Chongqing Iron & Steel : 2020 INTERIM REPORT

September 18, 2020 at 12:16 am EDT

(H Share Stock Code: 1053) (A Share Stock Code: 601005)

2020

INTERIM REPORT

Contents

Section I	Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Section II	Company Profile and Major Financial Indicator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Section III	Company Business Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Section IV	Management Discussion and Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Section V	Significant Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Section VI	Movement of Ordinary Shares and the Particulars of Shareholders . . . . . . . . . . . . . . . . .	57
Section VII	Related Information on Preference Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	61
Section VIII	Directors, Supervisors and Senior Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	62
Section IX	Relevant Information on Corporate Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	66
Section X	Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	67
Section XI	Documents Available for Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	212

IMPORTANT NOTICE

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

All directors of the Company attended Board meetings.

This interim report has not been audited.

IV. Mr. Zhang Jingang, head of the Company, and Mr. Zou An, the Chief Financial Officer and Ms. Lei Xiaodan, the Chief Accountant, have declared that they guarantee the truthfulness, accuracy and completeness of the financial statements in the interim report.

The profit distribution proposal or proposal to transfer capital reserve to share capital for the Reporting Period as considered by the Board
Nil

VI.	Risk warning in respect of forward-looking statements

	✓	Applicable	Not applicable

	The forward-looking statements in this interim report, such as the future plans, are subject to
	uncertainties and do not constitute the Company's substantive undertakings to investors. Investors
	should pay attention to investment risks.
VII.	Is there any non-operational fund occupancy by the controlling shareholder or its related party?
	No
VIII.	Is there any provision of external guarantee by the Company in violation of the stipulated decision
	making procedure?
	No
IX.	Major Risk Warning
	Nil

Others

Applicable	✓	Not applicable

Chongqing Iron & Steel Company Limited	1

Section I Deﬁnitions

Unless the context otherwise requires, the following expressions have the following meanings in this report:

DEFINITIONS OF COMMON TERMS

CSRC	China Securities Regulatory Commission
SSE	Shanghai Stock Exchange
HKEx	The Stock Exchange of Hong Kong Limited
Baowu Group	China Baowu Steel Group Corporation Limited
Siyuanhe Investment	Siyuanhe Equity Investment Management Co., Ltd.
Siyuanhe Industrial Development Fund	Siyuanhe (Chongqing) Steel Industry Development Equity Investment
	Fund Partnership (Limited Partnership)
Changshou Iron & Steel,	Chongqing Changshou Iron & Steel Company Limited
controlling shareholder
Company, Group, Chongqing	Chongqing Iron & Steel Company Limited
Iron & Steel
General Meeting	the general meeting of Chongqing Iron & Steel Company Limited
Board	the board of directors of Chongqing Iron & Steel Company Limited
Supervisory Committee	the supervisory committee of Chongqing Iron & Steel Company
	Limited
Companies Law	the Companies Law of the People's Republic of China
Securities Law	the Securities Law of the People's Republic of China
Articles of Association	Articles of Association of Chongqing Iron & Steel Company Limited
Reporting Period	From 1 January 2020 to 30 June 2020
RMB, RMB'000, RMB0'000,	RMB yuan, RMB thousand yuan, RMB ten thousand yuan, RMB
RMB000'000'000	hundred million yuan

2	2020 Interim Report

Section II Company Proﬁle and Major Financial Indicator

COMPANY INFORMATION

Chinese name	重慶鋼鐵股份有限公司
Abbreviation of Chinese name	重慶鋼鐵
English name	Chongqing Iron & Steel Company Limited
Abbreviation of English name	CISC
Legal representative	Liu Jianrong

CONTACT INFORMATION

	Secretary to the Board	Securities Representative
Name	Meng Xiangyun	Peng Guoju
Correspondence	No.2 Jiangnan Avenue,	No.2 Jiangnan Avenue,
address	Jiangnan Street,	Jiangnan Street,
	Changshou District,	Changshou District,
	Chongqing, the PRC	Chongqing, the PRC
Telephone	86-23-6898 3482	86-23-6898 3482
Fax	86-23-6887 3189	86-23-6887 3189
E-mail	IR@email.cqgt.cn	IR@email.cqgt.cn

III. CHANGES IN BASIC INFORMATION

Registered address	No.2 Jiangnan Avenue, Jiangnan Street, Changshou District,
	Chongqing, the PRC
Postal code of registered address	401258
Office address	No.2 Jiangnan Avenue, Jiangnan Street, Changshou District,
	Chongqing, the PRC
Postal code of office address	401258
Website	http://www.cqgt.cn
E-mail	IR@email.cqgt.cn
Query index for the change	Announcement on Completion of the Change of Industrial and
during the Reporting Period	Commercial Registration and Renewal of Business License
	（Announcement No.: 2020-036）published on the website of
	Shanghai Stock Exchange (http://www.sse.com.cn)

Chongqing Iron & Steel Company Limited	3

Section II Company Proﬁle and Major Financial Indicator (Continued)

IV. CHANGE IN DISCLOSURE OF INFORMATION AND PLACE FOR INSPECTION

Name of newspapers designated by the Company for information disclosure

Website designated by CSRC for posting the interim report

Place for inspection of the interim report

Query index for the change during the Reporting Period

China Securities Journal, Shanghai Securities News, Securities Times and Securities Daily

http://www.sse.com.cn https://sc.hkex.com.hk (HKEx) Secretariat of the Board of the Company

There was no change during the Reporting Period.

BASIC INFORMATION ABOUT THE SHARES OF THE COMPANY

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

VI. OTHER RELATED INFORMATION

Applicable ✓ Not applicable

4	2020 Interim Report

Section II Company Proﬁle and Major Financial Indicator (Continued)

VII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS OF THE COMPANY

(I)	Key Accounting Data
			Unit: RMB'000 Currency: RMB

				Change from the same
		This Reporting Period		period of last year to
	Key accounting data	(January to June)	Same period last year	this Reporting Period
				(%)

	Revenue	10,927,367	11,483,560	-4.84
	Net profit attributable to shareholders of
	the Company	121,355	615,728	-80.29
	Net profit attributable to shareholders of
	the Company after deducting
	non-recurring profit or loss	107,793	589,097	-81.70
	Net cash flow from operating activities	82,586	88,417	-6.59

				Change from the end
		At the end of		of last year to the end
		the Reporting Period	At the end of last year	of the Reporting Period
				(%)

	Net assets attributable to shareholders of
	the Company	19,520,184	19,396,003	0.64
	Total assets	28,611,251	26,975,726	6.06

Chongqing Iron & Steel Company Limited	5

Section II Company Proﬁle and Major Financial Indicator (Continued)

VII. KEY ACCOUNTING DATA AND FINANCIAL INDICATORS OF THE COMPANY (CONTINUED)

(II)	Key Financial Indicators

				Change from the
		This Reporting		same period of
		Period		last year to this
	Key financial indicators	(January to June)	Same period last year	Reporting Period
				(%)

	Basic earnings per share (RMB per share)	0.01	0.07	-85.71
	Diluted earnings per share (RMB per share)	0.01	0.07	-85.71
	Basic earnings per share after non-recurring
	profit or loss (RMB per share)	0.01	0.07	-85.71
				Decreased by 2.65
	Weighted average return on net assets (%)	0.62	3.27	percentage points
	Weighted average return on net assets after			Decreased by 2.58
	deducting non-recurring profit or loss (%)	0.55	3.13	percentage points

Explanation on the major financial data and financial indicators

Applicable ✓ Not applicable

VIII. DIFFERENCE IN ACCOUNTING DATA BETWEEN THE PRC ACCOUNTING STANDARDS AND OVERSEAS ACCOUNTING STANDARDS

Applicable ✓ Not applicable

6	2020 Interim Report

Section II Company Proﬁle and Major Financial Indicator (Continued)

IX. NON-RECURRING PROFIT OR LOSS ITEMS AND AMOUNTS

	✓	Applicable		Not applicable
					Unit: RMB'000	Currency: RMB

	Non-recurring profit or loss	Amount
	Gains/(losses) from disposal of non-current assets	-197
	Government grants charged in the profit or loss for the current period (except for
	those closely related to the ordinary operation and gained constantly at a fixed
	amount or quantity according to certain standard based on state policies)	6,515
	Capital occupied income from non-financial entities recognized through profit
	or loss			319
	Gains or losses on changes in fair value of financial assets held for trading,
	derivative financial assets, financial liabilities held for trading, and derivative
	financial liabilities and investment income from disposal of financial assets
	held for trading, derivative financial assets, financial liabilities held for trading,
	derivative financial liabilities and other equity investments, excluding those
	arising from effective hedging business related to operating activities	6,791
	Non-operating income and expenses other than the above items	134

	Total			13,562

X.	OTHERS
		Applicable
			✓	Not applicable

Chongqing Iron & Steel Company Limited	7

Section III Company Business Summary

MAIN BUSINESS, OPERATIONAL MODE OF THE COMPANY AND EXPLANATION ON INDUSTRY SITUATION DURING THE REPORTING PERIOD

Particulars on Main Business and Operational Mode of the Company

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

The Company's products are applied in various industries, such as machinery, architecture, engineering, automobile, motorbike, shipbuilding, offshore oil, gas cylinder, boiler as well as 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.

The Company follows the production and operation policy of "expanding scale, adjusting structure and reducing costs" and the working keynotes of "conducting comprehensive benchmarking to identify areas for improvement, increasing efforts in cost reduction and efficiency enhancement, refining management and minimizing resource consumption", and strives to build itself into a 10 million-tonne-level iron and steel enterprise, shape "Chongqing Iron & Steel to be beautiful and picturesque "and become a leader in the steel industry in Southwest China.

8	2020 Interim Report

Section III Company Business Summary (Continued)

MAIN BUSINESS, OPERATIONAL MODE OF THE COMPANY AND EXPLANATION ON INDUSTRY SITUATION DURING THE REPORTING PERIOD (CONTINUED)

Explanation on industrial situation

In the first half of 2020, the iron and steel industry has gradually shrugged off the impact of the pandemic, resumed work and production in an orderly manner, and maintained a stable operation of production.

First, the operation of production maintained at a high level. In June, the production of pig iron, crude steel and steel products in China reached 77.64 million tonnes, 91.58 million tonnes and

115.85 million tonnes, respectively, representing year-on-year increases of 4.1%, 4.5% and 7.5%, respectively; from January to June, the production of pig iron, crude steel and steel products in China reached 433 million tonnes, 499 million tonnes and 606 million tonnes, respectively, representing year-on-year increases of 2.2%, 1.4% and 2.7%, respectively.

Second, steel prices hovered at a low level. According to the monitoring of China Iron and Steel Industry Association, in June, the average steel price index of China was 103.1 points, representing a year-on-year decrease of 5.4%; from January to June, the average steel price index of China was 101.0 points, representing a year-on-year decrease of 7.7%, of which, an average decline of 8.2% for long products and 7.5% for plates.

Third, the pressure on steel exports increased. According to data from the General Administration of Customs, in June, the country exported 3.701 million tonnes of steel, representing a year-on-year decrease of 30.2%; from January to June, the cumulative export volume of steel was 28.704 million tonnes, representing a year-on-year decrease of 16.5%.

Fourth, the import volume and price of ore both increased. According to data from the General Administration of Customs, in June, the import volume of iron ore was 101.68 million tonnes, representing an increase of 16.8% month-on-month and 35.3% year-on-year; the average import price was US$100.8/tonne, representing a month-on-month increase of 10.0%. From January to June, the cumulative import volume of iron ore was 546.91 million tonnes, representing a year-on-year increase of 9.6%; the average import price was US$90.2/tonne, representing an increase of 0.9% year-on-year and 1.8% from the first quarter.

Chongqing Iron & Steel Company Limited	9

Section III Company Business Summary (Continued)

EXPLANATION ON SUBSTANTIAL CHANGES OF MAJOR ASSETS OF THE COMPANY DURING THE REPORTING PERIOD

Applicable ✓ Not applicable

ANALYSIS OF CORE COMPETITIVENESS DURING THE REPORTING PERIOD

✓	Applicable		Not applicable

Advantage regarding the system and mechanism.

As a mixed ownership enterprise, the Company gave full play to the advantage in relation to the system and mechanism, established a streamlined and efficient production and operation system and a market-oriented incentive mechanism for the Company, which resulted in a high level of consistency in respect of interests among staff, management and shareholders, truly allowed the staff to share profits, risks and responsibilities with the Company, and injected vitality and momentum to the future sustainable development of the Company.

Advantage regarding product market and logistics

Chongqing and the southwestern regions have a net inflow of steel. The Company is the only iron and steel conglomerate meeting national production policies. With its proximity to the Yangtze River, the Company enjoys favourable logistic conditions of the port for self-owned raw material and finished products transportation with its products mainly sold in Chongqing and southwestern regions. It boasts logistics advantages of waterway transportation and enjoys bright development prospects.

(III) Advantage regarding product production line

With rich production lines, the Company is able to provide a diversified portfolio of products. The product structure includes medium plates, hot coil and long products, which meets the development demands in northwestern regional markets and the products are highly recognized in southwestern regional markets.

10	2020 Interim Report

Section IV Management Discussion and Analysis

MANAGEMENT DISCUSSION AND ANALYSIS

In first half of 2020, under the influence of the rapid release of production capacity in the iron and steel industry and the COVID-19 pandemic, the Company followed the production and operation policy of "expanding scale, adjusting structure and reducing costs", and stuck to the working keynotes of "conducting comprehensive benchmarking to identify areas for improvement, increasing efforts in cost reduction and efficiency enhancement, refining management and minimizing resource consumption". With a focus on "scale + cost" and "efficiency + benefit", the Company carried out various tasks such as comprehensive benchmarking to identify areas for improvement. Accordingly, the Company maintained stable production and operation, and promoted the technical renovation plan in an efficient way, thus cementing a solid foundation for the further development of the Company.

In the first half of 2020, in response to the rising temperature of the blast furnace wall, the Company suspended the operation of No.1 blast furnace for a quick revamping, and enabled the blast furnace to achieve the expected production and efficiency in a short period, with its utilization factor reaching the advanced level of the industry. Meanwhile, the Company strengthened the daily maintenance of the other two blast furnaces, achieving a cumulative iron output of 2.86 million tonnes. In addition, the Company adopted appropriate refined material policies and optimized coal and ore blending plans. As a result, the fuel ratio reached 515kg/t iron, representing a year-on-year decrease of 13kg/t iron. As for steel making, the Company adopted measures such as saving iron to increase steel and using more scrap steel to increase production. The ratio of iron to steel reached the best level of 822kg/t steel in June and the cumulative steel output amounted to 3.28 million tonnes, representing a year-on- year increase of 2.96%. Meanwhile, the consumption of steel and iron materials was 1,063kg/t steel, representing a year-on-year decrease of 13kg/t steel. As for rolled steel, the Company optimized the structure to increase production according to the market demand and production line performance. The Company produced 3.14 million tonnes of steel products, representing a year-on-year increase of 4.25%, and sold 3.14 million tonnes of steel products, achieving a balance between production and sales.

In the first half of 2020, the Company's profit was reduced by RMB612 million due to lower steel price and higher raw material price. However, the Company vigorously conducted comprehensive benchmarking to identify areas for improvement and adopted proactive measures for cost reduction and efficiency enhancement, resulting in significant improvement of the main technical and economic indicators and a year-on-year decrease of RMB146 million in process costs. After defusing the adverse factors impacting the profit in the external market, the Company achieved a profit of RMB121 million.

In the future, the Company will strive to build itself into a 10 million tonne-level iron and steel enterprise, shape "Chongqing Iron & Steel to be beautiful and picturesque", and take "becoming a leader in the steel industry in Southwest China" as its vision and goal. Meanwhile, it will make every effort to promote its production and operation, project construction and various reform and development initiatives, and continuously enhance the competitiveness of the Company. In 2020, the Company plans to produce

6.12 million tonnes of pig iron, 6.80 million tonnes of steel and 6.38 million tonnes of steel products, and realize sales volume of 6.38 million tonnes of steel products and sales revenue of RMB22.0 billion (tax exclusive).

Chongqing Iron & Steel Company Limited	11

Section IV Management Discussion and Analysis (Continued)

II. MAJOR OPERATIONS DURING THE REPORTING PERIOD

（I） Principal business analysis

1 Analysis of changes in certain items from financial statements

		Unit: RMB'000	Currency: RMB

		For the
	For the	corresponding
	Reporting	period
Subject	Period	last year	Change
			(%)
Operating income	10,927,367	11,483,560	-4.84
Operating cost	10,342,993	10,342,032	0.01
Selling expenses	53,355	45,161	18.14
Administrative expenses	244,093	330,030	-26.04
Financial expenses	90,148	75,985	18.64
R&D expenses	-	-	-
Net cash flow from operating
activities	82,586	88,417	-6.59
Net cash flow from investing
activities	251,153	-214,233	N/A
Net cash flow from financing
activities	1,039,510	370,217	180.78

Reasons for changes in selling expenses: The increase in selling expenses was mainly due to the fact that higher steel inventory as a result of the pandemic led to an increase in freight transportation and freight charge.

Reasons for changes in administrative expenses: The decrease in administrative expenses was mainly due to the decrease in provision for the incentive fund and the apportionment according to the nature of the expenses.

Reasons for change in financial expenses: The increase in financial expenses was mainly due to the increase in interest expenses as a result of increased financing.

Reasons for changes in net cash flow from investing activities: The increase in net cash flow from investing activities was mainly due to the decrease in investment in wealth management products.

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 in financing.

