CITIC Limited — Interim / Quarterly Report 2011

Aug 19, 2011

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

CITIC Pacific Limited 中信泰富有限公司

(Incorporated in Hong Kong with limited liability) (Stock Code: 00267)

ANNOUNCEMENT OF RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011

CHAIRMAN’S LETTER TO SHAREHOLDERS

Dear Shareholders,

In the first half of 2011, CITIC Pacific achieved profit attributable to ordinary shareholders of HK$6,012 million. This is 24% higher than the same period in 2010. I am pleased to report that whereas 2010’s result included HK$1,774 million of one-time gains, in 2011 it was largely from our continuing business operations. On a comparable basis, contribution from operating businesses increased 73%, which demonstrated the solid performance of our businesses. The board is recommending an interim dividend of HK$0.15 per share.

Our already strong balance sheet was improved in April by the addition of USD1.25 billion raised from the capital market with maturities of 10 years and beyond. Early this month, we raised another RMB1 billion through a private placement under our newly established Medium Term Notes programme. We also agreed to sell to CITIC Group our 50% interest in CITIC Guoan, which will provide over HK$4 billion of additional cash if the transaction is approved by the shareholders and regulators. Gearing was 43% at the end of June, when we had a total of HK$44 billion of cash and available committed facilities.

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We are coming to the end of a major investment period. Expansion of our special steel production capacity is complete. The property development business in mainland China requires capital but is substantially self-funding as it generates good cash flow from the sale of projects. Capital expenditure on our iron ore mine will remain high in 2011, and we look forward to the significant cash flow from the mine once it begins production.

The Sino Iron project is one of the largest overseas iron ore investments made by a Chinese company. It is significant not only to CITIC Pacific, but also CITIC Group and indeed China. I feel the pressure and the challenge of constructing this project, and I am sure some of my colleagues share this feeling. We have come so far and we remain committed to our mission of completing the project as soon as possible.

Much progress has been made this year. The power station, desalination plant and the port area are ready for integrated commissioning. Up to now, over 100 million tonnes of material have been moved from the mine pit. Other components such as crushers, grinding mills, pipelines, the dewatering plant, stockpiles and related facilities are all in various stages of completion and testing. However, we still have a lot of work ahead of us to achieve integrated commissioning and initial production.

In the progress update provided last month, we said that our target to produce and export high quality concentrate had been moved back to the first half of 2012. This is later than our plan to export at the end of this year and was due to slower progress made by our EPC (engineering, procurement and construction) contractor, MCC, which is responsible for ore processing related facilities. Because of this delay, we are working with some vendors to ensure that supplies needed for the mine’s operation are delivered at the appropriate time and to minimise liabilities. We are also negotiating with MCC regarding their proposal to increase their contract price by an additional USD900 million. Clearly, we are very disappointed by this request. The fact is that we need to complete this mine as fast as possible so that it can begin to generate profit and cash flow for our company. We believe that continuing to employ MCC to finish the project at a cost within reason is in the best interest of CITIC Pacific and our shareholders.

When the Chief Executive of Hong Kong, Mr Donald Tsang, visited our mine in June, we impressed upon him the scale and complexity of our undertaking. The Sino Iron project is the largest magnetite iron ore project under development and is also the first large-scale production facility in the world employing advanced technology to process magnetite iron ore. Since the project was conceived in 2006, the price of iron ore has risen over 260%, driven by demand from China and other developing markets. At the same time, the costs of building an iron ore mine — from labour to equipment and materials — have increased significantly. The appreciation of the Australian Dollar has also contributed to this rise in construction costs expressed in USD and HKD. Looking at all of these factors objectively, I don't think it is inaccurate to say that building a similar mine today would cost much more. We are encouraged by the fact that the industrialisation and

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urbanisation of China and other emerging markets are expected to drive demand for steel, which in turn will keep the price of iron ore at a firm level.

The project today, which is the most advanced among similar but smaller magnetite mines in Australia, is nearing initial production. Completing construction and preparing for operation is our top priority. I am happy to see that we have built a solid management team in Australia composed of experienced Australian and Chinese managers. They are very committed to successfully completing the project, doing all they can to control costs, and to operating the mine.

In June, the Australian government released draft legislation for the proposed Minerals Resource Rent Tax (“MRRT”). According to the draft, magnetite iron ore will be subject to the MRRT. The tax is set prior to the first point of processing, which in our case will be the primary crusher when the value of the material is low. No details have been given on how the resource is valued; therefore, it is uncertain what impact the MRRT will have on our project. We strongly believe that magnetite projects should be excluded from the MRRT as the Australian Government’s stated intention is to tax the resource mined, not the value created through processing. Magnetite iron ore in the ground has low iron content and requires extensive downstream processing to produce a saleable product. We continue to lobby the government and work with other producers in the industry to make our voice heard.

The Australian government has also announced its plan to tax companies with high carbon emissions. Unfortunately, the proposal only considers emissions in Australia and not the global effect of products made in Australia. Sino Iron is a case in point. Magnetite iron ore produces more carbon in Australia but less when used in steel making; therefore, there is a net reduction in carbon emissions in the overall mine-to-steel value chain. We are working closely with other magnetite iron ore producers to lobby the government for an appropriate level of assistance that recognises the benefits of this new and upcoming industry in terms of creating jobs in Australia and producing carbon savings across the globe.

