[Important Notice](index=2&type=section&id=Item%201.%20Important%20Notice) This section provides crucial preliminary information regarding the report [Company Overview](index=3&type=section&id=Item%202.%20Company%20Overview) This section details the company's fundamental information, including key financial data and shareholder structure [Key Accounting Data and Financial Indicators](index=3&type=section&id=1.%20Key%20Accounting%20Data%20and%20Financial%20Indicators) In the first three quarters of 2019, the company's operating revenue grew by 4.07%, but net profit attributable to shareholders significantly declined by 47.10%, primarily due to the steel industry market environment, while total assets remained stable 2019 Q3 Key Financial Indicators | Indicator | Year-to-Date (YTD) (Billion Yuan) | YTD Change vs. Prior Year (%) | | :--- | :--- | :--- | | Operating Revenue | 94.29 | 4.07% | | Net Profit Attributable to Shareholders | 1.78 | -47.10% | | Net Profit Attributable to Shareholders (Excluding Non-Recurring Items) | 1.76 | -47.13% | | Net Cash Flow from Operating Activities | 5.22 | -23.10% | | Basic Earnings Per Share (Yuan/share) | 0.1370 | -56.78% | | Weighted Average Return on Net Assets | 2.54% | -63.92% | | **Balance Sheet Indicators** | **As of Report Period End (Billion Yuan)** | **Change vs. Prior Year-End (%)** | | Total Assets | 209.75 | 0.48% | | Net Assets Attributable to Shareholders | 55.84 | -0.95% | - The company's non-recurring gains and losses totaled **20.87 million Yuan** from the beginning of the year to the reporting period end, primarily from government subsidies[5](index=5&type=chunk)[6](index=6&type=chunk) [Shareholder Information at Period-End](index=4&type=section&id=2.%20Shareholder%20Information%20at%20Period-End) As of the reporting period, the company had 360,798 common shareholders, with the top three state-owned entities, controlled by HBIS Group, holding over 61%, indicating a highly concentrated equity structure Top Ten Shareholders' Shareholding | Shareholder Name | Shareholder Nature | Shareholding Ratio | Number of Shares Held | | :--- | :--- | :--- | :--- | | Handan Iron & Steel Group Co., Ltd. | State-owned Legal Person | 39.73% | 4,218,763,010 | | Tangshan Iron & Steel Group Co., Ltd. | State-owned Legal Person | 17.45% | 1,853,409,753 | | Chengde Iron & Steel Group Co., Ltd. | State-owned Legal Person | 4.07% | 432,063,701 | | China Securities Finance Corporation Limited | Other | 2.17% | 230,034,501 | | Hong Kong Securities Clearing Company Limited | Overseas Legal Person | 1.19% | 126,327,137 | | HBIS Group Mining Co., Ltd. | State-owned Legal Person | 0.87% | 91,970,260 | - Among the top ten shareholders, Handan Iron & Steel Group, Tangshan Iron & Steel Group, Chengde Iron & Steel Group, and HBIS Group Mining Co., Ltd. are all related parties controlled by HBIS Group Co., Ltd., forming a concerted action relationship[8](index=8&type=chunk) [Significant Matters](index=6&type=section&id=Item%203.%20Significant%20Matters) This section outlines important events and their impact on the company's operations and financial position [Analysis of Changes in Key Financial Data and Indicators](index=6&type=section&id=1.%20Analysis%20of%20Changes%20in%20Key%20Financial%20Data%20and%20Indicators) During the reporting period, several key financial indicators showed significant changes, primarily due to declining steel prices and rising raw material costs, leading to a 47.10% decrease in net profit attributable to the parent company, alongside notable shifts in accounts receivable, long-term borrowings, and financing cash flow - The company explained the changes in key financial data: - **Net profit attributable to the parent company decreased by 47.10% year-on-year**: Primarily due to falling steel prices and rising raw material costs, such as imported iron ore, which compressed profit margins - **Accounts receivable increased by 92.03% from the beginning of the year**: Mainly due to an increased proportion of bill settlements in sales collections - **Long-term borrowings decreased by 51.82% from the beginning of the year**: Primarily due to repayment of maturing borrowings - **Net cash flow from financing activities decreased by 244.49% year-on-year**: Mainly because no bonds were issued for financing in the current period[12](index=12&type=chunk) [Progress of Significant Matters and Impact Analysis](index=6&type=section&id=2.