12	2020 Interim Report

Section IV Management Discussion and Analysis (Continued)

M A J O R O P E R A T I O N S D U R I N G T H E R E P O R T I N G P E R I O D (CONTINUED)

（I） Principal business analysis (Continued)

2 Others

Detailed description of the major changes in the Company's profit structure or profit sources

✓	Applicable		Not applicable

In the first half of 2020, the Group realized a total profit of RMB121 million, representing a year-on-year decrease of 80.33%, which was mainly due to the following reasons: the overall selling price of steel products amounted to RMB3,348/tonne, representing a year-on-year decrease of 4.62% and resulting in a decrease of RMB485 million in profit; the rising prices of raw materials, such as ore, coal, alloy, scrap steel, etc., resulted in a decrease of RMB127 million in profit; the Company vigorously conducted comprehensive benchmarking to identify areas for improvement and adopted proactive measures for cost reduction and efficiency enhancement, resulting in significant improvement of the main technical and economic indicators and remarked decrease in consumption of various resources, and thus achieving a year-on-year decrease of RMB146 million in process costs.

In the first half of 2020, the Group's revenue from principal operations amounted to RMB10,876 million, representing a year-on-year decrease of 4.94%. Among this, the average sales price of steel products was RMB3,348/tonne, representing a year-on-year decrease of 4.62%, leading to a decrease of RMB485 million in sales income.

Chongqing Iron & Steel Company Limited	13

Section IV Management Discussion and Analysis (Continued)

M A J O R O P E R A T I O N S D U R I N G T H E R E P O R T I N G P E R I O D (CONTINUED)

（I） Principal business analysis (Continued)

2 Others (Continued)

Detailed description of the major changes in the Company's profit structure or profit sources (Continued)
Composition of revenue from principal operations:

Type	First half of 2020	First half of 2019	Year-on-year

	Amount Percentage	Amount	Percentage	growth
	(RMB'000)	(%)	(RMB'000)	(%)	(%)
Plates	3,456,117	31.78	3,542,337	30.96	-2.43
Hot rolling	5,313,138	48.85	5,158,288	45.08	3.00
Bars	958,786	8.82	1,142,570	9.99	-16.09
Wire rods	773,514	7.11	1,151,350	10.06	-32.82

Sub-total of steel
products	10,501,555	96.56	10,994,545	96.09	-4.48

Other	374,200	3.44	446,743	3.91	-16.24
Total	10,875,755	100.00	11,441,288	100.00	-4.94

Sales prices of steel products:

	Sales price	Sales price
	in the first	in the first Year-on-year	Income
Item	half of 2020	half of 2019	Growth	increase
	(RMB/tonne)	(RMB/tonne)	(%)	(RMB'000)

Plates	3,508		3,622	-3.15	-113,023
Hot rolling	3,252		3,389	-4.04	-223,701
Bars	3,337		3,659	-8.80	-92,675
Wire rods	3,356		3,599	-6.75	-56,085

Total	3,348		3,510	-4.62	-485,484

14	2020 Interim Report

Section IV Management Discussion and Analysis (Continued)

M A J O R O P E R A T I O N S D U R I N G T H E R E P O R T I N G P E R I O D (CONTINUED)

（I） Principal business analysis (Continued)

2 Others (Continued)

Detailed description of the major changes in the Company's profit structure or profit sources (Continued)
Sales volumes of steel products:

	Sales	Sales
	volume	volume
	for the first	for the first	Year-on-year	Income
Item	half of 2020	half of 2019	Growth	increase
	(Ten	(Ten
	thousand	thousand
	tonnes)	tonnes)	(%)	(RMB'000)

Plates	98.53	97.79	0.76	26,803
Hot rolling	163.39	152.22	7.34	378,551
Bars	28.73	31.22	-7.98	-91,109
Wire rods	23.05	31.99	-27.95	-321,751

Total	313.70	313.22	0.15	-7,506

Chongqing Iron & Steel Company Limited	15

Section IV Management Discussion and Analysis (Continued)

M A J O R O P E R A T I O N S D U R I N G T H E R E P O R T I N G P E R I O D (CONTINUED)

（I） Principal business analysis (Continued)

Others (Continued)

(2)

Others

Not applicable

✓

Applicable

Principal operations by sectors, products and regions

Unit: RMB'000

Main operations by sectors

Year-

on-year

on-year increase/ increase/

increase/

decrease

Cost of

Gross

decrease

in cost

in gross

By sectors

Revenue

sales

Margin

in revenue

of sales

margin

(%)

Iron and steel

10,875,755

10,316,945

5.14

-4.94

0.09

-4.77

Main operations by products

Year-

on-year

on-year increase/ increase/

increase/

decrease

Cost of

Gross

decrease

in cost

in gross

By products

Revenue

sales

Margin

in revenue

of sales

margin

(%)

Steel products

10,501,555

9,934,475

5.40

-4.48

0.70

-4.87

Other

374,200

382,470

-2.21

-16.24

-13.47

-3.27

16	2020 Interim Report

Section IV Management Discussion and Analysis (Continued)

M A J O R O P E R A T I O N S D U R I N G T H E R E P O R T I N G P E R I O D (CONTINUED)

（I） Principal business analysis (Continued)

2 Others (Continued)

Others (Continued)

		Main operations by regions
					Year-	Year-
				Year-	on-year	on-year
				on-year	increase/	increase/
				increase/	decrease	decrease
			Gross	decrease	in cost of	in gross
By regions	Revenue	Cost of sales	Margin	in revenue	sales	margin
			(%)	(%)	(%)	(%)
Southwest	10,281,370	9,767,107	5.00	-5.44	-0.39	-4.82
Other regions	594,385	549,838	7.49	4.60	9.63	-4.25

Total	10,875,755	10,316,945	5.14	-4.94	0.09	-4.77

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

Applicable ✓ Not applicable

Chongqing Iron & Steel Company Limited	17

Section IV Management Discussion and Analysis (Continued)

M A J O R O P E R A T I O N S D U R I N G T H E R E P O R T I N G P E R I O D (CONTINUED)

(III) Analysis of assets and liabilities

✓	Applicable		Not applicable

1. Assets and liabilities

						Unit: RMB'000

		Percentage		Percentage
		of the		of the amount
		amount at	Amount at	at the end of
	Amount at	the end of	the end of	the previous
	the end of	the period in	the previous	period in total	Year-on-year
Item	the period	total assets	period	assets	change	Explanation
		(%)		(%)	(%)

Cash and bank	3,208,632	11.21	1,783,747	6.61	79.88	Increase in financing
balances
Financial assets	-	-	400,000	1.48	-100.00	Redemption of wealth management
held for trading						products
Trade receivables	11,747	0.04	5,610	0.02	109.39	Discrepancy in time for settlement of
						energy receivables outstanding
Receivables financing	2,528,817	8.84	861,373	3.19	193.58	Decrease in endorsement amount of
						notes receivable and discount
Other receivables	7,203	0.03	78,132	0.29	-90.78	Receipt of special fund for industrial
						development for 2019
Other current assets	5,055	0.02	43,410	0.16	-88.36	Decrease in taxes to be verified
Other equity	15,000	0.05	5,000	0.02	200.00	Acquisition of 10% equity interest in
investments						Luyang Chemical
Construction	637,162	2.23	171,858	0.64	270.75	Increase in investments in fixed
in progress						assets projects
Short-term borrowings	695,273	2.43	384,528	1.43	80.81	New borrowings amounting to
						RMB0.5 billion from Baosteel
						Finance Co., Ltd
Employee benefits	125,703	0.44	257,143	0.95	-51.12	Transfer to employee incentive funds
payable						for 2019
Taxes payable	146,648	0.51	70,867	0.26	106.93	Value added tax payable for June
Other payables	555,798	1.94	421,768	1.56	31.78	Increase in construction payables
Non-current liabilities	456,526	1.60	841,576	3.12	-45.75	Repayment of borrowings amounting
due within one year						to RMB0.5 billion from Changshou
						Iron & Steel
Bonds payable	993,347	3.47	-	-	N/A	Issuance of 2020 First Tranche of
						Medium-term Notes
Long-term payables	333,333	1.17	-	-	N/A	New finance lease

18	2020 Interim Report

Section IV Management Discussion and Analysis (Continued)

M A J O R O P E R A T I O N S D U R I N G T H E R E P O R T I N G P E R I O D (CONTINUED)
1. Analysis of assets and liabilities (Continued)

2. Major restricted assets at the end of the Reporting Period

✓	Applicable			Not applicable
							Unit: RMB'000


					30 June	31 December
Item		2020	2019	Notes

Cash and bank balances	240,060	188,424	Note 1
Notes receivables		-	190,000	Note 2
Property, plant and equipment -
houses and buildings		1,903,716	1,928,087	Note 3
Property, plant and equipment -
machinery and equipment	562,447	-	Note 4
Intangible assets		2,361,008	2,392,114	Note 5

Total		5,067,231	4,698,625

Note 1: As at 30 June 2020, the Group's ownership of cash and bank balances with carrying value of RMB240,060,000 (31 December 2019: RMB188,424,000) was restricted for issuing bank acceptances and letters of credit.

Note 2: As at 30 June 2020, the Group's notes receivables with carrying value of RMB0 (31 December 2019: RMB190,000,000) were pledged for issuing bank acceptances.

Note 3: As at 30 June 2020, the Group's houses and buildings with a net carrying amount of RMB1,903,716,000 (31 December 2019: RMB1,928,087,000) were pledged to banks to secure the bank loans and working capital loan facilities granted to the Group.

Note 4: As at 30 June 2020, the Group's machinery and equipment with carrying amount of RMB562,447,000 (31 December 2019: Nil) were used for acquisition of assets under finance lease.

Note 5: As at 30 June 2020, the Group's land use right with a carrying amount of RMB2,361,008,000 (31 December 2019: RMB2,392,114,000) was pledged to banks to secure the bank loans and working capital loan facilities granted to the Group. The amortisation of above land use right for the current period was RMB31,106,000.

3. Others

Applicable ✓ Not applicable

Chongqing Iron & Steel Company Limited	19

Section IV Management Discussion and Analysis (Continued)

M A J O R O P E R A T I O N S D U R I N G T H E R E P O R T I N G P E R I O D (CONTINUED)
(IV) Investment Analysis

1. General analysis of external equity investment

✓	Applicable		Not applicable

In the first half of 2020, the Company completed equity investment projects of RMB10,000,000, representing an increase of RMB10,000,000 as compared to the same period last year. In the eighteenth meeting of the eighth session of the Board, the acquisition of 10% equity interests in Luyang Chemical out of the Company's self owned funds at a consideration of RMB 11,237,000 was duly approved by a passing a resolution in relation to the acquisition of 10% equity interests in Luyang Chemical. On 30 April 2020, the Company paid the first installment of the equity interest transfer payments amounting to RMB10,000,000 (excluding transaction service charges). On 20 May 2020, Luyang Chemical completed its ownership change registration procedures for the equity interest transferred. According to the articles of association of Luyang Chemical, the Company is entitled to the voting rights corresponding to its equity interest in Luyang Chemical.

Significant Equity Investment

Applicable ✓ Not applicable

Significant Non-Equity Investment

Applicable ✓ Not applicable

Financial Assets Measured at Fair Value

✓	Applicable		Not applicable
						Unit: RMB'000


					Changes	Effects on
					in the	the profit for
			Opening	Closing	reporting	the reporting
Item	balance	balance	period	period

Financial assets held for	400,000	-	-400,000	6,791
trading
Receivables financing	861,373	2,528,817	1,667,444	-
Other equity investments	5,000	15,000	10,000	-

Total	1,266,373	2,543,817	1,277,444	6,791

20	2020 Interim Report

Section IV Management Discussion and Analysis (Continued)

M A J O R O P E R A T I O N S D U R I N G T H E R E P O R T I N G P E R I O D (CONTINUED)

(V) Major Assets and Equity Disposal

Applicable ✓ Not applicable

(VI) Analysis of principal controlled and investee companies

✓	Applicable		Not applicable


						Shareholdings
Name of the subsidiary/	Principal place	Place of	Business			Acquisition
investee companies	of business	registration	nature	Direct	Indirect	method

Chongqing CIS Building Materials	Changshou Economic	Changshou	Trading	100%	-	Establishment
Sales Co., Ltd.	Development Zone,	Economic				by capital
（重慶市重鋼建材銷售有限責任公司）	Chongqing	Development				contribution
				Zone,
				Chongqing
Chongqing Jian Wei Intelligent	Changshou Area,	Changshou	Software and	50%	-	Establishment
Technology Co.,Ltd*	Chongqing	Area,	information			by capital
(重慶鑒微智能科技有限公司)		Chongqing	technology			contribution
					services
Chongqing Xingang Changlong	Changshou Economic	Changshou	Transportation,	28%	-	Equity
Logistics Co., Ltd.	Development Zone,	Economic	storage			acquisition
(重慶新港長龍物流有限責任公司)	Chongqing	Development
				Zone,
				Chongqing

(VII) Structured entities under the control of the Company

Applicable ✓ Not applicable

Chongqing Iron & Steel Company Limited	21

Section IV Management Discussion and Analysis (Continued)

OTHER DISCLOSURE
1. Warning and description of a forecast of recording a loss-making aggregate net profit from the beginning of the year to the end of next reporting period or recording a substantial year-on-year change

Applicable ✓ Not applicable

Potential Risks

Applicable ✓ Not applicable

(III) Other disclosure

Applicable ✓ Not applicable

22	2020 Interim Report

Section V Signiﬁcant Events

INTRODUCTION OF GENERAL MEETINGS

			Date of
		Website designated for	publication of
Meeting	Date	publication of resolutions	resolutions

2019 Annual	16 June 2020	Announcement of Resolutions Passed	17 June 2020
General Meeting		at the 2019 Annual General Meeting
		(Ann. No.: 2020-029) published on
		the website of the Shanghai Stock
		Exchange (http://www.sse.com.cn)
2020 First	9 July 2020	Announcement of Resolutions Passed	10 July 2020
Extraordinary		at the 2020 First Extraordinary
General Meeting		General Meeting (Ann. No.: 2020-
		038) published on the website
		of the Shanghai Stock Exchange
		(http://www.sse.com.cn)

Explanation on shareholders' meeting

✓	Applicable		Not applicable

Chongqing Iron & Steel Company Limited	23

Section V Signiﬁcant Events (Continued)

INTRODUCTION OF GENERAL MEETINGS (CONTINUED)

2019 Annual General Meeting

The 2019 Annual General Meeting ("AGM") of the Company was convened by the Board of the Company and presided by the chairman Mr. Zhou Zhuping. The convening of and the procedures for holding the meetings and the voting procedures at the AGM were in compliance with the relevant requirements of the Company Law and other laws and regulations as well as the Articles of Association of the Company. Independent directors of the Company delivered the performance report for the year 2019 at the AGM. The following resolutions were considered and approved at the AGM:

No. Resolutions

Resolutions adopting non-cumulative voting

The final financial accounts report for the year 2019
The 2019 annual report (full text and summary)
The profit distribution plan for the year 2019
The report of the Board for the year 2019
The report of the supervisory committee for the year 2019
The proposal for the re-appointment of the financial and internal control auditor of the Company for the year 2020
The proposal for the proposed budget for the year 2020
The proposal for the related investment in relation to joint establishment of special fund for acquisition of Chonggang Group through capital contribution
The proposal for the grant of general mandate to the board of directors to issue corporate bonds
The proposal for the amendments to the Article of Association of Chongqing Iron & Steel Company Limited
The proposal for the amendments to the Rules of Procedures of General Meeting of Chongqing Iron & Steel Company Limited
The proposal for the issuance of Medium-term Notes

24	2020 Interim Report

Section V Signiﬁcant Events (Continued)

INTRODUCTION OF GENERAL MEETINGS (CONTINUED)

2020 First Extraordinary General Meeting

The 2020 First Extraordinary General Meeting ("EGM") of the Company was convened by the Board of the Company and presided by the chairman Mr. Zhou Zhuping. The convening of and the procedures for holding the meetings and the voting procedures at the EGM were in compliance with the relevant requirements of the Company Law and other laws and regulations as well as the Articles of Association of the Company. The following resolutions were considered and approved at the EGM:

No. Resolutions

Resolutions adopting cumulative voting

1.00 The proposal for the election of directors for the eighth session of the board of

directors of the Company

1.01 To elect Mr. Zhang Jingang as a director of the eighth session of the board of directors of the Company

1.02 To elect Mr. Liu Jianrong as a director of the eighth session of the board of directors of the Company

1.03 To elect Mr. Zou An as a director of the eighth session of the board of directors of the Company

1.04 To elect Mr. Zhou Ping as a director of the eighth session of the board of directors of the Company

2.00 The proposal for the election of supervisors for the eighth session of the supervisory committee of the Company

2.01 To elect Mr. Wu Xiaoping as a supervisor of the eighth session of the supervisory committee of the Company

2.02 To elect Mr. Wang Cunlin as a supervisor of the eighth session of the supervisory

committee of the Company

2.03 To elect Mr. Xu Xudong as a supervisor of the eighth session of the supervisory committee of the Company
SCHEME FOR PROFIT DISTRIBUTION OR TRANSFER OF CAPITAL RESERVE TO SHARE CAPITAL
1. Interim proposals on profit distribution and the proposal on transferring capital reserve to share capital

Profit distribution or transfer of capital reserve to share
capital	No
Number of bonus shares for every 10 shares (share)	/
Dividends for every 10 shares (RMB) (tax inclusive)	/
Number of shares transferred for every 10 shares (share)	/
Relevant explanation on proposals on profit distribution
and transfer of capital reserve to share capital	Not applicable

Chongqing Iron & Steel Company Limited	25

Section V Signiﬁcant Events (Continued)

III. COMPLIANCE WITH UNDERTAKINGS

Commitment of de facto controller, shareholders, related parties, acquirer and the Company during or sustained to the Reporting Period

✓	Applicable		Not applicable


				Time and		Performed in
		Commitment	term of	Performance	time and
Background Type	party	Commitment Contents	commitment	term or not	strictly or not

Commitment made	Restriction	Changshou	In 36 months after the date of completion of the implementation
in acquisition	on sale	Iron & Steel	of the bankruptcy reorganisation plan of Chongqing Iron
report or equity	of shares		& Steel, the shares of Chongqing Iron & Steel held by
change report			Changshou Iron & Steel will not be transferred. In five years
			after the date of completion of the implementation of the
			bankruptcy reorganization plan, the control over Chongqing
			Iron & Steel will not be transferred, except when Changshou
			Iron & Steel transfers the controlling interests in Chongqing
			Iron & Steel to China Baowu Steel Group Corporation
			Limited or its holding subsidiaries.
	Restriction	Siyuanhe	In five years after the date of completion of the implementation
	on sale	Industrial	of the bankruptcy reorganisation plan of Chongqing Iron &
	of shares	Development	Steel, the controlling interests held by Siyuanhe Industrial
		Fund	Development Fund in Changshou Iron & Steel will not be
			lost by way of transferring or capital increase or by other
			means, except (1) when Siyuanhe Industrial Development
			Fund transfers such controlling interests to China Baowu
			Steel Group Corporation Limited or its holding subsidiaries;
			(2) when Siyuanhe Industrial Development Fund transfers
			equity interests in Changshou Iron & Steel to other entities
			controlled by Siyuanhe Investment on the premise that
			Siyuanhe Investment's controlling interests in Changshou
			Iron & Steel are maintained. On the premise that Siyuanhe
			Investment's controlling interests in Changshou Iron & Steel
			are maintained, when Siyuanhe Industrial Development
			Fund transfers equity interests in Changshou Iron & Steel to
			other entities controlled by Siyuanhe Investment, Siyuanhe
			Industrial Development Fund undertakes that the transferees
			will make undertakings with the same contents as the letter
			of undertaking.

