本钢板材(000761)2004年年度报告摘要（英文版）

Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ Bengang Steel Plate Co., Ltd. Annual Report 2004 Summary §1 Important Notes 1.1 The Board of Directors and the directors of the Company guarantee that there are no significant omissions, fictitious or misleading statements carried in the Report and we will accept individual and joint responsibilities for the truthfulness, accuracy and completeness of the Report. 1.2 No director against the guarantee about the authenticity, accuracy and integrality of this report’s content. 1.3 Name of directors absent from the board meeting Name of director Reason of absent Consignee Xue Xiangxin –independent Out on business trip Zhong Tianli –independent director director 1.4 Beijing TIN WHA CPAs and Ho and Ho & Company CPAs issued the standard audit report for the Company with the fair and true opinion. 1.5 The Chairman of the Board –Mr. Chen Hongguo, Chief Accounting Supervisor –Mr. Yu Shiyong, Administrator of the Accounting Department –Mr. Liu Junwu hereby declare: the truthfulness and completeness of the report are guaranteed. 1.6 This report is prepared both in English and Chinese. When there is any conflict in understanding, the Chinese version shall prevail. §2 Company Profile 2.1 Company Profile Stock ID Bengangban B, Bengangbancai Stock Code 200761、000761 Stock Exchange Shenzhen Stock Exchange Registered address No.16, Renmin Road, Pingshan District, Benxi City, Liaoning Province and office address No.16, Renmin Road, Pingshan District, Benxi City, Liaoning Province Post Code Post code of the registered address: 117000 Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ Post code of the office address: 117000 Website None Email. bgbctwg@mail.bxptt.ln.cn Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ 2.2 Liaison Secretary of the Board Representative of Stock Affairs Name Liang Guangde Lu Xiaoyong Address No.16, Renmin Road, Pingshan District, No.16, Renmin Road, Pingshan District, Benxi City, Liaoning Province Benxi City, Liaoning Province Tel. 0414-7828360 0414-7828010 Fax. 0414-7824158 0414-7827004 Email. bgbcgdl@online.ln.cn bgbclxy@126.com §3 Financial Highlights 3.1 Major accounting data In RMB ‘000 2004 2003 Increase/decrease 2002 (%) Major business 17,349,451.00 11,210,196.00 54.76% 7,750,477.00 turnover Gross profit 912,073.00 728,906.00 25.13% 545,816.00 Net profit 700,425.00 473,512.00 47.92% 346,120.00 Net profit deducted non-recurring 701,350.00 461,564.00 51.95% 367,368.00 gain/loss Net Cash flow generated by business 2,027,329.00 854,077.00 137.37% 764,227.00 operation End of 2004 End of 2003 Increase/decrease End of 2002 (%) Gross Assets 8,164,472.00 7,398,116.00 10.36% 7,319,306.00 Shareholders’ Equity (Exclude Minority Shareholders’ Equity) 5,119,611.00 4,646,386.00 10.18% 4,172,874.00 3.2 Major financial indices In RMB’000 2004 2003 Increase/decrease 2002 (%) Earnings per share 47.92% 0.30 0.62 0.42 Earnings per share (Note) 47.92% 0.30 0.62 0.42 Net earnings / capital ratio 13.68% 10.19% 3.49% 8.29% Net earnings / capital ratio basing on net profit after deducting of non-recurring gain/loss (%) 13.70% 9.93% 3.77% 8.80% Net Cash flow per share generated by business operation 1.78 0.75 137.37% 0.66 End of 2004 End of 2003 Increase/decrease End of 2002 (%) Net asset per share 10.18% 4.5067 4.0901 3.6733 Net asset per share, adjusted 10.20% 4.5034 4.0867 3.6715 Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ Note: In case of the capital shares has been changed during the period from the end of the report term to the date when this report is released, the new capital share will be adopted to calculate the earnings per share. Non-recurring gain and loss items □Applicable □Non-applicable In RMB Yuan Ｎｏｎ－ｒｅｃｕｒｒｉｎｇ ｇａｉｎ ａｎｄ Ａｍｏｕｎｔ ｌｏｓｓ ｉｔｅｍｓ Ｇａｉｎ／ｌｏｓｓ ｆｒｏｍ ｄｉｓｐｏｓａｌ ｏｆ ｆｉｘｅｄ ａｓｓｅｔｓ -2,200.00 Ｎｏｎｅ－ｂｕｓｉｎｅｓｓ ｅｘｐｅｎｓｅｓ ｄｅｄｕｃｔｉｎｇ ｉｍｐａｉｒｍｅｎｔ ｐｒｏｖｉｓｉｏｎ 819.00 Ｉｍｐａｉｒｍｅｎｔ ｐｒｏｖｉｓｉｏｎｓ ｃａｒｒｉｅｄ ｂａｃｋ - Ｉｍｐａｃｔ ｏｆ ｉｎｃｏｍｅ ｔａｘ ｏｆ ａｂｏｖｅ ｉｔｅｍｓ 456.00 Ｔｏｔａｌ -925.00 3.3 Diversity between the domestic and international accounting standard □Applicable □Non-applicable In RMB Yuan Domestic Accounting Standard Overseas accounting standard: Net profit Statement about the diversity §4 Movement of Capital Share and the Shareholders 4.1 Movement of capital share in Shares Before the change Changed this term (+,-) After the changed Sub-total I. None negotiable shares 1. Promoters’ shares 616,000,000 0 616,000,000 Incl. State-owned shares 616,000,000 0 616,000,000 Domestic legal person shares 0 0 0 Overseas legal person shares 0 0 0 Others 0 0 0 2. Legal person shares 0 0 0 3. Employees’ shares 30,000 0 30,000 4. Preference shares or other 0 0 0 Total of non-negotiable shares 616,030,000 0 616,030,000 II. Negotiable shares Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ 1. Common shares in RMB 119,970,000 0 119,970,000 2. Foreign shares listed in domestic market 400,000,000 0 400,000,000 3. Foreign shares listed in overseas market 0 0 0 4. Others 0 0 0 Total of negotiable shares 519,970,000 0 519,970,000 III. Total of capital shares 1,136,000,000 0 1,136,000,000 Shares allotted from foundations, employees’ shares traded on site, shares allotted to strategic investors, and shares allotted to common legal persons shall be presented their amount. □Applicable √Non-applicable Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ 4.2 Top 10 shareholders and negotiable-shares holders. Total shareholders