XD Inc. — Interim / Quarterly Report 2018

Oct 30, 2018

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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THIRD QUARTERLY REPORT OF 2018

I. IMPORTANT NOTICE

• 1.1 The board of directors, the supervisory committee and the directors, supervisors and senior management of the Company warrant the truthfulness, accuracy and completeness of the contents in the quarterly report, confirm that there are no false representations or misleading statements contained in or material omissions from this report, and jointly and severally accept legal responsibility.

• 1.2 Absent Director

Name of absent director	Position held by absent director	Reasons for absence	Name ofproxy
Zhang Shuogong	Director	Due to business engagement	Li Yongxiang

• 1.3 Mr. Zhou Zhuping, the chairman of the Company and Mr. Lv Feng, the chief financial officer and the chief accountant (accounting officer), warrant the truthfulness, accuracy and completeness of the financial statements contained in the quarterly report.

• 1.4 The third quarterly report of the Company was unaudited.

– 1 –

1.5 Operating highlights of the Company

Since the beginning of 2018, the Company has been practicing the strategies of cost priority and leading manufacturing technologies in a proactive manner and has carried out each production and operating task in close compliance with the annual operating principle of “achieving full production and sales, low costs and high efficiency”. Meanwhile, it continuously promoted the smooth integration of production, supply and sale, and realised stable and smooth production, substantial improvement of cost effectiveness, and rapid growth of systematic capabilities, thus its production and operation entered a virtuous cycle. The cash flows of the Company during the period of January to September were significantly improved and the profitability was better than expected.

From January to September 2018, the Company manufactured 4,210,100 tonnes of iron, 4,750,600 tonnes of steel and 4,553,500 tonnes of steel products, representing an increase of 63.63%, 73.33% and 74.27%, respectively, as compared with the same period last year. The Company expected that its annual production of iron, steel and steel products would amount to 5,650,000 tonnes, 6,350,000 tonnes and 5,950,000 tonnes, respectively. Its revenue from operations, total profit and net profit amounted to RMB17,437 million, RMB1,481 million and RMB1,480 million respectively, marking a dramatic turnaround as compared with the huge loss of RMB882 million of the same period last year.

In the third quarter, the production and sales volume of steel products amounted to 1,586,600 tonnes and 1,589,800 tonnes, increasing by 2.53% and 1.6% month on month as compared to the second quarter, respectively; revenue from operations and total profit amounted to RMB6,344 million and RMB718 million, increasing by 6.78% and 74.27% month on month as compared to the second quarter, respectively; the substantial increase in profit in the third quarter was mainly due to the energetic practice of the cost reduction plan and thorough promotion of meticulous cost management, resulting in prominent reduction of cost.

– 2 –

II. BASIC INFORMATION OF THE COMPANY

2.1 Major financial data

Unit: RMB’000

	As at the	As at the
	end of the	end of the	Changes from
	reporting	previous	the end of the
	period	year	previous year
			(%)
Total assets	26,529,411	25,012,459	6.06
Net assets attributable to the
shareholders of the Company	18,218,615	16,730,115	8.90
Net assets per share (RMB/share)	2.04	1.88	8.42
Asset-liability ratio (%)	31.33	32.82	-4.54
		From the
	From the	beginning of the
	beginning of	previous year
	year to the	to the end of the
	end of the	reporting
	reporting	period of the
	period	previous year	Changes from
	(January to	(January to	the same
	September)	September)	period last year
			(%)
Net cash flow from operating
activities	439,134	-81,623	N/A

– 3 –

		From the
		beginning of
	From the	the previous
	beginning of	year to the
	year to the	end of the
	end of the	reporting
	reporting	period of the
	period	previous year	Changes from
	(January to	(January to	the same
	September)	September)	period last year
			(%)
Revenue from operations	17,436,860	8,183,124	113.08
Net profit attributable to the
shareholders of the Company	1,480,017	-882,075	N/A
Net profit attributable to the
shareholders of the Company after
extraordinary profit or loss	1,435,306	-936,187	N/A
Return on net assets (weighted
average) (%)	8.45	N/A	N/A
Basic earnings per share
(RMB per share)	0.166	-0.199	N/A
Diluted earnings per share
(RMB per share)	0.166	-0.199	N/A

– 4 –

Extraordinary profit and loss items and amounts

✓ Applicable Not applicable

Unit: RMB’000

Item Profit or loss on disposal of non-current assets Government grants included in profit or loss of the period other than those closely related with the normal operation of the Company and in compliance with national policies and regulations and conferred on the standard quota or quantity basis Capital occupancy fee from non-financial enterprises recognized through profit or loss Other non-operating income and expenses other than the above items Impact of non-controlling interest (after tax) Impact of income tax Total	Amount for the period (July to September) – 1,023 21,657 -3,833 – – 18,847	Amount from the beginning of the year to the end of the reporting period (January to September) 8,482 2,525 53,553 -17,550 -531 -1,768 44,711