From 29 December Yes	Yes
2017 to 28
December 2020

From 29 December Yes	Yes
2017 to 28
December 2022

26	2020 Interim Report

Section V Signiﬁcant Events (Continued)

COMPLIANCE WITH UNDERTAKINGS (CONTINUED)
1. Commitment of de facto controller, shareholders, related parties, acquirer and the Company during or sustained to the Reporting Period (Continued)

				Time and		Performed in
		Commitment		term of	Performance	time and
Background	Type	party	Commitment Contents	commitment	term or not	strictly or not

	Restriction on	Siyuanhe	In five years after the date of completion of the implementation	From 29 December	Yes	Yes
	sale of shares	Investment	of the bankruptcy reorganisation plan of Chongqing Iron &	2017 to 28
			Steel, Siyuanhe Investment will procure Siyuanhe Fund not	December 2022
			to lose the controlling interests in Changshou Iron & Steel
			by way of transferring or capital increase or by other means,
			except: (1) when Siyuanhe Fund transfers such controlling
			interests to China Baowu Steel Group Corporation Limited or
			its holding subsidiaries; (2) when Siyuanhe Fund transfers
			equity interests in Changshou Iron & Steel to other entities
			controlled by Siyuanhe Investment on the premise that
			Siyuanhe Investment's controlling interests in Changshou
			Iron & Steel are maintained. On the premise that Siyuanhe
			Investment's controlling interests in Changshou Iron &
			Steel are maintained, when Siyuanhe Fund transfers
			equity interests in Changshou Iron & Steel to other entities
			controlled by Siyuanhe Investment, Siyuanhe Investment
			undertakes that the transferees will make undertakings with
			the same contents as the undertakings made by Siyuanhe
			Fund on maintaining the controlling interest therein, and it
			also will procure the transferees to fulfill such commitments.
	To solve the	Changshou Iron &	(1) As of 1 December 2017, Changshou Iron & Steel has not	1 December 2017	No	Yes
	horizontal	Steel	engaged in any business that is the same as or similar to the
	competition		existing core business of Chongqing Iron & Steel. (2) During
			the period when Changshou Iron & Steel is the controlling
			shareholder of Chongqing Iron & Steel, if Changshou Iron
			& Steel obtains a business opportunity of engaging in the
			same business as Chongqing Iron & Steel, Changshou
			Iron & Steel shall concede the business opportunity to
			Chongqing Iron & Steel and can invest only after Chongqing
			Iron & Steel has given up such business opportunity.
			("engaged/engaging in" refers to any situations in which
			the business is conducted directly or indirectly through a
			controlling entity, excluding minority equity investments that
			do not generate a controlling position.)

Chongqing Iron & Steel Company Limited	27

Section V Signiﬁcant Events (Continued)

COMPLIANCE WITH UNDERTAKINGS (CONTINUED)
1. Commitment of de facto controller, shareholders, related parties, acquirer and the Company during or sustained to the Reporting Period (Continued)

				Time and		Performed in
		Commitment		term of	Performance	time and
Background	Type	party	Commitment Contents	commitment	term or not	strictly or not

	To solve the	Siyuanhe	(1) As of 21 December 2018, Siyuanhe Industrial Development	21 December 2018	No	Yes
	horizontal	Industrial	Fund has not engaged in any business that is the same as
	competition	Development	or similar to the existing core business of Chongqing Iron
		Fund	& Steel. (2) During the period when Siyuanhe Industrial
			Development Fund is the controlling shareholder of
			Chongqing Iron & Steel, if Siyuanhe Industrial Development
			Fund obtains a business opportunity of engaging in the
			same business as Chongqing Iron & Steel, Siyuanhe
			Industrial Development Fund shall concede the business
			opportunity to Chongqing Iron & Steel and can invest only
			after Chongqing Iron & Steel has given up such business
			opportunity. ("engaged/engaging in" refers to any situations
			in which the business is conducted directly or indirectly
			through a controlling entity, excluding minority equity
			investments that do not generate a controlling position.)
	To solve the	Changshou	(1) After the implementation of the bankruptcy reorganisation	1 December 2017	No	Yes
	related party	Iron & Steel	plan of Chongqing Iron & Steel, Changshou Iron & Steel
	transactions		will, in strict accordance with the requirements of laws and
			regulations such as the Company Law and the relevant
			provisions of the Articles of Association of Chongqing Iron
			& Steel, exercise the rights of shareholders, or urge the
			directors nominated by Changshou Iron & Steel to exercise
			the rights of directors according to law and to fulfill the
			obligation to abstain from voting when the general meeting
			and the Board vote on the related party transactions
			involving Chongqing Iron & Steel and Changshou Iron
			& Steel. (2) After the implementation of the bankruptcy
			reorganisation plan of Chongqing Iron & Steel, for the
			possible related party transactions arising from various
			reasonable reasons, Changshou Iron & Steel will, according
			to applicable laws and regulations and on the principles
			of justice and equity, sign agreements according to law,
			perform relevant procedures, and perform its obligation of
			information disclosure in a timely manner, so as to ensure
			that such transactions will not harm the legitimate rights and
			interests of Chongqing Iron & Steel and other shareholders.

28	2020 Interim Report

Section V Signiﬁcant Events (Continued)

COMPLIANCE WITH UNDERTAKINGS (CONTINUED)
1. Commitment of de facto controller, shareholders, related parties, acquirer and the Company during or sustained to the Reporting Period (Continued)

				Time and		Performed in
		Commitment		term of	Performance	time and
Background	Type	party	Commitment Contents	commitment	term or not	strictly or not

	Others	Changshou	During the period when Changshou Iron & Steel holds the	1 December 2017	No	Yes
		Iron & Steel	shares of Chongqing Iron & Steel, Changshou Iron & Steel
			will, in strict compliance with the rules of CSRC, Stock
			Exchanges, as well as those of the management system of
			Chongqing Iron & Steel such as the Articles of Association,
			exercise the shareholders' rights and fulfill the shareholders'
			obligations in the same manner as other shareholders.
			Changshou Iron & Steel will not seek improper interests
			by using the position of shareholders but respect the
			independence of Chongqing Iron & Steel in terms of its
			personnel, assets, business, finance, and organization.

IV. APPOINTMENT AND REMOVAL OF ACCOUNTING FIRMS

Explanation for appointment and removal of accounting firms

✓	Applicable		Not applicable

The 20th meeting of the eighth session of the Board and 13th meeting of the eighth session of the Supervisory Committee were held on 27 March 2020, and the 2019 annual general meeting was held on 16 June 2020, where the Resolution on Reappointment of the Company's Auditor for Financial and Internal Control for the Year of 2020 was considered and approved, whereby Ernst & Young Hua Ming LLP was re-appointed as the Company's auditor for financial and internal control in 2020 for a term from the date of consideration and approval at the 2019 annual general meeting till the convening of the 2020 annual general meeting. The remuneration for the year of 2020 is RMB2.25 million for financial auditing services and RMB0.7 million for internal control, totaling RMB2.95 million (tax exclusive). The remuneration for the period was determined in accordance with the fair and reasonable pricing principles in the market after negotiation with the accounting firm, and was the same as that for the year of 2019.

Chongqing Iron & Steel Company Limited	29

Section V Signiﬁcant Events (Continued)

IV. APPOINTMENT AND REMOVAL OF ACCOUNTING FIRMS (CONTINUED)

Explanation for change of the accounting firm during the auditing period

Applicable ✓ Not applicable

Explanation for the "Non-Standard Audit Report" Issued by the Accounting Firm

Applicable ✓ Not applicable

Explanation for the "Non-Standard Audit Report" Issued by the Certified Public Accountant in respect of the Financial Report in the Annual Report for the Previous Year

Applicable ✓ Not applicable

MATTERS RELATING TO INSOLVENCY OR REORGANISATION

Applicable ✓ Not applicable

VI. MATERIAL LITIGATION AND ARBITRATION

Material litigations and arbitrations	✓	No material litigations and arbitrations
occurs during the Reporting Period		occurs during the Reporting Period

VII. PUNISHMENT ON THE COMPANY AND ITS DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING SHAREHOLDER, DE FACTO CONTROLLER AND ACQUIRER AND RECTIFICATION MEASURES

Applicable ✓ Not applicable

VIII. INTEGRITY OF THE COMPANY AND ITS CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER FOR THE REPORTING PERIOD

Applicable ✓ Not applicable

30	2020 Interim Report

Section V Signiﬁcant Events (Continued)

IX. EQUITY INCENTIVE PLAN, EMPLOYEE SHARE OWNERSHIP PLAN OR OTHER EMPLOYEE INCENTIVES AND EFFECTS THEREOF

Relevant incentive events disclosed in extraordinary announcements but without subsequent development or changes during implementation

Applicable ✓ Not applicable

Incentive events not disclosed in extraordinary announcements or with subsequent development

Equity incentive

Applicable ✓ Not applicable

Other explanations

Applicable ✓ Not applicable

Employee share ownership plan

✓	Applicable		Not applicable

In order to establish and improve the mechanism of sharing the benefits and risks of employees and owners of the Company, and to improve the cohesion of employees and the competitiveness of the Company, to retain core employees, and to integrate the interests of the management, the core and mainstay personnel and the shareholders, aiming to facilitate the long-term and stable development of the Company and improvement of the shareholder value, the Company has prepared the Employee Share Ownership Plan from 2018 to 2020 (Draft) and its summary in accordance with relevant laws, regulations as well as the Articles of Association.

The Company convened the 15th meeting of the seventh session of the Board and the 18th meeting of the seventh session of the supervisory committee on 20 March 2018 and the 2017 annual general meeting on 15 May 2018, at which the Proposal for the Employee Share Ownership Plan from 2018 to 2020 (Draft) of Chongqing Iron & Steel Company Limited and its Summary (《關於〈重慶鋼鐵股份有限公司2018年至2020年員工持股計劃（草案)〉及其摘要的議案》), the Proposal for the proposed authorisation to the board of directors by the general meeting to handle relevant matters regarding employee share ownership plan(《關於提請股東大會授權董事會辦理公司員工持股計劃相關事宜的議案》) and other proposals were considered and approved.

Chongqing Iron & Steel Company Limited	31

Section V Signiﬁcant Events (Continued)

IX. EQUITY INCENTIVE PLAN, EMPLOYEE SHARE OWNERSHIP PLAN OR OTHER EMPLOYEE INCENTIVES AND EFFECTS THEREOF (CONTINUED)

Incentive events not disclosed in extraordinary announcements or with subsequent development (Continued)

According to the authorization by the 2017 annual general meeting of the Company, the Resolution in relation to Employee Share Ownership Plan Phase I of the Company was considered and approved at the fifth meeting of the eighth session of the Board held on 18 December 2018.

As at 14 May 2019, according to the Single Asset Management Plan of Huatai Asset Management for Employee Share Ownership Plan No. 1 of Chongqing Iron & Steel (華泰資管重慶鋼鐵員工持股計劃1號單一資產管理計劃), an aggregate of 24,791,400 A shares of the Company, representing approximately 0.28% of the total share capital of the Company, have been purchased by way of centralized bidding in the secondary market at an average transaction price of approximately RMB1.97 per share for the first phase of employee share ownership plan, and the transaction amount was approximately RMB48.7831 million. So far, the Company has completed the share purchase for the first phase of employee share ownership plan, and the shares purchased for the share ownership plan shall be subject to a lock-up period commencing from 15 May 2019 to 14 May 2020 according to regulations.

The Company convened 2018 annual general meeting, 2019 first class meeting of A shareholders and the 2019 first class meeting of H shareholders on 21 May 2019, at which the Proposal for the grant of general mandate to the board of directors to repurchase A Shares of the Company(《授予董事會回購本公司A股股份的一般性授權》), the Proposal for the grant of general mandate to the board of directors to repurchase H Shares of the Company 《( 授予董事會回購本公司H股股份的一般性授權》)and other proposals were considered and approved. 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, the Resolution on Repurchase of the Shares of the Company through Centralized Bidding Trading was considered and approved at the 10th meeting of the eighth session of the Board of the Company convened on 21 May 2019.

As at 27 June 2019, the Company repurchased a total of 31,500,000 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 costs). The shares repurchased are deposited in the Company's securities account designated for share repurchase and will be used for the employee share ownership plans of the Company.

32	2020 Interim Report

Section V Signiﬁcant Events (Continued)

IX. EQUITY INCENTIVE PLAN, EMPLOYEE SHARE OWNERSHIP PLAN OR OTHER EMPLOYEE INCENTIVES AND EFFECTS THEREOF (CONTINUED)

Incentive events not disclosed in extraordinary announcements or with subsequent development (Continued)

As authorized at the 2017 annual general meeting of the Company, the written resolutions of the 14th meeting of the eighth session of the Board and the 10th meeting of the eighth session of the supervisory committee have been signed and issued in writing on 25 September 2019, by which the Proposal in relation to the Implementation of the Second Phase of Employee Share Ownership Plan of the Company(《關於公司實施第二期員工持股計劃的議案》) was considered and approved.

As at 28 November 2019, according to the Single Asset Management Plan of Huatai Asset Management for Employee Share Ownership Plan No. 2 of Chongqing Iron & Steel (華泰資管重慶鋼鐵員工持股計劃2號單一資產管理計劃), an aggregate of 25,135,600 A shares of the Company, representing approximately 0.28% of the total share capital of the Company, have been purchased by way of centralized bidding in the secondary market at an average transaction price of RMB1.798 per share for the second phase of employee share ownership plan, and the transaction amount was RMB45,194,969. So far, the Company has completed the share purchase for the second phase of employee share ownership plan, and the shares purchased for the share ownership plan shall be subject to a lock-up period commencing from 29 November 2019 to 28 November 2020 according to regulations.

As authorized at the 2017 annual general meeting of the Company, the Company convened the16th meeting of the eighth session of the Board and the 12th meeting of the eighth session of the supervisory committee have been signed and issued in writing on 27 December 2019, by which the Proposal in relation to the Third Phase of the Employee Share Ownership Plan of the Company(《關於公司第三期員工持股計劃的議案》) was considered and approved.

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, the Resolution on Repurchase of the Shares of the Company through Centralized Bidding Trading was considered and approved at the 18th meeting of the eighth session of the Board of the Company convened and circulated in writing on 26 February 2020.

Chongqing Iron & Steel Company Limited	33

Section V Signiﬁcant Events (Continued)

IX. EQUITY INCENTIVE PLAN, EMPLOYEE SHARE OWNERSHIP PLAN OR OTHER EMPLOYEE INCENTIVES AND EFFECTS THEREOF (CONTINUED)

Incentive events not disclosed in extraordinary announcements or with subsequent development (Continued)

As at close time on 12 March 2020, the Company repurchased a total of 50,000,000 shares through centralized bidding trading, representing approximately 0.56% of its total share capital. 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). The shares repurchased are deposited in the Company's securities account designated for share repurchase and will be used for the employee share ownership plans of the Company. So far, the Company has repurchased a total of 81,500,000 shares accumulatively, representing approximately 0.91% of its total share capital.

On 11 June 2020, the Company received the Confirmation of Transfer Registration 《( 過戶登記確認書》) issued by China Securities Depository and Clearing Corporation Limited. The number of A shares of the Company deposited in the Company's securities account designated for share repurchase was 44,837,800, representing approximately 0.50% of the Company's total share capital, which were transferred into the securities account designated for the Third Phase of the Employee Share Ownership Plan through a non-transaction way on 9 June 2020, at a transfer price of RMB1.80 per share. The shares purchased for the share ownership plan shall be subject to a lock-up period commencing from 9 June 2020 to 8 June 2021 according to regulations.

