Chongqing Iron & Steel Company Limited (CHONGQING IRON, 01053) has approved a connected transaction to transfer its entire 1.61% equity interest in Baowu Water Technology Co., Ltd. to Baowu Group Environmental Resources Technology Co., Ltd. (“Baowu Environment”) as a capital injection valued at RMB58.08 million (USD ~8.1 million).

Key Transaction Terms • Consideration and Allocation: Of the RMB58.08 million valuation, RMB5.53 million will be credited to Baowu Environment’s registered capital and RMB52.55 million to its capital reserve. • Post-deal Holdings: CHONGQING IRON will hold 0.53% of Baowu Environment and exit Baowu Water. • Expanded Capital Base: Baowu Environment’s registered capital will rise from RMB711.55 million to RMB1.04 billion. Following completion, Baowu Environment will own 96.48% of Baowu Water; Bayi Iron & Steel will retain 3.52%. • Listing Rules: As the highest applicable percentage ratio is above 0.1% but below 5%, the deal is classified as a connected transaction that requires announcement and reporting only, with no need for independent shareholders’ approval.

Valuation Highlights • Baowu Environment: Appraised at RMB7.47 billion, a 51.18% premium to its book value of RMB4.94 billion. • Baowu Water: Appraised at RMB3.62 billion, 6.10% above its book value of RMB3.41 billion.

Financial Snapshots (audited FY 2025; unaudited Q1 2026) Baowu Environment • Total assets: RMB11.02 billion (31 Dec 2025) • Total liabilities: RMB4.90 billion • Debt-to-asset ratio: 44.50% • Revenue: RMB8.17 billion (FY 2025); RMB1.74 billion (Q1 2026) • Net profit: RMB35.40 million (FY 2025); RMB12.31 million (Q1 2026)

Baowu Water • Total assets: RMB8.12 billion (31 Dec 2025) • Debt-to-asset ratio: 52.42% • Revenue: RMB4.58 billion (FY 2025); RMB0.92 billion (Q1 2026) • Net result: RMB-46.78 million loss (FY 2025); RMB19.89 million profit (Q1 2026)

Strategic Rationale and Accounting Impact The reorganisation supports China Baowu’s “1+X” environmental platform integrating solid waste, wastewater and waste-gas treatment, which management expects to reduce CHONGQING IRON’s long-term environmental costs. For CHONGQING IRON, the transaction is a non-cash equity swap; its new stake in Baowu Environment and the disposal of Baowu Water will both remain classified as financial assets measured at fair value through other comprehensive income. No gain or loss will be recognised, and the consolidation perimeter is unchanged.

Board and Governance The deal was approved by CHONGQING IRON’s Board on 27 May 2026, with directors linked to China Baowu abstaining. Baowu Environment’s board will expand to nine directors post-transaction, and all shareholders, including the new entrants, will participate under the PRC Company Law and the firm’s articles of association.

Completion is expected by the end of the month in which the agreement becomes effective, followed by registration of equity changes within 20 business days.