– 5 –

• 2.2 Total number of shareholders and shareholdings of the top 10 shareholders and the top 10 holders of tradable shares (or holders of shares not subject to trading moratorium) as at the end of the reporting period

Unit: Share

Total number of shareholders

150,685

Shareholdings of top 10 shareholders

			Number
	Number of		of shares
	shares held		held subject
	as at the end		to trading	Pledged and	frozen status	Nature of
(Full) Name of shareholder	**of the period **	Percentage	moratorium	Share status	Number	shareholders
		(%)
Chongqing Changshou Iron &	2,096,981,600	23.51	0	Pledged	2,096,981,600	Domestic non-
Steel Company Limited						state-owned
						legal person
HKSCC NOMINEES	530,839,540	5.95	0	Unknown	–	Overseas legal
LIMITED						person
Chongqing Qianxin Energy	427,195,760	4.79	0	Unknown	–	Unknown
Environmental Protection
Company Limited
Chongqing Rural Commercial	289,268,939	3.24	0	Unknown	–	Unknown
Bank Co., Ltd.
Chongqing Guochuang	278,288,059	3.12	0	Unknown	–	Unknown
Investment and Management
Co., Ltd.
Sinosteel Equipment &	252,411,692	2.83	0	Unknown	–	Unknown
Engineering Co., Ltd.
Bank of Chongqing Co., Ltd.	226,042,920	2.53	0	Unknown	–	Unknown
Industrial Bank Co., Ltd.	219,633,096	2.46	0	Unknown	–	Unknown
Chongqing Branch
Agricultural Bank of China	216,403,628	2.43	0	Unknown	–	Unknown
Limited Chongqing Branch
China Shipbuilding Industrial	211,461,370	2.37	0	Unknown	–	Unknown
Complete Equipment &
Logistics Co., Ltd.

– 6 –

Shareholdings of top 10 holders of shares not subject to trading moratorium

	Number of shares
	not subject to	Class and number	of shares
Name of shareholder	trading moratorium	Class	Number
Chongqing Changshou Iron & Steel Company	2,096,981,600	RMB-denominated	2,096,981,600
Limited		ordinary shares
HKSCC NOMINEES LIMITED	530,839,540	Overseas listed	530,839,540
		foreign shares
Chongqing Qianxin Energy Environmental	427,195,760	RMB-denominated	427,195,760
Protection Company Limited		ordinary shares
Chongqing Rural Commercial Bank Co., Ltd.	289,268,939	RMB-denominated	289,268,939
		ordinary shares
Chongqing Guochuang Investment and	278,288,059	RMB-denominated	278,288,059
Management Co., Ltd.		ordinary shares
Sinosteel Equipment & Engineering Co., Ltd.	252,411,692	RMB-denominated	252,411,692
		ordinary shares
Bank of Chongqing Co., Ltd.	226,042,920	RMB-denominated	226,042,920
		ordinary shares
Industrial Bank Co., Ltd. Chongqing Branch	219,633,096	RMB-denominated	219,633,096
		ordinary shares
Agricultural Bank of China Limited	216,403,628	RMB-denominated	216,403,628
Chongqing Branch		ordinary shares
China Shipbuilding Industrial Complete	211,461,370	RMB-denominated	211,461,370
Equipment & Logistics Co., Ltd.		ordinary shares

Explanation about connected relationship and There is no connected relationship between Chongqing acts in concert of the above shareholders Changshou Iron & Steel Company Limited (the Controlling Shareholder of the Company) and the other 9 shareholders and they are not parties acting in concert as defined in Measures for Management on Information Disclosure of Changes in Shareholdings of Listed Companies’ Shareholders. The Company is not aware of any connected relationship among the other 9 shareholders or whether they are parties acting in concert.

Explanation on preferential shareholders Not applicable. with voting rights restored and their shareholdings

• 2.3 Total number of preferential shareholders and shareholdings of the top 10 preferential shareholders and the top 10 holders of preferential shares not subject to trading moratorium as at the end of the reporting period

Applicable ✓ Not applicable

– 7 –

III. SIGNIFICANT EVENTS

• 3.1 Material changes in items of major accounting statements and financial indicators of the Company and the reason thereof

• ✓ Applicable Not applicable

(1) Analysis on production and operations

From January to September this year, the Group recorded a total profit of RMB1,481 million, increasing by RMB2,364 million as compared to the loss of RMB883 million in the corresponding period last year, which was mainly due to the followings: from January to September, the selling price of steel products amounted to RMB3,650 per tonne, representing a year-on-year increase of 15.40% and resulting in an increase of RMB2,206 million in the profit; sales volume of steel products was 4,532,900 tonnes, representing a year-on-year increase of 94.18% and resulting in an increase of RMB457 million in profit; sales cost was RMB3,003 per tonne, representing a year-on-year increase of 1.62% and resulting in a decrease of RMB218 million in profit. In particular, the increase in prices of raw materials such as ore, coal, alloy, steel scrap, etc., resulted in a decrease of RMB1,023 million in profit; the Company implemented the annual operating principle of “achieving full production and sales, low costs and high efficiency”, improved basic management 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 consumption was reduced substantially, thus resulting in an increase of RMB805 million in profit from cost reduction in the aspect of process.