Other incentive measures

Applicable ✓ Not applicable

34	2020 Interim Report

Section V Signiﬁcant Events (Continued)

MATERIAL RELATED PARTY TRANSACTIONS
1. Related party transactions related to day-to-day operation

1. Matters disclosed in extraordinary announcements but without development or changes in subsequent implementation

Applicable ✓ Not applicable

2. Matters disclosed in extraordinary announcements with subsequent development or changes during implementation

✓	Applicable		Not applicable

At the 16th meeting of the eighth session of the Board of the Company, the Resolution in relation to Leasing of Assets from Related Companies in 2020 was considered and approved, pursuant to which, the Board approved the lease of machinery and equipment by the Company from Changshou Iron & Steel for the year 2020, and the Announcement on Related Party Transaction of Leasing of Assets from Related Companies in 2020 (Announcement No.: 2019-045) was disclosed on 28 December 2019. During the Reporting Period, the actual amount of the related party transaction was within the annual caps, the details of which are as follows:

Type of related		Transaction
party transaction	Pricing principle	Amount
		(Unit: RMB'000)

Renting	Market price	94,912

Chongqing Iron & Steel Company Limited	35

Section V Signiﬁcant Events (Continued)

MATERIAL RELATED PARTY TRANSACTIONS (CONTINUED)
1. Related party transactions related to day-to-day operation (Continued)

3. Matters not disclosed in extraordinary announcements

✓

Applicable

Not applicable

Unit: RMB'000

Currency: RMB

Reason for

the difference

As a

between

Pricing

percentage

Settlement

transaction

Type of

Content

principle

Transaction

of the

method

price and

of related

price of

amount of

amount

of related

market

party

of similar

party

Market

reference

party

relationship

transaction

party

Transactions

transaction

price

(%)

Chongqing Xingang

Associate

Procurement

Acceptance

With reference

13,304

1.98

Changlong

of products

of services

to market

Logistics Co., Ltd.

price

Chongqing Xingang

Associate

Sale of

With reference

622

0.24

Changlong

products

energy,

to market

Logistics Co., Ltd.

rendering of

price

services

Total

13,926

Particulars of substantial sales return

Nil

Explanation on related party transactions

They enabled the Company to obtain stable and reliable service supply at a reasonable price,

which is vital to the Company to keep stable production, improve production efficiency and

increase production output.

36	2020 Interim Report

Section V Signiﬁcant Events (Continued)

MATERIAL RELATED PARTY TRANSACTIONS (CONTINUED)
1. Related party transactions related to acquisition and disposal of assets or equity interests

1. Events disclosed in extraordinary announcements without subsequent development or changes during implementation

Applicable ✓ Not applicable

2. Events disclosed in extraordinary announcements with subsequent development or changes during implementation

Applicable ✓ Not applicable

3. Events not disclosed in extraordinary announcements

Applicable ✓ Not applicable

4. Disclosure of the performance of the results relating to the results agreement during the Reporting Period

Applicable ✓ Not applicable

(III) Material related party transactions related to joint external investment

1. Events disclosed in extraordinary announcements without subsequent development or changes during implementation

Applicable ✓ Not applicable

2. Events disclosed in extraordinary announcements with subsequent development or changes during implementation

Applicable ✓ Not applicable

3. Events not disclosed in extraordinary announcements

Applicable ✓ Not applicable

Chongqing Iron & Steel Company Limited	37

Section V Signiﬁcant Events (Continued)

MATERIAL RELATED PARTY TRANSACTIONS (CONTINUED)
(IV) Amounts due to or from related parties

1. Events disclosed in extraordinary announcements without subsequent development or changes during implementation

✓	Applicable		Not applicable
			Website designated for

Event		publication of resolutions

At the 23rd meeting of the eighth session of the Board of the Company held on 16 June 2020, the Resolution in Relation to the Provision of the Facilities by Chongqing Changshou Iron & Steel Company Limited to the Company was considered and approved. Chongqing Changshou Iron & Steel Company Limited intended to offer the credit facilities to the Company in an amount of not more than RMB1,000,000,000 for a term of 3 years, bearing interest calculated at the Loan Prime Rate (LPR). For a loan with a term of one year or less, the interest was calculated at LPR for one-year loan; and for a loan with a term of more than one year, the interest was calculated at the average of LPR for one-year loan and LPR for five-year loan, applicable at the time of application for the facilities. The Company was not required to provide any guarantee for such facilities. As at 30 June 2020, the Company borrowed RMB0.

Announcement of Resolutions Passed at the 23rd Meeting of the Eighth Session of the Board (Ann. No.: 2020-030) published on the website of the Shanghai Stock Exchange (http://www.sse.com.cn)

38	2020 Interim Report

Section V Signiﬁcant Events (Continued)

MATERIAL RELATED PARTY TRANSACTIONS (CONTINUED)
(IV) Amounts due to or from related parties (Continued)

2. Events disclosed in extraordinary announcements with subsequent development or changes during implementation

✓	Applicable		Not applicable

According to the Announcement of the Administrator of Chongqing Iron & Steel Company Limited in Relation to the Progress of Implementation of the Reorganisation Plan (Announcement No.: 2017-111) disclosed on 25 November 2017, Changshou Iron & Steel shall lend RMB2.4 billion to Chongqing Iron & Steel for implementing the reorganisation plan. As at 30 June 2020, an amount of RMB80 million had been repaid.

At the 16th meeting of the seventh session of the Board of the Company, the Resolution in Relation to the Provision of the Facilities by Chongqing Changshou Iron & Steel Company Limited to the Company was considered and approved and the Announcement of the 16th Meeting of the Seventh Session of the Board of Directors (Announcement No.: 2018-026) was disclosed on 26 April 2018. Changshou Iron & Steel intended to offer the credit facilities to the Company in an amount of no more than RMB500,000,000 for a term of 3 years, and the interest rate was calculated at benchmark lending rate for loans of the same term as published by the People's Bank of China. The Company is not required to provide any guarantee for such facilities. On 30 June 2020, such loan had been repaid in full.

		Interest in the
Related party	Amount borrowed	current period
	(Unit: RMB'000)	(Unit: RMB'000)

Chongqing Changshou
Iron & Steel Company Limited	2,320,000	67,633

3. Events not disclosed in extraordinary announcements

Applicable ✓ Not applicable

Chongqing Iron & Steel Company Limited	39

Section V Signiﬁcant Events (Continued)

MATERIAL RELATED PARTY TRANSACTIONS (CONTINUED)

(V) Other material related party transactions

Applicable ✓ Not applicable

(VI) Others

Applicable ✓ Not applicable

XI. MATERIAL CONTRACTS AND THE IMPLEMENTATION

1 Trust, contracted businesses and leasing affairs

✓	Applicable		Not applicable

Trust

Applicable ✓ Not applicable

Contracted businesses

Applicable ✓ Not applicable

40	2020 Interim Report

Section V Signiﬁcant Events (Continued)

XI. MATERIAL CONTRACTS AND THE IMPLEMENTATION (CONTINUED)

1 Trust, contracted businesses and leasing affairs (Continued)

Leasing affairs

✓

Applicable

Not applicable

Unit: RMB'000

Currency: RMB

Effect of

Status of

Amount

Date of

Expiry

Basis of

gain on

Whether a

Name of

leased

of leased

commencement

date of

Gain

determination of lease on the

related party

Connected

lessor

lessee

assets

of lease

lease

on lease

such gain

Company

transaction

relations

Chongqing

Chongqing Iron &Equipment

2020.01.01

2020.12.31

73,009

Contract

Affecting the

Iron & Steel

Steel Company

production

Company

Limited

costs

(Group)

Limited

Chongqing

Chongqing Iron &Equipment

2020.01.01

2020.12.31

94,912

Contract

Affecting the

Yes

Controlling

Changshou

Steel Company

production

shareholder

Iron & Steel

Limited

costs

Company

Limited

Chongqing

Chongqing Xin

Buildings

2020.01.01

2020.12.31

Contract

Affecting the

Yes

Associate

Iron & Steel

Gang Chang

profit

Company

Long Logistics

Limited

Company

Limited

2 Guarantee

Applicable ✓ Not applicable

3 Other significant contracts

Applicable ✓ Not applicable

XII. POVERTY ALLEVIATION BY THE LISTED COMPANY

Applicable ✓ Not applicable

Chongqing Iron & Steel Company Limited	41

Section V Signiﬁcant Events (Continued)

XIII. PARTICULARS OF CONVERTIBLE BOND OF THE COMPANY

Applicable ✓ Not applicable

XIV. ENVIRONMENTAL INFORMATION

Explanation on the performance of environmental protection of companies and its key subsidiaries under the classification of key pollutant discharging entity as published by the environmental protection department

✓	Applicable		Not applicable

1. Pollutant discharging

✓	Applicable		Not applicable

In 2020, the Company has strictly implemented the permit management system for pollutant discharging, and fully carried out the enterprise self-monitoring and information disclosure, achieving pollutant discharging according to the law and regulations and with permit. The Company has strictly implemented pollutant reduction and discharging control by strengthening the operation and management of environmental protection facilities. In the first half of 2020, the total amount of pollutant discharging did not exceed the total permitted index. During the Reporting Period, there was no accident caused by the Company which was subject to environmental penalty. The major pollutants discharged by the Company are as follows:

								Approved	Are there
	Major	Emission	Number of			Total	Pollutant emission	total	excessive
No.	pollutants	method	vent ports	Distribution	Emission concentration	emissions	standards implemented	emissions	emissions
					(mg/Nm3)	(tonnes)

1	Particulate matter	Continuous	10	Goods transportation	Less than Emission Standard of Air	48	Emission Standard of Air Pollutants	Nil	No
					Pollutants for Ironmaking Industry		for Ironmaking Industry
					(GB28663-2012)		(GB28663-2012)
2	Particulate matter	Continuous	30	Coking	Less than Emission Standard of	378	Emission Standard for Pollutants	Nil	No
3	Sulfur dioxide	Continuous			Pollutants for Coking Chemical	345	for Coking Chemical Industry	Nil	No
4	Nitrogen oxides	Continuous			Industry (GB16171-2012)	502	(GB16171-2012)	Nil	No
5	Particulate matter	Continuous	17	Sintering	Less than Emission Standard of	1683	Emission Standard of Air Pollutants	Nil	No
6	Sulfur dioxide	Continuous			Air Pollutants for Iron and Steel	898	for Iron and Steel Sintering and	Nil	No
7	Nitrogen oxides	Continuous			Sintering and Pelletizing Industry	1482	Pelletizing Industry (GB28663-	Nil	No
					(GB28663-2012)		2012)

42	2020 Interim Report

Section V Signiﬁcant Events (Continued)

XIV. ENVIRONMENTAL INFORMATION (CONTINUED)

Explanation on the performance of environmental protection of companies and its key subsidiaries under the classification of key pollutant discharging entity as published by the environmental protection department (Continued)
1. Pollutant discharging (Continued)

								Approved	Are there
	Major	Emission	Number of			Total	Pollutant emission	total	excessive
No.	pollutants	method	vent ports	Distribution	Emission concentration	emissions	standards implemented	emissions	emissions
					(mg/Nm3)	(tonnes)

8	Particulate matter	Continuous	27	Ironmaking	Less than Emission Standard of Air	1241	Emission Standard of Air Pollutants	Nil	No
9	Sulfur dioxide	Continuous			Pollutants for Ironmaking Industry	216	for Ironmaking Industry	Nil	No
10	Nitrogen oxides	Continuous			(GB28663-2012)	371	(GB28663-2012)	Nil	No
11	Particulate matter	Continuous	18	Steelmaking	Less than Emission Standard of Air	397	Emission Standard of Air Pollutants	Nil	No
					Pollutants for Steelmaking Industry		for Steelmaking Industry
					(GB28664-2012)		(GB28664-2012)
12	Particulate matter	Continuous	13	Steel Rolling	Less than Emission Standard of Air	45	Emission Standard of Air Pollutants	Nil	No
13	Sulfur dioxide	Continuous			Pollutants for Steel Rolling Industry	212	for Steel Rolling Industry	Nil	No
14	Nitrogen oxides	Continuous			(GB28665-2012)	347	(GB28665-2012)	Nil	No
15	COD	Continuous	1	Central wastewater	Less than Emission Standard of	45.58	Emission Standard of Water	Nil	No
16	Nitrox	Continuous		treatment station	Water Pollutant for Iron and Steel	3.65	Pollutant for Iron and Steel	Nil	No
					Industry (GB13456-2012		Industry (GB13456-2012 in
							place of GB13456-1992)
17	Total	Particulate	3792	Sulfur dioxide	1671	Nitrogen	2702	Cod	45.58
		matter				oxides		Nitrox	3.65
18	Permitted	Particulate	11635	Sulfur dioxide	6137	Nitrogen	11155	Cod	472
	emissions under	matter				oxides		Nitrox	47.2
	the pollutant
	discharging
	permit

Chongqing Iron & Steel Company Limited	43

Section V Signiﬁcant Events (Continued)

XIV. ENVIRONMENTAL INFORMATION (CONTINUED)

Explanation on the performance of environmental protection of companies and its key subsidiaries under the classification of key pollutant discharging entity as published by the environmental protection department (Continued)

2. Construction and operation of pollution control facilities

✓	Applicable		Not applicable

The Company has completed the transformation of the pollution control facilities for desulfurization of flue gas from 2# and 3# sintering machines. The facilities have achieved ultra-low emission and have been put into operation. After operation, the emission concentration of particulate matter, sulfur dioxide and nitrogen oxides among flue gas pollutant has fulfilled the emission requirement. All of the existing pollution control facilities are under sound operating condition with a stable emission up to the standard.

3. Environmental impact assessment of construction projects and other environmental protection administrative licensing

Applicable ✓ Not applicable

4. Environmental emergency plan

✓	Applicable		Not applicable

In order to implement the requirements of the laws and regulations on strengthening the environmental protection of enterprises promulgated by the central and local government, the Company has established a sound environmental risk prevention system, formulated the Environmental Emergency Plan of Chongqing Iron & Steel Company Limited 《( 重慶鋼鐵股份有限公司突發環境事件應急預案》) and carried out environmental protection filing with a period of validity until 16 January 2021 and filling No. of 500115-2018-001-HT.

44	2020 Interim Report

Section V Signiﬁcant Events (Continued)

XIV. ENVIRONMENTAL INFORMATION (CONTINUED)

Explanation on the performance of environmental protection of companies and its key subsidiaries under the classification of key pollutant discharging entity as published by the environmental protection department (Continued)

5. Self-monitoring program on environmental protection

✓	Applicable		Not applicable

According to the requirements of the Measures for Self-monitoring and Information Disclosure by the Enterprises Subject to Intensive Monitoring and Control of the State (Trial Implementation) (《國家重點監控企業自行監測及信息公開辦法（試行)》) and the General Rules for Technical Guidance on Self-monitoring of Pollutant Discharging Organizations (《排污單位自行監測技術指南總則（發佈稿)》), the Self-monitoring Program of Chongqing Iron & Steel Company Limited (《重慶鋼鐵股份有限公司自行監測方案》) was formulated and filed with the ecology and environment bureau in order to regulate the self-monitoring and information disclosure of the Company and ensure the conscious fulfillment of its legal obligations and social responsibilities. The Company has carried out its self-monitoring work in accordance with such program in the first half of 2020.

6. Other environmental information required to be disclosed

✓	Applicable		Not applicable

According to the Public Participation Measures to Environmental Impact Assessment, three public participation disclosures were completed for environmental impact assessment of the Capacity Expansion of the Company's Newly-built Wastewater Treatment System through the Internet and on-site posting.

On 9 May 2020, the Ministry of Ecological Environment published The Feedback of the Supervision from the Fourth Ecological and Environmental Protection Supervision Team of the Central Government to Chongqing City, in which, the illegal pile and storage of steel slag of the Company has been reported. In order to effectively rectify the illegal pile and storage of steel slag, the Company has formulated a special rectification plan and carried out material removal and sale. During the Reporting Period, the materials previously piled and stored have been removed and disposed of, and a standardized pile and storage yard for steel slag has been completed and put into operation.

Explanation on environmental protection of companies beyond the classification of key pollutant discharging entity

Applicable ✓ Not applicable

Chongqing Iron & Steel Company Limited	45

Section V Signiﬁcant Events (Continued)

XIV. ENVIRONMENTAL INFORMATION (CONTINUED)

Explanation of reasons for non-disclosure of environmental information by companies beyond the classification of key pollutant discharging entity

Applicable ✓ Not applicable

(IV) Explanation on development or changes in environmental information disclosed during the Reporting Period

Applicable ✓ Not applicable

XV. EXPLANATIONS ON OTHER SIGNIFICANT MATTERS

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

Applicable ✓ Not applicable

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

Applicable ✓ Not applicable

(III) Other significant events

✓	Applicable		Not applicable

1. Relevant disclosure made according to the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange

Compliance with the Corporate Governance Code
To the best knowledge of the Board, the Company has 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.

46	2020 Interim Report

Section V Signiﬁcant Events (Continued)

XV. EXPLANATIONS ON OTHER SIGNIFICANT MATTERS (CONTINUED)

Other significant events (Continued)
1. Relevant disclosure made according to the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange (Continued)
1. 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 2020.
2. 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 2020 pursuant to the provision of Article 250 of the Articles of Association.
3. Purchase, Sale or Redemption of Listed Securities of the Company
  From 6 March 2020 to 12 March 2020, the Company accumulatively repurchased a total of 50,000,000 A shares through centralized bidding trading, representing approximately 0.56% of its total share capital. 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 fees).
4. Major acquisition and disposal of subsidiaries and affiliates
  No major acquisition and disposal of subsidiaries and affiliates occurred during the reporting period.