at the end of 89,470 the report period Top Ten Shareholders Changed Shares held at the Pledged or Property of Full name of shareholder in the end of report term Proportion % Class of share frozen shareholder year Benxi Steel (Group) Co., 0 616,000,000 54.23%Non-negotiable State-owned Ltd. DEUTCHE BANK AG 5,763,934 0.51%Negotiable Foreign shares LONDON MELLON/VIRGINIA 3,484,300 0.31%Negotiable Foreign shares REIREMENT SYSTEM ACADINA EMERGING MARKETS EQUITY 3,160,206 0.28%Negotiable Foreign shares FUND Zeng Xinrong 2,616,100 0.23%Negotiable Foreign shares Li Weiqin 2,579,300 0.23%Negotiable Foreign shares YULAN DANG DE 2,212,900 0.19%Negotiable Foreign shares FERREYRA UBOC A/C UAM FUNDS INC ACADIAN 2,066,180 0.18%Negotiable Foreign shares EMERGING MKTS PORT Zhang Zukun 2,005,100 0.18%Negotiable Foreign shares Fang Yijun 1,785,740 0.16%Negotiable Foreign shares Top Ten Shareholders of Negotiable Shares Full name of shareholder Negotiable shares held at the end of Categories (A, B, or H shares) report term DEUTCHE BANK AG LONDON 5,763,934 B-stock MELLON/VIRGINIA REIREMENT 3,484,300 B-stock SYSTEM ACADINA EMERGING MARKETS 3,160,206 B-stock EQUITY FUND Zeng Xinrong 2,616,100 B-stock Li Weiqin 2,579,300 B-stock YULAN DANG DE FERREYRA 2,212,900 B-stock UBOC A/C UAM FUNDS INC ACADIAN 2,066,180 B-stock EMERGING MKTS PORT Zhang Zukun 2,005,100 B-stock Fang Yijun 1,785,740 B-stock Huang Liandi 1,763,924 B-stock 1. Benxi steel (group) Co. Ltd is the controlling shareholder of the Company, it holds shares on behalf of the country, and the holding shares have not been listed as negotiable stocks. 2. There is no related transaction relationship between Benxi Steel (Group) Co. Ltd and other shareholders among the top 10 shareholders. None of them are regarded as the “action in concert” as stated by the relative regulations. None of the other Notes to relationship or “action in concert” among the top ten shareholders. shareholders of negotiable shares are to the knowledge of the Company as related parties or “action in concert”. 3. There is only 1 shareholder - Benxi Steel (group) Co. Ltd is holding more than 5% (including 5%) of the Company’ s share, its holding shares have not increased and decreased this year and the situation of hypothecating , freezing etc. has not happened in its shares holding. 4.3 Controlling shareholder and practical controllers 4.3.1 Movement of controlling shareholder and practical controller □Applicable √Non-applicable 4.3.2 Introduction of the controlling shareholder and practical controller Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ Name of controlling shareholder: Benxi Steel (Group) Co., Ltd. Legal representative: Zhang Yingfu Established date: July 10th 1996 Registration Capital: RMB 4,700 million Company's classification: State-own proprietorship, Authorized Business Business scope: steel smelt, mine exploitation, panel rolling, oxygen manufacturing, pipe manufacturing, power generating, coal industry, special steel material manufacturing, heating, supply of the water, electricity, wind and gas, metal processing, electro mechanics builds, device manufacturing, architecture installation, railway, highway transportation, import and export trade, traveling industry, construction material , refractory material , counting device instrument , goods and materials supply and marketing, development of real estate , scientific research , design , information service ,etc.. Authorized operate and manage state-own assets. 4.3.3 Controlling relationship chart State-own assets committee of Liaoning Province 100% Benxi Steel (Group) Co. Ltd. 54.23% Bengang Steel Plate Co. Ltd Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ §5 Particulars About the Directors, Supervisors, and Senior Executives 5.1 Particulars About the Changing of Shareholding Status of Directors, Supervisors, Senior Executives Name Position SexAge Job term Shares held at the Shares held at Cause of beginning of term the end of term change Li Mohua Chairman, GM M 56 July 26 2003 - 0 0 July 26 2006 Yu Vice Chairman M 52 July 26 2003 - 10,000 10,000 Tianchen July 26 2006 Liang Director, Vice GM, M 50 July 26 2003 - 10,000 10,000 Guangde secretary of the board July 26 2006 Li Yu Director M 49 July 26 2003 - 0 0 July 26 2006 Zhang Director M 45 July 26 2003 - 0 0 Guiyu July 26 2006 Guan Director representing M 58 July 26 2003 - 0 0 Dianguo employees July 26 2006 Zhong Independent Director F 49 July 26 2003 - 0 0 Tianli July 26 2006 Xue Independent Director M 51 July 26 2003 - 0 0 Xiangxin July 26 2006 Liu Junyou Chairman of the M 52 July 26 2003 - 0 0 supervisory comission July 26 2006 He Vice Chairman of the M 54 July 26 2003 - 0 0 Xusheng supervisory comission July 26 2006 Yu Ping Supervisor F 52 May 25 2004 - 0 0 July 26 2006 Zhang Supervisor representing M 55 July 26 2003 - 0 0 Fuchen employees July 26 2006 Li Binqiang Supervisor representing M 39 May 25 2004 - 0 0 employees July 26 2006 5.2 Directors and supervisors taking positions in the shareholding parties √Applicable □ None applicable Get Name Name of the shareholder Job taken Job term remuneration or not Li Mohua Benxi Steel (Group) Co., Ltd. Director Since April 1 1996 No Yu Benxi Steel (Group) Co., Ltd. Director, GM Since Feb. 1 2001 Yes Tianchen Li Yu Benxi Steel (Group) Co., Ltd. Vice chief accountant Since Nov. 1 2004 Yes Liu Junyou Benxi Steel (Group) Co., Ltd. Chief secretary of discipline Since Aug. 1 2000 No