During the reporting period, expenses for the period amounted to RMB1,395 million, representing a year-on-year increase of 3.10% and resulting in a decrease of RMB42 million in profit, and such increase was mainly due to the followings: given the acute shortage of repair for equipment, the Company recorded considerable expenses for repair and maintenance in order to guarantee the effective implementation of the full production and sales strategy and the normal functioning of equipment of the Company, which resulted in the increase in administrative expenses.

– 8 –

						Percentage
						change in the
						amount for the
				January to	Corresponding	period over the
				September	period	corresponding	Increase in
No.	Item		Unit	2018	last year	period last year	profit
						(%)	(RMB’000)
1	Selling price	per unit	RMB per tonne	3,650	3,163	15.40	2,207,522
2	Sales volume		0’000 tonnes	453.29	233.44	94.18	457,288
3	Sales cost		RMB per tonne	3,003	2,955	1.62	-218,101
3–1	Including: Prices of raw materials		RMB’000	–	–	–	-1,023,583
3–2	Cost reduction in		RMB’000	–	–	–	805,482
		process
4	Expenses for	the period	RMB’000	1,395,387	1,353,372	3.10	-42,015
4–1	Including: Selling expenses		RMB’000	71,025	38,564	84.18	-32,461
4–2	Administrative		RMB’000	1,142,030	791,957	44.20	-350,073
		expenses
4–3	Financial expenses		RMB’000	182,332	522,851	-65.13	340,519
5	Others		RMB’000	–	–	–	-40,860
	Total		RMB’000	–	–	–	2,363,833

– 9 –

(2) Analysis on material changes in assets and liabilities

Unit: RMB’000 Audit type: unaudited

					Percentage of
			Percentage of		the amount
			the amount	Amount at	at the end of
		Amount at	at the end of	the end of	the previous
		the end of the	the period in	the previous	period in	Year-on-year
Item		period	total assets	period	total assets	change	Explanation
			(%)		(%)	(%)
Current assets:
Bills and accounts		1,559,571	5.88	167,134	0.67	833.13	Increase in sales
receivable							volume and effective
							implementation of
							policy on recovery of
							payments for goods
Including:	Bi lls	1,537,080		123,096
	receivable
	Ac counts	22,491		44,038
	receivable
Prepayments		391,044	1.47	70,022	0.28	458.46	Scaling up of production
Inventories		2,479,635	9.35	1,330,469	5.32	86.37	and sales, and
							substantial increase in
							raw material and fuel
							inventories
Other current assets		94	0.00	1,128,655	4.51	-99.99	Completion of liquidation
							of subsidiaries,
							recovery of wealth
							management products,
							and the VAT to be
							paid after deduction of
							the unused input VAT
							from the cumulative
							taxes payable due to
							the increase in gross
							profit of products of
							the Company.

– 10 –

				Percentage of
		Percentage of		the amount
		the amount	Amount at	at the end of
	Amount at	at the end of	the end of	the previous
	the end of the	the period in	the previous	period in	Year-on-year
Item	period	total assets	period	total assets	change	Explanation
		(%)		(%)	(%)
Non-current assets:
Long-term equity			124,158	0.50	-100.00	Completion of liquidation
investment						and cancellation of
						associates
Construction in progress	17,654	0.07	8,695	0.03	103.04	Investment in projects
						on equipment
						management and
						technological
						improvement and
						measures
Current liabilities:
Employee benefits	47,256	0.18	563,547	2.25	-91.61	Payment for the employee
payable						claims under the
						judicial reorganization
Tax payable	77,079	0.29	13,095	0.05	488.61	The VAT to be paid
						after deduction of the
						unused input VAT
						from the cumulative
						taxes payable due to
						the increase in gross
						profit of products of
						the Company.
Other payables	536,498	2.02	1,491,912	5.96	-64.04	Payment for the relevant
						guarantee claims
						under the judicial
						reorganization
Non-current liabilities	590,000	2.22	400,000	1.60	47.50	Reclassification of long-
due within one year						term borrowings into
						borrowings due within
						one year

– 11 –

3.2 Analysis and explanation of progress and impact of significant events and their solutions

✓ Applicable Not applicable

In May 2018, the employee share ownership plan was approved at the Company’s shareholders’ meeting. Provision was intended to be made at a certain percentage of the audited total profits. The board of directors of the Company intended to withdraw not more than 25% of the audited total profits (before withdrawal of bonus fund) as the total amount of the bonus fund under the profits sharing plan for employees, and the specific ratio relating to the employee share ownership plan would be further confirmed on such basis.