Chongqing Iron & Steel Company Limited	47

Section V Signiﬁcant Events (Continued)

XV. EXPLANATIONS ON OTHER SIGNIFICANT MATTERS (CONTINUED)

Other significant events (Continued)
1. Relevant disclosure made according to the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange (Continued)
1. 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 Zhou Ping 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 2020 had been reviewed by the members of the Audit Committee before being submitted to the Board for approval.
2. Interests or Short Positions
  As at 30 June 2020, 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:

					Percentage	Percentage
					in the share	in the
	The				capital of	total share
	Company/			Total number	A shares	capital
	associated		Nature of	of interested	of the	of the	Class of
Name	corporations	Capacity	interests	shares held	Company	Company	shares
				(share)	(%)	(%)

Wang Li	The Company	Director	Beneficial	113,800	0.00136	0.00128	A share
			interests	(long position)

48	2020 Interim Report

Section V Signiﬁcant Events (Continued)

XV. EXPLANATIONS ON OTHER SIGNIFICANT MATTERS (CONTINUED)

Other significant events (Continued)
2. The Third Phase of Employee Share Ownership Plan
As authorized at the 2017 annual general meeting of the Company, the Company convened the 16th meeting of the eighth session of the Board and the 12th meeting of the eighth session of the supervisory committee on 27 December 2019, at which the Resolution in relation to the Third Phase of the Employee Share Ownership Plan of the Company (《關於公司第三期員工持股計劃的議案》) was considered and approved. According to the operations in 2019, the bonus fund provision for Employee Share Ownership Plan is made at 9.5% of the total profit (before the withdrawal of the bonus fund) under the audited consolidated statements for 2019.
The Company convened the first holders' meeting of the Third Phase of the Employee Share Ownership Plan on 22 January 2020, at which the Constitution of the Meeting of the Holders of the Third Phase of the Employee Share Ownership Plan 《( 第三期員工持股計劃持有人會議章程》), the Resolution in relation to the Establishment of the Management Committee of the Third Phase of Employee Share Ownership Plan and Authorization to the Management Committee to be Responsible for Matters Relevant to the Employee Share Ownership Plan (《關於設立第三期員工持股計劃管理委員會並授權管理委員會負責員工持股計劃管理事宜的議案》) and the Resolution for the Election of the Candidates for the Members of the Management Committee of the Third Phase of the Employee Share Ownership Plan (《關於選舉第三期員工持股計劃管理委員會候選委員的議案》) were considered and approved.
The source of shares of this phase of the employee share ownership plan is as follows:
1. 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 0.35% of its total share capital. The highest, lowest and average prices 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 RMB62,223,734.00 (excluding transaction fees).
2. From 6 March 2020 to 12 March 2020, the Company accumulatively repurchased a total of 50,000,000 A shares through centralized bidding trading, representing approximately 0.56% of its total share capital. The highest, lowest and average prices 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 fees).

As of 12 March 2020, the Company accumulatively repurchased a total of 81,500,000 A shares, representing approximately 0.91% of its total share capital.

Chongqing Iron & Steel Company Limited	49

Section V Signiﬁcant Events (Continued)

XV. EXPLANATIONS ON OTHER SIGNIFICANT MATTERS (CONTINUED)

Other significant events (Continued)
2. The Third Phase of Employee Share Ownership Plan (Continued)
On 11 June 2020, the Company received the Transfer Registration Confirmation from China Securities Depository and Clearing Corporation Limited, and 44,837,800 A shares of the Company held by its securities account designated for share repurchase, representing approximately 0.50% of its total share capital, were transferred to the respective securities account designated for the Third Phase of Employee Share Ownership Plan of the Company by non-transaction transfer on 9 June 2020, at a transfer price of RMB1.80 per share. The shares obtained for the employee share ownership plan shall be subject to a lock-up period commencing from 9 June 2020 to 8 June 2021 according to regulations.
3. Repurchase of A shares 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, the Resolution on Repurchase of the Shares of the Company through Centralized Bidding Trading was considered and approved at the 18th meeting of the eighth session of the Board of the Company. For specific details of the repurchase of A shares of the Company, please refer to the Report on the Repurchase of Shares of the Company through Centralized Bidding Trading (Announcement No.: 2020-002) and the Announcement on the Resolutions approved at the 18th Meeting of the Eighth Session of the Board of the Company (Announcement No.: 2020-003) disclosed by the Company on 3 March 2020.
As at the closing date of 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 by the Company on 7 March 2020.
As at the closing date of 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. 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 the 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) on disclosed by the Company on 13 March 2020.

50	2020 Interim Report

Section V Signiﬁcant Events (Continued)

XV. EXPLANATIONS ON OTHER SIGNIFICANT MATTERS (CONTINUED)

Other significant events (Continued)
4. The issuance of medium-term notes

On 21 May 2019, the Company held the 2018 annual general meeting, at which the Proposal for the Grant of General Mandate to the Board of Directors to Issue Debt Financing Instruments was considered and approved. The Company was approved to apply to the National Association of Financial Market Institutional Investors (the "NAFMII") for new registration and issuance of debt financing instruments of non-financial enterprises in the inter-bank market (the "Debt Financing Instruments"), including but not limited to medium-term notes and short-term financing bonds, etc. For relevant details, please refer to the Announcement of Resolutions Passed at the 8th Meeting of the Eighth Session of the Board (Announcement No.: 2019-006), the Announcement on Grant of General Mandate to the Board to Issue Debt Financing Instruments (Announcement No.: 2019-009) disclosed by the Company on 29 March 2019 and the Announcement of Resolutions Passed at the 2018 Annual General Meeting, 2019 First Class Meeting of A Shareholders and 2019 First Class Meeting of H Shareholders (Announcement No.: 2019- 017) disclosed on 22 May 2019.

On 2 March 2020, the Company has received the Notice of Acceptance of Registration (Zhong Shi Xie Zhu [2020] No. MTN106) issued by the NAFMII stating that the registration of medium-term notes of the Company has been accepted. The registered amount was RMB1 billion and such registered amount will be effective for 2 years commencing from the date of issue of the notice. Please refer to the Announcement on the Acceptance of Registration of Medium-Term Notes (Announcement No.: 2020-004) disclosed by the Company on 3 March 2020 for details.

From 17 to 18 March 2020, the Company issued the 2020 first tranche of medium-term notes with a principal amount of RMB1 billion and the proceeds raised were fully received on 19 March 2020. Please refer to the Announcement on the Issuance Results of 2020 First Tranche of Medium-Term Notes (Announcement No.: 2020-008) disclosed by the Company on 20 March 2020 for details.

Chongqing Iron & Steel Company Limited	51

Section V Signiﬁcant Events (Continued)

XV. EXPLANATIONS ON OTHER SIGNIFICANT MATTERS (CONTINUED)

Other significant events (Continued)
4. The issuance of medium-term notes (Continued)
On 16 June 2020, the Company held the 2019 annual general meeting, at which the Proposal for the Issuance of Medium-Term Notes by the Company was considered and approved. The Company was approved to apply to the National Association of Financial Market Institutional Investors (the "NAFMII") and relevant competent regulatory authorities for new registration and issuance of the medium-term notes. On the same day, the Company held the 23rd meeting of the eighth session of the board of directors, at which the Proposal for the Application for the Issuance of Medium-Term Notes and the Grant of Mandate to the Management by the Board to Handle Matters in Relation to the Issuance of Medium-Term Notes was considered and approved. According to the mandate obtained at the general meeting of the Company, the Board authorized the management to determine matters including the issue size, specific terms and conditions of medium- term notes of the Company, subject to a maximum amount of not exceeding RMB2 billion and within 24 months from the date of the approval of the proposal at the general meeting. For relevant details, please refer to the Announcement on Issuance of Medium- Term Notes by the Company (Announcement No.: 2020-026) disclosed by the Company on 23 May 2020, the Announcement of Resolutions Passed at the 2019 Annual General Meeting (Announcement No.: 2020-029) and the Announcement of Resolutions Passed at the 23rd Meeting of the Eighth Session of the Board (Announcement No.: 2020-030) disclosed on 17 June 2020.
Currently, the Company has received the Notice of Acceptance of Registration (Zhong Shi Xie Zhu [2020] No. MTN736) issued by the NAFMII stating that the registration of medium- term notes of the Company has been accepted. The registered amount was RMB2 billion and such registered amount will be effective for 2 years commencing from the date of issue of the notice. Please refer to the Announcement on the Acceptance of Registration of Medium-Term Notes (Announcement No.: 2020-037) disclosed by the Company on 9 July 2020 for details.

52	2020 Interim Report

Section V Signiﬁcant Events (Continued)

XV. EXPLANATIONS ON OTHER SIGNIFICANT MATTERS (CONTINUED)

Other significant events (Continued)
5. Joint establishment of special fund for acquisition of Chonggang Group through capital contribution
On 27 March 2020, the Resolution on Related Investment in relation to Joint Establishment of Special Fund for Acquisition of Chonggang Group through Capital Contribution was considered and approved at the 20th meeting of the eighth session of the board of directors of the Company. The Company was approved to participate, as a limited partner, in the joint establishment of a partnership for the bidding of 100% equity interest in Chongqing Iron & Steel (Group) Co., Ltd. ("Chonggang Group") through capital contribution. Such issue has been submitted to the general meeting for consideration. Please refer to the Announcement of Resolutions Passed at the 20th Meeting of the Eighth Session of the Board (Announcement No.: 2020-010) and the Announcement on Related Investment in relation to Joint Establishment of Special Fund for Acquisition of Chonggang Group through Capital Contribution disclosed by the Company on 30 March 2020 for details.
On 29 April 2020, the Resolution on Supplemental Matters of Related Investment in relation to Joint Establishment of Special Fund for Acquisition of Chonggang Group through Capital Contribution was considered and approved at the 21st meeting of the eighth session of the board of directors of the Company. On the basis of the principles and matters determined in the Resolution on Related Investment in relation to Joint Establishment of Special Fund for Acquisition of Chonggang Group through Capital Contribution, it further clarified, among other things, the specific plans and methods of the Company to secure the assets it intended to acquire as a limited partner, other parties participating in the joint establishment of the partnership through capital contribution and the terms of agreements.
Since the subject assets listed for sale were the entire equity interest in Chonggang Group, and the Company only intended to purchase some of its assets and the equity of some of its subsidiaries, the Company intended to jointly establish the partnership with Siyuanhe Investment and Sichuan Desheng Group Vanadium & Titanium Co., Ltd. or their designated entities to obtain the total equity interest in Chonggang Group in accordance with the bidding process, and subsequently obtain the target assets it intended to acquire by means of dissolution and distribution of assets of the partnership. Please refer to the Further Announcement on Related Investment in relation to Joint Establishment of Special Fund for Acquisition of Chonggang Group through Capital Contribution (Announcement No.: 2020-024) disclosed by the Company on 30 April 2020 for details.

Chongqing Iron & Steel Company Limited	53

Section V Signiﬁcant Events (Continued)

XV. EXPLANATIONS ON OTHER SIGNIFICANT MATTERS (CONTINUED)

Other significant events (Continued)
1. Joint establishment of special fund for acquisition of Chonggang Group through capital contribution (Continued)
  On 16 June 2020, the Resolution on Related Investment in relation to Joint Establishment of Special Fund for Acquisition of Chonggang Group through Capital Contribution was considered and approved at the 2019 annual general meeting of the Company.
  In terms of the Company's joint establishment of a partnership for acquisition of Chonggang Group through capital contribution, the uncertainty lies in the chance of successful public bidding and the bidding price subsequently.
  The Company will pay sufficient attention to and guard against the risks, and implement strict risk control as per requirements of laws and regulations in the establishment of the partnership; during the process, it will devote greater efforts to feasibility demonstration and value analysis over the project, and reduce investment risks through reasonable transaction structure design and rigid project risk evaluation and control system.
  The Company will fulfil its information disclosure obligation based on subsequent business progress in strict accordance with relevant laws and regulations in a timely manner.
2. Establishment of joint venture through capital contribution
  On 27 March 2020, the Company held the 20th meeting of the eighth session of the board of directors, at which the Resolution in relation to the Related Party Transaction on Establishment of Baowu Raw Materials Procurement Service Company Limited through Joint Contribution was considered and approved. Considering the business development needs of the Company, the Company proposed to establish Baowu Raw Materials Procurement Service Company Limited (寶武原料採購服務有限公司) ("Baowu Raw Materials" or "JV Company", a preliminary name subject to industrial and commercial registration) with its internal funds of RMB40 million in cooperation with Baowu Group, Baoshan Iron & Steel Co., Ltd. (寶山鋼鐵股份有限公司), Magang (Group) Holding Co., Ltd. (馬鋼（集團）控股有限公司), WISCO Echeng Steel Company Limited (武漢鋼鐵集團鄂城鋼鐵有限責任公司) and SGIS Songshan Co., Ltd. (廣東韶鋼松山股份有限公司) through joint contribution. Please refer to the Announcement on Connected Transaction in relation to Establishment of Joint Venture through Capital Contribution (Announcement No.: 2020- 014) disclosed by the Company on 30 March 2020 for details.

54	2020 Interim Report

Section V Signiﬁcant Events (Continued)

XV. EXPLANATIONS ON OTHER SIGNIFICANT MATTERS (CONTINUED)

Other significant events (Continued)
6. Establishment of joint venture through capital contribution (Continued)
So far, the industrial and commercial registration of such joint venture has been completed. The relevant registration information is set out below:
Enterprise name: Baowu Raw Materials Procurement Service Company Limited
Unified social credit code: 91310000MA1H34T49Q
Enterprise type: other limited liability company
Registered address: Room 1108, No. 188A, Ye Sheng Road, Lingang New City Area, Pilot Free Trade Zone, Shanghai, the PRC
Legal representative: Zhang Dianbo
Registered capital: RMB500 million
Scope of business: general items: engaged in import and export of merchandise (mainly bulk raw materials and fuels) and technologies, domestic trade (except for items otherwise stipulated), international trade; freight forwarding, shipping agency, trading of coal, wholesale and retail of coal, third party logistics services (involving no carriage), oceangoing, offshore and riparian chartering, E-commerce (except for value- added telecommunication services and financial engagements). (Except for projects that are subject to approval in accordance with the laws, the business activities should be conducted independently with the business license(s) in accordance with the laws)
7. Proposed change of the de facto controller
On 27 December 2019, the Company was informed by Siyuanhe Investment, the de facto controller of the Company, that Siyuanhe Investment and Baowu Group had signed a Letter of Intent, pursuant to which Baowu Group intends to become the de facto controller of the Company. Please refer to the Indicative Announcement on Execution of the Letter of Intent by the De Facto Controller of the Company and Proposed Change of Control (2019-047) disclosed by the Company on 28 December 2019 for details..
As agreed by Siyuanhe Investment and Baowu Group, the term for the proposed transaction commenced from 27 December 2019 and will mature on 30 June 2020. In case of failing to fulfil necessary procedures within the term, the parties can extend the term for the proposed transaction through agreement.

Chongqing Iron & Steel Company Limited	55

Section V Signiﬁcant Events (Continued)

XV. EXPLANATIONS ON OTHER SIGNIFICANT MATTERS (CONTINUED)

Other significant events (Continued)
1. Proposed change of the de facto controller (Continued)
  On 29 June 2020, the Company received Letter on Matters in Relation to the Letter of Intent from Siyuanhe Investment. The Company noted that, following the entering into of the Letter of Intent, Siyuanhe Investment and Baowu Group had been working closely on implementing works on the proposed transaction. As of 29 June 2020, Baowu Group was performing internal decision-making and approval procedures. Siyuanhe Investment and Baowu Group as well as other parties involved in the proposed transaction will strive to accomplish the decision-making and approval procedures for the proposed transaction as soon as possible despite of the impact of COVID-19 on the progress, so as to complete the proposed transaction as early as possible and procure Baowu Group to be the de facto controller of the Company.
  Certain terms in the original Letter of Intent may change but the relevant changes will not affect Baowu Group's becoming of the de facto controller of the Company. The Company will pay continuous attention to the subsequent progress. After Siyuanhe Investment and Baowu Group have entered into a formal transaction agreement, the Company will fulfill its information disclosure obligations in a timely manner in strict compliance with relevant laws and regulations.
2. Online bidding for acquisition of equity interest
  On 27 March 2020, the Company held the 20th meeting of the eighth session of the board of directors, 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 approved 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 relevant procedures and laws and regulations. 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 for details.
  On 15 July 2020, the Company and Qianxin Group signed the Equity Transaction Contract in Changshou District, Chongqing. The price of the equity transfer was RMB836,623,600. The Equity Transaction Contract shall come into effect from the date of signing and sealing by the Company and Qianxin Group, i.e., 15 July 2020. 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 for details.

