59,905,581.68 | 638,476,816.66 | 698,382,398.34 |
| 2. Increase | 19,729,013.66 | 91,762,361.28 | 111,491,374.94 |
| Provision | 19,729,013.66 | 91,762,361.28 | 111,491,374.94 |
| 3. Decrease | 7,514.61 | -- | 7,514.61 |
| Items | Software | Land use rights | Total |
| Disposal | 7,514.61 | -- | 7,514.61 |
| 4. At 31 December 2020 | 79,627,080.73 | 730,239,177.94 | 809,866,258.67 |
| Impairment | |||
| 1. At 31 December 2019 | -- | -- | -- |
| 2. Increase | -- | -- | -- |
| 3. Decrease | -- | -- | -- |
| 4. At 31 December 2020 | -- | -- | -- |
| Carrying value | |||
| 1. 31 December 2020 | 296,517,643.32 | 3,758,762,224.17 | 4,055,279,867.49 |
| 2. 31 December 2019 | 63,761,236.53 | 2,863,364,822.76 | 2,927,126,059.29 |
14. Long-term prepaid expenses
| Item | 2019.12.31 | Increase | Decrease | 2020.12.31 | |
| Amortization | Others | ||||
| Renovation costs | 1,100,021.04 | 387,571.07 | 365,531.66 | -- | 1,122,060.45 |
15. Deferred income tax assets and deferred income tax liabilities
(1) Deferred income tax assets and deferred income tax liabilities without offsetting
| Items | 2020.12.31 | 2019.12.31 | ||
| Deductible/taxable temporary differences | Deferred tax assets/liabilities | Deductible/taxable temporary differences | Deferred tax assets/liabilities | |
| Deferred tax assets： | ||||
| Asset impairment provision | 180,255,923.00 | 29,932,810.24 | 138,304,544.01 | 22,895,507.18 |
| The actual payment amount of payroll payable less than the withdrawal amount | 11,860,973.73 | 1,779,146.06 | 11,920,536.11 | 1,788,080.42 |
| Defferred income | 231,572,159.49 | 35,170,511.45 | 215,965,473.99 | 32,853,493.78 |
| Asset amortization difference | 8,225,748.90 | 1,233,862.32 | 10,029,230.35 | 1,504,384.53 |
| Unrealized internal transaction | 244,850,723.70 | 36,727,608.55 | 189,374,005.54 | 28,406,100.82 |
| Joint commissioning cost | 287,056,216.51 | 43,058,432.48 | -- | -- |
| Subtotal | 963,821,745.33 | 147,902,371.10 | 565,593,790.00 | 87,447,566.73 |
| Deferred tax liabilities： | ||||
| Joint commissioning cost | 1,264,022,611.00 | 189,603,391.65 | 1,707,365,518.43 | 256,104,827.73 |
| Changes in fair value of in other equity instruments investments | 229,659,111.56 | 34,448,866.74 | 2,296,846,974.63 | 344,527,046.21 |
| Return on investment realized by the partnership | 227,976,094.59 | 34,196,414.19 | -- | -- |
| Subtotal | 1,721,657,817.15 | 258,248,672.58 | 4,004,212,493.06 | 600,631,873.94 |
(2) Details of unrecognized deferred tax assets from deductible temporary differences anddeductible tax losses:
| Items | 2020.12.31 | 2019.12.31 |
| Deductible temporary differences | 82,690,128.78 | 49,837,698.23 |
| Deductible tax losses | 655,600,345.27 | 1,751,474,549.76 |
| Total | 738,290,474.05 | 1,801,312,247.99 |
(3) Unrecognized deferred tax liabilities from deductible tax losses will expire in the followingyears:
| Years | 2020.12.31 | 2019.12.31 | Note |
| 2020 | —— | 1,124,331,528.68 | |
| 2021 | 522,048,520.82 | 523,333,244.38 | |
| 2022 | 34,487,825.76 | 36,829,887.95 | |
| 2023 | 35,278,200.93 | 36,315,575.20 | |
| 2024 | 34,995,102.07 | 30,664,313.55 | |
| 2025 | 28,790,695.69 | —— | |
| Total | 655,600,345.27 | 1,751,474,549.76 |
16. Other non-current assets
| Item | Closing balance | Opening balance |
| Phase II coking project | 1,965,717,410.38 | -- |
17. Short-term loans
Classification of short-term loans
| Items | 2020.12.31 | 2019.12.31 |
| Pledged loans | 59,260,000.00 | -- |
| Guaranteed loans | 7,736,984,828.91 | 8,809,731,733.54 |
| Unsecured loans | 15,916,146,611.34 | 21,483,489,431.88 |
| Total | 23,712,391,440.25 | 30,293,221,165.42 |
Note: The loan of RMB 59,260,000.00 is pledged by a discounted but unmatured andnon-terminatingly recognized note with a carrying value of RMB 59,260,000.00.
18. Notes payable
| Item | 2020.12.31 | 2019.12.31 |
| Commercial acceptance notes | 6,648,310,000.00 | 6,723,732,295.34 |
| Bank acceptances | 156,500,000.00 | 206,542,275.20 |
| Total | 6,804,810,000.00 | 6,930,274,570.54 |
19. Accounts payable
| Items | 2020.12.31 | 2019.12.31 |
| Payables for goods | 21,105,550,686.36 | 19,980,005,212.70 |
| Payables for construction | 5,433,803,694.32 | 4,106,157,596.17 |
| Total | 26,539,354,380.68 | 24,086,162,808.87 |
Among which, the material trade payables aged over one year was as follows:
| Company name | Closing balance | Reason for non-settlement |
| Tangshan Shougang Baoye Iron&Steel Co., Ltd. | 204,705,446.75 | In the execution |
| Beijing Shougang Mining Investment Co., Ltd | 175,708,332.43 | In the execution |
| Beijing Shougang Special Steel Co., Ltd. | 101,949,940.33 | In the execution |
| Beijing Teyu Plate Co., Ltd. | 81,284,004.50 | In the execution |
| Beijing Shougang Resources Comprehensive Utilization Technology Development Co., Ltd. | 70,690,426.64 | In the execution |
| Total | 634,338,150.65 |
20. Advances from customers
| Item | 2020.12.31 | 2019.12.31 |
| Advances from customers | —— | 4,461,511,152.40 |
21. Contract liability
| Items | 2020.12.31 | 2020.01.01 | 2019.12.31 |
| Advance from product sales | 4,659,444,741.25 | 3,948,239,957.88 | —— |
| Less: contractual liabilities included in other non-current liabilities | -- | -- | —— |
| Total | 4,659,444,741.25 | 3,948,239,957.88 | —— |
22. Payroll and employee benefits payable
| Items | 2019.12.31 | Increase | Decrease | 2020.12.31 |
| Short-term employee benefits | 357,405,193.28 | 3,574,851,106.36 | 3,478,607,215.78 | 453,649,083.86 |
| Post-employment benefits (defined contribution plans) | 20,486,188.38 | 142,031,191.84 | 149,847,082.06 | 12,670,298.16 |
| Termination benefits | -- | 34,378,115.22 | 34,378,115.22 | -- |
| Other retirement benefits due within one year | -- | -- | -- | -- |
| Total | 377,891,381.66 | 3,751,260,413.42 | 3,662,832,413.06 | 466,319,382.02 |
(1) Short-term employee benefits
| Items | 2019.12.31 | Increase during the year | Decrease during the year | 2020.12.31 |
| Salaries, bonuses and subsidies | 64,699,124.89 | 2,724,956,455.39 | 2,669,419,234.09 | 120,236,346.19 |
| Welfare | -- | 244,188,810.23 | 244,188,810.23 | -- |
| Social insurance | 100,559,631.13 | 218,352,522.11 | 195,681,441.81 | 123,230,711.43 |
| Including: 1.Medical insurance | 99,786,790.80 | 204,425,664.29 | 181,093,458.86 | 123,118,996.23 |
| 2.Work-related injury insurance | 299,155.00 | 13,663,812.68 | 13,881,506.48 | 81,461.20 |
| 3.Maternity insurance | 473,685.33 | 263,045.14 | 706,476.47 | 30,254.00 |
| Housing fund | -- | 286,507,192.76 | 286,461,505.76 | 45,687.00 |
| Labor union fee and employee education fee employee education fee | 192,121,282.79 | 100,198,830.47 | 82,208,928.49 | 210,111,184.77 |
| Short-term paid absences | -- | -- | -- | -- |
| Short-term profit-sharing plan | -- | -- | -- | -- |
| Non-monetary benefits | -- | -- | -- | -- |
| Other short-term employee benefits | 25,154.47 | 647,295.40 | 647,295.40 | 25,154.47 |
| Total | 357,405,193.28 | 3,574,851,106.36 | 3,478,607,215.78 | 453,649,083.86 |
(2) Defined contribution plans
| Items | 2019.12.31 | Increase | Decrease | 2020.12.31 |
| Post-employment benefits | ||||
| Including: 1.Pension insurance | 8,144,353.83 | 135,839,460.11 | 143,229,336.84 | 754,477.10 |
| 2.Unemployment insurance | 12,341,834.55 | 6,191,731.73 | 6,617,745.22 | 11,915,821.06 |
| Total | 20,486,188.38 | 142,031,191.84 | 149,847,082.06 | 12,670,298.16 |
(3) Termination benefits
| Item | 2019.12.31 | Increase | Decrease | 2020.12.31 |
| Compensation for employee resettlement | -- | 34,378,115.22 | 34,378,115.22 | -- |
23. Taxes payable
| Items | 2020.12.31 | 2019.12.31 |
| Value-added tax | 328,419,753.24 | 66,276,854.64 |
| City construction and maintenance tax | 8,219,107.89 | 4,437,451.61 |
| Corporate income tax | 204,377,308.95 | 21,725,069.02 |
| Land use tax | 440,536.03 | 440,536.03 |
| Real estate tax | 662,892.50 | 1,954,766.35 |
| Education surcharge | 6,378,667.56 | 3,185,825.91 |
| Resouorce tax | 8,728,760.60 | 4,327,645.80 |
| Stamp duty | 4,264,130.68 | 1,760,497.00 |
| Individual income tax | 2,817,099.40 | 1,720,025.93 |
| Environment protection tax | 8,226,691.30 | 8,568,606.28 |
| Other taxes | 105,907.85 | 4,417.27 |
| Total | 572,640,856.00 | 114,401,695.84 |
24. Other payables
| Items | 2020.12.31 | 2019.12.31 |
| Other payables | 2,104,822,314.59 | 2,271,088,907.26 |
Other payables
| Items | 2020.12.31 | 2019.12.31 |
| Deposits | 6,832,124.47 | 7,495,926.88 |
| Guarantee | 342,057,412.19 | 68,653,103.45 |
| Due from other companies | 568,204,855.05 | 517,040,586.18 |
| Due from companies of Shougang Group | 1,187,727,922.88 | 1,677,899,290.75 |
| Total | 2,104,822,314.59 | 2,271,088,907.26 |
Among which, the material other payables aged over one year was as follows:
| Company name | Amount due | Reason for non-settlement |
| Tangshan Shougang Baoye Iron&Steel Co., Ltd. | 86,147,428.50 | In the execution |
25. Current portion of non-current liabilities
| Items | 2020.12.31 | 2019.12.31 |
| Long-term loans due within one year | 7,216,108,822.29 | 6,400,574,401.68 |
| Bonds payable due within one year | 4,055,334,722.33 | 3,000,000,000.00 |
| Long-term payables due within one year | 1,679,840.43 | -- |
| Total | 11,273,123,385.05 | 9,400,574,401.68 |
(1) Long-term loans due within one year
| Items | 2020.12.31 | 2019.12.31 |
| Guaranteed loans | 2,216,958,333.34 | 1,314,131,944.44 |
| Unsecured loans | 4,999,150,488.95 | 5,086,442,457.24 |
| Total | 7,216,108,822.29 | 6,400,574,401.68 |
(2) Bonds payable due within one year
| Bond name | Par Value | Issue date | Term to maturity | Amount on offer |
| Zhongshixiezhu No.[2015] MTN688 | 2,000,000,000.00 | 2016/11/3 | 5 years | 2,000,000,000.00 |
| Zhongshixiezhu No.[2015] MTN692 | 2,000,000,000.00 | 2016/11/3 | 5 years | 2,000,000,000.00 |
| Subtotal | 4,000,000,000.00 | 4,000,000,000.00 |
Bonds payable due within one year (continued)
| Bond name | 2019.12.31 | Current year issuance | Accrued interest by par value | Amortisation of discount | Current year repayment | 2020.12.31 |
| Zhongshixiezhu No.[2015] MTN688 | 2,513,366,666.72 | 2,000,000,000.00 | 205,200,000.04 | -- | 2,705,200,000.00 | 2,013,366,666.76 |
| Zhongshixiezhu No.[2015] MTN692 | 513,500,000.00 | 2,000,000,000.00 | 106,400,000.00 | -- | 606,400,000.00 | 2,013,500,000.00 |
| 20 shouqian 01 | -- | -- | 28,468,055.57 | -- | -- | 28,468,055.57 |
| Total | 3,026,866,666.72 | 4,000,000,000.00 | 340,068,055.61 | -- | 3,311,600,000.00 | 4,055,334,722.33 |
(3) Long-term payables due within one year
| Items | 2020.12.31 | 2019.12.31 |
| Finance lease payables | 1,679,840.43 | -- |
26. Other current liabilities
| Items | 2020.12.31 | 2019.12.31 |
| Short-term bonds payable | 501,195,000.00 | -- |
| Tax to be exported | 605,727,816.36 | -- |
| Total | 1,106,922,816.36 | -- |
Short-term bonds payable:
| Bond name | Nominal value | Issue date | Maturity of bond | Issue amount |
| SCP | 500,000,000.00 | 2020/11/26 | 110 days | 500,000,000.00 |
Short-term Bonds Payable (Continued)
| Bond name | 2019.12.31 | Issued during current period | Interest accrued per nominal value | Amortization of premium and discount | Repaid in the current period | 2020.12.31 |
| SCP | -- | 500,000,000.00 | 1,195,000.00 | -- | -- | 501,195,000.00 |
27. Long-term loans
| Items | 2020.12.31 | Range of interest rate | 2019.12.31 | Range of interest rate |
| Guaranteed loans | 12,016,958,333.34 | 4.75%-4.90% | 10,814,131,944.44 | 3.8%-4.90% |
| Unsecured loans | 15,838,450,488.95 | 3.5%-4.90% | 14,687,542,457.24 | 4.41%-4.90% |
| Subtotal | 27,855,408,822.29 | 25,501,674,401.68 | ||
| Less: Long-term loans due within one year | 7,216,108,822.29 | 3.5%-4.90% | 6,400,574,401.68 | 4.41%-4.75% |
| Total | 20,639,300,000.00 | 19,101,100,000.00 |
28. Bonds payable
| Item | 2020.12.31 | 2019.12.31 |
| Common bond | 2,500,000,000.00 | 4,026,866,666.72 |
Increase or decrease in bonds payable
| Bond name | Par value | Issue date | Term to maturity | Amount on offer |
| Zhongshixiezhu No.[2015] MTN688 | 2,000,000,000.00 | 2016/11/3 | 5 years | 2,000,000,000.00 |
| Zhongshixiezhu No.[2015] MTN692 | 2,000,000,000.00 | 2016/11/3 | 5 years | 2,000,000,000.00 |
| 20 shouqian 01 | 2,500,000,000.00 | 2020/9/17 | 5 years | 2,500,000,000.00 |
| Subtotal | 6,500,000,000.00 | 6,500,000,000.00 |
Bonds payable（continued）
| Bond name | 2019.12.31 | Current year issuance | Accrued interest by par value | Amortisation of discount | Current year repayment | 2020.12.31 |
| Zhongshixiezhu No.[2015] MTN688 | 4,513,433,333.38 | -- | 205,200,000.04 | -- | 2,705,200,000.00 | 2,013,433,333.42 |
| Zhongshixiezhu No.[2015] MTN692 | 2,513,433,333.34 | -- | 106,400,000.00 | -- | 606,400,000.00 | 2,013,433,333.34 |
| 20 shouqian 01 | -- | 2,500,000,000.00 | 28,468,055.57 | -- | -- | 2,528,468,055.57 |
| Subtotal | 7,026,866,666.72 | 2,500,000,000.00 | 340,068,055.61 | -- | 3,311,600,000.00 | 6,555,334,722.33 |
| Less: Long-term loans due within one year | 3,000,000,000.00 | -- | -- | -- | -- | 4,055,334,722.33 |
| Total | 4,026,866,666.72 | -- | -- | -- | -- | 2,500,000,000.00 |
29. Long-term payables
| Item | 2020.12.31 | 2019.12.31 |
| Long-term payables | 6,641,452.29 | -- |
| Special payables | 2,300,000.00 | 2,100,000.00 |
| Total | 8,941,452.29 | 2,100,000.00 |
(1) Long-term payables
| Item | 2020.12.31 | 2019.12.31 |
| Finance lease payables | 8,321,292.72 | -- |
| Less: Long-term payables due within one year | 1,679,840.43 | -- |
| Total | 6,641,452.29 | -- |
(2) Special payables
| Item | 2019.12.31 | Increase | Decrease | 2020.12.31 | Reason |
| Research and development funds | 2,100,000.00 | 200,000.00 | -- | 2,300,000.00 | State Funding |
30. Deferred revenue
| Item | 2019.12.31 | Adjustment | 2020.01.01 | Increase during the year | Decrease during the year | 2020.12.31 | Reason |
| Government grant | 328,422,670.27 | -- | 328,422,670.27 | 90,450,248.00 | 20,774,112.62 | 398,098,805.65 |
Notes: The government grants which recognized as deferred revenue refer to Note V. 56government grants.
31. Other non-current liabilities
| Item | 2020.12.31 | 2019.12.31 |
| Shougang Group advance payment for construction | 4,491,623,817.41 | 4,711,490,199.06 |
32. Share capital
| Item | 2019.12.31 | Changes in current (+/-) | 2020.12.31 | ||||
| Shares issued | Bonus issue | Shares transferred from reserves | Others | Subtotal | |||
| Total amount of shares | 5,289,389,600.00 | -- | -- | -- | -- | -- | 5,289,389,600.00 |
33. Capital reserve
| Items | 2019.12.31 | Increase | Decrease | 2020.12.31 |
| Share premium | 20,073,825,110.04 | 148,638,840.00 | 466,224,200.31 | 19,756,239,749.73 |
| Other capital reserve | 1,040,357.52 | 1,979,013.15 | -- | 3,019,370.67 |
| Total | 20,074,865,467.56 | 150,617,853.15 | 466,224,200.31 | 19,759,259,120.40 |
Note: the movement of other capital reserve is the change in other equity of joint venturesrecognized by the Company in accordance with shareholding ratio.
34. Other comprehensive income
| Items | 2019.12.31 | The amount of the year | 2020.12.31 | ||||
| Pre-tax income for the period | Less: previously recognized amount transferred to profit or loss | Less: Income tax expense | Net-of-tax amount attributable to shareholders of the Company | Net-of-tax amount attributable to non-controlling interests | |||
| 1. Other comprehensive income that may not be reclassified to profit or loss | 1,952,319,928.42 | 290,706,499.08 | 2,004,210,207.81 | 43,605,974.87 | 247,100,524.21 | -- | 195,210,244.82 |
| Other comprehensive income that may not be reclassified to profit or loss | 1,952,319,928.42 | 290,706,499.08 | 2,004,210,207.81 | 43,605,974.87 | 247,100,524.21 | -- | 195,210,244.82 |
| 2. Other comprehensive income that will be reclassified to profit or loss | -- | -- | -- | -- | -- | -- | -- |
| Total | 1,952,319,928.42 | 290,706,499.08 | 2,004,210,207.81 | 43,605,974.87 | 247,100,524.21 | -- | 195,210,244.82 |
The amount of other comprehensive income after tax for the period is RMB 247,100,524.21. The amount of other comprehensive income aftertax for reporting period attributable to the shareholders of parent company is RMB 247,100,524.21; and net-of-tax amount of othercomprehensive income attributable to non-controlling interest is RMB 0.00.
35. Special reserve
| Items | 2019.12.31 | Increase | Decrease | 2020.12.31 |
| Safety fund | 15,749,165.64 | 75,482,135.57 | 69,653,764.01 | 21,577,537.20 |
| Maintenance costs | -- | -- | -- | -- |
| Total | 15,749,165.64 | 75,482,135.57 | 69,653,764.01 | 21,577,537.20 |
36. Surplus reserve
| Items | 2019.12.31 | Increase | Decrease | 2020.12.31 |
| Statutory reserve | 1,729,509,055.66 | 99,168,790.71 | -- | 1,828,677,846.37 |
| Discretionary surplus reserve | -- | -- | -- | -- |
| Total | 1,729,509,055.66 | 99,168,790.71 | -- | 1,828,677,846.37 |
37. Retained earnings
| Items | 2020 | 2019 | Appropriation/ Distribution ratio |
| Retained earnings at previous year before adjustment | -2,179,897,484.27 | -3,260,964,367.74 | |
| Adjustment of total retained earnings at previous year (Increase in “+”, decrease in “-”) | -- | -62,841,211.49 | |
| Retained earnings at previous year after adjustment | -2,179,897,484.27 | -3,323,805,579.23 | |
| Add: Net profit attributable to parent company | 1,786,452,832.06 | 1,185,589,702.44 | |
| Add: Carry-forward retained earnings of other comprehensive income for current period | 2,357,894,362.15 | -- | |
| Less: Transfer to statutory surplus reserve | 99,168,790.71 | 41,681,607.48 | |
| Transfer to discretionary surplus reserve | -- | -- | |
| Transfer to general reserve | -- | -- | |
| Common Stock dividends payable | -- | -- | |
| Dividends payable to other equity holders | -- | -- | |
| Dividends of common stock converted to share capital | -- | -- | |
| Retained earnings at current year | 1,865,280,919.23 | -2,179,897,484.27 | |
| Includs: Surplus reserve attributable to parent company extracted by subsidiaries | -- | -- |
38. Revenue and cost of sales
(1) Revenue and cost of sales
| Items | 2020 | 2019 | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Main business | 76,204,354,719.07 | 70,025,177,064.76 | 65,897,466,517.34 | 59,411,843,385.76 |
| Other business | 3,746,827,229.03 | 3,047,531,257.38 | 2,943,841,304.57 | 2,366,053,956.90 |
| Total | 79,951,181,948.10 | 73,072,708,322.14 | 68,841,307,821.91 | 61,777,897,342.66 |
(2) Revenue and cost of sales presented as products
| Items | 2020 | 2019 | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Main business: | ||||
| Billet | 265,307,282.20 | 239,732,815.06 | 270,552,095.12 | 224,074,179.83 |
| Hot-rolled steel | 32,142,438,742.64 | 29,683,727,128.66 | 24,236,080,906.42 | 21,492,914,828.16 |
| Cold-rolled steel | 41,755,926,337.32 | 38,319,410,072.18 | 39,541,161,789.88 | 35,985,703,529.43 |
| Other steels | 2,040,682,356.91 | 1,782,307,048.86 | 1,849,671,725.92 | 1,709,150,848.34 |
| subtotal | 76,204,354,719.07 | 70,025,177,064.76 | 65,897,466,517.34 | 59,411,843,385.76 |
| Other business | ||||
| Power | 1,710,794,684.40 | 1,595,246,088.70 | 1,266,389,999.29 | 1,156,398,752.73 |
| Solid waste | 1,184,134,242.92 | 1,103,220,630.68 | 699,530,951.16 | 549,304,093.21 |
| Others | 851,898,301.71 | 349,064,538.00 | 977,920,354.12 | 660,351,110.96 |
| subtotal | 3,746,827,229.03 | 3,047,531,257.38 | 2,943,841,304.57 | 2,366,053,956.90 |
| Total | 79,951,181,948.10 | 73,072,708,322.14 | 68,841,307,821.91 | 61,777,897,342.66 |
(3) Breakdown of revenue information
| Items | 2020 |
| Revenue from main business | 76,204,354,719.07 |
| Including: recognised at a certain point in time | 76,204,354,719.07 |
| recognised during a certain period of time | -- |
| Revenue from other business | 3,746,827,229.03 |
| Total | 79,951,181,948.10 |
As of 31 December 2020, the amount of revenue corresponding to the performanceobligations that the company has signed but not yet fulfilled is RMB 4,593,738,182.55.The company expects to recognize all revenue in 2021.
