CITIC Limited

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.

This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities. This announcement does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The notes (the " Notes ") to be issued under the Programme (as defined below) have not been and will not be registered under the United States Securities Act of 1933, as amended (the " Securities Act "), or the securities laws of any other jurisdiction, and may not be offered or sold within the United States (as defined in Regulation S under the Securities Act (" Regulation S ")) or to, or for the account or benefit of, U.S. persons (as defined in Regulation S) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Notes will be offered and sold (i) in the United States only to qualified institutional buyers in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 144A thereunder and (ii) outside the United States to non-U.S. persons in compliance with Regulation S.

This announcement and the listing document referred to herein have been published for information purposes only as required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and do not constitute an offer to sell nor a solicitation of an offer to buy any securities. Neither this announcement nor anything referred to herein (including the listing document) forms the basis of any contract or commitment whatsoever. For the avoidance of doubt, the publication of this announcement and the listing document referred to herein shall not be deemed to be an offer of securities made pursuant to a prospectus issued by or on behalf of the Issuer (as defined below) for the purposes of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong nor shall it constitute an advertisement, invitation or document containing an invitation to the public to enter into or offer to enter into an agreement to acquire, dispose of, subscribe for or underwrite securities for the purposes of the Securities and Futures Ordinance (Cap. 571) of Hong Kong.

Notice to Hong Kong investors: The Issuer (as defined below) confirms that the Notes (as defined in the offering circular appended hereto) are intended for purchase by Professional Investors (as defined in Chapter 37 of the Listing Rules) only and, with respect to Notes to be listed on The Stock Exchange of Hong Kong Limited (the " Hong Kong Stock Exchange "), will be listed on the Hong Kong Stock Exchange on that basis. Accordingly, the Issuer confirms that the Notes are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.

PUBLICATION OF OFFERING CIRCULAR

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(the " Issuer ")

U.S.$9,000,000,000 Medium Term Note Programme

This announcement is issued pursuant to Rule 37.39A of the Listing Rules.

Please refer to the offering circular dated 20 December 2021 (the " Offering Circular ") appended hereto in relation to the U.S.$9,000,000,000 Medium Term Note Programme (the " Programme "). As disclosed in the Offering Circular, any Notes to be issued under the Programme will be intended for purchase by Professional Investors (as defined in Chapter 37 of the Listing Rules) only and, with respect to Notes to be listed on the Hong Kong Stock Exchange, will be listed on the Hong Kong Stock Exchange on that basis.

21 December 2021

As at the date of this announcement, the executive directors of the Issuer are Mr Zhu Hexin (Chairman), Mr Xi Guohua and Ms Li Qingping; the non-executive directors of the Issuer are Mr Song Kangle, Mr Liu Zhuyu, Mr Peng Yanxiang, Ms Yu Yang, Mr Liu Zhongyuan and Mr Yang Xiaoping; and the independent non-executive directors of the Issuer are Mr Francis Siu Wai Keung, Dr Xu Jinwu, Mr Anthony Francis Neoh, Mr Gregory Lynn Curl and Mr Toshikazu Tagawa.

Appendix

Offering Circular dated 20 December 2021

IMPORTANT NOTICE

NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE UNITED STATES

IMPORTANT: You must read the following before continuing. The following applies to the offering circular following this page (the " Offering Circular "), and you are therefore advised to read this carefully before reading, accessing or making any other use of the Offering Circular. In accessing the Offering Circular, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from us as a result of such access.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE " SECURITIES ACT "), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THE SECURITIES IN BEARER FORM ARE SUBJECT TO U.S. TAX LAW REQUIREMENTS. SUBJECT TO CERTAIN EXCEPTIONS, THE SECURITIES IN BEARER FORM MAY NOT BE OFFERED, SOLD OR DELIVERED WITHIN THE UNITED STATES OR TO U.S. PERSONS.

THE OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, AND IN PARTICULAR, MAY NOT BE FORWARDED TO ANY US ADDRESS. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.

Confirmation of your Representation: In order to be eligible to view the Offering Circular or make an investment decision with respect to the securities, investors must not be located in the United States. The Offering Circular is being sent at your request and by accepting the e-mail and accessing the Offering Circular, you shall be deemed to have represented to us that the electronic mail address that you gave us and to which this e-mail has been delivered is not located in the United States and that you consent to delivery of such Offering Circular by electronic transmission.

You are reminded that the Offering Circular has been delivered to you on the basis that you are a person into whose possession the Offering Circular may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver the Offering Circular to any other person.

The materials relating to the offering of securities to which the Offering Circular relates do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or dealer and the underwriters or any affiliate of the underwriters is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the underwriters or such affiliate on behalf of the Issuer (as defined in the Offering Circular) in such jurisdiction.

The Offering Circular has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of the Issuer, CLSA Limited, The Hongkong and Shanghai Banking Corporation Limited, UBS AG Hong Kong Branch (the " Arrangers "), Deutsche Bank AG, Hong Kong Branch or Standard Chartered Bank (together with the Arrangers, the " Dealers "), the Trustee or the Agents (each as defined in the Offering Circular), nor any directors, officers, employees, agents, advisers, affiliates, representatives, or any person who controls any of them accepts any liability or responsibility whatsoever in respect of any difference between the Offering Circular distributed to you in electronic format and the hard copy version available to you on request.

You are responsible for protecting against viruses and other destructive items. Your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature.

CONFIDENTIAL

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CITIC LIMITED 中國中信股份有限公司

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

U.S.$9,000,000,000 Medium Term Note Programme

Under the Medium Term Note Programme described in this Offering Circular (the " Programme "), CITIC Limited (the " Issuer "), subject to compliance with all relevant laws, regulations and directives, may from time to time issue Medium Term Notes (the " Notes ") denominated in any currency agreed between the Issuer and the relevant Dealer(s). The aggregate nominal amount of Notes outstanding will not at any time exceed U.S.$9,000,000,000 (or the equivalent in other currencies), subject to increases as described herein.

Application has been made to The Stock Exchange of Hong Kong Limited (the " Hong Kong Stock Exchange ") for the listing of the Programme under which the Notes may be issued by way of debt issues to professional investors (as defined in Chapter 37 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited) (" Professional Investors ") only during the 12-month period after the date of this Offering Circular on the Hong Kong Stock Exchange. This Offering Circular is for distribution to Professional Investors only.

Notice to Hong Kong investors: The Issuer confirms that the Notes are intended for purchase by Professional Investors only and, with respect to Notes to be listed on the Hong Kong Stock Exchange, will be listed on the Hong Kong Stock Exchange on that basis. Accordingly, the Issuer confirms that the Notes are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.

The Hong Kong Stock Exchange has not reviewed the contents of this Offering Circular, other than to ensure that the prescribed form disclaimer and responsibility statements, and a statement limiting distribution of this Offering Circular to Professional Investors only have been reproduced in this Offering Circular. Listing of the Programme and the Notes on the Hong Kong Stock Exchange is not to be taken as an indication of the commercial merits or credit quality of the Programme, the Notes, the Issuer, the CITIC Limited Group or quality of disclosure in this Offering Circular. Hong Kong Exchanges and Clearing Limited and the Hong Kong Stock Exchange take no responsibility for the contents of this Offering Circular, 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 Offering Circular.

Unlisted Notes and Notes to be listed, traded or quoted on or by any other competent authority, stock exchange or quotation system may be issued pursuant to the Programme. The relevant Pricing Supplement (as defined in " Summary of the Programme ") in respect of the issue of any Notes will specify whether or not such Notes will be listed on the Hong Kong Stock Exchange (or listed, traded or quoted on or by any other competent authority, other exchange or quotation system).

Each Series (as defined in " Summary of the Programme ") of Notes in bearer form (" Bearer Notes ") will be represented on issue by a temporary global note in bearer form (each a " temporary Global Note ") or a permanent global note in bearer form (each a " permanent Global Note ") (collectively, the " Global Note ") and will be sold in an "offshore transaction" within the meaning of Regulation S (" Regulation S ") under the United States Securities Act of 1933, as amended (the " Securities Act "). Interests in temporary Global Notes generally will be exchangeable for interests in permanent Global Notes, or if so stated in the relevant Pricing Supplement, definitive Notes (" Definitive Notes "), after the date falling 40 days after the later of the commencement of the offering and the relevant issue date of such Tranche upon certification as to non-US beneficial ownership. Interests in permanent Global Notes will be exchangeable for Definitive Notes in whole but not in part as described under " Summary of Provisions Relating to the Notes while in Global Form ". Notes in registered form will be represented by registered certificates (each a " Certificate "), one Certificate being issued in respect of each Noteholder's entire holding of Notes in registered form of one Series. Global Notes and Global Certificates (as defined below) may be deposited on the issue date with a common depositary (the " Common Depositary ") on behalf of Euroclear Bank SA/NV (" Euroclear ") and Clearstream Banking S.A. (" Clearstream ") or with a sub-custodian for the Central Moneymarkets Unit Service, operated by the Hong Kong Monetary Authority (the " CMU ").

The Notes of each Series to be issued in registered form (" Registered Notes ") and which are sold in an "offshore transaction" within the meaning of Regulation S (" Unrestricted Notes ") will initially be represented by a permanent registered global certificate (each an " Unrestricted Global Certificate ") without interest coupons, which may be deposited on the relevant issue date (a) in the case of a Series intended to be cleared through Euroclear, Clearstream and/or the CMU, with a common depositary on behalf of Euroclear and Clearstream or, as the case may be, a sub-custodian for the CMU and (b) in the case of a Series intended to be cleared through a clearing system other than, or in addition to, Euroclear, Clearstream and/or the CMU, or delivered outside a clearing system, as agreed between the Issuer and the relevant Dealer(s). Registered Notes which are sold in the United States to "qualified institutional buyers" (each, a " QIB ") within the meaning of Rule 144A (" Rule 144A ") under the Securities Act (" Restricted Notes ") will initially be represented by a permanent registered global certificate (each a " Restricted Global Certificate " and, together with the Unrestricted Global Certificate, the " Global Certificates "), without interest coupons, which will be deposited on the relevant issue date with (i) a custodian (the " Custodian ") for, and registered in the name of Cede & Co. as nominee for, The Depository Trust Company (" DTC ") or (ii) a common depositary on behalf of Euroclear and Clearstream, or, as the case may be, a sub-custodian for the CMU.

The provisions governing the exchange of interests in Global Notes for other Global Notes and definitive Notes and in Global Certificates are described in " Summary of Provisions Relating to the Notes while in Global Form ".

The Programme has been rated "A3" by Moody's Investor Service, Inc. (" Moody's ") and "BBB+" by S&P Global Ratings, a division of S&P Global Inc. (" S&P "). Tranches of Notes (as defined in " Summary of the Programme ") to be issued under the Programme will be rated or unrated. Where a Tranche of Notes is to be rated, such rating will not necessarily be the same as the ratings assigned to the Programme. A rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction, revision or withdrawal at any time by the assigning rating agency.

Prospective investors should have regard to the factors described under the section headed " Risk Factors " in this Offering Circular in connection with an investment in the Notes.

MiFID II product governance/target market – The Pricing Supplement in respect of any Notes may include a legend entitled " MiFID II Product Governance " which will outline the target market assessment in respect of the Notes and which channels for distribution of the Notes are appropriate. Any person subsequently offering, selling or recommending the Notes (a " distributor ") should take into consideration the target market assessment; however, a distributor subject to Directive 2014/65/EU (as amended, " MiFID II ") is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the target market assessment) and determining appropriate distribution channels.

A determination will be made in relation to each issue about whether, for the purpose of the MiFID Product Governance rules under EU Delegated Directive 2017/593 (the " MiFID Product Governance Rules "), any Dealer subscribing for any Notes is a manufacturer in respect of such Notes, but otherwise none of the Arrangers or the Dealers or any of their respective affiliates will be a manufacturer for the purpose of the MiFID Product Governance Rules.

UK MiFIR product governance/target market – The Pricing Supplement in respect of any Notes may include a legend entitled " UK MiFIR Product Governance " which will outline the target market assessment in respect of the Notes and which channels for distribution of the Notes are appropriate. Any distributor should take into consideration the target market assessment; however, a distributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook (the " UK MiFIR Product Governance Rules ") is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the target market assessment) and determining appropriate distribution channels.

A determination will be made in relation to each issue about whether, for the purpose of the UK MiFIR Product Governance Rules, any Dealer subscribing for any Notes is a manufacturer in respect of such Notes, but otherwise none of the Arrangers or the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the UK MiFIR Product Governance Rules.

IMPORTANT – EEA RETAIL INVESTORS – If the Pricing Supplement in respect of any Notes includes a legend entitled " Prohibition of Sales to EEA Retail Investors ", the Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (" EEA "). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; (ii) a customer within the meaning of Directive (EU) 2016/97 (the " Insurance Distribution Directive "), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (the " Prospectus Regulation "). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the " PRIIPs Regulation ") for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.

IMPORTANT – UK RETAIL INVESTORS – If the Pricing Supplement in respect of any Notes includes a legend entitled " Prohibition of Sales to UK Retail Investors ", the Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom (" UK "). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (" EUWA "); or (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (the " FSMA ") and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive, where that customer would not qualify as a professional client as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of the Prospectus Regulation as it forms part of domestic law by virtue of the EUWA (the " UK Prospectus Regulation "). Consequently no key information document required by the PRIIPs Regulation as it forms part of domestic law by virtue of the EUWA (as amended, the " UK PRIIPs Regulation ") for offering or selling the Notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.

Singapore SFA Product Classification: In connection with Section 309B of the Securities and Futures Act (Chapter 289) of Singapore (the " SFA ") and the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the " CMP Regulations 2018 "), unless otherwise specified before an offer of Notes, the Issuer has determined, and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA), that the Notes are 'prescribed capital markets products' (as defined in the CMP Regulations 2018).

CLSA

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Deutsche Bank
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Arrangers HSBC UBS Dealers HSBC Standard Chartered UBS Bank

20 December 2021

The Issuer having made all reasonable enquiries, confirms that (i) this Offering Circular contains all information with respect to the Issuer, the Issuer and its subsidiaries taken as a whole (the " CITIC Limited Group ") and the Notes that is material in the context of the issue and offering of the Notes, (ii) the statements contained in it relating to the Issuer and the CITIC Limited Group are in every material particular true and accurate and not misleading, (iii) the opinions and intentions expressed in this Offering Circular with regard to the Issuer and the CITIC Limited Group are honestly held, have been reached after considering all relevant circumstances and are based on reasonable assumptions, and (iv) all reasonable enquiries have been made by the Issuer to ascertain such facts and to verify the accuracy of all such information and statements.

Each Tranche (as defined in " Summary of the Programme ") of Notes will be issued on the terms set out herein under " Terms and Conditions of the Notes " (the " Conditions ") as amended and/or supplemented by a document specific to such Tranche called a pricing supplement (the " Pricing Supplement "). This Offering Circular must be read and construed together with any amendments or supplements hereto and with any information incorporated by reference herein and, in relation to any Tranche of Notes, must be read and construed together with the relevant Pricing Supplement.

No person has been authorised to give any information or to make any representation other than those contained in this Offering Circular in connection with the Issuer, the CITIC Limited Group or the issue or sale of the Notes and, if given or made, such information or representation must not be relied upon as having been authorised by or on behalf of any of the Issuer, the Arrangers, the Dealers (as defined in " Summary of the Programme "), the Trustee or the Agents (both defined in the Terms and Conditions of the Notes), or any of their respective directors, officers, representatives, employees, advisers, agents, affiliates or any person who controls any of them. Neither the delivery of this Offering Circular nor any Pricing Supplement nor any sale made in connection herewith shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer or CITIC Limited Group since the date hereof or the date upon which this Offering Circular has been most recently amended or supplemented or that there has been no adverse change in the financial position of the Issuer or CITIC Limited Group since the date hereof or the date upon which this Offering Circular has been most recently amended or supplemented or that any other information supplied in connection with the Programme is correct as of any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same.

None of the Issuer, the Arrangers, the Dealers, the Trustee or the Agents, nor any of their respective directors, officers, representatives, employees, advisers, agents, affiliates or any person who controls any of them represents that this Offering Circular may be lawfully distributed, or that any Notes may be lawfully offered, in compliance with any applicable registration or other requirements in any jurisdiction, or pursuant to any available exemption, or assumes any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by the Issuer, the Arrangers, the Dealers, the Trustee or the Agents, or any of their respective directors, officers, representatives, employees, advisers, agents, affiliates or any person who controls any of them which would permit a public offering of any Notes or distribution of this Offering Circular in any jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Offering Circular, any Pricing Supplement nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations.

The distribution of this Offering Circular and any Pricing Supplement and the offering or sale of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular or any Pricing Supplement comes are required by the Issuer, the Arrangers and the Dealers to inform themselves about and to observe any such restriction. The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the " Securities Act ") or with any securities regulatory authority of any state or other jurisdiction of the United States and the Notes may include Notes in bearer form that are subject to U.S. tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold or, in the case of bearer notes, delivered within the United States, or, in the case of notes issued in compliance with the D Rules (as defined herein), to U.S. persons.

The Notes are being offered and sold, in the case of Bearer Notes and Unrestricted Notes outside the United States in reliance on Regulation S and, in the case of Restricted Notes, within the United States to QIBs in reliance on Rule 144A. Prospective purchasers are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. For a description of these and certain further restrictions on offers, sales and transfers of Notes and distribution of this Offering Circular see " Subscription and Sale " and " Transfer Restrictions ".

THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE US SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION IN THE UNITED STATES OR ANY OTHER US REGULATORY AUTHORITY, NOR HAS ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OF NOTES OR THE ACCURACY OR THE ADEQUACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.

Neither this Offering Circular nor any Pricing Supplement constitutes an offer of, or an invitation by or on behalf of the Issuer, the Arrangers, the Dealers, the Trustee or the Agents, or any of their respective directors, officers, representatives, employees, advisers, agents, affiliates or any person who controls any of them to subscribe for, or purchase, any Notes.

This Offering Circular includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "HKSE Rules") for the purposes of giving information with regard to the Issuer and the CITIC Limited Group. The Issuer accepts full responsibility for the accuracy of the information contained in this document and confirms, having made all reasonable enquiries, that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading. This Offering Circular is to be read in conjunction with all documents which are deemed to be incorporated herein by reference (see " Documents Incorporated by Reference "). This Offering Circular shall be read and construed on the basis that such documents are incorporated and form part of this Offering Circular.

None of the Arrangers, the Dealers, the Trustee or the Agents, nor any of their respective directors, officers, representatives, employees, advisers, agents, affiliates or any person who controls any of them have separately verified the information contained in this Offering Circular. To the fullest extent permitted by law, none of the Arrangers, the Dealers, the Trustee or the Agents, nor any of their respective directors, officers, representatives, employees, advisers, agents, affiliates or any person who controls any of them makes any representation, warranty or undertaking, express or implied, or accepts any responsibility, with respect to the accuracy or completeness of any of the information in this Offering Circular. To the fullest extent permitted by law, none of the Arrangers, the Dealers, the Trustee or the Agents, nor any of their respective directors, officers, representatives, employees, advisers, agents, affiliates or any person who controls any of them accepts any responsibility for the contents of this Offering Circular or for any other statement made or purported to be made by the Arrangers, a Dealer, the Trustee or any Agent or on its behalf in connection with the Issuer, CITIC Limited Group, the Programme or the issue and offering of the Notes. The Arrangers, each Dealer, the Trustee and the Agents, and any of their respective directors, officers, representatives, employees, advisers, agents, affiliates and each person who controls any of them accordingly disclaim all and any liability whether arising in tort or contract or otherwise (save as referred to above) which it might otherwise have in respect of this Offering Circular or any such statement. Neither this Offering Circular nor any other information provided or incorporated by reference in connection with the Programme are intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Issuer, the Arrangers, the Dealers, the Trustee or the Agents, or any of their respective directors, officers, representatives, employees, advisers, agents, affiliates or any person who controls any of them that any recipient, of this Offering Circular or of any such information, should purchase the Notes. Each potential purchaser of Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer and CITIC Limited Group. Each potential purchaser of Notes should determine for itself the relevance of the information contained in this Offering Circular and its purchase of Notes should be based upon such investigation as it deems necessary.

None of the Arrangers, the Dealers, the Trustee or the Agents, nor any of their respective directors, officers, representatives, employees, advisers, agents, affiliates or any person who controls any of them undertakes to review the financial condition or affairs of the Issuer or CITIC Limited Group during the life of the arrangements contemplated by this Offering Circular nor to advise any investor or potential investor in the Notes of any information coming to the attention of any of the Arrangers, the Dealers, the Trustee or the Agents, or any of their respective directors, officers, representatives, employees, advisers, agents, affiliates or any person who controls any of them.

ii -

In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) (or persons acting on behalf of the Dealer or Dealers) (the "Stabilisation Manager(s)") may over-allot Notes or effect transactions with a view to supporting the price of the Notes at a level higher than that which might otherwise prevail for a limited period after the Issue Date. However, there is no obligation on such Stabilisation Manager(s) to do this. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Notes is made and, if begun may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the allotment of the Notes. Such stabilising shall be in compliance with all applicable laws, regulations and rules.

In this Offering Circular, unless otherwise specified or the context otherwise requires, references to "Hong Kong" or "Hong Kong SAR" are to the Hong Kong Special Administrative Region of the People's Republic of China, to the "PRC" are to the People's Republic of China excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan, to "HK$" are to Hong Kong dollars, to "CNY" or "RMB" are to Renminbi, the currency of the People's Republic of China, to "JPY" or to Japanese Yen, to "U.S.$", "US$" or "USD" are to U.S. dollars, to "sterling" or "£" are to the currency of the United Kingdom and to "euro" or "€" are to the lawful currency of member states of the European Union that adopt the single currency introduced in accordance with the Treaty establishing the European Community, as amended from time to time.

In this Offering Circular, unless otherwise specified or the context otherwise requires, references to: "AUM" are to asset under management, "EPC" are to engineering, procurement and construction, "GWP" are to gross written premium and "MW" are to megawatt.

For the convenience of the reader, this Offering Circular presents translations into U.S. dollars of certain Hong Kong dollar amounts at the rate of HK$7.80 = U.S.$1.00. No representation is made that Hong Kong dollars have been, could have been, or could be, converted into U.S. dollars at the rate indicated or at any other rate. On 30 June 2021, the exchange rate for Hong Kong dollars into U.S. dollars as set forth in the H.10 statistical release of the Federal Reserve Board was HK$7.7658 = U.S.$1.00. This Offering Circular also includes certain other currency amounts. The Hong Kong dollar equivalent amounts presented are translated at the approximate exchange rate at the time of the transactions to which they apply.

Certain figures included in this Offering Circular have been subject to rounding adjustments; accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.

ENFORCEABILITY OF JUDGMENTS

The Issuer is a corporation organised under the laws of Hong Kong. None of the directors of the Issuer are residents of the United States, and all or a substantial portion of the assets of the Issuer are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon the Issuer or such persons or to enforce against any of them in the United States courts judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any State or territory within the United States.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Offering Circular includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the United States Securities and Exchange Act of 1934 (the " Exchange Act "). The words "anticipate", "believe", "expect", "plan", "intend", "targets", "aims", "estimate", "project", "will", "would", "may", "could", "continue" and similar expressions are intended to identify forwardlooking statements. All statements other than statements of historical fact included in this Offering Circular, including, without limitation, those regarding CITIC Limited Group's financial position, business strategy, management plans and objectives for future operations, are forward-looking statements. These forwardlooking statements involve known and unknown risks, uncertainties and other factors, which may cause CITIC Limited Group's actual results, performance or achievements, or industry results, to be materially different from those expressed or implied by these forward-looking statements. These forward-looking statements are based on numerous assumptions regarding CITIC Limited Group's present and future business strategies and the environment in which CITIC Limited Group expects to operate in the future. Important factors that could cause CITIC Limited Group's actual results, performance or achievements to

iii -

differ materially from those in the forward-looking statements include, among other factors referenced in this Offering Circular:

CITIC Limited Group's ability to integrate its newly-built operations and any future expansion of its business;
CITIC Limited Group's ability to realise the benefits it expects from existing and future investments in its existing operations and pending expansion and development projects;
CITIC Limited Group's ability to obtain requisite governmental or regulatory approvals to undertake planned or proposed development projects;
CITIC Limited Group's ability to obtain external financing or maintain sufficient capital to fund its existing and future operations;
changes in political, social, legal or economic conditions in the markets in which CITIC Limited Group and its customers operate;
changes in the competitive environment in which CITIC Limited Group and its customers operate;
CITIC Limited Group's ability to secure or renew concessions or licences at future or existing facilities, operations or developments;
failure to comply with regulations applicable to CITIC Limited Group's business;
fluctuations in the currency exchange rates in the markets in which CITIC Limited Group operates; and
actions taken by CITIC Limited Group's joint venture partners that may not be in accordance with CITIC Limited Group's policies and objectives.

Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under " Risk Factors ". Forward-looking statements speak only as of the date of this Offering Circular and the Issuer expressly disclaims any obligation or undertaking to update publicly or revise any forward-looking statements in this Offering Circular to reflect any change in the Issuer's expectations or any change in events, conditions or circumstances on which these forward-looking statements are based. Given the uncertainties of forward-looking statements, there can be no assurance that projected results or events will be achieved and undue reliance should not be placed on these statements.

AVAILABLE INFORMATION

The Issuer has agreed that, for so long as any Notes are "restricted securities" as defined in Rule 144(a)(3) under the Securities Act, the Issuer will during any period that it is neither subject to Section 13 or 15(d) of the Exchange Act, nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder furnish, upon request, to any holder or beneficial owner of such restricted securities or any prospective purchaser designated by any such holder or beneficial owner or to the Trustee for delivery to such holder, beneficial owner or prospective purchaser, in each case upon the request of such holder, beneficial owner or, prospective purchaser or, as the case may be, the Trustee, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

iv -

Page SUMMARY OF THE PROGRAMME ........................................................................................................ 1 SUMMARY FINANCIAL INFORMATION .............................................................................................. 7 RISK FACTORS .......................................................................................................................................... 9 TERMS AND CONDITIONS OF THE NOTES ....................................................................................... 53 SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM ............... 91 USE OF PROCEEDS ................................................................................................................................. 97 CAPITALISATION AND INDEBTEDNESS ........................................................................................... 98 CITIC LIMITED GROUP .......................................................................................................................... 99 DIRECTORS AND SENIOR MANAGEMENT OF CITIC LIMITED .................................................. 148 DIRECTORS' INTERESTS IN SECURITIES ........................................................................................ 153 SHAREHOLDERS' INTERESTS IN SECURITIES ............................................................................... 154 TAXATION ............................................................................................................................................. 156 PRC CURRENCY CONTROLS .............................................................................................................. 159 CLEARANCE AND SETTLEMENT ...................................................................................................... 161 TRANSFER RESTRICTIONS ................................................................................................................ 166 SUBSCRIPTION AND SALE ................................................................................................................. 167 FORM OF PRICING SUPPLEMENT ..................................................................................................... 173 DOCUMENTS INCORPORATED BY REFERENCE ........................................................................... 184 GENERAL INFORMATION .................................................................................................................. 185 INDEX TO FINANCIAL STATEMENTS .............................................................................................. F-1

SUMMARY OF THE PROGRAMME

This summary must be read as an introduction to this Offering Circular and any decision to invest in the Notes should be based on a consideration of the Offering Circular as a whole, including any information incorporated by reference.

Words and expressions defined in the "Terms and Conditions of the Notes" below or elsewhere in this Offering Circular have the same meanings in this summary.

Issuer.............................................	CITIC Limited.
Programme Description...............	Medium Term Note Programme.
Programme Size............................	Up to U.S.$9,000,000,000 (or the equivalent in other currencies
	at the date of issue) aggregate nominal amount of Notes
	outstanding at any one time. The Issuer may increase the
	aggregate nominal amount of the programme in accordance with
	the terms of the Dealer Agreement.
Arrangers......................................	CLSA Limited, The Hongkong and Shanghai Banking
	Corporation Limited and UBS AG Hong Kong Branch.
Dealers...........................................	CLSA Limited, Deutsche Bank AG, Hong Kong Branch, The
	Hongkong and Shanghai Banking Corporation Limited, Standard
	Chartered Bank and UBS AG Hong Kong Branch.
	The Issuer may from time to time terminate the appointment of
	any dealer under the Programme or appoint additional dealers
	either in respect of one or more Tranches or in respect of the
	whole Programme. References in this Offering Circular to
	"Permanent Dealers" are to the persons listed above as Dealers
	and to such additional persons that are appointed as dealers in
	respect of the whole Programme (and whose appointment has not
	been terminated) and references to "Dealers" are to all Permanent
	Dealers and all persons appointed as a dealer in respect of one or
	more Tranches.
Trustee...........................................	The Bank of New York Mellon, London Branch.
Issuing and Paying Agents...........	The Bank of New York Mellon, London Branch (in respect of
	Unrestricted Notes other than CMU Notes) and The Bank of New
	York Mellon (in respect of Restricted Notes other than CMU
	Notes).
Paying Agents...............................	The Bank of New York Mellon, London Branch (in respect of
	Unrestricted Notes other than CMU Notes) and The Bank of New
	York Mellon (in respect of Restricted Notes other than CMU
	Notes).
Registrars......................................	The Bank of New York Mellon SA/NV, Luxembourg Branch (in
	respect of Unrestricted Notes other than CMU Notes), The Bank
	of New York Mellon (in respect of Restricted Notes other than
	CMU Notes) and The Bank of New York Mellon, Hong Kong
	Branch (in relation to CMU Notes).
Transfer Agents............................	The Bank of New York Mellon, London Branch (in respect of
	Unrestricted Notes other than CMU Notes) and The Bank of New
	York Mellon (in respect of Restricted Notes other than CMU
	Notes).
Calculation Agents.......................	The Bank of New York Mellon, London Branch (in respect of
	Unrestricted Notes other than CMU Notes) and The Bank of New

	York Mellon (in respect of Restricted Notes other than CMU
	Notes).
CMU Lodging and Paying Agent	The Bank of New York Mellon, Hong Kong Branch.
Method of Issue............................	The Notes will be issued on a syndicated or non-syndicated basis.
	The Notes will be issued in series (each a "Series") having one
	or more issue dates and on terms otherwise identical (or identical
	other than in respect of the first payment of interest), the Notes
	of each Series being intended to be interchangeable with all other
	Notes of that Series. Each Series may be issued in tranches (each
	a "Tranche") on the same or different issue dates. The specific
	terms of each Tranche (which will be completed, where
	necessary, with the relevant terms and conditions and, save in
	respect of the issue date, issue price, first payment of interest and
	nominal amount of the Tranche, will be identical to the terms of
	other Tranches of the same Series) will be completed in the
	pricing supplement (the "Pricing Supplement").
Issue Price.....................................	Notes may be issued at their nominal amount or at a discount or
	premium to their nominal amount. Partly-paid Notes may be
	issued, the issue price of which will be payable in two or more
	instalments.
Form of Notes...............................	The Notes may be issued in bearer form only ("Bearer Notes")
	or in registered form ("Registered Notes") only. Each Tranche
	of Bearer Notes will be represented on issue by a temporary
	Global Note if (i) definitive Notes are to be made available to
	Noteholders following the expiry of 40 days after their issue date
	or (ii) such Notes have an initial maturity of more than one year
	and are being issued in compliance with the D Rules (as defined
	in "Summary of the Programme – Selling Restrictions" below),
	otherwise such Tranche will be represented by a permanent
	Global Note. Registered Notes will be represented by
	Certificates, one Certificate being issued in respect of each
	Noteholder's entire holding of Registered Notes of one Series.
	Certificates representing Registered Notes that are registered in
	the name of, or in the name of a nominee for, one or more clearing
	systems are referred to as "Global Certificates". Registered
	Notes sold in an "offshore transaction" within the meaning of
	Regulation S will initially be represented by an Unrestricted
	Global Certificate. Registered Notes sold in the United States to
	QIBs within the meaning of Rule 144A will initially be
	represented by a Restricted Global Certificate.
Clearing Systems..........................	Clearstream, Euroclear, the CMU, DTC and, in relation to any
	Tranche, such other clearing system as may be agreed between
	the Issuer, the Issuing and Paying Agent, the Trustee and the
	relevant Dealer.
Initial Delivery of Notes...............	On or before the issue date for each Tranche, the Global Note
	representing Bearer Notes or the Global Certificate representing
	Registered Notes may be deposited with a common depositary
	for Euroclear and Clearstream or deposited with a sub-custodian
	for the CMU or registered in the name of Cede & Co. (or such
	other entity as is specified in the applicable Pricing Supplement)
	as nominee for DTC and deposited on or about the issue date with
	the DTC Custodian or deposited with any other clearing system
	or may be delivered outside any clearing systemprovided that
	the method of such delivery has been agreed in advance by the
	Issuer, the Trustee, the Issuing and Paying Agent and the relevant

	Dealers. Registered Notes that are to be credited to one or more
	clearing systems on issue will be registered in the name of, or in
	the name of nominees or a common nominee or a sub-custodian
	for, such clearing systems.
Currencies.....................................	Subject to compliance with all relevant laws, regulations and
	directives, Notes may be issued in any currency agreed between
	the Issuer and the relevant Dealers. Payments in respect of Notes
	may, subject to such compliance, be made in and/or linked to,
	any currency or currencies other than the currency in which such
	Notes are denominated.
Maturities......................................	Subject to compliance with all relevant laws, regulations and
	directives, any maturity as may be agreed between the Issuer and
	the relevant Dealer(s).
Specified Denomination...............	Definitive Notes will be in such denominations as may be
	specified in the relevant Pricing Supplement, subject to
	compliance with all relevant laws, regulations and directives.
	Unless otherwise permitted by then current laws and regulations,
	Notes (including Notes denominated in sterling) which have a
	maturity of less than one year and in respect of which the issue
	proceeds are to be accepted by the Issuer in the United Kingdom
	or the activity of issuing the Notes is carried on from an
	establishment maintained by the Issuer in the United Kingdom or
	whose issue otherwise constitutes a contravention of Section 19
	of the FSMA will have a minimum denomination of £100,000 (or
	its equivalent in other currencies).
Interest..........................................	Notes may be interest-bearing or non-interest bearing. Interest (if
	any) may accrue at a fixed rate or a floating rate or other variable
	rate or be index-linked and the method of calculating interest may
	vary between the issue date and the maturity date of the relevant
	Series.
Fixed Rate Notes...........................	Fixed interest will be payable in arrear on the date or dates in
	each year specified in the relevant Pricing Supplement.
Floating Rate Notes......................	Floating Rate Notes will bear interest determined separately for
	each Series as follows:
	(i) on the same basis as the floating rate under a notional
	interest rate swap transaction in the relevant Specified
	Currency governed by an agreement incorporating the
	2006 ISDA Definitions, as published by the
	International Swaps and Derivatives Association, Inc.;
	or by

(ii) reference to EURIBOR or HIBOR (or such other benchmark as may be specified in the relevant Pricing Supplement) as adjusted for any applicable margin.
(iii) on the basis of SOFR reference rates appearing on the agreed screen page of a commercial quotation service (in relation to Screen Rate Determination for Floating Rate Notes where the Reference Rate is specified as being SOFR Benchmark, please see Condition 5(b)(ii)(C)).

Interest periods will be specified in the relevant Pricing Supplement.

Benchmark Discontinuation	See Condition 5(n) (Benchmark Discontinuation (General)) and
	Condition 5(o) (Benchmark Discontinuation (SOFR)).
Zero Coupon Notes.......................	Zero Coupon Notes (as defined in "Terms and Conditions of the
	Notes") may be issued at their nominal amount or at a discount to
	it and will not bear interest.
Dual Currency Notes....................	Payments (whether in respect of principal or interest and whether
	at maturity or otherwise) in respect of Dual Currency Notes (as
	defined in "Terms and Conditions of the Notes") will be made in
	such currencies, and based on such rates of exchange as may be
	specified in the relevant Pricing Supplement.
Interest Periods and Interest	The length of the interest periods for the Notes and the applicable
Rates...........................................	interest rate or its method of calculation may differ from time to
	time or be constant for any Series. Notes may have a maximum
	interest rate, a minimum interest rate, or both. The use of interest
	accrual periods permits the Notes to bear interest at different rates
	in the same interest period. All such information will be set out
	in the relevant Pricing Supplement.
Redemption...................................	The relevant Pricing Supplement will specify the basis for
	calculating the redemption amounts payable (detailed in a
	formula, index or otherwise). Unless permitted by then current
	laws and regulations, Notes (including Notes denominated in
	pound sterling) which have a maturity of less than one year and
	in respect of which the issue proceeds are to be accepted by the
	Issuer in the United Kingdom or the activity of issuing the Notes
	is carried on from an establishment maintained by the Issuer in
	the United Kingdom or whose issue otherwise constitutes a
	contravention of Section 19 of the FSMA must have a minimum
	redemption amount of £100,000 (or its equivalent in other
	currencies).
Redemption by Instalments.........	The Pricing Supplement issued in respect of each issue of Notes
	that are redeemable in two or more instalments will set out the
	dates on which, and the amounts in which, such Notes may be
	redeemed.
Optional Redemption...................	The Pricing Supplement issued in respect of each issue of Notes
	will state whether such Notes may be redeemed prior to their
	stated maturity at the option of the Issuer (either in whole or in
	part) and/or the holders, and if so the terms applicable to such
	redemption.
Status of Notes..............................	The Notes will be direct, unconditional, unsubordinated and,
	subject to the provisions of Condition 4 (Negative Pledge),
	unsecured obligations of the Issuer and will rank (save for certain
	obligations required to be preferred by law) equally with all other
	unsecured obligations and unsubordinated indebtedness and
	monetary obligations of the Issuer, present and future.
Tax Redemption...........................	Except as described in "Summary of the Programme – Optional
	Redemption" above, early redemption will only be permitted for
	tax reasons as described in Condition 6(c) (Redemption,
	Purchase and Options – Redemption for Taxation Reasons).
Negative Pledge.............................	The Notes will have the benefit of a negative pledge as described
	in "Terms and Conditions of the Notes – Covenants – Negative
	Pledge".

Cross Acceleration........................	The Notes will have the benefit of a cross acceleration provision
	as described in "Terms and Conditions of the Notes – Events of
	Default".
Ratings...........................................	The Programme has been rated "A3" by Moody's and "BBB+" by
	S&P.
	Tranches of Notes may be rated or unrated. Where a Tranche of
	Notes is to be rated, such rating will be specified in the relevant
	Pricing Supplement.
	A rating is not a recommendation to buy, sell or hold securities
	and may be subject to suspension, revision, reduction or
	withdrawal at any time by the assigning rating agency.
Early Redemption........................	Except as provided in "Summary of the Programme – Optional
	Redemption" above, Notes will be redeemable at the option of the
	Issuer prior to maturity only for tax reasons. See "Terms and
	Conditions of the Notes – Redemption, Purchase and Options".
Withholding Tax...........................	All payments of principal and interest in respect of the Notes will
	be made free and clear of withholding taxes of Hong Kong,
	subject to customary exceptions (including the ICMA Standard
	EU tax exemption language), all as described in "Terms and
	Conditions of the Notes – Taxation".
Governing Law.............................	The Notes and any non-contractual obligations arising out of or
	in connection with the Notes will be governed by, and shall be
	construed in accordance with, English law.
Listing and Admission to Trading	Application has been made to the Hong Kong Stock Exchange
.....................................................	for listing of the Programme under which Notes may be issued
	during the 12-month period after the date of this Offering
	Circular on the Hong Kong Stock Exchange by way of debt
	issues to Professional Investors only.
	Separate application will be made for the listing of the Notes on
	the Hong Kong Stock Exchange. However, unlisted Notes and
	Notes to be listed, traded or quoted on or by any other competent
	authority, stock exchange or quotation system may be issued
	pursuant to the Programme. The relevant Pricing Supplement in
	respect of the issue of any Notes will specify whether or not such
	Notes will be listed on the Hong Kong Stock Exchange (or listed,
	traded or quoted on or by any other competent authority,
	exchange or quotation system) under which the Notes may be
	issued by way of debt issues to Professional Investors only.
	Notes listed on the Hong Kong Stock Exchange will be traded on
	the Hong Kong Stock Exchange in a board lot size of at least
	HK$500,000 (or its equivalent in other currencies).
Selling Restrictions.......................	The United States, the Public Offer Selling Restriction under the
	Prospectus Directive (in respect of Notes having a specified
	denomination of less than C50,000 (or C 100,000, to the extent
	that Directive 2010/73/EU has been implemented in the relevant
	Member State) or its equivalent in any other currency as at the
	date of issue of the Notes), the United Kingdom, Hong Kong,
	Singapore, Japan, the Netherlands and the PRC. See
	"Subscription and Sale".

Category 1 selling restrictions will apply for the purposes of Regulation S under the Securities Act.

The Bearer Notes will be issued in compliance with U.S. Treas. Reg. §1.163-5(c)(2)(i)(D) (the " D Rules ") unless (i) the relevant Pricing Supplement states that Bearer Notes are issued in compliance with U.S. Treas. Reg. §1.163-5(c)(2)(i)(C) (the " C Rules ") or (ii) the Bearer Notes are issued other than in compliance with the D Rules or the C Rules but in circumstances in which the Bearer Notes will not constitute "registration required obligations" under the United States Tax Equity and Fiscal Responsibility Act of 1982 (" TEFRA "), which circumstances will be referred to in the relevant Pricing Supplement as a transaction to which TEFRA is not applicable.

Transfer Restrictions ................... There are restrictions on the transfer of Registered Notes sold pursuant to Rule 144A under the Securities Act. See " Transfer Restrictions ".

Legal Entity Identifier (LEI) ....... 2549006I3Q3M98KHOT11. Risk Factors ..................................

Investing in Notes issued under the Programme involves certain risks. The principal risk factors that may affect the ability of the Issuer to fulfil its obligations under the Notes are discussed under " Risk Factors " below.

SUMMARY FINANCIAL INFORMATION

The consolidated financial information of CITIC Limited for the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021, as set forth below, is derived from the audited consolidated financial statements of CITIC Limited for the year ended 31 December 2020 (the " Audited Consolidated Financial Statements ") and the reviewed interim consolidated financial statements of CITIC Limited for the six months ended 30 June 2021 (the " Reviewed Consolidated Financial Statements "), each of which are set out in full elsewhere in this Offering Circular. Such audited consolidated financial information and reviewed interim consolidated financial information, as the case may be, should be read in conjunction with the Audited Consolidated Financial Statements and the Reviewed Consolidated Financial Statements and the notes thereto, together with the independent auditor's report in respect of such Audited Consolidated Financial Statements or the report on review of interim financial information in respect of such Reviewed Consolidated Financial Statements, as the case may be.

Consolidated Income Statement of CITIC Limited for the years ended 31 December 2020 and 2019 and the six months ended 30 June 2021 and 2020

Interest income ............................................................................... Interest expenses ............................................................................ Net interest income....................................................................... Fee and commission income .......................................................... Fee and commission expenses ........................................................ Net fee and commission income................................................... Sales of goods and services ............................................................ Other revenue ................................................................................. Total revenue................................................................................ Cost of sales and services ............................................................... Other net income ............................................................................ Impairment losses........................................................................... Expected credit losses .................................................................... Other impairment losses ................................................................. Other operating expenses ............................................................... Net valuation (loss)/gain on investment properties ......................... Share of profits of associates, net of tax ......................................... Share of profits of joint ventures, net of tax ................................... Profit before net finance charges and taxation........................... Finance income .............................................................................. Finance costs .................................................................................. Net finance charges...................................................................... Profit before taxation................................................................... Income tax ...................................................................................... Profit for the year/period............................................................. Attributable to: – Ordinary shareholders of CITIC Limited ................................. – Holders of perpetual capital securities ..................................... – Non-controlling interests ......................................................... Profit for the year/period............................................................. Earnings per share for profit attributable to ordinary shareholders of CITIC Limited during the year (HK$): Basic and diluted earnings per share..........................................	For the year ended 31 December For the six months ended 30 June 2020 2019 2021 2020 (HK$ million) Audited Unaudited 336,985 330,267 184,307 165,996 (164,967) (160,125) (93,473) (82,984) 172,018 170,142 90,834 83,012 44,814 42,770 29,107 23,559 (5,636) (6,807) (2,803) (2,769) 39,178 35,963 26,304 20,790 323,808 344,076 220,712 138,794 17,945 16,316 15,071 13,206 341,753 360,392 235,783 152,000 552,949 566,497 352,921 255,802 (276,305) (283,148) (190,106) (116,566) 6,363 9,944 3,781 3,913 (3,649) (7,024) (676) (1,318) (96,927) (88,722) (58,838) (53,025) - - - (88,647) (103,894) (42,380) (42,377) (675) (756) (224) (110) 10,533 8,083 6,689 4,836 3,960 5,474 1,330 501 107,602 106,454 72,497 51,656 1,266 2,264 1,424 1,037 (11,150) (12,703) (4,784) (6,149) (9,884) (10,439) (3,360) (5,112) 97,718 96,015 69,137 46,544 (16,790) (17,827) (10,448) (8,635) 80,928 78,188 58,689 37,909 56,628 53,903 44,175 27,014 - - - - 24,300 24,285 14,514 10,895 80,928 78,188 58,689 37,909 1.95 1.85 1.52 0.93	For the six months ended 30 June	For the six months ended 30 June
			2020
			152,000
			255,802
			(116,566) 3,913 (1,318) (53,025) - (42,377) (110) 4,836 501
			51,656
			1,037 (6,149)
			(5,112) 46,544 (8,635)
			37,909
			27,014 - 10,895
			37,909
			0.93

Consolidated Balance Sheet of CITIC Limited as at 31 December 2020 and 2019 and as at 30 June 2021

Assets Cash and deposits ........................................................................... Placements with banks and non-bank financial institutions ............ Derivative financial instruments ..................................................... Trade and other receivables ............................................................ Amounts due from customers for contract work ............................ Contract assets................................................................................ Inventories...................................................................................... Financial assets held under resale agreements ................................ Loans and advances to customers and other parties ........................ Investments in financial assets – Financial assets at amortised cost ............................................ – Financial assets at fair value through profit and loss ................ – Debt investments at fair value through other comprehensive income ..................................................................................... – Equity investments at fair value through other comprehensive income ..................................................................................... Available-for-sale financial assets .................................................. Held-to-maturity investments ......................................................... Investments classified as receivables .............................................. Asset classified as held for sale ...................................................... Interests in associates ..................................................................... Interests in joint ventures ............................................................... Fixed assets .................................................................................... Investment properties ..................................................................... Right-of-use assets ......................................................................... Intangible assets ............................................................................. Goodwill ........................................................................................ Deferred tax assets ......................................................................... Other assets .................................................................................... Total assets.................................................................................... Liabilities Borrowing from central banks ........................................................ Deposits from banks and non-bank financial institutions ............... Placements from banks and non-bank financial institutions ........... Financial liabilities at fair value through profit and loss ................. Derivative financial instruments ..................................................... Trade and other payables ................................................................ Amounts due to customers for contract work ................................. Contract liabilities .......................................................................... Financial assets sold under repurchase agreements ........................ Deposits from customers ................................................................ Employee benefits payables ........................................................... Income tax payable ........................................................................ Bank and other loans ...................................................................... Debt instruments issued ................................................................. Lease liabilities .............................................................................. Liabilities directly associated with assets classified as held for sale .............................................................................................. Provisions ....................................................................................... Deferred tax liabilities .................................................................... Other liabilities ............................................................................... Total liabilities.............................................................................. Equity Share capital ................................................................................... Perpetual capital securities ............................................................. Reserves ......................................................................................... Total ordinary shareholders' funds and perpetual capital securities Non-controlling interests ................................................................ Total equity................................................................................... Total liabilities and equity...........................................................	As at 31 December 2020 2019 (HK$ million) Audited 755,386 740,434 198,513 226,686 47,804 19,580 169,723 167,427 13,619 11,504 80,370 54,735 143,029 11,117 5,206,155 4,366,639 1,156,496 1,040,997 528,293 403,776 860,255 701,936 8,023 7,020 - - - - - - - 28,819 131,040 123,345 50,287 40,963 167,840 150,075 38,455 37,555 37,915 36,494 15,877 11,977 21,133 21,203 74,164 58,729 36,451 28,913 9,740,828 8,289,924 266,611 268,256 1,370,439 1,061,380 74,308 107,400 12,423 1,436 49,808 20,763 160,943 148,908 - - 28,092 21,380 94,774 127,766 5,427,694 4,541,841 36,176 33,357 13,448 13,989 163,604 151,312 973,858 823,964 18,267 17,435 - 20,674 15,172 11,155 11,444 9,963 15,125 14,454 8,732,186 7,395,433 381,710 381,710 - - 292,566 209,816 674,276 591,526 334,366 302,965 1,008,642 894,491 9,740,828 8,289,924	As at 30 June 2021
		Unaudited 704,169 169,753 30,559 191,289 - 16,585 100,866 118,984 5,535,826 1,310,077 653,358 780,219 9,056 - - - - 145,985 52.368 170,552 38,407 38,542 15,859 21,205 80.758 45,941
		10,230,358
		292,287 1,311,503 88,655 4,118 31,190 181,335 - 30,140 85,140 5,643,341 31,022 12,235 173,676 1,173,519 19,750 - 14,917 11,938 16,696
		9,121.462
		381,710 - 333,358
		715,068
		393,828
		1,108,896
		10,230,358

RISK FACTORS

Prior to making any investment decision, potential investors should consider carefully all of the information in this Offering Circular, including but not limited to the risks and uncertainties described below. The following factors are contingencies which may or may not occur and CITIC Limited is not in a position to express a view on the likelihood of any such contingency occurring. Any of the risks or uncertainties described below, as well as additional risks or uncertainties, including those which are not currently known to CITIC Limited or which CITIC Limited currently deems to be immaterial, may affect CITIC Limited's business, financial condition or results of operations of CITIC Limited Group or its ability to fulfil its obligations under the Notes.

" CITIC Limited Group " means CITIC Limited, its subsidiaries, associated companies and joint ventures; and " CITIC Corporation Group " refers to CITIC Corporation Limited, its subsidiaries, associated companies and joint ventures.

General Risks Relating to the Businesses of CITIC Limited Group

CITIC Limited Group comprises subsidiaries and investee companies operating in various industries, and therefore, is exposed to a wider variety of circumstances compared to companies operating in a single business segment

CITIC Limited Group's operating businesses are diverse and categorised into five business segments comprising comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation, and managed through five platforms comprising the financial, industrial, capital investment, capital operations and strategic investment platforms. Although CITIC Limited Group has invested heavily to embrace integration, collaboration and expansion to drive future development, the nature of operating diverse businesses is such that there may be risks relating to internal inefficiency and management costs, and in particular:

CITIC Limited Group needs to devote significant resources to monitor the operations of each business and changes in their different operating environments to assess their risks. If CITIC Limited Group does not effectively monitor these changes in the operational environment, CITIC Limited Group's results of operations, financial condition and development prospects would be adversely affected;
CITIC Limited Group has many listed company members which are subject to different regulatory regimes. These regulations impose obligations related to the transferring funds in or out of such companies, including issuing announcements, obtaining independent shareholders' approval at general meetings and disclosing events in the annual reports. The market prices and trading volumes of the listed companies' shares may fluctuate significantly, which could in turn affect the market price of CITIC Limited Group's shares;
CITIC Limited Group's voting rights in its subsidiaries may be diluted. The non-listed subsidiaries of CITIC Limited Group may become listed. If CITIC Limited Group chooses not to or is unable to subscribe for the additional equity or equity-linked securities issued by its listed and non-listed subsidiaries, CITIC Limited Group's voting rights in these entities may be diluted;
CITIC Limited Group's businesses are operated by its subsidiaries and investee companies. CITIC Limited Group may face risks of managing and controlling its subsidiaries and investee companies. As a large conglomerate, CITIC Limited Group's operational success requires effective management and control, including devising financial policies for subsidiaries and investee companies, as well as performance incentives for management personnel. If the management and control systems are ineffective, there is a risk of a loss of business, finance and human resources;
CITIC Limited Group has no control over certain investee companies. CITIC Limited Group's ability to manage and supervise certain investee companies mainly depends on its contractual rights under the relevant shareholders' agreements and its shareholder rights under company law and other relevant laws and regulations. Any dispute with other shareholders of an investee company of CITIC Limited Group could have an adverse effect on such investee company's operations;
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CITIC Limited's cash flow primarily comes from the dividends from its subsidiaries and investee companies. Any failure of CITIC Limited Group's subsidiaries or investee companies to pay cash dividends could in turn have an adverse effect on CITIC Limited Group's ability to pay dividends to its shareholders. Under PRC laws, rules and regulations, all of CITIC Limited Group's PRC entities are required to set aside at least 10 per cent. of their after-tax profit based on PRC accounting standards each year to their respective statutory capital reserve funds until the accumulative amount of such reserves reaches 50 per cent. of their respective registered capital. As a result, all of CITIC Limited Group's PRC entities are restricted in their ability to transfer a portion of their net income to CITIC Limited in the form of dividends. Such restricted reserves are not distributable as cash dividends and could in turn have an adverse effect on CITIC Limited Group's ability to pay dividends to its shareholders; and
CITIC Limited Group is exposed to credit risks arising from business partners in diverse industries whose credit worthiness may be affected by factors, circumstances or developments unique to the industry of each particular business partner. CITIC Limited Group needs to pay close attention to market developments and credit risks arising from its extensive business operations and counterparties in order to investigate and manage such risks. Furthermore, with the proliferation of new market entities, innovative business models, new products, businesses and counterparties, credit risks could increase in both width and complexity. There is no assurance that the measures adopted by CITIC Limited Group will be successful in managing credit risks.

CITIC Limited Group plans to further strengthen the overall productivity and efficiency of its assets and to engage in additional projects and businesses with high rates of return. CITIC Limited Group seeks to leverage integration and collaboration between its five business segments of comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation and its five platforms comprising the financial, industrial, capital investment, capital operations and strategic investment platforms to build a lasting enterprise and solidify the CITIC brand's position in the fields in which CITIC Limited Group operates. However, there can be no assurance that these efforts will be successful or that CITIC Limited will improve the profitability of the businesses in the future.

CITIC Limited Group's business is subject to economic fluctuation in the industries in which it has operations

The business operations of CITIC Limited Group rely on the overall activity level in the industries in which it operates and the relevant upstream and downstream industries. The volatility of the international financial markets; international trade disputes; economic downturn caused by the COVID-19 pandemic; cautious market sentiment towards corporate investment; slowdowns in the growth of market demand; and fluctuations in the prices of commodities, major raw material prices, and exchange rates of major currencies may each affect CITIC Limited Group's various businesses.

A substantial portion of CITIC Limited Group's businesses are closely linked to the success of the PRC economy. International trade disputes and any slowdown in the PRC economy is likely to have an adverse impact on CITIC Limited Group's business, results of operations and financial condition. In addition, the PRC government adjusts its monetary, fiscal, regulatory and other policies and measures from time to time to manage economic growth, strategic development, overheating and excess capacity in a specific industry or market. Therefore, changes in the PRC's overall economy or the industries in which CITIC Limited Group operates may result in a lower-than-expected growth rate or even negative growth for CITIC Limited Group, which may in turn have an adverse effect on CITIC Limited Group's business, results of operations and financial condition.

The global outbreak of the COVID-19 pandemic could affect CITIC Limited Group's results of operations, financial condition and profitability

Since late-2019, the COVID-19 pandemic has resulted in a widespread and global health crisis, restrictions on travel and public transport and prolonged closures of workplaces. Such outbreak has affected investment sentiment, resulted in sporadic volatility in global capital markets and adversely affected economies around the world. It has caused significant volatility in the stock markets worldwide and has impacted economic activity worldwide. Concerns about the spread of COVID-19 have caused governments around the world to take measures to prevent its spread. Such measures include lockdowns, restrictions on travel and public transport and prolonged closures of workplaces, which have had a material adverse effect on the global

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economy. Although, with the implementation of vaccination programmes in various countries, there are some signs that the effect of COVID-19 is gradually being contained, many parts of the world remain heavily impacted by the pandemic. There remains uncertainties surrounding the effectiveness of vaccines, particularly against new variants of COVID-19. Businesses and economies worldwide continue to be severely disrupted and adversely affected, resulting in impacts on local and cross-border logistics and supply chains and delays to timetables. These global disruptions on supply chains can be particularly damaging for CITIC Limited Group's business sectors that are heavily reliant on global and regional economies. Examples of such sectors are CITIC Limited Group's comprehensive financial markets, advanced intelligent manufacturing, advanced materials manufacturing (including mining and special steel), and new consumption business segments. Lack of demand domestically or globally in such sectors would adversely affect CITIC Limited Group's results of operations, financial condition and profitability. There can be no assurance that there will not be a continued occurrence or a recurrence of an outbreak of COVID-19 (or new variants of COVID-19 that may be more contagious), or another significant global outbreak of a severe communicable disease, in Hong Kong, the PRC or the rest of the world in the future, and if such an outbreak were to occur, it may have an impact on the operations of CITIC Limited Group and its results of operations may suffer.

Governments and central banks around the world have introduced or are planning fiscal and monetary stimulus measures including tax cuts, direct subsidies, rates cut, bond repurchase programs and suspension or relaxation of prudential bank capital requirements. These measures aim to contain the economic impact of the pandemic, stabilise the markets and provide liquidity easing to the markets. There is no assurance that such measures may be introduced in time or will be sufficient or effective in delivering their policy objectives. There is no assurance that these measures will be successful in containing the economic impact of the pandemic or stabilising the markets. As a result, the global economy is facing significant uncertainties and the global financial markets are experiencing significant volatilities, which may have an adverse impact on CITIC Limited Group's results of operations, financial condition and profitability.

