CITIC Limited - Audit Report / Information 2017

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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ANNOUNCEMENT

FINANCIAL STATEMENTS AND AUDITOR’S REPORT OF CITIC CORPORATION LIMITED FOR THE YEAR ENDED 31 DECEMBER 2017

This announcement is made by CITIC Limited (the “ Company ”) pursuant to Rule 13.09(2)(a) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Cap. 571 of the laws of Hong Kong).

CITIC Corporation Limited (“ CITIC Corporation ”), a wholly-owned subsidiary of the Company, is a company incorporated in the People’s Republic of China (“ PRC ”). As CITIC Corporation issued corporate debt, medium-term notes and super & short-term commercial paper in the PRC, it is required to announce the financial statements of itself and its subsidiaries prepared in accordance with the PRC Generally Accepted Accounting Principles periodically in accordance with the relevant regulations of the Shanghai Stock Exchange, the China Securities Regulatory Commission, the People’s Bank of China and the National Association of Financial Market Institutional Investors.

The financial statements and auditor’s report of CITIC Corporation for the year ended 31 December 2017 are available on China Bond, China Money and Shanghai Clearing House at www.chinabond.com.cn, www.chinamoney.com.cn and www.shclearing.com, respectively, and are set out at the end of this announcement.

By Order of the Board CITIC Limited Chang Zhenming Chairman

Hong Kong, 27 April 2018

As at the date of this announcement, the executive directors of the Company are Mr Chang Zhenming (Chairman), Mr Wang Jiong, Ms Li Qingping and Mr Pu Jian; the non-executive directors of the Company are Mr Liu Yeqiao, Mr Song Kangle, Ms Yan Shuqin, Mr Liu Zhuyu, Mr Liu Zhongyuan, Mr Yang Xiaoping and Mr Wu Youguang; and the independent non-executive directors of the Company are Mr Francis Siu Wai Keung, Dr Xu Jinwu, Mr Anthony Francis Neoh, Ms Lee Boo Jin, Mr Paul Chow Man Yiu and Mr Shohei Harada.

CITIC CORPORATION LIMITED

FINANCIAL STATEMENTS AND AUDITOR’S REPORT FOR THE YEAR ENDED 31 DECEMBER 2017

[English translation for reference only. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail.]

CITIC CORPORATION LIMITED

Financial Statements and Auditor’s Report For the year ended 31 December 2017 [English translation for reference only]

Contents	Page
Auditor’s Report	1 - 3
Financial Statements for the Year Ended 31 December 2017
Consolidated Balance Sheet	1 - 2
Company Balance Sheet	3
Consolidated Income Statement	4
Company Income Statement	5
Consolidated Cash Flow Statement	6-7
Company Cash Flow Statement	8
Consolidated Statement of Changes in Owners’ Equity	9-10
Company Statement of Changes in Owners’ Equity	11
Notes to the Financial Statements	12- 184

Auditor’s Report

PwC ZT Shen Zi (2018) No. 25137 (Page 1 of 3)

To the Board of Directors of CITIC Corporation Limited,

Opinion

What we have audited

We have audited the accompanying financial statements of CITIC Corporation Limited (hereinafter “CITIC Corporation”), which comprise:

the consolidated and company balance sheets as at 31 December 2017;
the consolidated and company income statements for the year then ended;
the consolidated and company cash flow statements for the year then ended;
the consolidated and company statements of changes in owners’ equity for the year then ended; and
notes to the financial statements.

Our opinion

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and company’s financial position of CITIC Corporation as at 31 December 2017, and their financial performance and cash flows for the year then ended in accordance with the requirements of Accounting Standards for Business Enterprises (“CASs”).

Basis for Opinion

We conducted our audit in accordance with China Standards on Auditing (“CSAs”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

We are independent of CITIC Corporation in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified Public Accountants (“CICPA Code”), and we have fulfilled our other ethical responsibilities in accordance with the CICPA Code.

PwC ZT Shen Zi (2018) No. 25137 (Page 2 of 3)

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management of CITIC Corporation is responsible for the preparation and fair presentation of these financial statements in accordance with the CASs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing these financial statements, management is responsible for assessing CITIC Corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intend to liquidate CITIC Corporation or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing CITIC Corporation’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether these financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control.
2 -

PwC ZT Shen Zi (2018) No. 25137 (Page 3 of 3)

Auditor’s Responsibilities for the Audit of the Financial Statements (Cont’d)

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on CITIC Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in these financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause CITIC Corporation to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within CITIC Corporation to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

PricewaterhouseCoopers Zhong Tian LLP

Shanghai , the People’s Republic of China

28 March 2018

CITIC CORPORATION LIMITED

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

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Assets Note 31 December 2017 31 December 2016
(Restated)
Cash and deposits 6(1) 747,606,800 810,389,375
Placements with banks and non-bank financial
institutions 6(2) 171,650,383 167,207,891
Financial assets at fair value through profit or loss 6(3) 75,855,420 69,609,531
Derivative financial instruments 6(4) 66,203,044 47,604,014
Trade and other receivables 6(5) 112,864,432 116,948,977
Inventories 6(6) 19,840,361 19,436,091
Financial assets held under resale agreements 6(7) 54,625,933 173,190,986
Loans and advances to customers and other parties 6(8) 3,115,806,170 2,807,157,088
Available-for-sale financial assets 6(9) 667,412,396 567,006,461
Held-to-maturity investments 6(10) 218,702,786 218,393,136
Investments classified as receivables 6(11) 538,985,157 1,043,289,575
Long-term equity investments 6(12) 58,631,339 52,022,970
Investment properties 6(13) 4,204,706 4,003,390
Fixed assets 6(14) 41,676,485 38,100,028
Construction in progress 6(15) 12,758,058 9,449,071
Intangible assets 6(16) 23,927,863 23,593,592
Goodwill 6(17) 8,286,807 8,377,578
Deferred tax assets 6(18) 23,921,974 14,578,545
Other assets 38,786,402 33,305,088
Total assets 6,001,746,516 6,223,663,387
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Approved by the board of directors on 28 March 2018.

Legal Representative

The person in charge of accounting affairs

The head of the accounting department

CITIC CORPORATION LIMITED

CONSOLIDATED BALANCE SHEET (CONTINUED) AS AT 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

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Liabilities and owners’ equity Note 31 December 2017 31 December 2016
(Restated)
Liabilities
Borrowing from central banks 6(19) 238,082,461 184,050,000
Placements from banks and non-bank financial institutions 6(21) 75,341,379 83,722,646
Derivative financial instruments 6(4) 65,295,254 45,068,448
Trade and other payables 6(22) 144,634,268 149,157,155
Financial assets sold under repurchase agreements 6(23) 134,499,933 120,342,029
Deposits from banks and non-bank financial institutions and
customers 6(24) 4,196,767,258 4,597,801,658
Employee benefits payables 6(25) 15,165,497 15,053,993
Taxes payable 4(3) 13,092,071 10,422,654
Bank and other loans 6(26) 43,420,072 47,539,959
Debt instruments issued 6(27) 488,817,567 432,353,847
Provisions 6(28) 2,705,096 1,489,976
Deferred tax liabilities 6(18) 2,204,279 1,964,803
Other liabilities 21,149,185 18,590,961
Total liabilities 5,441,174,320 5,707,558,129
Owners' equity
Paid-in capital 6(29) 139,000,000 139,000,000
Capital reserve 6(30) 39,485,307 40,329,661
Other comprehensive income 6(31) (6,985,379) 556,823
Surplus reserve 6(32) 7,392,237 5,982,516
General reserve 6(33) 36,617,842 36,105,518
Retained earnings 6(34) 154,070,403 118,631,997
Total equity attributable to owners of the Company 369,580,410 340,606,515
Non-controlling interests 190,991,786 175,498,743
Total owners' equity 560,572,196 516,105,258
Total liabilities and owners' equity 6,001,746,516 6,223,663,387
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Approved by the board of directors on 28 March 2018.

Legal Representative

The person in charge of accounting affairs

The head of the accounting department

The notes on pages 12 to 184 form part of these financial statements.

CITIC CORPORATION LIMITED

COMPANY BALANCE SHEET AS AT 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

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Assets Note 31 December 2017 31 December 2016
Cash and deposits 6(1) 19,201,006 15,857,709
Financial assets at fair value through profit or loss 6(3) 1,845,193 2,502,765
Trade and other receivables 6(5) 31,459,422 26,593,361
Loans and advances to customers and other parties 6(8) 8,865,759 11,044,002
Available-for-sale financial assets 6(9) 14,071,295 10,380,811
Long-term equity investments 6(12) 215,009,879 211,703,075
Fixed assets 6(14) 579,763 614,148
-
Intangible assets 2,567
Other assets - 2,495
Total assets 291,034,884 278,698,366
Liabilities and owners’ equity
Liabilities
Trade and other payables 6(22) 16,017,589 12,510,312
Taxes payable 4,166 6,209
Debt instruments issued 6(27) 42,811,165 41,240,807
Provisions 700,000 700,000
Deferred tax liabilities 6(18) 528,119 215,269
Other liabilities 2,110,299 2,044,926
Total liabilities 62,171,338 56,717,523
Owners' equity
Paid-in capital 6(29) 139,000,000 139,000,000
Capital reserve 6(30) 49,614,251 50,268,921
Other comprehensive income 6(31) 294,221 952,845
Surplus reserve 6(32) 7,392,237 5,982,516
Retained earnings 32,562,837 25,776,561
Total owners' equity 228,863,546 221,980,843
Total liabilities and owners' equity 291,034,884 278,698,366
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Approved by the board of directors on 28 March 2018.

Legal Representative

The person in charge of accounting affairs

The head of the accounting department

The notes on pages 12 to 184 form part of these financial statements.

CITIC CORPORATION LIMITED

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

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Note 2017 2016 (Restated)
Operating income 6(35) 267,804,649 246,718,817
Less: Total operating costs 6(37) 204,855,417 190,439,443
Including: Operating costs 6(36) 83,319,941 73,519,905
Taxes and surcharges 2,053,592 5,688,323
Selling and distribution expenses 2,056,594 2,710,390
General and administrative expenses 52,935,781 49,868,137
Financial expenses 6(38) 3,249,973 3,125,499
Impairment losses 6(39) 61,239,536 55,527,189
Add: (Loss)/gain from changes in fair value 6(40) (444,271) 183,350
Investment income 6(41) 8,774,707 13,288,776
(Including: Income from investments in
associates and joint ventures) 2,689,825 982,968
Assets disposal gain 6(42) 5,503 105,094
Other gain 501,139 -
Operating profit 71,786,310 69,856,594
Add: Non-operating income 1,190,499 1,755,819
Less: Non-operating expenses 419,581 1,012,964
Profit before income tax 6(37) 72,557,228 70,599,449
Less: Income tax expense 6(43) 12,623,269 15,837,423
Net profit for the year 59,933,959 54,762,026
Including: Net profit of the entity before business
combination under common control 6(55) 29,125 48,962
Attributable to:
Owners of the Company 43,105,451 39,757,293
Non-controlling interests 16,828,508 15,004,733
Continuing operations 59,933,959 54,762,026
Discontinued operations 6(54) - -
Other comprehensive income, net of tax 6(44) (11,113,340) (4,898,890)
Items that may be reclassified to profit or loss:
1. Share of other comprehensive income of the
equity-accounted investee 250,045 34,728
2. Gains or losses arising from changes in fair
value of available-for-sale financial assets (9,083,605) (7,511,503)
3. Effective hedging portion of gains or losses
arising from cash flow hedging instruments 525,396 523,900
4. Translation differences arising on translation of
foreign currency financial statements and others (2,805,176) 2,053,985
Total comprehensive income for the year 48,820,619 49,863,136
Attributable to:
Owners of the Company 35,563,249 37,050,132
Non-controlling interests 13,257,370 12,813,004
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Approved by the board of directors on 28 March 2018.

Legal Representative

The person in charge of accounting affairs

The head of the accounting department

The notes on pages 12 to 184 form part of these financial statements.

CITIC CORPORATION LIMITED

COMPANY INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

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Note 2017 2016
Operating income 6(35) 17,283,948 15,400,087
Less: Total operating costs 2,588,461 2,921,628
Including: Taxes and surcharges 8,186 64,088
General and administrative expenses 626,304 670,749
Financial expenses 6(38) 2,055,731 2,244,860
Impairment losses (101,760) (58,069)
Add: Assets disposal gain/(loss) 6(42) 1,064 (340)
Operating profit 14,696,551 12,478,119
Add: Non-operating income 17 -
Less: Non-operating expenses 3,880 -
Profit before income tax 14,692,688 12,478,119
Less: Income tax expense 6(43) 595,485 (165,175)
Net profit for the year 14,097,203 12,643,294
Other comprehensive income, net of tax 6(44) (658,624) (129,024)
Items that may be reclassified to profit or loss:
1. Share of other comprehensive income of the
equity-accounted investee 216,430 (270,630)
2. Gains or losses arising from changes in fair
value of available-for-sale financial assets (875,054) 141,606
Total comprehensive income for the year 13,438,579 12,514,270
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Approved by the board of directors on 28 March 2018.

Legal Representative The person in charge of accounting affairs

The head of the accounting department

The notes on pages 12 to 184 form part of these financial statements.

CITIC CORPORATION LIMITED

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

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Note 2017 2016 (Restated)
Cash flows from operating activities:
Cash received from sale of goods and rendering of services 98,445,772 80,567,660
Net decrease in deposits with banks and non-bank financial
institutions - 6,211,926
Net increase in deposits from customers - 452,263,450
Net decrease in deposits with central banks 14,351,497 -
Net increase in borrowing from central banks 54,032,461 146,550,000
Net decrease in investments classified as receivables 504,061,935 71,430,892
Net increase in placements from banks and non-bank
financial institutions - 33,746,946
Interests, fee and commission received 285,121,037 267,515,796
Net decrease in placements with banks and non-bank financial
institutions 10,896,172 -
Net increase in financial assets sold under repurchase agreements 14,161,850 49,171,739
Net decrease in financial assets held under resale agreements 118,565,054 -
Net decrease in financial assets at fair value through profit or loss 15,743,520 -
Refund of taxes 991,769 712,376
Cash received from other operating activities 18,136,110 61,239,085
Sub-total of cash inflows from operating
activities 1,134,507,177 1,169,409,870
Cash paid for goods and services (82,479,754) (69,111,446)
Net increase in loans and advance to customers and other parties (368,180,230) (363,525,884)
-
Net increase in deposits with central banks (45,765,730)
Net decrease in deposits from customers (202,636,881) -
Net decrease in deposits from banks and non-bank financial
institutions (182,881,011) (87,179,111)
Net increase in deposits with banks and non-bank financial
institutions (7,237,671) -
Net increase in placements with banks and non-bank financial
institutions - (49,367,803)
Net decrease in placements from banks and non-bank
financial institutions (6,755,696) -
Net increase in financial assets held under resale agreements - (34,583,175)
Net increase in financial assets at fair value through profit or loss - (36,012,670)
Interests, fee and commission paid (105,081,756) (97,411,510)
Cash paid to and on behalf of employees (34,537,974) (31,656,178)
Cash paid for various taxes (29,306,741) (33,212,120)
Cash paid for other operating activities (37,289,353) (79,755,341)
Sub-total of cash outflows from operating activities (1,056,387,067) (927,580,968)
Net cash flow from operating activities 6(45)(a) 78,120,110 241,828,902
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Approved by the board of directors on 28 March 2018.

Legal Representative

The person in charge of accounting affairs

The head of the accounting department

CITIC CORPORATION LIMITED

CONSOLIDATED CASH FLOW STATEMENT(CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

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Note 2017 2016 (Restated)
Cash flows from investing activities:
Cash received from disposal of financial investments 1,043,170,924 586,045,138
Cash received from returns on investments 5,229,820 3,098,209
Net proceeds from disposal of fixed assets, intangible assets
and other long-term assets 60,294 407,225
Net cash received from disposal of associates and joint ventures 1,715,728 120,212
Net cash received from disposal of subsidiaries 6(45)(d) 341,757 -
Cash received from other investing activities 3,577,653 4,667,656
Sub-total of cash inflows from investing activities 1,054,096,176 594,338,440
Cash paid for acquisition of fixed assets, intangible assets
and other long-term assets (12,905,832) (11,914,322)
Cash paid for acquisition of financial investments (1,179,546,177) (734,447,303)
Net cash payment for disposal of subsidiaries 6(45)(d) - (9,847,432)
Net cash payment for acquisition of subsidiaries (511,865) (1,393,189)
Net cash payment for acquisition of associates and joint ventures (2,758,644) (4,140,385)
Cash paid for other investing activities (4,277,809) (4,295,594)
Sub-total of cash outflows from investing activities (1,200,000,327) (766,038,225)
Net cash flows from investing activities (145,904,151) (171,699,785)
Cash flows from financing activities:
Cash received from capital contributions 354,500 546,526
(Including: Cash received by subsidiaries from non-controlling
interests) 354,500 546,526
Cash received from new banks and other loans 44,333,959 41,455,091
Cash received from issuance of new debt instruments 870,804,509 620,906,807
Cash received from issuance of preferred shares and other equity
instruments 1,153,544 39,432,685
Transactions with non-controlling interests 6(56) 7,824,467 -
Cash received from other financing activities 1,202,003 515,567
Sub-total of cash inflows from financing activities 925,672,982 702,856,676
Cash paid for repayment of banks and other loans and debt
instruments issued (852,672,400) (580,914,454)
Cash paid for dividends, profit distributions or interest (31,389,523) (34,095,480)
(Including: Dividends and profits paid by subsidiaries to
non-controlling interests) (6,330,712) (4,404,691)
Transactions with non-controlling interests - (5,325,922)
Cash paid for other financing activities (1,070,167) (2,586,869)
Sub-total of cash outflows from financing activities (885,132,090) (622,922,725)
Net cash flows from financing activities 40,540,892 79,933,951
Effect of foreign exchange rate changes on cash and cash
equivalents (7,797,331) 6,684,540
Net (decrease)/increase in cash and cash equivalents 6(45)(b) (35,040,480) 156,747,608
Add: Cash and cash equivalents at the beginning of the year 6(45)(c) 426,187,961 269,440,353
Cash and cash equivalents at the end of the year 6(45)(c) 391,147,481 426,187,961
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Approved by the board of directors on 28 March 2018.

Legal Representative The person in charge of accounting affairs

The head of the accounting department

The notes on pages 12 to 184 form part of these financial statements.

CITIC CORPORATION LIMITED

COMPANY CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

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Note 2017 2016
Cash flows from operating activities:
Interests, fee and commission received 684,883 2,180,723
Cash received from other operating activities 12,298,002 16,420,548
Sub-total of cash inflows from operating activities 12,982,885 18,601,271
Interests, fee and commission paid (657) (2,384)
Cash paid for various taxes (61,190) (1,215,204)
Cash paid for other operating activities (6,176,203) (6,815,183)
Sub-total of cash outflows from operating activities (6,238,050) (8,032,771)
Net cash flow from operating activities 6(45)(a) 6,744,835 10,568,500
Cash flows from investing activities:
Cash received from disposal of investments 6,770,945 29,149,766
Sub-total of cash inflows from investing activities 6,770,945 29,149,766
Cash paid for acquisition of investments (5,632,219) (25,852,198)
Cash paid for acquisition of fixed assets, intangible
assets and other long-term assets (3,950) (5,773)
Entrusted loans to subsidiaries (3,210,000) (552,870)
Sub-total of cash outflows from investing activities (8,846,169) (26,410,841)
Net cash flows from investing activities (2,075,224) 2,738,925
Cash flows from financing activities:
Cash received from issuance of new debt instruments 6,000,000 15,000,000
Cash received from new bank and other loans - 3,619,700
Sub-total of cash inflows from financing activities 6,000,000 18,619,700
Cash paid for repayment of bank and other loans and
debt instruments issued (4,500,000) (24,419,700)
Interest paid (2,042,100) (2,830,723)
Cash paid for dividends or profit distributions (3,539,000) (7,000,000)
Sub-total of cash outflows from financing activities (10,081,100) (34,250,423)
Net cash flows from financing activities (4,081,100) (15,630,723)
Effect of foreign exchange rate changes on cash and
cash equivalents (706) 16,331
Net increase /(decrease) in cash and cash equivalents 6(45)(b) 587,805 (2,306,967)
Add: Cash and cash equivalents at the beginning of the year 6(45)(c) 13,470,864 15,777,831
Cash and cash equivalents at the end of the year 6(45)(c) 14,058,669 13,470,864
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Approved by the board of directors on 28 March 2018. Legal Representative The person in charge of accounting affairs

The head of the accounting department

The notes on pages 12 to 184 form part of these financial statements.

CITIC CORPORATION LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’ EQUITY FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

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Attributable to owners of the Company
Other Non-
Paid-in Capital comprehensive Surplus General Retained controlling
Item Note capital reserve income reserve reserve earnings Sub-total interests Total
Balance at 1 January 2017 (Previously
reported) 139,000,000 40,078,654 556,541 5,982,516 36,105,518 118,552,754 340,275,983 175,093,953 515,369,936
Business combination under common
control 6(55) - 251,007 282 - - 79,243 330,532 404,790 735,322
Balance at 1 January 2017(Restated) 139,000,000 40,329,661 556,823 5,982,516 36,105,518 118,631,997 340,606,515 175,498,743 516,105,258
Movements for the year ended
31 December 2017
Total comprehensive income - - (7,542,202) - - 43,105,451 35,563,249 13,257,370 48,820,619
Capital contribution and withdrawal by owners
1. Capital contribution by owners - - - - - - - 354,500 354,500
2. Issue of other equity instruments by subsidiaries - - - - - - - 1,153,544 1,153,544
- - - - - - -
3. New subsidiaries 116,955 116,955
4. Transactions with non-controlling interests 6(56) - 233,043 - - - - 233,043 7,564,344 7,797,387
5. Acquire a subsidiary under common control
through capital injection 6(55) - (460,011) - - - - (460,011) 460,011 -
6. Disposal of subsidiaries 6(45)(d) - - - - - - - (217,930) (217,930)
7. Disposal of an associate - (601,480) - - - - (601,480) - (601,480)
Profit distribution
- - - - - - -
1. Appropriation to surplus reserve 6(32) 1,409,721 (1,409,721)
2. Appropriation to general reserve 6(33) - - - - 512,324 (512,324) - - -
3. Profit distribution to owners - - - - - (5,745,000) (5,745,000) (6,966,607) (12,711,607)
Others - (15,906) - - - - (15,906) (229,144) (245,050)
Balance at 31 December 2017 139,000,000 39,485,307 (6,985,379) 7,392,237 36,617,842 154,070,403 369,580,410 190,991,786 560,572,196
----- End of picture text -----

Approved by the board of directors on 28 March 2018.

Legal Representative

The person in charge of accounting affairs

The head of the accounting department

CITIC CORPORATION LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’ EQUITY(CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

==> picture [718 x 323] intentionally omitted <==

----- Start of picture text -----

Attributable to owners of the Company
Other Non-
Paid-in Capital comprehen Surplus General Retained controlling
Item Note capital reserve sive income reserve reserve earnings Sub-total interests Total
Balance at 1 January 2016 (Previously
reported) 139,000,000 38,050,059 3,266,332 4,718,187 29,708,529 89,660,183 304,403,290 132,766,840 437,170,130
Business combination under common
control 6(55) - 251,005 (2,348) - - 55,839 304,496 375,971 680,467
Balance at 1 January 2016(Restated) 139,000,000 38,301,064 3,263,984 4,718,187 29,708,529 89,716,022 304,707,786 133,142,811 437,850,597
Movements for the year ended
31 December 2016(Restated)
Total comprehensive income - - (2,707,161) - - 39,757,293 37,050,132 12,813,004 49,863,136
Capital contribution and withdrawal by owners
1. Capital contribution by owners - - - - - - - 565,676 565,676
2. Issue of preferred shares and other equity
- - - - - - -
instruments by a subsidiary 39,458,433 39,458,433
- - - - - - -
3. New subsidiaries 113,075 113,075
4. Termination of part of put options - 1,905,152 - - - - 1,905,152 - 1,905,152
5. Dilution of share of interests in associates - 120,736 - - - - 120,736 - 120,736
6. Transactions with non-controlling interests - (84,811) - - - - (84,811) (5,241,111) (5,325,922)
7. Disposal of subsidiaries 6(45)(d) - - - - - - - (915,227) (915,227)
Profit distribution
1. Appropriation to surplus reserve 6(32) - - - 1,264,329 - (1,264,329) - - -
2. Appropriation to general reserve 6(33) - - - - 6,396,989 (6,396,989) - - -
3. Profit distribution to owners - - - - - (3,180,000) (3,180,000) (4,404,691) (7,584,691)
Others - 87,520 - - - - 87,520 (33,227) 54,293
Balance at 31 December 2016(Restated) 139,000,000 40,329,661 556,823 5,982,516 36,105,518 118,631,997 340,606,515 175,498,743 516,105,258
----- End of picture text -----

Approved by the board of directors on 28 March 2018.

Legal Representative

The person in charge of accounting affairs

The head of the accounting department

The notes on pages 12 to 184 form part of these financial statements.

10 -

CITIC CORPORATION LIMITED

COMPANY STATEMENT OF CHANGES IN OWNERS’ EQUITY FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

==> picture [657 x 289] intentionally omitted <==

----- Start of picture text -----

Other
Paid-in Capital comprehensive Surplus Retained
Item Note capital reserve income reserve earnings Total
Balance at 1 January 2017 139,000,000 50,268,921 952,845 5,982,516 25,776,561 221,980,843
Movements for the year ended 31 December 2017
Total comprehensive income - - (658,624) - 14,097,203 13,438,579
Appropriation to surplus reserve 6(32) - - - 1,409,721 (1,409,721) -
Profit distribution to owners - - - - (5,745,000) (5,745,000)
- - - -
Subsidiary diluted as associate (156,206) (156,206)
Disposal of associates and joint ventures - (654,670) - - - (654,670)
Balance at 31 December 2017 139,000,000 49,614,251 294,221 7,392,237 32,562,837 228,863,546
Balance at 1 January 2016 139,000,000 50,268,921 1,081,869 4,718,187 17,577,596 212,646,573
Movements for the year ended 31 December 2016
Total comprehensive income - - (129,024) - 12,643,294 12,514,270
Appropriation to surplus reserve 6(32) - - - 1,264,329 (1,264,329) -
Profit distribution to owners - - - - (3,180,000) (3,180,000)
Balance at 31 December 2016 139,000,000 50,268,921 952,845 5,982,516 25,776,561 221,980,843
----- End of picture text -----

Approved by the board of directors on 28 March 2018.

Legal Representative

The person in charge of accounting affairs

The head of the accounting department

The notes on pages 12 to 184 form part of these financial statements.

11 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

1 General information

CITIC Corporation Limited (formerly known as “CITIC Limited” and herein referred to as “the Company”) was jointly established by CITIC Group Corporation (“CITIC Group”) and Beijing CITIC Enterprise Management Company Limited (a wholly-owned subsidiary of CITIC Group, “CITIC Enterprise Management”) on 27 December 2011 and obtained a business license (No. 100000000044124(4-1)) issued by the State Administration of Industry and Commerce of the Peoples Republic of China (“PRC”). The Company’s head office is located in Beijing and its registered address is 6 Xinyuannanlu, Chaoyang District, Beijing. The legal representative of the Company is Chang Zhenming. The registered capital of the Company is RMB139 billion.

CITIC Pacific Limited (“Former CITIC Pacific”) is incorporated in Hong Kong, the shares of which are listed on the Main Board of the Stock Exchange of Hong Kong Limited. The Company held 57.51% equity interests in Former CITIC Pacific through its overseas whollyowned subsidiaries. The Company’s overseas wholly-owned subsidiaries transferred their shares of Former CITIC Pacific to certain overseas wholly-owned subsidiaries of CITIC Group on 8 May 2014.

On 16 April 2014, CITIC Group, CITIC Enterprise Management and Former CITIC Pacific entered into a share transfer agreement, pursuant to which Former CITIC Pacific acquired 100% equity interests in the Company from CITIC Group and CITIC Enterprise Management (“the Acquisition”). The Acquisition was completed on 25 August 2014. Upon the completion of the Acquisition, the name of the Company was changed from CITIC Limited to CITIC Corporation Limited and the name of Former CITIC Pacific was changed from CITIC Pacific Limited to CITIC Limited (“CITIC Limited”). The Company became a wholly-owned subsidiary of CITIC Limited.

The Company and its subsidiaries (“the Group”) is principally engaged in financial services, resources and energy, manufacturing activities, engineering contracting, real estate and other businesses.

12 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

2 Basis of preparation of financial statements

The financial statements are prepared in accordance with the Accounting Standards for Business Enterprises – Basic Standard, the specific accounting standards and other relevant regulations issued by the Ministry of Finance on 15 February 2006 and in subsequent periods (hereafter collectively referred to as “the Accounting Standard for Business Enterprises” or “CAS”).

The financial statements have been prepared on the going concern basis.

(1) Statement of compliance with the Accounting Standard for Business Enterprises

These financial statements of the Company for the year ended 31 December 2017 are in compliance with the Accounting Standards for Business Enterprises, and truly and completely present the consolidated and the Company’s financial position as at 31 December 2017, and of their financial performance, cash flows and other information for the year then ended.

(2) Accounting year

The accounting year of the Group is from 1 January to 31 December.

(3) Functional currency and presentation currency

The Functional currency of the Company is Renminbi and these financial statements are presented in Renminbi. Functional currency is determined by the Company and its subsidiaries on the basis of the currency in which major income and costs are denominated and settled. Some of the Company’s subsidiaries have functional currencies that are different from the Company’s functional currency. Their financial statements have been translated based on the accounting policy set out in Note 3(2).

3 Significant accounting policies and accounting estimates

(1) Business combinations and consolidated financial statements
(a) Business combinations involving entities under common control

A business combination involving entities under common control is a business combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory. The assets acquired and liabilities assumed are measured based on their carrying amounts in the consolidated financial statements of the ultimate controlling party at the combination date. The difference between the carrying amount of the net assets acquired and the consideration paid for the combination (or the total face value of shares issued) is adjusted against the capital premium in the capital reserve with any excess adjusted against retained earnings. Any costs directly attributable to the combination is recognised in profit or loss when incurred. The combination date is the date on which one combining entities obtains control of other combining enterprises.

