XD Inc. — Annual Report 2021

Mar 21, 2021

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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ANNOUNCEMENT OF ANNUAL RESULTS FOR YEAR ENDED 31 DECEMBER 2020

I IMPORTANT NOTICE

• 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.

• 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 collectively and individually accept full responsibility for the truthfulness, accuracy and completeness of the contents hereof.

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

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

• 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 2020 amounted to RMB582 million, and the unappropriated profit as at the end of 2020 amounted to RMB-8.786 billion. As the Company recorded a negative unappropriated profit as at the end of 2020, the directors of the Company suggested not to make profit distribution or transfer capital reserve to share capital pursuant to the Article 250 of the Articles of Association for 2020.

• 6 The annual results of the Company for the year ended 31 December 2020 have been reviewed by the audit committee of the Company.

– 1 –

II 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 of Chongqing Iron 01053 N/A Hong Kong Limited

Contact information Secretary to the Board Securities affairs representative Name Liu Jianrong (Acting) Peng Guoju Correspondence No. 2 Jiangnan Avenue, Jiangnan No. 2 Jiangnan Avenue, Jiangnan address Street, Changshou District, Street, Changshou District, Chongqing Chongqing 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, wire rods, bar materials, billets and thin plates; production and sale of coal chemical products & grain slag, etc. The Company has the following main production lines: 4,100mm wide and thick plate, 2,700mm medium plate, 1,780mm hot rolled sheet, high speed wire rods and bar materials.

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.

– 2 –

Chongqing Iron & Steel, which has integrated into China Baowu, is marching forward with a new attitude towards the goal of high-quality development, striving to build itself into a 10-million-tonne-level iron and steel enterprise, shaping “Chongqing Iron & Steel to be beautiful and picturesque”, and becoming a leader in the steel industry in Southwest China. The Company actively implemented the annual production and operation policy of “expanding scale, adjusting structure, and reducing costs” and the working keynotes of “refining management, minimizing resource consumption, conducting comprehensive benchmarking to identify areas for improvement, and increasing efforts in cost reduction and efficiency enhancement”, and adhered to the philosophy of “all costs can be lowered”, while focusing on “scale + cost” and “efficiency + benefit” by means of maximizing the efficiency and minimizing the costs, so as to promote the Company’s production and operation and the implementation of construction projects and various reforms and development, strengthen the foundation for development, push forward the construction of a 10-million-tonne-level iron and steel enterprise, and move steadily towards the goal of development.

2.2 Explanation on the Industry

In 2020, under the severe impact of COVID-19 pandemic and the complex domestic and international environment, and in the face of high costs of raw materials such as iron ore, huge environmental pressure, intensified international competition and market volatility, the domestic iron and steel market witnessed upward fluctuations within a wide range.

According to the National Bureau of Statistics, the General Administration of Customs and the China Iron and Steel Association, in 2020, the domestic production of pig iron and crude steel reached 887.52 million tonnes and 1,064.77 million tonnes, representing a year-on-year increase of 4.3% and 7.0%, respectively; the production of steel products reached 1,324.89 million tonnes, representing a year-on-year increase of 10.0%; the cumulative exports of steel products reached 53.67 million tonnes, representing a year-on-year decrease of 16.5%; the cumulative imports of steel products reached 20.23 million tonnes, representing a year-on-year increase of 64.4%; the monthly average of China’s steel price index was 105.57 points, representing a year-on-year decrease of 2.2%; the national cumulative imports of iron ore and its concentrates reached 1,170.1 million tonnes, representing a year-on-year increase of 9.5%; according to the statistics of China Iron and Steel Association, the key iron and steel enterprises realized sales revenue of RMB4.7 trillion, representing a year-on-year increase of 10.9%; and profits of RMB207.4 billion, representing a year-on-year increase of 6.6%.

– 3 –

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
	2020	2019	last year	2018
			(%)
Total assets	39,949,856	26,975,726	48.10	26,933,351
Operating income	24,489,935	23,477,597	4.31	22,638,957
Net profit attributable to
shareholders of listed
company	638,479	925,723	-31.03	1,787,906
Net profit attributable to
shareholders of listed
company, netting non-
recurring gains and
losses	491,082	726,508	-32.41	1,677,588
Net assets attributable to
shareholders of listed
company	20,038,467	19,396,003	3.31	18,531,665
Net cash flow from
operating activities	1,337,765	-405,326		1,338,195
Basic earnings per share
(RMB/share)	0.07	0.10	-30.00	0.20
Diluted earnings per share
(RMB/share)	0.07	0.10	-30.00	0.20
			Decrease
			by 1.64
Weighted average return			percentage
on net assets (%)	3.24	4.88	points	10.14

– 4 –

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	5,178,323	5,749,044	6,998,527	6,564,041
Net profit attributable to
shareholders of listed
company	4,173	117,182	248,977	268,147
Net profit attributable to
shareholders of listed
company, netting non-
recurring gains and
losses	253	107,540	246,030	137,259
Net cash flow from
operating activities	-213,075	295,661	403,001	852,178