commission He Benxi Steel (Group) Co., Ltd. Vice chief economist Since Nov. 1 2004 Yes Xusheng Yu Ping Benxi Steel (Group) Co., Ltd. Director of auditing section Since Aug. 28 2003 Yes Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ 5.3 Annual rewards of directors, supervisors and senior management In RMB 10 thousand Yuan Total of annual reward 30.64 Top 3 directors 18.37 Top 3 managements 10.74 Allowance of Independent Director 2.00 10K/person.year Other expenses of Independent Directors: None Directors and supervisors not taking rewards from the Yu Tianchen, Li Yu, Liu Junyou, He Xusheng, Yu Company Ping Reward distribution Number of person 15K-40K 1 40K –50K 2 50K -100K 3 §6. Report of the Board of Directors 6.1 Overall business situation in the report term Under the powerful continuously growth situation of steel market at home and abroad in 2004 and the competition is getting fierce day by day, the Company catches market opportunities, effort to increase production and revenue, improve product quality, develop " double high products " in a more cost-effective manner, expanding the production and selling constantly, fully utilize strategy of revitalizing old industrial base of the Northeast of implementation that the 16th National Congress of Communist Party of China puts forward to assign, adhere to the scientific development view, accelerate technological transformation in an all-round way , make great efforts to strengthen the key competitiveness. Overcome by every possible means of fire material rise in price and some original fuel in short supply and transportation disadvantage, finished several producing operations objective in an all-round way and had made the good achievement. In report period, the output of steel finished 4.98 million tons, increased by 14% compared with the same period of last year; finished hot-rolled plate output 4,220,000 tons, increase by 5% compared with the same period of last year. The major business turnover realized of RMB17.3 billion, increased by 15% over the previous year. The Major business profit was RMB1.2 billion, increased by 26% over the previous year. Net profit of 730 million, increased by 40% over the previous year. 6.2 Distribution of business on industries and products In RMB 10 thousand Yuan Distribution on industries Increase/decrease of Major business cost Gross profit On industry or Major business Major business Gross profit ratio major business increased/decreased ration product turnover cost % over corresponding increased/decreas turnover (%) term ed Steel rolling 1,734,945.15 1,613,915.35 6.98% 54.76% 57.70% -19.86% business Including: related 1,039,862.00 965,601.28 7.14% 89.36% 89.46% -0.70% transactions Distribution on products Molten steel 48,782.39 47,953.28 1.70% 151.75% 141.79% 172.34% Continuous 135,812.53 118,629.66 12.65% 573.11% 507.48% 294.08% casting billet Hot Plate 1,528,653.78 1,427,283.25 6.63% 43.50% 47.63% -28.25% Disposal of 7,785.86 7,605.69 2.31% 14.63% -3.17% 114.76% materials Others 13,910.58 12,443.48 10.55% 51.76% 36.62% 1,574.60% Including: related 1,039,862.00 965,601.28 7.14% 89.36% 89.46% -0.70% transactions Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ Pricing of the raw materials: The price of the molten iron is the average of current price of molten iron of the same quality in the domestic pig iron market. The suitable price is not higher than the average price, which Bengang Steel Group Company sold to independent third party's customer's last January; The price of scrap steel is the price in scrap steel market plus the process cost, where the scrap steel market price is the weighted average of the price of scrap steel in bulk, which Bengang Steel Group Company purchased from independent third party last three months. The process cost is the cost which Bengang Steel Group Company made the scrap steel into shape. It is adjusted and authorized once every year for the above-mentioned process cost. The auxiliary materials all adopt the market price The pricing of the energy motive force: Except the electricity in market price brought from Bengang Steel Group Company plus the cost of retransferring as the transaction price, other energy motive force adopts the complete cost plus the national additional tax; Pricing of the spare part of the repair piece: buying the spare part of the repair piece processed by Bengang Steel Group Company follows the pricing standard of complete cost plus national additional tax. Pricing of the automobile traffic expense: The railway traffic expense is the national price, automobile transportation is the market price. Pricing of maintaining the factory building and overhauling and safeguarding of the equipments: The maintenance cost is confirmed according to the working degree of difficulty and the work load of both sides. Principle of Pricing of quality monitoring, measuring and weighting: carried out according to the state fixed price. pricing the Pricing of the listing service: Bengang Steel Group acted as agent to finish before our company failed to obtain the related power to engage in import and export trade, the agent commission is according to 1.5% of the total value of the transactions cargoes imported and exported. If obtained the power to engage in import and export trade, the company has the right to notify the Bengang Group Company to stop the agent relation. Bengang Steel Group is not a sole agent of our company, our