Intense competition in the markets in which CITIC Limited Group has operations may lead to a decrease in market share and profitability

CITIC Limited Group's businesses face intense competition in its operating markets. Its comprehensive financial services business segment faces competition from domestic and international commercial banks and other financial institutions; its new-type urbanisation business segment faces competition from global companies in the industry as well as the challenges from large state-owned enterprises and private companies; its advanced intelligent manufacturing, advanced materials and new consumption business segments face competition in terms of resources, technology, price and service; its businesses involving product sales face competition in terms of product specification, service quality, responsiveness to customer needs, reliability and price; its businesses operating in the consumer space face competition in terms of costs, product offering and changing consumer taste and behaviour; and its magnetite iron ore mining project in Cape Preston, Western Australia (the " Sino Iron Project ") faces competition from other iron ore producers in terms of supply, quality and price.

Competitors may have greater access to capital, technology, management and other resources than CITIC Limited Group, and may be capable of providing a wider range of services. These competitors may also merge or form joint ventures with other domestic or foreign competitors, which may intensify the competition CITIC Limited Group faces. In addition, whereas CITIC Limited Group operates in a diverse range of businesses, its competitors may be focused in only one or a few businesses and may therefore be capable of offering more specialised products or services than CITIC Limited Group.

CITIC Limited Group's market share depends on its ability to anticipate and respond to many competitive factors, including competitors' pricing strategies, change in customer preferences, funding and financing resources, introduction of new or improved technology, products or services in related industries or markets. There can be no assurance that actual or potential competitors of CITIC Limited Group will not provide similar products or services with comparable or even better quality at the same or even lower prices, or be more adaptable to industry trends or market changes. Increased competition may lead to lower prices, a decrease in profit margins and loss of market share.

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CITIC Limited Group faces risks arising from the restructuring and realignment of businesses and it may not effectively carry out the business strategy of the integrated CITIC Limited Group

CITIC Limited Group has been actively restructuring and realigning its businesses whilst optimising asset allocation.

In 2020, to better capitalise on the advantages of operating both financial and non-financial businesses, CITIC Limited Group has optimised its business portfolio into five strategic segments for enhanced alignment and a sharpened focus. The five strategic segments comprise of the comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation business segments. These five segments are matrixed with five platforms comprising the financial, industrial, capital investment, capital operations and strategic investment platforms.

Further restructuring, realignment and optimisation endeavours may also take place in the future. There can be no assurance that previous, current or future restructuring, realignment and optimisation endeavours have or will have the desired effect on the business, results of operations and financial condition of CITIC Limited Group. Such restructuring, realignment and optimisation endeavours, if unsuccessful, may have an adverse effect on the business, results of operations and financial condition of CITIC Limited Group. There can be no assurance that any such restructuring or realignment or optimisation endeavours will achieve the desired strategic objectives, business integration, or the expected return on investment of CITIC Limited Group.

CITIC Limited Group is exposed to the risk of fluctuations in the currency exchange rates

CITIC Limited Group has major operations in the PRC, Hong Kong and Australia, with Renminbi, Hong Kong dollar and U.S. dollar as functional currencies, respectively. The member companies of CITIC Limited Group are exposed to currency risk from gaps between financial assets and liabilities, future commercial transactions and net investments in foreign operations that are denominated in a currency that is not the member company's functional currency. CITIC Limited Group is therefore exposed to the risk of fluctuations in the exchange rate of the Renminbi, Hong Kong dollar or U.S. dollar against these other foreign currencies. In the event that other currencies appreciate against the Renminbi, Hong Kong dollar or U.S. dollar, CITIC Limited Group will spend a greater proportion of its funds to settle its expenses denominated in other currencies. If such increase in expenses is not offset by an appreciation in CITIC Limited Group's revenues denominated in other currencies, its profit may be adversely affected and this could have an adverse effect on CITIC Limited Group's financial condition and results. The reporting currency of the consolidated financial statements of CITIC Limited is the Hong Kong dollar, and as such the effect of fluctuation in exchange rates may be compounded upon the consolidation of subsidiaries whose functional currency is not the Hong Kong dollar.

CITIC Limited Group is subject to litigation and regulatory risk

CITIC Limited Group's businesses are wide-spread in terms of industry and geographical scope. In light of such wide business scope, CITIC Limited Group may not be able to improve and adjust its business practice, management and code of conduct in response to the relevant changes in domestic and foreign laws and regulations in a timely manner.

CITIC Limited Group's business and operations may be subject to litigation and regulatory actions from time to time. These proceedings and disputes may damage CITIC Limited Group's reputation and divert its resources and management's attention. Significant costs may have to be incurred in defending CITIC Limited Group in such proceedings. In addition, CITIC Limited Group may have disagreements with regulatory bodies in the course of its operations, which may subject it to administrative proceedings or unfavourable decrees that may result in liabilities and cause delays to its developments and interruptions to its operations. CITIC Limited Group may also be involved in disputes or legal proceedings in relation to delays in the completion and delivery of its projects. Any of the above could have a material adverse effect on CITIC Limited Group's business, results of operations and financial condition.

Furthermore, CITIC Limited Group is subject to periodical inspections from PRC and overseas regulatory authorities, and may be subject to potential punishments, fines or other penalties imposed by such regulatory authorities. There can be no assurance that the relevant PRC or overseas regulatory authorities will not impose punishments, fines or other penalties, or issue negative reports or opinion in the future

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which would have an adverse effect on the reputation, business, results of operations, and financial condition of CITIC Limited Group.

The final outcomes of CITIC Limited Group's pending litigation and other regulatory matters cannot be predicted reasonably and accurately, primarily due to the different levels of uncertainty and complexity of these litigation and regulatory matters.

For details regarding pending material litigation and other regulatory matters of CITIC Limited Group, see " CITIC Limited Group – Legal and Regulatory Proceedings ".

In addition, CITIC Limited Group may be sued by customers or other third parties in relation to CITIC Limited Group's facilities or products. CITIC Limited Group attempts to mitigate against such risk of potential claims by introducing liability limitation, compensation guarantees and insurance clauses in the relevant contracts. These attempts may not bring sufficient protection due to factors beyond the control of CITIC Limited Group, including:

in various jurisdictions where CITIC Limited Group has operations (including the PRC), CITIC Limited Group's potential legal liability in relation to environmental or labour matters is subject to applicable laws and regulations, which may not be limited by contracts;
customers and subcontractors may not have sufficient financial resources to fulfil their obligations owed to CITIC Limited Group;
losses may result from risks not covered by CITIC Limited Group's compensation guarantee contractual arrangement; and
the scope of the insurance may not be sufficient to CITIC Limited Group because certain matters cannot be insured with reasonable commercial clauses, if at all. CITIC Limited Group has not yet obtained insurance cover or been fully paid for all of the potential or actual losses in relation to environmental liabilities, business interruption, profit loss, or losses due to operating interruption, industrial accidents, employee or third party protest or other activities.

CITIC Limited Group is subject to reputation risk

CITIC Limited Group may not be able to maintain its existing credit rating and reputation. Failure of any subsidiary or branch of CITIC Limited Group to effectively avoid or mitigate adverse consequences in relation to CITIC Limited Group's operations caused by safety accidents, inadequate quality control, or other reasons could have an adverse effect on CITIC Limited Group, its reputation, results of operations, financial condition and profitability.

CITIC Limited Group's historical financial information is not indicative of future results of operations. There can be no assurance that CITIC Limited Group's future growth rate will be maintained at the historical level

CITIC Limited Group operates businesses in diverse areas. To maintain steady business growth, CITIC Limited Group reviews and adjusts its strategies from time to time. Therefore, CITIC Limited Group's historical financial information must be read in conjunction with the effect on business due to strategic adjustments during the period as reflected in financial reports. There can be no assurance that the historical financial information will reflect the results of operations, financial condition or cash flows of CITIC Limited Group in the future. CITIC Limited Group may be unable to maintain a growth rate comparable to the historical level of CITIC Limited Group or the CITIC Corporation Group in terms of revenue or net profit in the future.

Major capital expenditure items of CITIC Limited Group may not be completed on schedule or within budget, if at all, or may not achieve the expected economic or commercial results

CITIC Limited Group's major capital expenditure projects often entail substantial capital investments for years before completion. The projects of CITIC Limited Group may be delayed, or adversely affected by risks or uncertainties, including market conditions, policies and regulations adopted by the governments in the PRC or in other relevant jurisdictions, capital adequacy levels, and disputes with business partners, technology and equipment suppliers, and other contractors, employees and the local government and community, natural disasters, electricity and other energy supplies, access to technological or human

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resources, any adverse changes in bilateral relations between the PRC and the relevant foreign government, war or any other adverse development in international relations.

As a result, there can be no assurance that all of the planned projects of CITIC Limited Group will be completed successfully or in a profitable manner. Even if such project is completed, the actual costs may exceed the original budget due to many reasons, including delay and higher financing costs due to fluctuations in foreign exchange rates and interest rates, changes of original designs and the increasing costs of materials and other supplying goods and labour. CITIC Limited Group may not be able to achieve the desired economic results and commercial success. As a result, CITIC Limited Group's results of operations, financial condition, profitability and growth prospects may be adversely affected.

Certain businesses and operations of CITIC Limited Group require substantial and steady capital injection; lack of adequate financing may have an adverse effect on CITIC Limited Group's business, financial performance and growth prospects

Certain businesses of CITIC Limited Group are capital-intensive and in need of substantial capital for their operations. CITIC Limited Group's financial services business and the banking business in particular, is required to maintain adequate capital to meet capital adequacy ratio requirements imposed by the China Banking and Insurance Regulatory Commission (" CBIRC "). The advanced materials business requires significant capital expenditure for various purposes, including acquisitions and exploration of oil and mineral resources, obtaining mining permission and purchase and maintenance of the mining processing equipment in the PRC and overseas. In addition, CITIC Limited Group's advanced intelligent manufacturing business also requires substantial capital for building, maintaining and managing production facilities, purchases of machinery and equipment and the development of new technology and products. For its new-type urbanisation business segment, CITIC Limited Group may need to make advanced payments in engineering construction and other engineering activities before receiving payments from the customers, while substantial funds are also required for land acquisitions and property development.

If capital requirements of CITIC Limited Group exceed its financial resources, CITIC Limited Group will need to incur additional debt or equity financing. CITIC Limited Group and CITIC Corporation Group in the past mainly relied on cash generated from the business operations, equity financing, bond issues, bank loans and other borrowing to meet their capital requirements. There can be no assurance that cash generated from business operations could sufficiently support the development and expansion plans of CITIC Limited Group. As the arrangement and cost of external financing are dependent on numerous factors (including the general economic and capital market conditions, interest rates, the credit standing of CITIC Limited Group, and credit availability from banks or other lenders), CITIC Limited Group may fail to obtain additional financing in a timely manner and/or at reasonable cost which would in turn adversely affect CITIC Limited Group's business developments, financial performance and growth prospects. In recent years, there has been a reduction in certain banks' capacity for loan business which has resulted in a fall in the liquidity available in the credit markets and a rise in the credit spread. The availability of external funding is subject to various factors and uncertainties including governmental approval, market conditions, credit availability, interest rates and CITIC Limited Group's results of operations in various businesses.

CITIC Limited Group might experience unexpected difficulties in implementing its development strategy of optimising asset allocation and focusing on its five business segments

In alignment with the PRC's 14[th] Five-Year Plan and to adapt to the increasingly complex operating environment, CITIC Limited Group has outlined an updated development strategy focused on comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation. CITIC Limited Group seeks to continue to optimise its business structure and the allocation of resources by disposing of under-performing assets and nurturing new businesses, particularly in emerging industries. The implementation of CITIC Limited Group's current and any future strategies is subject to various risks, including CITIC Limited Group's lack of operational experience in certain emerging industries or markets, changes in government policies and regulations and other risks associated with such industries or markets. Market development may also tighten CITIC Limited Group's funds, personnel and management resources. As a result, CITIC Limited Group may not be able to effectively manage its development, which would have an adverse effect on its business, results of operations, financial condition and prospects of CITIC Limited Group. In addition, CITIC Limited Group may find it difficult to win market share from companies with considerable size and market share in its corresponding industries and markets. Furthermore, CITIC Limited Group's overseas target markets may

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have a higher threshold of establishment of foreign companies. There can be no assurance that CITIC Limited Group will succeed in implementing, and be successful in achieving the goals of its strategies.

CITIC Limited Group's acquisitions or strategic investments may not be integrated or managed effectively, or at all, which in turn could have an adverse effect on CITIC Limited Group's results of operations and financial condition

CITIC Limited Group may acquire or invest in businesses to expand its operations There are many risks and difficulties in relation to acquisitions, including potential difficulties of retention and assimilation of personnel, the integration of operations and corporate cultures, distraction of management attention and other resources, and lack of knowledge and experience in new industries or markets. In addition, CITIC Limited Group may be subject to debts, other obligations and potential legal obligations of the acquired companies as a result of the acquisition. The acquisition may also result in the impairment charges of goodwill and other intangible assets. Any of these factors may have an adverse effect on the results of operations and financial condition of CITIC Limited Group. In particular, if the acquired companies' results of operations do not meet expectations, CITIC Limited Group may be required to recognise significant impairment charges, resulting in an adverse effect on CITIC Limited Group's results of operations. Therefore, there can be no assurance that any acquisitions could achieve the desired strategic objectives, synergies, business integration, or deliver the expected return on investment.

CITIC Limited Group continue to consider and evaluate opportunities for further development. It may expand its business through acquisitions. However, there can be no assurance that CITIC Limited Group can identify attractive acquisition targets in the future; or CITIC Limited Group can acquire the targets on commercially acceptable terms even if such target is identified. CITIC Limited Group may fail to consummate an acquisition or investment due to the failure to obtain the relevant governmental approvals or other necessary approvals for such acquisition or investment. Failure to identify proper acquisition or investment targets or inability to complete such transactions may have an adverse effect on the competitiveness and growth prospects of CITIC Limited Group.

Part of CITIC Limited Group's businesses comprise operations outside Hong Kong, which are subject to risks in relation to uncertainties of different economies and politics, regulatory actions and safety issues

CITIC Limited Group conducts engineering contracting, resource exploration, iron ore and coal mining, manufacturing, trading and other businesses overseas. In addition, export of machinery, special steel and auto parts and other products of CITIC Limited Group's members from mainland China are also growing. CITIC Limited Group also conducts financial service business, infrastructure business, telecommunications business, satellite business and other businesses overseas. These businesses are susceptible to the relevant country's political, economic and social conditions. It is expected that CITIC Limited Group will continue to derive revenue and profits from international operations and other businesses overseas in the future. As a result, CITIC Limited Group is exposed to risks including but not limited to the following:

Political risk, including risks caused by riots and unrest, terrorism and war, local and global political or military tensions, diplomatic tension or changes, economic or trade sanctions and losses caused by embargoes;
Economic, financial and market instability and credit risk;
Policy changes or regulations changes by domestic or foreign government in relation to international business;
Reliance on foreign governments or foreign state-controlled entities for the need of electricity, water, transport and other public use facilities or infrastructure;
Unfamiliarity with the local business and market conditions which may cause adverse effects such as inadequate project bidding price;
Inadequate understanding of local laws, regulations, standards and other stipulations on construction, taxation, foreign exchange, customs, trade and others;
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Risks of increased costs, prolonged construction periods, and contradictions with anticipated targets caused by violation of laws and regulations of the host country or improper handling of the legal issues in the host country;
Risks and uncertainties relating to appointment of foreign agents in overseas operations;
Anti-PRC sentiments or protectionism, anti-dumping and others measures against PRC companies;
Global market supply and demand pattern changes;
Competition from other international and local companies, including new market entrants;
Adverse working conditions or strikes;
Failure to comply with environmental laws and regulations;
Potential disputes with foreign partners, customers, subcontractors and suppliers or local residents and communities; and
Confiscation or nationalisation of CITIC Limited Group's assets.

Failure to maintain an effective quality control system could have an adverse effect on the business and operations of CITIC Limited Group

The quality of CITIC Limited Group's services and products is essential to the success of its businesses. To ensure its business success, CITIC Limited Group endeavours to maintain an effective quality control system. The effectiveness of the quality control system depends on a series of factors, including the design of the system, the related training programs and CITIC Limited Group's ability to ensure its employees' compliance with the quality control policies and guidelines.

CITIC Limited Group engages external contractors that are responsible for the construction and development of its advanced materials and new-type urbanisation business segments. In respect of the advanced intelligent manufacturing, advanced materials and new-type urbanisation business segments, CITIC Limited Group also relies on third-party manufacturers and other service providers in the manufacturing and supply of various spare parts, components and services.

CITIC Limited Group may not effectively monitor the contractors and other third parties. In addition, CITIC Limited Group may not find qualified contractors and other third parties for outsourcing in a timely manner. If CITIC Limited Group fails to find qualified contractors and other third parties, its ability to complete the relevant project or other contracts could be adversely affected. If the required payment to the contractor and other third parties exceeds CITIC Limited Group's estimates, especially in the event of having a fixed price contract with CITIC Limited Group's customers, CITIC Limited Group could suffer losses. Project outsourcing also exposes CITIC Limited Group to risks of non-performance, delay of performance and non-compliance of contractors or other third parties, which may have an adverse effect on CITIC Limited Group's results of operations, financial condition, profitability, and reputation, and may lead to litigation or damage claims against CITIC Limited Group.

Some of CITIC Limited Group's internal control and coordination measures on the group business may not be implemented at the CITIC Limited Group level due to a large amount of subsidiaries, a wide range of businesses and widely distributed medium-level management teams. As a result, difficulties may arise in supervising whether the subsidiaries, management team members and employees abide by the internal control policies and procedures of CITIC Limited Group and related laws and regulations.

Any failure to comply with the quality control system, the deterioration of related systems or lack of supervision of the internal control mechanism may result in defects in CITIC Limited Group's services, projects or products, which could lead to compensatory claims in contract, product liability and other compensatory requirements. Any such claims, whether with or without merit, could lead to significant costs, damages to CITIC Limited Group's reputation and adverse effect on CITIC Limited Group's business.

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Reliance on the experience and industry expertise of management personnel, skilled personnel and other qualified staff and intense competition for talent may have an adverse effect on CITIC Limited Group's business and prospects

Talented executives are essential for the rapid business development of CITIC Limited Group. If the improvement of the internal motivation, incentive mechanism and discipline mechanism lag behind the development of other businesses, CITIC Limited Group's further development could be hampered. CITIC Limited Group's business operation growth depends on the continued service of the senior management team. To implement the future growth plan, CITIC Limited Group will need more management personnel with experience and talents. If any important management personnel leaves CITIC Limited Group, and CITIC Limited Group was unable to recruit or hire people with equivalent qualifications in a timely manner, CITIC Limited Group's business management and growth could be adversely affected.

CITIC Limited Group's businesses cover multiple industries and also depend on employment, training and retaining of skilled employees with different backgrounds, including management, finance, design, marketing, engineering and other technical professionals. In the PRC and other markets where CITIC Limited Group's businesses have operations, retaining qualified personnel is generally very competitive. Having high quality personnel is the key to meet the needs of future business competition. There can be no assurance that CITIC Limited Group will be able to hire the necessary manpower with the appropriate technical skills for operational activities.

There can be no assurance that the supply strains of skilful personnel will not increase the costs of employees. As a key enterprise having significant influence in the industries in which it operates, CITIC Limited Group has accumulated a large number of management personnel and technical personnel in the years of development. Despite CITIC Limited Group's various attempts to stabilise and attract the talented personnel, there are still certain risks of talent loss.

CITIC Limited Group is subject to risks of technological innovation and update

There continues to be new technological developments in each industry. New services are frequently introduced and industrial standards are always evolving. Technological transformation reduces cost and price, and competitors in the same industry attempt to provide more competitive and creative products and services. For example, the financial services segment of CITIC Limited Group covers various sectors, including banking, securities, trust, insurance and asset management. As information technology is widely applied in the modern financial services industry, the reliability of computer systems, computer networks and information management software is essential to both traditional financial and innovative businesses. Unreliable information technology systems or underdeveloped network technologies may result in inefficient trading systems, business interruption, or loss of important information, thus affecting the reputation and service quality of financial institutions and even incurring economic losses and legal disputes.

It is uncertain if CITIC Limited Group will be able to effectively adapt to evolving technology and respond to technological transformation and industrial development. To maintain its competitiveness, CITIC Limited Group must continuously invest, which will increase demands on financing and cash flow of CITIC Limited Group on the one hand, and expose CITIC Limited Group to the risk of delayed return or reduced return rate on the other hand.

The rapid change of technology is likely to increase competition and may render CITIC Limited Group's technology, products or services obsolete, or result in a loss of market share. Research and development of CITIC Limited Group may not be successful or generate economic interests at the expected level. Even if the research and development is successful, CITIC Limited Group may not be able to apply the new technology to market acceptable products, or capture market opportunities. In addition, the expected market demand during the development phase of any product may not be realised, or when CITIC Limited Group launches new products, the market may not accept the new products. If CITIC Limited Group cannot predict the trend of technology or product development, and develop new and innovative technology products required by customers, it may fail to produce sufficiently advanced products at competitive prices and may adversely affect CITIC Limited Group's results of operations, financial condition and profitability.

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The lack of permits, licenses, approvals, filings and certificates may be a serious impediment to CITIC Limited Group's business and operations, and is subject to regular inspection, investigation, inquiry and audit of regulatory agencies

CITIC Limited Group must obtain and maintain valid permits, licenses, approvals, filings and certificates from government authorities to engage in certain businesses. CITIC Limited Group is subject to the restrictions and conditions stipulated by government authorities. If CITIC Limited Group fails to comply with the provisions or fails to meet the necessary conditions to maintain permits, licenses, approvals, filings and certificates, CITIC Limited Group's permits, licenses, approvals, filings and certificates may be suspended or revoked. If CITIC Limited Group extends such permits, licenses, approvals, filings and certificates after the valid period, there may be delays or rejections on the applications; licence terms or regulations may also be changed at short notice and it may be difficult to comply with the amended terms in a timely fashion or without significant cost. Any of these factors may lead to an adverse effect on CITIC Limited Group's results of operations, financial condition and profitability.

To ensure the restrictions and conditions of relevant business permits, licenses, approvals, filings and certificates are fulfilled, the government authorities have regular or special inspections, investigations, inquiries and audits of CITIC Limited Group. If any non-compliance is found by the government authorities, the permits, licenses, approvals, filings and certificates of CITIC Limited Group may be suspended or revoked, and CITIC Limited Group may receive fines or other penalties, or in some cases, be unable to operate. Failure of CITIC Limited Group to maintain, renew, or obtain certain permits, licenses, approvals, filings or certificates pursuant to the applicable laws and regulations could have an adverse effect on the business, financial condition and results of operation of CITIC Limited Group.

With respect to certain projects of CITIC Limited Group which have been commenced in the PRC certain licenses, permits, approvals, or filing certificates may not be or have not been granted by the required level of approving authority. There can be no assurance that CITIC Limited Group will not encounter problems in obtaining such licenses, permits, approvals, or filing certificates required to complete these projects, and any failure to obtain them may adversely affect the business, financial condition and results of operations of CITIC Limited Group.

CITIC Limited Group does not have land use right certificates, building ownership certificates or consent of the property owner or has not registered with respect to some owned or leased properties

As of 30 June 2021, with respect to some of the land it owns or uses, CITIC Limited Group had not fully obtained land use right certificates and/or building ownership certificates. CITIC Limited Group is in the process of applying for the relevant land use right certificates and building ownership certificates. However, it may not be able to obtain certificates for all of the properties due to various title defects or other reasons. There can be no assurances that CITIC Limited Group's ownership rights would not be adversely affected in respect of properties for which CITIC Limited Group is unable to obtain the relevant title certificates. As a result, CITIC Limited Group may face the potential risk of litigation or other penalties.

As of 30 June 2021, CITIC Limited Group had not registered certain of its leased properties, primarily because certain lessors have not cooperated with CITIC Limited Group for completing the registration procedures and certain local authorities do not provide registration services for lease agreements. With respect to some of the leased properties, the lessors were not able to provide the title certificates or documents evidencing the authorisation or consent of the owners of such properties to the lease or subletting. As a result, third parties may be able to challenge the validity of these leases. In addition, there can be no assurance that CITIC Limited Group will be able to renew the leases on commercially acceptable terms, or at all, upon their expiration. If any of the leases were terminated as a result of challenges by third parties or expiration, CITIC Limited Group may be forced to relocate affected properties. Under such circumstances, if CITIC Limited Group is not able to find alternative locations with acceptable conditions, CITIC Limited Group's operation may be adversely affected.

As of 30 June 2021, the owners of certain lands which CITIC Limited Group leased from independent third parties in mainland China had not been able to provide the relevant land use right certificates or consent authorising the lessors to lease or sublease the relevant land. In the event that any third party challenges the ownership of such land, the CITIC Corporation Group may not be able to continue to lease such land.

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CITIC Limited Group is exposed to the risk of inadequate protection of its intellectual property

CITIC Limited Group relies on patent right, copyright, trademark and contract rights to protect CITIC Limited Group's intellectual property rights. CITIC Limited Group mainly uses "中信", "CITIC", and " " for brand management and marketing, and believes that the brand has always been central to the success of CITIC Limited Group's competitiveness and the key to success. By entering into trademark license agreements, CITIC Group Corporation (" CITIC Group ") granted CITIC Limited and its relevant subsidiaries, the rights to use these registered trademarks in their operations at nil consideration.

In addition, CITIC Limited Group has developed many advanced systems, trade secrets, proprietary technology, equipment, process, process method and other intellectual property rights, which enhance production or operation efficiency. There can be no assurance that the adopted measures are sufficient to prevent abuse or infringement of CITIC Limited Group's intellectual property rights, or the competitors of CITIC Limited Group's will not develop by themselves, or obtain equivalent or superior substitute technology of CITIC Limited Group's intellectual property rights through obtaining licensing.

Intellectual property laws in the PRC are still evolving and the levels of protection and means of enforcement of intellectual property rights in the PRC differ from those in other jurisdictions. CITIC Limited may not be able to immediately detect unauthorised use of CITIC Limited Group's intellectual property and take the necessary steps to enforce CITIC Limited Group's rights in such property. In the event that the measures taken by CITIC Limited Group or the protection afforded by law do not adequately safeguard CITIC Limited Group's proprietary technology and other intellectual property rights, CITIC Limited Group could suffer losses in revenue and profit due to competing sales of products and services that exploit CITIC Limited Group's intellectual property. Furthermore, there can be no assurance that any of CITIC Limited Group's existing intellectual property rights will not be challenged by third parties. Adverse judgements in any litigation or proceeding could result in the loss of CITIC Limited Group's proprietary rights and adversely affect CITIC Limited Group's results of operations, financial condition and profitability.

CITIC Limited Group's businesses may be exposed to certain risks of increasingly stringent environmental protection policies and heightened expectations in terms of environmental, social and corporate governance

CITIC Limited Group operates in various industries through its subsidiaries. Some of these businesses and operations may have an effect or impact on the environment and surrounding ecological area, including CITIC Limited Group's advanced intelligent manufacturing, advanced materials and new-type urbanisation business segments. An increasing amount of attention is being paid to the effect of business operations on the ecological environment. A number of jurisdiction in which CITIC Limited Group operates are strengthening the protection of the ecological environment, including the PRC. Increasingly stringent environmental policies may increase the investment expenditure and operation costs of CITIC Limited Group in the relevant industries.

CITIC Limited Group's current business operations are subject to obtaining various environmental licenses, approvals and permits in the PRC. There can be no assurance that CITIC Limited Group will not encounter problems in obtaining the required environmental approvals for the operation and development of its business or in fulfilling the conditions of such approvals. Failure to comply with the requirements or the results of an environmental impact assessment could give rise to significant fines or penalties, or restrict CITIC Limited Group's ability to utilise its infrastructure, plant and machinery. Any of these factors could have a material adverse effect on CITIC Limited Group's financial condition and results of operations.

In recent years, there have been growing concerns about the environmental footprint, ethical status, social impact and sustainability of businesses. Companies, investors and other stakeholders are becoming increasingly interested in evaluating a company's conscientiousness for social and environmental factors. As CITIC Limited is listed on The Stock Exchange of Hong Kong Limited, it is required to publish an environmental, social and governance report annually. Failure to operate its businesses in an environmentally friendly, socially responsible and sustainable manner may have an adverse effect on CITIC Limited Group and its reputation.

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Changes in tax policy may have an adverse effect on CITIC Limited Group's business and financial performance

Prior to 1 January 2008, except for a number of preferential tax treatment schemes applicable to various enterprises, industries and locations, enterprises in mainland China were subject to corporate income tax at the rate of 33 per cent. The new corporate income tax law took effect on 1 January 2008, imposing a tax rate of 25 per cent. on businesses. Companies which enjoy the fixed term tax benefit before 1 January 2008 will continue to enjoy tax preferential treatment until the fixed term ends. Some of CITIC Limited Group's subsidiaries are entitled to preferential enterprise income tax treatment. If there is any adjustment or termination in the tax preferential treatment of CITIC Limited Group, or any increase in the effective tax rate, the tax obligations of CITIC Limited Group will increase accordingly. In addition, with the implementation of the Circular on Comprehensively Promoting the Pilot Program of the Collection of Value-added Tax in Lieu of Business Tax (Caishui Circular [2016] No. 36), from 1 May 2016, taxpayers of business tax that are engaged in the building industry, the real estate industry, the financial industry and the life service industry shall be subject to value-added tax instead of business tax. As the tax rate and the mechanism of value-added tax are different from that of business tax, the change from business tax to valueadded tax may affect the business and financial performance of CITIC Limited Group. Besides, the PRC government also adjusts or changes its policies in resource tax and other taxes from time to time. Any uncertainty brought by such adjustment or change may have an adverse effect on the business and financial performance of CITIC Limited Group.

CITIC Limited Group operates in jurisdictions that may be subject to economic and trade sanctions imposed by the United States, the United Kingdom, the European Union and other jurisdictions, which may subject CITIC Limited Group to legal and regulatory risks

The international operations of CITIC Limited Group may expose it to trade and economic sanctions or other restrictions imposed by the United States or other governments or organisations, including the United Nations, the United Kingdom, the European Union and their member countries. Some major subsidiaries of CITIC Limited Group provide goods and services, including broadcasting, international transit and roaming services to and from countries that are, or have been, subject to comprehensive sanctions administered by the United States Office of Foreign Assets Control, including Congo, Cuba, Iran, North Korea, Sudan, Syria and Zimbabwe (" Sanctions "). Some major subsidiaries of CITIC Limited Group are also involved in certain construction and engineering projects and have manufacturing and sales business in countries that are, or have been, subject to Sanctions. Although the business activities of CITIC Limited Group in these countries are de minimis and do not violate applicable sanctions regulations, and CITIC Limited Group has no plans to conduct a material portion of its business with sanctioned countries, there can be no assurance that CITIC Limited Group will not in the future engage in further transactions with businesses in sanctioned countries. CITIC Limited cannot predict the interpretation or implementation of the government policies at the U.S. federal, state or local levels or any policy by any applicable jurisdiction with respect to any current or future activities of CITIC Limited Group in these jurisdictions. Any alleged violations of economic sanctions could adversely affect the public image and reputation of CITIC Limited Group and have an adverse effect on its results of operations and financial condition.

CITIC Limited Group may not be able to detect money laundering and other improper activities, which could expose it to additional liability and negatively affect its business

CITIC Limited Group is required to comply with applicable anti-money laundering, anti-terrorism and other laws or regulations in the PRC and other jurisdictions where CITIC Limited Group has operations. These laws and regulations require CITIC Limited Group to adopt and implement "know your customer" policies and procedures and to report suspiciously large transactions to the competent regulatory authorities of different jurisdictions. Some major subsidiaries of CITIC Limited Group are implementing improvements to its anti-money laundering and anti-terrorism system. However, there can be no assurance on the timing and effectiveness of the implementation of such improvements. Even though certain major subsidiaries of CITIC Limited Group have adopted policies and procedures that are aimed at detecting and preventing the use of its networks for money-laundering activities and illegal or improper trades conducted by terrorists or terrorists-related organisations or individuals, such policies and procedures in some cases have only been adopted recently and may not completely eliminate instances where CITIC Limited Group's networks may be used by other parties to engage in money-laundering and other illegal or improper activities. In the event that CITIC Limited Group fails to fully comply with applicable laws and regulations, the relevant government authorities to which members of CITIC Limited Group report in different jurisdictions have the power and authority to impose fines or other penalties on CITIC Limited Group. In addition, money

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laundering or other illegal or improper activities conducted by customers of CITIC Limited Group using its networks may negatively affect the business operations, financial condition and reputation of CITIC Limited Group.

CITIC Limited Group's businesses and prospects may be materially adversely affected if it fails to maintain its risk management system or if this system proved to be ineffective or inadequate

CITIC Limited Group has established a comprehensive risk management system. Certain areas within CITIC Limited Group's risk management system may require constant monitoring, maintenance and continual improvements by the senior management and staff. CITIC Limited Group's businesses and prospects may be materially and adversely affected if efforts to maintain these systems are proved to be ineffective or inadequate. Deficiencies in the risk management and internal control systems and procedures may adversely affect CITIC Limited Group's ability to record, process, summarise and report financial and other data in an accurate and timely manner, as well as adversely impact CITIC Limited Group's ability to identify any reporting errors and non-compliance with rules and regulations.

CITIC Limited Group's internal control system may contain inherent limitations caused by misjudgement or fault. As a result, there can be no assurance that the risk management and internal control systems are adequate or effective notwithstanding CITIC Limited Group's efforts, and any failure to address any internal control matters and other deficiencies could result in investigations and disciplinary actions or even prosecution being taken against CITIC Limited Group or its employees, disruption to the risk management system, and material and adverse effects on CITIC Limited Group's financial condition and results or operations.

CITIC Limited Group's financial investment activities may be exposed to credit, currency, interest rate, market and counterparty risks

In addition to day-to-day operational funds management aimed at maintaining the liquidity of CITIC Limited Group, CITIC Limited Group may also invest in certain financial investments. Investments by CITIC Limited Group are subject to strict governance guidelines, restrictions and policies, oversight, as well as established reporting procedures. However, there can be no assurance that such guidelines, restrictions, policies, oversight and reporting procedures will be sufficient to mitigate risks related to investments of this nature or to prevent unauthorised investments. These risk management methods may not adequately prevent losses, particularly if they relate to extreme market movements and a failure of any or all of the aforementioned risk management methods may result in investments which do not meet the investment objectives of CITIC Limited Group that will in turn have a material adverse effect on the results of operations and financial condition of CITIC Limited Group.

The financial investments made by CITIC Limited Group set out above are subject to credit, currency, interest rate, market and counterparty risks. CITIC Limited Group may not recoup the full value of its investments or the investments may result in a loss. If CITIC Limited Group does not recoup the full value of its investments or the investments result in a loss, CITIC Limited Group's results of operations and financial condition may be materially and adversely affected.

CITIC Limited Group's business may not be adequately insured

CITIC Limited Group maintains insurance coverage for risks including damage to property and assets, business interruption, employee insurance and third-party liability where insurance is available at what it considers reasonable commercial terms. The level of coverage and types of insurance obtained by the management of each business differs depending on the characteristics of each business and the regulations of the jurisdictions in which it operates. The insurance coverage maintained by CITIC Limited Group may not fully indemnify it for all potential losses, damages or liabilities relating to property or business operations, particularly those arising from or as a result of war, civil unrest, terrorism, pollution, fraud, professional negligence and acts of God.

If CITIC Limited Group suffers any losses, damage or liabilities in the course of its operations arising from events for which it does not have any or adequate insurance cover, it may not have sufficient funds to cover any such losses, damages or liabilities or to replace any property that has been destroyed. In addition, CITIC Limited Group's insurers may become impaired and become unable to meet claims. The occurrence of any of the above events and the resulting payment CITIC Limited Group makes to cover any losses, damages or liabilities may have a material adverse effect on its business, results of operations and financial position.

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A downgrading of the credit ratings of CITIC Limited may affect the price of the Notes

CITIC Limited is currently rated BBB+ (positive) and A3 (stable) by S&P and Moody's, respectively. CITIC Limited's ratings may be affected by changes in its results of operations, capital structure or other factors, which will mean certain risks for investors. A rating is not a recommendation to buy, sell or hold CITIC Limited's securities and may be subject to suspension, change or withdrawal at any time by the assigning rating agency. There can be no assurance that any of these two ratings or outlooks given by the rating agencies will remain or not be lowered for any given period of time. A negative change in CITIC Limited's credit rating or outlook may materially affect CITIC Limited's ability to access the capital markets at a better cost of financing.

The comparability of CITIC Limited Group's financial statements and CITIC Limited Group's financial condition and operations may be affected by new and revised Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants

The consolidated financial statements of CITIC Limited Group referred to and included (including incorporated by reference) in this Offering Circular have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (" HKFRS "), which includes all applicable individual HKFRS, Hong Kong Accounting Standards and interpretations issued by the Hong Kong Institute of Certified Public Accountants (" HKICPA ") and accounting principles generally accepted in Hong Kong. The HKICPA issues new and revised HKFRS from time to time. As the accounting standards continue to evolve, HKICPA might further issue new and revised HKFRS in the future. The new accounting policies, if required to be adopted by CITIC Limited Group, could affect the comparability of its financial statements. Such new accounting policies may also have a significant impact on the financial condition and operations of CITIC Limited Group.

Risks Relating to the Comprehensive Financial Services Business Segment

The banking and trust businesses of CITIC Limited Group are subject to various credit risks

CITIC Limited Group's banking business provides a wide range of financial products and services, including corporate loans and trade financing to its individual customers, corporate customers, government agencies and financial institutions. If CITIC Limited Group's customers do not fulfil their obligations, thus leading to the increase of outstanding non-performing loans of CITIC Limited Group's banking business, its results of operations, financial condition and profitability could be adversely affected.

Portfolio Quality of CITIC Limited Group

Non-performing loans have an adverse effect on results of the operations of CITIC Limited Group's banking and trust businesses. The sustainable growth of CITIC Limited Group's banking business mainly depends on its ability to effectively manage the credit risk and maintain the quality of its portfolio (including loans to connected parties). Any defect in the credit risk management policy of CITIC Limited Group or any risks beyond the control of CITIC Limited Group, may have an adverse effect on the results of operations, financial condition and profitability of the banking business of CITIC Limited Group.

Loan Portfolio Losses

Actual losses on CITIC Limited Group's loan portfolio in the future may exceed its current allowance for impairment losses. If CITIC Limited Group's allowance for impairment losses is inadequate to cover the actual losses then CITIC Limited Group may need to make additional allowance for impairment losses, in which case the results of operations, financial condition and profitability of CITIC Limited Group's banking business may be adversely affected.

Loan Security

A substantial portion of CITIC Limited Group's loans portfolio is secured by collateral or guarantees. Any significant decline in the value of the collateral or deterioration of the financial condition of the guarantors or any failure by CITIC Limited Group to enforce its rights as a creditor may adversely affect the results of operations, financial condition and profitability of CITIC Limited Group's banking business.

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Certain Loan Clauses

The loan customers of CITIC Limited Group are often allowed to prepay the loans owed to it under conditions approved by CITIC Limited Group. If the loan customers decide to borrow from the competitors of CITIC Limited Group or use other methods of financing, these customers may prepay or not renew their loans upon maturity, thus the interest income of the banking business of CITIC Limited Group would be adversely affected.

Concentration Risk of Loans

CITIC Limited Group's banking business faces risks relating to loans concentration. CITIC Limited Group provides loans to various groups of concentrated customers, industries and regions. If the credit profile of these concentrated customers deteriorates, the financial conditions of these concentrated industries experiences a significant or prolonged downturn, or the economy of these concentrated regions slows down, the assets quality, financial condition, and results of operations of CITIC Limited Group may be adversely affected.

The trust business of CITIC Limited Group also faces credit risk when its counterparties or financing parties in the proprietary trading or trust businesses default. If credit risks arise from proprietary trading, it may have an adverse impact on the assets and income of the trust company. If the credit risk arises from its trust businesses, it may result in the loss of trust assets. This kind of risk may lead to an adverse effect on the credibility, management capabilities and brand of CITIC Limited Group's trust business.

Risks Associated with Certain Industries

CITIC Limited Group's banking business provides real estate-related loans including corporate loans extended to real estate customers, corporate loans with real estate as collateral and housing mortgage loans, which may be affected by the various risks related to the real estate market. Furthermore, in light of the PRC's national policies aimed at restricting the over-development of certain industry sectors with excess capacity, CITIC Limited Group's banking business is exposed to credit risks of loans extended to such industry sectors with excess capacity. Despite CITIC Limited Group's efforts in monitoring risks associated with the industries of its loan counterparties, any significant change, whether as a result of changes in the macroeconomic environment, market volatility, changes in national policies or otherwise, may materially and adversely affect CITIC Limited Group's banking business.

The banking, securities and trust businesses of CITIC Limited Group is exposed to interest and exchange rate risk

The results of operations of CITIC Bank Corporation Limited (" CITIC Bank ") depend, to a great extent, on net interest income. The financial market and environment of mainland China experienced significant changes in recent years. Domestic interest rate liberalisation accelerated as the People's Bank of China (" PBoC ") removed the higher limit of interest rates of deposits and competition in mainland China's banking industry became more intense as market interest rates fluctuated further. These had an impact on CITIC Bank. There can be no assurance that timely adjustments of the composition of asset and liability portfolios and the pricing mechanism could be made to effectively cope with the existing and any further liberalisation of interest rates. Adjustments of interest rates in the future, or market expectations of interest rate adjustment may lead to fluctuations in the price of financial products, which in turn could affect the profitability of CITIC Limited Group's fixed interest rate loans, and investment in fixed income securities. In the long run, further liberalisation of the interest rate regime may result in the narrowing of the spread in the average interest rates between Renminbi-denominated loans and Renminbi-denominated deposits, which would affect the results of operation of CITIC Limited Group's banking business. In addition, an increase in interest rates may result in increased financing costs for customers of CITIC Limited Group's banking business and thus reduce the overall demand for loans and accordingly, adversely affect the growth of the loan portfolio of CITIC Limited Group's banking business and increase the risk of default by customers. Furthermore, as the promotion of the internationalisation of Renminbi may result in domestic interest rates becoming more affected by foreign interest rates, there can be no assurance that there will not be further interest rate fluctuations. Changes in interest rates may adversely affect the net interest income, results of operations, financial condition and profitability of CITIC Limited Group's banking business.

CITIC Securities Co., Ltd. (" CITIC Securities ") engages in derivatives transactions such as interest rate swaps to hedge interest rate exposure that arises from asset and liability positions, and uses derivative

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instruments such as stock index futures, to mitigate the influence of price volatility of its investment portfolio. As the derivatives market in mainland China is still developing, the ability to hedge the market risks associated with CITIC Limited Group's securities business in mainland China is constrained by the limited derivative products available in mainland China. Therefore, CITIC Securities may not be able to successfully use available derivative instruments to reduce its exposure to fluctuation in the interest rates, foreign exchange rates, and price of its investment products or the derivatives it uses may not be completely effective.

The trust business of CITIC Limited Group is also subject to risks relating to price fluctuations in securities prices and interest rate. Fluctuations in securities prices and interest rates will directly affect the yield of the trust products with fixed income and the rate of return to trust beneficiaries, and thus affecting the commission income of the trust business, which may adversely affect the results of operations, financial condition and profitability of CITIC Limited Group's trust business.

The banking and securities businesses of CITIC Limited Group is exposed to liquidity risks

Customer deposits have always been the primary funding source and the main component of liabilities of CITIC Limited Group's banking business. Due to lack of alternative investment products in mainland China, CITIC Limited Group's short-term customer deposits have generally not been withdrawn upon maturity and have thus represented a stable source of funding. However, there can be no assurance that this will continue to be the case, especially as more alternative investment products become available. If a substantial portion of CITIC Limited Group's depositors withdraw their current deposits or do not renew their fixedterm deposits upon maturity, CITIC Limited Group may need to seek alternative sources of funding to meet liquidity requirements. The availability of alternative capital sources may be adversely affected by factors beyond CITIC Limited Group's control, such as deterioration of market conditions and turmoil of the financial markets. Given the foregoing reasons, if CITIC Limited Group fails to meet liquidity requirements through customer deposits and other capital sources, or if CITIC Limited Group's cost of capital increases, its liquidity, results of operations, financial condition and profitability may be adversely affected.

In response to changes and to improve profitability, CITIC Securities maintained operating leverage at a moderate level. CITIC Securities engages in debt financing through domestic and overseas capital markets and the inter-bank lending markets. CITIC Securities provides financing services through margin trading and securities lending, repurchase agreements, stocks pledged repo and stock return swaps. If CITIC Securities cannot obtain new funding sources upon maturity of existing debts, or funding sources are adversely affected by factors beyond its control, such as deteriorating market conditions, instability in financial markets, or market liquidity shortage when CITIC Securities needs temporary inter-bank lending, the results of operations, financial condition and profitability of CITIC Limited Group's securities business may be adversely affected.

The financial services businesses of CITIC Limited Group are subject to operational risks and risks relating to information technology systems

Malfunctions in the operations and information technology system of CITIC Limited Group's financial services business may jeopardise liquidity, cause business interruptions and result in leakage of confidential information, which can damage CITIC Limited Group's reputation and result in financial losses.

The financial services business of CITIC Limited Group relies heavily on the ability to process huge amounts of transactions on a daily basis, some of which is very complex and highly time sensitive. As a result, CITIC Limited Group is extremely dependent on financial, accounting, data processing and other operating system and facilities. If any of these systems cannot operate normally or at all due to events partially or entirely beyond CITIC Limited Group's control, it may have an adverse effect on CITIC Limited Group's ability to deal with transactions. If CITIC Limited Group's systems cannot accommodate the increased transaction volume, it may restrict CITIC Limited Group's ability to further expand business. There can be no assurance that the upgrades of systems will effectively prevent future system malfunction or that the upgrades could generate the adequate return on CITIC Limited Group's investment.

Information technology is widely used in the modern securities industry in areas such as fund clearance, online trading and other businesses. The level of information technologies has become an important factor in measuring the competitiveness of securities companies. Due to the rapid development in information technology, CITIC Securities is subject to corresponding technology risks. To maintain its leadership in technology and its competitive position, CITIC Securities requires ongoing investments in technology

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upgrading, which will increase its operation costs. The proprietary business, asset management business, and brokerage business of CITIC Securities are all dependent on the support of computer systems, networks and information management software. Unreliable computer systems and imperfect networks system will cause trading inefficiencies and loss of information, affecting its reputation and service quality, and may result in economic losses and legal disputes to CITIC Securities.

CITIC Limited Group relies on its information technology system in the process of services provided to customers, risk management, internal controls and the supervision on CITIC Limited Group's business operations. The essential equipment and communication networks of CITIC Limited Group's information technology system all have backups. CITIC Limited Group has also established a disaster backup centre which may maintain business continuity when disasters or major system malfunction occur. There can be no assurance that the business of CITIC Limited Group will not be interrupted due to partial or entire malfunction of the major information technology systems or communication networks. In addition, any threat caused by misappropriation of CITIC Limited Group's staff or theft by unauthorised persons, any maliciously caused dysfunction or impairment of data, software, hardware or other computer equipment are all likely to have an adverse effect on the business, results of operations and financial condition of CITIC Limited Group.

Furthermore, CITIC Limited Group may not be able to improve or upgrade information technology system successfully and timely in the future to satisfy customer's increasing demand on variety and quality of the products and services, the results of operations, financial condition and profitability and prospects of CITIC Limited Group's banking business may be adversely affected.

The financial services businesses of CITIC Limited Group are subject to various risks of competition

The trend of mixed operations in finance business has led to a new competitive landscape in mainland China's securities industry. Commercial banks, insurance companies and other financial institutions, both domestic and foreign, have entered the traditional securities industry and compete with the traditional business of securities companies through product and service innovation, leading to intense competition. Commercial banks compete with securities companies directly with their sales networks, customer resources and capital strength in businesses such as bond sales, financial advisory services and the sale of wealth management products. In recent years, the overseas business of CITIC Securities has developed rapidly and faces competition from overseas capital markets. If it cannot develop and implement effective strategic plans and develop new business in time, or due to insufficient internal operations and management experience, CITIC Securities may lose its competitive advantage. Failure of CITIC Securities in the execution of its strategies and the development of new businesses will cause it to lose its competitive advantage and adversely affect the results of operations, financial condition, profitability and development prospects of CITIC Limited Group's securities business.

The trust business of CITIC Limited Group faces competition from other trust companies which may have competitive advantages in various aspects such as financial strength, management capability, resources, operation experience, market share and/or product sales channel. With changes in regulatory policies, commercial banks, securities companies, insurance companies, and fund management companies are now permitted to offer a variety of financial products, some of which are similar to those offered by trust companies. If the competitiveness of CITIC Limited Group's trust business declines in one or more aforementioned aspects, the results of operations, financial condition and business prospects of the trust business of CITIC Limited Group may be adversely affected, including reduction in market share, loss of customers and decrease in profitability.

As there is substantial product homogeneity in the insurance market, CITIC-Prudential faces market threats arising from increased product competition and comprehensive product offerings by its industry counterparties which are highly versatile and up-to-date. In addition, through sales model and the application of new technologies, industry peers have expanded sales channels, improved service efficiency and reduced service costs, which causes CITIC-Prudential to face challenges in relation to its cooperation models, sales system, business processes and management system.

The financial services business of CITIC Limited Group is subject to risks associated with employee misconduct

The financial services business of CITIC Limited Group has established rigorous internal control procedures and systems to detect, control and prevent employee misconduct. However, there can be no

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assurance that it can avoid economic losses, legal disputes, regulatory proceedings, investigations and default risk triggered by operational errors during all businesses and decision-making processes nor can such procedures and systems completely eliminate the individual misconduct of employees. If such misconduct occurs and is not timely detected or prevented, it may have adverse impacts on CITIC Limited Group's reputation and financial condition, and even result in lawsuits and regulatory sanctions against CITIC Limited Group.

The banking business of CITIC Limited Group is required to comply with regulatory requirements relating to capital adequacy ratios

In accordance with Administrative Measures for the Capital of Commercial Banks (for Trial Implementation) promulgated by the CBIRC on 7 June 2012, the regulatory requirements relating to the capital adequacy ratio of CITIC Limited Group include minimum capital requirements, reserve capital requirements, and countercyclical capital requirements, additional capital requirements of banks of systematic importance. According to the CBIRC's transitional arrangements of capital adequacy ratios, CITIC Limited Group's banking business must satisfy the minimum capital requirements by the end of 2018 (a minimum core tier-1 capital adequacy ratio of 7.5 per cent., a minimum tier-1 capital adequacy ratio of 8.5 per cent. and a minimum capital adequacy ratio of 10.5 per cent.). As of 30 June 2021, the core tier-1 capital adequacy ratio, tier-1 capital adequacy ratio, and capital adequacy ratio of CITIC Bank were 8.63 per cent., 10.71 per cent. and 13.53 per cent., respectively, all of which satisfied regulatory requirements.

To continue to meet regulatory capital adequacy ratios, the banking business of CITIC Limited Group may need to raise additional core capital or supplementary capital in the future. The continuing rapid growth of the banking business of CITIC Limited Group will lead to an increase in risk-weighted assets. In the event that CITIC Limited Group cannot replenish capital in time, the capital adequacy ratios of the banking business of CITIC Limited Group may decline. In addition, if the CBIRC increases the minimum capital adequacy ratio and core capital adequacy ratio or changes its regulations on capital requirements or computing method of capital adequacy ratios, CITIC Limited Group may not be able to satisfy the new regulatory requirements in a timely manner. If the banking business of CITIC Limited Group is unable to meet capital adequacy requirements, CBIRC may require CITIC Limited Group to take corrective measures including restrictions on the growth of loans and other assets of CITIC Limited Group's banking, or the declaration or distribution of dividends. These measures may adversely affect the results of operations, financial condition and profitability of CITIC Limited Group's banking business.

The loan classification criteria adopted by the banking business of CITIC Limited Group is different from criteria applied by banks in certain other countries and regions

The loans of the banking business of CITIC Limited Group are classified in accordance with the CBIRC's five-category loan classification system. The loan classification system of CITIC Limited Group is different from the loan classification systems adopted by banks in certain other countries and regions in some respects. Therefore, the loan classification criteria applied by the banking business of CITIC Limited Group towards loans and advances may differ from that adopted by other jurisdictions. If CITIC Limited Group adopts the loan classification and the allowance for impairment losses policies in such countries and regions, the loan classification and provisioning policies reported by CITIC Limited Group may differ from those that could be reported.

CITIC Limited Group's financial services business is subject to extensive regulatory requirements, the non-compliance with which could cause it to incur penalties

CITIC Limited Group's financial services business is subject to extensive regulatory requirements, including requirements imposed by the PRC, Hong Kong and other jurisdictions. Such regulatory requirements are designed to ensure the integrity of the financial markets, the viability of financial institutions as well as the protection of investors and stakeholders. However, regulatory requirements may restrict the activities of CITIC Limited Group's financial services business by, among other things, imposing regulatory capital requirements, limiting the types and complexities of products and services it may offer, restricting the types of securities in which it may invest and limiting the number and location of branches it may establish. Regulatory authorities may also impose restrictions or penalties on CITIC Limited Group for non-compliance with regulatory requirements.

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Despite the efforts of CITIC Limited Group to comply with applicable regulatory requirements, there are nevertheless associated risks, particularly in areas where applicable regulations may be subject to interpretation by regulators. Non-compliance may subject CITIC Limited Group to restrictions or penalties, which could have a material adverse effect on its business, results of operations or financial condition.

There can be no assurance that CITIC Limited Group will be able to meet all the applicable regulatory requirements, or comply with all the applicable regulations and guidelines, at all times. Failure to do so could result in sanctions, fines, penalties or other disciplinary actions, including, among other things, a downgrade of its regulatory rating and limitations or prohibitions on the future business activities of CITIC Limited Group in the financial services sector, which may in turn harm its reputation, and consequently have a material adverse effect on its financial condition and results of operations.

The banking regulatory regime in the PRC is continually evolving and CITIC Limited Group is subject to future regulatory changes

CITIC Limited Group's banking business operates in a highly regulated industry and is subject to laws and regulations of the PRC and other jurisdictions. These include banking-related statutes and regulations in mainland China such as the PRC Commercial Banking Law and related implementation rules while the principal regulators of the mainland China banking industry include the CBIRC, the PBoC and SAFE. In particular, the banking regulatory regime of mainland China continues to evolve and changes in the laws, rules and regulations as well as their interpretations may result in additional costs or restrictions on CITIC Limited Group's banking business. For example, the PBoC adjusted the reserve requirement ratio for banks in mainland China and revised its calculation basis in 2014 and 2016 and may further issue regulations in the future. Furthermore, on 27 April 2018, the PBoC, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and the State Administration of Foreign Exchange announced the Guiding Opinions on Regulating Asset Management Business of Financial Institutions (關於規範金融機構資產管理業務的指導意見), which requires financial institutions to finish rectification and reformation according to the Guiding Opinions before the end of 2020.

CITIC Limited Group's banking business and operations are directly affected by such changes in the laws, regulations and regulatory regimes of the PRC. There can be no assurance that the policies, laws, regulations and regulatory regimes governing the banking business of CITIC Limited Group will not change in the future or that any such changes will not materially and adversely affect CITIC Limited Group's business, financial condition and results of operations nor can there be any assurance that CITIC Limited Group will be able to adapt to all such changes on a timely basis. In addition, there may be uncertainties regarding the interpretation and application of new policies, laws and regulations, which may result in penalties and restrictions on CITIC Limited Group's activities and could also have a significant impact on its business.

Emerging internet finance and mobile finance may impact the operations of the traditional banking business of CITIC Limited Group

With the rise of internet finance, the financial service industry has experienced many changes in terms of payment methods, wealth management products and forms of financing which bring new challenges to the traditional banking business, such as the rapid growth of third-party payment organisations, the emergence of new wealth management products and the development of new internet financing forms. In addition, with the liberalisation of the interest rates regime, internet financing companies can attract customers through higher deposit rate, raising the cost of deposits taken by banks. The increasing popularity of mobile phones and mobile internet device allows customers to reduce reliance on traditional banking websites. There can be no assurance that the increasingly developed internet and mobile-finance will not adversely affect the existing banking business of CITIC Limited Group.