13 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(1) Business combinations and consolidated financial statements (Continued)
(b) Business combinations not involving entities under common control

A business combination not involving entities under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the business combination. Where (1) the aggregate of acquisition date fair value of assets transferred (including the acquirer’s previously held equity interest in the acquiree), liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the acquiree, exceeds (2) the acquirer’s interest in the acquisition date fair value of the acquiree’s identifiable net assets, the difference is recognised as goodwill (Note 3(10)). If (1) is less than (2), the difference is recognised in profit or loss for the current period. The costs of issuing equity or debt securities as a part of the consideration for the acquisition are included in the carrying amounts of these equity or debt securities upon initial recognition. Other acquisition-related costs are expensed when incurred. Any difference between the fair value and the carrying amount of the assets transferred as consideration is recognised in profit or loss. The acquiree’s identifiable asset, liabilities and contingent liabilities, if the recognition criteria are met, are recognised by the Group at their acquisition-date fair value. The acquisition date is the date on which the acquirer obtains control of the acquiree.

(c) Consolidated financial statements

The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Company and its subsidiaries, as well as structured entities controlled by the Group. Control exists when the investor has all of following: power over the investee; exposure, or rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. When assessing whether the Group has power, only substantive rights (held by the Group and other parties) are considered. The financial position, financial performance and cash flows of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Where a subsidiary was acquired during the reporting period, through a business combination involving entities under common control, the financial statements of the subsidiary are included in the consolidated financial statements as if the combination had occurred at the date that the ultimate controlling party first obtained control. The opening balances and the comparative figures of the consolidated financial statements are also restated. In the preparation of the consolidated financial statements, the subsidiary’s assets and liabilities based on their carrying amounts in the financial statements of the ultimate controlling party are included in the consolidated balance sheet, and financial performance is included in the consolidated income statement, respectively, from the date that the ultimate parent company of the Company obtains the control of the subsidiary to be consolidated.

14 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(1) Business combinations and consolidated financial statements (Continued)
(c) Consolidated financial statements (Continued)

Where a subsidiary was acquired during the reporting period, through a business combination not involving entities under common control, the identifiable assets and liabilities of the acquired subsidiaries are included in the scope of consolidation from the date that control commences, based on the fair value of those identifiable assets and liabilities at the acquisition date. For a business combination not involving entities under common control and achieved in stages, the Group remeasures its previously-held equity interest in the acquiree to its fair value at the acquisition date and recognises any resulting difference between the fair value and the carrying amount as investment income for the current period. In addition, any amount recognised in other comprehensive income that can be reclassified to profit or loss, in prior reporting periods relating to the previously-held equity interest, and any other changes in the owners’ equity under equity accounting (See Note 3(5)(b)), are transferred to investment income in the period in which the acquisition occurs.

Where the Company acquires a non-controlling interest from a subsidiary’s non-controlling shareholders or disposes of a portion of an interest in a subsidiary without a change in control, the difference between the amount by which the non-controlling interests are adjusted and the amount of the consideration paid or received is adjusted to the capital reserve (capital surplus) in the consolidated balance sheet, with any excess adjusted to retained earnings.

When the Group loses control of a subsidiary due to the disposal of a portion of an equity investment, the Group derecognises assets, liabilities, non-controlling interests and other related items in owners’ equity in relation to that subsidiary. The remaining equity investment is remeasured at its fair value at the date when control is lost. Any resulting gains or losses are recognised as investment income of the current period.

Non-controlling interests are presented separately in the consolidated balance sheet within owners’ equity. Net profit or loss attributable to non-controlling shareholders is presented separately in the consolidated income statement below the net profit line item. Total comprehensive income attributable to non-controlling shareholders is presented separately in the consolidated income statement below the total comprehensive income line item.

When the amount of loss for the current period attributable to the non-controlling shareholders of a subsidiary exceeds the non-controlling shareholders’ portion of the opening balance of owners’ equity of the subsidiary, the excess is still allocated against the non-controlling interests.

When the accounting period or accounting policies of a subsidiary are different from those of the Company, the Company makes necessary adjustments to the financial statements of the subsidiary based on the Company’s own accounting period or accounting policies. Intragroup balances and transactions, and any unrealised profit or loss arising from intra-group transactions, are eliminated when preparing the consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains, unless they represent impairment losses that are recognised in the financial statements.

15 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(2) Translation of foreign currencies

Foreign currency transactions are, on initial recognition, translated by applying the foreign exchange rates ruling at the transaction dates. Monetary items denominated in foreign currencies are translated at the foreign exchange rates ruling at the reporting date, the resulting exchange differences are recognised in profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates ruling at the transaction dates. Non-monetary items that are measured at fair value in a foreign currency are translated using the foreign exchange rates ruling at the dates the fair value was determined. The exchange differences are recognised in profit or loss, except for the differences arising from the translation of available-for-sale equity investments, which is recognised in other comprehensive income.

The financial statements of the Group’s subsidiaries with a foreign functional currency are translated into Renminbi for the preparation of the Group’s consolidated financial statements. The assets and liabilities in these financial statements are translated into Renminbi at the foreign exchange rates ruling at the reporting date. The equity items, except for “retained earnings”, are translated to Renminbi at the foreign exchange rates at the dates on which such items arose.

Income and expenses in the profit or loss are translated into Renminbi at the foreign exchange rates or the rates that approximate the foreign exchange rates at the transaction dates. The resulting exchange differences are presented as “Other comprehensive income” in the consolidated balance sheet within the shareholder’s equity.

Upon disposal of a foreign operation, the cumulative amount of the translation differences recognised in shareholders’ equity which relates to that foreign operation is transferred to profit or loss in the period in which the disposal occurs.

(3) Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are also included as a component of cash and cash equivalents for the purpose of the cash flow statement.

(4) Inventories
(a) Manufacturing, resources and energy segments

Inventories of the manufacturing, and resources and energy segments are carried at the lower of cost and net realisable value.

Cost is calculated using the first-in first-out, specific identification or weighted average cost formula as appropriate, and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

16 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(4) Inventories (Continued)
(a) Manufacturing, resources and energy segments (Continued)

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any writedown of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories is recognised in profit or loss in the period in which the reversal occurs.

(b) Real estate segment

Inventories in respect of property development activities under the real estate segment are carried at the lower of cost and net realisable value. Cost and net realisable values are determined as follows:

Property under development

The cost of properties under development comprises specifically identified cost, including the acquisition cost of land, aggregate cost of development, materials and supplies, wages and other direct expenses, an appropriate proportion of overheads and borrowing costs capitalised (See Note 3(21)). Net realisable value represents the estimated selling price less estimated costs of completion and costs to be incurred in selling the property.

- Completed property held for sale

In the case of completed properties developed by the Group, cost is determined by apportionment of the total development costs for that development project, attributable to the unsold properties. Net realisable value represents the estimated selling price less costs to be incurred in selling the property.

The cost of completed properties held for sale comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

17 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(5) Long-term equity investments
(a) Investments in subsidiaries

In the Group’s consolidated financial statements, investments in subsidiaries are accounted for in accordance with the principles described in Note 3(1)(c).

In the Company’s separate financial statements, investments in subsidiaries are measured as follows:

The initial cost of a long-term equity investment acquired through a business combination involving entities under common control is the Company’s share of the carrying amount of the subsidiary’s equity in the consolidated financial statements of the ultimate controlling party at the combination date. The difference between the initial investment cost and the carrying amounts of the consideration given is adjusted to the share premium in the capital reserve, with any excess adjusted to retained earnings.
For a long-term equity investment obtained through a business combination not involving entities under common control, the initial cost comprises the aggregate of the fair value of assets transferred, liabilities incurred or assumed, and equity securities issued by the Company, in exchange for control of the acquiree. For a long-term equity investment obtained through a business combination not involving entities under common control and achieved in stages, the initial cost comprises the carrying value of the previously-held equity investment in the acquiree immediately before acquisition date, and the additional investment cost at the acquisition date.
An investment in a subsidiary acquired otherwise than through a business combination is initially recognised in accordance with the principles described in: at the amount of cash paid if the company acquires the investment by cash or at the fair value of the equity securities issued if an investment is acquired by issuing equity securities.

In the Company’s separate financial statements, long-term equity investments in subsidiaries are accounted for using the cost method. Except for cash dividends or profit distributions declared but not yet distributed that have been included in the price or consideration paid in obtaining the investments, the Company recognises its share of the cash dividends or profit distributions declared by the subsidiary as investment income in the current period. The investments in subsidiaries are stated in the balance sheet at cost less impairment losses (Note 3(13)(b)).

(b) Investments in joint venture and associates

Joint ventures are the investees over which the Group is able to exercise joint control together with other venturers. Associates are the investees that the Group has significant influence on their financial and operating policies.

18 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(5) Long-term equity investments (Continued)
(b) Investments in joint venture and associates(Continued)

An investment in a joint venture or an associate is initially recognised in accordance with the following principles: at the amount of cash paid if the Group acquires the investment by cash or at the fair value of the equity securities issued if an investment is acquired by issuing equity securities.

An investment in a joint venture or an associate is accounted for using the equity method, unless the investment is classified as held for sale (Note 3(11)).

Under the equity method:

Where the initial cost of a long-term equity investment exceeds the Group’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition, the investment is initially recognised at cost. Where the initial investment cost is less than the Group’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition, the investment is initially recognised at the investor’s share of the fair value of the investee’s identifiable net assets, and the difference is recognised incharged to profit or loss.
After the acquisition of the investment, the Group recognises its share of the investee’s profit or loss and other comprehensive income, as investment income or losses and other comprehensive income respectively, and adjusts the carrying amount of the investment accordingly. Once the investee declares any cash dividends or profit distributions, the carrying amount of the investment is reduced by that amount attributable to the Group. Changes in the Group’s share of the investee’s owners’ equity, other than those arising from the investee’s net profit or loss, other comprehensive income or profit distribution (“other changes in owners’ equity”), is recognised directly in the Group’s equity, and the carrying amount of the investment is adjusted accordingly.
In calculating its share of the investee’s net profits or losses, other comprehensive income and other changes in owners’ equity, the Group recognises investment income and other comprehensive income after making appropriate adjustments to align the accounting policies or accounting periods with those of the Group based on the fair value of the investee’s identifiable net assets at the date of acquisition. Unrealised profits and losses resulting from transactions between the Group and its associates or joint ventures are eliminated to the extent of the Group’s interest in the associates or joint ventures. Unrealised losses resulting from transactions between the Group and its associates or ventures are eliminated in the same way as unrealised gains but only to the extent that there is no impairment.
The Group discontinues recognising its share of further losses of the investee after the carrying amount of the long-term equity investment and any long-term interest that in substance forms part of the Group’s net investment in the joint venture or associate is reduced to zero, except to the extent that the Group has an obligation to assume additional losses. If the joint venture or associate subsequently reports net profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

The Group makes provision for impairment of investments in joint ventures and associates in accordance with the principles described in Note 3(13)(b).

19 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(6) Investment properties

Investment properties are interests in buildings and/or land which are held to earn rentals or for capital appreciation or both. These include land held for a currently undetermined future use. Land held under operating leases is classified and accounted for as investment property when the rest of the definition of investment property is met.

Investment properties are stated in the balance sheet at fair values which are reviewed annually. Any gain or loss arising from a change in fair value or from the retirement or disposal of an investment property is recognised in profit or loss.

(7) Fixed assets and construction in progress

Fixed assets represent the tangible assets held by the Group for use in the production of goods, supply of services, for rental to others or for administrative purposes with useful lives over one year.

Fixed assets are stated in the balance sheet at cost less accumulated depreciation and impairment losses (Note 3(13)(b)). Construction in progress is stated in the balance sheet at cost less impairment losses (Note 3(13)(b)).

The cost of a purchased fixed asset comprises the purchase price, related taxes, and any directly attributable expenditure for bringing the asset to working condition for its intended use. The cost of self-constructed assets includes the cost of materials, direct labour, capitalised borrowing costs (Note 3(21)), and any other costs directly attributable to bringing the asset to working condition for its intended use. Costs of environmental protection and ecological restoration arising from obligations incurred when fixed assets are disposed of are included in the initial cost of fixed assets.

Construction in progress is transferred to fixed assets when it is ready for its intended use. No depreciation is provided against construction in progress.

Where the parts of an item of fixed assets have different useful lives or provide benefits to the Group in a different pattern, thus necessitating use of different depreciation rates or methods, each part is recognised as a separate fixed asset.

Any subsequent costs including the cost of replacing part of an item of fixed assets are recognised as assets if the criteria to recognise fixed assets are satisfied, and the carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of fixed assets are recognised in profit or loss as incurred.

Gains or losses arising from the retirement or disposal of an item of fixed asset are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of retirement or disposal.

The cost of fixed asset, less its estimated residual value and accumulated impairment losses, is depreciated using the straight-line method over their estimated useful lives, unless the fixed asset is classified as held for sale (See Note 3(11)).

20 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(7) Fixed assets and construction in progress (Continued)

The estimated useful lives and residual rates of each class of fixed assets are as follows:

	Estimated
	useful life	Residual rate
Plant and buildings	20-34 years	5%
Machinery and equipment	5-22 years	5%
Office equipment and other equipment,
vehicles and vessels	5-10 years	5%
Others	3-10 years	5%

Useful lives, residual value and depreciation methods are reviewed at least at each yearend.

(8) Operating lease charges

Leases which do not transfer substantially all the risks and rewards of ownership to the lessee are classified as operating leases.

Where the Group leases out assets under operating leases, the assets are included in the balance sheet according to their nature and, where applicable, are depreciated in accordance with the Group’s depreciation policies, as set out in Note 3(7) except where the asset is classified as an investment property. Impairment losses are accounted for in accordance with the accounting policy as set out in Note 3(13). Revenue arising from operating leases is recognised in accordance with the Group’s revenue recognition policies, as set out in Note 3(18).

Where the Group has the use of assets held under operating leases, payments made under the leases are charged to profit or loss in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognised in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.

The cost of acquiring land held under an operating lease is amortised on a straight-line basis over the period of the lease term except where the property is classified as an investment property (See Note 3(6)).

21 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(9) Intangible assets

Intangible assets are stated in the balance sheet at cost less accumulated amortisation (where the estimated useful life is finite) and impairment losses (See Note 3(13)(b)).

Amortisation of intangible assets with finite useful lives is charged to profit or loss over the assets’ estimated useful lives. The following intangible assets are amortised from the date they are available for use as follows:

Land use rights

Over the estimated useful lives of 10-50 years

Roads operating rights

Over the estimated useful lives of 30 years

Mining assets

Over the estimated useful lives of the mines in accordance with the production plan of the entities concerned and the proven probable reserves of the mines using the unit-ofproduction method

Both the period and method of amortisation are reviewed annually.

Intangible assets are not amortised while their useful lives are assessed to be indefinite. Any conclusion that the useful life of an intangible asset is indefinite is reviewed annually to determine whether events and circumstances continue to support the indefinite useful life assessment for that asset. If they do not, the change in the useful life assessment from indefinite to finite is accounted for prospectively from the date of change and in accordance with the policy for amortisation of intangible assets with finite lives as set out above.

22 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(10) Goodwill

Goodwill represents the excess of the consideration transferred, including the amount of assets transferred (including the acquirer’s previously held equity interest in the acquiree), liabilities incurred or assumed, and the equity securities issued by the acquirer at the date of acquisition, over the fair value of the Group’s share of the identifiable net assets acquired, when the excess is positive, otherwise it’s recognised directly in profit or loss.

Positive goodwill will be stated in the consolidated balance sheet as a separate asset or included within joint ventures and associates at cost less accumulated impairment losses and is subject to impairment testing at least annually. Impairment losses on goodwill are not reversed. Negative goodwill is recognised in profit or loss immediately on acquisition.

(11) Held for sale and discontinued operations

A non-current asset or a disposal group is classified as held for sale when all of the following conditions are satisfied: (1) the non-current asset or the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such non-current asset or disposal group; (2) the Group has entered a legally enforceable sales agreement with other party and obtained relevant approval, and the sales transaction is expected to be completed within one year.

Non-current assets (except for financial assets, investment properties measured at fair value and deferred tax assets) that meet the recognition criteria for held for sale are recognised at the amount equal to the lower of the fair value less costs to sell and the carrying amount. Any excess of the original carrying amount over the fair value less costs to sell is recognised as asset impairment losses.

Such non-current assets and assets and liabilities included in disposal groups classified as held for sale are classified as current assets and current liabilities respectively, and are separately presented in the balance sheet.

A discontinued operation is a component of the Group that either has been disposed of or is classified as held for sale, and is separately identifiable operationally and for financial reporting purposes, and satisfies one of the following conditions: (1) represents a separate major line of business or geographical area of operations; (2) is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; and (3) is a subsidiary acquired exclusively with a view to resale.

The net profit from discontinued operations in the income statement includes operating profit or loss and disposal gains or losses of discontinued operations.

23 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(12) Financial instruments
(a) Initial recognition

The Group classifies its financial instruments into different categories at inception, depending on the purpose for which the assets were acquired or the liabilities were incurred, and on the contractual terms of the financial instruments. The categories are: financial assets or financial liabilities at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets and other financial liabilities.

Financial instruments are measured initially at fair value, which normally will be equal to the transaction price plus, in case of a financial asset or financial liability not held at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset or issue of the financial liability. Transaction costs on financial assets and financial liabilities at fair value through profit or loss are expensed immediately.

The Group recognises financial assets and financial liabilities on the date it becomes a party to the contractual provisions of the instrument. A regular way purchase or sale of financial assets and financial liabilities at fair value through profit or loss is recognised using trade date accounting. Other financial assets and financial liabilities are recognised using settlement date accounting. From these dates, any gains and losses arising from changes in fair value of the financial assets or financial liabilities at fair value through profit or loss are recorded.

(b) Categorisation

Financial assets at fair value through profit or loss

This category comprises financial assets held for trading, and those designated at fair value through profit or loss upon initial recognition, but excludes those investments in equity instruments that do not have a quoted market price and whose fair value cannot be reliably measured.

A financial asset is classified as held for trading if it is: (i) acquired principally for the purpose of selling or repurchasing it in the near term; (ii) part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or (iii) a derivative. Derivatives that do not qualify for hedge accounting (See Note 3(22)) are accounted for as trading instruments.

24 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(12) Financial instruments (Continued)
(b) Categorisation (Continued)

Financial assets at fair value through profit or loss (Continued)

Financial instruments are designated at fair value through profit or loss upon initial recognition when:

the assets are managed, evaluated and reported internally on a fair value basis;
the designation eliminates or significantly reduces an accounting mismatch in the gain and loss recognition arising from the difference in measurement bases of the financial assets which would otherwise arise;
the asset contains an embedded derivative that significantly modifies the cash flows that would otherwise be required under the contract; or
the separation of the embedded derivative(s) from the financial instrument is not prohibited.

Financial assets under this category are carried at fair value. Changes in the fair value are included in profit or loss in the period in which they arise. Upon disposal, the difference between the net sale proceeds and the carrying value is included in profit or loss.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than (a) those that the Group intends to sell immediately or in the near term, which will be classified as held for trading; (b) those that the Group, upon initial recognition, designates as at fair value through profit or loss or as available-for-sale.

Loans and receivables mainly comprise loans and advances to customers and other parties, deposits and placements with banks and non-bank financial institutions, financial assets held under resale agreements, investments classified as receivables, and trade and other receivables.

Loans and receivables are carried at amortised cost using the effective interest method, less impairment losses, if any (See Note 3(13)(a)) Where the receivables are interest-free loans made to related parties without any fixed repayment term or the effect of discounting would be immaterial, the receivables are stated at cost less allowance for impairment of doubtful debts.

25 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(12) Financial instruments (Continued)
(b) Categorisation (Continued)

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity for which the Group has the positive intention and ability to hold to maturity, other than (a) those that the Group, upon initial recognition, designates as at fair value through profit or loss or as available-for-sale; and (b) those that meet the definition of loans and receivables.

Held-to-maturity investments are carried at amortised cost using the effective interest method less impairment losses, if any (See Note 3(13)(a)).

If, as a result of a change in intention or ability, it is no longer appropriate to classify an investment as held-to-maturity, it shall be reclassified as available-for-sale and remeasured at fair value.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the other three categories above. They include financial assets intended to be held for an indefinite period of time, but which may be sold in response to needs for liquidity or changes in the market environment.

Available-for-sale financial assets are carried at fair value. Unrealised gains and losses arising from changes in the fair value are recognised in other comprehensive income and accumulated separately in equity, except for impairment losses and foreign exchange gains and losses on monetary items such as debt securities which are recognised in profit or loss. Dividend income from equity securities and interest income from debt securities calculated using the effective interest method are recognised in profit or loss in accordance with the policies set out in Notes 3(18)(g) and 3(18)(a) respectively.

Investments in equity securities that do not have a quoted market price in an active market and whose fair value cannot be measured reliably, and derivatives that are linked to and must be settled by delivery of such unquoted equity securities are carried at cost less impairment losses, if any (See Note 3(13)(a)).

When the available-for-sale financial assets are sold, gains or losses on disposal include the difference between the net sale proceeds and the carrying value, and the accumulated fair value adjustments which are previously recognised in other comprehensive income shall be reclassified from equity to profit or loss.

26 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(12) Financial instruments (Continued)
(b) Categorisation (Continued)

Financial liabilities at fair value through the profit or loss

Financial liabilities at fair value through the profit or loss include those classified as held for trading, and those designated by the Group upon recognition as at fair value through the profit or loss.

A financial liability is classified as held for trading if it is: (i) acquired or incurred principally for the purpose of selling or repurchasing it in the near term; (ii) part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or (iii) a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

Financial liabilities are designated at fair value through the profit or loss upon initial recognition when: (i) the financial liabilities or are managed, evaluated and reported internally on a fair value basis; (ii) the designation eliminates or significantly reduces an accounting mismatch in the gain and loss recognition arising from the difference in measurement bases of the financial liabilities; or (iii) a contract contains one or more embedded derivatives, i.e. an entire hybrid (combined) contract, unless: (i) the embedded derivative does not significantly modify the cash flows that otherwise would be required by the hybrid (combined) contract; or (ii) it is clear with little or no analysis when a similar hybrid (combined) instrument is first considered that separation of the embedded derivative is prohibited.

Other financial liabilities

Financial liabilities, other than trading liabilities and those designated at fair value through profit or loss, are measured at amortised cost using the effective interest method.

Other financial liabilities mainly comprise borrowing from central banks, deposits from banks and non-bank financial institutions, placements from banks and non-bank financial institutions, trade and other payables, financial assets sold under repurchase agreements and deposits from customers, banks and other loans, and debt instruments issued.

A financial asset is derecognised when the contractual rights to receive the cash flows from the financial asset expire, or where the financial asset together with substantially all the risks and rewards of ownership, have been transferred.

The Group derecognises a financial asset, if the part being considered for de-recognition meets one of the following conditions: (a) the contractual rights to receive the cash flows from the financial asset expire; or (b) the contractual rights to receive the cash flows of the financial asset have been transferred, and the Group transfers substantially all the risks and rewards of ownership of the financial asset; or (c) the Group retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to the eventual recipient in an agreement that meets all the conditions of derecognition of transfer of cash flows ("pass through requirements”) and transfers substantially all the risks and rewards of ownership of the financial asset.

27 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(12) Financial instruments (Continued)
(c) De-recognition (Continued)

Where a transfer of a financial asset in its entirety meets the criteria for de-recognition, the difference between the two amounts below is recognised in the consolidated statements of profit or loss:

the carrying amount of the financial asset transferred
the sum of the consideration received from the transfer and any cumulative gain or loss that has been recognised directly in equity.

If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group continues to recognise the asset to the extent of its continuing involvement and recognises an associated liability.

As part of its operations, the Group securitises financial assets, generally through the sale of these assets to structured entities which issue securities to investors. Further details on prerequisites for de-recognition of financial assets are set out above. When the securitisation of financial assets that qualify for de-recognition, the relevant financial assets are derecognised in their entirety and a new financial asset or liabilities is recognised regarding the interest in the unconsolidated securitisation vehicles that the Group acquired. When the securitisation of financial assets that do not qualify for de-recognition, the relevant financial assets are not derecognised, and the consideration paid by third parties are recorded as a financial liability; when the securitisation of financial assets that partially qualify for de-recognition, where the Group has not retained control, it derecognizes these financial assets and recognizes separately as assets or liabilities any rights and obligations created or retained in the transfer. Otherwise the Group continues to recognize these financial assets to the extent of its continuing involvement in the financial asset.

The de-recognition of financial assets sold on condition of repurchase is determined by the economic substance of the transaction. If a financial asset is sold under an agreement to repurchase the same or substantially the same asset at a fixed price or at the sale price plus a reasonable return, the Group will not derecognise the asset. If a financial asset is sold together with an option to repurchase the financial asset at its fair value at the time of repurchase (in case of transferor sells such financial asset), the Group will derecognise the financial asset.

The financial liability is derecognised only when: (a) the underlying present obligation specified in the contracts is discharged/cancelled, or (b) an agreement between the Group and an existing lender to exchange the original financial liability with a new financial liability with substantially different terms, or a substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid is recognised in profit or loss.

28 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(12) Financial instruments (Continued)

(d) Offsetting

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

(e) Derivatives

The Group uses derivatives to hedge its exposure on risks. The Group adopts hedge accounting in accordance with Note 3(22) for derivatives designated as hedging instruments if the hedge is effective. Other derivatives are accounted for as trading financial assets or financial liabilities. Derivatives are recognised at fair value upon initial recognition. The positive fair value is recognised as assets while the negative fair value is recognised as liabilities. The gain or loss on re-measurement to fair value is recognised immediately in profit or loss.

(f) Embedded derivatives

An embedded derivative is a component of a hybrid (combined) instrument that includes both the derivative and a host contract with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. The embedded derivatives are separated from the host contract and accounted for as a derivative when (a) the economic characteristics and risks of the embedded derivative are not closely related to the host contract; and (b) the hybrid (combined) instrument is not measured at fair value with changes in fair value recognised in profit or loss.

When the embedded derivative is separated, the host contract is accounted for in accordance with Note 3(12)(a) above.

(13) Impairment of assets

Except for impairment of assets set out in Notes 3(4), impairment of other assets is accounted for using the following principles:

(a) Financial assets

The carrying amounts of the Group’s financial assets other than those measured at fair value through profit and loss are reviewed at balance sheet date to determine whether there is objective evidence of impairment. Objective evidence that financial assets are impaired includes but not limited to one or more of the following loss events that occurred after the initial recognision of the asset and has an impact on the future cash flows on the assets that can be estimated reliably:

29 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(13) Impairment of assets (Continued)
(a) Financial assets (Continued)
significant financial difficulty of the issuer or borrower;
a breach of contract, such as a default or delinquency in interest or principal payments;
the Group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the Group would not otherwise consider;
it becoming probable that the borrower will enter bankruptcy or other financial reorganisation; and
disappearance of an active market for financial assets because of financial difficulties;
observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the Group, including: adverse changes in the payment status of borrowers in the Group, an increase in the unemployment rate in the geographical area of the borrowers, a decrease in property prices for mortgages in the relevant area, or adverse changes in industry conditions that affect the borrowers in the Group;
significant changes in the technological, market, economic or legal environment that have an adverse effect on the issuer;
a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost; and
other objective evidence indicating there is an impairment of a financial asset.

If any such evidence exists, the carrying amount is reduced to the estimated recoverable amount by means of a charge to profit or loss.

Impairment losses are written off against the corresponding assets directly, except for impairment losses recognised in respect of loans and receivables and held-to-maturity investments, which are measured at amortised cost, whose recovery is considered doubtful but not remote. In this case, the impairment losses are recorded using an allowance account. When the Group is satisfied that recovery is remote after all the necessary legal or other proceedings are completed, the amount considered irrecoverable is written off against loans and receivables or held-to-maturity investments directly and any amounts held in the allowance account relating to that borrower/investment are reversed. Subsequent recoveries of amounts previously charged to the allowance account are reversed against the allowance account. Other changes in the allowance account and subsequent recoveries of amounts previously written off directly are recognised in profit or loss.

Loans and receivables

Impairment losses on loans and receivables are measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets). Receivables with a short duration are not discounted if the effect of discounting is immaterial.

The total allowance for credit losses consists of two components: individual impairment allowances, and collective impairment allowances.

30 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(13) Impairment of assets (Continued)
(a) Financial assets (Continued)

The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.

The individual impairment allowance is based upon management’s best estimate of the present value of the cash flows which are expected to be received discounted at the original effective interest rate. In estimating these cash flows, management makes judgements about the borrower’s financial situation and the net realisable value of any underlying collateral or guarantees in favour of the Group. Each impaired asset is assessed on its own merits.

In assessing the need for collective loan loss allowances, management uses statistical modelling and considers historical trends of factors such as credit quality, portfolio size, concentrations, and economic factors. In order to estimate the required allowance, the Group makes assumptions both to define the way the Group models inherent losses and to determine the required input parameters, based on historical experience and current economic conditions.

The accuracy of the impairment allowances the Group makes depends on how well the Group can estimate future cash flows for individually assessed impairment allowances and the model assumptions and parameters used in determining collective impairment allowances. While this necessarily involves judgement, the Group believes that the impairment allowances on loans and advances to customers and other parties are reasonable and supportable.

Any subsequent changes to the amounts and timing of the expected future cash flows compared to the prior estimates that can be linked objectively to an event occurring after the write-down, will result in a change in the impairment allowances on loans and receivables and be charged or credited to the income statement. A reversal of impairment losses is limited to the loans and receivables’ carrying amount that would have been determined had no impairment loss been recognised in prior years.

When there is no reasonable prospect of recovery, the loan and the related interest receivables are written off.

Loans and receivables with renegotiated terms are loans that have been restructured due to deterioration in the borrower’s financial position and where the Group has made concessions that it would not otherwise consider. Renegotiated loans and receivables are subject to ongoing monitoring to determine whether they remain impaired or past due.

31 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(13) Impairment of assets (Continued)
(a) Financial assets (Continued)

Held-to-maturity investments

Impairment on held-to-maturity investments is considered at both an individual and collective level. The individual impairment allowance is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the asset’s original effective interest rate, where the effect of discounting is material.

All significant assets found not to be individually impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Assets that are not individually significant are then collectively assessed for impairment by grouping together financial assets with similar risk characteristics.

If in a subsequent period the amount of an impairment loss decreases and the decrease can be linked objectively to an event occurring after the impairment loss was recognised, the impairment loss is reversed through the income statement. A reversal of impairment losses shall not result in the asset’s carrying amount exceeding that which would have been determined had no impairment loss been recognised in prior years.

Available-for-sale financial assets

When there is objective evidence that an available-for-sale financial asset is impaired, the cumulative loss that had been recognised in the fair value reserve is reclassified to profit or loss. The amount of the cumulative loss that is recognised in profit or loss is the difference between the acquisition cost (net of any principal repayment and amortisation) and current fair value, less any impairment loss on that asset previously recognised in profit or loss.

