China International Marine Containers : RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2020 (SUMMARY OF THE 2020 ANNUAL REPORT)

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

ʕ਷਷ყऎ༶ණༀᇌ€ණྠٰ΅Ϟࠢʮ̡

CHINA INTERNATIONAL MARINE CONTAINERS (GROUP) CO., LTD.

(a joint stock company incorporated in the People's Republic of China with limited liability)

(H Share Stock Code: 2039)

(A Share Stock Code: 000039)

RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2020

(SUMMARY OF THE 2020 ANNUAL REPORT)

• 1 IMPORTANT NOTICE

• 1.1 The board of directors (the "Board") of China International Marine Containers (Group) Co., Ltd. (the "Company"), the Supervisory Committee and the directors, supervisors and senior management of the Company warrant that there are no misrepresentations, misleading statements or material omissions contained in this results announcement for the year ended 31 December 2020 (the "Announcement"), and jointly and severally accept full responsibility for the truthfulness, accuracy and completeness of the information contained in this summary of the annual report for the year ended 31 December 2020 (the "2020 Annual Report").

  The Announcement is published on the websites of the Hong Kong Stock Exchange (www.hkexnews.hk) and the Company (www.cimc.com). The Announcement is a summary of the 2020 Annual Report and the full version of the 2020 Annual Report will be posted on the above websites in due course.

• 1.2 The 2020 Annual Report and the Announcement have been considered and approved at the seventh meeting of the ninth session of the Board in 2021 (the "Board Meeting"). All Directors have attended the Board Meeting , among whom Mr. DENG Weidong, a director, authorized Mr. HU Xianfu, the vice-chairman, to exercise the voting right on his behalf.

• 1.3 The financial statements of the Company and its subsidiaries (the "Group") have been prepared in accordance with China Accounting Standards for Business Enterprises ("CASBE"). The financial statements of the Group for the year ended 31 December 2020, which have been prepared in accordance with CASBE, have been audited by PricewaterhouseCoopers Zhong Tian LLP ("PricewaterhouseCoopers"), who has issued an audit report with unqualified opinions on the financial statements. The figures contained in the Announcement have been agreed by PricewaterhouseCoopers, and are consistent with the amounts set out in the Group's audited consolidated financial report for 2020. The work performed by PricewaterhouseCoopers in this respect did not constitute an assurance engagement in accordance with "Hong Kong Standards on Auditing", "Hong Kong Standards on Review Engagements" or "Hong Kong Standards on Assurance Engagements" issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by PricewaterhouseCoopers on the Announcement.

• 1.4 Mr. MAI Boliang, Chairman of the Board and CEO of the Company, and Mr. ZENG Han, Chief Financial Officer of the Company, hereby warrant the truthfulness, accuracy and completeness of the financial statements in the 2020 Annual Report and the Announcement.

• 1.5 The proposed profit distribution plan for 2020 of the Company as considered and approved by the Board Meeting is based on the total share capital of the Company as at the record date of dividend payment for 2020. A cash dividend of RMB0.28 (tax inclusive) per one share will be distributed to all shareholders, no bonus shares will be issued and shares will not be converted from capital reserve into share capital. The proposed dividend is expected to be payable on or around 20 July 2021. The annual dividend-distribution plan for 2020 shall be submitted to the Company's annual general meeting for consideration and approval.

• 1.6 The forward-looking statements in this Announcement regarding future plans and development strategies do not constitute a material commitment by the Group to investors. Investors are advised to be fully aware of the risks involved, to understand the differences between plans, forecasts and commitments and to be aware of the investment risks.

• 1.7 The reporting period (the "Reporting Period") means the twelve months started from 1 January 2020 and ended on 31 December 2020.

• 1.8 The Announcement is published in English and Chinese. In the event of any inconsistency between the two versions, the Chinese version shall prevail.

• 2 BASIC INFORMATION OF THE COMPANY

• 2.1 Basic Information of the Company

  The Company was incorporated in Shenzhen, Guangdong Province, the PRC under the PRC Company Law on 14 January 1980 and was named as "China International Marine Containers Co., Ltd." (ʕ਷਷ყऎ༶ණༀᇌٰ΅Ϟࠢʮ̡) upon incorporation. After being restructured as a joint stock limited company in December 1992, and publicly offered A shares and B shares which were listed on the Shenzhen Stock Exchange in 1994, the Company changed its name to "China International Marine Containers (Group) Co., Ltd." (ʕ਷਷ყऎ༶ණༀᇌ(ණྠ )ٰ΅Ϟ ࠢʮ̡) in 1995. The A shares of the Company were listed on the Shenzhen Stock Exchange on 8 April 1994 and its H shares were listed by introduction on the main board of the Hong Kong Stock Exchange on 19 December 2012. The Company is the first enterprise in China with its B shares converted into H shares listed on the main board of the Hong Kong Stock Exchange.

  The Group is a world leading equipment and solution provider in the logistics and energy industries and is principally engaged in the manufacture of containers, road transportation vehicles, energy/ chemical/liquid food equipment, offshore engineering equipment, airport facilities equipment as well as the provision of relevant services, including the design and manufacture of international standard dry containers, reefer containers, special-purpose containers, tank containers, wooden container floorboards, road tank trucks, natural gas processing equipment and static tanks, road transportation vehicles, heavy trucks, jack-up drilling platforms, semi-submersible drilling platforms, special vessels, passenger boarding bridges and bridge-mounted equipment, airport ground support equipment, fire safety and rescue vehicles, automated logistics system and intelligent parking system and relevant services. In addition, the Group is also engaged in logistics services business, finance and asset management and other businesses. Through business expansion and technology upgrading, the Group have formed an industry cluster focusing on key equipment and solutions provided for the logistics and energy industries.

Currently, the Group is ranked No. 1 in the world in terms of production and sales of standard dry containers, reefer containers and special containers; according to statistics from the International Tank Container Organisation, the production and sales of tank containers is ranked No. 1 in the world; the Group is the top semi-trailer manufacturer in the world; the Group's comprehensive competitiveness in boarding bridge business ranks among the world's leaders, as one of the world's three largest passenger boarding bridge manufacturers, and its market share in China has reached more than 95% for five consecutive years; and the Group is also one of the leading high-end offshore engineering equipment enterprises in China.

During the Reporting Period, CIMC Industry & City Development Group Co., Ltd. ("CIMC Industry & City") became an associate of the Group upon completion of its secondary introduction of strategic investment in October 2020. Apart from that, there was no material change in the principal business model of the Group. During the Reporting Period, the products and businesses contributing 10% or more to the Group's revenue included container manufacturing business, road transportation vehicles business, energy, chemical and liquid food equipment business and logistics services business.

• 2.2 Contact Persons and Means of Communication

  YU Yuqun

  Vice President, Secretary to the Board, Company SecretaryWANG Xinjiu Representative of Securities

  Affairs

  Telephone:	(86 755) 2669 1130	(86 755) 2680 2706
  Facsimile:	(86 755) 2682 6579	(86 755) 2682 6579
  Email Address:	ir@cimc.com	ir@cimc.com
  Contact Address in
  mainland China:

  CIMC R&D Centre, 2 Gangwan Avenue, Shekou, Nanshan

  District, Shenzhen, Guangdong, PRC (Postal code: 518067)

  Contact Address in Hong Kong: 3101-2 Infinitus Plaza, 199 Des Voeux Road Central, Hong

  Kong

• 3 SUMMARY OF ACCOUNTING DATA AND FINANCIAL INDICATORS PREPARED IN ACCORDANCE WITH CASBE

• 3.1 Retrospective Adjustment to or Restatement of the Accounting Data for Prior Years by the Company due to Change of Accounting Policies and Correction of Accounting Errors

  Retrospective adjustment to or restatement of the accounting data for prior years by the Company due to change of accounting policies and correction of accounting errors

✓Yes

½NoFor details, please refer to "8.1 Explanation for Changes in Accounting Policies, Accounting Estimates and Calculation Method as Compared with Those for the Last Annual Report" of the

Announcement.

3.2

Key Accounting Data of the Group for the Last Five Years

Consolidated Income Statement Items

Revenue Operating profit

Profit before income tax Income tax expense Net profit

Including:

Net profit attributable to shareholders and other equity holders of the Company

Profit or loss attributable to minority shareholders Net profit attributable to shareholders and other equity holders of the Company after deducting non-recurring profit or loss

2020 94,159,083 7,439,627 7,290,406

For the year ended 31 December Changes from the previous

• 1,278,666 3,103,761 (58.80%) 2,615,103

2019 85,815,341 5,838,747 5,613,874

6,011,740

2,510,113

5,349,613 662,127

1,542,226 967,887

• 342,887 1,241,479

• 139.50% 4,068,455

• 246.88% 3,380,436

• 9.72% 93,497,622

• 27.42% 6,477,005

• 29.86% 6,683,558

• (31.59%) 688,019

• (72.38%) 2,258,609

Unit: RMB thousandUnit: RMB thousand

As at 31 December Changes from the previous

Total equity attributable to shareholders

Consolidated Balance Sheet Items

Total current assets Total non-current assets Total assets

Total current liabilities Total non-current liabilities Total liabilities

Equity attributable to shareholders and other equity holders of the Company Minority interests

Consolidated Cash Flow Statement Items

Net cash flows from operating activities Net cash flows from

2020

67,141,741

79,069,770

146,211,511

60,895,028

31,462,639

92,357,667

53,853,844

44,017,516

• 9,836,328 15,784,092 (37.68%) 15,077,989

2020

12,810,486

investing activities (3,538,804)

Net cash flows from

financing activities (6,539,564)

2019

90,023,127

82,084,394

172,107,521

70,551,310

46,518,233

117,069,543

55,037,978

39,253,886

2019

3,538,522

• (25.42%) 81,902,959

• (3.67%) 76,981,004

• (15.05%) 158,883,963

• (13.69%) 73,137,289

• (32.36%) 33,343,686

• (21.11%) 106,480,975

• (2.15%) 52,402,988

12.14% 37,324,999

Unit: RMB thousand

3.3

Basic earnings per share attributable to shareholders of the Company (RMB) Diluted earnings per share attributable to shareholders of the Company (RMB) Net cash flows from operating activities per share (RMB)

Net assets per share attributable to shareholders and other equity holders of the Company (RMB) (Total shares based on ordinary shares outstanding at the end of the year)

Weighted average return on net assets (%)

Weighted average return on net assets after deducting non-recurring profit or loss (%)

2018 (Note)

1.41

1.41

3.57

12.24 14%

0.19%

0.37

0.37

0.99

10.95

4%

3%

281.08% 0.92

281.08% 0.92

260.61% 0.05

11.78% 12.50

10% 10%

(2.81%) 7%

Note:As the Company implemented the increase in capital from capital reserve into share capital in 2019, various earnings per share data in 2018 were adjusted for the latest share capital pursuant to the relevant accounting standards.

3.4

Non-recurring Profit or Loss Items of the Group for the Last Three Years

Unit: RMB thousand

Items

(Losses)/gains on disposal of non-current assets Government grants recognised in profit or loss for the current period

Gains or losses from changes in fair value arising from holding financial assets held for trading, and investment gains arising from disposal of investments in other equity instruments, other debt investments and other non-current financial assets and gains or losses from changes in fair values of investment properties subsequently measured at fair value, except for the effective hedging activities relating to the Group's ordinary activities

Reversal of impairment provision for accounts receivable tested for impairment separately Net gains from disposal of long-term equity investment

Other profit/loss items defined as non-recurring profit/loss items

Other non-operating income and expenses other than the above items

Effect of income tax

Effect of minority interests (after tax)

2020

2019

(91,808)

(3,905)

712,117

893,366

• 544,929 (217,160)

27,385 4,427,236

-

(28,845) (335,163) (249,125)

2018 1,347,841

386,822

(442,899)

6,521 352,525

- 113,061

-

(158,226)

• (158,785) 259,462

• (207,787) (360,164)

• (364,028) (24,070)Total

5,006,726

300,747

1,121,827

• 4 SHAREHOLDINGS AND SHAREHOLDING STRUCTURE CHART

• 4.1 Number of Shareholders and Shareholdings

  As at 31 December 2020, the Company had a total of 3,595,013,590 shares in issue, including 1,535,121,660 A shares and 2,059,891,930 H shares.

  The total number of shareholders of the Company as at 31 December 2020 was 78,512, including 78,485 holders of A shares and 27 registered holders of H shares. The Company satisfied the requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Hong Kong Listing Rules") in relation to the minimum public float. The total number of shareholders of the Company as at 28 February 2021, being the end of the month preceding the Announcement, was 82,827, including 82,800 holders of A shares and 27 registered holders of H Shares.

• 4.2 Shareholdings of the Top Ten Shareholders as at the End of the Reporting Period (Prepared According to the Relevant Provisions of Domestic Securities Regulatory Rules)

  Shareholdings of the Shareholders who held 5% or above or the top ten Shareholders at the end of the Reporting Period

Unit: Shares

Name of shareholdersNature of shareholdersPercentage of

Number of shares held at the end of the

Changes during the Reporting

shareholding Reporting Period

PeriodNumber of shares held with selling restrictions

Number of shares held without selling restrictions

HKSCC Nominees Limited (Note 1)

Shenzhen Capital Group (Note 2)Foreign legal person State-owned legal person

• 58.20% 2,092,288,993

9,065,960

- 2,092,288,993

COSCO Container Industries Limited China Securities Finance Corporation Limited

Central Huijin Asset Management Ltd.

Foreign legal person State-owned legal person State-owned legal person

Henan Yiluo Investment Management

Co., Ltd. - Jun'an No.9 Yiluo private equity investment fund

Domestic non-state-owned legal person

9.74% 4.69% 2.09% 1.27% 1.21%

350,000,000 168,606,212 75,061,751 45,592,560 43,351,833

350,000,000 - 350,000,000

(350,000,000) - 168,606,212

(9,897,857) - 75,061,751

- - 45,592,560

43,351,833 - 43,351,833

Henan Yiluo Investment Management Co., Ltd. - Junxing No.10 private equity fund

Domestic non-state-owned legal person

0.97%

34,790,686

34,790,686 - 34,790,686

Henan Yiluo Investment Management Co., Ltd.- Junxing No.4 private equity fund

Domestic non-state-owned legal person

0.63%

22,637,154

22,637,154 - 22,637,154

CITIC - Prudential Life Insurance Co., Ltd. - participating products (Note 3) Miao Yanfen (ߴᜮځ)

Domestic non-state-owned legal person Domestic natural person

0.55% 0.52%

19,733,298 18,589,013

11,070,715 - 19,733,298

18,589,013 - 18,589,013

Explanation on the relationship or concerted action of the above shareholders

Unknown

Explanation on above shareholders' delegation of/ being entrusted with and waiver of voting rights

None

Note 1: As at 31 December 2020, HKSCC Nominees Limited held 2,092,288,993 shares of the Company, including

32,519,453 A shares and 2,059,769,540 H shares. The H shares registered under HKSCC Nominees Limited include (but not limited to) 880,429,220 H shares held by China Merchants Group Limited ("China Merchants Group") through its subsidiaries (including China Merchants (CIMC) Investment Limited etc.), and the 719,089,532 H shares directly held by Shenzhen Capital Operation Group Co., Ltd. ("Shenzhen Capital Group") through its wholly-own subsidiary Shenzhen Capital (Hong Kong) Container Investment Co., Ltd. ("Shenzhen Capital (Hong Kong)").

Note 2: As at 31 December 2020, Shenzhen Capital Group held 719,089,532 H shares of the Company which were registered under HKSCC Nominees Limited (see note 1 above) and 350,000,000 A shares of the Company.

Note 3: As at 31 December 2020, CITIC-Prudential Life Insurance Co., Ltd. held 19,733,298 A Shares of the

Company and another 180,922,580 H Shares of the Company registered in the name of HKSCC Nominees Limited (see note 1 above) as mentioned above.

4.3 Disclosure of Substantial Shareholders under the Securities and Futures Ordinance of Hong Kong

So far as the directors are aware, as at 31 December 2020, the persons other than a director, supervisor or chief executive of the Company who have interests or short positions in the shares or underlying shares of the Company which are discloseable under Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance of Hong Kong are as follows:

Name of shareholderNature of shareholding Number of sharesCapacityPercentage of such shares in the issued share capital of the same classPercentage of such shares in the total share capital

Shenzhen Capital Group

• A shares

  (Note 1)

  • 350,000,000(L) Interest of corporation controlled by the substantial shareholder

    22.80% 9.74%

• H shares

  • 719,089,532(L) Interest of corporation controlled by the substantial shareholder

    34.91% 20.00%China Merchants Group

• H shares

(Note 2)

• 880,429,220(L) Interest of corporation controlled by the substantial shareholder

42.74% 24.49%

(L) Long position

Note 1: Shenzhen Capital Group has an interest in A Shares of the Company, being 350,000,000 A Shares (L),

and holds an interest in H Shares of the Company, being 719,089,532 H Shares (L) through its subsidiary Shenzhen Capital (Hong Kong), both of which are held in the capacity as interest of corporation controlled by the substantial shareholder.

Note 2: China Merchants Group, through its subsidiaries (including China Merchants (CIMC) Investment Limited etc.), holds an interest in the H shares of the Company, and all the 880,429,220 H shares (L) are held in the capacity as interest of corporation controlled by the substantial shareholder.

Save as disclosed above and so far as the directors are aware, as at 31 December 2020, no other person (other than a director, supervisor or chief executive of the Company) had any interests recorded in the register of interests and short positions in shares required to be kept by the Company pursuant to Section 336 of the Securities and Futures Ordinance of Hong Kong.