56	2020 Interim Report

Section VI Movement of Ordinary Shares and the Particulars of Shareholders

INFORMATION ON CHANGES IN SHARE CAPITAL
1. Table of movement of shares
2. 1. Table of movement of shares
    During the Reporting Period, the total number of shares and the structure of the share capital of the Company remained unchanged.
  2. Explanation on movement of shares

Applicable ✓ Not applicable

3. Impact on financial indicators such as earnings per share and net assets per share from change in shares occurred from the Reporting Period up to the disclosure date of the interim report (if applicable)

Applicable ✓ Not applicable

4. Other information considered necessary by the Company or required by regulators to be disclosed

Applicable ✓ Not applicable

(II) Information on Changes in Lock-up Shares

Applicable	✓	Not applicable

II. PARTICULARS OF SHAREHOLDERS

(I) Total number of shareholders:

Total number of ordinary shareholders as of the end of the Reporting
Period	145,157
Total number of preferential shareholders with resumed voting rights as
of the end of the Reporting Period	0

Chongqing Iron & Steel Company Limited	57

Section VI Movement of Ordinary Shares and the Particulars of Shareholders (Continued)

PARTICULARS OF SHAREHOLDERS (CONTINUED)
1. Table of Shareholdings of the Top Ten Shareholders, Top Ten Tradable Share Holders (or Shareholders Without Trading Limitations) as of the End of the Reporting Period

							Unit: share
Shareholdings of top ten shareholders

		Number of			Pledged or frozen
	Increase/	shares held		Number
	Decrease	as at the		of shares
	during	end of the		held subject
Name of shareholder	Reporting	Reporting		to trading	Status of		Type of
(full name)	Period	Period	Percentage	moratorium	shares	Number	shareholder
			(%)

Chongqing Changshou Iron &	0	2,096,981,600	23.51	0	Pledged	2,096,981,600	Domestic non-
Steel Company Limited							state-owned
							legal person
HKSCC NOMINEES LIMITED	-400	531,217,021	5.96	0	Unknown	-	Foreign legal
							person
Chongqing Qianxin Energy	0	427,195,760	4.79	0	Pledged	427,190,070	Unknown
Environmental Protection
Company Limited
Chongqing Rural Commercial	0	289,268,939	3.24	0	Nil	0	Unknown
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 Co., Ltd.	0	226,042,920	2.53	0	Nil	0	Unknown
Industrial Bank Co., Ltd.	0	219,633,096	2.46	0	Nil	0	Unknown
Chongqing Branch
Agricultural Bank of China	0	216,403,628	2.43	0	Nil	0	Unknown
Limited Chongqing Branch
China Shipbuilding Industry	0	211,461,370	2.37	0	Nil	0	Unknown
Complete Logistics Co., Ltd.
(中船工業成套物流有限公司)

58	2020 Interim Report

Section VI Movement of Ordinary Shares and the Particulars of Shareholders (Continued)

PARTICULARS OF SHAREHOLDERS (CONTINUED)
1. Table of Shareholdings of the Top Ten Shareholders, Top Ten Tradable Share Holders (or Shareholders Without Trading Limitations) as of the End of the Reporting Period (Continued)

Shareholdings of Top Ten Shareholders Without Trading Limitations

	Shareholdings	Type and number of shares
	of tradable
	shares without
	trading
Name of shareholder	limitations	Type	Number

Chongqing Changshou Iron & Steel Company Limited	2,096,981,600	RMB denominated	2,096,981,600
		ordinary shares
HKSCC NOMINEES LIMITED	531,217,021	Overseas listed	531,217,021
		foreign shares
Chongqing Qianxin Energy Environmental Protection	427,195,760	RMB denominated	427,195,760
Company Limited		ordinary shares
Chongqing Rural Commercial Bank Co., Ltd.	289,268,939	RMB denominated	289,268,939
		ordinary shares
Chongqing Guochuang Investment and Management	278,288,059	RMB denominated	278,288,059
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 Chongqing Branch	216,403,628	RMB denominated	216,403,628
		ordinary shares
China Shipbuilding Industry Complete Logistics Co.,	211,461,370	RMB denominated	211,461,370
Ltd. (中船工業成套物流有限公司)		ordinary shares

Chongqing Iron & Steel Company Limited	59

Section VI Movement of Ordinary Shares and the Particulars of Shareholders (Continued)

PARTICULARS OF SHAREHOLDERS (CONTINUED)
1. Table of Shareholdings of the Top Ten Shareholders, Top Ten Tradable Share Holders (or Shareholders Without Trading Limitations) as of the End of the Reporting Period (Continued)

The above shareholders' connected relationship or concerted action

There is no connection between Chongqing Changshou Iron

Steel Company Limited, 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 not aware of any connected relationship among the other 9 shareholders or whether they are acting in concert.

Preferential shareholders with resumed voting rights N/A and their shareholding

Shareholdings and Trading Limitations of Top Ten Shareholders with Trading Limitations

Applicable ✓ Not applicable

Strategic investors or ordinary legal persons who became top ten shareholders due to placing of new shares

Applicable ✓ Not applicable

CHANGES IN THE CONTROLLING SHAREHOLDER OR THE DE FACTO CONTROLLER

Applicable ✓ Not applicable

60	2020 Interim Report

Section VII Related Information on Preference Shares

Applicable ✓ Not applicable

Chongqing Iron & Steel Company Limited	61

Section VIII Directors, Supervisors and Senior Management

INFORMATION ON CHANGES IN SHAREHOLDINGS
1. Changes in shareholdings of directors, supervisors and senior management currently holding office or having resigned during the Reporting Period

✓	Applicable			Not applicable
							Unit: share


						Increase/
				Shareholding		Decrease in
				at the		shareholding
				beginning of	Shareholding	during the	Reason for
				the Reporting	at the end of the	Reporting	changes in
Name	Title	Period	Reporting Period	Period	shareholding

Wang Li	Director	113,800	113,800	0	No change Other
							explanations
Other Information
	Applicable			Not applicable
		✓

Information on incentive share option granted to directors, supervisors and senior management during the Reporting Period

Applicable ✓ Not applicable

62	2020 Interim Report

Section VIII Directors, Supervisors and Senior Management (Continued)

C H A N G E S I N D I R E C T O R S , S U P E R V I S O R S A N D S E N I O R MANAGEMENT OF THE COMPANY

✓	Applicable		Not applicable


Name		Position	Change

Zhang Jingang		Chairman	Election
Liu Jianrong		Director	Election
Zou An		Director	Election
Zhou Ping		Director	Election
Wu Xiaoping		Chairman of the Supervisory Committee	Election
Wang Cunlin		Supervisor	Election
Xu Xudong		Supervisor	Election
Zhao Wei		Staff Representative Supervisor	Election
Zou An		Chief Financial Officer	Appointment
Zhou Zhuping		Chairman	Resigned
Li Yongxiang		Director	Resigned
Wang Li		Director	Resigned
Zhang Shuogong		Director	Resigned
Zhang Wenxue		Chairman of the Supervisory Committee	Resigned
Lu Junyong		Supervisor	Resigned
Yin Dong		Supervisor	Resigned
Xiao Yuxin		Staff Representative Supervisor	Resigned
Lv Feng		Chief Financial Officer	Resigned
Wang Bulin		Deputy General Manager	Resigned

Details on changes in directors, supervisors and senior management of the Company

✓	Applicable		Not applicable

Chongqing Iron & Steel Company Limited	63

Section VIII Directors, Supervisors and Senior Management (Continued)

C H A N G E S I N D I R E C T O R S , S U P E R V I S O R S A N D S E N I O R MANAGEMENT OF THE COMPANY (CONTINUED)
1. Details on changes in directors of the Company
2. 1. On 15 June 2020, the Company received written resignation letters from Mr. Zhou Zhuping, the chairman of the Company; and Mr. Li Yongxiang, Mr. Wang Li and Mr. Zhang Shuogong, directors of the Company. Due to work adjustments, Mr. Zhou Zhuping resigned from the position as the chairman, a director and other positions of the eighth session of the Board; and Mr. Li Yongxiang, Mr. Wang Li and Mr. Zhang Shuogong resigned, respectively, from the position as a director and other positions of the eighth session of the Board. Their resignations shall be subject to the election of new directors at the general meeting of the Company.
  2. On 9 July 2020, the Company convened the 2020 first extraordinary general meeting, at which Mr. Zhang Jingang, Mr. Liu Jianrong, Mr. Zou An and Mr. Zhou Ping were elected as directors of the eighth session of the Board of the Company.
    On the same date, the Company convened the 24th meeting of the eighth session of the Board, at which Mr. Zhang Jingang was elected as the chairman of the Company.

Details on changes in supervisors of the Company
1. On 15 June 2020, the Company received written resignation letters from Mr. Zhang Wenxue, the Chairman of the Supervisory Committee, and Mr. Lu Junyong and Mr. Yin Dong, supervisors of the Company. Due to work adjustments, Mr. Zhang Wenxue resigned from the position as the Chairman and a supervisor of the Supervisory Committee, and Mr. Lu Junyong and Mr. Yin Dong resigned, respectively, from the position as a supervisor of the Company. Their resignations shall be subject to the election of new supervisors at the general meeting of the Company.
2. On 9 July 2020, the Company convened the 2020 first extraordinary general meeting, at which Mr. Wu Xiaoping, Mr. Wang Cunlin and Mr. Xu Xudong were elected as supervisors of the eighth session of the Supervisory Committee.
  On the same date, the Company convened the 16th meeting of the eighth session of the Supervisory Committee, at which Mr. Wu Xiaoping was elected as the chairman of the Supervisory Committee of the Company.
3. Due to work adjustments, Mr. Xiao Yuxin resigned from the position as a staff representative supervisor of the Supervisory Committee with effect from 12 August 2020.
  On 12 August 2020, the Company convened the 4th joint meeting of the first session of staff congress, at which Mr. Zhao Wei was elected as a staff representative supervisor of the eighth session of the Supervisory Committee of the Company.

64	2020 Interim Report

Section VIII Directors, Supervisors and Senior Management (Continued)

C H A N G E S I N D I R E C T O R S , S U P E R V I S O R S A N D S E N I O R MANAGEMENT OF THE COMPANY (CONTINUED)
1. Details on changes in senior management of the Company
2. 1. On 27 March 2020, Mr. Lv Feng requested to resign from the position as the chief financial officer (the financial controller). Upon his resignation from such position, Mr. Lv Feng still holds the position as a deputy general manager of the Company.
    On the same date, the Company convened the 20th meeting of the eighth session of the Board, at which Mr. Zou An was elected as the chief financial officer (the financial controller) of the Company.
  2. On 9 July 2020, the Company received a written resignation letter from Mr. Wang Bulin, a deputy general manager of the Company. Due to work adjustments, Mr. Wang Bu Lin resigned from the position as a deputy general manager of the Company.

III. OTHER EXPLANATIONS

Applicable ✓ Not applicable

Chongqing Iron & Steel Company Limited	65

Section IX Relevant Information on Corporate Bond

Applicable ✓ Not applicable

66	2020 Interim Report

Section X Financial Report Consolidated Statement of Financial Position

As at 30 June 2020

AUDITOR'S REPORT
Applicable ✓ Not applicable

FINANCIAL STATEMENTS

		Unit: RMB '000 Currency: RMB

Items	Note VII	30 June 2020	31 December 2019

Current assets:
Cash and bank balances	1	3,208,632	1,783,747
Financial assets held for trading	2	-	400,000
Trade receivables	3	11,747	5,610
Receivables financing	4	2,528,817	861,373
Prepayments	5	647,644	751,498
Other receivables	6	7,203	78,132
Inventories	7	2,979,319	3,931,513
Other current assets	8	5,055	43,410

Total current assets		9,388,417	7,855,283
Non-current assets:
Long-term equity investments	10	28,258	28,258
Other equity investments	9	15,000	5,000
Property, plant and equipment	11	16,112,970	16,442,264
Construction in progress	12	637,162	171,858
Intangible assets	13	2,361,008	2,392,114
Deferred tax assets	14	68,436	68,436
Other non-current assets	15	-	12,513

Total non-current assets		19,222,834	19,120,443

Total assets		28,611,251	26,975,726

The accompanying notes form an integral part of these financial statements

Chongqing Iron & Steel Company Limited	67

Section X Financial Report

Consolidated Statement of Financial Position (Continued)

As at 30 June 2020

FINANCIAL STATEMENTS (CONTINUED)

Items	Note VII	30 June 2020	31 December 2019

Current liabilities:
Short-term borrowings	17	695,273	384,528
Notes payable	18	88,805	91,127
Trade payables	19	2,104,786	1,726,883
Contract liabilities	20	1,175,270	1,145,615
Employee benefits payable	21	125,703	257,143
Taxes payable	22	146,648	70,867
Other payables	23	555,798	421,768
Non-current liabilities due within one year	24	456,526	841,576
Other current liabilities		152,785	150,208

Total current liabilities		5,501,594	5,089,715
Non-current liabilities:
Bonds payable	25	993,347	-
Long-term payables	26	333,333	-
Long-term employee benefits payable	27	175,707	201,737
Deferred income	28	37,086	38,271
Other non-current liabilities	29	2,050,000	2,250,000

Total non-current liabilities		3,589,473	2,490,008

Total liabilities		9,091,067	7,579,723

The accompanying notes form an integral part of these financial statements

68	2020 Interim Report

Section X Financial Report Consolidated Statement of Financial Position (Continued)

				As at 30 June 2020
II.	FINANCIAL STATEMENTS (CONTINUED)

	Items	Note VII	30 June 2020	31 December 2019

	Owners' equity:
	Share capital	30	8,918,602	8,918,602
	Capital reserves	31	19,282,147	19,282,147
	Less: Treasury shares	32	65,940	62,314
	Special reserves	33	21,025	14,573
	Surplus reserves	34	606,991	606,991
	Accumulated losses	35	(9,242,641)	(9,363,996)

	Total owners' equity		19,520,184	19,396,003

	Total liabilities and owners' equity		28,611,251	26,975,726

The accompanying notes form an integral part of these financial statements

The financial statements have been signed by:

Legal Representative:	Chief accountant:	Head of the accounting department:
Liu Jianrong	Zou An	Lei Xiaodan

Chongqing Iron & Steel Company Limited	69

Section X Financial Report

Statement of Financial Position of the Parent Company

As at 30 June 2020

FINANCIAL STATEMENTS (CONTINUED)

		Unit: RMB '000 Currency: RMB

Items	Note XV	30 June 2020	31 December 2019

Current assets:
Cash and bank balances		3,202,852	1,779,736
Financial assets held for trading		-	400,000
Trade receivables	1	11,774	5,610
Receivables financing		2,528,817	861,373
Prepayments		609,907	707,289
Other receivables	2	7,098	78,027
Inventories		2,971,875	3,931,513
Other current assets		4,087	43,410

Total current assets		9,336,410	7,806,958
Non-current assets:
Long-term equity investments	3	28,258	28,258
Other equity investments		15,000	5,000
Property, plant and equipment		16,112,806	16,442,087
Construction in progress		637,162	171,858
Intangible assets		2,361,008	2,392,114
Deferred tax assets		68,192	68,192
Other non-current assets		-	12,513

Total non-current assets		19,222,426	19,120,022

Total assets		28,558,836	26,926,980

The accompanying notes form an integral part of these financial statements

70	2020 Interim Report

Section X Financial Report

Statement of Financial Position of the Parent Company (Continued)

				As at 30 June 2020
II.	FINANCIAL STATEMENTS (CONTINUED)

	Items	Note XV	30 June 2020	31 December 2019

	Current liabilities:
	Short-term borrowings		695,273	384,528
	Notes payable		88,805	91,127
	Trade payables		2,104,540	1,726,883
	Contract liabilities		1,133,379	1,105,972
	Employee benefits payable		125,703	257,143
	Taxes payable		146,538	70,398
	Other payables		555,628	421,590
	Non-current liabilities due within one year		456,526	841,576
	Other current liabilities		147,339	144,958

	Total current liabilities		5,453,731	5,044,175
	Non-current liabilities:
	Bonds payable		993,347	-
	Long-term payables		333,333	-
	Long-term employee benefits payable		175,707	201,737
	Deferred income		37,086	38,271
	Other non-current liabilities		2,050,000	2,250,000

	Total non-current liabilities		3,589,473	2,490,008

	Total liabilities		9,043,204	7,534,183

	Shareholders' equity:
	Share capital		8,918,602	8,918,602
	Capital reserves		19,313,090	19,313,090
	Less: Treasury shares		65,940	62,314
	Special reserves		21,025	14,573
	Surplus reserves		577,012	577,012
	Accumulated losses		(9,248,157)	(9,368,166)

	Total shareholders' equity		19,515,632	19,392,797

	Total liabilities and owners' equity		28,558,836	26,926,980

The accompanying notes form an integral part of these financial statements

Chongqing Iron & Steel Company Limited	71

Section X Financial Report

Consolidated Income Statement

For the six months ended 30 June 2020

FINANCIAL STATEMENTS (CONTINUED)

				Unit: RMB '000 Currency: RMB

				For the	For the
				six months ended	six months ended
Items		Note VII	30 June 2020	30 June 2019

I.	Revenue	36	10,927,367	11,483,560

	Less: Cost of sales	36	10,342,993	10,342,032
		Taxes and surcharges	37	88,595	92,194
		Distribution and selling expenses	38	53,355	45,161
		General and administrative
		expenses	39	244,093	330,030
		Finance expenses	40	90,148	75,985
		Including: Interest expenses		110,693	106,499
		Interest income		23,202	33,469
	Add:	Other income	41	6,515	1,227
		Investment income	42	6,791	5,351

II.	Operating profit		121,489	604,736
	Add:	Non-operating income	43	684	13,252
	Less: Non-operating expenses	44	747	665

III.	Total profit		121,426	617,323
	Less: Income tax expenses	45	71	1,595

The accompanying notes form an integral part of these financial statements

72	2020 Interim Report

Section X Financial Report

Consolidated Income Statement (Continued)

For the six months ended 30 June 2020

FINANCIAL STATEMENTS (CONTINUED)

		For the	For the
		six months ended	six months ended
Items	Note VII	30 June 2020	30 June 2019

IV. Net Profit		121,355	615,728

Breakdown by continuity of operations

1. Net profit from continuing

		operations	121,355	615,728
(2)	Breakdown by attributable
		interests
	1.	Net profit attributable to
		shareholders of the parent	121,355	615,728
	2.	Non-controlling interests	-	-

Other comprehensive income after

	tax	121,355	615,728

VI.	Total comprehensive income	121,355	615,728
	Total comprehensive income
	attributable to shareholders of
	the parent	121,355	615,728
	Total comprehensive income
	attributable to non-controlling
	interests	-	-

VII.	Earnings per share：	46

Basic earnings per share

(RMB/share)

0.01

0.07

Diluted earnings per share

(RMB/share)	0.01	0.07

The accompanying notes form an integral part of these financial statements

Chongqing Iron & Steel Company Limited	73

Section X Financial Report

Income Statement of the Parent Company

For the six months ended 30 June 2020

FINANCIAL STATEMENTS (CONTINUED)

				Unit: RMB '000 Currency: RMB

				For the	For the
				six months ended	six months ended
Items		Note XVI	30 June 2020	30 June 2019

