XD Inc. — Interim / Quarterly Report 2019

Aug 11, 2019

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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UNAUDITED INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2019

I IMPORTANT

• 1.1 This Interim Report summary is extracted from the full text of the Interim Report. To fully understand the operating results, financial position and future development plans of the Company, investors are advised to read carefully the full text of the Interim Report which has also been published on the websites designated by the CSRC including the website of the Shanghai Stock Exchange for details.

• 1.2 The Board, supervisory committee and directors, supervisors and senior executives of the Company guarantee that the contents of the Interim Report are real, accurate and complete, without false representations, misleading statements or material omissions, and assume several and joint liability in respect thereof.

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

• 1.4 The Interim Report is unaudited.

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

Nil

– 1 –

II BASIC INFORMATION ON THE COMPANY

2.1 Company Information

Stock Profile

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

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

– 2 –

2.2 Major Financial Data of the Company

Unit: RMB’000

			Change from
			the end of
			last year to
	At the		the end of
	end of the	At the	the
	Reporting	end of	Reporting
	Period	last year	Period
			(%)
Total assets	26,486,557	26,933,351	-1.66
Net assets attributable to
shareholders of the Company	19,093,683	18,531,665	3.03
	Reporting
	Period	Same
	(January to	period	Year-on-
	June)	last year	year change
			(%)
Net cash flow from operating
activities	88,417	-1,301,188	N/A
Revenue	11,483,560	11,092,899	3.52
Net profit attributable to
shareholders of the Company	615,728	761,960	-19.19
Net profit attributable to
shareholders of the Company
after extraordinary gains and
losses	589,097	736,096	-19.97
			Decrease by
			1.18
Weighted average return on net			percentage
assets (%)	3.27	4.45	points
Basic earnings per share (RMB
per share)	0.07	0.09	-22.22
Diluted earnings per share (RMB
per share)	0.07	0.09	-22.22

– 3 –

2.3 Shareholdings of top ten shareholders

Unit: share

Total number of shareholders as of the end of the reporting
period (account)	142,205
Total number of preferred shareholders with restored voting
rights as of the end of the reporting period (account)	0

Shareholdings of top 10 shareholders

				Number of
				shares held
		Shareholding	Number of	with trading	Number	of shares pledged
Name of shareholder	Type of shareholder	percentage	shares held	limitations		or frozen
		(%)
Chongqing Changshou Iron & Steel	Domestic non-state-owned	23.51	2,096,981,600	0	Pledged	2,096,981,600
Company Limited	legal person
HKSCC NOMINEES LIMITED	Foreign legal person	5.95	531,040,021	0	Unknown
Chongqing Qianxin Energy	Unknown	4.79	427,195,760	0	Pledged	427,190,070
Environmental Protection Company
Limited
Chongqing Rural Commercial Bank	Unknown	3.24	289,268,939	0	Nil	0
Co., Ltd.
Chongqing Guochuang Investment	Unknown	3.12	278,288,059	0	Nil	0
and Management Co., Ltd.
Sinosteel Equipment & Engineering	Unknown	2.83	252,411,692	0	Nil	0
Co., Ltd.
Bank of Chongqing Co., Ltd.	Unknown	2.53	226,042,920	0	Nil	0
Industrial Bank Co., Ltd. Chongqing	Unknown	2.46	219,633,096	0	Nil	0
Branch
Agricultural Bank of China Limited	Unknown	2.43	216,403,628	0	Nil	0
Chongqing Branch
China Shipbuilding Industry	Unknown	2.37	211,461,370	0	Nil	0
Complete Logistics Co., Ltd.

– 4 –

Description on the related relationship or acts in concert among the Chongqing Changshou Iron & Steel Company Limited is the controlling above shareholders shareholder of the Company and has no related relationship with the other 9 shareholders and they are not parties acting in concert as stipulated in Administrative Measures for Management of Information Disclosure of Changes in Shareholdings of Shareholders of Listed Companies. The Company is also not aware of whether there is any related relationship among the other 9 shareholders or whether they are parties acting in concert.