4.4 Information on Substantial Shareholders

The Company has no controlling shareholder or actual controller, and there was no change during the Reporting Period. As of the end of the Reporting Period, the substantial shareholders of the Company are Shenzhen Capital Group and China Merchants Group.

Shenzhen Capital Group was incorporated in the PRC in June 2007 with a registered capital of RMB14.62 billion and Mr. Hu Guobin as its legal representative. Shenzhen Capital Group is the only state-owned municipal capital operation company in Shenzhen and one of the five municipal enterprises in Shenzhen selected for the national "Double Hundred Action". With the reform and development of Shenzhen state-owned enterprises, Shenzhen Capital Group has explored a business model with capital operation as its core, established four major business segments, namely strategic research and merger and acquisition, equity investment, industrial fund and capital market investment, formed an investment and acquisition service system covering the whole life cycle of enterprises and a post-investment service empowerment system focusing on "capital management", and devoted itself to developing from a local state-owned capital operation platform in Shenzhen into a first-class market-oriented, professional and comprehensive state-owned capital operation integrated service provider in China. As at the end of the Reporting Period, Shenzhen Capital Group and its wholly-owned subsidiary, Shenzhen Capital (Hong Kong), held a total of 29.74% of the issued shares of the Company and was the largest shareholder of the Company.

China Merchants Group was incorporated in October 1986 in the PRC. Its registered capital is RMB16.7 billion and its chairman of the board of directors is Mr. Miao Jianmin. China Merchants Group's business focuses on three core industries, namely transportation (harbour, highway, shipping, logistics, ocean engineering and trade), finance (banking, securities, funds and insurance) and real estates (industrial park development and real estate development), and is transforming from these three core industries to three major platforms, namely industrial operations, financial services, investment and capital operations. On 9 June 2017, China Merchants Ports Holdings Company Limited, a subsidiary of China Merchants Group, completed the transaction of transferring all shares of Soares Limited to China Merchants Industry Holdings Company Limited, another subsidiary of China Merchants Group. As of the end of the Reporting Period, China Merchants Group through its subsidiaries (including China Merchants Steam Navigation Company Limited, China Merchants Holdings (Hong Kong) Company Limited, China Merchants Industry Holdings Company Limited, Soares Limited and China Merchants (CIMC) Investment Limited) held 24.49% of the issued shares of the Company and was the second largest shareholder of the Company.

Apart from above two entities, no other legal person or individual holds shares representing 10% or more of the total issued share capital of the Company (excluding HKSCC Nominees Limited).

Chart of shareholding structure between the Company and the substantial shareholders as at the end of the Reporting Period:

State-owned Assets Supervision and

Administration Commission of the State Council

100%

China Merchants

Group Limited

100%

China Merchants Steam Navigation Company Limited

100%

5 DIRECTORS' REPORT

5.1 Overview

In 2020, the COVID-19 epidemic spread around the world, the blockade measures of various countries once led to a massive economic shutdown and soaring unemployment, the US-China trade tension continued and global economic and trading activities had been faced with various uncertainties. The year 2020 was the last year of the 13th Five Year Plan, and the crucial year of achieving the goal to finish the building of a society of initial prosperity in all aspects and double China's 2010 GDP and per capita income for urban and rural residents. Benefiting from the Chinese government's continued coordination of epidemic prevention and control and economic and social development, the Belt and Road Initiative, the supply-side reform and a basket of consumption policies, life and production of the whole country gradually resumed to normal; industrial and service sectors continued to recover; investment and consumption improved steadily; the national economy was on the trend of stable recovery.

During the Reporting Period, the Group's revenue amounted to RMB94.159 billion (2019: RMB85.815 billion), representing a year-on-year increase of 9.72%; the net profit attributable to shareholders and other equity holders of the Company amounted to RMB5.350 billion (2019: RMB1.542 billion), representing a year-on-year increase of 246.88%; and the basic earnings per share amounted to RMB1.41 (2019: RMB0.37), representing a year-on-year increase of 281.08%. Among the principal businesses of the Group, container manufacturing business, road transportation vehicles business, offshore engineering business, airport facilities/fire safety/automated logistics equipment business, logistics services business and industrial city development business achieved growth in their revenues; the finance and asset management business remained relatively stable in revenue; and the energy/chemical/liquid food equipment business and heavy trucks business saw a decline.

The financial data set out below is extracted from the audited financial statements of the Group prepared under CASBE. The following discussion and analysis should be read in conjunction with the audited financial statements of the Group and their accompanying notes as set out elsewhere in the Announcement.

Consolidated Operating Results

Unit: RMB thousand

Percentage

2020

2019 change

5.2 Review of the Principal Businesses of the Group during the Reporting Period

Through business expansion and technology development, the Group has formed an industry cluster focusing on key equipment and solutions provided for the logistics and energy industries.

(I) In logistics field:

The Group adheres to taking container manufacturing business as our core business

The Group's container manufacturing business mainly consists of standard dry containers, reefer containers and special-purpose containers. The Group has the capacity to produce a full series of container products with independent intellectual property rights. Special-purpose containers mainly include North American domestic 53-foot containers, European pallet wide containers, bulk containers, special-purpose reefer containers, flatracks and other products. During the Reporting Period, the Group remained No. 1 in the industry in terms of production and sales of containers.

In 2020, the global economy and trade slumped in the first half due to the shock of COVID-19; container demands hit the bottom accordingly, with customers reducing the purchase of new containers; the Group's container manufacturing business experienced dramatic year-on-year decline. In the second half of the year, the overseas market witnessed strong demands but weak production under the impact of the stimulus policy of Europe and the United States and the continual resurgence of COVID-19 in countries around the world. China, in contrast, became the most stable link in the global supply chain with the complete industry chain and supply chain and the recovered productivity after the rapid and effective pandemic control, which comprehensively boosted China's exports and stimulated the strong recovery of container trade. Driven by the demand from downstream transportation industry, the containers manufacturing industry turned around accordingly. In the second half of 2020, the export volume of the domestic containers recorded continuous growth and various sales have significantly increased since September 2020 as compared with the same period last year. At the same time, under the impact of the COVID-19 pandemic, the decline in the conveyance volume of ports in major countries such as Europe and the United States at the early stage has led to a reduction in the efficiency of container turnover and a structural and geographical shortage of containers available globally. Under the combined effect of these factors, container demands rebounded rapidly from the low to the level that exceeded the supply. The strong and rapid demand recovery boosted the price of dry containers and the profitability of the industry. According to the data of Drewry Shipping Consultants Limited, the World Container Index has rebounded rapidly since July 2020 and is now at a relatively high level with the container output in the whole industry recording a year-on-year increase of 10.3% in 2020.

USD

World Container Index - Assessed by Drewry

USD per 40 ft container

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

25-Apr-19

20-Jun-19

During the Reporting Period, the Group's container sales volume and sales revenue both recorded significant year-on-year increase, especially in the second half of the year, when both sales volume and price increased. In 2020, in respect of price, the average statement settlement price of the Group's twenty-foot standard dry containers was USD1,656 in January, which increased to USD1,998 in June and further increased to USD2,322 in December; in respect of sales volume, the accumulated sales volume of ordinary dry containers of the Group reached 1,002,600 TEUs (2019: 898,600 TEUs), representing a year-on-year increase of 11.57%; the accumulated sales volume of reefer containers was 128,600 TEUs (2019: 137,500 TEUs), representing a year-on-year decrease of 6.47%.

During the Reporting Period, the container manufacturing business of the Group realised a revenue of RMB22,164 million (2019: RMB20,163 million), representing a year-on-year growth of 9.92%, and recorded a net profit of RMB1,987 million (2019: RMB137 million), representing a year-on-year growth of 1349.65%. In the revenue, the sales revenue of ordinary dry containers reached RMB13,659 million (2019: RMB11,543 million), representing a year-on-year growth of 18.33%; the sales revenue of reefer containers amounted to RMB3,761 million (2019: RMB4,161 million), representing a year-on-year decrease of 9.61%; the sales revenue of special-purpose containers was RMB4,638 million (2019: RMB4,674 million), representing a year-on-year decrease of 0.77%.

In 2020, the Group's container manufacturing business took proactive measures to cope with the shock and lasting impact of the black swan of COVID-19. At the early stage, the container segment overcame the epidemic to return to work rapidly. At the later stage, the container segment made its own contribution to the country for stabilizing foreign trade and ensuring container supply for export purposes and to the world for stabilizing the supply chain system. In the meantime, the container segment firmly promoted the innovation-driven upgrading, internal improvement and asset efficiency enhancement. The intelligent manufacturing and upgrading project for the container segment named "Longteng Plan" (Ꮂᙜࠇྌ) completed the construction of model project and pilot project for the relevant module on schedule, and made phased progress in a series of key projects. In the significant investments, Dongguan Fenggang Phase 2 Relocation Project made adjustment to the transition and upgrading according to the market condition and the segment plan, completed the construction at the end of the year and basically had the ability to conduct new businesses.

Expand the road transportation vehicles business:

CIMC Vehicles (Group) Co., Ltd. ("CIMC Vehicles") is the main operating entity of the Group's road transportation vehicles business. CIMC Vehicles is a leading global high-end semi-trailer and specialty vehicle manufacturers, the main products of which include: 1) semi-trailer products in the global markets, which include the manufacture, sales and after-sales services of seven main categories of semi-trailers, namely skeletal container semi-trailers, flatbed trucks and their derivatives, curtain side semi-trailers, van semi-trailers, refrigerated semi-trailers, tank semi-trailers and other special types of semi-trailers; 2) specialty vehicle products in China, which include the manufacture of urban muck truck bodies and cement mixer truck bodies and sales of fully-assembled vehicles; 3) the production of truck bodies and sales of fully-assembled trucks of refrigerated vans.

In 2020, in terms of the domestic market, the Chinese government has proposed "a new development pattern in which domestic economic cycle plays a leading role while international economic cycle remains its extension and supplement", which provides a wide scope for the development of sectors such as logistics and transportation (including cold chain logistics) as well as engineering and infrastructure in China, resulting in significant growth in the Group's domestic road transportation vehicles business. In terms of overseas markets, the epidemic has resumed in many countries and the global economy is resultingly under downward pressure. However, the overall business of the Group's road transportation vehicles picked up in the second half of the year, thanks to its business model of "transoceanic management and local manufacturing", with solid business performance delivered.

During the Reporting Period, 131,327 (2019: 117,707) semi-trailers of various types were sold around the world, representing a year-on-year increase of 11.57%, and 56,449 (2019: 46,267) truck bodies for specialty vehicles and 6,049 (2019: 4,455) refrigerated van bodies were sold in China by CIMC Vehicles, representing a year-on-year increase of 22.01% and 35.78%, respectively. The total revenue was RMB26.499 billion (2019: RMB23.335 billion), representing a year-on-year increase of 13.56%; the total net profit realized was RMB1.269 billion (2019: RMB1.303 billion), representing a year-on-year decrease of 2.60%.

Since 2014, CIMC Vehicles has been building a "high-end manufacturing system" and has now built 13 "lighthouse" factories for semi-trailers production, 6 "lighthouse" factories for production of truck bodies for specialty vehicles and 2 "lighthouse" factories for production of refrigerated van bodies, both within and outside the PRC.

• (1) In terms of the global semi-trailer business, as a world top semi-trailer manufacturer, the "lighthouse" plants for semi-trailers of CIMC Vehicles demonstrated its advantage in scale. In terms of key products such as liquid tank semi-trailers, powder tank semi-trailers, van semi-trailers and skeletal container semi-trailers, CIMC Vehicles, with its "micro-innovation", has steadily ranked in the first tier. Meanwhile, benefiting from scale expansion of the logistics and transportation market and subject to the policies such as GB7258-2017, demand for semi-trailers in China has surged, and the revenue of CIMC Vehicles from domestic market recorded significant increase. In the overseas semi-trailer market, business recovered well in the second half of the year after being somewhat affected by the pandemic in the first half.

• (2) In terms of China's truck bodies for specialty vehicles business which includes urban muck truck bodies and cement mixer truck bodies, in 2020, benefiting from the transformation of urban muck truck products into intelligent, environmental-friendly and light-weight ones, CIMC Vehicles took the opportunity of upgrading its product modules to jointly develop products with main machinery plants and actively upgrade its production lines, thus improved its delivery capability and customer satisfaction. In addition, in line with Chinese government's policy of "overloading" regulation and increased investment in infrastructure, CIMC Vehicles has sold a total of 29,255 (2019: 20,980) cement mixer trucks in 2020, which hit a record high and ranked first in the Chinese market in terms of sales volume for the fourth consecutive year. CIMC Vehicles continued to expand its scale advantage as a leader in cement mixer trucks and urban muck truck modification business.

• (3) In terms of China's refrigerated van bodies business, in 2020, due to scale expansion of the cold chain logistics market in China, the government introduced a number of policies and standards related to refrigerated trucks and encouraged the development of compliant and environmentally friendly refrigerated trucks. CIMC Vehicles enhanced its leading position in the refrigerated van bodies business, and recorded a significant increase in sales volume.

• (4) Apart from the above three core business, CIMC Vehicles also has sales business of components and parts for semi-trailers and specialty vehicles. As CIMC Vehicles actively adjusted its global supply chain management system, the supply chain of components and parts business in key markets gradually recovered in the second quarter, resulting in a good business performance for the year with revenue growth of 10% year-on-year.

Expand the airport facilities, fire safety and automated logistics equipment business

The principal businesses of the Group's airport facilities, fire safety and automated logistics system business are carried out through its subsidiary CIMC-TianDa Holdings Company Limited ("CIMC TianDa"). On 25 January 2021, the listing of the shares of CIMC TianDa on the Hong Kong Stock Exchange was withdrawn after privatisation by way of a scheme of arrangement.

During the Reporting Period, the airport facilities, fire safety and automated logistics system business of the Group recorded a revenue of RMB6,089 million (2019: RMB5,962 million), representing a year-on-year increase of 2.12%; and a net profit of RMB324 million (2019: RMB253 million), representing a year-on-year increase of 28.00%.

• (1) Airport facilities business: In the second half of 2020, as the economy gradually recovered, the civil aviation industry was basically restored to the level of the same period before epidemic while the delivery and installation of boarding bridges and bridge-mounted equipment, which were delayed due to the COVID-19 outbreak, have been substantially completed as originally scheduled for the year under intensifying work efforts made in the second half of the year, thus maintaining a good trend of the business. However, the overseas markets were still affected by the epidemic to varying degrees, resulting in the progress of some overseas projects still lagging behind. Operating income for the business was essentially flat.

• (2) The fire and rescue vehicle business: Sales revenue and profit in 2020 recorded a decrease from the level of last year as a result of the effect from insufficient supply of raw materials, especially the imported chassis, disrupted overseas logistics and postponed tenders by customers. CIMC TianDa, completing the acquisition of equity interest in Shanghai Jindun Special Vehicle Equipment Co., Ltd., Shenyang Jietong Fire Truck Co., Ltd and Ziegler in 2019, has become the largest domestic fire truck group whose strategic layout in respect of market, product and production has been improved accordingly. In addition to the integration, the Group is actively engaged in the research and development of various high-end fire vehicles. It launched its self-developed 72-meter multi-purpose aerial platform truck (which can reach a height of more than 20 floors) to the market at the end of this year, which was interested by many provincial and municipal fire-fighting units in China for procurement. In addition, the 42-meter multi-purpose ladder truck developed by the Group was stationed at Lhasa Gonggar Airport for the first time this year and put into service in the cold and high-altitude snowy plateau, being the first batch of domestic-made 40+ meters airport aerial fire trucks of in China.

(3) The automated logistics systems business: The Group continued to consolidate the logistics business unit vigorously, remained focused on the business and market. While improving project management, the Group developed competitive advantages of professionalism and high-efficient delivery. The projects that were delayed due to the COVID-19 epidemic have resumed in the second half of 2020 and, with the exception of a few projects, are basically on track to meet the original schedule. The automated logistics system business recorded a higher revenue growth for the year due to the rapid recovery of the e-commerce industry.

Leveraging the logistics services business

The logistics services business of the Group is committed to becoming the leader characterized by "equipment + service" in multimodal transport industry in the PRC, focusing on the multimodal transport network layout of major domestic seaports, Yangtze River ports, railway hub stations and major international routes. By conducting businesses of combined container transport, professional logistics, station operation and ecological support, the Group endeavors to build a multimodal transport development model combining containers, goods and yards with railway stations as the foundation, equipment as the support, and cargo control as the core.

In the first half of 2020, countries hit by the epidemic were faced with economic downturn, which led to declining overall demands for international multimodal transport and project logistics. Consequently, each major business was affected to different extent. In the second half of 2020, overall logistics services business gradually improved as the epidemic was effectively controlled and the country released policies to encourage the development of import and export logistics enterprises, such as stabilising foreign trade, taxes and fees reduction, and one-stop customs clearance.

During the Reporting Period, the logistics services business of the Group realised a revenue of RMB10,636 million (2019: RMB9,157 million), representing a year-on-year growth of 16.15%, and recorded a net profit of RMB266 million (2019: RMB110 million), representing a year-on-year growth of 140.57%. The increase in net profit was mainly due to the effect of gains on disposal of equity.

In 2020, the Group's logistics services business focused on the multimodal transport and made steady progress by implementing various measures in aspects including passage network deployment, core resource control, market development and exploration of new model: the combined container transport business focused on developing railway-related businesses, including China-Europe international and domestic trains, river-rail combined transport and sea-rail combined transport, and made breakthrough in the business volume. Over 20 international and domestic railway routes were opened, such as the Xiaogan-Northeast regular train and the Xuzhou-Moscow regular train, and the capacity improved by 261%. The station operation business maintained basically same level as the prior year in terms of annual loading and unloading capacity and repair capacity, with the volume of containers coming in and out of the station remaining at the first place in the country.

