CITIC Limited — Annual Report 2010

Mar 3, 2011

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited 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.

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(Incorporated in Hong Kong with limited liability) (Stock Code: 267)

ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

CHAIRMAN’S LETTER TO SHAREHOLDERS

Dear Shareholders,

CITIC Pacific achieved a profit attributable to shareholders of HK$8,915 million for the year 2010, the second highest in the history of the company. This was due both to the strong performance of our business, particularly special steel, and the sale of non-core assets, which added HK$3,008 million to our bottom line.

Return on equity improved to 14% for the year compared with 11% in 2009, and our financial position remains strong. As at the end of 2010, bank deposits and available committed facilities totalled HK$43,152 million, sufficient to meet our investment needs. As we are investing to complete our iron ore mine in Australia, finish the expansion of our special steel business and develop our property projects in mainland China, our net debt has inevitably increased, and as a result leverage was 46% at the end of 2010. This is higher than ideal but not something I am overly concerned about as CITIC Pacific is coming to the end of a major investment period. When our iron ore mine begins operation and more property projects are sold, substantial cash will be generated which will naturally reduce our leverage.

Your board recommends paying a final dividend of HK$0.30 per share, giving you a full year dividend of HK$0.45 per share. This is an increase of HK$0.05 per share compared with that of 2009. We considered a number of factors when deciding how much to pay our shareholders, including our future investment needs and our obligation to repay borrowings.

• 1 -

Our Businesses

For CITIC Pacific, 2010 can be characterised as a year during which we made significant progress in all our businesses, particularly our three major businesses. In this letter, I will update you on their activities so you can understand clearly why we chose to invest in these businesses, what our expectations are for them in 2011, and why we think they will transform our company. I believe CITIC Pacific has emerged from the difficulties faced two years ago and has become stronger and better positioned for the future.

Iron Ore Mining

The number one priority for our management continues to be bringing our magnetite iron ore mine in Australia into production as early as possible. During the year, we made tremendous progress towards achieving this objective, as our management team and employees in Australia have all been dedicated to ensuring the completion of the mine, which is unprecedented in scale.

In mid January, we provided a project progress update. As I write, the structures for major facilities such as the power station, four grinding mills, dewatering plant, desalination plant and port are being completed. Commissioning of the power station has begun, and the desalination plant will begin soon so the necessary power and water can be supplied to other components of the production line. Our target is to begin commissioning the first production line as an integrated system by the end of July. Export of iron ore is expected to be in the latter part of this year. By then, the second production line should also be ready for system commissioning. When the senior management of our major contractors, equipment manufacturers and suppliers met in Beijing in January, everyone expressed their strong commitment to the success of this project and the start of production according to plan.

In the business review section, you will find a detailed project report. I would like to explain here the key reasons for the schedule change. For each component, there is one - and in some cases, more than one – power supply and control system, which our engineers call “e-houses”. These are effectively the heart of their respective components or plants. Without them, nothing can operate. There are altogether 17 of these e-houses needed for commissioning the first production line. Of these, 8 have been delivered to site and are in various stages of being installed and tested. The remaining e-houses are scheduled to arrive in mid May. Delivery of these e-houses was delayed primarily due to design changes on some units, which affected their manufacturing schedule. We also experienced some contractual disputes, which are not uncommon in such massive projects. One example was our termination in October of the company responsible for building our power station due to their breaching of the contract. This was certainly not a happy situation. However, we were able to quickly engage most of the subcontractors directly to continue their work, which minimised interruption to the construction.

Since we began this journey of building the biggest magnetite iron ore mine in Australia, we have learned a great deal despite the steep learning curve. We are now more familiar with operating conditions in Australia, better equipped to deal with issues arising, and more confident that once the mine is completed we will be able to operate it as well as any other organisation. It is no secret that the cost of building and operating a magnetite mine is higher than that of a haematite mine. Although the money we are investing is by no means a small amount, let’s not forget that the price of iron ore has increased considerably since we initially committed to the investment. Personally, I believe that there will be a continuing strong demand for the type of high quality ore we will be producing, and this mine will add substantial value to your investment in CITIC Pacific.

• 2 -

Looking back, I have to admit that we have come through some challenging times, and the process has not been without stress. But, I am happy to see that we are making solid progress. Our goal is to complete construction of the mine as soon as possible so that it can contribute to our bottom line over its 25-year life.

Special Steel

Our special steel business recorded an impressive HK$2,102 million in profit contribution, a growth of 49% from that of 2009. It is worth noting that this was achieved by our two plants — Xingcheng Special Steel and Xin Yegang — unlike in 2009 when we also had contribution from Shijiazhuang Steel, which was subsequently sold. Over the last three years, we have expanded our production capacity. More importantly, we further broadened our portfolio of products, optimised their mix, and increased their technology content. In certain categories of special steel, we are the only producer in China. We are on track to reach our target annual steel production capacity of nine million tonnes this year. Our goal is to supply our customers not only with high quality bar steel but also new special steel plates and increased volumes of seamless steel tubes.

The market for special steel has significant potential as China continues to develop and the demand for special steel inevitably grows to become more in line with that of the industrialised countries. As the largest manufacturer dedicated to the production of special steel in China, we have the advantage and leading market position to excel. However, we cannot ignore the fact that this market has grown increasingly competitive and customers expect better quality products and more services. For this reason, the management at our steel mills have been focusing their efforts on raising product quality and expanding their customer base. The result is that we are producing an increasing percentage of very high quality products every year. These efforts are particularly important for our special steel plates, which are new to us. With one of the two plate lines entering production, our efforts are already paying off as we see improving margins in this area. Of course, there is much more to be done for our new plate products to occupy the same leading position as our well established bar products.

The first two months of this year saw good production volume at our steel mills. Product prices were firm, supported in part by the increased price of raw materials. For 2011, we should bear in mind that we are facing increased capacity in the steel industry in China, which will put pressure on all producers. However, we are comforted by the fact that supply and demand in the special steel sector is mostly balanced and the industries we sell our products to all have strong future growth potential. My colleagues in our steel business have set themselves a challenging target for this year and, as always, they will work very hard to achieve their objectives.

Property in Mainland China

Construction and sales of our property projects in mainland China are progressing apace. The twin office towers in Shanghai Pudong’s Lu Jia Zui financial district are being fitted out before they are handed over to Agricultural Bank of China and China Construction Bank, which have purchased them for their Shanghai headquarters. Our residential developments in Shanghai, Wuxi, Yangzhou, Jiangyin and Hainan Island are being completed in phases.

• 3 -

In the past year, a number of measures were put in place by the Chinese government with the aim of moderating the rapid increases in property prices. These have clearly had an impact on our property sales. I have often been asked by investors if I was worried about this and whether we should change our property development strategy. I am a firm believer in the long-term potential of the Chinese property market. Of course, short-term fluctuations are inevitable, but CITIC Pacific is a long-term developer in this market. We have sufficient financial resources and staying power. What’s more, our land banks were acquired some time ago and at relatively low prices. So we are better equipped to withstand market volatility, and temporary adjustments in the market do not worry us unduly.