Description on the preferred shareholders with restored voting rights N/A and shareholding

• 2.4 Particulars of the total number of preferred shareholders and top ten preferred shareholders as of the end of the reporting period

Applicable ✔ Not Applicable

• 2.5 Changes in controlling shareholder or beneficial controller

Applicable ✔ Not Applicable

• 2.6 Undue and unpaid or overdue corporate bonds

Applicable ✔ Not Applicable

III MANAGEMENT DISCUSSION AND ANALYSIS

3.1 Management Discussion and Analysis

2019 is a crucial year for the Company to embark on a new journey towards sustainable and high-quality development as well as a year for consolidating foundations, improving management and advancing development. The Company actively implemented the strategies highlighting “cost and manufacturing technology leadership” and continuously carried out the operation principle of “achieving full production and sales, low cost and high efficiency”. In response to the declining sales price of steel, the soaring prices of iron ores and other adverse circumstances, it implemented the problems-oriented and reform-driven approaches to solidify the foundation, improve the system, enhance the capability and drive business development. It vigorously promoted cost reduction and continuously conducted targeted benchmarking to bridge the gaps and effectively leveraged the coordinated support of China Baowu Steel Group. With the joint efforts of all employees, in the first half of the year, the Company maintained stable and smooth production operations, with production and sales hitting record high, resource consumption decreasing significantly, new breakthroughs made in building low-cost manufacturing capacity, and competitiveness further enhanced.

– 5 –

(1) Production and sales hit historical records

In the first half of the year, the Company produced 2,984,200 tonnes of iron, 3,250,600 tonnes of steel and 3,097,200 tonnes of steel products, representing an increase of 199,700 tonnes, 150,500 tonnes and 130,300 tonnes as compared with the same period of the previous year, respectively. It sold 3,132,200 tonnes of steel products, representing an increase of 188,700 tonnes as compared with the same period of the previous year and hitting a historical record.

(2) Dominant position in regional markets gradually enhanced

In the first half of the year, the Company fully exploited its advantages in geographical location and product offerings, actively explored marketing channels, improved the marketing system featured with direct supply, sales and distribution, innovated cooperation model with project users and further expanded end market. The proportion of products sold through direct supply, sales and distribution increased significantly as compared with the corresponding period of last year. Direct supply of steel to Jin’an Jinsha River Bridge, Wushan Guihua Bridge, Shuitu Jialing River Bridge and other key infrastructure projects has been materialized in the first half of the year.

(3) Noticeable improvement in manufacturing capacity

In the first half of the year, the Company insisted on production scheduling and management which focused on the blast furnace and continuously optimized the structure of coal blending and furnace materials. It energetically implemented the policy on high-quality raw materials and fuels, strengthened technological operation and lean management under the current conditions, actively explored and gradually solidified basic operational rules on blast furnace with high productivity, low consumption and high quality, so as to strengthen blast furnace smelting, improve utilization coefficient and reduce fuel ratio. As a result, its main economic and technical indicators of blast furnace process reached the best levels in the first half of the year, with production capacity increased and technical and economic indicators optimized.

In the first half of the year, the Company preliminarily established a professional and consistent centralized management system on equipment. Through focusing on fundamental management and risk control, the failures of equipment decreased significantly as compared with the corresponding period of last year. The monthly average downtime of equipment for main operation lines reached the best in the first half of the year and the guarantee capability was strengthened substantially.

– 6 –

(4) On-going cost reduction efforts

In the first half of the year, by means of “reducing system costs and reducing technology costs”, the Company continued to promoted cost reduction, deepened cost control and improved cost analysis with a focus on procurement costs, resource consumption, expenses and operational efficiency. It actively carried out targeted benchmarking in economic and technical indicators, consumption level and cost data of each process to bridge the gaps with an aim to reach the best in history and catch up industry benchmarks horizontally. Through indicator breakdown, implementation of responsibilities, tracking and analysis, appraisal and incentives, it strengthened whole-process cost management and control, and thus achieved a cost reduction of RMB144/tonne for steel products, with a total cost reduction of RMB449 million, completing 64.5% of the annual target. In the first half of the year, nearly 80% of the main economic and technical indicators at the corporate level reached the best for three consecutive months since 2018, and the molten iron cost of the Company maintained the leading level in the southwestern region, with new breakthroughs made in building low-cost manufacturing capacity.

(5) Results achieved with the coordinated support of China Baowu Steel Group

In the first half of the year, the Company continued to shore up its own weaknesses and enhance its capacity leveraging on the analysis and guidance on the production, technology, management and business of the Company conducted by the supporting team of China Baowu Steel Group. 50 programs coordinated and supported by China Baowu Steel Group were under orderly progress and preliminary results have been achieved in the coordination and support.

(6) Fully advancing system capacity building

In the first half of the year, with the promotion of chief operator system and standardized operation, the Company fully enhanced on-site management. Focusing on the budget targets in annual plans, the Company devised 48 improvement programs on production, technology, equipment and management. By means of programizing work tasks, it continuously enhanced the professional management capability of functional and business departments and the professional quality of employees.

The Company will continue with the above strategies and principles in the latter half of 2019 and it is expected that there will be no material change to the business development.