Reviewing the performance of our other businesses, I am proud to say that they continued to do well in increasingly competitive markets. Our colleagues in the special steel business have proved again that they are experts at their trade. Profit contribution from our two special steel plants rose 21% compared with the first half of 2010 to reach HK$1,398 million. This far exceeded the average growth in profit of domestic special steel companies. Sales volume increased 14%, due primarily to new capacity. The expansion programme that we embarked upon three years ago is now complete. With nine million tonnes of annual steel producing capacity and new special steel plates, which further broadens our portfolio of products, we are in an excellent position to continue serving our customers and capturing the long-term growth opportunities the China market presents.

Although we achieved good results in special steel, we do note the recent weakness in steel demand, particularly from the auto sector. Currently about 25% of the special steel products we sell are to this sector. Despite the slower than previous growth in motor vehicle sales, the auto sector remains

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an important one for our steel business as its long-term growth is undeniable. We will continue to raise the quality of our products and explore opportunities in downstream product manufacturing. At the same time, our increasingly diverse portfolio of products will help lessen our reliance on some industries. I strongly believe that our expertise, solid customer base and excellent product quality will continue to solidify our leading position in special steel manufacturing in China.

Profit contribution from the mainland property business rose over four times compared with the same period last year mainly due to delivery of completed properties. The twin office towers in Shanghai’s Lujiazui area were handed over to the two buyers — Agricultural Bank of China and China Construction Bank — early in the year. We still have about 4.3 million square metres of gross floor area for development in the next seven to eight years. Sales of residential projects in the first half of 2011 were slow as a result of the measures put in place by the government to moderate the rapid rise of property prices. Looking at the rest of the year, sales will likely continue to be sluggish. In our view, however, these measures are beneficial to the long-term and sustainable growth of a healthy property market.

While our focus is on the three main businesses, our other businesses of energy, tunnels in Hong Kong, Dah Chong Hong and CITIC Telecom, representing 28% of the assets of our company, are all well managed and operating well. Their solid performance not only contributes profit and cash flow to CITIC Pacific but also allows us to spend much of our time and energy focusing on bringing the iron ore mine into production.

As you know, in May we bid farewell to five retiring directors and welcomed two new independent non-executive directors to our board. In these few short months, we have already benefited from their expertise and fresh perspectives. One of them was recently appointed to the committee of the board that is handling matters related to the foreign exchange incident of 2008, responding to the suggestion by shareholders that an independent director join that committee.

I feel privileged to have the support of our board and so many of our shareholders. Everything we do and every decision we make is driven by our goal of creating value and generating superior returns for our shareholders. Together, we can create a better future for CITIC Pacific.

I would like to thank our employees, shareholders and lenders for their hard work, understanding and support, which are essential to the success of CITIC Pacific.

Chang Zhenming Chairman

Hong Kong, 19 August 2011

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CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2011

Note Revenue 2 Cost of sales Gross profit Other income and net gains 3 Distribution and selling expenses Other operating expenses Change in fair value of investment properties Profit from consolidated activities 2 Share of results of Jointly controlled entities 2 Associated companies 2 Profit before net finance charges and taxation Finance charges Finance income Net finance charges 5 Profit before taxation Taxation 6 Profit for the period Profit attributable to: Ordinary shareholders of the Company 2 Holders of perpetual capital securities Non-controlling interests Dividends Proposed dividend 7 Earnings per share for profit attributable to ordinary shareholders of the Company during the period (HK$) Basic 8 Diluted 8	As restated 2011 2010 HK$m HK$m 45,940 31,873 (38,772) (26,676) ─────── ─────── 7,168 5,197 683 2,030 (1,295) (911) (2,340) (1,718) 1,338 755 ─────── ─────── 5,554 5,353 2,436 851 472 363 ─────── ─────── 8,462 6,567	As restated 2011 2010 HK$m HK$m 45,940 31,873 (38,772) (26,676) ─────── ─────── 7,168 5,197 683 2,030 (1,295) (911) (2,340) (1,718) 1,338 755 ─────── ─────── 5,554 5,353 2,436 851 472 363 ─────── ─────── 8,462 6,567
	(318) 253	(356) 142
	(65) (214) ─────── ─────── 8,397 6,353 (1,422) (983) ─────── ─────── 6,975 5,370 ═══════ ═══════ 6,012 4,866 99 - 864 504 ─────── ─────── 6,975 5,370 ═══════ ═══════ (547) (547) ═══════ ═══════ 1.65 1.33 ═══════ ═══════ 1.65 1.33 ═══════ ═══════

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2011

		As restated
	2011	2010
	HK$m	HK$m
Profit for the period	6,975	5,370
Other comprehensive income, net of tax
Cash flow hedging reserve movement from interest rate swaps
and foreign exchange contracts	(560)	(2,277)
Fair value changes of other financial assets	(3)	75
Share of other comprehensive income of associated companies
and jointly controlled entities	45	61
Exchange translation differences	1,003	625
Surplus on revaluation of properties transferred from self-use
properties to investment properties	-	120
Reserve released on disposal of an associated company	-	(421)
Reserve released on disposal of a jointly controlled entity	-	(298)
Reserve released upon liquidation of a jointly controlled entity
and subsidiary companies	(28)	5
	───────	───────
Total comprehensive income for the period	7,432	3,260
	═══════	═══════
Total comprehensive income for the period attributable to
Ordinary shareholders of the Company	6,399	2,709
Holders of perpetual capital securities	99	-
Non-controlling interests	934	551
	───────	───────
	7,432	3,260
	═══════	═══════