The projects we are developing are large in scale and very well situated. According to our development schedule, we will be busy for the next seven to eight years. In the meantime, we will be on the lookout for attractive new sites. I would like to point out here that CITIC Pacific is not a pure property company, and therefore we are not pressured to buy land or sell completed units. We are also fortunate to have a team of highly experienced property professionals who are very good at designing and building to suit the needs of individual markets in China. This is evident in our products being well received by the market when they go on sale.

Our People and Our Organisation

As in any organisation, no matter what our strategy is and how good our assets are, the key to success is always people. In my letter of March last year, I mentioned we were looking at ways to enhance our training programmes so that our employees would be equipped with up-to-date knowledge and skills they can apply in their jobs. In 2010, we further strengthened our training efforts by adding an experienced professional to focus on senior management training. We also renewed our focus on hiring young talent through our graduate training programme and took on 12 new trainees who will be the future of our business.

With improved communication among our operations, we are a much stronger organisation. I often remind people that effective communication is essential to our success and that this is a continuous process which needs to be improved at every level. To that end, we held our second group-wide finance conference last year which was attended by senior finance personnel from all parts of our business. This conference was invaluable for ensuring that our finance policies and priorities are aligned with our overall business strategy. Similar activities are now taking place regularly in other businesses and functions.

I am proud to say that as a direct result of our improved communication and management we are able to provide our 2010 financial results to shareholders even earlier than last year, which was already a big improvement from the previous years. We are now in the forefront of leading Hong Kong listed companies disseminating timely information to shareholders and the public.

I would like to mention that five long serving directors will retire in May. I want to thank them for their many and varied contributions to CITIC Pacific’s development over so many years. I am also pleased to report that two highly experienced businessmen have agreed to join our board in the middle of the year as independent directors. They will be able to provide a variety of perspectives to the board, which will benefit our company.

• 4 -

Our Future

In the nearly two years since I have been Chairman of CITIC Pacific, we have expanded and built our three main businesses of special steel, iron ore mining and property in mainland China. We also sold a number of assets over which we had little management control or were not a strategic part of our future. We are now much more focused, and this is clearly demonstrated by the fact that our main businesses accounted for 72% of our assets at the end of 2010. Our future emphasis will be on further developing the businesses we have so that we can become a leader in each of them. This is what I believe our shareholders and investors should focus upon. I spelled out quite clearly in my last annual letter that CITIC Pacific is, and will continue to be, a company with multiple businesses in a few industries.

In December, I was appointed Chairman of CITIC Group, the 58% shareholder of CITIC Pacific. I have spent almost my entire career with CITIC Group. Since its establishment in the late 1970s by Mr Rong Yiren, CITIC Group has grown into the largest conglomerate in China with assets of over RMB2.5 trillion and businesses ranging from banking and insurance to resources and property. I am very honoured to be given the opportunity to lead the Group, and I welcome the challenge my new position brings.

In June last year, during an interview with Caixin Media my predecessor Mr Kong Dan and I talked about the development history of CITIC Group and why we believe this is the right time for the Group to be transformed into a shareholding company. We are now at the stage of consolidating information at the CITIC Group level. Clearly, one of the benefits of the process is that it is an opportunity to take stock and develop plans to achieve greater synergies among the businesses of the whole Group. One example is the real estate business. CITIC Real Estate has a substantial property business with a focus on residential development. Moreover, it has a vast sales network. CITIC Pacific is also an experienced property developer, particularly in the development of commercial properties. The two companies are working together with the objective of leveraging off their individual strengths and utilising their resources effectively. Although they already have an agreement to work more closely together, including sharing market intelligence and sales networks, we are considering the possibility of further integration. There are likely to be other areas we identify that could serve CITIC Pacific well and benefit CITIC Group as a whole. Any significant opportunities would be reviewed carefully by the CITIC Pacific board and presented to shareholders for approval as appropriate. It is clear that CITIC Pacific is, and will continue to be, a very important part of CITIC Group.

Our employees are fundamental to our success as a company, and I thank them from the bottom of my heart for their dedication and hard work. I would also like to say thank you to our board, our investors and banks for their trust and support.

Chang Zhenming Chairman

Hong Kong, 3 March 2011

• 5 -

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2010

Note Revenue 2 Cost of sales ─ Gross profit Other income and net gains 3 Distribution and selling expenses Other operating expenses Change in fair value of investment properties ─ Profit from consolidated activities 2 Share of results of Jointly controlled entities 2 Associated companies 2 ─ Profit before net finance charges and taxation Finance charges Finance income ─ Net finance charges 5 Profit before taxation Taxation 6 ─ Profit for the year ═ Attributable to: Shareholders of the Company 2 Non-controlling interests ─ ═ Dividends 7 ═ Earnings per share for profit attributable to shareholders of the Company during the year (HK$) Basic 8 ═ Diluted 8 ═	2010 HK$m 70,614 (59,662) ────── ─ 10,952 4,395 (2,084) (4,472) 1,294 ────── ─ 10,085 2,000 630 ────── ─ 12,715 ----------- (704) 356 ────── ─ (348) ----------- 12,367 (2,178) ────── ─ 10,189 ══════ ═ 8,915 1,274 ────── ─ 10,189 ══════ ═ (1,642) ══════ ═ 2.44 ══════ ═ 2.44 ══════ ═	2009 HK$m 46,409 (38,248) ────── 8,161 2,632 (1,470) (3,523) 90 ────── 5,890 2,018 642 ────── 8,550 ----------- (937) 313 ────── (624) ----------- 7,926 (1,097) ────── 6,829 ══════ 5,950 879 ────── 6,829 ══════ (1,459) ══════ 1.63 ══════ 1.63 ══════

• 6 -

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2010

	2010	2009
	HK$m	HK$m
Profit for the year	10,189	6,829
Other comprehensive income, net of tax
Cash flow hedging reserves movement from interest rate swap
and foreign exchange contracts	(513)	4,312
Transfer from investment revaluation reserve to profit and loss
account on disposal of other financial assets	(1,232)	(80)
Fair value changes from other financial assets	835	509
Revaluation gain recognised upon transfer from property held
for own use to investment properties	116	-
Share of other comprehensive income of associated companies
and jointly controlled entities	56	51
Exchange translation differences	2,391	246
Reserve released on disposal/dilution of interest in jointly
controlled entities	(298)	(27)
Reserve released on disposal of interest in associated
companies and non-current assets held for sale	(421)	50
Reserve released upon liquidation of subsidiary companies	5	-
	───────	───────
Total comprehensive income for the year	11,128	11,890
	═══════	═══════
Total comprehensive income for the year attributable to
Shareholders of the Company	9,679	11,000
Non-controlling interests	1,449	890
	───────	───────
	11,128	11,890
	═══════	═══════