Rely on the unit load business as the supplementary to provide the modernized transportation and logistics with first-class products and services

In order to realise the strategy of "focusing on smart logistics equipment", the Group integrated member companies which were mainly engaged in the logistics vehicles business and established unit load business segment ("CIMC Unit Load") in 2020. The company has three major business lines: research, development and manufacturing, leasing operation and multimodal transport, and focuses on providing comprehensive solutions of professional research, development and manufacturing, leasing operation and packaging of unitized logistics vehicles in the automobile, liquid chemical and rubber industries.

During the Reporting Period, the unit load business realised a revenue of RMB3,036 million and recorded a net profit of RMB94 million.

The business of CIMC Unit Load mainly includes vehicle manufacturing, leasing operation and multimodal transport businesses. As affected by the pandemic in 2020: (1) the vehicle manufacturing business recorded a revenue decline as compared with the same period of the previous year. But the net profit grew year on year, which was attributable to the rebound of overseas demands, the significant increase of the price and the improvement of gross margin in the second half of the year; (2) the leasing operation business was less affected by the epidemic, and the lease operation of automobile and liquid chemical gradually recovered in the second half of the year and maintained a stable operation; (3) the multimodal transport business was hit hard by the pandemic, with both revenue and net profit experiencing significant decrease. The main reasons were that: due to the pandemic, domestic ports, railway stations and other logistics points suspended operation for a period of time, which led to high costs of capacity idleness incurred on vessels, vehicles and transportation resources in this business line.

While striving to increase its share of the stock market, CIMC Unit Load is actively expanding into emerging markets. In respect of new energy vehicle market, CIMC Unit Load successfully developed a recycling packaging product for new energy power battery, which was well received by major domestic and foreign new energy battery manufacturers and orders reached saturation. In respect of rubber logistics vehicle leasing market, CIMC Unit Load successfully developed its own rubber containers with intellectual property rights, which were highly rated by customers and the leasing business grew rapidly.

(II) In Energy field:

On the one hand, carry out energy, chemical and liquid food equipment business based on onshore resources

The Group's energy, chemical and liquid food equipment business segment is principally engaged in the design, development, manufacturing, engineering, sales and operations of various transportation, storage and processing equipment widely used in three sectors, namely clean energy, chemical environment and liquid food, as well as provision of relevant technical and maintenance services. The main operating entity is CIMC Enric Holdings Limited ("CIMC Enric").

During the Reporting Period, the Group's energy, chemical and liquid food equipment business recorded a revenue of RMB13,292 million (2019: RMB15,075 million), representing a year-on-year decrease of 11.83%; the net profit amounted to RMB360 million (2019:

RMB818 million), representing a year-on-year decrease of 55.96%, mainly due to the continued decline in the global market capacity for chemical tank containers as a result of the combined effects of industry cyclicality and the epidemic. Among the three major business segments of CIMC Enric, a subsidiary of the Group, the clean energy business recorded a revenue of RMB7,002 million (2019: RMB6,815 million), representing a year-on-year increase of 2.7%; the chemical environment business recorded a revenue of RMB2,027 million (2019: RMB3,386 million), representing a year-on-year decrease of 40.1%; the liquid food business recorded a revenue of RMB2,728 million (2019: RMB3,077 million), representing a year-on-year decrease of 11.3%.

1. Clean energy segment

Despite the slowdown of increase in demand for natural gas in the PRC due to the impact of the epidemic and the plunge in international oil prices at the beginning of 2020, with the implementation of effective anti-epidemic measures and resumption of work and production of enterprises in an orderly manner in the PRC, the natural gas demand rebounded and showed a certain degree of resilience. It was supposed based on the data from the National Bureau of Statistics that China's natural gas consumption reach 328.9 billion cubic meters in 2020, representing a year-on-year increase of 7.6%. In particular, the consumption of liquefied natural gas (LNG) grew against the trend. According to the data from "Less Better", an energy consulting company, in 2020, the total consumption of LNG tanks in China reached 36.80 million tons, representing a year-on-year increase of 38.35%. From the perspective of consumption structure, the proportion of the consumption of LNG for vehicles and ships in the total consumption of LNG has increased for three consecutive years, and in 2020, it became China's largest LNG consumption area for the first time and reached 13.55 million tons, accounting for 37%.

CIMC Enric is China's only manufacturer of equipment manufacturing and provider of engineering services claiming full coverage of the natural gas value chain and capable of providing one-stop system solutions. It is widely recognized by customers in the industry chain. In particular, it leads the nation in terms of production and sales of industrial gas storage and transportation products such as LNG, LPG, CNG, oxygen, nitrogen and argon.

(1) In terms of storage facilities, this segment continues to proactively participate in the construction of domestic peak shaving storage infrastructures. In 2020, it supplied 68 LNG storage tanks of 100m3 and above to Guangdong Province to help promote the coal-to-gas project of local ceramic plants and the supply guarantee of urban gas pipeline network. It also supplied 22 LNG storage tanks of 150m3 and above to the world's leading integrated glass manufacturers, contributing to the transformation of production mode, energy conservation, environmental protection, and green development of the glass industry. In addition to covering the natural gas market, the supply of industrial gas storage tanks for ethane and ethylene, etc. has also grown. In 2020, the orders of the two low-temperature ethane and propane storage facilities of 150,000 cubic meters in Zhejiang and an unconventional project of a skid-mounted facility of 60,000 cubic meters in Xinjiang were secured, and two cryogenic storage tanks of 80,000 cubic meters constructed by Lianyungang and the overseas LPG spherical tank project in Ghana were successfully capped.

• (2) In respect of transportation facilities: it successfully developed China's first batch of large-volume standard 45-foot LNG tank containers to improve turnover efficiency and reduce customers' operating costs, and a number of commercial orders have been delivered. The first batch of LNG tank containers exported to Brazil were used for storage and transportation of raw materials for power generation by local power plants, opening up new application scenarios for LNG tank containers. As of now, the LNG tank containers of CIMC Enric enjoy a market share of more than 70% in North America and the Caribbean, and have already served Mexico and other markets in South America. In addition, benefiting from active trading of LNG during the year, the annual sales of liquid energy trucks increased significantly year-on-year.

  In terms of maritime liquefied gas transportation facilities, CIMC Enric is the world leader in the market of small and medium-sized liquefied gas carriers, and its product chain covers fully-pressing as well as semi-cooling and semi-pressing carriers and LNG bunkering vessels capable of carrying various types of liquefied gases such as LPG, ethane, LEG and LNG and ranks the top in respect of the global market share. In 2020, the world's largest LNG transport bunkering vessel of 20,000m3 built by the Group was successfully launched, marking that CIMC Enric's capabilities of design, manufacturing, and project management of small and medium-sized liquefied gas carriers reached a new level.

• (3) In terms of terminal applications, in June 2020, it successfully assisted the smooth maiden voyage of China's first "oil-gas-electric" hybrid power ship, which is currently the representative of the most advanced oil-to-gas technologies of China's inland waterway vessels. The two LNG marine fuel tanks of 685m3 successfully delivered at the end of 2020 are the largest fuel tanks for double-deckers delivered in China so far, which will be loaded onto the world's largest new dual-role super Ro-Ro ship.

In particular, CIMC Enric responded to the national "carbon neutral" plan. In 2020, this segment continued to actively expand borderless cooperation in terms of hydrogen energy resources, application scenarios and technology research and development, and explored the market opportunities in all aspects including hydrogen production, hydrogen storage, hydrogen transportation, hydrogen refueling, and hydrogen use. In 2020, this segment won the bid in the "Public Bidding Project of Integrated Procurement of Equipment for Mobile Hydrogen Refueling Stations" organized by the CHN Energy, and will showcase the key technologies of wind-solar hybrid hydrogen production system at the Beijing Winter Olympics. The "Hebei Shijiazhuang Hydrogen Energy Equipment Manufacturing Industry Demonstration Base" established in 2020 was listed in the "14th Five-Year Plan" for the hydrogen energy industry of Hebei Province and Shijiazhuang City. Meanwhile, it has also negotiated and cooperated with many provinces, cities and local governments to assist the implementation of hydrogen energy development plans in these provinces and cities.

• 2. Chemical environment segment

  In 2020, as affected by the global pandemic, the overall demand in the tank container market in the chemical industry dropped sharply, and the market competition was intense. The tank container manufacturing industry was experiencing a reshuffle.

  When the business volume of competitors at home and abroad shrank sharply, the segment was under pressure in the short term. However, in the long run, its market position will be further consolidated.

  CIMC Enric has the ability to design, manufacture and sell a full range of tank containers including standard liquid tank containers, special liquid tank containers, gas tank containers, powder tank containers, and cryogenic tank containers, and is a leading enterprise with the world largest tank container manufacturing scale, the most complete series, the most varieties, and the longest service chain. CIMC Enric proactively promotes the application of Internet of Things technology in the tank container industry, and has exclusively designed "Tankmiles", an intelligent sensor, digital display terminal and platform, integrating whole life cycle monitoring, management and service for tank containers, and successfully cooperated and maintained cooperation with many well-known container leasing companies and operators.

  At the same time, CIMC Enric values green production and has obtained qualifications of environmental engineering and security. The first cooperation project of comprehensive utilization of hazardous wastes was officially put into operation in the fourth quarter of 2020, laying the foundation for the business development of environmental protection equipment and supporting services.

  In 2020, ʕණτ๿ᐑ߅Ҧٰ΅Ϟࠢʮ̡ (CIMC Safeway Technology Co., Ltd*), a subsidiary of CIMC Enric, intended to carry out separate A-shares listing and obtained the approval of proposed spin-off from Hong Kong Stock Exchange.

• 3. Liquid food segment

  In 2020, the liquid food industry grew rapidly in recent years due to the steady growth of population, the increasing prosperity of the global society, the improvement of people's living standards, and the enhanced awareness of food safety and health.

  This segment of CIMC Enric specialises in the engineering, manufacture and sale of stainless steel tanks for storage and processing liquid food such as beer, spirit, fruit juice and dairy products; and the provision of design, procurement, and construction services for the brewery industry as well as other liquid food industries. Despite the challenges in 2020, this segment has won three major contracts before the fourth quarter of 2020, including a brewery expansion project in the Western Hemisphere market and two alcoholic soda plant construction and implementation projects, with a total amount of more than USD200 million. In addition, the development of new markets such as Baijiu and sparkling water has not been interrupted, and initial orders have been obtained. In April 2020, the liquid food segment completed the acquisition of McMillan Coppersmiths & Fabricators Ltd. ("McMillan"), a leading supplier of copper distillers in Scotland, based in UK. The acquisition enabled the segment to achieve full coverage of the distilled liquor equipment chain, making it the largest global engineering supplier to the distilled liquor industry.

On the other hand, carry out offshore engineering business relying on offshore resources

Under the Group's offshore engineering business, there are 4 research and development and design companies, 3 construction bases and 3 operation and management companies, which are operated under an integrated operating model covering design, procurement, manufacturing, construction, commission and operation. The offshore engineering business possesses the capability of mass and industrialised construction of high-end offshore engineering equipment and other special vessels under EPC model, being one of the leading EPC contractors of high-end offshore engineering equipment manufacturing in China that has always participated in international competition in the offshore engineering market. Its major businesses include the design and construction of semi-submersible drilling platforms, semi-submersible accommodation platforms, jack-up drilling platforms, jack-up accommodation platforms, floating production storage vessels (FPSO), liftboats, crane vessels, fall pipe vessels, offshore support vessels (OSV), ocean tugs, mid-to-high-end yachts and other vessels with its products covering a majority of offshore engineering products.

Affected by the COVID-19 pandemic, the global economy fell into recession, accompanied by the governance system being hit hard. The international crude oil market experienced great volatility and the international oil production witnessed the first negative growth in the recent years.

During the Reporting Period, as new orders for offshore engineering entered the construction period, the offshore engineering business of the Group recorded a revenue of RMB5,425 million (same period in 2019: RMB4,517 million), representing a year-on-year increase of 20.12%; and a net loss of RMB1,943 million (same period in 2019: net loss of RMB1,285 million), representing a year-on-year loss increase of 51.21%, mainly due to: (1) the significant financing adjustment as a result of the implementation of new revenue standards in the same period of the previous year; (2) the provision for impairment of inventory made and loss on disposal of bulk cargo ships included during the year. If above factors are excluded, the offshore engineering business would record a year-on-year decrease in loss.

In 2020, CIMC Raffles Offshore (Singapore) Limited ("CIMC Raffles") actively promoted its business transformation and deployment, expanded to related diversified businesses with the oil and gas industry as the core, established an industrial structure with high technology that calms industrial fluctuation cycles, and formed a business portfolio with each of oil-and-gas segment and non-oil-and-gas segment accounting for approximately 50%. Within this segment, 1) drilling business: continued to maintain its leading position and market share in the industry; 2) FPSO (Floating Production Storage and Offloading) business: formed EPC (Engineering Procurement Construction) comprehensive capabilities, and leveraged the module business to consolidate EPC capabilities; 3) exploration and special vessels business: took advantage of the accumulation of expertise and experience in the traditional offshore engineering field to accelerate the diversified business expansion; 4) deep-sea and offshore fishery and sea tourism and offshore wind power business: formed its unique business model; 5) technical services: accelerated development of the business such as service delivery. At present, CIMC Raffles has four 300-foot jack-up drilling platforms, three 400-foot jack-up drilling platforms and one high-end yacht.

In respect of project construction and delivery: In March 2020, the world's largest salmon breeding vessel built by the Group finished the shipbuilding and headed for Norway. "Bohai Hengda", the largest ship of Asia, was launched and delivered in October 2020. In December 2020, Lingshui 17-2 Project, the world's first 10,000-ton semi-submersible production and storage platform, completed the closure; the "100 Cages Plan" (ϵᇌࠇ ྌ) commenced the construction to help achieve new cage development milestones. On the basis of consolidating the traditional oil and gas business, the Group actively explored businesses of offshore cultural tourism and offshore new energy. The Group has signed the cooperation agreement of "Mirage•Yantai Bajiao Bay Offshore Art City" (ऎ̹໷ᅽ • ๧̨ɞԉᝄऎɪᖵஔ۬) to build the world's first super cultural tourism complex; singed the Comprehensive Deepening Strategic Cooperation Agreement on Offshore Wind Power and Offshore Engineering Equipment (ऎɪࠬཥʿऎʈༀ௪Όࠦଉʷ኷ଫΥЪ՘ᙄ') with Huadian Heavy Industries Co., Ltd. to provide system solutions for offshore wind power projects in terms of engineering and technical services, material transportation and new energy utilization.

In respect of new orders: In 2020, CIMC Raffles had USD300 million of newly acquired effective orders, and held USD800 million of orders on a cumulative basis as at the end of 2020, among which non-oil-and-gas orders accounted for approximately 70% and showed a momentum of sustained growth. The newly acquired effective orders included five production platform and oil-and-gas module projects, four clean energy projects, three fishery projects and four ship repair projects.

(III) Finance and Asset Management Business that serves the Group itself

The Group's finance and asset management business is devoted to establishing a financial service system which matches the Group's strategic positioning as a leading manufacturer in the world, enhancing the efficiency and effectiveness of the Group's offshore engineering assets and internal capital utilisation, and providing diversified financial service measures for the Group's strategic expansion, business model innovation, industrial structure optimisation and overall competitiveness enhancement. The main operating entities consist of CIMC Financial Leasing Co., Ltd. ("CIMC Financial Leasing Company") and CIMC Finance Co., Ltd. ("CIMC Finance Company") and offshore engineering asset management platform companies.

In 2020, given the global spread of the COVID-19 epidemic and in response to the impact of the epidemic, financial regulation has further increased counter-cyclical control in 2020, lowering the reserve requirement ratio for three times, continuously reducing the MLF and LPR and introducing targeted support tools facing small and medium-sized enterprises. Such measures have achieved remarkable results with a significant increase in the growth rate of monetary and social financing and a significant decrease in the interest rate of comprehensive financing.

During the Reporting Period, the Group's finance and asset management business achieved revenue of RMB2.178 billion (2019: RMB2.213 billion), representing a year-on-year decrease of 1.59%, and net profit of RMB0.312 billion (2019: net loss of RMB5.118 billion), representing a turnaround from loss, which was mainly attributable to the change arising from the provision for impairment of semi-submersible platforms of RMB5.03 billion made by offshore engineering asset management platform companies in 2019.

CIMC Financial Leasing Company: In 2020, CIMC Financial Leasing Company adhered to the strategic positioning of "integration of industry and finance", focusing on the Group's core business ecosystem and consolidating the operational and financial synergies in the Group's manufacturing segment in order to further optimize its business layout and asset portfolio. From the aspect of risks, CIMC Financial Leasing Company continued to improve and optimize the comprehensive risk management system by upholding the strategy of "quality first, strict risk control", and strengthened the risk management and control for all employees and throughout the whole process and introduced big data and other technological risk control means. In 2020, CIMC Financial Leasing Company was awarded the Financial Industry Technology Application Scenario Innovation Award (ږፄБุҦஔᏐ͜ఙ౻௴ อᆤ) by IDC. From the aspect of funds, it further explored asset securitization models and developed a diversified financing system and financing capability, realized early recovery of cash flows. For the year, the investment in new businesses remained healthy and business portfolio was under continuous optimization according to the Group's strategic planning for special periods. In 2020, CIMC Financial Leasing Company was awarded "China Financial Leasing Company of the Year" for the sixth time.