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)	133,960
At the end of the month before the annual report
disclosure, the total number of ordinary shareholders
(accounts)	133,736
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	0	2,096,981,600	23.51	0	Pledged	2,096,981,600	Domestic non-
Iron & Steel							state-owned
Company Limited							legal person
HKSCC NOMINEES	23,200	531,240,621	5.96	0	Unknown		Foreign legal
LIMITED							person
Chongqing Qianxin	427,195,760	427,195,760	4.79	0	Pledged	427,190,070	Unknown
Group Co., Ltd.
Chongqing Rural	0	289,268,939	3.24	0	Nil	0	Unknown
Commercial Bank
Co., Ltd.
Chongqing Guochuang	0	278,288,059	3.12	0	Nil	0	Unknown
Investment and
Management Co.,
Ltd.
Sinosteel Equipment	0	252,411,692	2.83	0	Nil	0	Unknown
& Engineering Co.,
Ltd.
Bank of Chongqing	0	226,042,920	2.53	0	Nil	0	Unknown
Co., Ltd.
Industrial Bank Co.,	0	219,633,096	2.46	0	Nil	0	Unknown
Ltd., Chongqing
Branch
Agricultural Bank of	0	216,403,628	2.43	0	Nil	0	Unknown
China Limited,
Chongqing Branch
China Shipbuilding	0	211,461,370	2.37	0	Nil	0	Unknown
Industry Complete
Logistics Co., Ltd.
(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

– 6 –

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
----- End of picture text -----

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----- Start of picture text -----

Party acting in concert
Chongqing Strategic
Emerging Equity Investment China Baowu Steel Sichuan Desheng Group
Fund Partnership Group Corporation Vanadium & Titanium
(Limited Partnership) Limited Co., Ltd.
25.00% 40.00% 35.00%
Chongqing Changshou
Iron & Steel Company Limited
23.51%
Chongqing Iron & Steel
Company Limited
----- End of picture text -----

• 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

5 Information on Corporate Bond

Applicable ✓ Not applicable

– 7 –

III MANAGEMENT DISCUSSION AND ANALYSIS

1 Major Operations During the Reporting Period

During the reporting period, the Group produced 6.3784 million tonnes of iron, 7.1155 million tonnes of steel and 6.7775 million tonnes of commodity billet, representing year-on-year growth of 4.39%, 5.83%, and 5.45% respectively, which exceeded the annual planned goals and reached the highest level in history. The sales volume of commodity billet was 6.8256 million tonnes, representing a year-on-year growth of 4.89%. The operating income was RMB24.49 billion, representing a year-on-year increase of 4.31%, while the total profit was RMB624 million, representing a year-onyear decrease of 29.88%.

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	24,489,935	23,477,597	4.31
Operating cost	22,658,292	21,718,957	4.32
Selling expenses	91,929	121,521	-24.35
Administrative expenses	591,920	597,612	-0.95
R&D expenses	–	–	–
Financial expenses	132,514	170,887	-22.46
Net cash flow from
operating activities	1,337,765	-405,326	Not applicable
Net cash flow from
investing activities	-711,113	-718,828	Not applicable
Net cash flow from
financing activities	2,476,115	749,934	230.18

• 1) Reasons for change in distribution and selling expenses: The decrease in distribution and selling expenses was mainly due to the decrease in sales transportation fee as a result of the change of sales model of the Company.

– 8 –

• 2) Reasons for change in financial expenses: The decrease in financial expenses was mainly due to the increase in foreign exchange gains.

• 3) Reasons for change in net cash flow from operating activities: The increase in net cash flow from operating activities was mainly due to the increase in advances from customers.

• 4) Reasons for change in net cash flow from financing activities: The increase in net cash flow from financing activities was mainly due to the increase in financing for the period.

• (2) Revenue and cost analysis

✓ Applicable Not applicable

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

In 2020, the Group realized a total profit of RMB624 million, representing a year-on-year decrease of 29.88%, which was mainly due to the following reasons: the selling price of steel products amounted to s RMB3,464/tonne, representing a year-onyear increase of 0.20%, and commodity billet achieved an increase of RMB133 million in profit affected by products structure; the sales volume of commodity billet reached 6.8256 million tonnes, representing a year-on-year increase of 4.89%, and achieving an increase of RMB44 million in profit; the Company continuously promoted cost reduction plan, thus key technical and economic indicators improved significantly, all consumption obviously reduced, thus resulting in an increase of RMB277 million in profit from cost reduction in the aspect of process; the increase in prices of ore and scrap steel, offset by the decrease in price of coal, resulted in a decrease of RMB337 million in profit; the upgrading and trasformation of production line and the impairment of fixed assets resulted in a decrease of RMB385 million in profit.

– 9 –

In 2020, the Group’s revenue from main business amounted to RMB24.349 billion, representing a year-on-year increase of 4.19%. In particular, the income from sales of commodity billet amounted to RMB23.569 billion, representing an increase of RMB1.0750 billion as compared with the corresponding period of last year. Firstly, the sales volume of commodity billet was 6.8256 million tonnes, representing a year-on-year increase of 4.89%, resulting in an increase in the sales income of RMB942 million; secondly, the sales price of steel products was RMB3,464/tonne, representing a year-on-year increase of 0.20%, resulting in an increase in the sales income of RMB133 million affected by products structure.

Composition of income from main businesses:

Type Plate Hot rolling Bars Profiles Billet Subtotal Other Total	2020 Amount Percentage (RMB’000) (%) 7,394,107 30.37 12,385,118 50.85 1,464,818 6.02 1,133,878 4.66 1,190,733 4.89 23,568,654 96.79 780,503 3.21 24,349,157 100.00	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	Year-on- year increase in amount (%) 7.25 14.75 -40.94 -51.27 – 4.78 -10.86 4.19

– 10 –

Sales prices of commodity billet:

Item 2020 Sales price 2019 Sales price (RMB/tonne) (RMB/tonne) Plate 3,603 3,587 Hot rolling 3,423 3,338 Bars 3,293 3,554 Profiles 3,299 3,554 Sub-total of steel products 3,464 3,457 Billet 3,254 – Total of commodity billet 3,453 3,457 Sales volumes of commodity billet:	Year- on-year growth (%) 0.45 2.55 -7.34 -7.18 0.20 – -0.12	Income increase (RMB’000) 31,479 305,327 -116,628 -87,819 132,359 – 132,359