%20Progress%20of%20Significant%20Matters%20and%20Impact%20Analysis) The company is advancing a public rights issue plan to raise up to 8 billion RMB for debt repayment, with the application currently under review by the China Securities Regulatory Commission since June 2019 - The company plans to raise up to **8 billion Yuan** through a rights issue to repay interest-bearing debt and optimize its capital structure[13](index=13&type=chunk) - The rights issue application has been accepted by the CSRC and a response to the first round of feedback has been completed, with the application currently under review[13](index=13&type=chunk)[14](index=14&type=chunk) [Unfulfilled Commitments by Controlling Shareholders and Related Parties](index=7&type=section&id=3.%20Unfulfilled%20Commitments%20by%20Controlling%20Shareholders%20and%20Related%20Parties) During the reporting period, the company did not engage in share repurchases, securities investments, wealth management, or derivative investments, and had no overdue unfulfilled commitments, illegal external guarantees, or non-operating fund occupation by controlling shareholders - The company had no significant matters such as share repurchases, securities investments, wealth management, derivative investments, or illegal guarantees during this reporting period[15](index=15&type=chunk) [Financial Statements](index=8&type=section&id=Item%204.%20Financial%20Statements) This section presents the company's detailed financial performance and position through its consolidated and parent company financial statements [Consolidated Financial Statements](index=8&type=section&id=1.%20Consolidated%20Financial%20Statements) Consolidated financial statements as of September 30, 2019, show total assets of 209.75 billion Yuan and total liabilities of 151.06 billion Yuan, with a 72% asset-liability ratio, while Q3 2019 revenue grew 4.07% to 94.29 billion Yuan, but net profit attributable to the parent company significantly declined by 47.10% to 1.78 billion Yuan, and operating cash flow decreased by 23.10% to 5.22 billion Yuan [Consolidated Balance Sheet](index=8&type=section&id=Consolidated%20Balance%20Sheet) As of September 30, 2019, total assets were 209.75 billion Yuan, a slight increase of 0.48% from the beginning of the year, with total liabilities at 151.06 billion Yuan, resulting in a 72.0% asset-liability ratio, and parent company equity at 55.84 billion Yuan, down 0.95% | Item | Sep 30, 2019 (Billion Yuan) | Dec 31, 2018 (Billion Yuan) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 19.56 | 28.15 | -30.51% | | Notes Receivable | 17.58 | 9.16 | 92.03% | | Inventories | 21.98 | 22.25 | -1.21% | | **Total Assets** | **209.75** | **208.75** | **0.48%** | | Short-term Borrowings | 57.10 | 52.85 | 8.04% | | Long-term Borrowings | 4.34 | 9.01 | -51.82% | | **Total Liabilities** | **151.06** | **149.80** | **0.85%** | | Equity Attributable to Parent Company Shareholders | 55.84 | 56.37 | -0.95% | | **Total Liabilities and Equity** | **209.75** | **208.75** | **0.48%** | [Consolidated Income Statement](index=13&type=section&id=Consolidated%20Income%20Statement) In the first three quarters of 2019, total operating revenue reached 94.29 billion Yuan, up 4.07%, but rising costs led to a 6.08% increase in total operating expenses, resulting in a 45.35% decline in operating profit to 2.65 billion Yuan, and a 47.10% drop in net profit attributable to the parent company to 1.78 billion Yuan, with basic earnings per share at 0.1370 Yuan Consolidated Income Statement Key Items (YTD, Billion Yuan) | Item | Jan-Sep 2019 | Jan-Sep 2018 | YOY Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 94.29 | 90.61 | 4.07% | | Total Operating Costs | 91.86 | 85.84 | 7.01% | | Operating Profit | 2.65 | 4.84 | -45.35% | | Total Profit | 2.65 | 4.89 | -45.72% | | Net Profit | 2.06 | 3.94 | -47.69% | | **Net Profit Attributable to Parent Company Shareholders** | **1.78** | **3.37** | **-47.10%** | | Basic Earnings Per Share (Yuan/share) | 0.1370 | 0.317 | -56.78% | [Consolidated Cash Flow Statement](index=20&type=section&id=Consolidated%20Cash%20Flow%20Statement) In the first three quarters of 2019, net cash flow from operating activities decreased by 23.10% to 5.22 billion Yuan, while investing activities resulted in a net outflow of 5.47 billion Yuan, and financing activities shifted from a net inflow to a net outflow of 5.65 billion Yuan, primarily due to no bond issuance and increased debt repayment, leading to a net decrease of 5.89 billion Yuan in cash and cash equivalents Consolidated Cash Flow Statement Key Items (YTD, Billion Yuan) | Item | Jan-Sep 2019 | Jan-Sep 2018 | YOY Change (%) | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 5.22 | 6.79 | -23.10% | | Net Cash Flow from Investing Activities | -5.47 | -5.30 | -3.19% | | Net Cash Flow from Financing Activities | -5.65 | 3.91 | -244.49% | | **Net Increase in Cash and Cash Equivalents** | **-5.89** | **5.40** | **-209.24%** | [Parent Company Financial Statements](index=11&type=section&id=2.