3.3 Undertakings not being fully performed during the reporting period

Applicable ✓ Not applicable

• 3.4 Warning and explanation in the forecast of any possible loss in accumulated net profit from the beginning of the year to the end of next reporting period or any material changes compared to the corresponding period of last year

✓ Applicable Not applicable

The Company recorded a net profit of RMB320 million in 2017. Upon the completion of the Company’s judicial reorganisation at the end of 2017, the huge debts of Company were properly dealt with, and its asset quality was further enhanced. The Company fully leveraged on the advantages of its system and mechanism and energetically promoted the reform of comprehensive management. Thanks to these efforts, both production and sales volumes were significantly improved, and major economic and technical indicators set new records constantly. Moreover, with the further enhanced cost management, the competitiveness of the Company and its products was dramatically improved, and thus its production and operation entered a virtuous cycle. Taking into account the market trends of steel products in the fourth quarter of 2018 and the implementation of profitsharing plans and employee share ownership plan, the accumulated net profit at the end of next reporting period is expected to increase by more than 400%, detailed figures of which are subject to those to be disclosed in the 2018 annual report of the Company.

Company Name Chongqing Iron & Steel Company Limited Legal Representative Zhou Zhuping Date 29 October 2018

– 12 –

IV. APPENDICES

4.1 Financial statements

Consolidated Balance Sheet

30 September 2018

Prepared by: Chongqing Iron & Steel Company Limited

Unit: RMB’000 Audit type: unaudited

Item Current assets: Cash and bank balance Balances with clearing companies Placements with banks and other financial institutions Held-for-trading financial assets Derivative financial assets Bills and accounts receivable Including: Bills receivable Accounts receivable Prepayments Premiums receivable Accounts receivable from reinsurers Deposits receivable from reinsurers Other receivables Including: Interests receivable Dividends receivable Proceeds from financial assets purchased under agreements to resell Inventories Contract assets Held-for-sale assets Non-current assets due within one year Other current assets Total current assets	Closing balance at the end of the period 2,514,481 1,559,571 1,537,080 22,491 391,044 20,244 2,479,635 94 6,965,069	Opening balance at the beginning of the year 2,050,538 167,134 123,096 44,038 70,022 10,355 1,330,469 1,128,655
		4,757,173

– 13 –

Item Non-current assets: Loans and advances granted Debt investments Other debt investments Long-term receivables Long-term equity investments Other equity instruments investments Other non-current financial assets Investment properties Fixed assets Construction in progress Biological assets for production Fuel assets Intangible assets Development expenses Goodwill Long-term deferred expenditures Deferred income tax assets Other non-current assets Total non-current assets Total assets	Closing balance at the end of the period 5,000 17,071,807 17,654 2,469,881 19,564,342 26,529,411	Opening balance at the beginning of the year 124,158 5,000 17,595,699 8,695 2,521,734
		20,255,286
		25,012,459

– 14 –

Item Current liabilities: Short-term borrowings Borrowings from central bank Deposit taking and deposit in interbank market Placements from banks and other financial institutions Held-for-trading financial liabilities Derivative financial liabilities Bills and accounts payable Advances from customers Contract liabilities Disposal of repurchased financial assets Handling charges and commissions payable Employee benefits payable Taxes payable Other payables Including: Interests payable Dividends payable Payable to reinsurers Deposits for insurance contracts Customer deposits for trading in securities Customer deposits for underwriting Held-for-sale liabilities Non-current liabilities due within one year Other current liabilities Total current liabilities	Closing balance at the end of the period 1,985,036 1,722,182 47,256 77,079 536,498 6,304 590,000 4,958,051	Opening balance at the beginning of the year 2,155,294 187,099 563,547 13,095 1,491,912 7,174 400,000
		4,810,947

– 15 –

Item Non-current liabilities: Long-term borrowings Debentures payable Including: Preferential shares Perpetual bonds Long-term payables Long-term staff remuneration payable Accrued liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities	Closing balance at the end of the period 500,000 133,000 278,637 41,108 2,400,000 3,352,745 8,310,796	Opening balance at the beginning of the year 700,000 243,190 11,204 43,154 2,400,000
		3,397,548
		8,208,495

– 16 –

			Closing		Opening
		balance at			balance at
		the end of the			the beginning
Item			period		of the year
Owners’ equity (or Shareholders’
equity)
Paid-in capital (or share capital)		8,918,602			8,918,602
Other equity instruments
Including: Preferential shares
Perpetual bonds
Capital reserve		19,282,147			19,282,147
Less: Treasury stock
Other comprehensive income
Special reserve			10,193
Surplus reserve			606,991		606,991
General risk provision
Undistributed profit		-10,599,318			-12,077,625
Total equity attributable to owners of
the Company		18,218,615			16,730,115
Minority interests					73,849
Total owners’ equity (or shareholders’
equity)		18,218,615			16,803,964
Total liabilities and owners’ equity (or
shareholders’ equity)		26,529,411			25,012,459
Legal Representative: Chief	Financial Officer:		Chief Accountant:
Zhou zhuping	Lv Feng				Lv Feng

