XD Inc. — Annual Report 2019

Mar 29, 2020

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ANNOUNCEMENT OF ANNUAL RESULTS FOR YEAR ENDED 31 DECEMBER 2019

A. IMPORTANT NOTICE

• 1.1 This summary of annual report is abstracted from the full text of the annual report. In order to completely understand the operating results, financial conditions and future development planning of Chongqing Iron & Steel Company Limited (the “ Company ”), investors are advised to carefully read the full text of the annual report on the media designated by the China Securities Regulatory Commission (CSRC), such as the website of the Shanghai Stock Exchange.

• 1.2 The board of directors (the “ Board ”), the supervisory committee and directors, supervisors and senior management of the Company warrant that there are no false representations, misleading statements contained in or material omissions from the annual report and individually and collectively accept full responsibility for the truthfulness, accuracy and completeness of the contents hereof.

• 1.3 All directors of the Company attended the Board meeting.

• 1.4 Ernst & Young Hua Ming LLP issued a standard unqualified audit report for the Company.

• 1.5 The profit distribution proposal or proposal to transfer capital reserve to share capital for the reporting period as considered by the Board

According to the auditing by Ernst & Young Hua Ming LLP, the net profit attributable to shareholders of the Company for 2019 amounted to RMB926 million, and the unappropriated profit as at the end of 2019 amounted to RMB-9.364 billion. As the Company recorded a negative unappropriated profit as at the end of 2019, the Board suggested not to make profit distribution or transfer capital reserve to share capital in 2019 pursuant to Article 250 of the Articles of Association.

• 1.6 The annual results of the Company for the year ended 31 December 2019 have been reviewed by the audit committee of the Company.

– 1 –

B. BASIC INFORMATION ON THE COMPANY

1 Company Information

Stock Profile

Stock abbreviation Stock type Place of listing Abbreviated name Stock code before adjustment A share Shanghai Stock Exchange Chongqing Iron & 601005 N/A Steel H share The Stock Exchange Chongqing Iron 01053 N/A of Hong Kong Limited

Contact information Secretary to the Board Securities affairs representative Name Meng Xiangyun Peng Guoju Correspondence No. 1 Gangcheng Avenue, Changshou No. 1 Gangcheng Avenue, Changshou address Economic Development Zone, Economic Development Zone, Chongqing, the PRC Chongqing, the PRC Tel 86-23-6887 3311 86-23-6898 3482 E-mail IR@email.cqgt.cn IR@email.cqgt.cn

2 Main Business Profile during the Reporting Period

2.1 Explanation on the Company’s Main Business and Business Model

The Company is mainly engaged in the production, processing and sale of steel plates, steel sections, wire rods, bar materials, billets and thin plates; production and sale of coal chemical products & grain slag, etc. The Company has a production capacity of 8.40 million tonnes of steel per year, with the following production lines: 4,100mm wide and thick plate, 2,700mm medium plate, 1,780mm hot rolled sheet, high speed wire rods, bar materials and steel sections.

– 2 –

The Company’s products are applied in various industries, such as machinery, architecture, engineering, automobile, motorbike, shipbuilding, offshore oil, gas cylinder, boiler and oil and gas pipelines. The Company’s steel products used in hull structure, boilers and pressure vessels were rewarded the title of “Chinese brand products” and four other products were rewarded the title of “Chongqing’s brand products”. The Company successively obtained the following titles of honor: national Labor Day certificate, national implementation of performance excellence model advanced enterprises, Chongqing famous trademark, Chongqing quality benefit enterprise and Chongqing contract-abiding and trustworthy enterprises.

With the vision of “becoming the most competitive iron & steel company in southwest regions, the leader among mainland steel plants characterized by eco-friendly development and active transformation and upgrade as well as the model for common development of employees and the enterprise”, and by implementing strategies highlighting “cost and manufacturing technology leadership”, carrying out the operation principle of “achieving full production and sales, low cost and high efficiency” and adhering to the market positioning of “taking root in Chongqing, pursuing further development in Sichuan and Chongqing, and branching out across southwest regions”, the Company vigorously promoted direct supply, sales and distribution, strengthened strategic partnerships with major customers, and continued to enhance service capacity to improve customer satisfaction.

2.2 Explanation on the Industry

In 2019, the iron and steel industry continued to advance the supplyside structural reform, consolidated the results of the capacity cutting, accelerated structural adjustment, transformation and upgrading, and achieved stable operation in general. Due to factors such as accelerated growth of steel production, slight decrease in steel price and higher price of raw materials (such as iron ore), the economic benefits of steel companies fell sharply. In the period from January to December 2019, the production of pig iron, crude steel and steel products in China reached 809.37 million tonnes, 996.34 million tonnes and 1,204.77 million tonnes, up 5.3%, 8.3% and 9.8% as compared with the corresponding period of last year, respectively. China’s steel composite price average index ( 中國鋼材綜合價格平均指數 ) was 107.98 points, down 5.9% as compared with the corresponding period of last year. In 2019, members of the China Iron and Steel Association realized sales revenue of RMB4.27 trillion, up 10.1% as compared with the corresponding period of last year; and profits of RMB188.994 billion, down 30.9% as compared with the corresponding period of last year.

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3 Major Financial Data and Financial Indicators of the Company

3.1 Major financial data and financial indicators for the last three years

Unit: RMB’000

			Increase/
			decrease
			from
	2019	2018	last year	2017
			(%)
Total assets	26,975,726	26,933,351	0.16	25,012,459
Operating income	23,477,597	22,638,957	3.70	13,236,840
Net profit attributable to
shareholders of listed
company	925,723	1,787,906	-48.22	320,086
Net profit attributable to
shareholders of listed
company, netting non-
recurring gains and
losses	726,508	1,677,588	-56.69	-1,870,066
Net assets attributable to
shareholders of listed
company	19,396,003	18,531,665	4.66	16,730,115
Net cash flow from
operating activities	-405,326	1,338,195	-130.29	505,815
Basic earnings per share
(RMB/share)	0.10	0.20	-50.00	0.04
Diluted earnings per share
(RMB/share)	0.10	0.20	-50.00	0.04
			Decrease
			by 5.26
Weighted average return			percentage
on net assets (%)	4.88	10.14	points	-1,290.51

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3.2 Major financial data by quarter during the reporting period

Unit: RMB’000

	1st	2nd	3rd	4th
	Quarter	Quarter	Quarter	Quarter
	(January-	(April-	(July-	(October-
	March)	June)	September)	December)
Operating income	5,307,920	6,175,640	5,800,779	6,193,258
Net profit attributable to
shareholders of listed
company	150,437	465,291	104,173	205,822
Net profit attributable to
shareholders of listed
company, netting non-
recurring gains and
losses	128,191	460,906	100,097	37,314
Net cash flow from
operating activities	-138,559	226,976	-994,837	501,094

Explanation on the differences between quarterly data and disclosed regular reporting data

Applicable ✓ Not applicable

4 Share Capital and Shareholders

4.1 Table of holdings of the number of ordinary shareholders and preferred shareholders with restored voting rights and the top 10 shareholders

	Unit: share
As of the end of the reporting period, the total number
of ordinary shareholders (accounts)	136,901
At the end of the month before the annual report
disclosure, the total number of ordinary shareholders
(accounts)	134,269
As of the end of the reporting period, the total number
of preferred shareholders with restored voting rights
(accounts)	0
At the end of the month before the annual report
disclosure, the total number of preferred shareholders
with restored voting rights (accounts)	0