The securities business of CITIC Limited Group is exposed to risks brought by market fluctuations

CITIC Securities is principally engaged in investment banking, sales, trading and brokerage, asset management and investment businesses, all of which are highly dependent on economic and market conditions of mainland China and other jurisdictions (including Hong Kong) in which CITIC Securities operates. Market conditions in the PRC's capital market may change quickly and significantly, which may adversely affect the results of operations, financial condition and profitability of CITIC Securities. In addition, global market conditions may have uncertain or unfavourable effects on the PRC's market. With the continued development of the overseas business of CITIC Securities, it will also be directly affected by the global market conditions. There remain concerns over how ongoing international trade disputes will be

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resolved, the stability of the Eurozone economy, political unrest in the Middle East and Eastern Europe as well as threats of or actual terrorist attacks or conflicts in the Middle East, Asia Pacific, Eastern Europe or other regions. On 31 January 2020, the United Kingdom officially exited the European Union following a United Kingdom - European Union Withdrawal Agreement signed in October 2019. In December 2020, the United Kingdom, the European Union and the European Atomic Energy Community concluded the European Union – United Kingdom Trade and Cooperation Agreement, which was rectified in April 2021 by the European Parliament and the Council of the European Union. Given the lack of precedent, it is unclear how Brexit and the implementation of the European Union – United Kingdom Trade and Cooperation Agreement would affect the global financial market, and the mid- to long-term economic uncertainty to the economy in the United Kingdom, the European Union and globally. This event has resulted in a downgrade of the credit ratings of the United Kingdom and may also create a negative economic impact and increase volatility in global markets. Furthermore, the rising trade tensions between the United States, the PRC and other major nations create uncertainties in the world economy and global financial market. Starting in April 2018, the United States imposed tariffs on various categories of imports from the PRC, and the PRC responded with similarly sized tariffs on the United States' products. In January 2020, the United States and the PRC entered into "phase one" of an economic and trade agreement as an initial step towards resolving the trade war disputes between them. The effect of such an agreement remains elusive, and the lasting impacts any trade conflict may have on the global economic conditions remain uncertain. There are also uncertainties as to when and whether the phase two negotiations will begin and whether the two governments will fulfil their respective obligations under the phase one agreement. In July 2020, the United States imposed sanctions on certain Chinese companies from purchasing U.S. technology and products without a special licence. In August 2020, the United States further determined that certain Chinese firms are allegedly owned or controlled by the Chinese military. It remains unclear whether the United States will impose further sanctions on more Chinese companies in the future. Any prolonged tension between the two countries over trade policies could result in further volatility in global markets.

Continued concerns about the systemic impact of potential long-term and widespread recession, energy costs, geopolitical issues, the availability and cost of credit, and the global housing and mortgage markets have contributed to increased market volatility and diminished expectations for economic growth around the world. The outlook for the world economy and financial markets remains uncertain. In Europe, several countries are facing difficulties in refinancing sovereign debt. In Asia and other emerging markets, some countries are expecting increasing inflationary pressure as a consequence of liberal monetary policy or excessive foreign fund inflow, or both. In the Middle East, political unrest in various countries has resulted in economic instability and uncertainty. Around the world, disruptions caused by the COVID-19 pandemic has resulted in congestion and bottlenecks in the global supply chain. Uncertain or unfavourable financial or economic conditions, in particular, a global financial and economic crisis, may adversely affect the securities business of CITIC Limited Group.

The performance of CITIC Securities will fluctuate with the capital market conditions and be exposed to uncertainties. The risks and challenges faced by CITIC Securities include: (i) its investment banking business is subject to the ability of CITIC Securities to acquire, execute and complete projects; (ii) its brokerage business might be affected by the decrease in brokerage fees and reduced customer trading activities; (iii) its asset management business might be affected by CITIC Securities' ability to manage assets placed under its management, and if the investments performed poorly, CITIC Securities might lose customers or suffer deterioration in its performance and financial results; and (iv) any mistakes in buying and selling strategies could lead to equity and bond trading losses.

The trust business of CITIC Limited Group is exposed to risks relating to business innovation

With changes of industrial structure and regulatory environment, the trust business of CITIC Limited Group has increasingly undertaken business innovation in various areas such as capital markets and equity investment. It has explored business development opportunities in multiple markets and developed innovative businesses including equity index futures, private equity, offering innovative products including land circulation trusts and family trusts. The profit models of these new businesses are still in their rudimentary stage and face operating risks.

The insurance business of CITIC Limited Group is exposed to risks relating to distribution of insurance products

The insurance business of CITIC-Prudential primarily provides products to individual customers through individual insurance agents, bancassurance channels, direct sales and other channels, while it provides

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group insurance products to institutional customers primarily through CITIC-Prudential's group insurance sales representatives, individual insurance agents and bancassurance channels. Any termination of, interference with or any adverse change to the relationships with these distribution channels may adversely affect the business of CITIC-Prudential. Moreover, as competition intensifies, these sales agents may demand higher commission rates, which may increase CITIC-Prudential's cost of sales, thus adversely affect the results of operations of CITIC Limited Group's insurance business.

The insurance business of CITIC Limited Group is exposed to risks relating to insurance policy claims

If CITIC-Prudential experiences deterioration in operations, or a downgrade in solvency and credit levels, customers' confidence in its insurance products may be negatively affected. This may lead to large numbers of insurance policy surrenders, especially within the long-term life insurance business segment, which will lead to a further deterioration of CITIC-Prudential's financial condition. In addition, even when insurance business is carried out under normal circumstances, CITIC-Prudential may still be exposed to risks of normal policy surrenders or concentrated surrenders caused by radical emergencies, major changes in national policy, significant changes in the market environment or other causes. If concentrated claims lead to insufficient asset liquidity, CITIC-Prudential may be forced to dispose of assets at unfavourable prices, causing serious deterioration in the financial condition of CITIC-Prudential and leading to operation difficulties. The occurrence of emergencies with significant impacts may also adversely affect the results of operations, financial condition and profitability of CITIC Limited Group's insurance business.

The insurance business of CITIC Limited Group is exposed to certain risks relating to the inability in effective asset management

With the continuing expansion of premiums scale, insurance companies will experience more pressure on asset allocation. CITIC-Prudential will face significant uncertainty on how to increase its return on assets in the environment of declining market returns. Fluctuations in the capital markets may also affect the achievement of stable return on the investment of CITIC-Prudential. CITIC-Prudential faces various inherent risks of the insurance market. Failing to effectively control these risks may adversely affect the financial performance of CITIC-Prudential. CITIC-Prudential is subject to relevant regulations of the CBIRC on the maintenance of a required solvency ratio. If CITIC-Prudential cannot meet the solvency ratio requirement, the CBIRC may impose a series of regulatory sanctions.

The insurance business of CITIC Limited Group is exposed to certain risks relating to adverse changes in reinsurance market and the failure of reinsurance companies to perform their contractual obligations

CITIC-Prudential transfers a portion of its business to international reinsurance companies and reinsurance companies in mainland China to reduce its own underwriting risk. Adverse changes in the reinsurance market or the failure of reinsurance companies to perform their contractual obligations for CITICPrudential may adversely affect CITIC-Prudential's results of operations and financial condition. In accordance with the relevant regulatory requirements such as Insurance Law and Provisions on the Administration of Reinsurance Business, based on comprehensive assessment of business development scale, concentration of risks undertaken, and actual financial situation, CITIC-Prudential developed and implemented a series of reinsurance arrangements to ensure that underwriting risks are dispersed. If CITICPrudential cannot effectively identify the potential risk of existing insurance products and fails to enter into reinsurance arrangements at reasonable costs or appropriately select a reinsurance company, in the event of a claim or reinsurer default, any loss compensation obligations incurred due to the occurrence of major trigger events will not be compensated by reinsurance companies and shall be borne by CITIC-Prudential.

There are risks relating to CITIC Limited Group's other financial businesses

In addition to the above businesses, CITIC Limited Group also include fund business, futures business and asset management business. In particular, China AMC and Goldstone Investment which are subsidiaries of CITIC Securities may face market risk, management risk, policy risk and other risks in their operations.

The aforementioned businesses of CITIC Limited Group are subject to greater influence from economic cycles. The differences in policy implementation progress among regional management and compliance departments, or poor implementations of the policies in certain regions may cause difficulties for CITIC Limited Group's business operation. Based on the actual experiences, the delay in implementation of the relevant laws and regulations by regional offices and compliance departments may result in adverse effects on business development or other legal risks.

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Risks relating to the Advanced Intelligent Manufacturing Business Segment

The advanced intelligent manufacturing business segment of CITIC Limited Group is subject to the risk of changing market demand

The advanced intelligent manufacturing business segment of CITIC Limited Group mainly includes business areas such as producing aluminium automotive wheels, manufacturing heavy machinery and specialised robotics, smart manufacturing, industrial internet, building lighthouse factories and related venture investment partnerships. CITIC Limited Group's business operations depend on the overall market activity level and growth rate of the upstream and downstream industries in which its customers conduct their businesses. CITIC Heavy Industries Co., Limited (" CITIC Heavy Industries "), a subsidiary of CITIC Limited Group, engages in the design, manufacturing and sales of large equipment, complete technical equipment and key basic parts of Heavy Equipment, Complete Engineering Project Management (which is the provision of complete engineering, capital equipment manufacturing and project management services for the entire project, including site assessment and investigation, design, procurement of materials, provision of technical services, manufacturing, installation, training and other services in relation to each stage of the project), Robots and Intelligent Equipment, Energy Conservation and Environmental Protection, New Energy Power Equipment and others. CITIC Dicastal Co., Ltd. (" CITIC Dicastal "), a subsidiary of CITIC Limited Group, engages in the manufacturing of automobile aluminium wheels and automobile aluminium casting. Its customers are mainly from the automobile industry, which is highly dependent on economic development and growth. Due to the recovering international financial markets and the slowdown in market demand, investors tend to be more cautious when making investment decisions in enterprises. Large fluctuations may occur in the prices of commodities and principal raw materials, the major foreign exchange rates, the money markets and the capital markets. Therefore, the growth rate of the overall economy and the industries in which customers of the advanced intelligent manufacturing business segment operate in may be slower than expected or experience a decline, which may adversely affect the results of operations, financial condition and profitability of the advanced intelligent manufacturing business segment of CITIC Limited Group.

CITIC Limited Group's advanced intelligent manufacturing business segment depends on whether it can obtain sufficient raw materials supply at acceptable prices and in a timely manner

The successful operation of the advanced intelligent manufacturing business segment depends on it obtaining a sufficient supply of raw materials in a timely manner, and obtaining supplementary materials, energy, water and other commodities from suppliers at acceptable prices and quality. Global fluctuations in the prices of raw materials and spare parts will directly influence the production capacity and profitability, while the import and export businesses, as well as their respective settlement methods, are affected by foreign exchange rates. In addition, the advanced intelligent manufacturing business segment is exposed to market risks including price fluctuations of raw materials and other commodities. The advanced intelligent manufacturing business segment involves the production of heavy machinery and auto parts, which are subject to the supply and demand of upstream and downstream industries in the short term. The raw materials required by the advanced intelligent manufacturing business segment, such as aluminium alloy, are subject to significant price fluctuations due to their respective production costs, market demand, short-term market speculations and other factors. In addition, an increase in energy prices (including fuel oil, natural gas, electricity and water prices) may also adversely affect the business operations of CITIC Limited Group. Power outages, shortages of oil, natural gas and water and other factors may also have an adverse effect on CITIC Limited Group's business operations.

In addition, changes in the global economic landscape have encouraged the domestic manufacturing industry to conduct industrial upgrades and structural adjustments, which in turn has affected the competitive landscape and future trends of the industry as a whole. There can be no assurance that CITIC Limited Group will continue to obtain sufficient raw materials in a timely manner or obtain energy and water supply from its existing suppliers at the prevailing or acceptable prices. There can also be no assurance that CITIC Limited Group will not be adversely affected by a shortage of raw materials, energy or water supply, or that it will be able to pass the increasing costs of the raw materials, energy or water supply onto its customers. If CITIC Limited Group cannot obtain sufficient raw materials, energy or water on commercially acceptable terms in a timely manner, the results of operations, financial condition and profitability of the advanced intelligent manufacturing business segment of CITIC Limited Group may be adversely affected.

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The research and development activities of CITIC Limited Group may not bring the expected benefits to CITIC Limited Group

The future performance and reputation of the advanced intelligent manufacturing business segment of CITIC Limited Group depends on whether it can continuously develop new products. Research and development activities require a substantial input of labour and capital resources. CITIC Limited Group's research and development activities may not be successful or generate the expected economic benefits. Even if such efforts are successful, CITIC Limited Group may not be able to apply the newly-developed technology in products that will be accepted in the market, or apply such technology in a timely manner to capture commercial opportunities. In addition, the anticipated market demand during the development phase may not actualise.

Alternatively, the market may not accept such new products upon their launch. The level of economic benefits that can be reaped from newly-developed technologies or products may be affected by the following factors:

The rate at which competitors are able to copy the relevant technology or products, or the rate at which competitors are able to develop newer or cheaper substitute products; and
If CITIC Limited Group cannot predict the trend of technology or product development and promptly develop new models, including new technology or products required by its customers, CITIC Limited Group may not be able to produce sufficiently advanced products at competitive prices, which will adversely affect the results of operations, financial condition and profitability of the advanced intelligent manufacturing business segment of CITIC Limited Group.

Certain new products, new processes, and new technologies that are currently under development by CITIC Heavy Industries are unprecedented, and there are risks that they may not be successfully developed, which may adversely affect CITIC Heavy Industries' results of operations. CITIC Dicastal engages in automobile aluminium wheels and automobile aluminium castings and must internally develop the various core industry technology upgrades required in its manufacturing process. If CITIC Limited Group cannot successfully upgrade its industrial technologies or fails to obtain the prerequisites to achieve standardised production, CITIC Limited Group may be unable to compete effectively with its competitors in the industry.

Anti-dumping measures and other non-tariff barriers adopted by countries of destination may affect the export sales of CITIC Limited Group

A portion of the automobile aluminium wheels and automobile aluminium castings produced by CITIC Dicastal are exported. CITIC Dicastal's products exported to Europe and India were partly regulated by anti-dumping measures. There can be no assurance that the countries and regions to which CITIC Limited Group's products are exported will not impose additional anti-dumping measures or other regulatory restrictions on CITIC Limited Group. If such countries and regions adopt additional anti-dumping measures or other non-tariff barriers, the results of operations, financial condition and profitability advanced intelligent manufacturing business segment of CITIC Limited Group may be adversely affected.

CITIC Limited Group's advanced intelligent manufacturing business segment may be materially and adversely affected if there is malfunction of equipment, insufficient or suspension of electric power or water

The production process of CITIC Limited Group's advanced intelligent manufacturing business segment may cease if there is unanticipated malfunctioned equipment, or insufficient or suspension of electric power. Certain manufacturing businesses of CITIC Limited Group also rely on water to operate its cooling systems, and consequently a shortage of water may adversely affect operations.

CITIC Limited Group may in the future suffer from plant shutdowns, extended periods of reduced production as a result of such equipment failures or other events or major shortage of electricity or water supply. Any significant increase in utilities costs or any interruption in such supply or lost production which could not be recovered by unaffected facilities, will not only increase cost of production, adversely affecting its financial position, but will also prevent CITIC Limited Group from producing and delivering its products to its customers as scheduled.

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Risks relating to the Advanced Materials Business Segment

The advanced materials business segment of CITIC Limited Group is subject to operating risks

CITIC Limited Group has significant investments in its advanced materials business segment and operates various businesses overseas in Australia, Brazil, Congo, Peru, Gabon, Indonesia, Kazakhstan and South Africa as well as other countries and regions. These overseas businesses involve the exploration and production of oil, coal, iron ore, manganese, aluminium, niobium, copper and other metal and mineral resources. CITIC Limited Group has invested and will continue to invest substantial capital and other resources in its projects in the advanced materials business segment, and must undertake various risks relating to these projects, including operational risks.

CITIC Limited Group may continue to encounter various operational difficulties in implementing its projects in the advanced materials business segment. Since some of the difficulties are beyond the control of CITIC Limited Group, there could be resulting delays in the production process or an increase in production costs. These operating risks include deferred payments from governments, changes in environmental policies, less beneficial tax policies, labour disputes, disputes with contractors and partners, unexpected technical and maintenance failures, production disruptions caused by adverse weather conditions and natural disasters, outbreak of a severe communicable disease, interruption in the energy and fuel supply, fire and other unusual and unexpected changes to the mineral, geological or mining conditions. These risks can cause damage and loss to CITIC Limited Group's advanced materials business segment, resulting in an adverse impact on CITIC Limited Group's results of operations, financial condition and profitability.

The advanced materials business segment of CITIC Limited Group is subject to the influence of market price fluctuations

As the resources and energy industry is significantly influenced by economic cycles, changes in supply and demand in the resources and energy market, currency fluctuations, speculation in the international market, the discovery of new resources and the related substitution effect will have a significant impact on the cost, revenue and results of operations in this industry and result in certain operational risks. Factors such as fluctuations in resource and energy prices, including but not limited to the prices of commodities such as Brent Crude Oil, iron ore and coking coal, changes in supply and demand and currency fluctuations may have an adverse impact on the business and profitability of CITIC Limited Group.

The existing and forecasted price of iron ore is a key consideration for each periodic review of the value of the Sino Iron Project. Non-cash impairment has been made in previous financial years as a result. There can be no assurance that similar or other impairment will not be made by CITIC Limited Group in the future. Such impairment may have an adverse impact on the profitability of CITIC Limited Group.

The advanced materials business segment of CITIC Limited Group is subject to the risk that actual resources, production amount and resource quality may be lower than expected

The advanced materials business segment of CITIC Limited Group is exposed to the risk that the actual resource may be lower than expected. For energy resources such as oil and minerals, the proven reserves, probable reserves and possible reserves are only estimates, and are not equivalent to the actual reserves available.

In the mining process, there is the risk that the estimated resources may be significantly higher than the actual resources available. The estimated resource amount, the estimation of potential production rate and resource quality is a complex process which does not have a definitive measure. CITIC Limited Group will inevitably encounter various uncertain factors, some of which are beyond the control of CITIC Limited Group. The estimation of the life of mine may also be adjusted based on actual production experience, prevailing commodity prices and other factors. As a result, not all of estimated resources can be converted into reserves. There can be no assurance that CITIC Limited Group will be able to realise the expected production volume. The actual production amount produced by CITIC Limited Group is subject to many factors which are beyond the control of CITIC Limited Group. The inability to realise its projected production volume and resource quality may adversely affect CITIC Limited Group's future cash flows, results of operations, financial condition and profitability.

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The advanced materials business segment of CITIC Limited Group is subject to risks relating to overseas business development

The continuing success of the advanced materials business segment of CITIC Limited Group depends on the policies and macro economies of the foreign invested countries, whether new resources and energy can be continuously obtained and developed, and acquisition of the relevant mining rights and government approvals. The continuing success of the advanced materials business segment also depends on whether CITIC Limited Group can successfully exploit and develop current mines and land as well as expand oil reserves. CITIC Limited Group may not be able to maintain its current profitability level in the future. In addition, if CITIC Limited Group obtains new resources and energy, it may substantially amend the reserves estimation. The variations in recyclable rate caused by the geological environment and technology advancements may eventually lead to the adjustment of resources and energy reserve estimations. Fluctuation in commodity prices and changes in production costs may also affect the scope and scale of the mining process and the probability of success. These factors may lead to substantial decrease in extractable reserves in one or more main resources and energy development regions, the results of operations, financial condition, profitability and prospects of advanced materials business segment of CITIC Limited Group may be adversely affected.

CITIC Limited Group's strategy includes exploring and developing new oil reserves, obtaining mining rights for new resources, increasing resources and energy reserves through mergers and acquisitions, making joint venture investments in other oil production and mining regions, and cooperating with other resource operators. However, CITIC Limited Group does not have a specific timetable for these plans. There can be no assurance that CITIC Limited Group's exploration and development projects and acquisition activities will lead to a substantial increase in its resources and energy reserves, and there can be no assurance that CITIC Limited Group will continue to develop its advanced materials business segment successfully. In addition, developing the advanced materials business segment requires obtaining approvals from different government authorities. There can be no assurance that CITIC Limited Group will continue to obtain the necessary licenses and authorisations to conduct economically-feasible operations in the various regions it operates in.

The advanced materials business segment of CITIC Limited Group is subject to risks relating to operational safety and natural disasters

The advanced materials business segment is exposed to health, safety and environmental protection risks. In part of its exploration, development and mining business, CITIC Limited Group is involved in operating and storing explosives, poisonous substances and other dangerous goods. Although procedures and policies are in place to reduce risks, there can be no assurance that CITIC Limited Group's current on-site safety measures are sufficient to prevent accidents. If any on-site accidents occur, the results of operations, financial condition, profitability of the advanced materials business segment of CITIC Limited Group may be adversely affected.

CITIC Limited Group faces impairment pressure in relation to the Sino Iron Project and may experience construction and operating cost pressures; it is also subject to operating challenges

CITIC Limited Group continues to face impairment pressure in relation to the Sino Iron Project. Fluctuations in resource and energy prices can have an impact on the valuation of the Sino Iron Project on CITIC Limited's consolidated balance sheet and in turn, result in impairment or provisions that impact the consolidated income statement. Non-cash impairment has been made in previous financial years as a result. There can be no assurance that further impairment provisions or charges will not be made in the future. Such impairment provisions or charges, if made, might have an adverse effect on CITIC Limited Group's business, financial condition and results of operation.

CITIC Limited Group's estimates and budgets may be exceeded due to additional construction and labour costs. The inability to contain costs, and in particular labour and contractor costs, may impact CITIC Limited Group's operating margins for an extended period. Construction schedules may be delayed and actual costs may exceed budgeted amounts, and there may be further cost overruns prior to the project coming into full operation. In addition, CITIC Limited Group will be subject to all the risks inherent in the establishment and operating of any mining project. The commercial viability and future profitability of such projects are substantially dependent upon the successful completion, commissioning and operation of the mine, and the price of ore when available for sale. There can be no assurance that CITIC Limited Group will be able to fully commission or achieve full production or sustain the successful operation of the new

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mining projects or achieve project completion or commercial viability. Any failure to do so would increase the operating cost pressures and thus have a material adverse impact on CITIC Limited Group's business, financial condition and operating results.

Changing industrial relations legislation may impact workforce flexibility, productivity and costs. Labour unions may seek to pursue claims under the new framework. Industrial action may impact CITIC Limited Group's operations, resulting in lower production and revenues.

CITIC Limited Group has operations that are energy intensive and earnings could be adversely affected by rising costs or by supply interruptions including the unavailability of energy, fuel or water due to a variety of reasons, including fluctuations in climate, significant increase in costs, inadequate infrastructure capacity, interruptions in supply due to equipment failure or other causes and the inability to extend supply contracts on economical terms.

Unexpected natural and operational events could lead to disruptions in production and loss of facilities and adversely affect CITIC Limited Group's financial results

CITIC Limited Group operates extractive, processing and logistical operations in many geographic locations both onshore and offshore. CITIC Limited Group's operational processes and geographic locations may be subject to operational accidents such as port and shipping incidents, fire and explosion, floods, pitwall failures, loss of power supply, railroad incidents and mechanical failures. Existing business continuity plans may not be able to ensure the recovery or continuity in production and operations. The impact of these events could lead to disruptions in production and loss of facilities and adversely affecting CITIC Limited Group's financial results.

Malfunction of equipment could have an adverse effect on the Sino Iron Project's product delivery, business, financial position and operating results

The production processes of the Sino Iron Project are dependent on various equipment such as some of the largest in-pit crushers in Australia, autogenous grinding mills, ball mills, classifying cyclones, magnetic separators and concentrate thickeners that make up the concentrators, complex slurry and water pipelines, power stations and desalination plants as well as sophisticated systems to operate such equipment. Such equipment and operational systems may incur downtime as a result of unanticipated malfunctions or other events, such as breakdowns or unexpected natural conditions.

There can be no assurance that technical problems or equipment malfunction will not occur in the future. If the Sino Iron Project experiences problems or disruptions relating to equipment going forward, it may be subject to delay and loss of production which could have an adverse effect on CITIC Limited Group's product delivery, business, financial position and operating results.

The Sino Iron Project may not achieve its total life of mine production estimates

The mineral reserve estimates of the Sino Iron Project are estimates based on the judgment, experience and technical data available to CITIC Limited Group only and may not be recoverable in full. As a result, CITIC Limited Group may not achieve its total life of mine production estimates. There can be no assurance that the reserves presented in this Offering Circular will be recovered at the quality or yield presented. Investors should not assume that resource estimates will be directly reclassified as reserves under the Australasian Joint Ore Reserves Committee Code. Mineral resources that are not mineral reserves do not have demonstrated economic viability and are not the equivalent of a commercially mineable ore bodies or reserves. While there has been metallurgical testing of the Sino Iron Project's magnetite iron ore from samples taken across the proposed mining area, by its very nature, mineralisation is not homogenous and the samples may not be representative of the broader ore body. The extent to which the magnetite iron ore produced has different properties to the Sino Iron Project's original evaluation may affect the saleability and price as well as the volume that can be produced. In addition, market fluctuations in the price of iron ore, as well as increased production costs or reduced recovery rates, may render certain mineral resources uneconomic and may ultimately result in a restatement of reserves, resources or both.

The Sino Iron Project may not be able to maintain its right to mine

The right to mine at the Sino Iron Project is granted under agreements entered into with Mineralogy Pty Ltd. (" Mineralogy "), whose right to mine is derived from the mining leases granted to it under the Mining Act 1978 (WA) and the Iron Ore Processing (Mineralogy Pty. Ltd.) Agreement Act 2002 (WA). In the

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event of a breach by Mineralogy of the mining leases or other tenements, Mineralogy's capacity to grant the right to mine to CITIC Limited may cease. This could result in production slow down or stoppage and would have a material adverse impact on the operations of the Sino Iron Project and the business, financial condition and results of operations of CITIC Limited Group as a whole. Furthermore, in the event of a contractual breach by CITIC Limited under the project documents, CITIC Limited's right to mine, process and export at the Sino Iron Project may be affected or may cease. CITIC Limited is involved in and may be subject to further disputes or legal proceedings with Mineralogy in relation to the Sino Iron Project. These disputes and proceedings may have a major bearing on the long-term viability, profitability and cash flow of the Sino Iron Project. For a discussion of risks relating to such disputes and legal proceedings, see " CITIC Limited Group – Legal Proceedings and Regulatory Investigations ".

The Sino Iron Project may not be sustainable without access to additional space for waste and tailings storage

As a magnetite project, the Sino Iron Project requires vast areas for the storage of waste and tailings generated by mining and processing activities. For several years now, the Sino Iron Project has been seeking the assistance of Mineralogy to obtain the necessary government approvals required for life-of-mine operations of the Sino Iron Project. Mineralogy's refusal to cooperate and adversarial approach mean that the Sino Iron Project will run out of space for waste and tailings storage in the near future, and the Sino Iron Project may not be able to find viable alternatives for waste and tailings storage. This will severely constrain operations and threaten the sustainability of the Sino Iron Project, which may in turn adversely affect the results of operations, financial condition and profitability of CITIC Limited, and may lead to project suspension.

A proceeding was commenced against Mineralogy and Mr. Clive Palmer in the Federal Court of Australia. Following a cross-vesting application by the defendants, the proceeding was transferred to the Supreme Court of Western Australia and admitted to the Commercial Managed Cases List of Justice K Martin on 10 June 2019. The proceeding relates to the failure and refusal of Mineralogy to:

submit mine continuation proposals for the Sino Iron Project to the State of Western Australia under the State Agreement;
grant further necessary tenure for the Sino Iron Project;
take steps to secure the re-purposing of general purpose leases for the Sino Iron Project; and
submit a Programme of Works for the Sino Iron Project to the State of Western Australia.

The claims against Mineralogy are for breach of contract, of unconscionable conduct under the Australian Consumer Law, and in estoppel. Mr. Palmer is sued as an accessory to the unconscionable conduct claim. Orders are sought to require Mineralogy to take the four steps listed above, and to pay damages for its failure and refusal to do so. Damages are also sought from Mr. Palmer. As at the date of this Offering Circular, the primary trial of issues in the proceeding other than the quantification of loss and damage is provisionally listed to commence on 14 February 2022 to conclude on 29 April 2022. There is no assurance that the proceeding will result in a judgment and orders that are favourable to CITIC Limited or that such a judgment and orders will be made before the Sino Iron Project is forced into production curtailment or suspension due to, for example, a lack of space for waste and tailings storage.

Equity interest held by CITIC Limited in certain of its subsidiaries exceeds the limit provided in the "Policy on the Development of the Steel and Iron Industry"

In July 2005, the NDRC promulgated its "Policy on the Development of the Steel and Iron Industry" (the " Iron and Steel Development Policy "). Amongst other things, the Iron and Steel Development Policy prohibits non-PRC investors from holding majority equity interests in a PRC steel mill. As at 30 June 2021, CITIC Limited indirectly owned 83.85 per cent. of CITIC Pacific Special Steel Group Co., Ltd. (" CITIC Pacific Special Steel ") (formerly Daye Special Steel Co., Ltd.). Although CITIC Limited is a non-PRC entity, CITIC Group, itself a PRC entity, indirectly owns approximately 58 per cent. of CITIC Limited as at 30 June 2021. As such, CITIC Limited is of the view that its shareholdings in its special steel plants do not conflict with the Iron and Steel Development Policy. There can, however, be no assurance that governmental authorities in mainland China would subscribe to this view and in these circumstances CITIC Limited may be required to reduce its equity interests in the plants to a level below 50 per cent.

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Risks Relating to the New Consumption Business Segment

Rapid technological changes may increase competition and render technologies, products or services offered by CITIC Limited Group's new consumption business segment obsolete or cause CITIC Limited Group to lose market share in the new consumption business segment

The areas in which CITIC Limited Group operates in the new consumption business segment, such telecommunications, information and communications technologies, content publishing, motor and consumer products distribution, and agricultural science and technology, are subject to rapid and significant changes in technology, frequent new service introductions and evolving industry standards and practices. For example, in the case of CITIC Press Corporation (" CITIC Press "), digital media has experienced rapid growth and has impacted the mode of production, operations and distribution of traditional publishers. With the rise of online content distribution channels such as online bookstores (which may sell hardcopy books and/or e-books), e-book subscription services and audiobook subscription services, there is increasing competition for traditional hardcopy publishers and brick-and-mortar bookstores. CITIC Press, recognising the importance of, and the opportunities presented by, the digital media in the future of the publishing industry, has been actively engaged in developing content in various digital forms aimed at a wide range of audiences. Other businesses of CITIC Limited Group's new consumption business segment are similarly actively pursuing new technologies to keep up with the market trends in their respective industries. However, there is no assurance that CITIC Limited Group will be able to adapt to rapid technological changes, nor is there assurance that CITIC Limited Group's technologies, products or services will not be rendered obsolete as a result of technological advances of competitors in the new consumption business segment. If CITIC Limited Group is unable to adapt to rapid technological changes, this may result in CITIC Limited Group losing market share and may adversely affect the financial condition and the result of operations of CITIC Limited Group's new consumption business segment.

Certain businesses of CITIC Limited Group's new consumption business segment are in highly regulated industries

CITIC Limited Group operates certain of its businesses in the new consumption business segment in highly regulated industries, for example, the telecommunications industry. CITIC Telecom International Holdings Limited (" CITIC Telecom ") requires licences from the Communications Authority of Hong Kong (the " CA "), without which CITIC Telecom would be unable to operate. CITIC Telecom is subject to the rules and regulations of the CA, which regulates the telecoms industry in Hong Kong, and the Office of the Communications Authority of Hong Kong (the " OFCA "), which assists the CA in enforcing and administering the Telecommunications Ordinance. The CA's authority includes regulating and licensing telecoms facilities and managing the radio frequency spectrum. If the CA determines that CITIC Telecom has violated Hong Kong's telecoms laws or regulations or the conditions of its licences, the CA may suspend or cancel the CITIC Telecom's licences or take other action detrimental to CITIC Telecom. CITIC Telecom is also subject to various other rules, laws and ordinances applicable to companies operating in Hong Kong, including, for example, laws relating to obscenity and privacy. If CITIC Telecom is found to be in violation of these laws, it may face judgments or consequences detrimental to its business. In addition, the public non-exclusive telecommunications services licences granted by OFCA to CITIC Telecom are normally valid for one year, subject to renewal at the discretion of OFCA and compliance of all terms and conditions of the licences. In the event that OFCA refuses to renew any of the existing licences of CITIC Telecom, CITIC Telecom's ability to offer its services will be adversely affected. The Hong Kong Chief Executive in Council may also cancel or suspend licences if it considers that it is in the public's interest to do so.

There is no assurance that CITIC Limited Group will be able to obtain or renew in a timely manner all licenses, approvals or consents necessary for its new consumption business segment, and any failure to do so may adversely affect the financial condition and the result of operations of CITIC Limited Group's new consumption business segment.

Risks Relating to New-Type Urbanisation Business Segment

Failure to accurately estimate overall risk or cost of the new-type urbanisation business segment of CITIC Limited Group may result in cost overrun, declining profitability or even a loss

A substantial part of the operating income of the new-type urbanisation business segment of CITIC Limited Group comes from fixed price engineering contracting contracts. The cost estimation of CITIC Limited Group involves a number of assumptions including future economic conditions, labour and material costs

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and supplies, performance of sub-contractor, equipment utilisation rate and construction and technology standards specific to a particular project. However, such assumptions may not be always accurate. In addition, there are uncertainties and risks to the fulfilment of fixed price engineering contracting contracts, such as delay caused by bad weather, technical issues, and failing to obtain the necessary permits and approvals. Even if the increases in labour, materials, and other costs have been considered by CITIC Limited Group during the bidding, these factors may still result in significant differences in the actual risk and costs incurred by CITIC Limited Group as compared to the original estimation. Several project contracts of CITIC Limited Group contain price adjustment provisions that allow CITIC Limited Group to claim for additional costs attributed to certain unexpected rise in the costs of raw materials. However, CITIC Limited Group usually still has to bear part of the increased costs. The risk of cost overrun for existing or future engineering contracting projects may adversely affect the financial condition and the result of operations of CITIC Limited Group's new-type urbanisation business segment.

Customers of CITIC Limited Group may pay funds according to project progress and ask for quality assurance deposit. The delay in payment and refund of cash deposits from the customers of CITIC Limited Group will affect the operating capital and cash flows of CITIC Limited Group

Most engineering contracting contracts of CITIC Limited Group and some other contract entered into by CITIC Limited Group in the new-type urbanisation business segment require customers to pay instalment payments by reference to the project value that is completed at the specified deadlines. If CITIC Limited Group fails to obtain favourable advance payment terms and fails to achieve a balance between advance payment deduction and progress payment disbursement, or if customers delay in paying the instalment payments, or refunding the quality assurance deposits, CITIC Limited Group's working capital may be adversely affected. If customers defer in the payments of projects in which CITIC Limited Group has invested substantial resources, the liquidity of CITIC Limited Group may be affected and it reduces the capital source that CITIC Limited Group can use. CITIC Limited Group may bring a claim based on the contract for its loss, but dispute resolution generally requires a significant amount of time, money and other resources, and the results are usually unpredictable. In general, CITIC Limited Group makes provisions for bad debts originated from instalment payments or refunds of quality assurance deposits mainly based on aging and other factors, including the specific circumstances of a particular customer. There can be no assurance that customers can perform instalment payments and refund the quality assurance deposits on schedule. There can be no assurance that CITIC Limited Group may be able to effectively manage the bad debts level attributed to such payment failures.

The new-type urbanisation business segment of CITIC Limited Group may be exposed to certain project implementation risks

The new-type urbanisation business segment of CITIC Limited Group faces the following project implementation risks: (i) risk of project implementation, delivery and operation; (ii) risk relating to making the land ready for constructions and the quality of land (such as the costs and the time required for acquisition of the land, license requirements and right of the way assurance, the effects of geological conditions, or other conditions of the land and the costs pressure to satisfy environmental protection standards); (iii) risk of exceeding the time limit or budget for the process of design, construction and adjustment, and risks of the design or construction quality not meeting the requirements of the project and because CITIC Limited Group usually appoints third party contractors to provide construction service, the construction quality of the construction done by third party contractors is not completely under control; (iv) risk relating to engaging third-party contractors with financial or operational difficulties which results in delay and additional costs in construction or commission of new projects and developments business; and (v) risk of service disruption and the risk of potential differences between the cost of operation and maintenance of the assets and the expected demand. The risks above may adversely affect the financial conditions and the result of operations of CITIC Limited Group's new-type urbanisation business segment.

The new-type urbanisation business segment of CITIC Limited Group may be exposed to certain design technique risks

Design companies of CITIC Limited Group may need to conduct additional work or change the design according to the contract from time to time. Such process may require determination on whether such work is within the original project scope of work listed, or it is additional work for which the customer should pay additionally. Even if the customer agrees to pay for additional work, CITIC Limited Group may still need to invest money and bear the costs of such work upfront for an extended period of time before such customer recognises the change of design and delivers the payment. In addition, any delay caused by

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additional work may affect the project progress of CITIC Limited Group and the ability to finish the specific contract and project in a timely manner. Additional costs may also be incurred when design changes are not recognised or when a contract dispute arises. There can be no assurance that CITIC Limited Group can fully recover costs of additional work or change of design related work, or at all, which may lead to commercial disputes, or may adversely affect the financial condition, results of operations and prospects of CITIC Limited Group's new-type urbanisation business segment. In addition, the additional work on one project may lead to delays of other projects and may adversely affect CITIC Limited Group's ability to finish other projects on time.

The new-type urbanisation business segment of CITIC Limited Group may be exposed to certain risks of safe operation and natural disasters

CITIC Limited Group's new-type urbanisation business segment is subject to production safety risks during production and operation. Various disasters and emergencies may bring potential risks to CITIC Limited Group's production and operation, including aerial work, dangerous areas work, underground excavation engineering, and the use of heavy equipment and handling of inflammable and explosive materials. Therefore, CITIC Limited Group may face risks relating to these activities including geological disasters, poisonous gas and liquid leakage, equipment failure, industrial accidents, fire, explosion and leakage of groundwater. These risks have historically caused casualties when they materialised and may cause damage to property or production facilities, pollution and other environmental damage in some cases, any of such serious consequences can affect the business of CITIC Limited Group and lead to potential legal liability and damage the reputation and corporate image of CITIC Limited Group.

The contract value and backlog of engineering contracting business of CITIC Limited Group may not be a reliable indicator to the future results of operations

The contract value and backlog of the engineering contracting business of CITIC Limited Group represent the total estimated contract value of work that remains to be completed pursuant to the terms of outstanding contracts as of a certain date. Any modification, termination or suspension of these contracts by clients, especially with regard to any one or more sizeable contracts, may have a substantial and immediate effect on CITIC Limited Group's contract backlog of new-type urbanisation projects. Projects may also remain in the backlog for an extended period of time beyond what was initially anticipated due to various factors beyond CITIC Limited Group's control.

Adding new contracts may also have a direct impact on the backlog. Moreover, backlog is not a measure defined by generally accepted accounting principles. Due to various reasons, including some projects commencing and ending within a short period of time, not all revenue will be recorded in the backlog information. Therefore, backlog information only reflects the general volume of future projects under contract and may not be indicative of future operating results. There can be no assurance that the estimated amount of the backlog of CITIC Limited Group's engineering contracting business will be realised in a timely manner, or at all, or that even if realised, such amounts will result in profits. As a result, undue reliance should not be placed on backlog information of CITIC Limited Group's engineering contracting business nor should it be considered a reliable indicator of future profits or results of operations.

The policies, laws and regulations, and the implementation measures adopted by the PRC government may have an adverse effect on the properties business segment of CITIC Limited Group

CITIC Limited Group's properties business segment is subject to extensive laws and regulations and is sensitive to changes in regulatory measures and policies adopted by the PRC government. In the past, the PRC government had promulgated a series of policies and measures to control the overheating real estate development and the speculation activities of the residential property market.

These measures include:

Raising the requirements on real estate developers;
Stipulating that a set portion of approved development in any year be used for the development of low-cost, small and medium-sized and low-rent properties;
Imposing more stringent minimum down payment and lowest mortgage interest rate requirements for purchasers of both first and second residential property through mortgage loans;
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Suspension of mortgage loans for the purchase of the third or subsequent residential properties;
Increasing the minimum down payment for purchasers of the dual-use (residential and commercial) properties;
Imposing higher taxation for properties with a holding period of individual external transaction of less than 2 years;
Confiscating land which the holder of land use right may hold from time to time without compensation if the holder of land use right does not commence construction within two years after the date specified in the land grant contract unless delay is caused by certain permitted circumstances;
Restricting the ability of foreign-invested real estate companies to raise funds offshore for the purpose of injecting such funds into the companies by way of shareholder loans.

These existing policies and measures, any future policies and measures, or even any rumours related to new restriction policies and measures, may cause decline in CITIC Limited Group's new-type urbanisation business segment, results of operations and financial condition may be adversely affected.

Restrictions on land usage

Since 2003, applications for changes in land use for the construction of villas have been ordered to be rejected by the Ministry of Land and Resources (the " MLR "). In 2004, the State Council ordered all levels of governments and all departments to cease approving the land supply for property comprising high-grade villas until new policies or regulations are formulated. In 2006, the land use rights for construction of villas fell within the remit of the "Forbidden Land Use Catalogue (2006 Edition)" promulgated by the MLR and the NDRC. In March 2010, the MLR declared a prohibition on land supply for villas. Since 2013, the land use rights for construction of villas are still stipulated in the "Forbidden Land Use Catalogue (2012 Edition)" promulgated by the MLR and the NDRC. If CITIC Limited Group's property business fails to comply with the aforesaid regulations and rules, it may be ordered to cease the development or operation of villas within its developments and/or rectify such illegal activities and/or be subject to penalties.

Land grant conditions

Under PRC laws and regulations, if a holder of land use right fails to develop a property according to the terms of the land grant contract, the PRC government may issue a warning, impose a penalty or confiscate any land which CITIC Limited Group may hold from time to time. Under current PRC laws and regulations, the PRC government may impose an "idle land fee" equal to 20 per cent. of the land premium if (i) construction does not commence for more than one year after the date specified in the relevant land grant contract, (ii) total constructed gross floor area is less than one-third of the total proposed gross floor area for the development and the development is suspended for one year without PRC government approval, or (iii) the capital invested in the development is less than one-quarter of the PRC government-approved total investment amount for the development and the development is suspended for one year without PRC governmental approval.

The PRC government has the authority to confiscate land which the holder of land use right may hold from time to time without compensation if the holder of land use right does not commence construction within two years after the date specified in the land grant contract, unless the delay is caused by force majeure, governmental action or preliminary work necessary for the commencement of construction.

There are certain pieces of land where the land use rights are held by CITIC Limited Group in relation to which development or commencement of development has not taken place according to original plans for various reasons, including but not limited to the modification of urban planning by the PRC government, the delay in approval of the master plans and/or design modification, incomplete infrastructure, changes in government approval process and site formation for the commencement of construction, a delay in site hand-over and the need for site clearance and/or resettlement of residences on the land. CITIC Limited Group has been discussing and co-ordinating with relevant authorities to resolve issues with the aim of commencing construction as soon as possible. However, there can be no assurance that the relevant authorities will not take any of the actions described above in relation to these pieces of land.

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The new-type urbanisation business segment of CITIC Limited Group in the PRC is exposed to the risk of its profitability being affected by property price fluctuations

Changes in the supply and demand of property, changes in property prices or unfavourable government actions in the PRC may adversely affect the results of operations, financial condition and profitability of CITIC Limited Group's new-type urbanisation business segment. Policies and measures that have been or may be adopted by the PRC government may lead to changes in market conditions, including unstable property prices in mainland China and imbalanced supply and demand. There can be no assurance that the real estate market in mainland China will not experience sharp downturns in the future or there will not be any material decline in other real estate markets within the regions where CITIC Limited Group operates. In addition, there can be no assurance that the relevant PRC government departments will not implement additional measures to limit the growth of the real estate market, or mainland China's economy and its real estate market will not experience any adverse changes due to policies implemented by the PRC government. Any such changes may cause the property price to fluctuate and in turn may bring adverse effects on CITIC Limited Group's results of operations.

The properties business segment of CITIC Limited Group is exposed to the risk of fluctuations in market demand

Due to regional overheating of real estate markets, imbalance in supply and demand of real estate such as over-development and lack of demand in some regions contrasts with strong demand but lack of supply in other regions, the PRC government has strengthened control of the real estate market and implemented a series of policies to promote stable and healthy development of the real estate market in recent years. On 20 February 2013, the executive committee of the State Council issued five measures and further promulgated the State Council Notice on the Regulation of the Continuing to Improve the Work of the Real Estate Market《國務院辦公廳關於繼續做好房地產市場調控工作的通知》(國辦發(2013)17 號) (" State Five Rules ") to further tighten controls of the real estate market. The new rules have been implemented according to the State Council Notice of Certain Questions on the Regulation of Further Improving the Work of the Real Estate Market promulgated on 26 January 2011 to continue to restrict purchases of real estate. These restrictions apply to primary and secondary commercial housing properties located in all administrative areas of designated cities, and stipulate the review of the purchasing eligibility of all potential purchasers prior to the signing of any purchase agreement. In addition, non-resident households, which have one or more residential property and cannot produce payment evidences of local taxes or social insurance contributions within the prescribed period, shall continue to be suspended from the purchase of any other commercial residential properties. Therefore, the scales of commercial bank credit and mortgage approvals are affected in various degrees.

Factors such as macroeconomic fluctuations, performance of the real estate markets, regulatory changes in the local government financing platform and the implementation of Capital Management Measures of Commercial Bank (Tentative) may materially impact the financing environment. Any real estate market downturn, economic downturn or over-supply of properties and adverse development in these or any other markets where CITIC Limited Group operates could adversely affect its profitability. Policies and measures may also lead to changes in the real estate market conditions including unstable prices and imbalanced supply and demand of offices, residential area, retails, entertainment and cultural properties which could adversely affect the results of operations and financial condition of CITIC Limited Group's properties business segment.

The properties business segment of CITIC Limited Group depends on whether CITIC Limited Group could acquire land reserves that are suitable for development at reasonable prices

CITIC Limited Group's properties business segment depends on CITIC Limited Group's ability to seek and acquire suitable land reserves at affordable prices. CITIC Limited Group needs to acquire land reserves to achieve business growth. Substantial costs may be incurred when CITIC Limited Group seeks, evaluates and acquires appropriate new land sites for future developments. The PRC government's land supply policy may affect the cost of land acquisition and CITIC Limited Group's ability to purchase land for future property developments. The PRC government controls the land supply through zoning, land usage regulations and other measures and stipulates that public bidding, auction or listing must be used for any transfer of land-use rights in residential and commercial property development projects. In addition, the PRC government may restrict the land supply for the development of commercial housing in mainland China or the cities in which CITIC Limited Group operates or intends to operate its business. All these measures intensify the competition for land in mainland China among property developers and land supply

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policies have a direct impact on CITIC Limited Group's ability to acquire land use rights and its costs of acquisition. If the government policy changes and reduces the supply of land for future projects of CITIC Limited Group or CITIC Limited Group fails to bid for new land, locate new land at reasonable prices, or acquire sufficient new land for development, the results of operations of CITIC Limited Group's properties business segment may be adversely affected.

There may be significant differences in the results of operations of the new-type urbanisation business segment of CITIC Limited Group in different periods

Results of operations of CITIC Limited Group's new-type urbanisation business segment may fluctuate according to factors such as the property project development schedule, the popularity of the project among the target customers, sales timing, as well as the fluctuations in the cost of land and construction and other costs. If CITIC Limited Group delays or fails to obtain relevant and necessary PRC government approvals or licenses for the development projects, the project completion time may be delayed, which may adversely affect the results of operations of CITIC Limited Group's new-type urbanisation business segment.

In addition, when the properties are completed and delivered to the buyer (CITIC Limited Group considers that the main risks and returns of ownership have been transferred to the buyer), CITIC Limited Group will recognise its income from the sale of property. As the completion and delivery time may be different based on the construction schedule, the income and results of operations in different periods (depending on the completion and delivery time) may significantly differ. In addition, any completion and delivery of properties in development may be adversely affected by various factors, including bad weather conditions, delay in obtaining the permits and approvals from relevant government authorities and other factors that are beyond CITIC Limited Group's control. Any such factor may affect the completion and delivery time, cash flows, project revenue recognition and the financial condition of CITIC Limited Group's new-type urbanisation business segment.

The increase in costs of construction and development may have an adverse effect on the results of operations of the new-type urbanisation business segment of CITIC Limited Group

CITIC Limited Group's ability to profit from new-type urbanisation projects depends on effective control on the construction and development costs. Competitive pricing construction costs in the PRC generally continue to increase due to the increasing cost of building materials and labour costs. To obtain the competitive pricing from the contractors, CITIC Limited Group generally conducts project bidding. However, CITIC Limited Group will not contract out projects to the sub-contractor of the lowest bid price without considering factors including the required skills and professional knowledge of the contractor, required project design and project schedule requirements. There can be no assurance that CITIC Limited Group can always obtain the most competitive price from the contractor or that the actual project construction cost is no more than the preliminary estimation. If the cost of labour or materials increases greatly and CITIC Limited Group cannot reduce other costs to offset such increase or such increase in costs cannot be transferred to the buyer or tenant of the property, the results of operations, financial condition and profitability of CITIC Limited Group's new-type urbanisation business segment may be adversely affected.

Leasing of investment properties makes CITIC Limited Group subject to risks incidental to the ownership and operation of industrial, office, retail and residential properties

CITIC Limited Group is subject to risks incidental to the ownership and operation of industrial, office, retail and residential including, among other things, changes in market rental levels, competition for tenants, concentration of lease renewals and inability to collect rent from tenants or renew leases with tenants due to bankruptcy, insolvency or other financial difficulties. In addition, failure to renew leases with tenants on reasonable terms or at all, upon the expiration of the existing terms and any downturn in the rental market could negatively affect the demand for CITIC Limited Group's investment properties and the amount of rental income, which may have a material adverse effect on its business, results of operations and financial condition.

Hotel operations in the PRC are subject to events and operating conditions that impact the hotel industry

CITIC Limited Group's hotel operations in the PRC are subject to seasonality and changes in general economic conditions, including the severity and duration of the current economic downturn, unfavourable weather conditions and the impact of natural disasters, competition with other hotels for customers,

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decreases in demand for rooms and related lodging services, changes in travel patterns, the performance of third-party hotel management companies, limitations of the local labour pool, and changes in operating costs. Deterioration in the events and operating conditions that impact the hotel industry could adversely affect the hotel operations and CITIC Limited Group's business, results of operations and financial condition. CITIC Limited may be liable to fines, penalties or may be required to cease operations if final environmental assessment approval and completion reports or final acceptance filings for construction pending from local governments or regulatory bodies are not ultimately issued.

Risks Relating to the PRC

The PRC's economic, political and social conditions, as well as governmental policies could affect CITIC Limited Group's business, financial condition and results of operations

A significant part of CITIC Limited Group's businesses, assets and operations are located in the PRC. Accordingly, CITIC Limited Group's financial condition, results of operations and business prospects are, to a large extent, subject to the economic, political and legal development in the PRC.

Changes in the PRC's macroeconomy may subject the results of operations of CITIC Limited Group to fluctuation risks. The PRC's economy has started to enter into an adjustment phase. The PRC's future economic growth on a macro-level may be positioned in a weak growth cycle and fluctuations in the international and domestic economy will affect the operations of PRC enterprises. The government is in the process of conducting comprehensive reforms to expand and open up the economy, implement innovation-driven policies, actively develop a mixed-ownership economy, deepen reforms of state-owned enterprises, promote tax system reforms, accelerate the establishment of a modern market system, construct a new open economy system, expand financial businesses in the PRC and overseas, enable qualified private capital to set up medium and small sized banks and other financial institutions according to the law, consolidate the multi-tiered capital market system, improve the Renminbi exchange rate marketisation system and push forward interest rate marketisation. The relevant reform policies may be promulgated stepby-step and the relevant businesses of CITIC Limited Group may be affected by the changes in policies in varying degrees.

The PRC may not be able to maintain such growth rate in terms of GDP for the past 20 years. If the PRC's economic growth rate declines or the PRC's economy enters into a severe economic downturn, the results of operations, financial condition, profitability and business prospects of CITIC Limited Group may be adversely affected.

The rules and regulations of the PRC government impose certain restrictions on CITIC Limited Group's financial business. A majority of the Renminbi-denominated investment assets of CITIC Limited Group are invested in certain limited products that the PRC's commercial banks are approved to issue, such as government bonds issued by the Ministry of Finance of the PRC, financial bonds issued by policy banks in the PRC, bonds issued by the PBoC, bonds issued by other PRC commercial banks, short-term financing bonds issued by qualified PRC company entities, derivatives and domestic company bonds traded on the interbank market. Such restrictions on CITIC Limited Group's ability to create a diverse investment portfolio limit its ability to adopt similar investments made by other countries' banks in order to obtain more returns and manage liquidity. In addition, CITIC Limited Group is exposed to risks relating to its heavy focus on Renminbi-denominated investment assets and its lack of hedging tools. The decrease in investment value of CITIC Limited Group's financial business will adversely affect the results of operations and financial condition of CITIC Limited Group. CITIC Limited Group is subject to a credit scale system for its industry loans. Pursuant to national policies, CITIC Limited Group has restricted lending capability in industries that (i) generate substantial pollution, (ii) have high energy consumption or (iii) have excess production capacity. If the PRC government further tightens the relevant policies, the loan quality of the financial business of CITIC Limited Group may be adversely affected. If borrowers of the government's financing vehicles are unable to repay loans, whether due to macroeconomic fluctuations, changes in national policies or other reasons, the loan quality, financial condition and results of operations of CITIC Limited Group may be adversely affected. The relevant regulatory policies relating to trust business may bring about systematic risk to CITIC Trust Co., Ltd. (" CITIC Trust "). The PRC government has promulgated a series of laws and regulations related to the trust industry. The PRC's financial regulatory system and related policies are undergoing constant improvements. Changes in regulatory policies related to the trust business and other relevant policies can subject the business expansion and product innovation plans of CITIC Trust to certain systematic risks. Meanwhile, as the trust business is governed by various financial regulatory fields, changes in the regulatory policies of different financial regulatory departments

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may also affect types of trust products offered by trust companies and their profit models and sources of profit, which in turn affect the profitability of CITIC Limited Group's financial business.

In light of the overheating of the property market in regional areas and for other policy reasons, the PRC government has intensified its efforts to regulate and stabilise the property market with the promulgation of a series of policies to enable the stable development of the property market. As a result, the credit scale and mortgage approvals of commercial banks may be affected in various degrees. CITIC Limited Group's real estate business may be affected by regulatory and industry changes. CITIC Limited Group's infrastructure construction business includes expressways, ports and piers, which depend largely on the macroeconomic policies adopted by the PRC government, especially the PRC government's investment guides and scale control policies towards infrastructure construction. In recent years, along with the growth in the PRC's comprehensive national strength, the investment in infrastructure has experienced rapid growth, and there have been substantial fixed asset investments and technological advancements in industries such as building materials, mining and electricity, which has promoted the development of the burgeoning heavy machinery industry. Nevertheless, the PRC government's spending on infrastructure construction and other construction projects may be easily affected by fluctuations in the PRC's economy and policy changes. If the PRC government adjusts its macroeconomic policies and shifts its preferential policies towards these industries, there may be changes to the operating environment of the aforementioned industries, causing a decrease in the fixed assets investment amount or adjustments to the technological advancement projects, which can adversely affect the market prospects for CITIC Limited Group's products and services.

There are uncertainties regarding the interpretation and enforcement of PRC laws and regulations which could adversely affect CITIC Limited Group

The majority of CITIC Limited Group's operations are conducted in the PRC and are therefore subject to PRC laws and regulations. Since the opening up of the PRC's economy, many new laws and regulations governing general economic matters have been promulgated in the PRC. The PRC's legal system is based on written statutes and their interpretations by the courts. While prior court decisions may be cited for reference purposes, they have limited weight as precedents. There are uncertainties regarding the interpretation and enforcement of the PRC's laws and regulations which could adversely affect CITIC Limited Group.

Any future occurrence of natural disasters or outbreaks of contagious diseases in the PRC may have an adverse effect on the business operations, financial condition and results of operations of CITIC Limited Group

Any future occurrence of natural disasters such as earthquakes, typhoons, floods, cyclones or other adverse weather conditions, acts or threats of terrorism, or outbreaks of epidemics and contagious diseases, which may include avian influenza, severe acute respiratory syndrome and swine influenza from H1N1 or other strains, may adversely affect CITIC Limited Group's business, financial condition and results of operations. In 2009, there were reports on the occurrences of H1N1 influenza in certain regions of the world, including the PRC and Hong Kong where CITIC Limited Group's principal businesses are located. Since 2019, there has been a global outbreak of COVID-19. The outbreak of an epidemic or contagious disease can result in a widespread health crisis, restrict or suspend the level of production, operational and business activities in the affected areas, disrupt transportation, materially affect labour supply and adversely affect the national economy, which may in turn adversely affect CITIC Limited Group's results of operations, financial condition and business. Moreover, the PRC has experienced natural disasters such as earthquakes, floods, landslides, rainstorms, hail and droughts in the past. Any future occurrence of severe natural disasters in the PRC may adversely affect the national economy and in turn CITIC Limited Group's results of operations, financial condition and business. There can be no assurance that any future occurrence of natural disasters or outbreaks of COVID-19, avian influenza, severe acute respiratory syndrome, swine influenza or other contagious diseases, or the measures taken by the PRC government or other countries in response to such contagious diseases, would not seriously disrupt the operations and business of CITIC Limited Group. In the event of such disruption, CITIC Limited Group's results of operations, financial condition and profitability may be adversely affected.