– 17 –

30 September 2018

Balance Sheet of the Parent Company

Prepared by: Chongqing Iron & Steel Company Limited

Unit: RMB’000 Audit type: unaudited

Item Current assets: Cash and bank balance Held-for-trading financial assets Derivative financial assets Bills and accounts receivable Including: Bills receivable Accounts receivable Prepayments Other receivables Including: Interests receivable Dividends receivable Inventories Contract assets Held-for-sale assets Non-current assets due within one year Other current assets Total current assets	Closing balance at the end of the period 2,512,389 1,561,470 1,537,080 24,390 390,924 20,239 2,479,635 75 6,964,732	Opening balance at the beginning of the year 1,961,403 169,949 123,096 46,853 69,581 10,355 1,330,469 478,510 4,020,267

– 18 –

Item Non-current assets: Debt investments Other debt investments Long-term receivables Long-term equity investments Other equity instruments investments Other non-current financial assets Investment properties Fixed assets Construction in progress Biological assets for production Fuel assets Intangible assets Development expenses Goodwill Long-term deferred expenditures Deferred income tax assets Other non-current assets Total non-current assets Total assets	Closing balance at the end of the period 50,000 5,000 17,071,807 17,654 2,469,881 19,614,342 26,579,074	Opening balance at the beginning of the year 835,780 5,000 17,595,699 8,695 2,521,734 20,966,908 24,987,175

– 19 –

Item Current liabilities: Short-term borrowings Held-for-trading financial liabilities Derivative financial liabilities Bills and accounts payable Advances from customers Contract liabilities Employee benefits payable Taxes payable Other payables Including: Interests payable Dividends payable Held-for-sale liabilities Non-current liabilities due within one year Other current liabilities Total current liabilities	Closing balance at the end of the period 2,032,663 1,721,053 47,256 76,814 530,801 6,300 590,000 4,998,587	Opening balance at the beginning of the year 2,204,070 185,905 563,518 13,113 1,486,183 7,174 400,000 4,852,789

– 20 –

Item Non-current liabilities: Long-term borrowings Debentures payable Including: Preferential shares Perpetual bonds Long-term payables Long-term staff remuneration payable Accrued liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities	Closing balance at the end of the period 500,000 133,000 278,637 41,108 2,400,000 3,352,745 8,351,332	Opening balance at the beginning of the year 700,000 243,190 11,204 43,154 2,400,000 3,397,548 8,250,337

– 21 –

			Closing		Opening
		balance at			balance at
		the end of			the beginning
Item		the period			of the year
Owners’ equity (or Shareholders’
equity)
Paid-in capital (or share capital)		8,918,602			8,918,602
Other equity instruments
Including: Preferential shares
Perpetual bonds
Capital reserve		19,313,090			19,313,090
Less: Treasury stock
Other comprehensive income
Special reserve			10,193
Surplus reserve			577,013		577,012
Undistributed profit		-10,591,156			-12,071,866
Total owners’ equity (or shareholders’
equity)		18,227,742			16,736,838
Total liabilities and owners’ equity
(or shareholders’ equity)		26,579,074			24,987,175
Legal Representative: Chief	Financial Officer:		Chief Accountant:
Zhou zhuping	Lv Feng				Lv Feng

– 22 –

Consolidated Income Statement January to September 2018

Prepared by: Chongqing Iron & Steel Company Limited

Unit: RMB’000 Audit type: unaudited

					Amount from
				Amount from	the beginning
				the beginning	of the previous
				of the year	year to the end
				to the end of	of the reporting
		Amount for	Amount for	the reporting	period of the
		the period	the previous	period	previous year
		(July to	period (July to	(January to	(January to
Item		September)	September)	September)	September)
I.	Total revenue from operations	6,343,961	3,661,397	17,436,860	8,183,124
	Including: Revenue from operations	6,343,961	3,661,397	17,436,860	8,183,124
	Interest income
	Premiums earned
	Income from fee and commission
II.	Total operating costs	5,623,483	3,593,764	15,940,829	9,118,256
	Including: Operating costs	5,110,402	3,291,686	14,454,700	7,704,503
	Interest expenses
	Fee and commission expenses
	Surrender value
	Net expenditure for compensation
	payments
	Net drawing on deposits for
	insurance contracts
	Expenditures for insurance policy
	dividend
	Reinsurance costs
	Taxes and surcharges	38,305	20,602	90,742	60,381
	Selling expenses	29,040	14,883	71,025	38,564
	Administrative expenses	410,654	259,301	1,142,030	791,957
	R&D expenses
	Finance cost	35,082	7,292	182,332	522,851

– 23 –

						Amount from
					Amount from	the beginning
					the beginning	of the previous
					of the year	year to the end
					to the end of	of the reporting
			Amount for	Amount for	the reporting	period of the
			the period	the previous	period	previous year
			(July to	period (July to	(January to	(January to
Item			September)	September)	September)	September)
		Including: Interest expenses	42,325	5,633	232,791	464,433
		Interest income	-25,866	-829	-72,294	-8,015
		Asset impairment loss
		Credit impairment loss
	Add:	Other income	1,023	48,421	2,525	54,707
		Gains from investment (loss is
		represented by “-”)	260		-1,566	-1,911
		Including: G ains from investment
		in associates and
		joint ventures	260		-2,369	-1,911
		Income on hedging the net
		exposure (loss is represented
		by “-”)
		Gain from change in fair value
		(loss is represented by “-”)
		Gain on disposal of assets (loss is
		represented by “-”)			8,482
		Exchange gain (loss is represented
		by “-”)
III.	P rofit from operations (loss is represented
	by “-”)		721,761	116,054	1,505,472	-882,336
	Add: Non-operating income		159	39	485	134
	Less: Non-operating expenses		3,992	203	25,055	729
IV.	T otal profit (total loss is represented
	by “-”)		717,928	115,890	1,480,902	-882,931
	Less: Income tax expense				885	2