For unquoted available-for-sale equity securities that are carried at cost, the impairment loss is measured as the difference between the carrying amount of the equity securities and the estimated future cash flows, discounted at the current market rate of return for a similar financial asset where the effect of discounting is material. Such impairment losses are not reversed.

Impairment losses recognised in profit or loss in respect of available-for-sale equity securities are not reversed through profit or loss. Any subsequent increase in the fair value of such assets is recognised in other comprehensive income.

Impairment losses in respect of available-for-sale debt securities are reversed if the subsequent increase in fair value can be objectively related to an event occurring after the impairment loss was recognised. Reversals of impairment losses in such circumstances are recognised in profit or loss.

32 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(13) Impairment of assets (Continued)
(b) Impairment of other assets

The carrying amounts of the following assets are reviewed at each balance sheet date based on the internal and external sources of information to determine whether there is any indication of impairment:

Fixed assets
construction in progress
intangible assets
goodwill
long-term equity investments

If any indication exists, the recoverable amount of the asset is estimated. In addition, the Group estimates the recoverable amount of intangible assets not ready for use at least annually and the recoverable amounts of goodwill at each year-end, irrespective of whether there is any indication of impairment. Goodwill is allocated to each asset group, or set of asset groups, that is expected to benefit from the synergies of the combination for the purpose of impairment testing.

An asset group is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or asset groups. An asset group is composed of assets directly relating to cash-generation. Identification of an asset group is based on whether major cash inflows generated by the asset group are largely independent of the cash inflows from other assets or asset groups. In identifying an asset group, the Group also considers how management monitors the Group’s operations and how management makes decisions about continuing or disposing of the Group’s assets.

The recoverable amount of an asset (or asset group, set of asset groups, same as below) is the higher of its fair value (See Note 3(14)) less costs to sell and its present value of expected future cash flows.

The present value of expected future cash flows of an asset is determined by discounting the future cash flows, estimated to be derived from continuing use of the asset and from its ultimate disposal, to their present value using an appropriate pre-tax discount rate.

33 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(13) Impairment of assets (Continued)
(b) Impairment of other assets (Continued)

An impairment loss is recognised in profit or loss when the recoverable amount of an asset is less than its carrying amount. A provision for impairment of the asset is recognised accordingly. Impairment losses related to an asset group or a set of asset groups are allocated first to reduce the carrying amount of any goodwill allocated to the asset group or set of asset groups, and then to reduce the carrying amount of the other assets in the asset group or set of asset groups on a pro rata basis. However, such allocation would not reduce the carrying amount of an asset below the highest of its fair value less costs to sell (if measurable), its present value of expected future cash flows (if determinable) and zero.

Once an impairment loss is recognised, it is not reversed in a subsequent period.

(14) Fair value measurement principles

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique.

If there is no publicly available latest traded price nor a quoted market price on a recognised stock exchange or a price from a broker/dealer for non-exchange-traded financial instruments, or if the market for it is not active, the fair value of the instrument is estimated using valuation techniques that provide a reliable estimate of prices which could be obtained in actual market transactions.

Where discounted cash flow techniques are used, estimated future cash flows are based on management’s best estimates and the discount rate is based on the relevant government yield curve as at the balance sheet date plus an adequate constant credit spread. Where other pricing models are used, inputs are based on market data at the balance sheet date.

34 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(15) Employee benefits
(a) Short-term employee benefits

Employee wages or salaries, bonuses, social security contributions such as medical insurance, work injury insurance, maternity insurance and housing fund, measured at the amount incurred or at the applicable benchmarks and rates, are recognised as a liability as the employee provides services, with a corresponding charge to profit or loss or included in the cost of assets where appropriate.

(b) Post-employment benefits – defined contribution plans

Pursuant to the relevant laws and regulations of the PRC, the Group participated in a defined contribution basic pension insurance in the social insurance system established and managed by government organisations. The Group makes contributions to basic pension insurance plans based on the applicable benchmarks and rates stipulated by the government. Basic pension insurance contributions are recognised as part of the cost of assets or charged to profit or loss as the related services are rendered by the employees.

The Group’s employees have joined its annuity scheme which was established by the Group in accordance with policies regarding the state owned enterprise annuity policy. The Group has made annuity contributions in proportion to its employees’ gross wages which are expensed in profit or loss when the contributions are made.

The Group also operates defined contribution retirement schemes and Mandatory Provident Fund schemes for certain subsidiaries operating in overseas. Contributions are charged to profit or loss as and when the contribution fall due.

When the Group terminates the employment with employees before the employment contracts expire, or provides compensation under an offer to encourage employees to accept voluntary redundancy, a provision is recognised with a corresponding expense in profit or loss at the earlier of the following dates:

When the Group cannot unilaterally withdraw the offer of termination benefits because of an employee termination plan or a curtailment proposal;
When the Group has a formal detailed restructuring plan involving the payment of termination benefits and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.
35 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(16) Income tax

Income tax for the year comprises current tax and deferred tax.

The balance sheet liability method is adopted whereby deferred tax is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts. However, the deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss; or in respect of those temporary differences which arise either from goodwill not deductible for tax purposes, or relating to investments in subsidiaries to the extent that the Group controls the timing of the reversal and it is probable that the temporary differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future.

Provision for withholding tax that will arise on the remittance of retained earnings is only made where there is a current intention to remit such earnings.

Deferred tax assets are recognised to the extent that their future utilisation is probable. Deferred tax arising from revaluation of investment properties is recognised on the rebuttable presumption that the recovery of the carrying amount of the properties would be through sale and calculated at the applicable tax rates.

Current tax assets and liabilities are offset, and deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

(17) Financial guarantees issued, provisions and contingent liabilities
(a) Financial guarantees issued

Financial guarantees are contracts that require the issuer (i.e. the guarantor) to make specified payments to reimburse the beneficiary of the guarantee (the “holder”) for a loss the holder incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.

36 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(17) Financial guarantees issues, provisions and contingent liabilities (Continued)

(a) Financial guarantees issued (Continued)

Where the Group issues a financial guarantee, the fair value of the guarantee is initially recognised as deferred income within “other liabilities”. The fair value of financial guarantees issued at the time of issuance is determined by reference to fees charged in an arm’s length transaction for similar services, when such information is obtainable, or is otherwise estimated by reference to interest rate differentials, by comparing the actual rates charged by lenders when the guarantee is made available with the estimated rates that lenders would have charged, had the guarantees not been available, where reliable estimates of such information can be made. Where consideration is received or receivable for the issuance of the guarantee, the consideration is recognised in accordance with the Group’s policies applicable to that category of asset. Where no such consideration is received or receivable, an immediate expense is recognised in profit or loss on initial recognition of any deferred income.

The amount of the guarantee initially recognised as deferred income is amortised in profit or loss over the term of the guarantee as income from financial guarantees issued. In addition, provisions are recognised in accordance with Note 3(17)(c) if and when: (1) it becomes probable that the holder of the guarantee will call upon the Group under the guarantee; and (2) the amount of that claim on the Group is expected to exceed the amount currently carried in other liabilities in respect of that guarantee i.e. the amount initially recognised, less accumulated amortisation.

(b) Contingent liabilities assumed in business combinations

Contingent liabilities assumed in a business combination which are present obligations at the date of acquisition are initially recognised at fair value, provided the fair value can be reliably measured. After their initial recognition at fair value, such contingent liabilities are recognised at the higher of the amount initially recognised, less accumulated amortisation where appropriate, and the amount that would be determined in accordance with Note 3(17)(c). Contingent liabilities assumed in a business combination that cannot be reliably fair valued or were not present obligations at the date of acquisition are disclosed in accordance with Note 3(17)(c).

(c) Other provisions and contingent liabilities

Provisions are recognised for other liabilities of uncertain timing or amount when the Group has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors pertaining to a contingency such as the risks, uncertainties and time value of money are taken into account as a whole in reaching the best estimate. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

37 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(17) Provisions and contingent liabilities (Continued)
(c) Other provisions and contingent liabilities (Continued)

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

(18) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in profit or loss as follows:

(a) Interest income

Interest income arising from the use of entity assets by others is recognised in profit or loss based on the duration and the effective interest rate. Interest income includes the amortisation of any discount or premium or other differences between the initial carrying amount of an interest bearing instrument and its amount at maturity calculated on an effective interest rate basis.

The effective interest method is a method of calculating the amortised cost of financial assets and liabilities and of allocating the interest income and interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial instrument. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument (for example, call and similar options) but does not consider future credit losses. The calculation includes all fees and interests paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

Interest on the impaired financial assets is recognised using the rate of interest used to discount future cash flows (“unwinding of discount”) for the purpose of measuring the related impairment loss.

(b) Fee and commission income

Fee and commission income is recognised in profit or loss when the corresponding service is provided.

Origination or commitment fees received/paid by the Group which result in the creation or acquisition of a financial asset are deferred and recognised as an adjustment to the effective interest rate. When a loan commitment is not expected to result in the draw-down of a loan, loan commitment fees are recognised.

38 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(18) Revenue recognition (Continued)
(c) Sales of goods and services

Revenue is recognised when goods are delivered at the customers’ premises which is taken to be the point in time when the customer has accepted the goods and the related risks and rewards of ownership. Revenue excludes value added tax or other sales taxes and is after deduction of any trade discounts.

Service fee income is recognised when the services are rendered.

(d) Sales of properties

Revenue from sales of properties is only recognised when the significant risks and rewards of ownership have been transferred to the buyer. The Group considers that the significant risks and rewards of ownership are transferred when the buildings contracted for sale are completed and the relevant permits essential for the delivery of the properties have been issued by the authorities.

(e) Contract revenue

When the outcome of a construction contract can be estimated reliably, revenue from a fixed price contract is recognised using the percentage of completion method.

The Group measured the stage of completion by reference to the percentage of contract costs incurred to date to estimated total contract costs for the contract.

When the outcome of a construction contract cannot be estimated reliably, revenue is recognised only to the extent of contract costs incurred that it is probable will be recoverable.

(f) Rental income from operating leases

Rental income receivable under operating leases is recognised in profit or loss in equal instalments over the periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the use of the leased asset. Lease incentives granted are recognised in profit or loss as an integral part of the aggregate net lease payments receivable. Contingent rentals are recognised as income in the accounting period in which they are earned.

(g) Dividend income

Dividend income from unlisted investments is recognised when the shareholder’s right to receive payment is established. Dividend income from listed investments is recognised when the share price of the investment goes ex-dividend.

39 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(19) Government grants

Government grants are non-reciprocal transfers of monetary or non-monetary assets from the government to the Group except for capital contribution from the government in the capacity as an investor in the Group. Specific transfers from the government, such as investment grants that have been clearly defined in official documents as part of “capital reserve” are also dealt with as capital contributions, rather than government grants.

A government grant is recognised when there is reasonable assurance that the grant will be received and that the Group will comply with the conditions attaching to the grant.

If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a transfer of a nonmonetary asset, it is measured at fair value.

Government grants related to assets refer to government grants which are obtained by the Group for the purposes of purchase, construction or acquisition of the long-term assets. Government grants related to income refer to the government grants other than those related to assets.

Government grants related to assets are either deducted against the carrying amount of the assets, or recorded as deferred income and recognised in profit or loss on a systemic basis over the useful lives of the assets. Government grants related to income that compensate the future costs, expenses or losses are recorded as deferred income and recognised in profit or loss, or deducted against related costs, expenses or losses in reporting the related expenses; government grants related to income that compensate the incurred costs, expenses or losses are recognised in profit or loss, or deuducted against related costs, expenses or losses directly in current period. The Group applies the presentation method consistently to the similar government grants in the financial statements.

Government grants that are related to ordinary activities are included in operating profit, otherwise, they are recorded in non-operating income or expenses.

For the policy loans with favourable interest rates, the Group records the loans at the actual amounts and calculates the interests by loan principals and the favourable interest rates. The interest subsidies directly received from government are recorded as a reduction of interest expenses.

40 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(20) Special reserve

The Group recognises a safety fund in the specific reserve pursuant to relevant government regulations, with a corresponding increase in the costs of the related products or expense. When the safety fund is subsequently used for revenue expenditure, the specific reserve is reduced accordingly. On utilisation of the safety production fund for fixed assets, the specific reserve is reduced as the fixed assets are recognised, which is the time when the related assets are ready for their intended use; in such cases, an amount that corresponds to the reduction in the specific reserve is recognised in accumulated depreciation. with respect to the related fixed assets. As a consequence, such fixed assets are not depreciated in subsequent periods.

(21) Borrowing costs

Borrowing costs incurred directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the asset.

Other borrowing costs are recognised as financial expenses when incurred.

41 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(21) Borrowing costs (Continued)

During the capitalisation period, the amount of interest (including amortisation of any discount or premium on borrowing) to be capitalised in each accounting period is determined as follows:

Where funds are borrowed specifically for the acquisition, construction or production of a qualifying asset, the amount of interest to be capitalised is the interest expense calculated using effective interest rates during the period less any interest income earned from depositing the borrowed funds or any investment income on the temporary investment of those funds before being used on the asset.
To the extent that the Group borrows funds generally and uses them for the acquisition, construction or production of a qualifying asset, the amount of borrowing costs eligible for capitalization is determined by applying a capitalisation rate to the weighted average of the excess amounts of cumulative expenditures on the asset over the above amounts of specific borrowings. The capitalisation rate is the weighted average of the interest rates applicable to the general-purpose borrowings.

The effective interest rate is determined as the rate that exactly discounts estimated future cash flow through the expected life of the borrowing or, when appropriate, a shorter period to the initially recognised amount of the borrowings.

During the capitalisation period, exchange differences related to the principal and interest on a specific-purpose borrowing denominated in foreign currency are capitalised as part of the cost of the qualifying asset. The exchange differences related to the principal and interest on foreign currency borrowings other than a specific-purpose borrowing are recognised as a financial expense when incurred.

The capitalisation period is the period from the date of commencement of capitalisation of borrowing costs to the date of cessation of capitalisation, excluding any period over which capitalization is suspended. Capitalisation of borrowing costs commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities of acquisition, construction or production that are necessary to prepare the asset for its intended use or sale are in progress, and ceases when the assets become ready for their intended use or sale. Capitalisation of borrowing costs is suspended when the acquisition, construction or production activities are interrupted abnormally for a period of more than three months.

(22) Hedging

Hedge accounting recognises the offsetting effects on profit or loss of changes in the fair values of the hedging instrument and the hedged item. The Group assesses and documents whether the financial instruments that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items attributable to the hedged risks both at hedge inception and on an ongoing basis. The Group discontinues prospectively hedge accounting when (a) the hedging instrument expires or is sold, terminated or exercised; (b) the hedge no longer meets the criteria for hedge accounting; or (c) the Group revokes the designation.

42 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(22) Hedging (Continued)
(a) Cash flow hedge

Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable forecast transaction, or the foreign currency risk of a committed future transaction, the effective part of any gain or loss on remeasurement of the derivative financial instrument to fair value is recognised in other comprehensive income and accumulated separately in equity in the hedging reserve. The ineffective portion of any gain or loss is recognised immediately in profit or loss.

If the hedge of a forecast transaction subsequently results in the recognition of a nonfinancial asset or non-financial liability, the associated gain or loss is reclassified from equity to be included in the initial cost or other carrying amount of the non-financial asset or liability.

If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gain or loss is reclassified from equity to the profit or loss in the same period or periods during which the asset acquired or liability assumed affects the profit or loss (such as when interest income or expense is recognised).

For cash flow hedges, other than those covered by the preceding two policy statements, the associated gain or loss is reclassified from equity to profit or loss in the same period or periods during which the hedged forecast transaction affects profit or loss.

When a hedging instrument expires or is sold, terminated or exercised, or the Group revokes designation of the hedge relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity until the transaction occurs and is recognised in accordance with the above policy. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss is reclassified from equity to profit or loss immediately.

43 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(22) Hedging (Continued)
(b) Fair value hedge

A fair value hedge seeks to offset risks of changes in the fair value of recognised asset or liability that will give rise to a gain or loss being recognised in profit or loss. The hedging instrument is measured at fair value, with fair value changes recognised in profit or loss. The carrying amount of the hedged item is adjusted by the amount of the changes in fair value of the hedging instrument attributable to the risk being hedged. This adjustment is recognised in profit or loss to offset the effect of the gain or loss on the hedging instrument.

When a hedging instrument expires or is sold, terminated or exercised, the hedge no longer meets the criteria for hedge accounting, or the Group revokes designation of the hedge relationship, any adjustment up to that point, to a hedged item for which the effective interest method is used, is amortised to profit or loss as part of the recalculated effective interest rate of the item over its remaining life.

In order to qualify for hedge accounting, the Group carries out prospective effectiveness testing to demonstrate that it expects the hedge to be highly effective at the inception of the hedge and throughout its life. Actual effectiveness (retrospective effectiveness) is also demonstrated on an ongoing basis.

The documentation of each hedging relationship sets out how the effectiveness of the hedge is assessed. The method which the Group adopts for assessing hedge effectiveness will depend on its risk management strategy.

For fair value hedge relationships, the Group utilises the cumulative dollar offset method or regression analysis as effectiveness testing methodologies. For cash flow hedge relationships, the Group utilises the change in variable cash flow method or the cumulative dollar offset method using the hypothetical derivative approach.

For prospective effectiveness, the hedging instrument must be expected to be highly effective in achieving offsetting changes in fair value or cash flows attributable to the hedged risk during the period for which the hedge is designated. For actual effectiveness, the changes in fair value or cash flows must offset each other in the range of 80 percent to 125 percent for the hedge to be deemed effective.

44 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(23) Fiduciary activities

The Group acts in a fiduciary capacity as a custodian, trustee, or an agent for customers. Assets held by the Group and the related undertakings to return such assets to customers are excluded from the financial statement as the risks and rewards of the assets reside with the customers.

Entrusted lending is the business where the Group enters into entrusted loan agreements with customers, whereby the customers provide funding (the “entrusted funds”) to the Group, and the Group grants loans to third parties (the “entrusted loans”) at the instruction of the customers. As the Group does not assume the risks and rewards of the entrusted loans and the corresponding entrusted funds, entrusted loans and funds are recorded as offbalance sheet items at their principal amounts and no impairment assessments are made for these entrusted loans.

(24) Profit distributions

Distributions of profit proposed in the profit appropriation plan to be approved after the balance sheet date are not recognised as a liability at the balance sheet date but are disclosed in the notes separately.

(25) Related parties
(a) A person, or a close member of that person’s family, is related to the Group if that person:
has control or joint control over the Group;
has significant influence over the Group; or
is a member of the key management personnel of the Group or the Group’s parent.
45 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(25) Related parties(continued)
(b) An entity is related to the Group if any of the following conditions applies:
The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
Both entities are joint ventures of the same third party.
One entity is a joint venture of a third entity and the other entity is an associate of the third entity (one entity is an associate of a third entity and the Group is a joint venture of the third party).
The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group.
The entity is controlled or jointly controlled by a person identified in (a).
A person identified in (a) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

(26) Segment reporting

Reportable segments are identified based on operating segments which are determined based on the structure of the Group’s internal organisation, management requirements and internal reporting system. An operating segment is a component of the Group that meets the following respective conditions:

engage in business activities from which it may earn revenues and incur expenses;
whose operating results are regularly reviewed by the Group’s management to make decisions about resource to be allocated to the segment and assess its performance; and
for which financial information regarding financial position, results of operations and cash flows are available.
46 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(26) Segment reporting(continued)

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of:

the nature of each products and service;
the nature of production processes;
the type or class of customers;
the methods used to distribute products or provide services; and
the nature of the regulatory environment.

Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segment reporting, and segment accounting policies are consistent with those for the consolidated financial statements.

(27) Significant accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the actual results. The estimates and associated key assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Note 6(13) and 6(17) contain information about the assumptions and their risk factors relating to valuation of impairment of goodwill and the estimated fair value of investment properties. Other key sources of estimation uncertainty are as follows:

(a) Impairment losses on loans and advances to customers and other parties and investment classified as receivables

Loans and advances to customers and other parties

The Group reviews its loans and advances to customers and other parties to assess impairment on a periodic basis during the year. In determining whether an impairment loss should be recognised in the consolidated income statement, the Group makes estimates and judgements as to whether there is any observable data indicating that there is objective evidence of impairment and the extent, if any, to which it will have a measurable decrease in the estimated future cash flows related to individually assessed loans and advances or pools of loans and advances to customers and other parties with similar risk characteristics, as described in Note 3(13)(a) impairment of financial assets carried at amortised cost.

47 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(27) Significant accounting estimates and judgements (Continued)
(a) Impairment losses on loans and advances to customers and other parties and investment classified as receivables (Continued)

Loans and advances to customers and other parties (Continued)

Significant judgments are made in the determination of whether objective evidence of impairment exists in individually assessed loans and advances to customers and other parties or pools of loans and advances to customers and other parties with similar risk characteristics. Among other things, objective evidence of impairment includes deterioration in the financial condition of specific borrowers (or specific pools of borrowers) affecting their ability to meet their loan payment obligations, overdue status, financial position of guarantors, latest collateral valuations, concession the Group that would not otherwise be granted to borrowers for economic or legal reasons relating to their financial difficulties, as well as increasing industry sector over-capacity or obsolescence, or deterioration in national or regional economic conditions that are correlated to increasing loans and advances to customers and other parties defaults. These judgments are made both during management’s regular assessments of credit quality of loans and advances to customers and other parties and when other circumstances indicate the possibility that objective evidence of impairment may exist.

Where it is determined that objective evidence of impairment exists, significant judgments and estimates are made in estimating the adverse impact on future cash flows related to individually assessed impaired loans and advances to customers and other parties. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience. Factors affecting these estimates include the availability and granularity of information related to specific borrowers; the results of regulatory reviews and the related portfolio analysis, and the clarity of the correlation between qualitative factors, such as industry sector performance or changes in regional economic conditions and loans and advances to customer’s defaults of related borrowers.

Corporate loans and advances to customers and other parties not identified as impaired from individually assessments, together with all personal loans and advances to customers and other parties are included in in homogenous groups with similar credit risks characteristics for performance of impairment assessments on a collective basis. Migration model is used for corporate loans and roll rate models are used for personal loans considering the similarity of credit risks and applying key assumptions. Significant judgments are applied to the calculation of assessed impairment using these models. Critical factors affecting these judgments include modelling assumptions (e.g., loss given default) and levels of correlation between qualitative factors and loans and advances to customers and other parties default. The collective impairment loss is assessed after taking into account: (i) historical loss experience in portfolios of similar credit risk characteristics; (ii) the emergence period between a loss occurring and that loss being identified; (iii) high risk products and geographic locations; and (iv) the current economic and credit environments and whether in management’s experience these indicate that the actual level of inherent losses is likely to be greater or less than that suggested by historical experience. The Group considers the impact of the changes and uncertainty in the macro-economic environment, in which the Group operates when assessing the methodologies and assumptions used for loss estimation, makes adjustments where appropriate.

48 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(27) Significant accounting estimates and judgements (Continued)
(a) Impairment losses on loans and advances to customers and other parties and investment classified as receivables(Continued)

Investment classified as receivables

In determining whether an impairment loss should be recognised in the consolidated income statement, the Group makes significant estimates and judgments as to whether there is any observable data indicating that there is objective evidence of impairment and the extent, if any, to which it will have a measurable decrease in the estimated future cash flows related to individually significant investments classified as receivables by underlying assets or groups of underlying assets with similar risk characteristics, as described in Note 3(13)(a) Impairment of financial assets carried at amortised cost.

Where it is determined that objective evidence of impairment exists, significant judgments and estimates are made in estimating the adverse impact on future cash flows based on the underlying assets related to individually significant impaired investment classified as receivables.

Investments classified as receivables not identified as impaired from the individual assessment are included in groups with similar credit risk characteristics by underlying assets with the consideration of risk factors specific to different industries and different type of underlying assets, and assessed for impairment collectively. Significant judgments are applied to the calculation of collectively assessed impairment.

(b) Impairment of available-for-sale equity investments

For available-for-sale equity investments, a significant or prolonged decline in fair value below cost is considered to be objective evidence of impairment. Judgement is required when determining whether a decline in fair value has been significant or prolonged. In making this judgement, the Group considers historical data of market volatility and historical share price of the specific equity investment as well as other factors, such as sector performance, and financial information regarding the investee.

As described in Note 3(4), the Group reviews the carrying amounts of inventories at each balance sheet date to determine whether the inventories are carried at lower of cost and net realisable value. The Group estimates the net realisable value, based on the current market situation and historical experience on similar inventories. Any change in the assumptions would increase or decrease the amount of inventories write-down or the related reversals of write-down. The change in the write-down would affect the Group’s profit or loss during the year.

(d) Impairment of non-financial assets

As described in Note 3(13)(b), assets such as fixed assets and intangible assets are reviewed at each balance sheet date to determine whether the carrying amount exceeds the recoverable amount of the assets. If any such indication exists, an impairment loss is recognised.

49 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(27) Significant accounting estimates and judgements (Continued)
(d) Impairment of non-financial assets (Continued)

The recoverable amount of an asset (asset group) is the greater of its fair value less costs to sell and its present value of expected future cash flows. Since a market price of the asset (the asset group) cannot be obtained reliably, the fair value of the asset cannot be estimated reliably. In assessing value in use, significant judgements are exercised over the asset’s production, selling price, related operating expenses and discount rate to calculate the present value. All relevant materials which can be obtained are used for estimation of the recoverable amount, including the estimation of the production, selling price and related operating expenses based on reasonable and supportable assumptions.

(e) Depreciation and amortisation of fixed assets and intangible assets

As described in Notes 3(7) and Note 3(9), fixed assets and intangible assets are depreciated and amortised over their useful lives after taking into account residual value. The useful lives of the assets are regularly reviewed to determine the depreciation and amortisation costs charged in each reporting period. The useful lives of the assets are determined based on historical experience of similar assets and the estimated technical changes. If there have been significant changes in the factors used to determine the depreciation or amortisation, the rate of depreciation or amortisation is revised prospectively.

(f) Fair value of financial instruments

For financial instruments without active market, the Group determines fair values using valuation techniques which include discounted cash flow models, as well as other types of valuation models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, credit spreads and foreign currency exchange rates. Where discounted cash flow techniques are used, estimated cash flows are based on management’s best estimates and the discount rate used is a market rate at the end of each reporting period applicable for an instrument with similar terms and conditions. Where other pricing models are used, inputs are based on observable market data at the end of each reporting period. However, where market data are not available, management needs to make estimates on such unobservable market inputs. based on assumptions. Changes in assumptions about these factors could affect the estimated fair value of financial instruments.

(g) Income taxes

Significant judgement is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

50 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(27) Significant accounting estimates and judgements (Continued)
(g) Income taxes (Continued)

Deferred tax assets, which principally relate to tax losses and deductible temporary differences, are recognised when the future taxable profit will be available against such deferred tax assets. Hence, it requires formal assessment by management regarding the future profitability to utilise the deferred tax assets.

(h) Assets acquired/liabilities assumed in business combination

Assets acquired/liabilities assumed in business combination are recognised at fair value in connection with the Group’s acquisition of an entity. The fair values of the acquired assets/assumed liabilities are determined based on valuation methodologies and techniques that involved the use of a third-party valuation firm’s expertise. The judgements and assumptions used in that valuation of assets and liabilities along with the assumptions on the useful lives of acquired assets have an effect on the consolidated financial statements.

(i) De-recognition of financial assets

In its normal course of business, the Group transfers financial assets through various types of transactions including regular way sales and transfers, securitisation, financial assets sold under repurchase agreements, and etc. The Group applies significant judgement in assessing whether it has transferred these financial assets which qualify for a full or partial de-recognition.

Where the Group enters into structured transactions by which it transferred financial asset to structured entities, the Group analyses whether the substance of the relationship between the Group and these structured entities indicates that it controls these structured entities to determine whether the Group needs to consolidate these structured entities. This will determine whether the following de-recognition analysis should be conducted at the consolidated level or at the entity level from which the financial assets was transferred.

The Group analyses the contractual rights and obligations in connection with such transfers to determine whether the de-recognition criteria are met based on the following considerations.

whether it has transferred the rights to receive contractual cash flows from the financial assets or the transfer qualified for the “pass through” of those cash flows to independent third parties;
the extent to which the associated risks and rewards of ownership of the financial assets are transferred by using appropriate models. Significant judgment is applied in the Group’s assessment with regard to the parameters and assumptions applied in the models, estimated cash flows before and after the transfers, the discount rates used based on current market interest rates, variability factors considered and the allocation of weightings in different scenarios;
where the Group neither retained nor transferred substantially all of the risks and rewards associated with their ownership, the Group analyses whether the Group has relinquished its controls over these financial assets, and if the Group has continuing involvement in these transferred financial assets.
51 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

3 Significant accounting policies and accounting estimates (Continued)

(27) Significant accounting estimates and judgements (Continued)
(j) Consolidation of structured entities

The Group makes significant judgment to assess whether or not to consolidate structured entities. When performing this assessment, the Group:

assesses its contractual rights and obligations in light of the transaction structures, and evaluates the Group’s power over the structured entities;
performs independent analyses and tests on the variable returns from the structured entities, including but not limited to commission income and asset management fees earned, retention of residual income, and, if any, liquidity and other support provided to the structured entities; and
assesses its ability to exercise its power to influence the variable returns assessed whether the Group acts as a principal or an agent through analysis of the scope of the Group’s decision-making authority, remuneration entitled, other interests the Group holds, and the rights held by other parties.
52 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

4 Taxation

(1) The types of taxes applicable to the Group’s sale of goods and rendering of services include value added tax (“VAT”) and land appreciation tax.

Tax Name	Tax basis
VAT	Output VAT is 3-17% of product sales and taxable services
	revenue, based on tax laws. The remaining balance of output
	VAT, after subtracting the deductible input VAT of the period,
	is VAT payable
Land appreciation tax	Appreciation amount in transferring property and applicable tax
	rate

(2) The statutory income tax rate of the Company for the year ended 31 December 2017 is 25% (2016: 25%).

Except for certain subsidiaries of the Group which are entitled to preferential tax treatment, the statutory income tax rate applicable to the Group’s other domestic subsidiaries for the year ended 31 December 2017 is 25% (2016: 25%).

Taxation for other overseas subsidiaries is charged at the rates of taxation prevailing in the countries / jurisdiction in which the overseas subsidiaries operate.

