Annual Report 2007 二零零七年年報 Contents

Annual Report 2007 Annual Report 2 0 07 二零零七年年報 Stock Code: 1205 Contents 2 Corporate Information 47 Independent Auditors’ Report 3 Financial Highlights 49 Consolidated Income Statement Consolidated Balance Sheet 5 Chairman’s Statement 50 52 Consolidated Statement of Management’s Discussion and 8 Changes in Equity Analysis 54 Consolidated Cash Flow Statement 20 Board of Directors and 56 Balance Sheet Senior Management 57 Notes to Financial Statements 24 Corporate Governance Report 157 Five Year Financial Summary 35 Report of the Directors 158 Reserve Quantities Information Corporate Information EXECUTIVE DIRECTORS COMPANY SECRETARY Mr. Kong Dan (Chairman) Ms. Li So Mui Mr. Mi Zengxin (Vice Chairman) Mr. Shou Xuancheng (Vice Chairman) QUALIFIED ACCOUNTANT Mr. Sun Xinguo (President and Chief Executive Officer) Mr. Chung Ka Fai, Alan Ms. Li So Mui Mr. Qiu Yiyong REGISTERED OFFICE Mr. Zeng Chen Clarendon House, 2 Church Street Mr. Zhang Jijing Hamilton HM 11, Bermuda NON-EXECUTIVE DIRECTORS HEAD OFFICE AND Mr. Ma Ting Hung PRINCIPAL PLACE OF BUSINESS Mr. Wong Kim Yin Ms. Yap Chwee Mein (Alternate to Mr. Wong Kim Yin) Suites 3001-3006, 30/F, One Pacific Place 88 Queensway, Hong Kong INDEPENDENT Telephone : (852) 2899 8200 NON-EXECUTIVE DIRECTORS Facsimile : (852) 2815 9723 E-mail : [email protected] Mr. Fan Ren Da, Anthony Website : www.citicresources.com Mr. Ngai Man Mr. Tsang Link Carl, Brian SHARE REGISTRAR AND TRANSFER OFFICE AUDIT COMMITTEE Tricor Tengis Limited Mr. Tsang Link Carl, Brian (Chairman) 26/F, Tesbury Centre Mr. Fan Ren Da, Anthony 28 Queen’s Road East, Wanchai, Hong Kong Mr. Ngai Man AUDITORS REMUNERATION COMMITTEE Ernst & Young Mr. Fan Ren Da, Anthony (Chairman) Certified Public Accountants Mr. Ngai Man 18th Floor, Two International Finance Centre Mr. Tsang Link Carl, Brian 8 Finance Street, Central, Hong Kong Mr. Sun Xinguo PRINCIPAL BANKERS NOMINATION COMMITTEE China Development Bank Mr. Ngai Man (Chairman) CITIC Ka Wah Bank Limited Mr. Fan Ren Da, Anthony Mizuho Corporate Bank, Ltd. Mr. Tsang Link Carl, Brian Mr. Kong Dan Mr. Zhang Jijing INVESTMENT COMMITTEE Mr. Mi Zengxin (Chairman) Mr. Sun Xinguo Mr. Zeng Chen Mr. Zhang Jijing Mr. Wong Kim Yin Mr. Fan Ren Da, Anthony CITIC Resources Holdings Limited 2 Annual Report 2007 Financial Highlights The board of directors (the “Board”) of CITIC Resources Holdings Limited (the “Company”) is pleased to deliver a satisfactory 2007 annual results of the Company and its subsidiaries (collectively the “Group”). 2007 2006 HK$ million HK$ million Change (restated) Revenue 10,007.7 6,835.2 + 46.4% Gross profit 1,431.1 528.8 + 170.6% Profit attributable to shareholders 282.8 200.8 + 40.8% Total assets 30,775.0 9,328.4 + 229.9% Net assets 7,159.6 3,505.1 + 104.3% Earnings per share attributable to ordinary shareholders Basic HK 5.65 cents HK 4.65 cents + 21.5% Diluted HK 5.61 cents HK 4.61 cents + 21.7% Revenue Gross Profit HK$ million HK$ million 1,431.1 10,007.7 6,835.2 5,786.4 528.8 410.3 05 06 07 05 06 07 CITIC Resources Holdings Limited Annual Report 2007 3 Kong Dan Chairman 4 Chairman’s Statement I am very pleased to present this report on behalf of the Board and as the first of my Chairmanship of CITIC Resources Holdings Limited. The steady economic growth in 2007 helped by strong and persistent demand for energy and natural resources allowed the Company to achieve satisfactory results, notwithstanding the turmoil in the international financial markets. The Company’s growth has benefited from its increased investment in energy assets. Oil and commodity prices generally reached then market highs during the year, whilst the Group also faced the challenge of increases in operating costs and capital expenditure incidental to the Group’s businesses. FINANCIAL RESULTS In 2007, the Group’s revenue increased by 46.4% to HK$10,007.7 million. Profit attributable to shareholders was HK$282.8 million, representing an increase of 40.8% from the previous year. Earnings per share was HK 5.65 cents, compared with HK 4.65 cents per share in 2006. BUSINESS REVIEW In December 2007, the Group concluded the purchase of an almost 50% interest in the Karazhanbas oilfield located in Kazakhstan which had proved reserves of 341.1 million barrels of oil as at 31 December 2007. This was financed from funds raised in the international debt markets. In May 2007, the Group successfully closed on the issue of its US$1,000 million 6.75% senior notes due 2014, which marked the Group’s first ever bond issue. This was a major financing activity successfully completed by the Group prior to the onset of the subprime crisis in the United States of America. The Group manages and operates the Karazhanbas oilfield on a joint venture basis with JSC KazMunaiGas Exploration Production (“KMG EP”) which holds an identical interest in the oilfield. KMG EP is one of the largest oil and gas producing companies in Kazakhstan and is listed on the Kazakhstan