– 24 –

						Amount from
					Amount from	the beginning
					the beginning	of the previous
					of the year	year to the end
					to the end of	of the reporting
			Amount for	Amount for	the reporting	period of the
			the period	the previous	period	previous year
			(July to	period (July to	(January to	(January to
Item			September)	September)	September)	September)
V.	Net	profit (net loss is represented by “-”)	717,928	115,890	1,480,017	-882,933
	(I)	Classified on a going concern basis
		1. N et profit from continuing operations
		(net loss is represented by “-”)	717,928	115,890	1,480,017	-882,933
		2. N et profit from discontinued
		operations (net loss is represented
		by “-”)
	(II)	Classified according to the ownership
		1. N et profit attributable to owners of
		the parent company	717,928	116,407	1,480,017	-882,075
		2. P rofit or loss attributable to minority
		shareholders		-517		-858

VI. Other comprehensive income (net of tax)

Other comprehensive income (net of tax) attributable to owners of the parent company

• (I) O ther comprehensive income that will not be reclassified to profit or loss

• C hanges in re-measurement of defined benefit plan

• O ther comprehensive income accounted for using equity method that will not be reclassified to profit or loss

• C hanges in fair value of other equity instruments investment

• C hanges in fair value of the enterprise’s own credit risk

– 25 –

						Amount from	Amount from
					Amount from	the beginning
					the beginning	of the	previous
					of the year	year to the end
					to the end of	of the	reporting
		Amount for	Amount for		the reporting	period of the
		the period	the previous		period	previous year
		(July to	period (July to		(January to	(January to
Item		September)	September)		September)	September)
	(II) O ther comprehensive income that will be
	reclassified to profit or loss
	1. O ther comprehensive income
	accounted for using equity method
	which will be reclassified to profit
	and loss
	2. C hanges in fair value of other debt
	investments
	3. A mount of financial assets
	reclassified to other comprehensive
	income
	4. P rovision for credit impairment of
	other debt investments
	5. Cash flow hedging reserve
	6. E xchange difference on translation of
	foreign financial statements
	Other comprehensive income (net	of tax)
	attributable to minority shareholders
VII.	Total comprehensive income	717,928	115,890		1,480,017		-882,933
	Total comprehensive income attributable to
	owners of the parent company	717,928	116,407		1,480,017		-882,075
	Total comprehensive income attributable to
	minority shareholders			-517			-858
VIII.	Earnings per share:
	(I) Basic earnings per share
	(RMB per share)	0.080		0.026	0.166		-0.199
	(II) Diluted earnings per share
	(RMB per share)	0.080		0.026	0.166		-0.199
Legal Representative:		Chief Financial Officer:			Chief Accountant:
	Zhou zhuping	Lv Feng			Lv Feng

– 26 –

Income Statement of the Parent Company

January to September 2018

Prepared by: Chongqing Iron & Steel Company Limited

Unit: RMB’000 Audit type: unaudited

					Amount from
				Amount from	the beginning
				the beginning	of the previous
				of the year	year to the end
				to the end of	of the reporting
		Amount for	Amount for	the reporting	period of the
		the period	the previous	period	previous year
		(July to	period (July to	(January to	(January to
Item		September)	September)	September)	September)
I.	Revenue from operations	6,330,872	3,633,344	17,424,569	8,018,794
	Less: Operating costs	5,097,395	3,263,621	14,443,023	7,540,747
	Taxes and surcharges	38,303	20,407	90,733	59,983
	Selling expenses	29,039	14,657	70,854	36,467
	Administrative expenses	413,311	256,239	1,141,456	782,938
	R&D expenses
	Finance cost	36,847	6,471	189,436	525,645
	Including: Interest expenses	42,325	5,633	232,791	464,433
	Interest income	-25,861	-132	-63,934	-1,906
	Asset impairment loss				-1
	Credit impairment loss
	Add: Other income	1,023	48,421	2,525	54,707
	Gains from investment (loss is
	represented by “-”)	2,549		2,600	-4,547
	Including: G ains from investment
	in associates and joint
	ventures	260		-2,369	-1,911
	Income on hedging the net exposure
	(loss is represented by “-”)
	Gain from change in fair value (loss is
	represented by “-”)
	Gain on disposal of assets (loss is
	represented by “-”)			8,482
II.	P rofit from operations (loss is
	represented by “-”)	719,549	120,370	1,502,674	-876,825
	Add: Non-operating income	159	39	400	132
	Less: Non-operating expenses	1,335	132	22,367	658