– 5 –

The top 10 shareholders

Name of	Changes during the	Period-end		Number of	Pledged or frozen	Pledged or frozen
shareholder	reporting	number		restricted			Nature of
(Full name)	period	of stock	Ratio	stock held	Stock Status	Quantity	shareholders
			(%)
Chongqing Changshou							Domestic non-
Iron & Steel	0	2,096,981,600	23.51	0	Pledged	2,096,981,600	state-owned
Company Limited							legal person
HKSCC NOMINEES LIMITED	195,881	531,217,421	5.96	0	Unknown	–	Foreign legal person
Chongqing
Qianxin Energy
Environmental	0	427,195,760	4.79	0	Pledged	427,190,070	Unknown
Protection
Company Limited
Chongqing Rural
Commercial Bank	0	289,268,939	3.24	0	Nil	0	Unknown
Co., Ltd.
Chongqing Guochuang
Investment and Management Co.,	0	278,288,059	3.12	0	Nil	0	Unknown
Ltd.
Sinosteel Equipment
& Engineering Co.,	0	252,411,692	2.83	0	Nil	0	Unknown
Ltd.
Bank of Chongqing Co., Ltd.	0	226,042,920	2.53	0	Nil	0	Unknown
Industrial Bank Co.,
Ltd., Chongqing	0	219,633,096	2.46	0	Nil	0	Unknown
Branch
Agricultural Bank of
China Limited,	0	216,403,628	2.43	0	Nil	0	Unknown
Chongqing Branch
China Shipbuilding
Industry Complete
Logistics Co., Ltd.	0	211,461,370	2.37	0	Nil	0	Unknown
(中船工業成套
物流有限公司)
The above shareholders’ connected		There is no connection between Chongqing Changshou Iron & Steel Company Limited,
relationship or acting in concert		the controlling shareholder of the Company, and the other 9 shareholders, nor are
		they persons acting in concert regulated in Measures for Management					on Information
		Disclosure of Changes in Shareholdings of Listed Companies’					Shareholders.
		The Company is also not aware of any connected				relationship among the other 9
		shareholders or whether		they are acting in concert.
Preferred shareholders with		Not applicable.

Preferred shareholders with restored voting rights and their shareholding

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4.2 Chart of equity and the controlling relationship between the Company and the controlling shareholder

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✓ Applicable Not applicable
Chongqing Changshou Iron &
Steel Company Limited
23.51%
Chongqing Iron &
Steel Company Limited
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4.3 Chart of equity and the controlling relationship between the Company and the actual controllers

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✓ Applicable Not applicable
Access Star Company Limited East Oak Company Limited
100% 100%
Invesco(IVZ) of the State CouncilState-owned AssetsSupervision andAdministrationCommission 100%in Ningbo EconomicConsulting Co., Ltd.Development ZoneWeijun Investmentand Technical 100%in Ningbo EconomicConsulting Co., Ltd.Huiyong InvestmentDevelopment Zoneand Technical
Xubo Investment Chunyong Investment
100% Aviation Industry Bai Bo Zhang Guojin 77% in Ningbo EconomicConsulting Co., Ltd.Development Zoneand Technical in Ningbo EconomicConsulting Co., Ltd.Development Zoneand Technical
100% Corporation of China39.32% 70% 30% Development Co., Ltd.Zhongmei Lvse Consulting Co., Ltd. in 100%Penghui Investment 100%Runyong InvestmentConsulting Co., Ltd.
China MerchantsGroup Limited AVIC Capital Co., Ltd.100% 100% Technical Development 100%Ningbo Economic and Zone 100%in Ningbo EconomicDevelopment Zoneand Technical
100% AVIC Investment Co., Ltd.28.97%AVIC Trust Co., Zhangjiakou Zhongtai Consulting Co., Ltd.Energy Technology ManagementCenturium Capital Ltd.�HK� Consulting Co., Ltd.Energy TechnologyZhangjiakouChuangyuan Tianjin WeiyuanManagementInvestmentCo., Ltd. Tianjin HaoyongManagementInvestmentCo., Ltd.
Navigation CompanyChina Merchants Steam 100% Ltd. 100% 100% 100% 45% 55%
100% Shenzhen Putai DevelopmentInvestment Co., Ltd. Zhangjiakou Kaixuan Energy Technology Co., Ltd. Consulting Co., Ltd.Beijing Dazheng Management Zhangjiakou LongzeConsulting Co., Ltd.Energy Technology Guaranty CorporationInvestment andChina National Investment Co., Ltd.Tianjin Taiding
100% 100% 100% 81.25% 14.6% 85.4%
Energy TechnologyConsulting Co., Zhangjiakou HuacheLtd. Zhangjiakou Huajie Meirun Energy Technology ConsultingCo., Ltd. Protection FoundationHebei Huamei GreenEnvironmental Zhangjiakou HuaqingConsulting Co., Ltd.Meiyuan EnergyTechnology Zhangjiakou HuapingMei'an EnergyTechnology ConsultingCo., Ltd. (Tianjin) Co., Ltd.Dinghui EquityManagementInvestment Xu Lin
100% 15.45% 14.55% 15.45% 15.45% 14.55% 15.45% 9.09%
of China, Ltd.Ping An LifeInsuranceCompany Holding Co., Ltd.InvestmentShenzhen Financing HoldingInvestmentShenzhenCo., Ltd. Credit InvestmentChina SecuritiesCo., Ltd. Other Limited Partnerships (LP) Zhongmei Lvse InvestmentManagement Co., Ltd.100%
39.00% 8.00% 51.00% 2.00% China Baowu Steel Group Corporation Beijing Zhongmei Lvse and HuayuanInvestment Partinership (LP) 1%GP Management (Beijing) Co., U.S.-China Green Fund Ltd.
100% 99.93% 0.07%
WL ROSS&Co.LLC China Merchants Ping'an AMC Huabao Investment Co., Ltd. U.S.-China Green East InvestmentManagement Co., Ltd.
26% 24% 25% 25%
Siyuanhe Equity Investment Management Co., Ltd. (GP) China Baowu Steel Group Corporation Limited (LP) Sichuan Desheng Group Vanadium & Titanium Co., Ltd. (LP) Other Limited Partnership (LP) Chongqing Yufu Assets Equity Investment Fund Management Co., Ltd. (GP)
Siyuanhe (Chongqing) Iron & Steel Industrial Development Chongqing Strategic Emerging Equity Investment Fund Partnership (Limited
and Equity Investment Fund Partnership (LP) Partnership)
75% 25%
Chongqing Changshou Iron & Steel Company Limited Other Shareholders
23.51% 76.49%
Chongqing Iron & Steel Company Limited
(Chongqing Iron & Steel: 601005.SH/Chongqing Iron: 01053.HK)
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4.4 The total number of preferred shareholders of the Company and the top 10 shareholders at the end of the reporting period

Applicable ✓ Not applicable

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5 Information on Corporate Bond

Applicable ✓ Not applicable

C. MANAGEMENT DISCUSSION AND ANALYSIS

1 Major Operations During the Reporting Period

During the reporting period, the Company produced 6.1103 million tonnes of iron, 6.7236 million tonnes of steel and 6.4274 million tonnes of steel products, representing year-on-year growth of 7.62%, 5.36%, and 5.18% respectively, which exceeded the annual goals and reached the highest level in history. The sales volume of steel products was 6.5074 million tonnes, representing a year-on-year growth of 7.62%. The operating income was RMB23.478 billion, representing a year-on-year increase of 3.70%, while the net profit was RMB926 million, representing a year-on-year decrease of 48.23%.

1.1 Main business analysis

• (1) Analysis of changes in certain items from Income Statement and Cash Flow Statement

Unit: RMB’000

		Corresponding
	Current	period of
Item	period	last year	Change
			(%)
Operating income	23,477,597	22,638,957	3.70
Operating cost	21,718,957	19,681,846	10.35
Selling expenses	121,521	88,057	38.00
Administrative expenses	597,612	795,392	-24.87
R&D expenses	–	–	–
Financial expenses	170,887	183,073	-6.66
Net cash flow from
operating activities	-405,326	1,338,195	-130.29
Net cash flow from
investing activities	-718,828	630,605	-213.99
Net cash flow from			Not
financing activities	749,934	-868,219	applicable

• 1) The increase of operating income was mainly due to the improvement of production and sales.