and London stock exchanges. The Group looks forward to creating a successful working relationship with KMG EP and to increasing the production of the oilfield by employing China National Petroleum Corporation’s exclusive recovery technology for heavy oil. The Group expects that a significant increase in oil production from the oilfield will be achieved in 2008 notwithstanding the challenges of production and costs associated with such production. In October 2007, the Group closed the acquisition of a 90% interest in Tincy Group Energy Resources Limited, the appointed contractor in respect of the Hainan-Yuedong Block in the Bohai Bay Basin in Liaoning Province, the People’s Republic of China. The principal field in this block has an estimated total recoverable proved, probable and possible oil reserves of about 63.5 million barrels as of 30 June 2007. The Group has been undertaking preparation work in respect of development of the block. CITIC Resources Holdings Limited Annual Report 2007 5 Chairman’s Statement With the addition of the Karazhanbas and the Hainan-Yuedong interests, the total oil reserves (proved, probable and possible) under operation by the Group have increased from 37.5 million barrels to 622.9 million barrels during the course of 2007. We believe the significant growth of the Group’s oil business will enhance the Group’s long term profitability. We contemplate that profits from our oil business once fully developed will become the Group’s largest profit contributor. Our Australia based businesses of aluminium smelting, coal and import and export of commodities continue to make significant contributions to the Group’s performance and remain an integral part of the Group’s overall strategy. A noteworthy event was the Group’s acquisition of an additional 8.37% in the equity of the Australian Stock Exchange listed Macarthur Coal Limited (“Macarthur Coal”) in July 2007 which pushed the Group’s interest up to 19.99% at that time. We are now one of the substantial shareholders in Macarthur Coal which provides about 44% of the low volatile pulverised coal injection coal exported from Australia. CITIC Australia Trading Limited, a company listed in Australia and controlled by the Group, again delivered record profits in 2007. The manganese business performed well in 2007 and is expected to increase capacity with our proposed acquisition of additional manganese mining interests in Gabon, Western Africa. We believe all of these developments create and will help deliver value to our shareholders. During 2007, to strengthen our capital base and raise capital to support the growth of the Group, the Company undertook a number of share placements raising HK$2,137.9 million cash in total. Singapore based Temasek Holdings (Private) Limited (“Temasek Holdings”) became a substantial shareholder in the Company as part of the process. Temasek Holdings has considerable experience and investment intelligence in a wide range of businesses. They have nominated a non-executive director to the Board. We believe Temasek Holdings’ presence and support will benefit our Group. BUSINESS OUTLOOK In 2008, energy investment will become more challenging and the international financial markets may continue to remain unstable. However, we are determined to further our efforts in improving the efficiency and productivity of our existing assets and to contain operating costs while securing an increase in production from the Karazhanbas oilfield, the commercial development of the Hainan- Yuedong Block and the expansion of the Indonesian Seram Island Non-Bula Block, all with a view to further boosting the development capability, profitability and risk resistance of the Group’s oil business. The Group is also committed to improving the profitability of the commodities business in Australia and to further increasing the productivity of CITIC Dameng Mining Industries Limited. Meanwhile, the Group will continue to identify new investment opportunities to enhance the Group’s performance and shareholder value. CITIC Resources Holdings Limited 6 Annual Report 2007 Chairman’s Statement BOARD MEMBER CHANGES Mr. Kwok Peter Viem stepped down as a director and the Chairman and Mr. Ma Ting Hung stepped down from his position as Vice Chairman but continues as a non-executive director. On behalf of the Board, I wish to thank Mr. Kwok and Mr. Ma for their valuable contribution to the Group during their respective stewardship as Chairman and Vice Chairman I myself was appointed as a director and the Chairman of the Company during the year. Mr. Mi Zengxin was elected a Vice Chairman of the Company. I wish to extend my congratulations to Mr. Mi on his appointment. APPRECIATION The Group has undertaken various business initiatives in 2007. I thank my fellow directors, management and dedicated staff for their hard work and unstinting efforts in what was an extremely busy year for the Group.

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