CIMC Finance Company: In 2020, CIMC Finance Company launched comprehensive services to meet financing requirements of members of the Group and industry chain enterprises, set differentiated financial service plans during the outbreak of COVID-19, and continuously strengthened centralized management level of the funds through implementation of various measures to ensure the overall fund security and sufficient liquidity of the Group. It improved the financial services and increased the financial support for the Group's industries. For the year, the total amount of new capital investment exceeded RMB15.2 billion, which effectively met the capital needs of the Group. The types of financial products were continuously enriched and the first forward sale and settlement of foreign exchange business was completed, which marked the official initiation of the foreign exchange derivatives business of CIMC Finance Company, and will be helpful for improving the Group's foreign exchange risk management efficiency and lowering its forex trading cost.

Offshore engineering asset operation and management business of CIMC: As at the end of 2020, the offshore engineering asset management platform of the Group involved 8 offshore engineering assets in total, including two ultra-deepwater semi-submersible drilling platforms, three semi-submersible drilling platforms in severe sea conditions, three semi-submersible lifting/life support platforms. In 2020, the Group's offshore engineering asset operation and management business basically remained stable under dual pressures of the COVID-19 and low oil price across the world. (1) For asset operation, eight leases were in force and all existing leases have been steadily fulfilled. The "Blue Whale No. I" completed the drilling of several exploration and production wells in China's first deepwater self-operated gas field; the "Blue Whale No. II" made contributions to the success of China's second phase of natural gas hydrate pilot production, setting two world records; the "Deepsea Yantai" has been operating steadily in the North Sea of Norway throughout the year and has been awarded a new drilling service contract by Statoil, a Norwegian national petroleum company, extending its existing operations until the end of 2022; the "OOS Tiradentes" life support platform has been operating normally in the coast of Brazil throughout the year; several jack-up drilling platforms maintained normal operations in the Gulf of Mexico, the Bohai Bay and the Caspian Sea; the "OC Aggnes" self-unloading bulk carrier operated steadily in Europe with an annual lease rate of over 90%. (2) Forasset preservation, the Group successfully completed various warm stopping maintenance and special inspection and overhaul works, and strengthened spare parts management to reasonably reduce maintenance costs; strengthened cash flow management to effectively reduce capital pressure; adopted an information and process-based approach to achieve standardized management of asset preservation. (3) For asset disposal, the Group sold bulk carrier stock H190 in December, which improved operating cash flow.

(IV) Innovative Businesses that highlight the advantage of CIMC

Modular Building Business

CIMC Modular Building Investment Company Limited ("CIMC Modular"), a subsidiary of the Group, is engaged in the modular building business. As a company that is customer-centric, technology-led and innovation-driven, CIMC Modular develops a one-stop service model of "manufacturing + finance + service" integrating the production and finance, striving to become a technological leader in global green modular buildings. During the Reporting Period, the department achieved a record-high revenue.

Overseas markets: The modular building business further cultivated the existing markets amid the COVID-19 epidemic. In the UK market, the Group continued to successfully deliver hotel projects to world-renowned hotels, while steadily advancing into the apartment market. In the Northern Europe market, the first steel structure modular hotel project delivered in Iceland was completed and received great attention from all sectors of the local community. Meanwhile, the project obtained the technology certification of SINTEF from the local authority in Norway, and the delivery and operation of the first modular hotel project signed with the strategic partner in Norway were successfully completed during the Reporting Period. In the U.S. market, the first high-rise modular building in a high seismic intensity zone was officially completed and received the LEED Gold Award from the U.S. Green Building Council. In the Middle East market, the Group cooperated with well-known technology groups to explore the construction of overseas information centers, and have successfully delivered several phases of information centers. In the "Belt and Road" markets, Djibouti Hotel project in East Africa was undertook as an EPC contractor for the first time.

Mainland China: The Group's modular building business actively participated in the industrialized construction market and fully exploited and developed steadily. The Group succeeded in delivering a number of domestic information center projects in cooperation with renowned technology groups; supported medical staffs who worked at the frontline fighting the virus and built apartments for them; actively explored the promotion and application of modular in schools and other fields, and built a number of schools in just three months during the Reporting Period, helping Shenzhen to release the pressure of degree availability and smoothly securing a number of project contracts. With the promotion of the "Standard for Construction of Urban Fire Stations", the fire stations developed and built independently under the Group's modular building business were widely used. At the same time, the "Technical Regulations for Box-Type Steel Structure Integrated Modular Buildings (ᇌό፻ഐ࿴ණϓᅼ෯ʷܔጘҦஔ஝೻')" compiled by the modular building business department of the Group was formally implemented, further promoting the development of modular building in China.

Hong Kong market in China: The first MIC (Modular Integrated Construction) permanent high-rise and high-end talent apartment project in Hong Kong was completed at the Hong Kong Science and Technology Park. This project has gained a competitive edge for the Group's modular building business in the Hong Kong modular building market by achieving Platinum rating certification for new buildings granted by HKGBC BEAM PLUS, the highest standard for green buildings in Hong Kong. In order to support the emergency fight against epidemic in Hong Kong, the Group's modular building business quickly delivered a quarantine center project at the beginning of the year and undertook another quarantine center project in September, making contributions to the fight against epidemic in Hong Kong. Upon completion of the anti-epidemic mission, the project will be reassembled into a 4-storey building to be used as a public transitional housing, highlighting the advantages of the Group's modular building business, which is movable, easy to assemble and recyclable. The Group's modular building business is participating in the development of public transitional housing and public housing in Hong Kong, aiming to provide more green and environmental solutions to the society.

Cold Chain Equipment Business:

The Group should follow the general trend of the development of the domestic cold chain industry and expand the cold chain equipment and services market in order to have a place in the domestic cold chain industry.

Leveraging its own resources, the Group has developed a series of cold chain logistics equipment so far, including reefer containers, refrigerated trailers, refrigerated van bodies, small cold chain logistics equipment, smart cold chain logistics and warehousing system and mobile cold warehouse. What's more, cold chain logistics business has initially formed the cold chain end-to-end service capability in Southeast Asia, and the revenue of multimodal transport business of importing fruits under cross-border fresh food transportation exceeded RMB100 million. At the same time, it established a relatively mature cold chain logistics information platform, achieved temperature monitoring and remote adjustment in the course of food cold chain logistics, and ensured the food safety and traceability.

The Group actively expanded to medical cold chain, aviation cold chain and other fields that had higher requirements on temperature control. Take medical cold chain as an example, during COVID-19, the "Lengyun" team of Beijing CIMC JingXin XiangNeng Technology Co., Ltd. succeeded in sending test kits and other medical materials to hospitals of Hubei and other regions hit hard by the virus and to affected countries in Europe, Africa, America and Middle East. This company was selected as one of the first batch of 28 key contact enterprises for vaccine cargo transportation announced by the Ministry of Transportation and Communications; Yangzhou Tonglee has developed the "vaccine multimodal storage and transport cabin".

At present, the cold chain business of the Group has grown in size. Given that the domestic cold chain logistics market is more standardized and that demands grow continuously and rapidly, the Company is upbeat about the future of cold chain business.

(V) Others

Industrial city development business, which was no longer the subsidiary in October 2020

The industrial city development business under the Group is operated mainly through its associates CIMC Industry & City and its subsidiaries. The principal activities include the development and operation of industrial parks and development of complexes in industrial cities, etc..

In January to October 2020, the Group's industrial city development business recorded a revenue of RMB2,173 million (January to December in 2019: RMB1,436 million); and a net profit of RMB416 million (January to December in 2019: RMB806 million).

In 2020, the industrial city development business adhered to development strategy of industry and city integration, focusing on the development of two major core areas of Guangdong-Hong Kong-Macao Greater Bay Area and Yangtze River Delta. Overcoming the impact of the COVID-19 epidemic, the Group recorded contracted pre-sale amount of approximately RMB6.37 billion and contracted payment of approximately RMB5.58 billion as at the end of October 2020.

5.3 Business Prospects of the Group in 2021

• 5.3.1 Macroeconomic Environment and Policies

  The year 2021 is the initial year of the 14th Five-Year Plan. The global economic and trading landscape, the COVID-19 epidemic, technology and energy revolutions are pushing forward China's reforms. It is expected that monetary policy in 2021 will have more prominent structural features, deepen market-oriented interest rate reforms, unblock the conduction mechanism of monetary policy, and optimize the allocation of resources in regions, industries and cycles. In 2021, the world economy will grow by 5.2% year-on-year, and China's economy will grow by 7.9% year-on-year according to the latest forecast of the International Monetary Fund. Meanwhile, with the good news of vaccine research and launch and the end of the U.S. election, it is expected that the macro economy will improve gradually in the future.

• 5.3.2 Industry Development Trend and Market Outlook

  (1) In the Logistics Field:

In respect of the container manufacturing business: According to the latest prediction made by CLARKSONS (a leading global industry analyst) in February 2021, the growth of global container trade will rebound from -1.2% in 2020 to 5.7% in 2021, and the demand for container shipping is expected to welcome a full recovery. The growth of shipping capacity is expected to rebound to 3.9% in 2021 after it was slowed down to 2.9% in 2020, maintaining a tight supply/demand balance in the market. Old container replacement is expected to peak in 2021, and the supply and demand pattern will continue to improve. Although the future impact of the epidemic on container shipping and the industry is still relatively uncertain, it is expected that the overall demand of the container industry in 2021 will more likely continue its growth trend since the second half of 2020.

In respect of the road transportation vehicles business: In 2021, the Chinese government has proposed a new development pattern of "domestic and international economic cycles", which will have a profound impact on the development of global logistics and transportation industry. The domestic semi-trailers and truck bodies for specialty vehicles business of CIMC Vehicles will gets a long cycle of development under macro level of "domestic and international economic cycles" and micro levels, including full implementation of "new national standards", more stringent environmental protection policies, as well as "overloading" regulation. The domestic refrigerated van bodies business will continue to enjoy a rapid development despite the COVID-19 epidemic and driven by the fresh cold chain support policy. In terms of overseas markets, in 2021, the widespread usage of COVID-19 vaccine is expected to revive the global economy, and the global demand for logistics, transportation and semi-trailers is expected to benefit from economic recovery.

In respect of the airport facilities, fire safety and automated logistics equipment business: (1) The airport facilities equipment business: future electric and smart airport facilities equipment will contribute to the construction of "a safe, green, smart and human-oriented airport" of civil aviation. Demand for such airport facilities equipment is expected to grow gradually in the future which will replace the existing fuel and non-smart equipment. On the other hand, further development of the civil aviation industry in China will increase the share of wide-body passenger aircrafts, the number of which operated by Chinese airlines is expected to account for 19% of the globe by 2039. Accordingly, that would lead to a significant increase in the need to update boarding bridge. (2) Fire safety and rescue business: the increasing modernization of cities, rapid development of oversized space buildings, super-high buildings and high fire risk industries, such as petroleum, chemicals and building materials, has led to a rapid increase in the number of flammable and explosive sites and more complexity of fires. Therefore, this segment faces increasingly high technological requirements and has a market of certain demand. (3) Automated logistics systems business: with the scale expansion of airports in various regions and continued development of e-commerce business, we have seen a rapid rebound in manufacturing and logistics after the epidemic, which is favourable to the automated logistics business.

In respect of the logistics services business: The global value chain is showing a trend of strengthening regional attribute, and the official signing of Regional Comprehensive Economic Partnership (RCEP) marks the expected continuous increase in trade with Southeast Asia and other Belt and Road countries. In the meanwhile, China is forming a new pattern which is based on domestic macro-circulation, along with international and domestic dual-circulation and mutual promotion. The Group's logistics services business will actively face changes in macro environment and the industry to ensure the stability and sustainability of its development.

In respect of the unit load business: Looking ahead to 2021, the Group's unit load related business will accelerate its pace of recovery. Particularly, with the recovery of international trade, the demand for international maritime transportation will rebound and the multimodal transport business is expected to improve, both to a significant extent. The continued boom of automobile and liquid chemical industries will drive the increase in demand for unit loads, and the leasing operation business will continue to improve. Production and manufacturing of unit load business will improve gradually as the impact of COVID-19 is wearing off and the demand is picking up.

• (2) In the Energy Industries Field:

  In respect of the energy, chemical and liquid food equipment business: To further propel optimization of its energy structure, China actively develops green energy, improves energy utilization efficiency, and continues with its transformation towards low carbon development, striving to achieve carbon neutrality by 2060. At present, China's natural gas industry is entering a new stage of development and a critical period of energy transformation when its natural gas market demand will continue on growth in a long run, demonstrating an important period in which its clean energy industry will still be. Although the tank container industry is under pressure in the short term, a safer, more economical, more environmentally friendly and smarter green logistics model will be the trend in the long term. The new version of the Solid Waste Pollution Prevention and Control Law of the People's Republic of China implemented on 1 September 2020, specifies "establishment of a system of charge for treatment of domestic waste" and "the extended producer responsibility system", making it mandatory for waste producers to take effective measures to control solid waste pollution. Social investment in environmental governance of traditional manufacturing industry has increased, resulting in more room for the development of chemical environmental industry. According to the research report of Global Beverage Processing Equipment Market in 2020 by Manufacturer, Region, Type and Application, Forecast to 2025, the global beverage processing equipment market will reach a total value of USD24.3 billion by 2025. In the meantime, increased health consciousness among consumers and the rising consumption of high-quality beverages will drive continuous innovation in the liquid food processing equipment market.

  In respect of the offshore engineering business: The global economy is forecast to improve in 2021. In the medium to long term, however, major energy companies are reducing their budgets in the traditional oil and gas business segment, especially in the upstream exploration business, under the guidance of international proclamations such as "carbon neutrality" and "net-zero carbon", while the new and clean energy industry is gaining favor in the capital market. In view of the major trend of energy transition, the Group will accelerate the transition from traditional oil and gas to offshore renewable energy with the focus on principal growing businesses in the future, including FPSO/module, offshore wind power and deep-sea fishery. The Group means to significantly increase the proportion of revenue from non-oil and gas offshore business, and establish a product line layout to mitigate the impact of the oil and gas cycle fluctuations.

• (3) Finance and Asset Management Business:

  CIMC Financial Leasing Company: Compared with the leasing market in developed countries, China's financial leasing industry is still in the primary stage of development with relatively large market capacity. With the gradual implementation of unified supervision and the introduction of favourable national policies, the financial leasing industry still has middle and long-term development opportunities. There are two trends in the future development of the financial leasing industry: First, the leasing business will return to its nature. In light of this, the Group will adhere to the coordinated development of industry and finance to create a professional and differentiated competitive advantage with respect to leasing properties. Second, the industry will accelerate the application of technologies, especially to enhance the risk control capability and operational efficiency by using big data and artificial intelligence.

CIMC Finance Company: The year 2021 is the opening year of China's 14th Five-Year Plan. Despite uncertain external environment, there are more favorable factors for China's economic growth, thus the impact of COVID-19 on the economy may be reduced. China's monetary policy is expected to strike a balance between stabilizing growth and preventing risks, and will return to a neutral and prudent principle in 2021.

CIMC's offshore engineering asset management business: At present, as the

global economy is expected to recover, demand for oil is picking up. The ultra-loose monetary and fiscal support policies rolled out in major countries worldwide, the weakening U.S. dollar and higher inflation and other factors are also supportive for the current relatively higher oil prices in a short term. Therefore, both the demand and price trends are favorable for the development of the offshore oil and gas business.

5.3.3 Overall Operation Targets and Initiatives for Main Business Segments

Looking forward, in 2021, the Group will persist in its strategic positioning of "Manufacturing + Service + Financing", continue to promote the transformation and upgrade of its businesses, extend its manufacturing segment toward the service segment based on customer needs and focus on its main business to optimise business structure. The Group will also continue to improve its global operating capabilities, optimise its businesses and assets, accelerate the clustering of industries, and develop competitive advantages in its industrial chain. In terms of technological upgrade, business model and management mechanism, the Group will strive for constant innovation and risk control. The Group will also strive to grasp changes in the market and complete the layout of its emerging industries and innovative businesses in order to achieve sustainable quality growth.

(1) In the Logistics Field:

In respect of the container manufacturing business: In 2021, the Group's container

manufacturing business will actively grasp opportunities arising from the market situation brought about by global economic recovery and positive growth of the shipping industry in the post-epidemic era, stabilize and consolidate the profitability of its main business and its leading industry position through various initiatives, such as the Dragon Program (Ꮂᙜࠇྌ), major technical reforms and management improvements. While China is initiating a new development paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other, and enhancing the construction of "new infrastructure, new urbanization initiatives and major projects", the Group's container manufacturing business will also actively participate in and strive to grasp the opportunities arising therefrom on incremental special container business and innovative business. In terms of the incremental special container business, we will accelerate expansion in key areas to further enhance the integration and added value of our products. In terms of new business development, the Group will establish a model combining industrial fund investment and direct equity investment to conduct investment and acquisition in areas related to container strategies, such as cold chain, new materials and logistics equipment after-market mainly through controlling equity investment and supplemented by the establishment of joint venture companies.