• 7 -

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2010

			As restated	As restated
			31 December	1 January
	Note	2010	2009	2009
		HK$m	HK$m	HK$m
Non-current assets
Property, plant and equipment		63,334	40,032	23,865
Investment properties		13,579	11,164	11,230
Properties under development		9,881	9,065	8,630
Leasehold land – operating leases		1,597	1,581	1,483
Jointly controlled entities		21,681	22,097	21,140
Associated companies		6,116	5,611	14,801
Other financial assets		448	2,198	1,063
Intangible assets		12,989	10,913	8,979
Deferred tax assets		714	554	1,967
Derivative financial instruments	11	1,854	748	235
Non-current deposits and prepayment		6,403	6,480	8,709
		──────	──────	──────
		138,596	110,443	102,102
		---------	-----------	-----------
Current assets
Properties under development		2,280	2,172	1,218
Properties held for sale		1,870	1,651	733
Other assets held for sale		298	1,765	-
Inventories		11,191	6,983	5,605
Derivative financial instruments	11	73	92	1,016
Debtors, accounts receivable, deposits and
prepayments	9	14,070	11,082	9,931
Cash and bank deposits		24,558	21,553	18,296
		──────	──────	──────
		54,340	45,298	36,799
		---------	-----------	-----------
Current liabilities
Bank loans, other loans and overdrafts
- secured		598	105	490
- unsecured		14,629	4,252	8,892
Creditors, accounts payable, deposits and accruals	10	26,911	19,992	13,500
Derivative financial instruments	11	55	167	3,043
Provision for taxation		936	243	274
		──────	──────	──────
		43,129	24,759	26,199
		---------	-----------	-----------
Net current assets		11,211	20,539	10,600
		---------	-----------	-----------
Total assets less current liabilities		149,807	130,982	112,702
		---------	-----------	-----------
Non-current liabilities
Long term borrowings		68,456	61,318	47,852
Deferred tax liabilities		2,419	1,891	1,710
Derivative financial instruments	11	2,543	1,727	6,682
Provisions and deferred income		2,254	807	734
		──────	──────	──────
		75,672	65,743	56,978
		---------	-----------	-----------
Net assets		74,135	65,239	55,724
		══════	══════	══════

• 8 -

CONSOLIDATED BALANCE SHEET (Continued) AS AT 31 DECEMBER 2010

			As restated	As restated
			31 December	1 January
	Note	2010	2009	2009
		HK$m	HK$m	HK$m
Equity
Share capital		1,459	1,459	1,458
Reserves		65,728	57,888	48,230
Proposed dividend	7	1,095	912	-
		──────	──────	──────
Equity attributable to shareholders of the Company		68,282	60,259	49,688
Non-controlling interests in equity		5,853	4,980	6,036
		──────	──────	──────
Total equity		74,135	65,239	55,724
		══════	══════	══════

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NOTES TO THE FINANCIAL STATEMENTS

1 Significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements (“the Accounts”) of CITIC Pacific Limited (the “Company”) and its subsidiary companies (together the “Group”) are set out below. These policies have been consistently applied to each of the years presented, other than the adoption of new or revised Hong Kong Financial Reporting Standards (“HKFRS”) in 2010 as set out below. The Accounts have been prepared in accordance with HKFRS, and under the historical cost convention, except as disclosed in the accounting policies. The following revised standards, amendments or interpretations became effective in 2010 and are relevant to the Group.

Standard No. HKFRS 3 (revised) HKAS 27 (revised) HK Int 5 Improvements to HKFRS 2009	Title Business combinations Consolidated and separate financial statements Presentation of financial statements – classification by the borrower of a term loan that contains a repayment on demand clause	Effect Note (i) Note (ii) Insignificant Note (iii)

Adoption of the above revised standards, amendments or interpretations / change in accounting policies does not have a significant impact on these Accounts except as stated below.

• (i) HKFRS 3 (revised) continues to apply the acquisition method for business combinations. The major changes from the existing standard include: the immediate expensing of all acquisition related costs, the inclusion in the cost of acquisition the fair value at acquisition date of any contingent purchase consideration, the remeasurement of previously held equity interest in the acquiree at fair value with any difference from the carrying value recognised in the profit and loss accounts in a business combination achieved at stages. There is a choice, on the basis of each acquisition, to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

• (ii) HKAS 27 (revised) provides that changes in a parent’s ownership interest in a subsidiary company that do not result in a loss of control are accounted for as equity transactions and these transactions shall no longer result in goodwill or gains and losses. When control is lost, any remaining interest in the subsidiary company is remeasured to fair value and the difference between the fair value and the carrying value is recognised in the profit and loss accounts.

• 10 -

• (iii) HKAS 17 (amendments) is part of the 2009 improvement project. It specifies that a land lease may be classified as a finance lease when significant risks and rewards associated with the land are transferred to the lessee despite there being no transfer of the title at the end of the lease term. The amendments to HKAS 17 are required to be applied retrospectively on the basis of information existing at the inception of those leases. Comparative information has been restated to reflect this change in accounting policy. The effect of the adoption of this change in accounting policy is a reclassification of certain leasehold land classified as operating leases to leasehold land classified as finance leases for the amount of HK$677 million as at 31 December 2010, HK$796 million as at 31 December 2009 and HK$837 million as at 1 January 2009 respectively. Other amendments in this 2009 improvement project are immaterial to the Group.

The following new standards, amendments and interpretations which have been issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) as of 31 December 2010 may impact the Group in future years but are not yet effective for the year ended 31 December 2010:

Standard No. HKAS 24 (Revised) HKFRS 9 Amendments of HKAS 12 Improvements to HKFRS 2010	Title Related party disclosure (revised) Financial instruments Deferred tax: recovery of underlying assets	Applicable accounting period to the Group 2011 2013 2012 2011

The adoption of the above standards, amendments or interpretations in the years listed and the Group is in the process of assessing their impact on future accounting periods.

