Shougang Group'S Restructuring Promise Again

Suspension for more than one and a half months

According to the reply issued by the national development and Reform Commission in February 18, 2005 about the implementation of relocation, structural adjustment and environmental treatment of Shougang, the production facilities of Shougang Group in Shijingshan District, Beijing, will be shut down by the end of 2010.

Shougang Group Co., Ltd. is a listed company which was partially restructured by the Shougang Iron and steel company in 1999 and launched exclusively for social collection. It is mainly composed of the iron and steel production system located in the Shijingshan plant area.

At present, Shougang Group owns about 63.24% stake in Shougang Group.

In order to protect the interests of listed companies and their shareholders, the Shougang Group has made a commitment to put the stable and promising steel assets into Shougang Group by the end of 2010, so as to ensure the continuous operation ability of Shougang Group. Meanwhile, Shougang Group's capital production will be replaced by the Shougang Group through the replacement mode, so as to ensure that the Shougang shares are not damaged.

At the end of 2010, there is no definite plan for asset replacement.

Shougang head office said that in June 30, 2011 as a goal, the implementation of restructuring.

In order to assure investors, Shougang Group further promised that the net assets yield of assets injected into Shougang Group in 2011 should not be lower than that of Shougang Group in 2010, and the proceeds generated from the reorganization date from December 31, 2010 to the date of reorganization will be owned by Shougang Group; the assets liquidation related to discontinued production from the date of reorganization date, the placement of workers and related expenses will be borne by the head office.

The three quarterly report of Shougang Group in 2010 showed that the total assets of the company amounted to 19 billion 300 million yuan, and the shareholders' equity of the parent company was 7 billion 700 million yuan. In the first three quarters, the company achieved 21 billion 400 million yuan of business income and 295 million yuan of net profit attributable to its parent company, and the income related to the discontinued assets accounted for 63% of the company's main business income.

The injection of assets led to widespread speculation in the market, Qilu Securities analysis report said that from the scale, the group's iron and steel assets in the Qian'an steel plant and the original Shijingshan District production capacity is the most close, and at the same time, Shunyi cold rolling mill to provide hot-rolled substrate, so this part of the assets are most likely to be listed companies.

Zhao Liming, a researcher at Hongyuan securities, said that Shougang mineral company and Qian'an steel plant had large raw material trading, so Shougang Mining had great influence on the production of moving steel.

The possibility that the relocation of steel as a replacement target will increase the possibility of Shougang Mining, and if Shougang Mining is incorporated into the company, it will substantially improve the profitability of the company.

Shougang Group has a large number of steel assets, including Qian'an iron and steel, Qian'an iron ore, Caofeidian project, Shuicheng Steel Plant, Changzhi iron and steel and so on.

In the first trading day before the suspension, Shougang shares closed at 4.42 yuan in October 28th.