%20Parent%20Company%20Financial%20Statements) The parent company's financial statements reflect its standalone operations, showing total assets of 168.18 billion Yuan at period-end, and for the first three quarters of 2019, operating revenue of 81.60 billion Yuan and net profit of 0.86 billion Yuan, consistent with the consolidated trend of declining profitability and cash flow pressure [Explanation of Financial Statement Adjustments](index=23&type=section&id=2.%20Explanation%20of%20Financial%20Statement%20Adjustments) Effective January 1, 2019, the company adopted new financial instrument standards, retrospectively reclassifying 290.73 million Yuan from 'Available-for-sale financial assets' to 'Other equity instrument investments,' a change impacting only balance sheet classification without affecting opening net assets or net profit - Due to the adoption of new financial instrument standards, the company reclassified **RMB 290,725,660.39** from "Available-for-sale financial assets" to "Other equity instrument investments"[44](index=44&type=chunk) Accounting Policy Change Adjustment | Item | Before Adjustment (Dec 31, 2018) (Yuan) | After Adjustment (Jan 01, 2019) (Yuan) | Adjustment Amount (Yuan) | | :--- | :--- | :--- | :--- | | Available-for-sale financial assets | 290,725,660.39 | 0 | -290,725,660.39 | | Other equity instrument investments | 0 | 290,725,660.39 | 290,725,660.39 | [Audit Report](index=28&type=section&id=3.%20Audit%20Report) This quarterly report is unaudited - The company's 2019 third-quarter report is unaudited[45](index=45&type=chunk)

Financial Performance - The total revenue for 2018 was approximately ¥120.96 billion, representing a 10.99% increase compared to ¥108.98 billion in 2017[17]. - The net profit attributable to shareholders for 2018 was approximately ¥3.63 billion, a significant increase of 99.57% from ¥1.82 billion in 2017[17]. - The net profit after deducting non-recurring gains and losses was approximately ¥3.57 billion, up 93.66% from ¥1.84 billion in the previous year[17]. - The basic earnings per share for 2018 was ¥0.32, an increase of 88.24% compared to ¥0.17 in 2017[17]. - The total operating revenue for 2018 was approximately ¥120.96 billion, representing a year-on-year increase of 10.99%[43]. - The company achieved a gross profit margin of 14.12% in the steel sector, which is an increase of 1.63% year-on-year[46]. - The company reported a positive profit for the reporting period, with a net profit attributable to ordinary shareholders of 7,652,532,309.83 CNY[93]. - The company reported a significant increase in research and development expenses, totaling ¥3.35 billion, which represents a 65.25% increase compared to 2017, and accounts for 2.77% of total revenue[57]. Assets and Liabilities - The total assets at the end of 2018 were approximately ¥208.75 billion, a 9.78% increase from ¥190.15 billion at the end of 2017[17]. - The net assets attributable to shareholders at the end of 2018 were approximately ¥56.37 billion, reflecting a 23.02% increase from ¥45.83 billion at the end of 2017[17]. - The company’s total liabilities increased, with short-term loans rising to approximately ¥52.85 billion, representing 25.32% of total assets[63]. - The debt-to-asset ratio decreased to 71.76% in 2018 from 74.94% in 2017, indicating a reduction in financial leverage[197]. Cash Flow - The net cash flow from operating activities for 2018 was approximately ¥9.98 billion, a decrease of 39.14% compared to ¥16.41 billion in 2017[17]. - Operating cash inflow increased by 25.67% to approximately ¥108.5 billion, primarily due to a substantial rise in steel prices[59]. - The company’s cash interest coverage ratio decreased by 38.74% to 4.08, indicating a decline in cash flow relative to interest expenses[197]. Production and Sales - The company produced 26.57 million tons of pig iron, 26.8 million tons of steel, and 25.78 million tons of steel products in 2018[34]. - The company produced 20.5 million tons of steel in 2018, with high-end products accounting for 79% of total production, an increase of 7 percentage points year-on-year[36]. - The company’s sales volume in the steel sector was approximately 25.59 million tons, a slight increase of 0.64% from the previous year[47]. - The total sales of steel products reached 1,680,855.37 million RMB, with a significant contribution from various subsidiaries[110]. Dividends and Shareholder Returns - The company plans to distribute a cash dividend of ¥1.00 per 10 shares, based on a total share capital of 10,618,607,852 shares as of December 31, 2018[6]. - In 2018, the cash dividend represented 29.28% of the net profit attributable to the company's ordinary shareholders, which was CNY 3,626,314,344.62[92]. - A cash dividend of 1.00 CNY