• 11 -

2 Segment information

(a) Revenue and profit attributable to shareholders of the Company

			Share of									Profit/(loss)
		Profit/(loss)	results of	Share of								attributable to
		from	jointly	results of				Segment			Non-	shareholders
	Revenue	consolidated	controlled	associated	Finance	Finance		allocations	Segment		controlling	of the
Year ended 31 December 2010	Note (a)	activities	entities	companies	income	charges	Group total	Note (b)	profit/(loss)	Taxation	interests	Company
	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m
Special steel	30,478	2,646	386	29	192	(355)	2,898	(7)	2,891	(522)	(267)	2,102
Iron ore mining	27	(470)	-	-	1	-	(469)	-	(469)	123	-	(346)
Property
Mainland China	3,791	987	-	-	51	(31)	1,007	10	1,017	(379)	(55)	583
Hong Kong	258	207	-	108	-	-	315	85	400	(23)	-	377
Energy	-	966	1,043	-	11	-	2,020	-	2,020	(61)	-	1,959
Tunnels	775	523	193	-	-	-	716	-	716	(86)	(128)	502
Dah Chong Hong	32,211	1,885	50	21	15	(115)	1,856	(89)	1,767	(355)	(637)	775
CITIC Telecom	2,966	355	-	108	1	-	464	1	465	(44)	(173)	248
Other investments	108	2,092	328	69	2	(2)	2,489	-	2,489	(502)	-	1,987
Change in fair value of investment
properties	-	1,294	-	295	-	-	1,589	-	1,589	(255)	(14)	1,320
Corporate
General and administration expenses	-	(511)	-	-	-	-	(511)	-	(511)	(34)	-	(545)
Exchange gain	-	111	-	-	-	-	111	-	111	-	-	111
Net finance charges	-	-	-	-	83	(201)	(118)	-	(118)	(40)	-	(158)
	--------------	----------------	------------	------------	------------	------------	--------------	------------	-------------	------------	------------	------------
Total	70,614	10,085	2,000	630	356	(704)	12,367	-	12,367	(2,178)	(1,274)	8,915
	========	=========	=======	=======	=======	=======	========	=======	========	=======	=======	=======

Notes:

(a) Companies making up each reportable segment are set out in the notes to the accounts.

• (b) Segment allocations arising from property leases between segments were carried out at arms’ length rentals.

• 12 -

2 Segment information (Continued)

(a) Revenue and profit attributable to shareholders of the Company (Continued)

			Share of									Profit/(loss)
		Profit/(loss)	results of	Share of								attributable to
		from	jointly	results of				Segment			Non-	shareholders
Year ended 31 December 2009	Revenue	consolidated	controlled	associated	Finance	Finance		allocations	Segment		controlling	of the
	Note (a)	activities	entities	companies	income	charges	Group total	Note (b)	profit/(loss)	Taxation	interests	Company
	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m
Special steel	19,079	1,591	371	29	151	(162)	1,980	-	1,980	(317)	(248)	1,415
Iron ore mining	27	484	-	-	1	-	485	-	485	(109)	-	376
Property
Mainland China	1,390	654	-	-	40	(25)	669	4	673	(161)	12	524
Hong Kong	257	189	-	141	-	-	330	86	416	(19)	-	397
Energy	-	(65)	1,018	(16)	-	-	937	-	937	(51)	-	886
Tunnels	724	488	148	-	-	-	636	-	636	(80)	(119)	437
Dah Chong Hong	22,131	1,090	73	28	12	(112)	1,091	(90)	1,001	(252)	(347)	402
CITIC Telecom	2,716	444	-	(1)	5	-	448	-	448	(75)	(177)	196
Other investments (Note (c))	85	1,060	408	411	6	-	1,885	-	1,885	7	-	1,892
Change in fair value of investment
properties	-	90	-	50	-	-	140	-	140	(20)	-	120
Corporate
General and administration expenses	-	(562)	-	-	-	-	(562)	-	(562)	(20)	-	(582)
Gain from leveraged foreign exchange
contracts	-	283	-	-	-	-	283	-	283	(88)	-	195
Exchange gain	-	144	-	-	-	-	144	-	144	-	-	144
Net finance charges	-	-	-	-	98	(638)	(540)	-	(540)	88	-	(452)
	--------------	----------------	------------	------------	------------	------------	--------------	------------	-------------	------------	------------	------------
Total	46,409	5,890	2,018	642	313	(937)	7,926	-	7,926	(1,097)	(879)	5,950
	========	=========	=======	=======	=======	=======	========	=======	========	=======	=======	=======

Notes:

(a) Companies making up each reportable segment are set out in the notes to the accounts.

• (b) Segment allocations arising from property leases between segments were carried out at arms’ length rentals.

• (c) Other investments segment includes the aviation segment which comprised a profit of approximately HK$1 billion from the disposal of interests in Cathay Pacific Airways Ltd.

• 13 -

2 Segment information (Continued)

• (a) Revenue and profit attributable to shareholders of the Company (Continued)

An analysis of the Group’s revenue by geographical area is as follows:

	2010	2009
	HK$m	HK$m
Mainland China	54,102	34,467
Hong Kong	11,574	9,891
Other countries	4,938	2,051
	──────	──────
	70,614	46,409
	══════	══════

• 14 -

2 Segment information (Continued)

(b) Assets and liabilities

An analysis of the Group’s segment assets and liabilities by operating segment is as follows:

													Additions of non-	Additions of non-
													current assets* (other
			Investments		Investments								than	financial
			in jointly	controlled	in associated								instruments and
	Segment	assets#	entities		companies		Total	assets	Segment	liabilities#	Total net assets		deferred tax assets)
	2010	2009	2010	2009	2010	2009	2010	2009	2010	2009	2010	2009	2010	2009
	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m
By principal
activities
Special steel	45,243	34,271	2,923	4,291	185	148	48,351	38,710	(23,409)	(18,146)	24,942	20,564	7,032	6,296
Iron ore mining	53,397	36,026	-	-	-	-	53,397	36,026	(38,678)	(25,977)	14,719	10,049	19,434	10,310
Property
Mainland China	31,778	24,263	5,677	5,465	-	-	37,455	29,728	(9,897)	(7,158)	27,558	22,570	2,833	3,325
Hong Kong	6,910	6,389	-	-	5,305	4,704	12,215	11,093	(534)	(473)	11,681	10,620	285	20
Energy	1,181	301	6,659	6,567	-	-	7,840	6,868	(101)	(52)	7,739	6,816	-	-
Tunnels	972	980	991	948	-	-	1,963	1,928	(181)	(194)	1,782	1,734	4	-
Dah Chong Hong	14,158	11,072	356	258	203	130	14,717	11,460	(7,606)	(5,704)	7,111	5,756	888	524
CITIC Telecom	2,652	2,532	-	-	408	-	3,060	2,532	(1,131)	(749)	1,929	1,783	330	376
Other investments	534	4,040	5,075	4,568	15	629	5,624	9,237	(617)	(113)	5,007	9,124	300	15
Corporate	8,314	8,159	-	-	-	-	8,314	8,159	(36,647)	(31,936)	(28,333)	(23,777)	1	-
	──────	─────	──────	─────	──────	─────	──────	──────	──────	──────	──────	──────	──────	─────
Segment assets/
(liabilities)	165,139	128,033	21,681	22,097	6,116	5,611	192,936	155,741	(118,801)	(90,502)	74,135	65,239	31,107	20,866
	══════	══════	══════	══════	══════	══════	══════	══════	══════	══════	══════	══════	══════	══════

Corporate segment assets and liabilities mainly represent financial instruments, cash and bank deposits and borrowings which are managed centrally by the group treasury function and are not allocated to individually reportable segments.

• Non-current assets are amounts expected to be recovered more than twelve months after the year end.

Segment assets and segment liabilities are presented with intercompany balances eliminated.