– 27 –

					Amount from
				Amount from	the beginning
				the beginning	of the previous
				of the year	year to the end
				to the end of	of the reporting
		Amount for	Amount for	the reporting	period of the
		the period	the previous	period	previous year
		(July to	period (July to	(January to	(January to
Item		September)	September)	September)	September)
III. T otal profit (total loss is represented
by “-”)		718,373	120,277	1,480,707	-877,351
Less: Income tax expense
IV. Net profit (net loss is represented by “-”)		718,373	120,277	1,480,707	-877,351
(I)	N et profit from continuing operations (net
	loss is represented by “-”)	718,373	120,277	1,480,707	-877,351

• (II) N et profit from discontinued operations

(net loss is represented by “-”)

V. Other comprehensive income (net of tax)

• (I) O ther comprehensive income that will not be reclassified to profit or loss

• C hanges in re-measurement of defined benefit plan

• O ther comprehensive income accounted for using equity method that will not be reclassified to profit or loss

• C hanges in fair value of other equity instruments investment

• C hanges in fair value of the enterprise’s own credit risk

– 28 –

Item

			Amount from
		Amount from	the beginning
		the beginning	of the previous
		of the year	year to the end
		to the end of	of the reporting
Amount for	Amount for	the reporting	period of the
the period	the previous	period	previous year
(July to	period (July to	(January to	(January to
September)	September)	September)	September)

• (II) O ther comprehensive income that will be reclassified to profit or loss

• O ther comprehensive income accounted for using equity method which will be reclassified to profit and loss

• C hanges in fair value of other debt investments

• A mount of financial assets reclassified to other comprehensive income

• P rovision for credit impairment of other debt investments

• Cash flow hedging reserve

3. A mount of financial assets reclassified to other comprehensive income 4. P rovision for credit impairment of other debt investments 5. Cash flow hedging reserve	3. A mount of financial assets reclassified to other comprehensive income 4. P rovision for credit impairment of other debt investments 5. Cash flow hedging reserve
6. E xchange difference on translation of
foreign financial statements
VI. Total comprehensive income		718,373	120,277	1,480,707	-877,351
VII. Earnings per share:
(I) Basic earnings per share (RMB per share)		0.081	0.027	0.166	-0.198
(II) Diluted earnings per share
(RMB per share)		0.081	0.027	0.166	-0.198
Legal Representative:	Chief Financial Officer:			Chief Accountant:
Zhou zhuping		Lv Feng		Lv Feng

– 29 –

Consolidated Cash flow Statement

January to September 2018

Prepared by: Chongqing Iron & Steel Company Limited

Unit: RMB’000 Audit type: unaudited

Item I. Cash flow from operating activities: Cash received from sale of goods or rendering of services Net increase in customer and interbank deposits Net increase in borrowings from central bank Net increase in placements from other financial institutions Cash received from premiums under original insurance contract Net cash received from reinsurance business Net increase in deposits of policy holders and investment Net increase in disposal of financial assets at fair value through profit or loss Cash received from interest, fees and commissions Net increase in placements from banks and other financial institutions Net increase in capital from repurchase business Refunds of taxes Other cash received relating to operating activities Sub-total of cash inflow from operating activities	Amount from the beginning of the year to the end of the reporting period (January to September) 16,344,018 0 157,343 16,501,361	Amount from the beginning of the previous year to the end of the reporting period of the previous year (January to September) 1,760,571 0 2,304,517 4,065,088

– 30 –

Item Cash paid for goods purchased and service received Net increase in customer loans and advances Net increase in deposit in central bank and interbank deposit Cash paid for compensation payments under original insurance contract Cash paid for interest, fee and commission Cash paid for insurance policy dividend 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 outflow from operating activities Net cash flow from operating activities	Amount from the beginning of the year to the end of the reporting period (January to September) 13,655,562 1,287,505 77,974 1,041,186 16,062,227 439,134	Amount from the beginning of the previous year to the end of the reporting period of the previous year (January to September) 1,409,514 556,373 77,650 2,103,174 4,146,711 -81,623

– 31 –

Item II. Cash flows from investment activities: Cash received from disposal of investments Cash received from return on investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and other operating entities Other cash received relating to investing activities Sub-total of cash inflow from investing activities Cash paid for acquisition and construction of fixed assets, intangible assets and other long- term assets Cash paid for investments Net increase in pledged loans Net cash paid for acquiring subsidiaries and other operating entities Other cash paid relating to investing activities Sub-total of cash outflow from investing activities Net cash flow from investing activities	Amount from the beginning of the year to the end of the reporting period (January to September) 651,376 7,021 8,561 2,549 669,507 2,664 2,664 666,843	Amount from the beginning of the previous year to the end of the reporting period of the previous year (January to September) 25,685 25,685 -25,685