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Risks relating to the Notes issued under the Programme

The Notes may not be a suitable investment for all investors

Each potential investor in any Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:

(i) have sufficient knowledge and experience to make a meaningful evaluation of the relevant Notes, the merits and risks of investing in the relevant Notes and the information contained or incorporated by reference in this Offering Circular or any applicable supplement;
(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the relevant Notes and the impact such investment will have on its overall investment portfolio;
(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the relevant Notes, including where principal or interest is payable in one or more currencies, or where the currency for principal or interest payments is different from the potential investor's currency;
(iv) understand thoroughly the terms of the relevant Notes, and be familiar with the behaviour of any relevant indices and financial markets; and
(v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

Some Notes may be complex financial instruments and such instruments may be purchased as a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to the purchaser's overall portfolios. A potential investor should not invest in Notes which are complex financial instruments unless it has the expertise (either alone or with the help of a financial adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on the value of such Notes and the impact this investment will have on the potential investor's overall investment portfolio.

Additionally, the investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (1) Notes are legal investments for it, (2) Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase of any Notes. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-based capital or similar rules.

Modification and waivers

The Trust Deed contains provisions for convening meetings of the Noteholders to consider matters affecting their interests, including the sanctioning by Extraordinary Resolution (as defined in the Trust Deed) of a modification of any of the Conditions or any provisions of the Trust Deed. These provisions permit defined majorities to bind all the Noteholders including the Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority.

The Conditions of the Notes also provide that the Trustee may agree, without the consent of the Noteholders, to (i) any modification to the provisions of the Trust Deed that is of a formal, minor or technical nature or is made to correct a manifest error, and (ii) any other modification (except as mentioned in the Trust Deed), and any waiver or authorisation of any breach or proposed breach, of any of the provisions of the Trust Deed that is in the opinion of the Trustee not materially prejudicial to the interests of the Noteholders.

A change in English law which governs the Notes may adversely affect Noteholders

The Conditions of the Notes are governed by English law in effect as at the date of issue of the relevant Notes. No assurance can be given as to the impact of any possible judicial decision or change to English law or administrative practice after the date of issue of the relevant Notes.

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The Notes may be represented by Global Notes and holders of a beneficial interest in a Global Note must rely on the procedures of the relevant Clearing System(s)

Notes issued under the Programme may be represented by one or more Global Notes. Such Global Notes will be deposited with a common depositary for Euroclear and Clearstream, with DTC or lodged with CMU (each of Euroclear, Clearstream, DTC and CMU, a " Clearing System "). Except in the circumstances described in the relevant Global Note, investors will not be entitled to receive definitive Notes. The relevant Clearing System(s) will maintain records of the beneficial interests in the Global Notes. While the Notes are represented by one or more Global Notes, investors will be able to trade their beneficial interests only through the Clearing Systems.

While the Notes are represented by one or more Global Notes, CITIC Limited will discharge its payment obligations under the Notes by making payments to the common depositary for Euroclear and Clearstream, to DTC or, as the case may be, to CMU, for distribution to their account holders. A holder of a beneficial interest in a Global Note must rely on the procedures of the relevant Clearing System(s) to receive payments under the relevant Notes. CITIC Limited has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Notes.

Holders of beneficial interests in the Global Notes will not have a direct right to vote in respect of the relevant Notes. Instead, such holders will be permitted to act only to the extent that they are enabled by the relevant Clearing System(s) to appoint appropriate proxies.

Noteholders should be aware that Definitive Notes which have a denomination that is not an integral multiple of the minimum denomination may be illiquid and difficult to trade

Notes may be issued with a minimum denomination. The Pricing Supplement of a Tranche of Notes may provide that, for so long as the Notes are represented by a Global Note and the relevant Clearing System(s) so permit, the Notes will be tradable in nominal amounts (a) equal to, or integral multiples of, the minimum denomination, and (b) the minimum denomination plus integral multiples of an amount lower than the minimum denomination.

Definitive Notes will only be issued if the relevant Clearing System(s) is/are closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business. The Pricing Supplement may provide that, if Definitive Notes are issued, such Notes will be issued in respect of all holdings of Notes equal to or greater than the minimum denomination. However, Noteholders should be aware that Definitive Notes that have a denomination that is not an integral multiple of the minimum denomination may be illiquid and difficult to trade. Definitive Notes will in no circumstances be issued to any person holding Notes in an amount lower than the minimum denomination and such Notes will be cancelled and holders will have no rights against CITIC Limited (including rights to receive principal or interest or to vote) in respect of such Notes.

Risks relating to the structure of a particular issue of Notes

A wide range of Notes may be issued under the Programme. A number of these Notes may have features which contain particular risks for potential investors. Set out below is a description of certain such features:

Notes subject to optional redemption by CITIC Limited may have a lower market value than Notes that cannot be redeemed

Unless in the case of any particular Tranche of Notes the relevant Pricing Supplement specifies otherwise, in the event that CITIC Limited would be obliged to increase the amounts payable in respect of any Notes due to any withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of Hong Kong or any political subdivision thereof or any authority therein or thereof having power to tax, CITIC Limited may redeem all outstanding Notes in accordance with the Conditions.

An optional redemption feature is likely to limit the market value of Notes. During any period when CITIC Limited may elect to redeem Notes, the market value of those Notes generally will not rise substantially above the price at which they can be redeemed. This also may be true prior to any redemption period. CITIC Limited may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to do

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so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other investments available at that time.

The Trustee may request Noteholders to provide an indemnity and/or security and/or prefunding to its satisfaction

In certain circumstances (including the giving of notice to the Issuer pursuant to Condition 10 and the taking of enforcement steps pursuant to Condition 12), the Trustee may (at its sole discretion) request the Noteholders to provide an indemnity and/or security and/or pre-funding to its satisfaction before it takes actions on behalf of the Noteholders. The Trustee shall not be obliged to take any such actions if not indemnified and/or secured and/or pre-funded to its satisfaction. Negotiating and agreeing to any indemnity and/or security and/or pre-funding can be a lengthy process and may impact on when such actions can be taken. The Trustee may not be able to take actions, notwithstanding the provision of an indemnity or security or pre-funding to it, in breach of the terms of the Trust Deed constituting the Notes and in such circumstances, or where there is uncertainty or dispute as to the applicable laws or regulations, to the extent permitted by the agreements and the applicable law, it will be for the Noteholders to take such actions directly.

Dual currency notes have features which are different from single currency issues

CITIC Limited may issue Notes with principal or interest payable in one or more currencies which may be different from the currency in which the Notes are denominated. Potential investors should be aware that:

(i) the market price of such Notes may be volatile;
(ii) they may receive no interest;
(iii) payment of principal or interest may occur at a different time or in a different currency than expected; and
(iv) the amount of principal payable at redemption may be less than the nominal amount of such Notes or even zero.

Failure by an investor to pay a subsequent instalment of partly-paid Notes may result in an investor losing all of its investment

CITIC Limited may issue Notes where the issue price is payable in more than one instalment. Failure to pay any subsequent instalments could result in an investor losing all of its investment.

The market price of variable rate Notes with a multiplier or other leverage factor may be volatile

Notes with variable interest rates can be volatile securities. If they are structured to include multipliers or other leverage factors, or caps or floors, or any combination of those features or other similar related features, their market values may be even more volatile than those for securities that do not include such features.

Inverse Floating Rate Notes are typically more volatile than conventional floating rate debt

Inverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon a reference rate. The market values of such Notes typically are more volatile than market values of other conventional floating rate debt securities based on the same reference rate (and with otherwise comparable terms). Inverse Floating Rate Notes are more volatile because an increase in the reference rate not only decreases the interest rate of the Notes, but may also reflect an increase in prevailing interest rates, which further adversely affects the market value of these Notes.

Notes carrying an interest rate which may be converted from fixed to floating interest rates and viceversa, may have lower market values than other Notes

Fixed/Floating Rate Notes may bear interest at a rate that CITIC Limited may elect to convert from a fixed rate to a floating rate, or from a floating rate to a fixed rate. CITIC Limited's ability to convert the interest rate will affect the secondary market and the market value of such Notes since CITIC Limited may be expected to convert the rate when it is likely to produce a lower overall cost of borrowing. If CITIC Limited

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converts from a fixed rate to a floating rate, the spread on the Fixed/Floating Rate Notes may be less favourable than then prevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition, the new floating rate at any time may be lower than the rates on other Notes. If CITIC Limited converts from a floating rate to a fixed rate, the fixed rate may be lower than then prevailing rates on its Notes.

The market prices of Notes issued at a substantial discount or premium tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing securities

The market values of securities issued at a substantial discount or premium to their nominal amount tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interestbearing securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities.

Investors may lose part or all of their investment in any index linked Notes issued

If, in the case of a particular tranche of Notes, the relevant Pricing Supplement specifies that the Notes are index-linked Notes or variable redemption amount Notes, there is a risk that the investor may lose the value of its entire investment or part of it.

The regulation and reform of "benchmark" rates of interest and indices may adversely affect the value of Notes linked to or referencing such "benchmarks"

Interest rates and indices which are deemed to be or used as "benchmarks", are the subject of national and international regulatory guidance and proposals for reform. Some of these reforms are already effective whilst others are still to be implemented. These reforms may cause such benchmarks to perform differently than in the past or to disappear entirely, or have other consequences which cannot be predicted. Any such consequence could have a material adverse effect on any Note linked to or referencing such a benchmark.

Regulation (EU) 2016/1011 (the " EU Benchmarks Regulation ") applies, subject to certain transitional provisions, to the provision of benchmarks, the contribution of input data to a benchmark and the use of a benchmark within the EU. Among other things, it (i) requires benchmark administrators to be authorised or registered (or, if non-EU-based, to be subject to an equivalent regime or otherwise recognized or endorsed) and (ii) prevents certain uses by European Union supervised entities of benchmarks of administrators that are not authorised or registered (or, if non-European Union based, not deemed equivalent or recognized or endorsed). Regulation (EU) 2016/1011 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (the " UK Benchmarks Regulation ") among other things, applies to the provision of benchmarks and the use of a benchmark in the UK.

Similarly, it prohibits the use in the UK by UK supervised entities of benchmarks of administrators that are not authorised by the United Kingdom Financial Conduct Authority (" FCA ") or registered on the FCA register (or, if non-UK based, not deemed equivalent or recognised or endorsed).

The EU Benchmarks Regulation and/or the UK Benchmarks Regulation, as applicable could have a material impact on any Notes linked to or referencing a benchmark in particular, if the methodology or other terms of the benchmark are changed in order to comply with the requirements of the EU Benchmarks Regulation and/or the UK Benchmarks Regulation, as applicable. Such changes could, among other things, have the effect of reducing, increasing or otherwise affecting the volatility of the published rate or level of the relevant benchmark.

More broadly, any of the international reforms or the general increased regulatory scrutiny of benchmarks could increase the costs and risks of administering or otherwise participating in the setting of a benchmark and complying with any such regulations or requirements. For example, the sustainability of the London Interbank Offered Rate (" LIBOR ") has been questioned as a result of the absence of relevant active underlying markets and possible disincentives (including as a result of regulatory reforms) for market participants to continue contributing to such benchmarks. On 27 July 2017, the United Kingdom Financial Conduct Authority announced that it will no longer persuade or compel banks to submit rates for the calculation of the LIBOR benchmark after 2021 (the " FCA Announcement "). The FCA Announcement indicated that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021. On 5 March 2021, the United Kingdom Financial Conduct Authority announced that: (i) the publication of 24 LIBOR settings (as detailed in the FCA announcement) will cease immediately after 31 December 2021;

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(ii) the publication of the overnight and 12-month U.S. dollar LIBOR settings will cease immediately after 30 June 2023; (iii) immediately after 31 December 2021, the 1-month, 3-month and 6-month sterling LIBOR settings will no longer be representative of the underlying market and economic reality that they are intended to measure and representativeness will not be restored (and the United Kingdom Financial Conduct Authority will consult on requiring the InterContinental Exchange Benchmark Administration (the " IBA ") to continue to publish these settings on a synthetic basis, which will no longer be representative of the underlying market and economic reality they are intended to measure, for a further period after 31 December 2021); and (iv) immediately after 30 June 2023, the 1-month, 3-month and 6-month U.S. dollar LIBOR settings will no longer be representative of the underlying market and economic reality that they are intended to measure and representativeness will not be restored (and the United Kingdom Financial Conduct Authority will consider the case for using its proposed powers to require the IBA to continue publishing these settings on a synthetic basis, which will no longer be representative of the underlying market and economic reality they are intended to measure, for a further period after 30 June 2023).

Separately, the euro risk free-rate working group for the euro area has published a set of guiding principles and high level recommendations for fallback provisions in, amongst other things, new euro denominated cash products (including bonds) referencing EURIBOR. The guiding principles indicate, amongst other things, that continuing to reference EURIBOR in relevant contracts (without robust fallback provisions) may increase the risk to the euro area financial system.

The potential elimination of any benchmark, or changes in the manner of administration of any benchmark, could require an adjustment to the terms and conditions, or result in other consequences, in respect of any Notes linked to such benchmark. Such factors may have the following effects on certain benchmarks: (i) discourage market participants from continuing to administer or contribute to the benchmark; (ii) trigger changes in the rules or methodologies used in the benchmark or (iii) lead to the disappearance of the "benchmark". Any of the above changes or any other consequential changes as a result of international reforms or other initiatives or investigations, could have a material adverse effect on the value of and return on any Notes linked to or referencing a benchmark. Investors should consult their own independent advisers and make their own assessment about the potential risks imposed by any international reforms in making any investment decision with respect to any Notes linked to or referencing a benchmark.

The use of Secured Overnight Financing Rate ("SOFR") as a reference rate is subject to important limitations

The rate of interest on the Floating Rate Notes may be calculated on the basis of SOFR (as further described under Condition 6(b)(ii)(C) of the Conditions). In June 2017, the New York Federal Reserve's Alternative Reference Rates Committee (the " ARRC ") announced SOFR as its recommended alternative to U.S. dollar LIBOR. However, the composition and characteristics of SOFR are not the same as those of LIBOR. SOFR is a broad U.S. Treasury repo-financing rate that represents overnight secured funding transactions. This means that SOFR is fundamentally different from LIBOR for two key reasons. First , SOFR is a secured rate, while LIBOR is an unsecured rate. Second , SOFR is an overnight rate, while LIBOR represents interbank funding over different maturities. As a result, there can be no assurance that SOFR will perform in the same way as LIBOR would have at any time, including, without limitation, as a result of changes in interest and yield rates in the market, market volatility or global or regional economic, financial, political, or regulatory events. For example, since publication of SOFR began in April 2018, daily changes in SOFR have, on occasion, been more volatile than daily changes in comparable benchmark or other market rates.

As SOFR is an overnight funding rate, interest on SOFR-based Notes with interest periods longer than overnight will be calculated on the basis of either the arithmetic mean of SOFR over the relevant interest period or compounding SOFR during the relevant interest period. As a consequence of this calculation method, the amount of interest payable on each interest payment date will only be known a short period of time prior to the relevant interest payment date. Noteholders therefore will not know in advance the interest amount which will be payable on such Notes.

Although the Federal Reserve Bank of New York has published historical indicative SOFR information going back to 2014, such prepublication of historical data inherently involves assumptions, estimates and approximations. Noteholders should not rely on any historical changes or trends in the SOFR as an indicator of future changes in the SOFR.

The Federal Reserve Bank of New York notes on its publication page for SOFR that use of the SOFR is subject to important limitations and disclaimers, including that the Federal Reserve Bank of New York may

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alter the methods of calculation, publication schedule, rate revision practices or availability of the SOFR at any time without notice. In addition, SOFR is published by the Federal Reserve Bank of New York based on data received from other sources. There can be no guarantee that the SOFR will not be discontinued or fundamentally altered in a manner that is materially adverse to the interests of the Noteholders. If the manner in which the SOFR is calculated is changed or if SOFR is discontinued, that change or discontinuance may result in a reduction or elimination of the amount of interest payable on the Notes and a reduction in the trading prices of the Notes which would negatively impact the Noteholders who could lose part of their investment.

The Terms and Conditions of the Notes provide for certain fallback arrangements in the event that a SOFR Benchmark Event occurs, which is based on the ARRC recommended language. There is however no guarantee that the fallback arrangements will operate as intended at the relevant time or operate on terms commercially acceptable to all Noteholders. Investors should consult their own independent advisers and make their own assessment about the potential risks in making any investment decision with respect to any Notes linked to SOFR.

The market continues to develop in relation to SOFR as a reference rate for Floating Rate Notes.

Investors should be aware that the market continues to develop in relation to SOFR and its adoption as an alternative to U.S. dollar LIBOR. Market participants and relevant working groups are exploring alternative reference rates based on SOFR (which seek to measure the market's forward expectation of a SOFR rate over a designated term). The market or a significant part thereof may adopt an application of SOFR that differs significantly from that set out in the Terms and Conditions of the Notes. In addition, the manner of adoption or application of SOFR in the bond markets may differ materially compared with the application and adoption of SOFR in other markets, such as the derivatives and loan markets. Investors should carefully consider how any mismatch between the adoption of SOFR in the bond, loan and derivatives markets may impact any hedging or other financial arrangements which they may put in place in connection with any acquisition, holding or disposal of Notes referencing SOFR.

The use of SOFR as a reference rate for bonds is nascent, and may be subject to change and development, both in terms of the substance of the calculation and in the development and adoption of market infrastructure for the issuance and trading of bonds referencing such rates. Notes referencing SOFR may have no established trading market when issued, and an established trading market may never develop or may not be very liquid which, in turn, may reduce the trading price of such Notes or mean that investors in such Notes may not be able to sell such Notes at all or may not be able to sell such Notes at prices that will provide them with a yield comparable to similar investments that have a developed secondary market, and may consequently suffer from increased pricing volatility and market risk. Investors should consider these matters when making their investment decision with respect to Notes referencing SOFR.

Risks relating to the market generally

Set out below is a brief description of certain market risks, including liquidity risk, exchange rate risk, interest rate risk and credit risk:

Notes issued under the Programme have no current active trading market and may trade at a discount to their initial offering price and/or with limited liquidity

Notes issued under the Programme will be new securities which may not be widely distributed and for which there is currently no active trading market (unless in the case of any particular Tranche, such Tranche is to be consolidated with and form a single series with a Tranche of Notes which is already issued). In particular, one or more initial investors in the Notes may purchase a significant portion of the aggregate principal amount of the Notes pursuant to an offering. The existence of any such significant holder may reduce the liquidity of Notes in the secondary trading market. If the Notes are traded after their initial issuance, they may trade at a discount to their initial offering price, depending upon prevailing interest rates, the market for similar securities, general economic conditions and the financial condition of CITIC Limited. If the Notes are trading at a discount, investors may not be able to receive a favourable price for their Notes, and in some circumstances investors may not be able to sell their Notes at all or at their fair market value. Although an application has been made for the Notes issued under the Programme to be admitted to listing on the Stock Exchange of Hong Kong Limited, there is no assurance that such application will be accepted, that any particular Tranche of Notes will be so admitted or that an active trading market will develop. In addition, the market for investment grade and crossover grade debt has been subject to disruptions that have

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caused volatility in prices of securities similar to the Notes issued under the Programme. Accordingly, there is no assurance as to the development or liquidity of any trading market, or that disruptions will not occur, for any particular Tranche of Notes.

Exchange rate risks and exchange controls may result in investors receiving less interest or principal than expected

CITIC Limited will pay principal and interest on the Notes in the currency specified in the relevant Pricing Supplement (the " Specified Currency "). This presents certain risks relating to currency conversions if an investor's financial activities are denominated principally in a currency or currency unit (the " Investor's Currency ") other than the Specified Currency. These include the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Currency or revaluation of the Investor's Currency) and the risk that authorities with jurisdiction over the Investor's Currency may impose or modify exchange controls. An appreciation in the value of the Inventor's Currency relative to the Specified Currency would decrease (1) the Investor's Currency equivalent yield on the Notes, (2) the Investor's Currency equivalent value of the principal payable on the Notes and (3) the Investor's Currency equivalent market value of the Notes.

Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal.

Changes in market interest rates may adversely affect the value of Fixed Rate Notes

Investment in Fixed Rate Notes involves the risk that subsequent changes in market interest rates may adversely affect the value of Fixed Rate Notes.

The credit ratings assigned to the Notes may not reflect all risks

One or more independent credit rating agencies may assign credit ratings to an issue of Notes. The ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed above and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time.

Risks Relating to Renminbi-denominated Notes

Notes denominated in Renminbi (" RMB Notes ") may be issued under the Programme. RMB Notes contain particular risks for potential investors.

Renminbi is not freely convertible. There are significant restrictions on remittance of Renminbi into and outside the PRC which may adversely affect the liquidity of RMB Notes

Renminbi is not freely convertible at present. The PRC government continues to regulate conversion between Renminbi and foreign currencies, including the Hong Kong dollar, despite significant reduction in control by it in recent years over trade transactions involving import and export of goods and services as well as other frequent routine foreign exchange transactions. These transactions are known as current account items.

Remittance of Renminbi by foreign investors into the PRC for the purposes of capital account items, such as capital contributions, is generally only permitted upon obtaining specific approvals from, or completing specific registrations or filings with, the relevant authorities and is subject to a strict monitoring system. Regulations in the PRC on the remittance of Renminbi into the PRC for settlement of capital account items are developing gradually.

In respect of Renminbi foreign direct investments (" FDI "), the PBoC promulgated the Administrative Measures on Renminbi Settlement of Foreign Direct Investment (the " PBoC FDI Measures ") on 13 October 2011 as part of the PBoC's detailed Renminbi FDI accounts administration system. The system covers almost all aspects in relation to FDI, including capital injections, payments for the acquisition of PRC domestic enterprises, repatriation of dividends and other distributions, as well as Renminbi denominated cross-border loans. On 14 June 2012, the PBoC issued a circular setting out the operational guidelines for FDI. Under the PBoC FDI Measures, special approval for FDI and shareholder loans from the PBoC, which was previously required, is no longer necessary. In some cases however, post-event filing

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with the PBoC is still necessary. On 5 June 2015, the PBoC further issued the amendment rules for the PBoC FDI Measures as well as its implementing rules, under which the registered capital verification requirement and the precondition of full contribution of the registered capital in respect of the borrowing of foreign debt denominated in Renminbi are cancelled.

On 3 December 2013, the Ministry of Commerce of the PRC (" MOFCOM ") promulgated the Circular on Issues in relation to Cross-border Renminbi Foreign Direct Investment (the " MOFCOM Circular "), which became effective on 1 January 2014, to further facilitate FDI by simplifying and streamlining the applicable regulatory framework. Pursuant to the MOFCOM Circular, the appropriate office of MOFCOM and/or its local counterparts will grant written approval for each FDI and specify "Renminbi Foreign Direct Investment" and the amount of capital contribution in the approval. Unlike previous MOFCOM regulations on FDI, the MOFCOM Circular removes the approval requirement for foreign investors who intend to change the currency of its existing capital contribution from a foreign currency to Renminbi. In addition, the MOFCOM Circular also clearly prohibits the FDI funds from being used for any investment in securities and financial derivatives (except for investment in the PRC listed companies as strategic investors) or for entrustment loans in the PRC. Effective 30 July 2017, pursuant to the Decision on Revision of the Provisional Measures on Administration of Filing for Establishment and Change of Foreign Investment Enterprises, the establishment and change of foreign invested enterprises, other than those subject to special administration measures, only needs to be filed with the local arm of MOFCOM. As such, the aforesaid written approval requirement regarding "Renminbi Foreign Direct Investment" set forth in the MOFCOM Circular has been replaced with a simplified record filing requirement.

The PBoC FDI Measures, the MOFCOM Circular and other PRC laws, regulations and policies in relation to the general administration of Renminbi will be subject to interpretation and application by the relevant authorities in the PRC.

There is no assurance that the PRC government will continue to gradually liberalise control over crossborder remittance of Renminbi in the future, that any schemes for Renminbi cross-border utilisation will not be discontinued or that new regulations in the PRC will not be promulgated in the future which have the effect of restricting or eliminating the remittance of Renminbi into or outside the PRC. In the event that any regulatory restrictions inhibit the ability of the Issuer to repatriate funds outside the PRC to meet its obligations under Notes denominated in Renminbi, the Issuer will need to source Renminbi offshore to finance such obligations under the relevant Notes denominated in Renminbi, and its ability to do so will be subject to the overall availability of Renminbi outside the PRC.

There is only limited availability of Renminbi outside the PRC, which may affect the liquidity of the RMB Notes and the ability of the Issuer to source Renminbi outside the PRC to service the RMB Notes

As a result of the restrictions by the PRC government on cross-border Renminbi fund flows, the availability of Renminbi outside of the PRC is limited. Since February 2004, in accordance with arrangements between the PRC central government and the Hong Kong government, licensed banks in Hong Kong may offer limited Renminbi denominated banking services to Hong Kong residents and specified business customers. The PBoC has also established a Renminbi clearing and settlement system for participating banks in Hong Kong. On July 2010, further amendments were made to the Settlement Agreement on the Clearing of RMB Business (the " Settlement Agreement ") between the PBoC and Bank of China (Hong Kong) Limited (the " RMB Clearing Bank ") to further expand the scope of Renminbi business for participating banks in Hong Kong. Pursuant to the revised arrangements, all corporations are allowed to open Renminbi accounts in Hong Kong; there is no longer any limit on the ability of corporations to convert Renminbi; and there will no longer be any restriction on the transfer of Renminbi funds between different accounts in Hong Kong. In addition, the PBoC has now established Renminbi clearing and settlement systems with financial institutions in other major global financial centres (each also a " RMB Clearing Bank "), including London, Frankfurt and Singapore to further internationalise the Renminbi.

There are restrictions imposed by the PBoC on Renminbi business participating banks in respect of crossborder Renminbi settlement, such as those relating to direct transactions with PRC enterprises. Furthermore, Renminbi business participating banks do not have direct Renminbi liquidity support from the PBoC. The Renminbi Clearing Banks only have access to onshore liquidity support from the PBoC for the purpose of squaring open positions of participating banks for limited types of transactions and are not obliged to square for participating banks any open positions resulting from other foreign exchange transactions or conversion services. In such cases, the participating banks will need to source Renminbi from outside the PRC to square such open positions.

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Although it is expected that the offshore Renminbi market will continue to grow in depth and size, its growth is subject to many constraints as a result of PRC laws and regulations on foreign exchange. There is no assurance that new PRC regulations will not be promulgated or the settlement arrangements will not be terminated or amended in the future which will have the effect of restricting availability of Renminbi outside the PRC. The limited availability of Renminbi outside the PRC may affect the liquidity of the RMB Notes. To the extent the Issuer is required to source Renminbi in the offshore market to service its RMB Notes, there is no assurance that the Issuer will be able to source such Renminbi on satisfactory terms, if at all.

Investment in the RMB Notes is subject to exchange rate risks

The value of the Renminbi against the U.S. dollar and other foreign currencies fluctuates and is affected by changes in the PRC, by international political and economic conditions and by many other factors. All payments of interest and principal will be made with respect to the RMB Notes in Renminbi. As a result, the value of these Renminbi payments in U.S. dollars or other foreign currencies may vary with the prevailing exchange rates in the marketplace. If the value of Renminbi depreciates against the U.S. dollar or other foreign currencies, the value of investment in U.S. dollars or other applicable foreign currencies will decline. In August 2015, the PBoC changed the way it calculates the mid-point price of Renminbi against the US dollar, requiring the market-makers who submit for the PBoC's reference rates to consider the previous day's closing spot rate, foreign-exchange demand and supply as well as changes in major currency rates. This change, and other changes such as widening the trading band that may be implemented, may increase volatility in the value of the Renminbi against foreign currencies. In May 2017, the PBoC further decided to introduce counter-cyclical factors to offset the market pro-cyclicality, so that the midpoint quotes could adequately reflect China's actual economic performance. However, the volatility in the value of the Renminbi against other currencies still exists.

Payments in respect of the RMB Notes will only be made to investors in the manner specified in such RMB Notes

All payments to investors in respect of the RMB Notes will be made solely by (i) when the RMB Notes are represented by a global certificate, transfer to a Renminbi bank account maintained in Hong Kong in accordance with prevailing CMU rules and procedures, or (ii) when the RMB Notes are in definitive form, transfer to a Renminbi bank account maintained in Hong Kong in accordance with prevailing rules and regulations. The Issuer can be required to make payment by any other means (including in any other currency or in bank notes, by cheque or draft or by transfer to a bank account in the PRC).

There may be PRC tax consequences with respect to investment in the RMB Notes

In considering whether to invest in the RMB Notes, investors should consult their individual tax advisers with regard to the application of PRC tax laws to their particular situations as well as any tax consequences arising under the laws of any other tax jurisdictions. The value of the holder's investment in the RMB Notes may be materially and adversely affected if the holder is required to pay PRC tax with respect to acquiring, holding or disposing of and receiving payments under those RMB Notes.

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TERMS AND CONDITIONS OF THE NOTES

The following is the text of the terms and conditions that, subject to completion and amendment and as supplemented or varied in accordance with the provisions of Part A of the relevant Pricing Supplement, shall be applicable to the Notes in definitive form (if any) issued in exchange for the Global Note(s) or the Global Certificate representing each Series. Either (i) the full text of these terms and conditions together with the relevant provisions of Part A of the Pricing Supplement or (ii) these terms and conditions as so completed, amended, supplemented or varied (and subject to simplification by the deletion of nonapplicable provisions), shall be endorsed on such Bearer Notes or on the Certificates relating to such Registered Notes. All capitalised terms that are not defined in these Conditions will have the meanings given to them in Part A of the relevant Pricing Supplements. Those definitions will be endorsed on the definitive Notes or Certificates, as the case may be. References in the Conditions to "Notes" are to the Notes of one Series only, not to all Notes that may be issued under the Programme.

The Notes are constituted by an Amended and Restated Trust Deed (as amended or supplemented as at the date of issue of the Notes (the " Issue Date "), the " Trust Deed ") dated 20 December 2021 between the Issuer and The Bank of New York Mellon, London Branch (the " Trustee ", which expression shall include all persons for the time being the trustee or trustees under the Trust Deed) as trustee for the Noteholders (as defined below). These terms and conditions (the " Conditions ") include summaries of, and are subject to, the detailed provisions of the Trust Deed, which includes the form of the Bearer Notes, Certificates, Receipts, Coupons and Talons referred to below. An Amended and Restated Agency Agreement (as amended or supplemented as at the Issue Date, the " Agency Agreement ") dated 20 December 2021 has been entered into in relation to the Notes between the Issuer, the Trustee, The Bank of New York Mellon, London Branch and The Bank of New York Mellon as the initial issuing and paying agent and the other agents named in it. The issuing and paying agent, the CMU lodging and paying agents, the other paying agents, the registrar, the transfer agent(s), the exchange agent(s) and the calculation agent(s) for the time being (if any) are referred to below respectively as the " Issuing and Paying Agent ", the " CMU Lodging and Paying Agent ", the " Paying Agents " (which expression shall include the Issuing and Paying Agent and the CMU Lodging and Paying Agent), the " Registrar ", the " Transfer Agents " (which expression shall include the Registrar), the " Exchange Agent(s) " and the " Calculation Agent(s) " (such Issuing and Paying Agent, CMU Lodging and Paying Agent, Paying Agents, Registrar, Transfer Agent(s), Exchange Agent(s) and the Calculation Agent(s) being together referred to as the " Agents "). For the purposes of these Conditions, all references to the Issuing and Paying Agent shall, with respect to a Series of Notes to be held in the CMU, be deemed to be a reference to the CMU Lodging and Paying Agent and all such references shall be construed accordingly. Copies of the Trust Deed and the Agency Agreement are available for inspection during usual business hours at the principal office of the Trustee (presently at One Canada Square, 40th Floor, London E14 5AL, United Kingdom) and at the specified offices of the Paying Agents and the Transfer Agents.

The Noteholders, the holders of the interest coupons (the " Coupons ") relating to interest bearing Notes in bearer form and, where applicable in the case of such Notes, talons for further Coupons (the " Talons ") (the " Couponholders ") and the holders of the receipts for the payment of instalments of principal (the " Receipts ") relating to Notes in bearer form of which the principal is payable in instalments are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and are deemed to have notice of those provisions applicable to them of the Agency Agreement. As used in these Conditions, " Tranche " means Notes which are identical in all respects.

1. Form, Denomination and Title

The Notes are issued in bearer form (" Bearer Notes ") or in registered form (" Registered Notes ") in each case in the Specified Denomination(s) shown hereon.

This Note is a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, an Index Linked Interest Note, an Index Linked Redemption Note, an Instalment Note, a Dual Currency Note or a Partly Paid Note, a combination of any of the foregoing or any other kind of Note, depending upon the Interest and Redemption/Payment Basis shown hereon.

Bearer Notes are serially numbered and are issued with Coupons (and, where appropriate, a Talon) attached, save in the case of Zero Coupon Notes in which case references to interest (other than in relation to interest due after the Maturity Date), Coupons and Talons in these Conditions are not applicable. Instalment Notes are issued with one or more Receipts attached.

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Registered Notes are represented by registered certificates (" Certificates ") and, save as provided in Condition 2(c), each Certificate shall represent the entire holding of Registered Notes by the same holder.

Title to the Bearer Notes and the Receipts, Coupons and Talons shall pass by delivery. Title to the Registered Notes shall pass by registration in the register that the Issuer shall procure to be kept by the Registrar in accordance with the provisions of the Agency Agreement (the " Register "). Except as ordered by a court of competent jurisdiction or as required by law, the holder (as defined below) of any Note, Receipt, Coupon or Talon shall be deemed to be and may be treated as its absolute owner for all purposes whether or not it is overdue and regardless of any notice of ownership, trust or an interest in it, any writing on it (or on the Certificate representing it) or its theft or loss (or that of the related Certificate) and no person shall be liable for so treating the holder.

In these Conditions, " Noteholder " means the bearer of any Bearer Note and the Receipts relating to it or the person in whose name a Registered Note is registered (as the case may be), " holder " (in relation to a Note, Receipt, Coupon or Talon) means the bearer of any Bearer Note, Receipt, Coupon or Talon or the person in whose name a Registered Note is registered (as the case may be) and capitalised terms have the meanings given to them hereon, the absence of any such meaning indicating that such term is not applicable to the Notes.

2. No Exchange of Notes and Transfers of Registered Notes

(a) No Exchange of Notes : Registered Notes may not be exchanged for Bearer Notes. Bearer Notes of one Specified Denomination may not be exchanged for Bearer Notes of another Specified Denomination. Bearer Notes may not be exchanged for Registered Notes.
(b) Transfer of Registered Notes : One or more Registered Notes may be transferred upon the surrender (at the specified office of the Registrar or any Transfer Agent) of the Certificate representing such Registered Notes to be transferred, together with the form of transfer endorsed on such Certificate, (or another form of transfer substantially in the same form and containing the same representations and certifications (if any), unless otherwise agreed by the Issuer), duly completed and executed and any other evidence as the Registrar or Transfer Agent may reasonably require to prove the title of the transferor and the authority of the individuals that have executed the form of transfer. In the case of a transfer of part only of a holding of Registered Notes represented by one Certificate, a new Certificate shall be issued to the transferee in respect of the part transferred and a further new Certificate in respect of the balance of the holding not transferred shall be issued to the transferor. All transfers of Notes and entries on the Register will be made subject to the detailed regulations concerning transfers of Notes scheduled to the Agency Agreement. The regulations may be changed by the Issuer, with the prior written approval of the Registrar and the Trustee. A copy of the current regulations will be made available by the Registrar to any Noteholder upon request.
(c) Exercise of Options or Partial Redemption in Respect of Registered Notes : In the case of an exercise of an Issuer's or Noteholders' option in respect of, or a partial redemption of, a holding of Registered Notes represented by a single Certificate, a new Certificate shall be issued to the holder to reflect the exercise of such option or in respect of the balance of the holding not redeemed. In the case of a partial exercise of an option resulting in Registered Notes of the same holding having different terms, separate Certificates shall be issued in respect of those Notes of that holding that have the same terms. New Certificates shall only be issued against surrender of the existing Certificates to the Registrar or any Transfer Agent. In the case of a transfer of Registered Notes to a person who is already a holder of Registered Notes, a new Certificate representing the enlarged holding shall only be issued against surrender of the Certificate representing the existing holding.
(d) Delivery of New Certificates : Each new Certificate to be issued pursuant to Conditions 2(b) or 2(c) shall be available for delivery within five business days of receipt of the form of transfer or Exercise Notice (as defined in Condition 6(e)) and surrender of the Certificate for exchange. Delivery of the new Certificate(s) shall be made at the specified office of the Transfer Agent or of the Registrar (as the case may be) to whom delivery or
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surrender of such form of transfer, Exercise Notice or Certificate shall have been made or, at the option of the holder making such delivery or surrender as aforesaid and as specified in the relevant form of transfer, Exercise Notice or otherwise in writing, be mailed by uninsured post at the risk of the holder entitled to the new Certificate to such address as may be so specified, unless such holder requests otherwise and pays in advance to the relevant Transfer Agent the costs of such other method of delivery and/or such insurance as it may specify. In this Condition 2(d), " business day " means a day, other than a Saturday or Sunday, on which banks are open for business in the place of the specified office of the relevant Transfer Agent or the Registrar (as the case may be).

(e) Transfers Free of Charge : Transfers of Notes and Certificates on registration, transfer, exercise of an option or partial redemption shall be effected without charge by or on behalf of the Issuer, the Registrar or the Transfer Agents, but upon payment of any tax or other governmental charges that may be imposed in relation to it (or the giving of such indemnity and/or security as the Registrar or the relevant Transfer Agent may require) in respect of tax or charges.
(f) Closed Periods : No Noteholder may require the transfer of a Registered Note to be registered (i) during the period of 15 days ending on the due date for redemption of, or payment of any Instalment Amount in respect of, that Note, (ii) during the period of 15 days prior to any date on which Notes may be called for redemption by the Issuer at its option pursuant to Condition 6(d), (iii) after any such Note has been called for redemption or (iv) during the period of seven days ending on (and including) any Record Date.

3. Status

The Notes and the Receipts and the Coupons relating to them constitute direct, unconditional, unsubordinated and (subject to Condition 4) unsecured obligations of the Issuer and shall at all times rank pari passu and without any preference among themselves. The payment obligations of the Issuer under the Notes and the Receipts and the Coupons relating to them shall, save for such exceptions as may be provided by applicable legislation and subject to Condition 4, at all times rank at least equally with all other unsecured and unsubordinated indebtedness of the Issuer, present and future.

4. Negative Pledge

So long as any Note or Coupon remains outstanding (as defined in the Trust Deed), the Issuer will not, and will ensure that none of the Principal Non-listed Subsidiaries of the Issuer will, create, or have outstanding, any mortgage, charge, lien, pledge or other security interest (" Security ") upon the whole or any part of its present or future undertaking, assets or revenues (including any uncalled capital) to secure any Relevant Indebtedness, or any guarantee or indemnity in respect of any Relevant Indebtedness, other than Permitted Security, without at the same time or prior thereto according to the Notes and the Coupons the same security as is created or subsisting to secure any such Relevant Indebtedness, guarantee or indemnity or such other security.

For the purposes of these Conditions:

" Permitted Security " means:

(a) any Security over assets (or related documents of title) of a Principal Non-listed Subsidiary incurred or assumed for the purpose of financing the purchase price thereof or the cost of construction, improvement or repair of all or any part thereof and any substitute security created on those assets in connection with the refinancing (together with interest, fees and other charges attributable to such refinancing) of the indebtedness secured on those assets ( provided that the principal amount secured by any such security may not be increased without the approval by an Extraordinary Resolution of the Noteholders);
(b) any Security on assets (or related documents of title) of a Principal Non-listed Subsidiary existing prior to the time such Principal Non-listed Subsidiary becomes a direct or indirect Subsidiary of the Issuer or arising after such time pursuant to contractual commitments entered into prior to and not in contemplation thereof, and any substitute security created
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on those assets in connection with the refinancing (together with interest, fees and other charges attributable to such refinancing) of the indebtedness secured on those assets ( provided that the principal amount secured by any such security may not be increased without the approval by an Extraordinary Resolution of the Noteholders);

" Person " means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organisation, government or any agency of political subdivision thereof or any other entity;

" Principal Non-Listed Subsidiary " means any Principal Subsidiary of the Issuer other than one which is listed on The Stock Exchange of Hong Kong Limited, the Shanghai Stock Exchange, the Shenzhen Stock Exchange or any other stock exchange, and their respective Subsidiaries;

" Principal Subsidiary " means any Subsidiary of the Issuer:

(a) whose profit after taxation (" after-tax profit ") or (in the case of a Subsidiary which itself has Subsidiaries) consolidated after-tax profit, as shown by its latest audited profit and loss account is at least 10 per cent. of the consolidated after-tax profit as shown by the latest published audited consolidated profit and loss account of the Issuer and its Subsidiaries including, for the avoidance of doubt, the Issuer and its consolidated Subsidiaries' share of profits of Subsidiaries not consolidated and of associated entities and after adjustments for minority interests; and
(b) whose gross assets or (in the case of a Subsidiary which itself has Subsidiaries) gross consolidated assets, as shown by its latest audited balance sheet are at least 10 per cent. of the consolidated gross assets of the Issuer and its Subsidiaries as shown by the latest published audited consolidated balance sheet of the Issuer and its Subsidiaries including the investment of the Issuer and its consolidated Subsidiaries in each Subsidiary whose accounts are not consolidated with the consolidated audited accounts of the Issuer and of associated companies and after adjustment for minority interests; or
(c) any Subsidiary of the Issuer to which is transferred the whole or substantially the whole of the assets of a Subsidiary which immediately prior to such transfer was a Principal Subsidiary, provided that the Principal Subsidiary which so transfers its assets shall forthwith upon such transfer cease to be a Principal Subsidiary and the Subsidiary to which the assets are so transferred shall cease to be a Principal Subsidiary at the date on which the first published audited accounts (consolidated, if appropriate), of the Issuer prepared as of a date later than such transfer are issued unless such Subsidiary would continue to be a Principal Subsidiary on the basis of such accounts by virtue of the provisions of paragraph (a) and (b) above, provided that , in relation to paragraphs (a) and (b) above:
(1) in the case of a Person becoming a Subsidiary after the end of the financial period to which the latest consolidated audited accounts of the Issuer relate, the reference to the then latest consolidated audited accounts of the Issuer for the purposes of the calculation above shall, until consolidated audited accounts of the Issuer for the financial period in which the relevant corporation or other business entity becomes a Subsidiary are published be deemed to be a reference to the then latest consolidated audited accounts of the Issuer adjusted to consolidate the latest audited accounts (consolidated in the case of a Subsidiary which itself has Subsidiaries) of such Subsidiary in such accounts;
(2) if at any relevant time in relation to the Issuer or any Subsidiary which itself has Subsidiaries no consolidated accounts are prepared and audited, after-tax profit or gross assets of the Issuer and/or any such Subsidiary shall be determined on the basis of pro forma consolidated accounts prepared for this purpose by the Issuer;
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(3) if at any relevant time in relation to any Subsidiary, no accounts are audited, its after-tax profit or gross assets (consolidated, if appropriate) shall be determined on the basis of pro forma accounts (consolidated, if appropriate) of the relevant Subsidiary prepared for this purpose by the Issuer; and
(4) if the accounts of any Subsidiary (not being a Subsidiary referred to in proviso (1) above) are not consolidated with those of the Issuer, then the determination of whether or not such Subsidiary is a Principal Subsidiary shall be based on a pro forma consolidation of its accounts (consolidated, if appropriate) with the consolidated accounts (determined on the basis of the foregoing) of the Issuer;

" Project Subsidiary " means any Subsidiary:

(a) which is a special purpose joint venture, partnership, company or other entity whose principal assets and activities are constituted by, or relate to, a project;
(b) whose obligations in respect of the Relevant Indebtedness over which security has been created in relation to the project is not subject to any recourse whatsoever in respect thereof to the Issuer or any of its other Subsidiaries (other than another Project Subsidiary), except in connection with an enforcement of any encumbrance given by the Issuer or any of its other Subsidiaries over the Issuer's or such other Subsidiary's shares or the like in the capital of such single purpose company; and
(c) which has been designated as such by the Issuer by written notice to the Trustee, provided that the Issuer may give written notice to the Trustee at any time that any Project Subsidiary is no longer a Project Subsidiary, whereupon it shall cease to be a Project Subsidiary;

" Relevant Indebtedness " means any indebtedness which is in the form of, or represented or evidenced by, bonds, notes, debentures, or other securities which for the time being are, or are intended by the issuer thereof to be quoted, listed or dealt in or traded on any stock exchange or over-the-counter or other securities market, having an original maturity of more than one year from its date of issue, and are initially issued, offered or distributed outside the People's Republic of China (which for the purposes of these Conditions excludes the Hong Kong Special Administrative Region of the People's Republic of China, the Macau Special Administrative Region of the People's Republic of China and Taiwan); and

" Subsidiary " means, in respect of any Person, any entity whose financial statements at any time are required by law, or in accordance with generally accepted accounting principles, of the jurisdiction of incorporation of such Person to be fully consolidated with those such Person.

Interest and other Calculations
(a) Interest on Fixed Rate Notes : Each Fixed Rate Note bears interest on its outstanding nominal amount from the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Interest, such interest being payable in arrear on each Interest Payment Date. The amount of interest payable shall be determined in accordance with Condition 5(h).
(b) Interest on Floating Rate Notes and Index Linked Interest Notes:
- (i) Interest Payment Dates : Each Floating Rate Note and Index Linked Interest Note bears interest on its outstanding nominal amount from the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Interest, such interest being payable in arrear on each Interest Payment Date. The amount of interest payable shall be determined in accordance with Condition 5(h). Such Interest Payment Date(s) is/are either shown hereon as Specified Interest Payment Dates or, if no Specified Interest Payment Date(s) is/are shown hereon, " Interest Payment Date " shall mean each date which falls the number of months or other period shown hereon as the Interest Period after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date.
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(ii) Rate of Interest for Floating Rate Notes : The Rate of Interest in respect of Floating Rate Notes for each Interest Accrual Period shall be determined in the manner specified hereon and the provisions below relating to either ISDA Determination or Screen Rate Determination shall apply, depending upon which is specified hereon.
(A) ISDA Determination for Floating Rate Notes where ISDA Determination is specified hereon as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Accrual Period shall be determined by the Calculation Agent as a rate equal to the relevant ISDA Rate. For the purposes of this sub-paragraph (A), " ISDA Rate " for an Interest Accrual Period means a rate equal to the Floating Rate that would be determined by the Calculation Agent under a Swap Transaction under the terms of an agreement incorporating the ISDA Definitions and under which:
- (x) the Floating Rate Option is as specified hereon;
- (y) the Designated Maturity is a period specified hereon; and
- (z) the relevant Reset Date is the first day of that Interest Accrual Period unless otherwise specified hereon.

For the purposes of this sub-paragraph (A), " Floating Rate ", " Calculation Agent ", " Floating Rate Option ", " Designated Maturity ", " Reset Date " and " Swap Transaction " have the meanings given to those terms in the ISDA Definitions.

(B) Screen Rate Determination for Floating Rate Notes (other than Floating Rate Notes where the Reference Rate is specified as being SOFR Benchmark)
(x) where Screen Rate Determination is specified hereon as the manner in which the Rate of Interest is to be determined where the Reference Rate is not SOFR Benchmark, the Rate of Interest for each Interest Accrual Period will, subject as provided below, be either:
- (1) the offered quotation; or
- (2) the arithmetic mean of the offered quotations,

(expressed as a percentage rate per annum) for the Reference Rate which appears or appear, as the case may be, on the Relevant Screen Page as at either 11.00 a.m. (Brussels time in the case of EURIBOR or Hong Kong time in the case of HIBOR) on the Interest Determination Date in question as determined by the Calculation Agent. If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Calculation Agent for the purpose of determining the arithmetic mean of such offered quotations.

If the Reference Rate from time to time in respect of Floating Rate Notes is specified hereon as being other than EURIBOR or HIBOR, the Rate of Interest in respect of such Notes will be determined as provided hereon;

(y) if the Relevant Screen Page is not available or if, sub-paragraph (x)(1) applies and no such offered quotation appears on the
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Relevant Screen Page or if sub-paragraph (x)(2) above applies and fewer than three such offered quotations appear on the Relevant Screen Page in each case as at the time specified above, subject as provided below, the Calculation Agent shall request, if the Reference Rate is EURIBOR, the principal Euro-zone office of each of the Reference Banks or, if the Reference Rate is HIBOR, the principal Hong Kong office of each of the Reference Banks, to provide the Calculation Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate if the Reference Rate is EURIBOR, at approximately 11.00 a.m. (Brussels time), or if the Reference Rate is HIBOR, at approximately 11.00 a.m. (Hong Kong time) on the Interest Determination Date in question. If two or more of the Reference Banks provide the Calculation Agent with such offered quotations, the Rate of Interest for such Interest Accrual Period shall be the arithmetic mean of such offered quotations as determined by the Calculation Agent; and

(z) if paragraph (y) above applies and the Calculation Agent determines that fewer than two Reference Banks are providing offered quotations, subject as provided below, the Rate of Interest shall be the arithmetic mean of the rates per annum (expressed as a percentage) as communicated to (and at the request of) the Calculation Agent by the Reference Banks or any two or more of them, at which such banks were offered, if the Reference Rate is EURIBOR, at approximately 11.00 a.m. (Brussels time) or, if the Reference Rate is HIBOR, at approximately 11.00 a.m. (Hong Kong time) on the relevant Interest Determination Date, deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate by leading banks in, if the Reference Rate is EURIBOR, the Euro-zone inter-bank market or, if the Reference Rate is HIBOR, the Hong Kong inter-bank market, as the case may be, or, if fewer than two of the Reference Banks provide the Calculation Agent with such offered rates, the offered rate for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, or the arithmetic mean of the offered rates for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, at which, if the Reference Rate is EURIBOR, at approximately 11.00 a.m. (Brussels time) or, if the Reference Rate is HIBOR, at approximately 11.00 a.m. (Hong Kong time), on the relevant Interest Determination Date, any one or more banks (which bank or banks is or are in the opinion of the Issuer suitable for such purpose) informs the Calculation Agent it is quoting to leading banks in, if the Reference Rate is EURIBOR, the Euro-zone inter-bank market or, if the Reference Rate is HIBOR, the Hong Kong inter-bank market, as the case may be, provided that , if the Rate of Interest cannot be determined in accordance with the foregoing provisions of this paragraph, the Rate of Interest shall be determined as at the last preceding Interest Determination Date (though substituting, where a different Margin or Maximum or Minimum Rate of Interest is to be applied to the relevant Interest Accrual Period from that which applied to the last preceding Interest Accrual Period, the Margin or Maximum or Minimum Rate of Interest relating to the relevant Interest Accrual Period, in place of the Margin or Maximum or Minimum Rate of Interest relating to that last preceding Interest Accrual Period).

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(C) Screen Rate Determination for Floating Rate Notes where the Reference Rate is specified as being SOFR Benchmark

Where Screen Rate Determination is specified hereon as the manner in which the Rate of Interest is to be determined where the Reference Rate is SOFR Benchmark, the Rate of Interest for each Interest Accrual Period will, subject as provided below, be equal to the relevant SOFR Benchmark plus or minus the Margin (if any) in accordance with Condition 5(g), all as determined by the Calculation Agent on the relevant Interest Determination Date.

The " SOFR Benchmark " will be determined based on Simple SOFR Average, Compounded Daily SOFR or Compounded SOFR Index, as follows (subject in each case to Condition 5(o) as further specified hereon):

(x) If Simple SOFR Average (" Simple SOFR Average ") is specified hereon as the manner in which the SOFR Benchmark will be determined, the SOFR Benchmark for each Interest Accrual Period shall be the arithmetic mean of the SOFR reference rates for each day during the period, as calculated by the Calculation Agent, and where, if applicable and as specified hereon, the SOFR reference rate on the SOFR Rate Cut-Off Date shall be used for the days in the period from (and including) the SOFR Rate Cut-Off Date to (but excluding) the Interest Period Date.
(y) If Compounded Daily SOFR (" Compounded Daily SOFR ") is specified hereon as the manner in which the SOFR Benchmark will be determined, the SOFR Benchmark for each Interest Accrual Period shall be equal to the compounded average of daily SOFR reference rates for each day during the relevant Interest Accrual Period (where SOFR Lag, SOFR Payment Delay or SOFR Lockout is specified as applicable hereon to determine Compounded Daily SOFR) or the SOFR Observation Period (where SOFR Observation Shift is specified as applicable hereon to determine Compounded Daily SOFR).

Compounded Daily SOFR shall be calculated by the Calculation Agent in accordance with one of the formulas referenced below depending upon which is specified as applicable hereon:

(1) SOFR Lag:

==> picture [189 x 38] intentionally omitted <==

with the resulting percentage being rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with 0.000005 per cent. being rounded upwards (e.g., 9.876541 per cent. (or 0.09876541) being rounded down to 9.87654 per cent. (or 0.0987654) and 9.876545 per cent. (or 0.09876545) being rounded up to 9.87655 per cent. (or 0.0987655)) and where:

" SOFRi-xUSBD " for any U.S. Government Securities Business Day(i) in the relevant Interest Accrual Period, is equal to the SOFR reference rate for the U.S. Government Securities Business Day falling the number of Lookback Days prior to that U.S. Government Securities Business Day(i);

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" Lookback Days " means such number of U.S. Government Securities Business Days as specified hereon;

" d " means the number of calendar days in the relevant Interest Accrual Period;

" do " means the number of U.S. Government Securities Business Days in the relevant Interest Accrual Period;

" i " means a series of whole numbers ascending from one to do, representing each relevant U.S. Government Securities Business Day from (and including) the first U.S. Government Securities Business Day in the relevant Interest Accrual Period (each a " U.S. Government Securities Business Day(i) "); and

" ni ", for any U.S. Government Securities Business Day(i), means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S. Government Securities Business Day.

(2) SOFR Observation Shift:

==> picture [161 x 38] intentionally omitted <==

" SOFRi " for any U.S. Government Securities Business Day(i) in the relevant SOFR Observation Period, is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i);

" SOFR Observation Period " means, in respect of an Interest Accrual Period, the period from (and including) the date falling the number of SOFR Observation Shift Days prior to the first day of such Interest Accrual Period to (but excluding) the date falling the number of SOFR Observation Shift Days prior to the Interest Period Date for such Interest Accrual Period;

" SOFR Observation Shift Days " means the number of U.S. Government Securities Business Days as specified hereon;

" d " means the number of calendar days in the relevant SOFR Observation Period;

" do " means the number of U.S. Government Securities Business Days in the relevant SOFR Observation Period;

" i " means a series of whole numbers ascending from one to do, representing each U.S. Government Securities Business Day from (and including) the first U.S. Government Securities Business Day in the relevant SOFR Observation Period (each a " U.S. Government Securities Business Day(i) "); and

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(3) SOFR Payment Delay:

==> picture [161 x 38] intentionally omitted <==

" SOFRi " for any U.S. Government Securities Business Day(i) in the relevant Interest Accrual Period, is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i);

" Interest Payment Date " shall be the number of Interest Payment Delay Days following each Interest Period Date; provided that the Interest Payment Date with respect to the final Interest Accrual Period will be the Maturity Date or, if the Issuer elects to redeem the Notes prior to the Maturity Date, the relevant Optional Redemption Date;

" Interest Payment Delay Days " means the number of Business Days as specified hereon;

" d " means the number of calendar days in the relevant Interest Accrual Period;

" do " means the number of U.S. Government Securities Business Days in the relevant Interest Accrual Period;

For the purposes of calculating Compounded Daily SOFR with respect to the final Interest Accrual Period where SOFR Payment Delay is specified hereon, the SOFR reference rate for each U.S. Government Securities Business Day in the period from (and including) the SOFR Rate Cut-Off Date to (but excluding) the Maturity Date or the relevant Optional Redemption Date, as applicable, shall be the SOFR reference rate in respect of such SOFR Rate Cut-Off Date.

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(4) SOFR Lockout:

==> picture [161 x 38] intentionally omitted <==

" SOFRi " for any U.S. Government Securities Business Day(i) in the relevant Interest Accrual Period, is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i), except that the SOFR for any U.S. Government Securities Business Day(i) in respect of the period from (and including) the SOFR Rate Cut-Off Date to (but excluding) the Interest Period Date for such Interest Accrual Period shall be the SOFR reference rate in respect of such SOFR Rate Cut-Off Date;

" d " means the number of calendar days in the relevant Interest Accrual Period;

" do " means the number of U.S. Government Securities Business Days in the relevant Interest Accrual Period;

The following defined terms shall have the meanings set out below for purpose of this Condition 5(b)(ii)(C)(x) and Condition5(b)(ii)(C)(y):

" Bloomberg Screen SOFRRATE Page " means the Bloomberg screen designated " SOFRRATE " or any successor page or service;

" Reuters Page USDSOFR= " means the Reuters page designated " USDSOFR= " or any successor page or service;

" SOFR " means, in respect of a U.S. Government Securities Business Day, the reference rate determined by the Calculation Agent in accordance with the following provision:

(i) the Secured Overnight Financing Rate published at the SOFR Determination Time as such reference rate is reported on the Bloomberg Screen SOFRRATE Page; the Secured Overnight Financing Rate published at the SOFR Determination Time as such reference rate is reported on the Reuters Page USDSOFR=; or the Secured Overnight Financing Rate published at the SOFR Determination Time on the SOFR Administrator's Website;
(ii) if the reference rate specified in (i) above does not appear and a SOFR Benchmark Transition Event and its related SOFR Benchmark Replacement Date have not
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occurred, the SOFR reference rate shall be the reference rate published on the SOFR Administrator's Website for the first preceding U.S. Government Securities Business Day for which SOFR was published on the SOFR Administrator's Website; or

(iii) if the reference rate specified in (i) above does not appear and a SOFR Benchmark Transition Event and its related SOFR Benchmark Replacement Date have occurred, the provisions set forth in Condition 5(o) shall apply as specified hereon;

" SOFR Rate Cut-Off Date " means the date that is a number of U.S. Government Securities Business Days prior to the end of each Interest Accrual Period, the Maturity Date or the relevant Optional Redemption Date, as applicable, as specified hereon; and

" SOFR Determination Time " means approximately 3:00 p.m. (New York City time) on the immediately following U.S. Government Securities Business Day.

