HALFYEAR REPORT 2015 CITIC Limited at A Glance CITIC Limited is one of the largest companies on the Hang Seng Index (SEHK: 00267). Our diversified businesses, including financial services, resources and energy, manufacturing, engineering contracting, real estate and infrastructure, are well positioned and aligned with China’s economic growth and development. We are fully committed to increasing our levels of transparency, being innovative and delivering consistent performance, regardless of market dynamics. By leveraging the CITIC platform, leading market positions and expertise, we will continue striving to increase our global competitiveness, deliver profitability, and maximise shareholder value. CITIC Limited (00267.HK) Financial Resources Manufacturing Engineering Real Estate and Others Services and Energy Contracting Infrastructure CITIC Bank CITIC Resources CITIC Pacific CITIC Construction CITIC Real Estate CITIC Telecom (67.13%) (59.42%) Special Steel (100%) (88.37%) International (100%) (58.82%) CITIC Securities CITIC Pacific Mining CITIC Heavy Industries CITIC Engineering CITIC Pacific Properties AsiaSat (15.59%) (100%) (71.04%) Design (100%) (37.59%) ★ (100%) (Note 1) CITIC Trust CITIC United Asia CITIC Dicastal CITIC Heye Dah Chong Hong (100%) (100%) (100%) (100%) (56.07%) CITIC Prudential CITIC Metal CITIC Industrial CITIC Press (50%) (100%) Investment (100%) (100%) Sunburst Energy New Hong Kong COHC (100%) Tunnel (19.71%) (70.79%) (Note 2) CITIC Tourism (100%) CITIC Guoan Football Club refers to the companies listed on both the SEHK and the SSE. Note: (100%) 1. This refers to CITIC Limited’s attributable interest in AsiaSat refers to the companies listed on the SEHK. CITIC Environment ★ refers to the companies listed on the SSE. through Bowenvale Limited, CITIC Limited’s 50.50%-owned entity, (100%) refers to the companies listed on the SZSE. where Bowenvale Limited holds a 74.43% equity in AsiaSat. As at 30 June 2015 2. This refers to CITIC Limited’s attributable interest in COHC through CITIC Zhonghaizhi, CITIC Limited’s 51.03%-owned subsidiary, where CITIC Zhonghaizhi holds a 38.63% equity in COHC. Contents 2 Highlights 4 Chairman’s Letter to Shareholders 10 Financial Review 20 Risk Management 28 Human Resources 29 Past Performance and Forward Looking Statements Financial Statements 30 Consolidated Income Statement 31 Consolidated Statement of Comprehensive Income 32 Consolidated Balance Sheet 34 Consolidated Statement of Changes in Equity 36 Consolidated Cash Flow Statement 38 Notes to the Consolidated Financial Statements 104 Report on Review of Interim Financial Information Statutory Disclosure 105 Subscription of Preferred Shares, Sale of Shares, Subscription of New Shares and Conversion of Preferred Shares 106 Interim Dividend and Closure of Register of Members 106 Share Option Plan Adopted by the Company 107 Share Option Plan Adopted by Subsidiaries of the Company 113 Directors’ Interests in Securities 114 Interests of Substantial Shareholders 115 Purchase, Sale or Redemption of Listed Securities 115 Continuing Disclosure Requirements under the Listing Rules 116 Corporate Governance 118 Review of Half-Year Report 118 Compliance with the Model Code for Securities Transactions by Directors 119 Update on Directors’ Information Pursuant to Rule 13.51B(1) of the Listing Rules 120 Corporate Information CITIC Limited Half-Year Report 2015 1 Highlights Half-year ended 30 June 2014 Increase/ In HK$ million 2015 (Restated) (Decrease) Revenue 201,461 200,627 834 Profit before taxation 62,254 48,759 13,495 Profit attributable to ordinary shareholders 37,685 25,896 11,789 Earnings per share (HK$) 1.51 1.04 0.47 Dividend per share (HK$) (Note) 0.10 0.015 0.085 Net cash generated from operating activities 64,997 126,361 (61,364) Capital expenditure 34,869 64,173 (29,304) As at As at 30 June 31 December Increase/ In HK$ million 2015 2014 (Decrease) Total assets 6,537,307 5,947,831 589,476 Total liabilities 5,916,161 5,372,324 543,837 Total ordinary shareholders’ funds and perpetual capital securities 461,351 431,960 29,391 Note: Dividend per share for the year 2014 was for the former CITIC Pacific Limited. Profit attributable to ordinary Business assets Revenue shareholders Increase/ Half-year Half-year Businesses As at (Decrease) ended Increase/ ended Increase/ In HK$ million 30 June 2015 (Note) 30 June 2015 (Decrease) 30 June 2015 (Decrease) Financial services 5,868,151 545,641 103,254 22,226 33,317 12,324 Resources and energy 162,241 14,338 22,146 (13,275) 709 136 Manufacturing 100,180 (8,321) 32,336 (2,668) 1,307 183 Engineering contracting 42,698 (1,322) 6,240 (1,895) 995 (223) Real Estate and infrastructure 262,994 23,064 7,223 (2,326) 2,217 (431) Others 92,559 20,021 30,170 (1,320) 704 (268) Note: As compared with balances as at 31 December 2014. CITIC Limited 2 Half-Year Report 2015 Highlights