– 32 –

Item III. Cash flow from financing activities: Cash received from investments Including: P roceeds received by subsidiaries from minority shareholders’ investment Cash received from borrowings Cash received from issuing bonds Other cash received relating to financing activities Sub-total of cash inflow from financing activities Cash paid for repayments of debts Cash paid for distribution of dividends and profits or for interest expenses Including: D ividend and profit paid by subsidiaries to minority shareholders Other cash paid relating to financing activities Sub-total of cash outflow from financing activities Net cash flow from financing activities	Amount from the beginning of the year to the end of the reporting period (January to September) 1,314,577 1,314,577 10,000 191,349 764,569 965,918 348,659	Amount from the beginning of the previous year to the end of the reporting period of the previous year (January to September) 1,817,740 412,753 2,230,493 1,311,117 164,601 645,210 2,120,928 109,565

– 33 –

						Amount from
			Amount from			the beginning
			the	beginning		of the previous
			of the year to			year to the
				the end of		end of the
			the	reporting		reporting period
				period		of the previous
			(January to			year (January to
Item			September)			September)
IV. E ffect of fluctuations in exchange		rates on
cash and cash equivalents						-3,304
V. Net increase in cash and cash equivalents				1,454,636		-1,047
Add: B alance of cash and cash equivalents at
the beginning of the period				869,952		745,426
VI. B alance of cash and cash equivalents at the
end of the period				2,324,588		744,379
Legal Representative:	Chief Financial Officer:			Chief Accountant:
Zhou Zhu Ping		Lv Feng				Lv Feng

– 34 –

Cash Flow Statement of the Parent Company January to September 2018

Prepared by: Chongqing Iron & Steel Company Limited

Unit: RMB’000 Audit type: unaudited

Item I. Cash flow from operating activities: Cash received from sale of goods or rendering of services Refunds of taxes Other cash received relating to operating activities Sub-total of cash inflow from operating activities Cash paid for goods purchased and service received 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 outflow from operating activities Net cash flow from operating activities	Amount from the beginning of the year to the end of the reporting period (January to September) 16,341,302 158,450 16,499,752 13,656,832 1,287,476 77,083 1,033,937 16,055,328 444,424	Amount from the beginning of the previous year to the end of the reporting period of the previous year (January to September) 1,568,286 2,290,249 3,858,535 1,217,408 548,217 77,466 2,095,467 3,938,558 -80,023

– 35 –

Item II. Cash flows from investment activities: Cash received from disposal of investments Cash received from return on investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and other operating entities Other cash received relating to investing activities Sub-total of cash inflow from investing activities Cash paid for acquisition and construction of fixed assets, intangible assets and other long- term assets Cash paid for investments Net cash paid for acquiring subsidiaries and other operating entities Other cash paid relating to investing activities Sub-total of cash outflow from investing activities Net cash flow from investing activities	Amount from the beginning of the year to the end of the reporting period (January to September) 1,376 8,561 2,549 12,486 2,664 2,664 9,822	Amount from the beginning of the previous year to the end of the reporting period of the previous year (January to September) 24,329 0 24,329 -24,329

– 36 –

				Amount from
	Amount from			the beginning of
	the	beginning		the previous year
	of the year to the			to the end of
		end of the		the reporting period
	reporting period			of the previous year
	(January to			(January to
Item	September)			September)
III. Cash flow from financing activities:
Cash received from investments
Cash received from borrowings				1,817,740
Cash received from issuing bonds
Other cash received relating to financing
activities		1,314,577		412,753
Sub-total of cash inflow from financing
activities		1,314,577		2,230,493
Cash paid for repayments of debts		10,000		1,311,117
Cash paid for distribution of dividends and
profits or for interest expenses		188,596		164,601
Other cash paid relating to financing activities		27,557		645,210
Sub-total of cash outflow from financing
activities		226,153		2,120,928
Net cash flow from financing activities		1,088,424		109,565
IV. E ffect of fluctuations in exchange rates on
cash and cash equivalents				0
V. Net increase in cash and cash equivalents		1,542,670		5,213
Add: B alance of cash and cash equivalents at the
beginning of the period		779,826		5,137
VI. B alance of cash and cash equivalents at the
end of the period		2,322,496		10,350
Legal Representative: Chief Financial Officer:		Chief Accountant:
Zhou Zhu Ping Lv Feng				Lv Feng

– 37 –

4.2 Auditor’s report

Applicable

✓ Not applicable

By order of the Board Chongqing Iron & Steel Company Limited Yu Hong Secretary to the Board

Chongqing, the PRC, 30 October 2018

As at the date of this announcement, the directors of the Company are: Mr. Zhou Zhuping (Non-executive Director), Mr. Zheng Jie (Non-executive Director), Mr. Li Yongxiang (Executive Director), Mr. Tu Deling (Executive Director), Mr. Zhang Shuogong (Executive Director), Mr. Xu Yixiang (Independent Non-executive Director), Mr. Xin Qingquan (Independent Non-executive Director), Mr. Wong Chunwa (Independent Non-executive Director) and Mr. Zheng Yuchun (Independent Non-executive Director).

– 38 –