39. Taxes and surcharges
| Items | 2020 | 2019 |
| Environmental protection tax | 30,905,784.13 | 30,513,521.76 |
| Urban maintenance and construction tax | 96,491,361.42 | 59,842,388.15 |
| Education surcharge | 70,770,584.49 | 46,424,287.10 |
| Resources duty | 53,698,875.92 | 46,958,712.20 |
| Property tax | 183,284,662.68 | 156,620,289.41 |
| Land usage tax | 219,267,210.73 | 280,834,467.33 |
| Vehicle and vessel usage tax | 361,812.52 | 322,443.43 |
| Stamp duty | 119,173,635.91 | 77,707,387.52 |
| Other taxes | 120,585.96 | 377,607.91 |
| Total | 774,074,513.76 | 699,601,104.81 |
Note: The provision and payment standards of taxes and surcharges refer to Note IV.Taxation.
40. Selling and distribution expenses
| Items | 2020 | 2019 |
| Staff costs | 129,607,334.56 | 120,209,816.04 |
| Depreciation and amortization | 129,921.70 | 141,260.50 |
| Transportation expenses | -- | 1,029,354,428.04 |
| Export expenses | -- | 79,106,533.88 |
| Other regualr expenses | 37,303,433.87 | 36,750,642.95 |
| Total | 167,040,690.13 | 1,265,562,681.41 |
41. General and administrative expenses
| Items | 2020 | 2019 |
| Staff costs | 509,368,436.44 | 517,208,719.02 |
| Depreciation and amortization | 234,968,386.33 | 238,300,955.22 |
| Other regular expenses | 232,089,438.08 | 195,035,644.76 |
| Total | 976,426,260.85 | 950,545,319.00 |
42. Research and development expenses
| Items | 2020 | 2019 |
| Staff costs | 379,551,768.61 | 350,045,450.18 |
| Depreciation and amortization | -- | -- |
| Other regular expenses | 100,935,305.78 | 35,751,384.90 |
| Total | 480,487,074.39 | 385,796,835.08 |
43. Financial expenses
| Items | 2020 | 2019 |
| Interest costs | 2,860,147,718.46 | 2,781,121,685.75 |
| Less: interest capitalized | 499,100,376.94 | 577,303,197.38 |
| Interest expenses | 2,361,047,341.52 | 2,203,818,488.37 |
| Less:interest income | 133,289,009.17 | 91,721,455.32 |
| Discount on notes acceptance | 4,308,589.40 | 2,499,299.88 |
| Exchange losses and gains | 669,847.63 | 3,152,529.68 |
| Less: exchange losses and gains capitalized | -- | -- |
| Bank charges and others | -69,644,836.56 | -55,807,665.64 |
| Total | 2,163,091,932.82 | 2,061,941,196.97 |
Note: The amount of interest capitalization is under construction. The capitalization rateused to calculate and determine the capitalization amount of borrowing costs in thecurrent period is 4.62% (previous period: 4.68%).
44. Other income
| Items (sources of other income) | 2020 | 2019 | Related to assets/income |
| Engineering informationization project subsidy (Qiangang Co., cold-rolled) | 99,999.96 | 99,999.96 | Related to assets |
| Government grants for energy central project from the Ministry of Industry and Information Technology of the People’s Republic of China | 1,999,999.96 | 1,999,999.96 | Related to assets |
| Government grants of hot-rolled steel strip TMCP project | 105,263.16 | 105,263.16 | Related to assets |
| Government grants for heating furnace revamping project (Qiangang Co., hot-rolled) | 526,315.80 | 526,315.80 | Related to assets |
| Government grants for dedusting system upgrading project (Qiangang Co.) | 1,105,263.12 | 1,105,263.12 | Related to assets |
| Government grants for advanced sewage treatment | 342,222.24 | 313,703.72 | Related to assets |
| Special government grants for denitration engineering from the Hebei Provincial Finance Department | 245,000.00 | 245,000.00 | Related to assets |
| Items (sources of other income) | 2020 | 2019 | Related to assets/income |
| Government grants for online environmental monitoring | 500,000.00 | 500,000.00 | Related to assets |
| National funds for the national 863 project | 278,200.00 | 278,200.00 | Related to assets |
| Special government grants for circular economy development from the Finance Bureau of Caofeidian | 1,578,947.36 | 1,052,631.58 | Related to assets |
| Government grants for the desulfurization of pelletizing flue gas | 1,486,105.28 | 1,486,105.24 | Related to assets |
| Environmental protection government grants for closing limestone yards | 80,000.00 | 80,000.00 | Related to assets |
| Government grants for energy-saving incentive for No.3 hydrogen generator | 67,878.96 | 67,878.96 | Related to assets |
| Galvanized high-strength automobile sheet special production line project | 5,263,157.88 | -- | |
| Phase II thermal desalination project | 1,052,631.56 | -- | |
| Government grants for the specialized production line project of Zinc-plated high-strengthen auto sheet | 191,578.96 | 191,578.95 | Related to assets |
| Other government grants related to assets | 5,375,648.38 | 2,356,178.38 | Related to assets |
| Job stabilization subsidy | 21,027,162.60 | 3,442,355.48 | Related to income |
| Government grants for low-carbon renovation of gas-fired boiler | -- | 2,009,600.00 | Related to income |
| Government grants for enterprises operat in the region | -- | 4,200,000.00 | Related to income |
| Other government grants related to income | 18,303,448.80 | 31,837,421.50 | Related to income |
| Tax refund | 1,000,295.73 | 329,604.04 | |
| Value added tax deduction | 565,161.68 | 62,319.78 | |
| Total | 61,194,281.43 | 52,289,419.63 |
Notes: (1) The details of government grants refer to Note V. 56 Government grants.
(2) As the government subsidy for recurring gains and losses refer to Note XV 1 for detailreasons.
45. Investment income
| Items | 2020 | 2019 |
| Investment income from long-term equity investments under the equity method | 379,578,180.14 | 81,800,924.01 |
| Dividend from other equity instruments investments | 177,781,289.99 | 202,033,784.60 |
| Interest income from entrusted loans | 10,361,268.74 | 8,187,426.69 |
| Total | 567,720,738.87 | 292,022,135.30 |
46. Credit impairment losses (loss in “-”)
| Items | 2020 | 2019 |
| Provision for bad debts of notes receivable | -772,467.65 | 2,803,952.75 |
| Provision for bad debts of accounts receivable | -9,291,195.46 | 9,672,684.54 |
| Provision for bad debts of financing receivable | -95,952.27 | -496,048.38 |
| Provision for bad debts of other receivables | -1,191,070.88 | 75,835.42 |
| Total | -11,350,686.26 | 12,056,424.33 |
47. Impairment losses on assets (loss in “-”)
| Items | 2020 | 2019 |
| Provision for invertory impairment | -156,492,924.46 | -98,182,828.73 |
48. Gains on disposal of assets
| Items | 2020 | 2019 |
| Gains from disposal of fixed assets (loss in “-”) | 75,385.37 | 773,665.71 |
49. Non-operating income
| Items | 2020 | 2019 | Included in non-recurring gains or losses in 2020 |
| Compensation payments | 316,237.90 | 856,958.95 | 316,237.90 |
| Others | 1,683,124.34 | 4,876,305.83 | 1,683,124.34 |
| Total | 1,999,362.24 | 5,733,264.78 | 1,999,362.24 |
50. Non-operating expenses
| Items | 2020 | 2019 | Included in non-recurring gains or losses in 2020 |
| Losses on disposal of assets | 768,699.07 | 8,182,914.32 | 768,699.07 |
| Public welfare donation | -- | 300,000.00 | -- |
| Compensation and penalty | 6,907.06 | 2,154,080.25 | 6,907.06 |
| tax overdue fine | 1,738,457.13 | 16,208,622.12 | 1,738,457.13 |
| Penalty | -- | 1,720,000.00 | -- |
| Others | 32,877.54 | 3,567,727.50 | 32,877.54 |
| Total | 2,546,940.80 | 32,133,344.19 | 2,546,940.80 |
51. Income tax expenses
(1) Details of income tax expenses
| Items | 2020 | 2019 |
| Current tax in accordance with tax laws and related regulations | 459,569,391.19 | 224,496,874.20 |
| Deffered income tax expenses | -92,759,826.26 | 15,654,937.79 |
| Total | 366,809,564.93 | 240,151,811.99 |
(2) Reconciliation between income tax expenses and profit before income tax is as follows:
| Items | 2020 | 2019 |
| Profit before tax | 2,777,952,370.40 | 1,932,522,078.81 |
| Tax at the applicable tax rate of 15% | 416,692,855.56 | 289,878,311.82 |
| Taxation effect of different tax rates of subsidiaries | 5,137,238.32 | -194,950.52 |
| Adjustment of income tax in the prior year | -6,929,659.41 | -22,487,786.87 |
| Share of profit or loss of joint ventures and associates under the equity method | -22,740,312.83 | -12,270,138.60 |
| Income not subject to tax（expressed in“-”） | -26,667,193.50 | -30,305,067.69 |
| Non-deductible costs, expenses and losses | 888,266.93 | 7,573,662.81 |
| Taxation effect of the change in the applicable tax rate on the beginning disclosure of the deffered income tax | -- | 2,563,911.18 |
| Taxation effect of utilizing previous unrecognized tax losses and deductible temporary differences (expressed in “-”) | -6,237,897.01 | -2,272,208.53 |
| Taxation effect of unrecognized tax losses and deductible temporary differences | 6,666,266.87 | 7,666,078.39 |
| Taxation effect of research and development expenses (expressed in “-”) | -- | -- |
| Others | -- | -- |
| Income tax expenses | 366,809,564.93 | 240,151,811.99 |
52. Notes to cash flow statement
(1) Proceeds from other operating activities
| Items | 2020 | 2019 |
| Government grants received | 130,166,631.11 | 95,744,472.16 |
| Non-operating income | 1,998,921.76 | -- |
| Return of restricted funds | -- | 1,899,618.00 |
| Total | 132,165,552.87 | 97,644,090.16 |
(2) Payments for other operating activities
| Items | 2020 | 2019 |
| Expenses paid | 595,391,580.99 | 1,667,492,770.07 |
| Non-operating expenses paid | 1,778,241.73 | 23,934,687.79 |
| Restricted funds paid | 546,622.77 | 179,887,738.68 |
| Margin of BMW Brilliance | 6,000,000.00 | -- |
| Other intercouse funds paid | 3,571,092.08 | 6,070,765.10 |
| Total | 607,287,537.57 | 1,877,385,961.64 |
(3) Proceeds from other investing activities
| Items | 2020 | 2019 |
| Interest income | 132,855,246.29 | 91,721,455.32 |
| Zhuzhou Hi-Tech Group Co., Ltd.-Deposit during construction period | 525,000.00 | -- |
| Jinshi Investment Co., Ltd. Investment Margin | 300,000,000.00 | -- |
| Total | 433,380,246.29 | 91,721,455.32 |
(4) Proceeds from other financing activities
| Items | 2020 | 2019 |
| Borrowings from Shougang Group | 148,638,840.00 | 690,938,155.85 |
(5) Payment for other financing activities
| Items | 2020 | 2019 |
| Financial commissions | 9,982,295.82 | 11,735,867.67 |
| Return the loan to Wuhan Zhongxin | 1,200,000.00 | -- |
| Paying back the borrowings from Shougang Group | 300,000,000.00 | 980,799,000.00 |
| Total | 311,182,295.82 | 992,534,867.67 |
53. Supplements to statement of cash flows
(1) Supplementary information
| Supplementary information | 2020 | 2019 |
| 1. Reconciliation of net profit to net cash flows from operating activities: | ||
| Net profit | 2,411,142,805.47 | 1,692,370,266.82 |
| Add: Impairment losses on assets | 156,492,924.46 | 98,182,828.73 |
| Credit impairment losses | 11,350,686.26 | -12,056,424.33 |
| Supplementary information | 2020 | 2019 |
| Depreciation of fixed assets | 6,406,432,068.56 | 5,879,746,319.04 |
| Amortization of intangible assets | 111,491,374.94 | 87,770,620.13 |
| Amortizaiton of long-term deffered expenses | 365,531.66 | 247,916.25 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (Gains as in “-”) | -75,385.37 | -773,665.71 |
| Losses on written-off fixed assets (Gains as in “-”) | 768,699.07 | 8,182,914.32 |
| Losses on fair value changes (Gain as in “-”) | -- | -- |
| Financial expenses (Income as in “-”) | 2,163,091,932.82 | 2,061,941,196.97 |
| Investment losses (Income as in “-”) | -567,720,738.87 | -292,022,135.30 |
| Decrease in deferred tax assets (Increase as in “-”) | -60,454,804.37 | 8,436,969.27 |
| Increase in deferred tax liabilities (Decrease as in “-”) | -32,305,021.89 | -277,138,526.50 |
| Decrease in inventories (Increase as in “-”) | -1,956,489,862.36 | -1,264,895,047.45 |
| Decrease in receivables from operating activities (Increase as in “-”) | -1,780,773,229.64 | -1,692,113,785.17 |
| Increase in payables from operating activities (Decrease as in “-”) | 3,403,848,159.38 | -2,710,876,489.76 |
| Others | 7,513,656.07 | -172,000,941.96 |
| Net cash flow from operating activities | 10,274,678,796.19 | 3,415,002,015.35 |
| 2. Significant non-cash payments for investing and financing activities: | ||
| Conversion of debt into capital | -- | -- |
| Convertible bonds due within one year | -- | -- |
| Fixed assets under finance lease | -- | -- |
| 3. Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 4,959,913,916.36 | 4,403,513,394.20 |
| Less: Opening balance of cash | 4,403,513,394.20 | 4,492,161,042.04 |
| Add: Closing balance of cash equivalents | -- | -- |
| Less: Opening balance of cash equivalents | -- | -- |
| Net increase in cash and cash equivalents | 556,400,522.16 | -88,647,647.84 |
Note: The amount of endorsement and transfer of acceptance notes received from goods salesof the company is RMB 55,324.66 million.
(2) Net cash paid to acquisition of subsidiaries during reporting period
| Item | Amount |
| Cash or cash equivalents paid in reporting period for business combinations occurred in reporting period | 524,984,710.78 |
| Including：Beijing Shougang Steel Trading Investment Management Co., Ltd. | 521,656,810.78 |
| Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | 3,327,900.00 |
| Less: Cash and cash equivalents held by subsidiaries at the date of acquisition | 12,051,057.95 |
| Including：Beijing Shougang Steel Trading Investment Management Co., Ltd. | -- |
| Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | 12,051,057.95 |
| Add: Cash or cash equivalents paid in reporting period for business combinations occurred in prior periods | -- |
| Net cash paid to acquisition of subsidiaries subsidiaries | 512,933,652.83 |
(3) Components of cash and cash equivalents
| Items | 31.12.2020 | 31.12.2019 |
| 1. Cash | 4,959,913,916.36 | 4,403,513,394.20 |
| Including: Cash on hand | 35,022.81 | 33,137.77 |
| Balances in banks without restriction | 4,959,878,880.81 | 4,403,480,243.69 |
| Other monetary funds without restriction | 12.74 | 12.74 |
| 2. Cash equivalents | -- | -- |
| Including: bonds investment due within three months | -- | -- |
| 3. Closing balance of cash and cash equivalents | 4,959,913,916.36 | 4,403,513,394.20 |
| Including: restricted cash and cash equivalents from the parent company or its subsidiaries | -- | -- |
54. Notes to items in the statement of changes in shareholders' equity
Note: The items with significant amount in the item "(VI) Others" are the net profitattributable to the parent company of Beijing Shougang Steel Trading InvestmentManagement Co., Ltd. from January to June 2020, which is RMB 62,397 thousand fromthe combination under common control. The above items are calculated based on the51% shareholding ratio. It is RMB 31,822 thousand, which affects the combined capitalreserve of RMB -31,822 thousand.
55. Restricted assets
| Items | 31.12.2020 | Restricted reasons |
| Cash and cash balances | 1,332,152,161.49 | Security deposits |
| Notes receivable | 650,054,514.79 | Pledge billing |
| Total | 1,982,206,676.28 |
56. Government grants
(1) Government grants recognized as deferred income and subsequently measured via total-valuemethod.
| Items | Type | 31.12.2019 | Increase | Recognition in P/L during 2020 | Other changes | 31.12.2020 | Item recognized in P/L | Related to assets/income |
| Government grants for engineering informationization project (Qian'an Iron and Steel, cold-rolled ) | Financial appropriation | 575,000.16 | -- | 99,999.96 | -- | 475,000.20 | Other income | Related to assets |
| Government grants for energy central project from the Ministry of Industry and Information Technology of the People’s Republic of China | Financial appropriation | 8,000,000.16 | -- | 1,999,999.96 | -- | 6,000,000.20 | Other income | Related to assets |
| Special government grants from the Finance Bureau of Qian'an | Financial appropriation | 4,200,000.00 | -- | -- | -- | 4,200,000.00 | Other income | Related to assets |
| Government grants for hot-rolled steel strip TMCP project | Financial appropriation | 1,578,947.36 | -- | 105,263.16 | -- | 1,473,684.20 | Other income | Related to assets |
| Government grants for dedusting system upgrading project (Qian'an Iron and Steel) | Financial appropriation | 29,368,421.08 | -- | 1,631,578.92 | -- | 27,736,842.16 | Other income | Related to assets |
| Government grants for advanced sewage treatment | Financial appropriation | 5,846,296.28 | -- | 342,222.24 | -- | 5,504,074.04 | Other income | Related to assets |
| Special government grants for denitration engineering from the Hebei Provincial Finance Department | Financial appropriation | 1,225,000.00 | -- | 245,000.00 | -- | 980,000.00 | Other income | Related to assets |
| Government grants for online environmental monitoring project from the Finance Bureau of Caofeidian | Financial appropriation | 4,000,000.00 | -- | 500,000.00 | -- | 3,500,000.00 | Other income | Related to assets |
| The steelmaking technology and facilities demonstration project through carbon dioxide-oxygen mixed injection, funded by University of Science and Technology Beijing | Financial appropriation | 4,000,000.00 | -- | -- | -- | 4,000,000.00 | Other income | Related to assets |
| National funds for the national 863 project | Financial appropriation | 1,391,000.00 | -- | 278,200.00 | -- | 1,112,800.00 | Other income | Related to assets |
| Special government grants for circular economy development from the Finance Bureau of Caofeidian | Financial appropriation | 20,000,000.00 | -- | 1,052,631.56 | -- | 18,947,368.44 | Other income | Related to assets |
| Government grants for cold-rolled intelligent manufacturing project | Financial appropriation | 13,500,000.00 | -- | 562,500.00 | -- | 12,937,500.00 | Other income | Related to assets |
| Government grants for seawater dsalination research, based on reuse of steelmaking waste heat | Financial appropriation | 7,650,000.00 | 1,050,000.00 | -- | -- | 8,700,000.00 | Other income | Related to assets |
| Government grants for the desulfurization of pelletizing flue gas | Financial appropriation | 25,263,789.50 | -- | 1,486,105.28 | -- | 23,777,684.22 | Other income | Related to assets |
| Environmental protection government grants for closing limestone yards | Financial appropriation | 1,840,000.00 | -- | 80,000.00 | -- | 1,760,000.00 | Other income | Related to assets |
| Government grants for improvement of deformation coupling matching in high strength steel production | Financial appropriation | 1,701,800.00 | 128,200.00 | -- | -- | 1,830,000.00 | Other income | Related to assets |
| Government grants for intelligent interface closed-loop control technology in multi-target optimize steelmaking and ironmaking | Financial appropriation | 2,208,000.00 | 192,000.00 | -- | -- | 2,400,000.00 | Other income | Related to assets |
| Government grants for new metal, ceramic composite powder, and refractory anticorrosion coating | Financial appropriation | 771,652.00 | 66,448.00 | -- | -- | 838,100.00 | Other income | Related to assets |
| Government grants for intelligent collaborative allocation techonglogy about material flow and power flow in steelmaking program | Financial appropriation | 1,760,000.00 | 590,000.00 | -- | -- | 2,350,000.00 | Other income | Related to assets |
| Government grants for energy-saving incentive for No.3 hydrogen generator | Financial appropriation | 1,153,942.09 | -- | 67,878.96 | -- | 1,086,063.13 | Other income | Related to assets |
| Government grants for cold rolling operation department aluminized silicon high strength steel automotive plate renovation project | Financial appropriation | 3,448,421.05 | -- | 191,578.96 | -- | 3,256,842.09 | Other income | Related to assets |
| Government grants for cold rolling operation department high strength steel 18 roll single stand project | Financial appropriation | 7,000,000.00 | 4,900,000.00 | -- | -- | 11,900,000.00 | Other income | Related to assets |
| Government grants for multi-targets optimization steelmaking | Financial appropriation | 2,740,000.00 | 200,000.00 | -- | -- | 2,940,000.00 | Other income | Related to assets |
| Government grants for the operation-control system of | Financial appropriation | 20,390,000.00 | -- | -- | -- | 20,390,000.00 | Other income | Related to assets |
| Items | Type | 31.12.2019 | Increase | Recognition in P/L during 2020 | Other changes | 31.12.2020 | Item recognized in P/L | Related to assets/income |
| production-marketing integration | ||||||||
| Government grants for green and intelligent collaborative mechanism of steel process and comprehensive energy efficiency assessment | Financial appropriation | 472,500.00 | 107,500.00 | -- | -- | 580,000.00 | Other income | Related to assets |
| Government grants for key technology of low-emission efficient energy-saving sintering and its utilizaiton project | Financial appropriation | 278,600.00 | 21,400.00 | -- | -- | 300,000.00 | Other income | Related to assets |
| Government grants for the specialized production line project of Zinc-plated high-strengthen auto sheet | Financial appropriation | 100,000,000.00 | -- | 5,263,157.88 | -- | 94,736,842.12 | Other income | Related to assets |
| Government grants for reforming of sinter desulfurization and denitrification | Financial appropriation | 18,947,368.42 | 10,000,000.00 | 1,578,947.36 | -- | 27,368,421.06 | Other income | Related to assets |
| Government grants for thin slab casting and rolling engineering | Financial appropriation | 5,000,000.00 | -- | -- | -- | 5,000,000.00 | Other income | Related to assets |
| Government grants for reform project of reducing oxynitride concentration in emissed flue gas from annealing furnace | Financial appropriation | 6,300,000.00 | -- | -- | -- | 6,300,000.00 | Other income | Related to assets |
| Government grants for industrial mechanism model base | Financial appropriation | -- | 1,800,000.00 | -- | -- | 1,800,000.00 | Other income | Related to assets |
| Government grants for 10,000 tons/d desalination project | Financial appropriation | -- | 8,900,000.00 | -- | -- | 8,900,000.00 | Other income | Related to assets |
| Government grants for enhancing the core competitiveness of the manufacturing industry | Financial appropriation | -- | 58,510,000.00 | -- | -- | 58,510,000.00 | Other income | Related to assets |
| Other government grants related to assets | Financial appropriation | 27,661,032.17 | 3,269,700.00 | 4,713,148.38 | -- | 26,217,583.79 | Other income | Related to assets |
| Other government grants related to income | Financial appropriation | 150,900.00 | 715,000.00 | 575,900.00 | -- | 290,000.00 | Other income | Related to income |
| Total | 328,422,670.27 | 90,450,248.00 | 20,774,112.62 | -- | 398,098,805.65 |
(2) Government grants which recognized as profit or loss, measured via total-value method.