– 8 –

• 2) The increase of operating cost was mainly due to the improvement of production and sales.

• 3) The increase of selling expenses was mainly due to the improvement of production and sales, as well as the increase of freight charge.

• 4) The decrease of administrative expenses was mainly due to decrease in provision of incentive funds and termination benefits in the period.

• 5) The decrease of net cash flow from operating activities was mainly due to increase in inventory of raw fuel and redemption of notes issued in previous period.

• 6) The decrease of net cash flow from investing activities was mainly due to new fixed investment projects and wealth management products.

• 7) The increase of net cash flow from financing activities was mainly due to repayment of guaranteed debt during the judicial reorganisation in the corresponding period of last year.

• (2) Revenue and cost analysis

✓ Applicable Not applicable

Detailed notes to the major changes in the Company’s profits structure or profits sources:

In 2019, the Group realized a total profit of RMB891 million, representing a year-on-year decrease of 49.37%, which was mainly due to the following reasons: the increase in prices of raw materials, such as ore, coal, alloy, scrap steel, etc., resulted in a decrease of RMB 1.120 billion in profit; the selling price of steel products amounted to RMB3,457/tonne, representing a year-onyear decrease of 4.26% and resulting in a decrease of RMB1.090 billion in profit; the sales volume of steel products reached 6,507,400 tonnes, representing a year-on-year increase of 7.62%, and achieving an increase of RMB303 million in profit; the Company implemented the operating principle of achieving full production and sales, improved basic management, realized stable

– 9 –

and smooth production and vigorously promoted the cost reduction plan. As a result, critical technical and economic indicators such as the hot strength of coke, tumbler index of sinter, fuel ratio, capacity factor of blast furnace, steel consumption in steelmaking, yield of rolled steel, etc., were all improved significantly and cost consumption levels were reduced substantially, thus resulting in an increase of RMB752 million in profit from cost reduction in the aspect of process; the year-on-year decrease in the total amount of expenses for the period gave rise to an increase of RMB177 million in profit; the year-on-year increase in other income gave rise to an increase of RMB142 million in profit.

In 2019, the Group’s revenue from main business amounted to RMB23.370 billion, representing a year-on-year increase of 3.50%. In particular, the income from sales of rolled steel billet amounted to RMB22.494 billion, representing an increase of RMB659 million as compared with the corresponding period of last year. Firstly, the sales volume of rolled steel billet was 6,507,400 tonnes, representing a year-on-year increase of 7.62%, resulting in an increase in the sales income of RMB1.749 billion; secondly, the average sales price of rolled steel billet was RMB3,457/ tonne, representing a year-on-year decrease of 4.26%, leading to a decrease in the sales income of RMB1.090 billion.

Composition of income from main businesses:

Type Plate Hot rolling Bars Profiles Billet Subtotal Other Total	2019 Amount Percentage (RMB’000) (%) 6,894,166 29.50 10,792,992 46.18 2,480,253 10.61 2,326,636 9.96 – – 22,494,047 96.25 875,587 3.75 23,369,634 100.00	2018 Amount Percentage (RMB’000) (%) 6,076,840 26.91 11,714,937 51.88 2,135,019 9.46 1,908,058 8.45 – – 21,834,854 96.71 743,921 3.29 22,578,775 100.00	Year-on- year increase in amount (%) 13.45 -7.87 16.17 21.94 – 3.02 17.70 3.50

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Sales prices of rolled steel billet:

Item 2019 Sales price 2018 Sales price RMB/tonne RMB/tonne Plate 3,587 3,802 Hot rolling 3,338 3,505 Bars 3,554 3,663 Profiles 3,554 3,652 Billet – – Subtotal 3,457 3,611 Sales volumes of rolled steel billet:	Year- on-year growth (%) -5.65 -4.76 -2.98 -2.68 – -4.26	Income increase (RMB’000) -412,241 -538,147 -76,011 -63,851 –
		-1,090,250

Item Plate Hot rolling Bars Profiles Billet Subtotal	Sales volume for 2019 (Ten thousand tonnes) 192.19 323.31 69.78 65.46 – 650.74	Sales volume for 2018 (Ten thousand tonnes) 159.85 334.26 58.28 52.25 – 604.64	Year- on-year growth (%) 20.23 -3.28 19.73 25.28 – 7.62	Income increase (RMB’000) 1,229,567 -383,798 421,245 482,429 –
				1,749,443

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1) Main business by sectors, products and regions

Unit: RMB’000

Main business by sectors

				Year-	Year-	Year-
				on-year	on-year	on-year
				increase/	increase/	increase/
				decrease in	decrease in	decrease
	Operating	Operating	Gross	operating	operating	in gross
By sectors	income	cost	margin	income	cost	margin
			(%)	(%)	(%)	(%)
Iron and steel	23,369,634	21,648,069	7.37	3.50	10.16	Decrease
						by 5.59
						percentage
						points

Main business by products

				Year-	Year-	Year-
				on-year	on-year	on-year
				increase/	increase/	increase/
				decrease in	decrease in	decrease
	Operating	Operating	Gross	operating	operating	in gross
By products	income	cost	margin	income	cost	margin
			(%)	(%)	(%)	(%)
Rolled steel	22,494,047	20,791,682	7.57	3.02	9.56	Decrease
billet						by 5.52
						percentage
						points
Other	875,587	856,387	2.19	17.70	27.01	Decrease
						by 7.17
						percentage
						points

– 12 –

Main business by regions

By regions Southwest Other regions Total	Operating income 19,098,458 4,271,176 23,369,634	Operating cost 17,677,078 3,970,991 21,648,069	Gross margin (%) 7.44 7.03 7.37	Year- on-year increase/ decrease in operating income (%) -3.30 51.00 3.50	Year- on-year increase/ decrease in operating cost Year- on-year increase/ decrease in gross margin (%) (%) 2.83 Decrease by 5.52 percentage points 61.37 Decrease by 5.97 percentage points 10.16 Decrease by 5.59 percentage points

Explanations on main business by sectors, products and regions

Not applicable

2) Table of production and sales volume analysis

✓ Applicable Not applicable

					Year-	Year-	Year-
					on-year	on-year	on-year
					increase/	increase/	increase/
					decrease in	decrease	decrease
Main		Production	Sales		production	in sales	in
products	Unit	volume	volume	Inventory	volume	volume	inventory
					(%)	(%)	(%)
Plate	Ten thousand	190.93	192.19	4.77	17.65	20.23	3.47
	tonnes
Hot rolling	Ten thousand	318.55	323.31	2.76	-5.02	-3.28	-43.33
	tonnes
Bars	Ten thousand	69.14	69.78	1.85	14.77	19.73	-26.59
	tonnes
Profiles	Ten thousand	64.12	65.46	0.07	20.57	25.28	-95.07
	tonnes

– 13 –

Explanations on production and sales volume

Not applicable

• 3) Cost analysis table

Unit: RMB’000

By sectors

					Percentage
					of the
			Percentage		amount
			of the	Amount	for the
			amount	for the	corresponding
		Amount	for the	corresponding	period of	Year-
		for the	period in	period of	last year in	on-year
By sectors	Cost component	period	total costs	last year	total costs	change
			(%)		(%)	(%)
Iron and steel	Raw material	16,364,965	75.59	14,282,976	72.68	14.58
Iron and steel	Energy	1,120,692	5.18	1,170,245	5.96	-4.23
	Labor and other
Iron and steel	costs	4,162,412	19.23	4,198,491	21.36	-0.86

By products

					Percentage
					of the
			Percentage		amount
			of the	Amount	for the
			amount	for the	corresponding
		Amount	for the	corresponding	period of	Year-
		for the	period in	period of	last year	on-year
By products	Cost component	period	total costs	last year	in total costs	change
			(%)		(%)	(%)
Rolled steel	Raw material and	20,791,682	96.04	18,977,424	96.57	9.56
billet	energy costs
Other	Raw material and	856,387	3.96	674,288	3.43	27.01
	energy costs

– 14 –

Explanations on other information of cost analysis

Not applicable

• 4) Major buyers and major suppliers

✓ Applicable Not applicable

The sales attributable to the five largest buyers amounted to RMB7,022,417,000, representing 29.91% of the total sales for the year, of which the sales attributable to related parties amounted to nil, representing 0.00 % of the total sales for the year.