(3) Taxes payable

The Group

Income tax payable VAT unpayable Others	31 December 2017 8,088,933 4,277,096 726,042 13,092,071	31 December 2016 (Restated) 6,667,796 2,976,345 778,513 10,422,654

53 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

5 Subsidiaries

(1) As at 31 December 2017, the consolidated financial statements included the following subsidiaries:

Name of subsidiary
Place of
registration
Principal
place of
business
Registered
principal activities
China CITIC Bank
Corporation Limited
Mainland
China
Mainland
China
Financial services
CITIC Trust Co., Ltd.
Mainland
China
Mainland
China
Financial services
CITIC Finance Company
Limited
Mainland
China
Mainland
China
Financial services
CITIC Metal Group Ltd.
Hong Kong
Hong Kong
Resources
and energy
CITIC Resources
Holdings Limited (note
(a))
Bermuda
Hong Kong
Resources
and energy
CITIC Australia Pty
limited
Australia
Australia
Resources
and energy
CITIC Kazakhstan LLP
Kazakhstan
Kazakhstan
Resources
and energy
CITIC Heavy Industries
Co., Ltd.
Mainland
China
Mainland
China
Manufacturing
CITIC Dicastal Co., Ltd.
Mainland
China
Mainland
China
Manufacturing
CITIC Construction
Company Limited
Mainland
China
Mainland
China
Engineering
construction
CITIC Engineering
Design and
Construction Company
Limited
Mainland
China
Mainland
China
Engineering
construction
CITIC Urban
Development &
Operation Co., Ltd.
Mainland
China
Mainland
China
Real estate
CITIC Heye Investment
Co., Ltd.
Mainland
China
Mainland
China
Real estate
CITIC Asset Operation
Co., Ltd.
Mainland
China
Mainland
China
Real estate
CITIC Capital Mansion
Co., Ltd.
Mainland
China
Mainland
China
Real estate
CITIC Building Property
Management Co., Ltd.
Mainland
China
Mainland
China
Real estate
CITIC Industrial
Investment Group
Corp., Ltd.
Mainland
China
Mainland
China
Infrastructure
CITIC Environment
Investment Group Co.,
Limited
Mainland
China
Mainland
China
Energy saving and
environmental
protection
China Zhonghaizhi
Corporation
Mainland
China
Mainland
China
General aviation
CITIC Investment
Holdings Limited
Mainland
China
Mainland
China
Investment and
holding
CITIC Asia Satellite
Holding Company
Limited (Note (b))
British
Virgin
Islands
Hong Kong
Information
industry
CITIC Press Corporation
Mainland
China
Mainland
China
Publishing
CITIC Holdings Co., Ltd.
Mainland
China
Mainland
China
Service
CITIC Tourism Group
Co., Ltd.
Mainland
China
Mainland
China
Service

Registered capital
Percentage of equity
attributable to the
Company direct /
indirect
In thousands Currency
48,934,797
RMB
65.39%
10,000,000
RMB
100%
2,820,000
RMB
100%
11,800,000
HKD
100%
500,000
HKD
59.5%
85,882
AUD
100%
10
USD
100%
4,339,419
RMB
67.27%
1,377,962
RMB
100%
6,637,000
RMB
100%
1,000,000
RMB
100%
7,860,000
RMB
100%
100,000
RMB
100%
200,000
RMB
100%
800,000
RMB
100%
27,400
RMB
100%
1,600,000
RMB
100%
4,000,000
RMB
100%
1,000,000
RMB
51.03%
928,000
RMB
100%
60,524
USD
100%
142,614
RMB
88.00%
650,000
RMB
100%
185,900
RMB
100%

54 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

5 Subsidiaries (Continued)

(1) As at 31 December 2017, the consolidated financial statements included the following subsidiaries (Continued) :

Note:

(a) CITIC Resources Holdings Limited (“CITIC Resources”) is directly held by the Group’s wholly-owned subsidiaries, CITIC Australia Pty Limited and Keentech Group Limited.
(b) CITIC Asia Satellite Holding Company Limited are directly held by the Group’s whollyowned subsidiary, CITIC Projects Management (HK) Limited.
(c) There is no significant difference between the shareholding and voting rights in the above subsidiaries, directly and indirectly, held by the Group.
(2)
Material non-controlling interests

Details of the Group’s subsidiaries that have material non-controlling interests (“NCI”) are set out below:

				Accumulated
	Proportion of			balances of NCI
	equity interest	Profit for 2017	Dividends paid to	at 31 December
Name of subsidiary	held by NCI	allocated to NCI	NCI during 2017	2017
CITIC Bank Corporation
Limited (“CITIC Bank”)	34.61%	15,912,750	294,435	173,966,208
CITIC Heavy Industries Limited
Corporation Limited (“CITIC
Heavy Industries”)	32.73%	44,891	4,244	2,501,878
CITIC Resources	40.50%	152,825	-	1,954,999
				Accumulated
	Proportion of			balances of NCI
	equity interest	Profit/(loss) for 2016	Dividends paid to	at 31 December
Name of subsidiary	held by NCI	allocated to NCI	NCI during 2016	2016
CITIC Bank	34.61%	14,829,868	156,092	136,521,135
CITIC Heavy Industries	32.73%	(499,620)	-	2,439,272
CITIC Resources	40.50%	109,640	-	1,643,625

55 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

Subsidiaries (Continued)

(2) Material non-controlling interests (Continued)

The following table sets forth the key financial information on the above-mentioned subsidiaries. Relevant figures represent amounts before intragroup offsetting conducted by the Group:

Listed in Total assets Total liabilities Operating income Net profit Total comprehensive income Cash flows from operating activities	CITIC Bank 2017 2016 Hong Kong and Shanghai 5,677,690,501 5,931,050,444 (5,265,258,195) (5,546,554,632) 156,507,388 153,781,177 42,566,062 41,786,459 31,923,868 37,061,606 54,073,807 218,811,233	CITIC Heavy Industries 2017 2016 Shanghai 19,710,794 19,774,273 (12,400,358) (12,556,642) 4,620,580 3,771,394 65,961 (1,565,134) 68,654 (1,565,704) 565,922 (713,720)	CITIC Resources
			2017 2016 Hong Kong 11,813,846 11,869,029 (6,842,731) (7,668,150) 3,125,341 2,527,385 420,341 294,254 1,202,553 505,153 638,835 208,239

56 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements

(1) Cash and deposits

The Group

Cash Bank deposits Balances with central banks (note (a)) - Statutory deposit reserve funds(note (b)) - Surplus deposit reserve funds (note (c)) - Fiscal deposits(note (d)) - Foreign exchange reserves(note (e)) Deposits with banks and non-bank financial institutions Less: allowance for impairment losses on deposits with banks and non-bank financial institutions(Note6(20))	31 December 2017 6,765,238 21,902,525 464,305,589 89,288,020 4,082,783 5,445,741 155,816,904 - 747,606,800	31 December 2016 (Restated) 7,499,625 26,338,272 465,816,681 58,854,588 3,568,225 18,865,324 229,480,476 (33,816) 810,389,375

Notes:

(a) The balances with central banks represent deposits placed with central banks by CITIC Bank and CITIC Finance Company Limited (“CITIC Finance”).
(b) CITIC Bank and CITIC Finance place statutory deposit reserves with the People’s Bank of China and overseas central banks where they have operations. The statutory deposit reserves are not available for use in their daily business.

As at 31 December 2017, the statutory deposit reserve placed by CITIC Bank with the People’s Bank of China was calculated at 15% (31 December 2016: 15%) of eligible RMB deposits for domestic branches of CITIC Bank and at 15% (31 December 2016: 15%) of eligible RMB deposits from overseas financial institutions respectively. In addition, CITIC Bank is required to deposit an amount equivalent to 5% (31 December 2016:5%) of its foreign currency deposits from domestic branch customers as statutory deposit reserve as at 31 December 2017.

As at 31 December 2017, the statutory RMB deposit reserve rate applicable to Zhejiang Lin’an CITIC Rural Bank Corporation Limited, a subsidiary of CITIC Bank, was at 9% (31 December 2016: 9%).

The amounts of statutory deposit reserve funds placed with the central banks of overseas countries are determined by respective jurisdictions. The statutory deposit reserve funds are interest bearing except for the foreign currency reserve funds deposits placed with The People’s Bank Of China.

As at 31 December 2017, the statutory deposit reserve placed by CITIC Finance with the People’s Bank of China was calculated at 7% (31 December 2016: 7%) of eligible RMB deposits from the customers of CITIC Finance. As at 31 December 2017, CITIC Finance is also required to deposit an amount equivalent to 5% (31 December 2016: 5%) of its foreign currency deposits from the customers as statutory deposit reserve.

57 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(1) Cash and deposits (Continued)

Notes： (Continued)

(c) The surplus deposit reserve funds are maintained with the People’s Bank of China for the purposes of clearing.
(d) Fiscal deposits placed with the People’s Bank of China that are not available for use in the Group’s daily operations, and are non-interest bearing.
(e) The foreign exchange reserve is maintained with the People’s Bank of China in accordance with the related notice issued by the People’s Bank of China on 31 August 2015. The reserve is payable on a monthly basis at 20% (31 December 2016: 20%) of the total contract amount of customers driven forward transactions in the previous month. Such foreign exchange reserve is non-interest bearing and will be repayable in 12 months. According to the notice issued by the People’s Bank of China on 11 September 2017, the rate of the foreign exchange reserve for forward transactions has been reduced to 0%. The foreign exchange reserve remained in the account will be released on maturity.
(f) In addition to the statutory deposit reserve funds, fiscal deposits and foreign exchange reserves, RMB 956 million (31 December 2016: RMB 4,583 million) included in cash and deposits as at 31 December 2017 are restricted in use. They mainly include guaranteed deposits.

The Company

31 December 2017 Cash 52 Bank deposits 19,200,954 19,201,006 Placements with banks and non-bank financial institutions The Group 31 December 2017 Banks 53,004,334 Non-bank financial institutions 118,646,734 171,651,068 Less: allowance for impairment losses(Note 6(20)) (685) 171,650,383	31 December 2016 3 15,857,706 15,857,709 31 December 2016 28,923,666 138,292,923
	167,216,589 (8,698) 167,207,891

(2) Placements with banks and non-bank financial institutions
58 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(3) Financial assets at fair value through profit or loss

The Group Held for trading purpose - Debt trading financial assets - Investment funds - Certificates of interbank deposit - Trading equity investments Financial assets designated at fair value through profit or loss - Debt securities - Equity investment - Others The Company Held for trading purpose - Investment funds - Trading equity investments Financial assets designated at fair value through profit or loss - Others	31 December 2017 38,728,712 4,885,321 19,400,437 147,127 63,161,597 3,251,724 6,165,336 3,276,763 12,693,823 75,855,420 31 December 2017 812,470 13,344 825,814 1,019,379 1,845,193	31 December 2016 9,630,301 2,305,048 50,699,053 169,143
		62,803,545 4,580,546 - 2,225,440
		6,805,986
		69,609,531
		31 December 2016 320,082 13,488
		333,570 2,169,195
		2,502,765

59 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(4) Derivative financial instruments

The Group’s subsidiaries under the financial services segment act as an intermediary to offer derivative products including forwards and swap of interest rate and currency to its customers. These derivative positions are managed through entering back-to-back deals with external parties to ensure the remaining exposures are within acceptable risk levels. Meanwhile, derivatives are also used for proprietary trading purposes.

Subsidiaries under non-financial services segment of the Group enter into forward and swap contracts to hedge their exposure to fluctuations in foreign exchange rates, commodity prices and interest rates.

The following tables and notes provide an analysis of the nominal amounts of derivatives and the corresponding fair values as at the balance sheet date. The nominal amounts of the derivatives indicate the volume of transactions outstanding at the balance sheet date; they do not represent amounts at risk. Hedging instruments are derivatives qualified for hedge accounting, and non-hedging instruments are derivatives not qualified for hedge accounting.

60 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(4) Derivative financial instruments (Continued)

The Group

31 December 2017 Nominal amount Assets Liabilities Nominal amount Hedging instruments Fair value hedge (note (c)(i)): - Interest rate derivatives 9,798,813 122,817 18,162 14,067,694 - Currency derivatives - - - - Cash flow hedge (note (c)(ii)): - Currency derivatives 212,797 1,942 - 170,046 - Other derivatives 1,291,960 750,129 7,985 48,045 Non-hedging instruments - Interest rate derivatives 1,632,189,348 2,429,635 2,293,337 842,386,891 - Currency derivatives 3,347,854,744 62,030,254 62,540,630 2,612,556,583 - Precious metals derivatives 51,585,798 868,267 257,263 77,385,000 - Other derivatives 13,363,884 - 177,877 - 5,056,297,344 66,203,044 65,295,254 3,546,614,259 Nominal amount analysed by remaining maturity 31 December 2017 Within 3 months 1,868,921,105 Between 3 months and 1 year 2,765,274,670 Between 1 and 5 years 419,295,232 Over 5 years 2,806,337 5,056,297,344		31	December 2016
			Assets Liabilities 201,394 22,868 - - 5,176 806 49,234 8,485 3,164,061 2,790,131 42,415,675 40,045,452 1,768,474 2,200,706 - - 47,604,014 45,068,448 31 December 2016 962,638,416 2,298,020,271 283,656,953 2,298,619 3,546,614,259

(a) Nominal amount analysed by remaining maturity

The remaining term to maturity of derivatives does not represent the Group’s intended holding period.

61 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(4) Derivative financial instruments (Continued)
(b) Credit risk weighted amounts

The credit risk weighted amounts are solely in connection with the derivatives held by CITIC Bank, and have been computed in accordance with “Regulation Governing Capital of Commercial Banks (provisional)” promulgated by the China Banking Regulatory Commission in the year of 2012, and depends on the status of the counterparties and the maturity characteristics of the instruments including those customer-driven back-to-back transactions. As at 31 December 2017, the credit risk weighted amount for counterparty was RMB 70,217 million (31 December 2016: RMB 37,134 million).

(c) Derivatives designated as hedging instruments
(i) Fair value hedge

Fair value hedge is adopted to hedge the risk that a financial instrument’s fair value will fluctuate because of changes in market interest rates or foreign exchange rates by using interest rate swaps or foreign currency forward contracts.

(ii) Cash flow hedge

Cash flow hedge is adopted to hedge the risk that a financial instrument’s cash flows will fluctuate because of changes in market interest rates, foreign exchange rates or commodity price by using foreign currency forward contracts, commodity forward contracts or interest rate swaps.

62 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(5) Trade and other receivables

The Group Bills receivables (note (a)) Trade receivables (note (b)) Prepayments (note (c)) Other receivables (note (d)) Dividends receivables Interest receivables Long term receivables The Company Other receivables (note (d)) Amounts due from subsidiaries Dividends receivables Interest receivables	31 December 2017 1,861,968 17,008,197 5,849,801 45,008,204 259,173 33,158,360 9,718,729 112,864,432 31 December 2017 4,418,123 24,811,716 1,842,610 386,973 31,459,422	31 December 2016 (Restated) 1,261,971 16,825,809 13,058,543 44,484,846 80,387 33,490,267 7,747,154 116,948,977 31 December 2016 14,220,031 9,687,101 2,157,143 529,086 26,593,361

63 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(5) Trade and other receivables (Continued) (a) Bills receivables The Group Bank acceptance bills Commercial acceptance bills (b) Trade receivables	31 December 2017 1,734,425 127,543 1,861,968	31 December 2016 (Restated) 1,056,840 205,131 1,261,971

The ageing analysis of trade receivables is as follows: The Group 31 December 2017 Within 1 year (inclusive) 14,905,973 Between 1 and 2 years (inclusive) 2,017,450 Between 2 and 3 years (inclusive) 1,319,016 Over 3 years 1,156,488 19,398,927 Less: allowance for impairment losses (2,390,730) 17,008,197	31 December 2016 (Restated) 13,431,956 2,182,298 870,806 1,475,057
	17,960,117 (1,134,308) 16,825,809

64 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(5) Trade and other receivables (Continued)
(b) Trade receivables (Continued)

Trade receivables by customer type:

The Group

Related parties Other customers Less: allowance for impairment losses	31 December 2017 236,964 19,161,963 19,398,927 (2,390,730) 17,008,197	31 December 2016 (Restated) 280,614 17,679,503
		17,960,117 (1,134,308) 16,825,809

An analysis of the movements in provisions for impairment of trade receivables for the year is as follows:

The Group

Balance at the beginning of the year Charge Reversal Write-off Disposal of subsidiaries Exchange differences Balance at the end of the year	2017 1,134,308 1,701,102 (67,003) (38,423) (351,227) 11,973 2,390,730	2016 848,680 404,870 (18,225) (6,301) (91,973) (2,743) 1,134,308

65 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(5) Trade and other receivables (Continued)
(c) Prepayments

The ageing analysis of prepayments is as follows:

The Group

Within 1 year (inclusive) Between 1 and 2 years (inclusive) Between 2 and 3 years (inclusive) Over 3 years Less: allowance for impairment losses Prepayments by customer type: The Group Related parties Other customers Less: allowance for impairment losses	31 December 2017 5,024,378 331,187 333,932 220,303 5,909,800 (59,999) 5,849,801 31 December 2017 9,440 5,900,360 5,909,800 (59,999) 5,849,801	31 December 2016 (Restated) 12,080,563 487,510 503,492 379,725
		13,451,290 (392,747) 13,058,543 31 December 2016 (Restated) 1,055 13,450,235
		13,451,290 (392,747) 13,058,543

66 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(5) Trade and other receivables (Continued)
(d) Other receivables

The ageing analysis of other receivables is as follows:

The Group

Within 1 year (inclusive) Between 1 and 2 years (inclusive) Between 2 and 3 years (inclusive) Over 3 years Less: allowance for impairment losses The Company Within 1 year (inclusive) Between 1 and 2 years (inclusive) Between 2 and 3 years (inclusive) Over 3 years Less: allowance for impairment losses	31 December 2017 36,293,672 9,053,686 1,924,662 822,611	31 December 2016 (Restated) 36,898,979 6,416,589 981,457 811,771
	48,094,631 (3,086,427) 45,008,204 31 December 2017 - 4,418,123 - 6,699	45,108,796 (623,950)
		44,484,846
		31 December 2016 13,838,075 - 381,956 6,699
	4,424,822 (6,699) 4,418,123	14,226,730 (6,699) 14,220,031

67 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(5) Trade and other receivables (Continued)

(d) Other receivables (Continued) Other receivables by customer type: The Group Related parties Other customers Less: allowance for impairment losses The Company Related parties Other customers Less: allowance for impairment losses	31 December 2017 20,830,347 27,264,284 48,094,631 (3,086,427) 45,008,204 31 December 2017 4,418,123 6,699 4,424,822 (6,699) 4,418,123	31 December 2016 (Restated) 19,838,031 25,270,765
		45,108,796 (623,950)
		44,484,846
		31 December 2016 14,220,031 6,699
		14,226,730 (6,699) 14,220,031

68 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)
(5) Trade and other receivables (Continued)
(d) Other receivables (Continued)

An analysis of the movements in provisions for impairment of other receivables for the year is as follows:

The Group

Balance at the beginning of the year Charge Reversal Write-off Disposal of subsidiaries Exchange differences Balance at the end of the year	2017 623,950 2,655,527 (121,900) (11,251) (60,357) 458 3,086,427	2016 742,903 830,044 (218,101) (416,301) (313,813) (782) 623,950

69 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(5) Trade and other receivables (Continued)
(d) Other receivables (Continued)

An analysis of the movements in provisions for impairment of other receivables for the year is as follows (Continued):

The Company

Balance at the beginning of the year Charge Balance at the end of the year	2017 6,699 - 6,699	2016 6,699 - 6,699

(6) Inventories
(a) An analysis of the movements in inventories for the year is as follows:

The Group

Raw materials Work-in-progress Finished goods Properties Engineering construction Others Less: provision for decline in value of inventories (Note 6(20))	Balance at the beginning of 2017 (Restated) 1,214,257 2,906,938 6,432,900 7,863,138 2,551,969 834,752 21,803,954 (2,367,863) 19,436,091	Additions 9,995,481 21,878,181 86,768,307 513,221 3,427 605,323 119,763,940 (168,456) 119,595,484	Disposal of subsidiaries (546) (270,883) (271,429) (271,429)	Reductions (9,507,861) (21,521,039) (83,535,048) (3,022,466) (1,033,916) (670,784) (119,291,114) 895,598 (118,395,516)	Exchange differences and others 37,382 (13,562) (551,803) - - (44,323) (572,306) 48,037 (524,269)	Balance at the end of 2017 1,739,259 3,250,518 9,113,810 5,083,010 1,521,480 724,968
						21,433,045 (1,592,684) 19,840,361

70 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(6) Inventories (Continued)
(a) An analysis of the movements in inventories for the year is as follows (Continued) :

Raw materials Work-in-progress Finished goods Properties Engineering construction Others Less: provision for decline in value of inventories (Note 6(20))	Balance at the beginning of 2016 (Restated) 984,730 2,813,550 5,055,741 73,386,265 3,359,615 754,772 86,354,673 (2,955,040) 83,399,633	Additions 5,354,570 15,711,173 110,510,733 12,875,340 1,200,133 445,332 146,097,281 (474,966) 145,622,315	Disposal of subsidiaries - - (19,914) (76,584,779) - - (76,604,693) 336,222 (76,268,471)	Reductions (5,136,341) (15,620,537) (109,222,368) (1,830,228) (2,007,779) (365,354) (134,182,607) 766,117 (133,416,490)	Exchange differences and others 11,298 2,752 108,708 16,540 - 2 139,300 (40,196) 99,104	Balance at the end of 2016 (Restated) 1,214,257 2,906,938 6,432,900 7,863,138 2,551,969 834,752
						21,803,954 (2,367,863) 19,436,091

(b) An analysis of provision for decline in value of inventories of the Group is as follows:

The Group

Raw materials Work-in- progress Finished goods Properties Engineering construction Others	Balance at the beginning of 2017 (Restated) 70,409 142,057 1,013,689 304,795 808,802 28,111 2,367,863	Charge for the year 6,648 9,617 43,788 107,592 - 811 168,456	Writtenback Reversal Write-off - (5,996) (5,485) (37,161) (14,041) (22,365) - (1,748) (800,489) (8,313) - - (820,015) (75,583)	Disposal of subsidiaries - - - - - - -	Exchange differences and others (1,918) - (46,119) - - - (48,037)	Balance at the end of 2017 69,143 109,028 974,952 410,639 - 28,922 1,592,684
			Reversal - (5,485) (14,041) - (800,489) - (820,015)

71 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(6) Inventories (Continued)

(b) An analysis of provision for decline in value of inventories of the Group is as follows (Continued) :

Raw materials Work-in- progress Finished goods Properties Engineering construction Others	Balance at the beginning of 2016 (Restated) 9,272 12,748 859,539 561,382 1,488,349 23,750 2,955,040	Charge for the year 60,636 130,752 161,186 109,161 8,313 4,918 474,966	Writtenback Reversal Write-off (19) (914) - (1,443) (25,561) (20,237) (29,526) - (687,860) - - (557) (742,966) (23,151)	Disposal of subsidiaries - - - (336,222) - - (336,222)	Exchange differences and others 1,434 - 38,762 - - - 40,196	Balance at the end of 2016 70,409 142,057 1,013,689 304,795 808,802 28,111 2,367,863
			Reversal (19) - (25,561) (29,526) (687,860) - (742,966)

As at 31 December 2017, the Group’s inventories include an amount of RMB 5,749 million expected to be recovered after more than one year (31 December 2016: RMB8,782 million).

72 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(7) Financial assets held under resale agreements

The Group 31 December 2017 Securities 54,625,933 Discounted bills - Others - 54,625,933 Loans and advances to customers and other parties The Group 31 December 2017 Corporate loans: - Loans 1,824,892,909 - Discounted bills 108,827,499 - Finance lease receivables 45,258,755 1,978,979,163 Personal loans: - Residential mortgages 505,304,732 - Business loans 166,015,074 - Credit cards 333,718,978 - Personal consumption 226,544,900 1,231,583,684 3,210,562,847 Less: allowance for impairment losses (Note 6(20))(note (c)) - Individually assessed (32,206,582) - Collectively assessed (62,550,095) (94,756,677) 3,115,806,170	31 December 2016 173,156,918 - 34,068 173,190,986 31 December 2016 (Restated) 1,820,216,743 75,093,134 34,509,149
	1,929,819,026 433,209,680 111,948,736 237,711,838 173,735,169
	956,605,423
	2,886,424,449
	(28,839,082) (50,428,279)
	(79,267,361)
	2,807,157,088

(8) Loans and advances to customers and other parties
73 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(8) Loans and advances to customers and other parties (Continued)

The Company Corporate loans Less: allowance individually assessed (a) Analysed by type of security The Group Unsecured loans Guaranteed loans Secured loans - Loans secured by collateral - Pledged loans Discounted bills The Company Unsecured loans Secured loans - Pledged loans	31 December 2017 9,243,040 (377,281) 8,865,759 31 December 2017 713,262,557 516,827,835 1,510,605,360 361,039,596 3,101,735,348 108,827,499 3,210,562,847 31 December 2017 8,684,919 558,121 9,243,040	31 December 2016 11,457,452 (413,450) 11,044,002 31 December 2016 (Restated) 552,353,479 507,235,505 1,416,853,305 334,889,026
		2,811,331,315 75,093,134
		2,886,424,449
		31 December 2016 11,381,352 76,100 11,457,452

74 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)
(8) Loans and advances to customers and other parties (Continued)
(b) Analysis by assessment method of allowance for impairment losses

The Group

31 December 2017 Gross loans and advances Less: Allowance for impairment losses 31 December 2016 (Restated) Gross loans and advances Less: Allowance for impairment losses	Loans and advances for which allowance is collectively assessed 3,153,198,129 (53,574,477) 3,099,623,652 2,834,314,042 (42,321,662) 2,791,992,380	Impaired loans and advances(note(i)) for which allowance is collectively assessed for which allowance is individually assessed 11,393,359 45,971,359 (8,975,618) (32,206,582) 2,417,741 13,764,777 10,578,802 41,531,605 (8,106,617) (28,839,082) 2,472,185 12,692,523	Total Gross impaired loans and advances as a % of gross total loans and advances 3,210,562,847 1.79% (94,756,677) 3,115,806,170 2,886,424,449 1.81% (79,267,361) 2,807,157,088
		for which allowance is collectively assessed 11,393,359 (8,975,618) 2,417,741 10,578,802 (8,106,617) 2,472,185

Notes:

(i) As at 31 December 2017, the loans and advances of the Group for which allowance was individually assessed amounted to RMB 45,971 million (31 December 2016: RMB41,532 million). As at 31 December 2017, the secured and unsecured portion of these loans and advances were RMB 27,777 million (31 December 2016: RMB22,591 million) and RMB 18,194 million (31 December 2016: RMB18,941 million), respectively. As at 31 December 2017, the fair value of pledge and collateral held against these loans and advances amounted to RMB 22,199 million (31 December 2016: RMB18,643 million). As at 31 December 2017, the allowance for impairment losses from individual assessment made against these loans and advances were RMB 32,207 million (31 December 2016: RMB28,839 million).
(ii) The fair value of pledge and collateral was estimated by management based on the latest available external valuations adjusted by taking into account the current realisation experience as well as market situation.
75 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)
(8) Loans and advances to customers and other parties (Continued)
(c) Movements of allowance for impairment losses

The Group

Loans and advances for which allowance is collectively assessed 42,321,662 11,382,199 (106,974) - - - (22,410) 53,574,477	Impairedloans and advances for which allowance is collectively assessed for which allowance is individually assessed 8,106,617 28,839,082 6,405,784 37,379,826 (1,062,531) (3,515,833) - (554,405) (5,539,926) (29,760,621) 1,066,046 400,401 (372) (581,868) 8,975,618 32,206,582	Total 79,267,361 55,167,809 (4,685,338) (554,405) (35,300,547) 1,466,447 (604,650)
	for which allowance is collectively assessed 8,106,617 6,405,784 (1,062,531) - (5,539,926) 1,066,046 (372) 8,975,618
		94,756,677
Loans and advances for which allowance is collectively assessed 39,656,154 2,737,157 (92,298) - - - 20,649 42,321,662	Impairedloansandadvances for which allowance is collectively assessed for which allowance is individually assessed 5,846,397 18,408,671 6,917,630 38,971,686 (405,093) (2,305,175) - (563,901) (4,657,777) (26,294,709) 405,093 166,414 367 456,096 8,106,617 28,839,082	Total 63,911,222 48,626,473 (2,802,566) (563,901) (30,952,486) 571,507 477,112 79,267,361
	for which allowance is collectively assessed 5,846,397 6,917,630 (405,093) - (4,657,777) 405,093 367 8,106,617

76 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)
(8) Loans and advances to customers and other parties (Continued)
(d) Analysis of overdue loans by overdue period

		31 December 2017
Overdue within 3 months 6,739,002 8,543,116 14,168,350 3,391,597 32,842,065	Overdue between 3 months and 1 year 7,623,825 9,741,426 13,614,024 2,200,558 33,179,833	Overdue between 1 year and 3 years 766,550 8,814,452 12,221,862 2,145,317 23,948,181 31 December 2016	Overdue over 3 years 424,267 1,464,675 471,879 195,806 2,556,627	Total 15,553,644 28,563,669 40,476,115 7,933,278
				92,526,706

Overdue within 3 months 3,984,642 7,776,182 22,688,438 1,592,323 36,041,585	Overdue between 3 months and 1 year 5,577,037 11,648,328 17,261,292 2,764,651 37,251,308	Overdue between 1 year and 3 years 2,749,053 7,136,784 8,825,956 1,046,102 19,757,895	Overdue over 3 years 299,790 114,557 670,716 62,194 1,147,257	Total 12,610,522 26,675,851 49,446,402 5,465,270 94,198,045

Overdue loans represent loans of which principal or interest are overdue one day or more.

77 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(9) Available-for-sale financial assets

The Group Debt securities Certificates of deposit and certificates of interbank deposit Wealth management products issued by financial institutions Equity investments Investment funds Less: allowance for impairment losses(Note 6(20)) The Company Wealth management products issued by financial institutions Equity investments Held-to-maturity investments The Group Debt securities Others Less: allowance for impairment losses(Note 6(20))		31 December 2017 473,572,734 40,947,824 20,856,461 10,976,530 122,440,428 668,793,977 (1,381,581) 667,412,396	31 December 2016 402,121,749 116,050,009 15,702,941 10,311,705 23,592,549
			567,778,953 (772,492)
			567,006,461
		31 December 2017 10,249,206 3,822,089 14,071,295 31 December 2017 218,635,786 67,000 218,702,786 - 218,702,786	31 December 2016 9,322,172 1,058,639 10,380,811 31 December 2016 218,367,902 27,000
			218,394,902 (1,766) 218,393,136

(10) Held-to-maturity investments

78 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(11) Investments classified as receivables

The Group Trust investment plans Investment management products managed by securities companies Wealth management products issued by financial institutions Others Less: allowance for impairment losses(Note 6(20))	31 December 2017 133,132,786 269,368,632 139,020,001 860,859 542,382,278 (3,397,121) 538,985,157	31 December 2016 130,236,204 455,412,542 458,390,001 1,159,480
		1,045,198,227 (1,908,652) 1,043,289,575

As at 31 December 2017, certain of the Group’s investments with an aggregate amount of RMB 97,023 million (31 December 2016: RMB147,499 million) were managed by certain subsidiaries and related parties of the Group.