| Items | Type | Recognized in P/L for the year ended 31.12.2019 | Recognized in P/L for the year ended 31.12.2020 | Item recognized in P/L | Related to asset/income |
| Government grants for steady post | Financial appropriation | 21,027,162.60 | 3,442,355.48 | Other income | Related to income |
| Government grants for environmentally-friendly. | Financial appropriation | -- | 2,009,600.00 | Other income | Related to income |
| Government grants for enterprises operate in the region | Financial appropriation | -- | 4,200,000.00 | Other income | Related to income |
| Other government grants related to income | Financial appropriation | 18,303,448.80 | 31,837,421.50 | Other income | Related to income |
| Total | 39,330,611.40 | 41,489,376.98 |
VI. Change in the scope of consolidation
1. Business combination involving entities not under common control
(1) Business combination involving entities not under common control in reporting period
| Acquiree | Date of equity acquisition | Consideration of equity acquisition | Equity acquisition ratio | Method of equity acquisition | Acquisition date | Basis for determination of acquisition date | Income of the acquiree from the date of purchase to the end of the period | Net profit of the acquiree from the date of purchase to the end of the period |
| Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | 30/6/2020 | 3,327,900.00 | 50.00% | Purchase | 30/6/2020 | Refer to note | 73,282,614.91 | 3,448,312.47 |
Note: During the reporting period, the Company has acquired 50% equity of Beijing ShoubaoNuclear Equipment Technology Co., Ltd. at 30 June 2020 with cost of RMB 3,327,900.00 incash. The acquisition date is decided based on the payment date, the completion date ofbusiness registration of change, and date that the Company actually obtains the control of theacquiree.
(2) Cost of combination and goodwill
| Item | Beijing Shoubao Nuclear Equipment Technology Co., Ltd. |
| Cost of combination | |
| Cash and Cash equivalents | 3,327,900.00 |
| Fair value of non-cash assets | -- |
| Fair value of debt issued or assumed | -- |
| Fair value of equity securities issued | -- |
| Fair value of contingent consideration | -- |
| Fair value of equity held on the acquisition date before the acquisition | -- |
| Total consideration of business combination | 3,327,900.00 |
| Less: fair value of the obtained identifiable net assets | 3,327,900.00 |
| Goodwill or combination cost less than the fair value of the obtained identifiable net assets | -- |
(3) Identifiable assets and liabilities of the acquiree on the acquisition date
| Item | Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | |
| Fair value on the acquisition date | Carrying value on the acquisition date | |
| ASSETS: | ||
| Current assets | 61,676,490.29 | 61,676,490.29 |
| Non-current liabilities | 1,222,397.62 | 1,222,397.62 |
| Inclouds: Intangible assets | 185,649.79 | 185,649.79 |
| Fixed assets | 1,036,747.83 | 1,036,747.83 |
| Total assets | 62,898,887.91 | 62,898,887.91 |
| LIABILITIES: | ||
| Current liabilities | 56,243,087.91 | 56,243,087.91 |
| Non-current liabilities | -- | -- |
| Total liabilities | 56,243,087.91 | 56,243,087.91 |
| Net assets | 6,655,800.00 | 6,655,800.00 |
| Less: non-controlling | 3,327,900.00 | 3,327,900.00 |
| interests | ||
| Net assets acquired | 3,327,900.00 | 3,327,900.00 |
(4) The Company did not hold any equity in Shoubao Nuclear Power Company prior to thenon-common control acquisition date during the reporting period.
2. Business combination involving entities under common control
(1) Business combination involving entities under common control in reporting period
| Acquiree | Equity ratio obtained in business combination | Basis of business combination under the common control | Acquisition date | Income of the acquiree from the beginning of the current period to the acquisition date | Net profit of the acquiree from the beginning of the current period to the acquisition date | Income of the acquiree during the comparison period | Net profit of the acquiree during the comparison period |
| Beijing Shougang Steel Trading Investment Management Co., Ltd.(shorted as Steel Trading Co. hereinafter) | 51% | Controlled by the same parent company | 30/06/2020 | 326,345,044.28 | 61,522,051.81 | 645,124,444.88 | 5,124,466.43 |
On 23 June 2020, approved from annual shareholders’ meeting of the Company in 2019, thecompany purchased 51% share of Steel Trading Co. from Shougang Group by means of cashpayment as well as holding 1,028,748,707 domestic shares of BAIC Motor Corporation(shorted as BAIC Motor hereinafter). The valuation of BAIC Motor shares held by theCompany is RMB 4,546,865,020.05. On 18 June 2020, the general shareholders’ meeting ofBAIC Motor approved the 2019 profit and dividend distribution plan. Deducting thedividends receivable, the confirmed transfer price of BAIC Motor is RMB 4,371,977,739.86.The valuation of the 51% share of Steel Trading Co. is RMB 4,893,634,550.64. According tothe replacement agreement, the Company paid the difference between the valuation and thetransfer price of RMB 521,656,810.78 to Shougang Group on 30 June 2020. Steel Trading Co.was wholly-owned subsidiary of Shougang Group, the parent company of the Company, andsince both parties of this transaction before and after the merger are controlled by ShougangGroup and the control is not temporary, the combination is a business combination undercommon control. The Company completed the industrial and commercial change registrationof Steel Trading Co. on 24 June 2020, and the combination date is determined as 30 June2020. The assets and liabilities obtained from the business combination are measured as thecarrying value of on the combination date.
(2) Cost of combination
| Item | Beijing Shougang Steel Trading Investment Management Co., Ltd. |
| Cash and Cash equivalents | 521,656,810.78 |
| Carrying value of non-cash assets | 4,371,977,739.86 |
| Total | 4,893,634,550.64 |
(3) Carrying value of assets and liabilities of the acquiree
| Beijing Shougang Steel Trading Investment Management Co., Ltd. | ||
| Acquisition date | Closing balance of prior period | |
| Current assets | 7,107,324,379.00 | 6,513,019,066.50 |
| Non-current liabilities | 8,873,039,072.48 | 903,529,243.88 |
| Current liabilities | 7,005,801,941.62 | 6,394,701,114.62 |
| Non-current liabilities | 4,466,801.02 | 4,586,726.79 |
| NET ASSETS | 8,970,094,708.84 | 1,017,260,468.97 |
| Less: non-controlling interests | 4,510,861,660.42 | 614,419,334.55 |
| Net assets acquired | 4,459,233,048.42 | 402,841,134.42 |
| Cost of combination | 4,893,634,550.64 | -- |
| Balance (recognized in equity) | -434,401,502.22 | -- |
VII. Interests in other entities
1. Interests in subsidiaries
(1) Composition of the Company
| Subsidiary | Main Operation place | Registration place | Business nature | Shareholding ratio (%) | Acquisition method | |
| Directly | Indirectly | |||||
| Shougang Jingtang United Iron & Steel Co., Ltd. | Tangshan, PRC | Tangshan, PRC | Production and sales | 51.00 | 29.82 | Business combination under common control |
| Beijing Shougang Cold Rolling Co., Ltd. | Beijing, PRC | Beijing, PRC | Production and sales | 70.28 | -- | Establish or investment, etc. |
| Qian'an Shougang Metallurgical Technology Co., Ltd. | Qian’an, PRC | Qian’an, PRC | Consulting service | 100.00 | -- | Business combination under common control |
| Shougang Zhixin Qian'an Electromagnetic Materials Co., Ltd. | Qian’an, PRC | Qian’an, PRC | Production and sales | 100.00 | -- | Establish or investment, etc. |
| Beijing Shougang New Energy Automobile Material Technology Co., Ltd. | Qian’an, PRC | Qian’an, PRC | Production and sales | 64.29 | -- | Establish or investment, etc. |
| Beijing Shougang Steel Trading Investment Management Co., Ltd. | Beijing, PRC | Beijing, PRC | Production and sales | 51.00 | -- | Business combination under common control |
(2). Significant non-wholly owned subsidiaries
Unit：RMB Yuan
| Subsidiary | Shareholding of non-controlling interests (%) | Net profit/ (loss) attributable to non-controlling interests in reporting period | Dividends declared and distributed to non-controlling interests in reporting period | Non-controlling interests at the end of reporting period |
| Shougang Jingtang United Iron & Steel Co., Ltd. | 19.18 | 392,180,907.49 | -- | 5,472,564,141.02 |
| Beijing Shougang Cold Rolling Co., Ltd. | 29.72 | 12,111,869.67 | -- | -434,254,382.92 |
| Beijing Shougang Steel Trading Investment Management Co., Ltd. | 49.00 | 220,515,725.92 | -- | 4,703,679,944.23 |
(3) Major financial information of significant non-wholly owned subsidiaries
Unit：RMB Yuan
| Subsidiary | 31/12/2020 | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Shougang Jingtang United Iron & Steel Co., Ltd. | 14,059,270,920.30 | 71,145,567,255.55 | 85,204,838,175.85 | 37,188,390,465.32 | 19,992,708,121.06 | 57,181,098,586.38 |
| Beijing Shougang Cold Rolling Co., Ltd. | 1,490,147,711.17 | 4,268,819,475.85 | 5,758,967,187.02 | 1,582,846,978.81 | 5,633,442,048.18 | 7,216,289,026.99 |
| Beijing Shougang Steel Trading Investment Management Co., Ltd. | 7,412,249,175.07 | 9,256,712,881.65 | 16,668,962,056.72 | 7,300,343,767.67 | 5,822,605.25 | 7,306,166,372.92 |
Continued (1):
| Subsidiary | 31/12/2019 | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Shougang Jingtang United Iron & Steel Co., Ltd. | 11,881,191,449.18 | 70,776,790,831.56 | 82,657,982,280.74 | 36,967,775,096.14 | 19,344,562,845.34 | 56,312,337,941.48 |
| Beijing Shougang Cold Rolling Co., Ltd. | 1,449,807,066.29 | 4,549,948,995.36 | 5,999,756,061.65 | 1,644,115,581.18 | 5,858,064,579.96 | 7,502,180,161.14 |
| Beijing Shougang Steel Trading Investment Management Co., Ltd. | 6,513,019,066.50 | 903,529,243.88 | 7,416,548,310.38 | 6,394,701,114.62 | 4,586,726.79 | 6,399,287,841.41 |
Continued (2):
| Subsidiary | Current period | Prior period | ||||||
| Operating revenue | Net profit | Total comprehensive income | Cash flow from operating activities | Operating revenue | Net profit | Total comprehensive income | Cash flow from operating activities | |
| Shougang Jingtang United Iron & Steel Co., Ltd. | 43,685,024,160.13 | 1,675,290,645.88 | 1,675,290,645.88 | 6,825,110,017.00 | 36,189,924,483.50 | 1,024,880,097.27 | 1,024,880,097.27 | 2,375,586,203.10 |
| Beijing Shougang Cold Rolling Co., Ltd. | 8,721,456,245.22 | 40,753,262.67 | 40,753,262.67 | 286,447,510.65 | 7,696,233,920.49 | 6,024,982.53 | 6,024,982.53 | -46,591,184.16 |
| Beijing Shougang Steel Trading Investment Management Co., Ltd. | 870,677,653.85 | 450,137,492.87 | 450,137,492.87 | -26,937,175.44 | 645,124,444.88 | 5,124,466.43 | 5,124,466.43 | 96,373,076.82 |
2. Interests in joint ventures and associates
(1) Significant joint ventures and associates
| Joint ventures or associates | Main operating place | Place of registration | Business nature | Shareholding proportion (%) | Accounting method | |
| Direct | Indirect | |||||
| ①Jiont ventures | ||||||
| Tangshan Guoxing Industrial Co., Ltd. | Tangshan, PRC | Tangshan, PRC | Manufacturing | 50.00 | Equity method | |
| Tangshan Zhonghong Carbon Chemical Co., Ltd. | Tangshan, PRC | Tangshan, PRC | Chemical | 50.00 | Equity method | |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Tangshan, PRC | Tangshan, PRC | Coking | 50.00 | Equity method | |
| ②Associates | ||||||
| Tangshan Tangcao Railway Co., Ltd. | Tangshan, PRC | Tangshan, PRC | Transportation | 16.19 | Equity method | |
| Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | Tangshan, PRC | Tangshan, PRC | Building Material | 25.00 | Equity method | |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | Qian’an, PRC | Qian’an, PRC | Coking | 49.82 | Equity method | |
| Beijing Shouxin Jinyuan Management Consulting Center (Limited Partnership) | Beijing, PRC | Beijing, PRC | Investment | 20.00 | Equity method | |
| Beijing Dingshengcheng Packaging Materials Co., Ltd. | Beijing, PRC | Beijing, PRC | Manufacturing | 45.00 | Equity method | |
| Ningbo Shougang Zhejin Steel Co., Ltd. | Ningbo, PRC | Ningbo, PRC | Manufacturing | 40.00 | Equity method | |
| Guangzhou Jinghai Shipping Co., Ltd. | Guangzhou, PRC | Guangzhou, PRC | Transportation | 20.00 | Equity method | |
| Shougang (Qingdao) Steel Industry Co., Ltd. | Qingdao, PRC | Qingdao, PRC | Manufacturing | 35.00 | Equity method | |
| Guangdong Shougang Zhongshan Metal Steel Processing&Distribution Co., Ltd. | Guangzhou, PRC | Guangzhou, PRC | Manufacturing | 20.00 | Equity method | |
| Ordos Baotou Steel Shourui Material Technology Co., Ltd. | Ordos, PRC | Ordos, PRC | Manufacturing | 39.00 | Equity method | |
| Tianjin Shougang Steel Processing&Distribution Co., Ltd. | Tianjin, PRC | Tianjin, PRC | Manufacturing | 35.00 | Equity method | |
| Hebei Jingji Industry & Trading Co., Ltd. | Shijiazhuang, PRC | Shijiazhuang, PRC | Manufacturing | 35.71 | Equity method | |
(2) Primary financial information of significant joint ventures
| Items | Tangshan Guoxing Industrial Co., Ltd. | Tangshan Zhonghong Carbon Chemical Co., Ltd. | Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | |||
| 2020.12.31 | 2019.12.31 | 2020.12.31 | 2019.12.31 | 2020.12.31 | 2019.12.31 | |
| Current assets | 60,318,069.68 | 32,075,464.41 | 6,787,445.81 | 7,161,402.04 | 2,530,141,759.70 | 2,270,431,192.01 |
| Including： Cash and cash equivalents | 4,039,504.94 | 183,433.57 | 6,373,445.81 | 6,220,631.01 | 818,794,651.52 | 418,528,327.82 |
| Non-current assets | 63,563,529.32 | 70,133,241.93 | 742,585,489.79 | 736,281,354.41 | 1,777,873,986.27 | 2,007,056,849.60 |
| Total assets | 123,881,599.00 | 102,208,706.34 | 749,372,935.60 | 743,442,756.45 | 4,308,015,745.97 | 4,277,488,041.61 |
| Current liabilities | 55,567,287.83 | 43,831,336.24 | 531,871,072.97 | 504,666,538.81 | 1,825,155,516.05 | 559,182,858.08 |
| Non-current liabilities | 2,492,301.31 | 945,937.61 | -- | -- | 307,787,500.00 | 1,583,943,750.00 |
| Total liabilities | 58,059,589.14 | 44,777,273.85 | 531,871,072.97 | 504,666,538.81 | 2,132,943,016.05 | 2,143,126,608.08 |
| Net assets | 65,822,009.86 | 57,431,432.49 | 217,501,862.63 | 238,776,217.64 | 2,175,072,729.92 | 2,134,361,433.53 |
| Including: Non-controlling interests | -- | -- | -- | -- | -- | -- |
| Equity attributable to shareholders of the company | 65,822,009.86 | 57,431,432.49 | 217,501,862.63 | 238,776,217.64 | 2,175,072,729.92 | 2,134,361,433.53 |
| Net assets calculated by shareholding proportion | 32,911,004.94 | 28,715,716.25 | 108,750,931.30 | 119,388,108.81 | 1,087,536,364.97 | 1,067,180,716.78 |
| Adjustment | -- | -- | -- | -- | -- | -- |
| Including: Goodwill | -- | -- | -- | -- | -- | -- |
| Others | -- | -- | -- | -- | -- | -- |
| Carrying value of equity investment in the joint venture | 32,911,004.94 | 28,715,716.25 | 108,750,931.30 | 119,388,108.81 | 1,087,536,364.97 | 1,067,180,716.78 |
| Fair value of equity investment with quoted market price | -- | -- | -- | -- | -- | -- |
Continued:
| Items | Tangshan Guoxing Industrial Co., Ltd. | Tangshan Zhonghong Carbon Chemical Co., Ltd. | Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | |||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |
| Operating revenue | 80,117,784.81 | 49,090,881.11 | -- | -- | 7,350,697,535.09 | 7,889,128,204.38 |
| Financial expenses | 362,993.70 | 24,624.02 | 21,257,882.90 | 19,788,725.09 | 91,108,328.10 | 114,440,567.42 |
| Income tax expense | 2,796,859.12 | 1,532,418.14 | -- | 63,800.99 | 8,833,993.27 | |
| Net profit | 8,390,577.37 | 4,526,815.33 | -21,274,355.01 | -57,668,563.66 | 80,485,168.88 | 71,808,140.71 |
| Net profit from discontinuing operations | -- | -- | -- | -- | -- | -- |
| Other comprehensive income | -- | -- | -- | -- | -- | -- |
| Total comprehensive income | 8,390,577.37 | 4,526,815.33 | -21,274,355.01 | -57,668,563.66 | 80,485,168.88 | 71,808,140.71 |
| Dividends received from joint venture | -- | -- | -- | -- | 20,000,000.00 | 20,000,000.00 |
(3) Primary financial information of significant associates
| Items | Tangshan Tangcao Railway Co., Ltd. | Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | |||
| 2020.12.31 | 2019.12.31 | 2020.12.31 | 2019.12.31 | 2020.12.31 | 2019.12.31 | |
| Current assets | 196,664,337.03 | 275,045,534.91 | 126,778,258.13 | 112,850,617.01 | 2,142,096,795.97 | 2,004,737,886.87 |
| Non-current assets | 8,493,568,427.67 | 8,408,959,115.62 | 240,277,354.15 | 264,288,970.95 | 1,905,205,528.96 | 1,968,321,630.62 |
| Total assets | 8,690,232,764.70 | 8,684,004,650.53 | 367,055,612.28 | 377,139,587.96 | 4,047,302,324.93 | 3,973,059,517.49 |
| Current liabilities | 746,576,333.70 | 746,523,936.01 | 33,073,602.76 | 66,014,329.99 | 2,133,031,958.22 | 1,980,202,119.18 |
| Non-current liabilities | 5,164,162,916.48 | 5,157,987,200.00 | -- | -- | 11,180,546.68 | 11,878,127.32 |
| Total liabilities | 5,910,739,250.18 | 5,904,511,136.01 | 33,073,602.76 | 66,014,329.99 | 2,144,212,504.90 | 1,992,080,246.50 |
| Net assets | 2,779,493,514.52 | 2,779,493,514.52 | 333,982,009.52 | 311,125,257.97 | 1,903,089,820.03 | 1,980,979,270.99 |
| Including: Non-controlling interests | -- | -- | -- | -- | -- | -- |
| Equity attributable to shareholders of the company | 2,779,493,514.52 | 2,779,493,514.52 | 333,982,009.52 | 311,125,257.97 | 1,903,089,820.03 | 1,980,979,270.99 |
| Net assets calculated by shareholding proportion | 450,000,000.00 | 450,000,000.00 | 83,495,502.41 | 77,781,314.51 | 948,199,977.34 | 986,996,372.97 |
| Adjustment-goodwill | -- | -- | -- | -- | 4,147,420.21 | 4,147,420.21 |
| Carrying value of equity investment in the associates | 450,000,000.00 | 450,000,000.00 | 83,495,502.41 | 77,781,314.51 | 952,347,397.55 | 991,143,793.18 |
| Fair value of equity investment with quoted market price | -- | -- | -- | -- | -- | -- |
Continued:
| Items | Beijing Shouxin Jinyuan Management Consulting Center (Limited Partnership) | Beijing Dingshengcheng Packaging Materials Co., Ltd. | ||
| 2020.12.31 | 2019.12.31 | 2020.12.31 | 2019.12.31 | |
| Current assets | 598,504,465.05 | 1,022,994,630.61 | 38,077,883.76 | 36,252,312.04 |
| Non-current assets | 2,044,314,439.69 | -- | 485,332.49 | 328,695.69 |
| Total assets | 2,642,818,904.74 | 1,022,994,630.61 | 38,563,216.25 | 36,581,007.73 |
| Current liabilities | 483,805,460.10 | 3,861,658.94 | 13,372,193.62 | 13,390,467.77 |
| Non-current liabilities | -- | -- | -- | -- |
| Total liabilities | 483,805,460.10 | 3,861,658.94 | 13,372,193.62 | 13,390,467.77 |
| Net assets | 2,159,013,444.64 | 1,019,132,971.67 | 25,191,022.63 | 23,190,539.96 |
| Including: Non-controlling interests | -- | -- | -- | -- |
| Equity attributable to shareholders of the company | 2,159,013,444.64 | 1,019,132,971.67 | 25,191,022.63 | 23,190,539.96 |
| Net assets calculated by shareholding proportion | 431,802,688.93 | 203,826,594.33 | 11,335,960.18 | 10,435,742.99 |
| Adjustment-goodwill | -- | -- | 44,544.87 | 44,544.87 |
| Carrying value of equity investment in the associates | 431,802,688.92 | 203,826,594.33 | 11,380,505.05 | 10,480,287.86 |
| Fair value of equity investment with quoted market price | -- | -- | -- | -- |
Continued:
| Items | Tangshan Tangcao Railway Co., Ltd. | Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | |||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |
| Operating revenue | -- | -- | 464,761,681.90 | 383,670,512.68 | 6,567,974,662.78 | 6,913,378,291.52 |
| Net profit | -- | -- | 37,856,751.55 | 28,665,429.82 | 222,110,549.04 | 139,630,811.41 |
| Net profit from discontinuing operations | -- | -- | -- | -- | -- | -- |
| Other comprehensive income | -- | -- | -- | -- | -- | -- |
| Total comprehensive income | -- | -- | 37,856,751.55 | 28,665,429.82 | 222,110,549.04 | 139,630,811.41 |
| Dividend received from associates | -- | -- | 3,750,000.00 | 5,000,000.00 | 149,460,000.00 | -- |
| Items | Beijing Shouxin Jinyuan Management Consulting Center (Limited Partnership) | Beijing Dingshengcheng Packaging Materials Co., Ltd. | ||
| 2020 | 2019 | 2020 | 2019 | |
| Operating income | -- | -- | 126,204,932.84 | 101,033,864.73 |
| Net profit | 1,139,880,472.97 | 19,059,518.46 | 2,000,482.67 | 3,199,511.77 |
| Net profit from discontinuing operation | -- | -- | -- | -- |
| Other comprehensive income | -- | -- | -- | -- |
| Total comprehensive income | 1,139,880,472.97 | 19,059,518.46 | 2,000,482.67 | 3,199,511.77 |
| Dividend received from associates | -- | -- | -- | -- |
(4) Summary financial information of no significant joint ventures and associates
| 31.12.2020 or Current period | 31.12.2019 or Pervious period | |
| Associates | ||
| Total carrying value of investment | 182,983,769.62 | 189,348,844.85 |
| Items calculated according to shareholding ratio | ||
| Net profit | -3,226,619.53 | -9,519,494.11 |
| Other comprehensive income | -- | -- |
| Total comprehensive income | -3,226,619.53 | -9,519,494.11 |
3. Interests in unconsolidated structured entities
(1) Basic information of unconsolidated structured entities
The unconsolidated structured entity is the Limited Partnership initiated by the Company-Beijing Shouxin Jinyuan Management Consulting Center (Limited Partnership) (Hereinafterreferred to as Shouxin Jinyuan Fund or the Partnership). In accordance with the provisions ofthe limited partnership agreement, the company has no control over the Partnership.The purpose of establishing Shouxin Jinyuan Fund is combining the relevant policies ofBeijing on the development of sophisticated industry with the market-oriented operation ofM&A investment, actively responding to the strategic goal of Beijing to build a sophisticatedindustrial structure, promoting the upgrading and development of Beijing's sophisticatedindustry, contributing to the local economic development and industrial structure adjustmentof Beijing, and creating satisfactory return on investment for investors.The total subscribed capital of all partners to Shouxin Jinyuan Fund is no less than RMB onebillion. The partners of the Fund are divided into general partner and limited partner, thecontribution agreement is as follows: Beijing Shouyuan New Energy Investment ManagementCo., Ltd., the general partner, contributes RMB 10,000 thousand; and among the limitedpartners, the Company agrees to contribute RMB 200,000 thousand, and the other limitedpartners agrees to contribute RMB 790,000 thousand in total.As at 31 December 2020, Shouxin Jinyuan Fund has completed fund raising and registered onThe Chinese Association of Securities Investment Funds.As at 31 December 2020, Shouxin Jinyuan Fund has conducted investment activities andthree external investment projects has been invested with the amount of RMB 987,040.00thousand. No financing activity has been conducted by the Fund.
