Beijing Shougang Company Limited
2019 Annual Report
22 April 2020
Section I. Important notice, Content, Definitions
The 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 inthis Annual Report; and jointly and individuallytake full responsibility for the truthfulness, accuracy andcompleteness of the information contained in this annual report.Mr. Zhao Minge, representative of the Company, Mr. Li Baizheng, person overseeing the accounting operations,and Ms. Gong Juanjuan, head of Accounting Department, made representations in respect of the truthfulness,accuracy and completeness of the financial report contained in the annual report.All directorsattended the board meeting to review this report.Forward-looking statements contained in this report do not constitute any substantive commitments to investorsby the Company. Investors are advised to exercise caution of investment risks.The report elaborates major risks faced by the Company. Please refer to "IV. Discussion and Analysis ofBusiness Operations" for details.The Company has no plan to distribute cash dividend and bonus shares. No capital reserve shall be converted intoshare capital.This report is prepared based on the Chinese text and is prepared in both Chinese and English versions. In theevent of any discrepancy between the Chinese and English versions, please subject to Chinese text.
CONTENTS
SECTION I. IMPORTANT NOTICE, CONTENT, DEFINITIONS ................................................................................................................................................................................... 2
SECTION II. COMPANY PROFILE AND MAJOR FINANCIAL INDICATORS..................................................................................................................................................... 5
SECTION III.OVERVIEW OF THE COMPANY’S BUSINESSES................................................................................................................................................................................. 8
SECTION IV. DISCUSSION AND ANALYSIS OF BUSINESS OPERATIONS .................................................................................................................................................13
SECTION V. SIGNIFICANT EVENTS .......................................................................................................................................................................................................................................29
SECTION VI. MOVEMENTS IN SHARE CAPITAL AND SHAREHOLDERS.......................................................................................................................................................47
SECTION VII. PREFERRED SHARES ......................................................................................................................................................................................................................................50
SECTION VIII. CONVERTIBLE BONDS..................................................................................................................................................................................................................................51
SECTION IX DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES ...... 52
SECTION X. CORPORATE GOVERNANCE...........................................................................................................................................................................................................................64
SECTION XI. CORPORATE BOND..............................................................................................................................................................................................................................................73
SECTION XII. FINANCIAL REPORT (FULL TEXT)............................................................................................................................................................................................................74
SECTION XIII. DOCUMENTS AVAILABLE FOR REFERENCE.............................................................................................................................................................................. 203
INTERPRETATION
| Items | Refers to | Contents |
| CSRC | Refers to | China Securities Regulatory Commission |
| SZSE | Refers to | Shenzhen Stock Exchange |
| The Company, the Group, Shougang, Shougang Co. | Refers to | Beijing Shougang Company Limited |
| The Holding | 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 to Shougang Group. 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 the Company |
| Board of Directors or the Board Directors | Refers to | The board of directors of the Company |
| Supervisory Committee | Refers to | The supervisory committee of the Company |
| Shareholders’ General Meeting | Refers to | The Shareholders’ General Meeting of the Company |
| 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%) |
| 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 up-stream 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, holds 51%) |
| Major Assets Reorganization, First Reorganization, and Previous Major Assets Reorganization | Refers to | Since the shut down of the main process of iron and steel manufacturingin late 2010, which was operated in Shijingshan District, Beijing, a transaction between the Company and the Holding carried out. The transaction event was announced as "Related Party Transactions between Beijing Shougang Co., Ltd. and Shougang Corporation - Major Assets Replacement 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 Replacement, Second Reorganization | Refers to | On 23 April 2015, shares of the Company was suspended and the major assets replacement launched. Main contents of the replacement 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 replacement 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 replacementwas 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 2019 to 31 December 2019 |
| Thousand, Million, Billion | Refers to | RMB Thousand, RMB Million, RMB Billion |
Section II. Company Profile and Major Financial Indicators
I.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 | ||
| Legal representative of the Company | 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 of directors | |
| Name | Chen Yi |
| Correspondence address | No. 99 Shijingshan Road, Shijingshan District, Beijing, PRC |
| Telephone | 010-88293727 |
| Fax | 010-68873028 |
| Email address | Chenyi@shougang.com.cn |
III.Information disclosure and preparation place
| The chosen disclosure media | China Securities Journal, Securities Times, Shanghai Securities News |
| The website of annual report disclosure | http://www.cninfo.com.cn |
| The Reserve Location of annual report | Secretary office of the board of directors of the company, The Shenzhen Stock Exchange |
VI. 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 information
Accounting firm hired 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, Yu Qike |
Sponsor engaged by the Company for performing continuous supervision duties in reporting period
□Applicable √Not applicable
Financial consultant engaged by the Company for performing continuous supervision duties in reporting period
□Applicable √Not applicable
VI. Majoraccounting data and financial indicatorsWhether it has retroactive adjustment or re-statement on previous accounting data or not
√YES □NO
Reasons for retroactive adjustment or restatementChanges in accounting policies
Unit: RMB Yuan
| 2019 | 2018 | Changes over last year | 2017 | |||
| Pre-adjustment | Post-adjustment | Post- adjustment | Pre-adjustment | Post-adjustment | ||
| Operating income | 69,151,432,692.45 | 65,776,660,538.90 | 65,776,660,538.90 | 5.13% | 60,250,154,291.48 | 60,244,042,834.78 |
| Net profit attributable to shareholders of the listed company | 1,251,047,873.08 | 2,403,750,672.16 | 2,403,750,672.16 | -47.95% | 2,210,651,071.39 | 2,210,651,071.39 |
| Net profit attributable to shareholders of the listedcompany after deducting non-recurring gains and losses | 1,237,189,576.69 | 2,370,753,271.57 | 2,370,753,271.57 | -47.81% | 2,209,924,573.87 | 2,205,846,450.98 |
| Net cash flows from operating activities | 3,318,628,938.53 | 12,459,389,585.17 | 12,459,389,585.17 | -73.36% | 9,333,531,190.92 | 9,333,531,190.92 |
| Basic earnings per share (RMB/share) | 0.2365 | 0.4544 | 0.4544 | -47.95% | 0.4179 | 0.4179 |
| Diluted earnings per share (RMB/share) | 0.2365 | 0.4544 | 0.4544 | -47.95% | 0.4179 | 0.4179 |
| Weighted average ROE | 4.77% | 9.29% | 9.29% | Reduce 4.52 percentage point | 8.70% | 8.70% |
| As at 31 December 2019 | As at 31 December 2018 | Changes over end of last year | As at 31 December 2017 | |||
| Pre-adjustment | Post-adjustment | Post- adjustment | Pre-adjustment | Post-adjustment | ||
| Total assets | 141,370,925,410.35 | 135,106,278,049.83 | 135,204,153,025.76 | 4.56% | 134,158,519,805.27 | 134,158,519,805.27 |
| Net assets attributable to shareholders of the listed company | 27,028,680,992.20 | 25,347,851,871.23 | 25,431,045,600.77 | 6.28% | 26,419,676,048.08 | 26,419,676,048.08 |
Changes in accounting policies and correction of accounting errorsIn 2017, the Ministry of Finance issued Accounting Standard for Business Enterprises No. 22 - Recognition andMeasurement of Financial Instruments (Amended), Accounting Standard for Business Enterprises No. 23 -Transfer of Financial Assets (Amended), Accounting Standard for Business Enterprises No. 24 - HedgeAccounting (Amended), and Accounting Standard for Business Enterprises No. 37 - Presentation of financialinstruments (Amended) (hereinafter refers as the new financial instruments standards). Referring to XII. FinancialReports, Changes in significant accounting policies and accounting estimates.VII. Difference of the accounting data under accounting rules in and out ofChina
(1) Difference of the net profit and net assets disclosed in financial report, under both IAS (InternationalAccounting Standards) and PRC GAAP (Generally Accepted Accounting Principles in China)
□Applicable √Not applicable
(2) Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules andPRC GAAP (Generally Accepted Accounting Principles in China)
□Applicable √Not applicable
(3)Reasons for differences in accounting data under domestic and foreign accounting standards
□Applicable √Not applicable
VIII. Major quarterly financial index
Unit: RMB Yuan
| Q1 | Q2 | Q3 | Q4 | |
| Operating income | 15,387,593,768.93 | 17,396,019,766.57 | 17,504,795,774.61 | 18,863,023,382.34 |
| Net profit attributable to shareholders of listed company | 274,208,948.18 | 727,731,385.68 | 234,432,040.91 | 14,675,498.31 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains or losses | 274,734,879.67 | 722,256,000.54 | 231,415,430.73 | 8,783,265.75 |
| Net cash flows from operating activities | 1,130,256,251.70 | -3,330,460.19 | 2,368,603,904.92 | -176,900,757.90 |
Whether there are significant differences between the above-mentioned financial index or its total number and therelevant financialindex disclosed in the Company’s quarterly report and semi-annual report
□YES√NO
IX. Items and amounts of non-recurring profit (gain)/loss
√Applicable□Not applicable
Unit: RMB Yuan
| Item | 2019 | 2018 | 2017 | Note |
| Gains/(losses) from the disposal of non-current assets (including the write-off that accrued for impairment of assets) | -7,684,491.35 | -7,363,775.54 | -20,778,295.00 | |
| Government grants recognized in current gains/losses (excluding the those that enjoyed in quota or ration according to nationalstandards, which are closely relevant to enterprise’s normal business) | 42,102,501.30 | 31,376,175.07 | 30,507,306.90 | |
| Except for effective hedge business relevant to normal operationof the Company, gains and losses arising from fair value changeof tradable financial assets, derivative financial liabilities, tradablefinancial liability and derivative financial liability and investmentincome from disposal of tradable financial assets, derivative financialliabilities, tradable financial liability, derivative financial liability andother debt investment | -1,300.00 | |||
| Gains/losses from external entrusted loans. | 8,187,426.69 | 5,478,548.29 | 4,219,597.44 | |
| Net non-recurring income or expenses other than the above items. | -18,673,930.68 | 22,350,838.71 | -4,751,380.22 | |
| Less：Impact on income tax | 4,039,236.83 | 2,779,669.43 | -1,865,420.82 | |
| Impact on minority shareholders’ equity (post-tax) | 6,033,972.74 | 16,064,716.51 | 6,256,729.53 | |
| Total | 13,858,296.39 | 32,997,400.59 | 4,804,620.41 | -- |
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosurefor CompaniesOffering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined asrecurring profit (gain)/loss accordingto the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 onInformation Disclosure for Companies Offering TheirSecurities to the Public --- Extraordinary Profit/loss, explainreasons.
□Applicable√Non applicable
During the reporting period, there is no extraordinary profit (gain)/loss thatdefined by Q&A Announcement No.1on Information Disclosure for CompaniesOffering Their Securities to the Public --- Extraordinary Profit/loss
Section III. Overview of the Company’s BusinessesI. Main businesses during the reporting period
1. The Company runs the business in iron and steel industry, and main business range includes: iron and steelsmelting and steel rolling processing; copper smelter, copper rolling processing, and sell; sinter, coke, chemicalproducts manufacture and sell; Blast Furnace Top Gas Recovery Turbine Unit and coal gas production and sell;industrial waste processing and sell; sell of metal material, coke, chemical product, mechanical and electricalequipment, construction material, general equipment, five metals of gold, silver, copper, iron and tin, furniture,finishing material, equipment lease (except automobile); storage service; technological development, technicalconsulting, technical transformation, technological service, technical training; investment and investmentmanagement.
2. Iron and steel products of Qianshun Base include hot and cold plates. The hot plates mainly contain: picklesheet, weather-resistant steel, automobile structure steel, high-strength steel, pipeline steel, saw steel, etc. The coldplates 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-rolledproducts, i.e., automobile structure steel, pipeline steel, weather-resistant steel, high-strength steel etc.; and alsocontain medium and thick plates products, 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, homeelectrical appliances, special-use plate, tin sheet, tin-free-steel, color-coated sheet, general sheet etc. seven mainproducts 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, hardwareaccessories with five metals (gold, silver, copper, iron and tin) etc. The automobile structure steels mainly includeautomobile wheel steel, and automobile beam steel, which mainly used to produce wheel 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 and gasetc. The weather-resistant steel mainly include container steel, railway weathering steel, stirred tank steel, electricpower steel etc. The high-strength steels mainly include high performance steel for engineering mechanism,explosion proof steel for the safe and ATM machine, fan steel and auto-truck steel etc. The high-strength steelsare mainly used to manufacture lifting arm, body, and beam of cranes, pump, special vehicle etc., and also, theblade and other products of blower, mine fan and electric fan could be manufactured. The special-use platesmainly include weld gas vessel steel, boiler, pressure vessel steel, which could be used to manufacture containersfor liquefied petroleum gas, liquid nitrogen etc., and also could be used to produce pressure equipment for specialused equipment.
(2) Cold Plates
The automobile sheets are mainly used to manufacture automobile body, structure, and partial chassis parts ofcommercial and passenger vehicles of all kinds. The electrical steels include non-oriented electrical steel andoriented electrical steel, which mainly used in household electrical appliances, industrial motor, medium andsmall electric motor,new-energy cars, transformer, and other industries. The tin sheets are mainly used in packingof 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. The home electrical appliances are mainly used in fridges, washing machine, air-conditioning,tele-vision, and inner and outer plate, structure plates of small home appliances. The color-coated sheets arewidely used in construction industry, shipbuilding industry, stock manufacturing industry, furniture industry etc.The special-use plates are mainly used to manufacture chain, enamel, solder wire, tubbing, general motorcyclecomponents, etc.II. Material Changes in Major Assets
1. Material Changes in Major Assets
| Major Assets | Notes for material changes |
| Equity Assets | No material changes. |
| Fixed assets | Book value of fixed assets increased RMB1.136 billion compared to the beginning of the year.Mainlydue to thetransfer offixed assets from construction in progress by RMB6.957 billion and depreciated by RMB5.851 billion. |
| Intangible assets | Book value of intangible assets increased RMB181 million compared to the beginning of the year. Mainly due to the transfer ofland-use right from construction in progress by RMB263 million and amortized by RMB83 million. |
| Construction in progress | Book value of construction in progress increased RMB 3.273 billion compared to the beginning of the year. Mainly caused by the construction of Jingtang Co. Phase-II project. |
2. Major overseas assets
□Applicable √Not applicable
III. Core Competitiveness Analysis
1. Capability of production equipment
Qiangang Co. owns 2 blast furnaces with 2650m?each and 1 blast furnace with 4000m?, which adopt multipleinternational advanced technique such as distribution chute of larger blast, fully dry gas cleaning, pulverized coalinjection by parallel tank, zero interval iron production etc. and main technical indicators, such as coke ratios, coalinjection rate, using coefficient of the blast furnace etc., stand at the leading position in China. In addition, 5converters with 210t each, 4 two-strand slab caster and corollary equipment LF, CAS-OB, RH Vacuum RefiningFurnace, 1 hot-rolling wide steel strip rolling mill with 2250mm, 1 hot-rolling wide steel strip rolling mill with1580 are also owned by Qiangang Co. Meanwhile, Qiangang Co. takes the lead to realize “One-step Steelmaking”,“One-step Refining” and “Auto Steel-pouring”. Furthermore, Qiangang Co. introduce artificial intelligence intosteel production, and the many aspects of the Company reach the leading level in China, such as technicalequipment, energy saving and environmental protection, independent integration and innovation etc.Jingtang Co. owns the largest coke oven in Asia with 7.63m in high, 1 belt burning machine with effectiveburning area of 504㎡, 2 blast furnace with 5500m?each, 2 dephosphorize converter with 300t each, 3 decarbonizeconverter with 300t each, 4 slab continuous caster, 1 hot-rolling wide steel strip rolling mill with 2250mm, 1hot-rolling wide steel strip rolling mill with 1580, 6 cold-rolling wide steel strip rolling mill and corollaryauxiliary and public auxiliary facilities. Jingtang Co. adopts 220 advanced technologies, among which, two-thirdsof the advanced technologies are independent innovation and integrated innovation. The converter “One-step”technology and “3-De” (desulphurize, dephosphorize, desilicification) steel making technology are researched anddeveloped independently, which is the first clean steel production platform with high efficiency and low cost, andJingtang Co. is also the first steel mill that adopts low temperature multi-effect seawater desalination technology.
With this technology, the water recycling rate exceeds 97%. The phase-II project has 2 coke ovens with 7.63m inhigh and 70 holes, and also has corollary facilities of coke dry quenching and flue gas desulphurization anddenitrification, 2 pellet production lines with belt burning machines, and 1 blast furnace with 5500m?.The cold-rolled electrical steel production line of Zhixin Co. owns acid continuous rolling mills, continuousannealing line, acid pickling line, twenty high rolling mill and other production lines and other public supportingfacilities such as acid regeneration facility etc. The overall equipment of Zhixin Co. achieves advanced worldlevel. Zhixin Co. focus on promoting the steel production, sale, research and development on electric machineryin 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 productionenterprise in China for new energy car series production. Regarding to the orientation, Zhixin Co. self-developsthe production technique in high grain-oriented steel that prepared by low slab reheating temperature technique,which makes Zhixin Co. becomes the fourth enterprise in the word that industrialization of fully low temperatureprocess.Cold-R Co. integrates the most advanced manufacturing technique in the world, for example, sour rolling milladopts full continuous production technology with shallow turbulent pickling and 5 stand 6 continuous rollingmachine, and adopts control technologies such as CVC shape control, AC-DC-AC frequency control etc. as well.Continuous annealing and galvanizing line adopt a novel technology of rapid solidifying that suit for high strengthsteel and extra deep drawing sheet steel production. The highest strength level of the plates achieve 1000MPa,which potentially has the capacity to further develop higher strength steel products. The overall technical andequipment level of Cold-R Co. are among the first ranks in the world.
2. Scientific and technological innovation capabilities
Shougang Co., Jingtang Co., Cold-R Co., Zhixin Co. are qualified national high-tech enterprise qualificationcertification approved by government.In aspect of intellectual property: the technology center of Shougang Co. is authenticated by Beijing enterprisetechnology center, and is awarded the title of Beijing Intellectual Property Pilot Unit and Beijing IntellectualProperty Demonstration Unit. In the year of 2019, Qianshun Base and Jingtang Base gain 328 patent rights,among which, 141 invention patents, 186 utility model patents and 1 patent for appearance. Regards to JingtangCo., 32 patents of Jingtang Co. win the National Invention Exhibition Invention and Entrepreneurship Award &Project Award. Meanwhile, Cold-R Co. gain the title of Beijing Intellectual Property Pilot Unit and BeijingIntellectual Property Demonstration Unit, and Zhixin Co. win the third Mayor's Special Award of Tangshan.In aspect of standards establishment: the Company continuous promots the transformation of scientific andtechnological achievements and scientific innovation becomes the significant engine of high quality development.The Company organized and participated 12 national standard-settings and 6 industry standard-settings, amongwhich, the national standards such as “GB/T 4333.10-2019 Infrared Absorption Method for Determination ofCarbon Content in Silicon Steel” etc. have been issued and implemented. 3 projects of Ministry of Science andTechnology that undertook by the Company, such as “Intelligent Stability Control Technology of Steel Quality”,are going well. And, 12 projects such as Technical Research on the Application of Electrical Steel Products forZhixin New Energy Vehicles to Electric Motors” etc. achieve actual effects.In aspect of science and technology award: In the year of 2019, 7 projects of the Company was awarded formetallurgical science and technology prize, and 15 projects awarded for Hebei Province science and technologyprize. The project of Zhixin Co., named as High Quality Orientation Silicon Iron Production Technical in HighEfficiency Environmental Protection Transformer, awarded the first prize of metallurgical science and technology,which signals the electrical steel manufacturing technology of the Company achieves international advanced level.
3. Products Market Competitiveness
6 products of the Company are first issued, including 1 product that is first issued in the world. The Company hasbeen awarded many prizes, including Special Contribution Prize in CSP Platform System (Dongfeng-Nissan),Cost Improvement Prize (Great Wall Automobile), Sincere Cooperation Prize (Midea), Best Strategic PartnerPrize (Shanghai Hili), Platinum Award (Haier-Golden cube), and Best Supplier (Siemens). Many automobilesheet EVI events have been successfully held by the Company, such as BMW Media Day, Nissan Shougang Day,and the Second Technology Forum of Shougang Automobile Steel etc. The Company is list on the Top 10Excellent Steel Enterprises, appraised by the China Steel Association and the China Society for Metals, and on thelist of Leading Brand of Steel Mill in Beijing, Tianjin, Hebei).Cold rolled automobile sheet: Realizing full coverage of top 10 key vehicle enterprises; share of product supplyin the market remain steady increase; keep the position of No. 1 supplier for BMW and Changcheng in China;doubling products supplied to Japanese car year-over-year; Full coverage of 1180MPa grade; first proposing thetesting standards for high reflection middle coating free outer plates; stable supply of middle coating free outerplates, 590/780MPa high strength high extension DH steel and HC780/980CPD+Z galvanized duplex steel inbatch.Cold rolled electrical steel: including orientation and non-orientation electrical steel, and realizing first issue of25SW1250H electrical steel for premium new energy power generation; becoming the only supplier forVolkswagen MEB project; No. 1 of the German Siemens certification of global electrical steel enterprises.“Double million” material for large capacity transformer with ultra-high voltage passed the examination. Themain performance of product series of high magnetic, high strength and low loss new energy car catches up withtop- ranking enterprises in the world; obtain 14 new energy power generation clients authentication, and becomethe supplier for 10 clients; overall pushing the client authentication for passenger car (Toyota, Nissan, General,etc.)Cold rolled tin sheet: successful develop food can steel TS550, high elongation material for easy-open lid, theproportion of tin CA thin products achieve 80%.Other cold-rolled products: stablesupply ofhome electrical appliances to Haier, Midea, Hisense and other topenterprises; supply of special-used steel such as needle making steel and other 6 new products in batch; marketshare of double layers welded pipe remain ahead; color-coated sheet successful realize clean change overzinc-aluminium-magnesium products, and supply products in batch to the leading enterprises in animalhusbandry.Hot-rolled pickle sheet: a breakthrough development of automobile structure steel in vehicle enterprises such asBMW, Toyota, Honda, Nissan etc. has been achieved; and, supply Huawei 5G base station of lightweightspecial-used pickle sheets.Other hot-rolled products: the development of 10 new grades such as SAE1528B etc. of fine drawing steel hascompleted; 700MPa high strength automobile structure steel stable supply to Yutong, Beiqi FOTO and Sunhunk;two-phase wheel steel, the first issued product in China, becomes the main product which leading the industrylightweight upgrade; overcoming the integrate technology of fire and weathering resistant steel, and successfulapplies in construction of the diving platform of 2022 Beijing Winter Olympic Games; production of premiumcoiled tubing (CT90) in batch.
4. Management innovation ability
Qiangang Co., overall implements the self-established Lean (JIET) management system, establishing productionand operation parallel operate model, and improving the level of precise management; establishing the safety“double-control” operating mechanism based on informatization and essentialization, and becoming the importantparticipants, contributor, and the leader of the establishment of Hebei “double-control” mechanism. Qiangang Co.
has been assessed as the only one “National Safety Culture Construction Demonstration Enterprise” in iron andsteel industry. The “Intensive Production Line Management of Remote Intelligent Control in Large Iron and SteelEnterprises” won the second prize of Hebei Province Innovation Achievements of Enterprise ManagementModernization, and the “Construction and Implementation of Centralized Management and Control of MaterialMeasurement in Super Large State-owned Metallurgical Enterprises” won the second prize of the 26
th
NationalInnovation Achievements of Enterprise Management Modernization.Jingtang Co.: “The Construction and Implementation of the Training system of Skilled Personnel led byIntelligence in Iron and Steel Enterprises” won the second prize of the 34
thBeijing Innovation Achievements ofEnterprise Management Modernization; “Innovation and Practice of Intelligent Management and Control in LargeCoking Enterprises” won the third prize of Achievements of Management Modernization in MetallurgicalEnterprises; “Construction and Implementation of Management System for Market Oriented Consistent Productsin Large Iron and Steel Enterprises” won the first prize of Hebei Province Innovation Achievements of EnterpriseManagement Modernization. “The Construction and Implementation of the Evaluation System of SkilledEmployees in Large Enterprises” and “Practice of Quantitative Evaluation of Quality Management SystemOperation in Large Iron and Steel Enterprises” won the second prize of Hebei Province Innovation Achievementsof Enterprise Management Modernization; “High Efficiency Intelligent Management based on the Reliability ofLarge Blast Furnace Detection and Control” won the third prize of Hebei Province Innovation Achievements ofEnterprise Management Modernization.
5. Personnel training ability
The Company sets targets as: becoming the leader of the national strategy of coordinated development in Beijing,Tianjin, and Hebei, the demonstrator of the integrated development of industry and city, and the top-rankingservice provider of premium material in the word. The Company believes in that talent is the first resource of anenterprise, and emphasis the mission of the Company which is that “better quality, better service, better growth,better environment”. The Company continuous ramming the foundation and strengthen the base, meanwhile, openthe green channel for talents and strengthen the high quality talents team. The Company persists in matchingtalents with position and business, and provides positive talent development environment. As a result, leadingtalents with technical ability arose, for instance, Wang Rui won the championship in China Experts, Rongyanming won the title of National Technical Expert, Guo yuming and Liu jianbin won the title of National ModelWorker, Shang Guangpeng and Zheng mingyue won the Capital Labor Award. Satisfying the requirement ofhigh-tech talents training and development, the Company recommends Wang Qiuna, Gao Qian, Liu Zhaoyue, LiGuanglin, Hu Zhiyuan to study for a PhD at the University of Science and Technology Beijing, Iron and SteelResearch Institute, Beijing Institution of Technology, and other top universities, which then provide a talentguarantee for the continuous high quality development of the Company.
6. Environmental protection ability
Qianshun Base upholds the ideal of green development, continuously carrying out the environmental protectionimprovement and transformation, and improving the ultra-low emission capacity. As a result, Qianshun Base wonthe title of A-level Environmental Achievements Iron and Steel Enterprise in Tangshan for two successive years.In 2019, passing the assessment and acceptance procedure of “Ultra-low Emission in Iron and Steel Industry”,assessed by the Ministry of Ecological Environment, Qianshun Base became the first and the only enterprise iniron and steel industry who passed the assessment and acceptance procedure of ultra-low emission in the wholeprocess in China. This achievement provides the experience and technical demonstration for the green andsustainable development in iron and steel industry. Qianshun Base also won the first prize of Scientific andTechnological Development in Energy Conservation and Emission Reduction, assessed by the China EnergyConservation Association. Cold-R Co. won the title of National Green Manufacturing Plant in 2019.
Jingtang Base always gives a priority for environmental protection, and makes great effort on implementation ofthe green plan. In 2019, passing the assessment and acceptance procedure of ultra-low emission (Tangshan),Jingtang Base won the national titles of “Green Plant” and “National Green Demonstration Enterprise”, moreover,Jingtang Base is granted the title of Excellent Enterprise for Green Development by China Metallurgical Newsand China Steel News. Following the operation of the CCPP, Jingtang Base established the first new model of“Combustion-Heat- Electricity-Water-Salt” and realized the high efficient cycle utilization of low quality energy.
Section IV. Discussion and Analysis of Business Operations
I. OverviewIn 2019, the global economic growth slowing and the domestic economy remain stable with slightly increase, inthe meantime, the domestic economy turns from rapid growth stage to high quality development stage. Referringto the iron and steel industry, the overall business operated smoothly that even the steel price was underdownward pressure, the price of fuel and other raw material moved up especially the ironstone price. Overall, theprofitability of iron and steel industry has been impacted by the economic conditions. The development directionof the Company was: leading technical innovation, improve the capacity of manufacture and service, insist ongreen manufacture, intelligent manufacture, super quality manufacture, lean manufacture, and precise service. TheCompany also insisted to develop itself with the time, with clients, with shareholders, and with employees. TheCompany was confident and try its best to overcome difficulties and did the best to stay ahead in environmentalprotection sector. The Company also maintained the breakthrough of technology innovation, the improvement ofits brand value and its high-quality development.The achievement of major accounting data and financial indicators:
Operating incomeRMB69.15 billion (5.13% year on year increase); total profit RMB1.997 billion (36.78% yearon year decrease);net profit attributable to shareholders of the listed company RMB1.251 billion (year on yeardecrease 47.95%); EPS RMB0.24; total assets RMB141.371 billion; equity attributable to shareholders of thelisted company RMB27.029 billion.The achievement of major products:
Qiangang Co.: iron 7.71 million ton, (11.9% year on year increase); steel 8.1 million ton (9.3% year on yearincrease); material 7.79 million ton (include supply Cold-R Co. 1.806 million ton, Zhixin Co. 1.809 million ton),year on year increase by 11.1%. Jingtang Co.: iron 7.78 million ton (3.0% year on year increase); steel 9.27million ton (13.9% year on year increase); material 8.61 million ton (11.9% year on year increase). Zhixin Co.:
electrical steel 1.63 million ton (2.0% year on year increase).Cold-R Co.: Cold-rolled plate 1.699 million ton (4.6%year on year decrease).
1. Quality manufacturing
(1) Insist on quality first
Qianshun Base implemented quality management for the whole process and all of staff and organized the“100-day quality improvement” event. The standard deviation and the peak of the width of hot-rolled outer plateachieved the domestic leading level. The lateral thick difference of 0.35mm high grade non-oriented productachieved the international leading level, and the batch production of 1.8mm hot-rolled base material of orientedelectrical steel realized. The full production average carbon-oxygen equilibrium decreased to 0.0016. The defectrate of outer plate supplied to BMW decreased, and the supplied inside plate realize zero defect for 11 successivemonths.Jingtang Base perfected the whole process standard target system and focused on the production line process
control. The 34 of the 66 defined indicators reached or exceeded the benchmark enterprises (41.7% year on yearincrease). The 0.00156 carbon-oxygen equilibrium of decarbonization furnace achieved the internationaladvanced level. The 2250mm hot-rolled yield created new high repeatedly, and the product influence rosesteadily.
(2) Remain quality strategy
The product strategy of automobile sheet, electrical steel, tin sheet gained more and more market reputation. Theautomobile sheet product certification carried out for BMW, Benz, Honda, BYD and other 29 clients, and gained
99.3% pass rate. The CR440Y780T-DH and CR780Y980T-CP passed the BMW certification, which was the onlytwo projects that passed the BMW certification in China. A new breakthrough of Nissan achieved, and the middlecoating free outer plate broke the domestic monopoly. The electrical steel completed the development of 10 newprojects and realized the global first issue of 25SW1250H (for new energy vehicle power generator). The singleplant output of non-oriented electrical steel topped all over the world for 6 successive years. The non-orientedelectrical steel passed the material test of Toyota and Ford, and the Company also expanded the new energychannel for the non-oriented electrical steel. For the oriented steel, the market share for 0.20mm and blowultrathin products ranked at the first place in China for 2 successive years, and the projects successful applied inthe key projects of clean energy transmission, the Zhangbei - Xiongan ultra high voltage project, and othernational material projects such as Baihetan and Wudongde Hydropower Station. The order of tin sheet basic useprojects reduced 10% per month compare to the last year, while the percentage of milk powder, coating, drink andchrome-plating products raised 30%-70% per month compared to the last year. The order ratio for the overall tinproducts (0.20mm and below) reached 54%. The Company developed Jiamei Group and achieved supply in batch,and 90% of supply was protein beverage steel. Success developed and certified the T5CA for easy-open lid, theCompany supplied in batch to Yinglian, Xiangda, Biaoxin etc. The Company also completed the certificationprocess and started small batch supply of high tin and low chromium iron for mushroom can use.
(3) Remain structure optimization
The Company adhered to the structural reform of supply and demand, quickly pushing premium product intopremium market. Qianshun Base stable provided the multiphase steel to BMW; the pipeline steel supported theeast gas pipeline of Sino-Russian; the welding steel ranked at the first place in China for 9 successive years. Theoutput of premium tin sheet project of Jingtang Base gave some growth, for example, the milk powder steelincreased 54%, hot-rolled shape steel increased 39%, oil way welded pipe steel of Ti Automotive increased 30%;the yearly output of color coating products reached 100,000t; and the monthly output of Zn-Ai-Mg productsachieved 7000t.
2. Green Manufacturing
Insisting on the development idea that “lucid waters and lush mountains are invaluable assets”, the Companypioneered whole technology of whole process ultra-low emission in iron and steel industry, which with the ideathat iron and steel production is harmoniously commensal together with environmental protection.
(1) Establishing Integrated management and control platform of the intelligent environment protection.Improving the unorganized emission control, the Company applied the image intelligent recognition technology inparticulate emission control for the first time, and first time realized the effective flue gas capture of continuouscaster turret, and combined the wet electric dust collector with converter gas OG dust control. The Company alsoencouraged the transportation of clean energy vehicle and builds a new benchmark of green logistics. TheCompany ran 17 electric heavy trucks and 25 electric forklift in plant logistics operation.
(2) Promote the application of green technology
The Company started 9 energy saving projects, and the comprehensive energy and water consumption per ton
created the best record ever. The Company also pushed on the projects full life cycle green development. By usingthe high-efficiency electrical steel, the Company yearly saved 5.4 billion kilowatt of electricity and reduced 1.73million CO2 emissions. The thickness of the coating of middle coating free vehicle outer plate has reduced by20%; the weight of ultra-strengthen steel (780MPa and above) has reduced by 10%; the plate of anti-corrosioncontainer (550MPa and above) reduced the container weight by 12%.
(3) Realize ultra-low emission for the whole process.
Qiangang Co., completed the transformation of ultra-low emission and accepted by Tangshan. According to therequirement of “Notice on the Assessment and Monitoring of Ultra-low Emission in Iron and Steel Enterprises”issued by the Ministry of Ecological Environment, the whole process ultra-low emission of Qiangang Co. passedthe assessment acceptance. After publishment of the assessment acceptance, Qiangang Co. became the first andthe only enterprise in iron and steel industry who passed the assessment and acceptance procedure of ultra-lowemission in the whole process in China. Jingtang Co. always gives a priority for environmental protection duringthe operational period. Jingtang Co. passed the assessment and acceptance procedure of ultra-low emission byTangshan, and positive reacted to control the heavy air pollution. During the National Day, Jingtang Co.successful accomplished the blast furnace in turn maintenance and production task. The new model of greentransportation has started which linked railway with wharf. Jingtang Co. has been titled as national “Green Plant”and “National Green Demonstration Enterprise”.
3. Intelligent manufacturing
(1) Management and control platform for upstream production and marketing unificationThe Company introduced the production and marketing unification system into practice, and promoted the changeof management ecology through the informationization construction. The Company also improved the ability of“manufacture and service” through the realization of the integrity of production and marketing, the integrity ofmanagement and control, and the integrity of business and finance. Continuous improving the system functionsand enhancing the application effects resulted in the 60% improvement of contract execution efficiency, 80%reduction in the time of contract processing, 100% production of Steelmaking slab, 3.4% decrease insemi-finished products, and 99.3% automatic generation of financial documents.
(2) Promote intelligent factory construction
Qiangang Co. progressively formed a promoting mode which lead by the cold rolling intelligent plant construction,which then improved the intelligent manufacturing capability and demonstrated the industry demonstration effect.The national advanced integrated technology of intelligent plant that is built through focus on customizedproduction, integrated logistics, whole process management and control, and intelligent equipment. Thetechnology owned 18 patents, 13 copyrights of registered software, and 6 achievements are applied in 7 iron andsteel enterprises. The Company had 18 upgrading and transformation projects of main process intellectualizationand 4 robot new scene applications such as the independent researched and developed steel coil stripping belt andthe independent researched and developed steel inner fixation etc., which filled the domestic vacancy.
(3) Promote big data application
The business decision analysis system successfully launched which is the cornerstone of the managementinnovation and business innovation. The Company implemented the “robot instead of human” project and keyreservoir area intellectualization project, also, extensivelycarried forward the intelligent manufacturing. The No.5wharf unmanned warehouse was assessed as the pilot project for integrated development of internet andmanufacturing industry in Tangshan.
4. Lean manufacturing
(1) Overall cost reduction and efficiency increase
The high level stable production of blast furnace created the best record in the world; the flexible continuous
casting technology has been developed, and the best record for continuous casting is 508 furnaces which was thebest record ever; the output of oriented electrical steel increase 29 thousand ton; the number of Nissan, outer plate,GA and other high premium products of Cold-R Co. increased by 2%, which points to the realization of yield andefficiency increase. Promoting cost saving and making a good combination of "substitution, transformation,reduction, expansion and increase" to reduce the outsourcing cost; encourage homemade equipment, strictlyperform bidding procedure and reduce repair cost; to save the periodic expense, encourage low-interest loan swapand appropriate loan renewal; deepening commercialization and system collaborative to reduce raw material costand improve product structure, in the meantime, expending resource reutilization and reducing overall costs. As aresult, took the advantage of cost reducing and efficiency increasing, the Company got a benefit of 6.4 billion.
(2) Complete essential safety management
Qianshun Base continuous optimizing the essential safety management, perfecting the emergency managementsystem, innovating the “seven steps double prevention mechanism”, strengthen relative management; focusing onsafety culture construction, the Company won the title of “Safety Culture Construction Demonstration Enterprise”.Jingtang Base insisted on eliminating safety risks from the origin and encouraging essential safety management,and the risk and safety control achieved remarkable effect in multi-area and multi-system, especially in thecold-rolled system and belt transportation system. The Company also paid attention to the implementation ofsafety responsibility, integrating the safety management system with the enterprise standardization, promotingconstruction of internal training system (i.e. intrinsic safety training), and perfecting the safety evaluation system,as a result, the safety management move towards scientific management and independent management gradually.
(3) Lean management for whole process
The Company established a self-customized lean management system (JIET), which was on-time economicdelivery centered. The Company also established the production and operation parallel operate model, meanwhile,continuously perfecting the Six Sigma applying system and strengthen lean awareness and business sense of allstaff. Insisting on benchmark comparison and target-oriented, the Company established 107 amoeba operators,implemented 474 lean quick improvement projects and 372 important researches, and established 41 repair roomsfor spare parts.
5. Precision service
Perfecting the service system, building the comprehensive advantages of “manufacturing plus service” throughprécised services, establishing customer ecosystem based on “open sharing, interconnection, value creation”.
(1) Deepen technical services
The Company posited itself as “the discoverer of customer demand, the organizer of technical service, thesupporter of product optimization”. Based on which, the Company continuously improved the technicalcommunication with clients and integrates service resources in production, marketing and research in aspect ofnew material application, design optimization, process improvement, technology cost saving etc., to establish anintegrated client service mode. Under the new mode, the Company deeply developed clients’ new technology,new uses and new demands, and carried out customized and personalized projects around on accuracy,microstructure, capability, usage and other new features. The Company provided the customized solution forclients through the upgrading of the projects, standards and services. The Company gained 1845 certificationopportunities for parts, launched 33 EVI projects and supplied EVI 1.72 million ton.
(2) Improve service ability
The Company pushed the establishment of services system divided by category, region, and grade, and establishedcentralized and information-sharing service platform. The Company close-loop managed the clients’ requirement,and realized immediate review of common contract. As a result, the percentage of technical enquiry reduced to 3%
and blow, and the marketing response efficiency increased significantly. Adhered to market-orientation, theCompany improved the market frontier service ability, in the meantime, together with the high-end projects andchannels, enhanced personal service. The Company also established and implemented the instruction manual forautomobile outer plate processing, overall planned and optimized service resource allocation, and build exclusiveservices teams for significant clients. The in-plant service coverage rate of automobile plate main plant reached89%.
(3) Improve support capability
Completed system on-line running, such as production, marketing and decision support system, logisticscollaboration platform system, intelligent marketing platform system,marketing industry and trade managementsystem, and realized function docking with peripheral system; improved the allocation of front-line serviceresources; enhanced the resources of production line and the balance of cold-rolled products and hot-rolledproducts, and strengthen the contract organization; improved the consolidation of small orders; encouraged thematerial support between Qiangang Co., and Jingtang Co; improved the product supply guarantee ability throughdeveloping continuous casting and process merging; annual contract fulfillment rate achieved 95.7%; whole orderfulfilment rate of key clients reached 93.3%; established transportation emergency guarantee mechanism;provided professional logistics services for customers; satisfied the emergency contract delivery.
6. Strengthen foreign investment control
More focused on main business for foreign investment; strictly controlled the scale of new investment; continuedto strengthen foreign investment management; established a solid foundation for investment risk prevention andcontrol. During the reporting period, the Company gained from investment dividend RMB202.03million and setup a subsidiary - Beijing Shougang New Energy Automobile Material Technology Co., Ltd, and the constructionof relevant project has being carried out as planned. The completion of the project will boost the supply abilityand overall competitiveness of the new energy vehicle steel.II. Analysis of principal business
1. Overview
Referring to I. Overview in IV. Discussion and Analysis of Business Operations”
2. Operating income and operating costs
(1) Composition of operating income
Unit：RMB Yuan
| 2019 | 2018 | Year-on-year Changes | ||||
| Amount | Ratio in operation revenue | Amount | Ratio in operation revenue | |||
| Total operating income | 69,151,432,692.45 | 100% | 65,776,660,538.90 | 100% | 5.13% | |
| According to industries | ||||||
| Metallurgy | 69,151,432,692.45 | 100.00% | 65,776,660,538.90 | 100.00% | 5.13% | |
| According to products | ||||||
| Billet | 270,552,095.12 | 0.39% | 199,272,953.13 | 0.30% | 35.77% | |
| Hot-rolled steel | 25,181,443,445.34 | 36.41% | 22,374,672,870.28 | 34.02% | 12.54% | |
| Cold-rolled steel | 39,541,161,789.88 | 57.18% | 39,442,412,921.65 | 59.96% | 0.25% | |
| Other steels | 835,056,438.75 | 1.21% | 794,723,187.14 | 1.21% | 5.08% | |
| Gas products | 380,242,915.93 | 0.55% | 270,047,934.02 | 0.41% | 40.81% | |
| Other businesses | 2,942,976,007.43 | 4.26% | 2,695,530,672.68 | 4.10% | 9.18% | |
| According to regions | ||||||
| North China | 27,315,677,791.67 | 39.50% | 23,218,751,606.44 | 35.30% | 17.64% |
| Northeast China | 1,350,041,869.95 | 1.95% | 1,280,448,728.44 | 1.95% | 5.44% |
| East China | 22,355,059,382.30 | 32.33% | 23,750,172,869.03 | 36.11% | -5.87% |
| Mid-South China | 1,438,474,544.13 | 2.08% | 1,373,678,371.10 | 2.09% | 4.72% |
| South China | 11,947,057,123.11 | 17.28% | 9,937,141,618.47 | 15.11% | 20.23% |
| Southwest China | 806,904,623.65 | 1.17% | 1,010,873,535.18 | 1.54% | -20.18% |
| Northwest China | 279,209,962.95 | 0.40% | 310,839,666.90 | 0.47% | -10.18% |
| Export | 3,659,007,394.69 | 5.29% | 4,894,754,143.34 | 7.44% | -25.25% |
(2) Industries, products, or regions that generated operating income or operating profit that over 10% of the totaloperating income or operating profit of the Company
√Applicable □Not applicable
Unit: RMB Yuan
| Operating income | Operating costs | Gross margin | Year-on-year change of operating income | Year-on-year change of operating cost | Year-on-year change of gross margin | |
| According to industries | ||||||
| Metallurgy | 66,208,456,685.02 | 59,764,448,943.00 | 9.73% | 4.96% | 8.17% | -2.69% |
| According to products | ||||||
| Billet | 270,552,095.12 | 224,074,179.83 | 17.18% | 35.77% | 43.49% | -4.45% |
| Hot-rolled steel | 25,181,443,445.34 | 22,438,277,367.08 | 10.89% | 12.54% | 20.57% | -5.93% |
| Cold-rolled steel | 39,541,161,789.88 | 35,985,703,529.43 | 8.99% | 0.25% | 1.22% | -0.88% |
| Other steels | 835,056,438.75 | 755,558,703.74 | 9.52% | 5.08% | 9.04% | -3.29% |
| Gas products | 380,242,915.93 | 360,835,162.92 | 5.10% | 40.81% | 51.24% | -6.55% |
| According to regions | ||||||
| North China | 24,372,701,784.24 | 21,898,198,920.88 | 10.15% | 18.76% | 26.19% | -5.29% |
| Northeast China | 1,350,041,869.95 | 1,224,163,997.43 | 9.32% | 5.44% | 5.50% | -0.06% |
| East China | 22,355,059,382.30 | 20,137,841,861.11 | 9.92% | -5.87% | -4.56% | -1.24% |
| Mid-South China | 1,438,474,544.13 | 1,315,706,534.80 | 8.53% | 4.72% | 5.60% | -0.77% |
| South China | 11,947,057,123.11 | 10,797,851,089.32 | 9.62% | 20.23% | 22.97% | -2.02% |
| Southwest China | 806,904,623.65 | 739,472,900.96 | 8.36% | -20.18% | -18.13% | -2.29% |
| Northwest China | 279,209,962.95 | 259,330,213.59 | 7.12% | -10.18% | -10.90% | 0.76% |
| Export | 3,659,007,394.69 | 3,391,883,424.91 | 7.30% | -25.25% | -23.16% | -2.52% |
The adjusted principal business data according to the financial report of the Company under the circumstancesthat the statistical ranges of the Company’s principal business data changed during the reporting period.
□Applicable √Not applicable
(3)Whether operating income from sales of goods is more than operating income from service providing
√Yes □No
| Industry | Item | Unit | 2019 | 2018 | Year-on-year change |
| Metallurgy | Sales | Ton | 16,271,856 | 14,688,426 | 10.78% |
| Output | Ton | 16,200,692 | 14,700,688 | 10.20% | |
| Storage | Ton | 227,221 | 298,385 | -23.85% |
Explanation in the year-on-year change more than 30% based on above data
□Applicable √Not applicable
(4)Fulfillment of the singed material sales contracts during the reporting period
□Applicable √Not applicable
(5)Composition of operating cost
Presented as industries
Unit:RMB Yuan
| Industry | Item | 2019 | 2018 | Year-on-year change | ||
| Amount | Ratio in operation cost | Amount | Ratio inoperating cost | |||
| Metallurgy | Raw materials | 30,547,496,703.03 | 51.11% | 26,390,823,721.42 | 47.77% | 3.34% |
| Metallurgy | Fuels | 16,215,623,202.26 | 27.14% | 15,791,889,963.95 | 28.58% | -1.44% |
| Metallurgy | Power cost | 1,172,038,857.37 | 1.96% | 1,640,465,496.00 | 2.97% | -1.01% |
| Metallurgy | Staff cost | 2,113,771,266.24 | 3.54% | 2,342,839,360.33 | 4.24% | -0.70% |
| Metallurgy | Depreciation | 4,526,178,305.08 | 7.57% | 4,782,035,994.39 | 8.66% | -1.09% |
| Metallurgy | Manufacturing cost | 5,189,340,609.02 | 8.68% | 4,300,922,878.62 | 7.78% | 0.90% |
| Total | 59,764,448,943.00 | 100.00% | 55,248,977,414.71 | 100.00% | 0.00% | |
(6)Whether the scope of consolidation changes during the reporting period
√Yes □No
During the reporting period, a holding subsidiary was established which named as Beijing Shougang New EnergyAutomobile Materials Co., Ltd. The scope of consolidation includes five subsidiaries:Shougang Jingtang UnitedIron & Steel Co., Ltd, Beijing Shougang Cold Rolling Co., Ltd., Shougang Qian'an Conference Centre Co.,Ltd.,Shougang Zhixin Qian'an Electromagnetic Materials Co., Ltd, Beijing Shougang New Energy AutomobileMaterials Co., Ltd..
(7)Significant adjustments or changes in businesses, products, or services during the reporting period
□Applicable √Not applicable
(8)Major clientsand suppliers
Majorclients of the Company
| Total top five clients in sales | 44,611,306,968.03 |
| Proportion in total annual sales volume for top five clients | 64.51% |
| Ratio of the sales from related parties in total annual sales among the top five clients | 57.07% |
Information of top five clients of the Company
| Serial. | Name | Sales (RMB Yuan) | Proportion in total annual sales |
| 1 | Client A | 39,463,997,188.24 | 57.07% |
| 2 | ClientB | 1,729,902,796.43 | 2.50% |
| 3 | ClientC | 1,554,332,226.63 | 2.25% |
| 4 | ClientD | 1,121,894,249.53 | 1.62% |
| 5 | Client E | 741,180,507.20 | 1.07% |
| Total | -- | 44,611,306,968.03 | 64.51% |
Other information of the major customers of the Company
□Applicable √Not applicable
Major suppliers
| Total purchase amount from top five suppliers (RMB) | 49,632,721,948.78 |
| Proportion in total annual purchase amount for top five suppliers | 67.83% |
| Ratio of the purchase from related parties in total annual purchase among the top five suppliers | 66.60% |
Information on the top five suppliers of the Company
| Serial | Suppliers | Procurement (RMB Yuan) | Proportion in total annual procurement |
| 1 | Supplier A | 33,047,208,771.51 | 45.16% |
| 2 | Supplier B | 9,549,789,177.96 | 13.05% |
| 3 | Supplier C | 6,137,015,955.36 | 8.39% |
| 4 | Supplier D | 463,005,902.20 | 0.63% |
| 5 | Supplier E | 435,702,141.75 | 0.60% |
| Total | -- | 49,632,721,948.78 | 67.83% |
Other notes of main suppliers of the Company
□Applicable √Not applicable
3. Expenses
Unit: RMB Yuan
| 2019 | 2018 | Increase/decrease on a year-on-year basis | Notes of material changes | |
| Selling and distribution expenses | 1,275,449,457.91 | 1,218,816,464.68 | 4.65% | |
| General and administrative expenses | 862,556,312.13 | 976,548,380.69 | -11.67% | |
| Financial expenses | 2,075,693,466.13 | 2,298,307,856.25 | -9.69% | |
| Research and development expenses | 385,796,835.08 | 394,763,809.58 | -2.27% |
4. Research and development investment
√Applicable □Not applicable
The Company continuously promoted the transformation of scientific and technological achievements, andscientific research innovation became an important engine of high quality development. The Company organizedand participated 12 national standard-settings and 6 industry standard-settings, among which, the nationalstandards such as “GB/T 4333.10-2019 Infrared Absorption Method for Determination of Carbon Content inSilicon Steel” etc. have been issued and implemented. 3 projects of Ministry of Science and Technology thatundertook by the Company, such as “Intelligent Stability Control Technology of Steel Quality”, were going well.And, 12 projects such as Technical Research on the Application of Electrical Steel Products for Zhixin NewEnergy Vehicles to Electric Motors” etc. achieved actual effects.10 products of the Company were first issued, including 1 product that was first issued in the world. In 2019, 7projects of the Company was awarded for metallurgical science and technology prize, and 15 projects awarded forHebei Province science and technology prize. The project of Zhixin Co., named as High Quality OrientationSilicon Iron Production Technical in High Efficiency Environmental Protection Transformer, awarded the firstprize of metallurgical science and technology, which signaled the electrical steel manufacturing technology of theCompany achieved international advanced level.The technology center of Shougang Co. is authenticated by Beijing enterprise technology center, and was awarded
the title of Beijing Intellectual Property Pilot Unit and Beijing Intellectual Property Demonstration Unit. In 2019,Qianshun Base and Jingtang Base gained 328 patent rights, among which, 141 invention patents, 186 utility modelpatents and 1 patent for appearance. Regards to Jingtang Co., 32 patents of Jingtang Co. won the NationalInvention Exhibition Invention and Entrepreneurship Award & Project Award. Meanwhile, Cold-R Co. gained thetitle of Beijing Intellectual Property Pilot Unit and Beijing Intellectual Property Demonstration Unit, and ZhixinCo. won the third Mayor's Special Award of Tangshan.Shougang Co., Jingtang Co., Cold-R Co., Zhixin Co. are qualified national high-tech enterprise qualificationcertification approved by government.Research and development investment
| 2019 | 2018 | Change | |
| Number of R&D staff | 2,464 | 2,559 | -3.71% |
| Proportion of R&D staff | 13.87% | 15.89% | -2.02% |
| Investment amount (RMB) | 2,856,323,368.77 | 2,326,735,989.96 | 22.76% |
| Investment amount / Operating income | 4.13% | 3.54% | 0.59% |
| Capitalization amount of investment (RMB) | 0.00 | 0.00 | |
| Capitalization rate (%) | 0.00% | 0.00% | 0.00% |
Reason of the material changes of “Investment amount / operating income” compare to last year
□Applicable √Nonapplicable
Reason of the material changes of the capitalization ratio
□Applicable √Nonapplicable
5. Analysis of cash flows
Unit: RMB Yuan
| Items | 2019 | 2018 | Year-on-year changes |
| Cash inflow from operating activities | 31,676,510,248.94 | 29,908,042,676.52 | 5.91% |
| Cash outflow for operating activities | 28,357,881,310.41 | 17,448,653,091.35 | 62.52% |
| Net cash flow relating to operating activities | 3,318,628,938.53 | 12,459,389,585.17 | -73.36% |
| Cash inflow from investment activities | 311,923,882.49 | 222,586,192.88 | 40.14% |
| Cash outflow for investment activities | 5,534,753,637.58 | 9,863,640,698.05 | -43.89% |
| Net cash flow relating to investment activities | -5,222,829,755.09 | -9,641,054,505.17 | 45.83% |
| Cash inflow from financing activities | 46,065,218,155.85 | 31,024,870,000.00 | 48.48% |
| Cash outflow for financing activities | 44,212,766,507.28 | 33,421,157,658.39 | 32.29% |
| Net cash flow relating to financing activities | 1,852,451,648.57 | -2,396,287,658.39 | 177.31% |
| Net decrease (/increase) in cash and cash equivalents | -51,749,167.99 | 422,047,421.61 | -112.26% |
Main reasons for significant changes in relevant data on a year-on-year basis
√Applicable □Not applicable
The increase in cash outflow for operating activities and the decrease of net cash flow relating to the operatingactivities was caused by the cash purchase for raw fuel.The increase in cash inflow relating to the investmentactivities was due to cash received from investment income.The decrease in cash outflow for investing activitiesand the increase in net cash flow relating to the investing activities was caused by the reduction of cash paymentfor fixed assets investment. The increase in cash inflow from financing activities and was caused by the receivedbank loans and the increase in cash outflow for financing activities was caused by bank loan repayment, whichultimately resulted in the net increase in net cash flow relating to financing activities. Overall the decrease in netcash and cash equivalents is mainly due to the increase in cash outflow for operating activities.
Notes for the significant difference between the annual net profit and the annual net cash flow relating tooperating activities during the reporting period
√Applicable □Not applicable
During the reporting period, the difference between net cash flow from operating activities with the amount ofRMB3.319 billion and net profit with the amount of RMB1.754 billion is RMB1.565 billion. Major factors for thedifference are: depreciation RMB5.851 billion, financial expenses RMB2.076 billion, decrease in operatingpayables 4.328billion, decrease in inventories RMB1.499 billion, and increase in operating receivables RMB467million.III. Non-principalbusiness analysis
√Applicable □Not Applicable
IV. Assets and liabilities
1. Significant changes inthe composition of assets
The Company implemented the new financial instruments standards, new income standards or new leasestandards for the first time since 2019 and adjust the relevant items of the financial statements at the beginning ofthe year
√Applicable □Not Applicable
Unit: RMB Yuan
| Year-end of 2019 | Year-begin of 2019 | Ratio changes | Note | |||
| Amount | Ratio in totalassets | Amount | Ratio in totalassets | |||
| Cash and bank balances | 4,472,317,590.75 | 3.16% | 4,841,058,243.20 | 3.58% | -0.42% | |
| Account receivable | 836,576,066.13 | 0.59% | 870,151,434.92 | 0.64% | -0.05% | |
| Inventories | 6,593,865,645.47 | 4.66% | 5,192,790,897.33 | 3.84% | 0.82% | |
| Assets held for sale | 0.00% | 0.00% | 0.00% | |||
| Long-term equity investments | 2,948,516,531.72 | 2.09% | 2,878,517,166.72 | 2.13% | -0.04% | |
| Fixed assets | 82,861,544,532.17 | 58.61% | 81,726,018,549.33 | 60.45% | -1.84% | |
| Construction in progress | 25,310,588,638.42 | 17.90% | 22,037,846,981.69 | 16.30% | 1.60% | |
| Short-term loans | 30,267,213,915.42 | 21.41% | 31,155,720,000.00 | 23.04% | -1.63% | |
| Long-term loans | 19,101,100,000.00 | 13.51% | 15,965,040,000.00 | 11.81% | 1.70% | |
2. Assets and liabilities measured at fair value
√Applicable □Not applicable
Unit: RMB Yuan
| Term | Opening balance of 2019 | Gains/losses ofchange of fairvalue in the period | Accumulativechanges of fair valuereckoned into equity | Impairmentaccrual inthe period | Amount ofpurchase inthe period | Amount of salein the period | Other changes | Closing balance of 2019 |
| Financial assets | ||||||||
| 4. Other equity instruments Investment | 3,961,120,253.90 | 396,397,673.44 | 4,357,517,927.34 | |||||
| Receivable financing | 1,597,542,544.00 | 3,666,611,715.48 | ||||||
| Total | 5,558,662,797.90 | 396,397,673.44 | 8,024,129,642.82 | |||||
| Financial liabilities | 0.00 | 0.00 | ||||||
Other changes
NoWhether the company's main asset measurement attributes had changed significantlyduring the reporting period
□ Yes √ No
3. Major restricted assets at the end of the reporting period
| Items | Carrying amount at 31.12.2019(RMB) | Restriction reason |
| Cash and bank balances | 554,348,209.83 | |
| Notes receivable | 492,071,160.50 | |
| Total | 1,046,419,370.33 |
Notes: (1) As of 31 December 2019, the restricted cash and cash balances of include various cash deposits ascollateral amounting to RMB 554,348,209.83.