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CONSOLIDATED BALANCE SHEET (UNAUDITED) AS AT 30 JUNE 2011

Note Non-current assets Property, plant and equipment Investment properties Properties under development Leasehold land – operating leases Jointly controlled entities Associated companies Other financial assets Intangible assets Deferred tax assets Derivative financial instruments 11 Non-current deposits and prepayment Current assets Properties under development Properties held for sale Other assets held for sale Inventories Derivative financial instruments 11 Debtors, accounts receivable, deposits and prepayments 9 Cash and bank deposits Current liabilities Bank loans, other loans and overdrafts - secured - unsecured Creditors, accounts payable, deposits and accruals 10 Derivative financial instruments 11 Provision for taxation Other liabilities held for sale Net current assets Total assets less current liabilities Non-current liabilities Long term borrowings Deferred tax liabilities Derivative financial instruments 11 Provisions and deferred income Net assets

As restated 30 June 2011 31 December 2010 HK$m HK$m 71,461 63,334 14,769 13,579 8,509 9,881 1,610 1,597 20,412 21,681 6,784 6,345 457 448 14,471 12,944 818 714 1,938 1,854 5,813 6,403 ────── ────── 147,042 138,780 ----------- ----------- 3,206 2,280 802 1,870 4,321 298 13,967 11,191 61 73 15,415 14,070 32,647 24,558 ────── ────── 70,419 54,340 ----------- ----------- 930 598 20,289 14,629 30,198 26,911 66 55 1,271 936 38 - ────── ────── 52,792 43,129 ----------- ----------- 17,627 11,211 ----------- ----------- 164,669 149,991 ----------- ----------- 70,634 68,456 3,023 2,613 2,866 2,543 2,252 2,254 ────── ────── 78,775 75,866 ----------- ----------- 85,894 74,125 ══════ ══════

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CONSOLIDATED BALANCE SHEET (UNAUDITED) (Continued) AS AT 30 JUNE 2011

			As restated
			31 December
	Note	30 June 2011	2010
		HK$m	HK$m
Equity
Share capital		1,460	1,459
Perpetual capital securities	12	5,949	-
Reserves		71,498	65,699
Proposed dividend	7	547	1,095
		──────	──────
Total ordinary shareholders’ funds and perpetual capital
securities		79,454	68,253
Non-controlling interests in equity		6,440	5,872
		──────	──────
Total equity		85,894	74,125
		══════	══════

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NOTES TO THE FINANCIAL STATEMENTS

1 Significant accounting policies

These condensed unaudited consolidated interim accounts (“the Accounts”) are prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants and Appendix 16 to the Listing Rules of the Stock Exchange of Hong Kong Limited.

The accounting policies used in preparation of the Accounts are consistent with those adopted in the annual accounts for the year ended 31 December 2010 other than the adoption of certain new or revised Hong Kong Financial Reporting Standards (“HKFRS”) in 2011, of which the most significant and relevant to the Group are as set out below.

HKAS 24 (Revised) Related Party Disclosures HKAS 12 (Amendment) Deferred Tax: Recovery of Underlying Assets Improvements to HKFRS 2010

Adoption of the above revised standard and amendments do not result in a significant change of the Company’s accounting policies except as stated below.

• (i) HKAS 24 (Revised) clarifies and simplifies the definition of a related party.

• (ii) HKAS 12 (Amendment) introduces a presumption that an investment property measured at fair value is recovered entirely through sale. This presumption is rebutted if the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. Previously deferred taxation on investment properties at fair value is measured to reflect the tax consequences of recovering the carrying amounts of investment properties through use.

The Group has reassessed the measurement of deferred taxation by applying the presumption that the carrying amount of investment property will be recovered through sale.

Effect on consolidated balance sheet	30 June	31 December
	2011	2010
	HK$m	HK$m
Increase in deferred tax liabilities	230	194
Increase in associated companies	293	229
Increase in non-controlling interests	36	19
Decrease in goodwill	45	45
Decrease in reserves	18	29

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1 Significant accounting policies (Continued)

Effect on consolidated profit and loss account	For the six months ended 30 June
	2011 2010 HK$m HK$m
Increase in taxation Increase in share of profits less losses of associated companies Increase/(decrease) in profit attributable to the Company’s ordinary shareholders Increase in profit attributable to the non-controlling interests Decrease in other comprehensive income attributable to the Company’s ordinary shareholders	29 49 64 35 19 (18) 16 8 4 4

Notes:

1. Adoption of the above revised standard does not have a significant impact on basic and diluted earnings per share for both periods.

2. If the investment properties were acquired as part of a business combination which took place in prior years, the related deferred tax would be adjusted against goodwill.