I.	Revenue	4	10,933,097	11,486,217

	Less: Cost of sales	4	10,350,437	10,350,441
		Taxes and surcharges		88,528	91,997
		Distribution and selling expenses		53,116	44,950
		General and administrative
		expenses		244,093	330,030
		Finance expenses		90,157	75,989
		Including: Interest expenses		110,693	106,499
		Interest income		23,193	33,463
	Add:	Other income		6,515	1,227
		Investment income	5	6,791	9,571

II.	Operating profit		120,072	603,608
	Add:	Non-operating income		684	13,252
	Less: Non-operating expenses		747	665

III.	Total profit		120,009	616,195
	Less: Income tax expenses		-	-

IV.	Net Profit		120,009	616,195
	Breakdown by continuity of operations

1. Net profit from continuing

operations	120,009	616,195

Other comprehensive income

after tax	120,009	616,195

VI. Total comprehensive income	120,009	616,195

The accompanying notes form an integral part of these financial statements

74	2020 Interim Report

Section X Financial Report Consolidated Statement of Changes in Equity

For the six months ended 30 June 2020

FINANCIAL STATEMENTS (CONTINUED)

						Unit: RMB'000	Currency: RMB

				Six months ended 30 June 2020
			Total equity attributable to shareholders of the parent company
			Less:	Other				Non-	Total
	Share	Capital	Treasury	comprehensive	Special	Surplus	Accumulated	controlling	shareholders'
Items	capital	reserves	shares	income	reserves	reserves	losses	interests	equity

Closing balances of the preceding year and opening

balances of the current period

8,918,602

19,282,147

62,314

14,573

606,991

(9,363,996)

19,396,003

Changes in the current period

	(decrease is represented by "-")	-	-	3,626	-	6,452	-	121,355	-	124,181
(I)	Total comprehensive income	-	-	-	-	-	-	121,355	-	121,355

Shareholders' contribution and decrease in share

			capital	-	-	3,626	-	-	-	-	-	(3,626)
		1.	Others	-	-	3,626	-	-	-	-	-	(3,626)
	(III)	Special reserves	-	-	-	-	6,452	-	-	-	6,452
		1.	Amount established during the period	-	-	-	-	12,954	-	-	-	12,954
		2.	Amount utilized during the period	-	-	-	-	6,502	-	-	-	6,502
III.	Closing balance for the period	8,918,602	19,282,147	65,940	-	21,025	606,991	(9,242,641)	-	19,520,184

The accompanying notes form an integral part of these financial statements

Chongqing Iron & Steel Company Limited	75

Section X Financial Report

Consolidated Statement of Changes in Equity (Continued)

For the six months ended 30 June 2020

FINANCIAL STATEMENTS (CONTINUED)

				Six months ended 30 June 2019
			Total equity attributable to shareholders of the parent company
			Less:	Other				Non-	Total
	Share	Capital	Treasury	comprehensive	Special	Surplus	Accumulated	controlling	shareholders'
Items	capital	reserves	shares	income	reserves	reserves	losses	interests	equity

Closing balances of the preceding year and opening

balances of the current period

8,918,602

19,282,147

13,644

606,991

(10,289,719)

18,531,665

Changes in the current period

	(decrease is represented by "-")	-	-	62,314	-	8,604	-	615,728	-	562,018
(I)	Total comprehensive income	-	-	-	-	-	-	615,728	-	615,728

Shareholders' contribution and decrease in share

			capital	-	-	62,314	-	-	-	-	-	(62,314)
		1.	Others	-	-	62,314	-	-	-	-	-	(62,314)
	(III)	Special reserves	-	-	-	-	8,604	-	-	-	8,604
		1.	Amount established during the period	-	-	-	-	12,840	-	-	-	12,840
		2.	Amount utilized during the period	-	-	-	-	4,236	-	-	-	4,236
III.	Closing balance for the period	8,918,602	19,282,147	62,314	-	22,248	606,991	(9,673,991)	-	19,093,683

The accompanying notes form an integral part of these financial statements

76	2020 Interim Report

Section X Financial Report Statement of Changes in Equity of the Parent Company

For the six months ended 30 June 2020

FINANCIAL STATEMENTS (CONTINUED)

					Unit: RMB'000	Currency: RMB

			Six months ended 30 June 2020
			Less:	Other					Total
	Share	Capital	Treasury	comprehensive	Special	Surplus	Accumulated	shareholders'
Items	capital	reserves	shares	income	reserves	reserves		losses	equity

Closing balances of the preceding year and opening balances of the current

period	8,918,602	19,313,090	62,314	-	14,573	577,012	(9,368,166)	19,392,797
II. Changes in the current period
(decrease is represented by "-")	-	-	3,626	-	6,452	-	120,009	122,835
(I)	Total comprehensive income	-	-	-	-	-	-	120,009	120,009
(II)	Shareholders' contribution and
	decrease in share capital	-	-	3,626	-	-	-	-	(3,626)
	1. Others	-	-	3,626	-	-	-	-	(3,626)
(III)	Special reserves	-	-	-	-	6,452	-	-	6,452

1. Amount established during the

	period	-	-	-	-	12,954	-	-	12,954
2.	Amount utilized during the period	-	-	-	-	6,502	-	-	6,502
III. Closing balance for the period	8,918,602	19,313,090	65,940	-	21,025	577,012	(9,248,157)	19,515,632


				Six months ended 30 June 2019
				Less:	Other				Total
		Share	Capital	Treasury	comprehensive	Special	Surplus	Accumulated	shareholders
Items		capital	reserves	shares	income	reserves	reserves	losses	' equity

Closing balances of the preceding year and opening balances of the current

period	8,918,602	19,313,090	-	-	13,644	577,012	(10,292,036)	18,530,312
II. Changes in the current period
(decrease is represented by "-")	-	-	62,314	-	8,604	-	616,195	562,485
(I)	Total comprehensive income	-	-	-	-	-	-	616,195	616,195
(II)	Shareholders' contribution and
	decrease in share capital	-	-	62,314	-	-	-	-	(62,314)
	1. Others	-	-	62,314	-	-	-	-	(62,314)
(III)	Special reserves	-	-	-	-	8,604	-	-	8,604

1. Amount established during the

	period	-	-	-	-	12,840	-	-	12,840
2.	Amount utilized during the period	-	-	-	-	4,236	-	-	4,236
III. Closing balance for the period	8,918,602	19,313,090	62,314	-	22,248	577,012	(9,675,841)	19,092,797

The accompanying notes form an integral part of these financial statements

Chongqing Iron & Steel Company Limited	77

Section X Financial Report Consolidated Statement of Cash Flows

For the six months ended 30 June 2020

FINANCIAL STATEMENTS (CONTINUED)

		Unit: RMB'000	Currency: RMB

		Six months	Six months
		ended 30	ended 30
Items	Note VII	June 2020	June 2019

I. Cash flows from operating activities:
Cash received from sale of goods and
rendering of services		9,248,203	10,334,249
Other cash received relating to operating
activities	47	188,980	61,079

Sub-total of cash inflows from operating
activities		9,437,183	10,395,328
Cash paid for purchase of goods and
services		8,155,684	9,030,724
Cash paid to and on behalf of employees		650,980	743,222
Cash paid for all types of taxes		279,479	365,205
Other cash paid relating to operating
activities	47	268,454	167,760

Sub-total of cash outflows from operating
activities		9,354,597	10,306,911
Net cash flows from operating activities	48	82,586	88,417

The accompanying notes form an integral part of these financial statements

78	2020 Interim Report

Section X Financial Report Consolidated Statement of Cash Flows (Continued)

For the six months ended 30 June 2020

FINANCIAL STATEMENTS (CONTINUED)

		Six months	Six months
		ended 30	ended 30
Items	Note VII	June 2020	June 2019

II. Cash flows from investing activities:
Cash received from disposal of investments		433,000	404,400
Cash received from return on investments		6,791	5,351

Sub-total of cash inflows from investing
activities		439,791	409,751
Cash paid for acquisition of property, plant
and equipment, intangible assets and
other long-term assets		145,638	36,926
Cash paid for acquisition of investments		43,000	587,058

Sub-total of cash outflows from investing
activities		188,638	623,984
Net cash flows from investing activities		251,153	(214,233)

The accompanying notes form an integral part of these financial statements

Chongqing Iron & Steel Company Limited	79

Section X Financial Report

Consolidated Statement of Cash Flows (Continued)

For the six months ended 30 June 2020

FINANCIAL STATEMENTS (CONTINUED)

		Six months	Six months
		ended 30	ended 30
Items	Note VII	June 2020	June 2019

III. Cash flows from financing activities:
Cash received from borrowings		2,004,500	105,000
Other cash received relating to financing
activities	47	-	795,088

Sub-total of cash inflows from financing
activities		2,004,500	900,088
Cash repayments of borrowings		870,000	200,000
Cash paid for distribution of dividends or
profits, and for interest expenses		85,445	79,446
Other cash paid relating to financing
activities	47	9,545	250,425

Sub-total of cash outflows from financing
activities		964,990	529,871
Net cash flows from financing activities		1,039,510	370,217

IV. Effect of changes in exchange rate on
cash and cash equivalents		-	-
V. Net increase in cash and cash
equivalents		1,373,249	244,401
Add: Cash and cash equivalents at the
beginning of the period		1,595,323	1,969,543
VI. Cash and cash equivalents at the end of
the period	48	2,968,572	2,213,944

The accompanying notes form an integral part of these financial statements

80	2020 Interim Report

	Section X	Financial Report
Statement of Cash Flows of the Parent Company
		For the six months ended 30 June 2020
II. FINANCIAL STATEMENTS (CONTINUED)
		Unit: RMB'000	Currency: RMB

		Six months	Six months
		ended 30	ended 30
	Items	June 2020	June 2019

	I. Cash flows from operating activities:
	Cash received from sale of goods and rendering of
	services	8,975,505	10,328,057
	Other cash received relating to operating activities	187,118	61,079

	Sub-total of cash inflows from operating activities	9,162,623	10,389,136
	Cash paid for purchase of goods and services	7,885,766	9,030,724
	Cash paid to and on behalf of employees	650,980	743,222
	Cash paid for all types of taxes	278,758	363,825
	Other cash paid relating to operating activities	266,302	167,564

	Sub-total of cash outflows from operating activities	9,081,806	10,305,335
	Net cash flows from operating activities	80,817	83,801

The accompanying notes form an integral part of these financial statements

Chongqing Iron & Steel Company Limited	81

Section X Financial Report

Statement of Cash Flows of the Parent Company (Continued)

For the six months ended 30 June 2020

II. FINANCIAL STATEMENTS (CONTINUED)

	Six months	Six months
	ended 30	ended 30
Items	June 2020	June 2019

II. Cash flows from investing activities:
Cash received from disposal of investments	433,000	404,400
Cash received from return on investments	6,791	9,571

Sub-total of cash inflows from investing activities	439,791	413,971
Cash paid for acquisition of property, plant and
equipment, intangible assets and other long-term
assets	145,638	36,926
Cash paid for acquisition of investments	43,000	587,058

Sub-total of cash outflows from investing activities	188,638	623,984
Net cash flows from investing activities	251,153	(210,013)

The accompanying notes form an integral part of these financial statements

82	2020 Interim Report

Section X Financial Report Statement of Cash Flows of the Parent Company (Continued)

For the six months ended 30 June 2020

II.	FINANCIAL STATEMENTS (CONTINUED)

		Six months	Six months
		ended 30	ended 30
	Items	June 2020	June 2019

	III. Cash flows from financing activities:
	Cash received from borrowings	2,004,500	105,000
	Other cash received relating to financing activities	-	795,088

	Sub-total of cash inflows from financing activities	2,004,500	900,088
	Cash repayments of borrowings	870,000	200,000
	Cash paid for distribution of dividends or profits, and for
	interest expenses	85,445	79,446
	Other cash paid relating to financing activities	9,545	250,425

	Sub-total of cash outflows from financing activities	964,990	529,871
	Net cash flows from financing activities	1,039,510	370,217

	IV. Effect of changes in exchange rate on cash and cash
	equivalents	-	-
	V. Net increase in cash and cash equivalents	1,371,480	244,005
	Add: Cash and cash equivalents at the beginning of the
	period	1,591,312	1,967,354
	VI. Cash and cash equivalents at the end of the period	2,962,792	2,211,359

The accompanying notes form an integral part of these financial statements

Chongqing Iron & Steel Company Limited	83

Section X Financial Report

Notes to Financial Statements

January-June 2020

III BASIC INFORMATION ON THE COMPANY

According to the approval of Ti Gai Sheng Zi [1997] No. 127 issued by the State Commission for Restructuring Economic Systems and the approval of Guo Zi Qi Fa [1997] No. 156 issued by the State- owned Assets Administration Bureau, Chongqing Iron & Steel Company Limited (the "Company") was established as a limited liability company by Chongqing Iron & Steel (Group) Co., Ltd. ("CISG") as the sole promoter. The Company was incorporated and registered with Chongqing Municipal Administration of Industry and Commerce on 11 August 1997, whose headquarter is located in Changshou Economic Development Zone of Chongqing. The Company holds the business license with unified social credit code of 91500000202852965T, with the registered capital of RMB8,918,602,000 and the sum of 8,918,602,000 shares with par value of RMB1 each, including 81,500,000 A shares with restricted condition, 8,298,975,000 A shares without any restricted condition and 538,127,000 H shares. The Company's shares were listed in the Stock Exchange of Hong Kong Ltd. and listed in Shanghai Stock Exchange on 17 October 1997 and 28 February 2007, respectively.

Pursuant to the reorganization plan, 2,096,981,600 shares of the Company held by CISG were transferred to Chongqing Changshou Iron and Steel Co., Ltd. (重慶長壽鋼鐵有限公司) ("Changshou Iron & Steel") on 27 December 2017, and the share transfer procedures were completed with China Securities Depository and Clearing Corporation Limited. Subsequent to the completion of the share transfer, Changshou Iron & Steel holds 2,096,981,600 shares of the Company, with a shareholding percentage of 23.51%, and became the controlling shareholder of the Company.

The Company and its subsidiaries (collectively the "Group") are mainly engaged in the production, processing and sale of steel plates, steel sections, wire rods, bar materials, billets and thin plates, and in the production and sale of coking and coal chemical products, pig iron & grain slag, steel slag, and steel scrap.

The financial statements were approved by the Board of Directors of the Company on 25 August 2020.

The scope of consolidation of the consolidated financial statements is determined on the basis of control, the scope of consolidation remains unchanged during the period.

84	2020 Interim Report

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

IV PREPARATION BASIS OF THE FINANCIAL STATEMENTS

These financial statements have been prepared in accordance with the "Accounting Standards for Business Enterprises - Basic Standards" promulgated by the Ministry of Finance and the specific accounting standards, subsequent practice notes, interpretations and other relevant regulations as subsequently announced and revised (collectively "CAS").

These financial statements have been prepared in accordance with the "Accounting Standards for Business Enterprises - No. 32 Interim Financial Reporting" issued by the Ministry of Finance and the "Contents and Formats requirements in the Preparation Convention of Information Disclosure by Companies Offering Securities to the Public No. 3 - Contents and Formats Rules on Interim Financial Reporting (revised in 2017)" promulgated by the China Securities Regulatory Commission, and hence do not include all the information and disclosures of the annual financial statements for the year ended 31 December 2019. Accordingly, these interim financial statements should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2019.

These financial statements are prepared on a going concern basis.

Other than certain financial instruments, these financial statements have been prepared at historical cost convention. If the assets are impaired, corresponding provisions for impairment shall be made according to relevant provisions.

Chongqing Iron & Steel Company Limited	85

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

V SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

The Group has determined the specific accounting policies and accounting estimates based on the characteristics of the operation, especially those related to provision for bad debt of receivables, inventory pricing method, depreciation of property, plant and equipment ("PPE"), and amortization of intangible assets, etc.

1. Statement of compliance

These financial statements have been prepared in accordance with CAS, and present truly and completely the financial position of the Group and the Company as at 30 June 2020 and the results of their operations and cash flows for the six months ended 30 June 2020.

2. Accounting period

The accounting year of the Group is from 1 January to 31 December of each calendar year. The current accounting period starts on 1 January 2020 and ends on 30 June 2020.

3. Functional currency

The functional currency of the Group and the currency used in preparing the financial statements are Renminbi. The amounts in the financial statements were denominated in thousands of Renminbi, unless otherwise stated.

86	2020 Interim Report

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

V SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)

4. Business combination

Business combinations are classified into business combinations involving entities under common control and business combinations not involving entities under common control.

Business combination involving entities under common control

A business combination involving entities under common control is a business combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory. For a business combination involving entities under common control, the party that, on the combination date, obtains control of another entity participating in the combination is the absorbing party, while that other entity participating in the combination is a party being absorbed. Combination date is the date on which the absorbing party effectively obtains control of the party being absorbed.

Assets and liabilities that are obtained by the absorbing party in a business combination involving entities under common control, including goodwill arising from the acquisition of the party being absorbed by the ultimate controller, shall be accounted for on the basis of the carrying amounts on the financial statements of the ultimate controller at the combination date. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination (or the aggregate face value of shares issued as consideration) shall be adjusted to share premium under capital reserves and the balance transferred from capital reserves under the old accounting system. If the share premium is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.

Chongqing Iron & Steel Company Limited	87

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

V SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)

4. Business combination (Continued)

Business combination not involving entities under common control

A business combination not involving entities under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the combination. For a business combination not involving entities under common control, the party that, on the acquisition date, obtains control of another entity participating in the combination is the acquirer, while that other entity participating in the combination is the acquiree. Acquisition date refers to the date on which the acquirer effectively obtains control of the acquiree.