(2) As of 31 December 2019, the Group’s restricted note receivables include pledged notes amounting to RMB492,071,160.50.
V. Investment analysis
1. Overall situation
√Applicable □Not applicable
| Invested amount during the reporting period (RMB Yuan) | Investment amount during the previous reporting period (RMB Yuan) | Change |
| 11,053,416,832.92 | 10,139,936,448.81 | 9.01% |
2. Significant equity investment during the reporting period
□Applicable √Not applicable
3. Significant non-equity investment during the reporting period
√Applicable □Not applicable
Unit: RMB Yuan
| Project name | Investment method | Fixed asset investment or not (Y/N) | Related industries | Investment amount during the reporting period | Actualinvestmentamount up to theend of reportingperiod | Capital source | Projectschedule | Anticipated benefits | Realizedincome upto the endof reportingperiod | Reasons for non-achievement of planned scheduleand anticipatedincome |
| Shougang Jingtang-Phase II | Self-built | Y | Iron and steel | 7,783,812,530.78 | 21,174,023,967.29 | Self-raised | 93.96% | 1,361,360,000.00 | 0.00 | Production line debugging |
| Total | -- | -- | -- | 7,783,812,530.78 | 21,174,023,967.29 | -- | -- | 1,361,360,000.00 | 0.00 | -- |
4. Financial asset investment
(1) Securities investment
□Applicable √Not applicable
The Company had not securities investments during the reporting period.
(2)Derivatives investment
□Applicable √Not applicable
The Company has no derivatives investment during the reporting period.
5.Application of raised proceeds
□Applicable √Not 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 √Not applicable
During the reporting period, no material disposal of assets of the Company occurred.
2. Material disposal of equity
□Applicable √Not applicable
VII.Analysis of main holding companies and stock-jointly companies
√ Applicable□Not 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 income | Operating profit | Net profit |
| Shougang Jingtang United Iron&Steel Co., Ltd. | Subsidiary | Iron and steel smelting, Steel rolling, Technical consultation, Technical Service. | 35,821,676,294.00 | 82,657,982,280.74 | 26,345,644,339.26 | 36,189,924,483.50 | 1,232,163,567.62 | 1,024,880,097.27 |
| Beijing Shougang Cold Rolling Co., Ltd. | Subsidiary | Production cold rolled sheet and hot-galvanized steel, General freight, Freight, Design and sell cold rolled sheet, Warehousing service, Technical development. | 2,600,000,000.00 | 5,999,756,061.65 | -1,502,424,099.49 | 7,696,233,920.49 | 7,949,999.53 | 6,024,982.53 |
| Shougang Qian'an Conference Centre Co.,Ltd. | Subsidiary | Catering industry, Conference service, Hotel. | 1,900,000.00 | 196,299,492.12 | -99,851,036.17 | 15,164,662.04 | -13,986,522.16 | -13,983,529.76 |
| Shougang Zhixin Qian'an Electromagnetic Materials Co., Ltd. | Subsidiary | Cold rolled electrical steel sheet manufacture, Metallurgical special equipment manufacture, Motor manufacture, Equipment for power transmission and distribution manufacture, Energy conservation technology promotion service, New material technology promotion service. | 5,005,000,000.00 | 13,067,981,478.43 | 5,384,541,451.93 | 9,739,942,337.78 | 393,010,736.00 | 331,432,146.39 |
| BAIC Motor Corporation., Ltd | Joint stock |
| 8,015,338,182.00 | 193,211,289,240.82 | 72,626,504,652.15 | 182,207,316,708.26 | 21,353,226,036.25 | 14,322,409,614.03 | |||
| Beijing TIEKE Shougang RAILWAY-TECH Co., Ltd. | Joint stock | Production of railway fastener system, Low relaxation prestressed iron, General freight, Product quality inspection. | 158,000,000.00 | 1,680,770,514.26 | 1,171,732,352.33 | 1,264,677,587.49 | 230,067,527.55 | 201,059,928.12 |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | Joint stock | Coking, ammonium sulfate, coal gas, crude benzene, sulfur, primary coal chemical products. | 992,400,000.00 | 3,973,059,517.49 | 1,980,979,270.99 | 6,913,378,291.52 | 192,298,928.34 | 139,630,811.41 |
| Qian'an Shoujia Construction Material Co., Ltd. | Joint stock | Production and sale of GGBS, Sale of water slag, Provide technical consultation on product GGBS and water slag. | 152,442,500.00 | 463,840,111.41 | 24,271,015.94 | 187,522,222.28 | 8,214,605.09 | -1,835,349.55 |
| Qian'an China Petroleum Kunlun Gas Co., Ltd | Joint stock | Sale of natural gas, Development of natural gas utilization technology, Wholesale and retail of gas appliances, gas transmission equipment and materials, Equipment leasing. | 30,000,000.00 | 139,042,458.61 | 109,803,877.60 | 288,796,811.89 | 52,436,144.12 | 39,312,217.87 |
| Minmetals Tianwei Steel Co., Ltd. | Joint stock | Storage, cutting, processing, distribution and sales of silicon steel sheets and cold-rolled steel sheets. | 75,000,000.00 | 140,308,474.49 | 117,347,059.48 | 137,302,429.62 | 1,802,027.91 | 1,210,417.86 |
| Minmetals Special Steel (Dongguan) Co., Ltd. | Investee | Production and sales of electronic transformer cores, Sales of ferrous metals, nonferrous metals, ores, materials, machinery and electrical equipment, and related information consulting services, Shearing processing, inspection and test of steel, Import and export of goods, import and export of technology. | 50,000,000.00 | 145,528,651.24 | 36,031,448.50 | 483,085,909.11 | -6,427,498.54 | -4,826,025.28 |
| Beijing Dingshengcheng Packaging Material Co., Ltd. | Investee | Processing of plastic products, paper products, metal products, Highway transport, Sales of plastic products, paper products, metal products, furniture, electronic products, chemical products, hardware products, machinery accessories, provide labor services. | 20,000,000.00 | 36,581,007.73 | 23,190,539.96 | 101,033,864.73 | 4,342,657.08 | 3,199,511.77 |
| Beijing Shouxin Jinyuan Management Consulting Center (Limited Partnership) | Investee | Manage private equity, Provide investment management and related consulting services. | 1,000,000,000.00 | 1,022,994,630.61 | 1,019,132,971.67 | 39,185,156.34 | 19,059,518.46 | 19,059,518.46 |
| Beijing Shougang New Energy Automobile Material Technology Co., Ltd. | Subsidiary | Technical development、technical service、technical consultation、technical transfer, Sales of machinery and steel, Machinery rental (except cars), Import and export of goods, Import and export of Technology, Import and export of agent. | 950,000,000.00 | 311,874,720.46 | 284,835,585.96 | 0.00 | -164,221.46 | -164,414.04 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Investee | coke, coal tar, crude benzene, ammonium sulfate, sulfur, coke oven gas production and sales; coke oven gas power generation, heat production, Technical consultation. | 2,000,000,000.00 | 4,277,488,041.61 | 2,134,361,433.53 | 7,889,128,204.38 | 81,039,403.22 | 71,808,140.71 |
| Tangshan Shougang Jingtang Caofeidian Port Co., Ltd. | Sub-subsidiary | Freight port project construction. | 600,000,000.00 | 1,076,435,424.35 | 576,067,832.95 | 21,781,137.94 | -8,594,069.83 | -8,594,069.83 |
| Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | Investee | Production and sales of GGBS and attached products. | 200,000,000.00 | 377,139,587.96 | 311,125,257.97 | 383,670,512.68 | 38,603,991.16 | 28,665,429.82 |
| Tangshan Zhonghong Carbon Chemical Co., Ltd. | Investee | Technology introduction and import of production equipment and raw materials. | 300,000,000.00 | 780,522,552.95 | 275,856,014.14 | 0.00 | -20,588,267.16 | -20,588,767.16 |
| Tangshan Guoxing Industrial Co., Ltd. | Investee | Metal processing, machinery manufacturing, processing, repair, Wholesale and retail of steel, building materials (except wood and lime), water-based coatings, hardware, electrical materials, lubricating oil (barreled), mechanical accessories, iron powder, mineral products, rubber products, Rental of houses and venues, General freight, Processing of productive scrap metal, Cleaning service, Maintenance of Class II motor vehicles (maintenance of large and medium-sized trucks, valid until January 19, 2019), Domestic and international shipping agency business, Recovery of waste lubricating oil. | 42,000,000.00 | 104,181,221.56 | 59,446,543.91 | 49,090,881.11 | 8,738,610.73 | 6,541,926.75 |
| Tangshan Tangcao Railway Co., Ltd. | Investee | Railway investment, construction and operation (projects requiring approval under national laws and administrative regulations can only be operated after obtaining approval documents). | 2,500,000,000.00 | 8,684,004,650.53 | 2,910,000,000.00 | 0.00 | 0.00 | 0.00 |
Acquisition and disposal of subsidiaries during the reporting period
√Applicable □Not applicable
| Name | Mode of acquisition and disposal of subsidiaries during the reporting period | Impact on overall production management and performance |
| Beijing Shougang New Energy Automobile Materials Co., Ltd. | Newly established | None |
Notes of holding and shareholding companiesNoneVIII. Structured entity controlled by the Company
√Applicable □Not applicable
IX. Future development prospects
1. Industry competition pattern and development trend
In the year of 2020, the global economy might be in recession due to factors such as COVID-19. At present,structural and cyclical problem of domestic economy are intertwined, and the downward pressure on the economyis increasing. However, the basic trend of stable and long-term growth remains unchanged, and the economicgrowth rate will remain within an appropriate range. After the release of steel capacity replacement in 2020,market supply willincrease, while the growth rate of the main downstream steel industry may slow down. Thefundamentals of strong supply and weak demand would continue.In terms of demand, the state has successively issued relevant policies to stimulate the consumer market andencourage the downstream industry to resume production and work actively, especially infrastructure, real estateand material investment projects resumption, which will further boost the demand for steel. Meanwhile, thedemand restrained by the previous epidemic situation is also expected to rebound. On account of the backwarddemand in the early stage of 2020, the inventory of steel product will rise in the short term.In terms of price, although domestic demand has gradually recovered, uncertainty also exists in the steel marketunder the background of rising downward pressure of macro-economy due to the factors such as destockingpressure, uncertainty of overseas epidemic situation and financial market turbulence, and then the product pricefluctuation is also the high probability event.
2. Corporate development strategy
With the theme of promoting high-quality development and innovative development, the Company will alwayskeep pace with the times, customers, shareholders and employees, adhere to the core task of "enhancing vitality,improving competitiveness, and winning the battle for survival and development", and continue to deepen thereform of corporate governance structure and market-oriented mechanism; the Company will also insistinnovation-driven development and "boutique + service" strategy, focus on "four manufacturing, one service"
strategy and continue to accelerate the research and development of high-level products focusing on automotivepanels, electrical steel, tinning sheet, etc., and realize the transformation from product manufacturer tocomprehensive service provider. Additionally, the Company also insists on comprehensively improving theprofitability and capital operation ability, and strives to improve the company as a large, comprehensive anddiversified listed company with global competitiveness.
3. Operating plans of 2020
(1) Capacity of main products
①Qiangang Co.: 7.85 million ton of iron, year-on-year rise of 1.82%; 8.26 million ton of steel, year-on-year riseof 1.98%; 7.90 million ton of steel products, year-on-year rise of 1.41%.
②Jingtang Co.: 12 million ton of iron, year-on-year rise of 54.24%; 12.46 million ton of steel, year-on-year riseof 34.41%; 10.54 million ton of steel products, year-on-year rise of 14.81%.
③Zhixin Co.: 1.6 million ton of electric steel, year-on-year decrease of 1.85%. Including: 1.415 million ton ofnon-oriented electric steel, year-on-year decrease of 1.64%; 0.185 million ton of oriented electric steel,year-on-year decrease of 3.39%.
④Cold-R Co.: 1.70 million ton of cold-rolled steel sheets, year-on-year rise of 0.05%. Including: 0.87 million tonof continuous annealing line for cold-rolled steel sheets, year-on-year rise of 1.27%; 0.83 million ton ofgalvanized sheet, year-on-year rise of 3.11%.
(2) Budget arrangement of financial indicators
RMB71.64 billion for operating income, year-on-year rise of 3.57%, including: RMB28.79 billion for operatingincome of parent company, year-on-year decrease of 0.23%; RMB9.47 billion for operating income of Zhixin Co.,year-on-year decrease of 2.77%; RMB7.25 billion for operating income of Cold-R Co., year-on-year decrease of
5.8%; RMB39.60 billion for operating income of Jingtang Co., year-on-year rise of 9.42%.
(3) Budget arrangement of capital flow for income and expenditure
RMB147.41 billion for budget capital inflows, including RMB92.84 billion for capital inflows from operatingactivities, RMB0.37 billion for capital inflows from investing activities, RMB45.786 billion for capital inflowsfrom financing activities, capital balance of last year was RMB8.417 billion.RMB141.344 billion for budget capital outflows, including RMB75.498 billion for productive expenditure, RMB
3.389 billion for employee benefits, RMB2.24 billion for tax payments, RMB2.888 billion for expenditure ofother operating activities, RMB4.804 billion for capital outflows from investing activities, RMB52.524 billion forcapital outflows from financing activities.
(4) Budget arrangement of project capital expenditure
Arrangement of project investment plan is RMB4.20 billion, including: RMB0.705 billion for Qiangang Co.,RMB3.071 billion for Jingtang Co., RMB0.06 billion for Zhixin Co., RMB 0.065 billion for Cold-R Co. andRMB 0.303 billion for New-E Co..
4. Potential risks
(1)Policy and industry risks
In 2020, domestic economy still faces downward pressure. In addition, the outbreak of COVID-19 results in newdifficulties and challenges of steel industry, which is in the tight balance between supply and demand, mainlyreflected in supply and sales.To respond to the above risks, under the premise of preventing and controlling the epidemic, the Company shouldfirst strengthen production organization and technological innovation to reduce the operating cost of the enterprise;second, coordinate the supply, production and marketing, not only stabilize the supply of raw materials, ensure the
smooth and stable production, and also set production capacity by sales and promote sales by production; third,pay attention to the market demand dynamics, seize market opportunities, strengthen organization andcoordination in a targeted way to ensure the completion of the annual business task.
(2) Environmental risks
“Report on the work of the government” has proposed “promoting the realization of ultra-low emission in the ironand steel industry” and “the opinions of the CPC Central Committee and the State Council on comprehensivelystrengthening the ecological environment protection and firmly fighting the critical battle of pollution preventionand control” definitely proposed the requirement of “promoting the transformation of ultra-low emissions in theiron and steel industry” and the environmental concept “lucid waters and lush mountains are invaluable assets”,which constantly imposes strict environmental protection requirements for the iron and steel industry.Accordingly, the cost of environmental protection and the pressure of environmental protection areunprecedented.To respond to the above risks, the Company should first consolidate the achievements of ultra-low emission in thewhole process, actively apply the formed proprietary technology and strengthen the control of ultra-low emission;second, improve the effectiveness of the integrated manage and control platform of intelligent environmentalprotection by applying image intelligent identification technology to particle emission control; third, activelypromote the environmental design and application of the products throughout the life cycle and the entireindustrial chain, and continuously strengthen the control of moving pollution sources, and promote thetransportation of clean energy.
(3) Horizontal competition risks
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 “thecommitment on the settlement measures and avoidance of horizontal competition after the assets restructuring”.According to the iron and steel industry development plan of Shougang Group, Shougang Co. will be the onlyplatform for the development and integration of the iron and steel and upstream iron ore resources industry ofShougang Group in China, and eventually achieve the overall listing of Shougang Group's iron and steel andupstream iron ore resources business in China. Since then, Shougang Group has made further commitments on thebasis 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 risks
With the in-depth promotion of capacity reduction and structural adjustment, new changes and challenges haveemerged in the business situation of the iron and steel industry, which are highlighted in the increase of plateproduction capacity, the gathering of high-level production capacity, the intensification of homogeneouscompetition, and the change of business strategies of steel enterprises. Hence, there are periodic downward risksin the price of steel products.To respond to the above risks, the Company should first continue the channel terminal and high-level strategy,and accelerate the channel structure adjustment. Secondly, the Company should improve the proportion ofhigh-quality and efficient products, and continuously optimize the product structure. Thirdly, the Company shouldset reasonable price level according to competitive situation, and adopt differentiated and personalized pricepolicies for different varieties at specific time-points and channels. Finally, the Company should strengthentechnical service marketing and improve the ability to provide overall solutions for customers.
(5) Related transactions risks
Related transactions exit among Shougang Co., Shougang Group and the affiliated companies and Shougang Co.
signed the framework agreement of related transactions in accordance with the stock listing rules and otherprovisions for regular related transactions. If the agreement cannot be strictly executed in the future, interests ofthe company will be damaged and also the risks of related transactions will emerge.The above-mentioned regular related transactions are the continuous related transactions in the ordinary operationand production process of the Company, all of which are signed agreements in accordance with regulations andapproved legally, and the transactions will not affect the independence of the Company. The Company willstrictly implement the provisions of related transactions, perform the obligation of information disclosure inaccordance with the requirements of the stock listing rules and the Articles of Association, ensure the openness,fairness and justice of related transactions, and protect the legitimate rights and interests of the Company and allshareholders.X. Reception of research, communication and interview
1. The registration form of research, communication, interview etc. during the reporting period.
√Applicable □Not applicable
| Time | Method | Type | Basic information references | |
| 26 April 2019 | Telephone communication | Institution | Hold meetings of 2018 annual report and 2019 Q1 performance disclosure. Disclosed on the interactive platform in detail on 29 April 2019 | |
| 25 July 2019 | Telephone communication | Institution | Hold meeting of 2019 semi-annual performance disclosure. Disclosed on the interactive platform in detail on 29 July 2019 | |
| 18 July 2019 | Other | Individual | Overall Perspective – World of Road Show, 2019 reception day for Beijing listed company investors (www.p5w.net/roadshow) | |
| 27 August 2019 | Field research | Institution | Receive investors’ field research. Disclosed on the interactive platform in detail on 29 August 2019. | |
| Number of reception | 4 | |||
| Number of receiving institution research | 12 | |||
| Number of receiving individual research | 15 | |||
| Number of receiving other research | 0 | |||
| Whether disclose, give, or reveal unissued material information (Y/N) | N | |||
SectionV. Significant Events
I. Profit distribution proposal and proposal for transfer of capital reserve toshare capital
Formulation, Implementation and Adjustment of common stock Profit Distribution Policy Especially CashDividend policy duringthe reporting period
√Applicable □Not applicable
1. Since the establishment, the Company highly valued the investment return for shareholders, the protection forlegitimate rights and interests of all shareholders, especially for the small and medium shareholders. According tovarious regulations and relevant requirements issued by the regulatory authority, the Company timely revised andimproved the provisions of the profit distribution policy in the Articles of Association of the Company, and thestandard 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 theArticles of Association of the Company, complied with the provisions of normative documents issued by CSRCand other regulatory agencies and fulfilled the procedures for independent directors to issue independent opinionsand legal approval.
| 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 minorityare being protected totally (Y/N): | Y |
| As for the adjustment and change of cash bonus policy, the condition and procedures whether meets regulationsand transparent (Y/N): | Y |
Distribution plan (pre-plan) for common stock dividends, capitalization scheme of capital reserve (pre-plan) inlatest three years(including this period)
1. The scheme of the Company for profit distribution or for transfer of capital reserve to the share capital in 2019Audited by Grant Thornton LLP, in consolidated financial statements of 2019, the net profit attributable toshareholders of the listed company is RMB1,251,047,873.08, the listed company achieved a net profit ofRMB416,816,074.79, the profit available for distribution of the listed company is RMB5,605,709,861.57 and theprofit available for distribution of consolidated financial statements is RMB-2,051,598,102.14. The profitavailable for distribution of consolidated financial statements is lower than the profit available for distribution ofthe listed company with the negative amount. Therefore, in accordance with the provisions of the Articles ofAssociation of the Company, which states “the profit shall be distributed to the shareholders in proportion to thelower of the distributable profits of parent company and the consolidated statements recognized in the year”, theCompany should not distribute cash dividends or transfer capital reserve into share capital for the year of 2019.During the reporting period, the profit recognized by the listed company is mainly for repaying the merger andacquisition loan and investing the fixed asset project. Among them, the planned repayment of M&A loan is RMB
1.3 billion, and the intended investment of fixed assets project is RMB 700 million.
The proposal needs to be approved by the general meeting of shareholders.
2. The scheme of the Company for profit distribution or for transfer of capital reserve to the share capital in 2018Audited by Grant Thornton LLP, in consolidated financial statements of 2018, the net profit attributable toshareholders of the listed company is RMB 2,403,750,672.16, the listed company achieved a net profit of RMB1,404,376,673.49, the profit available for distribution of the listed company is RMB 5,189,366,782.39 and theprofit available for distribution of consolidated financial statements is RMB -3,260,964,367.74. The profitavailable for distribution of consolidated financial statements is lower than the profit available for distribution ofthe listed company with the negative amount. Therefore, in accordance with the provisions of the Articles ofAssociation of the Company, which states “the profit shall be distributed to the shareholders in proportion to thelower of the distributable profits of parent company and the consolidated statements recognized in the year”, theCompany should not distribute cash dividends or transfer capital reserve into share capital for the year of 2018.During the reporting period, the profit recognized by the listed company is mainly for repaying the merger andacquisition loan and investing the fixed asset project. Among them, the planned repayment of M&A loan is RMB600 million, and the intended investment of 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 2017Audited by Grant Thornton LLP, in consolidated financial statements of 2017, the net profit attributable toshareholders of the listed company is RMB 2,210,651,071.39, the listed company achieved a net profit of RMB1,286,348,291.61, the profit available for distribution of the listed company is RMB 3,925,427,776.25 and theprofit available for distribution of consolidated financial statements is RMB -5,524,277,372.55. The profitavailable for distribution of consolidated financial statements is lower than the profit available for distribution ofthe listed company with the negative amount. Therefore, in accordance with the provisions of the Articles ofAssociation of the Company, which states “the profit shall be distributed to the shareholders in proportion to thelower of the distributable profits of parent company and the consolidated statements recognized in the year”, theCompany should not distribute cash dividends or transfer capital reserve into share capital for the year of 2018.During the reporting period, the profit recognized by the listed company is mainly for repaying the merger andacquisition loan and investing the fixed asset project. Among them, the planned repayment of M&A loan is RMB500 million, and the intended investment of fixed assets project is RMB 900 million.Cash dividends of common shares of the Company for the last three years (the reporting period inclusive)
Unit: RMB Yuan
| Year of distribution | Amountof cashdividends(tax included) | Net profitattributableto ordinaryshareholdersof the listedcompany inconsolidatedfinancialstatementsin the year ofdistribution | Ratio of cash dividends tonet profits attributableto ordinaryshareholdersof the listedcompany inconsolidatedfinancialstatements | Proportion for cashdividends by other ways (i.e. share buy-backs) | Ratio of cash dividends in other ways tonet profitsattributableto ordinaryshareholdersof the listedcompany inconsolidatedfinancialstatements | Total cash dividends (including other ways) | Ratio of total cash dividends (including in other ways) tonet profitsattributableto ordinaryshareholdersof the listedcompany inconsolidatedfinancialstatements |
| 2019 | 0.00 | 1,251,047,873.08 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
| 2018 | 0.00 | 2,403,750,672.16 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
| 2017 | 0.00 | 2,210,651,071.39 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
The Company gains profits in reporting period and the retained profit of common stock shareholders provided byparent Company ispositive but no plan of cash dividend proposed of common stock
√Applicable □Not applicable
| Reasons for no resolution for cash dividend whenthe company records profits and the parent company records a positive undistributed profit during the reporting period | Purpose and use plan for undistributed profits of the company |
| During the reporting period, the profit available for distribution of parent company is RMB 5,605,709,861.57 and the profit available for distribution of consolidated financial statements is RMB -2,051,598,102.14. The profit available for distribution of consolidated financial statements is lower than the profit available for distribution of parent company with the negative amount. In accordance with the provisions of the company’s articles of association, which states “the profit shall be distributed to the shareholders in proportion to the lower of the distributable profits of parent company and the consolidated statements recognized in the year”, the company should not distribute cash dividends or transfer capital reserve into share capital for the year of 2019. | The undistributed profit is mainly for repaying the merger and acquisition loan and investing the fixed asset project. Among them, the planned repayment of M&A loan is RMB1.3 billion, and the intended investment of fixed assets project is RMB0.7 billion. |
II. Profit distribution plan and capitalizing of common reserves plan during thereporting period
□Applicable √Not applicable
The Company proposed not to distribute cash dividends, issue bonus shares or transfer reserve to share capital forthe year 2019.III. Implementation of commitment
1. Commitment of de facto controller, shareholders, related parties, acquirer and the Companyduring or sustained to the reporting period
√Applicable □Not applicable
| Reasons for Commitment | Commitment party | Type | Contents | Commitment date | Commitment term | Implementation |
| Commitments to share reform | ||||||
| Commitments made in a statement of acquisition or equity change |
| Commitment in material assets restructuring | Shougang Group Co., Ltd. (Formerly known as Shougang Corporation) | 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) | Implementingof the long-term commitment. |
| 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 |
| 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 |
| 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 2020, 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 December2020. | 27 Dec. 2018 | 31 Dec. 2020 | 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, 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. | 27 Dec. 2018 | 31 Dec. 2020 | Implementing | ||
| Commitments made in IPO or refinancing | ||||||
| Equity incentive commitment | ||||||
| Other commitments to small and medium shareholders of the company | ||||||
| Completed on time | Yes | |||||
2. Concerning assets or project of the Company, which has profit forecast, and reporting period stillin forecasting period,explain reasons of reaching the original profit forecast
□Applicable √Not applicable
IV.Non-operational fund occupation from controlling shareholders and itsrelated party
□Applicable √Not applicable
No non-operational fund occupation from controlling shareholders and its related party during the reportingperiod.V.Explanation from Board of Directors, Supervisory Committee andIndependent Directors(if applicable) for “Qualified Opinion” that issued byCPA
□Applicable √Not applicable
VI.Particulars about the changes in aspect of accounting policy, estimates andcalculationmethod compared with the financial report of previous year.
√Applicable □Not applicable
For details, refer to item Section XII. Financial Report, Changes in significant accounting policies and accountingestimatesVII.Material accounting errors within reporting period that needs retrospectiverestatement
□Applicable √Not applicable
No major accounting errors within reporting period that needs retrospective restatement for the Company duringthe reporting period.VIII.Explanation on the change in the scope of consolidated financial statementsduring the reporting period as compared with the financial report of theprevious year
√Applicable □Not applicable
For the year ended 31 December 2019, the company established a new holding subsidiary, Beijing Shougang NewEnergy Automobile Material Technology Co., Ltd. and has included five subsidiaries in the scope of consolidation,which are Shougang Jingtang United Iron&Steel Co., Ltd., Beijing Shougang Cold Rolling Co., Ltd., ShougangQian'an Conference Centre Co., Ltd., Shougang Zhixin Qian'an Electromagnetic Materials Co., Ltd. and BeijingShougang New Energy Automobile Material Technology Co., Ltd..
IX. Appointment and non-reappointment (dismissal) of CPACurrent Auditors
| Name of domestic accounting firm | Grant Thornton LLP. |
| Remuneration for domestic accounting firm (RMB’000) | 1800 |
| Continuous life of auditing service for domestic accounting firm (year) | 20 |
| Name of domestic CPA | Qian Bin, Yu Qike |
| Continuous life of auditing service for domestic accounting firm (year) | 4 |
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 periodXII. Major litigation or arbitration cases
□Applicable √Not applicable
No major 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 actualcontrollers during the reporting period
□Applicable √Not applicable
XV. Implementation of the Company’s equity incentive plan, employee stock
ownership plan or other employee incentive measures
□Applicable √Not applicable
No implementation of the company's equity incentive plan, employee stock ownership plan or other employeeincentive measures during 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 with the Group | Type of transaction | Nature of transaction | Pricing principle of transaction | Price of transaction | Relatedtransactionprice | Proportionin similartransactions | Approved transaction quota | Whether it exceeds the approved quota(N/Y) | 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 and Auxiliary material | Market price | Market price | 3,304,719 | 3,392,616 | N | Cash at bank and on hand | Market price | 26 April 2019 | "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 | 3,946,400 | 3,878,112 | Y | Cash at bank and on hand | Market price | 26 April 2019 | Ditto | |
| Other related parties | Investees | Related purchase | Raw fuel material and energy | Market price | Market price | 1,573,154 | 1,641,066 | N | Cash at bank and on hand | Market price | 26 April 2019 | Ditto | |
| Other related parties | Investees | Related sales | Energy | Market price | Market price | 125,939 | 120,054 | Y | Cash at bank and on hand | Market price | 26 April 2019 | Ditto | |
| Total | -- | -- | 8,950,212 | -- | 9,031,848 | -- | -- | -- | -- | -- | |||
| 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. The total amount of transactions approved in the current period was RMB 90,318.48 million, and the actual occurrence of this period was RMB 89,502 .12 million, which did not exceed the approved quota. For details of the related parties and related party transactions, please refer to Item XII of Section XII. | ||||||||||||
| 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
No related party transactions in respect of acquisition and disposal of assets or equity during the reporting period.
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
□Applicable √Not applicable
No related non-operating contact of related credit and debt during the reporting period.
5. Others
√Applicable □Not applicable
| On 24 April 2019，the ninth meeting of the sixth session of the Board of Directors of the Company Adopted the "proposal on Financial Business between Beijing Shougang Co., Ltd. And Shougang Group Finance Co., Ltd." and "the Financial Services Agreement between Beijing Shougang Co., Ltd. And Shougang Group Finance Co., Ltd." on 23 December 2019, Which was approved at the first interim general meeting of shareholders in 2019. (Unit:RMB) | |||||
| Item | As at 31.12.2018 | Addition | Reduction | As at 31.12.2019 | Charge or pay interest and handling fees |
| 1. Deposit in Shougang Group Finance Co., Ltd. | 4,815,617,592.86 | 103,704,851,711.64 | 104,069,863,095.76 | 4,450,606,208.74 | 71,871,537.49 |
| 2. Our company makes a loan from Shougang Group Finance Co., Ltd. | 14,623,784,423.81 | 19,865,823,255.92 | 23,485,555,610.51 | 13,054,027,812.28 | 338,525,458.95 |
| (1) Short-term loans | 11,500,000,000.00 | 12,643,161,772.28 | 14,538,517,938.95 | 9,604,643,833.33 |
| (2) Accounts payable | 2,421,734,423.81 | 5,493,223,194.50 | 6,518,211,066.03 | 3,446,722,295.34 |
| (3)Entrusted Loan | 702,050,000.00 | 1,729,438,289.14 | 2,428,826,605.53 | 2,661,683.61 |
Website for disclosure of interim report of major related party transactions
| Name | Disclosure date | Name of the website |
| Announcement on related party transactions of financial business with Shougang Group Finance Co., Ltd. | 24 April 2019 | 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 derivativesinvestment
(1) Entrusted asset management and other wealth management and derivatives investment
□Applicable√Not applicable
No entrusted asset management and other wealth management and derivatives investment during the reportingperiod.
(2) Entrusted loans
□Applicable√Not applicable
No entrusted loan during the reporting period.
4.Other material contracts
□Applicable√Not applicable
No other material contracts during the reporting period.
XVIII. Fulfillment of Social Responsibility
1.Fulfill social responsibility
Detailed in the 2019 corporate social responsibility report of the Company.
2.Performance of taking targeted measures in poverty alleviation
Detailed in the 2019 corporate social responsibility report of the Company.
3. Environmental protection
Whether the Company and its subsidiaries belongs to thekey pollutant released entities that published by theenvironmental protection 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) | Discharged after up-tostandard processing | 1 | The company total wastewater discharge port | 15-30mg/L | 50mg/L | 96.4 | 103 | No |
| Qiangang Co. | Ammonia Nitrogen | Discharged after up-tostandard processing | 1 | The company total wastewater discharge port | 0.5-1mg/L | 5mg/L | 6.9 | 7.5 | No |
| Qiangang Co. (Including Zhixin Co.) | Sulfur Dioxide | organized | 29 | Hot blast stove, heating furnace of hot rolling mill, boiler power generation, cycling power generation, annealing furnace of cold rolling mill, steelmaking kiln roof. | 1-20mg/m3 | Hot blast stove, heating furnace of hot rolling mill:50mg/m3，Boiler power generation, cycling power generation, annealing furnace of cold rolling mill, Steelmaking kiln roof:35mg/m3 | 829.3 | 965 | No |
| Qiangang Co. (Including Zhixin Co.) | Nitrogen Oxides | organized | 29 | Hot blast stove, heating furnace of hot rolling mill, boiler power generation, cycling power generation, annealing furnace of cold rolling mill, steelmaking kiln roof. | 5-40mg/m3 | 50mg/m3 | 1821.7 | 2130 | No |
| Qiangang Co. (Including Zhixin Co.) | Particulate Matter | organized | 88 | Boiler power generation, cycling power generation, dust removal of finishing mill, tension leveler of 1# cold rolling mill, dust removal of scale removal of welding machine, dust removal of shot blasting machine in annealing and pickling line of 2# cold rolling plant, dust removal of flattening and coating line of 2# cold rolling plant, dust removal of finishing line of 2# cold rolling mill, dust removal of iron powder warehouse at acid regeneration station, dust removal of scrap cutting, hot blast stove, annealing furnace of cold rolling mill, dust removal of slab finishing (electric dust removal), primary dedusting of converter of no.1 steelmaking plant, secondary dedusting of converter of no.1 steelmaking plant, dry dedusting of no.2 steelmaking plant. | 1-3mg/m3 | 5mg/m3 | 1244.1 | 2050 | 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 :<20 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；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:180 mg/m3；hot blast stove:80mg/m3；Lime kiln roasting:80 mg/m3；heating furnace of hot rolling mill:150 mg/m3；continuous annealing line of cold rolling mill、annealing furnace of HDG line:150mg/m3；Coal-fired and gas-fired generating units :35mg/m3；Gas boiler:50 mg/m3. | 1020 | 5209.59 | 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 :<50 mg/m3；Gas boiler :<150 mg/m3. | Coke oven chimney :130mg/m3；Sintering desulfurization :300 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:300mg/m3；Lime kiln roasting:400 mg/m3；Coal-fired and gas-fired generating units:50 mg/m3；Gas boiler:150 mg/m3。 | 4365 | 11666.5 | No |
| 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:<20 mg/m3。 | Coke pushing、Coke outlet、CDQ outlet、Coke oven chimney:10 mg/m3；The transter point of stock ground:20mg/m3；Sintering machine batching, crushing, finished products screening、sintering machine tail and ring cooler :20mg/m3；primary flue gas and Secondary flue gas of BF tapping field:15 mg/m3；below the blast furnace bunker、cast iron machine、blast furnace pulverized coal production、：10mg/m3；hot blast stove of BF :15mg/m3；Steelmaking electric dust removal :50 mg/m3；Steelmaking secondary dedusting :15mg/m3；dust removal of Lime kiln top and flame descaling:30mg/m3；heat treatment furnace /;15mg/m3；finishing mill :20mg/m3；tension leveller and welder of PLTCM :20mg/m3；iron powder warehouse :30mg/m3；Coal-fired and gas-fired generating units :10mg/m3；Gas boiler:20mg/m3。 | 4746 | 6687.4 | No |
| Cold-R Co. | COD | organized | 1 | Wastewater stations | 10-28 mg/m3 | 30mg/m3 | 5.817 | 67.5 | No |
| Cold-R Co. | Ammonia Nitrogen | organized | 1 | Wastewater stations | 0．1-1 mg/m3 | 1.5(2.5) mg/m3 | 0.5044 | 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 | 4.7186 | 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:25-80 mg/m3；Roaster of acid regeneration station :20-65 mg/m3；2# boiler room :20-40 mg/m3；1# boiler room, Hydrogen production generator, 3# boiler room :20-65 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 | 50.8205 | 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 :0.5-4 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 :2-8 mg/m3; iron powder warehouse at acid regeneration station:0.5-5 mg/m3；1# boiler room, 2# boiler room, 3# boiler room:2-4 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 | 9.3649 | 18.75 | No |
Construction and operation of pollution prevention facilities
According to the ultra-low emission standards for pollutants from the iron and steel industry in the nation andHebei Province, the Company has completed the "2019 Green Action Plan", actively adapt various newenvironmental protection technologies to transform environmental protection facilities, held regular projectpromotion meetings and coordinates to solve existing problems. As of the end of the reporting period, QiangangCo. has completed 20 environmental protection projects, becoming the first in China and the only enterprise in thesteel industry that has passed the assessment and acceptance of ultra-low emission in the whole process.Through a series of measures such as improving the environmental protection management system, insisting ondaily inspection and implementing problem rectification, the daily production operation and operational control ofenvironmental protection facilities are continuously strengthened, and the environmental protection facilities andproduction facilities operate synchronously and stably. The Company strengthens the maintenance andmanagement of environmental protection facilities, and conducts simultaneous maintenance of main productionfacilities and environmental protection facilities such as desulfurization, denitrification, dust removal, wastewatertreatment and so on. After self-monitoring and supervision by the environmental protection department, all kindsof pollutants can reach the standard.Jingtang Co. has built a total of 200 waste gas treatment facilities to effectively treat all kinds of waste gas. Twomethods are used for dust-removing, which are bag dust removal and electric dust removal, and ammoniadesulfurization + low temperature SCR denitrification process is used for coke oven flue gas.In 2019, the flue gas desulfurization and denitrification facilities were constructed simultaneously in 2#, 3# pellets,and the "Three Simultaneous", and the desulfurization and denitrification facilities of 1# pellet were upgraded.The circulating fluidized bed desulfurization + medium temperature SCR denitrification process was used forsintering and pellet; The seawater desulfurization and SCR denitrification process was used for desulfurization ofself-provided power plant, and 14 main wastewater treatment facilities were constructed. These facilities includedcoking phenol-cyanogen wastewater treatment system, continuous casting wastewater treatment system, hotrolling, cold rolling, medium and heavy plate, steel rolling wastewater treatment system and comprehensivewastewater treatment station. After these treatments, the clean water and rich desalination water are mixed forreuse to realize zero discharge of coupling wastewater. Also, 7 solid waste treatment facilities were built. It builtcomprehensive coal utilization facilities, and a 6*600,000 tons / year slag fine grinding cement production line. Itadopted new processing technology to transform the blast furnace slag of iron and steel factory into high qualitycement.The Company also built a 250,000 tons / year steel-making first dust-removing ash pelletizing project, andused as slag making coolant in steel-making. At present, all environmental protection facilities are operating well,and various indicators have reached the emission requirements. On 1 February 2019, all processes passed theacceptance of ultra-low emissions in Tangshan, marking that the environmental management level of Jingtang Co.has reached a new level and reached the domestic leading level.The Cold-R Co. constructs annealing furnaces and gas boilers that use natural gas as fuel，and reduces waste gaspollution from the source, constructes 11 sets of waste gas treatment facilities such as oil mist purification system,acid mist purification system, bag dust removal system and alkali mist treatment system, and all waste gas meetsthe standard; The Company constructs one wastewater station, through four systems including acid-containingwastewater treatment system, dilute alkali wastewater treatment system and oil-bearing and liquid finishingwastewater treatment system, all the wastewater are discharged after reaching the standard. In terms of noiseprevention and control, low-noise equipment and vibration reduction measures were adopted. Silencers areinstalled at the outlets of the iron oxide powder depot; air compressors, nitrogen compressors and other equipmentare installed inside of the factory, and soundproof covers are settled, and noise reduction tower is constructed atthe outlet of nitrogen generators; vibration and noise reduction and sound insulation measures are used in theboiler room; Three silencers are installed at the outlet to minimize noise pollution. 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 out key environmental protection transformation projects such as acid regeneration water washingtower transformation, dust collector cloth bag change to high-efficiency filters cartridge transformation andvarious maintenance projects. The Company's existing environmental protection facilities are all in stableoperation, and pollutants are discharged to the standard.Construction of environmental impact assessment of projects and other environmental protectionadministrative permitsIn order to further implement energy conservation and emission reduction, enhance the corporate environmentalimage, the Company invested projects such as Qiangang Co. Dust-removing Environmental Management Projectand Qiangang Co. Whitening Water and Exhausted Steam for Blast Furnace Slag Project, they have beenregistered on the registration form of construction project environmental impacts. In September 2017, thecompany obtained a new version of the sewage permit issued by the Tangshan Environmental Protection Bureau.Jingtang Co. adheres to the equally importance principle of production development and environmental protection,evaluates the environmental impact assessment project strictly in accordance with the Environment ImpactAssessment Act of China, Constructs strictly in accordance with the EIA approval during the implementation ofthe project. All construction projects are supported by construction of environmental protection facilities, to meetthe “Three Simultaneous” management requirements for environmental protection.In April 2006, the Company obtained the Reply on Environmental Impact Assessment (Environmental Audit[2006] No. 181) from the Ministry of Environmental Protection (the former State Environmental ProtectionAgency); In May 2010, it obtained the Reply on Changes of Environmental Impact Assessment (EnvironmentalAudit Change Office [2010] No. 11) by the Ministry of Environmental Protection; In January 2012, it obtained theReply on Trial Production (Hebei Environment [2012] No. 17) from Hebei Ministry of Environmental Protection;In January 2014, the Reply on the Completed Environmental Protection of Phase I Project (EnvironmentalAssessment [2014] No.4) was obtained from the Ministry of Environmental Protection; In December 2014, thePermit for the Discharge of Pollutants was obtained from the Environmental Protection Department of HebeiProvince; In October 2015, the Reply on Environmental Impact Assessment of Phase II Project (HebeiEnvironmental Assessment [2015] no.359) was obtained from Hebei Ministry of Environmental Protection; InAugust 2017, the New Pollution Discharge Permit issued by Tangshan Ministry of Environmental Protection wasobtained, and combining with the phase II construction project, the change for sewage permit was completed inApril 2019, and the second phase of the one-step project sewage outlet was incorporated into the standardizedmanagement. In April 2019, the Reply Letter on the Opinions on the Changes of the One Step of the Second Phaseof Jingtang Co. (Hebei Environmental Assessment Letter [2019] No.465) was obtained from Hebei ProvincialDepartment of Ecology and Environment.In October 2017, Cold-R Co. obtained the first permit of the discharge of pollutants for important companies inShunyi District, Beijing, it actively responded to the Beijing Municipal Economic Information Bureau, the StateMinistry of Industrial Information to carry out green manufacturing transformation and upgrading work call,carried out the construction of green factory in 2019, and was selected on the Ministry of Industry andInformation of the Country's list of green factories as the fourth batch on July 17, 2019, which improved the greenproduction visibility of the Company, established a good social image.Zhixin Co. has no circumstances on construction project environmental impact assessment and otherenvironmental protection administrative license in 2019.Emergency plans for environmental emergencies
In accordance with the Environmental Protection Law of the People's Republic of China and other laws andregulations and normative documents, Qiangang Co. has formulated the Emergency Plan for EnvironmentalEmergencies. The plan focuses on strengthening the daily management and safety prevention of production,strictly prevents all kinds of sudden environmental events, regulates and strengthens the abilities to deal withenvironmental emergencies, focuses on preventing the occurrence of sudden environmental events, graduallyimproves the mechanism of early warning, disposal and rehabilitation of environmental emergencies, andestablishes emergency disposal system of the Company, which would be strong, orderly, efficient, unified andcoordinated, for emergency environmental emergencies. On this basis, Qiangang Co. also formulated two specialplans, one is Sudden Environmental Event Emergency Plan Special for Atmospheric, and the other is SuddenEnvironmental Event Emergency Plan Special for Water, 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 storagetanks and other dangerous chemicals and toxic and harmful substances production, storage areas as dangeroustarget for emergency rescue, implements 11 emergency drills including wastewater over the standard, waste acidleakage, waste oil leakage, radioactive source loss and so on, ensures effective implementation of rescue underemergency, in accordance with the requirements of the Plan, and improves the prevention and treatment skills ofsudden environmental pollution events.In 2018, Cold-R Co. redrawn the Emergency Treatment Plan for Environmental Emergencies in accordance withrelated laws and regulations, and in 2019, in accordance with the Emergency Plan for Environmental Emergenciesrequirements, organized to carry out planning exercises in acid rolling, heat treatment work area and publicauxiliary areas, timely rectified when found problems, enhances the company's emergency response capacity ofenvironmental emergencies.Zhixin Co., in accordance with the Emergency Plan for Environmental Emergencies, organizes every units tocarry out emergency drills of environmental emergencies, comprehensive coverage of 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 andInformation Disclosure Measures (Trial) and National Key Monitoring Enterprises Pollution Source Supervisionand Information Disclosure Measures (Trial) and other relevant regulations, Qiangang Co. establishes andimproves the pollution source monitoring and information disclosure system, formulates the Pollutant EmissionMonitoring Plan 2019, and strictly implements it strictly. Qiangang Co. organizes and implements self-monitoringactivities 1288 times in the whole year, covering all pollution factors such as wastewater and waste gas. Themonitoring 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 manualmonitoring. The manual monitoring system delegates the monitoring activities to qualified third-party testingagencies, and regularly conducts environmental monitoring on the waste gas, wastewater, noise and radioactivesources in the factory according to the monitoring plan. Monitoring data and reports are formed, and all pollutantsare discharged up to standard throughout the year.According to the requirements of the Beijing Municipal Bureau of Environmental Protection's “notice onsupervision and assessment of total emission reduction monitoring system of main pollutants”, the Cold-R Co.supervises and tests each discharge point on a daily, monthly, and quarterly basis. In 2019, all emission indicatorsof pollution sources of the Company reach the standard.
According to the requirements of relevant national regulations, Zhixin Co. has formulated the 2019Self-Monitoring Plan, the Company entrusts qualified third-party testing agencies to carry out environmentalmonitoring monthly and quarterly in accordance with the monitoring plan, and all pollutants are discharged up tostandard throughout the year.Other environmental information that shallbe disclosedOn the basis of adhering to the environmental protection work, Qiangang Co., Jingtang Co., Cold-R Co., andZhixin Co. use the national key monitoring enterprises’ self-monitoring information disclosure platform, websiteof government environmental protection department and self-established information disclosure platform, topublicize and display the environmental protection projects, operation of environmental protection facilities,names and emissions of major pollution sources, monitoring methods, monitoring indicator names, solid wastecomprehensive 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 andlow-carbon oriented company, and also achieve a good and rapid development of the Company, Shougang Co.launched the preparation of environmental responsibility report at the end of 2016. The scope of theenvironmental responsibility report includes Qiangang Co., Jingtang Co., Cold-R Co., and other subsidiaries. InApril 2019, the 2018 Environmental Responsibility Report of Beijing Shougang Co., Ltd. was released on thewebsite of Shougang Co. (http://www.sggf.com.cn).
XIX. Other material events
□Applicable√Not applicable
No other material events that shall be notified during the reporting period.
XX. Material events of subsidiaries of the Company
□Applicable√Not applicable
Shougang Group transferred 29.8177% shareholding of Jingtang Co. to its wholly-owned subsidiary - BeijingShougang Steel Trade Investment Management Co., Ltd for free. The detailed contents please refers to theannouncements published on 8 April 2020 and 18 April 2020.
Section VI. Movements in share capital and shareholdersI. Share movements
1. Share movements
Unit: share
| Before change | Increase (/decrease) during the year | After change | |||||||
| Amount | Ratio | New shares issued | Bonus shares | Capitalization ofpublic reserve | Others | Subtotal | Amount | Ratio | |
| I. Restricted shares | 2,322,863,543 | 43.92% | -2,090,577,189 | -2,090,577,189 | 232,286,354 | 4.39% | |||
| 2. State-owned corporation shares | 2,322,863,543 | 43.92% | -2,090,577,189 | -2,090,577,189 | 232,286,354 | 4.39% | |||
| II. Un-restricted shares | 2,966,526,057 | 56.08% | 2,090,577,189 | 2,090,577,189 | 5,057,103,246 | 95.61% | |||
| 1. RMB ordinary shares | 2,966,526,057 | 56.08% | 2,090,577,189 | 2,090,577,189 | 5,057,103,246 | 95.61% | |||
| III. Total shares | 5,289,389,600 | 100.00% | 0 | 0 | 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 commonshareholders ofthe company and 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 securityregulators
√Applicable □Not applicable
In November 2019, Shougang Group and Baowu Group signed the Strategic Cooperation Agreement and the FreeShare Transfer Agreement. On 6 December 2019, Shougang Group transferred 15% of Shougang Co. shares toBaowu Group for free. On 8 January 2020, 2.19% of Baosteel Co. held by Baowu Group transferred to ShougangGroup for free.
2. Movements of restricted shares
√Applicable □Not applicable
Unit: Share
| Shareholder | No. of restricted shares at the beginning of the reporting period | Increase | Released | No. of restricted shares at the end of the reporting period | Reasons for restrictions | Release Date |
| Shougang Group | 2,322,863,543 | 0 | 2,090,577,189 | 232,286,354 | The commitment of substantial assets reorganization on 25 April 2014 (More details refer to the company's announcement in China Securities Journal, Securities Times, Shanghai Securities News and http://www.cninfo.com.cn on September 28, 2019.) | 9 October 2019 |
| Total | 2,322,863,543 | 0 | 2,090,577,189 | 232,286,354 | -- | -- |
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 assetsand liability structure
□Applicable √Not applicable
3.Current internal staff shares
□Applicable √Not applicable
III. Shareholders and the actual controller
1. Amount of shareholders andshareholding
Unit: Share
| Total common stock shareholders in reporting period-end | 100,027 | Total common stock shareholders at end oflast month before annualreport disclosed | 99,826 | Total preference shareholderswith voting rights recovered at end of reporting period (ifapplicable) (found in note 8) | 0 | Total preference shareholders with voting rights recovered at end of lastmonth 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 ofshares held | Total shareholders atthe end of report period | Changes inreport period | Amount ofrestrictedshares held | Amount of unrestrictedsharesheld | Shares pledged or frozen | |||||||
| Status | Amount | |||||||||||||
| Shougang Group | State-owned corporation | 64.38% | 3,405,352,431 | -793,408,440 | 232,286,354 | 3,173,066,077 | Pledged | 2,099,000,000 | ||||||
| Baowu Group | 15.00% | 793,408,440 | 793,408,440 | |||||||||||
| Beijing YizhenTechnology Development Co., Ltd | 3.02% | 159,790,000 | ||||||||||||
| Beijing Namunani Asset Management Co., Ltd | 1.51% | 79,900,000 | ||||||||||||
| Beijing Shiliugang Business Management Co., Ltd | 1.11% | 58,590,000 | ||||||||||||
| Xinhua Life Insurance Co., Ltd. - dividend - individual dividend – 018L-FH002 Shenzhen | 1.09% | 57,801,222 | ||||||||||||
| Beijing Xiaojian Technology Development Co., Ltd | 0.93% | 49,270,000 | ||||||||||||
| Beijing Saina Investment Development Co., Ltd | 0.50% | 26,475,500 | ||||||||||||
| Liu Wei | 0.39% | 20,600,000 | ||||||||||||
| Beijing Andes Investment Development Co., Ltd | 0.35% | 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 YizhenTechnology 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 YizhenTechnology Development Co., Ltd | 159,790,000 | |||
| Beijing Namunani Asset Management Co., Ltd | 79,900,000 | |||
| Beijing Shiliugang Business Management Co., Ltd | 58,590,000 | |||
| Xinhua Life Insurance Co., Ltd. - dividend - individual dividend – 018L-FH002 Shenzhen | 57,801,222 | |||
| Beijing Xiaojian Technology Development Co., Ltd | 49,270,000 | |||
| Beijing Saina Investment Development Co., Ltd | 26,475,500 | |||
| Liu Wei | 20,600,000 | |||
| 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 YizhenTechnology 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 havea 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 theCompany 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
| 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.Huaxia Bank, 20.28%；2.Foton Motor, 1.20%；3.Haohua Energy Resource, 1.86%；4.Shanxi Coking, 2.81%； 5.Bank of Communications, 0.01%；6.Baosteel Co., 2.19%. | |||
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 Companyand actual controllers
Actual controller controlling the company through trust or other asset management methods
□Applicable √Not applicable
4. Other legal person shareholders withover 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 |
| Baowu Group | Chen Derong | 1/1/1992 | 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 and reducing the holdings of shares of controlling shareholders, actual controllers,restructuring side andother commitment subjects
□Applicable √Not applicable
Section VII. Preferred Shares
□Applicable √Not applicable
No preferred shares issued by the company during the reporting period.
Section VIII. Convertible Bonds
□Applicable √Not applicable
No convertible bonds issued by the company during the reporting period.
Section IX Directors, Supervisors, Senior Management and Employees
I. Movements of sharesheld by directors, supervisors and senior management
| Name | Position | On or off the job | Gender | Age | Date of term commencement | Date of term termination | No. of shares held at the beginning of the year (Share) | No. of increased shares during the reporting period (Share) | No. of decreased shares during the period (Share) | Other changes during the reporting period (Share) | No. of shares held at the end of period (Share) |
| Zhao Minge | Chairman | On the job | Male | 53 | 16/05/2013 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Liu Jianhui | Director | On the job | Male | 55 | 19/09/2014 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Qiu Yinfu | Director | On the job | Male | 52 | 19/09/2014 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Wu Dongying | Director | On the job | Male | 56 | 23/12/2019 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Tang Di | Independent director | On the job | Male | 64 | 27/06/2014 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Yin Tian | Independent director | On the job | Male | 65 | 07/01/2016 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Zhang Bin | Independent director | On the job | Male | 46 | 19/09/2014 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Ye Lin | Independent director | On the job | Male | 56 | 26/12/2017 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Yang Guipeng | Independent director | On the job | Male | 47 | 07/01/2016 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Shao Wence | Chairman of supervisory committee | On the job | Male | 56 | 23/12/2019 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Guo Liyan | Supervisor | On the job | Female | 44 | 07/01/2016 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Yang Mulin | Supervisor | On the job | Male | 48 | 23/12/2019 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Chen Xiaowei | Supervior from the staff | On the job | Female | 46 | 23/12/2019 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Guo Yuming | Supervior from the staff | On the job | Male | 52 | 23/12/2019 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Liu Jianhui | General manager | On the job | Male | 55 | 29/08/2014 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Peng Kaiyu | Deputy general manager | On the job | Male | 39 | 24/04/2019 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Li Ming | Deputy general manager | On the job | Male | 45 | 27/01/2015 | 22/12/2022 | 0 | 0 | 0 | 0 | |
| Li Baizheng | Chief accountant | On the job | Male | 54 | 28/10/2015 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Sun Maolin | Deputy general manager | On the job | Male | 43 | 25/10/2017 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Li Jingchao | Deputy general manager | On the job | Male | 53 | 25/10/2017 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Chen Yi | Deputy general manager | On the job | Male | 52 | 24/04/2019 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Chen Yi | Board secretary | On the job | Male | 52 | 26/08/2015 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Ma Jiaji | Chief engineer | On the job | Male | 56 | 23/12/2019 | 22/12/2022 | 0 | 0 | 0 | 0 | 0 |
| Li Ming | Director | Off the job | Male | 45 | 26/12/2017 | 23/12/2019 | 0 | 0 | 0 | 0 | 0 |
| Xu Jianguo | Chairman of supervisory committee | Off the job | Male | 59 | 19/09/2014 | 23/12/2019 | 0 | 0 | 0 | 0 | 0 |
| Wang Zhian | Supervior from the staff | Off the job | Male | 60 | 19/09/2014 | 23/12/2019 | 0 | 0 | 0 | 0 | 0 |
| Cui Aimin | Supervior from the staff | Off the job | Female | 51 | 19/09/2014 | 23/12/2019 | 0 | 0 | 0 | 0 | 0 |
| Total | -- | -- | -- | -- | -- | -- | 0 | 0 | 0 | 0 |
II. Changes of directors, supervisors and senior management
√Applicable □Not applicable
| Name | Position | Change | Date | Reasons of changes |
| Li Ming | Director | Resignation | 23/12/2019 | Renewal of the board of directors and expiration of term of office |
| Xu Jianguo | Chairman of supervisory committee | Resignation | 23/12/2019 | Renwal of the supervisory committee and expiration of term of office |
| Wang Zhian | Supervisor from thestaff | Resignation | 23/12/2019 | Renewal of the supervisory committee and expiration of term of office |
| Cui Aimin | Supervisor from the staff | Resignation | 23/12/2019 | Renewal of the supervisory committee and expiration of term of office |
III. Current directors, supervisors and senior managementProfessional background, major experience, and major duties of current directors, supervisorsandseniormanagement.