company has the right to choose the independent third party to finish acting for the business. Pricing of the design and the project service: carried out according to the state fixed price. Pricing of the heating service of the dwelling house for staff and workers: carried out according to the state fixed price. Pricing of telephone, fax and the TV service: carried out according to the state fixed price. Pricing of the newspaper and other publications: carried out according to the state fixed price. Pricing of educational facilities: carried out according to the educational facility market leasing pric e or the market price. Pricing of office and business rooms: Bengang Steel Group does not collect and lease the expenses within the date of this agreement. Fee of trade mark: RMB 25,200 per year. Patent: Bengang Steel Group does not collect patent using right. B: Pricing of the products that our company sold to Bengang Steel Group: Hot-rolled steel sheet: carried out according to the weighting average price of the same quality products which our company sold to the independent third party in the previous month. Molten steel: carried out according to manufacturing cost plus the national additional tax. Iron and steel scrap, including the iron material: carried out according to the market price. 1. Melt iron is a kind of liquid metal material, it must be purchased from the Group at 100% for its special needs in processing technique and transportation. This part of transaction takes over 90% of total purchasing volume. 2. Hot rolling products are the upper products over the cool rolling products of the Group, basing on the principle of closest, scale, and lowest cost and matching of technique processes, the Company sell some 30% of the hot rolling products to the Group each year. Statement on the 3. The Company fully adopts the major material and supplementary material supplying system and mature sales necessity and network of the Group to lower the operational costs. continuousness 4. The accepting of labour services from the related parties is because of the subsidiaries of the Group are of related providing services in better quality and technical level following with the growth of the Group. They are transactions demonstrating obvious advantages over the other vendors. These will ensure the Company for its normal business operation and lower costs. 5. The related transactions are upon the market price principle. None of the parties is taking any advantage over the other, and will make no impact on the financial status or the business performance in the future. Including: The company has sold products or services to the controlling shareholder or its subsidiaries (related transactions) amounted to RMB0.00. 6.3 Major business distribution on geographic areas Regions Major business turnover Increase/decrease of major business turnover (%) Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ North 223,989.62 28.05% North-east 875,034.57 58.93% East 409,210.18 29.43% Mid-south 22,796.65 -60.68% North-west 952.58 19.30% South-west 0.00 -100.00% Export 202,961.55 890.02% In RMB 10 thousand Yuan 6.4 Major vendors and clients In RMB 10 thousand Yuan Total of top 5 vendors １，５８６，１８４．６３ Counted in total ９７．１５％ purchasing Total of top 5 clients ８４４，５４８．５７ Counted in total ４８．６８％ sales 6.5 Operation of shareholding subsidiaries □Applicable √Non-applicable In RMB 10 thousand Yuan 6.6 Causations of significant changes occurred on the major business and its structure. □Applicable √Non-applicable 6.7 Causations of significant change of major business profitability √Applicable □Non-applicable The major business profitability of hot plates has decreased slightly. This was caused by the increasing of raw material prices. The output of continuous billet increased due to increasing of export. 6.8 Causations of significant change on business performance and profit structure √Applicable □Non-applicable The major business income increased in its portion in the profit. This was caused by the sales price and volume have increased. The periodic expenses increased due to increasing of export expenses. Causations of significant change on overall financial status □Applicable √Non-applicable 6.9 Significant changes in business environment, national policies and regulations impacting the financial situation and business performance in the past, present or future □Applicable √Non-applicable Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ 6.10 Fulfilling of profitability prediction □Applicable √Non-applicable 6.11 Fulfilling of business plan □Applicable √Non-applicable In RMB 10 thousand Yuan 6.12 Utilizing of fund raised □Applicable √Non-applicable In RMB 10 thousand Yuan Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ Changing of projects □Applicable √Non-applicable In RMB 10 thousand Yuan 6.13 Utilizing of non-raised fund √Applicable □Non-applicable During the report period, the company finishes RMB939,430,000 of investment in technological transformation with the own fund. The concrete conditions are as follows: 1. 1’225ton crane project, started in 2004. Investment accumulated to RMB7.39 million at the end of 2004. Will be finished in 2004 2. Molten iron pre-process project: planned to invest RMB29.64 million, started in 2003 Investment of RMB15.80 million occurred in the year of 2003, and accumulated to RMB25.95 million, will be finished in 2004. 3. 