The purchase amount attributable to the five largest suppliers amounted to RMB6,405,210,000, representing 29.22% of the total purchase amount for the year, of which the purchase amount attributable to related parties amounted to nil, representing 0.00% of the total purchase amount for the year.

Other explanations

Not applicable

• (3) Expenses

✓ Applicable Not applicable

Unit: RMB’000

		Amount
	Amount	for the	Year-
	for the	previous	on-year
Item	period	period	change
			(%)
Selling expenses	121,521	88,057	38.00
Administrative expenses	597,612	795,392	-24.87
Financial expenses	170,887	183,073	-6.66

– 15 –

(4) R&D investment

• 1) Table of R&D investment

✓	Applicable Not applicable
		Unit: RMB’000
Expensed R&D investment for the period		516,014
Capitalized R&D investment for the period		0
Total R&D investment		516,014
Percentage of the total R&D investment in
operating income (%)		2.20
Number of R&D personnel of the Company		920
Percentage of R&D personnel in total number
of employees of the Company (%)		14.36
Percentage of capitalized R&D investment in
total R&D investment (%)		0

• 2) Explanations

Applicable ✓ Not applicable

• (5) Cash flow

✓ Applicable Not applicable

Unit: RMB’000

Item 2019 2018 Main reasons for changes Net cash flow -405,326 1,338,195 Increase in inventory of from operating raw fuel and redemption activities of notes issued in previous period Net cash flow -718,828 630,605 New fixed investment from investing projects and wealth activities management products Net cash flow 749,934 -868,219 Repayment of guaranteed from financing debt during the judicial activities reorganisation in the corresponding period of last year Net increase in -374,220 1,100,581 / cash and cash equivalents

– 16 –

1.2 Explanation on material change in profit due to non-principal business

Applicable ✓ Not applicable

1.3 Analysis of assets and liabilities

✓ Applicable Not applicable

• (1) Assets and liabilities

Unit: RMB’000

				Percentage of
		Percentage of		the amount
		the amount at	Amount at	at the end of
	Amount at	the end of the	the end of	the previous
	the end of the	period in total	the previous	period in total	Year- on-year
Item	period	assets	period	assets	**change **	Explanation
		(%)		(%)	(%)
Cash and bank	1,783,747	6.61	2,764,631	10.26	-35.48	Adjustment to
balances						payment methods
Financial assets held	400,000	1.48	30,000	0.11	1,233.33	Improving the
for trading						efficiency of
						capital operation
Trade receivables	5,610	0.02	30,340	0.11	-81.51	Differences in
						settlement time
						at the end of the
						reporting period
Receivables financing	861,373	3.19	575,652	2.14	49.63	Adjustment to
						payment methods
Prepayments	751,498	2.79	908,646	3.37	-17.29
Other receivables	78,132	0.29	10,506	0.04	643.69	Recognition of
						outstanding
						government
						subsidies
						receivable
Inventories	3,931,513	14.57	3,192,201	11.85	23.16	Increase in inventory
						and ore prices due
						to maintenance of
						the Three Gorges
						Dam
Other current assets	43,410	0.16	279	0.00	15,459.14	Increase in taxes to be
						verified

– 17 –

				Percentage of
		Percentage of		the amount
		the amount at	Amount at	at the end of
	Amount at	the end of the	the end of	the previous
	the end of the	period in total	the previous	period in total	Year- on-year
Item	period	assets	period	assets	**change **	Explanation
		(%)		(%)	(%)
Long-term equity	28,258	0.10	–	–	Not applicable	New equity
investments						investments
Other equity	5,000	0.02	5,000	0.02	0.00
investments
Property, plant and	16,442,264	60.95	16,914,109	62.80	-2.79
equipment
Construction in	171,858	0.64	16,593	0.06	935.73	Increase in technical
process						transformation
						projects
Intangible assets	2,392,114	8.87	2,454,327	9.11	-2.53
Deferred tax assets	68,436	0.25	31,067	0.12	120.29
Other non-current	12,513	0.05	–	–	Not applicable
assets
Short-term borrowings	384,528	1.43	–	–	Not applicable	New borrowings
Notes payable	91,127	0.34	1,199,147	4.45	-92.40	Redemption of notes
						issued in previous
						period
Trade payables	1,726,883	6.40	1,747,169	6.49	-1.16
Contract liabilities	1,145,615	4.25	1,004,280	3.73	14.07
Employee benefits	257,143	0.95	333,407	1.24	-22.87
payable
Taxes payable	70,867	0.26	35,733	0.13	98.32	VAT payable in
						December
Other payables	421,768	1.56	348,348	1.29	21.08
Non-current liabilities	841,576	3.12	416,317	1.55	102.15	Reclassification of
due within one						borrowings due
year						within one year
Other current liabilities	150,208	0.56	160,675	0.60	-6.51
Long-term borrowings	–	–	300,000	1.11	Not applicable
Long-term employee	201,737	0.75	240,615	0.89	-16.16
benefits payable
Deferred income	38,271	0.14	40,495	0.15	-5.49
Other non-current	2,250,000	8.34	2,575,500	9.56	-12.64
liabilities

Other explanation

Not applicable

– 18 –

• (2) Major restricted assets at the end of the reporting period

✓ Applicable

Not applicable

Unit: RMB’000

Item Cash and bank balances Notes receivables Property, plant and equipment – houses and buildings Intangible assets Total	Carrying amount at the end of the period 188,424 190,000 1,928,087 2,392,114 4,698,625	Carrying amount at the beginning of the period Reason for restrictions 795,088 Note 1 20,000 Note 2 1,975,369 Note 3 2,454,327 Note 4 5,244,784

• Note 1: As at 31 December 2019, the Group’s ownership of cash and bank deposits with carrying amount of RMB188,424,000 (31 December 2018: RMB795,088,000) was restricted for issuing bank acceptances and letters of credit.

• Note 2: As at 31 December 2019, the Group obtained short-term borrowings by discounting bank acceptances with carrying amount of RMB190,000,000 (31 December 2018: the Group’s bank acceptances with carrying amount of RMB20,000,000 were pledged for issuing bank acceptances).

• Note 3: As at 31 December 2019, the Group’s houses and buildings with carrying amount of RMB1,928,087,000 (31 December 2018: RMB1,975,369,000) were pledged for obtaining bank borrowing and working capital loan facilities.

• Note 4: As at 31 December 2019, the Group’s land use right with carrying amount of RMB2,392,114,000 (31 December 2018: RMB2,454,327,000) was pledged for obtaining bank borrowing and working capital loan facilities, and the amortised amount of the land use right was RMB62,213,000 (2018: RMB67,407,000) during the current year.

– 19 –

2 Management Discussion and Analysis on Future Development of the Company

2.1 Industry competition pattern and development trend

✓ Applicable Not applicable

In 2019, the iron and steel industry continued to advance the supplyside structural reform, consolidated the results of the capacity cutting, accelerated structural adjustment, transformation and upgrading, and achieved stable operation in general. Due to factors such as accelerated growth of steel production, slight decrease in steel price and higher price of raw materials (such as iron ore), the economic benefits of steel companies fell sharply.