A. Directors
1. Zhao Minge: chairman, professor-level senior engineer, postgraduate education, Ph.D of Engineering. Themajor employment history of Mr. Zhao is as follows: a teacher of mining and metallurgy department of BeijingIron and Steel College; a deputy director of teaching section of educational division, a deputy director (in chargeof daily routine) of educational division, the vice president of the college; a deputy director of ShougangTraining Centre; a deputy director of Shougang Ironmaking Factory; a deputy director of the No.2 IronmakingPlant of Shougang Co.; the secretary of CPC Committee of Beijing Shougang Oxygen Factory; a director ofShougang Training Center (Training Department); the head (first vice president of the Institute) of TechnicalQuality Department (Technical Research Institute, Xingang TechnicalQuality Department); a deputy secretary ofCPCCommittee and deputy general manager of Xingang Co.; a memberof the board and general manager ofShougang Changzhi Steel&Iron Co., Ltd.; a director and general manager of Shougang Changzhi Steel&Iron Co.,Ltd. (assistant level of the headquarter); the assistant of general manager of Shougang Corporation, the deputychief engineer and president of Shougang Technology Research Institute; later, concurrently, thedeputy secretaryof the CPCCommittee and executive deputy general manager of Shougang Jingtang United Iron&Steel Co., Ltd.;a standing member of CPC Committee, director, vice general manager of Shougang Corporation, at the sametime, appointeded as the director of Beijing Shougang Co., Ltd. and Shougang Jingtang United Iron&Steel Co.,Ltd. Since August 2017, Mr. Zhao served as chairman of Beijing Shougang Co., Ltd. In addition, Mr. Zhao alsois a standing member of CPC Committee, director, vice general manager of Shougang Group.
2.Liu Jianhui: director and general manager, professor-level senior engineer, postgraduate education, master ofengineering. The major employment history of Mr. Liu is as follows: a professional in the steel-making section ofBeigang Technology Office and deputy director of the steel-making inspection station; a student of LugouEngineering School of Shougang; a deputy director of the No.1 Steel-making Plant of Shougang and director ofthe Shougang’ Research Institute; thechief engineer, technical assistant of factory manager and technical sectiondirectorof the No.2 Steelmaking Plant of Shougang and director of the Research Institute; a technical assistant ofthe factory manager and director of the technical section and technical deputy director of the No.2 Steel-makingPlant of Shougang Corporation; adeputy director of the No.2 Steelmaking Plant of Beijing Shougang Co., Ltd.;the assistant of general manager and head of steelmaking department of Shouqin Co.;the assistant of generalmanager and deputy general manager of Qiangang Co.; the deputy general manager (acting general manager) andgeneral manager of sales company of Shougang Corporation; the deputy secretary of CPCCommittee, generalmanager 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; thedeputy secretary of CPCCommittee, director and general manager of Shougang Co., concurrently served assecretary of CPCCommittee and director for Jingtang Co. 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 asfollows:a professional and person in charge of the mobile section of Shougang’ Medium and Heavy Plate Plant;the deputy director, director, or director and secretary of CPC Branch of mobile division of the Shougang’s No.2Steelmaking Plant; a director and secretary of CPC Committee of the No.2 Steelmaking Plant of BeijingShougang Co., Ltd.; the deputy director to director of Shougang Oxygen Factory; the director and secretary ofCPC Branch of Oxygen Production Division and director of the Oxygen Factory of Shougang; the director of theOxygen Factory of Shougang and head of Jingtang Integration Project; the director of the Oxygen Factory ofShougang and head of Jingtang Integration Project, director of Oxygen Production Branch of Tangshan ShougangBaoye Steel & Iron Co., Ltd.; the director of cold rolling operation department and assistant to general manager inQiangang Co.; director and secretary of CPC Committee of cold rolling operation department, and assistant to
general manager of Qiangang Co.; the director and secretary of CPC Committee of cold rolling operationdepartment, and deputy general manager of Qiangang Co.; the deputy secretary of CPC Committee, director of theboard and general manager of Cold-R Co.; deputy secretary of CPC Committee, chairman and general manager ofCold-R Co.,; deputy secretary of CPC Committee, chairman and general manager of Cold-R Co., and deputygeneral manager of Shougang Co.; the deputy secretary of the CPC Committee, chairman of labor union, deputygeneral manager of Shougang Co., and secretary of CPC Committee of Qiangang Co.; the deputy secretary of theCPC Committee, chairman of labor union, deputy general manager of Shougang Co., secretary of CPC Committeeof Qiangang Co., director of BAIC Motor Corporation., Ltd., director of Beijing Automobile Investment Co., Ltd.;At present, he is the secretary of CPCCommittee and chairman of Jingtang Co., director of Shougang Co., anddirector of BAIC Motor Co., Ltd.
4. Wu Dongying: director, senior engineer, PhD candidate. The major employment history of Mr. Wu is asfollows: a teacher of Hefei University of Technology; a researcher, person in charge and deputy director ofstrategic research agency of Baosteel; the director of strategic section under planning & development departmentof Baosteel Group; the director of strategic development department of Baosteel Group; the director of economyand management institute ofBaosteel Group; the general manager of planning & development department anddirector of economy & planning institute of Baosteel Group; the general manager of planning & developmentdepartment and director of economy & planning institute of Baowu Group. At present, he is the general manager(president) of strategic planning department (economic & planning institute) of Baowu Group and director ofShougang Co.,.
5. Tang Di: independent director, professor and doctoral supervisor, doctoral degree.The major employmenthistory of Mr. Tang is as follows: a worker of Printing Factory of the Ministry of Culture; a teacher of Universityof Science and Technology Beijing (hereinafter "USTB"); the director of the National Engineering ResearchCenter for Efficient Rolling of USTB; the chairman of the USTB Institute of Design Co., Ltd.; the chairman of theBeijing Keda Hengxing Hi-Tech Co., Ltd. Since 27 June 2014, Mr. Tang is an independent director of ShougangCo. He is also the chief scientist of the Collaborative Innovation Center of Steel Technology of USTB, anindependent director of Sinosteel Anhui Tianyuan Technology Co., Ltd., the chairman of Intensive ProcessingBranch of the China Society of Metal, the director and deputy secretary general of Steel Rolling Branch of theChina Society of Metal.
6. Yin Tian: independent director, professor and doctoral supervisor, university education. The majoremployment history of Mr. Yin is as follows: an assistant, a lecturer and an associate professor of SouthwestUniversity of Political Science & Law (hereinafter “SWUPL”), a visiting scholar sent by the State EducationCommission to the University of Social Sciences in Toulouse, France, the director and professor of the FrenchLaw Research Center of SWUPL, and dean, professor and doctoral supervisor of the Law Faculty of SWUPL. Atpresent, he is a professor, doctoral supervisor and director of Civil Law Research Center of Peking UniversityLaw School. Since 7 Juanary, 2016, he has been appointed as an independent director of Shougang Co. He alsoserves as the president of China Law Society, vice president of China Civil Law Research Society, president ofChina Insurance Law Research Society, special supervisor of the Supreme People's Court, consultant expert of theSupreme People's Procurator ate, and independent director of Skyworth Digital Co., Ltd.
7. Zhang Bin: independent director, postdoctoral and researcher. The major employment history of Mr. Yin is asfollows: a lecturer of the School of Economics of Shandong University; an assistant researcher, a deputyresearcher of National Academy of Economics Strategy of the Chinese Academy of Social Sciences (hereinafter“CASS”), a deputy director and a deputy researcher of the Cost and Price Research Office, and a deputy directorof the Tax Research Office; a researcher of National Academy of Economics Strategy of CASS and a director ofthe Tax Research Office of CASS. Since 19 September, 2014, Mr.Zhang take the position as an independent
director of Shougang Co. In addition, he also is a researcher of National Academy of Economics Strategy ofCASS, a director of the Tax Research Office and assistant to the president of National Academy of EconomicsStrategy of CASS. Mr. Zhang enjoys the special allowance of the State Council in January 2019.
8. Ye Lin: independent director, professor and doctoral supervisor, doctor in law, Ye Lin was serving Law Schoolof Renmin University of China (hereinafter “RUC”) as an assistant, lecturer, associate professor and professor,successively. At present, he is the director, professor and doctoral supervisor of Civil & Commercial LawTeaching and Research Agency of RUC Law School. He is also an independent director of China Life AssetManagement Co., Ltd., an independent director of Founder Securities Co., Ltd., and a part-time lawyer of BeijingShengang Law Firm. Major part-time jobs include: the vice president of China Commercial Law Society underChina Law Society, the vice president of Civil and Commercial Law Society under Beijing Law Society, thepresident of Beijing Consumer Rights Protection Law Society; a legislative consultant of Financial and EconomicAffairs Committee of the National People's Congress of PRC, a consultant of drafting group to Futures Law, aconsultant of Administrative Punishment Committee of CSRC, a consumer rights protection social supervisor ofChina Insurance Regulatory Commission, a consultant of the Legal Professional Committee of the InsuranceSociety of China, a member of the Advisory Committee of Beijing High People’s Court, a consultant of theCompany Law Committee of China Lawyers Association, a consultant of the Company Law Committee ofBeijing Lawyers Association, a member of the Professional Committee of Shanghai Stock Exchange and ChinaFinancial Futures Exchange, a arbitrator and expert of the Advisory Committee of China International Economicand Trade Arbitration Commission. Ye Lin serves Shougang Co. as an independent director from 26 December,2017.
9. Yang Guipeng: independent director, university education and CICPA. The major employment history of Mr.Yang is as follows: the project manager of Beijing Wangda Certified Public Accountants Firm., the departmentmanager of Zhongzhou Certified Public Accountants Firm, the senior manager of Zhongtianxin Certified PublicAccountants Firm, the partner of Tianhua Certified Public Accountants Firm, the managing partner of GrantThornton China LLP, the member of the third CSRC Public Offering Review Committee of Growth EnterpriseBoard, and the partner of BDO China Shu Lun Pan Certified Public Accountants LLP. Mr. Yang was appointed asthe independent director of Shougang Co. on 7 January, 2016. And he also is an independent director of TangshanSanyou Chemical Co., Ltd. and Rizhao Port Co., Ltd.
B. Supervisors
1. Shao Wence: chairman of the supervisory committee, master degree, senior engineer. The major employmenthistory of Mr. Shao is as follows: a professional in the mobile division of Shougang Oxygen Factory; the personin charge and deputy secretary of CPC Branch in repair plant of Shougang Oxygen Factory; the professional(assisting roles of sections or equivalents) and deputy director of the power section under Beigang mobile division;the secretary (assistant level) of the Beigang’s mobile division; the deputy director in charge of the equipment anddirector of Shougang Oxygen Factory; the director of the Oxygen Factory of Shougang Corporation; the directorof the Oxygen Factory of Shougang Co.; the director and secretary of CPC Committee of the mobile departmentof Shougang Corporation (Xingang Company); the director and secretary of CPC Committee of the equipmentdepartment of Shougang Corporation (Xingang Company); the director and secretary of CPC Committee of theEquipment Department of Shougang Corporation (Xingang Company), and the director of the equipmentdepartment of Jingtang Co.; the director of the energy department of Jingtang Co.; the director of the energy andenvironment department; the director and secretary of CPC Committee of the energy and environment departmentof Jingtang Co.; the secretary of CPC Committee, the secretary of Commission for Discipline Inspection(hereinafter “CDI” in Section 9), and the chairman of labor union of the energy and evironment department ofJingtang Co.; the director of the equitpment department of Jingtang Co.; the director of the engineering
department of Jingtang Co.; the secretary of CDI of Jingtang Co.; the executive deputy director of the workadministration of supervisory committee of Shougang Corporation. At present, he is the executive deputy directorof the work office of supervisory committee of Shougang Corporation. and the chairman of the supervisorycommittee of Shougang Co.
2. Guo Liyan: Supervisor, university education, MBA, senior accountant.The major employment history of Mrs.Guo is as follows: a member of the financial section of the Mechanical Factory of Beijing ShougangMachinery&Electric Co., Ltd.; an auditor of the audit administration of Beijing Shougang Machinery&ElectricCo., Ltd., the director of the accounting section under the Hydraulic Center of Beijing ShougangMachinery&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 & accountingdepartment; the deputy director of the financial station of the Technical Research Institute under ShougangCorporation finance & accounting department; the executive deputy director of the first division under auditdepartment of Shougang Corporation; an assistant to the director and deputy director of Shougang Corporationaudit department; the director of Shougang Corporation audit department and supervisor of Shougang Co. Mrs.Guo is the current director of audit department of Shougang Group and the current supervisor of Shougang Co.,.
3. Yang Mulin: university education, master of engineering, senior economist. The major employment history ofMr. Yang is as follows: the dispatcher and production planner of production department of QinhuangdaoShougang Plate Mill Co., Ltd. (hereinafter “Qinhuangdao Plate Co.”) the production manager of comprehensivedepartment of Qinhuangdao Branch of Zhongshou, the secretary and deputy director of factory affairs office ofQinhuangdao Plate Co.; the executive deputy director of human resources department and the deputy director offactory affairs office of Qinhuangdao Plate Co.; the director of human resources department and the director offactory affairs office of Qinhuangdao Plate Co.; assistant to the general manager of Qinhuangdao Plate Co.; thedirector ofhuman resources department of Qinhuangdao Plate Co.; assistant to the director and duty director ofhuman resources department of Jingtang Co.; the secretary of CPC Committee, secretary of CDI and chairman oflabor union of cold-rolled operation department of Jingtang Co.; the director of organization department andhuman resources department under CPC Committee of Jingtang Co.; the deputy director of labor & salarydepartment of Shougang Corporation; the deputy director of labor & salary department of Shougang Corporation;the director of system optimization department of Shougang Corporation. Besides serving Shougang Co. as asupervisor, Yang Mulin is the head of system optimization department of Shougang Group Co., Ltd
4. Chen Xiaowei: supervisor from the staff, master degree, senior political engineer. The major employmenthistory of Mrs. Guo is as follows: the administrator of the comprehensive section under the commerce division ofShougang Mining Corporation; the administrator and director of the comprehensive section under the commercedivision, and the manager of material distribution department of Shougang Mining Corporation; the director ofoperating & management section under commerce division of Shougang Mining Corporation; the worker of theinformation section under the operation department of Qiangang Co.; the deputy director (temporary training) andthen the deputy director of secretariat section of Qiangang Co.; and the assistant to the secretary of CPCCommittee and director of comprehensive office under hot-rolled operation department of Qiangang Co.; thedeputy secretary of hot-rolled operation department of Qiangang Co.; the deputy secretary of CPC Committee, thesecretary of CDI, and the chairman of labor union under hot-rolled operation department of Qiangang Co.; thedeputy chairman of labor union, the secretary of authority CPC Committee, the secretary of CDI, the chairman oflabor union, the deputy director of CPC affairs department of Shougang Co.; the deputy chairman of labor union,the secretary of Official CPC Committee, the deputy director of CPC affairs department of Shougang Co.; thechairman of Shougang Co. labor union. Currently, Chen Xiaowei is the supervisor from the staff, the member ofCPC Committee, and the chairman of labor union, in Shougang Co.
5. Guo Yuming: supervisor from the staff, university education, senior technician. The major employment historyof Mr. Guo is as follows: a steelmaker in Shougang No.2 Steelmaking Factory, the head of steelmaking plant ofSteelmaking Branch of Qiangang Co.; the head of steelmaking operation plant 1 under steelmaking operationdepartment of Qiangang Co. At present, he is the chief steelmaking operator of No.1 steelmaking operation areaunder steelmaking operation department of Shougang Co. and the supervisor from the staff of Shougang Co.C. Senior Management
1.Liu Jianhui: director and general manager, professor-level senior engineer, postgraduate education, master ofengineering. The major employment history of Mr. Liu is as follows: a professional in the steel-making section ofBeigang Technology Office and deputy director of the steel-making inspection station; a student of LugouEngineering School of Shougang; a deputy director of the No.1 Steel-making Plant of Shougang and director ofthe Shougang’ Research Institute; the chief engineer, technical assistant of factory manager and technical sectiondirector of the No.2 Steelmaking Plant of Shougang and director of the Research Institute; a technical assistant ofthe factory manager and director of the technical section and technical deputy director of the No.2 Steel-makingPlant of Shougang Corporation; a deputy director of the No.2 Steelmaking Plant of Beijing Shougang Co., Ltd.;the assistant of general manager and head of steelmaking department of Shouqin Co.; the assistant of generalmanager and deputy general manager of Qiangang Co.; the deputy general manager (acting general manager) andgeneral manager of sales company of Shougang Corporation; the deputy secretary of CPC Committee, generalmanager 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; thedeputy secretary of CPC Committee, director and general manager of Shougang Co., concurrently served assecretary of CPC Committee and director for Jingtang Co. At present, he is the secretary of CPC Committee,director and general manager of Beijing Shougang Co., Ltd.
2. Peng Kaiyu: 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 chief deputy operator (training on duty), the chief deputy operator and the chief operator,in No.1 steelmaking refining operation area under steelmaking operation department of Shougang Co.; theassistant to the director under the steelmaking operation department of Qiangang Co.; the assistant to the directorand the deputy director of steelmaking operation department of Qiangang Co.; the deputy director (presiding overwork) and director of steelmaking operation department of Shougang Co.; the secretary of CPC Committee, theecretary of CDI, chairman in labor union and director of steelmaking operation department of Shougang Co.; thesecretary of CPC Committee, the secretary of CDI and the chairman in labor union, under steelmaking operationdepartment of Shougang Co.; the deputy secretary of CPC Committee of Shougang Co. Mr. Peng is the currentdeputy secretary of CPC Committee and the deputy general manager of Shougang Co.
3. Li Ming: deputy general manager, university education, doctoral candidate, professor level senior engineer.The major employment history of Mr. Li is as follows: a technician, person in charge of refining workshop, thedeputy director of refining workshop, the executive deputy director of refining workshop, the director of refiningworkshop, the deputy director (leading roles of sections or equivalents) of technical research section; an assistantto the director of the technical quality division and the director of the technical section under technical qualitydivision, the deputy director of technical quality division, in Qiangang Co.; an assistant to the manager and thenthe deputy manager of Qiangang Co.; the deputy manager of Qiangang Co.; the deputy secretary of CPCCommittee and director of marketing management department of Shougang Co.; the deputy secretary of CPCCommittee and director of Marketing Management Department, and the deputy general manager of Shougang Co.;the deputy secretary of CPC Committee and director of marketing management department, and the deputygeneral manager and director of Shougang Co. At present, he is the deputy secretary of CPC Committee and
director of marketing management department, and the deputy general manager and director of Shougang Co.
4. Li Baizheng: university education, chief accountant, accountant, economist. The major employment history ofMr. Li is as follows: the planning controller of No.1 Steelmaking Factory; the dispatcher of production setion, theplanning controller of steelmaking workshop, the planning controller of production section, the chief controller ofproduction section, the planner of production section, the director of billet area, the deputy director of productionsection, the director of finance and accounting section, planning person in charge of production and planningsection, in No. 2 Steelmaking Factory; the deputy director and then director of finance and accounting departmentof Qiangang Co.; the director of finance and accounting department of Qiangang Co.; the chief accountant ofShougang Co. Li Baizheng is the current chief accountant of Shougang Co., the board member of BeijingShougang Cold Rolling Co., Ltd. and Shougang Jingtang United Iron&Steel Co., Ltd.
5. Sun Maolin: deputy general manager, university education, MBA, engineer. The major employment history ofMr. Sun is as follows: when serving Shougang Medium and Heavy Plate Factory, a professional in the technicalsection, the deputy secretary of CPC Branch and deputy director of hot rolling section, the secretary of CPCBranch of operation zone B, the deputy director of technical research section; the deputy director of technicalsection under technical quality division, an assistant to the director of technical quality division, the executivedeputy director of silicon steel department, the standing deputy director of silicon steel department in QiangangCo.; the executive deputy director and then director of silicon steel business department of Shougang Co.; thedirector of Silicon Steel Engineering Research Center; the secretary of CPC Committee and director of siliconsteel business department, and an assistant to the general manager of Shougang Co.; the director of silicon steelbusiness department. Sun is the current deputy general manager of Shougang Co. and director of Silicon SteelEngineering Research Center. He also servesZhixin 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. Liis as follows: a milling worker of rail workshop in Shougang Middle-sized Factory; an electrician of electricalapparatus workshop in Shougang Power Factory; the person in charge of the Youth League Committee ofShougang Testing Branch; in Shougang No. 3 Steel Mill, the worker of steelmaking workshop, the administrativeperson in charge of the billet cast machine workshop, the production deputy director of power workshop, thedirector (leading roles of sections or equivalents) of power workshop, the director (leading roles of sections orequivalents) of spare parts section, the deputy director (leading roles of sections or equivalents) of mobile section,the deputy director (leading roles of sections or equivalents) of equipment section, the deputy director (leadingroles of sections or equivalents) of equipment section and director (leading roles of sections or equivalents) ofpower workshop, the deputy director (leading roles of sections or equivalents) of equipment section; an assistantto the director, the deputy director, the director of equipment division and the director of equipment department ofQiangang Co.; an assistant to the general manager and the director of equipment department of Qiangang Co.; anassistant to the general manager of Qiangang Co.; an assistant to the general manager of Qiangang Co., and thesecretary of CPC Committee and the director of equipment department of Shougang Co.; an assistant to thegeneral manager of Qiangang Co.; an assistant to the general manager of Qiangang Co., and the secretary of CPCCommittee and the director of equipment department of Shougang Co., the director of intelligent applicationdepartment 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 deputygeneral manager of Shougang Co., and concurrently vice chairman of Qian'an Sinochem Coal Chemical IndustrialCo., Ltd. and the director of Qian'an China Petroleum 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: a professional in the technical section of Shougang No.2 Wire Rod Coil Factory; a professional
in the steel rolling section under the technical division of Shougang Beigang Co., a designer in the rolling processsection of Shougang Design Institute, a deputy group leader and group leader of the first group of the rollingsection under steel rolling division of Shougang Design Institute; the deputy director of the steel rolling sectionunder 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 productiondeputy director of No. 1 Plate Factory of Shougang Corporation. The director of Shougang No.2 Wire Rod CoilFactory; the director of Beijing Shougang Fulu Shicai Coated Plate Co., Ltd.; the leader of cold-rolled preparationgroup, the general manager of Beijing Shougang Fulu Shicai Coated Plate Co., Ltd.; the leader of cold-rolledpreparation group, the director and general manager of Beijing Shougang Fulu Shicai Coated Plate Co., Ltd., andthe 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 SteelDepartment and the deputy general manager of Shougang Co.; the manager of Shunyi Cold Rolled Branch and thedeputy general manager of Shougang Co.; the manager and board member of Cold-R Co. and the deputy generalmanager of Shougang Co.; the deputy general manager of Shougang Co.; the deputy chief engineer of QiangangCo. Ma is the current deputy chief engineer of Shougang Co.
8. Chen Yi: deputy general manager, board secretary, postgraduate education, doctor of management, senioreconomist. The major employment history of Mr. Chen is as follows: a professional in the mobile section, anassistant to the director of the maintenance workshop, the deputy director of the mobile section of ShougangMedium-sized Rolling Mill; the secretary of the CPC Committee office; a trainee of the overseas training courseof Shougang University; the deputy director of the engineering division of the Jichai technical transformationleading group of Shougang; the deputy director of the Office (CPC Office) under the Shougang Economy & TradeDepartment; the deputy director of the board secretary office ofBeijing Shougang XinganglianTechnology&Trade Co., Ltd.; the deputy manager of Shougang Marketing Co.; the deputy director of marketingmanagement department, the deputy director of marketing management department and the person in charge ofthe board secretary office, in Shougang Co.; the board secretary and the director of the board secretary office ofShougang Co.; the general counsel, board secretary and director of the board secretary office of Shougang Co.,and director of Cold-R Co. and Jingtang Co. At the end of the reporting report, Chen Yi was the deputy generalmanager, board secretary, general counsel of Shougang Co., and director of Cold-R Co. and Jingtang Co.Position in shareholders’ entities
√Applicable □Not applicable
| Name | Name of other units | Position in other entities | Start dated ofoffice term | End date ofoffice term | Received remuneration from other unit (Y/N) |
| Zhao Minge | Shougang Group | Standing member of CPC Committee, board director, deputy general manager | June 2017 | Y | |
| Shao Wence | Shougang Group | Standing deputy director of the office of supervisory committee | June 2017 | Y | |
| Guo Liyan | Shougang Group | Director of audit department | June 2017 | Y | |
| Yang Mulin | Shougang Group | Director of systematic optimization department | June 2017 | Y |
Position in other entities
□Applicable √Not applicable
Notes for any punishment from securities review and management authorities, on resigned or current directors,supervisors, and senior managers within the three years
□Applicable √Not applicable
IV. Remuneration for directors, supervisors, and senior management
Decision-making program and determination basis of remuneration, and actual payment to directors, supervisors,and senior manages
Remuneration for directors: the independent directors enjoy independent directors’ allowance, and theremuneration standards is set by the general shareholder meeting. Internal directors have no directors’remuneration.Remuneration for supervisors: the company provides the superiors from the staff with remuneration accordingto other position in the company, and other supervisors do not receive any remuneration.Remuneration for senior management: The remuneration committee under the board of directors is responsiblefor organizing the performance assessment to the general manager and proposes remuneration, in terms of theAnnual Measures for Assessment and Distribution of General Manager Salary, and reports the performance anddeserved remuneration of general manger to the board. After the consideration and approval from the board ofdirectors, the company actually affords the remuneration. Other senior management remuneration is affordedmonthly, in accordance with performing duties assessed by the general manager and director under the Board’sauthorization.Remuneration for directors, supervisors and senior management during the reporting period
Unit: RMB 10,000
| Name | Position | Gender | Age | Post-holding status | Total remunerationobtained from theCompany (pre- taxes) | Whetherremuneration obtained fromrelated party of the Company |
| Zhao Minge | Chairman | Male | 53 | Currently in office | 0 | Yes |
| Liu Jianhui | Director | Male | 55 | Currently in office | 0 | No |
| Qiu Yinfu | Director | Male | 52 | Currently in office | 0 | No |
| Wu Dongying | Director | Male | 56 | Currently in office | 0 | No |
| Tang Di | Independent director | Male | 64 | Currently in office | 9 | No |
| Yin Tian | Independent director | Male | 65 | Currently in office | 9 | No |
| Zhang Bin | Independent director | Male | 46 | Currently in office | 0 | No |
| Ye Lin | Independent director | Male | 56 | Currently in office | 9 | No |
| Yang Guipeng | Independent director | Male | 47 | Currently in office | 9 | No |
| Shao Wence | Chairman of supervisory committee | Male | 56 | Currently in office | 0 | Yes |
| Guo Liyan | Supervisor | Female | 44 | Currently in office | 0 | Yes |
| Yang Mulin | Supervisor | Male | 48 | Currently in office | 0 | Yes |
| Chen Xiaowei | Supervisor from the staff | Female | 46 | Currently in office | 0 | No |
| Guo Yuming | Supervisor from the staff | Male | 52 | Currently in office | 0 | No |
| Liu Jianhui | General manager | Male | 55 | Currently in office | 71.29 | No |
| Peng Kaiyu | Deputy general manager | Male | 39 | Currently in office | 26.82 | No |
| Li Ming | Deputy general manager | Male | 45 | Currently in office | 65.87 | No |
| Li Baizheng | Chief accountant | Male | 54 | Currently in office | 62.5 | No |
| Sun Maolin | Deputy general manager | Male | 43 | Currently in office | 61.43 | No |
| Li Jingchao | Deputy general manager | Male | 53 | Currently in office | 60.98 | No |
| Ma Jiaji | Chief engineer | Male | 56 | Currently in office | 0 | No |
| Chen Yi | Deputy general manager, board secretary | Male | 52 | Currently in office | 56.39 | No |
| Li Ming | Director | Male | 45 | Currently in office | 0 | No |
| Xu Jianguo | Chairman of supervisory committee | Male | 58 | Currently in office | 0 | Yes |
| Wang Zhian | Supervisor from the staff | Male | 60 | Currently in office | 37.57 | No |
| Cui Aimin | Supervisor from the staff | Female | 51 | Currently in office | 0 | No |
| Total | -- | -- | -- | -- | 478.85 | -- |
Information on share option scheme provided to directors and senior management during the reporting period
□ Applicable √Not applicable
V. Particulars of workforce
1. Number of Employees, professional composition, education background
| Employee in-post of the parent Company (people) | 5,934 |
| Employee in-post of main Subsidiaries (people) | 11,831 |
| Total number of current employees (people) | 17,765 |
| Total number of current employees to receive pay (people) | 17,765 |
| Retired employee’ s expenses borne by the parent Companyand main Subsidiaries (people) | 416 |
| Professionalcomposition | |
| Category of professional composition | Numbers of professional composition (people) |
| Production personnel | 11,917 |
| Sales personnel | 214 |
| Technician | 2,886 |
| Financial staff | 224 |
| Administrative staff | 1,520 |
| Service personal and others | 1,004 |
| Total | 17,765 |
| Education background | |
| Type of education background | Numbers (people) |
| Master and above | 1,450 |
| Bachelor degree | 6,249 |
| Junior college | 6,292 |
| Vocational secondaryand below | 3,774 |
| Total | 17,765 |
2. Remuneration policy
The annual salary system is implemented for mid-level employees. The constitution ofannual salary system is:
basic salary, performance bonuses, and employment incentives. The basic salary is paid monthly. Theperformance bonus links to the performing duty monthly or annually, and is distributed monthly and annually interms of the Responsible Agreement of Business Objectives. After performance appraisal at the end ofemployment term according to the Responsible Agreement of Objective during The Employment Term, theincentives 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. Theoccupation salary is influenced by the attendance, and the benefit salary is distributed as the monthly performanceon the duty.
3. Training programs
In accordance with the overall requirements of the 13th five year plan of human resources and the annual focuses,the Qianshun Training Base persistently optimize the system construction, and emphasize ability training andcarreer development, through paying close attention to important tasks in the operation and production,continually combining the enterprise development with the staff improvement, taking the management building asimportance, setting the core to training key employees, making the objective of establishing the knowledgeable,technical, creative staff. The Qianshun Base has trained highly skilled employee to help the enterprisedevelopment through focus on standardizing the staff education, improving the management system,strengthening basic work, transferring function from the single training management to employee development,and increasing the training of high skilled talents. In 2019, 160 training projects have been completed.Guided by the development strategic planning, the Jingtang Base systematically plans to establish a trainingmanagement system suitable for the construction of talent echelon. Around the goal of cultivating "loyal, cleanand responsible" leaders, Jingtang Base carried out six periods of lectures for leaders, six periods of rotationtraining for middle-level leaders, and a training course for youth backbone for more than two months, so as to
broaden the working ideas and improve the working style of leaders. Improving the ability of professionaltechnician to a deeper and more technical development, strengthening study and discussion and foreign exchange,and promote the construction of internal training teachers system such as intrinsic safety. Focusing on the shortboard of skilled operators and making full use of the advantages in respects of training base, simulation system,professional skills competition and other platforms, Jingtang Base carried out multi-post multi-level skillcompetition and practical training rotation including personnel in maintenance line for 1094 person, andtraining inspecial (equipment) operation, team leader qualification, etc. for 3750 person, to continuously improve the qualityand ability of employees.
4. Labor outsourcing
□Applicable √Not applicable
Section X. Corporate GovernanceI. Information of corporate governance
Based on the requirements of the Company Law of People’s Republic of China, the Securities Law of People’sRepublic of China, the Code of Corporate Governance for Listed Companies, the Listing Rules of Shenzhen StockExchange,the Guidelines for Standardized Operation of Listed Companies of Shenzhen Stock Exchange, theArticles of Association and other applicable regulations and laws，the Company actively promote theimprovement of governance structure, continuously optimizing corporate governance, improving the level andquality of corporate governance, standardizing the company operation, protecting legal rights belongs to thecompany and the whole shareholders.According to the Articles of Association and Rules of Procedures of the General Shareholders Meeting,the Boardof Directors, the Supervisory Committee, the company organizes the General Shareholders Meeting,the meetingof director board, and the meeting of supervisory committee. Directors and supervisors are assiduous and dutiful,complying with the applicable rules and regulations, diligently safeguarding the lawful rights and interests of thecompany and its all shareholders. The management regularly operates the company, and faithfully abide by therules of internal system. In accordance with the relevant regulations such as the Listing Rules of Shenzhen StockExchange, 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 finished the tasks in the corporate governance as follows:firstly,amended the Articles of Association according to the actual operation;secondly, following the actual operatingrequirements, the company developed the 22 systems including the Management of Production, Organization andPlan; Storage Management of Equipment and Spare Parts,and the Management of R & D Project; amended 369systems such as Management System of Physical Fixed Assets; Management of Power Supply and Consumption;Management of Spare Parts Purchasing (Trial);third, restructured the organization setting, and launched theself-assessment on the internal control, combined with the Risk Control Program Handbook and the Risk ControlEvaluation Handbook;fourth, complying with the Articles of Association, the Rules to the General ShareholdersMeeting and other relevant regulations and carried out “On-site voting + Internet voting”procedures to keep theapproved proposal in the general shareholders meeting legally.At the end of the reporting period, the Company had developed 510 internal control systems,including 486systems established by the company and 24 systems issued by the authorities.Whether there are material differences between the fact of corporate governance and the regulations for listingcompanies required by the CSRC
□ Yes √No
There is no material difference between the fact of corporate governance and the regulations for listing companiesrequired by the CSRCII. Information on separation of the company and controlling shareholders inbusiness, personnel, assets, structure and finance.
The Company strictly comply with the applicable laws and regulations, and keep completely independent withcontrolling shareholders in businesses, personnel, assets, organizations, financing and other. In addition, theCompany has established complete business system in purchasing, production, selling, and operation, withindependently adequate product research institution and personnel and operating ability.
1. Business: the Company holds a complete operating management system, business operation system runsindependently, independent operation and risk self-responsible.
2. Personnel: with the effective and sound management, the HR system of the company is wholly complete andindependent. All directors and supervisors are elected in the General Shareholders Meetings or other democraticmethods. Resignation and appointment of the management need the approval procedure from the Board, withoutviolation of any rules or regulations. Staffs work hard on position duties.
3. Assets: the assets belonging to the company, are independent, clear, and complete property. The companyhave independent production system and relevant facilities separated to the controlling shareholders - ShougangGroup and its related parties.
4. Structure: the company have established complete structure of corporate governance, including the GSM, theBoard, the Supervisory Committee, and these organization systems operates independently to the controllingshareholders, without any subordinate relationship with Shougang Group and its related parties.
5. Finance: the company set up the independent finance management department that employs full-timeprofessional workers and has established complete finance management system. The finance system of thecompany is complete and can make independently financial decisions, including paying taxes according to laws.
III. Horizontal competition
√Applicable □Not applicable
| Type of problem | Name of controlling shareholders | Nature of controlling shareholders | Problemreason | Response to the problem | Work progress and follow-on plan |
| Horizontal Competition | Shougang Group | Local state-ownership | Since listed in the Shenzhen Stock Exchange, the Company is affected by the horizontal competition and related party transactions from the partial restructuring for public offering | 1. Shougang Group (formerly known as Shougang Corporation) had set the commitment about the solutions of horizontal completion and avoiding horizontal competition. (1)In addition to the existing horizontal competition before the announcement of this commitment letter, if Shougang Group obtains the same or similar acquisition, development and investment opportunities as Shougang Co.'s business, the company will immediately notify Shougang, and give priority to Shougang Co. for selection, and try its best to make such business opportunities meet the conditions for transfer to Shougang Co. (2)In the integration and operation of existing steel assets that are not included in Shougang Co., Shougang Group will select appropriate platforms and ways to realize resource integration, based on the principle that it is conducive to the future acquisition investment of Shougang Co. In addition, Shougang Group will not set any restricting or prohibiliting terms for transferring relevant assets or businesses to Shougang Co., in coopertation with partners or other third parties. (3)Shougang Group shall try its best to guarantee the normal operation and profitability of the existing steel assets that are not transformed into Shougang Co., and ensure that the above assets and businesses do not fall into operational difficulties due to the Group's reasons, or other circumstances that cannot achieve the ultimate goal of injecting into Shougang Co. or cause legal obstacles to such injection. (4)All commitments made by Shougang Group in eliminating or avoiding horizontal competition are also applicable to other enterprises directly or indirectly controlled by the Group except Shougang Co. and its subordinate enterprises. Shougang Group is on the duty to urge and ensure other subordinate enterprises in Shougang Group to implement the all matters mentioned in this document and strictly abide by all commitments. 2. With the approval of the Second Extraordinary General Shareholder Meeting in 2018, on 27 December 2018, Shougang Group promises as： (1)According to the development plan in the steel industry of Shougang Group, Shougang Co. will be the unique platform in the development and integration of domestic steel industry and iron ore industry, and ultimately Shougang Group will achieve all businesses in domestic steel industry and iron industry listed. (2) Other companies in Shougang Group, except Shougang Co., that engage in steel business, will achieve positive profit for 3successive years, through enforcing the national industrial policies and meeting the environmental requirements, further optimization in product structure. Based on the above, if there is no significant change in the industry, Shougang Group will launch to inject relevant quality assets to Shougang Co. through M&A, restructure, and other methods, under the applicable securities laws and regulations, and will finish above matters within 36 months after launching. | In December 2018, Shougang Co., Jingtang Co. and Shougang Group have signed the Management Service Agreement between Beijing Shougang Co., Ltd., Shougang Jingtang United Iron&Steel Co., Ltd., Shougang Group Co., Ltd. According to the agreement, Shougang Co. and Jingtang Co. provide management service for 17 aimed enterprises that operate in steel industry, in Shougang Group. Shougang Co. serves 14 firms and Jingtang Co. serves 3 firms including Shougang Casey Steel Co., Ltd. |
IV. General shareholders meetingsand extraordinary shareholders’ generalmeetingduring the reporting period
1. Information on the general shareholders meeting
| Name of meetings | Type of meetings | Participating proportion of investors | Meeting Date | Disclosure Date | Sources of disclosure |
| Annual General Shareholders Meeting in 2018 | Annual General Shareholders Meeting | 87.29% | 14 Jun.2019 | 15 Jun. 2019 | China Securities Journal, Securities Times, Shanghai Securities News and http://www.cninfo.com.cn |
| FirstExtraordinary General Shareholders Meeting in 2019 | Extraordinary General Shareholders Meeting | 79.71% | 23 Dec.2019 | 24 Dec. 2019 | China Securities Journal, Securities Times, Shanghai Securities News and 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 shareholdermeeting
| Information on independent directors attending the board meeting and the general shareholder meeting | |||||||
| Name of independent director | Times of boardmeeting supposedto attend in thereport period | Times ofpresence | Times ofattending bycommunication | Times ofentrusted presence | Times ofabsence | Absent the meetingfor the second timein a row (Y/N) | Times ofattendingshareholders’meeting |
| Tang Di | 6 | 3 | 3 | 0 | 0 | N | 2 |
| Yin Tian | 6 | 3 | 3 | 0 | 0 | N | 2 |
| Zhang Bin | 6 | 3 | 3 | 0 | 0 | N | 1 |
| Ye Lin | 6 | 3 | 3 | 0 | 0 | N | 1 |
| Yang Guipeng | 6 | 3 | 3 | 0 | 0 | N | 1 |
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)Information on the attendance and reviewing of proposals
In 2019, we attended the general shareholders meetings, the board meetings, and special committee meetingsunder the board (the report meeting of independent directors), on time. We carefully listened to the suggestions ofshareholders, and paid attention to the public shareholders’ demands, and discussed matters with relevant parties.The general shareholders meeting and the board meeting convened and held by the company in 2019, conformingto the legal procedures, and the proposals and contents submitted to the meeting for deliberation and voting arelegal and effective.
(2)Expression of independent opinions
A. Independent opinions on the board meetingsIn 2019, the company was able to submit meeting documents to the directors within the required time before theboard meeting, and arranged special reports on important matters to provide basic conditions for us to review and
timely express independent opinions in accordance with relevant regulations. In 2019, we expressed independentopinions on the following matters:
①We have expressed independent opinions on the Profit Distribution Plan of Shougang Co. in 2018, the InternalControl Self-Evaluation Report of Shougang Co. in 2018, the Proposal of Shougang Co.’s General Manager'sSalary Approval in 2018 and the Salary and Assessment Distribution Method in 2019, the Proposal of theRenewal of Independent Accountant Firm of Shougang Co., and the Proposal of the Expected Regular ConnectedTransactions of Shougang Co., the Proposal of Financial Business between Shougang Co. and Shougang GroupFinance Co., Ltd., the Financial Service Agreement on Financial Business between Shougang Co. and ShougangGroup Finance Co., Ltd., the Shougang Co. Risk Assessment and Review Report for Shougang Group FinanceCo., Ltd. in 2018, the Risk Response Plan for Shougang Co. Handling Deposit and Loan Business with ShougangGroup Finance Co., Ltd., the Proposal of Appointing the General Manager of Shougang Co., and these proposalshad been submitted to the 9th session of the 6th board of directors for deliberation. Ahead of the meeting, thecompany specially arranged the report meeting to explain relevant information on the proposals. We agreed thematters in the propsals mentioned above, and the procedures for deliberation of all proposals at the meeting arelegal and effective.
②We had expressed the independent opinions on the Proposal of Shougang Co. Giving Up the Preemptive Rightof Shares of Shougang Jingtang United Iron&Steel Co., Ltd. and the Proposal of Shougang Co. Redesignating theBoard Directors, and these proposals had been submitted to the 10th session of the 6th board of directors fordeliberation. Ahead of the meeting, the company specially arranged the report meeting to explain relevantinformation on the proposals. We agreed the matters in the propsals mentioned above, and the procedures fordeliberation of all proposals at the meeting are legal and effective.
③We had expressed the independent opinions on the Proposals of Appointing the General Managerof ShougangCo., the Proposal of Appointing the Board Secretary of Shougang Co., the Proposal of Appointing the DeputyGeneral Manager and Other Senior Managers of Shougang Co.,and those proposals had been submitted to the 1stsession of the 7th board of directors for deliberation. Ahead of the meeting, the company had communicatedcandidates of those position mentioned above with us. We agreed the matters in the proposals mentioned above,and the procedures for deliberation of all proposals at the meeting are legal and effective.B. Independent opinions on regular reports, external guarantee and other matters
①In accordance with the Listing Rules of Shenzhen Stock Exchange and other regulations, the company signedwritten confirmation opinions on: 2018annual report, 2019 1st quarter report, 2019 semi-annual report and 20193rd quarter report.
②we had made a special explanation and independent opinions on the external guarantee and the occupation ofthe company's funds by the controlling shareholders and other related parties. In the view of the fact that the cashflow between the company and its related parties (the controlling shareholder - Shougang Group and itssubsidiaries) was all the settlement fund generated from substantive related transactions such as purchase and saleof goods, provision of labor services, etc. in normal production and operation activities, there is no case that thecontrolling shareholder and other related parties occupied the company's capital in violation of regulations. Duringthe reporting period, the company had no external guarantee
③We made independent opinions on the matters that the board of directors of the company did not propose thecash dividend plan in 2018. Considering that the company's distributable profits are lower than the parentcompany's distributable profits and are negative, the board of directors had made a plan not to distribute cash orconvert capital reserve into share capital, which is in accordance with the Articles of Association and ShenzhenStock Exchange's No. 1 Memorandum for Information Disclosure by Companies in the Main Board - RelatedMatters of Regular Report Disclosure. The profit earned by the parent company was mainly used to repay the loan
of merger and acquisition and the investment in fixed assets, and the company fully considering the actualoperation and production, which was conducive to the development of the company and the protection of thelegitimate rights and interests of all shareholders. We agreed with the profit distribution plan proposed by theboard of directors.
(3)Routine duties on the board
In 2019, we actively participated in the daily work of the board of directors. We continued to pay attention to theindustry of the listed company and provided expert opinions for the company's operation and development. ①Welistened to the report of the company's management on the company's production and operation and financialstatements. ②We listened to the company's annual audit report from the company's annual audit accountant. ③We paid attention to the relevant policies issued by the securities regulatory authority.VI. Performance of special committees under the board of directors
1. The strategy and risk management committee
During the reporting period, the strategy and risk management Committee under the board of directors did nothold any meeting.
2. The audit committee
According to the relevant regulations of CSRC and Shenzhen Stock Exchange, as well as the work regulations ofthe audit committee under the board of directors and the working procedures of the annual report of the auditcommittee under the board of directors, the committee conscientiously performed its duties and completed thecommunication, supervision and verification of the internal and external audits of the Company. Theirperformance was as follows：
(1)According to the disclosure schedule of the Company's 2019 annual report, the audit committee and GrantThornton LLP have negotiated and determined the audit schedule on this year's financial report.
(2)Before auditors’ field work, the audit committee under the board of directors reviewed the consolidatedfinancial statements of Shougang Co., which comprise the consolidated balance sheet as at 31 December 2019,and the consolidated income statement, consolidated cash flow statement and consolidated statement of changesin owners’ equity for the year ended, and the consolidated statement of assets impairment provision as at 31December 2019, and notes to the financial statements.In the view of the committee, the Company's financial andaccounting statements are prepared in accordance with the Company's accounting policies, with proper applicationof accounting policies and reasonable accounting estimates, and meet the requirements of the new accountingstandards for business enterprises, the Company's accounting system and the relevant regulations issued by theMinistry of Finance; the entities and statements included in the scope of consolidation are complete and thebasicdata of consolidated financial statements is accurate; the financial statements are true, objective, accurate andcomplete, and are free from material misstatement and omission. Therefore, the committee recognizes that thefinancial statements prepared by the Company can be submitted to the external auditors.
(3)The audit committee under the board of directors shall actively communicate with the certified publicaccountants of the annual external audit and urge them to submit the Independent Audit Report within the agreedtime limit.
(4)The committee reviewed the financial statements after the preliminary audit opinion was issued by the certifiedpublic accountants. The audit committee under the board of directors believes that the Company has dealt with thematters after the balance sheet date properly in accordance with the new Accounting Standards for BusinessEnterprises, and the accompanying financial statements are prepared in accordance with Accounting Standards forBusiness Enterprises.The financialposition of the Company for the year ended 31 December 2019, and the resultsof its operations and cash flows for the year ended 31 December 2019 are fairlypresented in all material respects.
(5)According to the audit committee under the board of directors, Grant Thornton LLP has fulfilled its duties andcompleted the 2019 external audit of the Company in accordance with the independent, objective and fair practicestandards in providing audit services for the company.
(6)The audit committee held the meeting. The following proposals have been deliberated and approved: ①theannual final accounting report of Shougang Co. in 2019 (Draft); ②the proposal on the renewal of independentaccountant firm (draft). The audit committee under the board of directors agrees to submit the above proposals tothe board of directors for deliberation.
3. The remuneration and appraisal committee
During the reporting period, the remuneration and appraisal committee under the board of directors reviewed theremuneration of the Company's senior managers in 2018 in accordance with the relevant provisions of theRegulations on the Work of the Remuneration and AppraisalCommittee of the Board of Directors, andthecommittee reviewed the salary payment of the senior management, according to the Proposal of Shougang Co.’General Manager's Salary Approval in 2018 and the Salary and Assessment Distribution Method in 2019reviewed and approved by the 9th session of the 6th board of directors. It is believed that the salary standard andassessment of the above-mentioned salaried employees are in line with relevant regulations.
4. The nomination committee
During the reporting period, the Company reported to the independent directors on the matters such as the deputygeneral manager to be appointed by the board of directors, the candidate of the new board of directors to benominated by the board of directors, the candidate of the general manager, the candidate of the board secretaryand other senior executives to be appointed by the new board of directors. The independent directors all agreed tothe above candidates and agreed to submit them to the board of directors for deliberation. The independentdirectors published their independent opinion according to the regulations. The nomination committee under theboard of directors deliberated and approved the above matters.VII. Performance of the supervisory committee
The Company has risks in reporting period that found in supervisory activity from supervisory committee
□Yes √No
Supervisory committee has no objection about supervision events in reporting period.
VIII. Assessment and Incentive on the Senior ManagementAssessment on the General Manager: the general manager enjoy remuneration according to an annual salarysystem consisting of basic salary, performance annual salary and tenure incentive. Among them: the basic salaryproportion is 30%, which is calculated on a monthly basis; the annual performance salary proportion is 70%, ofwhich 50% is paid in advance on a monthly basis, and 20% is proposedby the remuneration and appraisalcommittee under the board of directors and determined by the board of directors,in terms of the annual generalmanager's remuneration evaluation and distribution method. The annual general manager's remunerationevaluation and distribution method is formulated annually by the remuneration and appraisal committee who alsoproposes the distribution proposal after assessment. The term incentive on the job accounts for 30% of the annualsalary standard, and at the end of the term of office, the assessment shall be carried out in accordance with theduty agreement for term objectivesAssessment on other senior managers: the company implements the annual salary system amongthe deputygeneral manager and other senior managers, and the managing director shall assess and afford remunerationaccording to the work performance of the deputy general manager and other senior managers under the directorboard’s authorization.
No share option scheme during the reporting period.IX. Internal Control (IC)
1. Details of major defects in internal IC appraisal report that found in reporting period
□Yes √No
2. Appraisal Report of Internal Control
| Disclosure date of full internal control evaluation report | 24 April 2020 | |
| Disclosure index of full internal control evaluation report | Website for information disclosure appointed by Shenzhen Stock Exchange: (http://www.cninfo.com.cn/). | |
| Proportion of total assets included ininternal control evaluation report accounting for the total assets in the financial statements | 99.85% | |
| Proportion ofoperating included ininternal control evaluation report accounting for operating income in the financial statements | 99.98% | |
| Defects Evaluation Standards s | ||
| Type | Financial reporting | 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. Materialdeficiency: (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: there is no "three important and one major" decision-making process, or the decision-making process is not sound or not implemented in place, and 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 authorities conduct investigation, causing public concern and irreparable damage to the reputation of the enterprise; violating laws of national 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 |
| Amount of significant defects in financial reports | 0 | |
| Amount of significant defects in non-financial reports | 0 | |
| Amount of important defects in financial reports | 0 | |
| Amount of important 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 2019, 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 | 24 April 2020 |
| Source for the internal control audit report | Searching for:http://www.cninfo.com.cn/. |
| Audit opinion on internal control | Unqualified opinion |
| Whether material deficiency over non-financial reporting | No |
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 oninternal control
√ Yes □ No
Section XI. Corporate Bond
Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on thedate whenannual report approved for released or fail to cash in full on dueNo.
Section XII. Financial Report(This section is translated based on the Chinese version of the full audit report of the Company. Immaterial difference may
exist beween this section in Chinese version annual report and English version annual report. Thedifference is due to thespecific template required by the Shenzhen Stock Exchange in Chinese version which is not applied in English version.)I. Auditor’s Report
－74－Type of audit opinion
| Type of audit opinion | Standard unqualified opinion |
| Date of signing of audit report | 22 April 2020 |
| Name of audit institution | Grant Thornton LLP |
| Number of audit report | GTCSZ (2020)No.110ZA3191 |
| Chinese Certified Public Accountant | Qian bin, Yu Qike |
Main body of audit reportTo the Shareholders of Beijing Shougang Co. Ltd:
I. Audit Opinion
We have audited the consolidated financial statement of Beijing Shougang Company Limited and itssubsidiaries (the "Company"/"Group"), which comprise the consolidated statement of financial position asat 31 December 2019, and the consolidated statement of comprehensive income, consolidated statement ofchanges in equity and consolidated statement of cash flows for the year then ended, and the notes to theconsolidated financial statements.In our opinion, the accompanying consolidated financial statement present fairly, in all material respects,the consolidated financial position of the Company/Group as at 31 December 2019, and its consolidatedfinancial performance and its consolidated cash flows for the year then ended in accordance withAccounting Standards for Business Enterprises.II. Basis for Audit OpinionWe conducted our audit in accordance with China Standards on Auditing. Our responsibilities underthose standards are further described in the Auditor’s Responsibilities for the Audit of the consolidatedFinancial Statement Section of our report. We are independent of the Company/Group in accordancewith the Code of Ethics for Chinese Certified Public Accountant (Ethics Code) together with theethical requirements that are relevant to our audit of the financial statements, and we fulfilled our otherethical responsibilities in accordance with these requirements and the Ethics Code. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in ouraudit of the consolidated financial statements of the current period. These matters were addressed inthe context of our audit of the consolidated financial statements as a whole, and in forming our opinionthereon, and we do not provide a separate opinion on these matters.(I) The provision for inventory impairmentsThe disclosures related to the impairment of inventories are disclosed in Notes III.10 and V.7 to thefinancial statements.
1. Descriptions of the matter
As of 31 December 2019, the book balance of inventory of Shougang Co., Ltd. amounted to RMB
6.673 billion with an impairment of RMB 79 million in the consolidated financial statements.Inventory had been regarded as the material part of the current assets of Shougang Co., Ltd. at the endof the period, and the provision for inventory impairment involved the application of management’saccounting estimates. Hence, we have identified the provision for inventory impairments as a key auditmatter.According to the accounting policy of Shougang Co., Ltd., if the cost is in excess of the net realizablevalue, impairment of inventories is recognized on the date of balance sheet. Net realizable value is
determined based on the estimated selling price on normal business terms deducted by the estimatedcosts 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 impairment testing ofinventories, and testing the effectiveness of key control executions.
(2) Testing, on a sample basis during the inventory monitoring procedure, observing the inventorystatus 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 difference betweenthe estimated selling price and the market price, and examining whether there is a significantdifference between the post-period selling price and the estimated price in conjunction with asubsequent-event audit.
(5) Evaluating the reasonableness of book cost of the ending inventory by analyzing manufacturingcosts of the current inventory(II) Fair value measurement of available-for-sale financial assetsThe disclosures related to the fair value of available-for-sale financial assets are disclosed in NotesIII.9, Notes III.28, V.9, V.11 and IX to the financial statements.
1. Descriptions of the matter
As of 31 December 2019, fair value of BAIC Motor Corporation's equity held by Shougang Co., Ltd.was RMB 4.197 billion. The change of the available-for-sale financial assets’ fair value has a greatimpact on the company's net assets. Additionally, the available-for-sale financial assets held byShougang Co., Ltd. cannot obtain the related fair value directly.Hence, we have identified themeasurement of fair value of available-for-sale financial assets as a key audit matter.According to the accounting policy of Shougang Co., Ltd, for the financial assets or liabilities with anactive trading market, fair value needs to be determined by the quoted price.Where there is no activemarket, fair value shall be determined by valuation techniques.
2. How our audit addressed the Key Audit Matter
Our procedures in relation to fair value measurement of available-for-sale financial assets included:
(1) Understanding and assessing the management’s internal controls related to measurement ofavailable-for-sale financial assets fair value, and testing the effectiveness of key control executions.
(2) Reviewing and recalculating the estimate of the fair value of available-for-sale financial assets onthe basis of the practical experience of the industry.
(3) Testing, on a sample basis,the rationality and appropriateness of unobservable or observable keyinput implemented in the valuation of fair value by comparing relevant market data
(4) Obtaining the appraisal report related to available-for-sale financial assets, reviewing thecompetence of the appraisal experts, and checking the rationality of the valuation model, assumptionsand key data.
(5) Concerning theappropriateness of disclosure regarding fair value measurement of available-for-salefinancial assets in the financial statements.IV. Other InformationManagement is responsible for the other information. The other information comprises the informationincluded in the Annual Report of 2019, but does not include the consolidated financial statements andour auditor’s report thereon.Our opinion on the consolidated financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materially inconsistentwith the consolidated financial statements or our knowledge obtained in the audit or otherwise appearsto be materially misstated.If, based on the work we have performed, we conclude that there is material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.V. Responsibilities of Management and Those Charge with Governance forthe Financial StatementManagement of the Company/Group is responsible for the preparation and fair presentation of thefinancial statement in accordance with Accounting Standards for Business Enterprises, and for suchinternal control as management determines in necessary to enable the preparation of financialstatements that are free form material misstatement, whether due to fraud or error.In preparing the financial statements, management is responsible for assessing the Company/Group’sability to continue as a going concern, disclosing, as applicable, matters related to going concern andusing the going concern basis of accounting unless management either intends to liquidate theCompany/Group or to cease operations, or has no realistic alternative but to do so.Those charge with governance are responsible for overseeing the Company/Group’s financial reportingprocess.VI. Auditor’s Responsibilities for the Audit of the Financial StatementOur objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with China Standards on Auditing will always detect a materialmisstatement when it exists. Misstatements can arise form fraud or error and are considered material if,individually or in the aggregate, they could reasonably be expected to influence the economicdecisions of users taken on the basis of these 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, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by management.