– 7 –

3.2 Principal business analysis

(1) Analysis of changes in certain items from financial statements

Unit: RMB’000

		For the
	For the	corresponding
	Reporting	period
Subject	Period	last year	Change
			(%)
Revenue	11,483,560	11,092,899	3.52
Cost of sales	10,342,032	9,769,641	5.86
Distribution and selling expenses	45,161	41,986	7.56
General and administrative expenses	330,030	306,033	7.84
Finance expenses	75,985	147,250	-48.40
Net cash flow from operating activities	88,417	-1,301,188	N/A
Net cash flow from investing activities	-214,233	664,294	-132.25
Net cash flow from financing activities	370,217	217,947	69.87
R&D spending	241,580	221,857	8.89

Reasons for changes in revenue: The increase in revenue was mainly due to the improvement of production and sales.

Reasons for changes in cost of sales: The increase in cost of sales was mainly due to the expansion of production and sales.

Reasons for changes in distribution and selling expenses: The increase in distribution and selling expenses was mainly due to the expansion of production and sales, as well as the increase in freight charges.

Reasons for changes in general and administrative expenses: The increase in general and administrative expenses was mainly due to the increase in employee benefits.

Reasons for changes in finance expenses: The decrease in finance expenses was mainly due to the virtuous cycle in production and operation with fewer funds utilized.

Reasons for changes in net cash flow from operating activities: The increase in net cash flow from operating activities was mainly due to the payment of the remaining amount on judicial reorganisation as agreed in the first half of 2018.

– 8 –

Reasons for changes in net cash flow from investing activities: The decrease in net cash flow from investing activities was mainly due to the purchase of wealth management products during the year.

Reasons for changes in net cash flow from financing activities: The increase in net cash flow from financing activities was mainly due to the increase of borrowings from Changshou Iron & Steel.

(2) Others

• ① Detailed description of the major changes in the Company’s profit structure or profit sources

• ✔ Applicable Not Applicable

In the first half of 2019, the Group realized a total profit of RMB617 million, representing a year-on-year decrease of 19.09%, which was mainly due to the following reasons: the overall selling price of steel products amounted to RMB3,510/tonne, representing a year-on-year decrease of 1.76% and resulting in a decrease of RMB198 million in profit; the rising prices of raw materials, such as ore, coal, alloy, scrap steel, etc., resulted in a decrease of RMB367 million in profit; the sales volume of steel products reached 3,132,200 tonnes, representing a year-on-year increase of 6.41%, and achieving an increase of RMB82 million in profit; the Company continued to promote the cost reduction plan and vigorously conducted benchmarking to bridge the gaps, resulting in significant improvement of the main economic and technical indicators and remarked decrease in consumption of various resources and effective control of various fees, and thus achieving a year-on-year decrease of RMB337 million in process costs.

In the first half of 2019, the Group’s revenue from principal operations amounted to RMB11,441 million, representing a yearon-year increase of 3.39%. In particular, the income from sales of steel products amounted to RMB10,990 million, representing an increase of RMB477 million as compared with the same period of previous year. Firstly, the sales volume of steel products was 3,132,200 tonnes, representing a year-on-year increase of 6.41%, resulting in an increase of RMB733 million in sales income; secondly, the average sales price of steel products was RMB3,510/ tonne, representing a year-on-year decrease of 1.76%, leading to a decrease of RMB256 million in sales income.

– 9 –

Composition of revenue from principal operations:

Type First half Amount (RMB’000) Medium plate 3,542,337 Hot rolling 5,158,288 Bars 1,142,570 Profiles 1,151,350 Sub-total of steel products 10,994,545 Other 446,743 Total 11,441,288	of 2019 Percentage (%) 30.96 45.08 9.99 10.06 96.09 3.91 100.00	First half Amount (RMB’000) 2,654,990 6,004,637 918,454 939,650 10,517,731 548,036 11,065,767	of 2018 Year-on-year growth Percentage (%) (%) 23.99 33.42 54.26 -14.09 8.30 24.40 8.49 22.53 95.04 4.53 4.96 -18.48 100.00 3.39

Sales prices of steel products:

Item Sales price in the first half of 2019 (RMB/tonne) Medium plate 3,622 Hot rolling 3,389 Bars 3,659 Profiles 3,599 Total 3,510	Sales price in the first half of 2018 Year-on-year Growth (RMB/tonne) (%) 3,776 -4.08 3,515 -3.58 3,498 4.60 3,488 3.18 3,573 -1.76	Income increase (RMB’000) -150,675 -191,505 50,615 35,556 -256,009

– 10 –

Sales volumes of steel products:

Item Sales volume for the first half of 2019 Sales volume for the first half of 2018 Year-on-year Growth (Ten thousand tonnes) (Ten thousand tonnes) (%) Medium plate 97.79 70.30 39.10 Hot rolling 152.22 170.85 -10.90 Bars 31.22 26.26 18.89 Profiles 31.99 26.94 18.75 Total 313.22 294.35 6.41	Income increase (RMB’000) 1,038,022 -654,844 173,501 176,144 732,823

The Group incurred expenses in the amount of RMB451 million for the reporting period, representing a year-on-year decrease of RMB44 million, mainly attributable to the decrease in finance expenses.