13 sector project: planned to invest RMB13.60 million, started in 2003, RMB12.11 million occurred in 2003, accumulated to RMB15.33 million till the end of 2004, and will be completed in 2004. 4. Furnace disassembling machine project: planned to invest RMB2.2 million, started in 2003, RMB1.66 million occurred in this term, accumulated to RMB2.09 million till the end of 2004, this project is expected to be completed in 2004. 5. Roller polishing shop project: planned to invest RMB60.31 million, started in 2003, RMB20.73 million occurred in 2003, accumulated to RMB60.74 million till the end of 2004, and was completed in 2004. 6. 5# heating furnace project: planned to invest RMB91.46 million, started in 2003, RMB110 thousand occurred in 2003, accumulated to RMB82.78 million till the end of this term, this project was completed at the end of 2004. 7. Electric motor purchased in small batch. Started in 2004, accumulated to RMB3.5 million. Finished in 2004. 8. Cutting machine purchased in small batch. Started in 2004, accumulated to RMB72 thousand. Finished in 2004. 9. Electric motor purchased in small batch. Started in 2004, accumulated to RMB460 thousand. Finished in 2004. 10. Magnetic drills purchased in small batch. Started in 2004, accumulated to RMB720 thousand at end of 2004. Finished in 2004. 11. 3# heating furnace project: planned to invest RMB78.00 million, started in 2002. RMB4.91 million occurred in 2003, accumulated to RMB5.41 million till the end of 2004, this project is in preparation stage. 12. 4# heating furnace project: planned to invest RMB1,352,632,000, started in 2003. RMB9.34 million occurred in 2003, accumulated to RMB680.26 million till the end of 2004, this project will completed in 2006. 13. Air compressor station: Total investment RMB8 million, started in 2004, accumulated to RMB3.1 million at the end of 2004. Will be completed in 2005. 14. Miller reforming project: Total investment RMB9.23 million, started in 2004, accumulated to RMB6.5 million at the end of 2004. Will be completed in 2005. 15. Renewing project of No.4 crane: total investment RMB2.6 million, started in 2004. Accumulated to RMB650 thousand at the end of 2004. Will be completed in 2005. 16. Annex reforming project: Total investment RMB210.93 million, started in 2003, RMB29.49 million occurred in 2003, accumulated to RMB191.23 million at the end of 2004. Will be completed in 2005. 17. Square billet project: total investment of RMB263.6861 million, started in 2005, will be completed in 2006. In RMB 10 thousand Yuan 6.14 Statement on the “None-standard” opinion issued by the CPA □Applicable √Non-applicable Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ 6.15 Business plan of the Board for the coming year √Applicable □ None applicable It will be an implementation of scientific development thinking year of 2005, consolidate the macro adjustments and controls achievement, the key year of keeping social healthy situation of economy. The company should catch the historical opportunity tightly, reforming, transforming and get development with the scientific development thinking, quickening the steps of developing in an all-round way and confirm 2005 as " Year of quality and variety ". 1. Organize production efficiency with science and achieve the whole year goal of high production. It should focus on the imbalance illogicality between major product’s increased fuel and transportation, make an effort on the connection of different processing working procedures insure hot plate can finish the production of 5,550,000 tons and steel production of 7,000,000 tons. ２． Insist on taking market as the direction, advance the effective adjustment, optimization and upgrading of product structure in a more cost-effective manner. According to the demand of following new-type and catch the development opportunity of national macro adjustment and control policy; insist on adjusting product structure during development, promote the product’s classification during adjusting. Target at the top-grade field and develop and exploits double-mutual steel , anti-corrosion container steel of hot rolling and other kind of high quality steel and achieve batch manufacture gradually. ３． Adhere to the demand for the scientific development thinking, combine with the overall plan of the Company built the high quality steel panel base in order to meet the effective adjustment of product structure and development of optimization and upgrading strategy, accelerate technological transformation in an all-round way. Not only to guarantee the cross year project finished construction and go into production, and also manage well of the newly-built project construction. It also should doing a good job basis on key technological transformation of this year, according to the development goal of " eleven five ", and start on planning of the third round of transformation and previous work. ４． According to the demand of developing recycle economy; make great efforts to the measure on saving energy, reducing cost and environmental pollution. With fast promotion of equipment, no only to close, stop, eliminate the high consume energy , with serious pollution draggle technology and equipment successively, fully utilize existing resources and energy as a basic that strengthen the recycling of the energy and usable second hand resource during steel production process. Meanwhile , it should take the corresponding measure and make the comprehensive energy consumption of