The underlying assets of investment classified as receivables primarily include interbank assets and wealth management products issued by other banks, credit assets and rediscounted bills.

79 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(12) Long-term equity investments

The Group 31 December 2017 Investments in joint ventures (note (b)) 9,804,727 Investments in associates (note (c)) 51,975,219 61,779,946 Less: allowance for impairment losses (Note 6(20)) - Joint ventures (1,174,911) - Associates (1,973,696) (3,148,607) 58,631,339 The Company 31 December 2017 Investments in subsidiaries (note (a)) 184,501,169 Investments in joint ventures (note (b)) 3,563,727 Investments in associates (note (c)) 27,607,254 Less: impairment loss - Subsidiaries (662,271) 215,009,879 The Company’s investments in principal subsidiaries are as follows: 31 December 2017 CITIC Bank 120,142,372 CITIC Urban Development & Operation Co., Ltd. 7,860,000 CITIC Trust Co., Ltd. 13,281,374 CITIC Industrial Investment Group Corp., Ltd. 5,884,723 CITIC Heavy Industries 3,657,012 CITIC Environment Investment Group Co., Limited 3,453,584 Others 30,222,104 184,501,169	31 December 2016 7,623,863 47,726,629
	55,350,492 (1,256,948) (2,070,574)
	(3,327,522)
	52,022,970
	31 December 2016 183,664,011 3,197,296 25,504,039 (662,271) 211,703,075 31 December 2016 120,142,372 7,860,000 13,281,374 5,884,723 3,657,012 2,642,425 30,196,105 183,664,011

(a) The Company’s investments in principal subsidiaries are as follows:

Detailed information of the subsidiaries is set out in Note 5(1).

80 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(12) Long-term equity investments (Continued)

(b)	The Group’s and	the Company’s investments in joint ventures are as follows:	the Company’s investments in joint ventures are as follows:	the Company’s investments in joint ventures are as follows:	the Company’s investments in joint ventures are as follows:	the Company’s investments in joint ventures are as follows:	the Company’s investments in joint ventures are as follows:
	The Group
					31 December 2017		31 December 2016
	Material joint ventures (note		(i))			3,563,727		3,024,792
	Immaterial joint ventures (note (ii))					6,241,000		4,599,071
						9,804,727		7,623,863
	Less: allowance for impairment losses					(1,174,911)		(1,256,948)
						8,629,816		6,366,915
	The Company
					31 December 2017		31 December 2016
	Material joint ventures (note		(i))			3,563,727		3,024,792
	Immaterial joint ventures (note (ii))					-		172,504
						3,563,727		3,197,296
(i)	Details of material joint venture are as follows:
								Percentage
								of equity
								attributable
								to the
		Principal		Registered		Registered		Group
		place of	Place of		principal	capital in		direct /
	Name	business	registration		activities	thousands	Currency	indirect
	CITIC-
	Prudential
	Life
	Insurance Co.,
	Ltd. (“CITIC-			Insurance
	Prudential	Mainland	Mainland		and
	Life”)	China	China	reinsurance		2,360,000	RMB	50%

CITIC-Prudential Life is also the material joint ventures of the Company, which holds 50% equity interests in CITIC-Prudential Life.

81 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(12) Long-term equity investments (Continued)
(b) The Group’s and the Company’s investments in joint ventures are as follows (Continued) :

The following table sets out the key financial information of the Group’s material joint ventures, and the reconciliation of the key financial information to the carrying amount of the Group’s investments in joint ventures using the equity method:

Total assets Including: Cash and deposits Total liabilities Net assets Group’s share of net assets Others Carrying amount of investments in joint ventures Operating income Income tax expenses Net profit Other comprehensive income Total comprehensive income Dividends received from joint ventures during the year	CITIC-Prudential Life	CITIC-Prudential Life
	31 December 2017 64,305,504 2,262,411 (59,426,842) 4,878,662 2,439,331 1,124,396 3,563,727 14,113,850 (369,767) 1,051,151 26,719 1,077,870 -	31 December 2016 54,671,906 4,626,777 (50,871,114)
		3,800,792
		1,900,396 1,124,396
		3,024,792
		9,844,633 (213,857) 700,059 (217,210) 482,849 -

82 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(12) Long-term equity investments (Continued)
(b) The Group’s and the Company’s investments in joint ventures are as follows (Continued) :
(ii) Details of immaterial joint ventures accounted for using the equity method are summarised as follows:

The Group

Aggregate carrying amount of investments Aggregate amount of share of - Net profit - Other comprehensive (loss)/income - Total comprehensive income The Company Aggregate carrying amount of investments Aggregate amount of share of - Net profit - Other comprehensive income - Total comprehensive income	31 December 2017 5,066,089 457,891 (729) 457,162 31 December 2017 - 22,549 - 22,549	31 December 2016 3,342,123 537,984 733
		538,717
		31 December 2016 172,504 22,035 (4,936) 17,099

83 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(12) Long-term equity investments (Continued)
(c) The Group’s and the Company’s investments in associates are as follows:

The Group Material associates (note (i)) Immaterial associates (note (ii)) Less: allowance for impairment losses The Company Material associates (note (i)) Immaterial associates (note (ii))	31 December 2017 29,925,181 22,050,038 51,975,219 (1,973,696) 50,001,523 31 December 2017 25,819,832 1,787,422 27,607,254	31 December 2016 28,784,079 18,942,550
		47,726,629 (2,070,574)
		45,656,055
		31 December 2016 24,691,875 812,164 25,504,039

84 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(12) Long-term equity investments (Continued)
(c) The Group’s and the Company’s investments in associates are as follows (Continued) :
(i) Details of the Group’s material associates are as follows:

Name Principal place of business Place of registration Registered principal activities CITIC Securities Co., Ltd. (“CITIC Securities”)* Mainland China Mainland China Securities related services MMG South America Management Co., Ltd. (“MMG”) Hong Kong Hong Kong Resources and energy	Registered capital Percentage of equity attributable to the Group direct / indirect in thousands Currency 12,116,908 RMB 16.50% 3,618,000 USD 15.00%

CITIC Securities is also the material associates of the Company, which holds 16.50% equity interests in CITIC Securities.
85 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)
(12) Long-term equity investments (Continued)
(c) The Group’s and the Company’s investments in associates are as follows (Continued) :
(i) Details of the Group’s material associates are as follows (Continued) :

The following table sets out the key financial information of the Group’s material associates, and the reconciliation of the key financial information to the carrying amount of the Group’s investments in associates using the equity method:

CITIC Securities	CITIC Securities	MMG	MMG
31 December 2017 625,574,644 126,689,478 (472,432,085)	31 December 2016 597,438,839 166,589,812 (451,650,170)	31 December 2017 76,525,605 4,617,533 (49,156,614)	31 December 2016 80,913,988 1,662,105 (55,656,938)
153,142,559	145,788,669	27,368,991	25,257,050
24,716,843 1,102,989	23,773,145 1,222,376	4,105,349 -	3,788,558 -
25,819,832	24,995,521	4,105,349	3,788,558
36,115,713 43,291,634 - (4,196,311) 11,977,470 (220,466) 11,757,004 699,751	32,418,760 38,001,923 - (3,281,419) 10,981,140 (818,683) 10,162,457 999,848	- 19,871,836 (2,611,688) (2,022,367) 3,164,473 - 3,164,473 -	- 8,144,480 (1,141,117) (495,641) 1,030,534 - 1,030,534 -

CITIC Securities is listed on the Main Board of The Stock Exchange of Hong Kong Limited and Shanghai Stock Exchange.

86 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(12) Long-term equity investments (Continued)
(c) the Group’s and the Company’s investments in associates are as follows (Continued) :
(ii) Details of immaterial associates accounted for using the equity method are summarised as follows:

The Group

Aggregate carrying amount of investments Aggregate amount of share of - Net loss - Other comprehensive (loss)/income - Total comprehensive loss The Company Aggregate carrying amount of investments Aggregate amount of share of - Net profit/(loss) - Other comprehensive income/(loss) - Total comprehensive income/(loss)	31 December 2017 20,076,342 (660,072) (23,172) (683,244)	31 December 2016 16,871,976 (538,729) 288,964
		(249,765)
	31 December 2017 1,787,422 874,144 6,967 881,111	31 December 2016 812,164 (1,254,776) (9,769) (1,264,545)

87 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(13) Investment properties

The Group

At 1 January Additions Disposal Transfers Disposal of subsidiaries Changes in fair value of investment properties Exchange difference At 31 December	2017 4,003,390 66,637 (3,612) (50,574) (205,727) 407,537 (12,945) 4,204,706	2016 5,086,392 28,097 (18,934) (346,790) (957,120) 155,173 56,572 4,003,390

The Group’s investment properties are mainly located in Mainland China and Hong Kong.

The fair value of investment properties located in Mainland China is determined by using income capitalisation approach and depreciated replacement cost approach under the circumstances.

The income capitalisation approach is the sum of the term value and the reversionary value by discounting the contracted annual rent at the capitalisation rate over the existing lease period; and the sum of average unit market rent at the capitalisation rate after the existing lease period.

Depreciated replacement cost values a property by taking into account of its current cost of replacement or reproduction, less deduction for physical deterioration and all relevant forms of obsolescence and optimisation. The fair value measurement is based on an estimate of the market value for the existing use of the land, plus the depreciated replacement cost.

The fair value of certain of investment properties located in Hong Kong is determined using market comparison approach by reference to recent sales price of comparable properties on a price per square foot basis, adjusted for a premium or a discount specific to the quality of the Group’s buildings compared to the recent sales. Higher premium for higher quality buildings will result in a higher fair value measurement.

The fair value of other certain of investment properties located in Hong Kong is determined by using income capitalisation approach and with reference to sales evidence as available in the market.

Investment properties were revalued as at 31 December 2017 and 2016 by the following independent professionally qualified valuers. The management of the Group had discussion with the surveyors on the valuation assumptions and valuation results when the valuation is performed at each balance sheet date.

88 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(13) Investment properties (Continued)

Properties located in Mainland China and Hong Kong Overseas Properties located in Mainland China and Hong Kong Overseas	Valuers in 2017
	Prudential Surveyors International Limited Beijing K&Z Real Estate Consult Co., Ltd. China United Assets Appraisal Group Jones Lang LaSalle Corporate Appraisal and Advisory Company Limited Valuers in 2016
	China Appraisal Associates Jones Lang LaSalle Corporate Appraisal and Advisory Company Limited China Enterprise Appraisals Company Zhong Ming International Asset Appraisal (Beijing) Co., Ltd. Prudential Surveyors International Limited Jones Lang LaSalle Corporate Appraisal and Advisory Company Limited

For disclosure information of fair value, please refer to Note 6(48).

89 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(14) Fixed assets

The Group

Plant & buildings Cost Balance at 1 January 2016(Restated) 24,029,516 Additions 3,000,966 Disposal of subsidiaries (805,263) Transfers from construction in progress 860,840 Disposals (174,777) Exchange difference 167,312 Balance at 31 December 2016(Restated) 27,078,594 Additions 4,632,242 Disposal of subsidiaries (161,521) Transfers from construction in progress 704,785 Disposals (63,729) Exchange difference (48,805) Balance at 31 December 2017 32,141,566 Less: Accumulated depreciation Balance at 1 January 2016(Restated) (5,863,642) Charge for the year (949,755) Disposal of subsidiaries 193,631 Written back on disposal 51,651 Exchange difference (46,360) Balance at 31 December 2016(Restated) (6,614,475) Charge for the year (991,135) Disposal of subsidiaries 49,385 Written back on disposal 6,476 Exchange difference 34,881 Balance at 31 December 2017 (7,514,868)	Machinery & equipment 19,076,771 873,467 (29,954) 678,335 (274,709) 369,214 20,693,124 848,600 (4,719) 990,785 (242,958) (212,534) 22,072,298 (6,664,123) (1,395,882) 21,663 200,355 (124,866) (7,962,853) (1,247,442) 2,962 127,594 62,142 (9,017,597)	Office & other equipment 10,257,731 1,162,344 (70,777) 10,498 (399,121) 76,684 11,037,359 971,094 (4,913) 40,576 (165,474) (89,770) 11,788,872 (6,035,625) (1,222,160) 48,995 279,775 (59,763) (6,988,778) (1,335,422) 4,135 145,392 70,598 (8,104,075)	Motor vehicles 4,790,095 65,098 (152,931) 3,524 (107,287) (2,267) 4,596,232 72,607 (5,241) 2,012 (54,170) (3,002) 4,608,438 (1,572,578) (303,885) 127,576 99,119 2,364 (1,647,404) (289,669) 3,754 44,666 450 (1,888,203)	Others 1,390,342 130,987 (111,035) 17,939 (83,584) 10,901 1,355,550 14,070 - 41,896 (28,403) (8,309) 1,374,804 (403,201) (69,931) 71,404 57,234 (1,141) (345,635) (55,414) - 3,723 277 (397,049)	Total 59,544,455 5,232,862 (1,169,960) 1,571,136 (1,039,478) 621,844
					64,760,859
					6,538,613 (176,394) 1,780,054 (554,734) (362,420)
					71,985,978
					(20,539,169) (3,941,613) 463,269 688,134 (229,766)
					(23,559,145)
					(3,919,082) 60,236 327,851 168,348 (26,921,792)

90 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(14) Fixed assets (Continued)

The Group (Continued)

Less: Allowance for impairment Losses (Note 6(20)) Balance at 1 January 2016 Charge for the year Written back on disposal Disposal of subsidiaries Exchange difference Balance at 31 December 2016 Charge for the year Written back on disposal Disposal of subsidiaries Exchange difference Balance at 31 December 2017 Net carrying amount At 31 December 2017 At 31 December 2016(Restated)	Plant & buildings (159,623) (5,964) - 25,361 (5,894) (146,120) - 1,292 44,086 5,976 (94,766) 24,531,932 20,317,999	Machinery & equipment (2,585,410) (220,005) 11,066 682 (153,912) (2,947,579) (508,585) 9,259 - 159,727 (3,287,178) 9,767,523 9,782,692	Office & other equipment (1,097) (2,127) 531 1,539 (10) (1,164) (16) 13 - - (1,167) 3,683,630 4,047,417	Motor vehicles (237) (167) 50 260 - (94) - 15 - - (79) 2,720,156 2,948,734	Others (4,375) (2,430) 76 - - (6,729) - 2,218 - - (4,511) 973,244 1,003,186	Total (2,750,742) (230,693) 11,723 27,842 (159,816)
						(3,101,686)
						(508,601) 12,797 44,086 165,703
						(3,387,701)
						41,676,485 38,100,028

As at 31 December 2017, the Group was in the process of applying the ownership certificate in respect of certain premises of RMB 2,951 million (31 December 2016: RMB3,887 million). The Group anticipates that there would be no significant issues and costs in completing such procedures.

91 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(14) Fixed assets (Continued)

The Company

Cost Balance at 1 January 2016 Additions Disposals Balance at 31 December 2016 Additions Disposals Balance at 31 December 2017 Less: Accumulated depreciation Balance at 1 January 2016 Charge for the year Written back on disposal Balance at 31 December 2016 Charge for the year Written back on disposal Balance at 31 December 2017 Net carrying amount At 31 December 2017 At 31 December 2016	Plant & buildings 638,758 - (35) 638,723 - - 638,723 (7,621) (30,340) - (37,961) (30,339) - (68,300) 570,423 600,762	Office & other equipment 55,080 5,806 (6,574) 54,312 957 (220) 55,049 (43,223) (4,728) 6,251 (41,700) (4,764) 208 (46,256) 8,793 12,612	Motor vehicles 20,352 - (240) 20,112 - (4,544) 15,568 (18,608) (952) 222 (19,338) - 4,317 (15,021) 547 774	Total 714,190 5,806 (6,849)
				713,147
				957 (4,764)
				709,340
				(69,452) (36,020) 6,473
				(98,999)
				(35,103) 4,525
				(129,577)
				579,763 614,148

92 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(15) Construction in Progress

The Group Cost Balance at 1 January 2016(Restated) Additions Including: capitalised interest Transfers to fixed assets Disposal of subsidiaries Decrease Exchange difference Balance at 31 December 2016(Restated) Additions Including: capitalised interest Transfers to fixed assets Disposal of subsidiaries Decrease Exchange difference Balance at 31 December 2017 Less: Allowance for impairment losses(Note 6(20)) Balance at 1 January 2016 Charge for the year Written back on disposal Disposal of subsidiaries Exchange difference Balance at 31 December 2016 Charge for the year Written back on disposal Disposal of subsidiaries Exchange difference Balance at 31 December 2017 Net carrying amount At 31 December 2017 At 31 December 2016(Restated)	6,816,053 5,456,864 223,309 (1,571,136) (743,075) (262,749) (102,108)
	9,593,849
	5,679,295 201,678 (1,780,054) - (541,793) (48,034)
	12,903,263
	(86,617) (63,253) - 4,995 97
	(144,778)
	- - - (427) (145,205) 12,758,058 9,449,071

93 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(16) Intangible assets

Cost Balance at 1 January 2016(Restated) Additions Disposal of subsidiaries Disposals Exchange difference Balance at 31 December 2016(Restated) Additions Disposal of subsidiaries Disposals Exchange difference Balance at 31 December 2017 Less: Accumulated amortisation Balance at 1 January 2016(Restated) Charge for the year Disposal of subsidiaries Written back on disposal Exchange difference Balance at 31 December 2016(Restated) Charge for the year Disposal of subsidiaries Written back on disposal Exchange difference Balance at 31 December 2017 Less: Allowance for impairment losses (Note 6(20)) Balance at 1 January 2016 Charge for the year Written back on disposal Disposal of subsidiaries Exchange difference Balance at 31 December 2016 Charge for the year Written back on disposal Disposal of subsidiaries Exchange difference Balance at 31 December 2017 Net carrying amount At 31 December 2017 At 31 December 2016(Restated)	Land use rights 12,895,560 774,340 (765,939) (711,032) 2,919 12,195,848 398,982 - (1,873) 10,775 12,603,732 (860,696) (213,598) 28,332 4,149 206 (1,041,607) (246,523) - 226 (1,656) (1,289,560) - - - - - - - - - - - 11,314,172 11,154,241	Mining assets 823,445 3,115 - (21,286) 54,915 860,189 43,119 - - (57,919) 845,389 (168,390) (4,372) - - (11,606) (184,368) (21,585) - - 12,863 (193,090) (428,729) - - - (29,031) (457,760) - - - 29,988 (427,772) 224,527 218,061	Roads and operating rights 9,487,823 8,709 - (471) - 9,496,061 7,121 - (9,970) (99) 9,493,113 (641,716) (174,849) - 152 - (816,413) (177,263) - - - (993,676) - - - - - - - - - - - 8,499,437 8,679,648	Others 5,585,389 1,184,264 (25,726) (1,127,366) 27,822 5,644,383 1,353,784 (418,857) (292,751) (33,352) 6,253,207 (2,298,716) (669,597) 13,295 897,999 (25,851) (2,082,870) (516,044) 175,579 100,946 (38,633) (2,361,022) (143,126) - 125,761 - (2,506) (19,871) (2,406) 19,870 - (51) (2,458) 3,889,727 3,541,642	Total 28,792,217 1,970,428 (791,665) (1,860,155) 85,656
					28,196,481
					1,803,006 (418,857) (304,594) (80,595)
					29,195,441
					(3,969,518) (1,062,416) 41,627 902,300 (37,251)
					(4,125,258)
					(961,415) 175,579 101,172 (27,426)
					(4,837,348)
					(571,855) - 125,761 - (31,537)
					(477,631)
					(2,406) 19,870 - 29,937
					(430,230)
					23,927,863 23,593,592

As at 31 December 2017, the Group had no ownership certificate in respect of certain land use rights that was in the process of applying (31 December 2016: Nil).

94 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(17) Goodwill

The Group
Cost
Balance at 1 January 2016			7,878,963
Additions			465,701
Exchange difference			366,975
Balance at 31 December 2016			8,711,639
Disposal			(102,608)
Exchange difference			(26,502)
Balance at 31 December 2017			8,582,529
Less: Allowance for impairment losses
Balance at 1 January 2016			(285,207)
Additions			(30,879)
Exchange difference			(17,975)
Balance at 31 December 2016			(334,061)
Disposal			19,773
Exchange difference			18,566
Balance at 31 December 2017			(295,722)
Net carrying amount
At 31 December 2017			8,286,807
At 31 December 2016			8,377,578
Goodwill is allocated to the Group’s cash-generating units identified in segments as follows:
	31 December 2017		31 December 2016
Resources and energy		1,116,871	1,231,255
Financial services		1,275,848	1,340,416
Manufacturing		740,808	739,030
Real estates		106,458	106,458
Others		5,046,822	4,960,419
		8,286,807	8,377,578

Based on management’s impairment assessment, no impairment loss was recognised for the year ended 31 December 2017 (2016: RMB 30.88 million).

95 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(18) Deferred tax assets and liabilities

Non-offset deferred tax assets and deferred tax liabilities：

The Group

Tax losses Accrued expenses Impairment loss on assets other than fixed assets and intangible assets Fair value changes of financial instruments Fixed assets and intangible assets Others			Deferred tax assets	Deferred tax assets
	Balance at 1 January 2017 (Restated) 15,326 1,620,016 13,691,209 15,017 384,060 243,670 15,969,298	Credited/(charged) to profit or loss (10,589) 773,668 4,552,543 227,599 (41,597) 96,065 5,597,689	Charged to equity - (2,953) - 2,848,910 - (49,408) 2,796,549	Disposal of subsidiaries - - - - - - -	Exchange difference and others - (32,716) (36,215) (383) 24,190 20,281 (24,843)	Balance at 31 December 2017 4,737 2,358,015 18,207,537 3,091,143 366,653 310,608 24,338,693

96 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(18) Deferred tax assets and liabilities (Continued)

The Group

Tax losses Accrued expenses Impairment loss on assets other than fixed assets and intangible assets Fair value changes of financial instruments Fixed assets and intangible assets Others			Deferred tax assets	Deferred tax assets
	Balance at 1 January 2016 (Restated) 261,968 1,317,321 10,037,423 236,814 275,385 1,110,969 13,239,880	Credited/(charged) to profit or loss (135,816) 382,223 3,673,965 (10,982) 84,678 (443,018) 3,551,050	Charged to equity - (761) 537 (215,590) - (240,056) (455,870)	Disposal of subsidiaries (110,802) (73,838) (35,127) - - (154,044) (373,811)	Exchange difference and others (24) (4,929) 14,411 4,775 23,997 (30,181) 8,049	Balance at 31 December 2016 (Restated) 15,326 1,620,016 13,691,209 15,017 384,060 243,670 15,969,298

97 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(18) Deferred tax assets and liabilities (Continued)

The Group

Fair value changes of financial instruments Fixed assets and intangible assets Revaluation of Investment properties Others		Deferred tax liabilities	Deferred tax liabilities
	Balance at 1 January 2017 (629,524) (485,440) (630,201) (1,610,391) (3,355,556)	Charged to profit or loss (197,176) 50,334 (99,465) 1,023,161 776,854	Credited to equity (70,605) - - 3,762 (66,843)	Disposal of subsidiaries - - - - -	Exchange difference and others 7,620 (3,066) 25,898 (5,905) 24,547	Balance at 31 December 2017 (889,685) (438,172) (703,768) (589,373) (2,620,998)

98 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(18) Deferred tax assets and liabilities (Continued)

The Group

Fair value changes of financial instruments Fixed assets and intangible assets Revaluation of Investment properties Others		Deferredtax liabilities	Deferredtax liabilities
	Balance at 1 January 2016 (2,303,862) (257,445) (684,555) (1,658,648) (4,904,510)	Charged to profit or loss (506,932) (195,194) (16,787) (458,502) (1,177,415)	Credited to equity 2,095,525 - 23 32,098 2,127,646	Disposal of subsidiaries 88,230 - 74,644 639,974 802,848	Exchange difference and others (2,485) (32,801) (3,526) (165,313) (204,125)	Balance at 31 December 2016 (629,524) (485,440) (630,201) (1,610,391) (3,355,556)

99 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(18) Deferred tax assets and liabilities (Continued)

The Company

Fair value changes of financial instruments Others Fair value changes of financial instruments Others		Deferred tax liabilities	Deferred tax liabilities	Balance at 31 December 2017 (323,637) (204,482) (528,119)
	Balance at 1 January 2017 (86,397) (128,872) (215,269)	Charged to equity Credited/(charged) to profit or loss 283,666 (520,906) - (75,610) 283,666 (596,516) Deferred tax liabilities
	Balance at 1 January 2016 (29,387) (310,361) (339,748)	Charged to equity (42,161) - (42,161)	Credited/(charged) to profit or loss (14,849) 181,489 166,640	Balance at 31 December 2016 (86,397) (128,872) (215,269)

(a) The net balances of after offsetting at the balance sheet date are as follows: deferred tax assets and liabilities:

The Group

Deferred tax assets Deferred tax liabilities The Company Deferred tax liabilities	31 December 2017 23,921,974 (2,204,279) 21,717,695 31 December 2017 (528,119)	31 December 2016 (Restated) 14,578,545 (1,964,803)
		12,613,742
		31 December 2016 (215,269)

100 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(18) Deferred tax assets and liabilities (Continued)
(b) Deferred tax assets not recognized

The Group has not recognised any deferred tax assets in respect of the following items:

The Group

Deductible temporary differences Tax losses	31 December 2017 2,530,334 5,800,343 8,330,677	31 December 2016 (Restated) 1,908,808 4,158,717 6,067,525

It is not probable that future taxable profits against which the above deductible temporary differences and tax losses can be utilised by the Group. As at 31 December 2017, tax losses amounting to RMB 5,726 million (31 December 2016: RMB 4,051 million) that can be carried forward against future taxable income are expiring within 5 years.

(c) Deferred tax liabilities not recognized

As at 31 December 2017 and 2016, the Group has not recognised any temporary differences relating to the undistributed profits of certain subsidiaries as the Group does not intend to have these subsidiaries making any profit distribution in the foreseeable future.

(19) Borrowing from central bank

The Group’s borrowing from central bank is borrowed by a subsidiary under the financial services segment.

101 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(20) Provisions for impairment

As at 31 December 2017, the movements of allowance for impairment losses of the Group are set out as follows:

Note Deposits and placements with banks and non-bank financial institutions 6(1),6(2) Trade and other receivables 6(5) Inventories 6(6) Loans and advances to customers and other parties 6(8) Available-for-sale financial assets 6(9) Held-to-maturity investments 6(10) Investments classified as receivables 6(11) Long-term equity investments 6(12) Fixed assets 6(14) Construction in Progress 6(15) Intangible assets 6(16) Others	Balance at 1 January 2017 (Restated) 42,514 6,250,299 2,367,863 79,267,361 772,492 1,766 1,908,652 3,327,522 3,101,686 144,778 477,631 3,357,125 101,019,689	Charge for the year - 9,667,443 168,456 55,167,809 756,974 - 1,618,103 3,734 508,601 - 2,406 725,037 68,618,563	Decrease Reversal Recovery of write- off/(write-off) (31,665) - (1,353,323) (3,924,071) (820,015) (75,583) (4,685,338) (35,300,547) (102,313) (37,422) (1,653) - (299,064) - - - - (12,797) - - - (19,870) (85,656) (863,629) (7,379,027) (40,233,919)	Disposal of subsidiaries - (744,257) - - (2,000) - - (52) (44,086) - - (29,850) (820,245)	Exchange difference and others (10,164) (157,386) (48,037) 307,392 (6,150) (113) 169,430 (182,597) (165,703) 427 (29,937) 96,734 (26,104)	Balance at 31 December 2017 685 9,738,705 1,592,684 94,756,677 1,381,581 - 3,397,121 3,148,607 3,387,701 145,205 430,230 3,199,761 121,178,957
			Reversal (31,665) (1,353,323) (820,015) (4,685,338) (102,313) (1,653) (299,064) - - - - (85,656) (7,379,027)

102 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the consolidated financial statements (Continued)
(20) Provisions for impairment (Continued)

As at 31 December 2016, the movements of allowance for impairment losses of the Group are set out as follows:

Note Deposits and placements with banks and non-bank financial institutions 6(1),6(2) Trade and other receivables 6(5) Inventories 6(6) Loans and advances to customers and other parties 6(8) Available-for-sale financial assets 6(9) Held-to-maturity investments 6(10) Investments classified as receivables 6(11) Long-term equity investments 6(12) Fixed assets 6(14) Construction in Progress 6(15) Intangible assets 6(16) Others	Balance at 1 January 2016 (Restated) 8,128 4,107,633 2,955,040 63,911,222 714,429 40,784 997,050 3,214,243 2,750,742 86,617 571,855 2,841,193 82,198,936	Charge for the year 33,816 6,839,168 474,966 48,626,473 692,241 1,744 1,394,451 4,610 230,693 63,253 - 1,884,549 60,245,964	Decrease Reversal Recovery of write- off/(write-off) - 570 (614,553) (3,294,319) (742,966) (23,151) (2,802,566) (30,952,486) (6,760) (298,379) - (40,774) (482,000) (849) - (70,071) - (11,723) - - - (125,761) (69,930) (309,035) (4,718,775) (35,125,978)	Disposal of subsidiaries - (965,966) (336,222) - (361,945) - - (3,169) (27,842) (4,995) - (1,036,662) (2,736,801)	Exchange difference and others - 178,336 40,196 484,718 32,906 12 - 181,909 159,816 (97) 31,537 47,010 1,156,343	Balance at 31 December 2016 (Restated) 42,514 6,250,299 2,367,863 79,267,361 772,492 1,766 1,908,652 3,327,522 3,101,686 144,778 477,631 3,357,125 101,019,689
			Reversal - (614,553) (742,966) (2,802,566) (6,760) - (482,000) - - - - (69,930) (4,718,775)

The reasons for recognising allowance for impairment losses are set out in respective notes to the impaired assets.