Item Distribution and selling expenses General and administrative expenses Finance expenses Total	Amount for the Reporting Period Amount for the corresponding period last year (RMB’000) (RMB’000) 45,161 41,986 330,030 306,033 75,985 147,250 451,176 495,269	Year-on-year change (%) 7.56 7.84 -48.40 -8.90

– 11 –

② Others

✔ Applicable

Not Applicable

Principal operations by sectors, products and regions

Unit: RMB’000

By sectors Iron and steel By products Steel products Other By regions Southwest Other regions Total	Revenue 11,441,288 Revenue 10,994,545 446,743 Revenue 9,330,516 2,110,772 11,441,288	Main operations by sectors Cost of sales Gross Margin Year-on- year increase/ decrease in revenue Year-on- year increase/ decrease in cost of sales Year-on- year increase/ decrease in gross margin (%) (%) (%) (%) 10,307,160 9.91 3.39 5.55 -1.84 Main operations by products Cost of sales Gross Margin Year-on- year increase/ decrease in revenue Year-on- year increase/ decrease in cost of sales Year-on- year increase/ decrease in gross margin (%) (%) (%) (%) 9,865,158 10.27 4.53 6.74 -1.86 442,002 1.06 -18.48 -15.51 -3.48 Main operations by regions Cost of sales Gross Margin Year-on- year increase/ decrease in revenue Year-on- year increase/ decrease in cost of sales Year-on- year increase/ decrease in gross margin (%) (%) (%) (%) 8,422,009 9.74 -7.71 -5.57 -2.05 1,885,151 10.69 120.90 122.70 -0.73 10,307,160 9.91 3.39 5.55 -1.84	Main operations by sectors Cost of sales Gross Margin Year-on- year increase/ decrease in revenue Year-on- year increase/ decrease in cost of sales Year-on- year increase/ decrease in gross margin (%) (%) (%) (%) 10,307,160 9.91 3.39 5.55 -1.84 Main operations by products Cost of sales Gross Margin Year-on- year increase/ decrease in revenue Year-on- year increase/ decrease in cost of sales Year-on- year increase/ decrease in gross margin (%) (%) (%) (%) 9,865,158 10.27 4.53 6.74 -1.86 442,002 1.06 -18.48 -15.51 -3.48 Main operations by regions Cost of sales Gross Margin Year-on- year increase/ decrease in revenue Year-on- year increase/ decrease in cost of sales Year-on- year increase/ decrease in gross margin (%) (%) (%) (%) 8,422,009 9.74 -7.71 -5.57 -2.05 1,885,151 10.69 120.90 122.70 -0.73 10,307,160 9.91 3.39 5.55 -1.84
			-1.84

– 12 –

3.3 Changes of accounting policies, estimations and methods and their reasons and impact as compared to the last accounting period

• ✔ Applicable Not Applicable

(1) New lease standard

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

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

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

	Unit: RMB’000
Minimum lease payments for significant operating leases as
at 31 December 2018	379,500
Less: minimum lease payments subject to simplified
treatment	379,500
Including: short-term lease	379,500
Minimum lease payments under the New Lease Standard as
at 1 January 2019	–
Weighted average at incremental borrowing rate as at 1
January 2019	4.86%
Lease liability as at 1 January 2019	–

– 13 –

The implementation of the New Lease Standard has no material effect on the consolidated and company balance sheets as at 1 January 2019 and the consolidated and company financial statements for January to June 2019.

(2) Changes in presentation of financial statement

To meet the requirements of the Notice on Revising and Issuing Format of 2019 Annual Financial Statements for General Business Enterprises (Cai Kuai [2019] No. 6) (《關於修訂印發 2019 年度一般企業財務 報表格式的通知》( 財會 [2019]6 號 )), in the balance sheet, the “notes and trade receivables” shall be split into “notes receivable” and “trade receivables”, the “notes and trade payables” shall be split into “notes payable” and “trade payables” and the new item “receivables financing” is added to present the notes receivable and trade receivables at fair value through other comprehensive income as at the balance sheet date, etc.; in the income statement, in addition to the expensed expenditures incurred during the research and development process, the “research and development expenses” shall also include the amortization of intangible assets developed by the Group as previously presented in the “general and administrative expenses”. The Group has retrospectively adjusted the comparative amounts correspondingly. The changes in accounting policies have had no impact on the consolidation and the interests of the shareholders of the Company.