per 10 shares was proposed, totaling 1,061,860,785.20 CNY, which represents 29.3% of the net profit for the year[93]. Environmental Performance - The company is recognized as a "world's cleanest steel plant" and has been awarded for its sustainable development practices[31]. - The company’s environmental indicators, including SO2 and NOx emissions per ton of steel, decreased compared to the previous year, maintaining industry leadership in environmental performance[40]. - The company has implemented several environmental protection upgrades in 2018, including a closed-loop system for raw materials and ultra-low emissions treatment for sintering machine flue gas, resulting in a significant reduction in pollutant emissions[129]. - The company has committed to transparency by publicly disclosing self-monitoring data related to pollutant emissions as required by national regulations[132]. Strategic Initiatives - The company is strategically positioned in North China, benefiting from the "Belt and Road" initiative and the development of the Xiong'an New Area[32]. - The company aims to enhance its product structure by increasing the proportion of high-end products and expanding its market share in high-end automotive and home appliance sectors[78]. - The company is focusing on technological innovation, including research and application of hydrogen energy utilization and additive manufacturing technologies[79]. - The company plans to expand its market presence through strategic partnerships and acquisitions in the coming year[109]. Governance and Management - The company has a diverse board with members holding advanced degrees and extensive experience in the steel industry[152]. - The company’s independent directors provided valuable suggestions for long-term strategic planning, reflecting their engagement in corporate governance[177]. - The company has established a comprehensive training program aimed at supporting high-quality development, including targeted training for young talents and financial professionals[166]. - The company has maintained its accounting policies and estimates without any changes during the reporting period[97]. Market Challenges - The company acknowledges challenges such as rising raw material prices and financing difficulties, which may impact profitability[75]. - The overall performance indicates a need for strategic adjustments to address market fluctuations and enhance profitability moving forward[109].

Financial Performance - Operating revenue for the current period was CNY 34.43 billion, a 6.12% increase year-on-year[8]. - Net profit attributable to shareholders for the current period was CNY 1.55 billion, a 64.05% increase year-on-year[8]. - Basic earnings per share increased by 64.04% to CNY 0.146[8]. - Net profit attributable to the parent company increased by 53.58% year-on-year, driven by steady increases in steel prices and sales revenue[16]. Assets and Equity - Total assets increased by 8.48% to CNY 206.28 billion compared to the end of the previous year[8]. - Net assets attributable to shareholders increased by 22.53% to CNY 56.15 billion compared to the end of the previous year[8]. - Cash and cash equivalents increased by 37.80% compared to the beginning of the year, primarily due to increased sales revenue and expanded financing[16]. - Accounts receivable notes increased by 111.28% compared to the beginning of the year, mainly due to rising steel prices and an increased proportion of accounts receivable notes in sales[16]. Cash Flow - Cash flow from operating activities decreased by 42.60% to CNY 6.79 billion year-to-date[8]. - Operating cash flow decreased by 42.60% year-on-year, primarily due to an increase in accounts receivable notes and higher procurement costs and taxes[16]. - Net cash flow from financing activities increased by 201.78% year-on-year, as the company issued perpetual bonds to optimize its capital structure[16]. Shareholder Information - The top shareholder, Handan Iron and Steel Group, holds 39.73% of shares[12]. - The company has not conducted any repurchase transactions during the reporting period[13]. Compliance and Activities - No derivative investments were reported during the period[22]. - No research, communication, or interview activities were conducted during the reporting period[23]. - There were no instances of non-compliant external guarantees during the reporting period[24]. - No non-operating fund occupation by controlling shareholders or related parties was reported[25]. Return on Equity - The weighted average return on equity was 3.08%, an increase of 49.29% compared to the same period last year[8]. Non-recurring Items - Non-recurring gains and losses totaled CNY 37.35 million for the year-to-date[9].