Item Plate Hot rolling Bars Profiles Sub-total of steel products Billet Total of commodity billet	Sales volume for 2020 (Ten thousand tonnes) 205.25 361.86 44.49 34.37 645.97 36.59 682.56	Sales volume for 2019 (Ten thousand tonnes) 192.19 323.31 69.78 65.46 650.74 – 650.74	Year- on-year growth (%) 6.80 11.92 -36.24 -47.49 -0.73 – 4.89	Income increase (RMB’000) 468,462 1,286,799 -898,807 -1,104,939 -248,485 1,190,733 942,248

– 11 –

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	24,349,157	22,554,529	7.37	4.19	4.19	Decrease
						by 0.00
						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
			(%)	(%)	(%)	(%)
Commodity	23,568,654	21,749,854	7.72	4.78	4.61	Decrease
billet						by 0.15
						percentage
						points
Other	780,503	804,675	-3.10	-10.86	-6.04	Decrease
						by 5.29
						percentage
						points

– 12 –

Main business by regions

By regions Southwest Other regions Total	Operating income 22,638,697 1,710,460 24,349,157	Operating cost 20,968,609 1,585,920 22,554,529	Gross margin (%) 7.38 7.28 7.37	Year- on-year increase/ decrease in operating income (%) 18.54 -59.95 4.19	Year- on-year increase/ decrease in operating cost Year- on-year increase/ decrease in gross margin (%) (%) 18.62 Decrease by 0.06 percentage points -60.06 Decrease by 0.25 percentage points 4.19 Decrease by 0.00 percentage points

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
	tonnes	201.90	205.25	3.23	5.75	6.80	-32.29
Hot rolling	Ten thousand
	tonnes	360.64	361.86	3.50	13.21	11.92	26.81
Bars	Ten thousand
	tonnes	42.68	44.49	0.01	-38.27	-36.24	-99.46
Profiles	Ten thousand
	tonnes	34.30	34.37	–	-46.51	-47.49	-100.00
Billet	Ten thousand
	tonnes	38.23	36.59	1.64	–	–	–

– 13 –

Unit: RMB’000

3) Cost analysis table

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	17,393,884	77.12	16,364,965	75.59	6.29
Iron and steel	Energy	1,043,748	4.63	1,120,692	5.18	-6.87
Iron and steel	Labor and other	4,116,898	18.25	4,162,412	19.23	-1.09
	costs

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
			(%)		(%)	(%)
Commodity billet	Raw material and	21,749,854	96.43	20,791,682	96.04	4.61
	energy costs
Other	Raw material and	804,675	3.57	856,387	3.96	-6.04
	energy costs

– 14 –

4) Major buyers and major suppliers

✓ Applicable Not applicable

The sales attributable to the five largest buyers amounted to RMB7,710,296,000, representing 31.48% of the total sales for the year, of which the sales attributable to related parties amounted to RMB1,535,082,000, representing 6.27% of the total sales for the year.

The purchase amount attributable to the five largest suppliers amounted to RMB7,622,376,000, representing 33.64% of the total purchase amount for the year, of which the purchase amount attributable to related parties amounted to RMB1,685,747,000, representing 7.44% of the total purchase amount for the year.

(3) Expenses

✓ Applicable Not applicable

Unit: RMB’000

		Amount
	Amount	for the	Year-
	for the	previous	on-year
Item	period	period	change
			(%)
Selling expenses	91,929	121,521	-24.35
Administrative expenses	591,920	597,612	-0.95
Financial expenses	132,514	170,887	-22.46

– 15 –

(4) R&D investment

Table of R&D investment

✓	Applicable Not applicable
		Unit: RMB’000
Expensed R&D investment for the period		889,617
Capitalized R&D investment for the period		–
Total R&D investment		889,617
Percentage of the total R&D investment in
operating income (%)		3.63
Number of R&D personnel of the Company		1,224
Percentage of R&D personnel in total number of
employees of the Company (%)		16.57
Percentage of capitalized R&D investment in total
R&D investment (%)		–

(5) Cash flow

	✓	Applicable		Not	applicable
						Unit: RMB’000
Item				2020	2019	Main reasons for changes
Net cash flow			1,337,765		-405,326	Increase in advances from
	from operating					customers
	activities
Net cash flow			-711,113		-718,828	–
	from investing
	activities
Net cash flow			2,476,115		749,934	Increase in financing
	from financing
	activities
Net increase in			3,102,767		-374,220	–
	cash and cash
	equivalents

Unit: RMB’000

– 16 –

1.2 Analysis of assets and liabilities

✓ Applicable

Not applicable

(1) Assets and liabilities

Unit: RMB’000

					Percentage	Percentage	Percentage
		Percentage		Amount	of the		amount
		of the	amount	at the end	at	the end of
	Amount at	at	the end	of the	the previous
	the end of	of the period		previous		period in		Year- on-year
Item	the period	in total assets		period	total assets			change	Explanation
			(%)				(%)	(%)
Cash and bank	4,943,231		12.37	1,783,747			6.61	177.13	Increase in
balances									advances from
									customers and
									financing
Financial assets	–		–	400,000			1.48	-100.00	Redemption
held for trading									of wealth
									management
									products
Trade receivables	35,041		0.09	5,610			0.02	524.62	Spread settlement
Receivables	2,068,546		5.18	861,373			3.19	140.15	Increase in
financing									pledged billing
Prepayments	534,516		1.34	751,498			2.79	-28.87
Other receivables	18,013		0.05	78,132			0.29	-76.95	Recovery of
									government
									grants for the
									prior period
Inventories	5,054,908		12.65	3,931,513			14.57	28.57	Scale expansion
									and increase
									in inventory of
									materials