(2) Carrying value and maximum loss exposure of interests related assets and liabilitiesAs at 31 December 2020, no assets and liabilities related to the interests in Shouxin JinyuanFund recognized are recognized in the financial statements of the Company except for thepartner contribution agreed in the partner agreement. The maximum loss exposure of thecompany's interests in Shouxin Jinyuan Fund is RMB 197,408.00 thousand.
(3) As at 31 December 2020, the Company had no intention to provide financial support orother support for Shouxin Jinyuan Fund.
(4) As at 31 December 2020, no additional information related to Shouxin Jinyuan Fun shouldbe disclosed by the Company.VIII. Financial instruments and risk managementThe major financial instruments of the Company include cash and cash equivalents, notesreceivable, accounts receivable, other receivables, other current assets, other equityinstrument investments, notes payable, accounts payable, other payables, short-termborrowings, current portion of non-current liabilities, long-term borrowings and bondpayables. The details of financial instruments are disclosed in the respective notes. Risksrelate to these financial instruments and risk management policies used by the Company tominimize the risks are disclosed as below. Management of the Company manages andmonitors the risk exposures to ensure the risks are controlled in the limited range.
1. Objectives and policies of risk management
The objective of the Company in risk management is to obtain an appropriate equilibriumbetween risk and return, and also focuses on minimizing potential adverse effects on thefinancial performance of the Company bring by the unpredictability of financial risk. Basedon the objectives of risk management, certain policies are established to recognize andanalyze the risk. Also, in order to monitor the risk position of the Company, internal controlprocedures are designed according to acceptable level of risk. Both the policies and internalcontrol procedures are reviewed and revised regularly to adapt the changes of the market andbusiness activities of the Company.The primary risks caused by the financial instruments of the Company are credit risk andliquidity risk.
(1) Credit risk
Credit risk refers to the risk that the counterparty to a financial instrument would fail todischarge its obligation under the terms of the financial instrument and cause a financial lossto the Company.The Company manages the credit risk on combination basis. Credit risks are mainly causedby cash and cash equivalents, notes receivable, accounts receivable, other receivables etc.The Company mainly deposits in financial institutions with good reputation and high creditrating therefore no significant credit risk associated with cash and cash equivalents isexpected.In addition, policies related to limit the credit risk exposure on notes receivable, accountsreceivable and other receivables are established by the Company. The Company evaluatescredit quality and sets credit limits on customers by taking into account their financialposition, credit records and other factors such as current market conditions. The credit history
of the customers is regularly monitored by the Company. In respect of customers with a poorcredit history, the Company will use written payment reminders, or shorten or cancel creditperiods, to ensure the overall credit risk of the Company is limited to a controllable extent.The highest credit risk exposure to the Company is limited to the carrying value of eachfinancial instrument illustrated in the financial statements. The Company has not providedany guarantee that might cause credit risk to the Company.Among the accounts receivable of the Company, the accounts receivable of the top fivecustomers accounted for 42.24% (2019: 40.25%); among the other receivables of theCompany, the other receivables of the top five customers accounted for 64.41% (2019:
68.52%)
(2) Liquidity risk
Liquidity risk refers to the risks that the Company will not be able to meet its obligationsassociated with its financial liabilities that are settled by delivering cash or other financialassets.The Company maintains and monitors sufficient level of cash and cash equivalents asconsidered by the management while managing liquidity risk in order to meet operationalneeds of the Company and reduce the effect of floating cash flow. The usage of bank loan ismonitored by the management of the Company and the loan covenants are ensured to becomplied. Meanwhile, primary financial institution commits to provide sufficient reservefunds to satisfy the short term and long term fund requirement of the Company.
2. Capital management
The capital management policies are made to keep the continuous operation of the Company,to enhance the return to shareholders, to benefit other related parties and to maintain the bestcapital structure to minimize the cost of capital.To the maintenance or adjustment of the capital structure, the Company might adjust theamount of dividends paid to shareholders, return capital to shareholders, issue new shares ormake an asset disposal to reduce debt liabilities.The Company monitors the capital structure on the basis of leverage ratio (total liabilitiesdivided total assets). As at 31 December 2020, leverage ratio of the Company is 73.10% (31December 2019: 72.65%).IX. Fair valueFair value hierarchies are categorized into three levels as the lowest level input that issignificant to the entire fair value measurement.Level 1: inputs are quoted prices (unadjusted) in active markets for identical assets andliabilities.Level 2: inputs are inputs other than quoted prices included within Level 1 that are observablefor the asset or liability, either directly or indirectly.Level 3: inputs are unobservable inputs for the asset or liability.
(1) Fair value of assets and liabilities measured at fair value
As at 31 December 2020, assets and liabilities measured at fair value are shown as follows:
| Items | Level 1 fair value measurement | Level 2 fair value measurement | Level 3 fair value measurement | Total |
| I. Recurring fair value measurement | ||||
| (1) Financing receivable | -- | -- | 4,532,592,689.43 | 4,532,592,689.43 |
| (2) Other equity instrument investment | -- | 245,378,470.24 | 30,868,216.32 | 276,246,686.56 |
| Total assets measured at fair value on a recurring basis | -- | 245,378,470.24 | 4,563,460,905.75 | 4,808,839,375.99 |
The transformation point between different levels is recognized by the Company when theevent led to the transformation occurs. During 2020, the Company has no transformationbetween level 1 and level 2.For financial instruments with active market, the Company measures fair value at quotedprice in active market; for financial instrument without active market, the company measuresfair value using valuation techniques. Valuation models used are mainly cash flow discountmodel and market comparable entity model. Inputs include risk free interest rate, base rate,liquidity premium, lack of liquidity discount, etc.
(2) Fair values of items not measured at fair value
Financial assets and financial liabilities measured at amortized cost include: cash and cashequivalents, notes receivable, accounts receivable, other receivables, short-term borrowings,notes payable, accounts payable, other payables, long-term borrowings due within one year,long-term borrowings and bonds payable, etc.No additional details of financial assets and financial liabilities should be disclosed since thedifference between the fair value and carrying value of financial assets and financial liabilitiesof the Company is approximately equal.X. Related parties and related party transactions
1. Information about the parent company of the Company
| Parent company | Registration place | Business nature | Registered capital (RMB0,000) | Shareholding percentage （%） | Percentage of voting rights （%） |
| Shougang Group Co., Ltd. | Beijing | Company with limited liability(wholly state-owned) | 2,875,502.50 | 64.38 | 64.38 |
The ultimate controlling party of the Company is State-owned Assets Supervision andAdministration Commission of People’s Government of Beijing Municipality.During the reporting period, the change of the registered capital of the parent company is asfollows:
| As at 31.12.2019 | Addition | Reduction | As at 31.12.2020 |
| 2,875,502.50 | -- | -- | 2,875,502.50 |
2. Information about the subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII, 1.
3. Information about joint ventures and associates of the Company
For information about joint ventures and associates of the Company, refer to Note VII, 2.Joint ventures and associates that have related transactions with the Company in this year orthe previous year are as follows:
| Name of joint venture or associate | Relationship with the Company |
| Tangshan Guoxing Industrial Co., Ltd. | Joint ventures of the Company |
| Tangshan Zhonghong Carbon Chemical Co., Ltd. | Joint ventures of the Company |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Joint ventures of the Company |
| Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | Associates of the Company |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | Associates of the Company |
| Beijing Shouxin Jinyuan Management Consulting Center (Limited Partnership) | Associates of the Company |
| Beijing Dingshengcheng Packaging Materials Co., Ltd. | Associates of the Company |
| Ningbo Shougang Zhejin Steel Co., Ltd. | Associates of the Company |
| Guangzhou Jinghai Shipping Co., Ltd. | Associates of the Company |
| Shougang (Qingdao) Steel Industry Co., Ltd. | Associates of the Company |
| Guangdong Shougang Zhongshan Metal Steel Processing&Distribution Co., Ltd. | Associates of the Company |
| Ordos Baotou Steel Shourui Material Technology Co., Ltd. | Associates of the Company |
| Tianjin Shougang Steel Processing&Distribution Co., Ltd. | Associates of the Company |
| Hebei Jingji Industry & Trading Co., Ltd. | Associates of the Company |
4. Information about other related parties
| Related party | Relationship with the Company |
| Shougang Group Finance Co., Ltd. | Under the control of the same parent company |
| Shougang Mining Corporation | Under the control of the same parent company |
| China Shougang International Trade&Engineering Corporation | Under the control of the same parent company |
| Beijing Shougang Refractory& Metallurgical Burden Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Construction Group Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Gas Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Automation Information Technology Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Machinery&Electric Co., Ltd. | Under the control of the same parent company |
| Qinhuangdao Shougang Machinery Co., Ltd. | Under the control of the same parent company |
| Qian'an Shouxin Automation Information Technology Co., Ltd. | Under the control of the same parent company |
| Qian'an First Real Packaging Service Co., Ltd. | Under the control of the same parent company |
| Qian'an Shougang Equipment Structure Co., Ltd. | Under the control of the same parent company |
| Related party | Relationship with the Company |
| Beijing Soly Technology Co., Ltd. | Under the control of the same parent company |
| Beijing Shouye Instruments&Meters Co., Ltd. | Under the control of the same parent company |
| Beijing Shoujian equipment maintenance Co., Ltd. | Under the control of the same parent company |
| Beijing Shoujian Hengxin Labor Service Co., Ltd. | Under the control of the same parent company |
| Beijing Shoujian Hengji Construction Engineering Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Landscaping Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Huaxia International Trade Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang International Engineering&Technology Co., Ltd. | Under the control of the same parent company |
| Beijing Jinanyuan Automobile Transportation Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Xinganglian Technology&Trade Co., Ltd. | Under the control of the same parent company |
| Beijing Huaxia Technology Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Catering Co., Ltd. | Under the control of the same parent company |
| Beijing Shoujia Steel Construction Co., Ltd. | Under the control of the same parent company |
| Shougang Hospital Co. Ltd. | Under the control of the same parent company |
| Beijing Shougang Ferroalloy Co., Ltd. | Under the control of the same parent company |
| Lujiashan Limestone Mining of Shougang Beijing Co., Ltd. | Under the control of the same parent company |
| Qinhuangdao Shougang Krosaki Refractory Co., Ltd. | Under the control of the same parent company |
| Yantai Shougang Mining 3D Co., Ltd. | Under the control of the same parent company |
| Tianjin Shougang Electric Equipment Co., Ltd. | Under the control of the same parent company |
| Beijing Chengxin Engineering Supervision Co., Ltd. | Under the control of the same parent company |
| Beijing Shoucheng Packaging Service Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Materials Trading Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Futong Elevator Co., Ltd. | Under the control of the same parent company |
| Tangshan Caofeidian Industrial District Shouhanxin Industrial Co., Ltd. | Under the control of the same parent company |
| Tonghua Iron and Steel Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | Under the control of the same parent company |
| Shougang Environmental Industry Co., Ltd. | Under the control of the same parent company |
| Beijing Teyu Plate Co., Ltd. | Under the control of the same parent company |
| Qinhuangdao Zhongshou Logistics Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Mining Construction Co., Ltd. | Under the control of the same parent company |
| Qinhuangdao Shouqin Metal Materials Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Industrial Group Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Cultural Development Co., Ltd. | Under the control of the same parent company |
| Related party | Relationship with the Company |
| Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | Under the control of the same parent company |
| Shougang Casey Steel Co., Ltd. | Under the control of the same parent company |
| Tangshan Caofeidian First Real Industrial Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Fulushi Color Coated Plate Co., Ltd. | Under the control of the same parent company |
| Qiangang Hotel. | Under the control of the same parent company |
| Beijing Shougang Special Steel Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Yunxiang Industrial Technology Co., Ltd. | Under the control of the same parent company |
| Bohai International Conference Center Co., Ltd. | Under the control of the same parent company |
| Qian'an Shougang Xingkuang Industrial Co., Ltd. | Under the control of the same parent company |
| Tangshan Caofeidian Jingshou Industrial Co., Ltd. | Under the control of the same parent company |
| Beijing Huayue Aviation Service Co., Ltd. | Under the control of the same parent company |
| Shougang Guiyang Special Steel Co., Ltd. | Under the control of the same parent company |
| Tangshan Shoukuang Cleaning Iron Co., Ltd. | Under the control of the same parent company |
| China Peace International Travel Service Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Steel Distribution Co., Ltd | Under the control of the same parent company |
| Beijing Shougang Park Comprehensive Service Co., Ltd. | Under the control of the same parent company |
| Beijing Shouao Real Estate Co., Ltd | Under the control of the same parent company |
| Beijing Shouxinsheng Trading Co., Ltd. | Under the control of the same parent company |
| Tonggang Jilin Welded Pipe Co., Ltd | Under the control of the same parent company |
| Qinhuangdao Shougang Plate Mill Co., Ltd. | Under the control of the same parent company |
| Qinhuangdao Shougang Racing Valley Co., Ltd | Under the control of the same parent company |
| Hebei Shougang Jingtang Machinery Co., Ltd. | Under the control of the same parent company |
| Jilin Tonggang International Trade Co., Ltd. | Under the control of the same parent company |
| South China International Leasing Co., Ltd | Under the control of the same parent company |
| Beijing Shougang Langze New Energy Technology Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Equipment Technology Co., Ltd. | Under the control of the same parent company |
| Beijing Shouronghui Technology Development Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Industrial Co., Ltd. | Under the control of the same parent company |
| Bejing Shougang International Travel Co., Ltd. | Under the control of the same parent company |
| Beijing Huayu Information Technology Co., Ltd. | Under the control of the same parent company |
| Ningbo Metallurgical Investigation, Design&Research Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Mining Investment Co., Ltd | Under the control of the same parent company |
| Beijing Shougang Property Management Co., Ltd. | Under the control of the same parent company |
| Related party | Relationship with the Company |
| Beijing Beiye Functional Materials Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Jitaian New Material Co., Ltd. | Under the control of the same parent company |
| Tangshan Caofeidian Industrial Zone Jingtang Industrial Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Metal Co., Ltd. | Under the control of the same parent company |
| Beijing Shoujian Centralized Trading Co., Ltd. | Under the control of the same parent company |
| Ningbo Shoude Bonded zone Trading Co., Ltd. | Under the control of the same parent company |
| Shougang Changzhi Steel&Iron Co., Ltd. | Under the control of the same parent company |
| Guizhou Bohong Industrial Co., Ltd. | Under the control of the same parent company |
| Shougang Shuicheng Steel (Group) Saide Construction Co., Ltd. | Under the control of the same parent company |
| Dachang Shougang Machinery&Electric Co., Ltd. | Under the control of the same parent company |
| Huludao Shougang Donghua Machinery Co., Ltd. | Under the control of the same parent company |
| Huludao Shougang Donghua Pipe Industry Co., Ltd. | Under the control of the same parent company |
| Beijing Shoushe Metallurgical Technology Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Beijing Shougang Kuangshan Hospital Co., Ltd | Joint ventures or associates of the Company’s parent company |
| Jingxi Shoutang Supply Chain Management Co., Ltd | Joint ventures or associates of the Company’s parent company |
| Jingxi (Guizhou) Supply Chain Management Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Jiangsu Capital Holdings Manufacturing Technology Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Beijing Shougang Resources Comprehensive Utilization Technology Development Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Beijing Shougang Shape Metal Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Beijing Thermal Zhongda Heat Exchange Equipment Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| PetroChina Shougang (Beijing) Petroleumsales Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Beijing Shouyu Industry and Trade Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Beijing Xingyeda Machinery&Electric Equipment Manufacture Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Chaoyang Shougang Beifang Machinery Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Tangshan Caofeidian Ganglian Logistics Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Tangshan Caofeidian Industry Port Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| YASKAWA Shougang Robert Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Cmi Engineering (Beijing) Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Hua Xia Bank Co.,Ltd. | Joint ventures or associates of the Company’s parent company |