Financial Performance - The company's operating revenue for the first half of 2018 was CNY 56.18 billion, an increase of 3.15% compared to CNY 54.46 billion in the same period last year[19]. - The net profit attributable to shareholders was CNY 1.82 billion, representing a significant increase of 45.67% from CNY 1.25 billion year-on-year[19]. - The net profit after deducting non-recurring gains and losses was CNY 1.79 billion, up 42.89% from CNY 1.25 billion in the previous year[19]. - The basic earnings per share rose to CNY 0.172, a 45.76% increase compared to CNY 0.118 in the same period last year[19]. - The company reported a total profit of CNY 2.71 billion[37]. - The gross margin for the steel industry was 14.57%, an increase of 2.12% compared to the previous year[46]. - The company reported a net profit for the first half of 2018 of CNY 2.18 billion, representing a significant increase of 68.67% from CNY 1.29 billion in the previous year[141]. - The company's total profit for the first half of 2018 was CNY 1,371,020,632.56, compared to CNY 1,328,174,510.64 in the previous year, representing a growth of approximately 3.2%[144]. Assets and Liabilities - The total assets at the end of the reporting period were CNY 197.71 billion, reflecting a growth of 3.98% from CNY 190.15 billion at the end of the previous year[19]. - The total liabilities amounted to CNY 145.918 billion, up from CNY 142.489 billion year-over-year[133]. - The company's cash and cash equivalents increased to CNY 21.27 billion from CNY 17.01 billion, showing significant growth[131]. - The company's inventory stood at CNY 23.93 billion, compared to CNY 23.15 billion at the end of the previous year[131]. - The company's total assets as of the end of the reporting period were CNY 159.99 billion, compared to CNY 155.05 billion at the end of the previous period, marking a growth of 3.77%[138]. - The total liabilities increased to CNY 113.04 billion, up from CNY 111.14 billion, indicating a rise of 1.71%[138]. Cash Flow - The company reported a net cash flow from operating activities of CNY 4.34 billion, a decrease of 25.52% from CNY 5.83 billion in the same period last year[19]. - Cash flow from operating activities generated a net amount of CNY 4,338,374,328.55, down from CNY 5,825,105,022.82 in the first half of 2017, reflecting a decrease of about 25.5%[145]. - Financing activities generated a net cash inflow of CNY 1,598,233,708.49, a turnaround from a net outflow of CNY 2,376,656,982.95 in the previous year, showing a positive shift in financing[147]. Production and Capacity - The company maintains a production capacity of 30 million tons of high-quality steel annually, with advanced technology and equipment[27]. - In the first half of 2018, the company produced 11.93 million tons of iron, 12.22 million tons of crude steel, and 11.69 million tons of steel, representing year-on-year declines of 13.87%, 7.97%, and 10.69% respectively due to environmental production restrictions[37]. Environmental Compliance - The company is classified as a key pollutant discharge unit by environmental protection authorities[86]. - Total emissions of particulate matter reached 1269.85 tons per year, with a limit of 2099.10 tons per year, indicating compliance[86]. - The company is committed to environmental responsibility and has been actively monitoring its emissions to ensure compliance with local regulations[86]. - The company has implemented specific emission standards for various pollutants, including particulate matter and sulfur dioxide, in line with national regulations[86]. - The company has set specific targets for reducing emissions in line with provincial environmental protection requirements[87]. Strategic Initiatives - The company plans to expand its market presence through strategic partnerships and acquisitions in the steel industry[73]. - The company aims to innovate in product development to meet changing market demands and enhance competitiveness[89]. - The company is focusing on new product development and technological advancements to enhance competitiveness in the market[73]. Shareholder Information - The total number of common shareholders at the end of the reporting period was 415,144[100]. - Handan Steel Group Co., Ltd. holds 39.73% of the shares, totaling 4,218,763,010 common shares[100]. - The company did not experience any changes in its controlling shareholder during the reporting period[102]. - The company did not experience any changes in its actual controller during the reporting period[103]. Debt and Financing - The company successfully issued CNY 8 billion perpetual bonds, which helped reduce the debt-to-asset ratio and optimize the capital structure[39]. - The debt-to-asset ratio decreased to 73.79% from 74.93%, indicating a 1.14% reduction compared to the previous year[123]. - The company maintains an AAA rating for the "16 河钢 01" and "16 河钢 02" bonds, with no changes from the previous rating[116]. Research and Development - Research and development investment amounted to CNY 1.24 billion, a decrease of 3.16% from the previous year[44]. - The company developed new high-strength steel products, including QP980, and successfully supplied HQT60C high-strength steel to Daimler for use in commercial vehicle axles[33].

