CITIC CITIC LIMITED Stock code: 00267 LI M IT ED Annual Report 2020 ANNUAL REPORT 2020 CITIC Limited Registered Office 32nd Floor, CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong HTML Tel +852 2820 2111 Fax +852 2877 2771 www.citic.com CITIC LIMITED ANNUAL REPORT 2020 Our Our Company Businesses CITIC Limited (SEHK: 00267) COMPREHENSIVE is one of China’s largest FINANCIAL SERVICES conglomerates and a CITIC Bank (65.97%) constituent of the Hang Seng CITIC Securities (15.47%)Note Index. Tracing our roots to the CITIC Trust (100%) beginning of China’s opening 綜合金融服務 CITIC-Prudential Life (50%) and reform, CITIC has grown in step with the country’s rise and modernisation. We have built a remarkable portfolio of ADVANCED INTELLIGENT businesses in comprehensive MANUFACTURING financial services, advanced CITIC Heavy Industries (67.27%) intelligent manufacturing, CITIC Dicastal (42.11%) advanced materials, new CITIC Holdings (100%) 綜合金融服務 consumption and先進材料 new-type 先進智造 urbanisation. We are driven today by the ADVANCED MATERIALS same values on which we were CITIC Metal Group (100%) founded: a pioneering spirit, CITIC Resources (59.50%) a commitment to innovation CITIC Mining International (100%) CITIC Pacific Special Steel (83.85%) and a focus on the long term. 綜合金融服務 先進材料 先進智造CITIC Pacific Energy Investment (100%) We embrace綜合金融服務 world-class 先進材料 先進智造 新型城鎮化technologies and aim for 新消費 international best practices. We are guided by a strategy NEW CONSUMPTION that is consumer-centric, CITIC Press (73.50%) commercially-driven, and CITIC Telecom International (58.11%) far-sighted in the allocation of CITIC Agriculture (100%) capital and resources. 綜合金融服務 先進材料Dah Chong Hong 先進智造 (100%) 新型城鎮化 新型城鎮化 新消費 新消費 Our platform is unique in its diversity and scale, allowing NEW-TYPE CITIC to capture emerging URBANISATION opportunities in China and around the world. Guiding us CITIC Construction (100%) as we grow is our fundamental CITIC Engineering (100%) CITIC Urban Development & Operation (100%) commitment to create long- 新型城鎮化 CITIC Pacific Properties新消費 (100%) term value for all of our CITIC Environment (100%) shareholders. CITIC Offshore Helicopter (38.63%) CITIC Industrial Investment (100%) As at 28 February 2021 Note: As at 31 March 2021, CITIC Limited's shareholding in CITIC Securities has increased to 16.46% Contents 2 Highlights 4 Chairman’s Letter to Shareholders OUR BUSINESSES 8 Comprehensive Financial Services 22 Advanced Intelligent Manufacturing 30 Advanced Materials 38 New Consumption 46 New-Type Urbanisation 60 Financial Review 77 Risk Management 83 Five Year Statistics 84 Corporate Governance 115 Board of Directors 119 Senior Management 121 Report of the Directors 136 Environmental, Social and Governance Report 168 Past Performance and Forward Looking Statements FINANCIAL STATEMENTS 169 Contents of Financial Statements and Notes 170 Consolidated Income Statement 171 Consolidated Statement of Comprehensive Income 172 Consolidated Balance Sheet 174 Consolidated Statement of Changes in Equity 176 Consolidated Cash Flow Statement 178 Notes to the Consolidated Financial Statements 364 Independent Auditor’s Report 375 Corporate Information CITIC LIMITED ANNUAL REPORT 2020 Highlights Year ended 31 December Increase/ HK$ million 2020 2019 (Decrease) Revenue 552,949 566,497 (2.4%) Profit before taxation 97,718 96,015 1.8% Net profit 80,928 78,188 3.5% Net profit attributable to ordinary shareholders 56,628 53,903 5.1% Basic earnings per share (HK$) 1.95 1.85 5.1% Diluted earnings per share (HK$) 1.95 1.85 5.1% Dividend per share (HK$) 0.488 0.465 4.9% Net cash generated from operating activities 193,225 160,082 21% Capital expenditure 29,616 32,318 (8.4%) As at As at 31 December 31 December Increase/ HK$ million 2020 2019 (Decrease) Total assets 9,740,828 8,289,924 18% Total liabilities 8,732,186 7,395,433 18% Total ordinary shareholders’ funds 674,276 591,526 14% Return on total assets (%) 1.2% 1.4% (0.2pp) Return on net assets (%) 8.9% 9.4% (0.5pp) Staff employed 135,304 287,910 (53%) Revenue from Profit attributable to Business assets external customer ordinary shareholders Increase/ Increase/ Increase/ (decrease) (decrease) (decrease) excluding excluding excluding As at the effect Year ended the effect Year ended the effect Business 31 December Increase/ of currency 31 December Increase/ of currency 31 December Increase/ of currency HK$ million 2020 (Decrease) translation 2020 (Decrease) translation 2020 (Decrease) translation Comprehensive financial services 9,113,747 18% 11% 229,103 3.1% 4.4% 43,516 1.6% 2.9% Advanced intelligent manufacturing 58,719 110% 98% 13,759 (62%) (61%) 453 (60%) (59%) Advanced materials 239,155 5.0% 5.0% 195,754 9.7% 9.7% 10,149 28% 28% New consumption 76,157 (23%) (24%) 70,056 (21%) (21%) 894 (21%) (21%) New-type urbanisation 