3. 10 -

2 Segment information

Revenue and profit attributable to ordinary shareholders of the Company and holders of perpetual capital securities:

Six months ended 30 June 2011 Revenue HK$m Special steel 21,448 Iron ore mining 28 Property Mainland China 2,580 Hong Kong 129 Energy 10 Tunnels 388 Dah Chong Hong 19,814 CITIC Telecom 1,492 Other investments 51 Change in fair value of investment properties - Corporate General and administration expenses - Exchange gain - Net finance income - ────── Total 45,940 =======

Profit / (loss) from consolidated activities Share of results of jointly controlled entities Share of results of associated companies Net finance income / (charges) Group total Segment allocations Segment profit / (loss) Taxation Non- controlling interests Profit / (loss) attributable to ordinary shareholders of the Company and holders of perpetual capital securities HK$m HK$m HK$m HK$m HK$m HK$m HK$m HK$m HK$m HK$m 1,737 261 15 (139) 1,874 (3) 1,871 (314) (159) 1,398 (319) - - - (319) - (319) (51) - (370) 1,045 1,122 - 34 2,201 5 2,206 (340) (159) 1,707 420 - 42 - 462 43 505 (14) - 491 42 821 - 6 869 - 869 (45) - 824 268 85 - - 353 - 353 (44) (65) 244 1,012 10 - (70) 952 (45) 907 (292) (287) 328 190 - 94 - 284 - 284 (33) (99) 152 4 137 10 - 151 - 151 (3) - 148 1,338 - 311 - 1,649 - 1,649 (226) (95) 1,328 (237) - - - (237) - (237) (8) - (245) 54 - - - 54 - 54 - - 54 - - - 104 104 - 104 (52) - 52 ---------------- ---------------- ------------------ ---------------- --------------- ---------------- -------------- ---------------- ------------------ -------------------- 5,554 2,436 472 (65) 8,397 - 8,397 (1,422) (864) 6,111 ========== ========= ========== ========== ========= ========== ======== ========== =========== ============ Profit attributable to: Ordinary shareholders of the Company 6,012 Holders of perpetual capital securities 99 -------------------- 6,111 ============

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

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2 Segment information (Continued)

Revenue and profit attributable to ordinary shareholders of the Company and holders of perpetual capital securities:

Six months ended 30 June 2010 (as restated) Revenue HK$m Special steel 14,372 Iron ore mining 13 Property Mainland China 1,527 Hong Kong 127 Energy - Tunnels 376 Dah Chong Hong 14,117 CITIC Telecom 1,291 Other investments 50 Change in fair value of investment properties - Corporate General and administration expenses - Exchange gain - Net finance charges - --------- Total 31,873 =====

Profit / (loss) from consolidated activities Share of results of jointly controlled entities Share of results of associated companies Net finance income / (charges) Group total Segment allocations Segment profit / (loss) Taxation Non- controlling interests Profit / (loss) attributable to ordinary shareholders of the Company and holders of perpetual capital securities HK$m HK$m HK$m HK$m HK$m HK$m HK$m HK$m HK$m HK$m 1,485 164 - (82) 1,567 - 1,567 (274) (139) 1,154 (78) - - - (78) - (78) (36) - (114) 404 - - 2 406 1 407 (122) 13 298 103 - 50 - 153 43 196 (15) - 181 920 537 - 5 1,462 - 1,462 (29) - 1,433 262 86 - - 348 - 348 (43) (64) 241 702 43 9 (51) 703 (44) 659 (190) (216) 253 186 - 26 1 213 - 213 (29) (80) 104 818 21 62 - 901 - 901 (4) - 897 755 - 216 - 971 - 971 (194) (18) 759 (244) - - - (244) - (244) (8) - (252) 40 - - - 40 - 40 - - 40 - - - (89) (89) - (89) (39) - (128) -------------- ---------------- ------------------ ---------------- ---------------- -------------- -------------- -------------- ---------------- ----------------- 5,353 851 363 (214) 6,353 - 6,353 (983) (504) 4,866 ======== ========= =========== ========= ========= ======== ======== ======== ========= ========== Profit attributable to: Ordinary shareholders of the Company 4,866 Holders of perpetual capital securities - ────── 4,866 ══════

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

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2 Segment information (Continued)

• (a) Segment revenue and profit

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

	Six months	ended 30 June
	2011	2010
	HK$m	HK$m
By geographical area
Mainland China	36,077	24,306
Hong Kong	6,051	5,401
Overseas	3,812	2,166
	──────	──────
	45,940	31,873
	══════	══════

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2 Segment information (Continued)