The main effects of the retroactive adjustments resulting from the abovementioned changes in accounting policies on the financial statements are as follows:

The Group

Unit: RMB’000

	Carrying	The impact
	amount	of changes in	Carrying
	according to	presentation	amount
	the original	of financial	according to the
January – June 2019	standards	statements	new standards
	31 Dece mber		1 January
	**2018 **	Reclassification	2019
Notes and trade receivables	30,340	(30,340)	–
Trade receivables	–	30,340	30,340
Other current assets	575,931	(575,652)	279
Receivables financing	–	575,652	575,652
Notes and trade payables	2,946,316	(2,946,316)	–
Notes payable	–	1,199,147	1,199,147
Trade payables	–	1,747,169	1,747,169

– 14 –

	Before changes	Changes in	After changes
	in accounting	accounting	in accounting
January – June 2018	policies	policies	policies
	1 January 2018		1 January 2018
Notes and trade receivables	44,038	(44,038)	–
Trade receivables	–	44,038	44,038
Other current assets	1,251,751	(123,096)	1,128,655
Receivables financing	–	123,096	123,096
Notes and trade payables	2,155,294	(2,155,294)	–
Notes payable	–	80,700	80,700
Trade payables	–	2,074,594	2,074,594

The Company

Unit: RMB’000

		The impact
	Carrying amount	of changes in
	according to	presentation	Carrying amount
	the original	of financial	according to the
January – June 2019	standards	statements	new standards
	31 December		1 January
	**2018 **	Reclassification	2019
Notes and trade receivables	29,851	(29,851)	–
Trade receivables	–	29,851	29,851
Other current assets	575,931	(575,652)	279
Receivables financing	–	575,652	575,652
Notes and trade payables	2,945,889	(2,945,889)	–
Notes payable	–	1,199,147	1,199,147
Trade payables	–	1,746,742	1,746,742

– 15 –

	Before changes	Changes in	After changes
	in accounting	accounting	in accounting
January – June 2018	policies	policies	policies
	1 January 2018		1 January 2018
Notes and trade receivables	46,853	(46,853)	–
Trade receivables	–	46,853	46,853
Other current assets	601,606	(123,096)	478,510
Receivables financing	–	123,096	123,096
Notes and trade payables	2,204,070	(2,204,070)	–
Notes payable	–	80,700	80,700
Trade payables	–	2,123,370	2,123,370

3.4 Correction of significant accounting errors requiring restatement, correction amount, and their reasons and impact during the reporting period.

Applicable ✔ Not Applicable

IV. OTHER SIGNIFICANT EVENTS

1 Compliance with the Corporate Governance Code

To the best knowledge of the Board, the Company had complied with the requirements of the Corporate Governance Code set out in Appendix 14 to the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange during the reporting period, and no deviation from the Code has been identified.

2 Model Code for Securities Transactions by Directors

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (“ Model Code ”) as set out in Appendix 10 to 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 six months ended 30 June 2019.

– 16 –

3 Interim dividend

Given the fact that the accumulated undistributed profit of the Company remained negative as of the end of the reporting period, the Company does not recommend distribution of any interim dividend for the six months ended 30 June 2019.

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

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

5 Major acquisition and disposal of subsidiaries and affiliates

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

6 Audit Committee

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

The unaudited interim financial report of the Company for the six months ended 30 June 2019 had been reviewed by the members of the Audit Committee before being submitted to the Board for approval.

– 17 –

7 Interests or Short Positions

As at 30 June 2019, the interests and short positions (including interests or short positions which they were taken or deemed to have under relevant provisions of the Securities and Futures Ordinance (“ SFO ”)) of the directors, supervisors and senior management members 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 Rules Governing the Listing of Securities on the Stock Exchange and the Model Code for Securities Transactions by Directors of Listed Companies, to be notified to the Company and the Stock Exchange, were as follows:

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

– 18 –

• V. UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR THE SIX MONTHS ENDED 30 JUNE 2019 PREPARED IN ACCORDANCE WITH THE PRC GAAP

Consolidated Statement of Financial Position

As at 30 June 2019

Items Current assets: Cash and bank balances Financial assets held for trading Trade receivables Receivables financing Prepayments Other receivables Inventories Other current assets Total current assets Non-current assets: Long-term equity investments Other equity investments Property, plant and equipment Construction in progress Intangible assets Deferred tax assets Other non-current assets Total non-current assets Total assets	30 June 2019 2,396,973 184,400 15,043 1,076,313 259,982 7,797 3,385,993 30,467 7,356,968 28,258 5,000 16,593,061 28,341 2,423,221 31,067 20,641 19,129,589 26,486,557	Unit: RMB’000 31 December 2018 2,764,631 30,000 30,340 575,652 908,646 10,506 3,192,201 279
		7,512,255
		– 5,000 16,914,109 16,593 2,454,327 31,067 –
		19,421,096
		26,933,351