• 15 -

2 Segment information (Continued)

• (b) Assets and liabilities (Continued)

An analysis of the Group’s non-current assets (other than financial instruments and deferred tax assets) by geographical area is as follows:

	2010	2009
	HK$m	HK$m
Mainland China	68,372	59,132
Australia	48,798	30,215
Hong Kong	17,863	18,934
Other countries	995	860
	──────	──────
	136,028	109,141
	══════	══════

• 16 -

3 Other income and net gains

Other income Commission income, subsidy income, rebates and others Dividend income from other financial assets - Listed shares Gain from leveraged foreign exchange contracts (note i) Net exchange gain (note ii) Net gain from disposal/deemed disposal of jointly controlled entities and associated companies Net gain from sale of other financial assets, mainly listed investments Net gain from disposal of property, plant and equipment	2010 HK$m 531 53 ──── 584 ------- - 335 2,117 1,228 131 ──── 3,476 ------- 4,395 ════	2010 HK$m 531 53 ──── 584 ------- - 335 2,117 1,228 131 ──── 3,476 ------- 4,395 ════	2009 HK$m 383 3 ──── 386 ------- 283 707	2009 HK$m 383 3 ──── 386 ------- 283 707
		2,117 1,228 131 ──── 3,476 -------		1,078 86 92 ──── 1,256 -------
				2,632 ════

Notes :

• (i) In 2008, the Group entered into multiple Australian dollar (AUD), Euro and Renminbi (RMB) leveraged foreign exchange contracts with the intention of minimising currency exposure of the Group’s iron ore project. These contracts were not eligible for hedge accounting and gains and losses arising from changes in fair market value of these contracts were reflected in the profit and loss account.

All of the leveraged foreign exchange contracts were novated to the CITIC Group, terminated or restructured into plain vanilla forward contracts (that are eligible for hedge accounting), during the period from December 2008 to May 2009 with the exception of three RMB leveraged foreign exchange contracts. Two of the RMB contracts matured in January 2010 and the final contract matured in July 2010. The net gain of HK$283 million recognised for the year ended 31 December 2009 in relation to leveraged foreign exchange contracts comprised realised gains and losses on taking delivery of foreign currencies under these leveraged contracts, and unrealised gains on revaluation of the RMB leveraged foreign exchange contracts.

• (ii) The net exchange gain of HK$335 million (2009: gain of HK$707 million which mainly represents the net exchange gain on Australian dollars bank balances arising from deliveries under leveraged and plain vanilla contracts subsequent to their delivery date) above mainly represents the net exchange gain on revaluation of monetary items in foreign currencies.

• 17 -

4 Profit from consolidated activities

	2010	2009
	HK$m	HK$m
The profit from consolidated activities is arrived at after charging:
Cost of inventories	48,087	33,566
Depreciation of property, plant and equipment	1,456	1,013
Amortisation of leasehold land – operating lease	34	40
Amortisation of intangible assets	140	124
Impairment losses provision on :
Other financial assets	74	114
Property, plant and equipment	345	13
Jointly controlled entities and associated companies	-	339
Trade and other receivable	18	19
Intangible assets	32	2
	══════	══════

5 Net finance charges

	2010	2009
	HK$m	HK$m
Finance charges
Interest expense
Bank loans and overdrafts wholly repayable within five years	1,274	1,240
Bank loans not wholly repayable within five years	1,518	947
Other loans wholly repayable within five years	278	268
Other loans not wholly repayable within five years	31	11
	─────	─────
	3,101	2,466
Amount capitalised	(2,335)	(1,816)
	─────	─────
	766	650
Other finance charges	107	62
Other financial instruments
Net realised loss	-	155
Fair value loss/(gain)	51	(96)
Ineffectiveness on cash flow hedges	(220)	166
	─────	─────
	704	937
Finance income
Interest income	(356)	(313)
	─────	─────
	348	624
	═════	═════

• 18 -

6 Taxation

Hong Kong profits tax is calculated at the rate of 16.5% (2009: 16.5%) on the estimated assessable profit for the year. Overseas taxation is calculated on the estimated assessable profit for the year at the rates of taxation prevailing in the countries in which the Group operates. Tax provisions are reviewed regularly to take into account changes in legislation, practice and status of negotiations. Details are as follows:

	2010	2009
	HK$m	HK$m
Current taxation
Hong Kong profits tax	268	226
Overseas taxation (i)	1,534	553
Deferred taxation
Changes in fair value of investment properties	255	19
Origination and reversal of other temporary differences
- arising from leveraged foreign exchange contracts of an
Australian subsidiary company	-	88
- others	121	210
Effect of tax rate changes	-	1
	─────	─────
	2,178	1,097
	═════	═════

(i) Overseas taxation in year 2010 has included taxes provided in relation to a group reorganisation in the PRC.

7 Dividends

	2010	2009
	HK$m	HK$m
2009 Final dividend paid: HK$0.25 (2008: HK$Nil) per share	912	-
	══════	══════
Interim
2010 Interim dividend paid: HK$0.15 (2009: HK$0.15) per
share	547	547
Final
2010 Final dividend proposed: HK$0.30 (2009: HK$0.25) per
share	1,095	912
	──────	──────
	1,642	1,459
	══════	══════
Dividend per share (HK$)	0.45	0.40
	══════	══════

• 19 -

8 Earnings per share

The calculation of earnings per share is based on the consolidated profit attributable to shareholders of the Company of HK$8,915 million (2009: HK$5,950 million).

The basic earnings per share is based on the number of 3,648,688,160 shares in issue during the year (2009: 3,646,765,954 weighted average number of shares). Diluted earnings per share for the year ended 31 December 2010 is the same as the basic earnings per share as it is deemed that no potential additional ordinary shares would be issued at no consideration from the exercise of options because the exercise price was above the average market price of the Company’s shares for the year ended 31 December 2010.

9 Debtors, accounts receivable, deposits and prepayments

	2010	2009
	HK$m	HK$m
Trade debtors and bills receivable aged:
- Within 1 year	5,002	5,322
- Over 1 year	178	134
	─────	─────
	5,180	5,456
Accounts receivable, deposits and
prepayments	8,890	5,626
	─────	─────
	14,070	11,082
	═════	═════

Notes:

• (i) Trade debtors are net of provision and the ageing is classified based on invoice date.

• (ii) Each business unit has its own defined credit policy.

• (iii) The carrying amounts of debtors, accounts receivable, deposits and prepayments approximate their fair value.

• (iv) Accounts receivable, deposits and prepayments include amounts due from jointly controlled entities of HK$227 million (2009: HK$183 million), which are unsecured, interest free and recoverable on demand, and amounts due from associated companies of HK$95 million (2009: HK$27 million) which are unsecured, interest free and recoverable on demand.

10 Creditors, accounts payable, deposits and accruals

	2010	2009
	HK$m	HK$m
Trade creditors and bills payable aged:
- Within 1 year	9,744	6,983
- Over 1 year	456	482
	──────	──────
	10,200	7,465
Accounts payable, deposits and accruals	16,711	12,527
	──────	──────
	26,911	19,992
	══════	══════

Note:

The carrying amounts of creditors, accounts payable, deposits and accruals approximate their fair value.