(z) If Compounded SOFR Index (" Compounded SOFR Index ") is specified as applicable hereon, the SOFR Benchmark for each Interest Accrual Period shall be equal to the compounded average of daily SOFR reference rates for each day during the relevant SOFR Observation Period as calculated by the Calculation Agent as follows:

==> picture [140 x 25] intentionally omitted <==

" SOFR Index " means, in respect of a U.S. Government Securities Business Day, the SOFR Index value as published on the SOFR Administrator's Website at the SOFR Index Determination Time on such U.S. Government Securities Business Day, provided that :

(a) if the value specified above does not appear and a SOFR Benchmark Transition Event and its related SOFR Benchmark Replacement Date have not occurred, the "SOFR Index" shall be calculated on any Interest Determination Date with respect to an Interest Accrual Period, in accordance with the Compounded Daily SOFR formula described above in Condition 5(b)(ii)(C)(y)(2) " SOFR Observation Shift ", and the term " SOFR Observation Shift Days " shall mean two U.S. Government Securities Business Days; or
(b) if the value specified above does not appear and a SOFR Benchmark Transition Event and its related SOFR Benchmark Replacement Date have occurred, the provisions set forth in Condition 5(o) shall apply as specified hereon;

" SOFR IndexEnd " means, in respect of an Interest Accrual Period, the SOFR Index value on the date that is the number of U.S. Government Securities Business Days specified hereon prior to the Interest Period Date for such Interest Accrual Period (or in the final Interest Accrual Period, the Maturity Date);

" SOFR IndexStart " means, in respect of an Interest Accrual Period, the SOFR Index value on the date that is the number of U.S. Government Securities Business Days specified hereon prior to the first day of such Interest Accrual Period;

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" SOFR Index Determination Time " means, in respect of a U.S. Government Securities Business Day, approximately 3:00 p.m. (New York City time) on such U.S. Government Securities Business Day;

" SOFR Observation Shift Days " means the number of U.S. Government Securities Business Days as specified hereon; and

" dc " means the number of calendar days in the applicable SOFR Observation Period.

The following defined terms shall have the meanings set out below for purpose of this Condition 5(b)(ii)(C):

" SOFR Administrator's Website " means the website of the Federal Reserve Bank of New York, or any successor source;

" SOFR Benchmark Replacement Date " means the date of occurrence of a Benchmark Event with respect to the then-current SOFR Benchmark;

" SOFR Benchmark Transition Event " means the occurrence of a Benchmark Event with respect to the then-current SOFR Benchmark; and

" U.S. Government Securities Business Day " means any day except for a Saturday, a Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.

(iii) Rate of Interest for Index Linked Interest Notes: The Rate of Interest in respect of Index Linked Interest Notes for each Interest Accrual Period shall be determined in the manner specified hereon and interest will accrue by reference to an Index or Formula as specified hereon.
(c) Zero Coupon Notes : Where a Note the Interest Basis of which is specified to be Zero Coupon is repayable prior to the Maturity Date and is not paid when due, the amount due and payable prior to the Maturity Date shall be the Early Redemption Amount of such Note. As from the Maturity Date, the Rate of Interest for any overdue principal of such a Note shall be a rate per annum (expressed as a percentage) equal to the Amortisation Yield (as described in Condition 6(b)(i)).
(d) Dual Currency Notes : In the case of Dual Currency Notes, if the rate or amount of interest falls to be determined by reference to a Rate of Exchange or a method of calculating Rate of Exchange, the rate or amount of interest payable shall be determined in the manner specified hereon.
(e) Partly Paid Notes : In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero Coupon Notes), interest will accrue as aforesaid on the paid-up nominal amount of such Notes and otherwise as specified hereon.
(f) Accrual of Interest : Interest shall cease to accrue on each Note on the due date for redemption unless, upon due presentation, payment is improperly withheld or refused, in which event interest shall continue to accrue (both before and after judgment) at the Rate of Interest in the manner provided in this Condition 5 to the Relevant Date (as defined in Condition 8).
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(g) Margin, Maximum/Minimum Rates of Interest, Instalment Amounts and Redemption Amounts and Rounding:

(i) If any Margin is specified hereon (either (x) generally, or (y) in relation to one or more Interest Accrual Periods), an adjustment shall be made to all Rates of Interest, in the case of (x), or the Rates of Interest for the specified Interest Accrual Periods, in the case of (y), calculated in accordance with Condition 5(b) above by adding (if a positive number) or subtracting the absolute value (if a negative number) of such Margin, subject always to the next paragraph.
(ii) If any Maximum or Minimum Rate of Interest, Instalment Amount or Redemption Amount is specified hereon, then any Rate of Interest, Instalment Amount or Redemption Amount shall be subject to such maximum or minimum, as the case may be.
(iii) For the purposes of any calculations required pursuant to these Conditions (unless otherwise specified), (x) all percentages resulting from such calculations shall be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with halves being rounded up), (y) all figures shall be rounded to seven significant figures (with halves being rounded up) and (z) all currency amounts that fall due and payable shall be rounded to the nearest unit of such currency (with halves being rounded up), save in the case of yen, which shall be rounded down to the nearest yen. For these purposes " unit " means the lowest amount of such currency that is available as legal tender in the countries of such currency.
(h) Calculations : The amount of interest payable per Calculation Amount in respect of any Note for any Interest Accrual Period shall be equal to the product of the Rate of Interest, the Calculation Amount specified hereon, and the Day Count Fraction for such Interest Accrual Period, unless an Interest Amount (or a formula for its calculation) is applicable to such Interest Accrual Period, in which case the amount of interest payable per Calculation Amount in respect of such Note for such Interest Accrual Period shall equal such Interest Amount (or be calculated in accordance with such formula). Where any Interest Period comprises two or more Interest Accrual Periods, the amount of interest payable per Calculation Amount in respect of such Interest Period shall be the sum of the Interest Amounts payable in respect of each of those Interest Accrual Periods. In respect of any other period for which interest is required to be calculated, the provisions above shall apply save that the Day Count Fraction shall be for the period for which interest is required to be calculated.
(i) Determination and Publication of Rates of Interest, Interest Amounts, Final Redemption Amounts, Early Redemption Amounts, Optional Redemption Amounts and Instalment Amounts : The Calculation Agent shall, as soon as practicable on each Interest Determination Date, or such other time on such date as the Calculation Agent may be required to calculate any rate or amount, obtain any quotation or make any determination or calculation, determine such rate and calculate the Interest Amounts for the relevant Interest Accrual Period, calculate the Final Redemption Amount, Early Redemption Amount, Optional Redemption Amount or Instalment Amount, obtain such quotation or make such determination or calculation, as the case may be, and cause the Rate of Interest and the Interest Amounts for each Interest Accrual Period and the relevant Interest Payment Date and, if required to be calculated, the Final Redemption Amount, Early Redemption Amount, Optional Redemption Amount or any Instalment Amount to be notified to the Trustee, the Issuer, each of the Paying Agents, the Noteholders, any other Calculation Agent appointed in respect of the Notes that is to make a further calculation upon receipt of such information as soon as possible after their determination but in no event later than (i) the commencement of the relevant Interest Period, if determined prior to such time, in the case of notification to such exchange of a Rate of Interest and Interest Amount, or (ii) in all other cases, the fourth Business Day after such determination. Where any Interest Payment Date or Interest Period Date is subject to adjustment pursuant to Condition 5(m), the Interest Amounts and the Interest Payment Date so published may subsequently be amended (or appropriate alternative arrangements made with the consent of the Trustee by way of adjustment) without notice in the event of an extension or
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shortening of the Interest Period. If the Notes become due and payable under Condition 10, the accrued interest and the Rate of Interest payable in respect of the Notes shall nevertheless continue to be calculated as previously in accordance with this Condition 5 but no publication of the Rate of Interest or the Interest Amount so calculated need be made unless the Trustee otherwise requires. The determination of any rate or amount, the obtaining of each quotation and the making of each determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error) be final and binding upon all parties and the Noteholders.

(j) Determination or Calculation by Trustee : If the Calculation Agent does not at any time for any reason determine or calculate the Rate of Interest for an Interest Accrual Period or any Interest Amount, Instalment Amount, Final Redemption Amount, Early Redemption Amount or Optional Redemption Amount, the Trustee shall appoint an agent on its behalf to do so and such determination or calculation shall be deemed to have been made by the Calculation Agent. In doing so, the Trustee shall apply the foregoing provisions of this Condition 5, with any necessary consequential amendments, to the extent that, in its opinion, it can do so, and, in all other respects it shall do so in such manner as it shall deem fair and reasonable in all the circumstances.
(k) Definitions : In these Conditions, unless the context otherwise requires, the following defined terms shall have the meanings set out below:

" Business Day " means:

(i) in the case of a currency other than euro and Renminbi, a day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets settle payments in the principal financial centre for such currency; and/or
(ii) in the case of euro, a day on which the TARGET System is operating (a " TARGET Business Day "); and/or
(iii) in the case of Renminbi, a day (other than a Saturday, Sunday or public holiday) on which commercial banks in Hong Kong are generally open for business and settlement of Renminbi payments in Hong Kong; and/or
(iv) in the case of a currency and/or one or more Business Centres a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments in such currency in the Business Centre(s) or, if no currency is indicated, generally in each of the Business Centres.

" Day Count Fraction " means, in respect of the calculation of an amount of interest on any Note for any period of time (from and including the first day of such period to but excluding the last) (whether or not constituting an Interest Period or an Interest Accrual Period, the " Calculation Period "):

(i) if " Actual/Actual " or " Actual/Actual – ISDA " is specified hereon, the actual number of days in the Calculation Period divided by 365 (or, if any portion of that Calculation Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365)
(ii) if " Actual/365 (Fixed) " is specified hereon, the actual number of days in the Calculation Period divided by 365
(iii) if " Actual/360 " is specified hereon, the actual number of days in the Calculation Period divided by 360
(iv) if " 30/360 ", " 360/360 " or " Bond Basis " is specified hereon, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:

𝐷𝑎𝑦 𝐶𝑜𝑢𝑛𝑡 𝐹𝑟𝑎𝑐𝑡𝑖𝑜𝑛 =

[360 × (𝑌2 −𝑌1)] + [30 × (𝑀2 −𝑀1)] + (𝐷2 −𝐷1)

360

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where:

" Y1 " is the year, expressed as a number, in which the first day of the Calculation Period falls;
" Y2 " is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
" M1 " is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
" M2 " is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
" D1 " is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and
" D2 " is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30
(v) if " 30E/360 " or " Eurobond Basis " is specified hereon, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:

[360 × (𝑌2 −𝑌1)] + [30 × (𝑀2 −𝑀1)] + (𝐷2 −𝐷1)

𝐷𝑎𝑦 𝐶𝑜𝑢𝑛𝑡 𝐹𝑟𝑎𝑐𝑡𝑖𝑜𝑛 = 360

where:

" Y1 " is the year, expressed as a number, in which the first day of the Calculation Period falls;
" Y2 " is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
" M1 " is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
" M2 " is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
" D1 " is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and
" D2 " is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31, in which case D2 will be 30
(vi) if " 30E/360 (ISDA) " is specified hereon, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:

𝐷𝑎𝑦 𝐶𝑜𝑢𝑛𝑡 𝐹𝑟𝑎𝑐𝑡𝑖𝑜𝑛 =

[360 × (𝑌2 −𝑌1)] + [30 × (𝑀2 −𝑀1)] + (𝐷2 −𝐷1)

360

where:

" Y1 " is the year, expressed as a number, in which the first day of the Calculation Period falls;
" Y2 " is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
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" M1 " is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
" M2 " is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
" D1 " is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and
" D2 " is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D2 will be 30
(vii) if " Actual/Actual-ICMA " is specified hereon,
(a) if the Calculation Period is equal to or shorter than the Determination Period during which it falls, the number of days in the Calculation Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Periods normally ending in any year; and
(b) if the Calculation Period is longer than one Determination Period, the sum of:
- (x) the number of days in such Calculation Period falling in the Determination Period in which it begins divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Periods normally ending in any year; and
- (y) the number of days in such Calculation Period falling in the next Determination Period divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Periods normally ending in any year

where:

" Determination Period " means the period from and including a Determination Date in any year to but excluding the next Determination Date; and

" Determination Date " means the date(s) specified as such hereon or, if none is so specified, the Interest Payment Date(s).

" Euro-zone " means the region comprised of member states of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community, as amended.

" Interest Accrual Period " means the period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Period Date and each successive period beginning on (and including) an Interest Period Date and ending on (but excluding) the next succeeding Interest Period Date.

" Interest Amount " means:

(i) in respect of an Interest Accrual Period, the amount of interest payable per Calculation Amount for that Interest Accrual Period and which, in the case of Fixed Rate Notes, and unless otherwise specified hereon, shall mean the Fixed Coupon Amount or Broken Amount specified hereon as being payable on the Interest Payment Date ending the Interest Period of which such Interest Accrual Period forms part; and
(ii) in respect of any other period, the amount of interest payable per Calculation Amount for that period.
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" Interest Commencement Date " means the Issue Date or such other date as may be specified hereon.

" Interest Determination Date " means, with respect to a Rate of Interest and Interest Accrual Period, the date specified as such hereon or, if none is so specified:

(i) the first day of such Interest Accrual Period if the Specified Currency is Sterling or Hong Kong dollars; or
(ii) the day falling two Business Days in London for the Specified Currency prior to the first day of such Interest Accrual Period if the Specified Currency is neither Sterling nor euro nor Hong Kong dollars; or
(iii) the day falling two TARGET Business Days prior to the first day of such Interest Accrual Period if the Specified Currency is euro; or
(iv) (where SOFR Benchmark is specified hereon as the Reference Rate and where Simple SOFR Average is specified as applicable hereon or where SOFR Lag, SOFR Observation Shift or SOFR Lockout is specified as applicable hereon to determine Compounded Daily SOFR or where Compounded SOFR Index is specified as applicable hereon) the fifth U.S. Government Securities Business Day prior to the last day of each Interest Period; or
(v) (where SOFR Benchmark is specified hereon as the Reference Rate and where SOFR Payment Delay is specified as applicable hereon to determine Compounded Daily SOFR) the Interest Period Date at the end of each Interest Accrual Period, provided that the Interest Determination Date with respect to the final Interest Accrual Period will be the U.S. Government Securities Business Day immediately following the relevant SOFR Rate Cut-Off Date;

" Interest Period " means the period beginning on and including the Interest Commencement Date and ending on but excluding the first Interest Payment Date and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next succeeding Interest Payment Date.

" Interest Period Date " means each Interest Payment Date unless otherwise specified hereon.

" ISDA Definitions " means the 2006 ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc., unless otherwise specified hereon.

" Rate of Interest " means the rate of interest payable from time to time in respect of this Note and that is either specified or calculated in accordance with the provisions hereon.

" Reference Banks " means, in the case of a determination of EURIBOR, the principal Euro-zone office of four major banks in the Euro-zone inter-bank market and, in the case of a determination of HIBOR, the principal Hong Kong office of four major banks in the Hong Kong inter-bank market, in each case selected by the Calculation Agent or as specified hereon.

" Reference Rate " means the rate specified as such hereon.

" Relevant Screen Page " means such page, section, caption, column or other part of a particular information service as may be specified hereon.

" Specified Currency " means the currency specified as such hereon or, if none is specified, the currency in which the Notes are denominated.

" TARGET System " means the Trans-European Automated Real-Time Gross Settlement Express Transfer (known as TARGET2) System which was launched on 19 November 2007 or any successor thereto.

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(l) Calculation Agents : The Issuer shall procure that there shall at all times be one or more Calculation Agents if provision is made for it or them hereon and for so long as any Note is outstanding (as defined in the Trust Deed). Where more than one Calculation Agent is appointed in respect of the Notes, references in these Conditions to the Calculation Agent shall be construed as each Calculation Agent performing its respective duties under the Conditions. If the Calculation Agent is unable or unwilling to act as such or if the Calculation Agent fails duly to establish the Rate of Interest for an Interest Accrual Period or to calculate any Interest Amount, Instalment Amount, Final Redemption Amount, Early Redemption Amount or Optional Redemption Amount, as the case may be, or to comply with any other requirement, the Issuer shall (with the prior approval of the Trustee) appoint a leading bank or financial institution engaged in the interbank market (or, if appropriate, money, swap or over-the-counter index options market) that is most closely connected with the calculation or determination to be made by the Calculation Agent (acting through its principal London office or any other office actively involved in such market) to act as such in its place. The Calculation Agent may not resign its duties without a successor having been appointed as aforesaid.
(m) Business Day Convention : If any date referred to in these Conditions that is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day that is not a Business Day, then, if the Business Day Convention specified is (A) the Floating Rate Business Day Convention, such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month, in which event (x) such date shall be brought forward to the immediately preceding Business Day and (y) each subsequent such date shall be the last Business Day of the month in which such date would have fallen had it not been subject to adjustment, (B) the Following Business Day Convention, such date shall be postponed to the next day that is a Business Day, (C) the Modified Following Business Day Convention, such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month, in which event such date shall be brought forward to the immediately preceding Business Day or (D) the Preceding Business Day Convention, such date shall be brought forward to the immediately preceding Business Day.

(n) Benchmark Discontinuation (General):

Where this Condition 5(n) is specified as applicable hereon:

(i) Independent Adviser

If a Benchmark Event occurs in relation to an Original Reference Rate when any Rate of Interest (or any component part thereof) remains to be determined by reference to such Original Reference Rate the Issuer shall use its reasonable endeavours to appoint an Independent Adviser, as soon as reasonably practicable, to determine a Successor Rate, failing which an Alternative Rate (in accordance with Condition 5(n)(ii)) and, in either case, an Adjustment Spread and any Benchmark Amendments (in accordance with Condition 5(n)(iv)). In making such determination, the Independent Adviser appointed pursuant to this Condition 5(n) shall act in good faith and in a commercially reasonable manner as an expert and in consultation with the Issuer. In the absence of bad faith or fraud, the Independent Adviser shall have no liability whatsoever to the Issuer, the Trustee, the Paying Agents, the Noteholders, the Receiptholders or the Couponholders for any determination made by it, pursuant to this Condition 5(n).

If (A) the Issuer is unable to appoint an Independent Adviser; or (B) the Independent Adviser appointed by it fails to determine a Successor Rate or, failing which, an Alternative Rate in accordance with this Condition 5(n)(i) prior to the date which is 10 business days prior to the relevant Interest Determination Date, the Rate of Interest applicable to the next succeeding Interest Accrual Period shall be equal to the Rate of Interest last determined in relation to the Notes in respect of the immediately preceding Interest Accrual Period. If there has not been a first Interest Payment Date, the Rate of Interest shall be determined using the Original Reference Rate last displayed on the relevant Screen Page prior to

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the relevant Interest Determination Date. Where a different Margin or Maximum or Minimum Rate of Interest is to be applied to the relevant Interest Accrual Period from that which applied to the last preceding Interest Accrual Period, the Margin or Maximum or Minimum Rate of Interest relating to the relevant Interest Accrual Period shall be substituted in place of the Margin or Maximum or Minimum Rate of Interest relating to that last preceding Interest Accrual Period. For the avoidance of doubt, this paragraph shall apply to the relevant next succeeding Interest Accrual Period only and any subsequent Interest Accrual Periods are subject to the subsequent operation of, and to adjustment as provided in, the first paragraph of this Condition 5(n)(i).

(ii) Successor Rate or Alternative Rate

If the Independent Adviser determines that:

(A) there is a Successor Rate, then such Successor Rate and the applicable Adjustment Spread shall subsequently be used in place of the Original Reference Rate to determine the Rate of Interest (or the relevant component part thereof) for all future payments of interest on the Notes (subject to the operation of this Condition 5(n)); or
(B) there is no Successor Rate but that there is an Alternative Rate, then such Alternative Rate and the applicable Adjustment Spread shall subsequently be used in place of the Original Reference Rate to determine the Rate of Interest (or the relevant component part thereof) for all future payments of interest on the Notes (subject to the operation of this Condition 5(n)).
(iii) Adjustment Spread

The Adjustment Spread (or the formula or methodology for determining the Adjustment Spread) shall be applied to the Successor Rate or the Alternative Rate (as the case may be). If the Independent Adviser is unable to determine the quantum of, or a formula or methodology for determining, such Adjustment Spread, then the Successor Rate or Alternative Rate (as applicable) will apply without an Adjustment Spread.

(iv)

Benchmark Amendments

If any Successor Rate or Alternative Rate and, in either case, the applicable Adjustment Spread is determined in accordance with this Condition 5(n) and the Independent Adviser (in consultation with the Issuer), determines (A) that amendments to these Conditions and/or the Trust Deed/Agency Agreement are necessary to ensure the proper operation of such Successor Rate or Alternative Rate and/or (in either case) the applicable Adjustment Spread (such amendments, the " Benchmark Amendments ") and (B) the terms of the Benchmark Amendments, then the Issuer shall, subject to giving notice thereof in accordance with Condition 5(n)(v), without any requirement for the consent or approval of Noteholders, vary these Conditions and/or the Trust Deed/Agency Agreement to give effect to such Benchmark Amendments with effect from the date specified in such notice.

At the request of the Issuer, but subject to receipt by the Trustee of a certificate signed by two Authorised Signatories of the Issuer pursuant to Condition 5(n)(v), the Trustee shall (at the expense of the Issuer), without any requirement for the consent or approval of the Noteholders, be obliged to concur with the Issuer in effecting any Benchmark Amendments (including , inter alia , by the execution of a deed supplemental to or amending the Trust Deed), provided that the Trustee shall not be obliged so to concur if in the opinion of the Trustee doing so would impose more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce or amend the protective provisions afforded

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to the Trustee in these Conditions or the Trust Deed (including, for the avoidance of doubt, any supplemental trust deed) in any way.

Notwithstanding any other provision of this Condition 5(n), the Calculation Agent or any Paying Agent is not obliged to concur with the Issuer or the Independent Adviser in respect of any changes or amendments as contemplated under this Condition 5(n) to which, in the sole opinion of the Calculation Agent or the relevant Paying Agent, as the case may be, would impose more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce or amend the protective provisions afforded to the Calculation Agent or the relevant Paying Agent (as applicable) in the Agency Agreement and/or these Conditions.

In connection with any such variation in accordance with this Condition 5(n)(iv), the Issuer shall comply with the rules of any stock exchange on which the Notes are for the time being listed or admitted to trading.

(v) Notices, etc.

Any Successor Rate, Alternative Rate, Adjustment Spread and the specific terms of any Benchmark Amendments determined under this Condition 5(n) will be notified at least 10 business days prior to the relevant Interest Determination Date by the Issuer to the Trustee, the Calculation Agent, the Paying Agents and, in accordance with Condition 17, the Noteholders. Such notice shall be irrevocable and shall specify the effective date of the Benchmark Amendments, if any.

No later than notifying the Noteholders of the same, the Issuer shall deliver to the Trustee, the Calculation Agent and the Paying Agents a certificate signed by two Authorised Signatories of the Issuer:

(A) confirming (a) that a Benchmark Event has occurred, (b) the Successor Rate or, as the case may be, the Alternative Rate, (c) the applicable Adjustment Spread and (d) the specific terms of the Benchmark Amendments (if any), in each case as determined in accordance with the provisions of this Condition 5(n); and
(B) certifying that the Benchmark Amendments (if any) are necessary to ensure the proper operation of such Successor Rate or Alternative Rate and (in either case) the applicable Adjustment Spread.

Each of the Trustee, the Calculation Agent and the Paying Agents shall be entitled to rely on such certificate (without liability to any person) as sufficient evidence thereof. The Successor Rate or Alternative Rate and the Adjustment Spread and the Benchmark Amendments (if any) specified in such certificate will (in the absence of manifest error or bad faith in the determination of the Successor Rate or Alternative Rate and the Adjustment Spread and the Benchmark Amendments (if any) and without prejudice to the Trustee's or the Calculation Agent's or the Paying Agents' ability to rely on such certificate as aforesaid) be binding on the Issuer, the Trustee, the Calculation Agent, the Paying Agents and the Noteholders.

Notwithstanding any other provision of this Condition 5(n), if following the determination of any Successor Rate, Alternative Rate, Adjustment Spread or Benchmark Amendments (if any), in the Calculation Agent's opinion there is any uncertainty between two or more alternative courses of action in making any determination or calculation under this Condition 5(n), the Calculation Agent shall promptly notify the Issuer thereof and the Issuer shall direct the Calculation Agent in writing as to which alternative course of action to adopt. If the Calculation Agent is not promptly provided with such direction, or is otherwise unable (other than due to its own gross negligence, willful default or fraud) to make such calculation or determination for any reason, it shall notify the Issuer

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thereof and the Calculation Agent shall be under no obligation to make such calculation or determination and (in the absence of such gross negligence, willful default or fraud) shall not incur any liability for not doing so.

(vi) Survival of Original Reference Rate

Without prejudice to the obligations of the Issuer under Condition 5(n)(i), (ii), (iii) and (iv), the Original Reference Rate and the fallback provisions provided for in Condition 5(b)(ii) will continue to apply unless and until a Benchmark Event has occurred.

(vii) Definitions:

As used in this Condition 5(n):

" Adjustment Spread " means either (a) a spread (which may be positive, negative or zero) or (b) a formula or methodology for calculating a spread, in each case to be applied to the Successor Rate or the Alternative Rate (as the case may be) and is the spread, formula or methodology which:

(A) in the case of a Successor Rate, is formally recommended in relation to the replacement of the Original Reference Rate with the Successor Rate by any Relevant Nominating Body; or (if no such recommendation has been made, or in the case of an Alternative Rate);
(B) the Independent Adviser determines (in consultation with the Issuer), is customarily applied to the relevant Successor Rate or the Alternative Rate (as the case may be) in international debt capital markets transactions to produce an industry-accepted replacement rate for the Original Reference Rate; or (if the Independent Adviser determines that no such spread is customarily applied);
(C) the Independent Adviser determines (in consultation with the Issuer) is recognised or acknowledged as being the industry standard for over-thecounter derivative transactions which reference the Original Reference Rate, where such rate has been replaced by the Successor Rate or the Alternative Rate (as the case may be).

" Alternative Rate " means an alternative benchmark or screen rate which the Independent Adviser determines in accordance with Condition 5(n)(ii) is customarily applied in international debt capital markets transactions for the purposes of determining rates of interest (or the relevant component part thereof) in the same Specified Currency as the Notes.

" Benchmark Amendments " has the meaning given to it in Condition 5(n)(iv).

" Benchmark Event " means:

(A) the Original Reference Rate ceasing to be published for a period of at least five Business Days or ceasing to exist; or
(B) a public statement by the administrator of the Original Reference Rate that it has ceased or that it will cease publishing the Original Reference Rate permanently or indefinitely (in circumstances where no successor administrator has been appointed that will continue publication of the Original Reference Rate); or
(C) a public statement by the supervisor of the administrator of the Original Reference Rate, that the Original Reference Rate has been or will be permanently or indefinitely discontinued; or
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(D) a public statement by the supervisor of the administrator of the Original Reference Rate as a consequence of which the Original Reference Rate will be prohibited from being used either generally, or in respect of the Notes; or
(E) the making of a public statement by the supervisor of the administrator of the Original Reference Rate that the Original Reference Rate is or will be (or is or will be deemed by such supervisor to be) no longer representative of its relevant underlying market; or
(F) it has become unlawful for any Paying Agent, the Calculation Agent, the Issuer or other party to calculate any payments due to be made to any Noteholder using the Original Reference Rate;

provided that the Benchmark Event shall be deemed to occur (a) in the case of sub-paragraphs (B) and (C) above, on the date of the cessation of publication of the Original Reference Rate or the discontinuation of the Original Reference Rate, as the case may be, (b) in the case of sub-paragraph (D) above, on the date of the prohibition of use of the Original Reference Rate and (c) in the case of subparagraph (E) above, on the date with effect from which the Original Reference Rate will no longer be (or will be deemed by the relevant supervisor to no longer be) representative of its relevant underlying market and which is specified in the relevant public statement, and, in each case, not the date of the relevant public statement.

The occurrence of a Benchmark Event shall be determined by the Issuer and promptly notified to the Trustee, the Calculation Agent and the Paying Agents. For the avoidance of doubt, neither the Trustee, the Calculation Agent nor the Paying Agents shall have any responsibility for making such determination.

" business day " means a day, other than a Saturday or Sunday, on which banks are open for business in the place of the specified office of the Calculation Agent.

" Independent Adviser " means an independent financial institution of international repute or an independent financial adviser with appropriate expertise appointed by the Issuer under Condition 5(n)(i).

" Original Reference Rate " means the originally-specified benchmark or screen rate (as applicable) used to determine the Rate of Interest (or any component part thereof) on the Notes.

" Relevant Nominating Body " means, in respect of a benchmark or screen rate (as applicable):

(A) the central bank for the currency to which the benchmark or screen rate (as applicable) relates, or any central bank or other supervisory authority which is responsible for supervising the administrator of the benchmark or screen rate (as applicable); or
(B) any working group or committee sponsored by, chaired or co-chaired by or constituted at the request of (a) the central bank for the currency to which the benchmark or screen rate (as applicable) relates, (b) any central bank or other supervisory authority which is responsible for supervising the administrator of the benchmark or screen rate (as applicable), (c) a group of the aforementioned central banks or other supervisory authorities or (d) the Financial Stability Board or any part thereof.

" Successor Rate " means a successor to or replacement of the Original Reference Rate which is formally recommended by any Relevant Nominating Body.

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(o) Benchmark Discontinuation (SOFR):

This Condition 5(o) shall only apply to U.S. dollar-denominated Notes where so specified hereon.

The following provisions shall apply if Benchmark Discontinuation (SOFR) is specified as applicable hereon:

(i) Benchmark Replacement

If the Issuer or its designee determines on or prior to the relevant Reference Time that a Benchmark Event and its related Benchmark Replacement Date have occurred with respect to the-then current Benchmark, the Benchmark Replacement will replace the then-current Benchmark for all purposes relating to the Notes in respect of all determinations on such date and for all determinations on all subsequent dates.

(ii) Benchmark Replacement Conforming Changes

In connection with the implementation of a Benchmark Replacement, the Issuer or its designee will have the right to make Benchmark Replacement Conforming Changes from time to time. For the avoidance of doubt, the Trustee and any of the Agents shall, at the direction and expense of the Issuer, effect such consequential amendments to the Trust Deed, the Agency Agreement and these Conditions as may be required to give effect to this Condition 5(o). Noteholders' consent shall not be required in connection with effecting any such changes, including the execution of any documents or any steps to be taken by the Trustee or any of the Agents (if required). Further, none of the Trustee, the Calculation Agent, the Paying Agents, the Registrars or the Transfer Agents shall be responsible or liable for any determinations, decisions or elections made by the Issuer or its designee with respect to any Benchmark Replacement or any other changes and shall be entitled to rely conclusively on any certifications provided to each of them in this regard.

(iii) Decisions and Determinations

Any determination, decision or election that may be made by the Issuer or its designee pursuant to this Condition 5(o), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection (A) will be conclusive and binding absent manifest error, (B) will be made in the sole discretion of the Issuer or its designee, as applicable, and (C) notwithstanding anything to the contrary in the documentation relating to the Notes, shall become effective without consent from the holders of the Notes or any other party.

(iv) The following defined terms shall have the meanings set out below for purpose of this Condition 5(o):

" Benchmark " means, initially, the relevant SOFR Benchmark specified hereon; provided that if the Issuer or its designee determines on or prior to the Reference Time that a Benchmark Event and its related Benchmark Replacement Date have occurred with respect to the relevant SOFR Benchmark (including any daily published component used in the calculation thereof) or the then-current Benchmark, then " Benchmark " means the applicable Benchmark Replacement;

" Benchmark Event " means the occurrence of one or more of the following events with respect to the then-current Benchmark (including any daily published component used in the calculation thereof):

(A) a public statement or publication of information by or on behalf of the administrator of the Benchmark (or such component) announcing that
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such administrator has ceased or will cease to provide the Benchmark (or such component), permanently or indefinitely, provided that , at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark (or such component); or

(B) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark (or such component), the central bank for the currency of the Benchmark (or such component), an insolvency official with jurisdiction over the administrator for the Benchmark (or such component), a resolution authority with jurisdiction over the administrator for the Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for the Benchmark, which states that the administrator of the Benchmark (or such component) has ceased or will cease to provide the Benchmark (or such component) permanently or indefinitely, provided that , at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark (or such component); or

(C) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark announcing that the Benchmark is no longer representative;

" Benchmark Replacement " means the first alternative set forth in the order below that can be determined by the Issuer or its designee as of the Benchmark Replacement Date:

(A) the sum of:
(x) the alternate reference rate that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark (including any daily published component used in the calculation thereof); and
(y) the Benchmark Replacement Adjustment;
(B) the sum of:
(x) the ISDA Fallback Rate; and
(y) the Benchmark Replacement Adjustment; or
(C) the sum of:
(x) the alternate reference rate that has been selected by the Issuer or its designee as the replacement for the then-current Benchmark (including any daily published component used in the calculation thereof) giving due consideration to any industryaccepted reference rate as a replacement for the then-current Benchmark (including any daily published component used in the calculation thereof) for U.S. dollar-denominated Floating Rate Notes at such time; and
(y) the Benchmark Replacement Adjustment;

" Benchmark Replacement Adjustment " means the first alternative set forth in the order below that can be determined by the Issuer or its designee as of the Benchmark Replacement Date:

(A) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been
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selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement;

(B) if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, the ISDA Fallback Adjustment; or
(C) the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Issuer or its designee giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark (including any daily published component used in the calculation thereof) with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated Floating Rate Notes at such time;

" Benchmark Replacement Conforming Changes " means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the timing and frequency of determining rates and making payments of interest, rounding of amounts or tenors, and other administrative matters) the Issuer or its designee decides may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market practice (or, if the Issuer or its designee decides that adoption of any portion of such market practice is not administratively feasible or if the Issuer or its designee determine that no market practice for use of the Benchmark Replacement exists, in such other manner as the Issuer or its designee determines is reasonably necessary);

" Benchmark Replacement Date " means the earliest to occur of the following events with respect to the then-current Benchmark (including any daily published component used in the calculation thereof):

(A) in the case of sub-paragraph (A) or (B) of the definition of " Benchmark Event ", the later of:
(x) the date of the public statement or publication of information referenced therein; and
(y) the date on which the administrator of the Benchmark permanently or indefinitely ceases to provide the Benchmark (or such component); or
(B) in the case of sub-paragraph (C) of the definition of " Benchmark Event ", the date of the public statement or publication of information referenced therein.

For the avoidance of doubt, if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination;

" designee " means a designee as selected and separately appointed by the Issuer in writing;

" ISDA Definitions " means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time;

" ISDA Fallback Adjustment " means the spread adjustment (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark;

" ISDA Fallback Rate " means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark (including any daily published component used in the

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calculation thereof) for the applicable tenor excluding the applicable ISDA Fallback Adjustment;

" Reference Time " with respect to any determination of the Benchmark means (A) if the Benchmark is the SOFR Benchmark, the SOFR Determination Time (where Simple SOFR Average or Compounded Daily SOFR is specified as applicable hereon) or SOFR Index Determination Time (where Compounded SOFR Index is specified as applicable hereon), or (B) if the Benchmark is not the SOFR Benchmark, the time determined by the Issuer or its designee after giving effect to the Benchmark Replacement Conforming Changes;

" Relevant Governmental Body " means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto; and

" Unadjusted Benchmark Replacement " means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.

6. Redemption, Purchase and Options

(a) Redemption by Instalments and Final Redemption:
(i) Unless previously redeemed, purchased and cancelled as provided in this Condition 6, each Note that provides for Instalment Dates and Instalment Amounts shall be partially redeemed on each Instalment Date at the related Instalment Amount specified hereon. The outstanding nominal amount of each such Note shall be reduced by the Instalment Amount (or, if such Instalment Amount is calculated by reference to a proportion of the nominal amount of such Note, such proportion) for all purposes with effect from the related Instalment Date, unless payment of the Instalment Amount is improperly withheld or refused, in which case, such amount shall remain outstanding until the Relevant Date relating to such Instalment Amount.
(ii) Unless previously redeemed, purchased and cancelled as provided below, each Note shall be finally redeemed on the Maturity Date specified hereon at its Final Redemption Amount (which, unless otherwise provided hereon, is its nominal amount) or, in the case of a Note falling within paragraph (i) above, its final Instalment Amount.

(b) Early Redemption:

(i) Zero Coupon Notes:
(A) The Early Redemption Amount payable in respect of any Zero Coupon Note, the Early Redemption Amount of which is not linked to an index and/or a formula, upon redemption of such Note pursuant to Condition 6(c) or upon it becoming due and payable as provided in Condition 10 shall be the Amortised Face Amount (calculated as provided below) of such Note unless otherwise specified hereon.
(B) Subject to the provisions of sub-paragraph (C) below, the Amortised Face Amount of any such Note shall be the scheduled Final Redemption Amount of such Note on the Maturity Date discounted at a rate per annum (expressed as a percentage) equal to the Amortisation Yield (which, if none is shown hereon, shall be such rate as would produce an Amortised Face Amount equal to the issue price of the Notes if they were discounted back to their issue price on the Issue Date) compounded annually.
(C) If the Early Redemption Amount payable in respect of any such Note upon its redemption pursuant to Condition 6(c) or upon it becoming due and payable as provided in Condition 10 is not paid when due, the Early
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Redemption Amount due and payable in respect of such Note shall be the Amortised Face Amount of such Note as defined in sub-paragraph (B) above, except that such sub-paragraph shall have effect as though the date on which the Note becomes due and payable were the Relevant Date. The calculation of the Amortised Face Amount in accordance with this sub-paragraph shall continue to be made (both before and after judgment) until the Relevant Date, unless the Relevant Date falls on or after the Maturity Date, in which case the amount due and payable shall be the scheduled Final Redemption Amount of such Note on the Maturity Date together with any interest that may accrue in accordance with Condition 5(c).

Where such calculation is to be made for a period of less than one year, it shall be made on the basis of the Day Count Fraction shown hereon.

(ii) Other Notes : The Early Redemption Amount payable in respect of any Note (other than Notes described in (i) above), upon redemption of such Note pursuant to Condition 6(c) or upon it becoming due and payable as provided in Condition 10, shall be the Final Redemption Amount unless otherwise specified hereon.
(c) Redemption for Taxation Reasons : The Notes may be redeemed at the option of the Issuer in whole, but not in part, on any Interest Payment Date (if this Note is either a Floating Rate Note or an Index Linked Note) or at any time (if this Note is neither a Floating Rate Note nor an Index Linked Note), on giving not less than 30 nor more than 60 days' notice to the Noteholders (which notice shall be irrevocable) at their Early Redemption Amount (as described in Condition 6(b) above) (together with interest accrued to the date fixed for redemption), if (i) the Issuer satisfies the Trustee immediately before the giving of such notice that it has or will become obliged to pay additional amounts as described under Condition 8 as a result of any change in, or amendment to, the laws or regulations of Hong Kong or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Notes, and (ii) such obligation will apply on the occasion of the next payment due in respect of the Notes and cannot be avoided by the Issuer taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a payment in respect of the Notes then due. Prior to the publication of any notice of redemption pursuant to this Condition 6(c), the Issuer shall deliver to the Trustee a certificate signed by two Authorised Signatories of the Issuer stating that the obligation referred to in (i) above cannot be avoided by the Issuer taking reasonable measures available to it, and an opinion of independent legal or tax advisors of recognised international standing to the effect that such change or amendment has occurred (irrespective of whether such amendment or change is then effective) and the Trustee shall be entitled without further enquiry to accept such certificate as sufficient evidence of the satisfaction of the condition precedent set out in (ii) above, in which event it shall be conclusive and binding on Noteholders and Couponholders.
(d) Redemption at the Option of the Issuer : If Call Option is specified hereon, the Issuer may, on giving not less than 15 nor more than 30 days' irrevocable notice to the Noteholders (or such other notice period as may be specified hereon) redeem all or, if so provided, some of the Notes on any Optional Redemption Date. Any such redemption of Notes shall be at their Optional Redemption Amount together with interest accrued to the date fixed for redemption. Any such redemption or exercise must relate to Notes of a nominal amount at least equal to the Minimum Redemption Amount to be redeemed specified hereon and no greater than the Maximum Redemption Amount to be redeemed specified hereon.

All Notes in respect of which any such notice is given shall be redeemed on the date specified in such notice in accordance with this Condition 6(d).

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In the case of a partial redemption the notice to Noteholders shall also contain the certificate numbers of the Bearer Notes, or in the case of Registered Notes shall specify the nominal amount of Registered Notes drawn and the holder(s) of such Registered Notes, to be redeemed, which shall have been drawn in such place and in such manner as determined by the Issuer and notified in writing to the Trustee, subject to compliance with any applicable laws and stock exchange or other relevant authority requirements.

(e) Redemption at the Option of Noteholders : If Put Option is specified hereon, the Issuer shall, at the option of the holder of any such Note, upon the holder of such Note giving not less than 15 nor more than 30 days' notice to the Issuer (or such other notice period as may be specified hereon) redeem such Note on the Optional Redemption Date(s) at its Optional Redemption Amount together with interest accrued to the date fixed for redemption.

To exercise such option the holder must deposit (in the case of Bearer Notes) such Note (together with all unmatured Receipts and Coupons and unexchanged Talons) with any Paying Agent or (in the case of Registered Notes) the Certificate representing such Note(s) with the Registrar or any Transfer Agent at its specified office, together with a duly completed option exercise notice (" Exercise Notice ") in the form obtainable from any Paying Agent, the Registrar or any Transfer Agent (as applicable) within the notice period. No Note or Certificate so deposited and option exercised may be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer.

(f) Partly Paid Notes : Partly Paid Notes will be redeemed, whether at maturity, early redemption or otherwise, in accordance with the provisions of this Condition 6 and the provisions specified hereon.
(g) Purchases : The Issuer and its Subsidiaries as defined in the Trust Deed may at any time purchase Notes ( provided that all unmatured Receipts and Coupons and unexchanged Talons relating thereto are attached thereto or surrendered therewith) in the open market or otherwise at any price.
(h) Cancellation : All Notes purchased by or on behalf of the Issuer or any of its Subsidiaries may be surrendered for cancellation, in the case of Bearer Notes, by surrendering each such Note together with all unmatured Receipts and Coupons and all unexchanged Talons to the Issuing and Paying Agent and, in the case of Registered Notes, by surrendering the Certificate representing such Notes to the Registrar and, in each case, if so surrendered, shall, together with all Notes redeemed by the Issuer, be cancelled forthwith (together with all unmatured Receipts and Coupons and unexchanged Talons attached thereto or surrendered therewith). Any Notes so surrendered for cancellation may not be reissued or resold and the obligations of the Issuer in respect of any such Notes shall be discharged.
Payments and Talons
(a) Bearer Notes : Payments of principal and interest in respect of Bearer Notes shall, subject as mentioned below, be made against presentation and surrender of the relevant Receipts (in the case of payments of Instalment Amounts other than on the due date for redemption and provided that the Receipt is presented for payment together with its relative Note), Notes (in the case of all other payments of principal and, in the case of interest, as specified in Condition 7(f)(vi)) or Coupons (in the case of interest, save as specified in Condition 7(f)(ii)), as the case may be:
- (i) in the case of a currency other than Renminbi, at the specified office of any Paying Agent outside the United States by a cheque payable in the relevant currency drawn on, or, at the option of the holder, by transfer to an account denominated in such currency with, a Bank; and
- (ii) in the case of Renminbi, by transfer to a Renminbi account maintained by or on behalf of the Noteholder with a bank in Hong Kong.
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In this paragraph, " Bank " means a bank in the principal financial centre for such currency or, in the case of euro, in a city in which banks have access to the TARGET System.

Payments of principal and interest in respect of Bearer Notes held in the CMU will be made to the CMU for their distribution to the person(s) for whose account(s) interests in the relevant Bearer Note are credited as being held with the CMU in accordance with the CMU Rules (as defined in the Agency Agreement) at the relevant time and payment made in accordance thereof shall discharge the obligations of the Issuer in respect of that payment.

(b) Registered Notes:

(i) Payments of principal (which for the purposes of this Condition 7(b) shall include final Instalment Amounts but not other Instalment Amounts) in respect of Registered Notes shall be made against presentation and surrender of the relevant Certificates at the specified office of any of the Transfer Agents or of the Registrar and in the manner provided in paragraph (ii) below.
(ii) Interest (which for the purpose of this Condition 7(b) shall include all Instalment Amounts other than final Instalment Amounts) on Registered Notes shall be paid to the person shown on the Register at the close of business on the fifth (in the case of Renminbi) and fifteenth (in the case of a currency other than Renminbi) day before the due date for payment thereof (the " Record Date "). Payments of interest on each Registered Note shall be made:
(x) in the case of a currency other than Renminbi, in the relevant currency by cheque drawn on a Bank and mailed to the holder (or to the first named of joint holders) of such Note at its address appearing in the Register. Upon application by the holder to the specified office of the Registrar or any Transfer Agent before the Record Date, such payment of interest may be made by transfer to an account in the relevant currency maintained by the payee with a Bank; and
(y) in the case of Renminbi, by transfer to the registered account of the Noteholder.

In this paragraph, " registered account " means the Renminbi account maintained by or on behalf of the Noteholder with a bank in Hong Kong, details of which appear on the Register at the close of business on the fifth business day before the due date for payment.

Payments of principal and interest in respect of Registered Notes held in the CMU will be made to the person(s) for whose account(s) interests in the relevant Registered Note are credited as being held with the CMU in accordance with the CMU Rules at the relevant time and payment made in accordance thereof shall discharge the obligations of the Issuer in respect of that payment.

So long as the Global Note or, as the case may be, the Global Certificate is held on behalf of Euroclear Bank SA/NV and Clearstream Banking S.A. or any other clearing system, each payment in respect of the Global Certificate will be made to the person shown as the holder in the Register at the close of business of the relevant clearing system on the Clearing System Business Day before the due date for such payments, where " Clearing System Business Day " means a weekday (Monday to Friday, inclusive) except 25 December and 1 January.

(c) Payments in the United States : Notwithstanding the foregoing, if any Bearer Notes are denominated in U.S. dollars, payments in respect thereof may be made at the specified office of any Paying Agent in New York City in the same manner as aforesaid if (i) the Issuer shall have appointed Paying Agents with specified offices outside the United States with the reasonable expectation that such Paying Agents would be able to make payment of the amounts on the Notes in the manner provided above when due, (ii) payment in full of such amounts at all such offices is illegal or effectively precluded by exchange controls
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or other similar restrictions on payment or receipt of such amounts and (iii) such payment is then permitted by United States law, without involving, in the opinion of the Issuer, any adverse tax consequence to the Issuer.

(d) Payments subject to Fiscal Laws : All payments are subject in all cases to (i) any applicable fiscal or other laws, regulations and directives, but without prejudice to the provisions of Condition 8 and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the " Code ") or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or (without prejudice to the provisions of Condition 8) any law implementing an intergovernmental approach thereto. No commission or expenses shall be charged to the Noteholders or Couponholders in respect of such payments.
(e) Appointment of Agents : The Issuing and Paying Agents, the CMU Lodging and Paying Agent, the Paying Agents, the Registrar, the Transfer Agents and the Calculation Agents initially appointed by the Issuer and their respective specified offices are listed below. The Issuing and Paying Agent, the CMU Lodging and Paying Agent, the Paying Agents, the Registrar, the Transfer Agents, any Exchange Agent appointed under the Agency Agreement and the Calculation Agents act solely as agents of the Issuer and do not assume any obligation or relationship of agency or trust for or with any Noteholder or Couponholder. The Issuer reserves the right at any time with the approval of the Trustee to vary or terminate the appointment of the Issuing and Paying Agent, the CMU Lodging and Paying Agent, any other Paying Agent, the Registrar, any Transfer Agent, any Exchange Agent or any Calculation Agent and to appoint additional or other Paying Agents or Transfer Agents, in each case in accordance with the Agency Agreement, provided that the Issuer shall at all times maintain (i) an Issuing and Paying Agent, (ii) a Registrar in relation to Registered Notes, (iii) a Transfer Agent in relation to Registered Notes, (iv) a CMU Lodging and Paying Agent in relation to Notes accepted for clearance through the CMU, (v) one or more Calculation Agent(s) where the Conditions so require, (vi) such other agents as may be required by any other stock exchange on which the Notes may be listed in each case, as approved by the Trustee, and (vii) a Paying Agent with a specified office in a European Union member state that will not be obliged to withhold or deduct tax pursuant to any law implementing European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of 2627 November 2000.

In addition, the Issuer shall forthwith appoint a Paying Agent in New York City in respect of any Bearer Notes denominated in U.S. dollars in the circumstances described in paragraph (c) above.

Notice of any such change or any change of any specified office shall promptly be given to the Noteholders.

Unmatured Coupons and Receipts and unexchanged Talons:

(i) Upon the due date for redemption of Bearer Notes which comprise Fixed Rate Notes (other than Dual Currency Notes or Index linked Notes), the Notes should be surrendered for payment together with all unmatured Coupons (if any) relating thereto, failing which an amount equal to the face value of each missing unmatured Coupon (or, in the case of payment not being made in full, that proportion of the amount of such missing unmatured Coupon that the sum of principal so paid bears to the total principal due) shall be deducted from the Final Redemption Amount, Early Redemption Amount or Optional Redemption Amount, as the case may be, due for payment. Any amount so deducted shall be paid in the manner mentioned above against surrender of such missing Coupon within a period of 10 years from the Relevant Date for the payment of such principal (whether or not such Coupon has become void pursuant to Condition 9).
(ii) Upon the due date for redemption of any Bearer Note comprising a Floating Rate Note, Dual Currency Note or Index Linked Note, unmatured Coupons relating to
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such Note (whether or not attached) shall become void and no payment shall be made in respect of them.

(iii) Upon the due date for redemption of any Bearer Note, any unexchanged Talon relating to such Note (whether or not attached) shall become void and no Coupon shall be delivered in respect of such Talon.
(iv) Upon the due date for redemption of any Bearer Note that is redeemable in instalments, all Receipts relating to such Note having an Instalment Date falling on or after such due date (whether or not attached) shall become void and no payment shall be made in respect of them.
(v) Where any Bearer Note that provides that the relative unmatured Coupons are to become void upon the due date for redemption of those Notes is presented for redemption without all unmatured Coupons, and where any Bearer Note is presented for redemption without any unexchanged Talon relating to it, redemption shall be made only against the provision of such indemnity as the Issuer may require.
(vi) If the due date for redemption of any Note is not a due date for payment of interest, interest accrued from the preceding due date for payment of interest or the Interest Commencement Date, as the case may be, shall only be payable against presentation (and surrender if appropriate) of the relevant Bearer Note or Certificate representing it, as the case may be. Interest accrued on a Note that only bears interest after its Maturity Date shall be payable on redemption of such Note against presentation of the relevant Note or Certificate representing it, as the case may be.
(g) Talons : On or after the Interest Payment Date for the final Coupon forming part of a Coupon sheet issued in respect of any Bearer Note, the Talon forming part of such Coupon sheet may be surrendered at the specified office of the Issuing and Paying Agent in exchange for a further Coupon sheet (and if necessary another Talon for a further Coupon sheet) (but excluding any Coupons that may have become void pursuant to Condition 9).
(h) Non-Business Days : If any date for payment in respect of any Note, Receipt or Coupon is not a business day, the holder shall not be entitled to payment until the next following business day nor to any interest or other sum in respect of such postponed payment. In this Condition 7, " business day " means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in the relevant place of presentation (if presentation and/or surrender of such Note, Receipt or Coupon is required), in such jurisdictions as shall be specified as " Financial Centres " hereon and:
(i) (in the case of a payment in a currency other than euro and Renminbi) where payment is to be made by transfer to an account maintained with a bank in the relevant currency, on which foreign exchange transactions may be carried on in the relevant currency in the principal financial centre of the country of such currency; or
(ii) (in the case of a payment in euro) which is a TARGET Business Day; or
(iii) (in the case of a payment in Renminbi) on which banks and foreign exchange markets are open for business and settlement of Renminbi payments in Hong Kong.

8. Taxation

All payments of principal and interest by or on behalf of the Issuer in respect of the Notes, the Receipts and the Coupons shall be made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within Hong Kong or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law. If the Issuer is required to make a deduction or withholding by or within Hong Kong, the Issuer shall pay such additional

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amounts as shall result in receipt by the Noteholders and Couponholders of such amounts as would have been received by them had no such withholding or deduction been required, except that no such additional amounts shall be payable with respect to any Note, Receipt or Coupon:

(a) Other connection : to, or to a third party on behalf of, a holder who is liable to such taxes, duties, assessments or governmental charges in respect of such Note, Receipt or Coupon by reason of his having some connection with Hong Kong or the PRC other than the mere holding of the Note, Receipt or Coupon; or
(b) Presentation more than 30 days after the Relevant Date : presented (or in respect of which the Certificate representing it is presented) for payment more than 30 days after the Relevant Date except to the extent that the holder of it would have been entitled to such additional amounts on presenting it for payment on the thirtieth day; or
(c) Payment to individuals : where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive; or
(d) Payment by another Paying Agent : (except in the case of Registered Notes) presented for payment by or on behalf of a holder who would have been able to avoid such withholding or deduction by presenting the relevant Note, Receipt or Coupon to another Paying Agent in a Member State of the European Union.

As used in these Conditions, " Relevant Date " in respect of any Note, Receipt or Coupon means the date on which payment in respect of it first becomes due or (if any amount of the money payable is improperly withheld or refused) the date on which payment in full of the amount outstanding is made or (if earlier) the date seven days after that on which notice is duly given to the Noteholders that, upon further presentation of the Note (or relative Certificate), Receipt or Coupon being made in accordance with the Conditions, such payment will be made, provided that payment is in fact made upon such presentation. References in these Conditions to (i) " principal " shall be deemed to include any premium payable in respect of the Notes, all Instalment Amounts, Final Redemption Amounts, Early Redemption Amounts, Optional Redemption Amounts, Amortised Face Amounts and all other amounts in the nature of principal payable pursuant to Condition 6 or any amendment or supplement to it, (ii) " interest " shall be deemed to include all Interest Amounts and all other amounts payable pursuant to Condition 5 or any amendment or supplement to it and (iii) " principal " and/or " interest " shall be deemed to include any additional amounts that may be payable under this Condition 8 or any undertaking given in addition to or in substitution for it under the Trust Deed.

9. Prescription

Claims against the Issuer for payment in respect of the Notes, Receipts and Coupons (which, for this purpose, shall not include Talons) shall be prescribed and become void unless made within 10 years (in the case of principal) or five years (in the case of interest) from the appropriate Relevant Date in respect of them.