Profit attributable to ordinary shareholders (Note) Profit attributable to ordinary shareholders HK$ million 48,430 39,834 37,685 25,896 9,233 6,954 2011 2012 2013 2014 First half of First half of 2014 2015 Note: Profit attributable to ordinary shareholders for the years from 2011 to 2012 are from the annual reports of the former CITIC Pacific. Those for the years from 2013 to 2014 are from the audited information of CITIC Limited. Assets by business Financial services HK$ billion Non-financial businesses 5,323 5,868 614 661 As at 31 December 2014 As at 30 June 2015 Assets of non-financial businesses Resources and energy Manufacturing Engineering contracting HK$ billion Real estate and infrastructure Others 162 148 109 100 43 44 240 263 73 93 As at 31 December 2014 As at 30 June 2015 CITIC Limited Half-Year Report 2015 3 Chairman’s Letter to Shareholders Dear Shareholders, I consider my biannual letters to you to be when CITIC Securities issued additional shares to among my most important tasks as Chairman. investors. Compared with the same period last I’m encouraged that many readers take great year, our company’s overall profit increased 46%. interest in these letters and find them insightful, especially those of you who have given feedback Profit from the financial services business was up and said that you have learned much about our 59%, and the sector continued to be the largest enlarged company from our 2014 Annual Report, contributor to our company’s bottom line. Profit our first since we became CITIC Limited. We from the non-financial business was 9% less than welcome all comments and will make it our goal the first six months of 2014. This decline was to further elevate investor understanding of our mainly due to a significant reduction in profit businesses, their performance and objectives. from the resources business. The lack of finished residential property units for delivery was another In this letter, I will review the performance of factor that led to a decrease in profitability of the our company and our businesses in the first six non-financial business. months of this year, sector by sector. I will also update you on some of the initiatives we are Since my last letter, there has been a material undertaking to improve our corporate structure improvement in CITIC Limited’s financial and to create value. position. This is due to the receipt in early August of HK$46 billion from the preferred share Our Financial Results placement to ITOCHU and CP Group, and HK$12 For the first six months of 2015, CITIC Limited billion on the issuance of ordinary shares to recorded profit attributable to ordinary the Youngor Group. This substantial inflow of shareholders of HK$37.7 billion, which included additional capital will strengthen our balance HK$12.2 billion (pre-tax) from the sale of a 3% sheet and increase the flexibility we require to interest in CITIC Securities and an accounting gain finance and execute our business development. CITIC Limited 4 Half-Year Report 2015 Chairman’s Letter to Shareholders Additionally, since becoming CITIC Limited we Traditionally, CITIC Bank’s core strength has have seen a reduction in our financing costs. been its corporate banking business. Alongside Taking advantage of this, we have retired some this, the bank has been developing two other higher interest debt. We will continue to utilise important parts of the business — retail and fund raising platforms in China and overseas to financial markets. It is keen to achieve greater optimise our financing arrangements. balance across these three areas. Our board recommends an interim dividend to In recent years, this strategy has seen CITIC Bank shareholders of HK$0.10 per share to shareholders. develop its retail arm by expanding its branch network, increasing its product sales channels, Our Business Performance improving service quality and developing Financial Services innovative products. These efforts have produced good results, particularly in the past 18 months. Profit from our financial services business was Compared with the first six months of last HK$33.3 billion, which included the gain from the year, revenue from the retail business for the sale of a 3% interest in CITIC Securities as well as period grew 42%. CITIC Bank’s financial markets the accounting gain mentioned earlier. Therefore, business also experienced good growth and now sector profit grew 59% from a year ago. represents 31% of the bank’s revenue. CITIC Bank contributed the majority of the So what is the one thing that makes CITIC sector’s profit. The bank’s revenue in the first Bank different from all the others? CITIC Bank half of the year grew 13% from a year ago to is an important part of the broader CITIC HK$88 billion. However, profit was tempered family, operating on a unique platform with by an increase in non-performing loans.