| Related party | Relationship with the Company |
| Qian'an Shoujia Construction Material Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Sanhe Shoujia Construction Material Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Beijing Shoubang New Material Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Jingtang Port Shougang Terminal Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Beijing Shougang Zhongye Machinery & Electric Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Beijing Shoutegang Yuandong Magnesium Alloy Products Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Suzhou Tonggang Shunye Steel Materials Processing Distribution Co., Ltd. | Joint ventures or associates of the Company’s parent company |
| Directors, Supervisors, CFO and Board Secretary | Key management personnel |
5. Information about related party transactions
(1) Details of related purchase and sales
①Purchase of goods and receiving of services from related parties
| Related party | Nature of transaction | 2020 | 2019 |
| Shougang Group Co., Ltd. | Raw material | 22,475,432,877.92 | 15,425,330,532.57 |
| Shougang Group Co., Ltd. | Fuel material | 839,111,830.96 | 928,205,109.08 |
| Shougang Group Co., Ltd. | Engineering equipment | 184,224,527.54 | -- |
| Shougang Group Co., Ltd. | Spare parts | 8,688,006.35 | 20,912,594.33 |
| Shougang Group Co., Ltd. | Production service | 21,908,162.53 | 3,568,781.04 |
| Shougang Group Co., Ltd. | Fund usage charges | 80,236,212.32 | 130,252,367.90 |
| Shougang Group Finance Co., Ltd. | Fund usage charges | 261,805,906.55 | 341,246,766.05 |
| Shougang Mining Corporation | Raw material | 10,039,993,073.26 | 8,574,990,158.95 |
| Shougang Mining Corporation | Power energy | 46,362,132.70 | 37,011,261.81 |
| Shougang Mining Corporation | Spare parts | 3,279,442.20 | 8,952,794.02 |
| Shougang Mining Corporation | Production service | 101,071,134.26 | 68,195,152.75 |
| Shougang Mining Corporation | Engineering equipment | 4,189,075.78 | 1,778,613.63 |
| China Shougang International Trade&Engineering Corporation | Export cost | 61,090,346.95 | 49,965,746.36 |
| China Shougang International Trade&Engineering Corporation | Fuel material | -- | 15,982,725.00 |
| China Shougang International Trade&Engineering Corporation | Raw material | 245,622,956.58 | 81,188,865.49 |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | Fuel material | 5,547,403,153.11 | 5,709,176,730.89 |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | Power energy | 439,201,428.59 | 427,839,224.47 |
| Beijing Shougang Refractory& Metallurgical Burden Co., Ltd. | Production service | 26,199,618.34 | 23,011,756.44 |
| Related party | Nature of transaction | 2020 | 2019 |
| Beijing Shougang Refractory& Metallurgical Burden Co., Ltd. | Auxiliary material | 2,926,927.87 | 35,151,689.38 |
| Beijing Shougang Refractory& Metallurgical Burden Co., Ltd. | Engineering service | 2,070,531.19 | 22,588,183.90 |
| Beijing Shougang Construction Group Co., Ltd. | Production service | 462,954,574.43 | 447,111,964.43 |
| Beijing Shougang Construction Group Co., Ltd. | Spare parts | 14,198,456.80 | 12,145,220.50 |
| Beijing Shougang Construction Group Co., Ltd. | Engineering equipment | 6,528,973.48 | 10,057,119.32 |
| Beijing Shougang Construction Group Co., Ltd. | Engineering service | 758,031,421.11 | 862,388,647.36 |
| Beijing Shougang Gas Co., Ltd. | Spare parts | 517,927.82 | 476,100.00 |
| Beijing Shougang Gas Co., Ltd. | Production service | 48,834,170.58 | 42,020,530.72 |
| Beijing Shougang Gas Co., Ltd. | Power energy | 88,465,933.43 | 83,070,684.93 |
| Beijing Shougang Gas Co., Ltd. | Auxiliary material | 11,803,452.97 | 9,186,947.82 |
| Beijing Shougang Automation Information Technology Co., Ltd. | Production service | 279,808,663.52 | 214,498,514.78 |
| Beijing Shougang Automation Information Technology Co., Ltd. | Spare parts | 5,778,449.10 | 7,349,173.00 |
| Beijing Shougang Automation Information Technology Co., Ltd. | Engineering service | 128,942,106.56 | 157,810,593.68 |
| Beijing Shougang Automation Information Technology Co., Ltd. | Engineering equipment | 120,428,074.99 | 262,928,432.01 |
| Beijing Shougang Machinery&Electric Co., Ltd. | Spare parts | 104,611,424.62 | 155,541,128.77 |
| Beijing Shougang Machinery&Electric Co., Ltd. | Production service | 210,197,665.05 | 118,853,124.83 |
| Beijing Shougang Machinery&Electric Co., Ltd. | Engineering equipment | 4,834,316.85 | 30,836,322.22 |
| Beijing Shougang Machinery&Electric Co., Ltd. | Engineering service | -- | 62,838.18 |
| Qinhuangdao Shougang Machinery Co., Ltd. | Spare parts | 48,022,099.00 | 31,618,421.00 |
| Qinhuangdao Shougang Machinery Co., Ltd. | Production service | 113,037,965.98 | 69,940,621.26 |
| Qinhuangdao Shougang Machinery Co., Ltd. | Auxiliary material | 108,800.00 | 880,000.00 |
| Qinhuangdao Shougang Machinery Co., Ltd. | Engineering equipment | 2,799,784.00 | 20,090,103.92 |
| Qian'an Shouxin Automation Information Technology Co., Ltd. | Production service | 111,609,021.92 | 119,047,982.00 |
| Qian'an First Real Packaging Service Co., Ltd. | Production service | 200,751,734.25 | 161,718,265.73 |
| Qian'an First Real Packaging Service Co., Ltd. | Raw material | 7,369,162.70 | 37,874,035.56 |
| Qian'an Shougang Equipment Structure Co., Ltd. | Spare parts | 26,631,135.84 | 8,747,649.50 |
| Qian'an Shougang Equipment Structure Co., Ltd. | Production service | 58,442,769.12 | 47,815,296.04 |
| Qian'an Shougang Equipment Structure Co., Ltd. | Engineering equipment | 1,399,569.04 | 26,530,109.39 |
| Qian'an Shougang Equipment Structure Co., Ltd. | Engineering service | 3,013,922.79 | 2,443,953.21 |
| Qian'an Shougang Equipment Structure Co., Ltd. | Raw material | 211,923,588.96 | 5,524,164.94 |
| Huludao Shougang Donghua Machinery Co., Ltd. | Spare parts | 6,440,584.00 | 13,503,870.92 |
| Huludao Shougang Donghua Machinery Co., Ltd. | Production service | 38,443,490.00 | 35,447,893.60 |
| Huludao Shougang Donghua Machinery Co., Ltd. | Engineering equipment | 7,399,092.61 | 1,134,823.98 |
| Related party | Nature of transaction | 2020 | 2019 |
| Beijing Soly Technology Co., Ltd. | Engineering equipment | 353,801.34 | 575,170.00 |
| Beijing Shouye Instruments&Meters Co., Ltd. | Spare parts | 39,934,823.79 | 33,420,805.93 |
| Beijing Shouye Instruments&Meters Co., Ltd. | Engineering equipment | 837,828.50 | -- |
| Beijing Shoujian Equipment Maintenance Co., Ltd. | Production service | 57,321,699.12 | 52,385,418.90 |
| Beijing Shoujian Equipment Maintenance Co., Ltd. | Auxiliary material | 2,138,400.00 | -- |
| Beijing Shoujian Hengxin Labor Service Co., Ltd. | Production service | 1,935,000.00 | 1,844,435.55 |
| Beijing Shoujian Hengji Construction Engineering Co., Ltd. | Spare parts | 560,348.00 | 374,702.30 |
| Beijing Shougang Landscaping Co., Ltd. | Life service | 14,216,782.92 | 26,750,116.85 |
| Beijing Shougang Landscaping Co., Ltd. | Engineering service | 2,670,354.40 | 2,234,477.70 |
| Beijing Shougang Huaxia International Trade Co., Ltd. | Spare parts | 4,960,000.00 | 7,891,127.19 |
| Beijing Shougang Huaxia International Trade Co., Ltd. | Raw material | -- | 57,227,366.92 |
| Beijing Shougang International Engineering&Technology Co., Ltd. | Spare parts | 7,746,855.00 | 3,293,988.00 |
| Beijing Shougang International Engineering&Technology Co., Ltd. | Engineering equipment | 267,038,760.67 | 271,843,498.28 |
| Beijing Shougang International Engineering&Technology Co., Ltd. | Engineering service | 1,387,188,083.59 | 1,159,795,094.46 |
| Beijing Shougang International Engineering&Technology Co., Ltd. | Production service | 645,886.79 | 1,105,774.00 |
| Beijing Jinanyuan Automobile Transportation Co., Ltd. | Production service | 67,580,189.65 | 66,732,849.79 |
| Beijing Shougang Xinganglian Technology&Trade Co., Ltd. | Production service | 30,436,073.78 | 34,507,421.25 |
| Beijing Shougang Xinganglian Technology&Trade Co., Ltd. | Auxiliary material | -- | 25,650,434.02 |
| Beijing Huaxia Technology Co., Ltd. | Spare parts | 3,792,279.26 | 3,017,378.43 |
| Beijing Huaxia Technology Co., Ltd. | Engineering equipment | 6,569,745.73 | -- |
| Beijing Huaxia Technology Co., Ltd. | Production service | 577,586.00 | -- |
| Beijing Shougang Catering Co., Ltd. | Life service | 31,571,639.79 | 30,076,116.28 |
| Beijing Shoujia Steel Construction Co., Ltd. | Production service | 25,231,426.92 | 15,001,207.08 |
| Shougang Hospital Co. Ltd | Life service | 6,369,334.59 | 8,344,330.04 |
| Beijing Shougang Ferroalloy Co., Ltd. | Raw material | 279,689,952.60 | 256,233,245.83 |
| Lujiashan Limestone Mining of Shougang Beijing Co.,Ltd. | Raw material | 110,828,669.76 | 106,745,309.77 |
| Lujiashan Limestone Mining of Shougang Beijing Co.,Ltd. | Production service | 23,047,011.45 | 6,213,750.99 |
| Lujiashan Limestone Mining of Shougang Beijing Co.,Ltd. | Auxiliary material | 2,952,512.20 | 714,241.37 |
| Qinhuangdao Shougang Krosaki Refractory Co., Ltd. | Auxiliary material | 126,746,773.19 | 123,446,064.55 |
| Qinhuangdao Shougang Krosaki Refractory Co., Ltd. | Engineering equipment | -- | 12,518,192.00 |
| Yantai Shougang Mining 3D Co., Ltd. | Spare parts | 10,791.62 | 291,580.05 |
| Tianjin Shougang Electric Equipment Co., Ltd. | Engineering equipment | 15,921,274.20 | 20,814,461.07 |
| Tianjin Shougang Electric Equipment Co., Ltd. | Spare parts | 3,439,500.00 | -- |
| Related party | Nature of transaction | 2020 | 2019 |
| Beijing Chengxin Engineering Supervision Co., Ltd. | Engineering service | 6,963,853.88 | 10,221,801.27 |
| Beijing Chengxin Engineering Supervision Co., Ltd. | Production service | -- | 182,075.48 |
| Beijing Shoucheng Packaging Service Co., Ltd. | Production service | 95,092,358.74 | 88,764,826.69 |
| Beijing Shougang Materials Trading Co., Ltd. | Fuel material | 119,602,059.49 | 93,412,206.47 |
| Beijing Shougang Materials Trading Co., Ltd. | Raw material | 692,506,744.95 | 501,003,231.60 |
| Beijing Shougang Materials Trading Co., Ltd. | Production service | 2,749,073.71 | -- |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Power energy | 905,225,354.25 | 902,058,261.99 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Fuel material | 8,843,642,545.42 | 8,646,318,959.07 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Raw material | 1,507,652.53 | 1,411,956.90 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Production service | 28,235,067.39 | -- |
| Beijing Shougang Futong Elevator Co., Ltd. | Spare parts | 59,440.00 | 433,075.00 |
| Beijing Shougang Futong Elevator Co., Ltd. | Production service | 1,211,800.00 | 577,068.97 |
| Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | Production service | 64,699,765.33 | 116,901,828.23 |
| Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | Spare parts | 10,676,027.00 | 16,424,561.47 |
| Tangshan Guoxing Industrial Co., Ltd. | Production service | 77,687,880.63 | 38,316,953.44 |
| Tangshan Guoxing Industrial Co., Ltd. | Spare parts | -- | 1,976,600.00 |
| Tangshan Guoxing Industrial Co., Ltd. | Fuel material | -- | 747,170.99 |
| Tangshan Guoxing Industrial Co., Ltd. | Engineering service | 988,895.30 | 3,682,543.70 |
| Tangshan Caofeidian Industrial District Shouhanxin Industrial Co., Ltd. | Production service | 346,895,130.34 | 337,362,439.03 |
| Tonghua Iron and Steel Co., Ltd. | Engineering equipment | -- | 100,789,692.06 |
| Tonghua Iron and Steel Co., Ltd. | Raw material | 2,247,601.84 | 204,456,645.81 |
| Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | Production service | 18,833.33 | 450,000.00 |
| Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | Engineering equipment | 1,362,800.00 | -- |
| Shougang Environmental Industry Co., Ltd. | Production service | 3,595,964.43 | 2,917,451.84 |
| Beijing Teyu Plate Co., Ltd. | Raw material | -- | 3,580,817.93 |
| Beijing Teyu Plate Co., Ltd. | Engineering equipment | 85,421,473.13 | -- |
| Qinhuangdao Zhongshou Logistics Co., Ltd. | Raw material | 1,271,692.78 | 12,322,833.89 |
| Beijing Shougang Mining Construction Co., Ltd. | Engineering service | 7,750,568.08 | 30,114,337.84 |
| Beijing Shougang Mining Construction Co., Ltd. | Production service | 429,992.00 | -- |
| Qinhuangdao Shouqin Metal Materials Co., Ltd. | Engineering equipment | -- | 3,706,128.56 |
| Qinhuangdao Shouqin Metal Materials Co., Ltd. | Raw material | 14,565,774.93 | 2,440,449.31 |
| Beijing Shougang Industrial Group Co., Ltd. | Life service | 8,392,406.50 | 1,587,534.37 |
| Beijing Shougang Shape Metal Co., Ltd. | Raw material | 1,448,649.56 | 1,004,008.95 |
| Related party | Nature of transaction | 2020 | 2019 |
| Beijing Dingshengcheng Packaging Materials Co., Ltd. | Production service | 119,980,137.18 | 99,899,345.64 |
| Beijing Dingshengcheng Packaging Materials Co., Ltd. | Auxiliary material | 1,045,368.00 | -- |
| Beijing Shougang Cultural Development Co., Ltd. | Production service | 448,351.70 | 188,679.25 |
| Jingxi (Guizhou) Supply Chain Management Co., Ltd. | Raw material | 7,894,247.79 | 72,644,648.46 |
| Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | Spare parts | 158,382.00 | 66,420.00 |
| Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | Raw material | -- | 2,792,411.50 |
| Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | Production service | 2,672,600.00 | 5,050,207.48 |
| Shougang Casey Steel Co., Ltd. | Production service | 85,312,691.44 | 74,672,046.11 |
| Tangshan Caofeidian First Real Industrial Co., Ltd. | Life service | 25,094,469.60 | 13,199,256.60 |
| Beijing Shougang Fulushi Color Coated Plate Co., Ltd. | Engineering equipment | -- | 17,022,018.50 |
| Qiangang Hotel. | Production service | 20,242,271.63 | 606,948.76 |
| Beijing Shougang Special Steel Co., Ltd. | Engineering equipment | -- | 102,565,023.77 |
| Beijing Shougang Special Steel Co., Ltd. | Production service | 7,257,200.37 | -- |
| Beijing Shougang Special Steel Co., Ltd. | Power energy | 99,547.79 | -- |
| Beijing Shougang Yunxiang Industrial Technology Co., Ltd. | Spare parts | 4,903,800.00 | 1,268,805.00 |
| Beijing Shougang Resources Comprehensive Utilization Technology Development Co., Ltd. | Raw material | -- | 16,002,746.00 |
| Beijing Shougang Resources Comprehensive Utilization Technology Development Co., Ltd. | Engineering equipment | -- | 32,508,824.69 |
| Bohai International Conference Center Co., Ltd. | Life service | 51,282.08 | 439,362.26 |
| Hebei Shoulang New Energy Technology Co., Ltd. | Power energy | 3,807,785.65 | 2,761,596.34 |
| Qian'an Shougang Xingkuang Industrial Co., Ltd. | Auxiliary material | 36,920,253.85 | 19,491,647.24 |
| Tangshan Caofeidian Jingshou Industrial Co., Ltd. | Spare parts | -- | 6,853,547.00 |
| Beijing Thermal Zhongda Heat Exchange Equipment Co., Ltd. | Spare parts | 19,795,045.90 | -- |
| Beijing Thermal Zhongda Heat Exchange Equipment Co., Ltd. | Production service | 11,504,293.00 | -- |
| Guangzhou Jinghai Shipping Co., Ltd. | Production service | 328,058,660.14 | 230,761,765.54 |
| PetroChina Shougang (Beijing) Petroleumsales Co., Ltd. | Spare parts | 42,519,088.05 | -- |
| PetroChina Shougang (Beijing) Petroleumsales Co., Ltd. | Production service | 789,805.94 | -- |
| Beijing Huayue Aviation Service Co., Ltd. | Life service | 4,340.72 | -- |
| Beijing Shoushe Metallurgical Technology Co., Ltd. | Life service | 102,902.26 | -- |
| Beijing Shouyu Industry and Trade Co., Ltd. | Auxiliary material | 10,164,440.09 | -- |
| Beijing Xingyeda Machinery&Electric Equipment Manufacture Co., Ltd. | Auxiliary material | 512,301.01 | -- |
| Chaoyang Shougang Beifang Machinery Co., Ltd. | Spare parts | 675,850.08 | -- |
| Shougang Guiyang Special Steel Co., Ltd. | Auxiliary material | 8,524,748.29 | -- |
| Shougang Guiyang Special Steel Co., Ltd. | Engineering equipment | 20,788,717.99 | -- |
| Related party | Nature of transaction | 2020 | 2019 |
| Tangshan Caofeidian Ganglian Logistics Co., Ltd. | Production service | 758,402.74 | -- |
| Tangshan Caofeidian Industry Port Co., Ltd. | Production service | 401,422,352.04 | -- |
| Tangshan Shoukuang Cleaning Iron Co., Ltd. | Raw material | 109,839,833.78 | -- |
| Tangshan Shoukuang Cleaning Iron Co., Ltd. | Production service | 132,782,532.37 | -- |
| Tianjin Shougang Steel Processing&Distribution Co., Ltd. | Production service | 4,954,693.41 | 3,640,759.36 |
| Tianjin Shougang Steel Processing&Distribution Co., Ltd. | Raw material | 35,232,137.78 | 209,356.21 |
| China Peace International Travel Service Co., Ltd. | Life service | 8,000.00 | -- |
| Beijing Shougang Steel Distribution Co., Ltd | Engineering equipment | 225,450.78 | -- |
| Shougang (Qingdao) Steel Industry Co., Ltd. | Raw material | 270,933.68 | 5,446.89 |
| Guangdong Shougang Zhongshan Metal Steel Processing&Distribution Co., Ltd. | Production service | -- | 55,459.33 |
| Beijing Shougang Kuangshan Hospital Co., Ltd | Life service | 1,929,427.00 | 1,476,833.00 |
| Beijing Shougang Park Comprehensive Service Co., Ltd. | Life service | 464,322.39 | -- |
| YASKAWA Shougang Robert Co., Ltd. | Production service | 17,000.00 | -- |
| Beijing Shouxinsheng Trading Co., Ltd. | Raw material | 60,505,643.28 | -- |
| Tonggang Jilin Welded Pipe Co., Ltd | Auxiliary material | 125,440.00 | -- |
| Qinhuangdao Shougang Plate Mill Co., Ltd. | Engineering equipment | 833,333.33 | -- |
| Qinhuangdao Shougang Racing Valley Co., Ltd | Production service | 609,269.80 | -- |
| Hebei Shougang Jingtang Machinery Co., Ltd. | Production service | 1,092,932.10 | -- |
| Beijing Shouao Real Estate Co., Ltd | Life service | 50,400.00 | -- |
| Cmi Engineering (Beijing) Co., Ltd. | Engineering equipment | 2,740,000.00 | -- |
| Jilin Tonggang International Trade Co., Ltd. | Raw material | 2,619,614.95 | -- |
| Ningbo Shougang Zhejin Steel Co., Ltd. | Production service | 12,059.42 | -- |
| South China International Leasing Co., Ltd | Fund usage charges | 317,749.91 | -- |
| Beijing Shouxin Jinyuan Management Consulting Center (Limited Partnership) | Fund usage charges | 5,276,712.33 | -- |
②Sale of goods and rendering of services to related parties
| Related party | Nature of transaction | 2020 | 2019 |
| Shougang Group Co., Ltd. | Management service | 388,673,540.30 | 370,745,020.29 |
| Shougang Group Co., Ltd. | Interest income | 21,582,482.08 | -- |
| Shougang Group Co., Ltd. | Production service | 16,269,090.54 | -- |
| Shougang Mining Corporation | Steel | 9,123,594.10 | 6,791,709.30 |
| Shougang Mining Corporation | Raw fuel material | 324,518,330.13 | 170,297,290.32 |
| Shougang Mining Corporation | Power energy | 360,465,665.25 | 369,371,013.03 |
| Related party | Nature of transaction | 2020 | 2019 |
| Shougang Mining Corporation | Production service | -- | 16,286,612.00 |
| Shougang Group Finance Co., Ltd. | Interest income | 108,641,085.66 | 89,697,571.81 |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | Power energy | 181,315,533.79 | 200,061,363.49 |
| Shougang Casey Steel Co., Ltd. | Steel | 481,920,723.73 | 253,514,239.52 |
| Beijing Shougang Xinganglian Technology&Trade Co., Ltd. | Steel | 259,068,925.83 | 1,327,021,632.07 |
| Beijing Shougang Construction Group Co., Ltd. | Power energy | 4,352,003.39 | 7,613,401.69 |