– 19 –

Items Current liabilities: Notes payable Trade payables Contract liabilities Employee benefits payable Taxes payable Other payables Non-current liabilities due within one year Other current liabilities Total current liabilities Non-current liabilities: Long-term borrowings Long-term employee benefits payable Deferred income Other non-current liabilities Total non-current liabilities Total liabilities Owners’ equity: Share capital Capital reserves Less: Treasury shares Special reserves Surplus reserves Accumulated losses Total owners’ equity Total liabilities and owners’ equity	30 June 2019 197,409 1,920,115 1,042,789 191,266 53,794 393,179 430,000 135,547 4,364,099 150,000 229,007 39,268 2,610,500 3,028,775 7,392,874 8,918,602 19,282,147 62,314 22,248 606,991 (9,673,991) 19,093,683 26,486,557	31 December 2018 1,199,147 1,747,169 1,004,280 333,407 35,733 354,665 410,000 160,675 5,245,076 300,000 240,615 40,495 2,575,500 3,156,610 8,401,686 8,918,602 19,282,147 – 13,644 606,991 (10,289,719) 18,531,665 26,933,351

– 20 –

Statement of Financial Position of the Parent Company

As at 30 June 2019

Unit: RMB’000

Items Current assets: Cash and bank balances Financial assets held for trading Trade receivables Receivables financing Prepayments Other receivables Inventories Other current assets Total current assets Non-current assets: Long-term equity investments Other equity investments Property, plant and equipment Construction in progress Intangible assets Deferred tax assets Other non-current assets Total non-current assets Total assets	30 June 2019 2,394,388 184,400 15,739 1,076,313 259,615 7,792 3,377,583 29,240 7,345,070 28,258 5,000 16,592,871 28,341 2,423,221 31,067 20,641 19,129,399 26,474,469	31 December 2018 2,762,442 30,000 29,851 575,652 908,523 10,500 3,192,201 279
		7,509,448
		– 5,000 16,914,084 16,593 2,454,327 31,067 –
		19,421,071
		26,930,519

– 21 –

Items Current liabilities: Notes payable Trade payables Contract liabilities Employee benefits payable Taxes payable Other payables Non-current liabilities due within one year Other current liabilities Total current liabilities Non-current liabilities: Long-term borrowings Long-term employee benefits payable Deferred income Other non-current liabilities Total non-current liabilities Total liabilities Owners’ equity: Share capital Capital reserves Less: Treasury shares Special reserves Surplus reserves Accumulated losses Total owners’ equity Total liabilities and owners’ equity	30 June 2019 197,409 1,920,115 1,033,166 191,266 53,642 393,002 430,000 134,297 4,352,897 150,000 229,007 39,268 2,610,500 3,028,775 7,381,672 8,918,602 19,313,090 62,314 22,248 577,012 (9,675,841) 19,092,797 26,474,469	31 December 2018 1,199,147 1,746,742 1,004,220 333,407 34,741 354,665 410,000 160,675 5,243,597 300,000 240,615 40,495 2,575,500 3,156,610 8,400,207 8,918,602 19,313,090 – 13,644 577,012 (10,292,036) 18,530,312 26,930,519

– 22 –

Consolidated Income Statement

For the six months ended 30 June 2019

Unit: RMB’000

Items I. 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/(loss) Including: investment income/ (loss) from an associate Gains/(losses) on disposal of assets II. Operating profit/(loss) Add: Non-operating income Less: Non-operating expenses III. Total profit/(loss) Less: Income tax expenses	Six months ended 30 June 2019 11,483,560 10,342,032 92,194 45,161 330,030 75,985 106,499 33,469 1,227 5,351 – – 604,736 13,252 665 617,323 1,595	Six months ended 30 June 2018 11,092,899 9,769,641 52,437 41,986 306,033 147,250 190,466 46,428 1,502 (1,826) (2,628) 8,482 783,710 325 21,063 762,972 885

– 23 –

Items IV. Net Profit/(loss) Breakdown by continuity of operations Net profit/(loss) from continuing operations Breakdown by attributable interests Net profit/(loss) attributable to owners of the parent Non-controlling interests V. Other comprehensive income after tax VI. Total comprehensive income Total comprehensive income attributable to owners of the parent Total comprehensive income attributable to non-controlling interests VII. Earnings per share: Basic earnings per share (RMB/share) Diluted earnings per share (RMB/share)	Six months ended 30 June 2019 615,728 615,728 615,728 – – 615,728 615,728 – 0.07 0.07	Six months ended 30 June 2018 762,087 762,087 761,960 127
		–
		762,087
		761,960 127
		0.09
		0.09