(4) Conclude on the appropriateness of management’s use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company/Group’s ability to continue as a goingconcern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor’s report to the related disclosures in the financial statements or, if such disclosures areinadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor’s report. However, further events or conditions may cause the Company/Group tocease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether thefinancial statements represent the underlying transactions and events in a manner that achieves fairpresentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements. Weare responsible for the direction, supervision and performance of the group audit. We remain solelyresponsible for our audit opinion.We communicate with those charged with governance regarding, among other matters, the plannedscope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.We also provide the governance body 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, relatedsafeguards.From the matters communicated with the governance body, we determine those matters that were ofmost significance in the audit of the financial statements of the current period and are therefore the keyaudit matters. We describe these matters in our auditor’s report unless law or regulation precludespublic disclosure about the matter or when, in extremely rare circumstances, we determine that amatter should not be communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.
－78－
Consolidatedand Parent Company Statement of Financial Position
| Consolidatedand Parent Company Statement of Financial Position | |||||
| Beijing Shougang Co., Ltd. as at 31 December 2019 | |||||
| Unit: RMB Yuan | |||||
| Items | Note | As at 31/12/2019 | As at 31/12/2018 | ||
| Consolidated | Company | Consolidated | Company | ||
| Current assets: | |||||
| Cash and bank balances | V. 1 | 4,472,317,590.75 | 2,100,647,913.85 | 4,841,058,243.20 | 1,920,854,622.28 |
| Financial assets held for trading | |||||
| Financial assets at fair value through profit or loss | |||||
| Notes receivable | V. 2 | 5,259,406,922.25 | 2,492,497,587.89 | 7,877,333,769.65 | 3,990,860,314.45 |
| Accounts receivable | V. 3 | 836,576,066.13 | 1,180,114,403.06 | 870,151,434.92 | 1,468,436,202.70 |
| Financing receivable | V. 4 | 3,666,611,715.48 | 1,825,294,953.86 | ||
| Prepayments | V. 5 | 1,892,877,352.59 | 201,462,809.27 | 2,532,274,356.71 | 183,530,920.91 |
| Other receivables | V. 6 | 15,541,219.96 | 1,673,247.41 | 39,829,376.18 | 2,742,352.97 |
| Inventories | V. 7 | 6,593,865,645.47 | 1,294,056,715.06 | 5,192,790,897.33 | 1,184,211,283.35 |
| Assets held for sale | |||||
| Non-current assets due within one year | |||||
| Other current assets | V. 8 | 339,065,468.02 | 3,453,190,809.55 | 589,119,538.20 | 1,935,827,685.08 |
| Total current assets | 23,076,261,980.65 | 12,548,938,439.95 | 21,942,557,616.19 | 10,686,463,381.74 | |
| Non-current assets: | |||||
| Debt investments | |||||
| Available-for-sale financial assets | V. 9 | 3,863,245,277.97 | 3,863,245,277.97 | ||
| Other debt investments | |||||
| Held-to-maturity investments | |||||
| Long-term receivables | |||||
| Long-term equity investments | V. 10 | 2,948,516,531.72 | 18,893,930,958.80 | 2,878,517,166.72 | 17,653,055,184.34 |
| Other equity instruments investments | V. 11 | 4,357,517,927.34 | 4,357,517,927.34 | ||
| Other non-current financial assets | |||||
| Investment properties | |||||
| Fixed assets | V. 12 | 82,861,544,532.17 | 21,144,600,686.04 | 81,726,018,549.33 | 22,689,417,371.01 |
| Construction in progress | V. 13 | 25,310,588,638.42 | 3,678,076,181.04 | 22,037,846,981.69 | 2,971,961,902.17 |
| Intangible assets | V. 14 | 2,762,518,616.98 | 875,411,256.49 | 2,581,451,681.00 | 907,077,997.65 |
| Development expenditure | |||||
| Goodwill | |||||
| Long-term deferred expenses | |||||
| Deferred tax assets | V. 15 | 53,977,183.07 | 29,098,335.72 | 76,640,776.93 | 44,142,858.12 |
| Other non-current assets | 1,134,117,184.62 | 1,257,549,996.71 | |||
| Total non-current assets | 118,294,663,429.70 | 50,112,752,530.05 | 113,163,720,433.64 | 49,386,450,587.97 | |
| Total assets | 141,370,925,410.35 | 62,661,690,970.00 | 135,106,278,049.83 | 60,072,913,969.71 | |
－79－
Consolidatedand Parent Company Statement of Financial Position (Continued)
| Consolidatedand Parent Company Statement of Financial Position (Continued) | |||||
| Beijing Shougang Co., Ltd. as at 31 December 2019 | |||||
| Unit: RMB Yuan | |||||
| Items | Note | As at 31/12/2019 | As at 31/12/2018 | ||
| Consolidated | Company | Consolidated | Company | ||
| Current liabilities: | |||||
| Short-term loans | V. 16 | 30,267,213,915.42 | 11,853,249,166.67 | 31,155,720,000.00 | 7,361,920,000.00 |
| Financial liabilities held for trading | |||||
| Financial liabilities at fair value through profit or loss | |||||
| Notes payable | V. 17 | 3,741,832,295.34 | 1,038,827,684.61 | 5,285,571,700.58 | 2,453,871,700.58 |
| Accounts payable | V. 18 | 23,963,485,983.39 | 11,497,447,540.23 | 23,684,774,325.63 | 12,063,348,369.96 |
| Advances from customers | V. 19 | 3,422,750,982.43 | 916,868,636.47 | 2,392,478,818.81 | 578,561,185.84 |
| Payroll and employee benefits payable | V. 20 | 369,433,476.30 | 101,792,194.59 | 319,572,506.94 | 94,927,349.85 |
| Taxes payable | V. 21 | 101,508,634.93 | 34,900,717.12 | 174,990,193.04 | 63,257,633.61 |
| Other payables | V. 22 | 1,639,040,708.48 | 1,122,685,701.59 | 2,045,638,173.44 | 1,187,135,220.72 |
| Including: Interest payables | 32,952,838.32 | 26,911,171.68 | |||
| Liabilities held for sale | |||||
| Non-current liabilities due within one year | V. 23 | 9,400,574,401.68 | 4,406,150,284.44 | 4,030,000,000.00 | 850,000,000.00 |
| Other current liabilities | |||||
| Total current liabilities | 72,905,840,397.97 | 30,971,921,925.72 | 69,088,745,718.44 | 24,653,021,460.56 | |
| Non-current liabilities: | |||||
| Long-term loans | V. 24 | 19,101,100,000.00 | 610,000.00 | 15,965,040,000.00 | 1,406,000,000.00 |
| Bonds payable | V. 25 | 4,026,866,666.72 | 4,026,866,666.72 | 7,000,000,000.00 | 7,000,000,000.00 |
| Long-term payables | V. 26 | 2,100,000.00 | 2,100,000.00 | 2,100,000.00 | 2,100,000.00 |
| Long-term employee benefits payable | |||||
| Provisions | |||||
| Deferred income | V. 27 | 323,835,943.48 | 90,085,674.14 | 285,274,558.77 | 94,064,842.98 |
| Deferred tax liabilities | V. 15 | 600,631,873.94 | 577,852,101.66 | 803,629,503.02 | 803,629,503.02 |
| Other non-current liabilities | V. 28 | 4,711,490,199.06 | 5,588,813,436.69 | ||
| Total non-current liabilities | 28,766,024,683.20 | 4,697,514,442.52 | 29,644,857,498.48 | 9,305,794,346.00 | |
| Total liabilities | 101,671,865,081.17 | 35,669,436,368.24 | 98,733,603,216.92 | 33,958,815,806.56 | |
| Shareholders’ equity： | |||||
| Share capital | V. 29 | 5,289,389,600.00 | 5,289,389,600.00 | 5,289,389,600.00 | 5,289,389,600.00 |
| Capital reserve | V. 30 | 20,093,311,344.62 | 12,415,326,156.11 | 20,091,435,081.71 | 12,415,326,156.11 |
| Less: treasury shares | |||||
| Other comprehensive income | V. 31 | 1,952,319,928.42 | 1,952,319,928.42 | 1,532,188,176.47 | 1,532,188,176.47 |
| Specific reserve | V. 32 | 15,749,165.64 | 7,975,932.61 | ||
| Surplus reserve | V. 33 | 1,729,509,055.66 | 1,729,509,055.66 | 1,687,827,448.18 | 1,687,827,448.18 |
| Retained earnings | V. 34 | -2,051,598,102.14 | 5,605,709,861.57 | -3,260,964,367.74 | 5,189,366,782.39 |
| Equity attributable to shareholders of the Company | 27,028,680,992.20 | 26,992,254,601.76 | 25,347,851,871.23 | 26,114,098,163.15 | |
| Non-controlling interests | 12,670,379,336.98 | 11,024,822,961.68 | |||
| Total shareholders' equity | 39,699,060,329.18 | 26,992,254,601.76 | 36,372,674,832.91 | 26,114,098,163.15 | |
| Total liabilities and shareholders' equity | 141,370,925,410.35 | 62,661,690,970.00 | 135,106,278,049.83 | 60,072,913,969.71 | |
－80－
Consolidated and Parent Company Income Statement
| Consolidated and Parent Company Income Statement | |||||
| Beijing Shougang Co., Ltd. for the year ended 31 December 2019 | |||||
| Unit: RMB Yuan | |||||
| Items | Note | As at 31/12/2019 | As at 31/12/2018 | ||
| Consolidated | Company | Consolidated | Company | ||
| I. Operating income | V. 35 | 69,151,432,692.45 | 28,855,288,539.61 | 65,776,660,538.90 | 29,223,058,702.82 |
| Less: Operating costs | V. 35 | 62,130,221,592.53 | 26,930,263,991.36 | 57,244,198,825.99 | 26,148,622,320.91 |
| Taxes and surcharges | V. 36 | 669,781,059.59 | 244,518,928.69 | 599,314,101.55 | 258,731,831.80 |
| Selling and distribution expenses | V. 37 | 1,275,449,457.91 | 385,991,602.97 | 1,218,816,464.68 | 421,425,351.02 |
| General and administrative expenses | V. 38 | 862,556,312.13 | 338,153,410.90 | 976,548,380.69 | 436,939,699.58 |
| Research and development expenses | V. 39 | 385,796,835.08 | 164,988,750.36 | 394,763,809.58 | 214,136,465.20 |
| Financial expenses | V. 40 | 2,075,693,466.13 | 775,056,552.24 | 2,298,307,856.25 | 772,374,357.27 |
| Including: Interest expenses | 2,201,423,690.97 | 810,726,999.08 | 2,428,614,048.63 | 856,170,073.74 | |
| Interest income | 73,361,281.32 | 28,498,411.11 | 97,858,563.96 | 76,071,455.66 | |
| Add: Other income | V. 41 | 42,432,105.34 | 7,650,282.88 | 31,376,175.07 | 5,422,553.85 |
| Investment income ("-" for losses) | V. 42 | 301,541,629.41 | 374,873,910.07 | 275,204,848.54 | 265,617,520.83 |
| Including: Income from associates and joint ventures ("-" for losses) | 91,320,418.12 | 74,820,864.46 | 165,758,806.86 | 128,311,138.55 | |
| Gains from changes in fair value ("-" for losses) | |||||
| Credit Impairment losses ("-" for losses) | V. 43 | 26,237,978.64 | 31,730,066.82 | ||
| Assets Impairment losses ("-" for losses) | V. 44 | -98,182,828.73 | -12,759,741.10 | -207,101,140.82 | -77,257,974.72 |
| Gains from assets disposal ("-" for losses) | V. 45 | 498,422.97 | 544,066.24 | 25,530.32 | |
| II. Operating profit ("-" for losses) | 2,024,461,276.71 | 418,353,888.00 | 3,144,216,513.27 | 1,164,610,777.00 | |
| Add: Non-operating income | V. 46 | 1,335,781.31 | 205,998.33 | 24,202,420.59 | 126,660.00 |
| Less: Non-operating expenses | V. 47 | 28,522,230.35 | 11,469,122.79 | 9,240,887.74 | 8,675,818.10 |
| III. Profit before income tax ("-" for losses) | 1,997,274,827.67 | 407,090,763.54 | 3,159,178,046.12 | 1,156,061,618.90 | |
| Less: Income tax expenses | V. 48 | 243,208,210.95 | -9,725,311.25 | -172,203,005.14 | -248,315,054.59 |
| IV.Net profit for the year ("-" for net losses) | 1,754,066,616.72 | 416,816,074.79 | 3,331,381,051.26 | 1,404,376,673.49 | |
| (I) Categorized by the continuity of operations | |||||
| 1. Net profit from continuing operations ("-" for net loss) | 1,754,066,616.72 | 416,816,074.79 | 3,331,381,051.26 | 1,404,376,673.49 | |
| 2. Net profit from discontinued operations ("-" for net loss) | |||||
| (II) Categorized by the portion of equity ownership | |||||
| 1.Net profit attributable to shareholders of parent company ("-" for net loss) | 1,251,047,873.08 | 2,403,750,672.16 | |||
| 2. Net profit attributable to non-controlling shareholders ("-" for net loss) | 503,018,743.64 | 927,630,379.10 | |||
| V. Other comprehensive income, net of tax | 336,938,022.41 | 336,938,022.41 | -3,476,944,220.85 | -3,476,944,220.85 | |
| Items attributable to shareholders of the company | 336,938,022.41 | 336,938,022.41 | -3,476,944,220.85 | -3,476,944,220.85 | |
| A. Items that will not be reclassified to profit or loss | 336,938,022.41 | 336,938,022.41 | |||
| Gains or losses from changes in fair value of other equity instrument investments | 336,938,022.41 | 336,938,022.41 | |||
| B. Items that may be reclassified to profit or loss | -3,476,944,220.85 | -3,476,944,220.85 | |||
| Gains or losses from changes in fair value of available-for-sale financial assets | -3,476,944,220.85 | -3,476,944,220.85 | |||
| Other comprehensive income (net of tax) attributable to non-controlling interests | |||||
| VI. Total comprehensive income for the year | 2,091,004,639.13 | 753,754,097.20 | -145,563,169.59 | -2,072,567,547.36 | |
| Items attributable to Shareholders of the company | 1,587,985,895.49 | -1,073,193,548.69 | |||
| Items attributable to non-controlling interests | 503,018,743.64 | 927,630,379.10 | |||
| VII .Earnings per share: | |||||
| (1) Basic earnings per share | 0.2365 | 0.4544 | |||
| (2) Diluted earnings per share | |||||
－81－
Consolidated and Parent Company Cash Flow Statement
| Consolidated and Parent Company Cash Flow Statement | |||||
| Beijing Shougang Co., Ltd. for the year ended 31 December 2019 | |||||
| Unit: RMB Yuan | |||||
| Items | Note | 2019 | 2018 | ||
| Consolidated | Company | Consolidated | Company | ||
| I. Cash flows from operating activities | |||||
| Proceeds from sales of goods or rendering of services | 30,624,051,342.91 | 10,278,095,378.97 | 29,722,040,939.86 | 12,146,970,515.65 | |
| Refund of taxes | 653,138,150.21 | 0.00 | 2,520,145.61 | 0.00 | |
| Proceeds from other operating activities | V. 49 | 399,320,755.82 | 137,606,351.19 | 183,481,591.05 | 40,397,627.42 |
| Sub-total of cash inflows | 31,676,510,248.94 | 10,415,701,730.16 | 29,908,042,676.52 | 12,187,368,143.07 | |
| Payment for goods and services | 21,323,834,750.14 | 8,063,310,012.77 | 9,680,662,487.86 | 4,282,594,828.51 | |
| Payment to and for employees | 3,510,797,145.34 | 1,168,538,163.50 | 3,374,010,868.24 | 1,301,442,949.39 | |
| Payments of various taxes | 1,875,245,785.24 | 830,689,198.50 | 2,309,583,656.22 | 1,450,540,242.66 | |
| Payment for other operating activities | V. 49 | 1,648,003,629.69 | 525,790,115.89 | 2,084,396,079.03 | 714,502,295.06 |
| Sub-total of cash outflows | 28,357,881,310.41 | 10,588,327,490.66 | 17,448,653,091.35 | 7,749,080,315.62 | |
| Net cash flows from operating activities | 3,318,628,938.53 | -172,625,760.50 | 12,459,389,585.17 | 4,438,287,827.45 | |
| II. Cash flows from investing activities | |||||
| Proceeds from disposal of investments | 0.00 | 1,500,000,000.00 | 0.00 | 0.00 | |
| Investment returns received | 235,221,211.29 | 300,053,045.61 | 124,446,041.68 | 137,306,382.28 | |
| Net proceeds from disposal of fixed assets, intangible assets and other long-term assets | 3,341,389.88 | 1,784,737.33 | 281,587.24 | 210,218.47 | |
| Net proceeds from disposal of subsidiaries and other business units | 0.00 | 0.00 | 0.00 | 0.00 | |
| Proceeds from other investing activities | V. 49 | 73,361,281.32 | 28,498,411.11 | 97,858,563.96 | 76,071,455.66 |
| Sub-total of cash inflows | 311,923,882.49 | 1,830,336,194.05 | 222,586,192.88 | 213,588,056.41 | |
| Payment for acquisition of fixed assets, intangible assets and other long-term assets | 5,469,993,637.58 | 731,440,424.44 | 9,746,566,090.06 | 1,077,905,429.56 | |
| Payment for acquisition of investments | 64,760,000.00 | 4,166,054,910.00 | 117,074,607.99 | 1,513,916,159.98 | |
| Net payment for acquisition of subsidiaries and other business units | |||||
| Payment for other investing activities | |||||
| Sub-total of cash outflows | 5,534,753,637.58 | 4,897,495,334.44 | 9,863,640,698.05 | 2,591,821,589.54 | |
| Net cash flows from investing activities | -5,222,829,755.09 | -3,067,159,140.39 | -9,641,054,505.17 | -2,378,233,533.13 | |
| III. Cash flows from financing activities | |||||
| Proceeds from investors | 150,000,000.00 | 0.00 | 0.00 | ||
| Including: Proceeds from non-controlling shareholders of subsidiaries | 150,000,000.00 | ||||
| Proceeds from borrowings | 45,224,280,000.00 | 13,152,530,000.00 | 31,024,870,000.00 | 8,697,920,000.00 | |
| Proceeds from other financing activities | V. 49 | 690,938,155.85 | 690,938,155.85 | 6,500,000,000.00 | |
| Sub-total of cash inflows | 46,065,218,155.85 | 13,843,468,155.85 | 31,024,870,000.00 | 15,197,920,000.00 | |
| Repayments of borrowings | 40,659,720,000.00 | 9,511,920,000.00 | 27,612,470,000.00 | 12,905,520,000.00 | |
| Payment for dividends, profit distributions or interest | 2,561,017,399.95 | 791,776,057.80 | 2,486,056,638.83 | 842,596,151.44 | |
| Including: Dividends and profits paid to non-controlling shareholders of subsidiaries | |||||
| Payment for other financing activities | V. 49 | 992,029,107.33 | 11,125,939.11 | 3,322,631,019.56 | 3,322,478,977.93 |
| Sub-total of cash outflows | 44,212,766,507.28 | 10,314,821,996.91 | 33,421,157,658.39 | 17,070,595,129.37 | |
| Net cash flows from financing activities | 1,852,451,648.57 | 3,528,646,158.94 | -2,396,287,658.39 | -1,872,675,129.37 | |
| IV. Effect of foreign exchange rate changes on cash and cash equivalents | |||||
| V. Net increase in cash and cash equivalents | -51,749,167.99 | 288,861,258.05 | 422,047,421.61 | 187,379,164.95 | |
| Add: Cash and cash equivalents as at 01/01/2019 | 3,969,718,548.91 | 1,465,781,255.59 | 3,547,671,127.30 | 1,278,402,090.64 | |
| VI. Cash and cash equivalent as at 31/12/2019 | 3,917,969,380.92 | 1,754,642,513.64 | 3,969,718,548.91 | 1,465,781,255.59 | |
－82－Consolidated Statement of Changes in Equity
| Consolidated Statement of Changes in Equity | |||||||||
| Beijing Shougang Co., Ltd. for the year ended 31 December 2019 | |||||||||
| Unit: RMB Yuan | |||||||||
| Items | Year ended 31/12/2019 | ||||||||
| Attributable to shareholders' equity of the listed company | Non-controlling interests | Total | |||||||
| Share capital | Capital reserve | Less: treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | |||
| I. Balance at the end of prior 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 involving enterprises under common control | |||||||||
| Others | |||||||||
| II. Balance at the beginning of current year | 5,289,389,600.00 | 20,091,435,081.71 | 1,615,381,906.01 | 7,975,932.61 | 1,687,827,448.18 | -3,260,964,367.74 | 11,024,822,961.68 | 36,455,868,562.45 | |
| III. Changes in equity during the year ("- "for decrease) | 1,876,262.91 | 336,938,022.41 | 7,773,233.03 | 41,681,607.48 | 1,209,366,265.60 | 1,645,556,375.30 | 3,243,191,766.73 | ||
| (I)Total comprehensive income | 336,938,022.41 | 1,251,047,873.08 | 503,018,743.64 | 2,091,004,639.13 | |||||
| (II)Shareholders' contributions and decrease of capital | 1,140,621,384.00 | 1,140,621,384.00 | |||||||
| 1.Contribution by ordinary shareholders | 1,140,621,384.00 | 1,140,621,384.00 | |||||||
| 2. Equity settled share-based payments | |||||||||
| 3. Others | |||||||||
| (III) Appropriation of profits | 41,681,607.48 | -41,681,607.48 | |||||||
| 1. Appropriation for surplus reserves | 41,681,607.48 | -41,681,607.48 | |||||||
| 2. Distributions to shareholders | |||||||||
| 3. Others | |||||||||
| (IV) Transfer within equity | |||||||||
| 1.Share capital increased by capital reserves transfer | |||||||||
| 2.Share capital increased by surplus reserves transfer | |||||||||
| 3.Transfer of surplus reserve to offset losses | |||||||||
| 4.Other comprehensive income transferred to retained earnings | |||||||||
| 5.Others | |||||||||
| (V) Specific Reserve | 1,876,262.91 | 7,773,233.03 | 1,916,247.66 | 11,565,743.60 | |||||
| 1. Appropriation during the year | 1,876,262.91 | 7,773,233.03 | 1,916,247.66 | 11,565,743.60 | |||||
| 2. Utilization during the year (expressed in “-”) | |||||||||
| (VI) Others | |||||||||
| IV. Balance at the end of current period | 5,289,389,600.00 | 20,093,311,344.62 | 1,952,319,928.42 | 15,749,165.64 | 1,729,509,055.66 | -2,051,598,102.14 | 12,670,379,336.98 | 39,699,060,329.18 | |
－83－ConsolidatedCompanyStatement of Changes in Equity
| ConsolidatedCompanyStatement of Changes in Equity | |||||||||
| Beijing Shougang Co., Ltd. for the year ended 31 December 2019 | |||||||||
| Unit: RMB Yuan | |||||||||
| Items | Year ended 31/12/2018 | ||||||||
| Attributable to shareholders' equity of the listed company | Non-controlling interests | Total | |||||||
| Share capital | Capital reserve | Less: treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | |||
| I. Balance at the end of prior year | 5,289,389,600.00 | 20,092,513,619.01 | 5,009,132,397.32 | 5,528,023.47 | 1,547,389,780.83 | -5,524,277,372.55 | 10,097,193,652.70 | 36,516,869,700.78 | |
| Add：Changes in accounting policies | |||||||||
| Correction of prior period errors | |||||||||
| Business combination involving enterprises under common control | |||||||||
| Others | |||||||||
| II. Balance at the beginning of current year | 5,289,389,600.00 | 20,092,513,619.01 | 5,009,132,397.32 | 5,528,023.47 | 1,547,389,780.83 | -5,524,277,372.55 | 10,097,193,652.70 | 36,516,869,700.78 | |
| III. Changes in equity during the year ("- "for decrease) | -1,078,537.30 | -3,476,944,220.85 | 2,447,909.14 | 140,437,667.35 | 2,263,313,004.81 | 927,629,308.98 | -144,194,867.87 | ||
| (I)Total comprehensive income | -3,476,944,220.85 | 2,403,750,672.16 | 927,630,379.10 | -145,563,169.59 | |||||
| (II)Shareholders' contributions and decrease of capital | |||||||||
| 1.Contribution by ordinary shareholders | |||||||||
| 2. Equity settled share-based payments | |||||||||
| 3. Others | |||||||||
| (III) Appropriation of profits | 140,437,667.35 | -140,437,667.35 | |||||||
| 1. Appropriation for surplus reserves | 140,437,667.35 | -140,437,667.35 | |||||||
| 2. Distributions to shareholders | |||||||||
| 3. Others | |||||||||
| (IV) Transfer within equity | |||||||||
| 1.Share capital increased by capital reserves transfer | |||||||||
| 2.Share capital increased by surplus reserves transfer | |||||||||
| 3.Transfer of surplus reserve to offset losses | |||||||||
| 4.Other comprehensive income transferred to retained earnings | |||||||||
| 5.Others | |||||||||
| (V) Specific Reserve | -1,078,537.30 | 2,447,909.14 | -1,070.12 | 1,368,301.72 | |||||
| 1. Appropriation during the year | 2,447,909.14 | 2,447,909.14 | |||||||
| 2. Utilization during the year (expressed in “-”) | -1,078,537.30 | -1,070.12 | -1,079,607.42 | ||||||
| (VI) Others | |||||||||
| IV. Balance at the end of current period | 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 | |
－84－
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 2019 | ||||||||
| Unit: RMB Yuan | ||||||||
| Items | Year ended 31/12/2019 | |||||||
| Share capital | Capital reserve | Less: treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | Total | |
| I. Balance at the end of prior 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 current 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. Changes in equity during the year (" - "for decrease) | 336,938,022.41 | 41,681,607.48 | 375,134,467.31 | 753,754,097.20 | ||||
| (I)Total comprehensive income | 336,938,022.41 | 416,816,074.79 | 753,754,097.20 | |||||
| (II)Shareholders' contributions and decrease of capital | ||||||||
| 1.Contribution by ordinary shareholders | ||||||||
| 2. Equity settled share-based payments | ||||||||
| 3. Others | ||||||||
| (III) Appropriation of profits | 41,681,607.48 | -41,681,607.48 | ||||||
| 1. Appropriation for surplus reserves | 41,681,607.48 | -41,681,607.48 | ||||||
| 2. Distributions to shareholders | ||||||||
| 3. Others | ||||||||
| (IV) Transfer within equity | ||||||||
| 1.Share capital increased by capital reserves transfer | ||||||||
| 2.Share capital increased by surplus reserves transfer | ||||||||
| 3.Transfer of surplus reserve to offset losses | ||||||||
| 4.Other comprehensive income transferred to retained earnings | ||||||||
| 5.Others | ||||||||
| (V) Specific Reserve | ||||||||
| 1. Appropriation during the year | ||||||||
| 2. Utilization during the year (expressed in “-”) | ||||||||
| (VI) Others | ||||||||
| IV. Balance at the end of current 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 | ||
－85－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 2019 | ||||||||
| Unit: RMB Yuan | ||||||||
| Items | Year ended 31/12/2018 | |||||||
| Share capital | Capital reserve | Less: treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | Total | |
| I. Balance at the end of prior year | 5,289,389,600.00 | 12,415,326,156.11 | 5,009,132,397.32 | 1,547,389,780.83 | 3,925,427,776.25 | 28,186,665,710.51 | ||
| Add：Changes in accounting policies | ||||||||
| Correction of prior period errors | ||||||||
| Others | ||||||||
| II. Balance at the beginning of current year | 5,289,389,600.00 | 12,415,326,156.11 | 5,009,132,397.32 | 1,547,389,780.83 | 3,925,427,776.25 | 28,186,665,710.51 | ||
| III. Changes in equity during the year (" - "for decrease) | -3,476,944,220.85 | 140,437,667.35 | 1,263,939,006.14 | -2,072,567,547.36 | ||||
| (I)Total comprehensive income | -3,476,944,220.85 | 1,404,376,673.49 | -2,072,567,547.36 | |||||
| (II)Shareholders' contributions and decrease of capital | ||||||||
| 1.Contribution by ordinary shareholders | ||||||||
| 2. Equity settled share-based payments | ||||||||
| 3. Others | ||||||||
| (III) Appropriation of profits | 140,437,667.35 | -140,437,667.35 | ||||||
| 1. Appropriation for surplus reserves | 140,437,667.35 | -140,437,667.35 | ||||||
| 2. Distributions to shareholders | ||||||||
| 3. Others | ||||||||
| (IV) Transfer within equity | ||||||||
| 1.Share capital increased by capital reserves transfer | ||||||||
| 2.Share capital increased by surplus reserves transfer | ||||||||
| 3.Transfer of surplus reserve to offset losses | ||||||||
| 4.Other comprehensive income transferred to retained earnings | ||||||||
| 5.Others | ||||||||
| (V) Specific Reserve | ||||||||
| 1. Appropriation during the year | ||||||||
| 2. Utilization during the year (expressed in “-”) | ||||||||
| (VI) Others | ||||||||
| IV. Balance at the end of current period | 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 | ||
Notes to the Financial StatementsI. Company’s Information
1. Company’s profile
Beijing Shougang Co., Ltd. (hereinafter referred to as the Group) is a joint stock limitedcompany 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 Group was the first to issue 350,000 thousand ordinary shares (A shares) tothe public in Shenzhen Stock Exchange from 21 to 27 September 1999 by the combination oflegal person placement and online issuance, with par value of RMB 1 per share and issueprice of RMB 5.15 per share, with the stock code of 000959. The Group registered withapproval of Beijing Administration for Industry and Commerce on 15 October 1999. TheGroup holds the business license with unified social credit code of 1100001028663 (1-1),with the registered capital of RMB 2,310,000 thousand.The Group issued the convertible corporate bonds worthed RMB 2,000,000 thousand on 16December 2003 upon the approval of zjxz [2003] No. 107 document issued by ChinaSecurities Regulatory Commission. On 31 December 2003, the convertible bond was listedand traded in Shenzhen Stock Exchange. The bond is abbreviated as “Shougang ConvertibleBond” with the bond code of “125959”. The convertible bonds were converted into sharessince June 16, 2004, and met the redemption conditions until 26 February 2007. Accordingly,the board of directors of the company issued the redemption announcement. As of 6 April2007, the date of convertible bond redemption, the total amount of Shougang convertiblebonds was RMB 1,950,217.5 thousand, which was converted into the Group's shares, with anaccumulated increase of RMB 656,526.057 thousand in share capital. The Group obtained anew business license of legal entity on November 20, 2008, with the registration number110000000286633 (1-1), and the registered capital changed to RMB 2,966,526.057 thousand.On 16 January 2013, the Group's major asset restructuring was reviewed by the reorganizationcommittee of CSRC and passed unconditionally. On 29 January 2014, China SecuritiesRegulatory Commission issued “Reply on approving major asset restructuring of BeijingShougang Co., Ltd. and shares issuance to Shougang Group to purchase assets”. As of 25April 2014, the implementation of major asset restructuring of the Group has been completed.In the major asset restructuring, the private placement to Shougang Group was 2,322,863,543shares, with par value of RMB 1 each and issue price of RMB 4.29 each. The Group obtainedthe business license of legal entity after capital increase on 9 July 2014, with the registrationnumber of 110000000286633, and the registered capital changed to RMB 5,289,389.6thousand.The Group obtained the business license of legal entity after the integration of five certificates,with the unified social credit code 911100007002343182.The statutory address is Shijingshan Road, Shijingshan District, Beijing.The Group has established the corporate governance structure of the general meeting ofshareholders, the board of directors and the board of supervisors. At present, the Group setsup the functional department, for instance, secretary office of the board of directors, theplanning and finance department, the manufacturing department, the marketing center, the
purchasing center, the human resources department, the equipment department, the energydepartment, the environmental protection department, the quality inspection department, theoffice, etc, as well as the subordinate factories such as Shougang Qian'an Iron&Steel Co., Ltd.and auxiliary production department, like the technical center. The Group owns foursubsidiaries, which are Shougang Jingtang United Iron&Steel Co., Ltd., Beijing ShougangCold Rolling Co., Ltd., Shougang Qian'an Conference Centre Co., Ltd., and Shougang ZhixinQian'an Electromagnetic Materials Co., Ltd.The business scope of the Group includes iron and steel smelting, steel calendering processing,copper smelting and calendering processing and sales; manufacturing and sales of sinter, cokeand chemical products; blast furnace residual pressure power generation and production andsales of gas; processing and sales of industrial waste; technology development, technicalconsultation, technology transfer, technical service and technical training; sales of metalmaterials, coke, chemical products, mechanical and electrical equipment, building materials;equipment leasing (excluding automobiles); warehousing services; investment and investmentmanagement.The financial statements and notes were approved by the second meeting of the seventh boardof directors on 22 April 2019.
2. Scope of consolidated financial statements
The scope of the consolidated financial statement is determined on the control basic, thescope of the Group’s consolidated financial statements includes the subsidiaries, ShougangJingtang United Iron&Steel Co., Ltd., Beijing Shougang Cold Rolling Co., Ltd., ShougangQian'an Conference Centre Co., Ltd., Shougang Zhixin Qian'an Electromagnetic MaterialsCo., Ltd. andBeijing Shougang New Energy Automobile Material Technology Co., Ltd., thedetails refer to Note VI Change of consolidation scope and Note VII Interests in other entities.II. Basis of preparation
The financial statements are prepared in accordance with the latest “China AccountingStandards for Business Enterprises” and their application guidelines, interpretations and otherrelevant requirements (collectively, CASBE) issued by the Ministry of Finance of the PRC(“MOF”).In addition, the Group discloses relevant financial information in accordance withrequirements in the Preparation Convention of Information Disclosure by CompaniesOffering Securities to the Public No.15—General Rules on Financial Reporting(2014 revised)issued by the China Securities Regulatory Commission.The financial statements of the Company have been prepared on going concern basis.The Group adopts the accrual basis of accounting. Except for certain financial instruments,the financial statements are prepared under the historical cost convention. In the event thatimpairment of assets occurs, a provision for impairment is made accordingly in accordancewith the relevant regulations.III. Significant accounting policies and accounting estimatesThe Group’s accounting policies for depreciation of fixed assets, amortization of intangibleassets, capitalization conditions of R&D expenses and revenue recognition on the basis of itsproduction and management characterisitics, the specific accounting policies are set out inNote III, 13, Note III, 17, Note III, 18 and Note III, 23.
1. Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements have been prepared in compliance with the Accounting Standards forBusiness Enterprises to truly and completely present the Company’s and consolidatedfinancial position as at 31 December 2019 and the Company’s and consolidated operatingresults and cash flows for the year ended 31 December 2019.
2. Accounting Period
The accounting period of the Group is from 1 January to 31 December.
3. Operating cycle
The operating cycle of the Group is 12 months.
4. Functional currency
The Company and domestic subsidiaries use Renminbi (“RMB”) as their functional currency.The financial statements of the Group have been prepared in RMB.
5. Accounting treatments for business combinations involving enterprises under commoncontrol and business combinations not involving enterprises under common control.
(1) Business combinations involving enterprises under common controlFor the business combination involving entities under common control, the assets andliabilities that are obtained in the business combination shall be measured at their originalcarrying amounts at the combination date as recorded by the party being combined, except forthe adjustments of different accounting policies. The difference between the carrying amountof the net assets obtained and the carrying amount of assets paid (or the total par value ofshares issued) shall be adjusted to capital reserve (equity premium), if the capital reserve(equity premium) is not sufficient to absorb the difference, any excess difference shall beadjusted to the retained earnings.Business combinations involving enterprises under common control and achieved in stagesIn the separate financial statements, the initial investment cost is calculated based on theshareholding portion of the assets and liabilities obtained and are measured at the carryingamounts as recorded by the enterprise being combined at the combination date. The differencebetween the initial investment cost and the sum of the carrying amount of the originalinvestment cost and the carrying amount of consideration paid for the combination is adjustedto the capital reserve (equity premium), if the capital reserve is not sufficient to absorb thedifference, the excess difference shall be adjusted to retained earning.In the consolidated financial statements, the assets and liabilities obtained at the combinationshall be measured at the carrying value as recorded by the enterprise at combination date,except for adjustments of different accounting policies. The difference between the sum of thecarrying value from original shareholding portion and the new investment cost incurred atcombination date and the carrying value of net assets obtained at combination date shall beadjusted to capital reserve (equity premium), if the balance of capital reserve is not sufficientto absorb the differences, any excess is adjusted to retained earnings. The long-terminvestment held by the combination party, the recognized profit or losses, comprehensive
income and other change of shareholding’s equity at the closer date of the acquisition date andcombination date under common control shall separately offset the opening balance ofretained earnings and profit or loss during comparative statements.
(2) Business combinations involving enterprises not under common control
For business combinations involving enterprises not under common control, the considerationcosts include acquisition-date fair value of assets transferred, liabilities incurred or assumedand equity securities issued by the acquirer in exchange for control of the acquiree. At theacquisition date, the acquired assets, liabilities and contingent liabilities of the acquiree aremeasured at their fair value. The acquiree’s identifiable asset, liabilities and contingentliabilities, are recognised at their acquisition-date fair value.Where the combination cost exceeds the acquirer’s interest in the fair value of the acquiree’sidentifiable net assets, the difference is recognised as goodwill, and subsequently measured onthe basis of its cost less accumulated impairment provisions. Where the combination cost isless than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, thedifference is recognised in profit or loss for the current period after reassessment.Business combinations involving enterprises not under common control and achieved instagesIn the separate financial statements, the initial investment cost of the investment is the sum ofthe carrying amount of the equity investment held by the entity prior to the acquisition dateand the additional investment cost at the acquisition date. The disposal accounting policy ofother comprehensive income related with equity investment prior to the purchase daterecognized under equity method shall be compliance with the method when the acquiredisposes the related assets or liabilities. Shareholder’s equity due to the changes of othershareholder’s equity other than the changes of net profit, other comprehensive income andprofit distribution shall be transferred to profit or lose for current period when disposed. If theequity investment held by the entity prior to the acquisition date is measured at fair value, thecumulative changes in fair value recognized in other comprehensive income shall betransferred to profit or loss for current period when accounted for using cost method.In the consolidation financial statements, the combination cost is the sum of considerationpaid at acquisition date and fair value of the acquiree’s equity investment held prior toacquisition date; the cost of equity of the acquiree held prior to acquisition date shall bere-measured at the fair value at acquisition date, the difference between the fair value andbook value shall be recognized as investment income or loss for the current period. Othercomprehensive income and changes of investment equity related with acquiree’s equity heldprior to acquisition date shall be transferred to investment profit or loss for current period atacquisition date, besides there is other comprehensive income incurred by the changes of netassets or net liabilities due to the re-measurement of defined benefit plan.
(3) Transaction costs for business combination
The overhead for the business combination, including the expenses for audit, legal services,valuation advisory, and other administrative expenses, are recorded in profit or loss for thecurrent period when incurred. The transaction costs of equity or debt securities issued as theconsiderations 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 based on control. Control exists when theCompany has power over the investee; exposure, or rights to variable returns from itsinvolvement with the investee and has the ability to affect its returns through its power overthe investee. A subsidiary is an entity that is controlled by the Company (including enterprise,a portion of an investee as a deemed separate component, and structured entity controlled bythe enterprise).
(2) Method of preparing of consolidated financial statements
The consolidated financial statements are based on the financial statements of the Companyand its subsidiaries, and are prepared by the Company in accordance with other relevantinformation. In preparing the consolidation financial statements, the Company and itssubsidiaries are required to apply consistent accounting policy and accounting period,intra-group transactions and balances shall be offset.A subsidiary acquired through a business combination involving entities under commoncontrol in the reporting period shall be included in the scope of the consolidation from thebeginning of the combination date, the subsidiary’s income, expenses and profits are includedin the consolidated results of operations, and cash flows are included in the consolidated cashflow statement from the acquisition date.A subsidiary acquired through a business combination involving entities not under commoncontrol in the reporting period, the subsidiary’s income, expenses and profits are included inthe consolidated results of operations, and cash flows are included in the consolidated cashflow statement from the acquisition date to the end of the reporting date.The portion of a subsidiary’s equity that is not attributable to the company is treated asminority interests and presented in the consolidated balance sheet within shareholders’ equity.The portion of a subsidiary’s profit or loss that is attributable to the minority interestspresented in the consolidated statement of comprehensive income as “minority interests”. Theportion of a subsidiary’s losses that exceeds to the beginning minority interests in theshareholders’ equity, the remaining balance still reduces the minority interests.
(3) Purchase of the minority stake in the subsidiary
The difference between the long-term equity investments costs acquired by the purchase ofminority interests and the share of the net assets that the subsidiaries have to continue tocalculate from the date of purchase or the date of consolidation in proportion to the newshareholding ratio is adjusted to the capital reserve (equity premium), if the capital reserve isnot sufficient, any excess is adjusted to retained earning. The difference between the disposalof the equity investment without losing control over its subsidiary and the disposal of thelong-term equity investment corresponding to the share of the net assets of the subsidiariesfrom the date of purchase or the date of consolidation is as well.
(4) Disposal of subsidiaries
When the Company loses control over a subsidiary because of disposing part of equityinvestment or other reasons, the remaining part of the equity investment is re-measured at fairvalue at the date when the control is lost. A gain or loss is recognised in the current period andis calculated by the aggregate of consideration received in disposal and the fair value ofremaining part of the equity investment deducting the share of net assets in proportion toprevious shareholding percentage in the former subsidiary since acquisition date and thegoodwill.Other comprehensive income related to the former subsidiary is transferred to profit or losswhen the control is lost, except for the comprehensive income arising from the movement ofnet liabilities or assets in the former subsidiary’s re-measurement of defined benefit plan.
(5) Special treatment of step disposal until the loss of control of subsidiariesThe clauses, conditions and economic impact of step disposal until the loss of control ofsubsidiaries satisfies one or more criteria, the Group will consider these transactions aspackage transactions for the accounting treatment:
① These transactions are entered simultaneously or in consideration of the mutual influence;
② These transactions can only achieve one complete business results;
③ The occurrence of a transaction is depending at least one of other transactions;
④ A transaction alone is not the economical; However, it becomes economical to considertogether with other transactions.In the separate financial statements, the difference between the related long term equityinvestment for each disposal of equity interest and received consideration are recognized inthe profit or loss in the current period.The difference between the disposal before the loss ofcontrol and the carrying amount of the long-term equity investment is recognized as othercomprehensive income, and shall be transferred to the profit or loss for the current periodwhen the entity loses the control.In the consolidated financial statements, the measurement of the remaining equity interest andtreatment of the loss of disposal is in accordance to “Treatment of loss of control ofsubsidiaries as described above”. The difference between the disposal consideration and therelated share of net assets of the subsidiaries for each step disposal:
①Related to a package transaction: Recognized as other comprehensive income. It isrecognized in the profit or loss in the current period when the entity loses the control.
②Not related to a package transaction: Recognized in capital reserve (equity premium) asequity. It shouldn’t be recognized in the profit or loss in the current period when the entityloses the control.
7. Cash and cash equivalents
Cash comprises cash in hand and deposits that can be readily withdrawn on demand. Cashequivalents include short-term, highly liquid investments that are readily convertible to
known amounts of cash and are subject to an insignificant risk of change in value.
8. Financial instruments
The financial instrument is any contract that gives rise to a financial asset of one enterpriseand a financial liability or an equity instrument of another enterprise.
(1) Recognition and derecognition of financial instruments
The financial asset or a financial liability is recognized when the Company becomes a party tothe contractual provisions of a financial instrument.If one of the following criteria is met, a financial asset is derecognised:
① the contractual rights to the cash flows from the financial asset expire; or
② The financial asset was transferred, and the transfer qualifies for derecognition inaccordance with criteria set out below in “Transfer of Financial Assets”.The financial liability (or part of it) is derecognized when its contractual obligation (or part ofit) is discharged or cancelled or expires. If the Company (as a debtor) makes an agreementwith the creditor to replace the current financial liability with assuming a new financialliability, and contractual provisions are different in substance, the current financial liability isderecognized and a new financial liability is recognized.If the financial assets are traded regularly, the financial assets are recognized andderecognized at the transaction date.
(2) Classification and measurement of financial assets
Financial assets are classified into the following three categories depends on the Group’sbusiness mode of managing financial assets and cash flow characteristics of financial assets:
financial assets measured at amortized cost, financial assets at fair value through othercomprehensive income and financial assets at fair value through profit or loss.Financial assets measured at amortised costThe Group 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 measuredat amortized cost:
? The Group’s business model for managing the financial assets is to collect contractual cashflows;? The terms of the financial asset contract stipulate that cash flows generated on a specificdate are only payments of principal and interest based on the amount of outstanding principal.After initial confirmation, the real interest rate method is used to measure the amortized costof such financial assets. Profits or losses arising from financial assets measured at amortizedcosts and not part of any hedging relationship are included in current profits and losses whenthe recognition is terminated, amortized or impaired according to the Actual Interest RateLaw.
Financial assets at fair value through other comprehensive incomeThe Group shall classify financial assets that meet the following conditions and are notdesignated as financial assets measured at fair value and whose changes are recorded incurrent profits and losses as financial assets measured at fair value through othercomprehensive income:
? The Group’s business model for managing the financial assets is both to collect contractualcash flows and to sell the financial assets;? The terms of the financial asset contract stipulate that cash flows generated on a specificdate are only payments of principal and interest based on the amount of outstanding principal.After initial recognition, financial assets are subsequently measured at fair value. Interest,impairment losses or gains and exchange gains calculated by the effective interest rate methodare recognised in profit or loss, while other gains or losses are recognised in othercomprehensive gains. When derecognized, the accumulated gains or losses previouslyrecognised in other comprehensive gains are transferred from other comprehensive gains andrecorded in current profits and losses.Financial assets at fair value through profit or lossIn addition to the aboving financial assets which are measured at amortized cost or at fairvalue a through other comprehensive income, the Group classifies all other financial assets asfinancial assets measured at fair value through profit or loss.When initial recognition, in orderto eliminate or significantly reduce accounting mismatches, the Group irrevocably designatessome financial assets that should have been measured at amortized cost or at fair valuethrough other comprehensive gains as financial assets at fair value through profit or loss.After initial recognition, the financial assets are subsequently measured at fair value, and theprofits or losses (including interest and dividend income) generated from which arerecognised in profit or loss, unless the financial assets are part of the hedging relationship.However, for non-tradable equity instrument investment, when initially recognized, the Groupirrevocably designates them as financial assets at fair value through other comprehensivegains. The designation is made on the basis of individual investment, and the relevantinvestment conforms to the definition of equity instruments from the issuer’s point of view.After initial confirmation, financial assets are subsequently measured at fair value. Dividendincome that meets the requirements is recognised in profit and loss, and other gains or lossesand changes in fair value are recognised in other comprehensive gains. When derecognized,the accumulated gains or losses previously recognised in other comprehensive gains aretransferred from other comprehensive gains to retained earnings.The business model of managing financial assets refers to how the Group manages financialassets to generate cash flow. The business model decides whether the source of cash flow offinancial assets managed by the Group is to collect contract cash flow, sell financial assets orboth of them. Based on objective facts and the specific business objectives of financial assetsmanagement decided by key managers, the Group determines the business model of financialassets management.The Group evaluates the characteristics of the contract cash flow of financial assets to
determine whether the contract cash flow generated by the relevant financial assets on aspecific date is only to pay principal and interest based on the amount of unpaid principal.Among them, principal refers to the fair value of financial assets at the time of initialconfirmation; interest includes the consideration of time value of money, credit risk related tothe amount of unpaid principal in a specific period, and other basic borrowing risks, costs andprofits. In addition, the Group evaluates the terms and conditions of the contracts that maylead to changes in the time distribution or amount of cash flow in financial asset contracts todetermine whether they meet the requirements of the aboving contract cash flow’scharacteristics.Only when the Group changes its business model of managing financial assets, all thefinancial assets affected shall be reclassified on the first day of the first reporting period afterthe business model changes, otherwise, financial assets shall not be reclassified after initialconfirmation.Financial assets are measured at fair value when initially recognized. For financial assets atfair value through profits and losses, the related transaction costs are directly recognizedthrough profits and losses, and the related transaction costs of other types of financial assetsare included in the initial recognition amounts. For accounts receivable arising from the saleof products or rendering services, exlcuding or without considering significant financingelements, the initial recognition amount shall be the amount of consideration, which theGroup is entitled to receive with the expectation.
(3) Classification and measurement of financial liabilities
On initial recognition, financial liabilities are classified as: financial liabilities at fair valuethrough profit or loss (FVTPL), and financial liabilities measured at amortized cost. Forfinancial liabilities not classified as at fair value through profit or loss, the transaction costsare recognised in the initially recognized amount.Financial liabilities at fair value through profits and lossesFinancial liabilities at FVTPL include transaction financial liabilities and financial liabilitiesdesignated as at fair value through profit or loss in the initial recognition. Such financialliabilities are subsequently measured at fair value, all gains and losses arising from changes infair value and dividend and interest expense relative to the financial liabilities are recognisedin profit or loss for the current period.Financial liabilities measured at amortized costOther financial liabilities are subsequently measured at amortized cost using the effectiveinterest method; gains and losses arising from derecognition or amortization is recognised inprofit or loss for the current period.Distinction between financial liabilities and equity instrumentsThe financial liability is the liability that meets one of following cateria:
① Contractual obligation to deliver cash or other financial instruments to another entity.
② Under potential adverse condition, contractual obligation to exchange financial assets orfinancial liabilities with other parties.
③ A 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 theentity’s own equity instruments.
④ A derivative that will or may be settled other than by the exchange of a fixed amount ofcash or another financial asset for a fixed number of the entity’s own equity instruments.An equity instrument is any contract that evidences a residual interest in the assets of an entityafter deducting all of its liabilities.If the Group cannot unconditionally avoid fulfilling a contractual obligation by deliveringcash or other financial assets, the contractual obligation meets the definition of financialliability.If a financial instrument must or are able to be settled by the Group’s own equity instrument,the Group should consider whether the Group’s equity instrument as the settlement instrumentis a substitute of cash or other financial assets or the residual interest in the assets of an entityafter deducting all of its liabilities. If the former, the tool is the Group’s financial liability; ifthe latter, the tool is the equity instrument of the Group.
(4) Fair value of financial instruments
Recognization of fair value of financial assets and financial liabilities please refers to Note III,9.
(5) Impairment of financial assets
On the basis of expected credit losses, the Group performs impairment assessment on thefollowing items and confirms the loss provision.? Financial assets measured at amortized cost;? Receivables and debt investments at fair value through other comprehensive income;? Lease receivables;? Financial guarantee contract (except measured at fair value through profit or loss or formedby continuing involvement of transferred financial assets or the transfer does not qualify forderecognition).Measurement of expected credit lossesThe expected credit losses refer to the weighted average of the credit losses of financialinstruments that are weighted by the risk of default. Credit loss refers to the differencebetween all contractual cash flows receivable from the contract and all cash flows expected tobe received by the Group at the original effective interest rate, that is, the present value of allcash shortages.The company considers the reasonable and basis information about past events, currentsituation and forecast of future economic situation, calculates the probability weightedamount of the present value of the difference between the receivable cash flow of the contractand the expected cash flow with the risk of default as the weight, and confirms the expectedcredit loss.
The Group 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 Phase I. The Group shall measure the loss allowance for that financialinstrument at an amount eequal to 12-month expected credit losses. If the credit risk offinancial instruments has increased significantly since the initial recognition, but no creditimpairment has occurred, which is in Phase II. The Group shall measure the loss allowancefor a financial instrument at an amount equal to the lifetime expected credit losses. If thefinancial instrument has occurred credit impairment since initial recognition, which is inPhase III, and the Group shall measure the loss allowance for a financial instrument at anamount equal to the lifetime expected credit losses.For financial instruments with lower credit risk at the balance sheet date, the Group assumesthat their credit risk has not increased significantly since the initial recognition, and shallmeasure the loss allowance for that financial instrument at an amount equal to 12-monthexpected credit losses.The lifetime expected credit losses, refer to the expected credit losses caused by all possibledefaults during the whole expected lifetime. The 12-month expected credit losses, refer to theexpected credit losses caused by all possible defaults during the 12-month after balance sheetdate (if the expected duration of financial instrument is less than 12 months, then for theexpected duration),which is part of the lifetime expected credit lossesWhen measure the expected credit loss, the longest contract period (including the option ofrenewal) that the Group needs to consider is the longest contract period the enterprise facingcredit risk.For financial instruments in Phase I, Phase II and with lower credit risk, the Group calculatesinterest income on the basis of their book balances without deduction of impairmentprovisions and actual interest rates. For financial instruments in Phase III, the Groupcalculates interest income according to their book balance minus the impairment provisionand the actual interest rate.For notes receivable and accounts receivable, whether or not there are significant financingelements, the Group shall always measure the loss allowance for them at an amount equal tothe lifetime expected credit losses.If the single financial asset is unable to evaluate the expected credit loss information at areasonable cost, the Group divides and combines notes receivable and accounts receivableaccording to the characteristics of credit risk. On the basis of the combination, the Groupcalculates the expected credit losses. The basis of determining the combination is as follows:
A. Notes receivable? Notes receivable group 1: Bank acceptance notes? Notes receivable group 2: Bank acceptance notes with lower credit rating andCommerical acceptance notesB. Accounts receivable: Amount receivables of goodsC. Financing Receivable
? Financing receivables group 1: Bank acceptance notes? Financing receivable group 2: Bank acceptance notes with lower credit rating and
Commerical acceptance notesFor the notes receivable and financing receivable divided into group, the Group refers tohistorical credit losses, with the current situation and the forecast of future economic situation,calculates the expected credit losses through the exposure on default and the lifetime expectedcredit losses rate.For the accounts receivable divided into group, the Group refers to the historical credit losses,combines the current situation with the forecast of future economic situation, compiles acomparison table between the age of accounts receivable/overdue days and the lifetimeexpected credit losses rate to calculate the expected credit losses.Other receivablesAccording to the characteristics of credit risk, the Group divides other receivables into group.On the basis of the combination, the Group calculates the expected credit losses. The basis ofdetermining the combination is as follows:
? Other receivables group 1: Petty cash and deposit, etc? Other receivables group 1: Other current accountsFor other receivables a divided into group, the Group calculates the expected credit lossesthrough the exposure on default and the lifetime expected credit losses rate.Debt investments, Other debt investmentsFor debt investments and other debt investments, the Group calculates the expected creditlosses through the exposure on default and the future 12-month or lifetime expected creditlosses rate, according to the nature of the investment, the types of counterparty and riskexposure.Assessment of Significant Increase in Credit RiskBy comparing the default risk of financial instruments on balance sheet day with that oninitial recognition day, the Group determines the relative change of default risk of financialinstruments during the expected life of financial instruments, to evaluate whether the creditrisk of financial instruments has increased significantly since the initial recognition.To determine whether credit risk has increased significantly since the initial recognition, theGroup considers reasonable and valid information, including forward-looking information,which can be obtained without unnecessary additional costs or efforts. Information consideredby the Group includes:
? The debtor can’t pay principal and interest on the expiration date of the contract;? Serious deterioration of external or internal credit ratings (if any) of financial instrumentsthat have occurred or are expected to occur;? Serious deterioration of the debtor’s operating results that have occurred or are expected to
occur;? Changes in the existing or anticipated technological, market, economic or legal environmentwill have a significant negative impact on the debtor’s repayment capacity.According to the nature of financial instruments, the Group evaluates whether credit risk hasincreased significantly on the basis of a single financial instrument or a combination offinancial instruments. When assessing on the basis of the combination of financialinstruments, the Group can classify financial instruments based on common credit riskcharacteristics, such as overdue information and credit risk rating.If the delay exceeds 30 days, the Group determines that the credit risk of financial instrumentshas increased significantly.Financial assets that have occured credit impairmentOn the balance sheet date, the Group assesses whether credit impairment has occurred infinancial assets measured at amortized cost and debt investments measured at fair valuethrough other comprehensive income. When one or more events adversely affect the expectedfuture cash flow of a financial asset occur, the financial asset becomes a financial asset withcredit impairment. Evidence of credit impairment of financial assets includes the followingobservable information:
? Significant financial difficulties occurs to the issuer or debtor;? The debtor breaches any of the contractual stipulations, for example, fails to pay or delaysthe payment of interests or the principal, etc.;? For economic or contractual considerations related to the financial difficulties of the debtor,the Group grants concessions to the debtor that will not be made under any othercircumstances.? The debtor is probable to go bankrupt or undergo other financial restructuring.? Financial difficulties of issuer or debtor lead to the disappearance of financial assets activemarket.Presentation of expected credit losses reserveIn order to reflect the changes happened to the credit risk of financial instruments since theinitial recognition, the Group recalculates the expected credit losses on each balance sheet day.The increase or reversal of the loss provision resulting therefrom is recognised as animpairment loss or gain in the current profit or loss.For financial assets measured at amortizedcost, loss provision offsets the carrying amount of the financial assets shown on the balancesheet; for debt investments measured at fair value through other comprehensive income, theGroup recognizes its loss provision through other comprehensive income and does not offsetthe financial assets’ carrying amount.Write offIf the Group 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 constitute the derecognition of the financial assets. What usually occurs when the
Group determines that the debtor has no assets or sources of income to generate sufficientcash flows to pay the amount to be reduced. However, in accordance with the Group’sprocedures for recovering due payment, the financial assets reduced may still be affected byenforcement activities.If the reduced financial assets are recovered later, the returns as impairment losses shall beincluded in the profits and losses of the recovery period.