In 2020, the last year of the 13th Five-Year Plan, the development of the iron and steel industry faces a complex and changeable situation. The entire industry will follow the requirements of the Central Economic Work Conference, continue to focus on supply-side structural reform, consolidate the results of the capacity cutting in the iron and steel industry, elevate green and intelligent standards in the iron and steel industry, and improve quality and efficiency, so as to promote high quality development of the iron and steel industry.

In the future, intelligent manufacturing, integration and innovation will be the key works of the iron and steel industry for a period of time. Green and low-carbon, integration and innovation, network and intelligence, and sharing and win-win are becoming new features of the development of intelligent manufacturing. Due to intensifying competition in domestic and foreign markets, rapid development of information technology, and the advent of information society, the iron and steel industry needs to accelerate the establishment of a highly integrated and coordinated comprehensive operation system for managing enterprise under the information environment, the green and low-carbon steel manufacturing system supported by information technology, the industry chain integration system based on network, and the digital lifetime management system for steel products, to make the development prospects of the iron and steel industry brighter.

– 20 –

2.2 Corporate development strategy

✓ Applicable Not applicable

The Company will strive to become the most competitive steel enterprise in Southwest China, the leading green-friendly, transforming and upgrading inland steel factory, becoming the model for the mutual development of the staff and enterprises, and shaping itself to “Be Strong”, “Be Beautiful” and “Be Attractive”.

The Company will implement its cost leadership strategy and leading manufacturing technology strategy. In a market with competition from the homogenization of the iron and steel industry, the cost leadership will become the most important competitive strategy for an enterprise. Since the leading manufacturing technologies can decide the competition pattern, the space of cost reduction in the future lies in whether the relevant technologies are in place. On the premise that the users’ usage standards can be met, the leadership in the manufacturing technologies can help lower manufacturing costs.

2.3 Operating plans

✓ Applicable Not applicable

In 2020, the Company consolidated its foundation and transformed its development model. The Company will continue to take “shaping Chongqing Iron to be strong, beautiful and attractive” as its vision and goals, actively implement the annual production and operation policy of “expanding scale, adjusting structure, and reducing costs” and basic work of “finding differences from excellent enterprises comprehensively, paying close attention to reducing costs and increasing efficiency, promoting the implementation of plans and improving system capabilities”, and adhere to the philosophy of “all costs can be lowered” to establish a sense of crisis for all employees and make plan for hard times, while focusing on “scale + cost” and “efficiency + benefit”, so as to promote the production and operation, project construction, reforms and development of the Company comprehensively, and improve the Company’s competitiveness continuously.

The Company plans to produce 6.12 million tonnes of pig iron, 6.80 million tonnes of steel and 6.38 million tonnes of steel products, and realize sales volume of 6.38 million tonnes of steel products and sales revenue of RMB22.0 billion (tax exclusive) in the year of 2020.

– 21 –

2.4 Potential risks

✓ Applicable Not applicable

• (1) The iron and steel industry is a strong cyclical industry. Domestic and international situation, macro-economic and industrial policies may have certain effect on the operation of the Company.

• (2) The steel price is subject to significant fluctuations, which may have certain effect on the profitability of the Company.

• (3) The Company is suffering increasing cost pressures as a result of the continuous rise in domestic steel production capacity, fluctuations of iron ore price at high level, and rising freight of bulk raw materials.

• (4) Serious backlog of steel stocks in the market and difficulties encountered by the Company in delivering products as a result of the epidemic have short-term adverse effect on the Company’s production and operation.

3 Reasons for the Suspension of Listing

Applicable ✓ Not applicable

• 4 The Circumstances and Reasons for the Termination of the Listing

Applicable ✓ Not applicable

• 5 The Company’s Analysis and Explanation about the Reasons for and Impact of Changes in Accounting Policy and Accounting Estimates ✓ Applicable Not applicable

– 22 –

Changes in accounting policy

5.1 New lease standard

In 2018, the Ministry of Finance issued the revised “Accounting Standard for Business Enterprises No. 21 – Leasing” (the “New Lease Standard”) which adopts the single model similar to the current accounting treatment for finance leases and requires the lessee to recognize the right-of-use asset and lease liability for all leases other than short-term and low-value assets leases and recognize depreciation and interest expenses, respectively. Since 1 January 2019, the Group has conducted accounting treatment in accordance with the newly revised lease standard and selected not to reevaluate whether the contracts that have existed before the date of initial implementation are or contain leases. According to the transitional requirements, the information for the comparable period will not be adjusted and retained earnings at the beginning of 2019 will be retrospectively adjusted based on the difference between the New Lease Standard and the current lease standard on the first day of implementation. The implementation of the New Lease Standard had no impact on the retained earnings of the Group as at 1 January 2019.

The Group adopted simplified treatment for the operating leases completed within 12 months before the date of first implementation and did not recognize the right-of-use asset and lease liability.

For the minimum lease payments not made for the significant operating leases as disclosed in the 2018 financial statements, the adjustment of the difference between the present value discounted at the incremental borrowing rate as at 1 January 2019 with the Group as the lessee and the lease liability included in the balance sheet as at 1 January 2019 is as follows:

– 23 –

Unit: RMB’000

Minimum lease payments for significant operating
leases as at 31 December 2018	379,500
Less: lease payments subject to simplified treatment	379,500
Including: short-term lease	379,500
Weighted average incremental borrowing rate	4.86%
Present value of lease payments for operating leases as
at 1 January 2019	–
Lease liability as at 1 January 2019	–

The implementation of the New Lease Standard had no significant impact on the consolidated and company balance sheet as at 1 January 2019 and consolidated and company financial statement for 2019.

5.2 Changes in presentation of financial statement

To meet the requirements of the Notice on Revising and Issuing Format of 2019 Annual Financial Statements for General Business Enterprises (Cai Kuai [2019] No.6) (《關於修訂印發 2019 年度一般企業財 務報表格式的通知》( 財會 [2019]6 號 )) and the Notice on Revising and Issuing Format of Consolidated Financial Statements (Cai Kuai [2019] No.16) ( 關於修訂印發合併財務報表格式 (2019 版）的通 知》( 財會 [2019]16 號 ), in the balance sheet, the amounts previously presented in “notes and trade receivables” shall be split into “notes receivable” and “trade receivables”, the amounts previously presented in “notes and trade payables” shall be split into “notes payable” and “trade payables”, notes at fair value through other comprehensive income previously included in “other current assets” shall be presented in “receivables financing” separately, “interest receivable” included in “other receivables” shall only reflect the interest receivable of relevant financial instruments which is due but not received on balance sheet date (interest of financial instruments based on effective interest method should be included in the carrying amount of the corresponding financial instrument), and the “interest payable” included in “other payables” shall only reflect the interest payable of relevant financial instruments which is due but not paid on balance sheet date (interest of financial instruments based on effective interest method should be included in the carrying amount of the corresponding financial instrument). The Group has retrospectively adjusted the comparative amounts correspondingly. The changes in the accounting policies have had no impact on the net profit and equity in the consolidated and company financial statements.