• 20 -

11 Derivative financial instruments

Qualified for hedge accounting – cash flow hedges - Interest-rate instruments - Forward foreign exchange instruments Not qualified for hedge accounting - Interest-rate instruments - Forward foreign exchange instruments Less: current portion - Interest-rate instruments - Forward foreign exchange instruments	2010 Assets Liabilities HK$m HK$m 33 2,379 1,635 - ───── ───── 1,668 2,379 --------- --------- 246 204 13 15 ───── ───── 259 219 --------- --------- 1,927 2,598 ───── ───── 60 40 13 15 ───── ───── 73 55 --------- --------- 1,854 2,543 ═════ ═════	2009 Assets Liabilities HK$m HK$m - 1,470 585 148 ───── ───── 585 1,618 --------- --------- 218 151 37 125 ───── ───── 255 276 --------- --------- 840 1,894 ───── ───── 58 40 34 127 ───── ───── 92 167 --------- --------- 748 1,727 ═════ ═════

12 Comparative Figures

Certain comparative figures for 2009 have been adjusted to conform with the current accounting standards described in note 1(iii) to the Accounts. In accordance with accounting standard, HKAS1 – Presentation of Financial Statements, an additional balance sheet and the relevant notes as at the beginning of the comparative year are also presented.

• 21 -

FINANCIAL REVIEW AND ANALYSIS

Group Debt and Liquidity

The debt of CITIC Pacific as at 31 December 2010 as compared with 31 December 2009 is as follows:

HK$ million	2010	2009
Totaldebt	83,857	65,675
Cashand bankdeposits	24,558	21,553
Net debt	59,299	44,122
Leverage (Net debt to Total capital*)	46%	42%

• Total capital = Shareholders’ funds + Net debt

The denomination of CITIC Pacific’s borrowings and cash and bank deposit balances by currency as at 31 December 2010 is summarised as follows:

HK$ million equivalent	Denomination HK$ US$ RMB JPY Other Total
Total debt in original currency Total debt after conversion Cashand bankdeposits	83,857 16,390 50,694 15,817 860 96 83,857 18,011 49,704 15,817 229 96 24,558 7,467 3,984 12,645 159 303
Net debt / (cash) after conversion	59,299 10,544 45,720 3,172 70 (207)

As at 31 December 2010, iron ore mining assets of HK$41.6 billion were pledged under its financing documents. Contracts for building 12 ships (HK$5 billion in aggregate) to transport iron ore from the mine to steel plants in mainland China were pledged as security for the ships’ financing. In addition, assets of HK$1,263 million (2009: HK$903 million) were pledged to secure banking facilities, which mainly related to Dah Chong Hong’s overseas business and to a property subsidiary in mainland China.

Maturity Profile of Outstanding Debt

The maturity of the debt outstanding at 31 December 2010 is:

HK$ million Total outstanding debt	Maturinginthese years
	2011 2012 2013 2014 2015 2016 and beyond
CITIC Pacific Limited 34,900 Subsidiaries 48,957 Total 83,857	5,460 7,550 6,320 7,149 631 7,790 9,767 4,634 4,482 2,385 2,058 25,631 15,227 12,184 10,802 9,534 2,689 33,421

• Including through wholly-owned special purpose vehicles.

• 22 -

The maturing banking facilities have to be renewed. The funding program is planned so that the amount maturing in any given year will not exceed the company’s ability to raise new funds in that year.

Available Sources of Financing

At 31 December 2010 CITIC Pacific and its consolidated subsidiaries had cash and deposits of HK$24.6 billion, and available loan and trade facilities of HK$25.2 billion:

	Total		Available
	financial	Amount	unutilised
HK$ million	facilities	utilised	facilities	Percentage
Committed facilities
Term loans	92,502	73,908	18,594	74%
Commercial Paper (RMB paper)	947	947	-	-
Global bond (USD bond)	3,510	3,510	-	-
Private placement (JPY & USD note)	1,801	1,801	-	-
Total committed facilities	98,760	80,166	18,594	74%
Uncommitted facilities
Money market lines
and short-term facilities	5,786	3,430	2,356	9%
Trade facilities	6,623	2,379	4,244	17%
Total uncommitted facilities	12,409	5,809	6,600	26%

In addition, CITIC Pacific has established cooperative agreements with major banks in mainland China under which CITIC Pacific can apply for credit facilities for projects in mainland China. The bank’s approval is required on a project-to-project basis.

Risk Management

Responsibilities

The management of risk starts with the board of directors. At each meeting the board receives a report of the financial results and the financial position of the group, both current and projected. At each meeting in 2010 the board received an in depth briefing on a business, on one occasion on special steel and on three occasions on the iron ore mining project. At every meeting written reports are provided on all businesses in a form similar to those reviewed by management at the executive committee. At the November meeting the board received a preliminary budget for the coming three years.

The board has established audit, asset and liability management, executive, investment and remuneration committees whose activities are important parts of the overall control of risk.

• 23 -

Liquidity Management

The objective of liquidity management is to ensure that CITIC Pacific always has enough money available to meet its liabilities. Every month, cash flow projections for three years are reviewed and revised by business units and the Asset and Liability Management Committee (‘ALCO’), and financing actions taken accordingly. Every day the group finance department manages the cash flows, and plans for the next few months. The primary guarantee of liquidity is a substantial amount of available deposits with banks, and undrawn committed credit facilities. In addition the group has available uncommitted money market lines.

Derivatives Policy

Financial derivatives are used to assist in the management of interest rate and exchange rate risks. To the extent possible, gains and losses of the derivatives offset the losses and gains on the assets, liabilities or transactions being hedged both in economic terms and under accounting rules.

CITIC Pacific has engaged Reval Inc., a derivative risk management and hedge accounting solutions firm, to provide software and consulting services to better monitor its derivatives portfolio and ensure compliance with accounting standards. The software provided by Reval generated the valuations that were used in the compilation of this report.

The use of financial instruments is currently restricted by ALCO to loans, bonds, deposits, interest rate swaps and plain vanilla foreign exchange contracts. It is CITIC Pacific’s policy not to enter into derivative transactions for speculative purposes. The use of structured derivatives and instruments or contracts that contain embedded options would require presentation to and the specific approval of ALCO. None have been approved in 2010 nor are any outstanding. From a risk management perspective, simple, cost-efficient and HKAS 39 hedge effective instruments are preferred.

In June 2010, CITIC Pacific, in partnership with Reval, won one of the Treasury Today Adam Smith Awards for best practices and innovation in treasury outsourcing. This is a recognition of the steps we have taken to improve our internal workflows for managing derivative risk and a testament to our commitment to global best practices for risk management.