10. Events of Default

If any of the following events (" Events of Default ") occurs, the Trustee at its discretion may, and if so requested in writing by holders of at least one-quarter in nominal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution shall (subject to being indemnified and/or secured and/or pre-funded by the Noteholders or by a third party on their behalf to its satisfaction), give notice to the Issuer that the Notes are, and they shall immediately become, due and payable at their Early Redemption Amount together (if applicable) with accrued interest:

(i) Non-Payment : the Issuer fails to pay any amount of principal in respect of any of the Notes within seven days of the due date for payment thereof or fails to pay any amount of interest in respect of any of the Notes within 14 days of the due date for the payment thereof; or
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(ii) Breach of Other Obligations : the Issuer does not perform or comply with any one or more of its other obligations in the Notes or the Trust Deed which default is incapable of remedy or, if in the opinion of the Trustee capable of remedy, is not in the opinion of the Trustee remedied within 45 days after notice of such default shall have been given to the Issuer by the Trustee; or
(iii) Cross-Acceleration : (A) any other present or future indebtedness of the Issuer or any Principal Subsidiary for or in respect of Borrowed Money (as defined below) becomes due and payable prior to its stated maturity by way of acceleration following a default by the Issuer or any Principal Subsidiary; or (B) when the Issuer or any Principal Subsidiary defaults for more than five days in the only or last remaining payment due of any principal of any of its Borrowed Money beyond any grace period provided in respect thereof; or (C) the Issuer or any Principal Subsidiary fails to pay when due any amount payable by it under any present or future guarantee for, or indemnity in respect of, any indebtedness for or in respect of Borrowed Money after any originally applicable grace period, provided that the aggregate amount of the relevant indebtedness, guarantees and indemnities in respect of which one or more of the events mentioned above in this paragraph (iii) has or have occurred equals or exceeds U.S.$75,000,000 or its equivalent; or
(iv) Enforcement Proceedings : a distress, attachment, execution or other legal process is levied, enforced or sued out on or against the whole or a substantial part of the property, assets or revenues of the Issuer or any of its Principal Subsidiaries and is not discharged or stayed within 60 days; or
(v) Security Enforced : any mortgage, charge, pledge, lien or other encumbrance, present or future, created or assumed by the Issuer or any of its Principal Subsidiaries against the whole or a substantial part of the property, assets or revenues of the Issuer or any of its Principal Subsidiaries becomes enforceable and any step is taken to enforce it (including the taking of possession or the appointment of a receiver, administrative receiver, administrator manager or other similar person) and is not discharged within 60 days; or
(vi) Insolvency : the Issuer or any of its Principal Subsidiaries is (or is, or could be, deemed by law or a court to be) insolvent or bankrupt or unable to pay its debts, stops, suspends or threatens to stop or suspend payment of all or a material part of (or of a particular type of) its debts, proposes or makes a general assignment or an arrangement or composition with or for the benefit of the relevant creditors in respect of any of such debts or a moratorium is agreed or declared in respect of or affecting all or any part of (or of a particular type of) the debts of the Issuer or any of its Principal Subsidiaries; or
(vii) Winding-up : an order is made or an effective resolution passed for the winding-up or dissolution of the Issuer or any of its Principal Subsidiaries, or the Issuer or any of its Principal Subsidiaries shall apply or petition for a winding-up or administration order in respect of itself or ceases or through an official action of its board of directors threatens to cease to carry on all or substantially all of its business or operations and is not discharged or stayed within 60 days, in each case except for the purpose of and followed by a solvent winding-up, dissolution, reconstruction, amalgamation, reorganisation, merger or consolidation (i) on terms approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders or (ii) in the case of a Principal Subsidiary, whereby the undertaking and assets of the Principal Subsidiary are transferred to or otherwise vested in the Issuer or another of its other Subsidiaries; or
(viii) Authorisation and Consents : any action, condition or thing (including the obtaining or effecting of any necessary consent, approval, authorisation, exemption, filing, licence, order, recording or registration) at any time required to be taken, fulfilled or done in order (i) to enable the Issuer lawfully to enter into, exercise its rights and perform and comply with its obligations under the Notes and the Trust Deed, (ii) to ensure that those obligations are legally binding and enforceable and (iii) to make the Notes and the Trust Deed admissible in evidence in the courts of England and Wales is not taken, fulfilled or done; or
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Meetings of Noteholders, Modification, Waiver and Substitution
(ix) Illegality : it is or will become unlawful for the Issuer to perform or comply with any one or more of its obligations under any of the Notes or the Trust Deed; or
(x) Analogous Events : any event occurs that under the laws of any relevant jurisdiction has an analogous effect to any of the events referred to in any of the foregoing paragraphs;

Provided that in the case of Condition 10(ii) and, in relation only to a Principal Subsidiary, Condition 10(iv), 10(v) and 10(x), the Trustee shall have certified that in its opinion such event is materially prejudicial to the interest of the Noteholders.

For the purposes of this Condition 10:

" Borrowed Money " means indebtedness incurred that has a final maturity of one year or more from its date of incurrence or issuance and that is evidenced by any agreement or other instrument, in respect of (i) money borrowed; (ii) any bond, note, loan stock, debenture or any similar instrument; (iii) acceptance or commercial paper facilities; and (iv) the deferred purchase price of assets or services (other than goods and services obtained on normal commercial terms in the ordinary course of trading).

(a) Meetings of Noteholders : The Trust Deed contains provisions for convening meetings of Noteholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution (as defined in the Trust Deed) of a modification of any of these Conditions or any provisions of the Trust Deed. Such a meeting may be convened by Noteholders holding not less than 10 per cent in nominal amount of the Notes for the time being outstanding. The quorum for any meeting convened to consider an Extraordinary Resolution shall be two or more persons holding or representing a clear majority in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting two or more persons being or representing Noteholders whatever the nominal amount of the Notes held or represented, unless the business of such meeting includes consideration of proposals, inter alia, (i) to amend the dates of maturity or redemption of the Notes, any Instalment Date or any date for payment of interest or Interest Amounts on the Notes, (ii) to reduce or cancel the nominal amount of, or any Instalment Amount of, or any premium payable on redemption of, the Notes, (iii) to reduce the rate or rates of interest in respect of the Notes or to vary the method or basis of calculating the rate or rates or amount of interest or the basis for calculating any Interest Amount in respect of the Notes, (iv) if a Minimum and/or a Maximum Rate of Interest, Instalment Amount or Redemption Amount is shown hereon, to reduce any such Minimum and/or Maximum, (v) to vary any method of, or basis for, calculating the Final Redemption Amount, the Early Redemption Amount or the Optional Redemption Amount, including the method of calculating the Amortised Face Amount, (vi) to vary the currency or currencies of payment or denomination of the Notes, or (vii) to modify the provisions concerning the quorum required at any meeting of Noteholders or the majority required to pass the Extraordinary Resolution, in which case the necessary quorum shall be two or more persons holding or representing not less than 75 per cent, or at any adjourned meeting not less than 25 per cent, in nominal amount of the Notes for the time being outstanding. Any Extraordinary Resolution duly passed shall be binding on Noteholders (whether or not they were present at the meeting at which such resolution was passed) and on all Couponholders.

The Trust Deed provides that a resolution in writing signed by or on behalf of the holders of not less than 90 per cent. in nominal amount of the Notes outstanding shall for all purposes be as valid and effective as an Extraordinary Resolution passed at a meeting of Noteholders duly convened and held. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders.

These Conditions may be amended, modified or varied in relation to any Series of Notes by the terms of the relevant Pricing Supplement in relation to such Series.

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(b) Modification of the Trust Deed : The Trustee may agree, without the consent of the Noteholders or Couponholders, to (i) any modification of any of the provisions of the Trust Deed that is of a formal, minor or technical nature or is made to correct a manifest error, and (ii) any other modification (except as mentioned in the Trust Deed), and any waiver or authorisation of any breach or proposed breach, of any of the provisions of the Trust Deed that is in the opinion of the Trustee not materially prejudicial to the interests of the Noteholders. Any such modification, authorisation or waiver shall be binding on the Noteholders and the Couponholders and, if the Trustee so requires, such modification shall be notified to the Noteholders as soon as practicable.
(c) Substitution : The Trust Deed contains provisions permitting the Trustee to agree, subject to such amendment of the Trust Deed and such other conditions as the Trustee may require and subject to the Trustee obtaining approval by way of an Extraordinary Resolution of the Noteholders, to the substitution of the Issuer's successor in business or any Subsidiary as defined in the Trust Deed of the Issuer or its successor in business in place of the Issuer, or of any previous substituted company, as principal debtor under the Trust Deed and the Notes. In the case of such a substitution the Trustee may agree to a change of the law governing the Notes, the Receipts, the Coupons, the Talons and/or the Trust Deed provided that such change would not in the opinion of the Trustee be materially prejudicial to the interests of the Noteholders. No Noteholder, Couponholder or Receiptholder shall, in connection with any such substitution be entitled to claim any indemnification or payment in respect of any tax consequence thereof to such Noteholder, Couponholder or Receiptholder except to the extent provided for in Condition 8 (or any undertaking given in addition to or substitution for it pursuant to the provisions of the Trust Deed).
(d) Entitlement of the Trustee : In connection with the exercise of its functions (including but not limited to those referred to in this Condition 11) the Trustee shall have regard to the interests of the Noteholders as a class and shall not have regard to the consequences of such exercise for individual Noteholders or Couponholders and the Trustee, acting for and on behalf of Noteholders, shall not be entitled to require, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuer any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders or Couponholders. For the avoidance of doubt, the provisions of this Condition 11(d) shall not restrict or prevent the Trustee from claiming any indemnity or payment from the Issuer for its own account.

12. Enforcement

At any time after the Notes become due and payable, the Trustee may, at its discretion and without further notice, institute such proceedings against the Issuer as it may think fit to enforce the terms of the Trust Deed, the Notes, the Receipts and the Coupons, but it need not take any such proceedings unless (a) it shall have been so directed by an Extraordinary Resolution or so requested in writing by Noteholders holding at least one-quarter in nominal amount of the Notes outstanding, and (b) it shall have been indemnified and/or secured and/or pre-funded to its satisfaction. No Noteholder, Receiptholder or Couponholder may proceed directly against the Issuer unless the Trustee, having become bound so to proceed, fails to do so within a reasonable time and such failure is continuing.

13. Indemnification of the Trustee

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility. The Trustee is entitled to enter into business transactions with the Issuer and any entity related to the Issuer without accounting for any profit.

The Trustee may rely without liability to Noteholders or Couponholders on a report, confirmation or certificate or any advice of any accountants, financial advisers, financial institution or any other expert, whether or not addressed to it and whether their liability in relation thereto is limited (by its terms or by any engagement letter relating thereto entered into by the Trustee or in any other manner) by reference to a monetary cap, methodology or otherwise. The Trustee may accept and

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shall be entitled to rely on any such report, confirmation or certificate or advice and such report, confirmation or certificate or advice shall be binding on the Issuer, the Trustee and the Noteholders.

14. Replacement of Notes, Certificates, Receipts, Coupons and Talons

If a Note, Certificate, Receipt, Coupon or Talon is lost, stolen, mutilated, defaced or destroyed, it may be replaced, subject to applicable laws, regulations and stock exchange or other relevant authority regulations, at the specified office of the Issuing and Paying Agent (in the case of Bearer Notes, Receipts, Coupons or Talons) and of the Registrar (in the case of Certificates) or such other Paying Agent or Transfer Agent, as the case may be, as may from time to time be designated by the Issuer for the purpose and notice of whose designation is given to Noteholders, in each case on payment by the claimant of the fees and costs incurred in connection therewith and on such terms as to evidence, security and indemnity (which may provide, inter alia, that if the allegedly lost, stolen or destroyed Note, Certificate, Receipt, Coupon or Talon is subsequently presented for payment or, as the case may be, for exchange for further Coupons, there shall be paid to the Issuer on demand the amount payable by the Issuer in respect of such Notes, Certificates, Receipts, Coupons or further Coupons) and otherwise as the Issuer may require. Mutilated or defaced Notes, Certificates, Receipts, Coupons or Talons must be surrendered before replacements will be issued.

15. Further Issues

The Issuer may from time to time without the consent of the Noteholders or Couponholders create and issue further securities either having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest on them) and so that such further issue shall be consolidated and form a single series with the outstanding securities of any series (including the Notes) or upon such terms as the Issuer may determine at the time of their issue. References in these Conditions to the Notes include (unless the context requires otherwise) any other securities issued pursuant to this Condition 15 and forming a single series with the Notes. Any further securities forming a single series with the outstanding securities of any series (including the Notes) constituted by the Trust Deed or any deed supplemental to it shall, and any other securities may (with the consent of the Trustee), be constituted by the Trust Deed. The Trust Deed contains provisions for convening a single meeting of the Noteholders and the holders of securities of other series where the Trustee so decides.

16. Currency Indemnity

Any amount received or recovered in a currency other than the currency in which payment under the relevant Note, Coupon or Receipt is due (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the insolvency, winding-up or dissolution of the Issuer or otherwise) by any Noteholder or Couponholder in respect of any sum expressed to be due to it from the Issuer shall only constitute a discharge to the Issuer to the extent of the amount in the currency of payment under the relevant Note, Coupon or Receipt that the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so). If the amount received or recovered is less than the amount expressed to be due to the recipient under any Note, Coupon or Receipt, the Issuer shall indemnify it against any loss sustained by it as a result. In any event, the Issuer shall indemnify the recipient against the cost of making any such purchase. For the purposes of this Condition 16, it shall be sufficient for the Noteholder or Couponholder, as the case may be, to demonstrate that it would have suffered a loss had an actual purchase been made. These indemnities constitute a separate and independent obligation from the Issuer's other obligations, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by any Noteholder or Couponholder and shall continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any Note, Coupon or Receipt or any other judgment or order.

17. Notices

Notices to the holders of Registered Notes shall be mailed to them at their respective addresses in the Register and deemed to have been given on the fourth weekday (being a day other than a Saturday or a Sunday) after the date of mailing. Notices to the holders of Bearer Notes shall be

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valid if published in a daily newspaper of general circulation in Hong Kong. If any such publication is not practicable, notice shall be validly given if published in another leading daily English language newspaper with general circulation in Europe. Any such notice shall be deemed to have been given on the date of such publication or, if published more than once or on different dates, on the first date on which publication is made, as provided above.

Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the holders of Bearer Notes in accordance with this Condition 17.

So long as any Notes are represented by a Global Note or a Global Certificate and such Global Note or Global Certificate is held on behalf of (i) Euroclear and/or Clearstream, DTC or any other clearing system (except as provided in (ii) below), notices to the holders of Notes of that Series may be given by delivery of the relevant notice to that clearing system for communication by it to entitled accountholders in substitution for publication as required by the Conditions or by delivery of the relevant notice to the holder of the Global Note or (ii) the CMU, notices to the holders of Notes of that Series may be given by delivery of the relevant notice to the persons shown in a CMU Issue Position Report issued by the CMU on the second business day preceding the date of despatch of such notice as holding interests in the relevant Global Note or Global Certificate.

Contracts (Rights of Third Parties) Act 1999

No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) Act 1999.

19. Governing Law and Jurisdiction

(a) Governing Law : The Trust Deed, the Notes, the Receipts, the Coupons and the Talons and any non-contractual obligations arising out of or in connection with them are governed by, and shall be construed in accordance with, English law.
(b) Jurisdiction : The Courts of England are to have jurisdiction to settle any disputes that may arise out of or in connection with any Notes, Receipts, Coupons or Talons and accordingly any legal action or proceedings arising out of or in connection with any Notes, Receipts, Coupons or Talons (" Proceedings ") may be brought in such courts. The Issuer has in the Trust Deed irrevocably submitted to the jurisdiction of such courts.
(c) Service of Process : The Issuer has in the Trust Deed irrevocably appointed an agent in England to receive, for it and on its behalf, service of process in any Proceedings in England.
(d) Waiver of immunity : The Issuer has irrevocably agreed in the Trust Deed that no immunity (to the extent that it may now or hereafter exist, whether on the grounds of sovereignty or otherwise) from any Proceedings or from execution of judgment shall be claimed by or on behalf of it or with respect to its assets, any such immunity being irrevocably waived by the Issuer, and the Issuer has irrevocably consented in the Trust Deed generally in respect of any such Proceedings to the giving of any relief or the issue of any process in connection with any such Proceedings including, without limitation, the making, enforcement or execution against any property whatsoever of any order or judgment which may be made or given in such Proceedings.
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SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM

1. Initial Issue of Notes

Global Notes and Certificates may be delivered on or prior to the original issue date of the Tranche to a common depositary for Euroclear and Clearstream (the " Common Depositary ") or a subcustodian for the CMU.

Upon the initial deposit of a Global Note with the Common Depositary or with a sub-custodian for the CMU or registration of Registered Notes in the name of (i) any nominee for Euroclear and Clearstream or (ii) the CMU and delivery of the relative Global Certificate to the Common Depositary or the sub-custodian for the CMU (as the case may be), Euroclear or Clearstream or the CMU (as the case may be) will credit each subscriber with a nominal amount of Notes equal to the nominal amount thereof for which it has subscribed and paid.

Upon the initial deposit of a Global Certificate in respect of, and registration of, Registered Notes in the name of a nominee for DTC and delivery of the relevant Global Certificate to the Custodian for DTC, DTC will credit each participant with a nominal amount of Notes equal to the nominal amount thereof for which it has subscribed and paid.

Notes that are initially deposited with the Common Depositary may also be credited to the accounts of subscribers with (if indicated in the relevant Pricing Supplement) other clearing systems through direct or indirect accounts with Euroclear and Clearstream held by such other clearing systems. Conversely, Notes that are initially deposited with any other clearing system may similarly be credited to the accounts of subscribers with Euroclear, Clearstream or other clearing systems.

2. Relationship of Accountholders with Clearing Systems

Each of the persons shown in the records of Euroclear, Clearstream, DTC or any other clearing system (" Alternative Clearing System ") as the holder of a Note represented by a Global Note or a Global Certificate must look solely to Euroclear, Clearstream, DTC or any such Alternative Clearing System (as the case may be) for his share of each payment made by the Issuer to the bearer of such Global Note or the holder of the underlying Registered Notes, as the case may be, and in relation to all other rights arising under the Global Notes or Global Certificates, subject to and in accordance with the respective rules and procedures of Euroclear, Clearstream, DTC or such Alternative Clearing System (as the case may be). Such persons shall have no claim directly against the Issuer in respect of payments due on the Notes for so long as the Notes are represented by such Global Note or Global Certificate and such obligations of the Issuer will be discharged by payment to the bearer of such Global Note or the holder of the underlying Registered Notes, as the case may be, in respect of each amount so paid.

If a Global Note or a Global Certificate is lodged with a sub-custodian for or registered with the CMU, the person(s) for whose account(s) interests in such Global Note or Global Certificate are credited as being held in the CMU in accordance with the CMU Rules shall be the only person(s) entitled or in the case of Registered Notes, directed or deemed by the CMU as entitled to receive payments in respect of Notes represented by such Global Note or Global Certificate and the Issuer will be discharged by payment to, or to the order of, such person(s) for whose account(s) interests in such Global Note or Global Certificate are credited as being held in the CMU in respect of each amount so paid. Each of the persons shown in the records of the CMU, as the holder of a particular nominal amount of Notes represented by such Global Note or Global Certificate must look solely to the CMU for his share of each payment so made by the Issuer in respect of such Global Note or Global Certificate.

3. Exchange

3.1 Temporary Global Notes

Each temporary Global Note will be exchangeable, free of charge to the holder, on or after its Exchange Date:

(a) if the relevant Pricing Supplement indicates that such Global Note is issued in compliance with the C Rules or in a transaction to which TEFRA is not applicable (as to which, see
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" Summary of the Programme – Selling Restrictions "), in whole, but not in part, for the Definitive Notes defined and described below; and

(b) otherwise, in whole or in part upon certification as to non-U.S. beneficial ownership in the form set out in the Agency Agreement for interests in a permanent Global Note or, if so provided in the relevant Pricing Supplement, for Definitive Notes.

The CMU may require that any such exchange for a permanent Global Note is made in whole and not in part and in such event, no such exchange will be effected until all relevant account holders (as set out in a CMU Issue Position Report (as defined in the rules of the CMU) or any other relevant notification supplied to the CMU Lodging Agent by the CMU) have so certified.

The holder of a temporary Global Note will not be entitled to collect any payment of interest, principal or other amount due on or after the Exchange Date unless, upon due certification, exchange of the temporary Global Note for an interest in a permanent Bearer Global Note or for Definitive Notes is improperly withheld or refused.

3.2 Permanent Global Notes

Each permanent Global Note will be exchangeable, free of charge to the holder, on or after its Exchange Date in whole but not, except as provided under paragraph 3.4 below, in part for Definitive Notes if the permanent Global Note is held on behalf of Euroclear, Clearstream, the CMU or an Alternative Clearing System and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or in fact does so.

In the event that a Global Note is exchanged for Definitive Notes, such Definitive Notes shall be issued in Specified Denomination(s) only. A Noteholder who holds a principal amount of less than the minimum Specified Denomination will not receive a definitive Note in respect of such holding and would need to purchase a principal amount of Notes such that it holds an amount equal to one or more Specified Denominations.

3.3 Permanent Global Certificates

(a) Unrestricted Global Certificates

If the Pricing Supplement states that the Notes are to be represented by an Unrestricted Global Certificate on issue, the following will apply in respect of transfers of Notes held in Euroclear, Clearstream, the CMU or an Alternative Clearing System. These provisions will not prevent the trading of interests in the Notes within a clearing system whilst they are held on behalf of such clearing system, but will limit the circumstances in which the Notes may be withdrawn from the relevant clearing system.

Transfers of the holding of Notes represented by any Global Certificate pursuant to Condition 2(b) may only be made:

(i) in whole but not in part if the relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so; or
(ii) in whole or in part with the consent of the Issuer,

provided that , in the case of the first transfer of part of a holding pursuant to paragraph 3.3(i) or 3.3(ii) above, the Registered Holder has given the Registrar not less than 30 days' notice at its specified office of the Registered Holder's intention to effect such transfer.

(b) Restricted Global Certificates

If the Pricing Supplement states that the Restricted Notes are to be represented by a Restricted Global Certificate on issue, the following will apply in respect of transfers of Notes held in DTC or Euroclear and Clearstream or the CMU. These provisions will not

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prevent the trading of interests in the Notes within a clearing system whilst they are held on behalf of that clearing system, but will limit the circumstances in which the Notes may be withdrawn from that clearing system. Transfers of the holding of Notes represented by that Restricted Global Certificate pursuant to Condition 2(b) may only be made:

(i) in whole but not in part, if such Notes are held on behalf of a Custodian for DTC and if DTC notifies the Issuer that it is no longer willing or able to discharge properly its responsibilities as depositary with respect to that Restricted Global Certificate or DTC ceases to be a "clearing agency" registered under the Exchange Act or is at any time no longer eligible to act as such, and the Issuer is unable to locate a qualified successor within 90 days of receiving notice of such ineligibility on the part of DTC;
(ii) in whole, but not in part, if the Notes are held on behalf of Euroclear or Clearstream or CMU or an Alternative Clearing System and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so; or
(iii) in whole or in part, with the Issuer's consent, provided that , in either case, the relevant Registered Noteholder has given the relevant Registrar not less than 30 days' notice at its specified office of the Registered Noteholder's intention to effect such transfer. Individual Certificates issued in exchange for a beneficial interest in a Restricted Global Certificate shall bear the legend applicable to such Notes as set out in " Transfer Restrictions ".

3.4 Partial Exchange of Permanent Global Notes

For so long as a permanent Global Note is held on behalf of a clearing system and the rules of that clearing system permit, such permanent Global Note will be exchangeable in part on one or more occasions for Definitive Notes (i) if principal in respect of any Notes is not paid when due or (ii) if so provided in, and in accordance with, the Conditions (which will be set out in the relevant Pricing Supplement) relating to Partly Paid Notes.

3.5 Delivery of Notes

On or after any due date for exchange the holder of a Global Note may surrender such Global Note or, in the case of a partial exchange, present it for endorsement to or to the order of the Issuing and Paying Agent (or, in the case of Notes lodged with the CMU, the CMU Lodging and Paying Agent). In exchange for any Global Note, or the part thereof to be exchanged, the Issuer will (i) in the case of a temporary Global Note exchangeable for a permanent Global Note, deliver, or procure the delivery of, a permanent Global Note in an aggregate nominal amount equal to that of the whole or that part of a temporary Global Note that is being exchanged or, in the case of a subsequent exchange, endorse, or procure the endorsement of, a permanent Global Note to reflect such exchange or (ii) in the case of a Global Note exchangeable for Definitive Notes, deliver, or procure the delivery of, an equal aggregate nominal amount of duly executed and authenticated Definitive Notes.

Global Notes and Definitive Notes will be delivered outside the United States and its possessions. In this Offering Circular, " Definitive Notes " means, in relation to any Global Note, the definitive Bearer Notes for which such Global Note may be exchanged (if appropriate, having attached to them all Coupons and Receipts in respect of interest or Instalment Amounts that have not already been paid on the Global Note and a Talon).

Definitive Notes will be security printed in accordance with any applicable legal and stock exchange requirements in or substantially in the form set out in the Schedules to the Trust Deed. On exchange in full of each permanent Global Note, the Issuer will, if the holder so requests, procure that it is cancelled and returned to the holder together with the relevant Definitive Notes.

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4.1

3.6 Exchange Date

" Exchange Date " means, in relation to a temporary Global Note, the day falling after the expiry of 40 days after its issue date and, in relation to a permanent Global Note, a day falling not less than 60 days, or in the case of failure to pay principal in respect of any Notes when due 30 days, after that on which the notice requiring exchange is given and on which banks are open for business in the city in which the specified office of the Issuing and Paying Agent is located and in the city in which the relevant clearing system is located.

4. Amendment to Conditions

The temporary Global Notes, permanent Global Notes and Global Certificates contain provisions that apply to the Notes that they represent, some of which modify the effect of the terms and conditions of the Notes set out in this Offering Circular. The following is a summary of certain of those provisions:

Payments

No payment falling due after the Exchange Date will be made on any Global Note unless exchange for an interest in a permanent Global Note or for Definitive Notes is improperly withheld or refused. Payments on any temporary Global Note issued in compliance with the D Rules before the Exchange Date will only be made against presentation of certification as to non-U.S. beneficial ownership in the form set out in the Agency Agreement. All payments in respect of Notes represented by a Global Note (except with respect to a Global Note held through the CMU) will be made against presentation for enfacement and, if no further payment falls to be made in respect of the Notes, surrender of that Global Note to or to the order of the Issuing and Paying Agent or such other Paying Agent as shall have been notified to the Noteholders for such purpose. A record of each payment so made will be enfaced on each Global Note, which enfacement will be prima facie evidence that such payment has been made in respect of the Notes. Condition 7(e)(vii) and Condition 8(d) will apply to the Definitive Notes only. For the purpose of any payments made in respect of a Global Note, the relevant place of presentation (if applicable) shall be disregarded in the definition of "business day" set out in Condition 7(h) ( Non-Business Days ).

All payments in respect of Notes represented by a Global Certificate (other than a Global Certificate held through the CMU) will be made to, or to the order of, the person whose name is entered on the Register at the close of business on the Clearing System Business Day immediately prior to the date for payment, where " Clearing System Business Day " means Monday to Friday inclusive except 25 December and 1 January.

In respect of a Global Note or Global Certificate held through the CMU, any payments of principal, interest (if any) or any other amounts shall be made to the person(s) for whose account(s) interests in the relevant Global Note or Global Certificate are credited (as set out in the records of the CMU) at the close of business on the Clearing System Business Day immediately prior to the date for payment and, save in the case of final payment, no presentation of the relevant bearer Global Note or Global Certificate shall be required for such purpose. For the purposes of this paragraph, " Clearing System Business Day " means a day on which the CMU is operating and open for business.

So long as the Notes are represented by the Global Note or the Global Certificate (as the case may be) and the Global Note or the Global Certificate is held on behalf of a clearing system, the Issuer has promised, inter alia , to pay interest in respect of such Notes from the Interest Commencement Date in arrear at the rates, on the dates for payment, and in accordance with the method of calculation provided for in the Conditions, save that the calculation is made in respect of the total aggregate amount of the Notes represented by the Global Note or the Global Certificate (as the case may be).

4.2 Prescription

Claims against the Issuer in respect of Notes that are represented by a permanent Global Note will become void unless it is presented for payment within a period of 10 years (in the case of principal)

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and five years (in the case of interest) from the appropriate Relevant Date (as defined in Condition 8).

4.3 Meetings

The holder of a permanent Global Note or of the Notes represented by a Global Certificate shall (unless such permanent Global Note or Global Certificate represents only one Note) be treated as being two persons for the purposes of any quorum requirements of a meeting of Noteholders and, at any such meeting, the holder of a permanent Global Note shall be treated as having one vote in respect of each integral currency unit of the Specified Currency of the Notes. (All holders of Registered Notes are entitled to one vote in respect of each integral currency unit of the Specified Currency of the Notes comprising such Noteholder's holding, whether or not represented by a Global Certificate.)

4.4 Cancellation

Cancellation of any Note represented by a permanent Global Note that is required by the Conditions to be cancelled (other than upon its redemption) will be effected by reduction in the nominal amount of the relevant permanent Global Note or its presentation to or to the order of the Issuing and Paying Agent for endorsement in the relevant schedule of such permanent Global Note or in the case of a Global Certificate, by reduction in the aggregate principal amount of the Certificates in the register of the certificate holders, whereupon the principal amount thereof shall be reduced for all purposes by the amount so cancelled and endorsed.

4.5 Purchase

Notes represented by a permanent Global Note may only be purchased by the Issuer or any of its subsidiaries if they are purchased together with the rights to receive all future payments of interest and Instalment Amounts (if any) thereon.

4.6 Issuer's Option

Any option of the Issuer provided for in the Conditions of any Notes while such Notes are represented by a permanent Global Note shall be exercised by the Issuer giving notice to the Noteholders within the time limits set out in and containing the information required by the Conditions, except that the notice shall not be required to contain the serial numbers of Notes drawn in the case of a partial exercise of an option and accordingly no drawing of Notes shall be required. In the event that any option of the Issuer is exercised in respect of some but not all of the Notes of any Series, the rights of accountholders with a clearing system in respect of the Notes will be governed by the standard procedures of Euroclear, Clearstream, the CMU, DTC or any other clearing system (as the case may be).

4.7 Noteholders' Options

Any option of the Noteholders provided for in the Conditions of any Notes while such Notes are represented by a permanent Global Note may be exercised by the holder of the permanent Global Note giving notice to the Issuing and Paying Agent (or, in the case of Notes lodged with the CMU, the CMU Lodging and Paying Agent) within the time limits relating to the deposit of Notes with a Paying Agent set out in the Conditions substantially in the form of the notice available from any Paying Agent, except that the notice shall not be required to contain the serial numbers of the Notes in respect of which the option has been exercised, and stating the nominal amount of Notes in respect of which the option is exercised and at the same time presenting the permanent Global Note to the Issuing and Paying Agent, or to a Paying Agent acting on behalf of the Issuing and Paying Agent (or, in the case of Notes lodged with the CMU, the CMU Lodging and Paying Agent), for notation.

4.8 Trustee's Powers

In considering the interests of Noteholders while any Global Note is held on behalf of, or Registered Notes are registered in the name of any nominee or sub-custodian for, a clearing system, the Trustee may have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its accountholders with

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4.9

entitlements to such Global Note or Registered Notes and may consider such interests as if such accountholders were the holders of the Notes represented by such Global Note or Global Certificate.

Notices

So long as any Notes are represented by a Global Note or a Global Certificate and such Global Note or Global Certificate is held on behalf of (i) Euroclear and/or Clearstream, DTC or any other clearing system (except as provided in (ii) below), notices to the holders of Notes of that Series may be given by delivery of the relevant notice to that clearing system for communication by it to entitled accountholders in substitution for publication as required by the Conditions or by delivery of the relevant notice to the holder of the Global Note or Global Certificate or (ii) the CMU, notices to the holders of Notes of that Series may be given by delivery of the relevant notice to the CMU in substitution for publication as required by the Conditions or by delivery of the relevant notice to the holder of the Global Note or Global Certificate, and any such notice shall be deemed to have been given to the Noteholders on the day on which such notice is delivered to the CMU.

5. Partly Paid Notes

The provisions relating to Partly Paid Notes are not set out in this Offering Circular, but will be contained in the relevant Pricing Supplement and thereby in the Global Notes. While any instalments of the subscription moneys due from the holder of Partly Paid Notes are overdue, no interest in a Global Note representing such Notes may be exchanged for an interest in a permanent Global Note or for Definitive Notes (as the case may be). If any Noteholder fails to pay any instalment due on any Partly Paid Notes within the time specified, the Issuer may forfeit such Notes and shall have no further obligation to their holders in respect of them.

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USE OF PROCEEDS

The net proceeds of any Notes issued under the Programme shall be used for the general corporate purposes of CITIC Limited Group including, without limitation, refinancing of indebtedness of CITIC Limited Group or as may otherwise be disclosed in the relevant Pricing Supplement.

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CAPITALISATION AND INDEBTEDNESS

Capitalisation of CITIC Limited

The following table sets out the consolidated capitalisation of CITIC Limited as derived from the Reviewed Consolidated Financial Statements of CITIC Limited. The table should be read in conjunction with the Reviewed Consolidated Financial Statements of CITIC Limited and the notes thereto:

Bank and other loans Bank loans ...................................................................................................................... Other loans...................................................................................................................... Subtotal.......................................................................................................................... *By remaining maturity* Within one year or on demand ........................................................................................ Between one and two years ............................................................................................. Between two and five years ............................................................................................ Over five years................................................................................................................ Subtotal.......................................................................................................................... Debt instruments issued(2) Within one year or on demand ........................................................................................ Between one and two years ............................................................................................. Between two and five years ............................................................................................ Over five years................................................................................................................ Subtotal.......................................................................................................................... Equity Share capital ....................................................................................................................... Reserves ............................................................................................................................. Non-controlling interests .................................................................................................... Total Equity...................................................................................................................... Total Capitalisation(3).......................................................................................................	As at 30 June 2021	As at 30 June 2021
	(US$ million)(1) 18,117 4,089 22,206 7,766 4,061 6,024 4,355 22,206 109,223 6,264 14,672 19,492 149,651 48,937 42,738 50,491 142,166 314,023	(HK$ million) 141,311 31,894
		173,205
		60,574 31,675 46,987 33,969
		173,205
		851,937 48,858 114,441 152,038
		1,167,274
		381,710 333,358 393,828
		1,108,896
		2,449,375

(1) The exchange rate used for translations into US$ in the capitalisation table is HK$:US$ = 7.8:1.

(2) Since 30 June 2021, CITIC Corporation Limited has issued new debt securities as follows:

(1) RMB1,000,000,000 3.49 per cent. corporate bond due 2026 on 2 November 2021; and

(2) RMB2,000,000,000 3.79 per cent. corporate bond due 2031 on 2 November 2021.

(3) Total capitalisation represents total borrowings (total of bank and other loans and debt instruments issued) and total equity.

Save as indicated above, there has been no material change in the capitalisation of CITIC Limited since 30 June 2021.

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CITIC LIMITED GROUP

CITIC Limited Group is a large multi-industry conglomerate involved in comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation business segments.

For the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021, the total revenue of CITIC Limited Group was HK$566,497 million, HK$552,949 million, HK$255,802 million and HK$352,921 million, respectively.

For the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021, the profit before tax of CITIC Limited Group was HK$96,015 million, HK$97,718 million, HK$46,544 million and HK69,137 million, respectively.

As at 31 December 2019 and 2020 and 30 June 2021, the net assets of CITIC Limited Group were HK$894,491 million, HK$1,008,642 million and HK$1,108,896 million, respectively.

CITIC Limited had a market capitalisation of approximately HK$243,485 million at the close of business on 30 June 2021. As at 30 June 2021, CITIC Limited had 29,090,262,630 shares in issue. Its registered office is at 32/F, CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong. It is a constituent stock of the Hang Seng Index.

Corporate Background

In 1990, CITIC Hong Kong (Holdings) Limited (formerly known as China International Trust & Investment Corporation Hong Kong (Holdings) Limited) acquired a 49 per cent. interest in Tylfull Company Limited. Tylfull Company Limited was incorporated in Hong Kong on 8 January 1985, listed on the Hong Kong Stock Exchange on 26 February 1986 and renamed CITIC Pacific Limited on 22 August 1991.

On 16 April 2014, CITIC Pacific Limited entered into a share transfer agreement (the " Share Transfer Agreement ") with CITIC Group and Beijing CITIC Enterprise Management Co., Ltd (together with CITIC Group, the " Vendors ") in relation to the acquisition of 100 per cent. of the total issued shares (the " Target Shares ") of CITIC Limited (now known as CITIC Corporation Limited) (the " Acquisition "). The total price paid by CITIC Pacific Limited to the Vendors for the Target Shares, as adjusted according to the Share Transfer Agreement, was RMB226,996 million (equivalent to approximately HK$286,585 million), which was satisfied through a combination of cash of (and in equivalent to) HK$53,358 million and share consideration of (and in equivalent to) HK$233,228 million.

The Acquisition was completed on 25 August 2014 and CITIC Pacific Limited changed its name to CITIC Limited on 26 August 2014. Prior to the Acquisition, the business of CITIC Group was conducted mainly through CITIC Corporation Limited, its subsidiaries, associated companies and joint ventures.

In 2015, Charoen Pokphand Group Company Limited, ITOCHU Corporation and Youngor Group Co., Ltd. became investors of CITIC Limited.

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Business Segment Structure

The business segment structure chart which shows the principal operating entities and/or units of CITIC Limited Group as at 30 June 2021 is set out below.

==> picture [426 x 279] intentionally omitted <==

⦁ refers to the companies listed on both the SEHK and SSE.

==> picture [15 x 9] intentionally omitted <==

refers to the companies listed on SSE.
⯀ refers to the companies listed on SEHK.

Strengths of CITIC Limited Group

CITIC Limited Group has the following competitive strengths:

CITIC Limited Group is one of the largest multi-industry conglomerates in the PRC with leading positions across multiple industries. With its well-structured business profile and deep understanding and knowledge across the multiple industries, CITIC Limited Group is well-equipped to capture the opportunities arising from the PRC's economic development

CITIC Limited Group is one of the largest multi-industry conglomerates in the PRC. As at 31 December 2019 and 2020 and 30 June 2021, the total assets of CITIC Limited Group were HK$8,289,924 million, HK$9,740,828 million and HK$10,230,358 million, respectively, and the total equity of CITIC Limited Group were HK$894,491 million, HK$1,008,642 million and HK$1,108,896 million, respectively. For the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021, the total revenue of CITIC Limited Group were HK$566,497 million, HK$552,949 million, HK$255,802 million and HK$352,921 million, respectively.

CITIC Limited Group has a well-structured business profile across the "pillar industries" and emerging industries in the PRC and has secured leading positions in many of its main business segments. CITIC Limited Group's main business segments include comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation. Among its main businesses, CITIC Limited Group has been engaged in emerging industries including information technology, renewable energy, modern agriculture, water treatment, robotics and other modern services.

One of CITIC Limited Group's core competitiveness is its ability to share and integrate resources. Many businesses of CITIC Limited Group have benefited from the sharing and integration of resources and crosspollination of staff and experience, enabling them to compete in the fast-changing market conditions. With

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a number of its businesses being industry leaders, the management of CITIC Limited has deep understanding, local knowledge and foresight to explore the opportunities in new sectors while enhancing existing businesses and embracing new technology. Accordingly, CITIC Limited Group believes that it is well-equipped to capture future opportunities arising from the PRC's economic growth and transition, thus creating greater value for its shareholders.

CITIC Limited Group is a pioneer of the PRC's economic reform and a market-oriented group with strong innovation capabilities

The establishment and development of CITIC Group has been closely connected to the process of "Reform and Opening up" in the PRC. From the outset, CITIC Group pursued growth through innovation, creativity and embraced market principles. The majority of the industries in which CITIC Group operates are highly competitive. For over 40 years, CITIC Group has been operating in accordance with market disciplines as well as adopting international best practices, and has been a pioneer in a series of unprecedented endeavours shown in various areas and has emerged as a formidable force amid intense market competition.

CITIC Limited Group believes that its innovation capabilities, its willingness to embrace new technology and its endogenous power enable it to remain competitive and to maintain its market vitality.

CITIC Limited Group has an international platform and the ability to allocate resources globally

The international platform owned by CITIC Limited Group, its ability to allocate resources globally and share information and data within its network are the core competitive advantages which distinguish it from the majority of Chinese enterprises.

CITIC Limited Group has an extensive global business network with operations covering multiple regions and has accumulated significant experience in foreign investment management and talented personnel.

CITIC Limited Group has various business segments operating internationally, including its comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation.

In the comprehensive financial services business segment, CITIC Limited Group has established international business platforms in banking and securities:

For its banking business, China CITIC Bank conducts its overseas banking business mainly through China CITIC Bank International Limited, providing services including corporate finance, retail finance and asset management.
For its securities business, CITIC Securities International, a subsidiary of CITIC Securities, conducts international securities business in Hong Kong and, having completed the acquisition of CLSA B.V. (" CLSA ") in 2013, has further expanded its overseas business channels and network.

In the advanced intelligent manufacturing business segment, CITIC Heavy Industries is one of the world's leading suppliers and service providers of heavy mining and cement equipment, and owns one of the PRC's top special intelligent robot enterprises in CITIC HIC Kaicheng Intelligence Equipment Co., Ltd and one of the world's most advanced mineral processing technology in SMCC Process Technology Pty Ltd. CITIC Dicastal is a world's largest producer of automotive aluminium wheels with manufacturing facilities in the United States and Europe, supplying top automakers around the globe.

In the advanced materials business segment, CITIC Resources Holdings Limited (" CITIC Resources ") and CITIC Metal Group Ltd. (" CITIC Metal Group "), which holds CITIC Metal Co., Ltd. (" CITIC Metal "), have been actively engaged in overseas acquisitions and exploration of various oil and mineral resources, holding various interests in development projects in countries and regions which have rich resource reserves, including China, Australia, Brazil, Peru, Gabon, Indonesia, Kazakhstan, Congo and South Africa. The Sino Iron Project in Western Australia, held through CITIC Mining International Ltd. (together with its subsidiaries, " CITIC Mining International "), is one of CITIC Limited Group's largest overseas investments.

For the new consumption business segment, CITIC Telecom is an internet-oriented telecommunications enterprise providing comprehensive services. CITIC Agriculture Technology Co., Ltd (" CITIC

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Agriculture ") focuses on the latest developments in agricultural science and technology and serves as a platform to execute CITIC Limited's agricultural development strategy.

In the new-type urbanisation business segment, CITIC Construction Company Limited (" CITIC Construction ") conducts its business in Angola, Venezuela, Brazil, Belarus, mainland China, the United Kingdom and other overseas markets, including countries along the "Silk Road Economic Belt" and the "21[st] Century Maritime Silk Road" (the " Belt and Road "). CITIC Construction has become one of the largest international project contractors and has successfully implemented various large-scale overseas projects recognised internationally.

With the tightened link between the PRC and global economy, the international knowledge of CITIC Limited Group will enable it to follow closely the development trend of both the PRC and the rest of the world, and to remain competitive globally.

CITIC Limited Group continuously enhances its existing businesses through the optimisation of its business structure or business model, the development of value added products and services through innovation, technology and a focus on new investments in areas that maximise returns

In respect of its existing business, CITIC Limited Group has anticipated market demand and has optimised business structures or models and developed high value products and services through innovation and technology to enhance quality and competitiveness. CITIC Limited Group has also sought opportunities that provide greater integration and increasingly focused on consumption driven, environmental and new economy industries. CITIC Limited Group has optimised its business structure and continued to develop new opportunities in the comprehensive financial services business segment.

CITIC Bank follows the general principle of pursuing progress while ensuring stability in terms of its corporate banking business. CITIC Bank acts upon the philosophy of customer-centric services and boosted transformation and sustainable development of its corporate banking business. CITIC Bank accelerated the building of its customer base system by promoting the "Six Hundred and Three Thousand" project and carrying out a series of activities such as traffic attraction through various channels and partnership plans.
In response to changes in the external environment and customer needs, CITIC Bank has implemented a strategic development plan to drive capability and system building in its wealth management business. CITIC Bank, as an expert at settlement, investment and financing services and activities, strives to become customers' first-choice bank for wealth management. Adhering to a customer-centric approach, CITIC Bank focuses on fostering professional competency in wealth management, strengthening multi-channel customer acquisition and carrying out stratified management of customers. This enhances CITIC Bank's professional capabilities in investment research, investment advisory and asset allocation, continues to ramp up retail assets under management and optimises asset structure under management, while improving its organisational system.
CITIC Bank adheres to its business concept of realising growth through science and technology, and actively pursued digital and intelligent transformation. CITIC Bank focuses on its capacity enhancement to drive business development. For the six months ended 30 June 2021, the cumulative number of business requests delivered to CITIC Bank's head office and branches increased by 110 per cent. from the corresponding period in the previous year, and the average delivery time of regular requests was shortened by 49 per cent. year on year. In terms of corporate banking, CITIC Bank recently launched innovative products such as CITIC e-Card, Corporate Treasure and Medical Insurance e-Loan, and accelerated the implementation of the e-welfare project covering the consumer aging-care market, enhancing its comprehensive financial service capacity. CITIC Bank has also put its business collaboration management system into operation, which improved the bank's collaboration efficiency significantly. Recently, CITIC Bank launched its first one-stop cross-border e-commerce model for foreign trade in the industry, which effectively solved the four major problems of small and medium-sized export enterprises, namely, difficulties in collecting foreign exchange, low efficiency, high risk and high rate. In terms of retail banking, CITIC Bank widely adopted artificial intelligence in precision marketing. As at 30 June 2021, retail assets increased by nearly RMB135 billion when compared to 31 December 2020. The efficiency of CITIC Bank's fully online loan business for auto scenarios is considerably higher than that of traditional auto loans, and CITIC Bank has experienced rapid growth in this area of business
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in recent years. Besides, CITIC Bank made steady advancements in building open banking ecosystems, and co-created more than 4,000 business scenarios in the aviation, internet finance, auto manufacturing and other industries. In terms of its financial market business, CITIC Bank launched a new-generation corporate treasury transaction platform, and realised online lifecycle management of all agency products of the financial market business, substantially enhancing transaction efficiency. It launched the "Foreign Exchange Trading" platform system to support online handling of foreign exchange business for corporate customers, greatly reducing labour and time costs of customers, helping micro, small and medium-sized foreign trade enterprises effectively manage exchange rate risks.

CITIC Bank actively promotes research and development and application of innovative technologies with continuous efforts. The bank's AI Model Centre has over 300 models in use, and has built an enterprise-level intelligent model group covering major business areas. The AI Efficiency Centre completed the "Robotic Process Automation + Artificial Intelligence (RPA+AI)" system, fully releasing the "superposition effect" of intelligent productivity, and was granted the "2021 Best Process Automation Award" by The Asian Banker. The Optical Character Recognition (OCR) basic engine is fully developed by CITIC Bank in-house and has been successfully applied in a number of business scenarios such as intelligent approval. CITIC Bank remains a leader in terms of blockchain technology, incubating and putting in place several innovative solutions such as smart supply chain and family investment advisor, where the blockchain-based fund management programme was awarded the "2021 Best Blockchain Program in China" by The Asian Banker.

As part of the optimisation of its business model, CITIC Construction has evolved from being a traditional project contractor to a large and comprehensive international engineering service provider. CITIC Heavy Industries also transformed its operations from being only an equipment manufacturer to a contracting service provider who provides project-based solutions. CITIC Dicastal has adopted an asset light development strategy.

In July 2019, CITIC Press successfully listed 47,537,879 of its A-Shares on the ChiNext board of the Shenzhen Stock Exchange.

In September 2019, CITIC Limited announced the completion of the restructuring of its special steel business through a series of transactions, consolidating the assets of this business under CITIC Pacific Special Steel. As at 30 June 2021, CITIC Limited indirectly held 83.85 per cent. equity interest in CITIC Pacific Special Steel.

In November 2019, CITIC Limited, through its indirectly wholly-owned investment holding company, began the privatisation process for CITIC Envirotech Ltd (" CITIC Envirotech ") by announcing the exit offer for the shares in CITIC Envirotech. In December 2019, all the PRC approvals and requisite filings required for the privatisation were obtained and the proposal to privatise and delist CITIC Envirotech was approved by CITIC Envirotech's shareholders. On 23 January 2020, the shares of CITIC Envirotech were delisted from the Official List of the Singapore Exchange Securities Trading Limited.

In December 2019, CITIC Limited, through its wholly-owned subsidiary CITIC Pacific Limited, privatised and delisted Dah Chong Hong Holdings Limited (" Dah Chong Hong ") through the scheme of arrangement involving the cancellation of shares held by the registered shareholders of Dah Chong Hong (" DCHH Scheme of Arrangement "). The DCHH Scheme of Arrangement was approved by the relevant shareholders and the High Court of Hong Kong and became effective on 8 January 2020. The listing of the shares of Dah Chong Hong on the Hong Kong Stock Exchange was withdrawn on 10 January 2020.

Also in December 2019, CITIC Dicastal was successfully restructured such that 57.89 per cent. equity interest in CITIC Dicastal was transferred from CITIC Industrial Investment Group Co., Ltd. (" CITIC Industrial Investment ") and CITIC Industrial Investment Ningbo Holding Ltd. to a consortium of investors.

In January 2020, three years after CITIC Limited acquired an interest in McDonald's PRC and Hong Kong businesses, CITIC Limited proposed to dispose of 22 per cent. of its interests, and the disposal was completed in June 2020. This disposal is entirely a commercial decision. Going forward, CITIC Limited and its business partners intend to remain committed to and benefit from the further development of McDonald's in the PRC and Hong Kong.

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CITIC Limited Group has also further developed its telecommunications and general aviation businesses in the modern services sector with a focus on satisfying the rapidly changing and demanding needs of customers.

CITIC Limited Group is able to maximise conglomerate synergies and possesses a strong ability to integrate resources

CITIC Limited Group has a strong synergy in terms of strategy, business, management, brand, talent and expertise, based on its strengths in business variety, clients, business network and other areas. CITIC Limited Group exerts the group's overall strength to mobilise the sharing of internal resources so as to maximise the group's overall value. CITIC Limited Group has accumulated a diversified client base in multiple industries and markets including a number of Fortune 500 enterprises, sector leading enterprises and high net worth clients both at home and abroad.

CITIC Limited Group has established a work process to enable synergy across its subsidiaries and investee companies. CITIC Limited Group has consistently promoted innovative models for its group synergy, aiming to help with business expansion and generate value for CITIC Limited Group.

Provision of comprehensive services centred on clients: CITIC Limited Group consolidates various resources within the group to win mandates for important projects and business opportunities and is able to provide comprehensive financial resolutions to clients through joint marketing, and increase the contribution in value by high-net-worth clients and strengthen their loyalty through joint development of products and cross-selling by financial companies as well as value-added services jointly developed by financial companies and industrial companies.
Industrial business and financial business complement each other: CITIC Limited Group's financial companies provide industrial companies and their customers with comprehensive financial solutions and services at a fair price, and industrial companies provide financial companies with specialised support to enable the latter to gain access to industry clients.
Synergy among industrial businesses connecting industry chains: each entity exerts its advantages in products, services, talents and technology to achieve cooperation between the upstream and downstream industry players along each industry chains. CITIC Limited Group also closely monitors the emerging industries with national strategic importance in order to identify new areas of growth momentum through group synergy.

To better prepare for continued change and uncertainty, the PRC is accelerating its dual circulation economic strategy, which prioritises the development of a dominant domestic economy supplemented by international trade. In alignment with the PRC's 14[th] Five-Year Plan, and to adapt to the increasingly complex operating environment, CITIC Limited Group has in 2020 outlined an updated development strategy focused on comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation. These five segments will be matrixed with five platforms: the financial, industrial, capital investment, capital operations and strategic investment platforms. CITIC Limited Group will seek to leverage integration, collaboration and expansion to build a lasting enterprise and solidify the CITIC brand's positioning as a leader in the fields in which CITIC Limited Group operates.

The "CITIC" brand is one of the PRC's most recognised brands

With a stable operation for over 40 years, CITIC Limited Group has established a series of "CITIC" linked and prestigious corporate brands in various business segments. The success of the "CITIC" brand allows its group members to enjoy reputational advantages over their competitors, provides them with strong support in entering new markets and business areas and enhances their acceptance level among customers and business partners. At the same time, the reputation gained by the group members in their sectors also further strengthens the "CITIC" brand.

CITIC Limited Group has a stable and experienced management team with market-oriented management philosophies, international vision and a corporate culture of pursuing excellence

CITIC Limited Group's senior management team possesses a wealth of experience in managing large conglomerates, with average relevant industry experience of more than 30 years. The senior management

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team is stable and with management experience encompassing multiple industries and regions. The management team of CITIC Limited Group also has international vision since many members of the senior management team have worked or studied overseas. CITIC Limited Group believes that the stable management and its extensive expertise and operational experience have laid a solid foundation for the success of CITIC Limited Group.

In a long history of its development, CITIC Limited Group, based on its development strategy, business characteristics and management style, has refined and established its own corporate culture with core values of "Integrity, Innovation, Cohesion, Unison, Dedication and Excellence". The successful development of CITIC Limited Group is attributable to the corporate culture of pursuing excellence, market-oriented positioning and innovative mind-set.

CITIC Limited Group actively fulfils its corporate responsibility and devotes itself in greening, environmental protection, education, poverty alleviation, disaster relief and other social public welfare matters. CITIC Limited Group has and maintains a good social image.

CITIC Limited Group operates a prudent and comprehensive risk management system with a balanced emphasis on both control and efficiency

CITIC Limited Group considers risk management one of its core competitiveness and has devoted resources to further improve the system. CITIC Limited Group has established a prudent and comprehensive risk management system covering all of its business segments and consistently develops and improves its risk management framework and processes.

A substantial portion of CITIC Limited Group's assets are already or were previously listed, with its listed subsidiaries and formerly listed subsidiaries having established their own risk management systems which have withstood challenges from the markets. All the financial subsidiaries of CITIC Limited Group are subject to stringent industry regulations. Non-financial subsidiaries have been required to either establish risk management departments or have designated personnel responsible for risk management according to their business needs.

Strategies of CITIC Limited Group

CITIC Limited Group is committed to being a first-class international conglomerate in the PRC by pursuing strategy-led, innovative and high value-added growth. CITIC Limited Group will (i) leverage the overall strengths that it has accumulated over years of operating its businesses; (ii) seize opportunities brought by the evolution of the Chinese economy and its globalisation; and (iii) adopt a market-led and customercentric business model to maximise enterprise value.

CITIC Limited's operating principles are as follows:

Enhance existing businesses with focus

CITIC Limited Group aims to maximise benefits of the CITIC platform.
By anticipating market demand, CITIC Limited Group will develop high value-added products and services through innovation.
CITIC Limited Group will consolidate similar businesses to maximise synergies within the group.
CITIC Limited Group will enhance quality and competitiveness, increase productivity and reduce cost.
CITIC Limited Group will strive for a balanced development between financial and non-financial industries.

Focus new investments in areas that align with the PRC's growth trajectory and continue to invest internationally

CITIC Limited Group will seek opportunities that provide greater integration and connectivity among its businesses.
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CITIC Limited Group will leverage its strong competitive advantage to identify consolidation opportunities in the PRC through mergers and acquisitions.
CITIC Limited Group will focus on its five business segments of comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation to align with the PRC's 14[th] Five-Year Plan.
CITIC Limited Group will continue to invest internationally to further its businesses in an integrated fashion.

Continue to exercise discipline in capital allocation and maintain a strong credit profile to enhance longterm shareholder value

CITIC Limited Group will adopt a disciplined approach towards capital planning and allocation, and will continue to optimise its business portfolio.
CITIC Limited Group will improve its capital efficiency and cash flow.
CITIC Limited Group will strengthen its funding capability and maintain its strong credit profile.
CITIC Limited Group will continue to exercise stringent disciplines in capital allocation, in order to maximise the overall value of CITIC Limited Group and realise sustainable growth.

Enhance corporate governance framework to protect shareholder interests by extending CITIC Limited's international standard of corporate governance to CITIC Limited Group

CITIC Limited's international standard of corporate governance will be extended to CITIC Limited Group.
CITIC Limited will strengthen overall supervision of CITIC Limited Group while providing clear strategies to guide businesses towards greater value creation.
CITIC Limited will ensure rights of all stakeholders are respected.

Business

The main businesses of CITIC Limited Group include the following:

Comprehensive Financial Services

CITIC Limited Group operates financial services businesses in different segments, including banking, trust, asset management, securities and insurance services. CITIC Limited Group provides domestic and overseas banking services through CITIC Bank and its subsidiaries, securities services through CITIC Securities, trust services through CITIC Trust, and insurance and reinsurance services through CITIC-Prudential Life Insurance Co., Ltd. (" CITIC-Prudential Life ").

Advanced Intelligent Manufacturing

The advanced intelligent manufacturing business segment of CITIC Limited Group consists mainly of the manufacturing of heavy machineries, specialised robotics, aluminium wheels, aluminium casting parts and other products.

CITIC Limited Group conducts the manufacturing of heavy machinery, key fundamental and spare components, engineering, procurement and construction (" EPC ") projects, specialised robotics and intelligent equipment through its subsidiary CITIC Heavy Industries, while the manufacturing of automobile aluminium wheels and automobile aluminium castings is conducted through CITIC Dicastal. CITIC Holdings develops and invests in smart manufacturing, industrial internet, and lighthouses, which are recognised as one of the most advance production facilities in the world.

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Advanced Materials

The advanced materials business segment of CITIC Limited Group has an extensive global business covering exploration, mining, processing and trading of mineral resources as well as power generation and manufacturing of special steel. CITIC Limited Group predominately operates its advanced materials business segment through CITIC Resources, CITIC Mining International, CITIC Metal Group, CITIC Pacific Special Steel and CITIC Pacific Energy Investment.

CITIC Limited owns 100 per cent. of the Sino Iron Project through CITIC Mining International which is being managed by CITIC Pacific Mining Management Pty Ltd. (" CITIC Pacific Mining "). The Sino Iron Project is one of the largest magnetite iron ore mine being developed in the world. It is located at Cape Preston, 100 kilometres southwest of Karratha in Western Australia's Pilbara region. The magnetite concentrate produced is shipped to the steel plant(s) operated by CITIC Pacific Special Steel as well as other third-party steel mills in mainland China and Vietnam.

CITIC Limited Group manufactures special steel through CITIC Pacific Special Steel, which is the largest manufacturer dedicated to the production of special steel in mainland China with four manufacturing bases located in Jiangyin and Jingjiang of Jiangsu province, Huangshi of Hubei province and Qingdao of Shandong province. Its annual steel producing capacity was over 14 million tonnes per annum at the end of 2020. Major products manufactured by CITIC Pacific Special Steel include bars, plates, seamless steel tubes, wires, forging steel and casting billets. These are widely used in various industries, including auto components, energy, machinery manufacturing, power generation, oil and petrochemicals and industrial sectors.

New Consumption

The new consumption business segment of CITIC Limited Group includes motor and food and consumer products business, telecommunications services, publication services, modern agriculture and others. These businesses are mainly operated through Dah Chong Hong, CITIC Telecom, CITIC Press and CITIC Agriculture.