– 17 –

				Percentage
		Percentage	Amount	of the amount
		of the amount	at the end	at the end of
	Amount at	at the end	of the	the previous
	the end of	of the period	previous	period in	Year- on-year
Item	the period	in total assets	period	total assets	change	Explanation
		(%)		(%)	(%)
Other current assets	394,153	0.99	43,410	0.16	807.98	Increase in excess
						VAT paid
Long-term equity	79,494	0.20	28,258	0.10	181.32	Purchase of
investments						equity interest
						in Baocheng
						Charcoal (寶
						丞炭材) and
						Baowu Raw
						Materials
Other equity	5,000	0.01	5,000	0.02	–
investments
Property, plant and	16,630,788	41.63	16,442,264	60.95	1.15
equipment
Construction in	2,844,665	7.12	171,858	0.64	1,555.24	Increase in
process						fixed asset
						investments
Right-of-use assets	4,095,211	10.25	–	–	Not applicable	Change in
						the method
						of leasing
						equipment
Intangible assets	2,394,593	5.99	2,392,114	8.87	0.10
Goodwill	295,407	0.74	–	–	Not applicable	Goodwill arising
						from the
						acquisition of
						Chongqing Iron
						& Steel Energy
Long-term deferred	299,730	0.75	–	–	Not applicable	Leasehold
expenditures						improvements
Deferred tax assets	131,468	0.33	68,436	0.25	92.10	Increase in
						deductible
						temporary
						differences
						such as
						provision
						for asset
						impairment

– 18 –

				Percentage
		Percentage	Amount	of the amount
		of the amount	at the end	at the end of
	Amount at	at the end	of the	the previous
	the end of	of the period	previous	period in	Year- on-year
Item	the period	in total assets	period	total assets	change	Explanation
		(%)		(%)	(%)
Other non-current	125,092	0.31	12,513	0.05	899.70	Increase in
assets						prepayments
						for fixed
						investment
						projects
Short-term	700,788	1.75	384,528	1.43	82.25	New borrowings
borrowings
Notes payable	1,272,291	3.18	91,127	0.34	1,296.17	Increase in bills
						payment
Trade payables	2,652,728	6.64	1,726,883	6.40	53.61	Increase in
						purchase of
						mine and coal
						and changes
						of settlement
						method
Contract liabilities	2,554,165	6.39	1,145,615	4.25	122.95	Increase in
						advance
						receipts due to
						enhancement of
						sales policy
Employee benefits	283,969	0.71	257,143	0.95	10.43
payable
Taxes payable	9,177	0.02	70,867	0.26	-87.05	No VAT payable
						due to excess
						VAT paid at
						the end of the
						period
Other payables	1,567,619	3.92	421,768	1.56	271.68	Increase in
						construction
						payables
Non-current	4,056,471	10.15	841,576	3.12	382.01	Reclassification
liabilities due						of judicial
within one year						reorganization
						loan and lease
						liabilities into
						that due within
						one year

– 19 –

				Percentage
		Percentage	Amount	of the amount
		of the amount	at the end	at the end of
	Amount at	at the end	of the	the previous
	the end of	of the period	previous	period in	Year- on-year
Item	the period	in total assets	period	total assets	change	Explanation
		(%)		(%)	(%)
Other current	332,041	0.83	150,208	0.56	121.05	Increase in
liabilities						advance
						receipts and
						increase
						in taxation
						involved
Long-term	450,000	1.13	–	–	Not applicable	New merger and
borrowings						acquisition loan
						from China
						Merchants
						Bank
Bonds payables	995,150	2.49	–	–	Not applicable	Issuance of
						medium- term
						notes in 2020
Lease liabilities	3,022,612	7.57	–	–	Not applicable	Change of method
						of leasing
						equipment
Long-term payables	1,352,264	3.38	–	–	Not applicable	New financing
						leases
Long-term	179,557	0.45	201,737	0.75	-10.99
employee
benefits payable
Deferred income	35,902	0.09	38,271	0.14	-6.19
Deferred tax	1,176	0.00	–	–	Not applicable	Increase in
liabilities						taxable
						temporary
						differences in
						the period
Other non-current	445,480	1.12	2,250,000	8.34	-80.20	Reclassification
liabilities						of judicial
						reorganization
						loan into that
						due within one
						year

– 20 –

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

✓ Applicable Not applicable

Unit: RMB’000

		Carrying
		amount
	Carrying	at the
	amount at	beginning	Reason
	the end of	of the	for
Item	the period	period	restrictions
Cash and bank balances	245,141	188,424	Note 1
Notes receivables	1,343,223	190,000	Note 2
Property, plant and
equipment – houses and
buildings	3,529,913	1,928,087	Note 3
Intangible assets	1,027,708	2,392,114	Note 4
Total	6,145,985	4,698,625

• Note 1: As at 31 December 2020, the Group’s ownership of cash and bank deposits with carrying amount of RMB245,141,000 (31 December 2019: RMB188,424,000) was restricted for issuing bank acceptances and letters of credit.

• Note 2: As at 31 December 2020, the Group’s bank acceptances with carrying amount of RMB1,343,233,000 were pledged for issuing bank acceptances (31 December 2019: the Group obtained short-term borrowings by discounting bank acceptances with carrying amount of RMB190,000,000).