(6) Transfer of financial assets
Transfer of financial assets is the transfer or delivery of financial assets to another party (thetransferee) other than the issuer of financial assets.A financial asset is derecognised if the Company transfers substantially all the risks andrewards of ownership of the financial asset to the transferee. A financial asset is notderecognised if the Company retains substantially all the risks and rewards of ownership ofthe financial asset to the transferee.The Company neither transfers nor retains substantially all the risks and rewards of ownershipof the financial asset, and the accounting treatment is shown as following: if the Company hasforgone control over the financial asset, the financial assets is derecognized, and new assetsand liabilities are recognized. If the Company retains control over the financial asset, thefinancial asset is recognised to the extent of its continuing involvement in the transferredfinancial asset, and an associated liability is recognised.
(7) Offseting financial assets and financial liabilities
When the Group has the legal rights to offset the recognized financial assets and financialliabilities and is capable to carry it out, the Group plans to net settlement or realize thefinancial assets and pay off the financial liabilities, the financial assets and financial liabilitiesshall be listed separately with the neutralized amount in balance sheet and are not allowed tobe offset.
9. 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 Group measures related assets or liabilities at fair value assuming the assets or liabilitiesare exchanged in an orderly transaction in the principal market; in the absence of a principalmarket, assuming the assets or liabilities are exchanged in an orderly transaction in the mostadvantageous market. Principal market (or the most advantageous market) is the market thatthe Group can normally enter into a transaction on measurement date. The Group adopts thepresumptions that would be used by market participants in achieving the maximizedeconomic value of the assets or liabilities.For financial assets or financial liabilities with active markets, the Group uses the quotedprices in active markets as their fair value. Otherwise, the Group uses valuation technique todetermine their fair value.Fair value measurement of a non-financial asset takes into account market participants’ abilityto generate economic benefits using the asset in its best way or by selling it to another market
participant that would best use the asset.The Group uses valuation techniques that are appropriate in the circumstances and for whichsufficient data are available to measure fair value, maximizing the use of relevant observableinputs, and using unobservable inputs only if the observable inputs aren’t available orimpractical.Fair value level for assets and liabilities measured or disclosed at fair value in the financialstatements are determined according to the significant lowest level input to the entiremeasurement: Level 1 inputs are quoted prices (unadjusted) in active markets for identicalassets or liabilities that the Company can access at the measurement date; Level 2 inputs areinputs other than quoted prices included within Level 1 that are observable for the assets orliabilities, either directly or indirectly; Level 3 inputs are unobservable inputs for the assets orliabilities.At the balance sheet date, the Group revalues assets and liabilities being measured at fairvalue continuously in the financial statements to determine whether to change the levels offair value measurement.
10. Inventories
(1) Classification
Inventories include raw materials, finished goods, consumables and self-made semi-finishedgoods.
(2) Mesurement method of cost of inventories
Inventories are initially measured at cost. Raw materials, finished goods and self-madesemi-finished goods are calculated using weighted average method.
(3) Basis for determining the net realisable value and method for provision for obsoleteinventoriesNet realisable value is the estimated selling price in the ordinary course of business less theestimated costs of completion and the estimated costs necessary to make the sale and relevanttaxes. The net realisable value is measured based on the verified evidences and considerationsfor the purpose of holding inventories and the effect of post balance sheet events.Any excess of the cost over the net realisable value of of inventories is recognised as aprovision for obsolete inventories, and is recognised in profit or loss. The Company usuallyrecognises provision for decline in value of inventories by a single inventory item. If thefactors caused the value of inventory previously written-down have disappeared, the provisionfor decline in value of inventories previously made is reversed.
(4) Inventory count system
The Group maintains a perpetual inventory system.
(5) Amortization methods of low-value consumables and packaging materialsLow-value consumables are charged with the one-off amortization method and multi-stageamortization method when they are used.
11. Assets held for sale and discontinued operations
(1) Classification and measurement of non-current assets or disposal groups held for sale
The Group classifies a 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 a sale transaction(including an exchange transaction of non-monetary assets with commercial substance) ratherthan through continuing use.Above mentioned non-current assets do not include investment properties subsequentlymeasured with the fair value model, biological assets measured at fair value less costs to sell,assets arising from employee benefits, financial assets, deferred tax assets and contractualrights under insurance contracts.The disposal group is a group of assets to be disposed of, by sale or otherwise, together as awhole in a single transaction, and liabilities directly associated with those assets that will betransferred in the transaction. In certain circumstances, disposal groups include goodwillacquired in a business combination.A non-current asset or disposal group is classified as held for sale when all the followingcriteria are met: According to the customary practices of selling such asset or disposal groupin similar transactions, the non-current asset or disposal group is available for immediate salein its present condition; The sale is highly probable to occur, that is, the Group has made aresolution on a sale plan and entered into a legally binding purchase agreement with otherparties. The sale is expected to be completed within one year. The Group that is committed toa sale plan involving loss of control of a subsidiary classifies all the investment in thatsubsidiary as held for sale in its separate financial statements, and classifies all the assets andliabilities of that subsidiary as held for sale in its consolidated financial statements, when theclassification criteria for held for sale are met, regardless of whether the Group retains anon-controlling interest in its former subsidiary after the sale.Non-current assets or disposal groups held for sale are initially and subsequently measured atthe lower of carrying amount and fair value less costs to sell. Any excess of the carryingamount over the fair value less costs to sell is recognised as an impairment loss in profit orloss. The impairment loss recognised for a disposal group firstly reduces the carrying amountof goodwill allocated to the disposal group, and then reduces the carrying amount of othernon-current assets pro rata on the basis of the carrying amount of each non-current asset in thedisposal group.The Group recognises a gain for any subsequent increase in fair value less costs to sell of anasset, but not in excess of the cumulative impairment loss that has been recognised afterclassified as held for sale. The reduced carrying amount of goodwill is not recovered.The Group does not depreciate (or amortise) a non-current asset while it is classified as held
for sale or while it is part of a disposal group classified as held for sale. Interest and otherexpenses attributable to the liabilities of a disposal group classified as held for sale continueto be recognised. If an investment or a part of investment in an associate or a joint venture isclassified as held for sale, equity method is not used for the part classified as held for sale,while equity method is used for the rest part (the part not classified as held for sale)continuely. When the Group does not have material impact on an associate or a joint venturedue to the sale transaction, it stops using equity method.The Group measures a non-current asset that ceases to be classified as held for sale at thelower of:
① Its carrying amount before the asset or disposal group was classified as held for sale,adjusted for any depreciation, amortisation or impairment that would have been recognisedhad the asset or disposal group not been classified as held for sale, and
② Its recoverable amount.
(2) Discontinued operations
The Group classifies a component as a discontinued operation either upon disposal of theoperation or when the operation meets the criteria to be classified as held for sale if it isseparately identifiable and satisfies one of the following conditions:
① It represents a separate major line of business or a separate geographical area ofoperations;
② It is part of a single co-ordinated plan to dispose of a separate major line of business or aseparate geographical area of operations;
③ It is a subsidiary acquired exclusively with a view to resale.
(3) Presentation
The Group presents a non-current asset classified as held for sale and the assets of a disposalgroup classified as held for sale as “Assets held for sale” in balance sheet. The liabilities of adisposal group classified as held for sale is presented as “Liabilities held for sale” in balancesheet.The Group presents profit or loss from discontinued operations separately from profit or lossfrom continuing operations in income statement. Impairment loss and reversal amount andany disposal gain or loss of a non-current asset or disposal group classified as held for salethat does not meet the definition of a discontinued operation is included in profit or loss fromcontinuing operations. Any gain or loss from continuing operation of discontinued operations,including impairment loss and reversal amount, and disposal gain or loss is included in profitor loss from discontinued operations.A disposal group which is planned to cease operation rather than for sale, and meets thecriteria of a part of discontinued operation, the Group presents it as discontinued operationfrom the date of cessation.
Where an operation is classified as discontinued in the current period, profit or loss fromcontinuing operations and profit or loss from discontinued operations are separately presentedin the income statement for the current period. If the Group ceases to classify a discontinuedoperation as held for sale, the information previously presented in discontinued operations isreclassified and included in income from continuing operations for all periods presented.
12. Long-term equity investments
Long-term equity investments include equity investments in subsidiaries and equityinvestments in joint ventures and associates. An associate is an enterprise over which theGroup has significant influence.
(1) Determination of initial investment cost
The initial cost of a long-term equity investment acquired through a business combinationinvolving enterprises under common control is the Company’s share of the carrying amountof the subsidiary’s equity in the consolidated financial statements of the ultimate controllingparty at the combination date. For a long-term equity investment obtained through a businesscombination not involving enterprises under common control, the initial cost is thecombination cost.A long-term equity investment acquired other than through a business combination: Along-term equity investment acquired other than through a business combination is initiallyrecognised at the amount of cash paid if the Company acquires the investment by cash, or atthe fair value of the equity securities issued if an investment is acquired by issuing equitysecurities.
(2) Subsequent measurement and recognition of profit or loss
Long-term equity investments in subsidiaries are accounted for using the cost method unlessthe investment meets the conditions for holding for sale. An investment in a joint venture oran associate is accounted for using the equity method for subsequent measurement.For a long-term equity investment which is accounted for using the cost method, Except forcash dividends or profit distributions declared but not yet distributed that have been includedin the price or consideration paid in obtaining the investments, the Company recognises itsshare of the cash dividends or profit distributions declared by the investee as investmentincome for the current period.For a long-term equity investment which is accounted for using the equity method, where theinitial cost of a long-term equity investment exceeds the Company’s interest in the fair valueof the investee’s identifiable net assets at the date of acquisition, the investment is initiallyrecognised at cost. Where the initial investment cost is less than the Company’s interest in thefair value of the investee’s identifiable net assets at the date of acquisition, the investment isinitially recognised at the investor’s share of the fair value of the investee’s identifiable netassets, and the difference is recognised in profit or loss.Under the equity method, the Company recognises its share of the investee’s profit or loss andother comprehensive income as investment income or losses and other comprehensive incomerespectively, and adjusts the carrying amount of the investment accordingly. Once the investeedeclares any cash dividends or profit distributions, the carrying amount of the investment isreduced by the amount attributable to the Company. Changes in the Company’s share of the
investee’s owners’ equity, other than those arising from the investee’s net profit or loss, othercomprehensive income or profit distribution (referred to as “other changes in owners’ equity”),is recognised directly in the Company’s capital surplus, and the carrying amount of theinvestment is adjusted accordingly. In calculating its share of the investee’s net profits orlosses, other comprehensive income and other changes in owners’ equity, the Grouprecognises investment income and other comprehensive income after making appropriateadjustments to align the accounting policies or accounting periods with those of the Groupbased on the fair value of the investee’s identifiable net assets at the date of acquisition.If an entity 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 ofthe original portion of equity investment and the additional investment cost under equitymethod. The difference between the fair value and carrying amount and cumulative changesin fair value recognized as other comprehensive income shall be recognized as current profitof loss under equity method.If an entity loses joint control or has no significant influence over investees due to theelimination of parts of the equity investment, the surplus equity after disposal shall berecognized in accordance with “CASBE 22-Recognition and Measurement of FinancialInstruments”, and the difference between fair value and carrying amount should berecognized as profit or loss for current period. Other comprehensive income of original equityinvestment recognized under equity method shall be recognized in accordance with the samefoundation used by the investees when dispose the relevant assets or liabilities directly in thetermination of equity method. Other changes of owners’ equity related to the original equityinvestment shall be transferred into profit or loss for current period.If an entity loses control over investees due to the elimination of parts of the equityinvestment, the surplus owners’ equity that are able to implement joint control or havesignificant influence over investees shall be measured at equity method and are deemed to berecognized under equity method since the acquisition date. The surplus owners’ equity thatare unable to implement joint control or have no significant influence over investees shall beprocessed in accordance with “CASBE 22-Recognition and Measurement of financialinstruments”, and the difference between fair value and carrying amount at the day of loss ofcontrol shall be recognized as profit or loss for current period.If the shareholding ratio of the Company is reduced due to the increase of capital of otherinvestors, and thus the control is lost, but the joint control or significant influence can beexerted on the invested entity, the company should recognize net asset according to the newshareholding ratio. The difference between the original book value of the long-term equityinvestment corresponding to the decrease in the shareholding ratio should be included in thecurrent profit and loss; then, according to the new shareholding ratio, the equity method isused to adjust the investment.Unrealised profits and losses resulting from transactions between the Group and its associatesor joint ventures are eliminated to the extent of the Group’s interest in the associates or jointventures. Unrealised losses resulting from transactions between the Group and its associatesor joint ventures are eliminated in the same way as unrealised gains but only to the extent thatthere is no impairment.
(3) Criteria for determining the existence of joint control or significant influence over an investee
Joint control refers to any joint venture party alone cannot control the production andoperation activities of the joint venture, decisions related to the basic operating activities ofjoint venture should require the unanimous consent of the parties sharing control. Indetermining whether there is a joint control, the first judge is to determine whether therelevant arrangement is controlled collectively by all the parties involved or the Group of theparties involved. Secondly, and then determine whether the decisions related to the basicoperating activities should require the unanimous consent of the parties involved. If theparties involved or the Group of the parties involved must act consistently to determine therelevant arrangement, it is considered that the parties involved or the Group of the partiesinvolved control the arrangement. If two or more parties involve in the collectively control ofcertain arrangement, it shall not be considered as joint control. Protection of rights shall notbe considered in determining whether there is joint control.Significant influence is the power to participate in the financial and operating policy decisionsof the investee but is not control or joint control over those policies. When determiningwhether an investing enterprise is able to exercise control or significant influence over aninvestee, the effect of potential voting rights of the investee (for example, warrants andconvertible debts) held by the investing enterprises or other parties that are currentlyexercisable or convertible shall be considered.When the Group, directly or indirectly through subsidiaries, owns 20% of the investee(including 20% ) or more but less than 50% of the voting shares, it has significant impact onthe investee unless there is clear evidence to show that in this case the Group cannotparticipate in the production and business decisions of the investee, and cannot form asignificant influence; when the Group owns 20% (excluding) or less of the voting shares,generally it is not considered to have a significant impact on the investee, unless there is clearevidence to show that in this case the Group can participate in the production and businessdecisions of the investee so as to form a significant influence.
(4) Held-for-sale equity investments
Accounting for an entity investment, or a portion of an equity investment, in an associate or ajoint venture that is classified as held for sale refers to Note III, 11.Any remaining equity investment that has not been classified as held for sale shall beaccounted for using the equity method.When an equity investment in an associate or a joint venture previously classified as held forsale no longer meets the criteria to be so classified, it is accounted for using the equity methodretrospectively as from the date of its classification as held for sale.
(5) Method of impairment testing and impairment provision
For investments in subsidiaries, associates and joint ventures, refer to Note III, 19 for themethod of asset impairment.
13. Fixed assets
(1) Recognition of fixed assets
Fixed assets represent the tangible assets held by the Group for use in production of goods,use in supply of services, rental or for administrative purposes with useful lives over one
accounting year.Fixed assets are only recognised when its related economic benefits are likely to flow to theCompany and its cost can be reliably measured.Fixed asset are initially measured at cost.
(2) Depreciation of fixed assets
The cost of a fixed asset is depreciated using the straight-line method since the state ofintended use, unless the fixed asset is classified as held for sale. Not considering impairmentprovision, the estimated useful lives, residual value rates and depreciation rates of each classof fixed assets are as follows:
－106－
Class
| Class | Estimated useful life (years) | Residual value rate % | Depreciation rate % |
| Plant and buildings | 25-44 | 3-5 | 2.16-3.88 |
| Machinery and equipment | 12-19 | 3-5 | 5.00-8.08 |
| Motor vehicles | 12 | 3-5 | 7.92-8.08 |
| Electronic equipment | 10 | 3-5 | 9.50-9.70 |
| Industrial furnace | 13 | 3-5 | 7.31-7.46 |
| Metallurgical equipment | 19 | 3-5 | 5.00-5.11 |
| Others | 12-22 | 3-5 | 4.32-8.08 |
The fixed assets that have been withdrawn for impairment provision shall also be deductedfrom the accumulative amount of the provision for impairment of fixed assets that have beenaccrued.
(3) Refer to Note III, 19 for the impairment testing and the impairment provision of fixed assets.
(4) Recognition and measurement of fixed assets financed by leasingThe leased fixed assets are recognized as fixed assets financed by leasing if they meet thefollowing one or more criteria:
①The ownership of leased assets can be transferred to the Group at the end of the leaseperiod
②The Group 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 beginningdate of lease period it is reasonably determined that the Group will exercise the option.
③Even if the ownership of assets is not transferred, lease period accounts for most of leasedassets’ useful life.
④The present value of minimum lease payment almost equals to the fair value of leased assetof the beginning date of lease period.
⑤Leased assets have special characteristics and they are used for the Group only if notreconstructed largely.At the beginning date of lease period, the Group will recognize the lower of the fair value ofleased asset of the beginning date of lease period and the present value of minimum leasepayment as the recorded value of the leased asset, their difference is recorded as unrecognizedfinancing charges. Initial direct costs such as charges, legal fee, travelling expenses and stamptaxes of the lease incurred during leasing negotiation and signing leasing contracts arerecognized in leased assets’ value. Unrecognized financing charges are measured at amortizedcost using the effective interest method in the periods of leasing.Fixed assets financed by leasing are depreciated according to the policy of owned assets. If itcan be reasonably determined that the ownership of the leased assets can be obtained at theend of the lease period, the leased assets are depreciated over their useful lives; otherwise, theleased assets are depreciated over the shorter of the lease terms and the useful lives of theleased assets.
(5) The Group reviews the useful life and estimated net residual value of a property, plant andequipment and the depreciation method applied annually at each of the period end.The useful lives of property, plant and equipment are adjusted if their expected useful livesare different from the original estimates; the estimated net residual values are adjusted if theyare different from the original estimates.
(6) Overhaul costs
The overhaul costs occurred in regular inspection of property, plant and equipment arerecognised in the cost of property, plant and equipment if there is undoubted evidence toconfirm that they meet the recognition criteria of fixed assets, otherwise, the overhaul costsare recognised in profit or loss for the current period. Property, plant and equipment aredepreciated during the intervals of the regular overhaul.
14. Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises necessary projectexpenditure incurred during construction, borrowing cost that are eligible for capitalizationand other necessary cost incurred to bring the fixed assets ready for their intended use.Construction in progress is transferred to fixed assets when the assets are ready for theirintended use.For provision for impairment of construction in progress, refer to Note III, 19.
15. Construction materials
Construction materials of the Group refer to various materials prepared for construction in
progress, including engineering materials, equipment not yet installed and instrumentsprepared for production, etc.The purchased construction materials are measured at cost, the delivered constructionmaterials are then transferred to the construction in progress, and the remaining constructionmaterials are transferred to the inventory after the completion of construction.For the impairment of construction materials, please refer to Note III, 19.In the balance sheet, the ending balance of construction materials is presented in the line itemof ‘‘Construction in progress’’.
16. Borrowing costs
(1) Recognition principle of capitalization of borrowing costs
For borrowing costs that are directly attributable to the acquisition, construction or productionof a qualifying asset, they shall be capitalized and included in the cost of related assets; otherborrowing costs are recognized as expenses and included in profit or loss when incurred.Capitalization of such borrowing costs can commence only when all of the followingconditions are satisfied:
①Expenditures for the asset incurred, capital expenditure includes the expenditure in theform of cash payment, transfer of non-cash assets or the interest bearing liabilities for thepurpose of acquiring or constructing assets eligible for capitalization;
②Borrowing costs incurred;
③Activities relating to the acquisition, construction or production of the asset that arenecessary to prepare the asset for its intended use or sale have commenced.
(2) Capitalization period of borrowing costs
Capitalization of such borrowing costs ceases when the qualifying assets being acquired,constructed or produced become ready for their intended use or sale. The borrowing costincurred after that is recognised as an expense in the period in which they are incurred andincluded in profit or loss for the current period.Capitalization of borrowing costs is suspended during periods in which the acquisition,construction or production of a qualifying asset is interrupted abnormally and when theinterruption is for a continuous period of more than 3 months; the borrowing costs in thenormally interrupted period continue to capitalize.
(3) Calculation of the capitalization rate and amount of borrowing costs.
The interest expense of the specific borrowings incurred at the current period, deducting anyinterest income earned from depositing the unused specific borrowings in bank or theinvestment income arising from temporary investment,shall be capitalized. The capitalizationrate of the general borrowing is determined by applying the weighted average effectiveinterest rate of general borrowings, to the weighted average of the excess amount ofcumulative expenditures on the asset over the amount of specific borrowings.on the asset overthe amount of specific borrowings.
During the capitalization period, exchange differences on foreign currency special borrowingsshall be capitalized; exchange differences on foreign currency special borrowings shall berecognized as current profits or losses.
17. Intangible assets
Intangible assets include software and land use rights.Intangible assets initially measured at cost. The Group analyzes and judges the service life ofintangible assets when obtained. An intangible asset with finite useful life shall be amortizedover the expected useful life using method which can reflect the expected realization of theeconomic benefits related to the assets from when the intangible asset is available for use. Anintangible asset whose expected realization can’t be reliably determined is amortized usingstraight-line amortization; an intangible asset with indefinite useful life shall not beamortized.For an intangible asset with a finite useful life, the Group reviews the useful life andamortization method at the end of each financial year, if it is different from the previousestimates, adjust the previous estimates and deal with it according to changes in accountingestimates.For an intangible asset with a finite useful life, the Group amortizes it by the category,expected service life and epected residual value with straight-line amortization method.Amortization of an intangible asset with finite useful life is as follows:
－109－Category
| Category | Useful life (years) | Estimated residual value | Annual amotiaztion rate |
| Software | 5-10 years | -- | 10.00-20.00 |
| Land use rights | 40-50 years | -- | 2.00-2.50 |
The Group estimates an intangible asset can no longer bring future economic benefits to theGroup at the end of a period, the carrying amount of which should be reversed to profit or lossfor the current period.For the impairment method of intangible assets, refer to Note III, 19.
18. Research and development expenditure
Expenditure on an internal research and development project is classified into expenditure onthe research phase and expenditure on the development phase.Expenditure on the research phase is recognised in profit or loss when incurred.Expenditure on the development phase is capitalized only when the Group can satisfy all ofthe following conditions: the technical feasibility of completing the intangible asset so that itwill be available for use or sale; its intention to complete the intangible asset is to use or sell it;how the intangible asset will generate economic benefits. Among other things, the Group candemonstrate the existence of a market for the output of the intangible asset or the intangibleasset itself or, if it is to be used internally, the usefulness of the intangible asset; the
availability of adequate technical, financial and other resources to complete the developmentand the ability to use or sell the intangible asset; its ability to measure reliably the expenditureattributable to the intangible asset during its development phase. Otherwise, it is charged toprofit or loss.The research and development projects of the Group will enter into the development stageafter meeting the above conditions and passing through the technical feasibility and economicfeasibility studies and the formation of the project.Capitalized expenditure on the development phase is presented as “development costs” in thebalance sheet and shall be transferred to intangible assets when the project is completed to itsintended use state.
19. Impairment of assets
The impairment of subsidiaries, associates and joint ventures in the long-term equityinvestments, fixed assets, construction in progress, intangible assets, goodwill, etc. (excludinginventories, deferred income tax assets and financial assets) are determined as follows:
At the balance sheet date, the Group determines whether there may be evidence ofimpairment, if there is any, the Group will estimate the recoverable amount for impairment,and then test for impairment. For goodwill arising from a business combination, intangibleassets with indefinite useful life and the intangible assets that have not yet ready for use aretested for impairment annually regardless of whether such evidence exists.The recoverable amount of an asset is determined by the higher amount of fair valuededucting disposal costs and net present value of future cash flows expected from the assets.The Group estimates the recoverable amount based on individual asset; for individual assetwhich is difficult to estimate the recoverable amount, the recoverable amount of the assetgroup is determined based on the asset group involving the asset. The identification of theasset group is based on whether the cash flow generated from the asset group is independentof the major cash inflows from other assets or asset groups.When the asset or asset group’s recoverable amount is lower than its carrying amount, theGroup reduces its carrying amount to its recoverable amount, the reduced amount is includedin profit or loss, while the provision for impairment of assets is recognised.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 areasonable basis at acquisition date. Those that are difficult to be allocated to related assetsshall be allocated to related asset group. Related assets or assets group refer to those that canbenefit from the synergies of business combination and are not larger than the Group’srecognized reporting segment.When there is an indication that the asset and asset group are prone to impair, the Groupshould test for impairment for asset and asset group excluding goodwill and calculate therecoverable amount and recognize the impairment loss accordingly. The Group should test forimpairment for asset or the asset group including goodwill and compare the asset or assetgroup’s recoverable amount with its carrying amount, provision for impairment of assets shallbe recognized when the recoverable amount of assets is lower than its carrying amount.Once impairment loss is recognized, it cannot be reversed in subsequent accounting periods.
20. Long-term deferred expenses
The Group’s long-term deferred expenses are are recorded at the actual cost and evenlyamortized on straight-line basis over the expected beneficial period. For the long-termdeferred expense items that cannot benefit in the accounting period, their amortized value isrecognized through profit or loss.
21. Employee benefits
(1) Scope of employee benefits
Employee benefits refer to all forms of consideration and compensation given by the Group inexchange for service rendered by employees or the termination of employment. Employeebenefits include short term employee benefits, post-employment benefits, termination benefitsand other long-term employee benefits. Employee benefits include benefits provided toemployees’ spouses, children, other dependants, survivors of the deceased employees or toother beneficiariesAccording to liquidity, employment benefits are presented separately as “accrued payroll” and“long-term employment benefits payable” in the balance sheet.
(2) Short-term employee benefits
During the accounting period in which the employee render the related services, wages,bonuses,social security contributions(including medical insurance, injury insurance, maternityinsurance, etc.) and house funding are recognized as liability and recognized as current profitof loss or assets related costs. If the short-term employee benefits are expected to be settledwholly before twelve months after the end of the annual reporting period in which theemployees render the related service and have significant financial impact, the liability shallbe measured as the discounted amounts.
(3) Post-employment benefits
Post-employment benefit plan includes defined contribution plans and defined benefit plans.Defined contribution plans are post-employment benefit plans under which an enterprise paysfixed contributions into a separate fund and will have no future obligations to pay thecontributions. Defined benefit plans are post-employment benefit plans other than definedcontribution plans.Defined contribution plans include primary endowment insurance, unemployment insurance.The Company shall recognise, in the accounting period in which an employee providesservice, the contribution payable to a defined contribution plan as a liability, with acorresponding charge to the profit or loss for the current period or the cost of a relevant asset.
(4) Termination benefits
The Group recognises termination benefits liabilities and profit or loss in the period in theearlier date of the followings: (i) The Group cannot unilaterally withdraws the terminationplan or reduce the termination benefits under the proposal, or (ii) The Group recognises thepayment of the termination benefits costs and expenses.For the implementation of the internal retirement plan for employees, the economic
compensation before the official retirement date is a termination benefit. From the date whenthe employee stops providing the service to the normal retirement date, the wages of theinternally retired employees and the social insurance premiums to be paid are included in thecurrent period’s profit or loss. Economic compensation after the official retirement date (suchas normal pension) should be treated as post-employment benefits.
22. Provisions
An obligation for additional losses of investees related to a contingency is recognised as aprovision when all of the following conditions are satisfied:
(1) The obligation is a present obligation of the Group;
(2) It is probable that an outflow of economic benefits will be required to settle theobligation;
(3) The amount of the obligation can be measured reliably.
Provisions are initially measured at the best estimate of the payment to settle the associatedobligations and consider the relevant risk, uncertainty and time value of money. If the impactof time value of money is significant, the best estimate is determined as its present value offuture cash outflow. TheGroup reviews the carrying amount of provisions at the balance sheet date and adjusts thecarrying amount to reflect the best estimate.If the expenses for clearing of provisions is fully or partially compensated by a third party,and the compensated amount can be definitely received, it is recognised separated as asset.The compensated amount shall not be greater than the carrying amount of the predictiveliability.
23. Revenue
(1) General principle
①Sale of goods
Revenue is recognised when all the following conditions are satisfied: significant risks andrewards of ownership of goods have been transferred to the buyer; the Company retainsneither continuing managerial involvement to the degree usually associated with ownershipnor effective control over the goods sold; it is probable that the economic benefits will flow tothe Company; and the revenue and costs can be measured reliably.
②Rendering of services
Where the outcome of a transaction involving the rendering of services can be estimatedreliably, revenue is recognised by reference to the stage of completion.
The stage of completion is based on the proportion of costs incurred to date to the estimatedtotal costs.Rendering of services can be estimated reliably when all the following conditions are satisfied:
A. the revenue can be measured reliably; B. it is probable that the economic benefits will flowto the Company; C. the stage of completion can be measured reliably; D. the costs incurredand to be incurred in the transaction can be measured reliably.
③Royalties from intangible assets
Revenue is recognized when it is probable that the economic benefits will flow to the Group,and the revenue can be measured reliably.
(2) Specific revenue recognition
Specific revenue recognition for the Group is as follows:
For the sale of iron and steel products, the Group recognizes the sales revenue under thefollowing conditions: ① signed product sales contract with customers; ② products havebeen delivered; ③ payment for goods has been received or the right has been obtained; ④relevant costs incurred or to be incurred can be reliably measured.
24. Government grants
A government grant shall be recognised only when the enterprise can comply with theconditions attaching to the grant and the enterprise can receive the grant.If a government grant is in the form of a transfer of a monetary asset, the item is measured atthe amount received or receivable. If a government grant is in the form of a transfer of anon-monetary asset, the item is measured at fair value, when fair value is not reliablydeterminable, the item is measured at RMB 1 of nominal amount.Government grant related to assets represents the government grant received for acquisition,construction and other ways of form of long term assets. Except for these, all are governmentgrant related to income.Regarding to the government grant not clearly defined in the official documents and can formlong term assets, the part of government grant which can be referred to the value of the assetsis classified as government grant related to assets and the remaining part is government grantrelated to income. For the government grant that is difficult to distinguish, the entiregovernment grant is classified as government grant related to income.The government grant related to assets is recognized as deferred income and evenly amortisedto profit or loss over the useful life of the related asset. For a government grant related toincome, if the grant is a compensation for related expenses or losses already incurred, thegrant is recognized immediately in profit or loss for the current period; if the grant is acompensation for related expenses or losses to be incurred in subsequent periods, the grant isrecognized as deferred income, and then recognized in profit or loss over the periods in whichthe costs are recognized. Government grants measured at nominal amounts are directlyrecognized in through profit or loss. The Group adopts a consistent approach to the same orsimilar government grants’ operations.
The government grants related to daily activities are recognized as other income inaccordance with the substance of economic business. Government grants that are not relatedto daily activities are recognized as non-operating income and expenses.When recognized government grants need to be returned, the book value of the relevant assetsshould be adjusted if the assets’ book value is written off at the initial recognition.If there is abalance of related deferred income, the book value of deferred income should be offset firstand the excess is recognized in profit or loss for the current period. In other cases, it is directlyrecognized in profit or loss for the current period.
25. Deferred tax assets and deferred tax liabilities
Tax expense comprises current tax expense and deferred tax expense. Current tax anddeferred tax are included in profit or loss for the current period as tax expense, except fordeferred tax related to transactions or events that are directly recognised in shareholders’equity which are recognised directly in shareholders’ equity, and deferred tax arising from abusiness combination, which is adjusted against the carrying amount of goodwill.Temporary differences arising from the difference between the carrying amount of an asset orliability and its tax base are recognised as deferred tax using the balance sheet liabilitymethod.All the taxable temporary differences are recognised as deferred tax liabilities except for thoseincurred in the following transactions:
(1) The initial recognition of goodwill, and the initial recognition of an asset or liability in atransaction which is neither a business combination nor affects accounting profit or taxableprofit (or deductible loss) when the transaction occurs;
(2) The taxable temporary differences associated with investments in subsidiaries, associatesand joint ventures, and the Group is able to control the timing of the reversal of the temporarydifference and it is probable that the temporary difference will not reverse in the foreseeablefuture.The Group recognizes a deferred tax asset for the carry forward of deductible temporarydifferences, deductible losses and tax credits to subsequent periods, to the extent that it isprobable that future taxable profits will be available against which the deductible temporarydifferences, deductible losses and tax credits can be utilized, except for those incurred in thefollowing transactions:
(1) The transaction is neither a business combination nor affects accounting profit or taxableprofit (or deductible loss) when the transaction occurs;
(2) The deductible temporary differences associated with investments in subsidiaries,associates and joint ventures, the corresponding deferred tax asset is recognized when both ofthe following conditions are satisfied: it is probable that the temporary difference will reversein the foreseeable future, it is probable that taxable profits will be available in the future,against which the temporary difference can be utilized.At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at thetax rates that are expected to apply to the period when the asset is realized or the liability issettled, and their tax effect is reflected.
At the balance sheet date, the Group reviews the carrying amount of a deferred tax asset. If itis probable that sufficient taxable profits will not be available in future periods to allow thebenefit of the deferred tax asset to be utilized, the carrying amount of the deferred tax asset isreduced. Any such reduction in amount is reversed when it becomes probable that sufficienttaxable profits will be available.
26. Operating leases and finance leases
A finance lease is a lease that transfers in substance all the risks and rewards incidental toownership of an asset. An operating lease is a lease other than a finance lease.
(1) As lessor
In finance leases, at the beginning date of lease period, the Group will recognize the sum ofminimum lease collection and initial direct costs as the recorded value of finance leasesreceivable and meanwhile is recorded as unguaranteed residual value; the difference betweenthe sum of minimum lease collection, initial direct costs and unguaranteed residual value andtheir present value is recorded as unrecognized financing income. Unrecognized financingincome are measured at amortized cost using the effective interest method in the periods ofleasing and recognized in financing income for the current period.Lease from operating leases is recognized in profit or loss on a straight-line basis over thelease term. The initial direct costs incurred are recognized in profit or loss for the currentperiod.
(2) As lessee
In finance leases, at the beginning date of lease period, the Group will recognize the lower ofthe fair value of leased asset of the beginning date of lease period and the present value ofminimum lease payment as the recorded value of the leased asset, their difference is recordedas unrecognized financing charges. Initial direct costs are recognized in leased assets’ value.Unrecognized financing charges are measured at amortized cost using the effective interestmethod in the periods of leasing and recognized in financing charges for the current period.The Group depreciates the leased assets by adopting the depreciation policy consistent withself-owned fixed assets.Lease from operating leases is recognised in the cost of relevant assets or profit or loss on astraight-line basis over the lease term. The initial direct costs incurred are recognised in profitor loss for the current period.
27. Safety and maintenance costs
The Group is in accordance with the relevant provisions of CQ [2012] No. 16 documentissued by the Ministry of Finance, the National Development and Reform Commission, andthe State Administration of Work Safety. The actual operating income of metallurgicalenterprises in the above years shall be the basis for provision, and the method of excessretirement shall be adopted for provision.Production safety and maintance reserve sets aside in compliance with relevant regulations, isincluded in the cost of relevant products or recognized in profit or loss for the period, andcredited to the special reserve at the same time.
When safety production reserve is utilized xxx, if the costs incurred can be categorized asexpenditure, the costs incurred should be charged against the special reserve; if the reserve isused to build up fixed assets, the costs should be charged to construction in progress, andreclassified to fixed assets when the projects reach the status ready for intended use.Meanwhile, the cost of fixed asset is offset against the specific reserves and accumulateddepreciation of the same amount is recognised, then the fixed asset is no longer depreciated inits useful life.
28. Significant accounting estimates and judgments
The Group gives continuous assessment of the reasonable expectations of future events andthe critical accounting estimates and key assumptions based on its historical experience andother factors. The critical accounting estimates and key assumptions that are likely to lead tosignificant adjusted risks of the carrying amount of assets and liabilities for the next financialyear are listed as follows:
Classification of financial assetsThe Group’s major judgments in determining the classification of financial assets include theanalysis of business models and the characteristics of contract cash flows.At the level of financial asset group, the Group determines the business model for managingfinancial assets, taking into account factors such as the way to evaluate and report financialassets performance to key managers, the risks affecting financial assets performance and theirmanagement 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 basiclending arrangements, the Group has the following judgments: whether the principal’s timedistribution or amount may change during the lifetime for early repayment and other reasons;whether the interest only includes the time value of money, credit risk, other basic lendingrisks and the consideration of cost and profit. For example, does the amount of advancepayment only reflect the unpaid principal and interest based on the unpaid principal, andreasonable compensation paid for the early termination of the contract.Measurement of expected credit loss of receivablesThe Group calculates the expected credit losses of accounts receivable by default riskexposure and expected credit losses rate of accounts receivable, and determines the expectedcredit losses rate based on default probability and default loss rate. In determining theexpected credit losses rate, the Group uses internal historical credit loss and other data, andadjusts the historical data with current situation and forward-looking information. Inconsidering forward-looking information, the indicators used by the Group include the risksof economic downturn, external market environment, technological environment and changesin customer conditions. The Group regularly monitors and reviews assumptions related to thecalculation of expected credit losses.Deferred income tax assetsDeferred tax assets relating to certain temporary differences and tax losses are recognised asmanagement considers it is probable that future taxable profit will be available against whichthe temporary differences or tax losses can be utilised. The management needs significantjudgment to estimate the time and extent of the future taxable profits and tax planning
strategy to recognise the appropriate amount of deferred income tax assets.Determination of fair unlisted equity investment fair valueThe fair value of unlisted equity investment is the estimated future cash flow discounted bythe current discount rate of the project with similar terms and risk characteristics. Thevaluation requires the Group to estimate the expected future cash flow and discount rate andis therefore uncertain. Under limited circumstances, if the information used to determine thefair value is insufficient, or the possible estimates of the fair value are widely distributed, andthe cost represents the best estimate of the fair value within the range, the cost could representthe appropriate estimate of the fair value within the distribution range.
29. Changes in significant accounting policies and accounting estimates
(1) Changes in accounting policies
①New financial instrument standards
In 2017,the Ministry of Finance have issued “Accounting Standards for Business EnterprisesNo. 22 - Recognition and Measurement of Financial Instruments (Revised)”,“AccountingStandards for Business Enterprises No. 23 - Finance Asset Transfer (Revised)”, “AccountingStandards for Business Enterprises No.24 - Hedge Accounting(Revised)”, “AccountingStandards for Business Enterprises No.37 - Financial Instruments Presentation(Revised)”(hereinafter referred to as the “New Financial Instruments Standards”). The Grouphas implemented the Accounting Standards since January 1, 2019, and adjusted the relevantcontents of accounting policies. The modified accounting policy refers to Note III, 8.According to the new financial instruments standards, financial assets are classified into thefollowing three categories depends on the Group’s business mode of managing financialassets and cash flow characteristics of financial assets: financial assets measured at amortizedcost, financial assets at fair value through other comprehensive income and financial assets atfair value through profit or loss. If the main contract contained in the mixed contract belongsto financial assets, it should not be separated from the mixed contract and embedded inderivatives, but should be applied as a whole to the relevant provisions of the classification offinancial assets.The adoption of new financial instrument standards has no significant impact on theaccounting policy of the Group’s financial liabilities.On January 1, 2019, the Group did not designate any financial assets or liabilities as financialassets or liabilities measured at fair value through profits and losses, nor did it revoke itsprevious designation.The new financial instrument standard replaces the method of recognising impairmentprovision according to actual impairment loss stipulated in the original financial instrumentstandard with the method of “expected credit losses method”. The“expected credit lossesmethod” model requires continuous assessment of the credit risk of financial assets. Therefore,under the new financial instrument standard, the Group’s credit loss is recognised earlier thanthe original financial instrument standard.On the basis of expected credit losses, the Group performs impairment assessment on thefollowing items and confirms the loss provision:
? Financial assets measured at amortized cost;? Receivables and debt investments at fair value through other comprehensive income;In accordance with the provisions of the new financial instrument standard, except in certainspecific cases, the Group retrospectively adjusts the classification and measurement offinancial instruments (including impairment), and calculates the difference between originalbook value of financial instruments and new book value on the date of implementation of thenew financial instrument standard (i.e. January 1, 2019) into the retained earnings or othercomprehensive earnings at the beginning of 2019. At the same time, the Group did not adjustthe comparative financial statements data.
On January 1, 2019, the results of classification and measurement of financial assets inaccordance with the original financial instrument standards and the new financial instrumentstandards are as follows:
－119－The original financial instrument standards
| The original financial instrument standards | The new financial instrument standards | ||||
| Items | Categories | Book Value | Items | Categories | Book Value |
| Available-for-sale financial assets | Measured at fair value through other comprehensive income | 3,816,657,702.97 | Other equity instrument investments | Measured at fair value through other comprehensive income | 3,961,120,253.90 |
| Measured at cost (equity instrument) | 46,587,575.00 | ||||
| Notes receivable | Measured at amortized cost | 7,877,333,769.65 | Notes receivable | Measured at amortized cost | 6,279,791,225.65 |
| Financing receivable | Measured at fair value through other comprehensive income | 1,597,542,544.00 | |||
| Accounts receivable | Measured at amortized cost | 870,151,434.92 | Accounts receivable | Measured at amortized cost | 870,151,434.92 |
| Financing receivable | Measured at fair value through other comprehensive income | -- | |||
On January 1, 2019, the adjustment table of the financial instrument classification and bookvalue, at the implemention of the new financial instrument standards, were as follows:
－120－Items
| Items | Pre-adjustment book value (31 December, 2018) | Reclassifiation | Re-measurement | Adjusted book value (1 January, 2019) |
| Available-for-sale financial assets | 3,863,245,277.97 | -3,863,245,277.97 | -- | -- |
| Other equity instrument investments | -- | 3,863,245,277.97 | 97,874,975.93 | 3,961,120,253.90 |
| Deferred tax liabilities | 803,629,503.02 | -- | 14,681,246.39 | 818,310,749.41 |
| Other comprehensive income | 1,532,188,176.47 | -- | 83,193,729.54 | 1,615,381,906.01 |
The Group's reconciliation between the loss provisions measured in accordance with theoriginal financial instruments standards at the end of 2018 and the loss provisions determinedin accordance with the new financial instruments standards at the beginning of 2019 is asfollows:
| Metrology categories | Pre-adjustment book value (31 December, 2018) | Reclassifiation | Re-measurement | Adjusted book value (1 January, 2019) |
| Provision for impairment of notes receivable | 8,162,441.06 | -- | -- | 8,162,441.06 |
| Provision for impairment of accounts receivable | 62,690,155.86 | -- | -- | 62,690,155.86 |
| Provision for impairment of other receivables | 4,640,300.88 | -- | -- | 4,640,300.88 |
②New debt restructuring standards
On May 16, 2019, the Ministry of Finance have issued “Accounting Standards for BusinessEnterprises No. 12 – Debt restructuring” (hereinafter referred to as the “New DebtRestructuring Standards”), modified the definition of debt restructuring, definitely confirmedthe guidelines as “Accounting Standards for Business Enterprises No. 22 - Recognition andMeasurement of Financial Instruments”, etc are applicable to financial instruments involvedin debt restructuring; confirmed the assets other than the financial assets transferred by thecreditor are initially measured at cost; confirmed when the debtor pays off the debt with assets,the profit and loss of asset disposal and the profit and loss of debt restructuring are no longerdistinguished.According to the provisions of Caikuai [2019] No. 6 document issued by Ministry of Finance,"non operating income" and "non operating expenditure" items no longer include gains orlosses arising from the disposal of non-current assets in debt restructuring.The Group adopts the future applicable method for the new debt restructuring on January 1,2019, and would not retroactively adjust the debt restructuring before January 1, 2019.
③New non-monetary assets exchange standards
On May 9, 2019, the Ministry of Finance have issued “Accounting Standards for BusinessEnterprises No. 17 – Non-monetary assets exchange” (hereinafter referred to as the “NewNon-monetary assets exchange Standards”), defined the concept of monetary assets andnon-monetary assets, confirmed the scope of application of the standards, recognition time ofnon-monetary assets exchange, the measurement basis and accounting method of
non-monetary assets exchange under different conditions, and improve disclosurerequirements of relevant information. The Group adopts the future applicable method for thenon-monetary assets exchange from January 1, 2019, and would not retroactively adjust thenon-monetary assets exchange before January 1, 2019.
④Changes in Financial Statements Format
In April 2019, the Ministry of Finance (the MOF) have issued “According to the Circular ofthe Ministry of Finance on Revising and Issuing the Format of the Financial Statements ofGeneral Enterprises for 2019” (Caikuai [2019] No. 6). Meanwhile “According to the Circularof the Ministry of Finance on Revising and Issuing the Format of the Financial Statements ofGeneral Enterprises for 2018” (Caikuai [2018] No. 15) issued by MOF was abolished. InSeptember 2019, the MOFhave issued “According to the Circular of the Ministry of Financeon Revising and Issuing the Format of the Consolidated Financial Statements (the 2019edition)” (Caikuai [2019] No. 16), meanwhile “According to the Circular of the Ministry ofFinance on Revising and Issuing the Format of the Consolidated Financial Statements of 2018”(Caikuai [2019] No. 1) was abolished. According to Caikuai [2019] No. 6 and Caikuai [2019]No. 16, the Group revised the financial statement format as follows:
The Group divided notes and accounts receivable into notes receivable and accountsreceivable, and notes and accounts payables into notes payable and accounts payable in thebalance sheet.The Group dajust comparative data for comparable periods in accordance with Caikuai [2019]No.6The revision of the financial statement format has no impact on the Group’s total assets, totalliabilities, net profit, other comprehensive income, etc.The main impacts of retrospective adjustment caused by the above changes in accountingpolicy are as following:
(2) Changes in accounting estimates
The Group has no significant changes in accounting estimates this year.
(3) At the first implementation of the new financial instrument standards, the situation to adjustthe relevant items of the financial statements at the beginning of the first implementation year isas follow:
Consolidated Balance Sheet
－121－Item
| Item | 2018.12.31 | 2019.01.01 | Adjustments |
| Current Assets ： | |||
| Cash and bank balances | 4,841,058,243.20 | 4,841,058,243.20 | -- |
| Financial assets held for trading | -- | -- | -- |
| Financial assets at fair value through profit or loss | -- | -- | -- |
| Notes receivable | 7,877,333,769.65 | 6,279,791,225.65 | -1,597,542,544.00 |
| Accounts receivable | 870,151,434.92 | 870,151,434.92 | -- |
－122－Item
| Item | 2018.12.31 | 2019.01.01 | Adjustments |
| Financing receivable | -- | 1,597,542,544.00 | 1,597,542,544.00 |
| Prepayments | 2,532,274,356.71 | 2,532,274,356.71 | -- |
| Other receivables | 39,829,376.18 | 39,829,376.18 | -- |
| Including：Interest receivables | -- | -- | -- |
| Dividend receivables | -- | -- | -- |
| Inventories | 5,192,790,897.33 | 5,192,790,897.33 | -- |
| Assets classified as held for sale | -- | -- | -- |
| Non-current assets due within one year | -- | -- | -- |
| Other current assets | 589,119,538.20 | 589,119,538.20 | -- |
| Total current assets | 21,942,557,616.19 | 21,942,557,616.19 | -- |
| Non-current assets： | |||
| Debt investments | -- | -- | -- |
| Available-for-sale financial assets | 3,863,245,277.97 | -- | -3,863,245,277.97 |
| Other debt investmens | -- | -- | -- |
| Held-to-maturity investments | -- | -- | -- |
| Long-term receivables | -- | -- | -- |
| Long-term equity investments | 2,878,517,166.72 | 2,878,517,166.72 | -- |
| Other equity instruments investments | -- | 3,961,120,253.90 | 3,961,120,253.90 |
| Other non-current financial assets | -- | -- | -- |
| Investment properties | -- | -- | -- |
| Fixed assets | 81,726,018,549.33 | 81,726,018,549.33 | -- |
| Construction in progress | 22,037,846,981.69 | 22,037,846,981.69 | -- |
| Intangible assets | 2,581,451,681.00 | 2,581,451,681.00 | -- |
| Development expenditure | -- | -- | -- |
| Goodwill | -- | -- | -- |
| Long-term deferred expenses | -- | -- | -- |
| Deferred tax assets | 76,640,776.93 | 76,640,776.93 | -- |
| Other non-current assets | -- | -- | -- |
| Total non-current assets | 113,163,720,433.64 | 113,261,595,409.57 | 97,874,975.93 |
| Total assets | 135,106,278,049.83 | 135,204,153,025.76 | 97,874,975.93 |
| Current liabilities： | |||
| Short-term loans | 31,155,720,000.00 | 31,155,720,000.00 | -- |
| Financial liabilities held for trading | -- | -- | -- |
| Financial liabilities at fair value through profit or loss | -- | -- | -- |
| Notes payable | 5,285,571,700.58 | 5,285,571,700.58 | -- |
| Accounts payable | 23,684,774,325.63 | 23,684,774,325.63 | -- |
| Advances from customers | 2,392,478,818.81 | 2,392,478,818.81 | -- |
| Payroll and employee benefits payable | 319,572,506.94 | 319,572,506.94 | -- |
－123－Item
| Item | 2018.12.31 | 2019.01.01 | Adjustments |
| Taxes payable | 174,990,193.04 | 174,990,193.04 | -- |
| Other payables | 2,045,638,173.44 | 2,045,638,173.44 | -- |
| Including：Interest payables | 32,952,838.32 | 32,952,838.32 | -- |
| Dividend payables | -- | -- | -- |
| Liabilities classified as held for sale | -- | -- | -- |
| Non-current liabilities due within one year | 4,030,000,000.00 | 4,030,000,000.00 | -- |
| Other current liabilities | -- | -- | -- |
| Total current liabilities | 69,088,745,718.44 | 69,088,745,718.44 | -- |
| Non-current liabilities： | |||
| Long-term loans | 15,965,040,000.00 | 15,965,040,000.00 | -- |
| Bonds payable | 7,000,000,000.00 | 7,000,000,000.00 | -- |
| Long-term payables | 2,100,000.00 | 2,100,000.00 | -- |
| Long-term employee benefits payable | -- | -- | -- |
| Provision | -- | -- | -- |
| Deferred revenue | 285,274,558.77 | 285,274,558.77 | -- |
| Deferred tax liabilities | 803,629,503.02 | 818,310,749.41 | 14,681,246.39 |
| Other non-current liabilities | 5,588,813,436.69 | 5,588,813,436.69 | -- |
| Total non-current liabilities | 29,644,857,498.48 | 29,659,538,744.87 | 14,681,246.39 |
| Total liabilities | 98,733,603,216.92 | 98,748,284,463.31 | 14,681,246.39 |
| Shareholders’ equity： | |||
| Share capital | 5,289,389,600.00 | 5,289,389,600.00 | -- |
| Capital reserve | 20,091,435,081.71 | 20,091,435,081.71 | -- |
| Less：Treasury stock | -- | -- | -- |
| Other comprehensive income | 1,532,188,176.47 | 1,615,381,906.01 | 83,193,729.54 |
| Special reserve | 7,975,932.61 | 7,975,932.61 | -- |
| Surplus reserve | 1,687,827,448.18 | 1,687,827,448.18 | -- |
| Retained earnings | -3,260,964,367.74 | -3,260,964,367.74 | -- |
| Equity attributable to shareholders of the listed company | 25,347,851,871.23 | 25,431,045,600.77 | 83,193,729.54 |
| Non-controlling interests | 11,024,822,961.68 | 11,024,822,961.68 | -- |
| Total shareholders’ equity | 36,372,674,832.91 | 36,455,868,562.45 | 83,193,729.54 |
| Total liabilities and shareholders’ equity | 135,106,278,049.83 | 135,204,153,025.76 | 97,874,975.93 |
Balance sheet of parent company
| Item | 2018.12.31 | 2019.01.01 | Adjustments |
| Current Assets： | |||
| Cash and bank balances | 1,920,854,622.28 | 1,920,854,622.28 | -- |
| Financial assets held for trading | -- | -- | -- |
－124－Item
| Item | 2018.12.31 | 2019.01.01 | Adjustments |
| Financial assets at fair value through profit or loss | -- | -- | -- |
| Notes receivable | 3,990,860,314.45 | 3,163,003,492.36 | -827,856,822.09 |
| Accounts receivable | 1,468,436,202.70 | 1,516,916,922.55 | 48,480,719.85 |
| Financing receivable | -- | 827,856,822.09 | 827,856,822.09 |
| Prepayments | 183,530,920.91 | 183,530,920.91 | -- |
| Other receivables | 2,742,352.97 | 2,742,352.97 | -- |
| Including：Interest receivables | -- | -- | -- |
| Dividend receivables | -- | -- | -- |
| Inventories | 1,184,211,283.35 | 1,184,211,283.35 | -- |
| Assets classified as held for sale | -- | -- | -- |
| Non-current assets due within one year | -- | -- | -- |
| Other current assets | 1,935,827,685.08 | 1,935,827,685.08 | -- |
| Total current assets | 10,686,463,381.74 | 10,734,944,101.59 | 48,480,719.85 |
| Non-current assets： | |||
| Debt investments | -- | -- | -- |
| Available-for-sale financial assets | 3,863,245,277.97 | -- | -3,863,245,277.97 |
| Other debt investments | -- | -- | -- |
| Held-to-maturity investments | -- | -- | -- |
| Long-term receivables | -- | -- | -- |
| Long-term equity investments | 17,653,055,184.34 | 17,653,055,184.34 | -- |
| Other equity instruments investments | -- | 3,961,120,253.90 | 3,961,120,253.90 |
| Other non-current financial assets | -- | -- | -- |
| Investment properties | -- | -- | -- |
| Fixed assets | 22,689,417,371.01 | 22,689,417,371.01 | -- |
| Construction in progress | 2,971,961,902.17 | 2,971,961,902.17 | -- |
| Intangible assets | 907,077,997.65 | 907,077,997.65 | -- |
| Development expenditure | -- | -- | -- |
| Goodwill | -- | -- | -- |
| Long-term deferred expenses | -- | -- | -- |
| Deferred tax assets | 44,142,858.12 | 36,870,750.14 | -7,272,107.98 |
| Other non-current assets | 1,257,549,996.71 | 1,257,549,996.71 | -- |
| Total non-current assets | 49,386,450,587.97 | 49,477,053,455.92 | 90,602,867.95 |
| Total assets | 60,072,913,969.71 | 60,211,997,557.51 | 139,083,587.80 |
| Current liabilities： | |||
| Short-term loans | 7,361,920,000.00 | 7,361,920,000.00 | -- |
| Financial liabilities held for trading | -- | -- | -- |
| Financial liabilities at fair value through profit or loss | -- | -- | -- |
－125－Item
| Item | 2018.12.31 | 2019.01.01 | Adjustments |
| Notes payable | 2,453,871,700.58 | 2,453,871,700.58 | -- |
| Accounts payable | 12,063,348,369.96 | 12,063,348,369.96 | -- |
| Advances from customers | 578,561,185.84 | 578,561,185.84 | -- |
| Payroll and employee benefits payable | 94,927,349.85 | 94,927,349.85 | -- |
| Taxes payable | 63,257,633.61 | 63,257,633.61 | -- |
| Other payables | 1,187,135,220.72 | 1,187,135,220.72 | -- |
| Including：Interest payables | 26,911,171.68 | 26,911,171.68 | -- |
| Dividend payables | -- | -- | -- |
| Liabilities classified as held for sale | -- | -- | -- |
| Non-current liabilities due within one year | 850,000,000.00 | 850,000,000.00 | -- |
| Other current liabilities | -- | -- | -- |
| Total current liabilities | 24,653,021,460.56 | 24,653,021,460.56 | -- |
| Non-current liabilities： | |||
| Long-term loans | 1,406,000,000.00 | 1,406,000,000.00 | -- |
| Bonds payable | 7,000,000,000.00 | 7,000,000,000.00 | -- |
| Long-term payables | 2,100,000.00 | 2,100,000.00 | -- |
| Long-term employee benefits payable | -- | -- | -- |
| Provision | -- | -- | -- |
| Deferred revenue | 94,064,842.98 | 94,064,842.98 | -- |
| Deferred tax liabilities | 803,629,503.02 | 818,310,749.41 | 14,681,246.39 |
| Other non-current liabilities | -- | -- | -- |
| Total non-current liabilities | 9,305,794,346.00 | 9,320,475,592.39 | 14,681,246.39 |
| Total liabilities | 33,958,815,806.56 | 33,973,497,052.95 | 14,681,246.39 |
| 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 | -- |
| Less：Treasury stock | -- | -- | -- |
| Other comprehensive income | 1,532,188,176.47 | 1,615,381,906.01 | 83,193,729.54 |
| Special reserve | -- | -- | -- |
| Surplus reserve | 1,687,827,448.18 | 1,687,827,448.18 | -- |
| Retained earnings | 5,189,366,782.39 | 5,230,575,394.26 | 41,208,611.87 |
| Equity attributable to shareholders of the listed company | 26,114,098,163.15 | 26,238,500,504.56 | 124,402,341.41 |
| Non-controlling interests | -- | -- | -- |
| Total shareholders’ equity | 26,114,098,163.15 | 26,238,500,504.56 | 124,402,341.41 |
| Total liabilities and shareholders’ equity | 60,072,913,969.71 | 60,211,997,557.51 | 139,083,587.80 |
IV. Taxation
1. The major taxes and related tax rates:
－126－Type of taxes
| Type of taxes | Tax bases | 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 | Tax payable | 25 |
2. Tax incentives and approval documents
On July 19, 2018, the company obtained the high-tech enterprise certificate issued by BeijingMunicipal Science and Technology Commission, with the certificate number ofG201811000105 and the certificate is valid for three years.On July 19, 2018, Beijing Shougang Cold Rolling Co., Ltd., a subsidiary of the companyobtained the high-tech enterprise certificate issued by Beijing Municipal Science andTechnology Commission, with the certificate number of G201811000419 and the certificate isvalid for three years.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 andTechnology Commission with the certificate number of GR201813001783 and the certificateis valid for three years.On October 30, 2019, Shougang Zhixin Qian'an Electromagnetic Materials Co., Ltd., asubsidiary of the company, obtained the high-tech enterprise certificate issued by HebeiScience and Technology Commission with the certificate number of GR201913001665 andthe certificate is valid for three years.In accordance to relevant provisions, above company could enjoy a preferential income taxrate at 15% in 2019.