– 24 –

Income Statement of the Parent Company

For the six months ended 30 June 2019

Unit: RMB’000

Items I. 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/(loss) Including: investment income/ (loss) from an associate Gains/(losses) on disposal of assets II. Operating profit/(loss) Add: Non-operating income Less: Non-operating expenses III. Total profit/(loss) Less: Income tax expenses	Six months ended 30 June 2019 11,486,217 10,350,441 91,997 44,950 330,030 75,989 106,499 33,463 1,227 9,571 – – 603,608 13,252 665 616,195 –	Six months ended 30 June 2018 11,093,696 9,770,971 52,430 41,815 302,802 152,589 190,466 38,073 1,502 52 (2,628) 8,482 783,125 241 21,032 762,334 –

– 25 –

Items IV. Net Profit/(loss) Breakdown by continuity of operations Net profit/(loss) from continuing operations V. Other comprehensive income after tax VI. Total comprehensive income	Six months ended 30 June 2019 616,195 616,195 – 616,195	Six months ended 30 June 2018 762,334 762,334
		–
		762,334

– 26 –

Consolidated Statement of Changes in Equity

For the six months ended 30 June 2019

Unit: RMB’000

Six months ended 30 June 2019

Items I. Closing balances of the preceding year and opening balances of the current period II. Changes in the current period (I) Total comprehensive income (II) Owners’ contribution and decrease in share capital 1. Others (III) Special reserves 1. Amount established during the period 2. Amount utilized during the period III. Closing balance for the period Items I. Closing balances of the preceding year and opening balances of the current period II. Changes in the current period (I) Total comprehensive income (II) Owners’ contribution and decrease in share capital 1. Others (III) Profit Appropriation 1. Distribution to owners (or shareholders) (IV) Special reserves 1. Amount established during the period 2. Amount utilized during the period III. Closing balance for the period		Total equity attributable to owne	Total equity attributable to owne	rs of the parent		Accumulated losses (10,289,719) 615,728 615,728 – – – – – (9,673,991)	Non- controlling interests – – – – – – – – –	Total owners’ equity 18,531,665 562,018 615,728 (62,314) (62,314) 8,604 12,840 4,236
	Share capital 8,918,602 – – – – – – – 8,918,602	Capital reserves 19,282,147 – – – – – – – 19,282,147	Less: treasury shares Other comprehensive income Special reserves – – 13,644 62,314 – 8,604 – – – 62,314 – – 62,314 – – – – 8,604 – – 12,840 – – 4,236 62,314 – 22,248 Six months ended 30 June		Surplus reserves 606,991 – – – – – – – 606,991 2018
								19,093,683
			Total equityattributable to owners	of theparent		Accumulated losses (12,077,625) 761,960 761,960 – – – – – – – (11,315,665)	Non- controlling interests 73,849 (73,849) 127 (73,513) (73,513) (463) (463) – – – –	Total owners’ equity 16,803,964 695,924 762,087 (73,513) (73,513) (463) (463) 7,813 10,260 2,447
	Share capital 8,918,602 – – – – – – – – – 8,918,602	Capital reserves 19,282,147 – – – – – – – – – 19,282,147	Less: treasury shares Other comprehensive income – – – – – – – – – – – – – – – – – – – – – –	Special reserves – 7,813 – – – – – 7,813 10,260 2,447 7,813	Surplus reserves 606,991 – – – – – – – – – 606,991
								17,499,888

– 27 –

Statement of changes in Equity of the Parent Company For the six months ended 30 June 2019

Unit: RMB’000

Items I. Closing balances of the preceding year and opening balances of the current period II. Changes in the current period (I) Total comprehensive income (II) Owners’ contribution and decrease in share capital 1. Others (III) Special reserves 1. Amount established during the period 2. Amount utilized during the period III. Closing balance for the period Items I. Closing balances of the preceding year and opening balances of the current period II. Changes in the current period (I) Total comprehensive income (II) Special reserves 1. Amount established during the period 2. Amount utilized during the period III. Closing balance for the period			Six months ended	30 June 2019
	Share capital 8,918,602 – – – – – – – 8,918,602	Capital reserves 19,313,090 – – – – – – – 19,313,090	Less: treasury shares Other comprehensive income – – 62,314 – – – 62,314 – 62,314 – – – – – – – 62,314 – Six months ended	Special reserves 13,644 8,604 – – – 8,604 12,840 4,236 22,248 30 June 2018	Surplus reserves 577,012 – – – – – – – 577,012	Accumulated losses (10,292,036) 616,195 616,195 – – – – – (9,675,841)	Total owners’ equity 18,530,312 562,485 616,195 (62,314) (62,314) 8,604 12,840 4,236
							19,092,797
	Share capital 8,918,602 – – – – – 8,918,602	Capital reserves 19,313,090 – – – – – 19,313,090	Less: treasury shares Other comprehensive income – – – – – – – – – – – – – –	Special reserves – 7,813 – 7,813 10,260 2,447 7,813	Surplus reserves 577,012 – – – – – 577,012	Accumulated losses (12,071,866) 762,334 762,334 – – – (11,309,532)	Total owners’ equity 16,736,838 770,147 762,334 7,813 10,260 2,447
							17,506,985