| Beijing Shougang Construction Group Co., Ltd. | Steel | 26,296,712.93 | 32,142,624.82 |
| Beijing Shougang Construction Group Co., Ltd. | Production service | 1,802,409.81 | 208,000.00 |
| Beijing Shougang Gas Co., Ltd. | Power energy | 137,638,625.60 | 134,452,950.60 |
| Beijing Shougang Machinery&Electric Co., Ltd. | Steel | 18,541,669.74 | 13,752,872.81 |
| Beijing Shougang Machinery&Electric Co., Ltd. | Power energy | 2,612,156.17 | 2,389,168.65 |
| Beijing Shougang Machinery&Electric Co., Ltd. | Production service | 3,627,733.33 | 2,840,000.00 |
| Beijing Shougang Ferroalloy Co., Ltd. | Power energy | 4,149,978.58 | 3,661,793.11 |
| Beijing Shougang Ferroalloy Co., Ltd. | Raw fuel material | 20,863,176.66 | 16,542,542.44 |
| Beijing Shougang Ferroalloy Co., Ltd. | Production service | 449,154.05 | 493,044.05 |
| Beijing Shougang Ferroalloy Co., Ltd. | Steel | 40,223,043.89 | -- |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Power energy | 597,223,735.88 | 564,148,285.44 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Production service | 174,213,431.05 | 176,641,061.76 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Raw fuel material | -- | 172,674.55 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Spare parts | -- | 343,324.00 |
| Beijing Beiye Functional Materials Co., Ltd. | Billet | 9,117,278.51 | 7,366,113.97 |
| Beijing Beiye Functional Materials Co., Ltd. | Production service | -- | 384,905.66 |
| Beijing Shougang Jitaian New Material Co., Ltd. | Billet | -- | 1,108,792.50 |
| Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | Power energy | -- | 39,123.00 |
| Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | Raw fuel material | 6,755,827.81 | 7,750,607.02 |
| Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | Production service | 118,539.00 | 133,523.81 |
| Beijing Shoucheng Packaging Service Co., Ltd. | Steel | 16,958,330.51 | 11,522,208.24 |
| Beijing Shoucheng Packaging Service Co., Ltd. | Power energy | 339,453.51 | 315,078.53 |
| Beijing Shoucheng Packaging Service Co., Ltd. | Production service | 1,712,510.00 | 758,312.49 |
| Qian'an First Real Packaging Service Co., Ltd. | Steel | 88,324,141.23 | 103,759,574.00 |
| Beijing Shouronghui Technology Development Co., Ltd. | Steel | -- | 6,608,317.76 |
| Related party | Nature of transaction | 2020 | 2019 |
| Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | Raw fuel material | 220,204,663.36 | 169,307,874.01 |
| Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | Power energy | 116,463,776.95 | 97,078,359.14 |
| Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | Production service | 23,682,420.06 | 14,439,797.30 |
| Jilin Tonggang International Trade Co., Ltd. | Steel | -- | 107,008,056.82 |
| Beijing Shougang International Engineering&Technology Co., Ltd. | Steel | -- | 2,857,231.84 |
| Beijing Shougang International Engineering&Technology Co., Ltd. | Power energy | 171,321.90 | 2,462,539.74 |
| Beijing Shougang International Engineering&Technology Co., Ltd. | Production service | 1,530,566.04 | -- |
| Beijing Shougang Metal Co., Ltd. | Steel | 41,942,213.93 | 19,773,832.46 |
| Beijing Shougang Metal Co., Ltd. | Power energy | 1,543,520.62 | 689,706.52 |
| Beijing Shougang Metal Co., Ltd. | Production service | 2,521,467.89 | 2,399,908.26 |
| Huludao Shougang Donghua Machinery Co., Ltd. | Production service | -- | 68,571.43 |
| Qinhuangdao Shouqin Metal Materials Co., Ltd. | Steel | 507,696,108.99 | 352,885,301.56 |
| Beijing Shougang Mining Construction Co., Ltd. | Steel | 3,680,894.15 | 6,158,563.95 |
| Tangshan Caofeidian Industrial District Shouhanxin Industrial Co., Ltd. | Steel | -- | 21,165,858.24 |
| Qinhuangdao Shougang Machinery Co., Ltd. | Raw fuel material | 443,666,813.98 | 345,954,765.97 |
| Qinhuangdao Shougang Machinery Co., Ltd. | Power energy | 304,923.67 | 124,916.40 |
| Qian'an Shougang Equipment Structure Co., Ltd. | Power energy | 20,002.50 | 17,638.22 |
| Qian'an Shougang Equipment Structure Co., Ltd. | Production service | 144,000.00 | 130,285.71 |
| Qian'an Shougang Equipment Structure Co., Ltd. | Steel | 3,911,445.31 | -- |
| Tangshan Guoxing Industrial Co., Ltd. | Power energy | 783,910.67 | 280,770.63 |
| Tangshan Guoxing Industrial Co., Ltd. | Raw fuel material | 57,837.12 | 261,251.65 |
| Tangshan Guoxing Industrial Co., Ltd. | Production service | 1,259,047.62 | 629,523.81 |
| Tangshan Caofeidian Industrial Zone Jingtang Industrial Co., Ltd. | Power energy | 119,962.50 | 77,437.50 |
| Tangshan Caofeidian First Real Industrial Co., Ltd. | Power energy | 906,346.18 | 794,987.04 |
| Beijing Shougang Automation Information Technology Co., Ltd. | Power energy | 80,430.00 | 138,558.00 |
| Beijing Shougang Automation Information Technology Co., Ltd. | Spare parts | 1,443,067.62 | 430,317.54 |
| Beijing Shougang Automation Information Technology Co., Ltd. | Production service | 237,735.85 | -- |
| Hebei Shoulang New Energy Technology Co., Ltd. | Power energy | 124,893,707.64 | 125,702,137.33 |
| Hebei Shoulang New Energy Technology Co., Ltd. | Production service | 5,142,857.14 | 92,567.10 |
| Beijing Jinanyuan Automobile Transportation Co., Ltd. | Production service | 215,148.25 | 205,714.29 |
| Related party | Nature of transaction | 2020 | 2019 |
| Tonghua Iron and Steel Co., Ltd. | Raw fuel material | 137,737,917.92 | 93,907,786.53 |
| Lujiashan Limestone Mining of Shougang Beijing Co.,Ltd. | Raw fuel material | 2,248,938.88 | 102,525.30 |
| Beijing Shoujian Centralized Trading Co., Ltd. | Steel | -- | 39,244,874.65 |
| Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | Steel | 245,150.45 | -- |
| Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | Power energy | 50,400.00 | 105,930.45 |
| Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | Production service | 342,857.14 | 665,142.86 |
| Beijing Shougang Refractory& Metallurgical Burden Co., Ltd. | Power energy | -- | 216,711.69 |
| Beijing Shougang Materials Trading Co., Ltd. | Raw fuel material | 5,226,123.89 | 31,584,175.47 |
| Beijing Shougang Materials Trading Co., Ltd. | Production service | 22,669.81 | -- |
| Beijing Shougang Materials Trading Co., Ltd. | Steel | 14,122,416.76 | 42,540,754.02 |
| Qinhuangdao Shougang Krosaki Refractory Co., Ltd. | Raw fuel material | -- | 1,508,943.59 |
| Shougang Shuicheng Steel (Group) Saide Construction Co., Ltd. | Steel | -- | 1,516,749.02 |
| Shougang Changzhi Steel&Iron Co., Ltd. | Raw fuel material | 8,612,048.19 | 46,433,676.10 |
| Shougang Changzhi Steel&Iron Co., Ltd. | Production service | 566,037.74 | -- |
| Tangshan Caofeidian Industry Port Co., Ltd. | Power energy | 7,431,690.00 | -- |
| Tangshan Zhonghong Carbon Chemical Co., Ltd. | Interest income | 10,361,268.74 | 8,187,426.69 |
| Guangdong Shougang Zhongshan Metal Steel Processing&Distribution Co., Ltd. | Steel | 103,615,972.75 | 240,259,549.34 |
| Ningbo Shougang Zhejin Steel Co., Ltd. | Steel | 387,404,125.34 | 206,636,029.91 |
| Shougang (Qingdao) Steel Industry Co., Ltd. | Steel | 2,068,145,685.62 | 1,760,014,068.46 |
| Shougang (Qingdao) Steel Industry Co., Ltd. | Production service | 1,191,850.64 | 349,368.93 |
| Tianjin Shougang Steel Processing&Distribution Co., Ltd. | Steel | 122,868,391.48 | 470,715,373.63 |
| Ordos Baotou Steel Shourui Material Technology Co., Ltd. | Steel | 43,172,333.19 | 18,641,068.22 |
| Qian'an Shoujia Construction Material Co., Ltd. | Power energy | 20,849,860.72 | -- |
| Qian'an Shoujia Construction Material Co., Ltd. | Raw fuel material | 72,638,182.03 | -- |
| Qian'an Shoujia Construction Material Co., Ltd. | Production service | 261,988.18 | -- |
| Beijing Dingshengcheng Packaging Materials Co., Ltd. | Power energy | 37,950.34 | -- |
| Guizhou Bohong Industrial Co., Ltd. | Production service | 95,464.82 | -- |
| Sanhe Shoujia Construction Material Co., Ltd. | Raw fuel material | 1,944,917.36 | -- |
| Beijing Shougang Landscaping Co., Ltd. | Power energy | 5,424.66 | -- |
| Dachang Shougang Machinery&Electric Co., Ltd. | Steel | 9,954,118.15 | -- |
| Guangzhou Jinghai Shipping Co., Ltd. | Production service | 30,107,927.27 | -- |
| Related party | Nature of transaction | 2020 | 2019 |
| Ningbo Shoude Bonded Zone Trading Co., Ltd. | Raw fuel material | 41,366,049.77 | -- |
| PetroChina Shougang (Beijing) Petroleumsales Co., Ltd. | Power energy | 23,415.00 | -- |
| PetroChina Shougang (Beijing) Petroleumsales Co., Ltd. | Steel | 76,412,124.74 | -- |
| Qingdao Shouyi Free Trade Zone Logistics Service Co., Ltd. | Raw fuel material | 8,278,494.73 | -- |
| Beijing Shouhua Technology Development Co., Ltd. | Production service | 297,169.81 | -- |
| Shougang Guiyang Special Steel Co., Ltd. | Steel | 2,110,641.08 | -- |
| Qian'an Shougang Xingkuang Industrial Co., Ltd. | Steel | 18,076,509.17 | -- |
| Beijing Shougang Gas Tangshan Co., Ltd. | Production service | 565,714.29 | -- |
| Chaoyang Shougang Beifang Machinery Co., Ltd. | Spare parts | 88,887.10 | -- |
| Beijing Shougang Catering Co., Ltd. | Power energy | 708,263.81 | -- |
| Beijing Jingxi Supply Chain Management Co., Ltd. | Steel | 2,355,838.60 | -- |
| Beijing Shouxinsheng Trading Co., Ltd. | Steel | 23,747,794.65 | -- |
| Chengde Xintongshoucheng Mining Co., Ltd. | Production service | 6,981.14 | -- |
| Guizhou Liupanshui Shenghongda Mechanical Equipment Manufacturing Co., Ltd | Production service | 28,478.78 | -- |
| Guizhou Shuigang Logistics Co., Ltd. | Production service | 4,491.51 | -- |
| Shougang Shuicheng Iron & Steel (Group) Xingyuan Development Investment Co., Ltd. | Production service | 43,601.42 | -- |
| Hebei Jingji Industry & Trading Co., Ltd. | Steel | 4,904,947.45 | -- |
| Jingtang Port Shougang Terminal Co., Ltd. | Production service | 1,325,021.21 | -- |
(2) Details of related party leases
The Company as a lessor
| Lessee | Type of assets leased | Lease income recognized in 2020 | Lease income recognized in 2019 |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | Land use right | 824,536.83 | 824,536.83 |
| Beijing Shougang Langze New Energy Technology Co., Ltd. | Land use right | 165,333.33 | 165,333.33 |
| Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | Land use right | 2,380,761.90 | 2,042,666.68 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Land use right | 25,252,761.92 | 24,976,236.65 |
The Company as a lessee
| Lessor | Type of assets leased | Lease expenses recognized in 2020 | Lease expenses recognized in 2019 |
| Shougang Group Co., Ltd. | Property | 2,908,102.36 | 1,725,822.97 |
| Beijing Shougang Special Steel Co., Ltd. | Property | 413,519.99 | 293,586.53 |
(3) Details of related party guarantees
The Company as a guarantee
| Guarantor | Amount of guarantee | Beginning date | Maturity date | Status of guarantee |
| Shougang Group Co., Ltd. | 7,736,984,828.91 | 2020/1/15 | 2021/12/02 | Incomplete |
| Shougang Group Co., Ltd. | 12,016,958,333.34 | 2019/3/29 | 2031/8/23 | Incomplete |
| Shougang Group Co., Ltd. | 4,026,866,666.76 | 2016/11/3 | 2021/11/3 | Incomplete |
| Shougang Group Co., Ltd. | 90,000,000.00 | 2020/8/28 | 2021/10/11 | Incomplete |
(4) Details of related party funding
| Related party | Amount of funding | Beginning date | Maturity date | Note |
| Funds received: | ||||
| Shougang Group Co., Ltd. | 4,205,075.00 | 2020/8/3 | 2021/8/3 | Short-term borrowings |
| Shougang Group Co., Ltd. | 2,663,088.56 | 2019/3/6 | 2023/3/25 | Long-term borrowings |
| Shougang Group Finance Co., Ltd. | 8,683,939,552.19 | 2019/5/20 | 2021/9/18 | Short-term borrowings |
| Shougang Group Finance Co., Ltd. | 5,964,050,000.00 | 2020/6/29 | 2021/6/29 | Notes payable |
| South China International Leasing Co., Ltd | 8,321,292.72 | 2020/1/7 | 2025/1/6 | Long-term payable |
| Funds provided: | ||||
| Tangshan Zhonghong Carbon Chemical Co., Ltd. | 245,455,297.98 | —— | —— | Other current assets |
(5) Details of transfer of assets and debt restructuring
| Related party | Nature of transaction | 2020 | 2019 |
| Shougang Group Co., Ltd. | Share Transfer of Beijing Automobile Investment Co., Ltd. | 4,371,977,739.86 | -- |
| Shougang Group Co., Ltd. | Share Purchase of Beijing Shougang Steel Trade Investment Management Co., Ltd. | 4,893,634,550.64 | -- |
| Beijing Shougang Equipment Technology Co., Ltd. | Share Purchase of Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | 3,327,900.00 | -- |
| Shougang Group Co., Ltd. | Material | -- | 990,621,384.00 |
(6) Remuneration of key management personnel
The Company has 21 key management personnel in 2020, and 21 key management personnelin 2019. The remuneration payment is as follows:
| Item | 2020 | 2019 |
| Remuneration of key management personnel | 6.5804 million | 4.7885 million |
6. Receivables from and payables to related parties
(1) Receivables from related parties
| Item | Related party | As at 31.12.2020 | As at 31.12.2019 | ||
| Book balance | Provision for bad debts | Book balance | Provision for bad debts | ||
| Bank deposit | Shougang Group Finance Co., Ltd. | 5,840,053,539.02 | -- | 5,639,058,204.86 | -- |
| Bank deposit | Hua Xia Bank Co.,Ltd. | 2,151,464.94 | -- | -- | -- |
| Accounts receivable | Beijing Shougang Gas Co., Ltd. | -- | -- | 6,417,820.87 | 207,459.01 |
| Accounts receivable | Shougang Group Co., Ltd. | -- | -- | 1,151,785.00 | 37,231.98 |
| Accounts receivable | Shougang Casey Steel Co., Ltd. | 154,836,520.71 | 5,264,260.70 | 159,556,205.55 | 5,157,727.80 |
| Accounts receivable | Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | 2,382,464.89 | 923,413.27 | 2,323,825.34 | 317,087.83 |
| Accounts receivable | Hebei Shoulang New Energy Technology Co., Ltd. | 47,946,382.54 | 1,630,120.96 | 68,164,731.53 | 2,203,456.33 |
| Accounts receivable | Qian'an Shoujia Construction Material Co., Ltd. | 64,498,577.06 | 2,192,876.22 | -- | -- |
| Accounts receivable | Sanhe Shoujia Construction Material Co., Ltd. | 11,275,968.24 | 5,998,186.89 | -- | -- |
| Accounts receivable | Qinhuangdao Shouqin Metal Materials Co., Ltd. | 1,479,233.93 | 50,292.22 | -- | -- |
| Accounts receivable | Tonghua Iron and Steel Co., Ltd. | 95,230,146.73 | 3,237,713.67 | -- | -- |
| Accounts receivable | Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | 11,199,223.84 | 380,760.52 | -- | -- |
| Accounts receivable | Beijing Shougang International Engineering&Technology Co., Ltd. | 1,156,700.00 | 318,437.01 | -- | -- |
| Accounts receivable | Beijing Shougang Materials Trading Co., Ltd. | 435,425.96 | 14,803.97 | 6,338,113.96 | 221,833.99 |
| Accounts receivable | Qian'an Shougang Xingkuang Industrial Co., Ltd. | 7,222,280.17 | 245,549.08 | -- | -- |
| Accounts receivable | Beijing Shougang Mining Construction Co., Ltd. | 12,987.00 | 441.54 | -- | -- |
| Accounts receivable | Beijing Shouxinsheng Trading Co., Ltd. | 285,008.00 | 9,689.94 | -- | -- |
| Accounts receivable | Tianjin Shougang Steel Processing&Distribution Co., Ltd. | 5,670,128.78 | 192,777.75 | -- | -- |
| Prepayments | Shougang Group Co., Ltd. | -- | -- | 1,333,506,134.45 | -- |
| Prepayments | Qinhuangdao Zhongshou Logistics Co., Ltd. | -- | -- | 8,510,097.67 | -- |
| Prepayments | Tonghua Iron and Steel Co., Ltd. | 87,647.33 | -- | 203,057,519.77 | -- |
| Prepayments | Tangshan Caofeidian Ganglian Logistics Co., Ltd. | 39,092,233.65 | -- | -- | -- |
| Prepayments | Qinhuangdao Shouqin Metal Materials Co., Ltd. | 813,907.90 | -- | 1,101,686.93 | -- |
| Item | Related party | As at 31.12.2020 | As at 31.12.2019 | ||
| Book balance | Provision for bad debts | Book balance | Provision for bad debts | ||
| Prepayments | Beijing Shouronghui Technology Development Co., Ltd. | -- | -- | 21,515.80 | -- |
| Prepayments | Tangshan Caofeidian Industry Port Co., Ltd. | 22,055.88 | -- | -- | -- |
| Prepayments | Huludao Shougang Donghua Machinery Co., Ltd. | 933,792.77 | -- | -- | -- |
| Other receivables | Beijing Shougang Materials Trading Co., Ltd. | 1,000,000.00 | 90,000.00 | 1,000,000.00 | 50,000.00 |
| Dividend receivable | Hebei Jingji Industry & Trading Co., Ltd. | 4,892,288.48 | -- | 2,754,886.56 | -- |
| Other current assets | Tangshan Zhonghong Carbon Chemical Co., Ltd. | 245,455,297.98 | -- | 229,012,500.00 | -- |
(2) Payables to related parties
| Item | Related party | As at 31.12.2020 | As at 31.12.2019 |
| Accounts payable | Shougang Group Co., Ltd. | 424,300,384.98 | 485,181,342.50 |
| Accounts payable | Shougang Mining Corporation | 4,758,872,958.16 | 4,954,955,975.46 |
| Accounts payable | Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | 522,003,740.47 | 562,563,215.95 |
| Accounts payable | Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | 898,085,897.55 | 1,127,800,443.39 |
| Accounts payable | Beijing Shoucheng Packaging Service Co., Ltd. | 12,194,373.08 | 11,922,547.50 |
| Accounts payable | Beijing Shougang Automation Information Technology Co., Ltd. | 323,142,973.59 | 241,556,645.81 |
| Accounts payable | Beijing Shougang Equipment Technology Co., Ltd. | -- | 11,280,854.02 |
| Accounts payable | Beijing Shougang Construction Group Co., Ltd. | 1,037,734,728.65 | 734,160,598.73 |
| Accounts payable | Beijing Shoujian Equipment Maintenance Co., Ltd. | 85,061,141.78 | 30,144,217.54 |
| Accounts payable | Beijing Shougang Landscaping Co., Ltd. | 9,860,436.91 | 26,989,729.75 |
| Accounts payable | Beijing Shougang Catering Co., Ltd. | 4,531,782.45 | 5,774,228.25 |
| Accounts payable | Beijing Huaxia Technology Co., Ltd. | 5,781,199.34 | 3,938,004.10 |
| Accounts payable | Qinhuangdao Shougang Machinery Co., Ltd. | 88,702,058.87 | 61,540,108.69 |
| Accounts payable | Beijing Shougang Huaxia International Trade Co., Ltd. | 5,564.75 | 4,794,021.27 |
| Accounts payable | Beijing Shougang Machinery&Electric Co., Ltd. | 165,812,736.46 | 126,063,646.01 |
| Accounts payable | Beijing Shouye Instruments&Meters Co., Ltd. | 14,344,260.92 | 18,297,061.23 |
| Accounts payable | Huludao Shougang Donghua Machinery Co., Ltd. | 9,207,347.77 | 11,811,553.01 |
| Accounts payable | Tianjin Shougang Electric Equipment Co., Ltd. | 11,468,267.73 | 12,409,340.28 |
| Accounts payable | Beijing Shougang Gas Co., Ltd. | 88,190,353.60 | 35,582,951.80 |
| Accounts payable | Beijing Shougang International Engineering&Technology Co., Ltd. | 681,763,620.48 | 47,746,731.92 |
| Accounts payable | Beijing Jinanyuan Automobile Transportation Co., Ltd. | 14,257,362.30 | 11,162,310.52 |
| Accounts payable | Lujiashan Limestone Mining of Shougang Beijing Co.,Ltd. | 29,007,357.23 | 30,073,742.97 |
| Accounts payable | Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | -- | 20,303,487.07 |
| Accounts payable | Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | 597,800.00 | 235,000.00 |
| Accounts payable | Beijing Shougang Xinganglian Technology&Trade Co., Ltd. | 4,558,161.84 | 7,610,949.74 |
| Accounts payable | Qian'an Shougang Equipment Structure Co., Ltd. | 105,856,397.86 | 61,865,188.47 |
| Accounts payable | Yantai Shougang Mining 3D Co., Ltd. | 914,117.76 | 671,563.74 |
| Accounts payable | Beijing Shoujian Hengji Construction Engineering Co., Ltd. | 1,346,603.21 | 1,256,807.44 |
| Accounts payable | Beijing Soly Technology Co., Ltd. | 1,325,147.26 | 1,444,906.52 |
| Accounts payable | Qian'an Shouxin Automation Information Technology Co., Ltd. | 23,932,561.21 | 17,153,131.40 |
| Accounts payable | Shougang Hospital Co. Ltd | 3,278,331.90 | 73,261.90 |
| Accounts payable | Qian'an First Real Packaging Service Co., Ltd. | 84,336,199.76 | 21,186,571.85 |
| Accounts payable | Beijing Shougang Refractory& Metallurgical Burden Co., Ltd. | 10,707,679.21 | 20,827,383.10 |