• Note 3: As at 31 December 2020, the Group’s houses and buildings with carrying amount of RMB987,609,000 (31 December 2019: RMB1,928,087,000) and machinery and other equipment with carrying amount of RMB2,542,304,000 (31 December 2019: nil) were pledged for obtaining bank borrowing and working capital loan facilities.

• Note 4: As at 31 December 2020, the Group’s land use right with carrying amount of RMB1,027,708,000 (31 December 2019: RMB2,392,114,000) was pledged for obtaining bank borrowing and working capital loan facilities, and the amortised amount of the land use right was RMB27,459,000 (2019: RMB62,213,000) during the current year.

– 21 –

2. Management Discussion and Analysis on Future Development of the Company

2.1 Industry competition pattern and development trend

✓ Applicable Not applicable

2020 was the final year of China’s 13th Five-Year Plan. Under the favourable policies, China’s economy continued to recover steadily. The abundant supply in the steel industry satisfied the new demand in the new development period, but the steel industry was still exposed to certain risks such as the high costs of raw materials such as iron ore, huge environmental pressure, intensified international competition and market volatility.

2021 is the first year of China’s 14th Five-Year Plan. Due to the rebound of global economy overlapping with the adjustments to import tariffs, both imports and exports of steel may see a boom. The tightening standards on capacity replacement will effectively regulate the industry layout, and the market support from rising raw material costs will be significantly enhanced. The steel market may continue to fluctuate within a wide range, and the average price of steel will increase.

In 2021, the in-depth promotion of ultra-low emission transformation will enable more steel enterprises to effectively control their pollutant emissions, and help the steel industry to achieve green development. On 16 December 2020, the Ministry of Industry and Information Technology publicly solicited opinions on the revised draft of the Implementation Measures of Capacity Replacement in the Steel Industry (《鋼鐵行業產能置換實施辦法》). The new version of the capacity replacement measures improved and perfected the original one. It will help resolve excess capacity in the industry, optimize the regional capacity layout, and effectively regulate the capacity development of the steel industry through strict execution of the Implementation Measures of Capacity Replacement. In the future, the steel industry will break the current “small, scattered and weak” status through mergers and reorganizations to create predominant enterprises groups at different levels, build an innovative pattern of industry collaboration, effective competition and common development, increase the industrial concentration, so as to promote the rationalization of the industrial structure and layout, and promote the realization of high-quality development of the steel industry.

– 22 –

2.2 Corporate development strategy

✓ Applicable

Not applicable

As the Company has integrated into the big family of China Baowu, it embarks on a new development journey. Standing at the new historic starting point, the Company begins the layout of green manufacturing and smart manufacturing, launches a new round of development planning, to create a high-quality green and smart steel manufacturing enterprise with the capacity of over 10 million tonnes, and shape “Chongqing Iron & Steel to be beautiful and picturesque”. The Company is committed to becoming a leader in the steel industry in Southwest China, and moving forward firmly towards the goal of high-quality development.

The Company is strategically located in Southwest China, close to the Yangtze River, and owns unique advantages in geographical location. Relying on Chongqing, it integrates into the construction of the Chengdu-Chongqing Double City Economic Circle, boosts the development of the Yangtze River Economic Belt, and contributes to the western development strategy. The Company strives to become an over 10-million-tonne-level iron and steel enterprise with the first comprehensive strength and dominant market position in Southwest China, possessing sound governance structure, efficient management system, advanced production technology, significant scale efficiency, leading cost, low carbon and environmental protection, and strong ability to cope with changes in the external environment. On the occasion of the implementation of the 14th Five-Year Plan, the Company will seek for the ultimate efficiency with scale enhancement, firmly follow the path of green development, build a smart factory with technological innovation, seize the opportunities and ride on the momentum, embarking on a new journey of high-quality development, and striving to achieve the development goal of building itself into an over 10-million-tonne-level iron and steel enterprise.

– 23 –

2.3 Operating plans

✓ Applicable Not applicable

In 2021, the Company will focus on the goal of the annual production capacity of steel totaling 10 million tonnes, in accordance with the production and operation policy of “expanding scale, adjusting structure, and reducing costs” and the basic work of “finding differences from excellent enterprises comprehensively, paying close attention to reducing costs and increasing efficiency, promoting the implementation of plans and achieving the scale benefits”, and focusing on “scale + cost” and pursing “perfection + efficiency”, so as to give full play to the advantages of system and mechanism and building a “green and intelligent manufacturing steel enterprise in high quality with a production capacity over 10 million tonnes” by accurately motivating the vitality of all employees.

The Company plans to produce 8.50 million tonnes of pig iron, 10 million tonnes of steel and 9.58 million tonnes of commodity billets, and realize sales volume of 9.58 million tonnes of commodity billets and revenue of RMB34.5 billion (tax exclusive) in the year of 2021.

Centering on the operating goal in the year of 2021, the Company will focus on promoting the following works:

1. Comprehensively deepening reform and improving management efficiency.

2. Elaborately organizing the production and forging ahead to build itself a steel and iron enterprise with the production capacity of 10 million tonnes.

3. Promoting marketing capacity and building the leading force in regional market.

4. Improving the purchase competitiveness and establishing a highly effective supply chain.

5. Strengthening the safety environmental protection management and constructing green plant.

6. Effectively advancing the intelligent manufacturing, providing supports for high quality development.

7. Focusing on talent project construction and releasing the vitality of employees.

– 24 –

2.4 Potential risks

✓ Applicable Not applicable

• (1) There is still a great challenge for controlling the COVID-19 pandemic around the world. The uncertainties for the global economy at the macro level are increasing, China-U.S. relations are still bewildering, the repeated outbreak of COVID-19 in China and other uncertain factors always exist and the development of steel and iron industry is also with large variables.