– 24 –

The main impact of retrospective adjustments on financial statements caused by the above changes in accounting policies are as follows:

The Group

Unit: RMB’000

	Before changes	Changes in	After changes
	in accounting	accounting	in accounting
2019	policies	policies	policies
		Effects of other
		changes in the
		presentation
	Closing balances	of financial	Opening
	of 2018	statements	balances of 2019
Notes and trade receivables	30,340	(30,340)	–
Trade receivables	–	30,340	30,340
Other current assets	575,931	(575,652)	279
Receivables financing	–	575,652	575,652
Notes and trade payables	2,946,316	(2,946,316)	–
Notes payable	–	1,199,147	1,199,147
Trade payables	–	1,747,169	1,747,169
Other payables	354,665	(6,317)	348,348
Non-current liabilities due within one year	410,000	6,317	416,317
		Unit: RMB’000
	Before changes	Changes in	After changes
	in accounting	accounting	in accounting
2018	policies	policies	policies
		Effects of other
		changes in the
		presentation
	Opening balances	of financial	Opening balances
	for the year	statements	for the year
Notes and trade receivables	44,038	(44,038)	–
Trade receivables	–	44,038	44,038
Other current assets	1,251,751	(123,096)	1,128,655
Receivables financing	–	123,096	123,096
Notes and trade payables	2,155,294	(2,155,294)	–
Notes payable	–	80,700	80,700
Trade payables	–	2,074,594	2,074,594
Other payables	1,491,912	(7,174)	1,484,738
Non-current liabilities due within one year	400,000	7,174	407,174

– 25 –

The Company

Unit: RMB’000

	Before changes	Changes in	After changes
	in accounting	accounting	in accounting
2019	policies	policies	policies
		Effects of other
		changes in the
	Closing	presentation	Opening
	balances of	of financial	balances of
	2018	statements	2019
Notes and trade receivables	29,851	(29,851)	–
Trade receivables	–	29,851	29,851
Other current assets	575,931	(575,652)	279
Receivables financing	–	575,652	575,652
Notes and trade payables	2,945,889	(2,945,889)	–
Notes payable	–	1,199,147	1,199,147
Trade payables	–	1,746,742	1,746,742
Other payables	354,665	(6,317)	348,348
Non-current liabilities due within
one year	410,000	6,317	416,317
		Unit: RMB’000
	Before changes	Changes in	After changes
	in accounting	accounting	in accounting
2018	policies	policies	policies
		Effects of other
		changes in the
	Opening	presentation	Opening
	balances for the	of financial	balances for
	year	statements	the year
Notes and trade receivables	46,853	(46,853)	–
Trade receivables	–	46,853	46,853
Other current assets	601,606	(123,096)	478,510
Receivables financing	–	123,096	123,096
Notes and trade payables	2,204,070	(2,204,070)	–
Notes payable	–	80,700	80,700
Trade payables	–	2,123,370	2,123,370
Interest payable	1,486,183	(7,174)	1,479,009
Non-current liabilities due within
one year	400,000	7,174	407,174

– 26 –

• 6 Company’s analysis on the cause and impact of correction of material errors of accounting

Applicable ✓ Not applicable

• 7 The Company shall make specific explanations regarding the changes in the scope of consolidation of financial statements compared to last year’s financial report.

Applicable ✓ Not applicable

D. RELEVANT DISCLOSURE MADE ACCORDING TO THE RULES GOVERNING THE LISTING OF SECURITIES ON THE HONG KONG STOCK EXCHANGE

1 Compliance of Corporate Governance Code

To the best of knowledge of the Board, the Company had complied with the requirements of the “Corporate Governance Code” as set out in Appendix 14 the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange (the “Listing Rules”) during the reporting period, and was not aware of any deviation from the Code.

2 Model Code for Securities Transactions by Directors

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 of the Listing Rules as the code for trading of the Company’s securities by directors. All directors of the Company confirmed upon specific enquiries that they had complied with the required standards as set out in the Model Code for the year ended 31 December 2019.

3 Purchase, Sale or Redemption of Listed Securities of the Company

From 12 June 2019 to 27 June 2019, the Company accumulatively repurchased a total of 31,500,000 A shares through centralized bidding trading, representing approximately 0.3532% of its total share capital. The highest, lowest and average price transacted for such shares were RMB2.13 per share, RMB1.88 per share and RMB1.975 per share, respectively. The total amount paid for such shares was RMB62,223,734 (excluding transaction fees).

4 Major Acquisition and Disposal of Subsidiaries and Affiliates

No major acquisition and disposal of subsidiaries and affiliates occurred during the reporting period.

– 27 –

5 Audit Committee

The Audit Committee of the Company is comprised of three independent non-executive directors and one non-executive director, namely, Xin Qing Quan, Xu Yi Xiang, Wong Chun Wa and Zhang Shuo Gong with Mr. Xin Qing Quan acting as the chairman of the Audit Committee.

The 2019 Annual Report of the Company had been reviewed by the members of the Audit Committee before being submitted to the Board for approval.

6 Interests or Short Positions

As at 31 December 2019, the interests or short positions (including interests or short positions which they were taken or deemed to have under relevant provisions of the SFO) of the directors, supervisors or senior management members of the Company in the shares or underlying shares or debentures of the Company and any of its associated corporations (within the meaning of Part XV of the SFO), which were required to be recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Rules Governing the Listing of Securities on the Stock Exchange, to be notified to the Company and the Stock Exchange, were as follows:

				Total	Percentage	Percentage
				number of	in the share	in the total
	The Company/			interested	capital of A	share capital
	associated		Nature of	shares held	shares of the	of the	Class of
Name	corporations	Capacity	interests	(share)	Company	Company	shares
					(%)	(%)
			Be neficial	113,800
Wang Li	The Company	Director	interests	(long position)	0.00136	0.00128	A share

7 Pre-emptive Rights

According to the Articles of Association of the Company and the laws of the People’s Republic of China, there are no pre-emptive rights which would require the Company to issue new shares to its existing shareholders on a pro-rata basis.

– 28 –

8 Public Float of H Shares

As of the date hereof, to the best knowledge of the Board, the Company has maintained sufficient public float as required by the Listing Rules of the Stock Exchange.

9 Circulating Market Capitalisation

Based on the available information to the Company, as at 31 December 2019, the circulating market capitalisation of H Shares of the Company (circulating H Share capital x closing price of H Shares (HK$1.03)) was approximately HK$554 million and the circulating market capitalisation of A Shares of the Company (circulating A Share capital x closing price of A Shares (RMB1.85)) was approximately RMB15.504 billion.

10 Final Dividend

The Company’s profit distribution policies are set out in detail in the Articles of Association, which provides the principles, forms and conditions of distribution, the justification procedures for distribution scheme and decision-making mechanism, as well as policy adjustments. When determining profit distribution (including dividend payment) and distribution proportion, the Company will follow several major principles including the continuity and stability of profit distribution policies, paying full attention to the reasonable investment return for investors, and considering the long-term interests of the Company, sustainable development and the interests of all shareholders as a whole, and the Board will prepare the proposal for profit distribution according to the operating situations and development of the Company, then submit it to the general meetings for approval. Please refer to the profit distribution policies set out in the Articles of Association for more details.

The Company does not have any predetermined dividend distribution proportion or dividend distribution ratio, and the distribution and the amount of dividend will be determined by the Board’s discretion as aforesaid.

According to the auditing by Ernst & Young Hua Ming LLP, the net profit attributable to shareholders of the Company for 2019 amounted to RMB926 million, and the unappropriated profit as at the end of 2019 amounted to RMB-9.364 billion. As the Company recorded a negative unappropriated profit as at the end of 2019, the Board suggested not to make profit distribution or transfer capital reserve to share capital in 2019 pursuant to Article 250 of the Articles of Association.