| Accounts payable | Beijing Shoujia Steel Construction Co., Ltd. | 4,070,335.14 | 3,156,322.62 |
| Accounts payable | Beijing Shougang Ferroalloy Co., Ltd. | 49,538,592.23 | 23,776,008.52 |
| Accounts payable | Beijing Shougang Materials Trading Co., Ltd. | 115,225,146.51 | 139,751,742.43 |
| Accounts payable | Beijing Shougang Resources Comprehensive Utilization Technology Development Co., Ltd. | 70,690,426.64 | 90,690,426.64 |
| Accounts payable | Shougang Environmental Industry Co., Ltd. | 692,794.10 | 271,509.00 |
| Accounts payable | China Shougang International Trade&Engineering Corporation | 303,356,345.33 | 26,266,404.95 |
| Accounts payable | Beijing Chengxin Engineering Supervision Co., Ltd. | 6,032,842.86 | 5,489,009.00 |
| Accounts payable | Qinhuangdao Shougang Plate Mill Co., Ltd. | 141,274.84 | -- |
| Accounts payable | Qinhuangdao Shougang Krosaki Refractory Co., Ltd. | 72,232,078.18 | 75,109,604.80 |
| Accounts payable | Tangshan Shoukuang Cleaning Iron Co., Ltd. | 137,489,080.84 | 255,466,259.07 |
| Accounts payable | Tangshan Guoxing Industrial Co., Ltd. | 27,550,753.14 | 24,005,948.59 |
| Accounts payable | Tangshan Caofeidian Industrial District Shouhanxin Industrial Co., Ltd. | 168,050,365.63 | 152,232,033.84 |
| Accounts payable | Beijing Shougang Futong Elevator Co., Ltd. | 2,677,608.70 | 745,205.78 |
| Accounts payable | Beijing Teyu Plate Co., Ltd. | 85,095,430.63 | 84,256,276.75 |
| Item | Related party | As at 31.12.2020 | As at 31.12.2019 |
| Accounts payable | Jingxi Shoutang Supply Chain Management Co., Ltd | 1,388,650.02 | 8,527,751.77 |
| Accounts payable | Beijing Shougang Mining Construction Co., Ltd. | 8,858,144.66 | 10,459,861.34 |
| Accounts payable | Qinhuangdao Shouqin Metal Materials Co., Ltd. | 16,537,107.72 | 32,939,235.34 |
| Accounts payable | Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | 528,208.91 | 1,233,757.39 |
| Accounts payable | Beijing Shoushe Metallurgical Technology Co., Ltd. | 26,672.40 | 1,851,378.60 |
| Accounts payable | Beijing Shougang Fulushi Color Coated Plate Co., Ltd. | 16,666,004.85 | 16,666,004.85 |
| Accounts payable | Beijing Shougang Industrial Co., Ltd. | 6,740,763.21 | 3,008,626.21 |
| Accounts payable | Bejing Shougang International Travel Co., Ltd. | 178,263.50 | 256,216.50 |
| Accounts payable | Beijing Shougang Cultural Development Co., Ltd. | -- | 200,000.00 |
| Accounts payable | Beijing Shougang Yunxiang Industrial Technology Co., Ltd. | 2,752,728.69 | 477,946.69 |
| Accounts payable | Qiangang Hotel. | 5,741,588.83 | 3,676,701.60 |
| Accounts payable | Beijing Dingshengcheng Packaging Materials Co., Ltd. | 11,814,696.28 | 31,025.28 |
| Accounts payable | Beijing Shouxinsheng Trading Co., Ltd. | 2,458,032.74 | 99,956.00 |
| Accounts payable | Beijing Huayu Information Technology Co., Ltd. | -- | 1,020,730.20 |
| Accounts payable | Beijing Huayue Aviation Service Co., Ltd. | -- | 69,032.60 |
| Accounts payable | Beijing Shougang Special Steel Co., Ltd. | 101,949,940.33 | 101,949,940.33 |
| Accounts payable | Hebei Shougang Jingtang Machinery Co., Ltd. | 1,525,293.86 | 93,066.99 |
| Accounts payable | Ningbo Metallurgical Investigation, Design&Research Co., Ltd. | 7,253,031.40 | 10,506,278.89 |
| Accounts payable | Qian'an Shougang Xingkuang Industrial Co., Ltd. | 5,935,224.42 | 9,794,718.39 |
| Accounts payable | Bohai International Conference Center Co., Ltd. | -- | 5,890.00 |
| Accounts payable | Beijing Thermal Zhongda Heat Exchange Equipment Co., Ltd. | 24,662,319.86 | -- |
| Accounts payable | Beijing Shougang Kuangshan Hospital Co., Ltd | 1,949,405.50 | -- |
| Accounts payable | Beijing Shouyu Industry and Trade Co., Ltd. | 5,817,793.42 | -- |
| Accounts payable | PetroChina Shougang (Beijing) Petroleumsales Co., Ltd. | 9,581,118.29 | -- |
| Accounts payable | YASKAWA Shougang Robert Co., Ltd. | 634,464.46 | -- |
| Accounts payable | Beijing Shoubang New Material Co., Ltd. | 629,938.31 | -- |
| Accounts payable | Beijing Xingyeda Machinery&Electric Equipment Manufacture Co., Ltd. | 124,606.53 | -- |
| Accounts payable | Chaoyang Shougang Beifang Machinery Co., Ltd. | 1,051,936.50 | -- |
| Accounts payable | Guangzhou Jinghai Shipping Co., Ltd. | 95,572,579.06 | 66,711,475.10 |
| Accounts payable | Jingtang Port Shougang Terminal Co., Ltd. | 2,927.40 | -- |
| Accounts payable | Tangshan Caofeidian Industry Port Co., Ltd. | 98,535,542.27 | -- |
| Accounts payable | Beijing Shougang Zhongye Machinery & Electric Co., Ltd. | 433,770.00 | -- |
| Accounts payable | Shougang Guiyang Special Steel Co., Ltd. | 17,565,638.66 | -- |
| Accounts payable | Tianjin Shougang Steel Processing&Distribution Co., Ltd. | 1,357,127.53 | 815,909.97 |
| Accounts payable | Cmi Engineering (Beijing) Co., Ltd. | 4,096,520.00 | -- |
| Accounts payable | Beijing Shoutegang Yuandong Magnesium Alloy Products Co., Ltd. | 200,408.00 | -- |
| Accounts payable | Shougang (Qingdao) Steel Industry Co., Ltd. | -- | 149,421.35 |
| Accounts payable | Huludao Shougang Donghua Pipe Industry Co., Ltd. | 176,817.81 | -- |
| Accounts payable | Tonggang Jilin Welded Pipe Co., Ltd | 31,747.20 | -- |
| Accounts payable | Beijing Shougang Mining Investment Co., Ltd | 175,708,332.43 | -- |
| Accounts payable | Qinhuangdao Shougang Racing Valley Co., Ltd | 259,520.00 | -- |
| Accounts payable | Beijing Shougang Property Management Co., Ltd. | 59,727.00 | -- |
| Accounts payable | Beijing Shougang Park Comprehensive Service Co., Ltd. | 9,620.00 | -- |
| Accounts payable | Jiangsu Capital Holdings Manufacturing Technology Co., Ltd. | 250,000.00 | -- |
| Accounts payable | Beijing Shouao Real Estate Co., Ltd | 16,800.00 | -- |
| Accounts payable | Guangdong Shougang Zhongshan Metal Steel Processing&Distribution Co., Ltd. | 29,597.98 | -- |
| Contract liability | Beijing Shoucheng Packaging Service Co., Ltd. | 140,353.75 | 60,349.05 |
| Contract liability | Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | 1,484,689.80 | 1,959,106.22 |
| Contract liability | Beijing Beiye Functional Materials Co., Ltd. | 129,484.80 | 551,053.97 |
| Item | Related party | As at 31.12.2020 | As at 31.12.2019 |
| Contract liability | Beijing Shougang Jitaian New Material Co., Ltd. | 43,809.62 | 69,810.40 |
| Contract liability | Beijing Shougang Xinganglian Technology&Trade Co., Ltd. | 12,812,385.43 | 31,287,940.73 |
| Contract liability | Huludao Shougang Donghua Machinery Co., Ltd. | 1,729,808.14 | 729,808.14 |
| Contract liability | Beijing Shouronghui Technology Development Co., Ltd. | 1,359,852.64 | 1,359,852.64 |
| Contract liability | Beijing Shougang Machinery&Electric Co., Ltd. | 308,844.95 | 365,757.09 |
| Contract liability | Beijing Shougang Construction Group Co., Ltd. | 119,407.58 | 112,035.58 |
| Contract liability | Tangshan Caofeidian Industrial District Shouhanxin Industrial Co., Ltd. | -- | 110,580.19 |
| Contract liability | Jilin Tonggang International Trade Co., Ltd. | -- | 864,766.91 |
| Contract liability | Qinhuangdao Shougang Machinery Co., Ltd. | 847,647.78 | 1,038,445.65 |
| Contract liability | Tangshan Caofeidian Industrial Zone Jingtang Industrial Co., Ltd. | 33,744.95 | 50,000.00 |
| Contract liability | Tangshan Guoxing Industrial Co., Ltd. | 40,000.00 | 90,000.00 |
| Contract liability | Beijing Shougang International Engineering&Technology Co., Ltd. | 113,815.14 | 46,739.83 |
| Contract liability | Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | -- | 9,492.00 |
| Contract liability | Beijing Shougang Automation Information Technology Co., Ltd. | -- | 49,999.87 |
| Contract liability | Qian'an First Real Packaging Service Co., Ltd. | 5,000,088.04 | 8,404,074.16 |
| Contract liability | Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | -- | 1,901,647.96 |
| Contract liability | Beijing Shougang Industrial Co., Ltd. | 52,984.32 | 81,591.43 |
| Contract liability | Beijing Jinanyuan Automobile Transportation Co., Ltd. | -- | 10,000.00 |
| Contract liability | Beijing Shougang Metal Co., Ltd. | -- | 142,999.07 |
| Contract liability | Beijing Shoujian Centralized Trading Co., Ltd. | -- | 320,533.42 |
| Contract liability | Ningbo Shoude Bonded Zone Trading Co., Ltd. | -- | 28,410,000.00 |
| Contract liability | Qian'an Shougang Equipment Structure Co., Ltd. | 6,019.15 | 4,891.98 |
| Contract liability | Qinhuangdao Shougang Plate Mill Co., Ltd. | 13,028.81 | 13,028.81 |
| Contract liability | Qinhuangdao Shougang Krosaki Refractory Co., Ltd. | 102,297.31 | 102,297.31 |
| Contract liability | Shougang Changzhi Steel&Iron Co., Ltd. | -- | 4,860,000.00 |
| Contract liability | Lujiashan Limestone Mining of Shougang Beijing Co.,Ltd. | 1,952,166.12 | 299.98 |
| Contract liability | Qian'an Shougang Xingkuang Industrial Co., Ltd. | 50,000.00 | -- |
| Contract liability | Beijing Shougang Materials Trading Co., Ltd. | 119,506.25 | -- |
| Contract liability | Guizhou Bohong Industrial Co., Ltd. | 50,000.00 | -- |
| Contract liability | Huludao Shougang Donghua Pipe Industry Co., Ltd. | 50,000.00 | -- |
| Contract liability | Beijing Shougang Mining Construction Co., Ltd. | 41,153.42 | -- |
| Contract liability | Tianjin Shougang Electric Equipment Co., Ltd. | 169.19 | -- |
| Contract liability | Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | 8,180.36 | -- |
| Contract liability | Shougang Shuicheng Steel (Group) Saide Construction Co., Ltd. | 805.61 | -- |
| Contract liability | Dachang Shougang Machinery&Electric Co., Ltd. | 697,971.31 | -- |
| Contract liability | Ningbo Shougang Zhejin Steel Co., Ltd. | 7,713,107.90 | 1,569,460.66 |
| Contract liability | Guangzhou Jinghai Shipping Co., Ltd. | 7,151,356.77 | 5,000,000.00 |
| Contract liability | Suzhou Tonggang Shunye Steel Materials Processing Distribution Co., Ltd. | 2,046.68 | -- |
| Contract liability | Beijing Shougang Shape Metal Co., Ltd. | 6,729,383.91 | -- |
| Contract liability | Ordos Baotou Steel Shourui Material Technology Co., Ltd. | 1,312,200.50 | 10,456,035.46 |
| Contract liability | PetroChina Shougang (Beijing) Petroleumsales Co., Ltd. | 11,593,447.04 | 10,121,074.25 |
| Contract liability | Shougang Casey Steel Co., Ltd. | 0.05 | 1,005,490.09 |
| Contract liability | Shougang (Qingdao) Steel Industry Co., Ltd. | 111,428,733.94 | 88,224,954.41 |
| Contract liability | Tianjin Shougang Steel Processing&Distribution Co., Ltd. | 1,604,220.81 | 14,828,502.62 |
| Contract liability | Guangdong Shougang Zhongshan Metal Steel Processing&Distribution Co., Ltd. | 5,255,500.85 | 26,679,883.60 |
| Contract liability | Beijing Shougang Ferroalloy Co., Ltd. | 50,000.00 | -- |
| Contract liability | Shougang Guiyang Special Steel Co., Ltd. | 21,353.73 | -- |
| Contract liability | Chaoyang Shougang Beifang Machinery Co., Ltd. | 114.02 | -- |
| Contract liability | Beijing Shouyu Industry and Trade Co., Ltd. | 50,000.00 | -- |
| Item | Related party | As at 31.12.2020 | As at 31.12.2019 |
| Contract liability | Hebei Jingji Industry & Trading Co., Ltd. | 460,409.38 | -- |
| Other payable | Shougang Group Co., Ltd. | 1,187,727,922.88 | 1,677,899,290.75 |
| Other payable | Beijing Shougang Automation Information Technology Co., Ltd. | 749,720.20 | 3,133,536.09 |
| Other payable | Beijing Shougang Construction Group Co., Ltd. | 3,458,000.00 | 21,645,486.00 |
| Other payable | Beijing Shougang Landscaping Co., Ltd. | 19,893.26 | 275,150.20 |
| Other payable | Beijing Chengxin Engineering Supervision Co., Ltd. | 269,324.00 | 269,324.00 |
| Other payable | Beijing Shougang Catering Co., Ltd. | -- | 667,619.99 |
| Other payable | Beijing Jinanyuan Automobile Transportation Co., Ltd. | -- | 45,924.29 |
| Other payable | Tianjin Shougang Electric Equipment Co., Ltd. | -- | 553,368.26 |
| Other payable | Beijing Shougang International Engineering&Technology Co., Ltd. | -- | 7,479,548.00 |
| Other payable | Beijing Shougang Mining Construction Co., Ltd. | -- | 50,000.00 |
| Other payable | Beijing Shougang Xinganglian Technology&Trade Co., Ltd. | 300,000.00 | 300,000.00 |
| Other payable | Qiangang Hotel. | -- | 1,027,929.08 |
| Other payable | Beijing Shougang Industrial Co., Ltd. | 200,000.00 | 200,000.00 |
| Other payable | Tangshan Guoxing Industrial Co., Ltd. | -- | 31,453.76 |
| Other payable | Ningbo Metallurgical Investigation, Design&Research Co., Ltd. | 190,000.00 | 190,000.00 |
| Other payable | Beijing Shougang Equipment Technology Co., Ltd. | -- | 162,740.00 |
| Other payable | Hebei Jingji Industry & Trading Co., Ltd. | -- | 1,820.70 |
| Other payable | Guangzhou Jinghai Shipping Co., Ltd. | 300,000.00 | -- |
| Other payable | Beijing Shougang Gas Co., Ltd. | 1,123,099.67 | -- |
| Other payable | Beijing Shouxin Jinyuan Management Consulting Center (Limited Partnership) | 95,276,712.33 | -- |
| Other non-current liability | Shougang Group Co., Ltd. | 4,491,623,817.41 | 4,711,490,199.06 |
XI. Commitments and contingencies
1. Material commitments
As at 31 December 2020, there is no material commitment to be disclosed.
2. Contingencies
As at 31 December 2020, there is no material contingency arising from pending litigation andguarantee provided to other entities.XII. Events after balance sheet date
On April 21, 2021, the Company received “Approval for Beijing Shougang Co., Ltd. to issue sharesto Beijing Investment Holding Co., Ltd. to purchase assets and raise supporting funds” (zjxk [2021]No. 1400) from China Securities Regulatory Commission, the company will handle the issuance ofshares to purchase assets and raise supporting funds as soon as possible according to therequirements of the approval.As of 28 April 2021, the Company has no subsequent events that should be disclosed after thebalance sheet date.XIII. Other significant events
1. Segment information
According to internal organizational structure, management requirement and requirement of internalreporting system, the Company divides businesses into iron and steel segment. The segmentinformation is determined based on the financial information required by routine internalmanagement of the Company. The management periodically evaluates the operating results of thesegment to determine its allocation of resources and evaluate the performance of the segment.The segment information of the Company includes: iron and steel segment.The segment information is disclosed in accordance with the accounting policies and measurementbasis used in the reports of the management, which are in line with those adopted in financialstatements.
(1) Segment profit or loss, assets and liabilities
| For the year ended 31 December 2020 or as at 31 December 2020 | Iron and steel Segment | Offset | Total |
| Operating revenue | 79,951,181,948.10 | -- | 79,951,181,948.10 |
| Including: External revenue | 79,951,181,948.10 | -- | 79,951,181,948.10 |
| Inter-segment revenue | -- | -- | -- |
| Including: Main operating revenue | 76,204,354,719.07 | -- | 76,204,354,719.07 |
| Cost of sales | 73,072,708,322.14 | -- | 73,072,708,322.14 |
| Including: Main operating cost of sales | 70,025,177,064.76 | -- | 70,025,177,064.76 |
| Operating expenses | 2,398,028,539.13 | -- | 2,398,028,539.13 |
| Operating profit/(loss) | 2,778,499,948.96 | -- | 2,778,499,948.96 |
| Total assets | 144,367,221,971.10 | -- | 144,367,221,971.10 |
| Total liabilities | 105,536,042,064.13 | -- | 105,536,042,064.13 |
| Supplementary information: | |||
| 1.Capital expenditure | 3,032,549,847.59 | -- | 3,032,549,847.59 |
| 2.Depreciation and amortisation | 6,518,288,975.16 | -- | 6,518,288,975.16 |
| 3.Non-cash expenses other than depreciation and amortisation | -- | -- | -- |
| 4. 4.Assets impairment losses | 167,843,610.72 | -- | 167,843,610.72 |
| For the year ended 31 December 2019 or as at 31 December 2019 | Iron and steel Segment | Offset | Total |
| Operating revenue | 68,841,307,821.91 | -- | 68,841,307,821.91 |
| Including: External revenue | 68,841,307,821.91 | -- | 68,841,307,821.91 |
| Inter-segment revenue | -- | -- | -- |
| Including: Main operating revenue | 65,897,466,517.34 | -- | 65,897,466,517.34 |
| Cost of sales | 61,777,897,342.66 | -- | 61,777,897,342.66 |
| Including: Main operating cost of sales | 59,411,843,385.76 | -- | 59,411,843,385.76 |
| Operating expenses | 3,301,505,940.30 | -- | 3,301,505,940.30 |
| Operating profit/(loss) | 1,958,922,158.22 | -- | 1,958,922,158.22 |
| Total assets | 146,872,471,898.20 | -- | 146,872,471,898.20 |
| Total liabilities | 106,705,737,493.66 | -- | 106,705,737,493.66 |
| Supplementary information: | |||
| 1.Capital expenditure | 5,574,697,638.95 | -- | 5,574,697,638.95 |
| 2.Depreciation and amortisation | 5,967,764,855.42 | -- | 5,967,764,855.42 |
| 3.Non-cash expenses other than depreciation and amortisation | -- | -- | -- |
| 4.Assets impairment losses | 86,126,404.40 | -- | 86,126,404.40 |
(2) Other segment information
①External revenue of goods and services
| Item | 2020 | 2019 |
| Iron and steel | 79,951,181,948.10 | 68,841,307,821.91 |
②Geographical information
No more details of geographical information should be disclosed as the production and sales of theCompany are all located in mainland China.XIV. Notes to the financial statements of parent company
1. Notes receivable
| Items | 2020.12.31 | ||
| Book balance | Bad debt provision | Net carrying value | |
| Bank acceptances | -- | -- | -- |
| Commercial acceptances | 2,840,061,486.24 | 2,840,061.49 | 2,837,221,424.75 |
| Total | 2,840,061,486.24 | 2,840,061.49 | 2,837,221,424.75 |
| Items | 2019.12.31 | ||
| Book balance | Bad debt provision | Net carrying value | |
| Bank acceptances | 8,804,600.00 | 8,804.60 | 8,795,795.40 |
| Commercial acceptances | 2,486,187,980.47 | 2,486,187.98 | 2,483,701,792.49 |
| Total | 2,494,992,580.47 | 2,494,992.58 | 2,492,497,587.89 |
(1) The pledged notes receivable of the Company at the end of the year
| Items | Pledged amount at the end of the year |
| Bank acceptances | -- |
| Commercial acceptances | 200,600,000.00 |
| Total | 200,600,000.00 |
(2) Outstanding endorsed or discounted notes that have not matured at the end of the year
| Items | Amount derecognized at year end | Amount not-derecognized at year end |
| Bank acceptances | -- | -- |
| Commercial acceptances | -- | 2,537,148,976.44 |
| Total | -- | 2,537,148,976.44 |
(3) The Company has no notes transferred to accounts receivable due to non-performance of theissuers at the end of the year.
(4) Classified by bad debt provision method
| Category | 2020.12.31 | ||||
| Book balance | Bad debt provision | Net carrying value | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 2,840,061,486.24 | 100.00 | 2,840,061.49 | 0.10 | 2,837,221,424.75 |
| Portfolio 1 | -- | -- | -- | -- | -- |
| Portfolio 2 | 2,840,061,486.24 | 100.00 | 2,840,061.49 | 0.10 | 2,837,221,424.75 |
| Total | 2,840,061,486.24 | 100.00 | 2,840,061.49 | 0.10 | 2,837,221,424.75 |
| Category | 2019.12.31 | ||||
| Book balance | Bad debt provision | Net carrying value | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 2,494,992,580.47 | 100.00 | 2,494,992.58 | 0.10 | 2,492,497,587.89 |
| Group 1 | -- | -- | -- | -- | -- |
| Group 2 | 2,494,992,580.47 | 100.00 | 2,494,992.58 | 0.10 | 2,492,497,587.89 |
| Total | 2,494,992,580.47 | 100.00 | 2,494,992.58 | 0.10 | 2,492,497,587.89 |
(5) Provision, recovery or reversal of bad debt
| Items | Bad debt provision |
| As at 31 December 2019 | 2,494,992.58 |
| Provision | 345,068.91 |
| Recovery or reversal | -- |
| Written-off | -- |
| As at 31 December 2020 | 2,840,061.49 |
(6) The Company has no notes receivable actually written off in reporting period.