(b) Assets and liabilities

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

													Additions of non-	Additions of non-
													current assets *
			Investments		Investments								(other than financial
			in jointly controlled		in	associated							instruments and
	Segment	assets #		entities	companies		Total assets		Segment liabilities #		Total	net assets	deferred tax assets)
		As restated		As restated		As restated		As restated		As restated		As restated	Six months ended
	30 June	31 December	30 June	31 December	30 June	31 December	30 June	31 December	30 June	31 December	30 June	31 December	30 June	30 June
	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010
	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m	HK$m
By principal activities
Special steel	50,337	45,243	2,886	2,923	203	185	53,426	48,351	(27,186)	(23,409)	26,240	24,942	3,280	3,048
Iron ore mining	60,674	53,397	-	-	-	-	60,674	53,397	(40,837)	(38,678)	19,837	14,719	6,337	7,180
Property
Mainland China	33,691	31,733	6,878	5,677	-	-	40,569	37,410	(10,031)	(10,332)	30,538	27,078	811	1,506
Hong Kong	7,315	6,910	-	-	6,007	5,534	13,322	12,444	(358)	(337)	12,964	12,107	130	-
Energy	2,872	1,181	6,273	6,659	-	-	9,145	7,840	(394)	(101)	8,751	7,739	6	-
Tunnels	978	972	1,080	991	-	-	2,058	1,963	(194)	(181)	1,864	1,782	-	-
Dah Chong Hong	16,520	14,158	235	356	206	203	16,961	14,717	(9,015)	(7,562)	7,946	7,155	556	227
CITIC Telecom	2,510	2,652	-	-	345	408	2,855	3,060	(834)	(1,131)	2,021	1,929	66	46
Other investments	2,734	534	3,060	5,075	23	15	5,817	5,624	(614)	(617)	5,203	5,007	11	8
Corporate	12,634	8,314	-	-	-	-	12,634	8,314	(42,104)	(36,647)	(29,470)	(28,333)	6	-
	──────	──────	──────	──────	──────	──────	──────	──────	──────	──────	──────	──────	──────	─────
Segment assets/
(liabilities)	190,265	165,094	20,412	21,681	6,784	6,345	217,461	193,120	(131,567)	(118,995)	85,894	74,125	11,203	12,015
	══════	══════	══════	══════	══════	══════	══════	══════	══════	══════	══════	══════	══════	═════

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

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

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

• 14 -

3 Other income and net gains

	Six months	ended 30 June
	2011	2010
	HK$m	HK$m
Other income
Commission income, subsidy income, rebates and
others	238	239
Dividend income from other financial assets
Listed shares	7	15
	──────	──────
	245	254
	-----------	-----------
Net gains
Net exchange gain/(loss)	133	(62)
Net gain from liquidation/disposal of jointly controlled
entities and associated companies	3	1,835
Net gain from disposal of investment properties	296	-
Others	6	3
	──────	──────
	438	1,776
	-----------	-----------
	683	2,030
	══════	══════

4 Profit from consolidated activities

	Six months ended 30 June	Six months ended 30 June
	2011	2010
	HK$m	HK$m
The profit from consolidated activities is arrived at
after charging:
Cost of inventories/properties sold	34,381	24,682
Depreciation and amortisation	1,027	764
Impairment losses on other financial assets	-	74
Impairment losses on trade and other receivables	17	6
Impairment losses on goodwill and intangible assets	-	32
Impairment losses on property, plant and equipment	28	2
	═════	═════

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5 Net finance charges

	Six months	ended 30 June
	2011	2010
	HK$m	HK$m
Finance charges
Interest expense	1,866	1,386
Amount capitalised	(1,473)	(1,026)
	──────	──────
	393	360
Other finance charges	69	55
Other financial instruments
- Fair value loss	35	99
- Ineffectiveness on cash flow hedges	(179)	(158)
	──────	──────
	318	356
	----------	----------
Finance income
Interest income	(253)	(142)
	----------	----------
	65	214
	═════	═════

6 Taxation

Hong Kong profits tax is calculated at the rate of 16.5% (Six months ended 30 June 2010: 16.5%) on the estimated assessable profit for the period. Overseas taxation is calculated on the estimated assessable profit for the period at the rates of taxation prevailing in the countries in which the Group operates. Tax provisions are reviewed regularly to take into account changes in legislation, practice and status of negotiations. Details are as follows:

	Six months	ended 30 June
		As restated
	2011	2010
	HK$m	HK$m
Current taxation
Hong Kong profits tax	137	129
Overseas taxation	799	501
Deferred taxation
Changes in fair value of investment properties	226	194
Origination and reversal of other temporary
differences	260	159
	────	────
	1,422	983
	════	════

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7 Dividends

	Six months	ended 30 June
	2011	2010
	HK$m	HK$m
2010 Final dividend paid : HK$0.30
(2009:HK$0.25) per share	1,095	912
	═══════	═══════
2011 Interim dividend proposed: HK$0.15
(2010: HK$0.15) per share	547	547
	═══════	═══════

8 Earnings per share

The calculation of earnings per share is based on the consolidated profit attributable to ordinary shareholders of HK$6,012 million (six months ended 30 June 2010: profit of HK$4,866 million).

The basic earnings per share is based on the weighted average number of 3,649,018,272 shares in issue during the period (six months ended 30 June 2010: 3,648,688,160 shares in issue). The diluted earnings per share for 2011 is based on 3,649,045,174 shares which is the weighted average number of shares in issue during the period plus the weighted average number of 26,902 shares (six months ended 30 June 2010: Nil) deemed to be issued at no consideration if all outstanding options had been exercised.