103 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(21) Placements from banks and non-bank financial institutions

The Group Banks Non-bank financial institutions Analysed by remaining maturity: Within 3 months Between 3 months and 1 year Over 1 year (22) Trade and other payables The Group Bills payables Trade payables Advances from customers Other payables (note (a)) Interest payables Dividends payables Others	31 December 2017 49,408,110 25,933,269 75,341,379 31 December 2017 37,186,164 38,122,655 32,560 75,341,379 31 December 2017 2,089,700 35,129,187 7,945,342 49,393,662 40,556,829 6,403,184 3,116,364 144,634,268	31 December 2016 63,722,646 20,000,000 83,722,646 31 December 2016 53,942,850 29,779,796 - 83,722,646 31 December 2016 (Restated) 1,098,249 32,144,616 5,161,610 61,065,914 38,337,740 3,561,044 7,787,982 149,157,155

104 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(22) Trade and other payables (Continued)

The Company Other payables (note (a)) Interest payables Dividends payables (a) Other payables The Group Related parties Third parties The Company Subsidiaries Related parties Third parties	31 December 2017 9,529,220 743,369 5,745,000 16,017,589 31 December 2017 9,823,654 39,570,008 49,393,662 31 December 2017 1,984,049 7,503,322 41,849 9,529,220	31 December 2016 8,278,500 692,812 3,539,000 12,510,312 31 December 2016 (Restated) 6,002,933 55,062,981 61,065,914 31 December 2016 5,291,529 2,964,616 22,355 8,278,500

105 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(23) Financial assets sold under repurchase agreements

The Group Analysis by types of counterparties: The People’s Bank of China Banks Non-bank financial institutions Analysis by types of collateral: Debt securities Discounted bills	31 December 2017 90,063,073 44,436,860 - 134,499,933 31 December 2017 82,084,820 52,415,113 134,499,933	31 December 2016 85,415,205 34,857,334 69,490 120,342,029 31 December 2016 91,287,090 29,054,939 120,342,029

The Group did not derecognise financial assets transferred as collateral in connection with repurchase agreements. As at 31 December 2017, legal title of these collateral pledged has not been transferred to counterparties.

106 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(24) Deposits from banks and non-bank financial institutions and customers

The Group
31 December 2017
Demand deposits
- Corporate customers
1,636,141,268
- Personal customers
234,960,743
1,871,102,011
Time and call deposits
- Corporate customers
1,223,018,361
- Personal customers
298,477,691
1,521,496,052
Deposits from banks and non-bank financial institutions
797,991,403
Outward remittance and remittance payables
6,177,792
4,196,767,258
Deposits from customers include pledged deposit for the following items:
The Group
31 December 2017
Bank acceptances
195,308,088
Letters of credit
9,288,811
Guarantees
24,941,311
Others
108,829,761
338,367,971

31 December 2016
(Restated)
1,660,915,144
232,960,141

1,893,875,285
1,390,211,862
325,053,114

1,715,264,976
981,423,773
7,237,624
4,597,801,658
31 December 2016
213,623,763
9,624,012
25,822,233
148,797,642
397,867,650

107 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(25) Employee benefits payable The Group Short-term employee benefits (note (a)) Post-employment benefits-Defined contribution plans (note (b)) Termination benefits Other long-term employee benefits	31 December 2017 13,072,888 184,356 151,900 1,756,353 15,165,497	31 December 2016 (Restated) 13,567,382 186,073 103,358 1,197,180 15,053,993

108 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(25) Employee benefits payable (Continued)
(a) Short-term employee benefits

Salaries, bonuses and allowances Staff welfare Social insurance - Medical insurance - Work-related injury insurance - Maternity insurance Housing funds Labour union fee, staff and workers’ education fee Short-term paid absences Other short-term employee benefits	Balance at 1 January 2017 (Restated) 11,975,895 180,358 101,065 3,938 966 54,662 1,199,140 - 51,358 13,567,382	Accrued 25,209,474 1,437,151 1,656,562 18,709 15,702 1,590,571 487,349 5,956 484,058 30,905,532	Paid (25,627,283) (1,433,301) (1,648,862) (18,546) (15,584) (1,603,856) (581,594) (5,956) (442,239) (31,377,221)	Disposal of subsidiaries (21,776) - (171) (5) (14) - (839) - - (22,805)	Balance at 31 December 2017 11,536,310 184,208 108,594 4,096 1,070 41,377 1,104,056 - 93,177 13,072,888

109 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(25) Employee benefits payable (Continued)
(a) Short-term employee benefits (Continued)

Salaries, bonuses and allowances Staff welfare Social insurance - Medical insurance - Work-related injury insurance - Maternity insurance Housing funds Labour union fee, staff and workers’ education fee Short-term paid absences Other short-term employee benefits	Balance at 1 January 2016 (Restated) 11,825,818 182,747 67,013 3,838 1,056 64,227 1,054,360 3,801 57,939 13,260,799	Accrued 22,383,775 1,744,503 1,467,759 17,819 15,499 1,562,971 731,168 2,509 403,950 28,329,953	Paid (22,099,888) (1,745,128) (1,434,215) (17,623) (15,542) (1,572,301) (574,489) (6,310) (409,171) (27,874,667)	Disposal of subsidiaries (133,810) (1,764) 508 (96) (47) (235) (11,899) - (1,360) (148,703)	Balance at 31 December 2016 (Restated) 11,975,895 180,358 101,065 3,938 966 54,662 1,199,140 - 51,358 13,567,382

110 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(25) Employee benefits payable (Continued)
(b) Post-employment benefits – defined contribution plans

Basic pension insurance Unemployment insurance Annuity payment and supplementary pension Others Basic pension insurance Unemployment insurance Annuity payment and supplementary pension Others	Balance at 1 January 2017 16,242 3,005 19,752 147,074 186,073 Balance at 1 January 2016 35,280 4,143 27,239 163,851 230,513	Accrued 2,059,412 65,997 755,339 44,045 2,924,793 Accrued 1,839,357 95,055 747,321 1,213,493 3,895,226	Paid (2,033,157) (65,437) (754,817) (72,758) (2,926,169) Paid (1,857,126) (96,119) (754,808) (809,748) (3,517,801)	Disposal of subsidiaries (324) (17) - - (341) Disposal of subsidiaries (1,269) (74) - (420,522) (421,865)	Balance at 31 December 2017 42,173 3,548 20,274 118,361 184,356 Balance at 31 December 2016 16,242 3,005 19,752 147,074 186,073

111 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(26) Bank and other loans

Analysis by types of collaterals:

The Group

Bank loans - Unsecured loans - Loans pledged with assets - Guaranteed loans Other loans - Unsecured loans - Loans pledged with assets - Guaranteed loans	31 December 2017 22,257,069 10,377,046 2,353,910 34,988,025 5,882,504 2,440,018 109,525 8,432,047 43,420,072	31 December 2016 (Restated) 31,185,491 8,817,374 574,915
		40,577,780
		5,969,875 882,779 109,525
		6,962,179 47,539,959

As at 31 December 2017, certain of the Group’s cash and deposits, trade and other receivables, fixed assets and intangible assets with an aggregate carrying amount of RMB 33.88 billion (31 December 2016: RMB 18.05 billion) was pledged to secure loans granted to the Group.

All of the Group’s banking facilities are subject to the fulfilment of covenants relating to balance sheet ratios or ownership of a minimum shareholding in certain entities of the Group, as are commonly found in lending arrangements with financial institutions. If the Group were to breach the covenants the drawn down facilities would become payable on demand. The Group regularly monitors its compliance with these covenants. Further details of the Group’s management of liquidity risk are set out in Note 6(47)(c). As at 31 December 2017, none of the covenants relating to drawn down facilities have been breached (31 December 2016: Nil).

112 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(26) Bank and other loans (Continued)

Analysis by currencies:

The Group RMB US$ HK$ Other currencies The maturity analysis of loans is as follows: The Group Within one year (inclusive) or on demand Between one and two years (inclusive) Between two and five years (inclusive) Over five years	31 December 2017 16,325,970 11,247,948 2,009,311 13,836,843 43,420,072 31 December 2017 15,257,618 5,967,830 9,622,803 12,571,821 43,420,072	31 December 2016 (Restated) 20,448,078 14,798,380 186,566 12,106,935
		47,539,959
		31 December 2016 (Restated) 17,084,989 6,546,700 11,409,697 12,498,573
		47,539,959

The maturity analysis of loans is as follows:

113 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(27) Debt instruments issued

The Group Corporate bonds issued Notes issued Subordinated bonds issued Certificates of deposit issued Certificates of interbank deposits issued The Company Corporate bonds issued Notes issued	31 December 2017 19,263,867 122,880,489 73,727,630 2,849,296 270,096,285 488,817,567 31 December 2017 15,967,619 26,843,546 42,811,165	31 December 2016 18,627,978 58,067,913 76,242,400 9,492,682 269,922,874 432,353,847 31 December 2016 14,460,964 26,779,843 41,240,807

114 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(27) Debt instruments issued (Continued)

The maturity analysis of debt instruments issued is as follows:

The Group

Within one year (inclusive) or on demand Between one and two years (inclusive) Between two and five years (inclusive) Over five years The Company Within one year (inclusive) or on demand Between one and two years (inclusive) Between two and five years (inclusive) Over five years	31 December 2017 301,253,932 5,911,993 114,756,750 66,894,892 488,817,567 31 December 2017 8,996,625 3,946,000 19,900,921 9,967,619 42,811,165	31 December 2016 285,634,134 22,144,860 37,053,662 87,521,191
		432,353,847
		31 December 2016 4,498,200 4,989,874 16,832,719 14,920,014 41,240,807

The Group did not have any defaults of principal, interest or other breaches with respect to its debt securities issued during the year ended 31 December 2017 (2016: Nil).

115 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(28) Provisions

The Group

Environment restoration expenditures Others Environment restoration expenditures Others	Balance at 1 January 2017 207,939 1,282,037 1,489,976 Balance at 1 January 2016 203,632 959,445 1,163,077	Charge for the year 20,938 247,043 267,981 Charge for the year 7,897 652,980 660,877	Payments during the year (10,820) (335,567) (346,387) Payments during the year (15,460) (14,086) (29,546)	Reversal - (25,099) (25,099) Reversal - (13,243) (13,243)	Reclassification - 1,324,484 1,324,484 Disposal of subsidiaries - (302,795) (302,795)	Exchange difference (1,033) (4,826) (5,859) Exchange difference 11,870 (264) 11,606	Balance at 31 December 2017 217,024 2,488,072 2,705,096 Balance at 31 December 2016 207,939 1,282,037 1,489,976

(29) Paid-in capital

The Company’s paid-in capital structure is as follows:

CITIC Limited	31 December 2017 Amount % 139,000,000 100%	31 December	2016
	Amount 139,000,000	Amount 139,000,000	% 100%

Upon the completion of the Acquisition mentioned in Note 1, the Company became a wholly-owned subsidiary of CITIC Limited.

The movements in the Company’s paid-in capital are as follows:

Paid-in capital	Balance at 1 January 2017 139,000,000	Issue of new shares -	Balance at 31 December 2017 139,000,000

116 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(30) Capital reserve The Group Capital premium (note (a)) Others The Company Capital premium (note (a)) Others	31 December 2017 38,952,484 532,823 39,485,307 31 December 2017 48,285,720 1,328,531 49,614,251	31 December 2016 (Restated) 39,778,740 550,921
		40,329,661
		31 December 2016 48,285,720 1,983,201 50,268,921

Notes:

(a) The difference between the amount of owners’ contribution and the paid-in capital of the Company was recognised in the capital reserve.

117 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(31) Other comprehensive income

The Group

Share of the other comprehensive income of the equity-accounted investee that may be reclassified to profit or loss Gains or losses arising from changes in fair value of available-for-sale financial assets Effective hedging portion of gains or losses arising from cash flow hedging instruments Translation differences arising on translation of foreign currency financial statements Others	31 December 2017	31 December 2017	Net-of-tax amount 93,198 (7,042,687) 1,083,111 (268,713) (850,288) (6,985,379)	31 December 2016(Restated)	31 December 2016(Restated)	31 December 2016(Restated)
	Before tax amount 93,198 (8,188,762) 1,705,192 (268,713) (775,644) (7,434,729)	Tax expense - 1,146,075 (622,081) - (74,644) 449,350		Before tax amount (179,221) 49,008 1,261,944 1,589,712 (801,991) 1,919,452	Tax expense - (800,107) (487,878) - (74,644) (1,362,629)	Net-of-tax amount (179,221) (751,099) 774,066 1,589,712 (876,635) 556,823

118 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the consolidated financial statements (Continued)

(31) Other comprehensive income (Continued)

The Company

Share of the other comprehensive income of the equity-accounted investee that may be reclassified to profit or loss Gains or losses arising from changes in fair value of available-for-sale financial assets	31 December 2017	31 December 2017	Net-of-tax amount 675,288 (381,067) 294,221		31 December 2016	31 December 2016
	Before tax amount 675,288 (593,186) 82,102	Tax expense - 212,119 212,119		Before tax amount 458,858 565,534 1,024,392	Tax expense - (71,547) (71,547)	Net-of-tax amount 458,858 493,987 952,845

119 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(32) Surplus reserve

The Group and the Company

Note Statutory surplus reserve 34(a) Note Statutory surplus reserve 34(a) (33) General reserve The Group Note General reserve 34(b) Note General reserve 34(b)	Balance at 1 January 2017 5,982,516 Balance at 1 January 2016 4,718,187 Balance at 1 January 2017 36,105,518 Balance at 1 January 2016 29,708,529	Additions 1,409,721 Additions 1,264,329 Additions 512,324 Additions 6,396,989	Balance at 31 December 2017 7,392,237
			Balance at 31 December 2016 5,982,516
			Balance at 31 December 2017 36,617,842
			Balance at 31 December 2016 36,105,518

120 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(34) Profit distribution and retained earnings as at the balance sheet date
(a) Appropriation to statutory surplus reserve

In accordance with the Articles of Association and relevant laws and regulations, the Company is required to make appropriations to statutory surplus reserve based on 10% of net profit for the year ended 31 December 2017.

(b) Appropriation to general reserve

Pursuant to the relevant notices issued by regulatory bodies, certain subsidiaries in the financial services segment in the Mainland China are required to set aside a general reserve to cover potential losses.

As at 31 December 2017, the consolidated retained earnings attributable to owners’ of the Company included an appropriation of RMB 16,302 million (31 December 2016: RMB 12,742 million) to surplus reserve made by the subsidiaries.

(d) Profit distribution for the year ended 31 December 2017

In accordance with the resolution at the Board of Directors’ 20th meeting, dated on 28 December 2017, the Company proposed a dividend in the amount of RMB 5,745 million to the parent company.

Further details of appropriation of profits for the year ended 31 December 2017 are set out in Note 6(51).

121 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(35) Operating income

The Group Operating income from non-financial services business - Sales of goods - Services rendered to customers - Revenue from construction contracts Net interest income (note (a)) Net fee and commission income (note (b)) Investment income from financial services business Other income from financial services business The Company Interest income from loans to customers Fee and commission income Losses arising from changes in fair value Investment income from financial services business - Associates/joint ventures accounted for under the equity method - Equity investment accounted for under the cost method - Gain on disposal Other income from financial services business	2017 73,935,082 8,391,097 14,543,304 101,125,835 51,335,595 14,666,132 3,807,604 267,804,649 2017 504,994 24,523 2,928 3,314,029 9,125,560 (36,945) 4,348,859 17,283,948	2016 (Restated) 65,096,037 11,173,462 8,435,917 107,525,906 46,654,457 6,507,094 1,325,944
		246,718,817
		2016 1,469,534 141,573 67,123 835,569 14,037,372 (1,420,388) 269,304 15,400,087

122 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(35) Operating income (Continued) (a) Net interest income The Group Interest income arising from: Deposits with central banks, banks and non-bank financial institutions Placements with banks and non-bank financial institutions Financial assets held under resale agreements Investments classified as receivables Loans and advances to customers and other parties Investments in debt securities Others Interest expenses arising from: Borrowing from central banks Deposits from banks and non-bank financial institutions Placements from banks and non-bank financial institutions Financial assets sold under repurchase agreements Deposits from customers Debt instruments issued Others Net interest income	2017 10,920,553 6,221,747 1,206,659 35,984,842 141,679,754 26,052,453 103,979 222,169,987 (6,148,474) (36,895,915) (3,017,008) (2,691,276) (52,958,804) (19,182,022) (150,653) (121,044,152) 101,125,835	2016 (Restated) 9,555,191 3,729,804 921,574 46,393,659 132,705,718 21,603,992 5,113
		214,915,051
		(2,686,349) (32,629,287) (1,470,819) (860,693) (55,309,662) (14,051,366) (380,969)
		(107,389,145) 107,525,906

123 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(35) Operating income (Continued) (b) Net fee and commission income The Group

Consultancy and advisory fees Bank card fees Settlement and clearing fees Commission for wealth management services Agency fees and commission Guarantee fees Trustee commission and fees Others Fee and commission expenses Net fee and commission income	2017 4,253,871 30,453,504 1,214,427 5,535,933 4,418,628 2,101,312 7,789,929 440,822 56,208,426 (4,872,831) 51,335,595	2016 5,830,542 19,285,095 1,396,268 7,114,342 6,153,147 2,384,477 6,836,175 747,367
		49,747,413 (3,092,956) 46,654,457

124 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(36) Operating costs

The Group

Costs of goods sold Costs of services rendered Costs of construction contracts	2017 66,448,990 4,973,881 11,897,070 83,319,941	2016 (Restated) 58,321,383 8,094,463 7,104,059 73,519,905

(37) Profit before income tax

Profit before income tax is arrived at after charging below items in total operating costs:

The Group

Staff costs Property management fees Depreciation Amortisation Operating lease charges Professional fees	2017 35,746,001 1,162,521 3,740,220 1,750,407 4,029,360 550,272 46,978,781	2016 (Restated) 35,039,258 1,070,373 3,883,924 1,936,906 3,987,213 817,675 46,735,349

125 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(38) Financial expenses

The Group

Non-financial services business Interest expenses from loans and payables Less: borrowing costs capitalised Net interest expenses Interest income from deposits and receivables Net exchange losses Other financial expenses The Company Interest expenses Interest income from deposits Other financial expenses	2017 3,867,195 (276,774)	2016 (Restated) 5,714,175 (2,225,023)
	3,590,421 (755,257) 157,596 257,213 3,249,973 2017 2,092,657 (107,894) 70,968 2,055,731	3,489,152 (1,259,851) 798,596 97,602
		3,125,499
		2016 2,486,663 (314,842) 73,039 2,244,860

Capitalisation rates applied to funds borrowed are 4.51%-5.70% per annum for the year ended 31 December 2017 (2016: capitalisation rate of 4.75%-5.70%).

126 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(39) Impairment losses

The Group

Deposits and placements with banks and non-bank financial institutions Trade and other receivables Inventories Loans and advances to customers and other parties Available-for-sale financial assets Held-to-maturity investments Investments classified as receivables Long-term equity investments Fixed assets Construction in progress Intangible assets Others (40) Gain from changes in fair value The Group Investment properties Financial assets at fair value through profit or loss Derivative financial instruments	2017 (31,665) 8,314,120 (651,559) 50,482,471 654,661 (1,653) 1,319,039 3,734 508,601 - 2,406 639,381 61,239,536 2017 377,205 (30,196) (791,280) (444,271)	2016 (Restated) 33,816 6,224,615 (268,000) 45,823,907 685,481 1,744 912,451 4,610 230,693 63,253 - 1,814,619 55,527,189 2016 140,718 4,446 38,186 183,350

127 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(41) Investment income The Group Long-term equity investments - Associates/joint ventures accounted for under the equity method - Gain on disposal Others (42) Assets disposal gain/(loss) The Group (Losses)/gain on disposal of fixed assets Gain on disposal of intangible assets Gains from disposal of repossessed assets The Company Gain/(losses) on disposal of fixed assets	2017 2,689,825 4,649,553 1,435,329 8,774,707 2017 (15,321) 11,788 9,036 5,503 2017 1,064	2016 982,968 11,449,852 855,956 13,288,776
		2016 85,385 19,318 391
		105,094
		2016 (340)

128 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(43)
Income tax expense
(a)
Details of income tax expense for the year are as follows:
The Group
2017
Current income tax expense
18,997,812
Deferred income tax
(6,374,543)
12,623,269
The Company
2017
Current income tax expense
-
Deferred income tax
595,485
595,485
(b) Reconciliation between income tax expense and accounting profit is as follows:
The Group
2017
Profit before income tax
72,557,228
Income tax expense calculated at statutory tax rate of 25%
18,139,307
Effect of different tax rates applicable to certain subsidiaries
(607,650)
Tax effect of non-deductible expenses
515,459
Tax effect of share of results of associates and joint ventures
(1,514,749)
Tax effect of other non-taxable income
(4,525,255)
Deductible temporary difference and tax losses not
recognised as deferred tax
623,698
Others
(7,541)
12,623,269

2016
(Restated)
18,211,058
(2,373,635)

15,837,423

2016
-
(165,175)
(165,175)
2016
(Restated)
70,599,449
17,649,862
(395,931)
1,011,323
(695,783)
(3,824,828)
2,216,738
(123,958)
15,837,423

129 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(43) Income tax expense (Continued)
(b) Reconciliation between income tax expense and accounting profit is as follows (Continued):

The Company

2017
Profit before income tax
14,692,688
Income tax expense calculated at statutory tax rate of 25%
3,673,172
Tax effect of non-deductible expenses
7,522
Tax effect of dividend distribution from subsidiaries
(2,281,390)
Tax effect of share of results of associates and joint ventures
(828,507)
Tax effect of other non-taxable income
(349,386)
Deductible temporary difference and tax losses not
recognised as deferred tax
364,795
Others
9,279
595,485

2016
12,478,119
3,119,530
3,847
(3,509,343)
(208,893)
(16,902)
5,464
441,122
(165,175)

130 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(44) Other comprehensive income

The Group Items that may be reclassified to profit or loss Share of other comprehensive income of the equity-accounted investee that may be reclassified to profit or loss Less: Net amounts previously recognised in other comprehensive loss transferred to profit or loss in the current year Gains arising from changes in fair value of available-for-sale financial assets Less: Tax effect Net amounts previously recognised in other comprehensive income transferred to profit or loss in the current year Effective hedging portion of losses arising from cash flow hedging instruments Less: Tax effect Net amounts previously recognised in other comprehensive income transferred to profit or loss in the current year Translation differences arising on translation of foreign currency financial statements and others	2017 28,060 221,985 250,045 (11,633,089) 2,875,602 (326,118) (9,083,605) 756,668 (227,001) (4,271)	2016 (Restated) 34,728 -
		34,728 (7,756,683) 2,172,645 (1,927,465)
		(7,511,503) 748,428 (224,528) -
	525,396 (2,805,176) (11,113,340)	523,900 2,053,985 (4,898,890)

131 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

The Company Items that may be reclassified to profit or loss Share of other comprehensive income of the equity-accounted investee Less: Net amounts previously recognised in other comprehensive loss/(income) transferred to profit or loss in the current year Gains arising from changes in fair value of available-for- sale financial assets Less: Tax effect Net amounts previously recognised in other comprehensive income transferred to profit or loss in the current year (44) Other comprehensive income (Continued)	2017 (5,455) 221,885 216,430 (711,783) 171,932 (335,203) (875,054) (658,624)	2016 (269,674) (956)
		(270,630) 183,767 (42,161) -
		141,606 (129,024)

132 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(45) Supplementary information to cash flow statement
(a) Reconciliation of net profit to cash flows from operating activities:

The Group

Net profit Add: Impairment losses Depreciation of fixed assets Amortisation of intangible assets Gain on disposal of fixed assets, intangible assets and other long-term assets Gain from changes in fair value Financial expenses Investment income Net movement in deferred tax assets/liabilities (Increase)/decrease in inventories Decrease/(increase) in operating receivables (Decrease)/increase in operating payables Net cash flows from operating activities The Company Net profit Add: Depreciation of fixed assets Impairment losses (Gain)/loss on disposal of fixed assets Loss from change in fair value Financial expenses Investment income Net change in deferred tax liabilities Decrease in operating receivables Decrease in operating payables Net cash flows from operating activities	2017 59,933,959 61,239,536 3,740,220 1,750,407 (5,503) 444,271 2,835,164 (10,660,163) (6,374,543) (404,270) 342,656,145 (377,035,113) 78,120,110 2017 14,097,203 35,103 (101,760) (1,064) (2,928) 2,031,066 (7,141,752) 596,516 2,047,945 (4,815,494) 6,744,835	2016 (Restated) 54,762,026 55,527,189 3,883,924 1,936,906 (105,094) (183,350) 2,229,301 (14,527,955) (2,373,635) 49,011,340 (381,594,479) 473,262,729
		241,828,902
		2016 12,643,294 36,020 (58,069) 340 (67,123) 2,599,028 610,485 (165,175) 1,099,947 (6,130,247)
		10,568,500

133 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(45) Supplementary information to cash flow statement (Continued) (b) Change in cash and cash equivalents: The Group

Cash at the end of the year Less: cash at the beginning of the year Add: cash equivalents at the end of the year Less: cash equivalents at the beginning of the year Net (decrease)/increase in cash and cash equivalents The Company Cash and cash equivalents at the end of the year Less: cash and cash equivalents at the beginning of the year Net increase/(decrease) in cash and cash equivalents	2017 27,488,700 (27,380,945) 363,658,781 (398,807,016) (35,040,480) 2017 14,058,669 (13,470,864) 587,805	2016 (Restated) 27,380,945 (25,921,726) 398,807,016 (243,518,627)
		156,747,608
		2016 13,470,864 (15,777,831)
		(2,306,967)

134 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(45) Supplementary information to cash flow statement (Continued)

The Group

Cash at bank and on hand - Cash on hand - Bank deposits on demand - Deposits due over three months - Cash with restricted use Cash equivalents - Surplus deposit reserve funds - Investments in debt securities due within three months - Deposits with banks and non-bank financial institutions due within three months - Placements with banks and non-bank financial institutions due within three months Closing balance of cash and cash equivalents Less: deposits due over three months Less: cash with restricted use Closing balance of cash and cash equivalents available on demand	31 December 2017 6,765,238 20,723,462 223,508 955,555 89,288,020 51,911,007 143,382,219 79,077,535 392,326,544 (223,508) (955,555) 391,147,481	31 December 2016 (Restated) 7,499,625 19,881,320 1,873,561 4,583,391 58,854,588 51,271,410 225,523,049 63,157,969
		432,644,913 (1,873,561) (4,583,391)
		426,187,961

135 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(45) Supplementary information to cash flow statement (Continued)

(c) Cash and cash equivalents held by the Group and the The Company Cash at bank and on hand - Cash on hand - Bank deposits on demand - Deposits due over three months Closing balance of cash Less: deposits due over three months Closing balance of cash available on demand (d) Disposal of subsidiaries Total assets Total liabilities Non-controlling interests Net (liabilities)/assets disposed Total consideration Release of other comprehensive income relating to interests in disposed subsidiaries Remeasurement at fair value of retained interest in former subsidiaries Gains on disposal of subsidiaries Net cash inflow/(outflow) is determined as follows: Cash proceeds received Less: cash and cash equivalents disposed	(c) Cash and cash equivalents held by the Group and the The Company Cash at bank and on hand - Cash on hand - Bank deposits on demand - Deposits due over three months Closing balance of cash Less: deposits due over three months Closing balance of cash available on demand (d) Disposal of subsidiaries Total assets Total liabilities Non-controlling interests Net (liabilities)/assets disposed Total consideration Release of other comprehensive income relating to interests in disposed subsidiaries Remeasurement at fair value of retained interest in former subsidiaries Gains on disposal of subsidiaries Net cash inflow/(outflow) is determined as follows: Cash proceeds received Less: cash and cash equivalents disposed	Company are as follows (Continued): 31 December 2017 31 December 2016 52 3 14,058,617 13,470,861 5,142,337 2,386,845 19,201,006 15,857,709 (5,142,337) (2,386,845) 14,058,669 13,470,864 31 December 2017 31 December 2016 4,910,590 109,042,326 (5,617,896) (99,641,322) (217,930) (915,227) (925,236) 8,485,777 757,432 19,660,910 - 158,238 2,000,000 - 3,682,668 11,333,371 822,153 102,697 (480,396) (9,950,129) 341,757 (9,847,432)	Company are as follows (Continued): 31 December 2017 31 December 2016 52 3 14,058,617 13,470,861 5,142,337 2,386,845 19,201,006 15,857,709 (5,142,337) (2,386,845) 14,058,669 13,470,864 31 December 2017 31 December 2016 4,910,590 109,042,326 (5,617,896) (99,641,322) (217,930) (915,227) (925,236) 8,485,777 757,432 19,660,910 - 158,238 2,000,000 - 3,682,668 11,333,371 822,153 102,697 (480,396) (9,950,129) 341,757 (9,847,432)



			8,485,777 19,660,910 158,238 -
			11,333,371
			102,697 (9,950,129) (9,847,432)

136 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(46) Segment reporting

The Group has presented six reportable operating segments which are financial services, resources and energy, manufacturing, engineering contracting, real estate and others. Reportable segments are identified based on operating segments which are determined based on the structure of the Group’s internal organisation, management requirements and internal reporting system. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, whose financial performance is regularly reviewed by the board of directors to make decisions about resource to be allocated to the segment and assess its performance, and for which financial information regarding financial position, financial performance and cash flows is available. The details of these six reportable segments are as follows:

Financial services: this segment includes banking, trust, asset management, securities and insurance services.
Resources and energy: the major businesses in this segment include exploration, processing and trading of resources and energy products, including crude oil, coal and iron ore.
Manufacturing: this segment includes manufacturing of special steels, heavy machineries, aluminum wheels and other products.
Engineering contracting: this segment provides contracting and design services for infrastructure, real estate and industrial projects, etc.
Real estate: this segment includes development, sale and holding of properties.
Others: others include various businesses including investment and operation of infrastructures, telecommunication services, motor and food and consumer products business, commercial aviation services, publication services and others.
(a)
Segment results, assets and liabilities

For the purposes of assessing segment performance and allocating resources among segments, the board of directors monitors the results, assets, liabilities, revenue and costs attributable to each reportable segment on the following bases:

Segment assets are those assets that are attributable to a segment, and segment liabilities are those liabilities that are attributable to a segment.

137 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(46) Segment reporting (Continued)
(a) Segment results, assets and liabilities (Continued)

Revenue and expenses are allocated to the reportable segments with reference to revenue generated by those segments and the expenses incurred by those segments or which otherwise arise from the depreciation of assets attributable to those segments.