– 29 –

CONSOLIDATED BALANCE SHEET

As at 31 December 2019

Assets Current assets Cash and bank balances Financial assets held for trading Trade receivables Receivables financing Prepayments Other receivables Inventories Other current assets Total current assets Non-current assets Long-term equity investments Other equity investments Property, plant and equipment Construction in progress Intangible assets Deferred tax assets Other non-current assets Total non-current assets Total assets	31 December 2019 1,783,747 400,000 5,610 861,373 751,498 78,132 3,931,513 43,410 7,855,283 28,258 5,000 16,442,264 171,858 2,392,114 68,436 12,513 19,120,443 26,975,726	RMB’000 31 December 2018 2,764,631 30,000 30,340 575,652 908,646 10,506 3,192,201 279 7,512,255 – 5,000 16,914,109 16,593 2,454,327 31,067 – 19,421,096 26,933,351

– 30 –

Liabilities and Shareholders’ equity Current liabilities Short-term borrowings Notes payable Trade payables Contract liabilities Employee benefits payable Taxes payable Other payables Non-current liabilities due within one year Other current liabilities Total current liabilities Non-current liabilities Long-term borrowings Long-term employee benefits payable Deferred income Other non-current liabilities Total non-current liabilities Total liabilities Shareholders’ equity Share capital Capital reserves Less: Treasury shares Special reserves Surplus reserves Unappropriated profit Total shareholders’ equity Total liabilities and shareholders’ equity	31 December 2019 384,528 91,127 1,726,883 1,145,615 257,143 70,867 421,768 841,576 150,208 5,089,715 – 201,737 38,271 2,250,000 2,490,008 7,579,723 8,918,602 19,282,147 62,314 14,573 606,991 (9,363,996) 19,396,003 26,975,726	31 December 2018 – 1,199,147 1,747,169 1,004,280 333,407 35,733 348,348 416,317 160,675 5,245,076 300,000 240,615 40,495 2,575,500 3,156,610 8,401,686 8,918,602 19,282,147 – 13,644 606,991 (10,289,719) 18,531,665 26,933,351

– 31 –

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2019

Revenue Less: Cost of sales Taxes and surcharges Distribution and selling expenses General and administrative expenses Finance expenses Including: Interest expenses Interest income Add: Other income Investment income Including: Investment losses from associates and joint ventures Impairment losses on credit Impairment losses on assets Gains on disposal of assets Operating profit Add: Non-operating income Less: Non-operating expenses Total profit Less: Income tax expenses/(credit) Net Profit Breakdown by continuity of operations Net profit from continuing operations	2019 23,477,597 21,718,957 168,336 121,521 597,612 170,887 216,278 52,977 144,872 15,894 – (531) – – 860,519 39,638 9,648 890,509 (35,214) 925,723 925,723	RMB’000 2018 22,638,957 19,681,846 127,675 88,057 795,392 183,073 278,680 99,927 2,729 5,455 (1,566) (8,752) (30,728) 14,822 1,746,440 19,827 7,534 1,758,733 (29,300) 1,788,033 1,788,033

– 32 –

2019

2018

Breakdown by attributable interests Net profit attributable to shareholders of the parent Non-controlling interests Other comprehensive income after tax Total comprehensive income Including: Total comprehensive income attributable to shareholders of the parent Total comprehensive income attributable to non-controlling interests Earnings per share Basic earnings per share (RMB/share) Diluted earnings per share (RMB/share)	925,723 – – 925,723 925,723 – 0.10 0.10	1,787,906 127
		–
		1,788,033
		1,787,906 127
		0.20
		0.20

– 33 –

RMB’000

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2019

2019

I. Closing balances of the preceding year and opening balances of the current year II. Changes in the current year (I) Total comprehensive income (II) Shareholders’ contribution and decrease in share capital 1. Others (III) Special reserve 1. Amount established during the year 2. Amount utilized during the year III. Closing balance for the year			Total equity attributable to shareholders of the parent	Total equity attributable to shareholders of the parent	Total equity attributable to shareholders of the parent	Subtotal 18,531,665 864,338 925,723 (62,314) (62,314) 929 25,680 24,751 19,396,003	Non- controlling interests – – – – – – – – –	Total shareholders’ equity 18,531,665
	Share capital 8,918,602 – – – – – – – 8,918,602	Capital reserves 19,282,147 – – – – – – – 19,282,147	Less: treasury shares Other comprehensive income – – 62,314 – – – 62,314 – 62,314 – – – – – – – 62,314 –	Special reserves 13,644 929 – – – 929 25,680 24,751 14,573	Surplus reserves Unappropriated profit 606,991 (10,289,719) – 925,723 – 925,723 – – – – – – – – – – 606,991 (9,363,996)
								864,338 925,723 (62,314) (62,314) 929 25,680 24,751
								19,396,003

2018

I. Closing balances of the preceding year and opening balances of the current year II. Changes in the current year (I) Total comprehensive income (II) Shareholders’ contribution and decrease in share capital 1. Others (III) Profit Appropriation 1. Distribution to shareholders (IV) Special reserve 1. Amount established during the year 2. Amount utilized during the year III. Closing balance for the year			Total equityattributable to shareholders of theparent	Total equityattributable to shareholders of theparent	Total equityattributable to shareholders of theparent		Subtotal 16,730,115 1,801,550 1,787,906 – – – – 13,644 20,520 6,876 18,531,665	Non- controlling interests 73,849 (73,849) 127 (73,513) (73,513) (463) (463) – – – –	Total shareholders’ equity 16,803,964
	Share capital 8,918,602 – – – – – – – – – 8,918,602	Capital reserves 19,282,147 – – – – – – – – – 19,282,147	Less: treasury shares Other comprehensive income – – – – – – – – – – – – – – – – – – – – – –	Special reserves – 13,644 – – – – – 13,644 20,520 6,876 13,644	Surplus reserves 606,991 – – – – – – – – – 606,991	Unappropriated profit (12,077,625) 1,787,906 1,787,906 – – – – – – – (10,289,719)
									1,727,701 1,788,033 (73,513) (73,513) (463) (463) 13,644 20,520 6,876
									18,531,665

– 34 –

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2019

I. Cash flows from operating activities: Cash received from sale of goods and rendering of services Other cash received relating to operating activities Sub-total of cash inflows from operating activities Cash paid for purchase of goods and services Cash paid to and on behalf of employees Cash paid for all types of taxes Other cash paid relating to operating activities Sub-total of cash outflows from operating activities Net cash flows from operating activities II. Cash flows from investing activities: Cash received from disposal of investments Cash received from return on investments Net cash received from disposal of property plant and equipment, intangible assets and other long-term assets Other cash received relating to investing activities Sub-total of cash inflows from investing activities Cash paid for acquisition of property plant and equipment, intangible assets and other long-term assets Cash paid for acquisition of investments Sub-total of cash outflows from investing activities Net cash flows from investing activities	2019 22,376,737 149,412 22,526,149 20,843,771 1,205,096 553,961 328,647 22,931,475 (405,326) 1,008,800 15,894 – 980 1,025,674 337,444 1,407,058 1,744,502 (718,828)	RMB’000 2018 13,270,746 175,337
		13,446,083
		9,306,899 1,536,319 263,339 1,001,331
		12,107,888
		1,338,195
		1,241,636 7,021 16,229 –
		1,264,886
		14,281 620,000
		634,281
		630,605

– 35 –

2019

2018

III. Cash flows from financing activities: Cash received from borrowings Other cash received relating to financing activities Sub-total of cash inflows from financing activities Cash repayments of borrowings Cash paid for distribution of dividends or profits, and for interest expenses Other cash paid relating to financing activities Sub-total of cash outflows from financing activities Net cash flows from financing activities IV. Effect of changes in exchange rate on cash and cash equivalents V. Net increase/(decrease) in cash and cash equivalents Add: Cash and cash equivalents at the beginning of the year VI. Cash and cash equivalents at the end of the year	591,545 795,088 1,386,633 410,000 157,441 69,258 636,699 749,934 – (374,220) 1,969,543 1,595,323	185,500 1,181,576 1,367,076 400,000 247,845 1,587,450 2,235,295 (868,219) – 1,100,581 868,962 1,969,543

– 36 –

STATEMENT OF BALANCE SHEET

As at 31 December 2019

Assets Current assets Cash and bank balances Financial assets held for trading Trade receivables Receivables financing Prepayments Other receivables Inventories Other current assets Total current assets Non-current assets Long-term equity investments Other equity investments Property, plant and equipment Construction in progress Intangible assets Deferred tax assets Other non-current assets Total non-current assets Total assets	31 December 2019 1,779,736 400,000 5,610 861,373 707,289 78,027 3,931,513 43,410 7,806,958 28,258 5,000 16,442,087 171,858 2,392,114 68,192 12,513 19,120,022 26,926,980	RMB’000 31 December 2018 2,762,442 30,000 29,851 575,652 908,523 10,500 3,192,201 279
		7,509,448
		– 5,000 16,914,084 16,593 2,454,327 31,067 –
		19,421,071
		26,930,519