• 17 -

9 Debtors, accounts receivable, deposits and prepayments

	30 June	31 December
	2011	2010
	HK$m	HK$m
Trade debtors and bills receivable aged:
- Within 1 year	5,614	5,002
- Over 1 year	54	178
	──────	─────
	5,668	5,180
Accounts receivable, deposits and prepayments	9,747	8,890
	──────	─────
	15,415	14,070
	══════	══════

Note:

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

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

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

• (iv) Accounts receivable, deposits and prepayments include amounts due from jointly controlled entities of HK$230 million (31 December 2010: HK$227 million), which are unsecured, interest free and recoverable on demand, and amounts due from associated companies of HK$112 million (31 December 2010: HK$95 million) which are unsecured, interest free and recoverable on demand.

10 Creditors, accounts payable, deposits and accruals

	30 June	31 December
	2011	2010
	HK$m	HK$m
Trade creditors and bills payable aged:
- Within 1 year	12,284	9,744
- Over 1 year	339	456
	──────	──────
	12,623	10,200
Accounts payable, deposits and accruals	17,575	16,711
	──────	──────
	30,198	26,911
	══════	══════

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

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11 Derivative financial instruments

Qualified for hedge accounting – cash flow hedge - Interest-rate instruments - Forward foreign exchange instruments Not qualified for hedge accounting - Interest-rate instruments - Forward foreign exchange instruments Less: current portion - Interest-rate instruments - Forward foreign exchange instruments	30 June 2011 Assets Liabilities HK$m HK$m - 2,553 1,755 - ───── ───── 1,755 2,553 --------- --------- 237 361 7 18 ───── ───── 244 379 --------- --------- 1,999 2,932 ───── ───── 54 48 7 18 ───── ───── 61 66 --------- --------- 1,938 2,866 ═════ ═════	31 December 2010 Assets Liabilities HK$m HK$m 33 2,379 1,635 - ───── ───── 1,668 2,379 --------- --------- 246 204 13 15 ───── ───── 259 219 --------- --------- 1,927 2,598 ───── ───── 60 40 13 15 ───── ───── 73 55 --------- --------- 1,854 2,543 ═════ ═════

12 Perpetual capital securities

In April 2011, the Company issued perpetual subordinated capital securities (the “perpetual capital securities”) with a nominal amount of US$750 million (approximately HK$5,850 million) for cash. These securities are perpetual and the coupon payments can be deferred at the discretion of the Company. Therefore, perpetual securities are classified as equity instruments and recorded in equity in the consolidated balance sheet. The amount as at 30 June 2011 included the accrued coupon payments for the period.

13 Event occurring after the balance sheet date

On 15 July 2011, a subsidiary company of the Group entered into a Sale and Purchase Agreement with a subsidiary company of CITIC Group to dispose of its 50% noncontrolling interest in CITIC Guoan Co, Ltd at a profit. The consideration for the disposal is RMB3,511 million (equivalent to approximately HK$4,213 million).

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FINANCIAL REVIEW

Group Debt and Liquidity

The debt of CITIC Pacific as at 30 June 2011 as compared with 31 December 2010 and 30 June 2010 is as follows:

HK$ million	30 June 2011	31 December 2010	30 June 2010
Totaldebt	92,035	83,857	74,771
Cashand bankdeposits	32,647	24,558	24,711
Net debt	59,388	59,299	50,060
Leverage (Net debt toTotalcapital*)	43%	46%	45%

• Total capital = Total ordinary shareholders’ funds and perpetual capital securities + Net debt

The denomination of CITIC Pacific’s borrowings and cash and bank deposit balances by currency as at 30 June 2011 is summarised as follows:

HK$ million equivalent	Denomination HK$ US$ RMB JPY Other Total
Total debt in original currency Total debt after conversion Cashand bankdeposits	16,649 57,615 16,814 872 85 92,035 17,886 57,015 16,814 235 85 92,035 4,322 12,167 15,499 289 370 32,647
Net debt / (cash) afterconversion	13,564 44,848 1,315 (54) (285) 59,388

As at 30 June 2011, iron ore mining assets of HK$47.2 billion were pledged under its financing documents. Contracts for building 11 ships (HK$4.6 billion in aggregate) and one completed ship with carrying value of HK$438 million for transporting iron ore from the mine to steel plants in mainland China were pledged as security for the ships’ financing. In addition, assets of HK$1,196 million (31 December 2010: HK$1,263 million) were pledged to secure banking facilities, which mainly related to Dah Chong Hong’s overseas business and to a property subsidiary in mainland China.

Maturity Profile of Outstanding Debt

The maturity of the debt outstanding as at 30 June 2011 is:

HK$ million Total outstanding debt	Maturinginthese years
	2011 2012 2013 2014 2015 2016 and beyond
CITIC Pacific Limited 40,037 Subsidiaries 51,998 Total 92,035	1,500 12,340 5,520 7,350 1,637* 11,690 4,770 8,119 5,360 4,611 2,073 27,065 6,270 20,459 10,880 11,961 3,710 38,755

• Including through wholly-owned special purpose vehicle.