New-Type Urbanisation

The new-type urbanisation business segment of CITIC Limited Group consists of development, sale and holding of properties, contracting and design services, infrastructure services, environmental services, general aviation and others.

The principal businesses of CITIC Engineering Design and Construction Company Limited (" CITIC Engineering ") include urban and rural planning, survey, consulting, design and supervision, project general contracting, project management and other businesses. CITIC Construction provides engineering contracting services both domestically and internationally, and engages in infrastructure, housing and industrial construction projects, whilst becoming increasingly involved in resources, energy, agriculture and environmental protection.

The new-type urbanisation business of CITIC Limited Group also consists of development, sale and management of commercial properties and integrated property projects. It is predominately operated through CITIC Urban Development and Operation Co., Ltd. (" CITIC Urban Development & Operation ") and CITIC Pacific Properties.

CITIC Environment Investment Group Co., Ltd. (" CITIC Environment "), CITIC Industrial Investment Group Co., Ltd (" CITIC Industrial Investment ") and CITIC Offshore Helicopter Co., Ltd. (" COHC ") carry out environmental services, aviation business and healthcare, logistics and infrastructure businesses as a capital operation platform, respectively, as new-type urbanisation business of CITIC Limited Group.

CITIC Environment is CITIC Limited Group's specialised investment and operational platform for environmental protection. Its core business covers three major sectors, including water treatment, solid waste and hazardous waste disposal and energy saving services.

CITIC Limited Group's infrastructure business includes the investment in and management of ports and port terminals as well as regional developments in China through CITIC Industrial Investment.

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COHC, as the leading company in the general aviation sector in China, has the qualification and capability to operate a full-service general aviation business. COHC is the first and only main-board listed company in the domestic general aviation industry, providing a full range of services, including offshore flights, onshore industry and forestry-related flights, emergency rescue, maintenance, training, integrated city flight services, sky tours, drone operation and data collection.

The following table sets out the revenue of each business segment of CITIC Limited Group for the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021.

CITIC Limited Group	CITIC Limited Group	CITIC Limited Group	CITIC Limited Group
For theyear ended 31 December For the six months ended 30 June 2019 2020 2020 2021 Revenue %(1) Revenue %(1) Revenue %(1) Revenue %(1) (in millions of HK$, except percentages) 222,316 39.2 229,103 41.4 116,984 45.7 132,245 37.5 35,942 6.3 13,759 2.5 2,896 1.1 23,071 6.5 178,399 31.5 195,754 35.4 86,020 33.6 142,504 40.4 89,017 15.7 70,056 12.7 35,415 13.8 32,885 9.3 40,718 7.2 44,224 8.0 14,454 5.7 22,195 6.3 105 0.0 53 0.0 33 0.0 21 0.0 566,497 100% 552,949 100% 255,802 100% 352,921 100%	For the six months ended 30 June
2019 Revenue %(1) 222,316 39.2 35,942 6.3 178,399 31.5 89,017 15.7 40,718 7.2 105 0.0 566,497 100%		2021
Revenue 222,316 35,942 178,399 89,017 40,718 105 566,497		Revenue 132,245 23,071 142,504 32,885 22,195 21 352,921	%(1)
			37.5 6.5 40.4 9.3 6.3 0.0
			100%

(1) Percentage figures are rounded to the nearest decimal.

The following table sets out the profit before tax (before non-controlling interests) of each business segment of CITIC Limited Group for the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021.

CITIC Limited Group	CITIC Limited Group	CITIC Limited Group	CITIC Limited Group
For theyear ended 31 December For the six months ended 30 June 2019 2020 2020 2021 Profit before tax %(1) Profit before tax %(1) Profit before tax %(1) Profit before tax %(1) (in millions of HK$, except percentages) 73,683 76.7 76,087 77.9 37,787 81.2 48,497 70.1 1,360 1.4 588 0.6 263 0.6 851 1.2 12,035 12.5 14,421 14.8 5,216 11.2 16,186 23.4 3,465 3.6 1,770 1.8 438 0.9 1,528 2.2 10,514 11.0 11,711 12.0 5,303 11.4 3,923 5.7 (5,045) (5.3) (6,880) (7.0) (2,473) (5.3) (1,856) (2.7) 3 0.0 21 0.0 10 0.0 8 0.0 96,015 100 97,718 100 46,544 100 69,137 100	For the six months ended 30 June
2019 Profit before tax %(1) 73,683 76.7 1,360 1.4 12,035 12.5 3,465 3.6 10,514 11.0 (5,045) (5.3) 3 0.0 96,015 100		2021 Profit before tax %(1) 48,497 70.1 851 1.2 16,186 23.4 1,528 2.2 3,923 5.7 (1,856) (2.7) 8 0.0 69,137 100
Profit before tax 73,683 1,360 12,035 3,465 10,514 (5,045) 3 96,015			%(1)
			70.1 1.2 23.4 2.2 5.7 (2.7) 0.0
			100

(1) Percentage figures are rounded to the nearest decimal.

Descriptions of the business segments are set out below.

Comprehensive Financial Services

CITIC Limited Group's comprehensive financial services business spans across the banking, trust, asset management, securities and insurance sectors. CITIC Limited Group offers a full-service platform which provides integrated financial solutions for its customers.

As at 31 December 2019 and 2020 and 30 June 2021, the total assets of CITIC Limited Group's comprehensive financial services business were HK$7,703,980 million, HK$9,113,747 million and HK$9,578,001 million, respectively, representing 92.9 per cent., 93.6 per cent. and 93.6 per cent. of CITIC Limited Group's total assets, respectively. The revenue generated from CITIC Limited Group's comprehensive financial services business for the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021 were HK$222,316 million, HK$229,103 million, HK$116,984 million and HK$132,245 million, respectively, representing 39.2 per cent., 41.4 per cent., 45.7 per cent.

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and 37.5 per cent. of CITIC Limited Group's total revenue, respectively. For the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021, CITIC Limited Group's profit before tax generated from comprehensive financial services business were HK$73,683 million, HK$76,087 million, HK$37,787 million and HK$48,497 million, respectively, representing 76.7 per cent., 77.9 per cent., 81.2 per cent. and 70.1 per cent. of CITIC Limited Group's profit before tax, respectively.

The following table sets out the respective financial information of the principal operational entities of CITIC Limited Group's comprehensive financial services business for the periods indicated:

For theyear ended 31 December	For theyear ended 31 December	For theyear ended 31 December
2019 2020 Revenue Net Profit Attributable to Ordinary Shareholders Revenue Net Profit Attributable to Ordinary Shareholders (in millions of RMB) 187,881 48,015 195,399 48,980 7,183 3,593 8,746 3,855 24,885 1,794 28,772 2,509 57,080 12,229 71,869 14,902	2020
Revenue 187,881 7,183 24,885 57,080		Net Profit Attributable to Ordinary Shareholders
		48,980 3,855 2,509 14,902

For the six months ended 30 June	For the six months ended 30 June	For the six months ended 30 June
2020 2021 Revenue Net Profit Attributable to Ordinary Shareholders Revenue Net Profit Attributable to Ordinary Shareholders (in millions of RMB) 102,200 25,541 105,656 29,031 3,331 1,071 4,096 2,012 14,652 777 17,274 1,221 34,708 8,926 47,769 12,198	2021
Revenue 102,200 3,331 14,652 34,708		Net Profit Attributable to Ordinary Shareholders
		29,031 2,012 1,221 12,198

(1) CITIC Corporation Limited held 65.97 per cent. of CITIC Bank's equity interest as at 30 June 2021.

(2) CITIC Corporation Limited held 50 per cent. of CITIC-Prudential Life's equity interest as at 30 June 2021. CITIC-Prudential Life was incorporated in 2000.

(3) CITIC Corporation Limited held 18.38 per cent. of CITIC Securities' equity interest as at 30 June 2021 and was its largest shareholder.

Banking

CITIC Limited Group conducts its domestic and overseas banking business through CITIC Bank and its subsidiaries.

CITIC Bank (SSE Stock Code: 601998; Stock Exchange Stock Code: 0998) was incorporated in 1987. CITIC Limited and its subsidiaries (including CITIC Corporation Limited) held 65.97 per cent. of CITIC Bank's total shares as at 30 June 2021. CITIC Bank is a national joint-stock commercial bank whose main businesses include corporate finance, personal finance and financial market.

The following table sets out the major consolidated financial and regulatory indicators of CITIC Bank and its subsidiaries during the periods indicated:

Major Operational Indicator Total Assets ................................................... Revenue ........................................................ Profit before tax ............................................ Net profit attributable to ordinary shareholders of CITIC Bank ...................... Return on average assets (ROAA) (%)(1)....... Return on average equity (ROAE) (%)(2)....... Cost-to-income ratio (%)(3)............................ Net interest spread (%)(4)............................... Net interest margin (%)(5)..............................	For theyear ended 31 December For the six months ended 30 June 2019 2020 2020 2021 (in millions of RMB, except percentages) 6,750,433 7,511,161 7,080,616 7,816,329 187,881 195,399 102,200 105,656 56,545 57,857 30,746 34,923 48,015 48,980 25,541 29,031 0.76 0.69 0.76 0.78 11.06 10.08 11.44 12.26 27.84 26.73 22.18 23.02 2.36 2.18 2.19 2.03 2.45 2.26 2.27 2.09	For the six months ended 30 June	For the six months ended 30 June
			2021
			7,816,329 105,656 34,923 29,031 0.78 12.26 23.02 2.03 2.09

(1) ROAA = Net profit of CITIC Bank/(total assets at the beginning of the period plus total assets at the end of the period)/2

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(2) ROAE = Net profit attributable to ordinary shareholders of CITIC Bank/(total equity attributable to ordinary shareholders of CITIC Bank at the beginning of the period plus total equity attributable to ordinary shareholders of CITIC Bank at the end of the period)/2
(3) Cost-to-income ratio = (Operating expense minus tax and surcharges)/revenue
(4) Net interest spread represents the difference between the average yield of total interest-earning assets and the average cost rate of total interest-bearing liabilities.
(5) Net interest margin = Net interest income divided by average balance of total interest-earning assets

The following table sets out the consolidated revenue of CITIC Bank and its subsidiaries for the periods indicated:

For the six months ended 30 June	For the six months ended 30 June	For the six months ended 30 June
2020 2021 Revenue % of total Revenue % of total (in millions of RMB, except percentages) 46,871 45.9 50,113 47.4 38,772 37.9 39,549 37.5 14,509 14.2 13,982 13.2 2,048 2.0 2,012 1.9 102,200 100.0 105,656 100.0	2021
		% of total
		100.0

(1) Percentage figures are rounded to the nearest decimal.

Corporate banking

The corporate banking business of CITIC Bank offers a range of financial products and services to corporations, government agencies and non-financial institutions. The products and services include corporate loans, deposit taking activities, agency services, remittance and settlement services and guarantee services. CITIC Bank enhanced the sustainable development of its corporate banking business by developing businesses such as investment banking, custody business, supply chain financing, cash management, online and cross border banking services transaction banking. In addition, CITIC Bank continues to strengthen its core competency in debt financing and reinforce its market-leading position in terms of total financing scale.

The revenue generated from corporate banking business was RMB93,790 million, RMB89,473 million, RMB46,871 million and RMB50,113 million, for the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021. Net non-interest income generated from corporate banking business was RMB14,080 million, RMB12,859 million, RMB7,614 million and RMB7,761 million, respectively, for the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021.

Retail banking

In response to changes in the external environment and customer needs, CITIC Bank has implemented a strategic development plan to drive capability and system building in its wealth management business. CITIC Bank, as an expert at settlement, investment and financing services and activities, strives to become customers' first-choice bank for wealth management. Adhering to a customer-centric approach, CITIC Bank focuses on fostering professional competency in wealth management, strengthening multi-channel customer acquisition and carrying out stratified management of customers. This enhances CITIC Bank's professional capabilities in investment research, investment advisory and asset allocation, continues to ramp up retail assets under management and optimises asset structure under management, while improving its organisational system.

As at 30 June 2021, CITIC Bank's balance of personal deposits was RMB860.344 billion, representing an increase of RMB38.328 billion or 4.66 per cent. compared to 31 December 2020. During the six months ended 30 June 2021, CITIC Bank's retail banking business recorded net operating income of RMB38.322 billion, a year-on-year growth of 1.78 per cent., representing 38.90 per cent. of its net operating income. Net non-interest income from retail banking recorded RMB11.181 billion, a year-on-year increase of 5.22 per cent., accounting for 40.33 per cent. of CITIC Bank's net non-interest income. Specifically, net noninterest income from credit cards amounted to RMB5.849 billion, accounting for 21.09 per cent. of CITIC Bank's net non-interest income.

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Financial markets business

CITIC Bank's financial markets business focuses on the monetary, capital and international finance markets. Its principal traded products include foreign currencies, bonds, precious metals and derivatives. In terms of services, the financial markets business provides bond market-making and distribution services, structured finance, international trade finance, bank bill and asset management products and a range of other specialised investment and financing services.

CITIC Bank maintains a leading position in the interbank market-making business and was included in the first group of market makers joining Bond Connect. CITIC Bank's online platform known as "CITIC Interbank + " is continually optimised to improve customer experience.

Innovation and Fintech

CITIC Bank continues to apply the latest fintech to financial services and accelerate its digital transformation by allocating more resources in fintech innovation and by expanding its fintech talent pool. CITIC Bank also was the first bank to launch a Blockchain-based Letter of Credit system in mainland China.

In line with CITIC Bank's commitment to develop and innovate, CITIC AiBank Corporation Limited (" CITIC AiBank ") was officially launched in November 2017. A new share issuance accepted by Canada Pension Plan Investment Board was approved by the China Banking and Insurance Regulatory Commission in November 2020; its registered capital increased from RMB4 billion to RMB5.6 billion with CITIC Bank holding 65.7 per cent. of the shares.

By the end of 2020, the number of CITIC AiBank users was over 51 million, cumulative online loans exceeded RMB300 billion and net operating income reached RMB1.7 billion. CITIC AiBank continued to innovate new products, including a collaboration with Baidu to launch Baidu QuickPass Card, the first digital card for deposits and loans available in the domestic market. Its key financial indicators remained healthy and balance sheet was further optimised during the year. As at 30 June 2021, CITIC AiBank recorded total assets of RMB67.9 billion and net assets of RMB6.7 billion. For the six months ended 30 June 2021, it realised net operating income of RMB1.3 billion and net profit of RMB104 million.

Trust

CITIC Limited Group conducts trust business through 100 per cent. indirectly owned CITIC Trust, which was incorporated in 1988.

CITIC Trust offers a comprehensive range of integrated solutions across its investment, financing and wealth management services. CITIC Trust allocates trust capital across several major industries, which allows it to align its investment portfolio in line with changing market opportunities. The primary sectors currently targeted by CITIC Trust include infrastructure, energy and resources, manufacturing, agriculture and financial institutions.

The assets under management (" AUM ") of CITIC Trust totalled RMB1,089,839 billion as at 30 June 2021.

The following table sets out the principal financial indicators of CITIC Trust for the periods indicated:

Financial Indicator Revenue ........................................................ Profit attributable to shareholders .................. Total proprietary assets .................................	For the year ended/ As at 31 December For the six months ended/ As at 30 June 2019 2020 2020 2021 (in millions of RMB, except percentages) 7,183 8,746 3,331 4,096 3,593 3,855 1,071 2,012 42,403 47,114 44,204 49,197	For the six months ended/ As at 30 June	For the six months ended/ As at 30 June
			2021
			4,096 2,012 49,197

CITIC Trust's business consists of trust business, proprietary business and professional subsidiary business. The main difference between these business arms is the source of assets. The assets managed in trust business originate from the clients and require the setting up of related arrangements such as trust product design, structural arrangements for trust product transactions, sales of trust products, beneficiary rights management (customer relationship management), information disclosure, trust establishment, trust termination and liquidation. The assets of CITIC Trust's proprietary business originate from funds owned by CITIC Trust itself, and thus have no arrangements related to clients' assets. The professional subsidiary

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business mainly comprises transaction, financing abroad and other financial consultancy services. CITIC Trust's specialised subsidiaries aim to explore and increase CITIC Trust's exposure to asset management, overseas businesses and consultancy services in order to provide synergies and add value to the core businesses.

The family trust services is operated through the brand "CITIC Family Trust", which has expanded the product line beyond family office trust plans and introduced specialised investment, insurance trust services and other wealth management services to its clients.

CITIC Trust has introduced a number of unique financial products and services and continues to innovate in relation to a wide array of financial solutions. CITIC Trust was one of the first institutions to qualify as an official underwriter of corporate debt financing instruments for non-financial clients. CITIC Trust is the first trust company to launch a consumer finance business. In 2019, CITIC Trust expanded into the western China market and launched two wealth management centres respectively in Chengdu and Shaanxi province and also established the first offshore family trust in Hong Kong through its overseas platform, CTI Capital Trust Limited. In 2020, CITIC Trust continued to deepen the integration of industry and finance to support the real economy and invested approximately RMB600 billion in projects to fully capture opportunities arising from the Belt and Road initiative and the development of key regions including the Beijing-TianjinHebei region and the Yangtze River Delta.

Insurance

CITIC-Prudential Life was incorporated in 2000. As at the date of this Offering Circular, CITIC Corporation Limited and Prudential Corporation Holdings Limited each held 50 per cent. of its equity interest. CITIC- Prudential Life is primarily engaged in the business of providing life insurance, health insurance and accident insurance, as well as reinsurance of the above categories.

The following table sets out the main financial indicators of CITIC-Prudential Life for the periods indicated:

Financial Indicator Operating revenue ......................................... Net profit attributable to shareholders ........... Total assets .................................................... Return on equity (%) .....................................	For the year ended/ As at 31 December For the six months ended/ As at 30 June 2019 2020 2020 2021 (in millions of RMB, except percentages) 24,885 28,772 14,652 17,274 1,794 2,509 777 1,221 104,105 138,094 123,571 163,587 24.5 24.5 8.8 9.9	For the six months ended/ As at 30 June	For the six months ended/ As at 30 June
			2021
			17,274 1,221 163,587 9.9

Products

CITIC-Prudential Life's products mainly include life insurance, accident insurance and health insurance, among which life insurance is its major source of revenue. The following is a summary of some of CITICPrudential Life's main products:

• Life insurance

Life insurance products include traditional life insurance, participating life insurance, universal life insurance and investment-linked insurance, among which participating life insurance products generate the majority of the GWP of CITIC-Prudential Life. Participating life insurance combines the features of traditional life insurance and investment products and can cater to the client's requirements for insurance, savings and investments in one product.

• Accident insurance

Accident insurance products include the provision of compensation for the death, disability and other conditions that have been stated in the policy of policy holders due to an accident or other incident specified by the policy.

• Health insurance

Health insurance products provide policy holders with insurance for illness and medical treatment and is divided into short-term health insurance and long-term health insurance.

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Distribution

CITIC-Prudential Life promotes multi-channel development and adopts a differentiated strategy. The agency distribution channel is under transition to high quality development while CITIC-Prudential Life is consolidating its competitive advantages in bancassurance and enhancing sales volume and value. CITICPrudential Life is also actively exploring e-business opportunities to drive sales.

Investment of Insurance Funds

In 2020, Citicpru AMC (中信保誠資產管理有限責任公司), a wholly-owned subsidiary of CITICPrudential Life, was established in Beijing.

CITIC-Prudential Life actively serves enterprises through issuances of bonds, creditor's rights and equity, supporting major infrastructure and livelihood projects. CITIC-Prudential Life also supports mixed reform of local enterprises, financing of small and medium-sized enterprises, and adheres to implement government policies.

Securities

CITIC Securities (SSE stock code: 600030; Stock Exchange stock code: 6030) was incorporated in 1995. CITIC Limited held 18.38 per cent. of CITIC Securities' equity interest, being the largest shareholder, as at the date of this Offering Circular.

CITIC Securities is one of the first comprehensive securities companies approved by the China Securities Regulatory Commission (" CSRC "). Its main businesses include investment banking, wealth management, asset management, financial markets and equity investment.

The following table sets out major financial and regulatory indicators of CITIC Securities during the periods indicated:

Financial Indicator Total assets .................................................... Total equity attributable to ordinary shareholders of CITIC Securities ............... Total Revenue and Other income .................. Profit before income tax ................................ Net profit attributable to ordinary shareholders of CITIC Securities ...............	For the year ended/ As at 31 December For the six months ended/As at 30 June 2019 2020 2020 2021 (in millions of RMB) 791,722 1,052,962 975,039 1,169,139 161,625 181,712 176,044 187,406 57,080 71,869 34,708 47,769 16,995 20,470 11,874 16,291 12,229 14,902 8,926 12,198	For the six months ended/As at 30 June	For the six months ended/As at 30 June
	2019 791,722 161,625 57,080 16,995 12,229		2021
			1,169,139 187,406 47,769 16,291 12,198

Principal Regulatory Indicator Net capital ................................................................................. Net capital/net assets (%) .......................................................... Net capital/total liabilities (%) ................................................... Net assets/total liabilities (%) .................................................... Value of proprietary equity securities and derivatives held/net capital (%) ............................................................................. Value of proprietary non-equity securities held/net capital (%) Risk Coverage Ratio (%) ........................................................... Capital Leverage Ratio (%) ....................................................... Liquidity Coverage Ratio (%) ................................................... Net Stable Funding Ratio (%) ...................................................	As at 31 December As at 30 June 2019 2020 2021 (in millions of RMB, except percentages) 94,904 85,906 89,340 71.06 56.63 58.03 23.35 16.51 15.41 32.86 29.15 26.55 47.88 78.54 44.05 289.28 293.17 336.50 201.05 154.96 143.33 19.61 14.95 14.22 149.74 141.83 125.60 131.15 124.15 121.73	As at 30 June
		2021

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The following table sets out the revenue generated from various businesses of CITIC Securities during the indicated period:

Fee and Commission Income Brokerage ...................................................... Investment banking ....................................... Trading .......................................................... Asset management ........................................ Others ............................................................ Fee and commission expenditure .................. Net fee and commission income ....................	For theyear ended 31 December For the six months ended 30 June 2019 2020 2020 2021 (in millions of RMB) 10,143 16,504 6,614 9,928 4,625 6,056 2,211 3,285 230 284 91 108 6,073 8,436 3,562 5,825 444 536 216 (212) 3,493 5,052 1,866 2,925 18,022 26,764 10,827 16,010	For the six months ended 30 June	For the six months ended 30 June
	2019 10,143 4,625 230 6,073 444 3,493 18,022		2021
			9,928 3,285 108 5,825 (212) 2,925 16,010

Investment banking

CITIC Securities provides financing and financial advisory services to all kinds of enterprises and institutional clients in mainland China and abroad. In mainland China, CITIC Securities is in an advantageous position in serving leading clients and obtaining large projects, and is also committed to meeting the diversified financing needs of small and medium enterprises and emerging enterprises. In 2020, CITIC Securities completed a total of 158 A-share lead underwriting transactions, with an aggregate value of RMB313.6 billion (including asset private placements), representing year-on-year growth of 12 per cent. and a market share of 18.9 per cent. ranking first in the market.

• Equity business

The equity financing business of CITIC Securities, which is comprised mainly of its equity financing business, follow-on offering and issuance of convertible bonds, has maintained its market leading position for many years. Based on its principle of "being client-oriented with comprehensive services, maximising the efficiency of resources allocation, and improving the quality of customer services", CITIC Securities aims to maximise business opportunities through comprehensive products coverage and professional customer services.

• Debt financing

CITIC Securities' debt securities businesses are divided into three categories, underwriting of bonds, structured financing and asset-backed securities, and have experienced a fast growth in recent years.

• Financial advisory

CITIC Securities' financial advisory business include financial advisory for cross-border and domestic mergers and acquisitions (M&A) projects as well as M&A investment and financing.

Wealth management

CITIC Securities provides wealth management services to companies, institutions and individual customers, including trading of stocks, bonds, mutual fund rights, warrants, futures and other tradable securities, and obtains commissions by implementing and clearing customers' trades and selling financial wealth management products for cooperative entities.

With diversified financial products and professional service, CITIC Securities made rapid development in its value-added services for customers such as financing, wealth management and consulting. CITIC Securities is continuously developing its wealth management business by enriching its product offerings and service system, strengthening its core asset allocation capabilities, and striving to build a team of highcalibre professionals.

Asset management

Following the latest regulations on capital management by the PRC government, CITIC Securities has focused on expanding its active management business, developing equity products, and pursuing opportunities in the real economy. CITIC Securities maintained a total AUM of RMB1.4 trillion from 31

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December 2018 to 30 June 2021, while its assets under active management increased significantly to RMB1.2 trillion as at 30 June 2021, ranking first in the industry.

CITIC Securities is also the largest shareholder of China AMC, a leading asset management company with RMB1.6 trillion under management as at 30 June 2021.

Financial markets and equity investment

CITIC Securities' financial market and equity investment business includes flow-based and proprietary trading. Flow-based trading includes equity derivatives, fixed income, commodities and securities financing.

As a member of the underwriting syndicate, CITIC Securities provides services for various government issuers in issuing fixed income products in the public market. CITIC Securities is an A level member of the underwriting syndicate appointed by the MOF to issue government bonds and a first-tier trader of the PBoC bills in the public market appointed by the PBoC. CITIC Securities also participates in the distribution of the policy financial bonds of the Agricultural Development Bank of China, the Export-Import Bank of China and the China Development Bank as a member of the underwriting syndicate.

Besides conventional proprietary trading, CITIC Securities received stable gains with low risk and low market correlation through means such as hedging, arbitrage and quantitative investment by leveraging on the inefficiency across the domestic and international markets.

CITIC Securities started to provide margin financing and securities lending services in March 2010 as one of the first six securities companies approved for such service in mainland China.

Other businesses

CITIC Securities' other businesses mainly include private equity investment and fund management, principal investments, research and others. With the completion of the restructuring of CITIC Securities' overseas business under the single brand of CLSA, the integrated off-shore financial platform offers institutional and other clients direct access to international capital markets and offers brokerage, investment banking and private investments across major markets such as Asia Pacific, the United States, the United Kingdom, Japan, Australia, Singapore, India, South Korea, the Philippines, Malaysia, Indonesia and Thailand. In addition, CITIC Securities operates a futures business through the wholly-owned CITIC Futures Company Limited. As at the date of this Offering Circular, CITIC Securities also held 62.20 per cent. equity interest in China Asset Management Co., Ltd., a fund management company in mainland China, owned 100 per cent. of GoldStone Investment Ltd., a platform for raising and managing private equity investment and fund management, and 100 per cent. of CITIC Securities Investment Ltd., a platform of alternative investment, targeting to invest in large equity financing opportunities in the Chinese market.

Other Financial Services

Other financial services of CITIC Limited Group involves primarily capital management. The capital management business of CITIC Limited Group is mainly conducted by CITIC Finance Company Limited, a 66.57 per cent. owned subsidiary of CITIC Corporation Limited.

Advanced Intelligent Manufacturing

CITIC Limited Group's advanced intelligent manufacturing business mainly comprises manufacturing of lightweight automotive parts and advanced equipment, intelligent heavy equipment and specialised robotics and industrial internet platform.

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The following table sets out the respective financial information of the principal operational entities of CITIC Limited Group's advanced intelligent manufacturing business for the periods indicated:

F	or theyear end	ed 31 Decemb	er	F	or the six mont	hs ended 30 Ju	ne
20	19	20	20	20	20	20	21
Revenue	Net Profit Attributable to Ordinary Shareholder s	Revenue	Net Profit Attributable to Ordinary Shareholder s	Revenue	Net Profit Attributable to Ordinary Shareholder s	Revenue	Net Profit Attributable to Ordinary Shareholder s
61 5,960 30,226	(27) 133 1,101	132 7,091 29,296	(in millio 0 219 806	ns of HK$) 57 2,967 11,749	(13) 187 305	94 4,517 18,565	(5) 208 599

(1) CITIC Limited held 62.27 per cent. equity interest in CITIC Heavy Industries as at 30 June 2021.

(2) CITIC Limited held 42.11 per cent. equity interest in CITIC Dicastal as at 30 June 2021.

The revenue generated from CITIC Limited Group's advanced intelligent manufacturing business for the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021 were HK$35,942 million, HK$13,759 million, HK$2,896 million and HK$23,071 million, respectively, accounting for 6.3 per cent., 2.5 per cent., 1.1 per cent. and 6.5 per cent. of CITIC Limited Group's total revenue, respectively. Profit before tax generated from CITIC Limited Group's advanced intelligent manufacturing business for the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021 were HK$1,360 million, HK$588 million, HK$263 million and HK$851 million, respectively, accounting for 1.4 per cent., 0.6 per cent., 0.6 per cent. and 1.2 per cent. of CITIC Limited Group's profit before tax, respectively.

CITIC Dicastal

CITIC Limited Group engages in the manufacturing of automobile aluminium wheel, automobile aluminium castings, model manufacturing, casting machinery manufacturing, manufacturing of specialised equipment for auto parts through CITIC Dicastal. CITIC Dicastal was incorporated in 1988 and as at 30 June 2021, CITIC Limited Group held a 42.11 per cent. equity interest in CITIC Dicastal. In December 2019, CITIC Industrial Investment and CITIC Industrial Investment Ningbo Holding Ltd., which are indirect wholly-owned subsidiaries of CITIC Limited, divested 57.89 per cent. of CITIC Dicastal through a public offering for tender to strategic investors at a consideration of RMB5.5 billion. In January 2020, CITIC Limited completed the restructuring which will enable CITIC Dicastal to crystalise its valuation whilst attaining more resources and expertise.

CITIC Dicastal mainly provides automobile aluminium wheels and automobile aluminium castings to automobile manufacturers. CITIC Dicastal has formed a business model of "headquarters core plus manufacturing bases" with a "one-stop" service from product design to production.

Products and Production

• Automobile aluminium wheels

CITIC Dicastal produces three main types of automobile aluminium wheels, namely cast wheels, forged wheels and cast flow-forming wheels. It is currently one of the few manufacturers in the world that is capable of providing all three types of automobile aluminium wheels. Furthermore, it is able to meet all surface treatment requirements of existing automobile aluminium wheels.

As at 30 June 2021, CITIC Dicastal's automobile aluminium wheel business had manufacturing bases in a number of regions, including mainland China, Europe and the United States and imports manufacturing equipment from Germany, the United States and Japan.

CITIC Dicastal operates a plant in Michigan, United States with a designated annual production capacity of three million wheels.

CITIC Dicastal's sixth production line at its Qinhuangdao production facility featuring advanced robotics and smart production systems and with a designated annual production capacity of three million wheels commenced production in 2018, significantly advancing its core competency in wheel manufacturing. To meet international demand, the second phase of CITIC Dicastal's

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manufacturing bases in Morocco commend production by the end of December 2020 and doubled production capacity of aluminium wheels in Morocco from 3 million to 6 million units per annum. CITIC Dicastal also revamped its integrated servicing unit to strengthen its relationship with global customers and better cater to their needs, reinforcing CITIC Dicastal's leading market position. CITIC Dicastal has also set up an aluminium wheel manufacturing base in Changsha with phase one production capacity of 2 million units completed in 2019 and currently in full operation. Phase two production capacity of 3 million units began trial production in October 2021.

Automobile aluminium castings

CITIC Dicastal produces three main types of automobile aluminium castings, namely powertrain segment, chassis segment and automobile body parts. CITIC Dicastal conducts automobile aluminium castings through KSM Castings, which was acquired in 2011, and three casting factories in China.

KSM Castings mainly produces chassis and powertrain segments, and is a technology-advanced company in the high-end market of automobile aluminium castings, one of the largest aluminium chassis segment suppliers in the world and one of the leading powertrain segment suppliers in Europe.

CITIC Dicastal has nine manufacturing bases for automobile aluminium castings in Germany, the Czech Republic, mainland China and the US with a total area of approximately 300,000 square meters.

Customers, Sales and Marketing

CITIC Dicastal's major customers for automobile aluminium wheels are leading, global automobile manufacturers including Daimler-Benz, BMW, Volkswagen (including Audi), Citroen-Peugeot, RenaultNissan, General Motors, Ford, Fiat-Chrysler, Toyota, Honda, Mazda, Mitsubishi, Hyundai and Kia and domestic automobile manufacturers including FAW Group, Shanghai Automobile Group, Donfeng Motor Group, Guangzhou Automobile Group, Beijing Automotive, Chang'an Automobile Group and Geely Volvo Car.

CITIC Dicastal's automobile aluminium casting business focuses on high-tech products that utilise advanced technologies. Its major customers are leading, global automobile manufacturers with brands including Mercedes-Benz, BMW, Volkswagen, Audi, and tier one suppliers in the automotive industry including ZF Friedrichshafen AG and Bosch.

R&D and Intellectual Property

CITIC Dicastal owns one state-certified enterprise technology centre in mainland China and R&D institutions in the EU and North America. It is the first domestic automobile aluminium wheels manufacturer that is able to synchronise its manufacturing process with that of foreign automobile manufacturers. It established a national automobile aluminium wheel test centre, which supervises and implements automobile wheel standards approved by the China Association of Automobile Manufacturers.

CITIC Dicastal's headquarters has installed proprietary testing equipment as well as a dedicated mould development centre and an innovation taskforce. The testing facility has set an industry benchmark for crash and stress tests as it is capable of conducting fully simulated in-house wheel and chassis tests, thereby minimising safety concerns. The mould centre has an annual capacity of 2,300 sets. CITIC Dicastal's new innovation task force has a wide range of sophisticated modelling and processing tools at its disposal and has the mandate of creating a long-standing technological advantage over its peers, with an emphasis on expanding its synchronous design services. At its CITIC Dicastal Engineering Technology Institute, CITIC Dicastal researches integrated solutions for aluminium wheels and cast components design and manufacturing. CITIC Dicastal has successfully developed a new generation of aluminium alloy applications and maintained high performance while limiting iron content in raw materials. The new products have been procured by Chinese OEMs including FAW and Inner Mongolia First Machinery Group, and the company has entered into negotiations with overseas OEMs.

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CITIC Heavy Industries

CITIC Limited Group, through CITIC Heavy Industries, engages in the design, manufacturing and sales of large equipment, complete technical equipment and key basic parts of Heavy Equipment, Complete Engineering Project Management (the provision of complete engineering, capital equipment manufacturing and project management services for an entire project, including site assessment and investigation, design, procurement of materials, provision of technical services, manufacturing, installation, training and other services in relation to each stage of the project), Robots and Intelligent Equipment, Intelligent Manufacturing, Energy Conservation and Environmental Protection, New Energy Power Equipment and others. As at 30 June 2021, CITIC Limited held a 67.27 per cent. equity interest in CITIC Heavy Industries. CITIC Heavy Industries (stock code: 601608) is listed on the SSE.

CITIC Heavy Industries adopts a "core manufacturing plus integrated service" business model with a balance between R&D and marketing services.

CITIC Heavy Industries owns one of the PRC's top special intelligent robot enterprises in CITIC HIC Kaicheng Intelligence Equipment Co., Ltd, the only enterprise in mainland China with the license to manufacture robot products in coal mining and rescue efforts and provides integrated mining automation solutions. CITIC Heavy Industries' robotics division has expanded significantly and offers five categories of robotic products (track, submarine, inspection, tunnelling and drilling) for a total of twenty individual products. These products have broad applicability across a range of contexts, including firefighting, civil infrastructure, power plants, mining and oil refining.

CITIC Heavy Industries started the Xingbang Manufacturing Industry Fund alongside China Capital Management and China Capital Zhongcai Fund Management, with a mandate of high-end manufacturing, energy conservation and environmental protection technologies, new energy and advanced materials.

Products and Production

CITIC Heavy Industries' main products include the following:

Heavy Equipment Industry: integrated and intelligent key equipment including mills, crushers, rolling press, vertical mills, rotatory kilns, hoists, tunnel boring machine and metal melting and milling machine, as well as key basic parts such as large forging and casting parts and different kinds of spare parts required for the operation of different projects;
Complete Engineering Project Management segment: the provision of complete engineering, capital equipment manufacturing and project management services for the entire project, including site assessment and investigation, design, procurement of materials, provision of technical services, manufacturing, installation, training and other services in relation to each stage of the project for clients in various sectors such as construction, mining and metallurgy;
Robots and Intelligent Equipment Industry: robotic products, intelligent control machines and related services; and
Energy Conservation and Environment Protection Industry: energy conservation and environment protection equipment that perform functions such as waste heat and waste pressure utilisation, waste disposal, liquid-solid separation, coal cleaning and high-efficiency utilisation.

Research and Development

CITIC Heavy Industries' core competitive advantages are its strength in product development and unique technologies. Its technical centre in mainland China features the most comprehensive research facilities in the country for mining equipment, while its R&D centre in Australia works closely with international customers to develop new products across the region. CITIC Heavy Industries has established the first national key laboratory for mining equipment, as well as an analysis and testing laboratory for new mining equipment and materials.

CITIC Heavy Industries has established the Luoyang CITIC Imaging Smart Technology Co., Ltd. with Zhengzhou Xinda Institute of Advanced Technology to develop industrial cone beam computed tomography for non-destructive testing and related applications, which will add to CITIC Limited Group's equipment business. CITIC Heavy Industries has also set up the Intelligent Robotics High-tech Park in

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Luoyang, which is the first Chinese smart factory for advanced robotics and is designated as a master design for future openings. CITIC Heavy Industries also launched an Internet of Things platform that has connected more than 130 items of equipment, covering its six core product lines. Through this platform, CITIC Heavy Industries has uploaded all crusher data to the cloud and gained access to overseas crusher data covering the same equipment specifications to support its integrated services and marketing initiatives.

Procurement and Supply

The major raw materials for CITIC Heavy Industries' heavy machinery manufacturing include steel, blanks, motors, bearings and spare parts. These materials are mainly procured from domestic and international markets through tendering and are mostly supplied directly by manufacturers with some procurement from distributors or dealers.

Customers, Sales and Marketing

CITIC Heavy Industries is one of the domestic enterprises in mainland China with the capability to design and manufacture cement and mining equipment in accordance with European Union (EU) and US standards. It has more than 60 large customer groups formed by high-end customers in the coal and mining industries, metallurgical industry, construction materials industry, power generation industry, nonferrous metals industry, power electronic industry and the energy-saving and environmental protection industry. These customers include, among others, BHP Billiton, VALE, China Shenhua Energy Company Limited, China Huaneng Group, China National Gold Group Corporation, Anhui Conch Cement Company, Lafarge S.A., Holcim Ltd, Cemex SAB de CV, Heidelberg Cement AG and Italcementi Group.

CITIC Heavy Industries' sales focus on the domestic market in mainland China and are supplemented by sales to the international market. In the domestic market in China, CITIC Heavy Industries uses a model of direct sales, winning orders by participating in bidding and negotiations. CITIC Heavy Industries' sales teams market the products nationwide in different industry sectors based on the targets of different products. In its sales to the international market, based on its own circumstances and the market demands, CITIC Heavy Industries targets different countries and regions by adopting different business models including direct sales, agent sales, subcontracting and cooperation with large customers.

CITIC Heavy Industries continues to developing the overseas and domestic markets for EPC projects.

CITIC Holdings

CITIC Holdings develops and invests in smart manufacturing, industrial internet, and lighthouses, which are recognised as the most advanced production facilities in the world. Centred on digitalisation, it strives to integrate digital technology with key pragmatic applications. In the field of industrial internet, CITIC Holdings, together with CITIC Dicastal, China Resources Cement, and Foxconn Industrial, co-founded Shenzhen CRF Digital Technology (CRF) to enhance vertical value chains, such as auto components and new construction materials, with an internet based intelligent industrial ecosystems. CRF solutions enable digital lean manufacturing and AI powered closed-loop control systems to advance the development of world-class lighthouse factories.

In terms of investment, CITIC New Future (Beijing) Investment Management, a private equity arm under CITIC Holdings, is mandated to nurture emerging businesses by financing innovative tech sectors, namely modern supply chains, intelligent manufacturing and smart vehicles. In 2020, Kunshan Xinjia Emerging Industry Equity Investment Fund was launched and invested in alternative operating system, database architecture and field programmable gate array (FPGA) developments.

Advanced Materials

CITIC Limited Group's advanced materials business comprises the exploration, mining, processing and trading of mineral resources as well as power generation and manufacturing of special steel. CITIC Limited Group predominately operates its advanced materials business through CITIC Resources, CITIC Mining International, CITIC Metal Group, CITIC Pacific Special Steel and CITIC Pacific Energy Investment.

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The following table sets out the respective financial information of the principal operational entities of CITIC Limited Group's advanced materials business for the periods indicated:

For theyear ended 31 December	For theyear ended 31 December	For theyear ended 31 December
2019 2020 Revenue Net Profit/ (Loss) Attributable to Ordinary Shareholders Revenue Net Profit/ (Loss) Attributable to Ordinary Shareholders (in millions of HK$) 3,426 600 2,850 (364) 14,644 (4,211) 18,978 (501) 73,400 963 88,505 1,731 83,467 4,983 85,829 5,556 10,357 1,457 8,798 707	2020
Revenue 3,426 14,644 73,400 83,467 10,357		Net Profit/ (Loss) Attributable to Ordinary Shareholders
		(364) (501) 1,731 5,556 707

For the six months ended 30 June	For the six months ended 30 June	For the six months ended 30 June
2020 2021 Revenue Net Profit/ (Loss) Attributable to Ordinary Shareholders Revenue Net Profit/ (Loss) Attributable to Ordinary Shareholders (in millions of HK$) 1,236 (431) 1,704 427 7,717 (1,322) 17,018 6,491 37,222 695 68,096 1,761 40,251 2,515 58,933 4,194 3,843 352 5,431 289	2021
Revenue 1,236 7,717 37,222 40,251 3,843		Net Profit/ (Loss) Attributable to Ordinary Shareholders
		427 6,491 1,761 4,194 289

(1) CITIC Limited held 59.50 per cent. equity interests in CITIC Resources as at 30 June 2021.

(2) CITIC Limited indirectly held 83.85 per cent. equity interests in CITIC Pacific Special Steel through CITIC Pacific Limited as at 30 June 2021.

Revenue from CITIC Limited Group's advanced materials business for the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021 amounted to HK$178,399 million, HK$195,754 million, HK$86,020 million and HK$142,504 million, respectively, which were 31.5 per cent., 35.4 per cent., 33.6 per cent. and 40.4 per cent. of CITIC Limited Group's revenue, respectively. The operating profit before tax of CITIC Limited Group's advanced materials business were HK$12,035 million, HK$14,421 million, HK$5,216 million and HK$16,186 million, for the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021, respectively.

CITIC Pacific Special Steel

CITIC Pacific Special Steel is the largest manufacturer dedicated to the production of special steel in mainland China with four manufacturing bases located in Jiangyin and Jingjiang of Jiangsu province, Huangshi of Hubei province, and Qingdao of Shandong province. Major products manufactured by CITIC Pacific Special Steel include special steel bar, special steel plates, seamless steel tubes, special wires, casting billets and special forging steel. These are widely used in various industries, including auto components, machinery manufacturing, oil, petrochemicals, transportation, energy, railways and shipbuilding. It continues to refine its procurement strategy and to maintain overall raw material costs at below market levels.

With a total production capacity of over 14 million tonnes per annum, CITIC Pacific Special Steel currently operates four main plants—Xingcheng Special Steel, Daye Special Steel, Qingdao Special Steel and Jingjiang Special Steel. The company also has two raw material processing plants in Tongling and Yangzhou, as well as two industrial extension plants—CITIC Pacific Special Steel Suspension in Ji'nan and Zhejiang Pacific Seamless Steel Tube in Shaoxing. In addition, the company successfully acquired 40 per cent. of the shares of Shanghai Electric Group Pipe Co., Ltd. and thereby obtained management rights of Tianjin Pipe Corporation in January 2021.

For the year ended 31 December 2020, CITIC Pacific Special Steel sold 13.99 million tonnes of special steel products, a 5.4 per cent. increase compared to the year ended 31 December 2019.

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CITIC Pacific Special Steel has established a centralised sales office integrating domestic sales and production capacity planning. It also continued to invest in optimising its product mix, including increased production of higher quality bar steel products and increased focus on high-margin product sales. CITIC Pacific Special Steel, Jiangyin Xingcheng Special Steel, Hubei Xin Yegang and Qingdao Special Steel jointly conduct new business development and customer relationship management activities. In 2019, CITIC Pacific Special Steel acquired Zhejiang Pacific Seamless Steel Tube. The acquisition enabled CITIC Pacific Special Steel to provide a complete product array of seamless steel tubes. Zhejiang Pacific Seamless Steel Tube's annual production capacity is 100,000 tonnes, with customers spanning the power generation, petroleum, petrochemicals, and coal chemical industries.

In June 2018, CITIC Limited Group also acquired Hualing Special Steel Co., Ltd. (renamed Jingjiang Special Steel Co., Ltd.), which further enlarged CITIC Limited's special steel production capacity.

CITIC Resources

As at 30 June 2021, CITIC Limited held a 59.50 per cent. equity interest in CITIC Resources. CITIC Resources is listed on The Stock Exchange of Hong Kong Limited (Stock Exchange stock code: 1205). CITIC Resources principally engages in the development and production of oil and coal, the import and export of commodities as well as investments in bauxite mining, alumina refinery and aluminium smelting.

The following table sets out CITIC Resources' revenue and segment performance attributed to external customers for the periods indicated:

For theyear ended 31 December	For theyear ended 31 December	For theyear ended 31 December
2019 2020 Revenue Segment Performance(1) Revenue Segment Performance(1) (in millions of HK$) 1,033 20 836 (32) 643 44 400 (67) 743 51 806 (53) 1,007 320 808 166 3,426 436 2,850 120	2020
Revenue 1,033 643 743 1,007 3,426		Segment Performance(1)
		(32) (67) (53) 166
		120

For the six months ended 30 June	For the six months ended 30 June	For the six months ended 30 June
2020 2021 Revenue Segment Performance(1) Revenue Segment Performance(1) (in millions of HK$) 388 (84) 567 122 220 (25) 259 (25) 329 4 320 11 299 18 558 240 1,236 (88) 1,704 348	2021
Revenue 388 220 329 299 1,236		Segment Performance(1)
		122 (25) 11 240
		348

(1) Management of CITIC Resources monitors the results of its operating segments separately for the purposes of resource-allocation decision-making and performance assessment. Segment performance is evaluated based on reportable segment profit/(loss), which is a measure of adjusted profit/(loss) before tax. The adjusted profit/(loss) before tax is measured consistently with CITIC Resources' profit/(loss) before tax except that interest income, fair value gain on a financial asset at fair value through profit or loss, finance costs, dividend income, share of profit/(loss) of associates and a joint venture, and impairment on assets as well as head office and corporate expenses are excluded from such measurement.

(2) The aluminium smelting business is located in Australia.

(3) The coal business is located in Australia.

As at 30 June 2021, CITIC Resources held a 22.5 per cent. participating interest in the Portland Aluminium Smelter joint venture and a 9.6 per cent. equity interest in Alumina Limited in Australia, which continued to make a substantial contribution to CITIC Resources.

CITIC Mining International

CITIC Limited, owns CITIC Mining International which in turn, owns via its subsidiary Sino Iron Holdings Pty Ltd, 100 per cent. of the Sino Iron Project which is being managed by CITIC Pacific Mining, a whollyowned subsidiary of CITIC Mining International.

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CITIC Pacific Mining was established to manage the construction and operation of the Sino Iron Project, which is an integrated mining, processing and port operation. The Sino Iron Project is located at Cape Preston, 100 kilometres southwest of Karratha in Western Australia's Pilbara region. It is the largest magnetite iron ore mining and processing operation by production in Australia focused on developing and producing magnetite iron ore.

The Sino Iron Project was granted major project facilitation status by the Australian Federal Government in 2006. CITIC Limited has rights to extract three billion tonnes of resource.

The Sino Iron Project has six production lines with an annual designated capacity of 24 million tonnes, based on available samples taken from the mine pit. Actual production volume will depend on the characteristics of the rocks being mined. All six production lines are in operation, as are the common facilities for the six lines, including infrastructure in support of the processing activities, the power station, gas pipeline and desalination plant. The operational focus now is to ramp up concentrate production, improve project efficiencies and lower operational costs, while ensuring an integrated "pit-to-port" operation supported by site-based energy and water supply. For the year ended 31 December 2020, more than 20 million wet metric tonnes of premium magnetite concentrate had been delivered to CITIC Limited's own special steel plants and other steel mills in mainland China.

In full production, the Sino Iron Project fully meets CITIC Limited's need for high quality iron ore concentrates. The iron ore product produced by the Sino Iron Project will be used in CITIC Limited's special steel mills in mainland China and sold to other steel mills in mainland China. There continues to be financial pressures in relation to the long-term sustainability of the Sino Iron Project.

For further information on the Sino Iron Project, see sections headed " Risk Factors – Risk relating to Resources and Energy Business " and " CITIC Limited Group – Legal and Regulatory Proceedings ".

CITIC Metal Group

CITIC Metal Group, which holds CITIC Metal, was formed to enhance the business' investment strength and trading power in the commodities markets.

CITIC Metal Group was incorporated in 2016. As at the date of this Offering Circular, CITIC Metal Group was a wholly owned subsidiary of CITIC Limited. CITIC Metal Group's principal businesses include resources trade and strategic resources investment in niobium products, iron ore, steel, nonferrous metals, coal and platinum.

Resources development

CITIC Titanium, a subsidiary of CITIC Metal Group, founded in 2002, is a new high-tech enterprise specialised in R&D, production and sale of high-grade chloride process TiO2. CITIC Titanium has a capacity of 60,000 tonnes/year of chloride Titanium Dioxide. At the same time, it has mastered both fluidised chlorination and molten salt chlorination techniques. Its product quality is among the best in the world. Since 2019, CITIC Titanium began building new production lines that have a capacity of 60,000 tonnes/year. Titanium dioxide, CITIC Titanium's major product, is widely used in industries closely related to the development of the national economy, including coatings, paints, paper, plastic, rubber, chemical fibres, ceramics and electronics.

CITIC Metal Group is the single largest shareholder with 33.3 per cent. equity interest in China Niobium Investment Holdings Limited which in turn holds a 15.0 per cent. equity interest in Companhia Brasileira de Metalurgia e Mineracao (" CBMM "), which produces more than 70 per cent. of global niobium products through its mine which contains high-grade pyrochlore ore and has relatively long-term mine life and low mining costs. Niobium product is used in the production of high strength low alloy steel, special alloy steel, stainless steel and superalloy. Due to its investment in the upstream market and good working relationship with CBMM, CITIC Metal Group is able to acquire a sufficient and stable niobium product supply for external sales. It has exclusive distribution rights of CBMM's niobium products in mainland China.

CITIC Metal Group has a 15 per cent. interest in the Las Bambas copper mine project in Peru. The Las Bambas copper mine project is located in Cotabambas, Apurimac Region of Peru and is currently one of the largest copper mine globally based on its copper resources and output. The Las Bambas copper mines achieved commercial production in July 2016. In 2020, the Las Bambas copper mine project produced

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copper concentrates containing 311,000 metric tonnes of copper. CITIC Metal Group has exclusive distribution rights to 26.25 per cent. of the copper concentrates extracted from the site.

CITIC Metal Africa Investments Limited, a subsidiary of CITIC Metal Group, has acquired in aggregate a 26.03 per cent. interest in Ivanhoe Mines Ltd (" Ivanhoe Mines "), establishing CITIC Metal Group as Ivanhoe Mines' single largest shareholder. Ivanhoe Mines is a Canadian mining company focused on advancing the development of new mines at the Kamoa-Kakula copper discovery in the Democratic Republic of Congo (" Congo "), the Platreef platinum-palladium-nickel-copper-gold discovery in South Africa and the extensive redevelopment and upgrading of the historic Kipushi zinc-copper-germanium-lead mine in Congo. Ivanhoe Mines is also exploring for new copper discoveries on its wholly-owned Western Foreland exploration licences, adjacent to the Kamoa-Kakula mining licence.

Resources trading

CITIC Metal Group is CBMM's exclusive distributor in mainland China. Its sales coverage of niobium products across most of the medium-to large-scale steel enterprises in mainland China and allows CITIC Metal Group to maintain an approximate 80 per cent. market share in ferroniobium sales annually.

CITIC Metal Group is one of mainland China's major iron ore importers, importing products from renowned mineral mining enterprises located in Australia, Brazil, India and South Africa, including VALE, Rio Tinto, BHP Billiton and Kumba, for national medium-to large-scale steel enterprises.

Procurement and supply

CITIC Metal Group maintains procurement channels and reduces procurement costs by establishing longterm working relationships and monitoring the procurement admittance mechanism, through selecting domestic partners with similar objectives and comparable skills as its qualified domestic suppliers alongside long-term and stable strategic alliances with large global mineral vendors to ensure a stable supply of bulk imported raw materials. CITIC Metal Group continues to optimise and evaluate its suppliers to achieve a stable and timely supply of high-quality and low-cost resources.

Customers, Sales and Marketing

CITIC Metal Group has adopted a technology-driven sales strategy and established the Microalloying Technology Center (" MTC ") with CBMM, which has an advisory team of metallurgists dedicated to the technological development, promotion and application of niobium technology. CITIC Metal Group and CBMM jointly fund R&D projects and industry chain cooperation on niobium technology, including joint laboratories established with University of Science and Technology Beijing, China Iron and Steel Research Institute and Shanghai University. CITIC Metal Group's customer base in mainland China covers most major steel companies, including China Baowu Steel Group Corporation, Ansteel Group Corporation, Taiyuan Iron and Steel Group Corporation and Shougang Group Corporation.

Proposed Spin-off

On 19 November 2021, CITIC Limited announced that it proposes to spin-off CITIC Metal by way of separate listing of its shares on the Shanghai Stock Exchange (the " Proposed Spin-off "). CITIC Limited has applied to the Hong Kong Stock Exchange in relation to the Proposed Spin-off and the Hong Kong Stock Exchange has confirmed that CITIC Limited may proceed with the Proposed Spin-off. It is expected that CITIC Metal will submit its listing application to the CSRC by the end of 2021.

CITIC Pacific Energy Investment

CITIC Limited Group, through CITIC Pacific Energy Investment, also has interests in a number of power stations, including coal-fired power stations managed through Sunburst Energy, as well as a coal mine in mainland China. It has the majority equity ownership in the Jiangsu Ligang Electric Power Co., Ltd., which has an installed capacity of 4,040 MW, as well as minority equity interests in the Hebei Hanfeng Power Generation Co., Ltd., the Huaibei Guo'an Electric Power Co., Ltd. and Shandong Xin Julong Energy Co., Ltd., which production capacity of 6.24 million tonnes of products including high-quality coking coal and thermal coal was fully utilised in 2018. Overseas, CITIC Pacific Limited, a wholly owned subsidiary of CITIC Limited, formed a 50:50 joint-venture with strategic partner ITOCHU, and jointly acquired 22.5 per cent. in an offshore wind farm with a capacity of 288 MW in Germany, forming the resource and energy unit's first renewable energy project in Europe.

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New Consumption

The following table sets out the respective financial information of the principal operational entities of CITIC Limited Group's new consumption business for the periods indicated:

For theyear ended 31 December	For theyear ended 31 December	For theyear ended 31 December
2019 2020 Revenue Net Profit/ (Loss) Attributable to Ordinary Shareholders Revenue Net Profit/ (Loss) Attributable to Ordinary Shareholders (in millions of HK$) 2,148 286 2,123 317 9,014 1,002 8,923 1,023 1 (56) - 58 49,636 160 49,361 105	2020
Revenue 2,148 9,014 1 49,636		Net Profit/ (Loss) Attributable to Ordinary Shareholders
		317 1,023 58 105

For the six months ended 30 June	For the six months ended 30 June	For the six months ended 30 June
2020 2021 Revenue Net Profit/ (Loss) Attributable to Ordinary Shareholders Revenue Net Profit/ (Loss) Attributable to Ordinary Shareholders (in millions of HK$) 884 113 1,141 173 4,384 512 4,795 534 - (37) - (44) 20,833 (302) 26,660 280	2021
Revenue 884 4,384 - 20,833		Net Profit/ (Loss) Attributable to Ordinary Shareholders
		173 534 (44) 280

Revenue from CITIC Limited Group's new consumption business for the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021 amounted to HK$89,017 million, HK$70,056 million, HK$35,415 million and HK$32,885 million, respectively, which were 15.7 per cent., 12.7 per cent., 13.8 per cent. and 9.3 per cent. of CITIC Limited Group's revenue, respectively. The operating profit before tax of CITIC Limited Group's new consumption business was HK$3,465 million, HK$1,770 million, HK$438 million and HK$1,528 million, for the for the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021, respectively.

CITIC Telecom

CITIC Limited Group provides services in two areas – mobile telecommunications, Internet, international telecommunications, enterprise solutions and fixed line services operated by CITIC Telecom; and the leasing and sale of satellite transponders operated by Asia Satellite Telecommunications Holdings Limited (" AsiaSat ").