Financial Performance - The total revenue for 2017 was approximately CNY 108.98 billion, representing a 46.19% increase compared to CNY 74.55 billion in 2016[14]. - The net profit attributable to shareholders for 2017 was CNY 1.82 billion, up 16.82% from CNY 1.56 billion in 2016[14]. - The net cash flow from operating activities surged to CNY 13.84 billion, a significant increase of 1,029.75% compared to CNY 1.22 billion in 2016[14]. - The basic earnings per share for 2017 was CNY 0.17, reflecting a 13.33% increase from CNY 0.15 in 2016[14]. - The company achieved an operating revenue of 108.98 billion yuan and a total profit of 2.92 billion yuan, with a net profit attributable to shareholders of 1.82 billion yuan, marking a year-on-year increase of 16.82%[34]. - The company’s total operating costs for 2017 were approximately ¥91.66 billion, with a year-on-year increase of 51.56%[46]. - The company’s management expenses rose by 23.70% to approximately ¥4.33 billion, attributed to increased investment in technology research and development[55]. - The company’s EBITDA before interest, taxes, depreciation, and amortization (EBITDA) increased by 29.83% year-on-year, reaching 1,130,891.83 million yuan in 2017[197]. Production and Capacity - In 2017, the company produced 2.73 million tons of pig iron, 2.69 million tons of crude steel, and 2.64 million tons of steel, representing year-on-year decreases of 6.66%, 7.04%, and 5.31% respectively[34]. - The company has an annual production capacity of 30 million tons of high-quality steel and is a leader in vanadium-titanium steelmaking technology[24]. - The production of variety steel reached 18.99 million tons, with the proportion of variety steel increasing by 9 percentage points to 72%[35]. - The company produced 1,899,000 tons of automotive steel, expanding from a single product to a full series, including ultra-high-strength steel[35]. - The company plans to produce 27.30 million tons of crude steel and 27.25 million tons of steel products in 2018, focusing on enhancing customer service and optimizing client structure[75]. Research and Development - The company successfully developed over 10 new high-strength steel varieties, including the third-generation ultra-high-strength automotive steel QP980 in 2017[31]. - The company applied for 774 patents in 2017, including 320 invention patents, and received 326 patent grants[31]. - Research and development investment increased by 43.40% to approximately ¥2.03 billion, accounting for 1.86% of total revenue[57]. - The company is focusing on technological advancements and optimizing its product structure to enhance competitiveness in the market[77]. - The company is actively researching new technologies and processes to improve production efficiency and product quality, particularly in the military sector[77]. Environmental Initiatives - The company’s environmental initiatives earned it the title of "World's Cleanest Steel Plant" and recognition for sustainable development[30]. - The company is committed to green development and is implementing energy-saving and emission-reduction technologies to maintain its leading position in environmentally friendly manufacturing[83]. - The company reported a total nitrogen oxide emissions of 5147 tons per year from the Handan branch, with a significant reduction target of 18063.316 tons per year[130]. - The company achieved a particulate matter emission of 3074 tons per year, aiming to reduce it to 5785.973 tons per year[130]. - The company issued green bonds totaling up to 700 million RMB to fund five green environmental projects, including a clean production demonstration project[138]. Shareholder and Dividend Information - The company plans to distribute a cash dividend of CNY 1.00 per 10 shares, based on a total share capital of 10,618,607,852 shares as of December 31, 2017[2]. - The total distributable profit for 2017 was 7,315,870,540.79 CNY, with cash dividends accounting for 100% of the profit distribution[94]. - The cash dividends have shown a consistent increase over the three years, reflecting a positive trend in profitability[90][91][93]. - The company has maintained a cash dividend payout ratio of at least 80% during its mature development stage[94]. Corporate Governance - The company has established a comprehensive governance structure and has revised 10 management systems to enhance corporate governance[174]. - The company maintains complete independence from its controlling shareholder in terms of business, personnel, assets, organization, and finance[176]. - The company is focused on expanding its market presence and enhancing its product offerings through ongoing research and development initiatives[158]. - The company is committed to maintaining transparency and accountability in its financial reporting and management practices[164]. Financial Management - The company established an integrated financial control system, successfully issuing corporate bonds totaling ¥8.7 billion[38]. - The company received a total bank credit of 104.495 billion yuan during the reporting period, with a total balance of short-term and long-term borrowings amounting to 93.2 billion yuan[199]. - The interest coverage ratio increased by 23.02% to 1.55 in 2017, reflecting improved profitability[198]. - The company maintained a loan repayment rate of 100% during the reporting period, ensuring all bank loans were repaid on time[199]. Market Position and Strategy - The company aims to strengthen cooperation with strategic clients in key sectors such as automotive and construction, enhancing its market position[76]. - The company is implementing lean production practices to optimize operations and increase the usage of scrap steel, aiming to mitigate the impact of production cuts[79]. - The company plans to enhance its brand value by promoting high-end product lines and establishing strategic partnerships with key clients in the automotive and home appliance sectors[78]. - The outlook for the steel industry remains cautious due to persistent overcapacity and intense competition, despite potential opportunities from government initiatives and infrastructure projects[73].