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

Available Sources of Finance

As at 30 June 2011, CITIC Pacific and its consolidated subsidiaries had cash and deposits of HK$32.6 billion, and available loan and trade facilities of HK$20 billion:

	Total		Available
	financial	Amount	unutilised	Percentage
HK$ million	facilities	utilised	facilities	ofunutilised
Committed facilities
Term loans	91,793	80,475	11,318	57%
Short term loan	400	-	400	2%
Commercial Paper	963	963	-	-
(RMB commercial paper)
Global bond (USD bond)	3,900	3,900	-	-
Privateplacement(JPY & USD note)	1,807	1,807	-	-
Total committed facilities	98,863	87,145	11,718	59%
Uncommitted facilities
Money market lines	8,085	4,607	3,478	17%
and short-term facilities
Trade facilities	7,538	2,719	4,819	24%
Total uncommittedfacilities	15,623	7,326	8,297	41%

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

Risk Management

The Board View

The management of risk starts with the board of directors. At each meeting the board receives a report of the financial results and the financial position of the group, both current and projected. At every meeting, written reports are provided on all businesses in a form similar to those reviewed by management at the executive committee.

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

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Liquidity Management

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

Derivatives Policy

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

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

The use of financial instruments is currently restricted by ALCO to loans, bonds, deposits, interest rate swaps and plain vanilla foreign exchange contracts. It is CITIC Pacific’s policy not to enter into derivative transactions for speculative purposes. The use of structured derivatives and instruments or contracts that contain embedded options would require presentation to and the specific approval of ALCO. None have been submitted for approval or outstanding in the first half of 2011. From a risk management perspective, simple, cost-efficient and HKAS 39 hedge effective instruments are preferred.

Foreign Exchange Risk

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

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

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

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

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

• (3) USD denominated debt

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

• (5) registered capital of investment in mainland China

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

Our Australian mining operation’s functional currency is USD as the future revenues from its iron ore business are denominated in USD. However, a substantial portion of its developmental and operating expenditures are denominated in AUD. As at 30 June 2011, the Australian mining operation had plain vanilla forward contracts with a notional amount of A$1 billion outstanding. They qualify as accounting hedges, because their maturities match the needs of the business over the next two years as well as fulfilling other relevant criteria to be considered accounting hedges. The average rate of these contracts is 0.82 USD to one AUD.

CITIC Pacific’s investment in businesses whose functional currency is USD is mostly from the iron ore mining business, which had USD gross assets of HK$59 billion. The company uses its USD borrowings to hedge these USD assets through a net investment hedge. As at 30 June 2011, CITIC Pacific had HK$57.6 billion equivalent of US dollar debt.

Businesses in mainland China had RMB gross assets of approximately HK$118 billion as at 30 June 2011, offset by debts and other liabilities of HK$43 billion. This gave the company an RMB net asset exposure of HK$75 billion. As investment in mainland China is expanding, CITIC Pacific will have an increasing exposure to the Renminbi.

Interest Rate Risk

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

The appropriate ratio of fixed/floating interest rate risk for CITIC Pacific is reviewed periodically. The level of fixed rate debt is decided after taking into consideration the potential impact of higher interest rates on profit, interest cover and cash flow cycles of CITIC Pacific’s business and investments. The ratio of fixed rate to the total borrowings of the portfolio for CITIC Pacific was 35% as at 30 June 2011.

CITIC Pacific’s overall weighted all-in cost of borrowing (including capitalised interest, fees and hedging costs, excluding perpetual capital securities) for the first half of 2011 was approximately 4.0% compared with 3.8% for the same period last year.

Commodity Risk

CITIC Pacific has considered the use of financial instruments to hedge its commodity exposures. However many commodities cannot be hedged effectively because there is no effective forward market for the product or there is insufficient liquidity in those markets. As at 30 June 2011, CITIC Pacific did not have any exposure to commodity derivatives. It is CITIC Pacific’s policy not to enter into derivative transactions for speculative purposes.

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Counterparty Risk

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

Major external risks and uncertainties

Economic risks

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

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

Competitive markets

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

Agency relationships

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

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Regulation

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

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

Capital expenditure

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

Natural disasters or events, terrorism and disease

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

Capital Commitments and Contingent Liabilities

As at 30 June 2011, the contracted capital commitments of CITIC Pacific Limited and its subsidiary companies were approximately HK$11 billion.

On 15 July 2011, CITIC Pacific announced that MCC, the iron ore mining project’s engineering, procurement and construction contractor, has put forward a proposal for an additional payment of approximately US$900 million, part of which they claimed to be due to design and scope of work changes made by CITIC Pacific. CITIC Pacific is evaluating and studying the details of the proposal and preparing to negotiate with MCC.

Apart from the above, CITIC Pacific’s contingent liabilities as at 30 June 2011 had not significantly changed from the position as at 31 December 2010.

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HUMAN RESOURCES

CITIC Pacific, including its principal subsidiaries worldwide, employed a total of 31,622 employees as at 30 June 2011 (30 June 2010: 27,116). Of these, 82% were based in mainland China; 14.5% in Hong Kong; 2% in Australia; and 1.5% in other countries including Singapore, Japan, Taiwan and Canada.

CITIC Pacific believes that people are the most valuable asset for supporting its business growth. To this end, competitive remuneration packages and comprehensive learning and development opportunities are provided to attract, motivate and retain talented employees.