V. Major notes to consolidated financial statements
1. Cash and bank balances
－127－
Items
| Items | 2019.12.31 | 2018.12.31 | ||||
| Foreign Currency Amount | Exchange rate | RMB equivalent | Foreign Currency Amount | Exchange rate | RMB equivalent | |
| Cash on hand： | -- | -- | 22,914.63 | -- | -- | 40,170.81 |
| Bank balances： | -- | -- | 3,917,946,453.55 | -- | -- | 3,969,678,365.37 |
| Among bank balances： Mandatory reserves of Financial companies Deposited | -- | -- | 3,903,955,073.90 | -- | -- | 3,960,843,387.29 |
| Other monetary assets： | -- | -- | 554,348,222.57 | -- | -- | 871,339,707.02 |
| Among other monetary assets: Mandatory reserves of Financial companies Deposited | -- | -- | 546,651,134.84 | -- | -- | 854,774,205.57 |
| Total | -- | -- | 4,472,317,590.75 | -- | -- | 4,841,058,243.20 |
At the end of year 2019, except for RMB 554,348 thousand of deposits, the Group has nobalance of cash or other monetary funds that are restricted because being pledged as security,guaranteed or blocked frozen or overseas balances that have restriction on remittance back tothe home country.
2. Notes receivable
| Items | 2019.12.31 | ||
| Book Value | Bad debt provision | Net carrying amount | |
| Bank acceptance notes | 9,904,600.00 | 9,904.60 | 9,894,695.40 |
| Commercial acceptance notes | 5,254,766,593.45 | 5,254,366.60 | 5,249,512,226.85 |
| Total | 5,264,671,193.45 | 5,264,271.20 | 5,259,406,922.25 |
| Items | 2018.12.31 | ||
| Book Value | Bad debt provision | Net carrying amount | |
| Bank acceptance notes | 1,711,067,728.95 | 5,662,441.06 | 1,705,405,287.89 |
| Commercial acceptance notes | 6,174,428,481.76 | 2,500,000.00 | 6,171,928,481.76 |
| Total | 7,885,496,210.71 | 8,162,441.06 | 7,877,333,769.65 |
(1) The pledged notes receivable of the Group at the end of the year
－128－Items
| Items | Pledged amount at the end of the year |
| Bank acceptance notes | -- |
| Commercial acceptance notes | 1,500,000.00 |
| Total | 1,500,000.00 |
(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 acceptance notes | -- | 9,904,600.00 |
| Commercial acceptance notes | -- | 4,977,496,290.56 |
| Total | -- | 4,987,400,890.56 |
(3) Notes transferred to accounts receivable due to non-performance of the issuers at the end ofthe year
| Items | Amount transferred to accounts receivable at the end of the year | |
| Bank acceptance notes | 1,000,000.00 | |
| Commercial acceptance notes | 800,000.00 | |
| Total | 1,800,000.00 | |
(4) Classified by bad debt provision method
| Category | 2019.12.31 | ||||
| Book value | Bad debt provision | Net carrying amount | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 5,264,671,193.45 | 100.00 | 5,264,271.20 | 0.10 | 5,259,406,922.25 |
| Group 1 | -- | -- | -- | -- | -- |
| Group 2 | 5,264,671,193.45 | 100.00 | 5,264,271.20 | 0.10 | 5,259,406,922.25 |
| Total | 5,264,671,193.45 | 100.00 | 5,264,271.20 | 0.10 | 5,259,406,922.25 |
－129－Category
| Category | 2019.01.01 | ||||
| Book value | Bad debt provision | Net carrying amount | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | 1,600,000.00 | 0.03 | 1,600,000.00 | 100.00 | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 6,286,077,302.95 | 99.97 | 6,286,077.30 | 0.10 | 6,279,791,225.65 |
| Group 1 | -- | -- | -- | -- | -- |
| Group 2 | 6,286,077,302.95 | 99.97 | 6,286,077.30 | 0.10 | 6,279,791,225.65 |
| Total | 6,287,677,302.95 | 100.00 | 7,886,077.30 | 0.13 | 6,279,791,225.65 |
(5) Provision, recovery or reversal of bad debt
| Items | Bad debt provision |
| As at 31 December 2018 | 8,162,441.06 |
| Adjustment amount for the first implementation of the new financial instrument standards | -276,363.76 |
| As at 1 January 2019 | 7,886,077.30 |
| Provision | -- |
| Recovery or reversal | 2,621,806.10 |
| Written-off | -- |
| As at 31 December 2019 | 5,264,271.20 |
3. Accounts receivable
(1) Disclosed by the ageing of accounts receivable
| Ageing | 2019.12.31 |
| Within 1 year | 858,161,740.21 |
| 1 – 2 years | 9,591,493.60 |
| 2 – 3 years | 200,000.00 |
| Over 3 years | 7,401,011.82 |
| Subtotal | 875,354,245.63 |
| Less: provision for bad debts | 38,778,179.50 |
| Total | 836,576,066.13 |
(2) Disclosed by bad debt provision
－130－Category
| Category | 2019.12.31 | ||||
| Book value | Bad debt provision | Net carrying amount | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | 8,401,011.82 | 0.96 | 8,401,011.82 | 100.00 | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 866,953,233.81 | 99.04 | 30,377,167.68 | 3.50 | 836,576,066.13 |
| Total | 875,354,245.63 | 100.00 | 38,778,179.50 | 4.43 | 836,576,066.13 |
Disclosed by bad debt provision (continued)：
| Category | 2019.01.01 | ||||
| Book value | Bad debt provision | Net carrying amount | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | 14,651,011.82 | 1.57 | 14,651,011.82 | 100.00 | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 918,190,578.96 | 98.43 | 48,039,144.04 | 5.23 | 870,151,434.92 |
| Total | 932,841,590.78 | 100.00 | 62,690,155.86 | 6.72 | 870,151,434.92 |
Assessed bad debt provision individually:
| Accounts receivable (by debtor) | 2019.12.31 | |||
| Book Value | 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 |
| Overdue recourse notes | 1,000,000.00 | 1,000,000.00 | 100.00 | Overdue recourse notes |
| Total | 8,401,011.82 | 8,401,011.82 | 100.00 | |
Assessed bad debt provision in portfolios：
| Items | 2019.12.31 | ||
| Book Value | Bad debt provision | Expected credit loss (%) | |
| Within 1 year | 857,161,740.21 | 27,708,147.88 | 3.23 |
| 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 | 866,953,233.81 | 30,377,167.68 | 3.50 |
Provision for bad debts on December 31, 2018:
－131－
Category
| Category | 2018.12.31 | ||||
| Amount | Proportion (%) | Bad debt provision | Provision proportion (%) | Net amount | |
| Individually significant and assessed for bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on ageing | 918,190,578.96 | 98.43 | 48,039,144.04 | 5.23 | 870,151,434.92 |
| Individually insignificant but assessed for bad debt provision individually | 14,651,011.82 | 1.57 | 14,651,011.82 | 100.00 | -- |
| Total | 932,841,590.78 | 100.00 | 62,690,155.86 | 6.72 | 870,151,434.92 |
(3) Provision, recovery or reversal of bad debt
| Items | Bad debt provision |
| As at 31 December 2018 | 62,690,155.86 |
| Adjustment amount for the first implementation of the new financial instrument standards | -- |
| As at 1 January 2019 | 62,690,155.86 |
| Provision | -- |
| Recovery or reversal | 23,911,976.36 |
| Written-off | -- |
| As at 31 December 2019 | 38,778,179.50 |
(4) During the year, there was no accounts receivable write-off.
(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 theend of the period is RMB 540,060 thousand, accounting for 61.70% of the total amount ofaccounts receivable at the end of the period, and the total amount of the corresponding baddebt provision at the end of the period is RMB 18,959 thousand.
| Company Name | Ending balance | Percentage of total accounts receivable % | Ending balance of bad debt provision |
| Beijing Shougang Steel Trade Investment Management Co., Ltd. | 188,572,372.49 | 21.54 | 6,095,688.76 |
| Shougang Casey Steel Co., Ltd. | 159,556,205.55 | 18.23 | 5,157,727.80 |
| Qian'an Shoujia Construction Material Co., Ltd. | 74,221,373.06 | 8.48 | 3,901,373.14 |
| Hebei Shoulang New Energy Technology Co., Ltd. | 68,164,731.53 | 7.79 | 2,203,456.33 |
| Ningbo Cimc Logistics Equipment Co., Ltd. | 49,545,667.98 | 5.66 | 1,601,586.53 |
| Total | 540,060,350.61 | 61.70 | 18,959,832.56 |
4. Financing receivable
－132－Items
| Items | 2019.12.31 | 2018.12.31 |
| Notes receivable | 3,666,611,715.48 | -- |
| Accounts receivable | -- | -- |
| Subtotal | 3,666,611,715.48 | -- |
| Less：Other comprehensive income - fair value change | -- | -- |
| Ending balance of fair value | 3,666,611,715.48 | -- |
The Group discounts and endorses most bank acceptance notes in accordance with daily fundmanagement. Therefore the bank acceptance notes are classified as financial assets at fairvalue through other comprehensive income.
(1) Classified by bad debt provision method
| Category | 2019.12.31 | ||||
| Book value | Bad debt provision | Net carrying amount | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 3,667,345,184.51 | 100.00 | 733,469.03 | 0.02 | 3,666,611,715.48 |
| Group 1 | 3,667,345,184.51 | 100.00 | 733,469.03 | 0.02 | 3,666,611,715.48 |
| Group 2 | -- | -- | -- | -- | -- |
| Total | 3,667,345,184.51 | 100.00 | 733,469.03 | 0.02 | 3,666,611,715.48 |
| Category | 2019.01.01 | ||||
| Book value | Bad debt provision | Net carrying amount | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 1,597,818,907.76 | 100.00 | 276,363.76 | 0.02 | 1,597,542,544.00 |
| Group 1 | 1,597,818,907.76 | 100.00 | 276,363.76 | 0.02 | 1,597,542,544.00 |
| Group 2 | -- | -- | -- | -- | -- |
| Total | 1,597,818,907.76 | 100.00 | 276,363.76 | 0.02 | 1,597,542,544.00 |
(2) The pledged notes receivable of the Group at the end of the year
－133－Items
| Items | Pledged amount at the end of the year |
| Bank acceptance notes | 490,571,160.50 |
| Commercial acceptance notes | -- |
| Total | 490,571,160.50 |
(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 | 15,845,754,671.73 | -- |
| Commercial acceptance notes | -- | -- |
| Total | 15,845,754,671.73 | -- |
(4) Provision, recovery or reversal of bad debt
| Items | Bad debt provision |
| As at 31 December 2018 | -- |
| Adjustment amount for the first implementation of the new financial instrument standards | 276,363.76 |
| As at 1 January 2019 | 276,363.76 |
| Provision | 457,105.27 |
| Recovery or reversal | -- |
| Written-off | -- |
| As at 31 December 2019 | 733,469.03 |
5. Prepayments
(1) Disclosed by the ageing of prepayments
| Ageing | 2019.12.31 | 2018.12.31 | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1 year | 1,861,327,375.78 | 98.33 | 2,473,862,935.64 | 97.69 |
| 1 – 2 years | 11,535,996.45 | 0.61 | 53,719,899.55 | 2.12 |
| 2 – 3 years | 17,996,199.23 | 0.95 | 2,931,991.62 | 0.12 |
| Over 3 years | 2,017,781.13 | 0.11 | 1,759,529.90 | 0.07 |
| Total | 1,892,877,352.59 | 100.00 | 2,532,274,356.71 | 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 endof the period is RMB 1,678,038 thousand, accounting for 88.65% of the total amount ofprepayments at the end of the period.
－134－
Company Name
| Company Name | Ending balance | Percentage of total prepayments % |
| Shougang Group | 1,333,506,134.45 | 70.45 |
| Tangshan Caofeidian Ganglian Logistics Service Co.,Ltd | 227,920,048.24 | 12.04 |
| Tianjin Jintie Xincheng Freight Forwarding Co., Ltd | 46,677,365.98 | 2.47 |
| Tangshan Freight Center of China Railway Beijing Bureau Group Co., Ltd | 42,230,150.70 | 2.23 |
| Hangzhou Steam Turbine Co., Ltd. | 27,704,464.56 | 1.46 |
| Total | 1,678,038,163.93 | 88.65 |
6. Other receivables
| Items | 2019.12.31 | 2018.12.31 |
| Interest receivable | -- | -- |
| Dividends receivable | -- | -- |
| Other receivables | 15,541,219.96 | 39,829,376.18 |
| Total | 15,541,219.96 | 39,829,376.18 |
Other receivables
①Disclosed by the ageing of other receivables
| Ageing | 2019.12.31 |
| Within 1 year | 14,274,719.74 |
| 1 – 2 years | 1,505,248.46 |
| 2 – 3 years | 657,701.80 |
| 3 – 4 years | 2,308,169.60 |
| 4 – 5 years | 1,400.00 |
| Over 5 years | 1,272,979.79 |
| Subtotal | 20,020,219.39 |
| Less: provision for bad debts | 4,478,999.43 |
| Total | 15,541,219.96 |
②Disclosed by nature of other receivables
－135－
Items
| Items | 2019.12.31 | 2018.12.31 | ||||
| Ending balance | Provision for bad debts | Carrying amount | Ending balance | Provision for bad debts | Carrying amount | |
| Imprest | 11,089,458.13 | 1,795,312.52 | 9,294,145.61 | 10,594,163.27 | 1,830,697.30 | 8,763,465.97 |
| Deposits | 201,900.00 | 10,284.00 | 191,616.00 | 203,020.00 | 10,253.00 | 192,767.00 |
| Due from trading companies | 6,423,811.66 | 368,353.31 | 6,055,458.35 | 3,964,634.79 | 211,410.82 | 3,753,223.97 |
| Court debit | 2,305,049.60 | 2,305,049.60 | -- | 29,707,859.00 | 2,587,939.76 | 27,119,919.24 |
| Total | 20,020,219.39 | 4,478,999.43 | 15,541,219.96 | 44,469,677.06 | 4,640,300.88 | 39,829,376.18 |
③Provision for bad debts
As at 31/12/2019, Phase I bad debts provision:
| Category | Book value | Expected credit loss within 12 months (%) | Provision for bad debts | Carrying amount | Reason for bad debts |
| Assessed bad debt provision individually | -- | -- | -- | -- | |
| Assessed bad debt provision in portfolios | 14,274,719.74 | 5.00 | 713,735.99 | 13,560,983.75 | |
| Imprest and Deposits | 9,252,909.43 | 5.00 | 462,645.48 | 8,790,263.95 | |
| Due from trading companies | 5,021,810.31 | 5.00 | 251,090.51 | 4,770,719.80 | |
| Total | 14,274,719.74 | 5.00 | 713,735.99 | 13,560,983.75 |
As at 31/12/2019, Phase II bad debts provision:
| Category | Book value | Expected credit loss within the lifetime (%) | Provision for bad debts | Carrying amount | Reason for bad debts |
| Assessed bad debt provision individually | |||||
| Assessed bad debt provision in portfolios | 2,167,470.26 | 8.64 | 187,234.05 | 1,980,236.21 | |
| Imprest and Deposits | 765,468.91 | 9.14 | 69,971.25 | 695,497.66 | |
| Due from trading companies | 1,402,001.35 | 8.36 | 117,262.80 | 1,284,738.55 | |
| Total | 2,167,470.26 | 8.64 | 187,234.05 | 1,980,236.21 |
As at 31/12/2019，Phase III bad debts provision:
－136－Category
| Category | Book value | Expected credit loss over the lifetime (%) | Provision for bad debts | Carrying amount | Reason for bad debts |
| Assessed bad debt provision individually | 3,578,029.39 | 100.00 | 3,578,029.39 | -- | |
| Court debit ofthe People's Court of Muye District, Xinxiang City, Henan Province | 2,305,049.60 | 100.00 | 2,305,049.60 | -- | Litigation matter, not expected to be recovered |
| Imprest over 5 years | 1,272,979.79 | 100.00 | 1,272,979.79 | -- | Long ageing |
| Total | 3,578,029.39 | 100.00 | 3,578,029.39 | -- |
Provision for bad debts on 31 December 2018：
| Category | 2018.12.31 | ||||
| Amount | Proportion (%) | Bad debt provision | Provision proportion (%) | Net amount | |
| Individually significant and assessed for bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on ageing | 43,260,904.27 | 97.28 | 3,431,528.09 | 7.93 | 39,829,376.18 |
| Individually insignificant but assessed for bad debt provision individually | 1,208,772.79 | 2.72 | 1,208,772.79 | 100.00 | -- |
| Total | 44,469,677.06 | 100.00 | 4,640,300.88 | 10.43 | 39,829,376.18 |
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 2018 | 509,274.99 | 2,922,253.10 | 1,208,772.79 | 4,640,300.88 |
| Adjustment amount for the first implementation of the new financial instrument standards | -- | -- | -- | -- |
| As at 1 January 2019 | 509,274.99 | 2,922,253.10 | 1,208,772.79 | 4,640,300.88 |
| Changes during the year | -- | -- | -- | -- |
| --Shift to Phase II | -- | -- | -- | -- |
| --Shift to Phase III | -- | -2,305,049.60 | 2,305,049.60 | -- |
| --Back to Phase II | -- | -- | -- | -- |
| --Back to Phase I | -- | -- | -- | -- |
| Provision | 204,461.00 | -- | 64,207.00 | 268,668.00 |
－137－Provision for bad debts
| Provision for bad debts | Phase I | Phase II | Phase III | Total |
| Reversal | -- | 429,969.45 | -- | 429,969.45 |
| Converse | -- | -- | -- | -- |
| Written-off | -- | -- | -- | -- |
| Other movements | -- | -- | -- | -- |
| As at 31 December 2019 | 713,735.99 | 187,234.05 | 3,578,029.39 | 4,478,999.43 |
⑤During the current period, there was no write-off of provision for bad debts
⑥The top five other receivables classified by debtors are as follows:
| Company Name | Nature of payment | Ending balance | Ageing | Percentage of total other receivable (%) | Ending balance of bad debt provision |
| Imprest | Imprest | 11,089,458.13 | 1-5 years | 55.39 | 1,795,312.52 |
| People's Court of Muye District, Xinxiang City, Henan Province | Court debit | 2,305,049.60 | 3-4 years | 11.51 | 2,305,049.60 |
| Beijing Shoubao Nuclear Equipment Technology Co., Ltd., Tangshan Caofeidian Branch | Others | 1,451,396.15 | Within 1 year | 7.25 | 72,569.81 |
| Tangshan Tangcao Railway Co., Ltd. | Due from trading companies | 1,258,409.49 | 1-4 years | 6.29 | 89,822.35 |
| Qian’an Longzegu International Winery Co., Ltd. | Due from trading companies | 556,185.00 | 1-2 years | 2.78 | 44,494.80 |
| Total | 16,660,498.37 | 83.22 | 4,307,249.08 |
7. Inventories
(1) Classification of inventories
| Items | 2019.12.31 | 2018.12.31 | ||||
| Book value | Provision for impairment | Carrying amount | Book value | Provision for impairment | Carrying amount | |
| Raw materials | 2,327,795,697.28 | 59,379,927.89 | 2,268,415,769.39 | 1,885,212,913.62 | 66,894,070.29 | 1,818,318,843.33 |
| Finished goods | 903,091,467.87 | 19,597,406.71 | 883,494,061.16 | 1,810,387,585.98 | 77,563,735.68 | 1,732,823,850.30 |
| Consumables | 685,164,676.33 | -- | 685,164,676.33 | 514,236,303.21 | -- | 514,236,303.21 |
| Self-made semi-finished goods | 2,756,791,138.59 | -- | 2,756,791,138.59 | 1,127,411,900.49 | -- | 1,127,411,900.49 |
| Total | 6,672,842,980.07 | 78,977,334.60 | 6,593,865,645.47 | 5,337,248,703.30 | 144,457,805.97 | 5,192,790,897.33 |
(2) Provision for impairment
| Items | 2019.01.01 | Increase during the period | Written back during the period | 2019.12.31 |
－138－Provision
| Provision | Others | Reversal or Write-off | Others | |||
| Raw materials | 66,894,070.29 | -- | -- | 7,514,142.40 | -- | 59,379,927.89 |
| Finished goods | 77,563,735.68 | 98,182,828.73 | -- | 156,149,157.70 | -- | 19,597,406.71 |
| Total | 144,457,805.97 | 98,182,828.73 | -- | 163,663,300.10 | -- | 78,977,334.60 |
Note：
①Net realizable value of inventories is the estimated selling price under normal businessterms deducted by the estimated costs to completion, the estimated selling expenses andrelated taxes.
②Due to the recovery of realizable value and the cost of product sales transferred into profitand loss, the reversal or write-off of impairment provision was recognized during this year.
8. Other current assets
| Items | 2019.12.31 | 2018.12.31 |
| Deductible value added tax | -- | 200,787,539.13 |
| Value added tax to be certified | 5,715.70 | 1,651,607.76 |
| Input value added tax | 75,561,702.46 | 134,297,800.88 |
| Entrusted Loans | 229,012,500.00 | 164,252,500.00 |
| Prepaid income tax | 34,485,549.86 | 88,130,090.43 |
| Total | 339,065,468.02 | 589,119,538.20 |
9. Available-for-sale financial assets
| Items | 2019.12.31 | 2018.12.31 | ||||
| Ending balance | Provision for impairment | Carrying amount | Ending balance | Provision for impairment | Carrying amount | |
| Available-for-sale debt instruments | —— | —— | —— | -- | -- | -- |
| Available-for-sale equity instruments | —— | —— | —— | 3,863,245,277.97 | -- | 3,863,245,277.97 |
| Including: based on fair value | —— | —— | —— | 3,816,657,702.97 | -- | 3,816,657,702.97 |
| Based on cost | —— | —— | —— | 46,587,575.00 | -- | 46,587,575.00 |
| Others | —— | —— | —— | -- | -- | -- |
| Total | —— | —— | —— | 3,863,245,277.97 | -- | 3,863,245,277.97 |
10. Long-term equity investments
－139－
Company Nmae
| Company Nmae | 2019.01.01 | Movements during the year | 2019.12.31 | 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. | 26,452,308.58 | -- | -- | 2,263,407.67 | -- | -- | -- | -- | -- | 28,715,716.25 | -- |
| Tangshan Zhonghong Carbon Chemical Co., Ltd. | 148,222,390.64 | -- | -- | -28,834,281.83 | -- | -- | -- | -- | -- | 119,388,108.81 | -- |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | 1,047,597,699.54 | -- | -- | 35,904,070.36 | -- | 3,678,946.88 | 20,000,000.00 | -- | -- | 1,067,180,716.78 | -- |
| Subtotal | 1,222,272,398.76 | -- | -- | 9,333,196.20 | -- | 3,678,946.88 | 20,000,000.00 | -- | -- | 1,215,284,541.84 | -- |
| ②Associates | |||||||||||
| Tangshan Tangcao Railway Co., Ltd. | 450,000,000.00 | -- | -- | -- | -- | -- | -- | -- | -- | 450,000,000.00 | -- |
| Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | 75,614,957.05 | -- | -- | 7,166,357.46 | -- | -- | 5,000,000.00 | -- | -- | 77,781,314.51 | -- |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | 921,574,612.71 | -- | -- | 69,569,180.47 | -- | -- | -- | -- | -- | 991,143,793.18 | -- |
| Beijing Shouxin Jinyuan Management Consulting Center (Limited Partnership) | 200,014,690.64 | -- | -- | 3,811,903.69 | -- | -- | -- | -- | -- | 203,826,594.33 | -- |
| Beijing Dingshengcheng Packaging Material Co., Ltd. | 9,040,507.56 | -- | -- | 1,439,780.30 | -- | -- | -- | -- | -- | 10,480,287.86 | -- |
| Subtotal | 1,656,244,767.96 | -- | -- | 81,987,221.92 | -- | -- | 5,000,000.00 | -- | -- | 1,733,231,989.88 | -- |
| Total | 2,878,517,166.72 | -- | -- | 91,320,418.12 | -- | 3,678,946.88 | 25,000,000.00 | -- | -- | 2,948,516,531.72 | -- |
11. Other equity instrument investments
| Items | 2019.12.31 | 2018.12.31 |
| BAIC Motor Corporation., Ltd | 4,197,294,724.56 | —— |
| Beijing TIEKE Shougang RAILWAY-TECH Co., Ltd. | 104,600,000.00 | —— |
| Minmetals Special Steel (Dongguan) Co., Ltd. | 3,603,144.85 | —— |
| Qian'an Shoujia Construction Material Co., Ltd. | 36,270,355.98 | —— |
| Qian'an China Petroleum Kunlun Gas Co., Ltd | 9,882,348.98 | —— |
| Minmetals Tianwei Steel Co., Ltd. | 5,867,352.97 | —— |
| Total | 4,357,517,927.34 | —— |
As other equity instruments are planned long-term holdings for strategic purposes, thus theGroup specify them as financial assets measured at fair value through other comprehensiveincome.
| Items | Dividend recognized in the year | Accumulated gain | Accumulated loss | Other comprehensive income transferred to retained earnings | Reasons |
| BAIC Motor Corporation., Ltd. | 195,462,254.33 | 2,183,211,346.85 | -- | -- | |
| Beijing TIEKE Shougang RAILWAY-TECH Co., Ltd. | 4,893,576.00 | 94,898,800.00 | -- | -- | |
| Minmetals Special Steel (Dongguan) Co., Ltd. | -- | -1,396,855.15 | -- | -- | |
| Qian'an Shoujia Construction Material Co., Ltd. | 300,000.00 | 13,403,980.98 | -- | -- | |
| Qian'an China Petroleum Kunlun Gas Co., Ltd. | 1,377,954.27 | 8,082,348.98 | -- | -- | |
| Minmetals Tianwei Steel Co., Ltd. | -- | -1,352,647.03 | -- | -- | |
| Total | 202,033,784.60 | 2,296,846,974.63 | -- | -- |
12. Fixed assets
| Items | 2019.12.31 | 2018.12.31 |
| Fixed assets | 82,861,544,532.17 | 81,726,018,549.33 |
| Fixed assets to be disposed | -- | -- |
| Total | 82,861,544,532.17 | 81,726,018,549.33 |
Fixed assets
①Analysis 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 2018 | 26,554,935,187.55 | 18,424,336,798.90 | 924,592,916.80 | 4,212,793,448.56 | 872,434,179.59 | 73,520,186,211.39 | 387,779,749.52 | 124,897,058,492.31 |
| 2.Increase in the year | 2,720,470,699.27 | 5,603,250,537.45 | 900,438,246.40 | 1,594,604,662.06 | -392,976,771.86 | -3,328,349,651.79 | -99,692,361.28 | 6,997,745,360.25 |
| (1) Purchase | 527,086.63 | 27,496,237.86 | 36,014.00 | 7,310,262.65 | -- | -- | 5,756,448.49 | 41,126,049.63 |
| (2) Transferred from construction in progress | 2,359,859,113.44 | 976,704,753.52 | 28,626,914.52 | 476,359,263.25 | -- | 3,041,070,129.58 | 73,999,136.31 | 6,956,619,310.62 |
| (3) Other increase | 360,084,499.20 | 4,599,049,546.07 | 871,775,317.88 | 1,110,935,136.16 | -392,976,771.86 | -6,369,419,781.37 | -179,447,946.08 | -- |
| 3.Written back during the year | 4,684,165.05 | 12,764,705.54 | 20,413,905.98 | 2,318,102.81 | -- | 7,754,462.14 | 1,333,747.15 | 49,269,088.67 |
| Disposal or retirement | 4,684,165.05 | 12,764,705.54 | 20,413,905.98 | 2,318,102.81 | -- | 7,754,462.14 | 1,333,747.15 | 49,269,088.67 |
| 4. At 31 December 2019 | 29,270,721,721.77 | 24,014,822,630.81 | 1,804,617,257.22 | 5,805,080,007.81 | 479,457,407.73 | 70,184,082,097.46 | 286,753,641.09 | 131,845,534,763.89 |
| Accumulated depreciation: | ||||||||
| 1. At 31 December 2018 | 7,097,085,778.44 | 6,797,117,902.65 | 482,408,360.97 | 1,932,900,813.08 | 458,171,546.78 | 26,329,264,705.18 | 74,090,835.88 | 43,171,039,942.98 |
| 2.Increase in the year | 310,331,678.20 | 3,500,228,544.55 | 855,988,149.92 | 1,156,050,356.32 | -148,477,221.41 | 158,642,779.54 | 18,429,209.06 | 5,851,193,496.18 |
| (1) Depreciation | 809,050,311.28 | 962,403,982.08 | 75,449,357.00 | 408,969,607.77 | 34,037,240.07 | 3,541,922,082.35 | 19,360,915.63 | 5,851,193,496.18 |
| (2) Other increase | -498,718,633.08 | 2,537,824,562.47 | 780,538,792.92 | 747,080,748.55 | -182,514,461.48 | -3,383,279,302.81 | -931,706.57 | -- |
| 3.Written back during the year | 1,789,772.22 | 10,780,400.71 | 17,863,792.01 | 2,257,419.05 | -- | 5,358,863.79 | 192,959.66 | 38,243,207.44 |
| Disposal or retirement | 1,789,772.22 | 10,780,400.71 | 17,863,792.01 | 2,257,419.05 | -- | 5,358,863.79 | 192,959.66 | 38,243,207.44 |
| 4.At 31 December 2019 | 7,405,627,684.42 | 10,286,566,046.49 | 1,320,532,718.88 | 3,086,693,750.35 | 309,694,325.37 | 26,482,548,620.93 | 92,327,085.28 | 48,983,990,231.72 |
| Impaiment | ||||||||
| 1.At 31 December 2018 | -- | -- | -- | -- | -- | -- | -- | -- |
| 2.Increase in the year | -- | -- | -- | -- | -- | -- | -- | -- |
| 3.Written back during the year | -- | -- | -- | -- | -- | -- | -- | -- |
| 4.At 31 December 2019 | -- | -- | -- | -- | -- | -- | -- | -- |
| Net carrying amount | ||||||||
| 1.At the ending of the year | 21,865,094,037.35 | 13,728,256,584.32 | 484,084,538.34 | 2,718,386,257.46 | 169,763,082.36 | 43,701,533,476.53 | 194,426,555.81 | 82,861,544,532.17 |
| 2.At the beginning of the year | 19,457,849,409.11 | 11,627,218,896.25 | 442,184,555.83 | 2,279,892,635.48 | 414,262,632.81 | 47,190,921,506.21 | 313,688,913.64 | 81,726,018,549.33 |
②As of 31 December 2019, there were no temporarily idle fixed assets.
③As of 31 December 2019, there were no fixed assets acquired under finance leases.
④As of 31 December 2019, there were no fixed assets leased out under operating leases.
⑤Fixed assets pending certificates of ownership
| Items | Net carrying amount | Reasons for pending certificates |
| Building of Beijing Shougang Cold Rolling Co., Ltd. | 34,888,371.00 | Property right certificate is in the process |
| Building of Shougang Jingtang United Iron&Steel Co., Ltd. | 8,041,966,254.56 | To be handled after completing the relevant procedures of the occupied phase I project land |
| Total | 8,076,854,625.56 |
Note: Beijing Shougang Cold Rolling Co., Ltd. andShougang Jingtang United Iron&SteelCo., Ltd. were in the process of obtaining the relevant certificates for building propertyright.
13. Construction in progress
| Items | 2019.12.31 | 2018.12.31 |
| Construction in progress | 24,517,054,405.87 | 21,229,778,633.37 |
| Construction materials | 793,534,232.55 | 808,068,348.32 |
| Total | 25,310,588,638.42 | 22,037,846,981.69 |
(1) Construction in progress
①Details of construction in progress
| Items | 2019.12.31 | 2018.12.31 | ||||||
| Book value | Provision for impairment | Carrying amount | Book value | Provision for impairment | Carrying amount | |||
| Jingtang Co. Phase-I project | 2,757,346,793.01 | -- | 2,757,346,793.01 | 3,723,652,983.37 | -- | 3,723,652,983.37 | ||
| Jingtang Co. Phase-II project | 16,800,493,905.29 | -- | 16,800,493,905.29 | 13,390,211,436.51 | -- | 13,390,211,436.51 | ||
| Qiangang Co. auxiliary project | 1,103,301,808.22 | -- | 1,103,301,808.22 | 1,093,553,890.62 | -- | 1,093,553,890.62 | ||
| Other projects | 3,855,911,899.35 | -- | 3,855,911,899.35 | 3,022,360,322.87 | -- | 3,022,360,322.87 | ||
| Total | 24,517,054,405.87 | -- | 24,517,054,405.87 | 21,229,778,633.37 | -- | 21,229,778,633.37 | ||
②The major construction projects in progress are as follows:
| Project name | 2019.01.01 | Additions | Transferred to fixed assets | Other deduction | Capitalized interest accumulated | Capitalized Interest in the year | Capitalized interest rate in the year | 2019.12.31 | |
| Jingtang Co. Phase-II project | 13,390,211,436.51 | 7,783,812,530.78 | 4,373,530,062.00 | -- | 1,153,789,218.30 | 577,303,197.38 | 4.68 | 16,800,493,905.29 | |
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 | 225.36 | 93.96 | The equipment prior to iron has been transferred to fixed assets, and the steel rolling production line is under commissioning | Selfraised |
③As of 31 December 2019, there is no provision for impairment of construction in progress.
(2) Construction materials
| Items | 2019.12.31 | 2018.12.31 |
| Specific materials | 190,995,418.57 | 416,694,630.42 |
| Specific equipments | 602,538,813.98 | 391,373,717.90 |
| Subtotal | 793,534,232.55 | 808,068,348.32 |
| Provision for impairment of construction materials | -- | -- |
| Total | 793,534,232.55 | 808,068,348.32 |
14. Intangible assets
Analysis of intangible assets
| Items | Software | Land use rights | Total |
| Cost | |||
| 1.At 31 December 2018 | 80,479,061.31 | 3,095,126,366.92 | 3,175,605,428.23 |
| 2.Increase in the year | 727,476.59 | 263,442,560.83 | 264,170,037.42 |
| (1) Purchase | 727,476.59 | -- | 727,476.59 |
| (2) Transferred from construction in progress | -- | 263,442,560.83 | 263,442,560.83 |
| 3.Written back during the year | -- | -- | -- |
| 4.At 31 December 2019 | 81,206,537.90 | 3,358,568,927.75 | 3,439,775,465.65 |
| Accumulated amortization: |
| Items | Software | Land use rights | Total |
| 1.At 31 December 2018 | 43,609,494.58 | 550,544,252.65 | 594,153,747.23 |
| 2.Increase in the year | 12,075,354.76 | 71,027,746.68 | 83,103,101.44 |
| Provision | 12,075,354.77 | 71,027,746.67 | 83,103,101.44 |
| 3.Written back during the year | -- | -- | -- |
| 4.At 31 December 2019 | 55,684,849.35 | 621,571,999.32 | 677,256,848.67 |
| Impairment: | |||
| 1.At 31 December 2018 | -- | -- | -- |
| 2.Increase in the year | -- | -- | -- |
| 3.Written back during the year | -- | -- | -- |
| 4.At 31 December 2019 | -- | -- | -- |
| Net carrying amount: | |||
| 1.At the ending of the year | 25,521,688.55 | 2,736,996,928.43 | 2,762,518,616.98 |
| 2.At the beginning of the year | 36,869,566.73 | 2,544,582,114.27 | 2,581,451,681.00 |
15. Deferred income tax assets and deferred income tax liabilities
(1) Deferred income tax assets and deferred income tax liabilities without offsetting
| Items | 2019.12.31 | 2018.12.31 | ||
| Deductible/taxable temporary differences | Deferred tax assets/liabilities | Deductible/taxable temporary differences | Deferred tax assets/liabilities | |
| Deferred tax assets： | ||||
| Asset impairment provision | 116,936,734.11 | 17,540,510.13 | 181,064,588.70 | 29,723,599.54 |
| The actual payment amount of payroll payable in the year is less than the withdrawal amount | 11,920,536.11 | 1,788,080.42 | 12,802,008.11 | 1,920,301.22 |
| Defferred income | 211,378,747.20 | 31,706,812.09 | 279,114,558.77 | 41,867,183.82 |
| Asset amortization difference | 10,029,230.35 | 1,504,384.53 | 12,541,431.23 | 1,881,214.67 |
| Unrealized internal transaction | 9,582,639.38 | 1,437,395.90 | 8,323,184.54 | 1,248,477.68 |
| Subtotal | 359,847,887.15 | 53,977,183.07 | 493,845,771.35 | 76,640,776.93 |
| Deferred tax liabilities： | ||||
| Joint commissioning cost | 1,707,365,518.43 | 256,104,827.73 | 3,554,955,694.91 | 533,243,354.23 |
| Changes in fair value of available-for-sale financial assets through other comprehensive income | 2,296,846,974.63 | 344,527,046.21 | 1,802,574,325.26 | 270,386,148.79 |
| Subtotal | 4,004,212,493.06 | 600,631,873.94 | 5,357,530,020.17 | 803,629,503.02 |
(2) The Group’s unrecognized deferred tax assets arising from deductible temporarydifferences and deductible tax losses were as follows:
| Items | 2019.12.31 | 2018.12.31 |
| Deductible temporary differences | 23,752,715.93 | 45,046,115.07 |
| Deductible tax losses | 1,703,664,533.54 | 1,999,882,292.76 |
| Total | 1,727,417,249.47 | 2,044,928,407.83 |
(3) Unrecognized deferred tax liabilities arising from deductible tax losses will expire inthe following years:
| Years | 2019.12.31 | 2018.12.31 | Note |
| Year 2019 | —— | 318,599,969.70 | |
| Year 2020 | 1,117,988,634.00 | 1,117,988,634.00 | |
| Year 2021 | 520,007,725.25 | 520,007,725.25 | |
| Year 2022 | 21,824,245.45 | 21,824,245.45 | |
| Year 2023 | 21,114,630.53 | 21,461,718.36 | |
| Year 2024 | 22,729,298.31 | —— | |
| Total | 1,703,664,533.54 | 1,999,882,292.76 |
16. Short-term loans
Classification of short-term loans
| Items | 2019.12.31 | 2018.12.31 |
| Guaranteed loans | 8,806,731,733.54 | 7,034,890,000.00 |
| Unsecured loans | 21,460,482,181.88 | 24,120,830,000.00 |
| Total | 30,267,213,915.42 | 31,155,720,000.00 |
17. Notes payable
| Item | 2019.12.31 | 2018.12.31 |
| Commercial acceptance notes | 3,741,832,295.34 | 5,285,571,700.58 |
18. Accounts payable
| Items | 2019.12.31 | 2018.12.31 |
| Payables for goods | 19,869,174,040.96 | 20,781,976,631.07 |
| Payables for construction | 4,094,311,942.43 | 2,902,797,694.56 |
| Total | 23,963,485,983.39 | 23,684,774,325.63 |
As of 31 December 2010, the material trade payables aged over one year was as follows:
| Company name | Amount due | Reason for non-settlement |
| Tangshan Shoukuang Cleaning Iron Co., Ltd. | 255,466,259.07 | In the execution |
| Tangshan Shougang Baoye Iron&Steel Co., Ltd. | 199,968,694.59 | In the execution |
| Beijing Teyu Plate Co., Ltd. | 81,765,796.77 | In the execution |
| Beijing Shougang Resources Comprehensive Utilization Technology Development Co., Ltd. | 39,618,416.59 | In the execution |
| Tangshan Iron&Steel Group Will Automation Co., Ltd. | 36,101,696.38 | In the execution |
| Total | 612,920,863.40 |
19. Advances from customers
| Item | 2019.12.31 | 2018.12.31 |
| Advances from customers | 3,422,750,982.43 | 2,392,478,818.81 |
As of 31 December 2019, there is no advance received aged over one year.
20. Payroll and employee benefits payable
| Items | 2018.12.31 | Increase during the year | Decrease during the year | 2019.12.31 |
| Short-term employee benefits | 297,242,973.64 | 3,222,125,646.56 | 3,170,167,458.36 | 349,201,161.84 |
| Post-employment benefits (defined contribution plans) | 22,329,533.30 | 400,970,701.13 | 403,067,919.97 | 20,232,314.46 |
| Termination benefits | -- | 18,034,922.37 | 18,034,922.37 | -- |
| Other retirement benefits due within one year | -- | -- | -- | -- |
| Total | 319,572,506.94 | 3,641,131,270.06 | 3,591,270,300.70 | 369,433,476.30 |
(1) Short-term employee benefits
| Items | 2018.12.31 | Increase during the year | Decrease during the year | 2019.12.31 |
| Salaries, bonuses and subsidies | 50,356,252.46 | 2,404,178,048.88 | 2,397,701,479.76 | 56,832,821.58 |
| Welfare | -- | 194,108,737.40 | 194,108,737.40 | -- |
| Social insurance | 78,642,832.25 | 271,138,450.06 | 249,389,768.53 | 100,391,513.78 |
| Including: Medical insurance | 77,845,506.56 | 226,900,177.11 | 205,108,513.27 | 99,637,170.40 |
| Work-related injury insurance | 359,509.12 | 26,371,901.61 | 26,436,408.82 | 295,001.91 |
| Maternity insurance | 437,816.57 | 17,866,371.34 | 17,844,846.44 | 459,341.47 |
| Housing fund | -- | 265,878,409.49 | 265,878,409.49 | -- |
| Labor union fee and employee education fee employee education fee | 168,197,134.46 | 85,418,794.53 | 61,664,256.98 | 191,951,672.01 |
| Items | 2018.12.31 | Increase during the year | Decrease during the year | 2019.12.31 |
| Short-term paid absences | -- | -- | -- | -- |
| Non-monetary benefits | -- | -- | -- | -- |
| Other short-term employee benefits | 46,754.47 | 1,403,206.20 | 1,424,806.20 | 25,154.47 |
| Total | 297,242,973.64 | 3,222,125,646.56 | 3,170,167,458.36 | 349,201,161.84 |
(2) Defined contribution plans
| Items | 2018.12.31 | Increase during the year | Decrease during the year | 2019.12.31 |
| Post-employment benefits | ||||
| Including：Pension insurance | 9,152,483.88 | 383,717,249.60 | 384,969,991.21 | 7,899,742.27 |
| Unemployment insurance | 13,177,049.42 | 17,253,451.53 | 18,097,928.76 | 12,332,572.19 |
| Total | 22,329,533.30 | 400,970,701.13 | 403,067,919.97 | 20,232,314.46 |
(3) Termination benefits
| Item | 2018.12.31 | Increase during the year | Decrease during the year | 2019.12.31 |
| Compensation for employee resettlement | -- | 18,034,922.37 | 18,034,922.37 | -- |
21. Taxes payable
| Items | 2019.12.31 | 2018.12.31 |
| Value-added tax | 61,035,278.73 | 127,468,352.62 |
| City construction and maintenance tax | 4,099,878.41 | 2,596,633.64 |
| Education surcharge | 2,928,484.58 | 1,854,738.30 |
| Personal income tax | 1,519,041.15 | 1,309,256.83 |
| Stamp duty | 11,250.00 | -- |
| Corporate income tax | 17,776,565.87 | 26,406,244.20 |
| Environment protection tax | 8,568,606.28 | 15,354,967.45 |
| Real estate tax | 1,241,884.11 | -- |
| Resouorce tax | 4,327,645.80 | -- |
| Total | 101,508,634.93 | 174,990,193.04 |
22. Other payables
| Items | 2019.12.31 | 2018.12.31 |
| Interest payables | -- | 32,952,838.32 |
| Other payables | 1,639,040,708.48 | 2,012,685,335.12 |
| Total | 1,639,040,708.48 | 2,045,638,173.44 |
(1) Interest payables
| Items | 2019.12.31 | 2018.12.31 |
| Interest payables for corporate bonds | -- | 26,866,666.68 |
| Interest payables for short-term loans | -- | 6,086,171.64 |
| Total | -- | 32,952,838.32 |
(2) Other payables
| Items | 2019.12.31 | 2018.12.31 |
| Deposits | 6,997,044.01 | 3,067,914.60 |
| Guarantee | 65,507,803.45 | 68,990,078.16 |
| Due from trading companies | 505,037,704.69 | 1,562,466,720.95 |
| Due from trading companies of Shougang Group | 1,061,498,156.33 | 378,160,621.41 |
| Total | 1,639,040,708.48 | 2,012,685,335.12 |
As of 31 December 2019, 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 |
23. Non-current liabilities due within one year
| Items | 2019.12.31 | 2018.12.31 |
| Long-term loans due within one year | 6,400,574,401.68 | 4,030,000,000.00 |
| Bonds payable due within one year | 3,000,000,000.00 | -- |
| Total | 9,400,574,401.68 | 4,030,000,000.00 |
(1) Long-term loans due within one year
| Items | 2019.12.31 | 2018.12.31 |
| Guaranteed loans | 1,314,131,944.44 | 850,000,000.00 |
| Unsecured loans | 5,086,442,457.24 | 3,180,000,000.00 |
| Total | 6,400,574,401.68 | 4,030,000,000.00 |
(2) Bonds payable due within one year
| Bond name | Par Value | Issue date | Term to maturity | Amount on offer |
| Zhongshixiezhu No.[2015] MTN688 | 2,500,000,000.00 | 2015/12/25 | 5 years | 2,500,000,000.00 |
| Zhongshixiezhu No.[2015] MTN692 | 500,000,000.00 | 2015/12/25 | 5 years | 500,000,000.00 |
| Subtotal | 3,000,000,000.00 | 3,000,000,000.00 |
Bonds payable due within one year (continued)
| Bond name | 2018.12.31 | Current year issuance | Accrued interest by par value | Amortisation of discount | Current year repayment | 2019.12.31 |
| Zhongshixiezhu No.[2015] MTN688 | 2,500,000,000.00 | -- | -- | -- | -- | 2,500,000,000.00 |
| Zhongshixiezhu No.[2015] MTN692 | 500,000,000.00 | -- | -- | -- | -- | 500,000,000.00 |
| Total | 3,000,000,000.00 | -- | -- | -- | -- | 3,000,000,000.00 |
24. Long-term loans
| Items | 2019.12.31 | Range of interest rate | 2018.12.31 | Range of interest rate |
| Guaranteed loans | 10,814,131,944.44 | 4.75%-4.9% | 2,150,000,000.00 | 4.75% |
| Unsecured loans | 14,687,542,457.24 | 4.41%-4.90% | 17,845,040,000.00 | 4.41%-4.90% |
| Subtotal | 25,501,674,401.68 | 19,995,040,000.00 | ||
| Less: Long-term loans due within one year | 6,400,574,401.68 | 4.41%-4.75% | 4,030,000,000.00 | 4.41%-4.90% |
| Total | 19,101,100,000.00 | 15,965,040,000.00 |
25. Bonds payable
| Item | 2019.12.31 | 2018.12.31 |
| Common bond | 4,026,866,666.72 | 7,000,000,000.00 |
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 |
| Subtotal | 4,000,000,000.00 | 4,000,000,000.00 |
Bonds payable（continued）
| Bond name | 2018.12.31 | Current year issuance | Accrued interest by par value | Amortisation of discount | Current year repayment | 2019.12.31 |
| Zhongshixiezhu No.[2015] MTN688 | 4,500,000,000.00 | -- | 218,633,333.38 | -- | 205,200,000.00 | 4,513,433,333.38 |
| Zhongshixiezhu No.[2015] MTN692 | 2,500,000,000.00 | -- | 119,833,333.34 | -- | 106,400,000.00 | 2,513,433,333.34 |
| Subtotal | 7,000,000,000.00 | -- | 338,466,666.72 | -- | 311,600,000.00 | 7,026,866,666.72 |
| Less: Long-term loans due within one year | 3,000,000,000.00 | |||||
| Total | 7,000,000,000.00 | 4,026,866,666.72 |
26. Long-term payables
| Item | 2019.12.31 | 2018.12.31 |
| Special payables | 2,100,000.00 | 2,100,000.00 |
Special payables
| Item | 2018.12.31 | Increase during the year | Decrease during the year | 2019.12.31 | Reason for the payable |
| Research and development funds | 2,100,000.00 | -- | -- | 2,100,000.00 | State Funding |
27. Deferred revenue
| Item | 2018.12.31 | Increase during the year | Decrease during the year | 2019.12.31 | Reason for the payable |
| Government grant | 285,274,558.77 | 48,729,652.00 | 10,168,267.29 | 323,835,943.48 |
Notes: The government grants which recognized as deferred revenue refer to Note XIII, 2government grants.
28. Other non-current liabilities
| Item | 2019.12.31 | 2018.12.31 |
| Advance payment for construction | 4,711,490,199.06 | 5,588,813,436.69 |
29. Share capital
| Item | 2018.12.31 | Changes in current (+/-) | 2019.12.31 | ||||
| Shares issued | Bonus issue | Shares transferred from reserves | Others | Subtotal | |||
| Total amount of shares | 5,289,389,600.00 | -- | -- | -- | -- | -- | 5,289,389,600.00 |
30. Capital reserve
| Items | 2018.12.31 | Increase during the year | Decrease during the year | 2019.12.31 |
| Share premium | 20,092,270,987.10 | -- | -- | 20,092,270,987.10 |
| Other capital reserve | -835,905.39 | 1,876,262.91 | -- | 1,040,357.52 |
| Total | 20,091,435,081.71 | 1,876,262.91 | -- | 20,093,311,344.62 |
Note: the movement of other capital reserve is the change in other equity of joint venturesrecognized by the Group in accordance with shareholding ratio.
31. Other comprehensive income
| Items | 2019.01.01 | The amount of the year | 2019.12.31 | ||||
| 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 | 1,615,381,906.01 | 396,397,673.44 | -- | 59,459,651.03 | 336,938,022.41 | -- | 1,952,319,928.42 |
| Other comprehensive income that may not be reclassified to profit or loss | 1,615,381,906.01 | 396,397,673.44 | -- | 59,459,651.03 | 336,938,022.41 | -- | 1,952,319,928.42 |
| 2. Other comprehensive income that will be reclassified to profit or loss | -- | -- | -- | -- | -- | -- | -- |
| Total | 1,615,381,906.01 | 396,397,673.44 | -- | 59,459,651.03 | 336,938,022.41 | -- | 1,952,319,928.42 |
The amount of other comprehensive income after tax for the period is 396,398 thousand. Theamount of other comprehensive income after tax for the period attributable to the owners’ ofparent company is 336,938 thousand; and net-of-tax amount of other comprehensive incomeattributable to minority shareholders is 0.00.
32. Special reserve
| Items | 2018.12.31 | Increase during the year | Decrease during the year | 2019.12.31 |
| Safety fund | 7,975,932.61 | 72,039,270.20 | 64,266,037.17 | 15,749,165.64 |
| Maintenance costs | -- | -- | -- | -- |
| Total | 7,975,932.61 | 72,039,270.20 | 64,266,037.17 | 15,749,165.64 |
33. Surplus reserve
| Items | 2018.12.31 | Increase during the year | Decrease during the year | 2019.12.31 |
| Statutory reserve | 1,687,827,448.18 | 41,681,607.48 | -- | 1,729,509,055.66 |
| Discretionary surplus reserve | -- | -- | -- | -- |
| Total | 1,687,827,448.18 | 41,681,607.48 | -- | 1,729,509,055.66 |
34. Retained earnings
| Items | For the year ended 31 December 2019 | For the year ended 31 December 2018 | Appropriation/ Distribution ratio |
| Retained earnings at 31 December 2017 before adjustment | -3,260,964,367.74 | -5,524,277,372.55 | |
| Adjustment of total retained earnings at 31 December 2017 (Increase in “+”, decrease in “-”) | -- | -- | |
| Retained earnings at 31 December 2017 after adjustment | -3,260,964,367.74 | -5,524,277,372.55 | |
| Add: Net profit attributable to parent company | 1,251,047,873.08 | 2,403,750,672.16 | |
| Less: Transfer to statutory surplus reserve | 41,681,607.48 | 140,437,667.35 | |
| 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 31 December 2019 | -2,051,598,102.14 | -3,260,964,367.74 | |
| Including: Surplus reserve attributable to parent company extracted by subsidiaries | -- | -- |
35. Revenue and cost of sales
| Items | 2019 | 2018 | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Principal business | 66,208,456,685.02 | 59,764,448,943.00 | 63,081,129,866.22 | 55,248,977,414.71 |
| Other business | 2,942,976,007.43 | 2,365,772,649.53 | 2,695,530,672.68 | 1,995,221,411.28 |
| Total | 69,151,432,692.45 | 62,130,221,592.53 | 65,776,660,538.90 | 57,244,198,825.99 |
Note：The information on revenue and cost of sales by industry and region refers to Note XIII,1.Principal business (presented as products)
| Items | 2019 | 2018 | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Billet | 270,552,095.12 | 224,074,179.83 | 199,272,953.13 | 156,164,916.90 |
| Hot-rolled steel | 25,181,443,445.34 | 22,438,277,367.08 | 22,374,672,870.28 | 18,610,859,401.52 |
| Cold-rolled steel | 39,541,161,789.88 | 35,985,703,529.43 | 39,442,412,921.65 | 35,550,472,036.72 |
| Other steels | 835,056,438.75 | 755,558,703.74 | 794,723,187.14 | 692,899,408.41 |
| Gas products | 380,242,915.93 | 360,835,162.92 | 270,047,934.02 | 238,581,651.16 |
| Total | 66,208,456,685.02 | 59,764,448,943.00 | 63,081,129,866.22 | 55,248,977,414.71 |
36. Taxes and surcharges
| Items | 2019 | 2018 |
| Urban maintenance and construction tax | 56,416,763.63 | 122,698,732.13 |
| Education surcharge | 43,960,195.38 | 89,617,754.93 |
| Property tax | 152,167,348.31 | 121,430,529.16 |
| Land usage tax | 279,401,512.74 | 155,318,019.07 |
| Vehicle and vessel usage tax | 308,066.27 | 318,368.96 |
| Stamp duty | 59,864,333.14 | 48,828,247.80 |
| Resources duty | 46,945,685.80 | 4,650,071.40 |
| Environmental protection tax | 30,513,521.76 | 56,452,378.10 |
| Disabled employment security fund | 203,632.56 | -- |
| Total | 669,781,059.59 | 599,314,101.55 |
Note: The provision and payment standards of taxes and surcharges refer to Note IV.Taxation.
