Angang Steel : CHANGE IN ACCOUNTING POLICY OF THE COMPANY

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(Stock Code: 0347)

CHANGE IN ACCOUNTING POLICY OF THE COMPANY

In response to the relevant regulations issued by the Ministry of Finance of the People's Republic of China ("MOF"), Angang Steel Company Limited*（鞍 鋼 股 份 有 限 公 司）(the "Company") held a meeting of the board of directors on 30 August 2019, at which proposed changes in accounting policies were considered and approved. Details are as follows:

1. OVERVIEW OF CHANGES IN ACCOUNTING POLICIES
   In 2018 and 2019, the MOF issued the following amendments to the Accounting Standards for Business Enterprises and relevant interpretations:
   No. 21 Accounting Standards for Business Enterprises - Leases (revised) ("New Leases Standards");
   Notice on Revision of the General Format of 2019 Financial Statements of Business Enterprises (Cai Kuai [2019] No. 6).
   The Company and its subsidiaries (the "Group") have adopted the above revised accounting standards and interpretations since 1 January 2019 and made adjustments to relevant accounting policies accordingly.

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1. EFFECTS OF CHANGES IN ACCOUNTING POLICIES ON THE COMPANY
2. 1. Effects of the New Leases Standards
      Pursuant to the requirements of the original standards on leases, the lease expenses of the operating leased assets are recognised as relevant assets or expenses over the lease term. After the amendments, the lessee shall first identify whether it constitutes a lease, and then lease contracts that meet the definition of a lease are accounted for as required by the New Lease Standard. At initial recognition, lease liabilities are recognised for operating leased assets at the present value of the outstanding lease payments on the commencement date of the lease while right-of-use assets are recognised at lease liabilities and other costs (such as initial expenses and restoration obligations). For subsequent measurement, right-of-use assets are depreciated and depreciation charges are recognised, while interest expenses of lease liabilities are recognised using the effective interest method. For short-term leases and leases of low-value assets, the recognition of right-of-use assets and lease liabilities is optional. Meanwhile, the specific requirements for disclosure of financial reports were imposed in respect of related matters. There is no material change in terms of leasing out, and leasing under finance leases.
      As the existing lease contracts of the Group are short-term leases, the adoption of simplified treatment has no material effects on the financial statements of the Group. Meanwhile, the Group did not make any adjustments to the data in the comparative financial statement.
   2. Effects of the changes in accounting policies on the presentation of the financial statements
      The Group prepared its 2019 interim financial statements in accordance with the format for financial statements specified by Cai Kuai [2019] No. 6 and retrospectively adjusted the presentation of the related financial statements.

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The relevant presentation adjustments are as follows:

Items affected in the consolidated balance sheet and the balance sheet of the Company as at 31 December 2018:

									Unit: RMB million
				Consolidated balance sheet
	2018-2-31				2018-12-31	Impact of
		Before					After	changes in
		retrospect		Impact of		retrospect	accounting
	adjustment to		changes in	adjustment to	policies
		the format of		the format of		the format of	regarding
Statement	new statement	new statement	new statement	new leases	2019-1-1
Assets:
Notes receivable			7,184		7,184		7,184
Accounts receivable			2,460	2,460		2,460
Notes receivable and accounts
receivable	9,644	-9,644		0
Liabilities:
Notes payable			1,400		1,400			1,400
Accounts payable			7,663		7,663			7,663
Notes payable and accounts
payable	9,063	-9,063		0			0

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					Balance sheet
	2018-2-31			2018-12-31	Impact of
		Before				After	changes in
		retrospect		Impact of		retrospect	accounting
	adjustment to		changes in	adjustment to	policies
		the format of		the format of		the format of	regarding
Statement	new statement	new statement	new statement	new leases	2019-1-1
Assets:
Notes receivable			6,249	6,249		6,249
Accounts receivable			3,239	3,239		3,239
Notes receivable and accounts
receivable	9,488	-9,488	0			0
Liabilities:
Notes payable			1,370	1,370			1,370
Accounts payable			6,976	6,976			6,976
Notes payable and accounts
payable	8,346	-8,346	0			0

The changes in accounting policies do not affect the items in consolidated income statement and income statement of the Company for the current period.

The changes in accounting policies do not have any material effects on the financial position and operating results of the Company and its subsidiaries.

1. OPINIONS OF INDEPENDENT DIRECTORS
   The independent opinions of the independent directors of the Company on the matter are as follows:
2. 1. The changes in accounting policies are made in accordance with the accounting standards newly published or revised by the MOF. The changes in accounting policies are in line with the requirements of relevant PRC rules and regulations.
   2. The approval and voting procedures for the changes in the accounting policies are in compliance with the laws, regulations and normative documents such as the Company Law of the People's Republic of China, the Rules Governing the Listing of Stocks on Shenzhen Stock Exchange, and the relevant provisions of the articles of association of the Company.

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IV. DOCUMENTS AVAILABLE FOR INSPECTION

1. Resolutions passed at the 7th meeting of the 8th session of the board of directors of Angang Steel Company Limited* ( 鞍 鋼 股 份 有 限 公 司).
2. Opinions of independent directors expressed at the 7th meeting of the 8th session of the board of directors of Angang Steel Company Limited* ( 鞍 鋼 股 份 有 限 公 司).

By Order of the Board

ANGANG STEEL COMPANY LIMITED*

Wang Yidong

Executive Director and Chairman of the Board

Anshan City, Liaoning Province, the PRC

30 August 2019

As at the date of this announcement, the Board comprises the following Directors:

Executive Directors:	Independent Non-executive Directors:
Wang Yidong	Wu Dajun
Li Zhen	Ma Weiguo
Ma Lianyong	Feng Changli
Xie Junyong	Wang Jianhua

• For identification purpose only

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