[Important Notice](index=2&type=section&id=%E7%AC%AC%E4%B8%80%E8%8A%82%20%E9%87%8D%E8%A6%81%E6%8F%90%E7%A4%BA) This section provides key declarations and attendance details regarding the board of directors [Board Declaration and Director Attendance](index=2&type=section&id=%E8%91%A3%E4%BA%8B%E4%BC%9A%E5%A3%B0%E6%98%8E%E4%B8%8E%E8%91%A3%E4%BA%8B%E5%87%BA%E5%B8%AD%E6%83%85%E5%86%B5) The company's management guarantees the truthfulness and completeness of this quarterly report and its financial statements, with two directors absent from the review meeting - The company's management guarantees the truthfulness, accuracy, and completeness of this quarterly report and its financial statements, assuming corresponding legal responsibilities[4](index=4&type=chunk)[5](index=5&type=chunk) - Directors Peng Zhaofeng and Wang Zhumin did not personally attend the board meeting to review this quarterly report due to work reasons[6](index=6&type=chunk) [Company Basic Information](index=3&type=section&id=%E7%AC%AC%E4%BA%8C%E8%8A%82%20%E5%85%AC%E5%8F%B8%E5%9F%BA%E6%9C%AC%E6%83%85%E5%86%B5) This section provides an overview of the company's key financial data, indicators, and shareholder structure [Key Accounting Data and Financial Indicators](index=3&type=section&id=%E4%B8%80%E3%80%81%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E5%92%8C%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) In Q1 2018, the company experienced a significant performance decline with operating revenue decreasing by 11.60% and net profit attributable to shareholders sharply falling by 42.57% 2018 Key Financial Indicators for Q1 | Item | Current Period | Prior Period | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue (Yuan) | 25,033,954,833.34 | 28,320,383,467.54 | -11.60% | | Net Profit Attributable to Shareholders (Yuan) | 372,878,986.42 | 649,296,986.39 | -42.57% | | Net Cash Flow from Operating Activities (Yuan) | 4,229,868,740.08 | 4,792,675,932.69 | -11.74% | | Basic Earnings Per Share (Yuan/share) | 0.035 | 0.061 | -42.62% | | Weighted Average Return on Net Assets | 0.90% | 1.43% | -0.53% | - During the reporting period, non-recurring gains and losses totaled **96,920 yuan**, primarily from government subsidies and other non-operating income and expenses[9](index=9&type=chunk) [Shareholder Information](index=4&type=section&id=%E4%BA%8C%E3%80%81%E6%8A%A5%E5%91%8A%E6%9C%9F%E6%9C%AB%E8%82%A1%E4%B8%9C%E6%80%BB%E6%95%B0%E5%8F%8A%E5%89%8D%E5%8D%81%E5%90%8D%E8%82%A1%E4%B8%9C%E6%8C%81%E8%82%A1%E6%83%85%E5%86%B5%E8%A1%A8) As of the reporting period end, the company had 427,746 common shareholders, with the top three state-owned entities holding over 61% and being related parties under HBIS Group Co., Ltd - As of the end of the reporting period, the company had a total of **427,746** common shareholders[11](index=11&type=chunk) Top Three Shareholders' Holdings | Shareholder Name | Shareholder Type | Shareholding Percentage | Number of Shares Held | | :--- | :--- | :--- | :--- | | Handan Iron & Steel Group Co., Ltd. | State-owned Legal Entity | 39.73% | 4,218,763,010 | | Tangshan Iron & Steel Group Co., Ltd. | State-owned Legal Entity | 17.45% | 1,853,409,753 | | Chengde Iron & Steel Group Co., Ltd. | State-owned Legal Entity | 4.07% | 432,063,701 | - The top three shareholders, Handan Iron & Steel Group, Tangshan Iron & Steel Group, Chengde Iron & Steel Group, and the fifth largest shareholder, HBIS Group Mining Co., Ltd., have an **affiliation**, all being controlled by **HBIS Group Co., Ltd**[12](index=12&type=chunk) [Significant Matters](index=6&type=section&id=%E7%AC%AC%E4%B8%89%E8%8A%82%20%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A1%B9) This section details significant changes in financial data, the fulfillment of commitments, and other important corporate events [Analysis of Changes in Key Financial Data and Reasons](index=6&type=section&id=%E4%B8%80%E3%80%81%E6%8A%A5%E5%91%8A%E6%9C%9F%E4%B8%BB%E8%A6%81%E8%B4%A2%E5%8A%A1%E6%95%B0%E6%8D%AE%E3%80%81%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87%E5%8F%91%E7%94%9F%E5%8F%98%E5%8A%A8%E7%9A%84%E6%83%85%E5%86%B5%E5%8F%8A%E5%8E%9F%E5%9B%A0) The company's net profit decreased by 36.35% due to environmental production limits, while active debt repayment and reduced capital expenditure significantly impacted cash flows - Net profit decreased by **36.35%** compared to the prior year, primarily due to environmental production restrictions leading to reduced product output and increased unit costs[15](index=15&type=chunk) - Non-current liabilities due within one year decreased by **74.62%** from the beginning of the year, mainly due to the repayment of maturing financing projects[15](index=15&type=chunk) - Net cash flow from financing activities decreased by **169.07%** year-on-year, primarily due to the company