Foreign Exchange Risk

The company’s functional currency is HKD. CITIC Pacific has major operations in Hong Kong, mainland China and Australia and is subject to the risk of loss or profit due to changes in United States dollar (“USD”), Renminbi (“RMB”) and Australian dollar (“AUD”) exchange rates. There are also exposures to the Japanese Yen (“JPY”) (from operations and assets related to DCH), Euro (“EUR”) (from equipment and product purchases) and other currencies.

Except in the case of RMB we strive to reduce currency exposures by matching assets with borrowings in the same currency to the extent possible. Our policy is to hedge transactions where value or time to execution will give rise to material currency exposure, provided that the cost of the hedging instrument is not prohibitively expensive in comparison to the underlying exposure.

• 24 -

CITIC Pacific’s material currency exposures arise from the following:

• (1) capital expenditures relating to its iron ore mining operations in Australia and steel operations in mainland China

• (2) purchase of raw materials by steel and property operations in mainland China

• (3) USD denominated debt and

• (4) purchases of finished products for sale by DCH

Translation exposures from the consolidation of subsidiaries whose functional currency is not HKD are not hedged using derivative instruments, as this is a non-cash exposure.

Our Australian mining operations’ functional currency is USD as the future revenues from its iron ore business are denominated in USD. However, a substantial portion of its developmental and operating expenditures are denominated in AUD. As at 31 December 2010, the Australian mining operation had plain vanilla forward contracts with a notional amount of A$1.4 billion outstanding. They are qualified as accounting hedges, because their maturities match the needs of the business over the next two years as well as fulfilling other relevant criteria to be considered accounting hedges. The average rate of these contracts is 0.82 USD to one AUD.

CITIC Pacific’s investment in businesses whose functional currency is USD is mostly from the iron ore mining business, which had USD gross assets of HK$52 billion. The company uses its USD borrowings to hedge these USD assets through a net investment hedge. As at 31 December 2010, CITIC Pacific had HK$51 billion equivalent of US dollar debt.

Businesses in mainland China had RMB gross assets of approximately HK$107 billion as at 31 December 2010, offset by debts and other liabilities of HK$38 billion. This gave the company an RMB net asset exposure of HK$69 billion. As investment in mainland China is expanding, CITIC Pacific will have an increasing exposure to the Renminbi.

Interest Rate Risk

This risk is managed by considering the portfolio of interest bearing assets and liabilities. The net desired position is then managed by borrowing fixed rate or through the use of interest rate swaps, which have the economic effect of converting floating rate borrowings into fixed rate borrowings.

The appropriate ratio of fixed/floating interest rate risk for CITIC Pacific is reviewed periodically. The level of fixed rate debt is decided after taking into consideration the potential impact of higher interest rates on profit, interest cover and cash flow cycles of CITIC Pacific’s business and investments. The current ratio of fixed rate to the total borrowings of the portfolio for CITIC Pacific was 33% at 31 December 2010.

CITIC Pacific’s overall weighted all-in cost of borrowing (including capitalised interest, fees and hedging costs) for 2010 was approximately 3.8% compared with 3.7% in 2009.

Commodity Risk

CITIC Pacific has considered the use of financial instruments to hedge its commodity exposures. However many commodities cannot be hedged effectively because there is no effective forward market for the product or there is insufficient liquidity in those markets. As at 31 December 2010, CITIC Pacific does not have any exposure to commodity derivatives. It is CITIC Pacific’s policy not to enter into derivative transactions for speculative purposes.

• 25 -

Counterparty Risk

CITIC Pacific keeps a large amount of cash deposits at financial institutions. To mitigate the risk of non-recovery of cash deposits or financial instrument gains, CITIC Pacific deals with international financial institutions with a credit rating of investment grade A- (S&P) or A3 (Moody’s) and above unless special authorisation has been received from ALCO. For unrated mainland Chinese institutions, special authorisation is required from ALCO. A maximum deposit limit is set that does not exceed the amount borrowed from those institutions, unless special authorisation has been received from ALCO. Deposits are safe, liquid, interest-bearing and consistent with treasury and business purpose needs. Management monitors market developments, reviews the list of approved counterparties and closely monitors their credit quality, and revises deposit limits on an on-going basis.

Major external risks and uncertainties

Economic risks

CITIC Pacific’s businesses are all subject to the risks of negative developments in the economies in which they operate, which may be affected by global trends. The results of most of our businesses are closely linked to the success of the mainland Chinese economy as a whole, and in Hong Kong, Shanghai and other cities: the sales of special steel are substantially all to customers in China, as are the vehicles and other products of Dah Chong Hong; the iron ore mine is expected to sell its output to steel mills in China, and our electricity is sold exclusively to mainland China. Our property developments are mainly in mainland China and our infrastructure assets such as tunnels are in Hong Kong. Economic policies implemented to affect the whole economy, or sections of it, may adversely affect our business for periods of time.

In addition to its effects on our customers, changes to the global or local economies or regulation may adversely affect our relationship banks, joint venture partners, suppliers of goods, raw materials or power, and others on which our business depends.

Competitive Markets

Some of our businesses, particularly special steel, property, telecommunications and vehicle and other product sales, operate in highly competitive markets. Failure to compete in terms of product specification, service quality, reliability or price may adversely affect us. The iron ore market price is set primarily by international supply and demand and if a surplus of supply occurs it could adversely affect the results of our business.

Agency relationships

Dah Chong Hong sells vehicles and other products on behalf of numerous principals. Most of such arrangements can be cancelled at relatively short notice. If the relationship cannot be maintained, due to a decision of the principal or inadequate performance, the concession may be lost which will adversely affect our business.

• 26 -

Regulation

CITIC Pacific’s business mainly operates under three different systems of law, regulation and business practice: Australia, China and Hong Kong. Each has its own characteristics, and may be subject to changes of substance or interpretation that could adversely affect our business. These may include tariffs, trade barriers, licenses, approvals, health and safety and environmental regulation, emission controls, taxation, exchange controls, employment legislation, and other matters. The electric power business is subject to price regulation and if tariffs are not permitted to rise with cost increases our results would be adversely affected.

The special steel, iron ore mining and power businesses are inherently likely to pollute the environment and be subject to stringent licensing and regulation. Failure to adhere to these may result in penalties or in extreme cases an inability to operate. The license terms or regulations may be changed at short notice and it may be difficult to comply in a timely fashion causing an adverse effect on our business.

Capital expenditure

The nature of CITIC Pacific’s business is capital intensive involving the construction and commissioning of major civil works and mechanical equipment. There may be difficulties in achieving this within time and budget resulting from inherent performance, disputes with contractors or their failure to perform to specification or contract, adverse weather conditions or other events.

Natural disasters or events, terrorism and disease

Our business could be affected by such things as earthquakes, typhoons, cyclones or adverse weather conditions, or acts or threats of terrorism, or the outbreak of highly contagious disease either directly, or indirectly through reductions in the supply of essential goods or services or reduced economic activity on a local, regional or global scale.