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

• (3) The implementation of new environmental law, pollutant emission standards and other relevant laws poses further pressure on the environmental protection of the steel and iron industry.

• (4) The steel price still presents a wide shock pattern, which may have certain effects on the profitability of the Company.

• (5) The Company may suffer increasing cost pressures as a result of the possible fluctuations of raw material price at a high level.

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

– 25 –

(1) Scope of disclosure of related parties

According to the requirements of the Accounting Standards for Business Enterprises – Interpretation No. 13, since 1 January 2020, the associates of investment parties which pose material impact on the Company shall no longer to be disclosed as the related parties. Such change in accounting policies has affected the determination of related parties and disclosure of related party transactions, and no retrospective adjustment to comparative data is required according to the transitional provisions.

(2) Whether it constitutes judgement on business

According to the requirements of the Accounting Standards for Business Enterprises – Interpretation No. 13, since 1 January 2020, “a portfolio obtained shall have at least one investment and one substantial processing procedure, and the combination of both shall contribute significantly to the production capacity” shall be taken as the judgement condition for whether the portfolio constitutes a business, and “a portfolio with two elements of investment and processing procedures” shall no longer be the judgement condition. Such change in accounting policies has affected the determination of whether a transaction constitutes a business merger, and no retrospective adjustment to comparative data is required according to the transitional provisions.

The implementation of such standard has no impact on the mergers and balance sheets of the Company on 1 January 2021 as well as the mergers and financial statements of the Company in 2020.

(3) Accounting treatment on carbon emission rights trading

On 16 December 2019, the Ministry of Finance issued the Notice on the Issuance of Interim Provisions on Accounting Treatment of Carbon Emission Rights Trading (《關於印發《碳排放權交易有關會計處 理暫行規定》的通知》) (Cai Kuai [2019] No. 22) ( 財會 [2019]22 號 ), which stipulates that if the relevant enterprises in the key emission units that conduct carbon emission rights trading business acquire carbon emission quota through purchase, they should recognize the carbon emission quota acquired as carbon emission rights assets on the date of purchase, and measure it at cost, debit it under the item of “carbon emission rights assets” and credit it under the items of “bank deposits” or “other payables”; if the carbon emission quota is acquired through allocation by the government for free, no accounting treatment will be made. If the carbon emission quota is purchased to fulfill the contract

– 26 –

(to fulfill the emission reduction obligation), the carrying amount of the quota used shall be debited under the item of “non-operating expense” and credited under the item of “carbon emission rights assets”; if the carbon emission quota is acquired for free and is used to fulfill the contract, no accounting treatment will be made.

• 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

In the year, the Company acquired 100% equity interests in Chongqing Iron & Steel Energy Environmental Protection Company Limited ( 重 慶 鋼鐵能源環保有限公司 ) (former name: Chongqing Qianxin Energy Environmental Protection Company Limited ( 重慶千信能源環保有限 公司 )) from Chongqing Qianxin Group Co., Ltd. (former name: Chongqing Qianxin International Trade Co., Ltd.* ( 重慶千信國際貿易有限公司 an independent third party, with a cash consideration of RMB837,610,000. The acquisition date was 30 July 2020, which the Group determined as the acquisition date for this transaction and from which, Chongqing Iron & Steel Energy Environmental Protection Company Limited ( 重慶鋼鐵能源環保 有限公司 ) has been consolidated into the Company’s account.

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.

– 27 –

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 2020.

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

As authorized at the 2018 annual general meeting, the 2019 first class meeting of A shareholders and the 2019 first class meeting of H shareholders of the Company, the Resolution on Repurchase of the Shares of the Company through Centralized Bidding Trading was considered and approved at the eighteenth meeting of the eighth session of the Board of the Company. For details of the repurchase of A shares of the Company, please refer to the Report on the Repurchase of A Shares of the Company through Centralized Bidding Trading (Announcement No.: 2020-002) and the Announcement on Resolution Passed at the Eighteenth Meeting of the Eighth Session of the Board (Announcement No.: 2020-003) disclosed on 3 March 2020 by the Company.

As at the close of trading on 6 March 2020, the Company repurchased 10,000,000 A shares through centralized bidding trading under the first repurchase, representing 0.11% of the total share capital of the Company. The highest price and the lowest price transacted for such shares were RMB1.71 per share and RMB1.68 per share, respectively. The total amount paid for such shares was RMB16,967,061.00 (excluding transaction costs). For details, please refer to the Announcement on the First Repurchase of Shares of the Company through Centralized Bidding Trading (Announcement No.: 2020-006) disclosed on 7 March 2020 by the Company.

As at the close of trading on 12 March 2020, the Company repurchased a total of 50,000,000 A shares through centralized bidding trading, representing approximately 0.56% of its total share capital of the Company. The highest, lowest and average price transacted for such shares were RMB1.71 per share, RMB1.65 per share and RMB1.69 per share, respectively. The total amount paid for such shares was RMB84,333,550.00 (excluding transaction costs). As such, the total amount of repurchase of the Company has reached the cap, and the repurchase plan was fully implemented. For details, please refer to the Announcement on the Result of Repurchase of Shares and Changes in Shareholding Structure (Announcement No.: 2020-007) disclosed on 13 March 2020 by the Company.