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Liabilities and owner’s equity Current liabilities Short-term borrowings Notes payable Trade payables Contract liabilities Employee benefits payable Taxes payable Other payables Non-current liabilities due within one year Other current liabilities Total current liabilities Non-current liabilities Long-term borrowings Long-term employee benefits payable Deferred income Other non-current liabilities Total non-current liabilities Total liabilities Shareholders’ equity Share capital Capital reserves Less: Treasury shares Special reserves Surplus reserves Unappropriated profit Total shareholders’ equity Total liabilities and shareholders’ equity	31 December 2019 384,528 91,127 1,726,883 1,105,972 257,143 70,398 421,590 841,576 144,958 5,044,175 – 201,737 38,271 2,250,000 2,490,008 7,534,183 8,918,602 19,313,090 62,314 14,573 577,012 (9,368,166) 19,392,797 26,926,980	31 December 2018 – 1,199,147 1,746,742 1,004,220 333,407 34,741 348,348 416,317 160,675 5,243,597 300,000 240,615 40,495 2,575,500 3,156,610 8,400,207 8,918,602 19,313,090 – 13,644 577,012 (10,292,036) 18,530,312 26,930,519

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INCOME STATEMENT

For the year ended 31 December 2019

Revenue Less: Cost of sales Taxes and surcharges Distribution and selling expenses General and administrative expenses Finance expenses Including: Interest expenses Interest income Add: Other income Investment income Including: Investment losses from associates and joint ventures Impairment losses on credit Impairment losses on assets Gains on disposal of assets Operating profit Add: Non-operating income Less: Non-operating expenses Total profit Less: Income tax expenses/(credit) Net Profit Including: Net profit from continuing operations Other comprehensive income after tax Total comprehensive income	2019 23,467,962 21,718,485 168,087 121,111 597,612 170,898 216,278 52,966 144,872 20,114 – – – – 856,755 39,638 9,648 886,745 (37,125) 923,870 923,870 – 923,870	RMB’000 2018 22,633,236 19,681,842 127,627 87,883 800,514 181,402 278,680 98,593 2,729 1,826 (1,566) (8,752) (30,728) 14,822 1,733,865 19,744 4,846 1,748,763 (31,067) 1,779,830 1,779,830 – 1,779,830

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Unit: RMB’000

STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2019

2019

I. Closing balances of the preceding year and opening balances of the current year II. Changes in the current year (I) Total comprehensive income (II) Shareholders’ contribution and decrease in share capital 1. Others (III) Special reserves 1. Amount established during the year 2. Amount utilized during the year III. Closing balance for the year 2018 I. Closing balances of the preceding year and opening balances of the current year II. Changes in the current year (I) Total comprehensive income (II) Special reserves 1. Amount established during the year 2. Amount utilized during the year III. Closing balance for the year	Share capital 8,918,602 – – – – – – – 8,918,602 Share capital 8,918,602 – – – – – 8,918,602	Capital reserves 19,313,090 – – – – – – – 19,313,090 Capital reserves 19,313,090 – – – – – 19,313,090	Less: treasury shares Other comprehensive income – – 62,314 – – – 62,314 – 62,314 – – – – – – – 62,314 – Less: treasury shares Other comprehensive income – – – – – – – – – – – – – –	Special reserves 13,644 929 – – – 929 25,680 24,751 14,573 Special reserves – 13,644 – 13,644 20,520 6,876 13,644	Surplus reserves Unappropriated profit Total shareholders’ equity 577,012 (10,292,036) 18,530,312 – 923,870 862,485 – 923,870 923,870 – – (62,314) – – (62,314) – – 929 – – 25,680 – – 24,751 577,012 (9,368,166) 19,392,797 Surplus reserves Unappropriated profit Total shareholders’ equity 577,012 (12,071,866) 16,736,838 – 1,779,830 1,793,474 – 1,779,830 1,779,830 – – 13,644 – – 20,520 – – 6,876 577,012 (10,292,036) 18,530,312	Surplus reserves Unappropriated profit Total shareholders’ equity 577,012 (10,292,036) 18,530,312 – 923,870 862,485 – 923,870 923,870 – – (62,314) – – (62,314) – – 929 – – 25,680 – – 24,751 577,012 (9,368,166) 19,392,797 Surplus reserves Unappropriated profit Total shareholders’ equity 577,012 (12,071,866) 16,736,838 – 1,779,830 1,793,474 – 1,779,830 1,779,830 – – 13,644 – – 20,520 – – 6,876 577,012 (10,292,036) 18,530,312
						862,485 923,870 (62,314) (62,314) 929 25,680 24,751
						19,392,797
						Total shareholders’ equity 16,736,838
						1,793,474 1,779,830 13,644 20,520 6,876
						18,530,312

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STATEMENT OF CASH FLOWS

For the year ended 31 December 2019

I. Cash flows from operating activities: Cash received from sale of goods and rendering of services Other cash received relating to operating activities Sub-total of cash inflows from operating activities Cash paid for purchase of goods and services Cash paid to and on behalf of employees Cash paid for all types of taxes Other cash paid relating to operating activities Sub-total of cash outflows from operating activities Net cash flows from operating activities II. Cash flows from investing activities: Cash received from disposal of investments Cash received from return on investments Net cash received from disposal of property plant and equipment, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and other business units Other cash received relating to investing activities Sub-total of cash inflows from investing activities Cash paid for acquisition of property plant and equipment, intangible assets and other long-term assets Cash paid for investments Sub-total of cash outflows from investing activities Net cash flows from investing activities	2019 22,365,668 149,135 22,514,803 20,843,237 1,205,096 549,662 328,176 22,926,171 (411,368) 1,008,800 20,114 – – 980 1,029,894 337,444 1,407,058 1,744,502 (714,608)	2018 13,269,131 173,919 13,443,050 9,306,899 1,536,290 262,516 994,972 12,100,677 1,342,373 591,636 – 16,229 2,289 – 610,154 14,256 620,000 634,256 (24,102)

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2019

2018

III. Cash flows from financing activities: Cash received from borrowings Other cash received relating to financing activities Sub-total of cash inflows from financing activities Cash repayments of borrowings Cash paid for distribution of dividends or profits, and for interest expenses Other cash paid relating to financing activities Sub-total of cash outflows from financing activities Net cash flows from financing activities IV. Effect of changes in foreign exchange rate on cash and cash equivalents V. Net increase/(decrease) in cash and cash equivalents Add: Cash and cash equivalents at the beginning of the year VI. Cash and cash equivalents at the end of the year	591,545 795,088 1,386,633 410,000 157,441 69,258 636,699 749,934 – (376,042) 1,967,354 1,591,312	185,500 1,181,576 1,367,076 400,000 247,382 850,438 1,497,820 (130,744) – 1,187,527 779,827 1,967,354

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The annual report of the Company for the year ended 31 December 2019 will be published on the website of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk) and the website of the Company (www.cqgt.cn) respectively on or before 30 March 2020.

By order of the Board Chongqing Iron & Steel Company Limited Meng Xiangyun Secretary to the Board

Chongqing, the PRC, 30 March 2020

As at the date of this announcement, the Directors of the Company are: Mr. Zhou Zhuping (Non-executive Director), Mr. Song De An (Non-executive Director), Mr. Zhang Shuogong (Non-executive Director), Mr. Li Yongxiang (Executive Director), Mr. Tu Deling (Executive Director), Mr. Wang Li (Executive Director), Mr. Xu Yixiang (Independent Non-executive Director), Mr. Xin Qingquan (Independent Nonexecutive Director) and Mr. Wong Chunwa (Independent Non-executive Director).

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