In respect of the road transportation vehicles business: In 2021, CIMC Vehicles will, under the philosophy of "transoceanic management and local manufacturing", actively invest in digital analog design, upgrade lighthouse factories, and invest in EPS (Electronic Power Steering) based global supply chain management system in semi-trailer manufacturers in North America and Europe, so as to build up long-term competitiveness of CIMC Vehicles in the global market. At the same time, CIMC Vehicles will, in line with the new "dual-circulation" development paradigm, and leveraging the policy review window of more stringent environmental protection and "overloading regulation", seize the opportunity arising from the development of China's logistics and transportation market and semi-trailer replacement and update to expand its production layout in the refrigerated van body business. For this purpose, CIMC Vehicles has put forward the development plan of "constructing a high-end manufacturing system to meet the big changes", and will comprehensively build a high-end manufacturing system to achieve a unique position in the dual-circulation economy at home and abroad, and to scale new heights in transoceanic operation. Core development strategies are (1) to increase R&D investment and carry out digital transformation; (2) to continue to upgrade and improve lighthouse factories and build a high-end manufacturing system in an all-round way; (3) to improve and promote "new marketing" and "new retailing" methods; (4) to attract top talents and promote organisational development; (5) to continue to promote the strategic transformation of "transoceanic operation and local manufacturing".

In respect of the airport facilities, fire safety and automated logistics equipment business: In 2021, the airport facilities business of the Group will continue to cultivate strategic market, consolidate and enhance market share, maintain the leading position in the global market of boarding bridge. The Group will strengthen product life cycle management, improve service system, expand for a broader range of product and service with the support of information technology and big data. Fire safety and rescue business will further deepen the integrated operation and management, unify "service + R&D + procurement", increase overall coordination at the sales and production levels and respond proactively to the supply chain issues that may arise afterwards by adjusting the production process and enhancing product research and development; it will also continue to optimize and innovate the overall solution of fire truck leasing, and start new model of "equipment + finance + service" for fire truck business and gradually promote nationwide. Automated logistics systems business will continue to carry out strong integration, actively develop product targeting at promising industries, do well in project management, and form competitive advantages at specialization and efficient delivery.

In respect of the logistics services business: In 2021, facing long-term effects of the migration of manufacturing industry, the epidemic and trade friction, the Group will continue to strive for steady growth and deeply cultivate the professional logistics fields such as LNG chemical, engineering projects and cold chain with the strategic vision to become a multiple-channel intermodal transport leader in terms of its logistics business, featuring "equipment + service". Leveraging on "one brand, one team and one goal", we will promote the connection, communication and concentration of the business sectors and enhance the capabilities of strategic leading, organizing and empowering, and business promoting, and advance the profound combining of products, customers and strategic resources to further optimize the overall business structure.

In respect of the unit load business: In 2021, CIMC Unit Load will continue to increase its business expansion based on the domestic market. In terms of R&D and manufacturing: it will integrate the Company's R&D strength and establish a R&D shared center in order to enhance R&D and design capabilities, thus providing customers with comprehensive R&D and design solutions. In terms of the leasing operation: CIMC Unit Load will focus on unit load leasing business and to increase external cooperation by vigorously expanding the leasing operation and comprehensive solution business in industries such as household appliances, new energy and fresh produce, based on the existing automotive, liquid chemical, food and rubber businesses.

(2) In the Energy Industries Field:

In respect of the energy, chemical and liquid food equipment business: In 2021,

1) adhering to the main development path of its core business, namely "equipment manufacturing + engineering services + comprehensive solutions", the clean energy segment will focus on building the LNG full service chain and LPG full service chain, continuously adjust and optimize the high-voltage business chain with industrial gases, electronic gas and CNG, and seize new opportunities in the hydrogen energy storage, transportation and refueling equipment and application, the processing and application equipment for unconventional natural gas and the development of marine LNG application; 2) the chemical environment segment will continue to enhance technology R&D and market development. Under the premise of consolidating the leading position in the standard tank container market, the segment will endeavour to expand applications of tank containers. At the same time, the chemical environment segment will build the whole-chain operation ability by making technological innovation in the field of environmental improvement as the core competitiveness and focusing on the industrial waste treatment business. In addition, with its emphasis on two business dimensions of "resource utilization + eco-environmental services", the segment will promote the large-scale, formalized and intensive development to realize a leapfrog development of the environmental protection business; 3) the liquid food segment will continue to maintain and strengthen its major role in the beer, distilled liquor and juice markets, with the ambition of becoming a global leader in many liquid foods industries.

In respect of the offshore engineering business: In 2021, the Group will

continue to actively carry out business transformation and layout of the offshore engineering business, enhance market development, and focus on reducing losses while implementing profitability plans. It intends to develop FPSO/module, offshore hydrogen production and offshore energy (wave energy, tidal energy, temperature difference energy, etc.) in the future. The Group plans to implement the following key measures: (1) structure adjustment: stabilizing the industrial fluctuation cycle and the industrial structure with high-tech products to form a 50/50 business portfolio and production capacity allocation for oil and gas and non-oil and gas businesses; (2) resource integration: leveraging on the core capabilities of the industrial chain (design/equipment) to integrate the resources of state-owned enterprises and leading domestic and foreign enterprises.

(3) Finance and Asset Management Business:

CIMC Financial Leasing Company: In 2021, CIMC Financial Leasing Company will continue to deepen the coordination of industry and finance, further optimize the coordination mechanism of industry and finance in all industrial sectors, and further propel the business upgrade and model innovation. Meantime, it will further improve and optimize the comprehensive risk management system, further explore the asset securitization model, develop a diversified financing system and financing capability, strengthen the operational efficiency and service capacity of mid and back offices, improve the standard of digital management and realize sustainable development.

CIMC Finance Company: In 2021, CIMC Finance Company will take transformation and upgrade as the core of strategic development around the operation principle of "transformation, consolidation, improvement, balance, upgrade and protection". Leveraging on the deep integration of Group's development and industrial segments, it will strengthen the construction of digitization and informatization. Guided by exploring the needs of the Group, business segments and members, and primarily by means of improving and optimizing financial products and services, CIMC Finance Company will pay more attention to organic growth and service capacity enhancement, to provide differentiated and distinctive financial services and achieve new development.

Offshore engineering asset management business of CIMC: In 2021, the offshore engineering asset management business of the Group will understand the market pulse to create opportunities, and strives to achieve the overall objectives of asset disposal, asset operation and asset preservation. The main measures include: (1) diversified de-stocking: to take the supply-side structural reform as an opportunity and firmly grasp the international and domestic dual-circulation to promote development, and to diversify opportunities for asset disposal in the fields of oil and gas, offshore wind power, offshore new energy, offshore cultural and tourism complex, science education, ocean scientific research, etc.; and (2) maintaining lean and healthy operation: to perform digitalized and intelligent upgrade on asset operation and management for the purpose of higher efficiency from the lean and healthy operation, to improve the profitability of asset operation projects as well as the rationality and effectiveness of capital management, thus realizing the healthy operation of each asset project.

5.3.4 Major Risk Factors in the Future Development of the Group

Risk of economic periodic fluctuations: the industries that the principal business of the Group is engaged in are dependent on global and domestic economic performance and often vary with economic periodical changes. In recent years, the global economy has become increasingly complex with increasing uncertainty factors. In particular, the rise of the trade protectionism will have a negative impact on the growth of the global economy and trade. The changes and risks in the global economic environment demand higher requirements on the Group's operating and management capabilities.

Risk of economic restructuring and industry policy upgrade in China: China's economy entered into the new normal and the government comprehensively deepened supply-side structural reform to push forward the transformation and upgrade of economic structure. Developments including new industrial policies, tax policies and land policies, etc. that have a huge impact on business operations have resulted in uncertainties to the future development of industries. The main businesses of the Group, as part of the traditional manufacturing industries, will face certain policy adjustment risks in the coming years.

Risk of trade protectionism and anti-globalisation: anti-globalisation trend such as the trade protectionism implemented by the United States, Brexit and political elections in European countries, will bring more uncertainties to global trade recovery and threats to global economic growth. Part of the Group's principal businesses will be affected by global trade protectionism and anti-globalisation, such as anti-monopoly, anti-subsidy and anti-dumping investigations, etc.

Fluctuations of financial market and foreign exchange risks: the presentation currency of the consolidated statements of the Group is RMB. The Group's exchange risks are mainly attributable to the foreign currency exposure resulting from the settlement of sales, purchases and finance in currencies other than RMB. During the process of promoting RMB internationalization, and under the backdrop of constant volatility in the global financial market, the exchange rate of RMB against USD will fluctuate with increased frequency and volatility, thus making it more difficult for the Group to manage its foreign currencies and capitals.

Market competition risks: the Group faces competition from both domestic and foreign enterprises in respect of its various principal businesses. In particular, a weak demand or relative overcapacity will lead to imbalance between supply and demand, which will cause intensified competition in the industry. In addition, the competition landscape of the industry may change due to entry of new players or improved capacity of existing competitors.

Employment and environmental protection pressure and risks: with demographic changes in China and gradual loss of demographic dividend, China's manufacturing industries see constantly soaring labour costs. Automation represented by robots is becoming one of the key directions for future upgrade of the traditional manufacturing industries. In addition, China has been attaching increasing attention on environmental protection and carrying out sustainable development strategies, strengthening environmental protection requirements for China's traditional manufacturing industries.

Risks of fluctuations in price of main raw materials: steel is one of the main raw materials consumed in the production process of the Group, accounting for a high proportion of product costs. The price of iron ore which is used for the production of steal has fluctuated significantly recently. From 2017 to 2020, the average imported price of iron ore was USD70.75/ton, USD71.07/ton, USD86.22/ton and USD101.65/ton, respectively. In addition, the increasing demand in the steel industry may increase the demand for iron ore, driving the increase in the cost of steel. The Group's various businesses are closely related to steel price, which brings uncertainties to the Group's operating result.

COVID-19 related risks: In 2020, the world was faced with a more severe and complex economic situation as COVID-19 had swept the globe. Although COVID-19 is effectively contained in China currently, it further spreads in other countries and regions, and the development in other countries is subject to high uncertainty, all of which have a more complex impact on China's economy. In response to the severe situation faced by the Group in such a special period, the Group has adopted a series of key measures in 2020, such as establishing a "Special Period Decision-making Committee", further enhancing the awareness of risk management and control, and implementing the management and control measures.

6 MANAGEMENT DISCUSSION AND ANALYSIS (PREPARED ACCORDING TO THE RELEVANT REQUIREMENTS OF THE HONG KONG LISTING RULES)

The financial data set out below is extracted from the audited financial statements of the Group prepared under CASBE. The following discussion and analysis should be read in conjunction with the audited financial statements of the Group and their accompanying notes as set out elsewhere in the Announcement.

Revenue Analysis by Segment and Region

The following table sets out the Group's revenue from various major business segments and the percentage in total revenue during the following periods:

Unit: RMB thousand

Year-on-year

Note: The 2020 figures of industrial city development business cover the period from January 2020 to October 2020, while the 2019 figures cover the full year of 2019.

For detailed analysis, please refer to the section headed "5.2 Review of the Principal Businesses of the Group during the Reporting Period" herein.

The following table sets out the Group's revenue from various regions and the percentage in total revenue during the following periods:

Unit: RMB thousand

2020

2019

In 2020, by region, the Group's revenue from China and America has recorded an increase, while the revenue from Europe, Asia (excluding China) and other regions has reported a decrease.

Cost of Sales, Gross Profit and Gross Profit Margin Analysis by Segment

The following table sets out the Group's cost of sales of various major business segments and the percentage in total cost of sales during the following periods:

Unit: RMB thousand

2020

2019

Note: The 2020 figures of industrial city development business cover the period from January 2020 to October 2020, while the 2019 figures cover the full year of 2019.

The following table sets out the Group's gross profit and gross profit margin of various major business segments during the following periods:

Unit: RMB thousand

2020

2019

Note: The 2020 figures of industrial city development business cover the period from January 2020 to October 2020, while the 2019 figures cover the full year of 2019.

In 2020, the Group's cost of sales amounted to RMB80,715 million (2019: RMB73,356 million), representing a year-on-year increase of approximately 10.03%; the overall gross profit margin amounted to 14.28% (2019: 14.52%), decreased comparing with the same period of the previous year.

Non-operating Income

In 2020, the Group's non-operating income amounted to RMB248.615 million (2019: RMB198.534 million), representing a year-on-year increase of 25.23%.

Research and Development Expenses

In 2020, the Group's research and development expenses amounted to RMB1,608.704 million (2019: RMB1,437.046 million), representing a year-on-year increase of 11.95%.

Sales Expenses

In 2020, the Group's sales expenses amounted to RMB1,990.076 million (2019: RMB2,297.273 million), representing a year-on-year decrease of 13.37%.

General and Administrative Expenses

In 2020, the Group's general and administrative expenses amounted to RMB4,896.341 million (2019: RMB5,204.271 million), representing a year-on-year decrease of 5.92%.

Financial Expenses

In 2020, the Group's financial expenses amounted to RMB2,096.553 million (2019: RMB1,276.165 million), representing a year-on-year increase of 64.29%, mainly due to the net exchange losses of RMB648.699 million (2019: net exchange gains of RMB25.325 million) during the Reporting Period. However, as the Group conducted exchange rate derivatives investment activities, mainly foreign exchange forward contracts and foreign exchange option contracts, for the purpose of exchange rate hedging, in order to smooth or reduce the impact of uncertainty caused by changes in exchange rates on the Company's operations. Such derivatives investment activities realised a net profit (including the realised gain or loss on the delivered portion and the gain or loss on the change in fair value of the undelivered portion) of RMB769.061 million in 2020, achieving the hedging purpose. Nevertheless, the exchange loss was attributed to recurring profit or loss and the gain on the foreign exchange hedging instruments hedged against it was attributed to non-recurring profit or loss.

Provisions for Asset Impairment and Losses

In 2020, the Group made provisions for asset impairment and losses totalling RMB1,193.965 million (2019: RMB6,029.373 million), representing a year-on-year decrease of 80.20%, mainly due to substantial provision for impairment of offshore engineering platform assets made in the same period of the previous year.

Income Tax Expenses

In 2020, the income tax expenses paid by the Group amounted to RMB1,278.666 million (2019: RMB3,103.761 million), representing a year-on-year decrease of 58.80%, mainly due to the substantial income tax expenses related to revenue from land recognized in the same period of the previous year.

Profits Attributable to Minority Shareholders

In 2020, the Group's profits attributable to minority shareholders amounted to RMB662.127 million (2019: RMB967.887 million), representing a year-on-year decrease of 31.59%, mainly due to the decrease in earnings of the companies with minority shareholders in the Reporting Period.

Cash Flows

Details of the cash flows of the Group during the Reporting Period are as follows:

Unit: RMB thousand

Year-on-year

Item

2020 2019

change

Sub-total of cash inflows of operating activities

Sub-total of cash outflows of operating activities

Net cash flows from operating activities Sub-total of cash inflows of investing activities

Sub-total of cash outflows of investing activities

Net cash flows from investing activities Sub-total of cash inflows of financing activities

99,324,035 86,513,549 12,810,486 2,123,983 5,662,787 (3,538,804)

90,165,152 86,626,630

10.16%

(0.13%)

3,538,522 262.03% 1,325,379 60.25% 10,409,536 (45.60%)

(9,084,157)

61.04%

Sub-total of cash outflows of financing activities

44,381,254 50,920,818

• 87,407,283 (49.22%)

• 83,793,641 (39.23%)

  Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents

• (6,539,564) 3,613,642 (280.97%)

2,550,355

(1,872,868)

236.17%During the Reporting Period, the Group's net cash flows from operating activities increased by 262.03% as compared with the same period of last year, which was mainly due to the significant increase in sales revenue. The Group's net cash flows from investing activities increased by 61.04% as compared with the same period of last year, which was mainly due to the significant decrease in expenses for acquisition of fixed assets, intangible assets and other long-term assets and cash payment for external investment as a result of strict control over investments by the Group during the outbreak of the epidemic. Net cash flows from financing activities decreased by 280.97% as compared with the same period of last year, due to the lower demand for external financing as a result of the increase in net cash inflows from operating activities and significant decrease in cash payment in investing activities.

Liquidity and Financial Resources

The Group's cash at bank and on hand primarily consists of cash and bank deposits, mainly denominated in RMB and US dollars. As at 31 December 2020, the Group's cash at bank and on hand amounted to RMB12,181.415 million (31 December 2019: RMB9,714.792 million), which increased primarily as a result of the fund provision in response to the outbreak of the epidemic.

The Group's development funds primarily consist of cash derived from operation, bank loans and other borrowings. The Group's cash demands mainly come from production and operation, payment of matured liabilities, capital expenditure, payment of interests and dividends, and other unexpected cash demands. The Group has always adopted prudent financial management policies and maintained sufficient and appropriate amount of cash on hand to repay the bank loans due and ensure the development of our businesses.

Bank Loans and Other Borrowings

As at 31 December 2020, the Group's short-term borrowings, non-current borrowings due within one year, debentures payable due within one year, long-term borrowings, debentures payable amounted to a total of RMB48,444.491 million (31 December 2019: RMB65,795.689 million).

Unit: RMB thousand

31 December 31 December 2020 2019

In 2020, interest capitalised by the Group was RMB746.740 million (2019: RMB1,181.927 million).

The Group's bank borrowings are mainly denominated in U.S. dollars, with the interest payments computed at fixed rates and floating rates. As at 31 December 2020, the Group's long-term interest-bearing debts are mainly RMB-denominated floating rate contracts amounted to RMB12,222.594 million (31 December 2019: RMB20,626.847 million). The interest rate range of the Group's short-term borrowings is 1.11% to 4.90% (31 December 2019: 1.40% to 6.31%), and the interest rate range of long-term borrowings is 1.20% to 6.87% (31 December 2019: interest rate range of long-term borrowings is 1.20% to 6.87%). As at the end of the Reporting Period, the Group's fixed-rate bank borrowings amounted to approximately RMB14,441.604 million (31 December 2019: approximately RMB22,444.195 million). The long-term borrowings are mainly expired within five years. There is no seasonal feature in respect of the Group's need for borrowing, which is mainly based on the Group's capital and business needs.