– 28 –

4 Major Acquisition and Disposal of Subsidiaries and Affiliates

On 27 March 2020, the Company held the 20th meeting of the eighth session of the Board, at which The Resolution in Relation to Participation in Online Bidding for Acquisition of 100% Equity Interest in Chongqing Qianxin Energy Environmental Protection Company Limited ( 重慶千信能源環 保有限公司 ) was considered and approved. The Company was granted approval to participate in the online bidding for 100% equity interest in Chongqing Qianxin Energy Environmental Protection Company Limited (“ Qianxin Energy ”) held by Chongqing Qianxin Group Co., Ltd. (“ Qianxin Group ”) based on its needs for business development, and the management was authorized to sign relevant agreements, documents and handle other related specific matters in accordance with the relevant procedures and laws and regulations. For details, please refer to the Announcement of Resolutions Passed at the 20th Meeting of the Eighth Session of the Board (Announcement No.: 2020-010) disclosed by the Company on 30 March 2020.

On 15 July 2020, the Company and Qianxin Group signed the Equity Transaction Contract in Changshou District, Chongqing, which shall come into effect from the date of signing and sealing by the Company and Qianxin Group, i.e., 15 July 2020. For details, please refer to the Further Announcement on Participation in Online Bidding for Acquisition of 100% Equity Interest in Chongqing Qianxin Energy Environmental Protection Company Limited (Announcement No.: 2020-042) disclosed by the Company on 16 July 2020.

On 30 July 2020, Qianxin Energy completed the change of industrial and commercial registration and become a wholly-owned subsidiary of the Company. On 3 December 2020, Qianxin Energy changed its name to Chongqing Iron & Steel Energy Environmental Protection Company Limited. The goodwill of the Company arising from this transaction at consolidation level was RMB295 million.

– 29 –

5 Audit Committee

The Audit Committee of the Company is comprised of three independent non-executive directors and one non-executive director, namely, Xin Qingquan, Xu Yixiang, Wong Chunwa and Zhang Shuogong with Mr. Xin Qingquan acting as the chairman of the Audit Committee.

The annual results for the year ended 31 December 2020 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 2020, 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:

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

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.

– 30 –

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 2020, the circulating market capitalisation of H Shares of the Company [circulating H Share capital × closing price of H Shares (HK$0.79)] was approximately HK$425 million and the circulating market capitalisation of A Shares [circulating A Share capital × closing price of A Shares (RMB1.48)] was approximately RMB12.403 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 2020 amounted to RMB582 million, and the unappropriated profit as at the end of 2020 amounted to RMB-8.786 billion. As the Company recorded a negative unappropriated profit as at the end of 2020, the Board suggested not to make profit distribution or transfer capital reserve to share capital in 2020 pursuant to Article 250 of the Articles of Association.

– 31 –

CONSOLIDATED BALANCE SHEET

As at 31 December 2020

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 Right-of-use assets Intangible assets Goodwill Long-term prepaid expenses Deferred tax assets Other non-current assets Total non-current assets Total assets	31 December 2020 4,943,231 – 35,041 2,068,546 534,516 18,013 5,054,908 394,153 13,048,408 79,494 5,000 16,630,788 2,844,665 4,095,211 2,394,593 295,407 299,730 131,468 125,092 26,901,448 39,949,856	RMB’000 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

– 32 –

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 Bonds payable Lease liabilities Long-term payables Long-term employee benefits payable Deferred income Deferred tax liabilities 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 2020 700,788 1,272,291 2,652,728 2,554,165 283,969 9,177 1,567,618 4,056,471 332,041 13,429,248 450,000 995,150 3,022,612 1,352,264 179,557 35,902 1,176 445,480 6,482,141 19,911,389 8,918,602 19,282,147 65,940 22,184 606,991 (8,725,517) 20,038,467 39,949,856	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

– 33 –

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2020

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 Impairment losses on credit Impairment losses on 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	2020 24,489,935 22,658,292 172,493 91,929 591,920 132,514 271,072 69,528 196,430 6,803 (23) (364,917) 681,080 2,703 59,396 624,387 (14,092) 638,479 638,479	RMB’000 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

– 34 –

Breakdown by attributable interests Net profit attributable to shareholders of the parent Non-controlling interests Other comprehensive income after tax Total comprehensive income 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)	2020 638,479 – – 638,479 638,479 – 0.07 0.07	2019 925,723 –
		–
		925,723
		925,723 –
		0.10
		0.10

– 35 –

RMB’000

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2020

2020

I. Cl osing balances of the preceding year and opening balances of the current year II. Changes in the current year (I) Total comprehensive income (II) sh areholders’ contribution and decrease in share capital 1. Amount increased during the year 2. Amount decreased during the year (III) Special reserve 1. Am ount established during the year 2. Amount utilized during the year III. Closing balance for the year 2019 I. Cl osing balances of the preceding year and opening balances of the current year II. Changes in the current year (I) Total comprehensive income (II) sh areholders’ contribution and decrease in share capital 1. Amount increased during the year (III) Special reserve 1. Am ount 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 19,282,147 – – – – – 19,282,147 Capital reserves 19,282,147 – – – – 19,282,147	Less: treasury shares Other comprehensive income 62,314 – – – 84,334 – (80,708) – – – – – 65,940 – Less: treasury shares Other comprehensive income – – – – 62,314 – – – – – 62,314 –	Special reserves 14,573 – – – 29,564 (21,953) 22,184 Special reserves 13,644 – – 25,680 (24,751) 14,573	Surplus reserves Unappropriated losses 606,991 (9,363,996) – 638,479 – – – – – – – – 606,991 (8,725,517) Surplus reserves Unappropriated losses 606,991 (10,289,719) – 925,723 – – – – – – 606,991 (9,363,996)	Total shareholders’ equity 19,396,003
						638,479 (84,334) 80,708 29,564 (21,953)
						20,038,467
						Total shareholders’ equity 18,531,665
						925,723 (62,314) 25,680 (24,751)
						19,396,003