The measure used for reporting segment profit is “profit for the year”. To arrive at segment results, the Group’s profit is further adjusted for items not specifically attributed to individual segments, such as share of results of associates and joint ventures.

Inter-segment pricing is based on similar terms as those available to other external parties.

138 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)
(46) Segment reporting (Continued)
(a) Segment results, assets and liabilities (Continued)

Information regarding the Group’s reportable segments as provided to the board of directors for the purposes of resources allocation and assessment of segment performance for the years ended 31 December 2017 and 2016 is set out below:

2017

Operating income from external customers Inter-segment operating income Segment operating income Income from investments in associates and joint ventures Interest income from deposits and receivables Net interest expenses Depreciation and amortisation Impairment losses Profit/(loss) before income tax Income tax Profit/(loss) for the year - Attributable to owners of the company - Attributable to non-controlling interests	Financial services 167,036,811 (141,579) 166,895,232 - - - (2,829,409) (57,179,490) 60,038,485 (10,303,182) 49,735,303 33,817,767 15,917,536	Resources and energy 40,010,045 6,619 40,016,664 1,749,863 171,978 (393,637) (606,580) (541,400) 1,899,869 (174,907) 1,724,962 1,614,404 110,558	Manufacturing 30,634,565 - 30,634,565 65,457 213,444 (451,859) (937,315) (95,671) 1,298,123 (216,524) 1,081,599 1,036,709 44,890	Engineering contracting 12,710,279 413,117 13,123,396 10,473 186,196 (41,771) (131,587) (756,745) 1,736,537 (236,762) 1,499,775 1,501,160 (1,385)	Real estate 1,275,967 101,122 1,377,089 172,109 267,542 (294,605) (47,717) (129,948) 1,579,191 (465,310) 1,113,881 904,680 209,201	Others 15,242,140 133,200 15,375,340 691,923 69,927 (746,714) (900,635) (1,294,784) 8,403,345 (1,135,361) 7,267,984 6,684,215 583,769	Operations Management 894,842 351,156 1,245,998 - 281,029 (2,405,698) (37,384) (1,241,498) (2,431,427) (80,861) (2,512,288) (2,468,972) (43,316)	Elimination - (863,635) (863,635) - (434,859) 743,863 - - 33,105 (10,362) 22,743 15,488 7,255	Total 267,804,649 -
									267,804,649
									2,689,825 755,257 (3,590,421) (5,490,627) (61,239,536)
									72,557,228 (12,623,269)
									59,933,959 43,105,451 16,828,508

139 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(46) Segment reporting (Continued)
(a) Segment results, assets and liabilities (Continued)

2017 (Continued)

Segment assets Including: Investments in associates Investments in joint ventures Segment liabilities Including: Bank and other loans Debt instruments issued	Financial services 5,786,638,420 27,657,667 5,318,465 (5,314,639,759) (5,998,322) (442,395,155)	Resources and energy 34,081,755 11,185,778 765,643 (20,335,367) (10,644,811) -	Manufacturing 41,638,938 476,316 - (28,601,341) (10,666,106) (2,199,704)	Engineering contracting 38,558,784 309,798 - (28,108,258) (1,059,065) -	Real estate 36,365,435 275,832 1,297,778 (27,328,639) (6,038,331) -	Others 69,125,733 9,213,627 1,247,930 (38,432,118) (17,912,903) (1,411,543)	Operations Management 83,592,202 882,505 - (71,517,945) (7,228,489) (42,811,165)	Elimination (88,254,751) - - 87,789,107 16,127,955 -	Total 6,001,746,516 50,001,523 8,629,816 (5,441,174,320) (43,420,072) (488,817,567)

140 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(46) Segment reporting (Continued)
(a) Segment results, assets and liabilities (Continued)

2016(Restated)

Operating income from external customers Inter-segment operating income Segment operating income Income/(loss) from investments in associates and joint ventures Interest income from deposits and receivables Net interest expenses Depreciation and amortisation Impairment losses Profit/(loss) before income tax Income tax Profit/(loss) for the year - Attributable to owners of the company - Attributable to non-controlling interests	Financial services 162,614,993 (131,705) 162,483,288 - - - (2,723,840) (52,869,049) 61,212,009 (13,840,502) 47,371,507 32,574,362 14,797,145	Resources and energy 32,787,596 1,914,898 34,702,494 365,998 326,218 (357,198) (814,746) (328,044) 522,666 (228,352) 294,314 345,830 (51,516)	Manufacturing 23,468,213 - 23,468,213 29,564 154,369 (377,936) (803,415) (541,655) (374,379) (283,291) (657,670) (167,782) (489,888)	Engineering contracting 9,422,151 269,387 9,691,538 39,833 211,721 (25,704) (134,553) 662,448 1,667,097 (253,456) 1,413,641 1,415,142 (1,501)	Real estate 10,282,835 84,759 10,367,594 (50,217) 504,965 (872,910) (261,140) (2,507,702) 7,786,222 (704,514) 7,081,708 6,705,477 376,231	Others 7,531,923 215,995 7,747,918 597,790 88,946 (858,147) (1,043,713) 56,933 654,515 (413,996) 240,519 (133,743) 374,262	Operations Management 611,106 1,317,728 1,928,834 - 446,288 (2,760,442) (39,423) (120) (717,200) (106,357) (823,557) (823,557) -	Elimination - (3,671,062) (3,671,062) - (472,656) 1,763,185 - - (151,481) (6,955) (158,436) (158,436) -	Total 246,718,817 -
									246,718,817
									982,968 1,259,851 (3,489,152) (5,820,830) (55,527,189)
									70,599,449 (15,837,423)
									54,762,026 39,757,293 15,004,733

141 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(46) Segment reporting (Continued)
(a) Segment results, assets and liabilities (Continued)

2016 (Restated) (Continued)

Segment assets Including: Investments in associates Investments in joint ventures Segment liabilities Including: Bank and other loans Debt instruments issued	Financial services 6,017,877,055 26,654,687 3,577,639 (5,578,528,574) (2,651,504) (386,946,026)	Resources and energy 39,670,989 10,134,618 155,592 (27,498,575) (12,470,485) -	Manufacturing 38,515,496 407,463 - (26,132,002) (9,293,584) (3,094,568)	Engineering contracting 32,914,278 415,611 - (23,775,027) (1,141,000) -	Real estate 40,894,027 201,430 1,495,435 (32,390,101) (9,136,096) -	Others 49,782,900 7,778,182 1,138,249 (32,809,525) (16,937,561) (1,072,446)	Operations Management 89,390,474 64,064 - (71,546,941) (7,454,914) (41,240,807)	Elimination (85,381,832) - - 85,122,616 11,545,185 -	Total 6,223,663,387 45,656,055 6,366,915 (5,707,558,129) (47,539,959) (432,353,847)

142 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(46) Segment reporting (Continued)
(b) Geographic information

An analysis of the Group’s revenue and total assets by geographical area are as follows:

Mainland China Hong Kong and Macau Overseas	Revenuefromexternalcustomers 2017 2016 (Restated) 215,770,150 224,295,339 30,577,254 4,103,037 21,457,245 18,320,441 267,804,649 246,718,817	Reportable segment assets	Reportable segment assets
	2017 215,770,150 30,577,254 21,457,245 267,804,649	31 December 2017 5,613,303,615 355,015,150 33,427,751 6,001,746,516	31 December 2016 (Restated) 5,889,404,102 313,602,481 20,656,804 6,223,663,387

Operating income from each individual customer of the Group is below 10% of the Group’s total operating income for the year ended 31 December 2017.

143 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(47) Financial risk management

Exposure to credit, liquidity, interest rate and currency risks arises in the normal course of the business of the Group. The Group has established policies and procedures to identify and analyse these risks, to set appropriate risk limits and controls, and to constantly monitor the risks and limits by means of reliable and up-to-date management information systems. The Group regularly updates and enhances its risk management policies and systems to reflect changes in markets, products and best practice risk management processes. Internal auditors also perform regular audits to ensure compliance with policies and procedures.

The Group’s exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below.

(a) Credit risk

Credit risk represents the potential loss that may arise from a customer or counterparty’s failure to meet its obligation when due. For loan business, the Group identifies and manages the credit risk through its target markets definitions, credit approval process, post-disbursement monitoring and remedial management procedures. In respect of treasury businesses, credit risk mainly represents impairment losses of different types of investments due to default by issuers or counterparties, and inability of derivative counter parties in fulfilling their obligations. The Group sets credit limits for treasury activities and monitors them regularly with reference to the fair values of the relevant financial instruments.

The Group is also confronted with credit risk resulting from receivables that arising from sale of goods and rendering of services within the non-financial services segments. The relevant subsidiaries have established a credit policy under which individual credit evaluations are performed on all customers to determine the credit limit and terms applicable to the customers. These evaluations focus on the customers’ financial position, the external ratings of the customers and their bank credit records where available.

144 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(47) Financial risk management (Continued)
(a) Credit risk (Continued)
(I) Maximum credit risk exposure

The maximum exposure to credit risk as at the balance sheet date without taking into consideration of any collateral held or other credit enhancement is represented by the net balance of each type of financial assets in the balance sheet after deducting any impairment allowance. A summary of the maximum exposure is as follows:

The Group

Deposits with central banks, banks and non-bank financial institutions Placements with banks and non-bank financial institutions Financial assets at fair value through profit or loss Derivative financial assets Financial assets held under resale agreements Loans and advances to customers and other parties Available-for-sale financial assets Held-to-maturity investments Investments classified as receivables Other financial assets Credit commitments and guarantees provided Maximum credit risk exposure	31 December 2017 740,841,562 171,650,383 64,657,636 66,203,044 54,625,933 3,115,806,170 514,470,293 218,702,786 538,985,157 107,014,631 5,592,957,595 1,125,225,566 6,718,183,161	31 December 2016 (Restated) 802,889,750 167,207,891 67,135,340 47,604,014 173,190,986 2,807,157,088 518,039,069 218,393,136 1,043,289,575 103,890,434
		5,948,797,283 1,103,801,372 7,052,598,655

As to the definition of credit risk, the equity instruments included in financial assets at fair value through profit or loss, available-for-sale financial assets and long-term equity investment have no credit risk.

145 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)
(47) Financial risk management (Continued)
(a) Credit risk (Continued)
(II) Distribution by credit exposure is as follows:

The Group

	31 December 2017	31 December 2017
Loans and advances to customers and other parties 45,971,359 (32,206,582) 13,764,777 11,393,359 (8,975,618) 2,417,741 40,473,690 30,811,928 9,513,872 147,890 (9,698,471) 30,775,219 3,112,724,439 (43,876,006) 3,068,848,433 3,115,806,170	Due from central banks, banks and non- bank financial institutions 685 (685) - - - - - - - - - - 912,491,945 - 912,491,945 912,491,945	Financial assets held under resale agreements - - - - - - - - - - - - 54,625,933 - 54,625,933 54,625,933	Debt securities investments and certificates of deposit 137,570 (50,265) 87,305 - - - - - - - - - 794,399,647 - 794,399,647 794,486,952	Investments classified as receivables 742,125 (303,263)
				438,862
				- - - 75,901 75,901 - -
				(1,518)
				74,383
				541,564,252 (3,092,340)
				538,471,912 538,985,157

146 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(47) Financial risk management (Continued)
(a) Credit risk (Continued)
(II) Distribution by credit exposure is as follows (Continued) :

The Group (Continued)

	31 December 2016(Restated)	31 December 2016(Restated)	31 December 2016(Restated)
Loans and advances to customers and other parties 41,531,605 (28,839,082) 12,692,523 10,578,802 (8,106,617) 2,472,185 45,403,452 34,667,006 10,736,446 - (8,401,974) 37,001,478 2,788,910,590 (33,919,688) 2,754,990,902 2,807,157,088	Due from central banks, banks and non- bank financial institutions 32,598 (8,698) 23,900 - - - - - - - - - 970,107,557 (33,816) 970,073,741 970,097,641	Financial assets held under resale agreements - - - - - - - - - - - - 173,190,986 - 173,190,986 173,190,986	Debt securities investments and certificates of deposit 61,013 (31,020) 29,993 - - - - - - - - - 801,388,547 (103,435) 801,285,112 801,315,105	Investments classified as receivables 28,125 (14,063)
				14,062
				- -
				-
				132,611 132,611 - - (2,652)
				129,959
				1,045,037,491 (1,891,937)
				1,043,145,554 1,043,289,575

147 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(47) Financial risk management (Continued)
(a) Credit risk (Continued)
(II) Distribution by credit exposure is as follows (Continued):
(i) Collaterals and other credit enhancements for overdue but not impaired loans and advances

As at 31 December 2017, the loans and advances to customers and other parties of the Group which were overdue but not impaired were RMB 40,474 million (31 December 2016: RMB 48,860 million). The secured portion and unsecured portion of these loans and advances to customers and other parties were RMB 23,877 million (31 December 2016: RMB 33,486 million) and RMB 16,597 million (31 December 2016: RMB 15,374 million) respectively. The fair value of pledge and collaterals held against these loans and advances to customers and other parties amounted to RMB 33,484 million (31 December 2016: RMB 41,139 million).

The fair value of collaterals was estimated by management based on the latest available external valuations adjusted by taking into account the current realisation experience as well as market situation.

(ii) The balances represent collectively assessed allowance of impairment loss.
148 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)
(47) Financial risk management (Continued)
(a) Credit risk (Continued)
(III) Analysis of loans and advances to customers and other parties analysed by economic sector :

The Group

Corporate loans - Manufacturing - Wholesale and retail - Real estate - Rental and business services - Transportation, storage and postal services - Water, environment and public utility management - Construction - Production and supply of electric power, gas and water - Public management and social organisations - Others Personal loans Discounted bills	31 December 2017 Gross balance % Loans and advances secured by collaterals 315,575,894 10% 138,650,525 193,817,934 6% 103,102,327 337,462,363 11% 275,124,955 222,758,514 7% 134,765,194 152,850,660 5% 79,120,070 180,015,570 6% 87,938,431 82,938,096 3% 31,511,779 70,750,349 2% 32,915,402 18,936,116 1% 5,768,877 295,046,168 9% 123,234,241 1,870,151,664 60% 1,012,131,801 1,231,583,684 37% 859,513,155 108,827,499 3% - 3,210,562,847 100% 1,871,644,956	31 December 2017 Gross balance % Loans and advances secured by collaterals 315,575,894 10% 138,650,525 193,817,934 6% 103,102,327 337,462,363 11% 275,124,955 222,758,514 7% 134,765,194 152,850,660 5% 79,120,070 180,015,570 6% 87,938,431 82,938,096 3% 31,511,779 70,750,349 2% 32,915,402 18,936,116 1% 5,768,877 295,046,168 9% 123,234,241 1,870,151,664 60% 1,012,131,801 1,231,583,684 37% 859,513,155 108,827,499 3% - 3,210,562,847 100% 1,871,644,956	31 December 2016(Restated)	31 December 2016(Restated)	31 December 2016(Restated)
	Gross balance 315,575,894 193,817,934 337,462,363 222,758,514 152,850,660 180,015,570 82,938,096 70,750,349 18,936,116 295,046,168 1,870,151,664 1,231,583,684 108,827,499 3,210,562,847	% 10% 6% 11% 7% 5% 6% 3% 2% 1% 9% 60% 37% 3% 100%	Gross balance 382,261,126 238,545,302 299,112,643 181,611,975 161,976,135 149,920,938 90,632,665 60,045,908 19,846,062 270,773,138 1,854,725,892 956,605,423 75,093,134 2,886,424,449	% 14% 8% 10% 6% 6% 5% 3% 2% 1% 9% 64% 33% 3% 100%	Loans and advances secured by collaterals 199,967,424 146,673,863 248,888,546 116,791,409 84,728,338 77,909,223 39,682,147 25,186,872 4,426,954 111,856,260
					1,056,111,036 695,631,295 - 1,751,742,331

149 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(47) Financial risk management (Continued)
(a) Credit risk (Continued)
(IV) Loans and advances to customers and other parties analysed by geographical sector:

The Group

Mainland China Hong Kong and Macau Overseas	31 December 2017 Gross balance % Loans and advances secured by collateral 3,038,859,540 94% 1,805,312,570 145,944,476 5% 50,517,035 25,758,831 1% 15,815,351 3,210,562,847 100% 1,871,644,956	31 December 2017 Gross balance % Loans and advances secured by collateral 3,038,859,540 94% 1,805,312,570 145,944,476 5% 50,517,035 25,758,831 1% 15,815,351 3,210,562,847 100% 1,871,644,956	31 December 2016(Restated)	31 December 2016(Restated)	31 December 2016(Restated)
	Gross balance 3,038,859,540 145,944,476 25,758,831 3,210,562,847	% 94% 5% 1% 100%	Gross balance 2,712,552,504 157,148,898 16,723,047 2,886,424,449	% 94% 5% 1% 100%	Loans and advances secured by collateral 1,683,211,198 59,700,891 8,830,242 1,751,742,331

(V) Rescheduled loans and advances to customers and other parties

The Group

Rescheduled loans and advances - Rescheduled loans and advances overdue more than 3 months	31 December 2017 Gross balance % of total loans and advances 23,245,497 0.72% 19,858,666 0.62%	31 December 2016 Gross balance % of total loans and advances 17,233,891 0.60% 14,679,797 0.51%

Rescheduled loans and advances to customers and other parties are those loans and advances to customers and other parties which have been restructured or renegotiated because of deterioration in the financial position of the borrower, or of the inability of the borrower to meet the original repayment schedule and for which the revised repayment terms are a concession that the Group would not otherwise consider.

150 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(47) Financial risk management (Continued)
(a) Credit risk (Continued)
(VI) Offsetting

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

As at 31 December 2017, the Group did not enter into significant enforceable master netting arrangements with counterparties and therefore there were no significant offsettings of any assets and liabilities in the consolidated balance sheet (31 December 2016: Nil).

151 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(47) Financial risk management (Continued)
(b) Market risk

Each of the Group’s operating entity has formulated its own market risk management policies and procedures covering identification, measurement, monitoring and control of risks. The Group manages market risk based on the market condition to control potential loss from market risk at an acceptable level.

Interest rate risk and currency risk are major market risks that confront the Group.

(I) Interest rate risk
(i)
Financial asset-liability gap

Interest rate risk arises from mismatch between repricing dates of financial assets and liabilities affected by market interest rate volatility.

The Group

Total financial assets Total financial liabilities Financial asset- liability gap			31 December 2017	31 December 2017
	Non-interest bearing 392,538,402 (210,196,648) 182,341,754	Within 3 months 2,585,162,797 (3,688,517,634) (1,103,354,837)	Between 3 months and 1 year 1,106,848,461 (1,042,210,564) 64,637,897	Between 1 year to 5 years 1,444,702,022 (390,387,161) 1,054,314,861	More than 5 years 234,611,038 (47,600,843) 187,010,195	Total 5,763,862,720 (5,378,912,850) 384,949,870

152 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)
(47) Financial risk management (Continued)
(b) Market risk (Continued)
(I) Interest rate risk (Continued)
(i) Financial asset-liability gap (Continued)

The Group (Continued)

Total financial assets Total financial liabilities Financial asset- liability gap			31 December 2016(Restated)	31 December 2016(Restated)
	Non-interest bearing 265,664,530 (158,330,475) 107,334,055	Within 3 months 2,658,967,338 (3,815,887,499) (1,156,920,161)	Between 3 months and 1 year 1,639,847,344 (1,178,978,810) 460,868,534	Between 1 year to 5 years 1,233,193,494 (426,697,212) 806,496,282	More than 5 years 210,065,785 (74,980,136) 135,085,649	Total 6,007,738,491 (5,654,874,132) 352,864,359

(ii) Effective interest rate

The Group

Assets Cash and deposits Placements with banks and non-bank financial institutions Financial assets held under resale agreements Loans and advances to customers and other parties Investments classified as receivables Investments (note (i)) Others	31 December 2017 Effective Interest rate RMB‘000 1.56%-2.21% 747,606,800 3.07% 171,650,383 2.89% 54,625,933 4.61% 3,115,806,170 4.25% 538,985,157 3.28% 1,020,601,941 352,470,132 6,001,746,516	31 December 2016(Restated)	31 December 2016(Restated)
	Effective Interest rate 1.56%-2.21% 3.07% 2.89% 4.61% 4.25% 3.28%	Effective Interest rate 1.40%-1.52% 2.56% 2.30% 4.82% 4.01% 3.41%	RMB‘000 810,389,375 167,207,891 173,190,986 2,807,157,088 1,043,289,575 907,032,098 315,396,374
			6,223,663,387

153 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(47) Financial risk management (Continued)
(b) Market risk (Continued)
(I) Interest rate risk (Continued)
(ii) Effective interest rate (Continued)

The Group

Liabilities Borrowing from central bank Deposits from banks and non-bank financial institutions Placements from banks and non-bank financial institutions Financial assets sold under repurchase agreements Deposits from customers Bank and other loans Debt instruments issued Others	31 December 2017 Effective Interest rate RMB‘000 3.13% 238,082,461 3.75% 797,991,403 2.85% 75,341,379 2.91% 134,499,933 1.59% 3,398,775,855 0.33%-6.7% 43,420,072 2.47%-6.13% 488,817,567 264,245,650 5,441,174,320	31 December	2016(Restated)
	Effective Interest rate 3.13% 3.75% 2.85% 2.91% 1.59% 0.33%-6.7% 2.47%-6.13%	Effective Interest rate 3.02% 2.81% 2.10% 2.42% 1.68% 0.33%-7.8% 3.20%-5.20%	RMB‘000 184,050,000 981,423,773 83,722,646 120,342,029 3,616,377,885 47,539,959 432,353,847 241,747,990 5,707,558,129

Note (i): The Group’s Investments include financial assets at fair value through profit or loss, available-for-sale financial assets, held-to-maturity investments, and long-term equity investments. The calculation of effective interest rates is based on the interest yielding part of the financial assets.

(iii) Sensitivity analysis

As at 31 December 2017, it is estimated that a general increase or decrease of 100 basis points in interest rates, with all other variables held constant, the Group’s profit before taxation would decrease or increase by RMB 10,549 million (31 December 2016: decrease or increase by RMB 8,113 million).

This sensitivity analysis is based on a static interest rate risk profile of the Group’s financial assets and financial liabilities and certain simplified assumptions. The analysis only measures the impact of changes in the interest rates within one year, showing how annualised interest income would have been affected by repricing of the Group’s financial assets and financial liabilities within the one-year period. The analysis is based on the following assumptions: (i) all assets and liabilities that reprice or mature within three months and after three months but within one year reprice or mature at the beginning of the respective periods; (ii) there is a parallel shift in the yield curve and in interest rates; and (iii) there are no other changes to the portfolio, all positions will be retained and rolled over upon maturity. The analysis does not take into account the effect of risk management measures taken by management. Because of its hypothetical nature with the assumptions adopted, actual changes in the Group’s profit before taxation resulting from increases or decreases in interest rates may differ from the results of this sensitivity analysis.

154 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(47) Financial risk management (Continued)
(b) Market risk (Continued)
(II) Currency risk

Currency risk arises from the changes in exchange rates on the Group’s foreign currency denominated assets and liabilities. The Group measures its currency risk with foreign currency exposures, and manages currency risk by entering into spot foreign exchange transactions, use of derivatives (mainly foreign forwards and swaps), and matching its foreign currency denominated assets with corresponding liabilities in the same currency.

The exposure to currency risk arising from the financial assets and financial liabilities at the balance sheet date is as follows (denominated in RMB thousand equivalence):

The Group

Total financial assets Total financial liabilities Financial asset- liability gap		31 December 2017	31 December 2017
	RMB 5,311,401,832 (4,909,065,889) 402,335,943	US$ 265,999,969 (283,129,561) (17,129,592)	HK$ 152,626,300 (131,135,788) 21,490,512	Others 33,834,619 (55,581,612) (21,746,993)	Total 5,763,862,720 (5,378,912,850) 384,949,870

The Group

Total financial assets Total financial liabilities Financial asset- liability gap		31 December 2016(Restated)	31 December 2016(Restated)	31 December 2016(Restated)
	RMB 5,484,269,059 (5,161,594,823) 322,674,236	US$ 352,643,067 (309,229,364) 43,413,703	HK$ 137,535,446 (129,742,204) 7,793,242	Others 33,290,919 (54,307,741) (21,016,822)	Total 6,007,738,491 (5,654,874,132) 352,864,359

Assuming all other risk variables remained constant, a 100 basis points strengthening or weakening of RMB against US$, HK$ and other currencies as at 31 December 2017 would increase or decrease the Group’s profit before taxation by 162 million (31 December 2016: decrease or increase by RMB 311 million).

This sensitivity analysis is based on a static foreign exchange exposure profile of assets and liabilities and certain simplified assumptions. The analysis is based on the following assumptions: (i) the foreign exchange sensitivity is the gain and loss recognised as a result of 100 basis point fluctuation in the foreign currency exchange rates against RMB; (ii) the exchange rates against RMB for all foreign currencies change in the same direction simultaneously, and does not take into account the correlation effect of changes in different foreign currencies; (iii) the foreign exchanges exposures calculated include both spot foreign exchanges, forward foreign exchanges and options, and all positions will be retained and rolled over upon maturity. The analysis does not take into account the effect of risk management measures taken by management. Because of its hypothetical nature with the assumptions adopted, actual changes in the Group’s profit before taxation resulting from increases or decreases in foreign exchange rates may differ from the results of this sensitivity analysis.

155 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(47) Financial risk management (Continued)

(c) Liquidity risk

Liquidity risk arises when there is mismatch between amounts and maturity dates of financial assets and financial liabilities.

Each of the Group’s operating entity formulate liquidity risk management policies and procedures within the Group’s overall liquidity risk management framework and takes into consideration of the business and regulatory requirements applicable to individual entity.

The Group manages liquidity risk by holding liquid assets (including deposits, other short term funds and securities) of appropriate quality and quantity to ensure that short term funding requirements are covered within prudent limits. Adequate standby facilities are maintained to provide strategic liquidity to meet unexpected and material demand for payments in the ordinary course of business.

The following tables indicate the analysis by remaining maturities of the Group’s financial assets and liabilities:

The Group

Total financial assets Total financial liabilities Financial asset- liability gap Total financial assets Total financial liabilities Financial asset- liability gap				31 December 2017
	Repayable on demand 264,614,711 (2,287,664,846) (2,023,050,135)	Within 3 months 1,064,759,743 (1,523,585,826) (458,826,083)	Between 3 month and 1 year Between 1 year and 5 years More than 5 years 1,134,342,953 1,490,392,484 1,159,577,521 (1,088,056,789) (409,621,427) (66,768,414) 46,286,164 1,080,771,057 1,092,809,107 31 December 2016(Restated)			No maturity date 650,175,308 (3,215,548) 646,959,760	Total 5,763,862,720 (5,378,912,850) 384,949,870
	Repayable on demand 243,368,432 (2,437,223,611) (2,193,855,179)	Within 3 months 1,403,165,743 (1,496,190,624) (93,024,881)	Between 3 month and 1 year 1,747,639,448 (1,209,573,752) 538,065,696	Between 1 year and 5 years 1,140,303,838 (416,844,086) 723,459,752	More than 5 years 922,807,725 (91,000,841) 831,806,884	No maturity date 550,453,305 (4,041,218) 546,412,087	Total 6,007,738,491 (5,654,874,132) 352,864,359

The cost of franchise right is the fair value at the date of acquisition and is subsequently amortised over the remaining franchise term pertaining to the term of MFAs.

Total financial assets Total financial liabilities Financial asset- liability gap				31 December 2017
	Repayable on demand 263,216,830 (2,284,807,514) (2,021,590,684)	Within 3 months 1,078,728,358 (1,514,201,291) (435,472,933)	Between 3 month and 1 year 1,231,651,375 (1,113,568,536) 118,082,839	Between 1 year and 5 years 1,832,408,018 (457,552,273) 1,374,855,745	More than 5 years 1,645,818,977 (75,085,328) 1,570,733,649	No maturity date 652,564,158 (3,215,548) 649,348,610	Total 6,704,387,716 (5,448,430,490) 1,255,957,226

156 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(47) Financial risk management (Continued)
(c) Liquidity risk (Continued)

Credit Commitments include acceptances, credit card commitments, guarantees, loan commitments, letters of credit and others. The tables below summarise the amounts of credit commitments by remaining contractual maturity.

The Group

Acceptances Credit card commitments Guarantees Loan commitments Letters of credit Total The Group Acceptances Credit card commitments Guarantees Loan commitments Letters of credit Total		31 December 2017	31 December 2017
	Within 1 year 427,599,843 310,314,921 123,455,953 17,435,236 86,906,379 965,712,332	Between 1 and 5 years More than 5 years 70,959 - - - 87,493,712 1,168,936 24,539,912 28,857,939 2,182,620 - 114,287,203 30,026,875 31 December 2016		Total 427,670,802 310,314,921 212,118,601 70,833,087 89,088,999 1,110,026,410
	Within 1 year 535,204,428 215,844,559 94,875,485 15,171,616 85,179,979 946,276,067	Between 1 and 5 years - - 78,924,379 27,835,084 1,500,318 108,259,781	More than 5 years - - 1,020,832 31,929,634 - 32,950,466	Total 535,204,428 215,844,559 174,820,696 74,936,334 86,680,297 1,087,486,314

157 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(48) Fair value
(a) Fair value measurement
(I) Fair value hierarchy

The following table presents the fair value information and the fair value hierarchy, at the end of the current reporting period, of the Group’s assets and liabilities which are measured at fair value at each balance sheet date on a recurring or non-recurring basis. The level in which fair value measurement is categorised is determined by the level of the fair value hierarchy of the lowest level input that is significant to the entire fair value measurement. The levels of inputs are defined as follows:

Level 1 inputs: unadjusted quoted prices in active markets that are observable at the measurement date for identical assets or liabilities;

Level 2 inputs: inputs other than Level 1 inputs that are either directly or indirectly observable for underlying assets or liabilities; Level 3 inputs: inputs that are unobservable for underlying assets or liabilities.

The fair value of the Group’s financial assets and financial liabilities are determined as follows:

If traded in active markets, fair values of financial assets and financial liabilities with standard terms and conditions are determined with reference to quoted market bid prices and ask prices, respectively;

If not traded in active markets, fair values of financial assets and financial liabilities are determined in accordance with generally accepted pricing models or discounted cash flow analysis using prices from observable current market transactions for similar instruments. If there were no available observable current market transactions prices for similar instruments, quoted prices from counterparty is used for the valuation, and management performs analysis on these prices. Discounted cash flow analysis using the applicable yield curve for the duration of the instruments is used for derivatives other than options, and option pricing models are used for option derivatives.

