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Shougang Group Finance Co., Ltd.

Shougang Group Finance Co., Ltd. ("Shougang Finance Company") is an institution and independent legal entity approved by the China Banking Regulatory Commission (CBRC) and jointly funded by Shougang Group Co., Ltd. and Beijing Shougang Construction Investment Co., Ltd. It has registered capital of RMB 10 billion, of which Shougang Group Co., Ltd. accounts for 80% and Beijing Shougang Construction Investment Co., Ltd. for 20%. Implementing independent accounting, self-management and self-financing, this company is a non-bank financial institution with independent legal status.

The Shougang Finance Company accepts the guidance, supervision and audit of its business by CBRC and the People's Bank of China (PBC). It has a board of shareholders, board of directors and board of supervisors, and implements the general manager responsibility system under the leadership of the board of directors. The board of directors has a risk control committee and audit committee, and the managers have a credit review committee. Meanwhile, the company has a comprehensive management department (party-masses work department), settlement business department, corporate business department, financial market department and other functional departments.

The Shougang Finance Company is a centralized fund management and operation platform of the Shougang Group, and a licensed financial institution established by the Group. Since its establishment in 2015, it has closely focused on the Group's development strategy, served the Group's industrial development and actively built a high-level "fund collection platform, fund settlement platform, fund monitoring platform and financial service platform" for Shougang, promoting the optimization of the Group's resource allocation, saving financial costs, ensuring the safety of funds and striving to improve the Group's fund management and control capabilities. The business scope includes the absorption of deposits from member units, handling of loans for member units, bill discounting, fund settlement, receipt and payment, bill acceptance, provision of entrusted loans for member units, bond underwriting, non-financing guarantee, financial consultant, credit verification and consulting agency, and engagement of local and foreign currency businesses such as interbank lending, which shows its rich experience and ability in fund management.

In the construction of the fund collection platform, the Shougang Finance Company centrally manages the funds of each member unit by absorbing their deposits. Together with commercial banks, the Shougang Finance Company is a depository financial institution under CBRC, which can absorb domestic and foreign currency from member units. The company maintains the independent control rights of the funds of each member unit according to the law, and carries out fund collection and bill life-cycle management by establishing direct connection with banks, stock exchanges, etc. In 2022, the company obtained the pilot qualification for the integrated fund pool of local and foreign currencies. It can now absorb the deposits of overseas member units in the form of foreign debts through the main account of domestic funds and establish a convenient cross-border fund collection channel so as to further enhance liquidity management and continuously improve the centralized management capability of Group's global fund.

In the construction of the fund settlement platform, a network settlement system among banks, finance companies and member units is established due to the signing of agreements with settlement cooperative banks on direct connection among banks and finance companies, and the use of the bank settlement network. Relying on the high-value payment and settlement system of the PBC, bill trading system of the Shanghai Stock Exchange, electronic commercial bill ECDS system, Society for Worldwide Interbank Financial Telecommunications System and Cross-border Interbank Payment System, combined with the qualification of the integrated fund pool of local and foreign currencies, a global network settlement system covering various funds such as domestic and overseas funds, various currencies, cash and bills is established, thereby realizing the unified management of fund settlement and fund centralizing of all units of the Group.

In the construction of the fund monitoring platform, a bank account management system is set up for all units. Each unit can log in to the system to inquire about the balances of direct and non-direct bank accounts so as to ensure that the fund balance displayed by each unit on the account management system is consistent with the accounting statement data. Meanwhile, they can use the financial functions of the finance company and information network means to monitor the fund flow, quantity and flow rate in real time, and evaluate and analyze the funds of each unit included in centralized management, thus preventing financial risks, giving full play to the synergistic effects of funds and realizing the safe and efficient operation of funds and the benefits of their centralized operation.

In the construction of the financial service platform, by issuing financial bonds, leading the formation of syndicated loans, underwriting bonds, etc., the company provides low-cost financing for all units and reduces financial expenses. Through securities investment, credit asset transfer and equity investment of financial institutions, etc., the company improves the capital returns and helps all units to develop with high quality through the provision of convenient and professional financial services.

By the end of December 2022, the total assets of the Company had reached RMB 54.488 billion, ranking first among finance companies in the steel industry for many years. Since its establishment, the company has won such honorary titles as "Excellent Unit of Industry Statistics in 2018" by the China Association of Finance Companies, "Excellent Finance Company in 2018" at the 14th China CFO Conference, "Excellent Enterprise Integrating the Steel Industry and Finance in 2020" by the Metallurgical Industry Economic Development Research Center, grade "A" in the investigation and statistics work of the central bank in 2020, "Excellent Unit of Data Statistics in 2021" by the China Association of Finance Companies and "Excellent Comprehensive Business Organization in 2022" by the Shanghai Stock Exchange.

During the "14th Five-year Plan" period, the Shougang Finance Company will continuously adhere to the tenet of "relying on the Group, focusing on services, boosting transformation, giving full play to leadership, operating with compliance and developing steadily", and improve its service level and stick to risk compliance, with the refined and comprehensive risk management system as the guarantee, sophisticated data and financial technology as the supports, and accurate and excellent services as the guide, thereby building a financial ecosystem of steel industry around the main business. At the same time, it will strive to build version 2.0 of the Group's "four platforms", namely fund collection, fund settlement, fund monitoring and financial services, and firmly implement the purpose of serving the Group and the real economy, and comprehensively improving the skills of the service industry. On the premise of meeting the liquidity, safety and quality improvement requirements of member units, external potential will be tapped and profits and efficiency increased, continuously improving the external operation capability and profitability, promoting the deep integration of finance and industry, and boosting the Shougang Group's further reform, transformation and development.

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