The Group's issued debentures are mainly denominated in RMB, with the interest payments computed at fixed rates. As at 31 December 2020, the remaining fixed-rate debentures issued by the Group amounted to RMB8,107.360 million (31 December 2019: RMB8,014.049 million). The maturity date of debentures is mainly distributed within one to three years.

Unit: RMB thousandOn 24 October 2018, the Company issued an unsecured perpetual debt with amount of RMB2 billion at par ("18 Hai Yun Ji Zhuang MTN002"). The net amount after deducting the issue fee was RMB1,987,264,000. The equity instrument was issued for general corporate finance purposes. The interest rate of the equity instrument is 5.17% per annum for the first three interest-bearing years and are paid annually from 26 October 2019 and the Company can choose a deferred interest payment. From the fourth interest-bearing year, the coupon rate is reset every three years. The equity instrument has no fixed maturity date and may be redeemed by the Company at the par value, together with a payment of any accrued, unpaid or deferred interest on or after 26 October 2021 or later every three interest-bearing years. Before the settlement of deferred interest (including the interest of deferred interest), the issuer cannot distribute dividend or reduce capital, etc.

On 3 December 2018, the Group issued unsecured perpetual bond at par value to the qualified investors of RMB2 billion ("18 Renewable Corporate Bonds (Tranche 1)"). The net amount was RMB1,994,340,000 after the deduction of issue expenses. The equity instrument was issued for general corporate finance purposes. The interest rate of the equity instrument is 4.85% per annum for the first three interest-bearing years and are paid annually from 5 December 2019 and the Company can choose a deferred interest payment. From the fourth interest-bearing year, the coupon rate is reset every three years. This instrument has no fixed maturity date, and the Company can choose to redeem at the par value together with any accrued, unpaid or deferred interest on or after 5 December 2021 or later every three interest-bearing years.

On 30 April 2020, the Company and a bank signed an agreement that the bank shall invest in the Company's perpetual debt with the funds legally raised and entitled to be used by issuing bank's financial planning, and amount of investment capital received by the Company is RMB2,000,000,000. The investment plan is made for general corporate financing purposes and the initial investment period is 24 months with initial investment rate of 5.5%. The investment plan does not have a fixed maturity and the Company may apply to the bank for partial or full redemption of the perpetual debt on the date corresponding to and on any date after the expiry of 6 months from the placement date of the investment fund of the perpetual debt. Before the settlement of the deferred interest (including the interest of deferred interest), the Company cannot carry out distribution of dividend, capital reduction or other actions. As at 30 December 2020, the Company redeemed the perpetual debt in the amount of RMB1,700,000,000. As the aforementioned perpetual debt did not constitute a contractual obligation to pay cash or other financial assets that the Company could not avoid, it was classified as an equity instrument and presented as other equity instruments.

Capital Structure

The Group's capital structure consists of equity interests attributable to shareholders and liabilities. As at 31 December 2020, the Group's equity interests attributable to shareholders amounted to RMB53,853.844 million (31 December 2019: RMB55,037.978 million); the total liabilities amounted to RMB92,357.667 million (31 December 2019: RMB117,069.543 million) and the total assets amounted to RMB146,211.511 million (31 December 2019: RMB172,107.521 million).

As at 31 December 2020, the gearing ratio of the Group was 63% (31 December 2019: 68%), representing a year-on-year decrease of 5%. The gearing ratios were calculated based on our total liabilities as at the respective dates divided by our total assets. The Group is committed to maintaining an appropriate combination of equity and liability, in order to maintain an effective capital structure and provide maximum returns for shareholders.

Foreign Exchange Risk and Relevant Hedge

The Group receives majority of its business revenue in U.S. dollars, while most of its expenditure is made in RMB. Currently, the PRC government has implemented a regulated floating exchange rate regime based on market supply and demand with reference to a basket of currencies. However, RMB is still regulated under capital account. As the exchange rates of RMB are affected by domestic and international economic and political situations, and demand for and supply of RMB, and the future exchange rates of RMB against other currencies may vary significantly from the current exchange rates, the Group is exposed to potential foreign exchange risk arising from the exchange rate fluctuation in RMB against other currencies, which may affect the Group's operating results and financial condition. The management of the Group constantly monitors its foreign exchange risk closely and take appropriate measures to avoid foreign exchange risk. Please also refer to the "Financial Expenses" under "MANAGEMENT DISCUSSION AND ANALYSIS (PREPARED ACCORDING TO THE RELEVANT REQUIREMENTS OF THE HONG KONG LISTING RULES)" of the Announcement for relevant analysis.

Interest Rate Risk

The Group is exposed to the market interest rate change risk relating to its interest-bearing bank loans and other borrowings. To minimise the impact of interest rate risk, the Group entered into interest rate swap contracts with certain banks. As at 31 December 2020, the Group held 9 unsettled interest rate swap contracts denominated in U.S. dollars, the nominal value of which amounted to a total of USD1,400,000,000. Their fair value of RMB94,667,000 was accounted as liabilities with RMB74,923,000 included in current liabilities and RMB19,744,000 in other non-current liabilities. These contracts will expire from 19 April 2021 to 9 March 2022.

Market Risks

For details of the Group's market risks, please refer to "5.3.4 Major Risk Factors in the Future Development of the Group" of "5.3 Business Prospects of the Group in 2021" in the Announcement.

Credit Risk

The Group's credit risk is primarily attributable to cash at bank and on hand, receivables and derivative financial instruments entered into for hedging purposes and etc. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, as in the balance sheet. Except for the financial guarantees given by the Group, the Group does not provide any other guarantees which would expose the Group to credit risk. Exposure to these credit risks is monitored by the management on an ongoing basis.

Capital Commitments

As at 31 December 2020, the Group had capital expenditure commitments of approximately RMB118.935 million (31 December 2019: RMB340.141 million), which was mainly used for fixed assets purchase contracts entered into but not performed or performed partially and external investment contracts entered into but not performed or performed partially. Please refer to note 15 to "8 Financial Report" in the Announcement for details.

Pledge of Assets

As at 31 December 2020, restricted assets of the Group amounted to a total of RMB9,465.867 million (31 December 2019: RMB18,543.985 million), with details summarised as follows:

Unit: RMB thousand

The restricted cash at bank and on hand was security deposits and deposits with the People's Bank of China by the Finance Company, a subsidiary of the Group. Notes receivables were used for pledge for letter of guarantee and pledge for pool of notes. Receivables financing were endorsed bank acceptance bills that have not yet expired and are subject to recourse. Long term receivables were used as collateral for mortgage loans. The restricted fix assets were collateral for long term payables and real estate subject to contracted sale restriction. The restricted intangible assets were collateral for bank borrowings.

Significant Investments and Major Acquisitions and Disposals of Subsidiaries, Associated Companies and Joint Ventures

During the Reporting Period, apart from the disposal of a subsidiary CIMC Industry & City, the Group did not have any significant investment, major acquisition or disposal of subsidiaries, associated companies and joint ventures.

During the Reporting Period, no significant investment accounted for 5% or more of the total assets of the Company at the balance sheet date.

Future Plans for Significant Investments, Expected Source of Funding, Capital Expenditure and Financing Plan

The Group's operating and capital expenditures are mainly financed by our own funds and external financing. Concurrently, the Group will take a prudent attitude in order to enhance its future operating cash flow. According to the changes in economic situation and operating environment, as well as the needs of the Group's strategic upgrade and business development, the capital expenditure of the Group is expected to be approximately RMB7.3 billion in 2021, mainly used in the acquisition of fixed assets, intangible assets and other long-term assets, etc. The Group will continuously consider various types of financing arrangements.

Contingent Liabilities

As at 31 December 2020, the Group had no contingent liabilities (31 December 2019: the Group had no contingent liabilities).

Employees and Remuneration Policies

As at 31 December 2020, there were approximately 51,100 employees of the Group (31 December 2019: approximately 49,715) in the PRC. The total staff cost during the Reporting Period, including directors' remuneration, contribution to the retirement benefit schemes and share option incentive schemes, amounted to approximately RMB8,828.911 million (2019: approximately RMB8,159.122 million).

The Group provides salary and bonus payment to its employees based on their performance, position value, qualification, experience and market conditions. The share option incentive scheme aims to recognise the previous contribution of directors and core employees to the Group and reward them for their long-term services. Other benefits include social insurance required by the Chinese government. The Group regularly reviews its remuneration policies, including directors' remuneration payable, and strives to formulate an improved incentive and assessment mechanism based on the operating results of the Group and the market conditions.

Employee Training Programme

The Company has built a multi-level and composite talent training system with its core human resources philosophy of "people-oriented and mutual business", including: new employees training, general skills training, professional training, leadership training programme and international talent training programme. Meanwhile, the Group has also provided its employees with ample career development opportunities. The Group, based on its requirements from the strategic development on the talents, has built its employees' career development path (such as management, engineering technology, lean, finance, audit, etc.) to conduct effective career management and clarify career development direction for its employees with a view to increasing their capabilities.

Employee Pension Scheme

The Group has provided employees with basic pension insurance arranged by local human resources and social security bureaus. The Group makes monthly contributions to the pension insurance at the applicable rates and based on the amounts in compliance with local rules. When employees retire, the local human resources and social security bureaus are responsible for the payment of the basic pension benefits to the retired employees. The amounts of pension insurance payable calculated according to the above regulations are recognised as liabilities during the accounting periods when the employees render services and are charged to profit or loss or capitalised in costs of related assets.

Share Option Incentive Scheme

The implementation of share option incentive scheme is helpful for the Group to establish an interest sharing and restraint mechanism among the directors, the management and the core employees, by which the management can better balance its short-term and long-term goals, attract and retain talented management candidates and core employees and stimulate sustainable value of incentives which will serve to guarantee the stable development of the Company in the long term and enhance its competitive strength.

In order to establish and improve the incentive-constraint mechanism, and effectively combine the interests of the shareholders, the Company and its employees, an A share(s) share option incentive scheme was considered and approved at the extraordinary general meeting of the Company on 17 September 2010. According to such scheme, the first tranche of 54,000,000 share options (the "First Tranche of Share Options") were registered on 26 January 2011 and the reserved 6,000,000 share options (the "Second Tranche of Share Options") were registered on 17 November 2011. The effective period of such scheme is ten years from the first grant date of the share options (i.e. 28 September 2010).

On 12 May 2015, upon the consideration and approval at the eighth meeting of the seventh session of the Board in 2015, the options of the second exercisable period for the First Tranche of Share Options have met the exercise conditions and were actually exercisable starting from 2 June 2015 to 27 September 2020 with the total exercisable share options amounting to 39,660,000 share options. As at 9 October 2015, upon the consideration and approval at the fourteenth meeting of the seventh session of the Board in 2015, the options of the second exercisable period for the Second Tranche of Share Options have met the exercise conditions and were actually exercisable starting from 24 October 2015 to 27 September 2020 with the total exercisable share options amounting to 4,132,500 share options.

In 2020, the total share options exercised under the above mentioned A share(s) option incentive scheme amounted to 10,509,208 options, representing 17.95% of the total (adjusted), among which: 10,509,208 share options were exercised for the First Tranche of Share Options, and 0 share option was exercised for the Second Tranche of Share Options. As at the end of the exercisable period, i.e. 27 September 2020, the total share options exercised under the above mentioned A share(s) option incentive scheme cumulatively amounted to 37,911,118 (the sum of the shares of the second exercisable period for the First Tranche of Share Options and of the second exercisable period for the Second Tranche of Share Options), representing 64.76% of the total (adjusted). The implementation of the above mentioned A share(s) option incentive scheme has no significant impact on the financial conditions and operating results of the Company during the Reporting Period.

On 20 October 2020, the Company convened the seventeenth meeting of the ninth session of the Board in 2020, and considered and approved the Resolution on Canceling Unexercised and Expired A Share Options in the Second Exercisable Period. The Board agreed that: (1) a total of 6,883,580 share options of the first tranche of A share options granted under the Share Option Incentive Scheme in September 2010, which were unexercised in the second exercisable period, would be cancelled; (2) a total of 2,670,660 share options of the second tranche of A share options granted under the Share Option Incentive Scheme on 22 September 2011, which were unexercised in the second exercisable period, would be cancelled. Based on the review and confirmation of China Securities Depository and Clearing Corporation Limited Shenzhen Branch, the Company has completed all procedures related to the said cancellation of share options on 19 November 2020.

Summary of Employee Stock Ownership Plan of the Company

On 23 March 2020, the operation scheme of the Company to establish a trust plan by utilizing the surplus funds from the bonus balance of the profit sharing plan and make a contribution to the Partnership, which may be used by the Partnership to purchase H Shares of the Company in the secondary market, was considered and approved at the first meeting of the ninth session of the Board of the Company in 2020. The total scale of the fund for the operation scheme shall not exceed RMB343 million, the valid period of which is ten years commencing from the date of approval at the general meeting. The capital scale of the trust plan (first phase) under the Trust and Operation Scheme for Surplus Funds from the Profit Sharing Plan of CIMC Group (Draft) (the "Operation Scheme"), which is determined in accordance with the Operation Scheme, is RMB200 million, with the duration of five years. Such matter has been considered and approved at the 2019 annual general meeting, the first class meeting of A Shareholders for 2020 and the first class meeting of H Shareholders for 2020. As at 31 December 2020, the Partnership under the first phase of trust plan purchased 22,441,100 H Shares of the Company cumulatively through the Southbound Stock Connect in the secondary market, which accounted for 0.6242% of the total share capital of the Company. The average transaction price was HKD8.83 per share (tax and fees exclusive). As at 19 January 2021, the Company has completed the purchase of shares under the First Phase of the Trust Plan and the lock-up period for the H Shares of the Company purchased is 12 months. For relevant information, please refer to the announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-008, [CIMC]2020-009, [CIMC]2020-036, [CIMC]2020-047, [CIMC]2020- 055, [CIMC]2020-075, [CIMC]2020-079, [CIMC]2021-002 and [CIMC]2021-003) and the announcements published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 23 March 2020, 1 June 2020, 22 June 2020, 30 June 2020, 3 August 2020, 3 September 2020, 30 September 2020, 6 January 2020 and 20 January 2021.

Dividend Distribution

Based on the Group's 2020 operating results and taking into account the Group's overall financial position and cash flows, the Board recommended a final dividend of RMB0.28 for every one share (including applicable taxes) for the year of 2020, no bonus shares will be issued, and no shares will be converted from capital reserve into share capital. The proposed dividend is expected to be payable on or around 20 July 2021. The proposed distribution plan of the final dividend of 2020 is subject to the shareholders' approval at the forthcoming annual general meeting of the Company for the year of 2020.

Use of Proceeds from Global Offering of CIMC Vehicles

Since 11 July 2019 (the "Listing Date of CIMC Vehicles"), CIMC Vehicles has been listed on the Hong Kong Stock Exchange. CIMC Vehicles offered 265,000,000 H Shares in total in the global offering. After reducing underwriting commissions and expenses in relation to the global offering, the net proceeds received by CIMC Vehicles from the global offering amount to approximately HK$1,591.3 million. The nominal value of H Shares of CIMC Vehicles is RMB1.00 per share.

On 5 December 2019, 25 March 2020, 12 October 2020 and 20 November 2020, the board of directors of CIMC Vehicles further resolved to change the use of the net proceeds, please refer to the relevant announcements issued by CIMC Vehicles on the same days for details.

Use of the net proceeds from the global offering and its utilization as at 31 December 2020, which are intended to be utilized in the next five years from the listing date of CIMC Vehicles are as follows:

Note: As affected by the COVID-19 outbreak, the preliminary preparation for the project will take longer than originally planned. It is expected that CIMC Vehicles will use the proceeds from the global offering for the project no later than the end of 2022.

• 7 SIGNIFICANT EVENTS AND SUBSEQUENT SIGNIFICANT EVENTS

• 7.1 During the Reporting Period, PricewaterhouseCoopers served as the auditor and internal control auditor of the Company. The remuneration in respect of the audit and internal control audit work totaled RMB12.17 million (including: the auditing fees amounting to RMB9.97 million and the auditing fees for the internal control amounting to RMB2.20 million), mainly due to the provision of audit and internal control audit services as required by the Company.

• 7.2 On 25 February 2020, the Company has completed the issuance of the first tranche of super & short-term commercial papers for 2020 (the "Tranche I Super & Short-term Commercial Papers"). The proceeds raised from the Tranche I Super & Short-term Commercial Papers were fully received on 26 February 2020. The issuance amount of the Tranche I Super & Short-term Commercial Papers was RMB2 billion and the issue rate was 1.8% per annum. China Development Bank is the lead underwriter of the Tranche I Super & Short-term Commercial Papers, and Bank of Shanghai Co., Ltd. (ɪऎვБٰ΅Ϟࠢʮ̡) is the joint lead underwriter of the Tranche I Super & Short-term Commercial Papers. On 29 April 2020, the Company has completed the issuance of the second tranche of super & short-term commercial papers of the Company for 2020 (the "Tranche II Super & Short-term Commercial Papers"). The proceeds raised from the Tranche II Super & Short-term Commercial Papers were fully received on 30 April 2020. The issuance amount of the Tranche II Super & Short-term Commercial Papers was RMB2 billion and the issue rate was 1.2% per annum. China Development Bank is the lead underwriter of the Tranche II Super & Short-term Commercial Papers, and Ping An Bank Co., Ltd. is the joint lead underwriter of the Tranche II Super & Short-term Commercial Papers. On 7 July 2020, the Company has completed the issuance of the third tranche of super & short-term commercial papers of the Company for 2020 (the "Tranche III Super & Short-term Commercial Papers"). The proceeds raised from the Tranche III Super & Short-term Commercial Papers were fully received on 7 July 2020. The issuance amount of the Tranche III Super & Short-term Commercial Papers was RMB2 billion and the issue rate was 1.6% per annum. Ping An Bank Co., Ltd. is the lead underwriter of the Tranche III Super & Short-term Commercial Papers. For relevant information, please refer to the announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-004, [CIMC]2020-029 and [CIMC]2020-050) and the announcements published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 26 February 2020, 29 April 2020 and 7 July 2020.