The acquirer shall measure the acquiree's identifiable assets, liabilities and contingent liabilities acquired in the business combination not involving entities under common control at their fair values on the acquisition date.

The excess of the fair value of the sum of the consideration paid (or the fair value of equity securities issued) for business combination and equity interests in the acquiree held prior to the date of acquisition over the share of the attributable net identifiable assets of the acquiree, measured at fair value, was recognized as goodwill, which is subsequently measured at cost less cumulative impairment loss. In case the fair value of the sum of the consideration paid (or fair value of equity securities issued) and equity interests in the acquiree held prior to the date of acquisition is less than the fair value of the share of the attributable net identifiable assets of the acquiree, a review of the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities, the consideration paid for the combination (or fair value of equity securities issued) and the equity interests in the acquiree held prior to the date of acquisition is conducted. If the review indicates that the fair value of the sum of the consideration paid (or the fair value of equity securities issued) and equity interests in the acquiree held prior to the date of acquisition is indeed less than the fair value of the share of the attributable net identifiable assets of the acquiree, the difference is recognized in current profit or loss.

88	2020 Interim Report

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

V SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)

5. Consolidated financial statements

The consolidation scope of consolidated financial statements is determined on the basis of control, including the financial statements of the Company and all of its subsidiaries. A subsidiary is an entity that is controlled by the Company, including separable parts of an enterprise or investee and structured entities controlled by the Company, etc.

In preparation of consolidated financial statements, the subsidiaries use the same accounting period and accounting policies as those of the Company. All intra-group assets, liabilities, equity interests, income, expenses and cash flow are eliminated in full on consolidation.

Where the amount of losses of a subsidiary attributable to the non-controlling shareholders in the current period exceeds their share of the opening balance of owner's equity of the subsidiary, the excess shall be allocated against non-controlling interests.

For subsidiaries acquired through business combinations not involving entities under common control, the operating results and cash flows of the acquiree shall be included in the consolidated financial statements, from the day on which the Group gains control, till the Group ceases the control of it. While preparing the consolidated financial statements, the acquirer shall adjust the subsidiary's financial statements, on the basis of the fair values of the identifiable assets, liabilities and contingent liabilities recognized on the acquisition date.

For subsidiaries acquired through business combinations involving entities under common control, the operating results and cash flows of the acquiree shall be included in the consolidated financial statements from the beginning of the period in which the combination occurs. While preparing the comparative consolidated financial statements, adjustments are made to related items in the financial statements for the prior period as if the reporting entity established through combination has been existing since the ultimate controller begins to exercise control.

The Group's control over an investee is re-assessed if change in relevant facts and situations causes changes in one or more of the control substances.

Chongqing Iron & Steel Company Limited	89

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

V SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)

6. Classification of joint arrangement and joint operation

A joint arrangement is classified as either a joint operation or a joint venture. A joint operation is a joint arrangement whereby the joint operators have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the joint operators have rights to the net assets of the arrangement.

A joint operator recognizes the following items in relation to its interest in a joint operation: its solely-held assets, and its share of any assets held jointly; its solely-assumed liabilities, and its share of any liabilities incurred jointly; its revenue from the sale of its share of the output arising from the joint operation; its share of the revenue from the sale of the output by the joint operation; its solely-incurred expenses, and its share of any expenses incurred jointly.

7. Cash and cash equivalents

Cash comprises the Group's cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are short-term, highly liquid investments held by the Group, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

8. Foreign currency translation and translation of foreign currency statements

The Group translates the amount of foreign currency transactions occurred into its functional currency.

Foreign currency transactions are recorded, on initial recognition, in the functional currency, by applying to the foreign currency amount the spot exchange rate prevailing on the transaction dates. At the balance sheet date, foreign currency monetary items are translated using the spot exchange rate prevailing on the balance sheet date. All the resulting differences on settlement and monetary item translation are taken to profit or loss in the current period, except for those relating to foreign currency borrowings specifically for acquisition and construction of qualifying assets, which are capitalized in accordance with the principle of capitalization of borrowing costs. Non-monetary foreign currency items measured at historical cost shall still be translated at the spot exchange rate prevailing on the transaction date, and the amount denominated in the functional currency is not changed. Non-monetary foreign currency items measured at fair value are translated at the spot exchange rate prevailing at the date on which the fair values are determined. The difference thus resulted are recognized in profit or loss or as other comprehensive income based on the nature of the non-monetary items.

Foreign currency cash flows are translated using the average exchange rate for the period during which the cash flows occur. The effect of exchange rate changes on cash is separately presented as an adjustment item in the cash flow statement.

90	2020 Interim Report

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

V SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)

9. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity, and a financial liability or equity instrument of another entity.

Recognition and derecognition of financial instruments

The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual provisions of a financial instrument.

The Group derecognizes and writes off a financial asset (or part of a financial asset, or part of a group of similar financial assets) from its account and balance sheet when the following conditions are met:

the rights to receive cash flows from the financial asset have expired;
the Group has transferred its rights to receive cash flows from the financial asset, or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a "pass-through arrangement"; and either (a) the Group has transferred substantially all the risks and rewards of the financial asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the financial asset, but has transferred control of the financial asset.

If the underlying obligation of a financial liability has been discharged or cancelled or has expired, the financial liability is derecognized. If an existing financial liability is replaced by the same creditor with a new financial liability that has substantially different terms, or if the terms of an existing financial liability are substantially revised, such replacement or revision is accounted for as the derecognition of the original liability and the recognition of a new liability, and the resulting difference is recognized in profit or loss.

Regular way purchases or sales of financial assets are recognized and derecognized on the trade date. Regular way purchases or sales of financial assets mean that the financial assets are received or delivered under the terms of a contract within a period established by regulations or conventions in the marketplace. Trade date is the date that the Group commits to purchase or sell the financial asset.

Chongqing Iron & Steel Company Limited	91

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

V SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)

9. Financial instruments (Continued)

Classification and measurement of financial assets

According to the Group's corporate business model for managing financial assets and the contractual cash flow characteristics of the financial assets, the Group's financial assets are, on initial recognition, classified into the following categories: financial assets at fair value through profit or loss, financial assets at amortized cost, and financial assets at fair value through other comprehensive income. Only when the business model for managing financial assets is changed by the Group, the Group will reclassify the related financial assets affected.

A financial asset is recognized initially at fair value. The trade receivables or notes receivable generated from sales of goods or services, which do not contain significant financing component or do not consider financing component over one year, initially are measured at trading price.

In the case of financial assets at fair value through profit or loss, relevant transaction costs are directly charged to profit or loss; transaction costs relating to financial assets of other categories are included in the amounts initially recognized.

The subsequent measurement of financial assets depends on their classification as follows:

Debt instrument investment at amortized cost

Financial assets are classified as financial assets at amortized cost if the financial assets meet the following conditions: the objective of the Group's business model for managing such financial assets is to collect contractual cash flows; the contractual terms of the financial assets stipulate that cash flows generated on a specific date are solely payment of the principal and the interest based on the outstanding principal amount. Such financial assets recognize interest income by using the effective interest rate method. The gains or losses arising from derecognition, adjustment or impairment are recognized in profit or loss.

92	2020 Interim Report

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

V SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)

9. Financial instruments (Continued)

Classification and measurement of financial assets (Continued)

Debt instrument investment at fair value through other comprehensive income

Financial assets are classified as financial assets at fair value through other comprehensive income if the financial assets meet the following conditions: the objective of the Group's business model for managing such financial assets is both to collect contractual cash flows and to dispose of the financial assets; the contractual terms of the financial assets stipulate that cash flows generated on a specific date are solely payment of the principal and the interest based on the outstanding principal amount. Such financial assets recognize interest income by using the effective interest rate method. Except for interest income, impairment losses and exchange difference recognized as profit or loss, other changes in fair value are recognized as other comprehensive income. When such financial asset is derecognized, the accumulated gain or loss previously recognized in other comprehensive income is transferred from other comprehensive income to profit or loss.

Equity instrument investment at fair value through other comprehensive income

The Group irrevocably elects to designate certain equity instrument investments not held for trading as financial assets at fair value through other comprehensive income, such that only relevant dividend income (excluding the dividends recovered as part of the investment cost) is recognized as profit or loss and the subsequent changes in fair value are recognized as other comprehensive income, and the provision for impairment is not accrued. When such financial asset is derecognized, the accumulated gain or loss previously recognized in other comprehensive income is transferred from other comprehensive income to retained earnings.

Financial assets at fair value through profit or loss

Apart from the financial assets at amortized cost and financial assets at fair value through other comprehensive income mentioned above, other financial assets are classified as financial assets at fair value through profit or loss. Such financial assets are subsequently measured at fair value. All changes in fair value are recognized in profit or loss.

Chongqing Iron & Steel Company Limited	93

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

V SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)

9. Financial instruments (Continued)

Classification and measurement of financial liabilities

The Group's financial liabilities are, on initial recognition, classified into other financial liabilities, and the related transaction costs are included in the amounts initially recognized. Such kinds of financial liabilities are subsequently measured at amortized cost by using the effective interest rate method.

Impairment of financial instruments

On the basis of expected credit losses ("ECLs"), the Group makes impairment provisions and recognizes loss provisions for the financial assets carried at amortized cost and investments on debt instrument at fair value through other comprehensive income.

For trade receivables that do not contain significant financing components, the Group uses a simplified measurement method to measure loss provision based on the amount of ECLs throughout the lifetime.

In addition to the abovementioned financial assets for which the simplified measurement method are used, the Group assesses whether its credit risk has increased significantly since the initial recognition on each balance sheet date. Financial instruments for which credit risk has not increased significantly since initial recognition, at stage 1, and for which the loss allowance is measured at an amount equal to 12-month ECLs, calculated by carrying amount and effective interest rate; financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets, at stage 2, and for which the loss allowance is measured at an amount equal to lifetime ECLs, calculated by carrying amount and effective interest rate; financial instruments that are credit-impaired since initial recognition, at stage 3, and for which the loss allowance is measured at an amount equal to lifetime ECLs, calculated at amortized cost and by effective interest rate. For these financial instruments with lower credit risk on the balance sheet date, the Group assumes the related credit risk has not increased significantly since initial recognition.

94	2020 Interim Report

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

V SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)

9. Financial instruments (Continued)

Impairment of financial instruments (Continued)

The Group assesses the ECLs of financial instruments by individual or group. Considering the characteristics of different customers' credit risk, the Group assesses the ECLs of trade receivables and other receivables based on the ageing portfolio. The Group assesses the ECLs of notes receivable, by considering the characteristics of the acceptors' credit risk.

The disclosure of the criteria for judging significant increase in credit risk, the definition of credit-impaired assets, and the assumption of ECLs measurement, please refer to Note IX.3.

When the Group no longer reasonably expects to be able to recover, in full or in part, the contractual cash flows of financial assets, the Group directly writes down the carrying amount of the financial assets.

If the financial assets that have been written down are recovered in the future, the reversal of the impairment losses are charged to the profit or loss.

Offset of financial instruments

Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet to the extent that there is a currently enforceable legal right to offset the recognized amounts and that there is an intention to settle on a net basis, or to realize the financial assets and settle the financial liabilities simultaneously.

Chongqing Iron & Steel Company Limited	95

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

V SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)

9. Financial instruments (Continued)

Financial guarantee contracts

Financial guarantee contracts are those contracts that require a payment to be made by the issuer to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are measured, on initial recognition, at fair value. For financial guarantee contracts that are not designated as at fair value through profit or loss, they are, after initial recognition, subsequently measured at the higher of: the amount of the ECLs settled at the balance sheet date, and the amount initially recognized less the cumulative amortization recognized in accordance with the guidance for revenue recognition.

Transfers of financial assets

If the Group transfers substantially all the risks and rewards of ownership of the financial asset, the Group derecognizes the financial asset; if the Group retains substantially all the risks and rewards of ownership of the financial asset, the Group does not derecognize the financial asset.

If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, it accounts for the transactions as follows: if the Group has not retained control, it derecognizes the financial asset and recognizes any resulting assets or liabilities; if the Group has retained control, it continues to recognize the financial asset to the extent of its continuing involvement in the transferred financial asset and recognizes an associated liability.

96	2020 Interim Report

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

V SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)

10. Inventories

Inventories include hold-for-sale stock goods in the ordinary course of business, working in progress in the process of production, raw materials to be consumed in the production process or in the rendering of services, lower valued consumables and repaired spare parts, etc.

Inventories are initially carried at cost. Cost of inventories comprises all costs of purchase, costs of conversion and other costs. The actual cost of inventories transferred out is assigned by using weighted average method. Revolving materials comprise lower valued consumables and packing materials and others, lower valued consumables and packing materials shall be amortized on the immediate written-off or amortization in stage basis.

At the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the cost of inventories is higher than the net realizable value, a provision for decline in value of inventories is recognized in profit or loss. If factors that previously resulted in the provision for decline in value of inventories no longer exist, so that the net realizable value is higher than the carrying amount, the amount of the write-down is reversed. The reversal is limited to the amount originally provided for the decline in value of inventories. The amount of the reversal is recognized in current profit or loss.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale and relevant amounts after taxes. The provision for decline in value of inventories is made on an individual basis.

The Group adopts the perpetual inventory system.

Chongqing Iron & Steel Company Limited	97

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

V SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)

11. Long-term equity investments

Long-term equity investments consist of equity investments in subsidiaries, joint ventures and associates.

Long-term equity investments are recognized at initial investment cost upon acquisition. For a long-term equity investment acquired through a business combination under common control, the initial investment cost of the long-term equity investment shall be the absorbing party's share of the carrying amount of the owners' equity of the party being absorbed in the consolidated financial statements of the ultimate controlling party at combination date. The difference between the initial investment cost and the carrying amount of consideration for combination shall be adjusted to capital reserves. If the balance of capital reserves is not sufficient, any excess shall be adjusted to retained earnings. Any other comprehensive income previously recognized before combination date shall be accounted for on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities. The portion recognized based on changes in the investee's equity (other than net profit or loss, other comprehensive income and profit appropriation) is charged to profit or loss upon disposal of such long-term equity investment. For those partially disposed equity investments, gains or losses upon disposal are proportionately recognized in profit or loss when they still constitute long-term equity investments after the disposal and are fully charged to profit or loss when they are reclassified to financial instruments after the disposal. For a long-term equity investment acquired through a business combination involving entities not under common control, the initial investment cost should be the cost of acquisition (for a business combination through step acquisitions not under common control, the initial investment cost is the sum of the carrying amount of the equity investment in the acquiree held before the acquisition date and the additional investment cost paid on the acquisition date), which is the sum of the fair value of assets transferred, liabilities incurred or assumed and equity securities issued. If the equity investments in the acquiree involve other comprehensive income prior to the acquisition date, when disposing of the investments, the relevant other comprehensive income will be accounted for on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities. The portion recognized based on changes in the investee's equity (other than net profit or loss, other comprehensive income and profit appropriation) is charged to profit or loss upon disposal of such long-term equity investment. For those partially disposed equity investments, gains or losses upon disposal are proportionately recognized in profit or loss when they still constitute long-term equity investments after the disposal and are fully charged to profit or loss when they are reclassified to financial instruments after the disposal. The initial investment cost of a long-term equity investment acquired otherwise than through a business combination shall be determined as follows: for a long-term equity investment acquired by paying cash, the initial investment cost shall be the actual purchase price has been paid plus those costs, taxes and other necessary expenditures directly attributable to the acquisition of the long-term equity investment; for those acquired by the issue of equity securities, the initial investment cost shall be the fair value of the equity securities issued.

98	2020 Interim Report

Section X Financial Report

Notes to Financial Statements (Continued)

January-June 2020

V SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)

11. Long-term equity investments (Continued)

The cost method is applied for long-term equity investments in the financial statements of the Parent Company when the investee is controlled by the Company. Control refers to the power over the investee such that the Company is able to direct the relevant activities, has exposure or rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor's returns.

When the cost method is adopted, long-term equity investments are recorded at initial investment cost. Adjusting the cost of long-term equity investment by adding or withdrawing investment. Cash dividends or profits declared to be distributed by the investee should be recognized as investment income for the period.

The equity method is adopted when the Group has joint control, or exercises significant influence over the investee. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

Under the equity method, where the initial investment cost of a long-term equity investment exceeds the investing entity's interest in the fair values of the investee's identifiable net assets at the acquisition date, the excess is included in the initial investment cost. Where the initial investment cost is less than the investing entity's interest in the fair values of the investee's identifiable net assets at the acquisition date, the difference is charged to profit or loss, and the cost of the long-term equity investment is adjusted accordingly.

Chongqing Iron & Steel Company Limited	99

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Chongqing Iron & Steel Company Limited published this content on 18 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 September 2020 04:09:03 UTC

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Apr. 01	Chongqing Iron & Steel's Loss Widens in 2023	MT
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Chongqing Iron & Steel Company Limited

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Iron & Steel

Chongqing Iron & Steel : 2020 INTERIM REPORT

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Company Profile

Income Statement Evolution

Sector Iron, Steel Mills & Foundries

	1st Jan change	Capi.
CHONGQING IRON & STEEL COMPANY LIMITED	-19.18%	1.5B
JSW STEEL LIMITED	-3.31%	24.94B
BAOSHAN IRON & STEEL CO., LTD.	+18.55%	21.86B
CHINA STEEL CORPORATION	-7.96%	11.79B
CITIC PACIFIC SPECIAL STEEL GROUP CO., LTD	+9.76%	11.34B
JINDAL STEEL & POWER LIMITED	+21.62%	11.03B
INNER MONGOLIA BAOTOU STEEL UNION CO., LTD.	+8.90%	10.15B
TERNIUM S.A.	+0.35%	8.38B
JINDAL STAINLESS LIMITED	+26.70%	7.04B
BHARAT FORGE LIMITED	-2.62%	6.72B