37. Selling and distribution expenses
| Items | 2019 | 2018 |
| Staff costs | 120,209,816.04 | 103,015,361.89 |
| Depreciation and amortization | 141,260.50 | 167,378.82 |
| Transportation expenses | 1,029,354,428.04 | 952,023,751.07 |
| Export expenses | 79,106,533.88 | 114,992,307.79 |
| Other regular expenses | 46,637,419.45 | 48,617,665.11 |
| Total | 1,275,449,457.91 | 1,218,816,464.68 |
38. General and administrative expenses
| Items | 2019 | 2018 |
| Staff costs | 462,340,801.91 | 498,631,226.87 |
| Depreciation and amortization | 229,612,209.84 | 236,271,359.82 |
| Other regular expeses | 170,603,300.38 | 241,645,794.00 |
| Total | 862,556,312.13 | 976,548,380.69 |
39. Research and development expenses
| Items | 2019 | 2018 |
| Staff costs | 350,045,450.18 | 330,699,251.29 |
| Depreciation and amortization | -- | -- |
| Other regular expenses | 35,751,384.90 | 64,064,558.29 |
| Total | 385,796,835.08 | 394,763,809.58 |
40. Financial expenses
| Items | 2019 | 2018 |
| Interest costs | 2,778,726,888.35 | 2,634,711,294.84 |
| Less: Interest capitalized | 577,303,197.38 | 206,097,246.21 |
| Interest expenses | 2,201,423,690.97 | 2,428,614,048.63 |
| Interest income | 73,361,281.32 | 97,858,563.96 |
| Discount on notes acceptance | 791,952.78 | -- |
| Cash discount | -67,543,533.31 | -20,163,555.28 |
| Exchange losses and gains | 3,152,529.68 | -19,386,773.03 |
| Less: Exchange losses and gains capitalized | -- | -- |
| Bank charges and others | 11,230,107.33 | 7,102,699.89 |
| Total | 2,075,693,466.13 | 2,298,307,856.25 |
41. Other income
| Items (sources of other income) | 2019 | 2018 | 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 | -- | Related to assets |
| Government grants for dedusting system upgrading project (Qiangang Co.) | 1,105,263.12 | -- | Related to assets |
| Government grants for advanced sewage treatment | 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 |
| 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 | 1,052,631.58 | -- | Related to assets |
| Government grants for the desulfurization of pelletizing flue gas | 1,486,105.24 | 1,486,105.26 | 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 | 67,878.95 | Related to assets |
| Public support funds for Shougang irons and steels integration project of manufacturing and marketing in operating and manangement system | 432,000.00 | -- | Related to assets |
| Government grants for the specialized production line project of Zinc-plated high-strengthen auto sheet | 191,578.95 | -- | Related to assets |
| Special government grants for provincial-level industrial transformation and technical upgrading | 300,000.00 | -- | Related to assets |
| Support funds for national science and technology projects (from Ministry of Science and Technology of the People’s Republic of China) | -- | 4,820,000.00 | Related to assets |
| Funds for RMB50,000 T/D seawater desalination subject | -- | 3,800,000.00 | Related to assets |
| Other government grants related to assets | 1,384,326.84 | 13,648,967.64 | Related to assets |
| Subsidy from Environmental Protection Agency of Qian’an City for operating expenses of online monitoring facilities | -- | 342,750.00 | Related to income |
| Items (sources of other income) | 2019 | 2018 | Related to assets/income |
| Intelligent stability control technology project for narrow window of molten steel quality | -- | 860,000.00 | Related to income |
| The project subsidy of high magnetic silicon steel used in ultra-high voltage transformer | -- | 800,000.00 | Related to income |
| Government grants for scientific and technological support | 17,117,710.00 | -- | Related to income |
| Government grants for steady post | 3,299,294.23 | -- | 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 | 5,307,629.78 | 370,450.00 | Related to income |
| Engineering informationization project subsidy (Qiangang Co., cold-rolled) | 329,604.04 | 1,871,560.14 | |
| Total | 42,432,105.34 | 31,376,175.07 |
Note: The details of government grants refer to Note XIII, 2 Government grants.
42. Investment income
| Items | 2019 | 2018 |
| Investment income from long-term equity investments under the equity method | 91,320,418.12 | 165,758,806.86 |
| Investment income from available-for-sale financial assets in duration | -- | 103,967,493.39 |
| Dividend income from other equity instruments investments | 202,033,784.60 | -- |
| Interest income from entrusted loans | 8,187,426.69 | 5,478,548.29 |
| Total | 301,541,629.41 | 275,204,848.54 |
43. Credit impairment losses (loss in “-”)
| Items | 2019 | 2018 |
| Provision for bad debts of notes receivable | 2,621,806.10 | -- |
| Provision for bad debts of accounts receivable | 23,911,976.36 | -- |
| Provision for bad debts of financing receivable | -457,105.27 | -- |
| Provision for bad debts of other receivables | 161,301.45 | -- |
| Total | 26,237,978.64 |
44. Impairment losses on assets (loss in “-”)
| Items | 2019 | 2018 |
| Provision for bad debts | -- | 5,977,001.32 |
| Provision for decline in the value of inventories | -98,182,828.73 | -213,078,142.14 |
| Total | -98,182,828.73 | -207,101,140.82 |
45. Gains on disposal of assets
| Items | 2019 | 2018 |
| Gains from disposal of fixed assets (loss in “-”) | 498,422.97 | 25,530.32 |
46. Non-operating income
| Items | 2019 | 2018 | Included in non-recurring gains or losses in 2019 |
| Compensation received | -- | 15,533,856.41 | -- |
| Waived payables | -- | 6,484,541.10 | -- |
| Others | 1,335,781.31 | 2,184,023.08 | 1,335,781.31 |
| Total | 1,335,781.31 | 24,202,420.59 | 1,335,781.31 |
47. Non-operating expenses
| Items | 2019 | 2018 | Included in non-recurring gains or losses in 2019 |
| Public welfare donation | 300,000.00 | 500,000.00 | 300,000.00 |
| Non-public welfare donation | -- | 60,000.00 | -- |
| Compensation | -- | 53,039.64 | -- |
| Non-current assets written off | 8,182,914.32 | 7,389,305.86 | 8,182,914.32 |
| Penalty | 1,720,000.00 | 1,219,616.12 | 1,720,000.00 |
| Overdue fine | 14,803,072.29 | -- | 14,803,072.29 |
| Others | 3,516,243.74 | 18,926.12 | 3,516,243.74 |
| Total | 28,522,230.35 | 9,240,887.74 | 28,522,230.35 |
48. Income tax expenses
(1) Details of income tax expenses
| Items | 2019 | 2018 |
| Current tax in accordance with tax laws and related regulations | 213,326,648.57 | 267,448,219.71 |
| Deffered income tax expenses | 29,881,562.38 | -439,651,224.85 |
| Total | 243,208,210.95 | -172,203,005.14 |
(2) Reconciliation between income tax expenses and profit before income tax is as follows:
| Items | 2019 | 2018 |
| Profit before tax | 1,997,274,827.67 | 3,159,178,046.12 |
| Tax at the applicable tax rate of 15% | 299,591,224.15 | 473,876,706.92 |
| Taxation effect of different tax rates of subsidiaries | -2,272,852.80 | 3,287,979.60 |
| Adjustment of income tax in the prior year | -22,493,523.44 | -- |
| Share of profit or loss of joint ventures and associates under the equity method | -13,698,062.72 | -24,863,821.04 |
| Income not subject to tax（expressed in“-”） | -30,305,067.69 | -15,595,124.01 |
| Non-deductible costs, expenses and losses | 4,996,571.40 | 1,669,934.45 |
| Taxation effect of the change in the applicable tax rate on the beginning disclosure of the deffered income tax | 2,563,911.18 | -378,456,971.47 |
| Taxation effect of utilizing previous unrecognized tax losses and deductible temporary differences (expressed in “-”) | -856,313.71 | -237,487,139.18 |
| Taxation effect of unrecognized tax losses and deductible temporary differences | 5,682,324.58 | 5,365,429.59 |
| Taxation effect of research and development expenses (expressed in “-”) | -- | -- |
| Others | -- | -- |
| Income tax expenses | 243,208,210.95 | -172,203,005.14 |
49. Notes to the cash flow statement
(1) Proceeds from other operating activities
| Items | 2019 | 2018 |
| Government grants received | 82,329,271.36 | 128,362,000.00 |
| Deposit for notes, credit and guarantee received | -- | 12,350,500.00 |
| Other intercouse funds received | -- | 16,695,110.32 |
| Non-operating income | -- | 24,202,420.59 |
| Refund of individual income tax commission | -- | 1,871,560.14 |
| Return of restricted funds | 316,991,484.46 | -- |
| Total | 399,320,755.82 | 183,481,591.05 |
(2) Payments for other operating activities
| Items | 2019 | 2018 |
| Period expenses paid | 1,621,915,129.66 | 1,464,595,370.31 |
| Non-operating expenses paid | 20,339,316.03 | 1,851,581.88 |
| Restricted funds paid | -- | 617,949,126.84 |
| Other intercouse funds paid | 5,749,184.00 | -- |
| Total | 1,648,003,629.69 | 2,084,396,079.03 |
(3) Proceeds from other investing activities
| Items | 2019 | 2018 |
| Interest income | 73,361,281.32 | 97,858,563.96 |
(4) Proceeds from other financing activities
| Items | 2019 | 2018 |
| Borrowings from Shougang Group | 690,938,155.85 | -- |
(5) Payment for other financing activities
| Items | 2019 | 2018 |
| Financial commissions | 11,230,107.33 | 7,102,699.89 |
| Paying back the borrowings from Shougang Group | 980,799,000.00 | 3,315,528,319.67 |
| Total | 992,029,107.33 | 3,322,631,019.56 |
50. Supplements to the statement of cash flows
(1) Supplementary information
| Supplementary information | 2019 | 2018 | |
| 1. Reconciliation of net profit to net cash flows from operating activities: | |||
| Net profit | 1,754,066,616.72 | 3,331,381,051.26 | |
| Add: Impairment losses on assets | 98,182,828.73 | 207,101,140.82 | |
| Credit impairment losses | -26,237,978.64 | -- | |
| Depreciation of fixed assets | 5,851,193,496.18 | 5,735,692,151.83 | |
| Amortization of intangible assets | 83,103,101.44 | 77,235,540.34 | |
| Amortizaiton of long-term deffered expenses | -- | -- | |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (Gains as in “-”) | -498,422.97 | -25,530.32 | |
| Losses on written-off fixed assets (Gains as in “-”) | 8,182,914.32 | 7,389,305.86 | |
| Losses on fair value changes (Gain as in “-”) | -- | -- | |
| Financial expenses (Income as in “-”) | 2,075,693,466.13 | 2,298,307,856.25 | |
| Investment losses (Income as in “-”) | -301,541,629.41 | -275,204,848.54 | |
| Decrease in deferred tax assets (Increase as in “-”) | 22,663,593.86 | -31,698,087.06 | |
| Increase in deferred tax liabilities (Decrease as in “-”) | -277,138,526.50 | -407,953,137.79 | |
| Decrease in inventories (Increase as in “-”) | -1,499,257,576.87 | -398,108,837.14 | |
| Supplementary information | 2019 | 2018 | |
| Decrease in receivables from operating activities (Increase as in “-”) | -466,532,795.21 | 522,206,293.76 | |
| Increase in payables from operating activities (Decrease as in “-”) | -4,328,128,430.43 | 2,007,532,732.00 | |
| Others | 324,878,281.18 | -614,466,046.10 | |
| Net cash flow from operating activities | 3,318,628,938.53 | 12,459,389,585.17 | |
| 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 | 3,917,969,380.92 | 3,969,718,548.91 | |
| Less: Opening balance of cash | 3,969,718,548.91 | 3,547,671,127.30 | |
| Add: Closing balance of cash equivalents | -- | -- | |
| Less: Opening balance of cash equivalents | -- | -- | |
| Net increase in cash and cash equivalents | -51,749,167.99 | 422,047,421.61 | |
Note: The amount of endorsement and transfer of acceptance notes received from goods salesof the company is RMB 53,644.78 million.
(2) Components of cash and cash equivalents
| Items | 31/12/2019 | 31/12/2018 |
| 1. Cash | 3,917,969,380.92 | 3,969,718,548.91 |
| Including: Cash on hand | 22,914.63 | 40,170.81 |
| Balances in banks without restriction | 3,917,946,453.55 | 3,969,678,365.37 |
| Other monetary funds without restriction | 12.74 | 12.73 |
| 2. Cash equivalents | -- | -- |
| Including: bonds investment due within three months | -- | -- |
| 3. Closing balance of cash and cash equivalents | 3,917,969,380.92 | 3,969,718,548.91 |
| Including: restricted cash and cash equivalents from the parent company or its subsidiaries | -- | -- |
51. Restricted assets
| Items | 31/12/2019 | Restricted reasons |
| Cash and cash balances | 554,348,209.83 | |
| Notes receivable | 492,071,160.50 | |
| Total | 1,046,419,370.33 |
Note：(1) As of 31 December 2019, the Group’s restricted cash and cash balances includevarious cash deposits as collateral amounting to RMB 554,348,209.83.
(2) As of 31 December 2019, the Group’s restricted notes receivable includepledged notes amounting to RMB 492,071,160.50.VI. Change in the scope of consolidationFor the year ended 31 December 2019, the Group established a new subsidiary, BeijingShougang New Energy Automobile Material Technology Co., Ltd.VII. Interests in other entities
1. Interests in subsidiaries
(1) Composition of enterprise group
| Subsidiaries | Main operating place | Place of registration | Business nature | Shareholding proportion (%) | Acquisition method | |
| Direct | Indirect | |||||
| Shougang Jingtang United Iron&Steel Co., Ltd | Tangshan, PRC | Tangshan, PRC | Manufacturing | 51.00 | Business combination under common control | |
| Beijing Shougang Cold Rolling Co., Ltd. | Beijing, PRC | Beijing, PRC | Manufacturing | 70.28 | Establishment or investment, etc. | |
| Shougang Qian'an Conference Centre Co., Ltd. | Qian’an, PRC | Qian’an, PRC | Service industry | 100.00 | Business combination under common control | |
| Shougang Zhixin Qian'an Electromagnetic Materials Co., Ltd | Qian’an, PRC | Qian’an, PRC | Manufacturing | 100.00 | Establishment or investment, etc. | |
| Beijing Shougang New Energy Automobile Material Technology Co., Ltd. | Qian’an, PRC | Beijing, PRC | Manufacturing | 47.37 | Establishment or investment, etc. | |
(2) Significant partly-owned subsidiaries
| Subsidiaries | Percentage of equity held by non-controlling interests (%) | Profit or loss attributable to non-controlling interests | Dividends attributable to non-controlling interests | Closing balance of equity held by non-controlling interests |
| Shougang Jingtang United Iron&Steel Co., Ltd | 49.00 | 501,314,652.54 | -- | 12,968,124,645.14 |
| Beijing Shougang Cold Rolling Co., Ltd. | 29.72 | 1,790,624.81 | -- | -447,658,774.45 |
| Beijing Shougang New Energy Automobile Material Technology Co., Ltd. | 52.63 | -86,533.71 | -- | 149,913,466.29 |
| Total | 503,018,743.64 | 12,670,379,336.98 |
(3) Primary financial information of significant partly-owned subsidiaries
| Subsidiaries | 2019.12.31 | |||||
| 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 New Energy Automobile Material Technology Co., Ltd. | 199,879,772.25 | 111,994,948.21 | 311,874,720.46 | 27,039,134.50 | -- | 27,039,134.50 |
Continued (1):
| Subsidiaries | 2018.12.31 | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Shougang Jingtang United Iron&Steel Co., Ltd | 10,540,772,837.09 | 64,414,300,389.83 | 74,955,073,226.92 | 35,815,574,510.02 | 15,844,089,715.79 | 51,659,664,225.81 |
| Beijing Shougang Cold Rolling Co., Ltd. | 1,276,737,959.77 | 4,831,807,665.59 | 6,108,545,625.36 | 1,864,853,386.00 | 5,752,523,433.40 | 7,617,376,819.40 |
| Beijing Shougang New Energy Automobile Material Technology Co., Ltd. | -- | -- | -- | -- | -- | -- |
Continued (2):
| Subsidiaries | 2019 | |||
| Operating income | Net profit | Total comprehensive income | Net cash flow from operating activities | |
| Shougang Jingtang United Iron&Steel Co., Ltd | 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. | 7,696,233,920.49 | 6,024,982.53 | 6,024,982.53 | -46,591,184.16 |
| Beijing Shougang New Energy Automobile Material Technology Co., Ltd. | -- | -164,414.04 | -164,414.04 | -27,704,279.26 |
| Subsidiaries | 2018 | |||
| Operating income | Net profit | Total comprehensive income | Net cash flow from operating activities | |
| Shougang Jingtang United Iron&Steel Co., Ltd | 33,767,208,820.95 | 1,880,020,315.81 | 1,880,020,315.81 | 7,483,943,545.30 |
| Beijing Shougang Cold Rolling Co., Ltd. | 8,473,531,312.65 | 23,919,553.95 | 23,919,553.95 | 212,440,025.47 |
| Beijing Shougang New Energy Automobile Material Technology Co., Ltd. | -- | -- | -- | -- |
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 industry | 50.00 | Equity method | |
| Tangshan Zhonghong Carbon Chemical Co., Ltd. | Tangshan, PRC | Tangshan, PRC | Coking industry | 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 materials | 25.00 | Equity method | |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | Qian’an, PRC | Qian’an, PRC | Coking industry | 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 | |
(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. | |||
| 31/12/2019 | 31/12/2018 | 31/12/2019 | 31/12/2018 | 31/12/2019 | 31/12/2018 | |
| Current assets | 32,075,464.41 | 28,548,133.80 | 7,161,402.04 | 6,913,045.23 | 2,270,431,192.01 | 2,309,867,668.62 |
| Including： Cash and cash equivalents | 183,433.57 | 628,328.66 | 6,220,631.01 | 5,206,111.17 | 418,528,327.82 | 1,359,904,176.21 |
| Non-current assets | 70,133,241.93 | 48,628,768.97 | 736,281,354.41 | 766,819,262.20 | 2,007,056,849.60 | 2,249,745,480.83 |
| Total assets | 102,208,706.34 | 77,176,902.77 | 743,442,756.45 | 773,732,307.43 | 4,277,488,041.61 | 4,559,613,149.45 |
| Current liabilities | 43,831,336.24 | 24,272,285.61 | 504,666,538.81 | 473,047,526.13 | 559,182,858.08 | 1,555,517,750.37 |
| Non-current liabilities | 945,937.61 | -- | -- | 4,240,000.00 | 1,583,943,750.00 | 908,900,000.00 |
| Total liabilities | 44,777,273.85 | 24,272,285.61 | 504,666,538.81 | 477,287,526.13 | 2,143,126,608.08 | 2,464,417,750.37 |
| Net assets | 57,431,432.49 | 52,904,617.16 | 238,776,217.64 | 296,444,781.30 | 2,134,361,433.53 | 2,095,195,399.08 |
| Including: Non-controlling interests | -- | -- | -- | -- | -- | -- |
| Equity attributable to shareholders of the listed company | 57,431,432.49 | 52,904,617.16 | 238,776,217.64 | 296,444,781.30 | 2,134,361,433.53 | 2,095,195,399.08 |
| Net assets calculated by shareholding proportion | 28,715,716.25 | 26,452,308.58 | 119,388,108.81 | 148,222,390.64 | 1,067,180,716.78 | 1,047,597,699.54 |
| Adjustment | -- | -- | -- | -- | -- | -- |
| Including: Goodwill | -- | -- | -- | -- | -- | -- |
| Others | -- | -- | -- | -- | -- | -- |
| Book value of equity investment in the joint venture | 28,715,716.25 | 26,452,308.58 | 119,388,108.81 | 148,222,390.64 | 1,067,180,716.78 | 1,047,597,699.54 |
| 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. | |||
| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |
| Operating income | 49,090,881.11 | 26,988,493.68 | -- | -- | 7,889,128,204.38 | 7,715,695,043.39 |
| Financial costs | 24,624.02 | -13,126.87 | 19,788,725.09 | -- | 114,440,567.42 | 127,821,263.79 |
| Income tax expense | 1,532,418.14 | 971,200.68 | -- | -- | 8,833,993.27 | 18,094,983.84 |
| Net profit | 4,526,815.33 | 2,098,172.86 | -57,668,563.66 | -976,101.39 | 71,808,140.71 | 62,458,137.51 |
| Net profit from discontinuing operation | -- | -- | -- | -- | -- | -- |
| Other comprehensive income | -- | -- | -- | -- | -- | -- |
| Total comprehensive income | 4,526,815.33 | 2,098,172.86 | -57,668,563.66 | -976,101.39 | 71,808,140.71 | 62,458,137.51 |
| Dividends received from joint venture | -- | -- | -- | -- | 20,000,000.00 | 15,000,000.00 |
(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. | |||
| 2019.12.31 | 2018.12.31 | 2019.12.31 | 2018.12.31 | 2019.12.31 | 2018.12.31 | |
| Current assets | 275,045,534.91 | 410,483,105.37 | 112,850,617.01 | 146,826,677.02 | 2,004,737,886.87 | 2,043,395,005.87 |
| Non-current assets | 8,408,959,115.62 | 7,798,176,814.07 | 264,288,970.95 | 221,302,279.14 | 1,968,321,630.62 | 1,902,756,955.39 |
| Total assets | 8,684,004,650.53 | 8,208,659,919.44 | 377,139,587.96 | 368,128,956.16 | 3,973,059,517.49 | 3,946,151,961.26 |
| Current liabilities | 746,523,936.01 | 918,607,654.92 | 66,014,329.99 | 65,669,128.01 | 1,980,202,119.18 | 2,092,227,793.72 |
| Non-current liabilities | 5,157,987,200.00 | 4,510,558,750.00 | -- | -- | 11,878,127.32 | 12,575,707.96 |
| Total liabilities | 5,904,511,136.01 | 5,429,166,404.92 | 66,014,329.99 | 65,669,128.01 | 1,992,080,246.50 | 2,104,803,501.68 |
| Net assets | 2,779,493,514.52 | 2,779,493,514.52 | 311,125,257.97 | 302,459,828.15 | 1,980,979,270.99 | 1,841,348,459.58 |
| Including: Non-controlling interests | -- | -- | -- | -- | -- | -- |
| Equity attributable to shareholders of the listed company | 2,779,493,514.52 | 2,779,493,514.52 | 311,125,257.97 | 302,459,828.15 | 1,980,979,270.99 | 1,841,348,459.58 |
| Net assets calculated by shareholding proportion | 450,000,000.00 | 450,000,000.00 | 77,781,314.51 | 75,614,957.05 | 986,996,372.97 | 917,427,192.50 |
| Adjustment-goodwill | -- | -- | -- | -- | 4,147,420.21 | 4,147,420.21 |
| Book value of equity investment in the associates | 450,000,000.00 | 450,000,000.00 | 77,781,314.51 | 75,614,957.05 | 991,143,793.18 | 921,574,612.71 |
| 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. | ||
| 2019.12.31 | 2018.12.31 | 2019.12.31 | 2018.12.31 | |
| Current assets | 1,022,994,630.61 | 1,001,973,453.21 | 36,252,312.04 | 28,317,400.32 |
| Non-current assets | -- | -- | 328,695.69 | 153,017.12 |
| Total assets | 1,022,994,630.61 | 1,001,973,453.21 | 36,581,007.73 | 28,470,417.44 |
| Current liabilities | 3,861,658.94 | 1,900,000.00 | 13,390,467.77 | 8,479,389.25 |
| Non-current liabilities | -- | -- | -- | -- |
| Total liabilities | 3,861,658.94 | 1,900,000.00 | 13,390,467.77 | 8,479,389.25 |
| Net assets | 1,019,132,971.67 | 1,000,073,453.21 | 23,190,539.96 | 19,991,028.19 |
| Including: Non-controlling interests | -- | -- | -- | -- |
| Equity attributable to shareholders of the listed company | 1,019,132,971.67 | 1,000,073,453.21 | 23,190,539.96 | 19,991,028.19 |
| Net assets calculated by shareholding proportion | 203,826,594.33 | 200,014,690.64 | 10,435,742.99 | 8,995,962.69 |
| Adjustment-goodwill | -- | -- | 44,544.87 | 44,544.87 |
| Book value of equity investment in the associates | 203,826,594.33 | 200,014,690.64 | 10,480,287.86 | 9,040,507.56 |
| 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. | |||
| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |
| Operating income | -- | -- | 383,670,512.68 | 304,547,081.08 | 6,913,378,291.52 | 6,798,519,584.51 |
| Net profit | -- | -- | 28,665,429.82 | 22,630,255.34 | 139,630,811.41 | 257,251,476.12 |
| Net profit from discontinuing operation | -- | -- | -- | -- | -- | -- |
| Other comprehensive income | -- | -- | -- | -- | -- | -- |
| Total comprehensive income | -- | -- | 28,665,429.82 | 22,630,255.34 | 139,630,811.41 | 257,251,476.12 |
| Dividend received from assocaites | -- | -- | 5,000,000.00 | -- | -- | -- |
| Items | Beijing Shouxin Jinyuan Management Consulting Center (Limited Partnership) | Beijing Dingshengcheng Packaging Materials Co., Ltd. | ||
| 2019 | 2018 | 2019 | 2018 | |
| Operating income | -- | -- | 101,033,864.73 | 38,202,466.22 |
| Net profit | 19,059,518.46 | 73,453.21 | 3,199,511.77 | 276,327.96 |
| Net profit from discontinuing operation | -- | -- | -- | -- |
| Other comprehensive income | -- | -- | -- | -- |
| Total comprehensive income | 19,059,518.46 | 73,453.21 | 3,199,511.77 | 276,327.96 |
| Dividend received from associates | -- | -- | -- | -- |
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". In accordance with the provisions of the limitedpartnership 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 contribution of all partners to Shouxin Jinyuan Fund shall not beless than RMB one billion. The partners of the fund are divided into general partner andlimited partner, the contribution agreement is as follows: The general partner,BeijingShouyuan New Energy Investment Management Co., Ltd. contributed RMB 10,000 thousand;among the limited partners, the Company agreed to contribute RMB 200,000 thousand, andthe other limited partners agreed to contribute RMB 790,000 thousand in total.As at 31 December 2019, Shouxin Jinyuan Fund has finished fund raising and filing of FundAssociation.As at 31 December 2019, Shouxin Jinyuan Fund has conducted investment activities by thecontribution of partners. There have been three cumulative external investment projects withthe amount of RMB 523,040 thousand, and the fund has not yet been financed.
(2) Book value and maximum loss exposure of interests related assets and liabilitiesAs at 31 December 2019, the Company has no assets and liabilities related to the interests inShouxin Jinyuan Fund recognized in the financial statements, except for the contribution ofpartners as agreed in the agreement. The maximum loss exposure of the company's interestsin Shouxin Jinyuan Fund is RMB 104,608 thousand.
(3) As at 31 December 2019, the Company had no intention to provide financial support orother support for Shouxin Jinyuan Fund.
(4) As at 31 December 2019, no additional information related to Shouxin Jinyuan Fun shouldbe disclosed by the Company.VIII. Financial instruments and risk management
The major financial instruments of the Group include cash on hand and bank balances,accounts receivable, notes receivable, other receivables, other current assets, other equityinstrument investments, notes payable, accounts payable, other payables, short-term loans,non-current liabilities due within one year, long-term loans and bond payables. The details ofthese financial instruments are disclosed in the respective notes. The financial risk of thesefinancial instruments and financial management policies used by the Group to minimize therisk are disclosed as below. The management manages and monitors the exposure of these
risks to ensure the above risks are controlled in the limited range.
1. Objectives and policies of financial risk management
The Group’s objective in risk management is to obtain an appropriate equilibrium betweenrisk and return. It also focuses on the unpredictability of financial markets and seeks tominimise potential adverse effects on the Group’s financial performance. Based on theobjectives of financial risk management, certain policies are made to recognize and analyzerisk and internal control is designed according to proper acceptable in order to monitor therisk position of the Group. Both the policies and internal control will be reviewed and revisedregularly to adapt the changes of the market and business activities of the Group. The Group’sfinancial instrument risks mainly include credit risk and liquidity risk.The primary risks caused by the financial instruments of the Group 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 Group.Credit is managed on the Grouping basis. Credit risk is mainly arises from cash on hand andbank balances, accounts receivable, notes receivable, other receivables etc.The Group expects that there is no significant credit risk associated with bank balamces sinceit is deposited or will be accepted by the financial institutions with good reputation and highcredit rating.In addition, the Group has policies to limit the credit risk exposure on notes receivable,accounts receivable and other receivables. The Group assesses the credit quality of and setscredit limits on it customers by taking into account their financial position, the availability ofguarantee from third parties, the availability of guarantee from third parties, their credithistory and other factors such as current market conditions. The credit history of thecustomers is regularly monitored by the Group. In respect of customers with a poor credithistory, the Group will use written payment reminders, or shorten or cancel credit periods, toensure the overall credit risk of the Group is limited to a controllable extent.The highest credit risk exposed to the Group is limited to the carrying amount of eachfinancial instrument illustrated in the balance sheet. The Group would not provide anyguarantee that might cause credit risk to the Group.Among the accounts receivable of the Group, the accounts receivable of the top fivecustomers accounted for 61.70% (2018: 59.43%); among the other receivables of the Group,the other receivables of the top five customers accounted for 83.22% (2018: 92.12%)
(2) Liquidity risk
Liquidity risk refers to the risks that the Group will not be able to meet its obligationsassociated with its financial liabilities that are settled by delivering cash or other financialassets.Cash flow forecasting is performed by Group’s finance department. The Group’s finance
management monitors cash and cash equivalents to meet operational needs and reduce theeffect of floating cash flow. The department monitors the usage of bank loan so that the Groupdoes not breach borrowing limits or covenants while maintaining sufficient headroom on itsundrawn committed borrowing facilities from major financial institute to meet the short-termand long-term liquidity requirements.
2. Capital management
The capital management policies are made to keep the continuous operation of the Group, toenhance the return to shareholders, to benefit other related parties and to maintain the bestcapital structure to minimize the cost of capital.For the maintenance or adjustment of the capital structure, the Group might adjust the amountof dividends paid to shareholders, return capital to shareholders, issue new shares or make anasset disposal to reduce the liabilities.The Group monitors the capital structure on the basis of leverage ratio (total liabilities dividedby total assets). As at December 31, 2019, leverage ratio of the Group is 71.92% (2018/12/31:
73.04%).
IX. Fair value
Fair 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 31/12/2019, 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 | ||||
| Financing receivable | -- | -- | 3,666,611,715.48 | 3,666,611,715.48 |
| Other equity instrument investments | -- | 4,197,294,724.56 | 160,223,202.78 | 4,357,517,927.34 |
| Total assets measured at fair value on a recurring basis | -- | 4,197,294,724.56 | 3,826,834,918.26 | 8,024,129,642.82 |
The Group recognises transfers between different levels at the end of the current reportingperiod during which such transfers are made. During 2019, there were no transfers betweenlevel 1 and level 2 of the Group’s other assets and liabilities.For financial instruments with active market, the company measures fair value at quoted price
in active market; for financial instrument without active market, the company measures fairvalue using valuation techniques. Valuation models used are mainly cash flow discount modeland market comparable entity model. Inputs include non-risk interest rate, base rate, liquiditypremium, lack of liquidity discount, etc.
(2) Fair values of assets and liabilities not measured at fair value
Financial assets and financial liabilities measured at amortized cost include: cash and bankbalance, notes receivable, accounts receivable, other receivables, short-term loans, notespayable, accounts payable, other payables, long-term loans due within one year, long-termloans and bonds payable, etc.The diference betwwen the fair value and carrying amounts of the Group’s financialinstruments is little and no more detailed disclosure.X. Related parties and related party transactions
1. Information about the parent of the Company
| Name | 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, change of the registered capital (paid-in capital) of the parentcompany is as follows:
| As at 31/12/2018 | Addition | Reduction | As at 31/12/2019 |
| 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 GroupFor information about the joint ventures and associates of the Company, refer to Note VII, 2.Joint ventures and associates that have related transactions with the Group in this year or theprevious year are as follows:
| Name of joint ventures or associates | Relationship with the Group |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Joint ventures of group |
| Tangshan Guoxing Industrial Co., Ltd. | Joint ventures of group |
| Tangshan Zhonghong Carbon Chemical Co., Ltd. | Joint ventures of group |
| Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | Associates of group |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | Associates of group |
| Beijing Dingshengcheng Packaging Materials Co., Ltd. | Associates of group |
4. Information about other related parties
| Realted parties | Related party relationship |
| 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 |
| Huludao Shougang Donghua Machinery Co., Ltd. | Under the control of the same parent 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 |
| Peking University Shougang Hospital | 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 |
| Realted parties | Related party relationship |
| 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 |
| Shougang Penglong Steel 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 |
| Beijing Shoubao Nuclear Equipment Technology 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 |
| Shougang Kuangshan Hospital | Under the control of the same parent company |
| Qinhuangdao Zhongshou Logistics Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Kuangjian 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 Shouxin Property Management Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Shape Metal Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Cultural Development Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Steel Trade Investment Management Co., Ltd. | Under the control of the same parent company |
| Jingxi (Guizhou) Supply Chain Management Co., Ltd. | Under the control of the same parent company |
| Jilin Jingxi Entrepreneurship Information Technology Co., Ltd. | Under the control of the same parent 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 Fulu Shicai 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 |
| Beijing Shougang Resources Comprehensive Utilization Technology Development Co., Ltd. | Under the control of the same parent company |
| Bohai International Conference Center Co., Ltd. | Under the control of the same parent company |
| Foshan Shougang Zhongjin Steel Processing&Distribution Co., Ltd. | Under the control of the same parent company |
| Hebei Shoulang New Energy Technology Co., Ltd. | Under the control of the same parent company |
| Realted parties | Related party relationship |
| 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 |
| Shanghai Shougang Steel Trading Co., Ltd. | Under the control of the same parent company |
| Guangzhou Shougang Steel Trading Co., Ltd. | Under the control of the same parent company |
| Shandong Shougang Steel Trading Co., Ltd. | Under the control of the same parent company |
| Tianjin Shougang Steel Trading Co., Ltd. | Under the control of the same parent company |
| Wuhan Shougang Steel Trading Co., Ltd. | Under the control of the same parent company |
| Suzhou Shouqin Steel Processing&Distribution Co., Ltd. | Under the control of the same parent 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 |
| Beijing Shouronghui Technology Development Co., Ltd. | Under the control of the same parent company |
| Jilin Tonggang International Trade Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Metal 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 |
| Harbin Shougang Wuzhong Steel Processing&Distribution Co., Ltd. | Under the control of the same parent company |
| West Factoring Co., Ltd. | Under the control of the same parent company |
| Beijing Shoujian Jicai Trading Co., Ltd. | Under the control of the same parent company |
| Shougang Guiyang Special Steel Co., Ltd. | Under the control of the same parent company |
| Chongqing Shougang Wuzhong Automotive Components Co., Ltd. | Under the control of the same parent company |
| Liuzhou Shougang Automotive Materials Co., Ltd. | Under the control of the same parent company |
| Ningbo Shougang Automotive Components 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 |
| Shougang Changzhi Steel&Iron 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 Shougang Park Comprehensive Service Co., Ltd. | Under the control of the same parent company |
| Beijing Shougang Heavy Duty Truck Manufacture Co., Ltd. | Under the control of the same parent company |
| Qinhuangdao Shougang Plate Mill Co., Ltd. | Under the control of the same parent company |
| Tangshan Shoukuang Cleaning Iron Co., Ltd. | Under the control of the same parent company |
| Qian'an Shoufa Equipment Technology Co., Ltd. | Under the control of the same parent company |
| Jingxi Shoutang Supply Chain Management Co., Ltd | Under the control of the same parent company |
| Beijing Shougang Open Source Service Center | Under the control of the same parent company |
| Beijing Shoushe Metallurgical Technology Co., Ltd. | Under the control of the same parent company |
| Realted parties | Related party relationship |
| 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 |
| Qian'an Shougang Xingkuang Property Service Co., Ltd. | Under the control of the same parent company |
| Beijing Shouxinsheng Trading Co., Ltd. | Under the control of the same parent company |
| Qinhuangdao Thermostable Ceramics 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 Huayu Information Technology Co., Ltd. | Under the control of the same parent company |
| Beijing Huayue Aviation Service Co., Ltd. | Under the control of the same parent company |
| Hebei Shougang Jingtang Machinery 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 Jitai'an Alloy Materials 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 |
| Beijing Shougang Resources Comprehensive Utilization Technology Development Company | Under the control of the same parent company |
| Beijing Shouyuan Electric Power Co., Ltd. | Under the control of the same parent company |
| Beijing Jingshoujian Concrete Mixing Station Co., Ltd. | Under the control of the same parent company |
| Directors, Supervisors, CFO and Board Secretary | Key management personnel |
5. Infromation about related transactions
(1) Details of related purchase and sales
①Purchase of goods and receiving of services from related parties
| Related parties | Nature of transaction | 2019 | 2018 |
| Shougang Group Co., Ltd. | Raw material | 15,425,330,532.57 | 10,486,982,787.02 |
| Shougang Group Co., Ltd. | Fuel material | 928,205,109.08 | 976,226,442.90 |
| Shougang Group Co., Ltd. | Engineering equipment | -- | 30,506,508.36 |
| Shougang Group Co., Ltd. | Spare parts | 20,912,594.33 | -- |
| Shougang Group Co., Ltd. | Production service | 3,568,781.04 | -- |
| Shougang Group Co., Ltd. | Interest expenses | 130,252,367.90 | 197,489,171.82 |
| Shougang Group Finance Co., Ltd. | Interest expenses | 338,517,938.95 | 249,598,137.48 |
| Shougang Group Finance Co., Ltd. | Service Charge | 7,520.00 | -- |
| Shougang Mining Corporation | Raw material | 8,574,990,158.95 | 6,743,135,491.48 |
| Shougang Mining Corporation | Power energy | 37,011,261.81 | 68,575,259.81 |
| Shougang Mining Corporation | Spare parts | 8,952,794.02 | 14,327,752.66 |
| Shougang Mining Corporation | Production service | 68,195,152.75 | 116,408,060.11 |
| Related parties | Nature of transaction | 2019 | 2018 |
| Shougang Mining Corporation | Engineering equipment | 1,778,613.63 | 8,047,005.78 |
| China Shougang International Trade&Engineering Corporation | Export cost | 49,965,746.36 | 50,174,631.81 |
| China Shougang International Trade&Engineering Corporation | Fuel material | 15,982,725.00 | 21,310,300.00 |
| China Shougang International Trade&Engineering Corporation | Raw material | 81,188,865.49 | -- |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | Fuel material | 5,709,176,730.89 | 5,637,708,180.30 |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | Power energy | 427,839,224.47 | 405,007,444.46 |
| Beijing Shougang Refractory& Metallurgical Burden Co., Ltd. | Production service | 23,011,756.44 | 20,003,014.72 |
| Beijing Shougang Refractory& Metallurgical Burden Co., Ltd. | Auxiliary material | 35,151,689.38 | 39,233,423.44 |
| Beijing Shougang Refractory& Metallurgical Burden Co., Ltd. | Raw material | -- | 7,364,133.61 |
| Beijing Shougang Refractory& Metallurgical Burden Co., Ltd. | Engineering service | 22,588,183.90 | 41,449,908.83 |
| Beijing Shougang Construction Group Co., Ltd. | Production service | 447,111,964.43 | 372,600,677.22 |
| Beijing Shougang Construction Group Co., Ltd. | Spare parts | 12,145,220.50 | 10,960,640.39 |
| Beijing Shougang Construction Group Co., Ltd. | Engineering equipment | 10,057,119.32 | 18,481,499.42 |
| Beijing Shougang Construction Group Co., Ltd. | Engineering service | 835,120,282.48 | 841,315,059.46 |
| Beijing Shougang Construction Group Co., Ltd. | Auxiliary material | -- | 147,842.00 |
| Beijing Shougang Gas Co., Ltd. | Spare parts | 476,100.00 | 236,000.00 |
| Beijing Shougang Gas Co., Ltd. | Production service | 42,020,530.72 | 37,312,767.26 |
| Beijing Shougang Gas Co., Ltd. | Power energy | 83,070,684.93 | 99,349,937.24 |
| Beijing Shougang Gas Co., Ltd. | Auxiliary material | 9,186,947.82 | 6,848,410.37 |
| Beijing Shougang Automation Information Technology Co., Ltd. | Production service | 214,496,627.99 | 156,493,896.59 |
| Beijing Shougang Automation Information Technology Co., Ltd. | Spare parts | 7,349,173.00 | 3,507,614.38 |
| Beijing Shougang Automation Information Technology Co., Ltd. | Engineering service | 157,810,593.68 | 111,484,335.02 |
| Beijing Shougang Automation Information Technology Co., Ltd. | Engineering equipment | 262,928,432.01 | 244,523,383.15 |
| Beijing Shougang Machinery&Electric Co., Ltd. | Spare parts | 155,541,128.77 | 105,079,635.96 |
| Beijing Shougang Machinery&Electric Co., Ltd. | Production service | 118,853,124.83 | 122,026,908.16 |
| Beijing Shougang Machinery&Electric Co., Ltd. | Engineering equipment | 30,836,322.22 | 63,141,135.43 |
| Beijing Shougang Machinery&Electric Co., Ltd. | Engineering service | 62,838.18 | 1,363,636.36 |
| Qinhuangdao Shougang Machinery Co., Ltd. | Spare parts | 31,618,421.00 | 26,156,708.97 |
| Qinhuangdao Shougang Machinery Co., Ltd. | Production service | 69,940,621.26 | 19,297,726.68 |
| Qinhuangdao Shougang Machinery Co., Ltd. | Auxiliary material | 880,000.00 | -- |
| Qinhuangdao Shougang Machinery Co., Ltd. | Engineering equipment | 20,090,103.92 | 16,344,930.96 |
| Qian'an Shouxin Automation Information Technology Co., Ltd. | Production service | 119,047,982.00 | 121,767,908.00 |
| Qian'an First Real Packaging Service Co., Ltd. | Production service | 161,718,265.73 | 167,473,727.18 |
| Related parties | Nature of transaction | 2019 | 2018 |
| Qian'an First Real Packaging Service Co., Ltd. | Raw material | 37,874,035.56 | -- |
| Qian'an Shougang Equipment Structure Co., Ltd. | Spare parts | 8,747,649.50 | 13,864,386.00 |
| Qian'an Shougang Equipment Structure Co., Ltd. | Production service | 47,815,296.04 | 48,694,545.19 |
| Qian'an Shougang Equipment Structure Co., Ltd. | Engineering equipment | 26,530,109.39 | 32,636,042.02 |
| Qian'an Shougang Equipment Structure Co., Ltd. | Engineering service | 2,443,953.21 | 115,096.55 |
| Qian'an Shougang Equipment Structure Co., Ltd. | Raw material | 5,524,164.94 | -- |
| Huludao Shougang Donghua Machinery Co., Ltd. | Spare parts | 13,503,870.92 | 15,452,699.61 |
| Huludao Shougang Donghua Machinery Co., Ltd. | Production service | 35,447,893.60 | 25,694,369.93 |
| Huludao Shougang Donghua Machinery Co., Ltd. | Engineering equipment | 1,134,823.98 | 67,828,636.13 |
| Beijing Soly Technology Co., Ltd. | Spare parts | -- | 386,705.51 |
| Beijing Soly Technology Co., Ltd. | Engineering equipment | 575,170.00 | 261,149.12 |
| Beijing Shouye Instruments&Meters Co., Ltd. | Spare parts | 33,420,805.93 | 30,583,429.22 |
| Beijing Shouye Instruments&Meters Co., Ltd. | Engineering equipment | -- | 134,716.00 |
| Beijing Shoujian equipment maintenance Co., Ltd. | Production service | 52,385,418.90 | 39,057,871.20 |
| Beijing Shoujian Hengxin Labor Service Co., Ltd. | Production service | 1,844,435.55 | 2,126,070.48 |
| Beijing Shoujian Hengji Construction Engineering Co., Ltd. | Spare parts | 374,702.30 | 632,087.70 |
| Beijing Shougang Landscaping Co., Ltd. | Life service | 26,750,116.85 | 21,587,938.85 |
| Beijing Shougang Landscaping Co., Ltd. | Engineering service | 2,234,477.70 | -- |
| Beijing Shougang Huaxia International Trade Co., Ltd. | Spare parts | 7,600,358.00 | 2,003,456.33 |
| Beijing Shougang Huaxia International Trade Co., Ltd. | Raw material | 57,227,366.92 | 98,503,729.53 |
| Beijing Shougang Huaxia International Trade Co., Ltd. | Auxiliary material | 290,769.19 | 1,007,665.75 |
| Beijing Shougang Huaxia International Trade Co., Ltd. | Engineering equipment | -- | 128,400.00 |
| Beijing Shougang International Engineering&Technology Co., Ltd. | Spare parts | 3,293,988.00 | 5,355,983.92 |
| Beijing Shougang International Engineering&Technology Co., Ltd. | Engineering equipment | 271,843,498.28 | 136,156,956.96 |
| Beijing Shougang International Engineering&Technology Co., Ltd. | Engineering service | 1,159,795,094.46 | 971,830,007.30 |
| Beijing Shougang International Engineering&Technology Co., Ltd. | Production service | 1,105,774.00 | 453,470.00 |
| Beijing Jinanyuan Automobile Transportation Co., Ltd. | Production service | 66,732,849.79 | 58,278,065.73 |
| Beijing Jinanyuan Automobile Transportation Co., Ltd. | Engineering service | -- | 476,516.00 |
| Beijing Shougang Xinganglian Technology&Trade Co., Ltd. | Production service | 34,507,421.25 | 29,312,018.32 |
| Beijing Shougang Xinganglian Technology&Trade Co., Ltd. | Auxiliary material | 25,650,434.02 | 25,366,827.32 |
| Beijing Shougang Xinganglian Technology&Trade Co., Ltd. | Engineering equipment | -- | 4,414,520.25 |
| Beijing Huaxia Technology Co., Ltd. | Spare parts | 3,017,378.43 | 3,570,183.86 |
| Beijing Huaxia Technology Co., Ltd. | Engineering equipment | -- | 4,299,515.41 |
| Related parties | Nature of transaction | 2019 | 2018 |
| Beijing Huaxia Technology Co., Ltd. | Production service | -- | 286,293.10 |
| Beijing Shougang Catering Co., Ltd. | Life service | 29,977,452.28 | 36,211,342.15 |
| Beijing Shoujia Steel Construction Co., Ltd. | Production service | 15,001,207.08 | 17,280,246.63 |
| Peking University Shougang Hospital | Life service | 8,344,330.04 | 3,358,877.90 |
| Beijing Shougang Ferroalloy Co., Ltd. | Raw material | 256,233,245.83 | 257,887,524.99 |
| Beijing Shougang Ferroalloy Co., Ltd. | Auxiliary material | -- | 174,396.61 |
| Lujiashan Limestone Mining of Shougang Beijing Co.,Ltd. | Raw material | 106,745,309.77 | 79,195,408.49 |
| Lujiashan Limestone Mining of Shougang Beijing Co.,Ltd. | Production service | 6,213,750.99 | 4,170,268.17 |
| Lujiashan Limestone Mining of Shougang Beijing Co.,Ltd. | Auxiliary material | 714,241.37 | 3,706,397.78 |
| Qinhuangdao Shougang Krosaki Refractory Co., Ltd. | Auxiliary material | 123,446,064.55 | 86,722,113.34 |
| Qinhuangdao Shougang Krosaki Refractory Co., Ltd. | Engineering equipment | 12,518,192.00 | -- |
| Yantai Shougang Mining 3D Co., Ltd. | Spare parts | 291,016.25 | 251,245.40 |
| Yantai Shougang Mining 3D Co., Ltd. | Auxiliary material | 563.80 | 362,080.00 |
| Tianjin Shougang Electric Equipment Co., Ltd. | Engineering equipment | 20,814,461.07 | 17,228,843.03 |
| Tianjin Shougang Electric Equipment Co., Ltd. | Spare parts | -- | 43,500.00 |
| Beijing Chengxin Engineering Supervision Co., Ltd. | Engineering service | 10,221,801.27 | 11,135,502.64 |
| Beijing Chengxin Engineering Supervision Co., Ltd. | Production service | 182,075.48 | 550,975.32 |
| Beijing Shoucheng Packaging Service Co., Ltd. | Production service | 88,764,826.69 | 116,685,917.69 |
| Shougang Penglong Steel Co., Ltd. | Production service | 7,268,770.36 | 8,716,306.75 |
| Beijing Shougang Materials Trading Co., Ltd. | Fuel material | 93,412,206.47 | 69,841,220.69 |
| Beijing Shougang Materials Trading Co., Ltd. | Raw material | 501,003,231.60 | 684,443,126.73 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Power energy | 902,058,261.99 | 880,542,090.00 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Fuel material | 8,646,318,959.07 | 6,229,651,283.87 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Raw material | 1,411,956.90 | 787,108.67 |
| Beijing Shougang Futong Elevator Co., Ltd. | Spare parts | 433,075.00 | 485,625.00 |
| Beijing Shougang Futong Elevator Co., Ltd. | Production service | 577,068.97 | 373,752.14 |
| Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | Production service | 116,901,828.23 | 63,201,577.98 |
| Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | Engineering equipment | 4,828,685.47 | 3,721,551.32 |
| Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | Spare parts | 11,595,876.00 | 13,088,912.00 |
| Tangshan Guoxing Industrial Co., Ltd. | Production service | 38,316,953.44 | 13,355,355.49 |
| Tangshan Guoxing Industrial Co., Ltd. | Spare parts | 1,976,600.00 | 832,640.00 |
| Tangshan Guoxing Industrial Co., Ltd. | Auxiliary material | -- | 93,000.00 |
| Tangshan Guoxing Industrial Co., Ltd. | Fuel material | 747,170.99 | 564,945.31 |
| Related parties | Nature of transaction | 2019 | 2018 |
| Tangshan Guoxing Industrial Co., Ltd. | Engineering service | 3,682,543.70 | 1,538,621.68 |
| Tangshan Caofeidian Industrial District Shouhanxin Industrial Co., Ltd. | Production service | 337,362,439.03 | 352,267,670.50 |
| Tonghua Iron and Steel Co., Ltd. | Engineering equipment | 100,789,692.06 | 187,439,037.37 |
| Tonghua Iron and Steel Co., Ltd. | Raw material | 172,306,141.47 | 84,630,613.17 |
| Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | Production service | 450,000.00 | -- |
| Shougang Environmental Industry Co., Ltd. | Production service | 2,917,451.84 | 1,748,989.61 |
| Beijing Teyu Plate Co., Ltd. | Raw material | 3,580,817.93 | 6,822,042.67 |
| Shougang Kuangshan Hospital | Life service | 1,476,833.00 | 1,411,701.50 |
| Qinhuangdao Zhongshou Logistics Co., Ltd. | Raw material | 12,322,833.89 | 15,950,694.25 |
| Beijing Shougang Kuangjian Co., Ltd. | Engineering service | 30,114,337.84 | 17,842,710.00 |
| Beijing Shougang Kuangjian Co., Ltd. | Production service | -- | 535,575.84 |
| Qinhuangdao Shouqin Metal Materials Co., Ltd. | Engineering equipment | 3,706,128.56 | 81,382,922.06 |
| Qinhuangdao Shouqin Metal Materials Co., Ltd. | Raw material | 2,440,449.31 | 689,857,860.96 |
| Beijing Shougang Industrial Group Co., Ltd. | Life service | 1,587,534.37 | 566,425.17 |
| Beijing Shouxin Property Management Co., Ltd. | Production service | -- | 257,339.25 |
| Beijing Shougang Shape Metal Co., Ltd. | Raw material | 1,004,008.95 | 1,303,560.40 |
| Beijing Dingshengcheng Packaging Materials Co., Ltd. | Production service | 99,899,345.64 | 40,241,035.97 |
| Beijing Shougang Cultural Development Co., Ltd. | Production service | 188,679.25 | 282,075.47 |
| Beijing Shougang Steel Trade Investment Management Co., Ltd. | Sales service Charge | 9,886,776.51 | 8,429,667.73 |
| Jingxi (Guizhou) Supply Chain Management Co., Ltd. | Raw material | 72,644,648.46 | 5,027,892.62 |
| Jilin Jingxi Entrepreneurship Information Technology Co., Ltd. | Raw material | -- | 4,727,462.05 |
| Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | Spare parts | 66,420.00 | 758,140.00 |
| Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | Raw material | 2,792,411.50 | 17,129,722.01 |
| Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | Engineering service | -- | 94,339.62 |
| Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | Auxiliary material | -- | 660,992.60 |
| Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | Production service | 5,050,207.48 | -- |
| Shougang Casey Steel Co., Ltd. | Production service | 74,672,046.11 | 19,252,368.51 |
| Tangshan Caofeidian First Real Industrial Co., Ltd. | Life service | 13,199,256.60 | 10,440,575.72 |
| Beijing Shougang Fulu Shicai Coated Plate Co., Ltd. | Engineering equipment | 17,022,018.50 | 46,094,126.95 |
| Qiangang Hotel. | Production service | 606,948.76 | 316,000.00 |
| Beijing Shougang Special Steel Co., Ltd. | Engineering equipment | 102,565,023.77 | -- |
| Beijing Shougang Yunxiang Industrial Technology Co., Ltd. | Spare parts | 1,268,805.00 | -- |
| Beijing Shougang Resources Comprehensive Utilization Technology Development Co., Ltd. | Raw material | 16,002,746.00 | -- |
| Related parties | Nature of transaction | 2019 | 2018 |
| Beijing Shougang Resources Comprehensive Utilization Technology Development Co., Ltd. | Engineering equipment | 32,508,824.69 | -- |
| Bohai International Conference Center Co., Ltd. | Life service | 439,362.26 | -- |
| Foshan Shougang Zhongjin Steel Processing&Distribution Co., Ltd. | Production service | 94,378.48 | -- |
| Hebei Shoulang New Energy Technology Co., Ltd. | Power energy | 2,761,596.34 | -- |
| Qian'an Shougang Xingkuang Industrial Co., Ltd. | Auxiliary material | 19,491,647.24 | -- |
| Tangshan Caofeidian Jingshou Industrial Co., Ltd. | Spare parts | 6,853,547.00 | -- |
②Sale of goods and rendering of services to related parties
| Related parties | Nature of transaction | 2019 | 2018 |
| Shougang Group Co., Ltd. | Management service | 370,745,020.29 | 384,196,400.00 |
| Shougang Mining Corporation | Steel | 6,791,709.30 | 10,511,689.12 |
| Shougang Mining Corporation | Raw fuel material | 170,297,290.32 | 147,669,427.10 |
| Shougang Mining Corporation | Power energy | 369,371,013.03 | 255,503,408.12 |
| Shougang Mining Corporation | Production service | 16,286,612.00 | 16,691,365.00 |
| Shougang Mining Corporation | Spare parts | -- | 47,996.66 |
| Shougang Group Finance Co., Ltd. | Interest income | 71,871,537.49 | 96,620,146.54 |
| Tangshan Zhonghong Carbon Chemical Co., Ltd. | Investment income | 8,187,426.69 | 5,478,548.29 |
| Beijing Shougang Steel Trade Investment Management Co., Ltd. | Steel | 89,947,445.05 | 330,490,493.33 |
| Shanghai Shougang Steel Trading Co., Ltd. | Steel | 8,259,950,875.29 | 6,946,632,277.06 |
| Guangzhou Shougang Steel Trading Co., Ltd. | Steel | 7,944,636,740.78 | 6,885,399,920.51 |
| Shandong Shougang Steel Trading Co., Ltd. | Steel | 6,894,010,250.49 | 5,966,594,087.29 |
| Tianjin Shougang Steel Trading Co., Ltd. | Steel | 8,647,563,468.71 | 6,800,287,319.67 |