– 28 –

Consolidated Statement of Cash Flows

For the six months ended 30 June 2019

Unit: RMB’000

Items 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	Six months ended 30 June 2019 10,334,249 61,079 10,395,328 9,030,724 743,222 365,205 167,760 10,306,911 88,417	Six months ended 30 June 2018 10,366,330 109,689 10,476,019 10,168,612 1,030,356 58,176 520,063 11,777,207 (1,301,188)

– 29 –

Items II. Cash flows from investing activities: Cash received from disposal of investments Cash received from return on investments Net cash received from disposal of property plant and equipment, intangible assets and other long-term assets Sub-total of cash inflows from investing activities Cash paid for acquisition of property plant and equipment, intangible assets and other long-term assets Cash paid for investments Sub-total of cash outflows from investing activities Net cash flows from investing activities 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	Six months ended 30 June 2019 404,400 5,351 – 409,751 36,926 587,058 623,984 (214,233) 105,000 795,088 900,088 200,000 79,446 250,425 529,871 370,217	Six months ended 30 June 2018 651,376 7,021 8,561
		666,958
		2,664 –
		2,664
		664,294
		– 1,181,576
		1,181,576
		10,000 189,060 764,569
		963,629
		217,947

– 30 –

Items IV. Effect of changes in exchange rate on cash and cash equivalents V. Net increase in cash and cash equivalents Add: Cash and cash equivalents at the beginning of the period VI. Cash and cash equivalents at the end of the period	Six months ended 30 June 2019 – 244,401 1,969,543 2,213,944	Six months ended 30 June 2018 – (418,947) 868,962 450,015

– 31 –

Statement of Cash Flows of the Parent Company For the six months ended 30 June 2019

Unit: RMB’000

Items I. Cash flows from operating activities: Cash received from sale of goods and rendering of services Other cash received relating to operating activities Sub-total of cash inflows from operating activities Cash paid for purchase of goods and services Cash paid to and on behalf of employees Cash paid for all types of taxes Other cash paid relating to operating activities Sub-total of cash outflows from operating activities Net cash flows from operating activities II. Cash flows from investing activities: Cash received from disposal of investments Cash received from return on investments Net cash received from disposal of property plant and equipment, intangible assets and other long-term assets Sub-total of cash inflows from investing activities Cash paid for acquisition of property plant and equipment, intangible assets and other long-term assets Cash paid for investments Sub-total of cash outflows from investing activities Net cash flows from investing activities	Six months ended 30 June 2019 10,328,057 61,079 10,389,136 9,030,724 743,222 363,825 167,564 10,305,335 83,801 404,400 9,571 – 413,971 36,926 587,058 623,984 (210,013)	Six months ended 30 June 2018 10,362,602 108,270 10,470,872 10,168,612 1,030,327 57,285 513,718 11,769,942 (1,299,070) 1,376 – 8,561 9,937 2,664 – 2,664 7,273

– 32 –

	Six months		Six months
	ended		ended
Items	30 June 2019		30 June 2018
III. Cash flows from financing activities:
Cash received from borrowings	105,000		–
Other cash received relating to financing
activities	795,088		1,181,576
Sub-total of cash inflows from financing
activities	900,088		1,181,576
Cash repayments of borrowings	200,000		10,000
Cash paid for distribution of dividends or
profits, and for interest expenses	79,446		188,597
Other cash paid relating to financing
activities	250,425		27,556
Sub-total of cash outflows from financing
activities	529,871		226,153
Net cash flows from financing activities	370,217		955,423
IV. Effect of changes in foreign exchange
rate on cash and cash equivalents	–		–
V. Net increase in cash and cash equivalents	244,005		(336,374)
Add: Cash and cash equivalents at the
beginning of the period	1,967,354		779,827
VI. Cash and cash equivalents at the end of
the period	2,211,359		443,453
	By order of the Board
Chongqing	Iron & Steel Company Limited
	Meng Xiangyun
Secretary to the Board

Chongqing, the PRC, 12 August 2019

– 33 –

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

– 34 –