steel drop to under 900 kilograms per ton of steel, the steel consumes fresh water drop to under 8 tons per ton of steel, the converter steel material consumes reaches the national leading level, achieves smelting steel with minus energy in an all-round way. Prediction of profitability for the new year □Applicable √Non-applicable 6.16 Current profit distribution plan or capitalization of public reserves plan √Applicable □Non-applicable As audited by Beijing TIN WHA CPA, the Company has realized the net profit of RMB732,062,544.19 in year 2004. As provided by the Article of Association of the Board, the statutory surplus reserves was drawn at 10% amounted to RMB73,206,254.42, and statutory public welfare was drawn at 5% amounted to RMB36,603,127.21. After the drawing of the statutory surplus reserves and public welfare, the net profit distributable for year 2004 was RMB395,053,162.56, plus the retained profit from year 2003 of RMB1,480,777,420.82, the profit distributable was totaled to RMB1,875,830,583.38. Therefore the dividend plan for year 2004 is as: Basing on the total capital shares of 1,136,000,000 shares ended Dec. 31 2004, cash dividend of RMB2.00 will be distributed to each 10 shares (tax included). There totally RMB227,200,000.00 of common share dividend will be distributed. The retained RMB1,648,630,583.38 will be carried over the next year as un-distributed profit. The company is making profit in the report term but not yet have any dividend plan. Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ □Applicable √Non-applicable §7 Significant Events 7.1 Acquisition □Applicable √Non-applicable 7.2 Selling of property □Applicable √Non-applicable 7.3 Significant guarantee □Applicable √Non-applicable 7.4 Significant Related Transactions Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ 7.4.1 Related sales and purchasing □Applicable □Non-applicable In RMB 10 thousand Yuan Sales of products or labour service to the related Purchasing of products or labour services from the related parties parties Related parties Amount of Ratio in similar trades Amount of Ratio in similar trades transaction transaction Bengang Group 479,262.36 27.62% 1,359,910.62 76.62% Iron Co., Ltd. 0.00 0.00% 215,499.10 12.14% Benxi Steel (Group) 0.00 0.00% 11,169.15 0.63% Mining Co., Ltd. Benxi Steel (Group) Construction Co., 0.00 0.00% 37,131.20 2.09% Ltd. Benxi Steel (Group) 0.00 0.00% 6,775.63 0.38% Machinery Co., Ltd. Benxi Steel (Group) Industrial 0.00 0.00% 518.94 0.03% Development Co., Ltd. Benxi Gaoxin Drill 0.00 0.00% 72.18 0.00% Tool Co., Ltd. Benxi Steel (Group) Transportation Co., 0.00 0.00% 1,346.71 0.08% Ltd. Benxi Steel (Group) 0.00 0.00% 49.05 0.00% Education Center Liaoning Metallurgy 0.00 0.00% 138.43 0.01% Technician College Benxi Steel (Group) Information and 0.00 0.00% 2,412.09 0.14% Automatic Tech. Ltd. Benxi Steel (Group) 0.00 0.00% 405.04 0.02% Designing Institute Benxi Steel (Group) Construction & 0.00 0.00% 4,042.36 0.23% Repairing Co., Ltd. Benxi Steel (Group) 0.00 0.00% 662.90 0.04% Electronics Co., Ltd. Benxi Steel (Group) Metallurgy Residues 0.00 0.00% 1,853.37 0.10% Co., Ltd. Bengang Group International Trading 203,009.19 11.70% 3,263.52 0.18% Ltd. Yinkou Bengang International 0.00 0.00% 2,387.75 0.13% Logistics Co., Ltd. Benxi Steel (Group) 0.00 0.00% 74.72 0.00% News Center Benxi Steel (Group) Real-estate 0.00 0.00% 22.98 0.00% Development Co., Ltd. Benxi Economic Development Zone Bengang Jufeng 0.00 0.00% 2,119.50 0.12% Development Co., Ltd. Benxi Steel (Group) 0.00 0.00% 229.93 0.01% Thermal Power Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ Development Co., Ltd. Benxi Steel New Business 0.00 0.00% 139.57 0.01% Development Co., Ltd. Benxi Steel (Group) Special Steel Co., 32,344.42 1.86% 92.78 0.01% Ltd. Bengang Xi’ an Goods 952.58 0.05% 0.00 0.00% Trading Ltd. Benxi Steel (Group) Steel Process and 26,303.98 1.52% 0.00 0.00% Logistics Co., Ltd. Benxi Steel (Group) Tengda Holdings 2,460.57 0.14% 0.00 0.00% Ltd. Chengchun Bengang 8,520.71 0.49% 0.00 0.00% Steel Sales Ltd. Dalian Boluole Steel 16,297.61 0.94% 0.00 0.00% Tube Ltd. Guangshou Free Trade Zone Bengang 6,142.70 0.35% 0.00 0.00% Sales Co., Ltd. Haerbin Bengang International Trading 10,096.35 0.58% 0.00 0.00% Ltd. Nanjing Bengang 31,878.07 1.84% 0.00 0.00% Steel Sales Ltd. Shanghai Bengang 31,166.74 1.80% 0.00 0.00% Steel Goods Ltd. Shenyang North 7,302.17 0.42% 0.00 0.00% Bengang Sales Ltd. Shenyang North 11,363.70 0.65% 0.00 0.00% Bengang Sales Ltd. Tianjin Bengang Steel 66,660.41 3.84% 0.00 0.00% Trading Ltd. Tianjin Be nchu 198.16 0.01% 0.00 0.00% Goods Trading Ltd. Wuxi Bengang Steel 23,466.59 1.35% 0.00 0.00% Sales Ltd. Xiamen Bengang 19,127.73 1.10% 0.00 0.00% Steel Sales Ltd. Yantai Bengang Steel 61,712.11 3.56% 0.00 0.00% Sales Ltd. Total 1,038,266.15 59.84% 1,650,317.52 92.98% 7.4.2 Related credit and debt interchange □Applicable □Non-applicable In RMB 10 thousand Yuan Related parties Provide money to the related parties Accept money from the related parties Amount occurred Balance Amount occurred Balance Bengang Group 10,021.62 610.22 27,576.71 5,305.45 Benxi Economic Development Zone Bengang Jufeng 0.00 0.00 2,496.81 412.45 Development Co., Ltd. Benxi Steel (Group) International 2,685.59 780.22 3,594.40 1,575.87 Trading Co., Ltd. Benxi Steel (Group) Construction 0.00 10.00 0.00 0.00 & Repairing Co., Ltd. Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ Benxi Steel (Group) Fire 0.00 0.00 0.00 0.00 Resistance Co., Ltd. Liaoning Metallurgy Technician 0.00 0.00 138.43 62.03 College Benxi Steel (Group) Transportation 0.00 0.00 1,317.01 608.58 Co., Ltd. Benxi Steel (Group) Electronics 0.00 0.00 753.76 323.87 Co., Ltd. Benxi Steel (Group) News Center 0.00 0.00 87.04 54.80 Benxi Steel (Group) New 0.00 0.00 145.57 28.94 Industrial Development Co., Ltd. Benxi Steel (Group) Industrial 0.00 0.00 1,187.54 757.57 Development Co., Ltd. Benxi Steel (Group) Metallurgy 0.00 0.00 1,855.22 174.29 Residues Co., Ltd. Benxi Steel (Group) Mining Co., 0.00 0.00 0.59 0.59 Ltd. Benxi Steel (Group) Special Steel 0.00 0.00 865.34 750.79 Co., Ltd. Benxi Steel (Group) Construction 48.12 1,983.26 0.00 0.00 Co., Ltd. Benxi Steel (Group) Machinery 868.54 103.40 138.53 103.80 Co., Ltd. Benxi Steel (Group) Education 48.12 8.45 0.00 0.00 Center Total 13,671.99 3,495.55 40,156.95 10,159.03 Including: Amount of capital provided to the controlling shareholder and its controlled subsidiaries occurred in the report term: RMB１３６，７１９，９００, balance of RMB ３４，９５５，５００ 7.5 Financing proxy □Applicable √Non-applicable 7.6 Fulfilling of consent issues □Applicable √Non-applicable 7.7 Significant lawsuit □Applicable √Non-applicable 7.8 Independent directors’execution of duties Independent directors’ presenting of board meetings Name of Times of board meetings Presented Presented by Independent to present personally proxy Absent Remarks Director Zhong Tianli 4 4 0 0 Out for business, Xue Xiangxin 4 2 2 0entrusted Zhong Tianli to vote Objection upon relative events raised by the independent directors □Applicable √Non-applicable Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ §8 Report of the Supervisory Committee √Applicable □ None applicable (I) The Status of Supervisory Committee Meeting During Report Term There are 3 supervisory committee meeting was held during the report term ---Bengang Steel Plate Co. Ltd held The 4th Session of the 3rd Term of Board of Directors Meetings on April. 20th 2004 in the conference room of second floor of the Company Benxi city Liaoning Province. This meeting examined and passed the following proposals: （1）2003 Work Report of The Supervisory Committee; (2) Proposal about replacing supervisor; (3)2003 Annual Report and Abstract; (4) 2004 First Quarterly Report; (5) Year 2003 Profit Distribution plan; 6) Proposal about Modify Article of Association; (7) Proposal about applying to withdraw especially dealing with stock; (8) Proposal of investing to build No.4 converter steel casting project; (9) Proposal of investing on supporting and rebuilding 1700mm hot continuous steel rolling mill; (10) Proposal of modifying integration service agreement; (11) Proposal of assets arrangement of ? blooming steel rolling factory; (12) Proposal of modifying classify depreciation life of fixed assets. --- Bengang Steel Plate Co. Ltd held The 5th Session of the 3rd Term of Board of Directors Meetings on July 28th 2004 in the conference room of second floor of the Company Benxi city Liaoning Province. This meeting examined and passed 2004 Semi-Annual Report and Abstract of Bengang Co., Ltd. Bengang Steel Plate Co. Ltd held The 8th Session of the 3rd Term of Board of Directors Meetings on Oct. 20th 2004 in the conference room of second floor of the Company Benxi city Liaoning Province. This meeting examined and passed the following proposals: (1) 2004 Third Quarterly Report of Bengang Co., Ltd. (2) Proposal about accelerates draw depreciation. (II) The Supervisory Committee of the Company Issued its Independent Opinion on 2004 Relevant Proceeding. The board of supervisors of the Company according to Company Law, Securities Law and relevant agreement of Article of Association focus on legal routine operation, standardize financial operation, etc. carefully carry out supervise work and this have protected the whole interests of the Company and the masses of shareholders, the Supervisory Committee issued the independent opinion on the relevant situations in report term as follows: 1.The legal operation status of the Company The Supervisory Committee joined and attended the Company's shareholder meeting and every conference of Board of Directors, and played an important role on resolution’ s formulated, implemented guarantee function during the report term. The Supervisory Committee of the Company considered that the production in 2004 of the Company was in good condition of operation. Company directors accorded with Company’ s article and regulation while carrying out company's work and did not violate laws and regulations, Article Association or any behavior that harmful to the interests of the Company and shareholder. The Supervisory Committee of the Company considered, the Company’s management of production and operation had responsible as devoted to their duty, had not violated laws and regulations, Article Association or any behavior harmful to the interests of the Company and shareholder while carrying out company's work, the Company made the proper strategy of business and Company’s management is doing well and with high-efficient. 2. Examining the finance status of the Company The finance statement was audited by Beijing TIN WHA CPAs and Ho and Ho & Company CPAs and they issued standard and without qualified opinion audit report, the finance report of the Company trueness, impersonality and accurately shown the status of finance and business harvest of the Company. 