• 7.3 On 23 March 2020, the operation scheme of the Company to establish a trust plan by utilizing the surplus funds from the bonus balance of the profit sharing plan and make a contribution to the Partnership, which may be used by the Partnership to purchase H Shares of the Company in the secondary market, was considered and approved at the first meeting of the ninth session of the Board of the Company in 2020. The total scale of the fund for the operation scheme shall not exceed RMB343 million, the valid period of which is ten years commencing from the date of approval at the general meeting. The capital scale of the trust plan (first phase) under the Trust and Operation Scheme for Surplus Funds from the Profit Sharing Plan of CIMC Group (Draft) (the "Operation Scheme"), which is determined in accordance with the Operation Scheme, is RMB200 million, with the duration of five years. Such matter has been considered and approved at the 2019 annual general meeting, the first class meeting of A Shareholders for 2020 and the first class meeting of H Shareholders for 2020. As at 31 December 2020, the Partnership under the first phase of trust plan purchased 22,441,100 H Shares of the Company cumulatively through the Southbound Stock Connect in the secondary market, which accounted for 0.6242% of the total share capital of the Company. The average transaction price was HKD8.83 per share (tax and fees exclusive). As at 19 January 2021, the Company has completed the purchase of shares under the first phase of the trust plan and the lock-up period for the H shares of the Company purchased is 12 months. For relevant information, please refer to the announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-008, [CIMC]2020-009, [CIMC]2020-036, [CIMC]2020-047, [CIMC]2020- 055, [CIMC]2020-075, [CIMC]2020-079, [CIMC]2021-002 and [CIMC]2021-003) and the announcements published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 23 March 2020, 1 June 2020, 22 June 2020, 30 June 2020, 3 August 2020, 3 September 2020, 30 September 2020, 6 January 2021 and 20 January 2021.

• 7.4 On 26 March 2020, having communicated with PricewaterhouseCoopers Zhong Tian LLP, the auditor of the Company, the Group made a total provision of RMB6,029.373 million for the asset impairment for the year 2019 under the principle of prudence for the purpose of reflecting the financial condition and asset value of the Company as at 31 December 2019 in a more truthful and accurate manner. For relevant information, please refer to the announcement published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement No.: [CIMC]2020-013) and the announcement published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 26 March 2020.

• 7.5 On 26 March 2020, as considered and approved at the second meeting of the ninth session of the Board of the Company in 2020, the Company proposed to amend certain articles of the Articles of Association and the Rules of Procedure for the General Meetings. This matter was considered and approved at the 2019 annual general meeting, the first class meeting of A Shareholders for 2020 and the first class meeting of H Shareholders for 2020. For relevant information, please refer to the announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-018 and [CIMC]2020-036) and the announcements published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 26 March 2020 and 1 June 2020.

• 7.6 On 26 March 2020, as considered and approved at the second meeting of the ninth session of the Board of the Company in 2020, the Company proposed to register and issue medium-term notes in an amount of no more than RMB6 billion, perpetual medium-term notes in an amount of no more than RMB2 billion (also known as "perpetual notes") and super & short-term commercial papers in an amount of no more than RMB8 billion. This matter was considered and approved at the 2019 annual general meeting, the first class meeting of A Shareholders for 2020 and the first class meeting of H Shareholders for 2020. For relevant information, please refer to the announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-019 and [CIMC]2020-036) and the announcements published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 26 March 2020 and 1 June 2020.

• 7.7 On 26 March 2020, as considered and approved at the second meeting of the ninth session of the Board of the Company in 2020, the Company proposed to issue the Corporate Bonds to the qualified investors who satisfy the requirements under the Administrative Measures for the Issuance and Trading of Corporate Bonds (ʮ̡වՎ೯Бၾʹ׸၍ଣ፬ج'), with the issuance size of the Corporate Bonds in aggregate not exceeding RMB8 billion (inclusive). This matter was considered and approved at the 2019 annual general meeting, the first class meeting of A Shareholders for 2020 and the first class meeting of H Shareholders for 2020 and shall be implemented after being approved by China Securities Regulatory Commission, and it is subject to the final plan approved by China Securities Regulatory Commission. On 7 December 2020, interest for the year 2020 was paid on the 2018 Public Issue of Renewable Corporate Bonds for Qualified Investors (Phase I) at RMB4.85 per bond. For relevant information, please refer to the announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-020 and [CIMC]2020-036) and the announcements published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 26 March 2020, 1 June 2020 and 2 December 2020.

• 7.8 On 29 May 2020, the Company received a notice from CITIC - Prudential Life Insurance Co., Ltd. ("CITIC - Prudential", a shareholder of the Company), stating that CITIC - Prudential acquired 7,137,495 additional unrestricted A Shares of the Company on 29 May 2020 through centralised trading on the Shenzhen Stock Exchange, accounting for 0.20% of the total share capital of the Company. Upon the change in shareholding, CITIC - Prudential held 19,733,298 A Shares and 166,355,080 H Shares of the Company, totaling 186,088,378 shares, accounting for 5.19% of the total share capital of the Company. For relevant information, please refer to the announcement published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement No.: [CIMC]2020-035) and the announcement published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 1 June 2020. As at the end of the Reporting Period, the Company, having made reasonable enquiries, confirmed that CITIC - Prudential held 19,733,298 unrestricted A Shares of the Company in addition to the 180,922,580 H Shares of the Company which were registered under HKSCC Nominees Limited, accounting for 5.58% of the total share capital of the Company.

7.9

On 22 July 2020, the Company and Xiang Shan Hua Jin Industrial Investment Partnership (Limited Partnership) (൥ʆശږྼุҳ༟ΥྫΆุ(ϞࠢΥྫ)) ("Xiang Shan Hua Jin") entered into the equity transfer agreement with Shanghai Tai Fu Xiang Zhong Equity Investment Fund Partnership (Limited Partnership) (ɪऎ˄బୂʕٰᛆҳ༟ਿږΥྫΆุ(ϞࠢΥྫ)) ("Tai Fu Xiang Zhong"). On the same date, the Company and Xiang Shan Hua Jin entered into the share confirmation with respect to the transfer of target shares. Pursuant to the equity transfer agreement and the share confirmation, the Company decided to purchase from Tai Fu Xiang Zhong 63,493,475 shares held in CIMC Vehicles at RMB6.80 per share for a consideration of RMB431,755,630. Upon completion of the transaction, the Company will hold approximately 57.42% equity interest in CIMC Vehicles, and CIMC Vehicles will remain as a non-wholly owned subsidiary of the Company. The transaction was considered and approved at the ninth meeting of the ninth session of the Board of the Company in 2020, at which no Director was required to abstain from voting on the relevant Board resolution due to any material interest in the transaction. The independent directors of the Company have conducted preliminary review and issued independent opinions. The transaction was not required to be submitted to the general meeting of the Company for consideration and approval. For relevant details, please refer to the announcement published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement No.: [CIMC]2020-052) and the announcement published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 22 July 2020.

• 7.10 The twelfth meeting of the ninth session of the Board of the Company in 2020 held on 27 August 2020 considered and approved that: 1) Mr. MAI Boliang, current executive Director, has been elected as the Chairman of the ninth session of the Board, with effect from 27 August 2020; 2) Mr. DENG Weidong and Mr. GAO Xiang have been nominated as additional candidates for directorships of the ninth session of the Board, and Mr. GAO Xiang has been appointed as President of the Company, with effect from 27 August 2020; and 3) the Board has appointed members of the committees. The nomination of Mr. DENG Weidong and Mr. GAO Xiang as additional Directors of the ninth session of the Board has been considered and approved at the first extraordinary general meeting of the Company for 2020. On 9 October 2020, the election of Mr. HU Xianfu, a Director, as an additional vice-chairman of the Company was considered and approved at the sixteenth meeting of the ninth session of the Board of the Company in 2020, and members of committees of the Board were determined at the meeting. For relevant details, please refer to the announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-067, [CIMC]2020- 072, [CIMC]2020-082 and [CIMC]2020-083) and the announcements published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 27 August 2020 and 9 October 2020.

• 7.11 On 16 September 2020, the Company intends to amend certain provisions of the Articles of Association as considered and approved at the thirteenth meeting of the ninth session of the Board of the Company in 2020. This matter has been considered and approved at the thirteenth meeting of the ninth session of the Board of the Company in 2020 and the first extraordinary general meeting for 2020. The full text of relevant rules has been disclosed publicly. For relevant information, please refer to announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-076 and [CIMC]2020-082) and the announcements published on the website of the Hong Kong Stock

  Exchange (www.hkexnews.hk) by the Company on 16 September 2020 and 9 October 2020.

• 7.12 On 11 October 2019, the Announcement on Extending the Time for the Book Building on 2019 Public Offering of Corporate Bonds (Tranche I) of China International Marine Containers (Group) Co., Ltd. for Qualified Investors has been published by the Company; on 14 October 2019, the Announcement on the Coupon Rate of 2019 Public Offering of Corporate Bonds (Tranche I) of China International Marine Containers (Group) Co., Ltd. for Qualified Investors has been published; On 15 October 2019, the Announcement on the Results of 2019 Public Offering of Corporate Bonds (Tranche I) of China International Marine Containers (Group) Co., Ltd. for Qualified Investors has been published; on 21 October 2019, the Announcement on the Listing of 2019 Public Offering of Corporate Bonds (Tranche I) of China International Marine Containers (Group) Co., Ltd. for Qualified Investors on the Shenzhen Stock Exchange has been published. The actual issuance size of the Bonds is RMB2.0 billion and the final coupon rate is 3.63%. On 11 October 2020, the Company disclosed the Announcement on 2020 Interest Payment for the Listing of 2019 Public Offering of Corporate Bonds (Tranche I) for Qualified Investors. For relevant information, please refer to the announcements published by the Company on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com), as well as the relevant announcements published on the website of the Hong Kong Stock Exchange (www. hkexnews.hk) on 11 October 2019, 14 October 2019, 15 October 2019, 21 October 2019 and 11 October 2020.

• 7.13 On 20 October 2020, after consideration and approval by the seventeenth meeting of the ninth session of the Board of the Company in 2020, as the term of the Share Option Incentive Scheme of China International Marine Containers (Group) Co., Ltd. (the "Share Option Incentive Scheme") expired on 27 September 2020 and the last trading day was 25 September 2020, according to the relevant rules of the Share Option Incentive Scheme, the Board agreed to cancel a total of 9,554,240 unexercised and expired share options of the A share options during the second exercisable period. For relevant information, please refer to announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-087, [CIMC]2020-088, [CIMC]2020-089 and [CIMC]2020-93) and the announcements published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 20 October 2020 and 20 November 2020.

• 7.14 On 18 August 2020, the Company received notices from COSCO SHIPPING Development Co., Ltd. ("COSCO SHIPPING"), Broad Ride Limited and Promotor Holdings Limited, being shareholders of the Company, whom have been proposing to transfer part of their shareholdings in the Company. On 25 August 2020, COSCO Container Industries Limited ("COSCO Industries") and Long Honour Investments Limited ("Long Honour"), both being wholly-owned subsidiaries of COSCO SHIPPING, together with Broad Ride Limited and Promotor Holdings Limited, as the four shareholders, and Shenzhen Capital Group entered into the Letter of Intent on Transfer of Shares of China International Marine Containers (Group) Co., Ltd., pursuant to which the four shareholders agreed to transfer part or all of their respective shares held in the Company to Shenzhen Capital Group and its designated wholly-owned subsidiary. On 12 October 2020, each of Shenzhen Capital (Hong Kong) Container Investment Co., Ltd. (ଉέ༟͉(࠰ಥ)ණༀ ᇌҳ༟Ϟࠢʮ̡) ("Shenzhen Capital (Hong Kong)") and Shenzhen Capital Group, COSCO Industries, Long Honour, COSCO SHIPPING, Broad Ride Limited and Promotor Holdings Limited entered into the Share Transfer Agreement. Upon the transfer, COSCO Industries will still hold 168,606,212 A Shares of the Company (representing 4.69% of the total share capital of the Company as of the date of signing the agreement), and Long Honour, Broad Ride Limited and Promotor Holdings Limited will no longer hold shares of the Company; Shenzhen Capital Group and its subsidiary, Shenzhen Capital (Hong Kong), will hold 350,000,000 A Shares and 719,089,532 H Shares of the Company, respectively, representing 29.74% of the total share

capital of the Company as of the date of signing the agreement in aggregate, and will become the Company's largest shareholder. There is still no controlling shareholder or actual controller of the Company upon the completion of this share transfer. On 18 December 2020, the Share Transfer has been fully completed. For relevant details, please refer to the announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-062, [CIMC]2020-066, [CIMC]2020-085, [CIMC]2020-100 and [CIMC]2020-102) and the announcements published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 18 August 2020, 25 August 2020, 12 October 2020, 16 December 2020 and 18 December 2020.

7.15 On 9 March 2021, the Board received the written resignations from Mr. LIU Chong, a director of the Company, and Mr. GAO Xiang, a director of the Company. Mr. LIU Chong has tendered his resignation from the positions of director, vice-chairman and the member of the Strategy Committee of the Board of the Company due to the change in job assignments. Mr. LIU Chong will not take any position in the Company upon his resignation of the aforesaid positions. Mr. GAO Xiang has tendered his resignation from the position of director of the Company due to the change in job assignments. Mr. GAO Xiang's position as the president of the Company and other positions in the subsidiaries of the Company remain unchanged upon his resignation of the aforesaid position. The resignations of Mr. LIU Chong and Mr. GAO Xiang have taken effect from the date of the Board's receipt of their written resignations. On the same date, the Supervisory Committee of the Company received the written resignation from Mr. LIN Feng, the chairman of the Supervisory Committee. Mr. LIN Feng has tendered his resignation from the positions of chairman of the Supervisory Committee and the supervisor representing shareholder of the Company due to the change in work arrangement. Mr. LIN Feng will not take any position in the Company upon his resignation of the aforesaid positions. Mr. LIN Feng's resignation will result in the total number of supervisors of the Company falling below the minimum quorum; therefore, according to the Articles of Association, Mr. LIN Feng's resignation will not come into effect until a new supervisor is elected at the Company's general meeting to fill the vacancy. Mr. LIN Feng shall continue to fulfill the duties of supervisor before his resignation takes effect. On 15 March 2021, the Resolution in Relation to the By-election of Mr. ZHU Zhiqiang (ϡқ੶) and Mr. KONG Guoliang (ˆ਷૑) as Directors of the Ninth Session of the Board and the Resolution in Relation to the By-election of Ms. SHI Lan (ͩᘜ) as a Supervisor Representing Shareholder of the Ninth Session of the Supervisory Committee were considered and approved by the fifth meeting in 2021 of the ninth session of the Board and the first meeting in 2021 of the ninth session of the Supervisory Committee of the Company, respectively. For relevant information, please refer to the announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcements Nos.: [CIMC]2021-014 and [CIMC] 2021-020) and the announcements published on the website of the Hong Kong Stock Exchange

(www.hkexnews.hk) by the Company on 9 March 2021 and 15 March 2021.

• 7.16 On 26 March 2020, as considered and approved at the second meeting of the ninth session of the Board of the Company in 2020, the non-wholly owned subsidiary of the Company, CIMC Industry & City provided guarantees for the financing businesses of related/connected parties including Shenzhen Taiziwan Shangrong Real Estate Co., Ltd. (ଉέ̹˄ɿᝄਠፄໄุϞࠢ ʮ̡) ("Shangrong Real Estate"), Shenzhen Taiziwan Shangtai Real Estate Co., Ltd. (ଉέ̹ ˄ɿᝄਠइໄุϞࠢʮ̡) ("Shangtai Real Estate"), majority-owned subsidiaries of China Merchants Shekou Industrial Zone Holdings Co., Ltd., and Qujing Zhongbirui Real Estate Development Co., Ltd. (Ϝཨ̹ʕ၀๿גήପක೯Ϟࠢʮ̡) ("Qujing Zhongbirui") which is a majority-owned subsidiary of Country Garden Real Estate Group Co., Ltd. (၀࣭෤ήପණ ྠϞࠢʮ̡) in proportion to its shareholding. The maximum amounts in respect of guarantees provided by CIMC Industry & City to Shangrong Real Estate, Shangtai Real Estate and Qujing Zhongbirui is RMB343 million, RMB343 million and RMB490 million, respectively. For relevant information, please refer to the announcement published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement No.: [CIMC]2020-015) and the announcement published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 26 March 2020.