– 36 –

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2020

I. Cash flows from operating activities: Cash received from sale of goods and rendering of services Receipts of taxes refunds 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 Other cash received relating to investing activities Sub-total of cash inflows from investing activities	2020 23,942,238 19,761 387,232 24,349,231 20,923,245 1,206,760 605,904 275,557 23,011,466 1,337,765 433,000 6,803 – 439,803	RMB’000 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

– 37 –

2020

2019

Cash paid for acquisition of property plant and equipment, intangible assets and other long-term assets Cash paid for acquisition of investments Net cash payments for acquisition of subsidiaries and other business units Sub-total of cash outflows from investing activities Net cash flows from investing activities 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. Ef fect of changes in exchange rate on cash and cash equivalents V. Ne t increase/(decrease) in cash and cash equivalents Add: Ca sh and cash equivalents at the beginning of the year VI. Ca sh and cash equivalents at the end of the year	223,158 84,236 843,522 1,150,916 (711,113) 2,742,480 1,478,358 4,220,838 1,251,050 203,007 290,666 1,744,723 2,476,115 – 3,102,767 1,595,323 4,698,090	337,444 1,407,058 – 1,744,502 (718,828) 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

– 38 –

STATEMENT OF BALANCE SHEET

As at 31 December 2020

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 Right-of-use assets Intangible assets Long-term prepaid expenses Deferred tax assets Other non-current assets Total non-current assets Total assets	31 December 2020 4,925,021 – 39,503 2,062,046 516,190 17,181 5,015,067 383,123 12,958,131 917,104 5,000 15,705,686 2,844,665 4,095,211 2,329,901 299,730 87,653 87,173 26,372,123 39,330,254	RMB’000 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

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Liabilities and shareholders’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 Bonds payable Lease liabilities Long-term payables 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 2020 700,788 1,256,400 2,692,577 2,554,123 280,322 6,822 1,565,471 3,711,113 332,036 13,099,652 450,000 995,150 3,022,612 1,125,491 179,557 35,902 445,480 6,254,192 19,353,844 8,918,602 19,313,090 65,940 19,398 577,012 (8,785,752) 19,976,410 39,330,254	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

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INCOME STATEMENT

For the year ended 31 December 2020

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 Impairment losses on 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	2020 24,486,676 22,731,657 168,062 91,572 580,949 112,667 251,069 69,371 175,565 6,791 (364,474) 619,651 2,697 59,396 562,952 (19,462) 582,414 582,414 – 582,414	RMB’000 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

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RMB’000

STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2020

2020

I. Cl osing balances of the preceding year and opening balances of the current year II. Changes in the current year (I) Total comprehensive income (II) sh areholders’ contribution and decrease in share capital 1. Amount increased during the year 2. Amount decreased during the year (III) Special reserves 1. Amount established during the year 2. Amount utilized during the year III. Closing balance for the year 2019 I. Cl osing balances of the preceding year and opening balances of the current year II. Changes in the current year (I) Total comprehensive income (II) sh areholders’ contribution and decrease in share capital 1. Amount increased during the year (III) 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 62,314 – 84,334 (80,708) – – 65,940 Less: treasury shares – – 62,314 – – 62,314	Other comprehensive income – – – – – – – Other comprehensive income – – – – – –	Special reserves 14,573 – – – 25,908 (21,083) 19,398 Special reserves 13,644 – – 25,680 (24,751) 14,573	Surplus reserves 577,012 – – – – – 577,012 Surplus reserves 577,012 – – – – 577,012	Unappropriated profit (9,368,166) 582,414 – – – – (8,785,752) Unappropriated profit (10,292,036) 923,870 – – – (9,368,166)	Total shareholders’ equity 19,392,797
								582,414 (84,334) 80,708 25,908 (21,083)
								19,976,410
								Total shareholders’ equity 18,530,312
								923,870 (62,314) 25,680 (24,751)
								19,392,797

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STATEMENT OF CASH FLOWS

For the year ended 31 December 2020

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 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 Net cash payments for acquisition of subsidiaries and other business units	2020 23,939,650 384,574 24,324,224 21,174,171 1,190,067 581,329 269,804 23,215,371 1,108,853 433,000 6,791 – 439,791 223,078 84,236 849,610	RMB’000 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 –

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Sub-total of cash outflows from investing activities Net cash flows from investing activities 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. Ef fect of changes in foreign exchange rate on cash and cash equivalents V. Net increase in cash and cash equivalents Add: Ca sh and cash equivalents at the beginning of the year VI. Ca sh and cash equivalents at the end of the year	2020 1,156,924 (717,133) 2,742,480 1,478,358 4,220,838 1,134,500 185,858 194,051 1,514,409 2,706,429 – 3,098,149 1,591,312 4,689,461	2019 1,744,502 (714,608) 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

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The annual report of the Company for the year ended 31 December 2020 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 20 March 2021.

By order of the Board Chongqing Iron & Steel Company Limited Liu Jianrong Chairman

Chongqing, the PRC, 20 March 2021

As at the date of this announcement, the Directors of the Company are: Mr. Liu Jianrong (Executive Director), Mr. Zhang Wenxue (Executive Director), Mr. Tu Deling (Executive Director), Mr. Zou An (Executive Director), Mr. Song De An (Nonexecutive Director), Mr. Zhou Ping (Non-executive Director), Mr. Xin Qingquan (Independent Non-executive Director), Mr. Xu Yixiang (Independent Non-executive Director) and Mr. Wong Chunwa (Independent Non-executive Director).

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