repaying financing loans and reducing its financing scale[15](index=15&type=chunk) [Fulfillment of Commitments](index=6&type=section&id=%E4%B8%89%E3%80%81%E5%85%AC%E5%8F%B8%E5%AE%9E%E9%99%85%E6%8E%A7%E5%88%B6%E4%BA%BA%E3%80%81%E8%82%A1%E4%B8%9C%E3%80%81%E5%85%B3%E8%81%94%E6%96%B9%E3%80%81%E6%94%B6%E8%B4%AD%E4%BA%BA%E4%BB%A5%E5%8F%8A%E5%85%AC%E5%8F%B8%E7%AD%89%E6%89%BF%E8%AF%BA%E7%9B%B8%E5%85%B3%E6%96%B9%E5%9C%A8%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E8%B6%85%E6%9C%9F%E6%9C%AA%E5%B1%A5%E8%A1%8C%E5%AE%8C%E6%AF%95%E7%9A%84%E6%89%BF%E8%AF%BA%E4%BA%8B%E9%A1%B9) All long-term commitments made by the controlling shareholder, HBIS Group Co., Ltd., and its related parties regarding avoiding horizontal competition and resolving land and property issues are being fulfilled normally - Long-term commitments made by **HBIS Group Co., Ltd.** in 2010 regarding avoiding horizontal competition and resolving land and property defects are currently being fulfilled normally[16](index=16&type=chunk)[17](index=17&type=chunk) - Handan Iron & Steel Group Co., Ltd. made a commitment regarding Handan Baosteel's land and property matters, ensuring the listed company's interests are not harmed, and this commitment is still being fulfilled[18](index=18&type=chunk) [Other Significant Matters](index=8&type=section&id=%E5%85%B6%E4%BB%96%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A1%B9) The company did not forecast H1 2018 performance and reported no securities or derivative investments, illegal guarantees, or controlling shareholder fund occupation - The company did not forecast its operating performance for **January-June 2018**[19](index=19&type=chunk) - During the reporting period, the company had no securities investments, derivative investments, illegal external guarantees, or controlling shareholder fund occupation[19](index=19&type=chunk)[20](index=20&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) [Financial Statements](index=10&type=section&id=%E7%AC%AC%E5%9B%9B%E8%8A%82%20%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) This section presents the company's consolidated financial statements, including the balance sheet, income statement, and cash flow statement [Consolidated Balance Sheet](index=10&type=section&id=1%E3%80%81%E5%90%88%E5%B9%B6%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8) As of March 31, 2018, total assets slightly increased by 1.11% to 192.252 billion yuan, total liabilities by 1.18% to 144.166 billion yuan, and equity attributable to owners of the parent company by 0.80% to 46.193 billion yuan, indicating a stable financial position Key Items from Consolidated Balance Sheet (March 31, 2018) | Item | Period-End Balance (Yuan) | Period-Beginning Balance (Yuan) | Change from Beginning of Year | | :--- | :--- | :--- | :--- | | Total Assets | 192,252,464,841.51 | 190,147,934,148.97 | 1.11% | | Total Liabilities | 144,165,665,501.10 | 142,488,819,020.45 | 1.18% | | Total Equity Attributable to Owners of Parent Company | 46,193,249,876.13 | 45,826,911,512.15 | 0.80% | [Consolidated Income Statement](index=15&type=section&id=3%E3%80%81%E5%90%88%E5%B9%B6%E5%88%A9%E6%B6%A6%E8%A1%A8) In Q1 2018, operating revenue decreased by 11.60% to 25.034 billion yuan, leading to a 34.50% drop in operating profit and a significant 42.57% decline in net profit attributable to owners of the parent company Key Items from Consolidated Income Statement (Q1 2018) | Item | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 25,033,954,833.34 | 28,320,383,467.54 | -11.60% | | Operating Profit | 547,220,435.61 | 835,281,903.77 | -34.50% | | Net Profit Attributable to Owners of Parent Company | 372,878,986.42 | 649,296,986.39 | -42.57% | [Consolidated Cash Flow Statement](index=18&type=section&id=5%E3%80%81%E5%90%88%E5%B9%B6%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In Q1 2018, net cash flow from operating activities decreased by 11.74% to 4.230 billion yuan, while net cash outflow from investing activities narrowed by 30.52% and net cash outflow from financing activities expanded by 169.07% due to increased debt repayment Key Items from Consolidated Cash Flow Statement (Q1 2018) | Item | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 4,229,868,740.08 | 4,792,675,932.69 | -11.74% | | Net Cash Flow from Investing Activities | -1,623,633,063.81 | -2,336,918,935.56 | Net outflow decreased by 30.52% | | Net Cash Flow from Financing Activities | -2,511,187,992.76 | -933,494,932.97 | Net outflow increased by 169.07% | | Net Increase in Cash and Cash Equivalents | 95,047,683.51 | 1,522,262,064.16 | -93.76% | [Audit Opinion](index=20&type=section&id=%E4%BA%8C%E3%80%81%E5%AE%A1%E8%AE%A1%E6%8A%A5%E5%91%8A) The company's Q1 2018 financial report was not audited - The company's first quarter report was **unaudited**[48](index=48&type=chunk)