Capital Commitment and Contingent Liabilities

As at 31 December 2010, the contracted capital commitments of CITIC Pacific Limited and its subsidiary companies were approximately HK$13.8 billion and the contingent liabilities had not changed significantly from the previous year end.

HUMAN RESOURCES

As of December 2010, CITIC Pacific, including its principal subsidiaries worldwide, employed a total of 29,886 employees (2009: 30,329). Due to the restructuring of its capital investments during the year, there was a slight decrease of 443 in headcount in its workforce in 2010 which represented a decrease of 1.5% as compared with 2009.

• 27 -

CITIC Pacific offers competitive remuneration packages and reviews remuneration packages annually to ensure internal equity and market competitiveness. In addition to base pay and comprehensive benefits programmes, CITIC Pacific has implemented a variable bonus policy supported by a well established performance management and development process. This variable bonus policy has proven to be effective in motivating performance of its employees.

In January 2011, the Board and the Remuneration Committee endorsed and resolved to put forward the following proposals for Shareholders’ approval at the 2011 AGM:

1. Raising the directors’ fee for Non-executive Directors from HK$200,000 to HK$350,000. 2. Removing the directors’ fee for Executive Directors serving on the board of CITIC Pacific Limited.

2. A newly proposed share options scheme following the expiry of the CITIC Pacific Share Incentive Plan 2000 (“the Plan”) in May 2010.

In addition, to the extent that Executive Directors or employees of CITIC Pacific are requested to take on assignments and serve on the boards of its subsidiaries as non-executive directors, it is expected that such persons would not receive additional remuneration (including directors’ fees and share options from such subsidiaries) for taking on such roles.

To expand the business expertise, competencies, skill sets and industry knowledge of its staff for meeting the ever-changing challenges of the marketplace, CITIC Pacific organises a wide range of internal and external training programmes, seminars as well as sharing sessions and supports self-initiated personal development plan through financial sponsorship. In 2010, CITIC Pacific implemented the CITIC Pacific Management Trainee Programme to groom a pool of highly trained graduates in support of business growth as well as to prepare for future management succession.

To enhance the sense of engagement, pride and community, CITIC Pacific and its subsidiaries have organised numerous activities and interest classes for employees and their families for fun, education, wellness and charity throughout the year of 2010.

As a socially-responsible organization, CITIC Pacific has contributed to the community by supporting and sponsoring different kinds of social activities in Hong Kong, the mainland China and overseas, such as charitable works, voluntary services, education, anti-drug and antismoking programmes, environment protection, sports, culture and arts.

SHARE OPTION PLAN

CITIC Pacific Share Incentive Plan 2000 (“the Plan”) was adopted on 31 May 2000 under which the board may invite any director, executive or employee of CITIC Pacific or any of its subsidiaries to subscribe for options over CITIC Pacific’s shares. The Plan ended on 30 May 2010.

• 28 -

Since the adoption of the Plan and up to 30 May 2010, CITIC Pacific has granted six lots of share options:-

Date of grant 28 May 2002 1 November 2004 20 June 2006 16 October 2007 19 November 2009 14 January 2010	Number of share options 11,550,000 12,780,000 15,930,000 18,500,000 13,890,000 880,000	Exercise price HK$
		18.20 19.90 22.10 47.32 22.00 20.59

All options granted and accepted under the Plan can be exercised in whole or in part within 5 years from the date of grant. None of the share options granted under the Plan were exercised or cancelled, but options for 2,990,000 shares have lapsed during the year ended 31 December 2010.

The share options at the exercise price of HK$18.20 per share and HK$19.90 per share expired at the close of business on 27 May 2007 and 31 October 2009 respectively.

CORPORATE GOVERNANCE

CITIC Pacific is committed to maintaining high standards of corporate governance. The board of directors believes that good corporate governance practices are important to maintain and promote investor confidence, protect the interests of shareholders and enhance shareholder value.

CITIC Pacific complied throughout 2010 with all of the provisions in the code on corporate governance practices contained in appendix 14 of the Listing Rules. The audit committee of the board reviewed the 2010 financial statements with management and the company’s auditors and recommended its adoption by the board. The committee consists of three non-executive directors of whom two are independent.

DIVIDEND AND CLOSURE OF REGISTER

The directors have resolved to recommend to shareholders the payment of a final dividend of HK$0.30 per share (2009: HK$0.25 per share), which together with the interim dividend of HK$0.15 per share (2009: HK$0.15 per share) already paid makes a total dividend of HK$0.45 per share (2009: HK$0.40 per share) for the year ended 31 December 2010. The total dividend of HK$0.45 per share will amount to HK$1,642 million of CITIC Pacific’s profit for the year ended 31 December 2010 (2009: HK$1,459 million).

The proposed final dividend of HK$0.30 per share, the payment of which is subject to approval of the shareholders at the forthcoming annual general meeting of CITIC Pacific to be held on Thursday, 12 May 2011, is to be payable on Friday, 20 May 2011 to shareholders whose names appear on the Register of Members of CITIC Pacific on 12 May 2011.

• 29 -

The Register of Members of CITIC Pacific will be closed from Thursday, 5 May 2011 to Thursday, 12 May 2011, both days inclusive, during which period no share transfer will be effected. In order to qualify for the proposed final dividend, all transfers, accompanied by the relevant share certificates, must be lodged with CITIC Pacific’s Share Registrars, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Wednesday, 4 May 2011.

SHARE CAPITAL

CITIC Pacific has not redeemed any of its shares during the year ended 31 December 2010. Neither CITIC Pacific nor any of its subsidiary companies has purchased or sold any of CITIC Pacific’s shares during the year ended 31 December 2010.

FORWARD LOOKING STATEMENTS

This announcement contains certain forward looking statements with respect to the financial condition, results of operations and business of the group. These forward looking statements represent CITIC Pacific’s expectations or beliefs concerning future events and involve known and unknown risks and uncertainty that could cause actual results, performance or events to differ materially from those expressed or implied in such statements.

ANNUAL REPORT AND FURTHER INFORMATION

A copy of the announcement will be found on CITIC Pacific’s website (www.citicpacific.com) and the Hong Kong Stock Exchange’s website (www.hkex.com.hk). The full Annual Report will be made available on the website of CITIC Pacific and the Hong Kong Stock Exchange around 21 March 2011.

By Order of the Board Ricky Choy Wing Kay Company Secretary

Hong Kong, 3 March 2011

As at the date of this announcement, the executive directors of CITIC Pacific are Messrs Chang Zhenming (Chairman), Zhang Jijing , Carl Yung Ming Jie, Vernon Francis Moore, Li Shilin, Liu Jifu, Milton Law Ming To, Wang Ande and Kwok Man Leung; the non-executive directors of CITIC Pacific are Messrs Willie Chang, André Desmarais, Ju Weimin, Yin Ke and Peter Kruyt (alternate director to Mr André Desmarais); and the independent non-executive directors of CITIC Pacific are Messrs Alexander Reid Hamilton, Hansen Loh Chung Hon and Norman Ho Hau Chong.

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