| Wuhan Shougang Steel Trading Co., Ltd. | Steel | 1,654,044,276.54 | 1,852,436,124.32 |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | Power energy | 200,061,363.49 | 168,953,933.39 |
| Shougang Casey Steel Co., Ltd. | Steel | 249,996,386.87 | 204,792,865.17 |
| Shougang Penglong Steel Co., Ltd. | Steel | 286,470,227.92 | 297,561,328.40 |
| Shougang Penglong Steel Co., Ltd. | Power energy | 1,739,933.64 | 1,401,446.42 |
| Shougang Penglong Steel Co., Ltd. | Production service | 3,340,150.50 | -- |
| Beijing Shougang Xinganglian Technology&Trade Co., Ltd. | Steel | 1,041,454,933.27 | 1,076,695,682.48 |
| Beijing Shougang Construction Group Co., Ltd. | Power energy | 7,613,401.69 | 18,251,576.70 |
| Beijing Shougang Construction Group Co., Ltd. | Steel | 32,142,624.82 | 11,696,826.93 |
| Beijing Shougang Construction Group Co., Ltd. | Production service | 208,000.00 | -- |
| Beijing Shougang Gas Co., Ltd. | Power energy | 134,452,950.60 | 188,077,819.57 |
| Related parties | Nature of transaction | 2019 | 2018 |
| Suzhou Shouqin Steel Processing&Distribution Co., Ltd. | Steel | 277,393,046.72 | 226,643,831.19 |
| Beijing Shougang Machinery&Electric Co., Ltd. | Steel | 13,752,872.81 | -- |
| Beijing Shougang Machinery&Electric Co., Ltd. | Power energy | 2,389,168.65 | 2,026,563.41 |
| Beijing Shougang Machinery&Electric Co., Ltd. | Production service | 2,840,000.00 | 108,342.85 |
| Beijing Shougang Ferroalloy Co., Ltd. | Power energy | 3,661,793.11 | 3,837,864.89 |
| Beijing Shougang Ferroalloy Co., Ltd. | Raw fuel material | 16,542,542.44 | 17,230,069.25 |
| Beijing Shougang Ferroalloy Co., Ltd. | Production service | 493,044.05 | 418,889.04 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Power energy | 564,148,285.44 | 566,497,279.42 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Production service | 176,641,061.76 | 155,315,836.93 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Recycled material | 172,674.55 | 1,690,673.37 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Spare parts | 343,324.00 | -- |
| Beijing Beiye Functional Materials Co., Ltd. | Billet | 7,366,113.97 | 6,781,499.61 |
| Beijing Beiye Functional Materials Co., Ltd. | Production service | 384,905.66 | -- |
| Beijing Shougang Jitaian New Material Co., Ltd. | Billet | 1,108,792.50 | 4,874,083.00 |
| Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | Power energy | 39,123.00 | -- |
| Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | Raw fuel material | 3,182,416.95 | 3,927,490.99 |
| Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | Recycled material | 4,568,190.07 | 3,562,846.76 |
| Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | Production service | 133,523.81 | -- |
| Beijing Shoucheng Packaging Service Co., Ltd. | Steel | 11,522,208.24 | 15,841,601.95 |
| Beijing Shoucheng Packaging Service Co., Ltd. | Power energy | 315,078.53 | 326,513.77 |
| Beijing Shoucheng Packaging Service Co., Ltd. | Production service | 758,312.49 | -- |
| Qian'an First Real Packaging Service Co., Ltd. | Steel | 100,954,027.21 | 57,751,905.99 |
| Beijing Shouronghui Technology Development Co., Ltd. | Steel | 6,608,317.76 | 19,765,769.92 |
| Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | Recycled material | 169,307,874.01 | 109,043,188.61 |
| Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | Power energy | 97,078,359.14 | 78,418,832.71 |
| Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | Production service | 14,439,797.30 | 9,134,772.01 |
| Jilin Tonggang International Trade Co., Ltd. | Steel | 107,008,056.82 | 92,141,965.69 |
| Beijing Shougang International Engineering&Technology Co., Ltd. | Steel | 2,857,231.84 | 237,672.76 |
| Beijing Shougang International Engineering&Technology Co., Ltd. | Power energy | 2,462,539.74 | 423,831.83 |
| Beijing Shougang Metal Co., Ltd. | Steel | 19,773,832.46 | 12,717,371.16 |
| Beijing Shougang Metal Co., Ltd. | Power energy | 689,706.52 | -- |
| Beijing Shougang Metal Co., Ltd. | Production service | 2,399,908.26 | 2,257,727.27 |
| Huludao Shougang Donghua Machinery Co., Ltd. | Steel | -- | 2,759,963.60 |
| Related parties | Nature of transaction | 2019 | 2018 |
| Huludao Shougang Donghua Machinery Co., Ltd. | Production service | 68,571.43 | -- |
| Qinhuangdao Shouqin Metal Materials Co., Ltd. | Steel | 352,885,301.56 | -- |
| Qinhuangdao Shouqin Metal Materials Co., Ltd. | Billet | -- | 1,027,690.50 |
| Qinhuangdao Shouqin Metal Materials Co., Ltd. | Raw fuel material | -- | 87,887,843.70 |
| Beijing Shougang Kuangjian Co., Ltd. | Steel | 6,158,563.95 | 11,457,050.71 |
| Tangshan Caofeidian Industrial District Shouhanxin Industrial Co., Ltd. | Steel | 21,165,858.24 | 17,941,395.76 |
| Qinhuangdao Shougang Machinery Co., Ltd. | Recycled material | 345,954,765.97 | 368,089,414.68 |
| Qinhuangdao Shougang Machinery Co., Ltd. | Power energy | 124,916.40 | 138,560.65 |
| Qian'an Shougang Equipment Structure Co., Ltd. | Power energy | 17,638.22 | 13,421.76 |
| Qian'an Shougang Equipment Structure Co., Ltd. | Production service | 130,285.71 | 120,000.00 |
| Tangshan Guoxing Industrial Co., Ltd. | Power energy | 280,770.63 | 76,016.92 |
| Tangshan Guoxing Industrial Co., Ltd. | Recycled material | 261,251.65 | -- |
| Tangshan Guoxing Industrial Co., Ltd. | Production service | 629,523.81 | -- |
| Tangshan Caofeidian Industrial Zone Jingtang Industrial Co., Ltd. | Power energy | 77,437.50 | 70,680.84 |
| Tangshan Caofeidian First Real Industrial Co., Ltd. | Power energy | 794,987.04 | 930,232.65 |
| Beijing Shougang Automation Information Technology Co., Ltd. | Power energy | 138,558.00 | 33,204.35 |
| Beijing Shougang Automation Information Technology Co., Ltd. | Production service | -- | 183,962.26 |
| Beijing Shougang Automation Information Technology Co., Ltd. | Spare parts | 430,317.54 | -- |
| Hebei Shoulang New Energy Technology Co., Ltd. | Power energy | 125,794,704.43 | 2,820,658.45 |
| Beijing Jinanyuan Automobile Transportation Co., Ltd. | Production service | 205,714.29 | 205,714.28 |
| Harbin Shougang Wuzhong Steel Processing&Distribution Co., Ltd. | Steel | 942,357,319.33 | 656,367,006.51 |
| Beijing Shoujian equipment maintenance Co., Ltd. | Raw fuel material | -- | 4,150,000.00 |
| Tonghua Iron and Steel Co., Ltd. | Raw fuel material | 93,907,786.53 | 97,304,484.28 |
| Lujiashan Limestone Mining of Shougang Beijing Co.,Ltd. | Raw fuel material | 102,525.30 | 393,351.27 |
| West Factoring Co., Ltd. | Production service | -- | 377,358.50 |
| Beijing Shoujian Jicai Trading Co., Ltd. | Steel | 39,244,874.65 | 4,227,350.60 |
| Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | Steel | -- | 18,968,039.67 |
| Shougang Guiyang Special Steel Co., Ltd. | Steel | -- | 1,697,643.31 |
| Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | Power energy | 105,930.45 | 103,227.24 |
| Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | Production service | 665,142.86 | 526,857.14 |
| Chongqing Shougang Wuzhong Automotive Components Co., Ltd. | Steel | 438,741,049.25 | -- |
| Beijing Shougang Refractory& Metallurgical Burden Co., Ltd. | Power energy | 216,711.69 | -- |
| Beijing Shougang Materials Trading Co., Ltd. | Raw fuel material | 31,584,175.47 | -- |
| Related parties | Nature of transaction | 2019 | 2018 |
| Liuzhou Shougang Automotive Materials Co., Ltd. | Steel | 6,644,320.41 | -- |
| Ningbo Shougang Automotive Components Co., Ltd. | Steel | 164,715,427.77 | -- |
| 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 | 46,433,676.10 | -- |
(2) Details of related party leases
The Group as a lessor
| Lessees | Type of assets leased | Lease income recognized in 2019 | Lease income recognized in 2018 |
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | Land use right | 824,536.83 | 385,153.36 |
| 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 | 2,042,666.68 | 1,366,476.19 |
| Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | Land use right | 24,976,236.65 | 21,315,076.18 |
(3) Details of related party guarantees
The Group as a guarantee
| Guarantor | Amount of guarantee | Beginning date | Maturity date | Status of guarantee |
| Shougang Group Co., Ltd. | 10,814,131,944.44 | 2015/10/13 | 2031/8/23 | Incomplete |
| Shougang Group Co., Ltd. | 7,026,866,666.72 | 2015/12/29 | 2021/11/3 | Incomplete |
| Shougang Group Co., Ltd. | 8,806,731,733.54 | 2018/5/28 | 2020/12/18 | Incomplete |
(4)Details of related party funding
| Related parties | Amount of funding | Beginning date | Maturity date | Note |
| Funds received: | ||||
| Shougang Group Co., Ltd. | 600,000.00 | 2019/3/6 | 2020/3/6 | Short-term loans |
| Shougang Group Co., Ltd. | 2,061,683.61 | 2019/3/6 | 2022/9/5 | Long-term loans |
| Shougang Group Finance Co., Ltd. | 9,604,643,833.33 | 2018/1/3 | 2020/11/28 | Short-term loans |
| Shougang Group Finance Co., Ltd. | 3,446,722,295.34 | 2019/7/11 | 2020/6/30 | Notes payable |
| Funds provided: | ||||
| Tangshan Zhonghong Carbon Chemical Co., Ltd. | 229,012,500.00 | -- | -- | Other current assets |
(5) Details of transfer of assets and debt restructuring
| Related parties | Nature of transaction | 2019 | 2018 |
| Shougang Group Co., Ltd. | Construction materials | 990,621,384.00 | -- |
(6) Remuneration of key management personnel
The Group has 21 key management personnel in 2019, and 18 key management personnel in 2018.The remuneration payment is as follows:
| Item | 2019 | 2018 |
| Remuneration of key management personnel | 4.7885 million | 6.8559 million |
6. Receivables from and payables to related parties
(1) Receivables from related parties
| Items | Related parties | As at 31/12/2019 | As at 31/12/2018 | ||
| Book value | Provision for bad debts | Book value | Provision for bad debts | ||
| Bank deposit | Shougang Group Finance Co., Ltd. | 4,450,606,208.74 | -- | 4,815,617,592.86 | -- |
| Accounts receivable | Beijing Shougang Steel Trade Investment Management Co., Ltd. | 188,572,372.49 | 6,095,688.76 | 231,850,909.91 | 6,865,805.49 |
| Accounts receivable | Beijing Shougang Gas Co., Ltd. | 6,417,820.87 | 207,459.01 | 38,017,756.54 | 1,125,820.56 |
| Accounts receivable | Shougang Group Co., Ltd. | 1,151,785.00 | 37,231.98 | 2,123,139.94 | 62,872.58 |
| Accounts receivable | Shougang Casey Steel Co., Ltd. | 159,556,205.55 | 5,157,727.80 | 179,832,788.85 | 5,325,391.86 |
| Accounts receivable | Tianjin Shougang Steel Trading Co., Ltd. | 39,601.29 | 1,280.13 | 852,954.13 | 25,258.55 |
| Accounts receivable | Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | 2,323,825.34 | 317,087.83 | 1,543,542.04 | 120,639.41 |
| Accounts receivable | Beijing Shougang Special Steel Co., Ltd. | -- | -- | 782,132.82 | 23,161.31 |
| Accounts receivable | Shanghai Shougang Steel Trading Co., Ltd. | -- | -- | 69,864.00 | 2,068.88 |
| Accounts receivable | Beijing Shougang Kuangjian Co., Ltd. | -- | -- | 5,445,368.57 | 161,253.81 |
| Accounts receivable | Hebei Shoulang New Energy Technology Co., Ltd. | 68,164,731.53 | 2,203,456.33 | -- | -- |
| Prepayments | Shougang Group Co., Ltd. | 1,333,506,134.45 | -- | 1,455,849,997.29 | -- |
| Prepayments | Qinhuangdao Zhongshou Logistics Co., Ltd. | 8,510,097.67 | -- | 5,955,395.57 | -- |
| Prepayments | Tonghua Iron and Steel Co., Ltd. | 138,135.63 | -- | 2,241,546.01 | -- |
| Prepayments | Qian'an Shougang Equipment Structure Co., Ltd. | -- | -- | 7,762,606.48 | -- |
| Other current assets | Tangshan Zhonghong Carbon Chemical Co., Ltd. | 229,012,500.00 | -- | 164,252,500.00 | -- |
(2) Payables to related parties
| Item | Related party | As at 31/12/2019 | As at 31/12/2018 |
| Accounts payable | Shougang Group Co., Ltd. | 485,181,342.50 | 1,121,538,179.31 |
| Accounts payable | Shougang Mining Corporation | 4,954,955,975.46 | 5,456,198,986.06 |
| Accounts payable | Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | 562,563,215.95 | 791,563,333.11 |
| Accounts payable | Tangshan Shougang Jingtang Xishan Coking Co., Ltd. | 1,127,800,443.39 | 708,222,489.45 |
| Accounts payable | Beijing Shoucheng Packaging Service Co., Ltd. | 11,922,547.50 | 15,844,268.79 |
| Accounts payable | Beijing Shougang Automation Information Technology Co., Ltd. | 240,030,149.52 | 85,349,820.82 |
| Accounts payable | Beijing Shougang Equipment Technology Co., Ltd. | 11,280,854.02 | 11,620,227.42 |
| Accounts payable | Beijing Shougang Construction Group Co., Ltd. | 730,363,964.00 | 525,458,730.20 |
| Accounts payable | Beijing Shoujian equipment maintenance Co., Ltd. | 30,144,217.54 | 21,733,704.33 |
| Accounts payable | Beijing Shougang Landscaping Co., Ltd. | 26,989,729.75 | 15,299,358.22 |
| Accounts payable | Beijing Shougang Catering Co., Ltd. | 5,774,228.25 | 5,109,757.18 |
| Accounts payable | Beijing Huaxia Technology Co., Ltd. | 3,938,004.10 | 3,079,576.83 |
| Accounts payable | Qinhuangdao Shougang Machinery Co., Ltd. | 61,540,108.69 | 34,208,267.27 |
| Accounts payable | Beijing Shougang Huaxia International Trade Co., Ltd. | 4,794,021.27 | 9,083,436.01 |
| Accounts payable | Beijing Shougang Machinery&Electric Co., Ltd. | 126,063,646.01 | 101,542,246.15 |
| Accounts payable | Shougang Penglong Steel Co., Ltd. | 1,737,052.74 | 300,000.00 |
| Accounts payable | Beijing Shouye Instruments&Meters Co., Ltd. | 18,297,061.23 | 15,839,325.95 |
| Accounts payable | Huludao Shougang Donghua Machinery Co., Ltd. | 11,811,553.01 | 18,917,346.56 |
| Accounts payable | Beijing Shoujian Hengxin Labor Service Co., Ltd. | -- | 183,000.00 |
| Accounts payable | Tianjin Shougang Electric Equipment Co., Ltd. | 12,409,340.28 | 12,973,115.95 |
| Accounts payable | Beijing Shougang Gas Co., Ltd. | 35,582,951.80 | 14,228,463.80 |
| Accounts payable | Beijing Shougang International Engineering&Technology Co., Ltd. | 47,548,731.92 | 180,632,514.82 |
| Accounts payable | Beijing Jinanyuan Automobile Transportation Co., Ltd. | 11,162,310.52 | 11,767,778.02 |
| Accounts payable | Beijing Shouronghui Technology Development Co., Ltd. | -- | 88,000.00 |
| Accounts payable | Beijing Shougang Park Comprehensive Service Co., Ltd. | -- | 194,919.95 |
| Accounts payable | Lujiashan Limestone Mining of Shougang Beijing Co.,Ltd. | 30,073,742.97 | 20,669,414.19 |
| Accounts payable | Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | 20,303,487.07 | 10,877,247.61 |
| Accounts payable | Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | 235,000.00 | -- |
| Accounts payable | Beijing Shougang Xinganglian Technology&Trade Co., Ltd. | 7,610,949.74 | 5,898,073.81 |
| Accounts payable | Qian'an Shougang Equipment Structure Co., Ltd. | 61,865,188.47 | 34,986,383.61 |
| Accounts payable | Yantai Shougang Mining 3D Co., Ltd. | 671,563.74 | 711,630.37 |
| Accounts payable | Beijing Shoujian Hengji Construction Engineering Co., Ltd. | 1,256,807.44 | 798,060.82 |
| Accounts payable | Beijing Soly Technology Co., Ltd. | 1,444,906.52 | 365,814.78 |
| Accounts payable | Qian'an Shouxin Automation Information Technology Co., Ltd. | 17,153,131.40 | 36,173,572.65 |
| Accounts payable | Peking University Shougang Hospital | 73,261.90 | 51,964.96 |
| Accounts payable | Qian'an First Real Packaging Service Co., Ltd. | 21,186,571.85 | 19,925,459.44 |
| Accounts payable | Beijing Shougang Refractory& Metallurgical Burden Co., Ltd. | 20,827,383.10 | 38,045,502.69 |
| Accounts payable | Beijing Shoujia Steel Construction Co., Ltd. | 3,156,322.62 | 3,074,982.31 |
| Accounts payable | Beijing Shougang Ferroalloy Co., Ltd. | 23,776,008.52 | 31,841,032.06 |
| Accounts payable | Beijing Shougang Materials Trading Co., Ltd. | 139,751,742.43 | 51,870,018.88 |
| Accounts payable | Beijing Shougang Heavy Duty Truck Manufacture Co., Ltd. | -- | 420,000.00 |
| Accounts payable | Beijing Shougang Resources Comprehensive Utilization Technology Development Co., Ltd. | 90,690,426.64 | 78,236,162.59 |
| Accounts payable | Shougang Environmental Industry Co., Ltd. | 271,509.00 | 87,500.00 |
| Accounts payable | China Shougang International Trade&Engineering Corporation | 26,266,404.95 | -- |
| Accounts payable | Beijing Chengxin Engineering Supervision Co., Ltd. | 5,377,809.00 | 5,280,841.07 |
| Item | Related party | As at 31/12/2019 | As at 31/12/2018 |
| Accounts payable | Qinhuangdao Shougang Plate Mill Co., Ltd. | -- | 174,773.54 |
| Accounts payable | Qinhuangdao Shougang Krosaki Refractory Co., Ltd. | 75,109,604.80 | 47,567,664.63 |
| Accounts payable | Tangshan Shoukuang Cleaning Iron Co., Ltd. | 255,466,259.07 | 255,466,259.07 |
| Accounts payable | Tangshan Guoxing Industrial Co., Ltd. | 24,005,948.59 | 7,420,121.89 |
| Accounts payable | Tangshan Caofeidian Industrial District Shouhanxin Industrial Co., Ltd. | 152,232,033.84 | 203,579,167.51 |
| Accounts payable | Qian'an Shoufa Equipment Technology Co., Ltd. | -- | 80,143.60 |
| Accounts payable | Beijing Shougang Futong Elevator Co., Ltd. | 745,205.78 | 755,229.65 |
| Accounts payable | Beijing Teyu Plate Co., Ltd. | 84,256,276.75 | 84,065,796.77 |
| Accounts payable | Jingxi Shoutang Supply Chain Management Co., Ltd | 8,527,751.77 | -- |
| Accounts payable | Beijing Shouxin Property Management Co., Ltd. | -- | 294,396.71 |
| Accounts payable | Beijing Shougang Open Source Service Center | 166,588.84 | 166,588.84 |
| Accounts payable | Beijing Shougang Kuangjian Co., Ltd. | 10,459,861.34 | -- |
| Accounts payable | Qinhuangdao Shouqin Metal Materials Co., Ltd. | 32,939,235.34 | 138,092,156.90 |
| Accounts payable | Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | 1,233,757.39 | 565,702.78 |
| Accounts payable | Beijing Shoushe Metallurgical Technology Co., Ltd. | 1,851,378.60 | -- |
| Accounts payable | Beijing Shougang Fulu Shicai Coated Plate Co., Ltd. | 16,666,004.85 | 53,647,818.53 |
| Accounts payable | Beijing Shougang Industrial Co., Ltd. | 3,008,626.21 | 930,371.30 |
| Accounts payable | Bejing Shougang International Travel Co., Ltd. | 256,216.50 | 2,738.00 |
| Accounts payable | Beijing Shougang Cultural Development Co., Ltd. | 200,000.00 | 299,000.00 |
| Accounts payable | Beijing Shougang Yunxiang Industrial Technology Co., Ltd. | 477,946.69 | 64,228.00 |
| Accounts payable | Qian'an Shougang Xingkuang Property Service Co., Ltd. | -- | 38,212.40 |
| Accounts payable | Qiangang Hotel. | 3,676,701.60 | 4,205,045.64 |
| Accounts payable | Beijing Dingshengcheng Packaging Materials Co., Ltd. | 31,025.28 | 7,192,932.36 |
| Accounts payable | Beijing Shouxinsheng Trading Co., Ltd. | 99,956.00 | 99,956.00 |
| Accounts payable | Qinhuangdao Thermostable Ceramics Co., Ltd. | -- | 18,745.89 |
| Accounts payable | China Peace International Travel Service Co., Ltd. | -- | 2,432.00 |
| Accounts payable | Beijing Huayu Information Technology Co., Ltd. | 1,020,730.20 | -- |
| Accounts payable | Beijing Shougang Steel Trade Investment Management Co., Ltd. | 414,310.23 | -- |
| Accounts payable | Beijing Huayue Aviation Service Co., Ltd. | 69,032.60 | -- |
| Accounts payable | Beijing Shougang Special Steel Co., Ltd. | 101,949,940.33 | -- |
| Accounts payable | Hebei Shougang Jingtang Machinery Co., Ltd. | 93,066.99 | -- |
| Accounts payable | Ningbo Metallurgical Investigation, Design&Research Co., Ltd. | 10,488,386.04 | -- |
| Accounts payable | Qian'an Shougang Xingkuang Industrial Co., Ltd. | 9,794,718.39 | -- |
| Accounts payable | Bohai International Conference Center Co., Ltd. | 5,890.00 | -- |
| Advances from customers | Beijing Shoucheng Packaging Service Co., Ltd. | 60,349.05 | 219,608.34 |
| Advances from customers | Beijing Shougang Huaxia Engineering&Technology Co., Ltd. | 1,959,106.22 | 239,770.21 |
| Advances from customers | Suzhou Shouqin Steel Processing&Distribution Co., Ltd. | 30,085,274.87 | 21,390,014.85 |
| Advances from customers | Shanghai Shougang Steel Trading Co., Ltd. | 526,794,553.45 | 333,435,604.22 |
| Advances from customers | Tianjin Shougang Steel Trading Co., Ltd. | 281,727,299.64 | 225,834,540.12 |
| Advances from customers | Wuhan Shougang Steel Trading Co., Ltd. | 49,457,273.37 | 36,506,315.71 |
| Advances from customers | Guangzhou Shougang Steel Trading Co., Ltd. | 292,552,816.41 | 55,159,477.72 |
| Advances from customers | Shandong Shougang Steel Trading Co., Ltd. | 306,842,098.51 | 170,826,986.33 |
| Advances from customers | Beijing Beiye Functional Materials Co., Ltd. | 551,053.97 | 415,620.91 |
| Advances from customers | Beijing Shougang Jitaian New Material Co., Ltd. | 43,809.62 | 57,778.91 |
| Advances from customers | Beijing Shougang Xinganglian Technology&Trade Co., Ltd. | 21,109,356.27 | 11,850,616.52 |
| Advances from customers | Huludao Shougang Donghua Machinery Co., Ltd. | 47,599.02 | 47,599.02 |
| Advances from customers | Beijing Shouronghui Technology Development Co., Ltd. | 1,359,852.64 | 1,425,325.77 |
| Advances from customers | Beijing Shougang Machinery&Electric Co., Ltd. | 365,757.09 | -- |
| Advances from customers | Beijing Shougang Construction Group Co., Ltd. | 112,035.58 | 11,415.58 |
| Advances from customers | Shougang Penglong Steel Co., Ltd. | 36,052,668.08 | 279,211.11 |
| Item | Related party | As at 31/12/2019 | As at 31/12/2018 |
| Advances from customers | Tangshan Caofeidian Industrial District Shouhanxin Industrial Co., Ltd. | 110,580.19 | 409,242.90 |
| Advances from customers | Jilin Tonggang International Trade Co., Ltd. | 864,766.91 | 5,733,042.73 |
| Advances from customers | Beijing Shougang Jitai'an Alloy Materials Co., Ltd. | 26,000.78 | 26,000.78 |
| Advances from customers | Qinhuangdao Shougang Machinery Co., Ltd. | 1,038,445.65 | 1,039,723.82 |
| Advances from customers | Tangshan Caofeidian Industrial Zone Jingtang Industrial Co., Ltd. | 50,000.00 | 50,000.00 |
| Advances from customers | Tangshan Guoxing Industrial Co., Ltd. | 90,000.00 | 39,999.97 |
| Advances from customers | Beijing Shougang International Engineering&Technology Co., Ltd. | 46,739.83 | 275,579.22 |
| Advances from customers | Beijing Shoubao Nuclear Equipment Technology Co., Ltd. | 9,492.00 | 10,000.00 |
| Advances from customers | Harbin Shougang Wuzhong Steel Processing&Distribution Co., Ltd. | 12,956,569.23 | 56,700,800.50 |
| Advances from customers | Beijing Shougang Gas Co., Ltd. | -- | 115,256.92 |
| Advances from customers | Beijing Shougang Automation Information Technology Co., Ltd. | 49,999.87 | 540,788.38 |
| Advances from customers | Hebei Shoulang New Energy Technology Co., Ltd. | -- | 150,000.00 |
| Advances from customers | Qian'an First Real Packaging Service Co., Ltd. | 6,550,289.25 | 10,708,146.61 |
| Advances from customers | Tangshan Caofeidian Dunshi New Construction Material Co., Ltd. | 1,901,647.96 | 1,901,647.61 |
| Advances from customers | Beijing Shougang Industrial Co., Ltd. | 81,591.43 | 81,386.87 |
| Advances from customers | Beijing Jinanyuan Automobile Transportation Co., Ltd. | 10,000.00 | -- |
| Advances from customers | Beijing Shougang Metal Co., Ltd. | 142,999.05 | -- |
| Advances from customers | Beijing Shoujian Jicai Trading Co., Ltd. | 320,533.42 | -- |
| Advances from customers | Foshan Shougang Zhongjin Steel Processing&Distribution Co., Ltd. | 128,170.60 | -- |
| Advances from customers | Liuzhou Shougang Automotive Materials Co., Ltd. | 391,917.94 | -- |
| Advances from customers | Ningbo Shoude Bonded zone Trading Co., Ltd. | 28,410,000.00 | -- |
| Advances from customers | Ningbo Shougang Automotive Components Co., Ltd. | 28,632,691.55 | -- |
| Advances from customers | Qian'an Shougang Equipment Structure Co., Ltd. | 4,891.98 | -- |
| Advances from customers | Qinhuangdao Shougang Plate Mill Co., Ltd. | 13,028.81 | -- |
| Advances from customers | Qinhuangdao Shougang Krosaki Refractory Co., Ltd. | 102,297.31 | -- |
| Advances from customers | Shougang Changzhi Steel&Iron Co., Ltd. | 4,860,000.00 | -- |
| Advances from customers | Chongqing Shougang Wuzhong Automotive Components Co., Ltd. | 14,306,118.74 | -- |
| Other payables | Shougang Group Co., Ltd. | 1,061,498,156.33 | 378,160,621.41 |
| Other payables | Beijing Shougang Automation Information Technology Co., Ltd. | 2,198,297.09 | 47,434,679.85 |
| Other payables | Beijing Shougang Construction Group Co., Ltd. | 21,645,486.00 | 139,486,767.71 |
| Other payables | Beijing Shougang Landscaping Co., Ltd. | 275,150.20 | 478,056.20 |
| Other payables | Huludao Shougang Donghua Machinery Co., Ltd. | -- | 3,033,103.10 |
| Other payables | Beijing Shougang Machinery&Electric Co., Ltd. | -- | 4,429,025.81 |
| Other payables | Beijing Shoujian Hengji Construction Engineering Co., Ltd. | -- | 233,802.10 |
| Other payables | Beijing Chengxin Engineering Supervision Co., Ltd. | 269,324.00 | 302,500.00 |
| Other payables | Beijing Soly Technology Co., Ltd. | -- | 213,191.66 |
| Other payables | Beijing Shouye Instruments&Meters Co., Ltd. | -- | 44,712.44 |
| Other payables | Beijing Shougang Catering Co., Ltd. | 667,619.99 | 516,489.50 |
| Other payables | Beijing Huayu Information Technology Co., Ltd. | -- | 1,020,730.20 |
| Other payables | Beijing Jinanyuan Automobile Transportation Co., Ltd. | 45,924.29 | 525,516.00 |
| Other payables | Beijing Shougang Resources Comprehensive Utilization Technology Development Company | -- | 11,385,000.00 |
| Other payables | Qian'an Shougang Equipment Structure Co., Ltd. | -- | 582,610.66 |
| Other payables | Tianjin Shougang Electric Equipment Co., Ltd. | 553,368.26 | -- |
| Other payables | Beijing Shougang International Engineering&Technology Co., Ltd. | 7,479,548.00 | 9,527,021.67 |
| Other payables | Beijing Shougang Kuangjian Co., Ltd. | 50,000.00 | 5,640,851.00 |
| Item | Related party | As at 31/12/2019 | As at 31/12/2018 |
| Other payables | Beijing Shouyuan Electric Power Co., Ltd. | -- | 20,000.00 |
| Other payables | Beijing Shougang Refractory& Metallurgical Burden Co., Ltd. | -- | 150,288.02 |
| Other payables | Shougang Mining Corporation | -- | 315,141.87 |
| Other payables | Qinhuangdao Shougang Machinery Co., Ltd. | -- | 1,805,898.52 |
| Other payables | Qinhuangdao Shouqin Steel Machining&Delivery Co., Ltd. | -- | 688,993.09 |
| Other payables | Beijing Shougang Xinganglian Technology&Trade Co., Ltd. | 300,000.00 | 3,194,733.80 |
| Other payables | Qiangang Hotel. | 1,027,929.08 | 1,017,517.81 |
| Other payables | Beijing Huaxia Technology Co., Ltd. | -- | 1,171,284.00 |
| Other payables | Beijing Shougang Huaxia International Trade Co., Ltd. | -- | 150,228.00 |
| Other payables | Beijing Jingshoujian Concrete Mixing Station Co., Ltd. | -- | 32,615.80 |
| Other payables | Beijing Shougang Industrial Co., Ltd. | 200,000.00 | 19,016.00 |
| Other payables | Tangshan Guoxing Industrial Co., Ltd. | 31,453.76 | -- |
| Other payables | Ningbo Metallurgical Investigation, Design&Research Co., Ltd. | 190,000.00 | -- |
| Other payables | Beijing Shougang Equipment Technology Co., Ltd. | 162,740.00 | -- |
| Other non-current liabilities | Shougang Group Co., Ltd. | 4,711,490,199.06 | 5,588,813,436.69 |
XI. Commitments and contingencies
1. Significant commitments
As at 31 December 2019, there is no significant commitment to be disclosed.
2. Contingencies
As at 31 December 2019, there is no material contingency arising from pending litigation andguarantee provided to other entities.XII. Events after balance sheet dateEvaluation of the impact of COVID-19 outbreakSince the COVID-19 epidemic break out in China in January, 2020, the prevention andcontrol of COVID-19outbreak is continuing nationwide. The Group will earnestly implementthe requirements of the prevention and control work, and strengthen support for epidemicprevention and control work. COVID-19 epidemic has a certain impact on the overalloperation of the Group. The company will continue to pay close attention to the developmentof COVID-19 epidemic and actively respond to its possible impact on the company's financialsituation and operating results.XIII. Other significant events
1. Segment information
The Group divides its business into an iron and steel segment according to internalorganizational structure, management requirements, and internal reporting system. Thesegment information is determined based on the financial information required by routineinternal management. The management periodically evaluates the operating results of thesegment to determine its allocation of resources and evaluate the performance of thesegement.
The segment information of the Group includes: the iron and steel segmentThe segment information is disclosed in accordance with the accounting policies andmeasurement basis used in the reports of the management, which are the same as those usedin working out financial statements.
(1) Segment profits or losses, assets and liabilities
| For the year ended 31 December 2019 and as at 31 December 2019 | The iron and steel Segment | Offset | Total |
| Revenue | 69,151,432,692.45 | -- | 69,151,432,692.45 |
| Including: External revenue | 69,151,432,692.45 | -- | 69,151,432,692.45 |
| Inter-segment revenue | -- | -- | -- |
| Including: Principal business revenue | 66,208,456,685.02 | -- | 66,208,456,685.02 |
| Cost of sales | 62,130,221,592.53 | -- | 62,130,221,592.53 |
| Including: Principal business cost | 59,764,448,943.00 | -- | 59,764,448,943.00 |
| Operating expenses | 3,193,583,664.71 | -- | 3,193,583,664.71 |
| Operating profits/(losses) | 2,024,461,276.71 | -- | 2,024,461,276.71 |
| Total assets | 135,106,278,049.83 | -- | 135,106,278,049.83 |
| Total liabilities | 98,733,603,216.92 | -- | 98,733,603,216.92 |
| Supplementary information: | |||
| 1.Capital expenditure | 5,469,993,637.58 | -- | 5,469,993,637.58 |
| 2.Depreciation and amortisation | 5,934,296,597.62 | -- | 5,934,296,597.62 |
| 3.Non-cash expenses other than depreciation and amortisation | -- | -- | -- |
| 4.Impairment losses on assets | 71,944,850.09 | -- | 71,944,850.09 |
(2) Other segment information
①External revenue of goods and services
| Item | 2019 | 2018 |
| The iron and steel Segment | 69,151,432,692.45 | 65,776,660,538.90 |
②Geographical information
No more details of geographical information will be listed as the production and sales of theGroup are located in mainland China.
2. Government grants
(1) Government grants which recognized as deferred income shall be subsequently measuredvia total-value method.
| Items | Type | 31/12/2018 | Increase | Recognition in profit or loss | 31/12/2019 | Presentation item recognized in profit and loss | Related to assets/income |
| Engineering informationization project subsidy (Qian'an Iron and Steel, cold-rolled ) | Financial appropriation | -- | 99,999.96 | -- | 575,000.16 | 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 | -- | 1,999,999.96 | -- | 8,000,000.16 | Other income | Related to assets |
| Special government grants from the Finance Bureau of Qian'an | Financial appropriation | -- | -- | -- | 4,200,000.00 | Other income | Related to assets |
| Government grants of hot-rolled steel strip TMCP project | Financial appropriation | -- | 105,263.16 | -- | 1,578,947.36 | Other income | Related to assets |
| Government grants for heating furnace revamping project (Qian'an Iron and Steel, hot-rolled) | Financial appropriation | -- | 526,315.80 | -- | 9,473,684.20 | Other income | Related to assets |
| Government grants for dedusting system upgrading project (Qian'an Iron and Steel) | Financial appropriation | -- | 1,105,263.12 | -- | 19,894,736.88 | Other income | Related to assets |
| Government grants for advanced sewage treatment | Financial appropriation | -- | 313,703.72 | -- | 5,846,296.28 | Other income | Related to assets |
| Special government grants for denitration engineering from the Hebei Provincial Finance Department | Financial appropriation | -- | 245,000.00 | -- | 1,225,000.00 | Other income | Related to assets |
| Government grants for online environmental monitoring project from the Finance Bureau of Caofeidian | Financial appropriation | -- | 500,000.00 | -- | 4,000,000.00 | 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 | Other income | Related to assets |
| National funds for the national 863 project | Financial appropriation | -- | 278,200.00 | -- | 1,391,000.00 | Other income | Related to assets |
| Special government grants for circular economy development from the Finance Bureau of Caofeidian | Financial appropriation | -- | -- | -- | 20,000,000.00 | Other income | Related to assets |
| Government grants for cold-rolled intelligent manufacturing project | Financial appropriation | -- | -- | -- | 13,500,000.00 | Other income | Related to assets |
| Government grants for seawater dsalination research, based on reuse of steelmaking waste heat | Financial appropriation | 1,260,000.00 | -- | 1,260,000.00 | 6,790,000.00 | Other income | Related to assets |
| Government grants for the desulfurization of pelletizing flue gas | Financial appropriation | -- | 1,486,105.24 | -- | 25,263,789.50 | Other income | Related to assets |
| Environmental protection government grants for closing limestone yards | Financial appropriation | -- | 80,000.00 | -- | 1,840,000.00 | Other income | Related to assets |
| Government grants for improvement of deeformation coupling matching and oxidation control in high strength steel production | Financial appropriation | 326,900.00 | -- | 326,900.00 | 1,701,800.00 | Other income | Related to assets |
| Government grants for intelligent interface closed-loop control technology in multi-target optimize steelmaking and ironmaking | Financial appropriation | 408,000.00 | -- | 408,000.00 | 2,208,000.00 | Other income | Related to assets |
| Government grants for new metal, ceramic composite powder, and refractory anticorrosion coating | Financial appropriation | 141,352.00 | -- | 141,352.00 | 771,652.00 | 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 | Other income | Related to assets |
| Government grants for energy-saving incentive for No.3 hydrogen generator | Financial appropriation | -- | 67,878.96 | -- | 1,153,942.09 | Other income | Related to assets |
| Government grants for procedure mathcing research and systema energy-saving in steelmaking program research | Financial appropriation | 195,500.00 | -- | 195,500.00 | 3,097,500.00 | Other income | Related to assets |
| Government grants for multi-targets optimization steelmaking | Financial appropriation | 540,000.00 | -- | 540,000.00 | 2,740,000.00 | Other income | Related to assets |
| Special government grants for integrating quality management and control system | Financial appropriation | 432,000.00 | 432,000.00 | 432,000.00 | 20,390,000.00 | Other income | Related to assets |
| Government grants for key technology of low-emission efficient energy-saving sintering and its utilizaiton project | Financial appropriation | 55,000.00 | -- | 55,000.00 | 278,600.00 | Other income | Related to assets |
| Government grants for the specialized production line project of Zinc-plated high-strengthen auto sheet | Financial appropriation | 10,640,000.00 | 191,578.95 | 10,640,000.00 | 110,448,421.05 | Other income | Related to assets |
| Special government grants for provincial-level industrial transformation and technical upgrading | Financial appropriation | -- | 300,000.00 | -- | -- | Other income | Related to assets |
| Government grants for reforming of sinter desulfurization and denitrification | Financial appropriation | 20,000,000.00 | 1,052,631.58 | 20,000,000.00 | 18,947,368.42 | Other income | Related to assets |
| Government grants for thin slab casting and rolling engineering | Financial appropriation | 5,000,000.00 | -- | 5,000,000.00 | 5,000,000.00 | Other income | Related to assets |
| Items | Type | 31/12/2018 | Increase | Recognition in profit or loss | 31/12/2019 | Presentation item recognized in profit and loss | Related to assets/income |
| 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 | 6,300,000.00 | Other income | Related to assets |
| Other government grants related to assets | Financial appropriation | 3,380,000.00 | 1,384,326.84 | 3,380,000.00 | 21,409,305.38 | Other income | Related to assets |
| Other government grants related to income | Financial appropriation | 50,900.00 | -- | 50,900.00 | 50,900.00 | Other income | Related to income |
| Total | 48,729,652.00 | 10,168,267.29 | 48,729,652.00 | 323,835,943.48 |
(2) Government grants which recognized as profit or loss, measured via total-value method.
| Items | Type | Recognised in profit or loss for the year ended 31/12/2018 | Recognised in profit or loss for the year ended 31/12/2019 | Presentation item recognized in profit and loss | Related to asset/income |
| Government grants for scientific and technological support | Financial appropriation | 17,117,710.00 | -- | Other income | Related to income |
| Government grants for steady post | Financial appropriation | 3,299,294.23 | -- | Other income | Related to income |
| Government grants for low-carbon renovation of gas-fired boiler | Financial appropriation | 2,009,600.00 | -- | Other income | Related to income |
| Government grants for enterprises operat in the region | Financial appropriation | 4,200,000.00 | -- | Other income | Related to income |
| Government grants for energy-saving incentive | Financial appropriation | 913,000.00 | 10,000.00 | Other income | Related to income |
| Government grants from the Market Supervision Administration | Financial appropriation | 700,000.00 | -- | Other income | Related to income |
| Other government grants related to income | Financial appropriation | 3,694,629.78 | 2,363,200.00 | Other income | Related to income |
| Total | 31,934,234.01 | 2,373,200.00 |
XIV. Notes to the financial statements of parent company
1. Notes receivable
| Items | 2019.12.31 | ||
| Book Value | Bad debt provision | Net carrying amount | |
| Bank acceptance notes | 8,804,600.00 | 8,804.60 | 8,795,795.40 |
| Commercial acceptance notes | 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 |
| Items | 2018.12.31 | ||
| Book Value | Bad debt provision | Net carrying amount | |
| Bank acceptance notes | 881,295,677.11 | 218,877.74 | 881,076,799.37 |
| Commercial acceptance notes | 3,113,228,299.87 | 3,444,784.79 | 3,109,783,515.08 |
| Total | 3,994,523,976.98 | 3,663,662.53 | 3,990,860,314.45 |
(1) The pledged notes receivable of the Group at the end of the year
| Items | Pledged amount at the end of the year |
| Bank acceptance notes | -- |
| Commercial acceptance notes | 1,500,000.00 |
| Total | 1,500,000.00 |
(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 acceptance notes | -- | 8,804,600.00 | ||
| Commercial acceptance notes | -- | 2,406,696,540.47 | ||
| Total | -- | 2,415,501,140.47 | ||
(3) Notes transferred to accounts receivable due to non-performance of the issuers at the end ofthe year
| Items | Amount transferred to accounts receivable at the end of the year |
| Bank acceptance notes | -- |
| Commercial acceptance notes | 700,000.00 |
| Total | 700,000.00 |
(4) Classified by bad debt provision method
| Category | 2019.12.31 | ||||
| Book value | Bad debt provision | Net carrying amount | |||
| 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 |
| Category | 2019.01.01 | ||||
| Book value | Bad debt provision | Net carrying amount | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | 500,000.00 | 0.02 | 500,000.00 | 100.00 | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 3,166,001,550.40 | 99.98 | 2,998,058.04 | 0.09 | 3,163,003,492.36 |
| Bank acceptance notes | -- | -- | -- | -- | -- |
| Commercial acceptance notes | 3,166,001,550.40 | 99.98 | 2,998,058.04 | 0.09 | 3,163,003,492.36 |
| Total | 3,166,501,550.40 | 100.00 | 3,498,058.04 | 0.11 | 3,163,003,492.36 |
(5) Provision, recovery or reversal of bad debt
| Items | Bad debt provision |
| As at 31 December 2018 | 3,663,662.53 |
| Adjustment amount for the first implementation of the new financial instrument standards | -165,604.49 |
| As at 1 January 2019 | 3,498,058.04 |
| Provision | -- |
| Recovery or reversal | 1,003,065.46 |
| Written-off | -- |
| As at 31 December 2019 | 2,494,992.58 |
2. Accounts receivable
(1) Disclosed by the ageing of account receivables
| Ageing | 2019.12.31 |
| Within 1 year | 1,178,784,486.91 |
| 1 – 2 years | 8,547,951.56 |
| 2 – 3 years | 200,000.00 |
| Over 3 years | 7,401,011.82 |
| Subtotal | 1,194,933,450.29 |
| Less: provision for bad debts | 14,819,047.23 |
| Total | 1,180,114,403.06 |
(2) Disclosed by bad debt provision
| Category | 2019.12.31 | ||||
| Book value | Bad debt provision | Net carrying amount | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | 1,030,744,009.67 | 86.26 | 7,401,011.82 | 0.72 | 1,023,342,997.85 |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 164,189,440.62 | 13.74 | 7,418,035.41 | 4.52 | 156,771,405.21 |
| Total | 1,194,933,450.29 | 100.00 | 14,819,047.23 | 1.24 | 1,180,114,403.06 |
| Category | 2019.01.01 | ||||
| Book value | Bad debt provision | Net carrying amount | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | 1,216,051,883.02 | 77.82 | 14,651,011.82 | 1.20 | 1,201,400,871.20 |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 346,552,330.38 | 22.18 | 31,036,279.03 | 8.96 | 315,516,051.35 |
| Total | 1,562,604,213.40 | 100.00 | 45,687,290.85 | 2.92 | 1,516,916,922.55 |
Assessed bad debt provision individually：
| Accounts receivable (by debtor) | 2019.12.31 | |||
| Book Value | 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 |
| Overdue recourse notes | 1,023,342,997.85 | -- | -- | |
| Total | 1,030,744,009.67 | 7,401,011.82 | 0.72 |
Assessed bad debt provision in portfolios：
| Item | 2019.12.31 | ||
| Book Value | Bad debt provision | Expected credit loss (%) | |
| Within 1 year | 155,441,489.06 | 5,024,717.69 | 3.23 |
| 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 | 164,189,440.62 | 7,418,035.41 | 4.52 |
Provision for bad debts on December 31, 2018：
| Category | 2018.12.31 | ||||
| Amount | Proportion (%) | Bad debt provision | Provision proportion (%) | Net amount | |
| Individually significant and assessed for bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on ageing | 1,547,953,201.58 | 99.06 | 79,516,998.88 | 5.14 | 1,468,436,202.70 |
| Individually insignificant but assessed for bad debt provision individually | 14,651,011.82 | 0.94 | 14,651,011.82 | 100.00 | -- |
| Total | 1,562,604,213.40 | 100.00 | 94,168,010.70 | 6.03 | 1,468,436,202.70 |
(3) Provision, recovery or reversal of bad debt
| Item | Bad debt provision |
| As at 31 December 2018 | 94,168,010.70 |
| Adjustment amount for the first implementation of the new financial instrument standards | -48,480,719.85 |
| As at 1 January 2019 | 45,687,290.85 |
| Provision | -- |
| Recovery or reversal | 30,868,243.62 |
| Written-off | -- |
| As at 31 December 2019 | 14,819,047.23 |
(4) During the year, there was no accounts receivable write-off.
(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 theend of the period is RMB 1,119,337.75 thousand, accounting for 93.68% of the total amount
of accounts receivable at the end of the period, and the total amount of the corresponding baddebt provision at the end of the period is RMB 11,864.68 thousand.
| Company Name | Ending balance | Percentage of total accounts receivable % | Ending balance of bad debt provision |
| Beijing Shougang Cold Rolling Co., Ltd. | 1,020,320,658.75 | 85.39 | -- |
| Qian'an Shoujia Construction Material Co., Ltd. | 74,221,373.06 | 6.21 | 3,901,373.14 |
| Sanhe Shoujia Construction Material Co., Ltd. | 11,728,211.62 | 0.98 | 7,540,890.55 |
| Zhangjiagang Cimc Sanctum Cryogenic Equipment Co., Ltd. | 6,649,685.84 | 0.56 | 214,954.16 |
| Beijing Shougang Gas Co., Ltd. | 6,417,820.87 | 0.54 | 207,459.01 |
| Total | 1,119,337,750.14 | 93.68 | 11,864,676.86 |
3. Financing receivable
| Items | 2019.12.31 | 2018.12.31 |
| Notes receivable | 1,825,294,953.86 | -- |
| Accounts receivable | -- | -- |
| Subtotal | 1,825,294,953.86 | -- |
| Less：Other comprehensive income - fair value change | -- | -- |
| Ending balance of fair value | 1,825,294,953.86 | -- |
(1) Classified by bad debt provision method
| Category | 2019.12.31 | ||||
| Book value | Bad debt provision | Net carrying amount | |||
| 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 |
| Group 1 | 1,825,660,085.88 | 100.00 | 365,132.02 | 0.02 | 1,825,294,953.86 |
| Group 2 | -- | -- | -- | -- | -- |
| Total | 1,825,660,085.88 | 100.00 | 365,132.02 | 0.02 | 1,825,294,953.86 |
| Category | 2019.01.01 | ||||
| Book value | Bad debt provision | Net carrying amount | |||
| Amount | Proportion (%) | Amount | Expected credit loss (%) | ||
| Assessed bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on credit risk characteristics | 828,022,426.58 | 100.00 | 165,604.49 | 0.02 | 827,856,822.09 |
| Group 1 | 828,022,426.58 | 100.00 | 165,604.49 | 0.02 | 827,856,822.09 |
| Group 2 | -- | -- | -- | -- | -- |
| Total | 828,022,426.58 | 100.00 | 165,604.49 | 0.02 | 827,856,822.09 |
(2) The pledged notes receivable of the Group at the end of the year
| Item | Pledged amount at the end of the year |
| Bank acceptance notes | 223,161,865.86 |
| Commercial acceptance notes | -- |
| Total | 223,161,865.86 |
(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 | 5,563,141,199.21 | -- |
| Commercial acceptance notes | -- | -- |
| Total | 5,563,141,199.21 | -- |
(4) Provision, recovery or reversal of bad debt
| Item | Bad debt provision |
| As at 31 December 2018 | -- |
| Adjustment amount for the first implementation of the new financial instrument standards | 165,604.49 |
| As at 1 January 2019 | 165,604.49 |
| Provision | 199,527.53 |
| Recovery or reversal | -- |
| Written-off | -- |
| As at 31 December 2019 | 365,132.02 |
4. Other receivables
| Item | 2019.12.31 | 2018.12.31 |
| Interest receivable | -- | -- |
| Dividends receivable | -- | -- |
| Other receivables | 1,673,247.41 | 2,742,352.97 |
| Total | 1,673,247.41 | 2,742,352.97 |
Other receivables
①Disclosed by the ageing of other receivables
| Ageing | 2019.12.31 |
| Within 1 year | 1,761,313.06 |
| Less: provision for bad debts | 88,065.65 |
| Total | 1,673,247.41 |
②Disclosed by nature of other receivables
| Item | 2019.12.31 | 2018.12.31 | ||||
| Ending balance | Provision for bad debts | Carrying amount | Ending balance | Provision for bad debts | Carrying amount | |
| Imprest | 1,510,560.20 | 75,528.01 | 1,435,032.19 | 2,688,109.03 | 136,321.18 | 2,551,787.85 |
| Deposits | 200,000.00 | 10,000.00 | 190,000.00 | 200,000.00 | 10,000.00 | 190,000.00 |
| Due from trading companies | 50,752.86 | 2,537.64 | 48,215.22 | 594.86 | 29.74 | 565.12 |
| Total | 1,761,313.06 | 88,065.65 | 1,673,247.41 | 2,888,703.89 | 146,350.92 | 2,742,352.97 |
③Provision for bad debts
As at 31/12/2019, bad debts provision for Phase I：
| Category | Book value | Expected credit loss within 12 months (%) | Provision for bad debts | Carrying amount | Reason for bad debts |
| Assessed bad debt provision individually | -- | -- | -- | -- | |
| Assessed bad debt provision in portfolios | 1,761,313.06 | 5.00 | 88,065.65 | 1,673,247.41 | |
| Total | 1,761,313.06 | 5.00 | 88,065.65 | 1,673,247.41 |
At the end of the period, the company had no interest receivable, dividends receivable andother receivables in Phase II.At the end of the period, the company has no provision for bad debts in Phase III.
Provision for bad debts on December 31, 2018：
| Category | 2018.12.31 | ||||
| Amount | Proportion (%) | Bad debt provision | Provision proportion (%) | Net amount | |
| Individually significant and assessed for bad debt provision individually | -- | -- | -- | -- | -- |
| Assessed bad debt provision in portfolios based on ageing | 2,888,703.89 | 100.00 | 146,350.92 | 5.07 | 2,742,352.97 |
| Individually insignificant but assessed for bad debt provision individually | -- | -- | -- | -- | -- |
| Total | 2,888,703.89 | 100.00 | 146,350.92 | 5.07 | 2,742,352.97 |
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 2018 | 146,350.92 | -- | -- | 146,350.92 |
| Adjustment amount for the first implementation of the new financial instrument standards | -- | -- | -- | -- |
| As at 1 January 2019 | 146,350.92 | -- | -- | 146,350.92 |
| Changes during the year | -- | -- | -- | -- |
| --Shift to Phase II | -- | -- | -- | -- |
| --Shift to Phase III | -- | -- | -- | -- |
| --Back to Phase II | -- | -- | -- | -- |
| --Back to Phase I | -- | -- | -- | -- |
| Provision | -- | -- | -- | -- |
| Reversal | 58,285.27 | -- | -- | 58,285.27 |
| Converse | -- | -- | -- | -- |
| Written-off | -- | -- | -- | -- |
| Other movements | -- | -- | -- | -- |
| As at 31 December 2019 | 88,065.65 | -- | -- | 88,065.65 |
⑤During the current period, there was no write-off of provision for bad debts
⑥The top five other receivables classified by debtors are as follows:
| Company Name | Nature of payment | Ending balance | Ageing | Percentage of total other receivable (%) | Ending balance of bad debt provision |
| Imprest | Imprest | 1,510,560.20 | Within 1 year | 85.76 | 75,528.01 |
| Kuche Tianyuan Coal Coking Co., Ltd. | Due from trading companies | 689.04 | Within 1 year | 0.04 | 34.45 |
| Qinhuangdao Shougang Krosaki Refractory Co., Ltd. | Due from trading companies | 50,063.82 | Within 1 year | 2.84 | 2,503.19 |
| Qian’an Administration of work safety supervision | Deposit | 200,000.00 | Within 1 year | 11.36 | 10,000.00 |
| Total | 1,761,313.06 | 100.00 | 88,065.65 |
5. Long-term equity investments
| Items | 2019.12.31 | 2018.12.31 | ||||
| Ending balance | Provision for impairment | Carrying amount | Ending balance | Provision for impairment | Carrying amount | |
| Investments in subsidiaries | 17,688,480,283.43 | -- | 17,688,480,283.43 | 16,522,425,373.43 | -- | 16,522,425,373.43 |
| Investment in associates | 1,205,450,675.37 | -- | 1,205,450,675.37 | 1,130,629,810.91 | -- | 1,130,629,810.91 |
| Total | 18,893,930,958.80 | -- | 18,893,930,958.80 | 17,653,055,184.34 | -- | 17,653,055,184.34 |
(1) Investments in subsidiaries
| Subsidiaries | 31/12/2018 | Increase | Decrease | 31/12/2019 | Provision for impairment | Impairment at the end of the year |
| Shougang Jingtang United Iron & Steel Co., Ltd | 9,684,449,473.43 | 1,031,054,910.00 | -- | 10,715,504,383.43 | -- | -- |
| Beijing Shougang Cold Rolling Co., Ltd. | 1,831,075,900.00 | -- | -- | 1,831,075,900.00 | -- | -- |
| Shougang Qian'an conference Centre Co.,Ltd. | 1,900,000.00 | -- | -- | 1,900,000.00 | -- | -- |
| Shougang Zhixin Qian'an Electromagnetic materials Co., Ltd | 5,005,000,000.00 | -- | -- | 5,005,000,000.00 | -- | -- |
| Beijing Shougang New Energy Automobile Materials Co., Ltd. | -- | 135,000,000.00 | -- | 135,000,000.00 | -- | -- |
| Total | 16,522,425,373.43 | 1,166,054,910.00 | -- | 17,688,480,283.43 | -- | -- |
(2) Investments in associates
| Associates | 31/12/2018 | Changes during the year | 31/12/2019 | Impairment at the end of the year | |||||||
| Increase | Decrease | Investment income under the equity method | Other comprehensive income | Other equity movement | Cash dividend received | Provision for impairment | Others | ||||
| Qian'an Sinochem Coal Chemical Industrial Co., Ltd. | 921,574,612.71 | -- | -- | 69,569,180.47 | -- | -- | -- | -- | -- | 991,143,793.18 | -- |
| Beijing Shouxin Jinyuan Management Consulting Center | 200,014,690.64 | -- | -- | 3,811,903.69 | -- | -- | -- | -- | -- | 203,826,594.33 | -- |
| Beijing Dingshengcheng Packaging Materials Co., Ltd. | 9,040,507.56 | -- | -- | 1,439,780.30 | -- | -- | -- | -- | -- | 10,480,287.86 | -- |
| Total | 1,130,629,810.91 | -- | -- | 74,820,864.46 | -- | -- | -- | -- | -- | 1,205,450,675.37 | -- |
6. Revenue and cost of sales
| Items | 2019 | 2018 | ||
| Revenue | Cost of sales | Revenue | Cost of sales | |
| Principal business | 27,165,864,018.15 | 25,670,609,173.34 | 26,805,984,414.49 | 24,263,256,966.16 |
| Other business | 1,689,424,521.46 | 1,259,654,818.02 | 2,417,074,288.33 | 1,885,365,354.75 |
| Total | 28,855,288,539.61 | 26,930,263,991.36 | 29,223,058,702.82 | 26,148,622,320.91 |
7. Investment income
| Item | 31/12/2019 | 31/12/2018 |
| Investment income from long-term investment under the equity method | 74,820,864.46 | 128,311,138.55 |
| Investment income from available-for-sale financial assets in duration | -- | 103,967,493.39 |
| Investment income from other equity instruments investments in duration | 202,033,784.60 | -- |
| Interest income from entrusted loans | 98,019,261.01 | 33,338,888.89 |
| Total | 374,873,910.07 | 265,617,520.83 |
XV. Supplementary information
1. Non-recurring gains or losses
| Items | 31/12/2019 | Notes |
| Gains or losses on disposal of non-current assets | -7,684,491.35 | |
| Government grants recognized in profit or loss for the current period (excluding those having close relationship with the Company’s normal business, conforming to the national policies and regulations and enjoying ongoing fixed amount or quantity according to certain standard) | 42,102,501.30 | |
| Gains or losses from external entrusted loans | 8,187,426.69 | |
| Non-operating income/(expenses) except the above | -18,673,930.68 | |
| Total non-recurring gains or losses | 23,931,505.96 | |
| Less: Effects of income tax on non-recurring gains or losses | 4,039,236.83 | |
| Net non-recurring gains or losses | 19,892,269.13 | |
| Less: Effects of non-recurring gains or losses attributable to the minority shareholders of the Company (after tax) | 6,033,972.74 | |
| Non-recurring gains or losses attributable to the shareholders of the Company | 13,858,296.39 |
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 attributable to owners of the parent | 4.7700 | 0.2365 | -- |
| Net profit attributable to owners of the parent excluding non-recurring gains or losses | 4.7200 | 0.2339 | -- |
Section XIII. Documents Available for Reference
1. Original Accounting Statement of 2019 carrying the signatures and seals of theChairman, General Manager, Chief accountant and Head of Accounting Department;
2. Original Auditors’ Report carrying the seals of accountingfirms, and signatures andseals of the CPA;
3. All original documents and notifications of the Company disclosed in newspapersthatdesignated by CSRC in report period;
4. Articles of Association and others.
Beijing Shougang Co., Ltd. Board of Directors
22 April 2020