158 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(48) Fair value(Continued) (a) Fair value measurement (Continued) (I) Fair value hierarchy (Continued)

The Group

Recurring fair value measurements assets Financial assets at fair value through profit or loss Derivative financial assets Available-for-sale financial assets Investment properties Total assets measured at fair value on a recurring basis Liabilities Derivative financial liabilities Recurring fair value measurements assets Financial assets at fair value through profit or loss Derivative financial assets Available-for-sale financial assets Investment properties Total assets measured at fair value on a recurring basis Liabilities Derivative financial liabilities	31 December 2017 75,855,420 66,203,044 651,891,430 4,204,706 798,154,600 (65,295,254) 31 December 2016 69,609,531 47,604,014 562,761,019 4,003,390 683,977,954 (45,068,448)	Level 1 fair value measurements 13,798,993 - 60,616,944 - 74,415,937 - Level 1 fair value measurements 7,618,361 183,836 53,310,293 - 61,112,490 -	Level 2 fair value measurements 62,048,437 65,471,417 581,053,255 - 708,573,109 (65,294,933) Level 2 fair value measurements 61,962,615 47,418,111 495,527,443 - 604,908,169 (45,066,381)	Level 3 fair value measurements 7,990 731,627 10,221,231 4,204,706
				15,165,554
				(321)
				Level 3 fair value measurements 28,555 2,067 13,923,283 4,003,390
				17,957,295
				(2,067)

As at 31 December 2017, the Group did not have any assets or liabilities measured at fair value on a non-recurring basis (31 December 2016: Nil).

During the year ended 31 December 2017, there were no transfers, between Level 1 and Level 2 of the Group’s above assets and liabilities which are measured at fair value on a recurring basis (31 December 2016: Nil). The Group recognises transfers between different levels at the balance sheet date during which such transfers are made.

159 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(48) Fair value(Continued)
(a) Fair value measurement (Continued)
(II) Level 2 fair value measurement

Level 2 fair value is generally obtained from third party pricing services for identical or comparable assets, or through the use of valuation methodologies using observable market inputs, or recent quotated market prices. Valuation service providers typically gather, analyse and interpret information related to market transactions and other key valuation model inputs from multiple sources, and through the use of widely accepted internal valuation models, providing a theoretical quote on various securities.

For the year ended 31 December 2017, there were no changes in valuation techniques for the recurring Level 2 fair value measurements (31 December 2016: Nil).

160 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)
(48) Fair value(Continued)
(a) Fair value measurement (Continued)
(III) Level 3 fair value measurement

The following table shows a reconciliation from the beginning to the ending balances for fair value measurement in recurring Level 3 of the fair value hierarchy:

		2017	2017
Financial assets at fair value through profit or loss 28,555 (16,288) - (4,277) 7,990 (16,288)	Derivatives financial assets 2,067 (1,343) 731,306 (403) 731,627 (1,343)	Assets Available-for-sale financial assets 13,923,283 (718,162) 269,125 (3,253,015) 10,221,231 (718,162)	Investment properties 4,003,390 423,249 - (221,933) 4,204,706 423,249	Total 17,957,295 (312,544) 1,000,431 (3,479,628) 15,165,554 (312,544)	Liabilities Derivatives financial liabilities (2,067) 701 - 1,045
					(321)
					701

161 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(48) Fair value (Continued)
(a) Fair value measurement (Continued)
(III) Level 3 fair value measurement (Continued)

		2016	2016
Financial assets at fair value through profit or loss 68,241 - (39,546) - (140) 28,555 (39,546)	Derivatives financial assets 3,344 - 1,110 - (2,387) 2,067 1,110	Assets Available-for-sale financial assets 15,752,113 (144,985) (149,102) (76,755) (1,457,988) 13,923,283 (149,102)	Investment properties 5,086,392 (957,120) 178,977 - (304,859) 4,003,390 178,977	Total 20,910,090 (1,102,105) (8,561) (76,755) (1,765,374) 17,957,295 (8,561)	Liabilities Derivatives financial liabilities (760,717) - 30,287 777,261 (48,898)
					(2,067)
					30,287

162 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)
(48) Fair value (Continued)
(b) Fair value of other financial instruments (items not measured at fair value as at the balance sheet date)

	31 December 2017	31 December 2017
Carrying amount 218,702,786 538,985,157 757,687,943 19,263,867 122,880,489 73,727,630 2,849,296 270,096,285 488,817,567	Fair value 212,596,958 533,669,214 746,266,172 19,263,866 121,289,312 76,246,158 2,849,080 265,071,146 484,719,562	Level 1 897,350 - 897,350 2,199,704 315,000 5,531,122 - - 8,045,826	Level 2 211,632,608 92,967,133 304,599,741 17,064,162 120,974,312 70,715,036 2,849,080 265,071,146 476,673,736	Level 3 67,000 440,702,081
				440,769,081
				- - - - - -

163 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(48) Fair value (Continued)
(b) Fair value of other financial instruments (items not measured at fair value as at the balance sheet date) (Continued)

	31 December 2016	31 December 2016
Carrying amount 218,393,136 1,043,289,575 1,261,682,711 18,627,978 58,067,913 76,242,400 9,492,682 269,922,874 432,353,847	Fair value 219,041,335 1,041,922,427 1,260,963,762 18,627,977 58,462,669 78,919,782 9,443,312 268,663,525 434,117,265	Level 1 961,170 - 961,170 3,094,568 - 8,124,268 - - 11,218,836	Level 2 218,053,165 264,700,385 482,753,550 15,533,409 58,462,669 70,795,514 9,443,312 268,663,525 422,898,429	Level 3 27,000 777,222,042
				777,249,042
				- - - - - -

164 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(49) Capital management

The Group’s primary objectives when managing capital are to safeguard the Group’s stability and growth, so that it can continue to provide returns for shareholders.

The Group actively and regularly reviews and manages its capital structure, with reference to such financial ratios like debt (total of debt instruments issued and bank and other loans) to total equity ratio, to maintain a balance between the higher shareholders’ returns that might be possible with of borrowings obtained and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions.

Certain subsidiaries under the financial services segment are subject to capital adequacy requirements imposed by the external regulators. There was no non-compliance of capital requirements as at 31 December 2017 (31 December 2016: Nil).

(50) Commitments and contingent liabilities
(a) Credit commitments

Credit commitments in connection with the financial services segment of the Group take the form of loan commitments, credit card commitments, financial guarantees ,letters of credit and acceptances.

Loan commitments represent the undrawn amount of approved loans with signed contracts. Credit card commitments represent the credit card overdraft limits authorised by the Group. Financial guarantees and letters of credit represent guarantee provided by the Group to guarantee the performance of customers to third parties. Acceptances comprise undertakings by the Group to pay bills of exchange drawn on customers. The Group expects most acceptances to be settled simultaneously with the reimbursement from the customers.

The contractual amounts of credit commitments by category as at the balance sheet date are set out below. The amounts disclosed in respect of loan commitments and credit card commitments assume that amounts are fully advanced. The amounts of guarantees, letters of credit and acceptances represent the maximum potential loss that would be recognised as at the balance sheet date if counterparties failed to perform as contracted.

165 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(50) Commitments and contingent liabilities (Continued)
(a) Credit commitments (Continued)

The Group 31 December 2017 Contractual amount Loan commitments With an original maturity of within 1 year 13,643,448 With an original maturity of 1 year or above 57,189,639 70,833,087 Guarantees 212,118,601 Letters of credit 89,088,999 Acceptances 427,670,802 Credit card commitments 310,314,921 1,110,026,410 Credit commitments analysed by credit risk weighted amount 31 December 2017 Credit risk weighted amount on credit commitments 351,475,306	31 December 2016 8,445,758 66,490,576
	74,936,334 174,820,696 86,680,297 535,204,428 215,844,559
	1,087,486,314
	31 December 2016 337,215,836

166 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(50) Commitments and contingent liabilities (Continued)
(a) Credit commitments (Continued)

The Company Guarantees Others	31 December 2017 7,899,510 - 7,899,510	31 December 2016 6,897,365 - 6,897,365

Note:

(i) The above credit risk weighted amount is solely in connection with the credit commitments held by CITIC Bank under the financial services segment of the Group.
(ii) As at 31 December 2017 and 2016, the credit risk weighted amount refers to the amount as computed in accordance with the rules set out by the China Banking Regulatory Commission and depends on the status of counterparties and the maturity characteristics. The risk weighting used is ranging from 0% to 150%.

(b) Redemption commitment for treasury bonds

As an underwriting agent of PRC treasury bonds, CITIC Bank has the responsibility to buy back those bonds sold by it should the holders decide to early redeem the bonds held. The redemption price for the bonds at any time before their maturity dates is based on the nominal value plus any interest unpaid and accrued up to the redemption date. Accrued interest payables to the bond holders are calculated in accordance with relevant rules of the Ministry of Finance and the People’s Bank of China. The redemption price may be different from the fair value of similar instruments traded at the redemption date.

The redemption obligations below represent the nominal value of treasury bonds underwritten and sold by CITIC Bank, but not yet matured at the balance sheet date:

Redemption commitment for treasury bonds	31 December 2017 11,492,000	31 December 2016 12,722,610

As at 31 December 2017, the original maturities of these bonds vary from one to five years (31 December 2016: one to five years). Management of the Group expects the amount of redemption before maturity dates of these bonds will not be material. The Ministry of Finance will not provide funding for the early redemption of these bonds on a back-to-back basis, but will settle the principal and interest upon maturity.

167 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(50) Commitments and contingent liabilities (Continued)
(c) Guarantees provided

Except for guarantees that have been recognised as liabilities, guarantee issued by the Group and the Company for other enterprises are as follows:

The Group

Related parties(note) Third parties The Company Subsidiaries Related parties(note)	31 December 2017 14,265,186 933,970 15,199,156 31 December 2017 - 14,064,186 14,064,186	31 December 2016 15,494,048 821,010
		16,315,058
		31 December 2016 3,913,560 15,479,648 19,393,208

Note:

As at 31 December 2017, the guarantees provided to related parties by the Group include guarantees provided to former subsidiaries of the Company that were disposed to China Overseas Land & Investment Limited (“China Overseas”) in 2017 amounting to RMB 5 billion (31 December 2016: RMB 5.3 billion). The guarantees are being transferred to China Overseas which has provided counter guarantees to the Group (Note 6(52)(c)(II)).

As at 31 December 2017, the Group’s counter guarantees issued to related parties were Nil (31 December 2016: Nil). And the Group’s counter guarantees issued to third parties of the Group were Nil (31 December 2016: Nil).

168 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)
(50) Commitments and contingent liabilities (Continued)
(d) Outstanding litigations and disputes
(1) In August 2014, 山煤煤炭進出口有限公司 (Shanxi Coal Import & Export Co., Ltd.) (“Shanxi Coal I/E ” ), a wholly-owned subsidiary of 山煤國際能源集團股份有限公司 (Shanxi Coal International Energy Group Co., Ltd.), commenced a claim in 山西省高級人民法院 (the Shanxi High People ’ s Court) (the “ Shanxi Court”) against, amongst others, CITIC Australia Commodity Trading Pty Limited (“CACT”), an indirect wholly-owned subsidiary of the Company (“Shanxi Claim A”). In connection with Shanxi Claim A, Shanxi Coal I/E obtained an asset protection order from the Shanxi Court over a certain quantity of the inventories (the “Shanxi APO”).

In January 2017, pursuant to a civil ruling of the Shanxi Court, Shanxi Claim A was transferred to the Public Security Bureau for determination in accordance with China’s criminal procedures. As a result, Shanxi Claim A was terminated and Shanxi Coal I/E has no further recourse or rights against CACT in respect of Shanxi Claim A.

In February 2017, the Shanxi Court ordered the lifting of the Shanxi APO.

(2) In the second half of 2015, CACT received an arbitration request notice from the International Court of Arbitration of the International Chamber of Commerce (the “ICC”) in respect of an arbitration application by Shanxi Coal I/E pursuant to which, Shanxi Coal I/E is (i) alleging that CACT has entered into two contracts for the supply of, and has failed to deliver, copper cathodes to Shanxi Coal I/E (the “Contracts”); and (ii) claiming an amount of US$27,890,000 (HK$217,542,000) as the aggregate purchase price Shanxi Coal I/E alleges it has paid to CACT under the Contracts, plus interest (“Shanxi Claim B”).

CACT has not entered into the Contracts as alleged by Shanxi Coal I/E and considers Shanxi Claim B to be baseless. Accordingly, no provision was made in respect of Shanxi Claim B.

Pursuant to the final award of the ICC of 28 September 2017, the ICC has determined that it did not have jurisdiction over CACT and Shanxi Coal I/E for the purposes of arbitrating the Claim B.

169 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(50) Commitments and contingent liabilities (Continued)
(e) Capital commitments

As at the balance sheet date, the Group had the following capital commitments not provided for in these consolidated financial statements:

The Group

31 December 2017 31 December 2016 (Restated) Contracted for 15,201,507 11,743,874

170 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(50) Commitments and contingent liabilities (Continued)
(f) Operating lease commitments

As at the balance sheet date, the Group’s future minimum lease payments under non-cancellable operating leases are as follows:

The Group

Within 1 year (inclusive) Between 1 and 2 years (inclusive) Between 2 and 3 years (inclusive) Over 3 years	31 December 2017 3,048,843 3,040,848 2,381,200 5,812,535 14,283,426	31 December 2016 3,090,695 2,579,321 2,207,503 6,047,280 13,924,799

171 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(51) Non-adjusting post balance sheet date events
(a) Profit distribution

On 28 March 2018, the board of directors of the Company suggest not make profit distribution to owners for the year ended 31 December 2017.

172 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(52) Related party relationships and transactions
(a) Information on the parent of the Company is listed as follows:

	Registered		Share capital	Shareholding	Proportion of
Company name	place	Business nature	HKD'000	percentage	voting rights
		Investment
CITIC Limited	Hong Kong	holding	381,710,400	100%	100%

(b) Further information on the subsidiaries of the Company is set out in Note 5.
(c) Transactions with related parties other than its key management personnel:
(I) Transaction amounts with related parties:

The Group

	2017	2016
		(Restated)
Sales of goods	706,753	734,419
Purchase of goods	2,221,087	2,046,687
Net interest expenses	221,545	578,014
Net fee and commissions expenses	680,589	801,842
Income from supplementary services	114,652	110,769
Expenses for supplementary services	817,477	639,311
Interest income from deposits and receivables	83,814	138,287
Business and administrative expenses	221,542	101,828
The Company
	2017	2016
Interest income from loans	504,994	1,469,533
Net fee and commissions expenses	20,010	141,573
Interest income from deposits	65,349	69,635
Interest expenses	-	248,722
Business and administrative expenses	-	1,462

Note:

(i) The above transactions with related parties were conducted under normal commercial terms or relevant agreements.

(ii) Interest rates of loans and advances to customers and other parties to the related parties were determined at rates negotiated between the Group and the related parties on a case by case basis.
173 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)
(52) Related party relationships and transactions (Continued)
(c) Transactions with related parties other than its key management personnel (Continued):
(I) Transaction amounts with related parties (Continued):
Note(Continued):
(iii) During the relevant years, CITIC Bank, a subsidiary of the Group, entered into transactions with related parties in the ordinary course of its banking businesses including lending, assets transfer (i.e. issuance of asset-backed securities in the form of private placement) wealth management, investment, deposit, settlement and clearing, off-balance sheet transactions, and purchase, sale and leases of property. These banking transactions were conducted under normal commercial terms and conditions and priced at the relevant market rates prevailing at the time of each transaction.
(iv) The company sold the Group’s interest in certain residential real estate projects in the PRC to China Overseas by its parent company CITIC Limited in 2016. The transaction above was entrusted to CITIC Limited on behalf of the company and CITIC Pacific to sell and settle with China Overseas (Note 6(54)).
(v) CITIC Limited, the parent of the Company, transferred part of long-term receivables due from of its subsidiary, CITIC Mining International Limited, of US$2.4 billion in aggregation (approximately RMB 15.7 billion) to three of the Company's subsidiaries through its subsidiary Castle Metro Limited in 2017.
174 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(52) Related party relationships and transactions (Continued)
(c) Transactions with related parties other than its key management personnel (Continued):
(II) The balances with related parties as at the balance sheet date are set out as follows:

The Group

	31 December 2017	31 December 2016
		(Restated)
Trade and other receivables	21,252,084	23,004,648
Loans and advances to customers and other
parties	19,356,877	15,634,535
Placements with banks and non-bank
institutions	1,488,602	692,968
Cash and deposits	666,152	2,279,755
Financial assets at fair value through profit
or loss	191,513	127,575
Derivative financial instruments and
other assets	632,626	661,292
Available-for-sale financial assets	3,386,186	842,332
Trade and other payables	18,593,039	16,886,850
Deposits from customers, banks and non-
bank institutions	69,779,102	35,608,516
Derivative financial instruments and other
liabilities	80,184	278,940
Bank and other loans	5,929,024	6,149,101
Debt instruments issued	1,110,215	-
Off-balance sheet items
Guarantees provided	14,265,186	15,494,048
Guarantees received	7,007,636	7,679,475
Entrusted funds	12,254,416	8,180,110
Funds raised from investors of non-principle
guaranteed wealth management products	31,020	6,000
The Company
	31 December 2017	31 December 2016
Trade and other receivables	31,459,121	26,569,650
Loans and advances to customers and
other parties	8,865,759	11,044,002
Cash and deposits	19,113,214	18,586,567
Derivative financial instruments and other
assets	-	2,495
Trade and other payables	15,232,371	11,637,272
Derivative financial instruments and
other liabilities	1,370,674	1,315,300
Guarantees provided	14,064,186	19,393,208

175 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(52) Related party relationships and transactions (Continued)
(c) Transactions with related parties other than its key management personnel (Continued):
(1) The above transactions with related party transactions which were conducted under the normal commercial terms.
(2) Interest rates of loans and advances to customers and other parties to the related parties were determined at rates negotiated between the Group and the corresponding related parties on a case by case basis.
(3) The guarantees provided by the Group to the related parties were based on the terms agreed between the Group and the related parties on a case by case basis.
(III) Relationships with the related parties under the transactions stated in 6(52)(c)(I) and 6(52)(c) (II) above

Company Name

Relationship with the Group

CITIC Group CITIC Limited CITIC Pacific Special Steel Co., Ltd. CITIC Pacific Mining Management Pty Ltd. Castle Metro Limited CITIC Polaris Limited CITIC Asset Management Co., Ltd. CITIC-Prudential Life Insurance Co., Ltd. CITIC Securities CITIC Real Estate Co., Ltd. CITIC Futures Company Limited Guangdong Honglianjiuwu Information Industry Co., Ltd.

Ultimate holding company Parent company Controlled by the parent company Controlled by the parent company Controlled by the parent company Controlled by the ultimate holding company Controlled by the ultimate holding company Jointly controlled by the Group Significantly influenced by the Group Significantly influenced by the Group Significantly influenced by the Group

Significantly influenced by the Group

176 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(53) Structured entities
(a) The principal guaranteed wealth management products issued and managed by the Group

The principal guaranteed wealth management products issued and managed by CITIC Bank, a subsidiary of the Group, represent products to which CITIC Bank has guaranteed the investor's principal investment. The investments of the wealth management products and the corresponding source of funding are categorised as financial assets and financial liabilities in accordance with the accounting policies.

(b) Structured entities sponsored by third party institutions in which the Group holds an interest

The Group holds an interest in some structured entities sponsored by third party institutions through investments in debt securities issued by these structured entities. Such structured entities include wealth management products, investment management products, trust investment plans, assetbacked securities and investment funds and the Group does not consolidate these structured entities.

The following table sets out an analysis of the carrying amounts of interests held by the Group as at the balance sheet date in the structured entities sponsored by third party institutions, as well as an analysis of the line items in the balance sheet in which the relevant assets are recognised:

177 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(53) Structured entities (Continued)

(b) Structured entities sponsored by third party institutions in which the Group holds an interest (Continued)

Carrying amount Financial assets at fair value through profit or loss Wealth management products issued by banks - Investment management products managed by non-bank financial institutions - Trust investment plans - Asset-backed securities - Investment funds 2,000,669 2,000,669				31 December 2017
		Held-to- maturity investments - - - 34,234,225 - 34,234,225	Available-for-sale financial assets 13,887,926 340,650 4,748,577 16,877,031 122,120,281 157,974,465	Investments classified as receivables 139,020,000 269,188,287 129,753,594 - 304,643 538,266,524	Total 152,907,926 269,528,937 134,502,171 51,111,256 124,425,593 732,475,883	Guarantees - - - - - -	Maximum loss exposure 152,907,926 269,528,937 134,502,171 51,111,256 124,425,593 732,475,883

178 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated) [English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(53) Structured entities (Continued)

(b) Structured entities sponsored by third party institutions in which the Group holds an interest (Continued)

Carrying amount Financial assets at fair value through profit or loss Wealth management products issued by banks - Investment management products managed by non-bank financial institutions - Trust investment plans - Asset-backed securities - Investment funds 1,000,075 1,000,075				31 December 2016
		Held-to- maturity investments - - - 1,526,555 - 1,526,555	Available-for-sale financial assets 11,035,796 963,750 2,465,723 9,746,698 22,213,208 46,425,175	Investments classified as receivables 458,390,000 455,363,610 126,307,728 - 980,000 1,041,041,338	Total 469,425,796 456,327,360 128,773,451 11,273,253 24,193,283 1,089,993,143	Guarantees - - - - - -	Maximum loss exposure 469,425,796 456,327,360 128,773,451 11,273,253 24,193,283 1,089,993,143

179 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(53) Structured entities (Continued)
(c) Structured entities sponsored by the Group which the Group does not consolidate but holds an interest

The investments issued by unconsolidated structured entities sponsored by the Group are primarily wealth management products and trust plans without principal and/or return guarantee. The nature and purpose of these structured entities are for the Group to generate fees from managing assets on behalf of investors. These structured entities are financed through issuance of products to investors. Interest held by the Group includes fees charged by providing management services and investment made by the Group.

Wealth management products and trust plans

As at 31 December 2017, the aggregate amount of assets held by the unconsolidated nonprincipal-guaranteed wealth management products and trust plans which are sponsored by the Group was RMB 3,119.4 billion (31 December 2016: RMB 2,381.4 billion).

As at 31 December 2017, the carrying amounts of management fee receivables recognised in the balance sheet were 700 million (31 December 2016: RMB500 million).

As at 31 December 2017, the amount of placements and financial assets held under resale agreements from the Group with non-principal-guaranteed wealth management products sponsored by the Group was RMB 70,500 million (31 December 2016: RMB 62,000 million).

The aggregate amount of the non-principal-guaranteed wealth management products sponsored and issued by the Group after 1 January but matured before 31 December for 2017 is RMB 596.6 billion (2016: RMB 742 billion).

During the year ended 31 December 2017, the maximum exposure of the placements and financial assets held under resale agreements from the Group with non-principal guaranteed wealth management products sponsored by the Group was RMB 72,400 million (2016: RMB 57,400 million). In the opinion of management, the transactions were conducted in the ordinary course of business under normal terms and conditions and at market rates.

During the year ended 31 December 2017, the amount of fee and commission income recognised from the abovementioned structured entities sponsored by the Group was RMB 9,700 million (2016: RMB 11,400 million).

180 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(53) Structured entities (Continued)
(c) Structured entities sponsored by the Group which the Group does not consolidate but holds an interest (Continued)

Securitisation transactions and loans transfers

For the year ended 31 December 2017, the Group entered into transactions which involved transfers of financial assets including securitisation transactions, transfers of loans including non-performing loans, and financial assets sold under repurchase agreements. Details of the financial assets sold under repurchase agreements are set forth in Note 6(23). Details of securitisation and loan transfer transactions conducted by the Group for the year ended 31 December 2017 totalled RMB 175,600 million are set forth below (2016: RMB119,100 million) .

During the year ended 31 December 2017, the Group entered into securitisation transactions backed by financial assets transferred with book value before impairment of RMB 127,300 million (2016: RMB 49,200 million), of which RMB 126,400 million (2016: RMB44,700 million) were qualified for full de-recognition. The balance of RMB 900 million (2016: RMB4,500 million) was in respect of non-performing loans transferred.

The Group concluded that it had continuing involvement in these assets as at 31 December 2017 based on the related criteria set forth in Note 3(12) and Note 3(27). As at 31 December 2017, the Group continued to recognise assets of RMB 800 million (31 December 2016: RMB 700 million) under loans and advances to customers and other parties together with assets and liabilities of the same amount under other assets and other liabilities, respectively, arising from such continuing involvement (Note 6(8)).

During the year ended 31 December 2017, the Group also through other types of transactions transferred loans of book value before impairment of RMB 48,300 million (2016: RMB70,000 million), of which RMB 38,700 million represented non-performing loans (2016: RMB54,000 million). The Group carried out assessment based on the criteria as detailed in Note 3(12) and Note 3(27) and concluded that these transferred assets qualified for full de-recognition (Note 6(8)(c)).

181 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(54) Discontinued operations

On 14 March 2016, the Company, CITIC Limited and CITIC Pacific entered into an agreement with China Overseas to sell the Group’s interest in certain residential real estate projects in the PRC to one of the affiliates of China Overseas. Completion of the transaction took place in September 2016.

The disposed residential real estate projects in the PRC mentioned above meet the condition of discontinued operation, and their operating results are as follows:

Revenue of discontinued operations Less: Costs and expenses of discontinued operations Total profit of discontinued operations Less: Income taxes of discontinued operations Net profit of discontinued operations before net disposal loss Net disposal gain Net profit of discontinued operations Attributable to: owners of the Company	2016 7,809,450 (11,204,295)
	(3,394,845) (418,089)
	(3,812,934) 11,240,653
	7,427,719 7,451,738

182 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(55) Business combinations involving entities under common control

On 29 September 2017, CITIC Metal Group Limited (“CITIC Metal”), an indirect whollyowned subsidiary of the group, and Star Thrive, an indirect wholly-owned subsidiary of CITIC Group (which is a special purpose vehicle holding 76.37% equity interest in Jinzhou Titanium) entered into the New Share Subscription Agreement, pursuant to which CITIC Metal agreed to subscribe for 60% of the enlarged share capital of Star Thrive at a consideration of HK$1,326 million (RMB 1,150 million). On 29 September 2017 (“the Acquisition Date”), the transaction under the New Share Subscription Agreement was completed. The Group’s share of the net asset of Star Thrive was RMB 1,030 million. The Acquisition represents a business combination under common control as Star Thrive and the Company were ultimately controlled by CITIC Group both before and after the Acquisition, and that control is not transitory.

The assets and liabilities of Star Thrive at the acquisition date are as follows:

Cash at bank and on hand Receivables Inventories Fixed assets Intangible assets Deferred tax assets Other assets Less: Payables Tax payable Borrowings Other liabilities Owners' equity Less: Minority interests The equity attributable to owners of the Company	Carrying amount	Carrying amount
	Acquisition date 1,253,198 298,366 142,908 640,737 272,753 10,312 11,676 (382,982) (18,775) (279,681) (35,578) 1,912,934 (195,708) 1,717,226	31 December 2016 112,685 200,323 85,435 356,275 219,674 13,883 400,711 (323,072) (275,131) (9,763) (45,698)
		735,322 (184,436)
		550,886

183 -

CITIC CORPORATION LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

[English translation for reference only]

6 Notes to the Consolidated Financial Statements (Continued)

(55)[Business combinations involving entities under common control (Continued) ]

The revenue, net profit and cash flows of Star Thrive for the year 2016 and the period from 1 January 2017 to the acquisition date are as follows:

	From 1 January 2017 to
	the acquisition date	2016
Total revenue	638,282	721,167
Net profit	29,125	48,962
Cash flows from operating activities	86,597	190,597
Net cash flows	54,606	(13,099)

(56) Major transactions with non-controlling interests

Dilution of interests in a subsidiary without loss of control

In September 2017, CBI issued new shares to five investors, raising RMB 7,847 million in total. Upon the issuance of new shares, equity interests indirectly owned by CITIC Bank in CBI reduced from 100% to 75% The Group recognised an increase in noncontrolling interests of RMB 7,624 million and an increase in equity attributable to shareholders of the Company of RMB 223 million.

The effect of changes in the ownership interest of CBI on the equity attributable to shareholders of the Company during the year is summarised as follows:

Increase in carrying amount of non-controlling interests Consideration received from non-controlling interests Gain on disposal within equity	For the year ended 31 December 2017 7,624,020 (7,847,000) (222,980)

184 -

AI assistant

CITIC Limited — Audit Report / Information 2017

49082_rns_2018-04-27_1d8110ec-7084-44ae-b4f8-e39a9f414954.pdf

ANNOUNCEMENT

FINANCIAL STATEMENTS AND AUDITOR’S REPORT OF CITIC CORPORATION LIMITED FOR THE YEAR ENDED 31 DECEMBER 2017

CITIC CORPORATION LIMITED

FINANCIAL STATEMENTS AND AUDITOR’S REPORT FOR THE YEAR ENDED 31 DECEMBER 2017

CITIC CORPORATION LIMITED

Auditor’s Report

Opinion

What we have audited

Our opinion

Basis for Opinion

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Auditor’s Responsibilities for the Audit of the Financial Statements

Auditor’s Responsibilities for the Audit of the Financial Statements (Cont’d)

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2017

CONSOLIDATED BALANCE SHEET (CONTINUED) AS AT 31 DECEMBER 2017

COMPANY BALANCE SHEET AS AT 31 DECEMBER 2017

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2017

COMPANY INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2017

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2017

CONSOLIDATED CASH FLOW STATEMENT(CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2017

COMPANY CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2017

CITIC CORPORATION LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’ EQUITY FOR THE YEAR ENDED 31 DECEMBER 2017

CITIC CORPORATION LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’ EQUITY(CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2017

CITIC CORPORATION LIMITED

COMPANY STATEMENT OF CHANGES IN OWNERS’ EQUITY FOR THE YEAR ENDED 31 DECEMBER 2017

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

1 General information

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

2 Basis of preparation of financial statements

3 Significant accounting policies and accounting estimates

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

(c) Consolidated financial statements

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

- Completed property held for sale

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

3 Significant accounting policies and accounting estimates (Continued)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

(8) Operating lease charges

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

3 Significant accounting policies and accounting estimates (Continued)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

(b) Categorisation

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

Loans and receivables

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

Held-to-maturity investments

Available-for-sale financial assets

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

Other financial liabilities

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

(d) Offsetting

(e) Derivatives

(f) Embedded derivatives

(a) Financial assets

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

3 Significant accounting policies and accounting estimates (Continued)

Loans and receivables

CITIC Limited Audit Report / Information 2017