In the last six months, besides reviewing the pay policies and procedures to ensure compliance with the Minimum Wage Ordinance coming into effect in Hong Kong from May 2011, CITIC Pacific has given priority over people development to ensure its employees are equipped with required knowledge and skills to support the business objectives. In addition to regular technical knowledge and skills training and sharing sessions covering employees in mainland China and Hong Kong, CITIC Pacific has launched a series of management training programmes across the group covering employees of subsidiary companies in Hong Kong. Partnering with a prominent university in Hong Kong, CITIC Pacific will, in the 2[nd] half of the year, hold a customised leadership development programme for its senior managers both from the mainland and Hong Kong within the group with a view to grooming its talents for senior leaders’ succession.

Corporate Social Responsibility

CITIC Pacific and its subsidiaries continue their contribution to local communities through active participation in charitable events such as donations and volunteer works for elderly and the disadvantaged groups.

CORPORATE GOVERNANCE

CITIC Pacific is committed to maintaining high standards of corporate governance. The board of directors believes that good corporate governance practices are important to maintain and promote investor confidence, protect the interests of shareholders and enhance shareholder value. Details of our corporate governance practices can be found on page 77 of the 2010 annual report and CITIC Pacific’s website www.citicpacific.com. In order to ensure a high standard of corporate governance, the board has:

• Established the executive committee, which serves as a channel for communicating the direction and priorities of CITIC Pacific and for sharing information with and amongst senior executives about key developments and issues affecting the various businesses of CITIC Pacific. This committee is chaired by the managing director and its membership includes the chairman, group finance director, other executive directors, the leaders of the major businesses in the group and group functional leaders.

• Established the investment committee to consider the strategy and planning of CITIC Pacific, and to review investment proposals. The committee is chaired by the chairman of the board; the other members are the managing director, group finance director and two other executive directors.

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• Established the asset and liability management committee (“ALCO”) to review the asset and liability balance of CITIC Pacific. ALCO monitors and sets limits on exposure in relation to asset and liability mismatches, counterparties, currencies, interest rates, commitments and contingent liabilities. It also establishes hedging policies, reviews and approves financing plans, and approves the use of new financial products. Chaired by the group finance director, the committee comprises two executive directors and a non-executive director, the group treasurer, group financial controller, the executive with responsibility for financial risk management and other finance team representatives in CITIC Pacific.

• Established the audit committee to assist the board in meeting its responsibilities for ensuring an effective system of internal control and compliance, and in meeting its external financial reporting obligations. The committee oversees the relationship with the external auditors and reviews and monitors the effectiveness of the internal audit function.

• Established the special committee to deal with matters relating to the investigations of CITIC Pacific by the Securities and Futures Commission and the Commercial Crime Bureau of the Hong Kong Police Force. With the recent addition of an independent non-executive director to the special committee, the special committee now comprises of three members. The other two members are the managing director and a non-executive director.

CITIC Pacific complied throughout the six months ended 30 June 2011 with all of the provisions in the code on corporate governance practices contained in Appendix 14 of the Listing Rules of The Stock Exchange of Hong Kong Limited.

The audit committee of the board reviewed the Half-Year Report with management and CITIC Pacific’s internal and external auditors and recommended its adoption by the board. The committee consists of three non-executive directors, two of whom are independent.

The interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 “Interim Financial Reporting”. It has been reviewed by CITIC Pacific’s independent auditor PricewaterhouseCoopers in accordance with Hong Kong Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”.

DIVIDEND AND CLOSURE OF REGISTER

The directors have declared an interim dividend of HK$0.15 per share (2010: HK$0.15 per share) for the year ending 31 December 2011 payable on Friday, 23 September 2011 to shareholders whose names appear on CITIC Pacific’s register of members on Friday, 16 September 2011. The register of members of CITIC Pacific will be closed from Monday, 12 September 2011 to Friday, 16 September 2011, both days inclusive, during which period no share transfer will be effected. To qualify for the interim dividend, all transfers, accompanied by the relevant share certificates, must be lodged with CITIC Pacific’s Share Registrar, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Friday, 9 September 2011.

• 27 -

SHARE CAPITAL

CITIC Pacific has not redeemed any of its shares during the six months ended 30 June 2011. Neither CITIC Pacific nor any of its subsidiary companies has purchased or sold any of CITIC Pacific’s shares during the six months ended 30 June 2011.

FORWARD LOOKING STATEMENTS

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

HALF-YEAR REPORT AND FURTHER INFORMATION

A copy of the announcement can be found on CITIC Pacific’s website (www.citicpacific.com) and the Hong Kong Stock Exchange’s website (www.hkex.com.hk). The full Half-Year Report will be made available on the respective websites of CITIC Pacific and the Hong Kong Stock Exchange around 31 August 2011.

By Order of the Board Ricky Choy Wing Kay Company Secretary

Hong Kong, 19 August 2011

As at the date hereof, the executive directors of CITIC Pacific are Messrs Chang Zhenming (Chairman), Zhang Jijing, Carl Yung Ming Jie, Vernon Francis Moore, Liu Jifu, Milton Law Ming To and Kwok Man Leung; the non-executive directors of CITIC Pacific are Messrs André Desmarais, Ju Weimin, Yin Ke and Peter Kruyt (alternate director to Mr André Desmarais); and the independent non-executive directors of CITIC Pacific are Messrs Alexander Reid Hamilton, Gregory Lynn Curl and Francis Siu Wai Keung.

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