309,736 12% 7.8% 44,224 8.6% 9.7% 9,409 17% 18% 2 CITIC LIMITED ANNUAL REPORT 2020 Highlights Total ordinary shareholders’ funds and Profit attributable to ordinary shareholders perpetual capital securities 43,146 7,873 483,129 2016 2016 (Restated) 43,902 (Restated) 7,873 543,078 2017 43,146 2017 7,873 483,129 50,239 558,545 2016 2016 (Restated)2018 43,902 (Restated)2018 7,873 543,078 53,903 591,526 2017 2017 2019 50,239 2019 558,545 43,146 56,628 7,873 483,129 674,276 2018 2018 20162020 53,903 20162020 591,526 (Restated) 43,902 (Restated) 7,873 543,078 2019 2019 HK$ million HK$ million Perpetual Capital Securities Ordinary Shareholders Funds 2017 56,628 2017 674,276 50,239 558,545 2020 2020 2018 2018 HK$ million 53,903 HK$ million Perpetual Capital Securities Ordinary591,526 Shareholders Funds 2019 2019 0.10 0.23 56,628 1.48 674,276 20162020 20202016 Dividend per share0.11 0.25 (Restated)Earnings per share 1.51 2017HK$ million 2017 0.10 0.23 HK$ million Perpetual Capital Securities Ordinary1.48 Shareholders Funds 0.15 0.26 1.73 2016 2016 2018 0.11 0.25 (Restated)2018 1.51 0.18 0.285 1.85 2017 2017 2019 0.15 0.26 2019 1.73 0.10 0.23 0.388 1.48 1.95 2018 0.10 2018 20162020 0.18 0.285 20162020 1.85 0.11 0.25 (Restated) 1.51 2019 2019 HK$ Interim dividend per share Final dividend per share HK$ 2017 0.10 0.388 2017 1.95 2020 0.15 0.26 2020 1.73 2018 2018 HK$ Interim dividend0.18 per share Final dividend per share0.285 HK$ 1.85 2019 16.61 2019 0.10 0.388 1.95 2016 2020 2020 (Restated) 18.67 2017HK$ Interim dividend per share Final16.61 dividend per share HK$ 19.20 2016 (Restated)2018 18.67 20.33 Ordinary2017 shareholders’ funds per share 2019 19.20 16.61 23.18 2018 20162020 20.33 (Restated) 18.67 2019 2017HK$ 23.18 2020 19.20 2018 HK$ 20.33 2019 Advanced Intelligent Advanced Materials Manufacturing New-Type23.18 Urbanisation New Consumption 2020 233 98 97 142 2016 (Restated) Advanced Intelligent HK$ Advanced Materials Manufacturing144 111New-Type96 Urbanisation New Consumption137 2017 233 98 97 142 160 123 130 129 2016 (Restated)2018 144 111 96 137 160 120 86 132 2017 Advanced Intelligent Advanced Materials Manufacturing New-Type Urbanisation New Consumption 2019 160 123 130 129 166233 98134 97 114 134 142 2018 20162020 160 120 86 132 (Restated) 144 111 96 137 2019 3 2017HK$ million 166 134 114 134 2020 160 123 130 129 2018 HK$ million 160 120 86 132 2019 166 134 114 134 2020 HK$ million CITIC LIMITED ANNUAL REPORT 2020 Chairman’s Letter to Shareholders asset quality. Our non-financial business recorded profit growth of 15% by adjusting operational strategies in response to market challenges, rapidly resuming production and fully leveraging beneficial policies. The board recommends a final dividend payment of HK$0.388 per share, giving shareholders a total dividend of HK$0.488 per share for the year 2020, 5% more than in 2019. As of the end of 2020, CITIC Limited had approximately HK$50.68 billion in cash and available facilities. To better prepare for continued change and uncertainty, China is accelerating its dual- circulation economic strategy, which prioritises the development of a dominant domestic economy supplemented by international trade. In alignment with China’s 14th Five-Year Plan, and to adapt to the increasingly complex operating environment, CITIC has outlined an updated development strategy focused on comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation. These five segments will be matrixed with five platforms: the financial, industrial, capital investment, capital operations and strategic investment platforms. We will leverage integration, collaboration and expansion to build a lasting enterprise and solidify the CITIC brand’s positioning as a leader in the fields in which we operate. Dear Shareholders, The year 2020 was both extraordinary and Optimising asset allocation, challenging. The world struggled with new focusing on five business segments complexities as global norms were upended by To better capitalise on the advantages of the COVID-19 pandemic and resulting economic operating both financial and non-financial downturn. In China, however, effective pandemic businesses, we have optimised our business management measures contributed to a swift portfolio into five strategic segments for recovery and the rapid resumption of domestic enhanced alignment and a sharpened focus. industrial, social and economic activities. Our comprehensive financial services segment As such, CITIC Limited realised profit attributable aims to become a leader in integration, guided to ordinary shareholders of HK$56.6 billion in by the principle of “one CITIC, one account” and 2020, an increase of 5% year-on-year that was the objective to provide seamless services across driven by 45% growth in profit in the second banking, securities, trust and insurance.