2. Accounts receivable
(1) Disclosed by ageing of account receivables
| Ageing | 2020.12.31 | 2019.12.31 |
| Within 1 year | 1,615,240,518.65 | 1,178,784,486.91 |
| 1 – 2 years | 4,327,199.80 | 8,547,951.56 |
| 2 – 3 years | -- | 200,000.00 |
| Over 3 years | 4,751,011.82 | 7,401,011.82 |
| Subtotal | 1,624,318,730.27 | 1,194,933,450.29 |
| Less: provision for bad debts | 8,893,085.98 | 14,819,047.23 |
| Total | 1,615,425,644.29 | 1,180,114,403.06 |
(2) Disclosed by bad debt provision
| Category | 2020.12.31 | ||||
| Book balance | Bad debt provision | Net carrying value | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | 4,751,011.82 | 0.29 | 4,751,011.82 | 100.00 | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 1,619,567,718.45 | 99.71 | 4,142,074.16 | 0.26 | 1,615,425,644.29 |
| Portfolio of aging analysis | 91,671,974.87 | 5.64 | 4,142,074.16 | 4.52 | 87,529,900.71 |
| Portfolio of consolidation scope | 1,527,895,743.58 | 94.07 | -- | -- | 1,527,895,743.58 |
| Total | 1,624,318,730.27 | 100.00 | 8,893,085.98 | 0.55 | 1,615,425,644.29 |
Continued：
| Category | 2019.12.31 | ||||
| Book balance | Bad debt provision | Net carrying value | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | 7,401,011.82 | 0.62 | 7,401,011.82 | 100.00 | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 1,187,532,438.47 | 99.38 | 7,418,035.41 | 0.62 | 1,180,114,403.06 |
| Portfolio of aging analysis | 164,189,440.62 | 13.74 | 7,418,035.41 | 4.52 | 156,771,405.21 |
| Portfolio of consolidation scope | 1,023,342,997.85 | 85.64 | -- | -- | 1,023,342,997.85 |
| Total | 1,194,933,450.29 | 100.00 | 14,819,047.23 | 1.24 | 1,180,114,403.06 |
Assessed bad debt provision individually：
| Accounts receivable (by debtor) | 2020.12.31 | |||
| Book balance | Bad debt provision | Expected credit loss (%) | Reason for bad debts | |
| Accounts receivable over 3 years | 4,751,011.82 | 4,751,011.82 | 100.00 | Long aging |
| Accounts receivable (by debtor) | 2019.12.31 | |||
| Book balance | Bad debt provision | Expected credit loss (%) | Reason for bad debts | |
| Accounts receivable over 3 years | 7,401,011.82 | 7,401,011.82 | 100.00 | Long aging |
Assessed bad debt provision in portfolios：
| Item | 2020.12.31 | ||
| Accounts receivable | Bad debt provision | Expected credit loss (%) | |
| Within 1 year | 1,615,240,518.65 | 2,969,620.25 | 0.18 |
| 1 – 2 years | 4,327,199.80 | 1,172,453.91 | 27.09 |
| 2 – 3 years | -- | -- | -- |
| Over 3 years | -- | -- | -- |
| Total | 1,619,567,718.45 | 4,142,074.16 | 0.26 |
| Item | 2019.12.31 | ||
| Accounts receivable | Bad debt provision | Expected credit loss (%) | |
| Within 1 year | 1,178,784,486.91 | 5,024,717.69 | 0.43 |
| 1 – 2 years | 8,547,951.56 | 2,258,354.68 | 26.42 |
| 2 – 3 years | 200,000.00 | 134,963.04 | 67.48 |
| Over 3 years | -- | -- | -- |
| Total | 1,187,532,438.47 | 7,418,035.41 | 0.62 |
(3) Provision, recovery or reversal of bad debt
| Item | Bad debt provision |
| As at 31 December 2019 | 14,819,047.23 |
| Adjustment amount for the first implementation of the new revenue standards | -- |
| As at 1 January 2020 | 14,819,047.23 |
| Provision | -- |
| Recovery or reversal | 5,925,961.25 |
| Written-off | -- |
| As at 31 December 2020 | 8,893,085.98 |
(4) The Company has no accounts receivable write-off during the reporting period.
(5) The top five accounts receivable classified by debtors are as follows:
During the year, the total amount of the top five accounts receivable collected by debtors at the endof the period is RMB 1,583,386,163.93, accounting for 97.47% of the total amount of accountsreceivable at the end of the period, and the total amount of the corresponding bad debt provision atthe end of the period is RMB 8,453,351.79.
| Company Name | Closing balance of accounts receivable | Percentage % | Closing balance of provision |
| Beijing Shougang Cold Rolling Co., Ltd. | 842,519,458.14 | 51.87 | -- |
| Shougang Zhixin Qian'an Electromagnetic Materials Co., Ltd. | 657,377,522.36 | 40.47 | -- |
| Qian'an Shoujia Construction Material Co., Ltd. | 64,498,577.06 | 3.97 | 2,192,876.22 |
| Sanhe Shoujia Construction Material Co., Ltd. | 11,275,968.24 | 0.69 | 5,998,186.89 |
| Nantong Zhongji Energy Equipment Co., Ltd. | 7,714,638.13 | 0.47 | 262,288.68 |
| Total | 1,583,386,163.93 | 97.47 | 8,453,351.79 |
3. Financing receivables
| Items | 2020.12.31 | 2019.12.31 |
| Notes receivable | 1,199,574,277.29 | 1,825,294,953.86 |
| Accounts receivable | -- | -- |
| Subtotal | 1,199,574,277.29 | 1,825,294,953.86 |
| Less：Other comprehensive income - fair value changes | -- | -- |
| Closing balance of fair value | 1,199,574,277.29 | 1,825,294,953.86 |
(1) Classified by bad debt provision method
| Category | 2020.12.31 | ||||
| Book balance | Bad debt provision | Net carrying value | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 1,199,814,240.14 | 100.00 | 239,962.85 | 0.02 | 1,199,574,277.29 |
| Portfolio 1 | 1,199,814,240.14 | 100.00 | 239,962.85 | 0.02 | 1,199,574,277.29 |
| Portfolio 2 | -- | -- | -- | -- | -- |
| Total | 1,199,814,240.14 | 100.00 | 239,962.85 | 0.02 | 1,199,574,277.29 |
| Category | 2019.12.31 | ||||
| Book balance | Bad debt provision | Net carrying value | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 1,825,660,085.88 | 100.00 | 365,132.02 | 0.02 | 1,825,294,953.86 |
| Portfolio 1 | 1,825,660,085.88 | 100.00 | 365,132.02 | 0.02 | 1,825,294,953.86 |
| Portfolio 2 | -- | -- | -- | -- | -- |
| Total | 1,825,660,085.88 | 100.00 | 365,132.02 | 0.02 | 1,825,294,953.86 |
(2) The pledged notes receivable of the Company at the end of the year
| Item | Pledged amount at the end of the year |
| Bank acceptance notes | 99,400,000.00 |
| Commercial acceptance notes | -- |
| Total | 99,400,000.00 |
(3) Outstanding endorsed or discounted notes that have not matured at the end of the year
| Item | Amount derecognized at year end | Amount not-derecognized at year end |
| Bank acceptance notes | 7,175,843,852.22 | -- |
| Commercial acceptance notes | -- | -- |
| Total | 7,175,843,852.22 | -- |
(4) Provision, recovery or reversal of bad debt
| Item | Bad debt provision |
| As at 31 December 2019 | 365,132.02 |
| Adjustment amount for implementation of the new revenue standards | -- |
| As at 1 January 2020 | 365,132.02 |
| Provision | -- |
| Recovery or reversal | 125,169.17 |
| Written-off | -- |
| As at 31 December 2020 | 239,962.85 |
4. Other receivables
| Item | 2020.12.31 | 2019.12.31 |
| Interest receivable | -- | -- |
| Dividends receivable | 600,000,000.00 | -- |
| Other receivables | 1,018,249,934.67 | 1,673,247.41 |
| Total | 1,618,249,934.67 | 1,673,247.41 |
(1) Dividends receivable
| Item | 2020.12.31 | 2019.12.31 |
| Shougang Zhixin Qian'an Electromagnetic Materials Co., Ltd. | 600,000,000.00 | -- |
| Less: Bad debt provision | -- | -- |
| Total | 600,000,000.00 | -- |
(2) Other receivables
①Disclosed by the ageing of other receivables
| Ageing | 2020.12.31 | 2019.12.31 |
| Within 1 year | 1,018,521,102.28 | 1,761,313.06 |
| 1 to 2 years | 300,000.00 | -- |
| Subtotal | 1,018,821,102.28 | 1,761,313.06 |
| Less: provision for bad debts | 571,167.61 | 88,065.65 |
| Total | 1,018,249,934.67 | 1,673,247.41 |
②Disclosed by nature of other receivables
| Item | 2020.12.31 | ||
| Book balance | Provision for bad debts | Carrying value | |
| Petty cash | 699,503.93 | 43,975.20 | 655,528.73 |
| Deposits | 200,000.00 | 10,000.00 | 190,000.00 |
| Due from other companies | 18,088.12 | 904.41 | 17,183.71 |
| Due from intra-companies | 1,017,387,222.23 | -- | 1,017,387,222.23 |
| Court attachment | 516,288.00 | 516,288.00 | -- |
| Total | 1,018,821,102.28 | 571,167.61 | 1,018,249,934.67 |
| Item | 2019.12.31 | ||
| Book balance | Provision for bad debts | Carrying value | |
| Petty cash | 1,510,560.20 | 75,528.01 | 1,435,032.19 |
| Deposits | 200,000.00 | 10,000.00 | 190,000.00 |
| Due from other companies | 50,752.86 | 2,537.64 | 48,215.22 |
| Total | 1,761,313.06 | 88,065.65 | 1,673,247.41 |
③Provision for bad debts
As at 31 December 2020, bad debts provision for Phase I:
| Category | Book balance | Expected credit loss within 12 months (%) | Provisions | Carrying value | Reasons |
| Assessed bad debt provision individually | -- | -- | -- | -- | |
| Assessed bad debt provision in portfolios | 1,018,004,814.28 | -- | 30,879.61 | 1,017,973,934.67 | |
| Petty cash and deposits | 599,503.93 | 5.00 | 29,975.20 | 569,528.73 |
| Due from other companies | 18,088.12 | 5.00 | 904.41 | 17,183.71 | |
| Due from intra-companies | 1,017,387,222.23 | -- | -- | 1,017,387,222.23 | |
| Total | 1,018,004,814.28 | -- | 30,879.61 | 1,017,973,934.67 |
As at 31 December 2020, bad debts provision for Phase II:
| Category | Book balance | Expected credit loss within 12 months (%) | Provisions | Carrying value | Reasons |
| Assessed bad debt provision individually | -- | -- | -- | -- | |
| Assessed bad debt provision in portfolios | 300,000.00 | 8.00 | 24,000.00 | 276,000.00 | |
| Petty cash and deposits | 300,000.00 | 8.00 | 24,000.00 | 276,000.00 | |
| Due from other companies | -- | -- | -- | -- | |
| Total | 300,000.00 | 8.00 | 24,000.00 | 276,000.00 |
As at 31 December 2020, bad debts provision for Phase III:
| Category | Book balance | Expected credit loss within 12 months (%) | Provisions | Carrying value | Reasons |
| Assessed bad debt provision individually | -- | -- | -- | -- | |
| Yinchuan Intermediate People's Court | 516,288.00 | 100.00 | 516,288.00 | -- |
④Provision, recovery or reversal of bad debt
| Provision for bad debts | Phase I | Phase II | Phase III | Total |
| Expected credit loss within 12 months | Expected credit loss over the lifetime (no credit impairment) | Expected credit loss over the lifetime (credit impairment occurred) | ||
| As at 31 December 2019 | 88,065.65 | -- | -- | 88,065.65 |
| Closing balance as at 31 December 2019 shifts to: | -- | -- | -- | -- |
| -- Shift to Phase II | -- | -- | -- | -- |
| -- Shift to Phase III | -- | -- | -- | -- |
| -- Back to Phase II | -- | -- | -- | -- |
| -- Back to Phase I | -- | -- | -- | -- |
| Provision | -- | 24,000.00 | 516,288.00 | 540,288.00 |
| Reversal | 57,186.04 | -- | -- | 57,186.04 |
| Provision for bad debts | Phase I | Phase II | Phase III | Total |
| Expected credit loss within 12 months | Expected credit loss over the lifetime (no credit impairment) | Expected credit loss over the lifetime (credit impairment occurred) | ||
| Converse | -- | -- | -- | -- |
| Written-off | -- | -- | -- | -- |
| Other movements | -- | -- | -- | -- |
| As at 31 December 2020 | 30,879.61 | 24,000.00 | 516,288.00 | 571,167.61 |
⑤No write-off of provision for bad debts during the reporting period.
⑥The top five other receivables classified by debtors are as follows:
| Company Name | Nature of transaction | Closing balance | Ageing | Percentage (%) | Closing balance of provisions |
| Shougang Jingtang United Iron & Steel Co., Ltd. | Due from intra-companies | 1,011,387,222.23 | Within 1 year | 99.27 | -- |
| Shenyang Shougang steel processing and Distribution Co., Ltd. | Due from intra-companies | 6,000,000.00 | Within 1 year | 0.59 | -- |
| Petty cash | Petty cash | 699,503.93 | 1-2 years | 0.07 | 43,975.20 |
| Yinchuan Intermediate People's Court deducting the execution payment of bills dispute | Court attachment | 516,288.00 | Within 1 year | 0.05 | 516,288.00 |
| Qian'an Administration of Work Safety | Deposits | 200,000.00 | Within 1 year | 0.02 | 10,000.00 |
| Total | 1,018,803,014.16 | 100.00 | 570,263.20 |
5. Long-term equity investments
| Items | 2020.12.31 | 2019.12.31 | ||||
| Book balance | Provision for impairment | Carrying value | Book balance | Provision for impairment | Carrying value | |
| Investments in subsidiaries | 24,941,718,854.54 | -- | 24,941,718,854.54 | 17,688,480,283.43 | -- | 17,688,480,283.43 |
| Investment in associates | 1,395,530,591.52 | -- | 1,395,530,591.52 | 1,205,450,675.37 | -- | 1,205,450,675.37 |
| Total | 26,337,249,446.06 | -- | 26,337,249,446.06 | 18,893,930,958.80 | -- | 18,893,930,958.80 |
(1) Investments in subsidiaries
| Subsidiaries | 2019.12.31 | Increase | Decrease | 2020.12.31 | Provision for impairment | Impairment at the end of the year |
| Shougang Jingtang United Iron & Steel Co., Ltd. | 10,715,504,383.43 | -- | -- | 10,715,504,383.43 | -- | -- |
| Beijing Shougang Cold Rolling Co., Ltd. | 1,831,075,900.00 | -- | -- | 1,831,075,900.00 | -- | -- |
| Qian'an Shougang Metallurgical Technology Co., Ltd. | 1,900,000.00 | -- | -- | 1,900,000.00 | -- | -- |
| Shougang Zhixin Qian'an Electromagnetic materials Co., Ltd. | 5,005,000,000.00 | 2,479,005,522.69 | -- | 7,484,005,522.69 | -- | -- |
| Beijing Shougang New Energy Automobile Material Technology Co., Ltd. | 135,000,000.00 | 315,000,000.00 | -- | 450,000,000.00 | -- | -- |
| Beijing Shougang Steel Trading Investment Management Co., Ltd. | -- | 4,459,233,048.42 | -- | 4,459,233,048.42 | -- | -- |
| Total | 17,688,480,283.43 | 7,253,238,571.11 | -- | 24,941,718,854.54 | -- | -- |
(2) Investments in associates
| Associates | 2019.12.31 | Changes during the year | 2020.12.31 | Impairment at the end of the year | |||||||
| Increase | Decrease | Investment income under the equity method | Other comprehensive income | Other equity movement | Cash dividend | Provision for impairment | Others | ||||
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | 991,143,793.18 | -- | -- | 110,663,604.37 | -- | -- | 149,460,000.00 | -- | -- | 952,347,397.55 | -- |
| Beijing Shouxin Jinyuan Management Consulting Center (Limited Partnership) | 203,826,594.33 | -- | -- | 227,976,094.59 | -- | -- | -- | -- | -- | 431,802,688.92 | -- |
| Beijing Dingshengcheng Packaging Materials Co., Ltd. | 10,480,287.86 | -- | -- | 900,217.19 | -- | -- | -- | -- | -- | 11,380,505.05 | -- |
| Total | 1,205,450,675.37 | -- | -- | 339,539,916.15 | -- | -- | 149,460,000.00 | -- | -- | 1,395,530,591.52 | -- |
6. Operating revenue and costs of sales
(1) Operating revenue and costs of sale
| Items | 2020 | 2019 | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Main business | 29,175,440,421.27 | 28,079,198,768.30 | 27,165,864,018.15 | 25,670,609,173.34 |
| Other business | 1,801,855,515.31 | 1,372,703,636.28 | 1,689,424,521.46 | 1,259,654,818.02 |
| Total | 30,977,295,936.58 | 29,451,902,404.58 | 28,855,288,539.61 | 26,930,263,991.36 |
(2)Operating revenue and operating costs of sale by product
| Product type | 2020 | 2019 | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Main business: | ||||
| Billet | 244,422,016.30 | 219,026,618.16 | 320,263,818.33 | 273,800,756.11 |
| Hot rolled | 28,356,414,900.52 | 27,280,962,500.45 | 26,340,384,895.69 | 24,899,525,385.53 |
| Cold rolled | -- | -- | -- | -- |
| Other steel products | 574,603,504.45 | 579,209,649.69 | 505,215,304.13 | 497,283,031.70 |
| Subtotal | 29,175,440,421.27 | 28,079,198,768.30 | 27,165,864,018.15 | 25,670,609,173.34 |
| Other business: | ||||
| power | 836,991,211.41 | 838,261,326.64 | 772,232,137.04 | 728,423,399.38 |
| Solid waste | 220,388,929.41 | 198,806,089.16 | 118,749,408.75 | 115,969,944.59 |
| Others | 744,475,374.49 | 335,636,220.48 | 798,442,975.67 | 415,261,474.05 |
| Subtotal | 1,801,855,515.31 | 1,372,703,636.28 | 1,689,424,521.46 | 1,259,654,818.02 |
| Total | 30,977,295,936.58 | 29,451,902,404.58 | 28,855,288,539.61 | 26,930,263,991.36 |
(3) Breakdown of operating revenue
| Items | 2020 |
| Main operating revenue | 29,175,440,421.27 |
| Including: recognized at a certain point | 29,175,440,421.27 |
| Recognized during a certain period of time | -- |
| Other revenue | 1,801,855,515.31 |
| Total | 30,977,295,936.58 |
7. Investment income
| Item | 2020 | 2019 |
| Investment income from long-term investment under cost method | 600,000,000.00 | -- |
| Investment income from long-term investment under equity method | 339,539,916.15 | 74,820,864.46 |
| Dividend from other equity instruments investments | 177,781,289.99 | 202,033,784.60 |
| Interest income from entrusted loans | 109,329,908.27 | 98,019,261.01 |
| Total | 1,226,651,114.41 | 374,873,910.07 |
XV. Supplementary information
1. Non-recurring gains or losses
| Items | 2020 | Notes |
| Gains or losses on disposal of non-current assets | -633,491.79 | |
| Government grants recognized in profit or loss during reporting period (excluding those close related to the Company’s normal business, conforming to the national policies and regulations and enjoying ongoing fixed amount or quantity according to certain standard) | 58,640,213.30 | |
| Net profit and loss of subsidiaries from the beginning of the period to the combination date arising from business combination under common control | 61,522,051.81 | |
| Gains or losses from external entrusted loans | 10,361,268.74 | |
| Non-operating income/(expenses) except the above | -289,865.40 | |
| Other profit and loss items satisfy the definition of non-recurring profit and loss | -6,922,580.64 | |
| Total non-recurring gains or losses | 122,677,596.02 | |
| Less: income tax effect on non-recurring gains or losses | 7,022,263.80 | |
| Net non-recurring gains or losses | 115,655,332.22 | |
| Less: non-recurring gains or losses attributable to non-controlling interests of the Company (after tax) | 43,642,220.99 | |
| Non-recurring gains or losses attributable to shareholders of the Company | 72,013,111.23 |
2. Return on net assets and earnings per share
| Profit of reporting period | Weighted average return on net assets % | Earnings per share | |
| Basic | Diluted | ||
| Net profit/ (loss) attributable to shareholders of the company | 6.40% | 0.3377 | -- |
| Net profit/ (loss) attributable to shareholders of the Company excluding non-recurring gains or losses | 6.14% | 0.3241 | -- |
3. Differences of accounting data under domestic and foreign accounting standards
(1) The differences of net profit and net assets in financial statements disclosed according toInternational Financial Reporting Standards and Chinese Accounting Standards
□ Applicable √ Non Applicable
(2) The difference of net profit and net assets in financial statements disclosed according to foreignaccounting standards and Chinese Accounting Standards
□ Applicable √ Non Applicable
(3)The description on the difference between the domestic and foreign accounting standards, theoverseas audit firms shall be indicated if you have adjusted the overseas audited financial data
4. Others
None
Section XIII. Documents Available for Reference
1. Original Accounting Statement of 2020 carrying the signatures and seals of the Chairman, General Manager,Chief accountant and Head of Accounting Department;
2. Original Auditors’ Report carrying the seals of accounting firms, and signatures and seals of the CPA;
3. All original documents and notifications of the Company disclosed in newspapers that designated by CSRC inreport period;
4. Articles of Association and others.
Board of Directors of Beijing Shougang Company Limited28 April 2021