3. It did not show the Company sold and purchase assets. 4. The Company was fairly traded according to the contract or agreement and there was no harmful to interests of company shown. Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ §9 Financial Report 9.1 Auditing Statement Standard auditing statement without qualified opinion 9.2 Financial Statements Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ 9.2.1 Balance Sheet ＲＭＢ’０００ Items 2004 2003 RMB’000 RMB’000 Assets Non-current assets Property, plant and equipment 3,553,450 3,346,888 Construction in progress 319,168 94,149 Asset of deferred tax 14,713 14,713 Total of non-current asset 3,887,331 3,455,750 Current Assets Inventories 1,627,268 841,007 Trade payment receivable 177,062 117,408 Notes receivable 77,758 378,485 Advance and other current assets 975,136 1,571,919 Prepaid tax 15,704 30,352 Bank deposit and cash 1,404,213 1,003,195 Total of current asset 4,277,141 3,942,366 Total of assets 8,164,472 7,398,116 Items 2004 2003 RMB’000 RMB’000 Equity and liability Capital and reserves Share capital 1,136,000 1,136,000 Reserves 3,983,611 3,510,386 Total of equity 5,119,611 4,646,386 Non-current liabilities Bank loan –due in 1 year 311,862 325,688 Current Liabilities Trade payment payable 437,762 284,847 Notes payable 10,000 20,756 Expenses payable and other payable 193,517 95,920 Account received in advance 1,829,228 1,411,136 Bank loan –due in 1 year 262,492 613,383 Total of current liabilities 2,732,999 2,426,042 Total of liabilities 3,044,861 2,751,730 Total of equity and liabilities 8,164,472 7,398,116 Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ 9.2.2 Income Statement ＲＭＢ’０００ Items 2004 2003 RMB’000 RMB’000 Turnover 17,349,451 11,210,196 Sales cost -16,141,686 -10,295,582 Gross profit 1,207,765 914,614 Other business income 2,783 5,479 Sales expense -127,302 -61,346 Administrative expense -106,910 -51,303 Other business expenses -33,189 -3,364 Operation profit 943,147 804,080 Financial expenses -31,074 -75,174 Profit before tax 912,073 728,906 Income tax expenses -211,648 -255,394 Net profit realized this year 700,425 473,512 Earnings per share - basic RMB0.62 RMB0.42 Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ 9.2.3 Cash Flow Statements ＲＭＢ’０００ Items 2004 2003 RMB’000 RMB’000 Operation profit 943,147 804,080 Adjustment: Property, plant and equipment depreciation 578,498 455,762 Impairment provision written back due disposal - -25,963 Loss from disposal of property, plant and equipment 31,884 23,615 Exchange income not realized /(loss) 360 -20,062 1,553,889 1,237,432 Business operation cash flow before changing of operational capital Inventory increasing -786,261 -108,511 Increasing of trade payment receivable -59,654 -75,000 Decreasing (increasing) of notes receivable 300,727 -247,887 Prepaid expenses and decreasing of other current assets 596,783 102,140 Increasing of trade payment payable 152,915 160,128 Increasing /(decreasing) of notes payable -10,756 20,756 Increasing of advance collected 418,092 108,533 Increasing of expenses payable and other payables 97,597 -16,419 Cash flow from business operation 2,263,332 1,181,172 Income tax paid -197,000 -258,000 Bank interest paid -38,285 -67,389 Fees paid to bank -718 -1,706 Net Cash flow generated by business operation 2,027,329 854,077 Items 2004 2003 RMB’000 RMB’000 Net Cash flow generated by business operation 2,027,329 854,077 Investment Interest collected 7,569 13,983 Net cash income from selling of property, plant and equipment 1,564 5,598 Purchasing of Property, plant and equipment -1,043,527 -99,487 Bank savings due in 3 months 456,421 -109,505 Increasing of bank credit security -226,039 - Net cash used in investment -804,012 -189,411 Financing Dividend paid -227,200 - Newly raised bank borrowings - - Return of bank borrowings -364,717 -667,645 Net cash of financing -591,917 -667,645 Increasing / (decreasing) of cash and cash equivalents 631,400 -2,979 Cash and cash equivalents at the beginning of year 428,579 431,558 Cash and cash equivalents at the end of year Bank deposit and cash 1,059,979 428,579 Ｂｅｎｇａｎｇ Ｓｔｅｅｌ Ｐｌａｔｅ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ Ｓｕｍｍａｒｙ 9.3 Statement on the changing of accounting policies, accounting estimations and method of calculating comparing with the latest term □Applicable √Non-applicable 9.4 Correcting of significant accounting error √Applicable □Non-applicable 1. According to the resolutions of the 6th meeting of the 3rd term of Board, and as approved by the shareholders’ meeting 2003 held on May 25th 2004, the Company revised partial of the classification of fixed assets since Jan 1 2004. This has influence the increasing of depreciation on fixed assets by RMB26,566,730.09 for year 2004, which deducted the current profit by RMB-26,566,730.09 2. According to the national strategic policy on recovering of formal industrial bases in North-east China (document Zhong-Fa[2003]11) , and relative preferable policies adopted thereof (Cai-shui [2004]153), as well as adopted by the 8th meeting of the 3rd term of Board, since July 1 2004, the fixed asset depreciation age was shorten basing on the current aging policy at 40%. Which speedup the depreciation of fixed assets. The change was adopting future application method, which influenced the current gain/loss by RMB-134,123,786.99 9.5 Changing of consolidation range comparing with the latest term □Applicable √Non-applicable