• 7.17 On 13 April 2020, CIMC Industry & City has completed the issuance of the first tranche of private placement notes (PPN) for 2020 (the "Tranche I PPN"). The proceeds raised from the Tranche I PPN were fully received on 13 April 2020. The actual issuance amount of the Tranche I PPN was RMB500 million and the issue rate was 5.5% per annum. Bank of Shanghai Co., Ltd. is the lead underwriter of the Tranche I PPN, and CSC Financial Co., Ltd. is the joint lead underwriter of the Tranche I PPN. On 15 June 2020, CIMC Industry & City has completed the issuance of the second tranche of private placement notes (PPN) for 2020 (the "Tranche II PPN"). The proceeds raised from the Tranche II PPN were fully received on 15 June 2020. The actual issuance amount of the Tranche II PPN was RMB400 million and the issue rate was 5.4% per annum. Bank of Shanghai Co., Ltd. is the lead underwriter of the Tranche II PPN, and CSC Financial Co., Ltd. is the joint lead underwriter of the Tranche II PPN. For relevant information, please refer to the announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-022 and [CIMC]2020-040) and the announcements published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 13 April 2020 and 15 June 2020.

• 7.18 On 16 April 2020, CIMC Industry & City proposed to provide financial assistance to a connected party, Shenzhen Country Garden Property Investment Co., Ltd. (ଉέ̹၀࣭෤גήପҳ༟Ϟ ࠢʮ̡) ("Shenzhen Country Garden"), through its non-wholly owned subsidiaries, Shenzhen Jihong Investment Co., Ltd. ("Jihong Investment") and Shenzhen Jiyuan Investment Co., Ltd. ("Jiyuan Investment"). Shenzhen Country Garden will receive the financial assistance of no more than RMB2.258 billion in total by a ratio of 30%, including no more than RMB0.474 billion of financial assistance to be provided by Jihong Investment to Shenzhen Country Garden and no more than RMB1.784 billion of financial assistance to be provided by Jiyuan Investment to Shenzhen Country Garden. The transaction has been considered and approved at relevant general meting. For relevant information, please refer to the announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-025 and [CIMC]2020-36) and the announcements published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 16 April 2020 and 1 June 2020.

7.19 On 6 May 2020 and 15 May 2020, the initial public offering of RMB ordinary shares (A shares),

listing and trading of the shares on the ChiNext (௴ุؐ) of the Shenzhen Stock Exchange (the "SZSE") by CIMC Vehicles (the "A-share Issue" or "ChiNext Listing") was considered and approved at the board meeting of CIMC Vehicles, a majority-owned subsidiary of the Company. A supplementary circular in relation to the A-share Issue and other relevant resolutions has also been published. The resolution regarding the A-share Issue and other relevant resolutions were considered and approved at the sixth meeting of the ninth session of the Board of the Company held on 19 June 2020. The independent Directors of the Company have conducted preliminary review and issued independent opinions on the A-share Issue. On 22 June 2020, the resolution regarding the A-share Issue and other relevant resolutions were considered and approved at the annual general meeting and the class meeting of CIMC Vehicles. CIMC Vehicles received an acceptance notice from the Shenzhen Stock Exchange on 31 July 2020. On 25 December 2020, the application for A Share offering of CIMC Vehicles was approved by the for ChiNext Market of Shenzhen Stock Exchange listing committee. The A Share offering of CIMC Vehicles is subject to the consent of the CSRC for registration and certain conditions precedent and is therefore has uncertainties. For relevant information, please refer to the announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-031, [CIMC]2020-032, [CIMC]2020-037, [CIMC]2020-043, [CIMC]2020- 044, [CIMC]2020-052, [CIMC]2020-053, [CIMC]2020-054 and [CIMC]2020-104) and the announcements published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 6 May 2020, 15 May 2020, 2 June 2020, 19 June 2020, 22 June 2020, 22 July 2020, 2 August 2020 and 27 December 2020.

7.20

CIMC Enric Investment Holdings (Shenzhen) Ltd.* (ʕණτ๿߅ҳ༟છٰ(ଉέ)Ϟࠢʮ̡) ("Enric Shenzhen") received certain litigation documents served by the Jiangsu Province High People's Court, including a notice of response to action [(2018) Su Min Chu No.37] ([(2018)ᘽ ͏ڋ37໮]) and a writ of summons in December 2018, pursuant to which, the plaintiff SOEG PTE LTD ("SOEG") sued the defendant Enric Shenzhen, and petitioned the court to: 1) order Enric Shenzhen to pay SOEG the remaining balance of the equity transfer of RMB153,456,000; 2) order Enric Shenzhen to bear the attorney fee loss of RMB50,000 incurred by SOEG; 3) order Enric Shenzhen to bear the costs of this case. The litigation entered the trial stage in September 2019, and the Nantong Intermediate Court has recently made the first-instance judgment: 1) the claim made by the plaintiff SOEG has been dismissed; 2) the case acceptance fee of RMB809,330 shall be borne by the plaintiff SOEG; 3) if the judgment is not accepted, the plaintiff SOEG and the defendant Enric Shenzhen may submit an appeal to the Nantong Intermediate Court within 30 days and 15 days, respectively, from the date the judgment is served, and may provide the copies of the appeal in the same number as that of the parties involved. The appeal (if any) will proceed at the Jiangsu Province High People's Court, and the case acceptance fee for the appeal shall be prepaid to the Jiangsu Province High People's Court according to the Measures for Payment of Litigation Costs (ൡத൬͜ʹॶ፬ج'). In August 2020, Enric Shenzhen has received the SOEG petition served by the Nantong Intermediate People's Court of Jiangsu Province, and the case will then be transferred to the Jiangsu Province High People's Court for second instance. As disclosed in the announcement of the Company dated 8 December 2020, as SOEG did not make advance payment for court hearing charges within the specified timeframe, the case was treated as automatic withdrawal of appeal. The first instance judgment shall be legally effective from the date of the Ruling served. For relevant details, please refer to the announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-041, [CIMC]2020-060 and [CIMC]2020-099) and the announcements published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 31 January 2019, 15 June 2020, 12 August 2020 and 8 December 2020.

• 7.21 On 6 August 2020, it was considered and approved at the tenth meeting of the ninth session of the Board of the Company in 2020 that Country Garden Real Estate Group Co., Ltd. ("Country Garden") will pay additional capital of RMB1,606,124,427 to CIMC Industry & City, an indirect non-wholly-owned subsidiary of the Company, and the corresponding additional capital to the equity value of uncompleted parts of Qianhai Projects (if any) will be increased to a maximum of RMB39,012,616. Upon the completion of the transaction, the equity interest in CIMC Industry & City held by Country Garden will increase from 25% to 30%. According to the Capital Increase Agreement dated 18 August 2020, Qujiang Cultural Industry Investment paid the tentative proposed additional capital price of RMB2,351,531,106.75 to CIMC Industry & City, an indirect non-wholly owned subsidiary of the Company. Upon completion of the transaction, the registered capital of CIMC Industry & City will be increased to RMB454,703,689.29, and Qujiang Cultural Industry Investment will hold 20% equity interest in CIMC Industry & City. Upon completion of the capital increase by Qujiang Cultural Industry Investment, the percentage of equity interest held by the Company in CIMC Industry & City will be decreased to 45.92%. Upon the completion of the above two transactions, CIMC Industry & City has become an associate of the Company. In addition, as certain directors and senior management of the Group will hold directorship on the new board of directors of CIMC Industry & City, according to the Rules Governing the Listing of Shares on the Shenzhen Stock Exchange (the "Shenzhen Listing Rules"), CIMC Industry & City will also constitute a related party of the Company under the Shenzhen Listing Rules. After CIMC Industry & City introduces the strategic investor, the Company will still have fund transfers with CIMC Industry & City and provide related-party guarantees to it. Such matters stated above have been considered and approved by the first extraordinary general meeting for 2020, the eleventh meeting of the ninth session of the Board of the Company in 2020 and the first extraordinary general meeting of the Company for 2020. All the independent Directors have issued preliminary review opinions. For relevant details, please refer to announcements published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement Nos.: [CIMC]2020-057, [CIMC]2020-058, [CIMC]2020-063, [CIMC]2020-064 and [CIMC]2020-082) and the announcements published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 6 August 2020, 18 August 2020 and 9 October 2020.

• 7.22 On 12 August 2020, the Company, Shenzhen CIMC Intelligent Technology Co., Ltd. ("CIMC Intelligent", a subsidiary of the Company), Southern CIMC (a wholly-owned subsidiary of the Company) and Dongjie Intelligent (Shenzhen) Co., Ltd. (؇௫౽ঐ(ଉέ)Ϟࠢʮ̡) ("Shenzhen Dongjie") signed the Equity Transfer Agreement Regarding Shenzhen CIMC Intelligent Technology Co., Ltd. (hereinafter referred to as the "Equity Transfer Agreement"). Pursuant to the Equity Transfer Agreement, the Group intends to transfer its 55% equity interest in CIMC Intelligent to an independent third party, Shenzhen Dongjie, for a transaction consideration of RMB49.5 million. Upon completion of the transaction, the Company's equity in CIMC Intelligent will be reduced from 68% to 13%, and CIMC Intelligent will cease to be a subsidiary of the Company. At the same time, the Company's loan amounting to RMB15 million to CIMC Intelligent constitutes the external financial assistance upon completion of the transaction. As stipulated in the Equity Transfer Agreement, the relevant parties shall repay the principal and interest in one lump sum within three months from the date of equity delivery in this transaction (bearing interest based on annualized interest rate of 6%). For relevant details, please refer to the announcement published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (Announcement No.: [CIMC]2020-059) and the announcement on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) by the Company on 12 August 2020.

• 7.23 On 28 September 2020, the joint offerors (one of which is Sharp Vision Holdings Limited, a wholly-owned subsidiary of the Company) requested the CIMC-TIANDA Board to put forward the Proposal to the scheme shareholders and option holders of CIMC-TIANDA regarding the proposed privatisation of CIMC-TIANDA by way of scheme of arrangement under Section 86 of the Companies Law of the Cayman Islands. The matter above was approved by the Grand Court of the Cayman Islands and the extraordinary general meeting and the scheme became effective on Thursday, 21 January 2021 (Cayman Islands time). The listing shares of the CIMC-TIANDA on the Stock Exchange was withdrawn at 4:00 p.m. on Monday, 25 January 2021. For relevant information, please refer to the announcements of the Company dated 8 October 2020, 24 December 2020 and 21 January 2021 published on Cninfo website (www.cninfo.com.cn) and the Company's website (www.cimc.com) (announcement no.: [CIMC] 2020-080, [CIMC] 2020-103 and [CIMC] 2021-004) and the announcement published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) on 4 October 2020.

• 7.24 On 16 December 2020, as disclosed in the announcement of the Company, the Company and CIMC Enric have jointly submitted to the Hong Kong Stock Exchange an application for the proposed spin-off of CIMC Safeway Technology Co., Ltd (ʕණτ๿ᐑ߅Ҧٰ΅Ϟࠢʮ̡) (formerly known as Nantong CIMC Tank Storage and Transport Equipment Manufacturing Co., Ltd. (یஷʕණᜦόᎷ༶ண௪ႡிϞࠢʮ̡), "CIMC Safe Tech") for separate A-shares listing in accordance with Practice Note 15 ("PN 15") of the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange. The Hong Kong Stock Exchange notified the Company and CIMC Enric that its Listing Committee has agreed that the Company and CIMC Enric may proceed with the proposed spin-off pursuant to PN15. The Company will make further announcement(s) on any major updates and progress in relation to the transaction in accordance with the Rules Governing the Listing of Stocks on Shenzhen Stock Exchange, the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange and other applicable laws and regulations as and when appropriate. For relevant information, please refer to the announcement of the Company dated 16 December 2020 published on Cninfo website (www.cninfo.com.cn), the Company's website (www.cimc.com) (announcement no.: [CIMC] 2020-101) and the website of the Hong Kong Stock Exchange (www.hkexnews.hk).

• 7.25 CIMC Financial Leasing Co., Ltd., a wholly-owned subsidiary of the Company, intended to establish the asset-backed securities program through program managers and proposed to apply to the Shenzhen Stock Exchange for the registration and issuance of asset-backed securities for medical devices leasing with a size not exceeding RMB370 million and to apply for the shelf offering of asset-backed securities for small and micro-sized vehicles leasing with a size not exceeding RMB2.5 billion. The issuance plan is not required to be submitted to the general meeting of the Company for consideration. The final issuance plan is subject to the approval of the Shenzhen Stock Exchange. For relevant information, please refer to the announcement of the Company dated 5 February 2021 published on Cninfo website (www.cninfo.com.cn), the Company's website (www.cimc.com) (announcement no.: [CIMC] 2021-008) and the website of the Hong Kong Stock Exchange (www.hkexnews.hk).

• 8 FINANCIAL REPORT

• 8.1 Explanation for Changes in Accounting Policies, Accounting Estimates and Calculation Method as Compared with Those for the Last Annual Report

  ✓Yes

  ½NoThe Ministry of Finance promulgated the Notice on the Publication of Regulations on Accounting Treatment of COVID-19-Related Rent Concessions (Cai Kuai [2020] No.10) (ᗫ׵Ι೯<อ ڿ٬فޥઋ޴ᗫॡږಯᜫึࠇஈଣ஝֛>ٙஷٝ'(ৌึ[2020]10໮)) and the Questions and Answers on the Implementation of Accounting Standards for Enterprises (Άุึࠇ๟ۆྼ݄ ਪഈ', which was published on 11 December 2020) in 2020. The Group has adopted the above Notice and Questions and Answers to prepare the financial statements of 2020, and the impact of adoption on the Group and the Company's financial statements are as follows:

  • (1) Accounting Treatment of COVID-19-Related Rent Concessions

    For rent concessions that was directly caused by COVID-19, reached with the lessee and the lessor respectively, and affects only the payments due before 30 June 2021, the Group and the Company have adopted the simplified method stated in the above Notice for accounting treatment when preparing the financial statements of 2020.

  • (2) Questions and Answers on the Implementation of Accounting Standards for Enterprises

  Unit: RMB thousand

  Names of affected

  Changes in accounting policies and their reasons	statements items
  The Group	The Company
  The Group and the Company reclassified the contract asset	Credit impairment losses	(1,189)	-
  impairment loss originally included in the credit impairment	Asset impairment losses	1,189	-
  loss items into the asset impairment loss items.

  Affected amount

  2019

• 8.2 Contents, Amounts Corrected, Reasons and Impact of Material Accounting Errors

  ½Yes

  ✓No

• 8.3 Explanation for Changes in the Scope of Consolidation as Compared with Those for the Last Annual Report

  The changes in the scope of consolidation for the current year are mainly due to subsidiaries that were acquired, newly established or disposed of. The subsidiaries newly included in the scope of consolidation for the current year are Lindenau Full Tank Services GmbH, McMillan (Coppersmiths & Fabricators) Ltd., Suzhou CIMC Liangcai Logistics Technology Co. Ltd. and Zhenjiang Shen Xing Tai Bao Technology Co., Ltd.. The subsidiaries no longer included in the scope of consolidation for the current year are Shenzhen CIMC Industry & City Development Co., Ltd. and its subsidiaries and Shenzhen CIMC Intelligent Technology Co., Ltd..

• 8.4 Statement of the Board and the Supervisory Committee on the "Non-Standard Auditing Report" issued by the Accountant

½Yes

✓No

8.5

Financial Statements Prepared in Accordance with CASBE

8.5.1 Consolidated Balance Sheet (audited)

Unit: RMB thousand

8.5.1 Consolidated Balance Sheet (audited) (Continued)

Unit: RMB thousand

8.5.2 Balance Sheet of the Company (audited)

Unit: RMB thousand

8.5.2 Balance Sheet of the Company (audited) (Continued)

Unit: RMB thousand

8.5.3 Consolidated Income Statement (audited)

Unit: RMB thousand

Item

Note

2020

2019

• I. Revenue

  Less: Cost of sales

  Taxes and surcharges

  Selling expenses

  General and administrative expenses

  Research and development expenses

  Financial expenses

  Including: Interest expenses

  Interest income

  Asset impairment losses

  Credit losses

  Add: Other income

  Investment income

  Including: Share of profit of associates

  and joint ventures

  Fair value gains/(losses)

  Gains on disposals of assets

  7 7

  94,159,083 85,815,341

  80,714,871 73,355,605

  709,016

  706,768

  1,990,076 2,297,273

  4,896,341 5,204,271

  1,608,704 1,437,046

  2,096,553 1,276,165

  319,578

  1,592,103 1,634,747

  490,214

  8 9

  582,437 5,225,309

  394,811 520,284

  712,117 893,366

  5,300,880 326,936

  473,599 34,819 144,853 (156,752)

  10

  115,503 8,982,577

• II. Operating profit

  Add: Non-operating income Less: Non-operating expenses

  7,439,627 5,838,747

  248,615 198,534

  397,836 423,407

• III. Profit before income tax Less: Income tax expenses

  7,290,406 5,613,874

  11

  1,278,666 3,103,761

• IV. Net profit

  Classified by business continuity

Net profit from continuing operations Net profit from discontinued operations

Classified by ownership

Net profit attributable to shareholders and other equity holders of the Company Non-controlling interests

6,011,740 2,510,113

1,196,597 1,812,164

4,815,143

697,949

5,349,613 1,542,226

662,127

967,887

8.5.3 Consolidated Income Statement (audited) (Continued)

Unit: RMB thousand

8.5.4 Income Statement of the Company (audited)

Unit: RMB thousand

Item

8.5.5 Consolidated Cash Flow Statement (audited)

Unit: RMB thousand

Item

8.5.5 Consolidated Cash Flow Statement (audited) (Continued)

Unit: RMB thousand

8.5.6 Cash Flow Statement of the Company (audited)

Unit: RMB thousand

Item

8.5.6 Cash Flow Statement of the Company (audited) (Continued)

Unit: RMB thousand

8.5.7 Consolidated Statement of Changes in Shareholders' Equity (audited)

Unit: RMB thousand

2020

Attributable to shareholders and other equity holders of the Company