The following table sets out CITIC Telecom's revenue by services for the periods indicated:

For theyear ended 31 December	For theyear ended 31 December	For theyear ended 31 December
2019 2020 Revenue Percentage Revenue Percentage (in millions of HK$, except percentages) 1,618 17.9% 945 10.6% 1,243 13.8% 957 10.7% 1,065 11.8% 1,123 12.6% 1,775 19.7% 2,481 27.8% 3,088 34.3% 3,227 36.2% 225 2.5% 190 2.1% 9,014 100.0% 8,923 100.0%	2020
		Percentage
		10.6% 10.7% 12.6% 27.8% 36.2% 2.1%
		100.0%

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For the six months ended 30 June	For the six months ended 30 June	For the six months ended 30 June
2020 2021 Revenue Percentage Revenue Percentage (in millions of HK$, except percentages) 359 8.2% 802 16.7% 493 11.2% 427 8.9% 552 12.6% 604 12.6% 1,165 26.6% 1,287 26.9% 1,718 39.2% 1,583 33.0% 97 2.2% 92 1.9% 4,384 100.0% 4,795 100.0%	2021
		Percentage
		16.7% 8.9% 12.6% 26.9% 33.0% 1.9%
		100.0%

As at 30 June 2021, CITIC Limited owns 57.88 per cent. of CITIC Telecom, which is a telecommunications operator in Asia providing international telecommunications services (including mobile, Internet, voice and data services), integrated telecoms services (in Macau), and through its wholly-owned subsidiary CITIC Telecom International CPC Limited, provides one-stop information and communications technology solutions (including private network solutions, ethernet private line, Internet access, Cloud computing, information security, Cloud data centre and a series of value-added services) to multinational corporations. CITIC Telecom's key markets are China, Macau and Hong Kong. CITIC Telecom is listed on the Hong Kong Stock Exchange.

CITIC Telecom also owns 99 per cent. of Companhia de Telecomunicações de Macau, S.A.R.L., one of the leading integrated telecoms services providers in Macau, and is the only full telecoms services provider in Macau.

AsiaSat

CITIC Limited Group's satellite transponder leasing and sales business is operated by its jointly controlled entity, AsiaSat. AsiaSat is a wholly-owned subsidiary of Bowenvale Limited (" Bowenvale "). However, CITIC Limited only holds a 50.5 per cent. equity interest, and 50 per cent. voting rights, in Bowenvale and therefore AsiaSat is not consolidated as a subsidiary of CITIC Limited.

AsiaSat's business includes the leasing and sale of satellite transponders to customers, broadcasting, communications and data uploading and downloading services. A service fee is charged based on the number of transponders leased or usage volume. The satellites owned and operated by AsiaSat provide high performance satellite transponder resources and services for its television broadcasting and communications users, and are capable of satisfying customer demands for a fast and efficient satellite communications network.

In December 2020, AsiaSat announced its cooperation with One Click Go Live (formerly known as HERMES Live) platform to provide broadcast-grade live streaming services to global customers, further expanding its media solutions offerings. AsiaSat will provide a complete solution that addresses customers' need for distributing content in a flexible and cost-effective way. In May 2021, AsiaSat acquired 80 per cent. equity interest in One Click Go Live.

Dah Chong Hong

Dah Chong Hong is a wholly-owned subsidiary of CITIC Pacific Limited.

Dah Chong Hong is a Hong Kong based conglomerate with a diversified business portfolio. Dah Chong Hong is involved in the sales of motor vehicles and motor related services, food and consumer products, supported by its logistics services. In 2016, Dah Chong Hong acquired Li & Fung's consumer and healthcare products business in Asia, now known as Integrated Market Services Asia Limited and DCH Auriga Holding Limited. In 2017, Dah Chong Hong acquired Audi and Mercedes-Benz dealerships to increase its exposure to the growing luxury vehicle market in mainland China. Dah Chong Hong's networks cover the PRC, Taiwan, Japan, Myanmar, Singapore and other Southeast Asia countries. In 2020, Dah Chong Hong led the Hong Kong market in the number of contracted yachts and established DCH Boats in mainland China as the exclusive authorised distributor of Princess Yachts and Williams Jet Tenders and agent of Bali, Parker, Aquador, Flipper and Falcon.

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CITIC Agriculture

CITIC Agriculture is working to establish a modern agricultural technology platform to upgrade the upstream agricultural industry. It has set up platforms for crop breeding, animal breeding and animal health and a financial investment arm, CITIC Agri Fund Management Co., Ltd. (" CITIC Agri Fund "). CITIC Agriculture will continue to leverage CITIC Limited's financial capacity, big data and other resources to better serve farmers' demand related to high quality seeds, precision farming and comprehensive agricultural services.

Crop Breeding Platform

CITIC Agriculture is the largest shareholder of Yuan Longping High-tech Agriculture Co., Ltd. (" Longping High-Tech "), the largest crop breeding business in mainland China, which focuses on breeding, producing and distributing high-quality seeds of hybrid rice, hybrid corn, vegetables, millet and sunflowers, among others. Longping High-Tech is listed on the Shenzhen Stock Exchange. Through investing in Longping High-Tech and other agriculture businesses, CITIC Agriculture aims to accelerate the consolidation of mainland China's seed industry and explore and expand in overseas agricultural markets. In 2019, CITIC Agriculture began to work with Longping High-Tech's management to develop its seed corn business in Brazil and established a wholly-owned subsidiary, CITIC Agricultural Biotechnology Co., Ltd. to take an interest in Huazhi Biotechnology Co., Ltd (" Huazhi Bio "), a company engaged in molecular breeding, germplasm innovation, genome editing, bioinformatics and varietal testing as a national molecular breeding platform. In 2020, CITIC Agriculture and the Hunan Provincial Government jointly founded Mount. Yuelu Breeding Innovation Center Co., Ltd. to introduce internationally leading technology, promote innovation in the breeding industry, develop investment projects and accelerate innovation incubating. Huazhi Bio possessed an integrated application capability of "Biotechnology + Data Technology" and built up a key generic technology platform in the field of biological breeding.

Financial Investment Platform

In June 2016, CITIC Agri Fund was jointly established by CITIC Agriculture, Longping High-Tech, Haid Group and other agricultural industrial and financial investment companies. In 2018, CITIC Agri Fund became the largest shareholder of Ausnutria (SEHK:1717), with a shareholding of approximately 23.95 per cent.

Global Expansion

In November 2017, CITIC Agri Fund, together with Longping High-Tech, completed the acquisition of Dow Agrosciences Sementes & Biotecnologia Brasil Ltda's corn seed business in Brazil for a purchase price of U.S.$1.1 billion. CITIC Agri Fund and Longping High-Tech will accelerate global integration plans in order to support Longping High-Tech's growth from a domestic Chinese market leader into a global market leading seed company. This transaction marks a milestone in Longping High-Tech's global expansion.

Animal Breeding Platform

CITIC Agriculture also acquired 16.67 per cent. of the shares of Beijing Capital Agribusiness Inc. and became a major shareholder in 2018. Beijing Capital Agribusiness Inc. is a leading animal breeding company in mainland China.

Animal Health Platform

CITIC Agriculture has acquired 25 per cent. of the shares of China Agricultural Vet. Bio. Science and Technology Co., Ltd. (" China Agricultural Vet "). CITIC Agri Fund holds an additional 5 per cent. of the shares of China Agricultural Vet. China Agricultural Vet is a high-tech agriculture science enterprise which is dedicated to developing, manufacturing and supplying biological products for veterinary use as well as providing consulting services. It is led and supported by the Lanzhou Veterinary Research Institute, the National Foot-and-Mouth Disease Reference Laboratory, and the State Key Laboratory of Veterinary Etiological Biology, and has strong research capabilities in the animal health products industry.

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CITIC Press

CITIC Limited Group's publishing business is operated through its subsidiary, CITIC Press. CITIC Press holds all required licenses for publishing, distribution and retail granted by the State Administration of Press, Publication, Radio, Film and Television.

CITIC Press has been listed on the ChiNext board of the Shenzhen Stock Exchange since 5 July 2019. CITIC Press had a total of 190,151,515 shares outstanding after its initial public offering. As at 30 June 2021, CITIC Limited held approximately 73.5 per cent. of CITIC Press.

In 2019, CITIC Press ranked second in the Chinese book retail market, as measured by the value of books sold, and held the number one position in books on economics and business management, as well as academic and cultural subjects.

CITIC Bookstores operates differentiated retail stores in three different types of locations: city centres, office buildings and major airports. As at 30 June 2021, there are 87 CITIC Bookstores in over 19 medium to large cities in China, including the Xiong'an New Area, covering a floor space of 14,386.87 square metres. It has also established a preliminary online bookstore system and successfully operates the official flagship of CITIC Press and online bookstores on several e-commerce platforms, such as Tmall.com, JD.com and Amazon China.

CITIC Press also explored new modes of offline operation and launched three types of new shops in featured venues with a focus on commercial and leisure travel themes, all of which were well received by the market.

New-Type Urbanisation

In the new-type urbanisation business segment, CITIC Limited Group has positioned itself as builders of smart cities. The CITIC Limited Group will continue to implement the PRC's regional development strategies, providing smart-city solutions that integrate engineering contracting, wastewater treatment and property development and operation.

As at 31 December 2019 and 2020 and 30 June 2021, the revenue generated from CITIC Limited Group's new-type urbanisation business segment for the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021 were HK$40,718 million, HK$44,224 million, HK$14,454 million and HK$22,195 million, respectively, representing 7.2 per cent., 8.0 per cent., 5.7 per cent. and 6.3 per cent. of CITIC Limited Group's total revenue, respectively. For the years ended 31 December 2019 and 2020 and the six months ended 30 June 2020 and 2021, CITIC Limited Group's profit before tax generated from the new-type urbanisation business segment were HK$10,514 million, HK$11,711 million, HK$5,303 million and HK$3,923 million, respectively, representing 11 per cent., 12 per cent., 11.4 per cent. and 5.7 per cent. of CITIC Limited Group's profit before tax, respectively.

Construction and engineering

CITIC Limited Group's construction and engineering businesses are dedicated to meeting the needs of clients with end-to-end services ranging from feasibility studies, planning, exploration, and financing, to the contracting of EPC projects. Projects undertaken include the development of infrastructure, housing, municipal and industrial facilities as well as environmental protection initiatives in both the PRC and international markets. For several consecutive years, both of CITIC Limited Group's engineering contracting companies have been rated at the top of the industry, as determined by Engineering NewsRecord (ENR), a global construction industry authority. It ranked CITIC Construction in the Top 250 International Contractors and CITIC Engineering's Architecture Design and Research Institute among the Top 60 Chinese Design Firms. In 2020, CITIC Limited Group's construction and engineering business was severely impacted by the COVID-19 pandemic. CITIC Construction and CITIC Engineering responded proactively to the circumstances, and once work was allowed to resume, dedicated its efforts to make up for time lost. Both domestic and international businesses of exploration, design and EPC services contributed to the company's bottom line. Domestically, key projects include a national network security talents and innovation centre, and the Jiangxia clean water project, both in Wuhan, the Chongli Prince Ice Town in Zhangjiakou, and Ziyang industrial new town development. Internationally, major projects include the upgrading of two expressways in Kazakhstan, and two projects in Belarus: an argo-industrial complex and a fertiliser processing plant.

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CITIC Construction

CITIC Limited has a 100.00 per cent. equity interest in CITIC Construction which was incorporated in 2002. CITIC Construction is an integrated engineering services company, providing management and engineering services, as well as procurement and construction services on large industrial and civil infrastructure projects.

The following table sets out the representative domestic and international engineering contracting projects of CITIC Construction:

Project Potassium Fertiliser Plant, Belarus .................................................................. Argro-industrial Complex Project, Phase I, II, Belarus ................................... TKU National Expressway Upgrade, Kazakhstan ........................................... KB Expressway Upgrade, Kazakhstan ............................................................ Chip Technology and Innovation Center at Jiangbei New District, Nanjing, Jiangsu Province, China ............................................................................... Industrial New Town of Linkong Economic Zone, Phase I, Sichuan Province, China ........................................................................................... Linqing Highway, Phase II, Yunnan Province, China ..................................... Chuda Highway Expansion Project, Yunnan Province, China ........................	As at 30 June 2021	As at 30 June 2021
	Contract Value Progress (Approximate percentage) (in millions of stated currency) US$855 8% complete RMB4,290 90% completed US$739 47% completed US$649 36% completed RMB12,277 1% completed RMB7,466 57% completed RMB6,217 70% completed RMB9,294 53% completed	Progress (Approximate percentage)

CITIC Engineering

CITIC Engineering is a wholly owned subsidiary of CITIC Limited incorporated in 2013. CITIC Engineering was formed through the integration of CITIC Limited's wholly-owned subsidiaries CITIC General Institute of Architectural Design and Research Co., Ltd. (" CADI ") and Central and Southern China Municipal Engineering Design and Research Institute Co., Ltd. (" CSMDI "). CADI's principal businesses include infrastructure design, urban planning, engineering consulting, design, supervision, general contracting, project management and other businesses. CSMDI's principal businesses include municipal infrastructure, urban planning, municipal engineering planning, engineering survey, project supervision, general contracting, project management and other businesses. CSMDI was granted premium-class engineering design certification in 2015.

CITIC Engineering transformed its business model in 2015, adding investment and EPC services to its historical core in municipal engineering design and management. In the fields of urban planning and architectural design as well as municipal engineering design, CITIC Engineering owns a number of patents and has participated in setting a number of national standards, demonstrating its comprehensive strength as a leading domestic technology innovation engineering company.

Environmental Services

CITIC Environment Investment Group (" CITIC Environment ") specialises in the investment and management of environmental-related businesses. It focuses on three major sectors, namely water treatment, solid waste and hazardous waste disposal and energy saving services.

CITIC Environment controls CITIC Envirotech, an integrated water and wastewater treatment solutions provider headquartered in Singapore with a business model covering the whole industrial chain, including EPC, membrane technology and water investment sectors. In addition, CITIC Envirotech has leading technologies in research, production and integration processes of a water purifying membrane that integrates membrane bioreactor, continuous membrane filtration, reverse osmosis and other technologies, and is one of the few companies in the world capable of carrying out membrane research, development and production and offering a complete range of membrane filtration products. The business focus of CITIC Envirotech is on the water and wastewater segment mainly in relation to the industrial and municipal fields in mainland China using its proprietary advanced membrane technologies. It has also expanded its business into the fields of hazardous waste treatment and circular economy. CITIC Envirotech's international operations include a water recycling project in Kazakhstan and a membrane production subsidiary in the United States. China Reform Fund is currently the second largest shareholder of CITIC Envirotech.

In the solid waste treatment sector, CITIC Environment became the second largest shareholder of Chongqing Sanfeng Environmental Group Co., Ltd. (" Chongqing Sanfeng "), after acquiring 13.58 per

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cent. of its shares in 2016. Chongqing Sanfeng is a vertically integrated solid waste treatment company which specialises in each of the design, investment, manufacture and construction and management phases of solid waste treatment. CITIC Environment further increased its shareholding in Chongqing Sanfeng in 2017 and 2018. Chongqing Sanfeng was listed on the Main Board of the Shanghai Stock Exchange on 5 June 2020, therefore CITIC Environment's shareholding became 12.08 per cent. after dilution. Chongqing Sanfeng is currently investing in 51 municipal waste incineration power generation build-own-transfer (BOT) projects, with a total design capacity of approximately 55,800 tonnes per day. A total of 1.8 billion KwH of electricity has been generated by this company through municipal waste incineration. Chongqing Sanfeng was ranked 211 among the "Top 500 Global New Energy Enterprises" in 2021, an improvement of 19 places from its ranking in 2020.

In January 2020, CITIC Envirotech was privatised and delisted from the Official List of the Singapore Exchange Securities Trading Limited. Following the privatisation, CITIC Envirotech became an indirect subsidiary of CITIC Environment and CITIC Limited.

Infrastructure

CITIC Limited Group operates and invests in the infrastructure business, which includes port terminal projects, mainly through CITIC Industrial Investment. CITIC Industrial Investment was incorporated in 1997 and as at 30 June 2021, was a wholly owned subsidiary of CITIC Limited. CITIC Industrial Investment's principal businesses include industrial investment and other businesses.

CITIC Industrial Investment invests in and operates the port terminal projects through acquisitions and constructions. The port terminals business mainly consists of investment in and the proprietary operation of liquefied oil terminals and storage, as well as the operation of other types of berths such as container berths. The port operation of CITIC Industrial Investment is positioned in oil port warehousing business, providing services to companies engaged in petrochemical production, trade and logistics. The oil port warehousing business consists of loading/unloading and warehousing business. The loading/unloading business consists of providing loading and unloading services to customers in CITIC Industrial Investment's ports, thereby charging loading and unloading fees. The warehousing business consists of providing warehousing services to customers after transporting their goods through special transportation channels to the storage tanks, thereby charging storage fees.

The following table sets out the main port terminal projects operated by CITIC Industrial Investment:

Project Ningbo Daxie PetroChina Fuel Oil Terminal Co., Ltd. (300,000 tonne grade) ...................................................................................................... Ningbo Daxie Guanwai Liquefied Chemical port terminal (50,000 tonne grade) ...................................................................................................... Ningbo Daxie Gangfa oil port terminal (50,000 tonne grade) .................... Ningbo Daxie China Merchants International Container Terminal ............ Ningbo Daxie Development Zone Xinhai Oil Terminal Co, Ltd. ............... Ningbo Daxie Development Zone Xinyuan Port Terminal Co, Ltd (50,000 tonne grade) ............................................................................... Ningbo Xinrun Petrochemical Storage and Transportation Co., Ltd (50,000 tonne grade, under construction) ................................................ Jiangyin Foreversun Chemical Logistics Co., Ltd ......................................	Project Type Oil terminal Chemical terminal Oil terminal Container terminal Oil storage Oil terminal Petrochemical terminal and storage Liquefied products terminal and storage	Equity Interest held by CITIC Industrial Investment
		51% 51% 20% 20% 30% 51% 90% 49%

Tunnels

CITIC Limited owns 35 per cent. equity stake in Western Harbour Tunnel Company Limited, which operates and manages the Western Harbour Tunnel Company Limited. This tunnel is one of three tunnels linking the island of Hong Kong to Kowloon.

The concession to operate the Western Harbour Tunnel will expire in 2023.

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Toll Roads

In 2018, CITIC Limited Group completed the disposal of its three toll roads in mainland China, which generated a total profit of HK$1.3 billion. The three toll roads were, in CITIC Limited Group's view, not essential to its future development.

General Aviation

CITIC Limited Group's general aviation business is primarily operated through its subsidiary, COHC, and provides general aviation services (offshore helicopter oil flight services and other general aviation flight services) and general aviation maintenance services. As at 31 December 2020, CITIC Limited held a 51.03 per cent. equity interest in China Zhonghaizhi Corporation, which in turn held a 38.63 per cent. equity interest in COHC.

As the leading company in the general aviation sector in China, COHC has the qualification and capability to operate a full service general aviation business. COHC is the first and only main-board listed company in the domestic general aviation industry, and also the only domestic company awarded the General Aviation Safety Four Stars Award. COHC provides a full range of services, including offshore flights, onshore industry and forestry-related flights, emergency rescue, maintenance, training, integrated city flight services, sky tours, drone operation and data collection, among other services.

Headquartered in Shenzhen, Guangdong, COHC owns four helicopter airports located in Shenzhen, Zhanjiang, Dongfang and Tianjin, and eight main operation bases located in Beijing, Qingdao, Lianyungang, Wenzhou, Fuzhou, Sanya, Yunnan and Heilongjiang. Its helicopter airports and bases form a network covering all provinces, cities and autonomous regions (excluding Tibet), maritime areas such as the South China Sea, the East China Sea, the Bohai Sea, the Yangtze River Delta and the Pearl River Delta, and overseas regions such as the North and South Poles and Myanmar.

COHC has the largest civil helicopter fleet in Asia and currently operates 84 helicopters comprising 15 types of the most advanced helicopter models in the world. COHC's offshore oil helicopter service has a leading position in the industry in terms of market share. It is the only general aviation company with a domestic port helicopter pilotage service, the only service provider of helicopters for China's national arctic scientific expeditions, the first and the only service provider of offshore wind power helicopter operation and maintenance, and the sole helicopter medical services provider for the Beijing 2022 Winter Olympic Games and Paralympic Winter Games. COHC is also the only general aviation company that engages in offshore oil flights overseas. COHC also operates Airbus Helicopters, an authorised helicopter repair centre in China.

In 2021, COHC completed the registration of its wholly owned subsidiary in Qingdao in March, and completed the acquisition of 51 per cent. shareholding in Huaxia Jiuzhou General Aviation Co., Ltd in April. In addition, the company completed a private offering which was listed on the Shenzhen Stock Exchange on 9 September 2021.

Property Development, Operation and Management

The property development, operation and management business of CITIC Limited Group includes development, sales, operation and management of residential, commercial and integrated property projects in mainland China and in Hong Kong. It is predominately operated through CITIC Urban Development & Operation and CITIC Pacific Properties. CITIC Pacific Properties focuses on developing and investing in mixed-use and commercial properties, and mid- to high-end residential properties. CITIC Urban Development & Operation specialises in urban renewal and development operations.

CITIC Limited has been aggressively pursuing new commercial opportunities in first and second tier mainland Chinese cities such as Wuhan and Nanjing as well as high-potential urban agglomerations in mainland China, optimised the mix of its property projects and expedited the development of existing projects.

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The following sets out the key development properties of CITIC Limited Group:

Projects Lujiazui Harbour City, Shanghai ......................... T Center, Shanghai .............................................. Harbour City, Wuhan .......................................... Optics Valley Xintiandi, Wuhan ......................... T Center, Nanjing ................................................ CBD Project, Jinan .............................................. Phase I of Harbour City, Guangzhou ................... Taihu New City Project, Suzhou .........................	Usage Office, retail, hotel and residential Office and retail Office, commercial apartment, retail and residential Office, residential, commercial apartment and retail Office, commercial apartment and retail Office, residential and retail Office, residential and retail Office, residential and retail	Ownership 50% 100% 85% 50% 100% 50% 50% 100%	Gross floor area(m2)
			872,800 229,372 1,173,000 1,197,400 131,100 355,900 220,000 234,800

The following sets out the major investment properties of CITIC Limited Group:

Projects CITIC Tower, Beijing ......................................... CITIC Square, Shanghai...................................... Capital Mansion, Beijing ..................................... CITIC Building, Beijing ...................................... CITIC Tower, Hong Kong ..................................	Usage Office Office and retail Office Office Office and retail	Ownership 100% 100% 100% 100% 100%	Approx. gross area(m2)
			447,340 132,300 140,200 62,200 52,000

Employee and Human Resources

CITIC Limited Group employed a total of 135,507 permanent staff as at 30 September 2021.

Intellectual Properties

CITIC Limited Group strongly emphasises the establishment, application, administration and protection of intellectual property rights. Through research, development and application in its ordinary course of business, CITIC Limited Group has obtained various intellectual property rights which add enormous value to CITIC Limited Group's businesses.

" 中信 ", "CITIC" and " " trademarks, trademarks containing words or patterns of " 中信 ", "CITIC" and " ", and trademarks of variant design on words or patterns of " 中信 ", "CITIC" and " " are all applied for registration by CITIC Group.

CITIC Group has entered into trademark licensing agreements with CITIC Limited and its related subsidiaries, pursuant to which CITIC Group has authorised CITIC Limited and its related subsidiaries to use the trademarks above in the names and business activities. The transactions under the trademark licensing agreements will constitute continuing connected transactions of CITIC Limited upon Completion. Given that the transactions contemplated under trademark licensing agreements are without consideration, according to Rule 14A.33(3)(a) of the Listing Rules, the transaction is exempted from reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

Legal and Regulatory Proceedings

CITIC Limited Group may be involved in legal and/or regulatory proceedings or disputes in the ordinary course of business. There are also a number of claims currently outstanding by or against the CITIC Limited Group. While the outcome of such claims cannot be readily predicted, CITIC Limited believes that such claims will be resolved without material adverse financial effect on the consolidated financial position or liquidity of the CITIC Limited Group.

CITIC Limited Group's operations in the PRC are subject to review and inspections by relevant governmental authorities, including MOF, the PBoC, CBIRC, CSRC, the State Administration of Foreign Exchange, the National Audit Office, State Administration of Taxation and State Administration for Market Regulation. As at the date of this Offering Circular, CITIC Limited Group was not aware of any material administrative penalties caused by the review or inspections conducted by such government departments that would have a material adverse effect on the business, financial condition, results of operations or prospects.

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Qualifications

Major domestic subsidiaries of CITIC Limited have acquired all the major licenses, permissions and accords that are necessary to conduct their major business.

Litigation and arbitration

As at the date of this Offering Circular and as part of its ordinary course of business, CITIC Limited Group was involved in a number of unresolved litigations and arbitrations. CITIC Limited Group was a plaintiff or claimant in the significant majority of these material unresolved litigations. Such proceedings mainly relate to disputes on loan agreements, guarantee agreements, bills, agreements of construction projects, bankruptcy reorganisation, loan fraud and other agreements.

CITIC Limited Group was a defendant in a number of other unresolved litigations and due to the nature of litigation, the aggregate amount in dispute involved in such claims is difficult to quantify.

Litigation proceedings in relation to which announcements have been made by CITIC Limited Group (either itself or through the relevant subsidiary) previously which may or may not be material depending the outcome (which cannot be readily predicted as at the date of this Offering Circular), include the following:

Eastern Harbour Tunnel Crossing proceedings

In November 2018, the Hong Kong government commenced proceedings in the High Court against CITIC Limited Group to recover expenses in relation to the repairs of the Eastern Harbour Crossing (the " EHC "). The Hong Kong government claims that during CITIC Limited Group's 30-year franchise of the EHC which expired in August 2016, CITIC Limited Group had failed to perform the necessary repairs to the EHC as required under notices sent to CITIC Limited Group by the Highways Department on 10 December 2015, 7 June 2016 and 24 June 2016. The amount of expenses sought by the Hong Kong government is unspecified. In January 2020, CITIC Limited Group and the Hong Kong government entered into a deed of settlement as a full and final settlement of the claims.

The proceedings was officially discontinued in February 2020.

CITIC Resources proceedings

(1) In April 2019, at the application of Shengli Oilfield KEER Engineering and Construction Co., Ltd (" KEER "), its legal claim for compensation made in 2017 to the Dalian Maritime Court (" Dalian Court ") was cancelled. As at 30 June 2021, Tincy Group was 90 per cent. owned by CITIC Haiyue Energy Limited, which was in turn an indirect wholly-owned subsidiary of CITIC Resources. The claim related to KEER's demand for compensation from Tincy Group Energy Resources Limited (" Tincy Group ") of RMB29,535,000 for, among other things, standby costs and expenses of labour and equipment, work slowdown losses, staying expenses and losses for overtime construction and loss of profits plus interest due to its sub-contraction work to perform at the Hainan-Yuedong Block. The court case was thereby concluded.

In July 2019, KEER commenced a joint legal claim action with a general contractor of Tincy Group seeking compensation from Tincy Group of RMB30,938,000 in respect of loss of construction contract and relevant warranty plus interest. Certain bank amount of RMB35,000,000 has been frozen as a blockade fund by the Dalian Court. The general contractor applied to withdraw its legal claim from the Dalian Court but was requested by the Dalian Court to participate in the litigation as a third party. Pursuant to the civil judgement issued by the Dalian Court in December 2020, Tincy Group had to pay a compensation of RMB17,271,000 plus interest to KEER. Based on a legal advice from its legal counsel, Tincy Group has justifiable arguments on determination of the contractual relationships amongst Tincy Group, KEER and the general contractor, any rights and obligations thereunder and judgement on compensation amount, in respect of which, Tincy Group lodged an appeal to Dalian Court in January 2021. As at 30 June 2021, no notification has been issued by the Dalian Court in respect of the appeal.

(2) In May 2021, TianEnLu (Dalian) Shipping Co., Ltd (" TianEnLu ") made a transportation fee claim against Tincy Group to the Dalian Court. Pursuant to the transportation fee claim, TianEnLu was
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seeking unpaid transportation fee from Tincy Group of RMB1,315,000 plus interest and legal fee. As at 30 June 2021, no decision has been issued by the Dalian Court.

(3) In April 2020, Weihai City Commercial Bank Co., Ltd (" Weihai ") commenced three claims in the Shandong High People's Court against, amongst others, CA Commodity Trading Pty Ltd (" CACT "), which is an indirect wholly-owned subsidiary of CITIC Resources. The claims relate to three letters of credit issued in favour of CACT as payment for the sale by CACT to Qingdao Decheng Minerals Co., Ltd. of certain quantity of aluminium stored at bonded warehouses at Qingdao Port, PRC in 2014. CACT refutes the claims and has engaged local counsel in the PRC to defend the claims accordingly. The Shandong High People's Court has issued a first instance judgment that CACT is not liable for Weihai's losses as there is no evidence of any intention to commit fraud on the part of CACT. However, the Shandong High People's Court published a notice on 16 May 2021 which states that Weihai submitted an appeal to the first instance judgment. On 30 July 2021, the Shandong High People's Court announced the appeal hearing will be held on 19 October 2021.

Material Disputes with Mineralogy in relation to the Sino Iron Project

Each of Sino Iron Pty Ltd (" Sino Iron ") and Korean Steel Pty Ltd (" Korean Steel "), subsidiary companies of CITIC Limited, has entered into a Mining Right and Site Lease Agreement (" MRSLA ") with Mineralogy. Among other things, those agreements, together with other project agreements, provide Sino Iron and Korean Steel the right to develop and operate the Sino Iron Project and to take and process one billion tonnes each of magnetite ore for that purpose.

There are a number of ongoing disputes between CITIC Limited, Sino Iron and Korean Steel (the " CITIC Parties ") on the one hand, and Mineralogy and Mr. Clive Palmer on the other hand, arising from the MRSLAs and other project agreements. Set out below are the details of those disputes considered to be material.

Option Agreement Dispute

CITIC Limited is a party to an option agreement (the " Option Agreement ") with Mineralogy and Mr. Palmer pursuant to which it has options to acquire up to four further companies, each holding the right to mine one billion tonnes of magnetite ore in the vicinity of the Sino Iron Project. CITIC Limited exercised the first option under the Option Agreement on 13 April 2012. The remaining options have now lapsed. Following the exercise of the first option, Mineralogy and Mr. Palmer alleged that the Option Agreement had been repudiated by CITIC Limited, purported to accept that repudiation and stated that the Option Agreement was at an end.

The CITIC Parties commenced a legal proceeding in relation to the dispute in the Supreme Court of Western Australia. On 30 September 2015, the Court made declarations by consent, including that CITIC Limited had not repudiated the Option Agreement in the manner asserted by Mineralogy and Mr. Palmer.

Notwithstanding the making of these declarations, Mineralogy and Mr. Palmer did not take the actions necessary to permit completion of the transaction resulting from CITIC Limited's exercise of the first option under the Option Agreement. On 31 March 2016, the CITIC Parties commenced a proceeding in the Supreme Court of Western Australia in relation to the Option Agreement (" Proceeding CIV 1514/2016 ") to seek orders compelling Mineralogy to take the steps necessary to complete the transfer of a further company having the right to mine one billion tonnes of magnetite ore. On 26 February 2018, Justice K Martin granted leave for Cape Preston Resource Holdings Pty Ltd to be added as a plaintiff to the proceeding and for the writ to be amended for that purpose.

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On 29 November 2020, CITIC Limited accepted the nomination of Balmoral Iron on the basis of certain representations and subject to certain conditions concerning guarantees, indemnities and warranties which had been proffered by Mineralogy and Mr. Palmer in the preceding weeks.

As the issues in dispute had narrowed, the principal remaining issue for determination at trial was the form of the takeover agreement and the project agreements to be entered into by Balmoral Iron.

On 30 March 2021, Justice K Martin delivered his reasons for decision. His Honour made various findings, including that Mineralogy had long been in breach of its first option performance obligations and that it was appropriate to make orders for specific performance. Among other things his Honour determined that the Option Agreement envisaged some permissible amendments to the takeover agreement and project agreements, but any amendments needed to be "benign, necessary and minimal".

Final orders for specific performance were made by Justice K Martin on 6 May 2021. Those orders annexed the takeover agreement and project agreements to be entered into by Balmoral Iron. The takeover agreement was signed and exchanged on 27 May 2021 and Cape Preston Resource Holdings Pty Ltd applied for Foreign Investment Review Board approval of the acquisition, which was received on 19 November 2021. Completion of the acquisition occurred on 24 November 2021.

FCD Indemnity Disputes

Mineralogy and Mr. Palmer have commenced and threatened to commence proceedings to pursue claims pursuant to an indemnity given by CITIC Limited under the Fortescue Coordination Deed (" FCD ") to Mineralogy and Mr. Palmer. That indemnity extends to losses suffered by Mineralogy and Mr. Palmer in relation to the failure by Sino Iron and Korean Steel to perform their obligations under the project agreements.

(a) Queensland Nickel FCD Indemnity Claim

On 29 June 2017, Mr. Palmer commenced a proceeding against CITIC Limited in the Supreme Court of Western Australia (" Proceeding CIV 2072/2017 ") claiming damages in the sum of AUD2,324,000,000 (now reduced by an amended statement of claim to AUD1,800,438,000). This amount is alleged to represent the reduction in the value of the assets of the joint venture business carried on by the Queensland Nickel group of companies controlled by Mr. Palmer. The joint venture business was a nickel and cobalt refinery located at Yabulu in North Queensland.

As Sino Iron and Korean Steel had not paid amounts sought by Mineralogy on account of the royalty on products produced by Sino Iron and Korean Steel (" Royalty Component B "), Mr. Palmer claims that Mineralogy did not, and was unable to, provide the funds to Queensland Nickel Pty Limited to enable it to continue managing and operating the joint venture business. Mr. Palmer alleges that Queensland Nickel Pty Limited was subsequently placed in administration, followed by liquidation, because it did not receive those funds from Mineralogy.

After commencing this proceeding, Mr. Palmer joined Mineralogy as a second plaintiff and Sino Iron and Korean Steel as second and third defendants.

On 16 April 2018, the CITIC Parties filed an amended defence, which pleaded a number of defences, including that there has been no breach of the project agreements, construction arguments, causation and mitigation.

On 14 September 2020, Justice K Martin ordered that:

(i) this proceeding be heard together with Proceeding CIV 1267/2018; and
(ii) damages be determined separately and subsequently to liability.

On 3 March 2021, Mineralogy and Mr. Palmer filed an application for leave to amend their statement of claim to introduce an allegation that the CITIC Parties' purpose in failing

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(b)

to pay Royalty Component B was to apply commercial pressure upon Mineralogy and Mr. Palmer to agree to alter the contractual relationship between the parties. In Mineralogy and Mr. Palmer's view, that alleged purpose amounted to the commission of the tort of collateral abuse of process and unconscionable conduct in contravention of section 21 of the Australian Consumer Law. The CITIC Parties rejected those allegations on various grounds. The application was dismissed by consent on 28 May 2021 following Chief Justice Quinlan's dismissal of the permanent stay application by Mineralogy and Mr. Palmer in Proceeding CIV 1915/2019, referred to below.

The CITIC Parties filed a re-amended defence on 22 October 2021. Among other things, the re-amended defence amended pleadings related to the Royalty Component B dispute, identified issues raised in other related proceedings, introduced abuse of process pleadings and removed the CITIC Parties' counterclaim.

On 9 December 2021, Justice K Martin made orders requiring Mineralogy and Mr. Palmer to, among other things, file an amended reply in this proceeding by 25 February 2022. A strategic conference is listed in this proceeding on 23 March 2022.

As at the date of this Offering Circular, no trial date has been set for this proceeding.

Palmer Petroleum FCD Indemnity Claim

On 16 February 2018, Mineralogy commenced another proceeding against the CITIC Parties in the Supreme Court of Western Australia (" Proceeding CIV 1267/2018 ") in which it claims damages in the sum of AUD2,675,400,000. The statement of claim pleads that Mineralogy had agreed to provide:

(i) from December 2009, funding; and
(ii) in or about 2013, all future working capital,

to its wholly owned subsidiary, Palmer Petroleum Pty Ltd (now named Aspenglow Pty Ltd) (" Palmer Petroleum "). As Sino Iron and Korean Steel had not paid Royalty Component B from the fourth quarter of 2013 to the second quarter of 2016, it is claimed that Mineralogy did not, and was unable to, provide the funding to Palmer Petroleum.

Mineralogy alleges that as a result, Palmer Petroleum was wound up in insolvency. The statement of claim pleads that Palmer Petroleum subsequently lost rights to a Papua New Guinea petroleum prospecting licence and suffered a diminution in value, equivalent to the sale value of oil that allegedly would have been recoverable under that licence. Mineralogy claims that it suffered a loss equivalent to the diminution in value of its shareholding in Palmer Petroleum.

On 24 April 2018, the CITIC Parties filed and served their defence, which is in similar terms to their defence in Proceeding CIV 2072/2017. The CITIC Parties have pleaded a number of defences, including that there has been no breach of the project agreements, construction arguments, causation and mitigation.

On 14 September 2020, Justice K Martin ordered that:

(i) this proceeding be heard together with Proceeding CIV 2072/2017; and
(ii) damages be determined separately and subsequently to liability.

On 3 March 2021, Mineralogy filed an application for leave to amend its statement of claim to introduce an allegation that the CITIC Parties' purpose in failing to pay Royalty Component B was to apply commercial pressure upon Mineralogy to agree to alter the contractual relationship between the parties. In Mineralogy's view, that alleged purpose amounted to the commission of the tort of collateral abuse of process and unconscionable conduct in contravention of section 21 of the Australian Consumer Law. The CITIC Parties rejected those allegations on various ground. The application was dismissed by consent on 28 May 2021 following Chief Justice Quinlan's dismissal of the permanent stay

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application by Mineralogy and Mr. Palmer in Proceeding CIV 1915/2019, referred to below.

The CITIC Parties filed an amended defence in Proceeding CIV 1267/2018 on 22 October 2021. Among other things, the amended defence amended pleadings related to the Royalty Component B dispute, identified issues raised in other related proceedings and introduced abuse of process pleadings.

On 9 December 2021, Justice K Martin made orders requiring Mineralogy to, among other things, file an amended reply in this proceeding by 25 February 2022. A strategic conference is listed in this proceeding on 23 March 2022.

As at the date of this Offering Circular, no trial date has been set for this proceeding.

Mine Continuation Proposals / Dispute

The continued operation of the Sino Iron Project requires it to extend beyond the footprint it currently occupies. The need for extension is primarily driven by the need to accommodate waste rock and tailings, which are necessary by-products of the mining process. The mining tenements upon which the Sino Iron Project is currently conducted, and those into which the CITIC Parties wish to extend in order to continue operation, are all held by Mineralogy. Without an increased footprint, it will be necessary to suspend operations at the Sino Iron Project.

The CITIC Parties commenced a proceeding against Mineralogy and Mr. Palmer in the Federal Court of Australia (" Proceeding WAD 471/2018 "). Following a cross-vesting application by the defendants, the proceeding was transferred to the Supreme Court of Western Australia and admitted to the Commercial Managed Cases List of Justice K Martin on 10 June 2019 (" Proceeding CIV 1915/2019 "). The proceeding relates to the failure and refusal of Mineralogy to:

submit mine continuation proposals for the Sino Iron Project to the State of Western Australia under the State Agreement;
grant further necessary tenure for the Sino Iron Project;
take steps to secure the re-purposing of general-purpose leases for the Sino Iron Project; and
submit a Programme of Works for the Sino Iron Project to the State of Western Australia.

The CITIC Parties brought claims for breach of contract, of unconscionable conduct under the Australian Consumer Law, and in estoppel. Mr. Palmer is sued as an accessory to the unconscionable conduct claim. The CITIC Parties seek orders requiring Mineralogy to take the four steps listed above, and to pay the CITIC Parties damages for its failure and refusal to do those things. Damages are also sought from Mr. Palmer. The State of Western Australia is joined to the proceeding as a necessary party, because it is a party to the State Agreement, but no relief is sought against it.

Mediation was conducted in late 2019 but was unsuccessful.

On 10 March 2020, Mineralogy and Mr. Palmer filed their further amended defences. The amendments alleged breaches of various project agreements, and that Mineralogy and Mr. Palmer have allocated parts of certain tenements to other projects. On 23 March 2020, the CITIC Parties filed their reply. On 17 September 2020, following a successful application by the CITIC Parties to strike out aspects of Mineralogy's further amended defence, Mineralogy filed a second further amended defence to remove the defences that were struck out.

On 5 January 2021, Mineralogy and Mr. Palmer filed an application to permanently stay the proceeding, alleging that the proceeding had been brought for an illegitimate or collateral purpose (namely, to apply commercial pressure upon Mineralogy and Mr. Palmer to agree to alter the contractual relationship between the parties) and an abuse of process.

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On 26 February 2021, the CITIC Parties filed an application to summarily dismiss or strike out Mineralogy and Mr. Palmer's permanent stay application. On 12 April 2021, Mineralogy and Mr. Palmer amended their points of claim. Among other things, those amendments sought alternative relief that Proceeding CIV 1915/2019 should be permanently stayed to the extent it raises matters the subject of issue, Anshun or abuse of process estoppels arising by reason of judgments in past proceedings between the parties concerning the Port of Cape Preston and the CITIC Parties' port terminal facilities (in which the CITIC Parties were wholly successful).

The CITIC Parties' application to summarily dismiss or strike out Mineralogy's and Mr. Palmer's permanent stay application was heard by Chief Justice Quinlan on 15 and 21 April 2021. On 28 May 2021, Chief Justice Quinlan summarily dismissed the permanent stay application and the application for discovery within that application. His Honour rejected all the grounds advanced by Mineralogy and Mr. Palmer in support of the permanent stay application, including finding that there was no reasonably arguable basis for Mineralogy and Mr. Palmer to argue Proceeding CIV 1915/2019 should be stayed as an abuse of process.

Mineralogy and Mr. Palmer appealed the decision of Chief Justice Quinlan to dismiss the permanent stay application but, on 1 July 2021, discontinued those appeals.

On 30 June 2021, Mineralogy and Mr. Palmer filed a chamber summons seeking a stay of Proceeding CIV 1915/2019 until after the CITIC Parties obtain approval under the Foreign Acquisitions and Takeovers Act 1975 (Cth) in respect of matters the subject of the specific performance orders or injunctions sought by the CITIC Parties. However, on 15 July 2021, Mineralogy and Mr. Palmer advised the CITIC Parties' solicitors that they did not intend to pursue that application. On 16 July 2021, by consent, that application was dismissed by the Court.

Mineralogy and Mr. Palmer were required to file and serve any amended defence by 6 August 2021. On 17 August 2021, Mineralogy filed a third further amended defence and Mr. Palmer filed a second further amended defence. Mineralogy's third further amended defence made substantial amendments. On 13 September 2021, the CITIC Parties filed a chamber summons seeking to strike out various paragraphs of the defence as failing to disclose any reasonably arguable defence or, alternatively, as an abuse of process. On 3 November 2021, Justice K Martin issued his reasons, in which the CITIC Parties were largely successful, striking out many of the identified paragraphs of Mineralogy's third further amended defence. On 11 November 2021, orders giving effect to Justice K Martin's reasons were issued. On 12 November 2021, Mineralogy filed a fourth further amended defence with those paragraphs struck out. Consequentially, Mr. Palmer filed a third further amended defence on 23 November 2021 and the CITIC Parties filed an amended reply on 29 November 2021.

On 26 November 2021, Justice K Martin's decision to strike out paragraphs of Mineralogy's third further amended defence was appealed by Mineralogy and Mr. Palmer to the Court of Appeal. However, the appeal notice filed by Mineralogy and Mr. Palmer was rejected for filing. Subsequently, on 1 December 2021, Mineralogy and Mr. Palmer filed a new appeal notice in the Court of Appeal appealing against Justice K Martin's decision to strike out paragraphs of Mineralogy's third further amended defence (" Proceeding CACV 114/2021 "). Proceeding CACV 114/2021 is listed for hearing by the Court of Appeal on 2 February 2022.

On 6 August 2021, Mineralogy and Mr. Palmer filed a chamber summons seeking orders that the CITIC Parties produce unredacted or complete copies of documents that were redacted or not produced by the CITIC Parties during discovery on the basis of legal professional privilege. On 5 October 2021, Mineralogy and Mr. Palmer amended the chamber summons to expand the number of documents to which their claims related. On 25 November 2021, the Court made orders upholding the CITIC Parties' claim for legal professional privilege over the majority of a sample of the identified documents. On 9 December 2021, the Court issued short form reasons for its determination in respect of the sample documents. On 10 December 2021, the Court dismissed the chamber summons filed by Mineralogy and Mr. Palmer.

On 26 October 2021, following the grant of leave by the Court, the CITIC Parties filed an amended statement of claim. The CITIC Parties filed a chamber summons on 29 November 2021 seeking leave to further amend the statement of claim. The CITIC Parties' application was heard before Justice K Martin on 7 December 2021. On 13 December 2021, Justice K Martin granted the CITIC

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Parties leave to file an amended statement of claim, and the CITIC Parties filed that document on 14 December 2021.

The CITIC Parties commenced a new proceeding (" Proceeding CIV 2326/2021 ") on 8 December 2021. Proceeding CIV 2326/2021 seeks orders for specific performance in relation to a refined tenure request addressed to Mineralogy on 29 November 2021. That tenure request is in the alternative to the tenure in respect of which relief is sought in Proceeding CIV 1915/2019. The CITIC Parties applied to the Court to consolidate Proceeding CIV 2326/2021 with Proceeding CIV 1915/2019. That application was heard by Justice K Martin on 13 December 2021, and his Honour reserved his decision.

The primary trial in Proceeding CIV 1915/2019 is listed before Justice K Martin from 14 February 2022 to 29 April 2022. The primary trial is to determine all issues in Proceeding CIV 1915/2019 other than the quantification of any loss or damage suffered by the CITIC Parties. That question will be addressed in a separate trial in Proceeding CIV 1915/2019 if that trial becomes necessary.

Minimum Production Royalty Disputes

The MRSLAs required each of Sino Iron and Korean Steel to produce a minimum of six million tonnes of product by 21 March 2013, unless prevented from doing so by:

(a) an act, matter or thing outside their control;
(b) Mineralogy doing, or failing to do an act (under the MRSLAs or otherwise); or
(c) a failure to obtain all government approvals necessary to allow them to do so (provided Sino Iron and Korean Steel used best endeavours to obtain such approvals in a timely manner).

If Sino Iron and Korean Steel failed to do so, they were each required, within one month of that date, to pay Mineralogy the equivalent of the Mineralogy Royalty payable on the amount of magnetite ore required to produce six million tonnes of iron ore concentrate (" Minimum Production Royalty "). The Minimum Production Royalty has been the subject of earlier proceedings, including Proceeding CIV 1808/2013, Proceeding CIV 2303/2015, Proceeding CIV 3011/2017 and Proceeding CIV 3166/2017.

On 11 December 2018, Mineralogy and Mr. Palmer commenced a new proceeding against the CITIC Parties and Sino Iron Holdings Pty Ltd (" SIH ") in the Supreme Court of Western Australia (" Proceeding CIV 3129/2018 "), in which the claim for the Minimum Production Royalty was again revived. In their statement of claim in Proceeding CIV 3129/2018, Mineralogy and Mr. Palmer pleaded that each of Sino Iron and Korean Steel failed to produce at least six million tonnes of product by 21 March 2013 (and were not prevented from doing so for any of the reasons set out in clause 6.3(a) of the MRSLAs), and accordingly became liable to pay the Minimum Production Royalty by 21 April 2013. In the event that Mineralogy and Mr. Palmer were unsuccessful against Sino Iron and Korean Steel, Mineralogy and Mr. Palmer also pursued a separate claim against CITIC Limited pursuant to the guarantee and indemnity in the FCD.

Mineralogy sought relief, including an order that CITIC Limited pay Mineralogy AUD13,731,970 plus US$174,209,266, plus interest (pursuant to the guarantee under the FCD). In the event that Mineralogy was estopped or precluded from seeking relief in Proceeding CIV 3129/2018, Mr. Palmer also sought payment by CITIC Limited of US$187,941,236 pursuant to the guarantee and indemnity in the FCD.

On 23 January 2019, the CITIC Parties and SIH filed and served an application to stay or permanently dismiss Proceeding CIV 3129/2018, or strike out the statement of claim. Justice K Martin delivered his reasons on 13 February 2020, finding in favour of the CITIC Parties. His Honour found that Proceeding CIV 3129/2018 was an abuse of process of the Court by Mineralogy and Mr. Palmer and on 20 February 2020 his Honour ordered that the proceeding be permanently stayed.

On 4 March 2020, Justice K Martin's decision to permanently stay Proceeding CIV 3129/2018 was appealed by Mineralogy (" Proceeding CACV 27/2020 ") and Mr. Palmer (" Proceeding CACV

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29/2020 "). Mineralogy and Mr. Palmer argued, among other things, that it was not open to Justice K Martin to find that the commencement of Proceeding CIV 3129/2018 was an abuse of process.

On 25 June 2021, the Court of Appeal dismissed Proceeding CACV 27/2020. The Court considered that Mineralogy's claim in Proceeding CIV 3129/2018 was an abuse of process, because allowing Mineralogy to prosecute the proceeding would serve to bring the administration of justice into disrepute. The Court of Appeal also dismissed Mr. Palmer's appeal in Proceeding CACV 29/2020. The Court agreed that Mr. Palmer's claim failed to disclose a reasonably arguable cause of action. Given the effect of Mr. Palmer's claim would have been to avoid the Court's stay of Proceeding CIV 3129/2018, that claim was also found to have brought the administration of justice into disrepute, and to have comprised an abuse of process.

On 23 July 2021, Mineralogy (" Proceeding P 23/2021 ") and Mr. Palmer (" Proceeding P 24/2021 ") filed applications with the High Court of Australia seeking special leave to appeal against the decision of the Court of Appeal in Proceeding CACV 27/2020 and Proceeding CACV 29/2020. On 13 August 2021, the CITIC Parties filed responsive submissions in Proceeding P 23/2021 and Proceeding P 24/2021. On 23 August 2021, Mineralogy filed its reply in Proceeding P 23/2021 and, on 20 August 2021, Mr. Palmer filed his reply submissions in Proceeding P 24/2021.

On 16 November 2021, the High Court of Australia dismissed Proceeding P 23/2021 and Proceeding P 24/2021 with costs.

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Site Remediation Fund Dispute

(a) 2018 Site Remediation Fund Dispute

Under clause 20.5 of the MRSLAs, Mineralogy may require Sino Iron and Korean Steel to provide reasonable security for the performance of their obligations under clause 20 of the MRSLAs, relating to the protection of the environment and rehabilitation following Mine Closure. Such security is to be provided by way of contributions by Sino Iron and Korean Steel into a Site Remediation Fund. Clause 20.6 of the MRSLAs provides for the operation of the Site Remediation Fund, and requires that:

(i) Mineralogy will establish the Site Remediation Fund, which will be maintained in a separate interest-bearing trust account, designated as a trust account, and Sino Iron and Korean Steel will make contributions into the Site Remediation Fund; and
(ii) for each Operating Year, Mineralogy will "determine an annual charge on account of future Site Remediation Costs… having regard to Mineralogy's best prevailing estimate of the amount of future Site Remediation Costs… and the number of years remaining until Mine Closure".

On 22 October 2018, Mineralogy commenced a proceeding against the CITIC Parties in the Supreme Court of Western Australia (" Proceeding CIV 2840/2018 ") concerning the Site Remediation Fund. Mineralogy claimed that the CITIC Parties were required to contribute AUD529,378,207 into the Site Remediation Fund established under the MRSLAs, as security for the performance of their obligations relating to the protection of the environment and rehabilitation. The CITIC Parties filed a defence and counterclaim in Proceeding CIV 2840/2018 seeking, among other things, orders appointing an independent trustee in place of Mineralogy.

While the CITIC Parties have always acknowledged their site remediation obligations and their obligations under clauses 20.5 and 20.6 of the MRSLAs, they disputed the amount claimed by Mineralogy. Among other arguments, the CITIC Parties considered that the amount demanded by Mineralogy was not an "annual charge" as required by clause 20.6(e) of the MRSLAs. Further, the CITIC Parties did not consider that the amount demanded was a "best prevailing estimate" of future site remediation costs, as required by clause 20.6(e) of the MRSLAs.

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The trial took place between 16 and 24 November 2020. On 24 February 2021, Justice K Martin published his reasons for decision. His Honour held that Mineralogy's claim should be dismissed, and that the CITIC Parties' counterclaim should also be dismissed. His Honour found, consistent with the submissions of the CITIC Parties, that the formulation of an "annual charge" pursuant to clause 20.6 (e) requires Mineralogy to take its best prevailing estimate, subtract the amount already in the Site Remediation Fund, and then divide that amount by the number of years remaining until mine closure.

On 10 June 2021, Mineralogy appealed Justice K Martin's decision to dismiss Mineralogy's claim in Proceeding CIV 2840/2018 (" Proceeding CACV 42/2021 "). On 23 August 2021, the CITIC Parties filed and served their respondents' answer to the appellant's case.

As at the date of this Offering Circular, no date has been set for the hearing of the appeal in Proceeding CACV 42/2021.

(b)
2021/22 Site Remediation Fund contributions sought by Mineralogy

On 31 May 2021, the CITIC Parties received notices, dated 30 May 2021, of a purported annual charge for the 2021–2022 Operating Year from Mineralogy seeking payment of AUD580,504,721 into the Site Remediation Fund by 31 December 2021 (" 2021 Notices "). The CITIC Parties sought further information from Mineralogy about the 2021 Notices, but Mineralogy refused to provide the requested information.

On 16 December 2021, the CITIC Parties commenced a proceeding against Mineralogy in the Supreme Court of Western Australia (" Proceeding CIV 2373/2021 "). The CITIC Parties seek declarations that the 2021 Notices are invalid and of no effect. The statement of claim alleges that the 2021 Notices are not valid due to noncompliance with the terms of the MRSLAs. Consequently, the CITIC Parties allege that the 2021 Notices do not trigger their obligations under clause 20.6 of the MRSLAs to pay an annual charge into the Site Remediation Fund.

Metallurgical Corporation of China ("MCC") claim

MCC was appointed as the EPC contractor for the processing area and related facilities at the Sino Iron Project. The fixed price contract amount was U.S.$3.4 billion.

On 30 January 2013, MCC announced that it had incurred costs over the value of the contract and had provided additional funding of U.S.$858 million to MCC Mining (Western Australia) Pty Ltd (" MCC WA "), its wholly owned subsidiary company responsible for delivering MCC's obligations under the contract.

As at the date of this Offering Circular, MCC has not claimed any additional costs from Sino Iron or its subsidiary companies, other than minor contract variations in the normal course of operations, and CITIC Limited Group believes it has satisfied all of its obligations under the contract. Under the contract, CITIC Limited Group has a right to claim liquidated damages from MCC WA for certain delays in the completion of their project scope at a daily amount of 0.15 per cent. of the value of the main contract (approximately U.S.$5 million per day, with a cap of approximately U.S.$530 million in total). As at the date of this Offering Circular the cumulative days delay that has been incurred has resulted in the contractual cap to the liquidated damages being reached.

As set out in the CITIC Limited's announcement dated 24 December 2013, Sino Iron and MCC WA entered into a supplemental contract pursuant to which Sino Iron will take over the management of the construction and commissioning of the remaining four production lines of the Sino Iron Project. An independent audit will opine on various matters including the contract price for the hand over pursuant to the supplemental contract and related fees and expenses, the value of the supporting services provided by Sino Iron to MCC WA in carrying out its responsibilities under the contract, the extent of the works completed by MCC WA in respect of the first two production lines, and the liability of MCC WA in respect of the extensive delays on completion of the works under the contract. By reference to such findings of the independent audit, Sino Iron and MCC WA expect to enter into further negotiations to determine the amount of liabilities to be borne between the parties.

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Outcomes are not yet known as at the date of this Offering Circular.

Administrative proceedings and penalties

As at the date of this Offering Circular, CITIC Limited Group was not aware of any material ongoing administrative penalties against it.

Risk Management

In accordance with CITIC Limited Group's development strategy, CITIC Limited has established a risk management and internal control system covering all the business segments to identify, assess and manage various risks in CITIC Limited Group's business activities.

The risk management and internal control system of CITIC Limited Group is established along the core concepts of risk management and internal control released by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and the Basic Standard for Enterprise Internal Control, as well as relevant guidelines and governmental policies.

The risk management and internal control system of CITIC Limited Group comprises "Four Levels" and "Three Lines of Defence" based on the corporate governance structure. The "Four Levels" are the (i) board of directors, (ii) management and several committees, (iii) risk management functions of CITIC Limited Group, and (iv) member companies. The "Three Lines of Defence" are the (i) first line of defence comprised by business units of each level of CITIC Limited Group, (ii) second line of defence comprised by the risk management functions of each level of CITIC Limited Group, and (iii) third line of defence comprised by the internal audit departments or functions of each level of CITIC Limited Group.

The asset and liability management committee (" ALCO ") has been established to monitor financial risks of CITIC Limited Group and its member companies in accordance with the relevant treasury and financial risk management policies. CITIC Limited has relevant departments which are responsible for communicating and implementing ALCO's decisions to member companies, monitoring adherence and preparing relevant reports. All member companies of CITIC Limited Group have the responsibility for identifying and managing their financial risk positions effectively in accordance with the overall risk framework under the treasury and financial risk management policies and within the scope of authorisation. Major subsidiaries report their financial risk positions to ALCO on a regular basis.

CITIC Limited Group is committed to constantly improving its risk management and internal control framework at all levels; strengthening the risk assessment and monitoring of major projects and key businesses; staying fully informed of the operations, financial condition and major business progress of its subsidiaries through off-site monitoring, on-site inspections and other means to assess the risks that may arise; reporting on a timely basis any weaknesses and potential risks; supervising and implementing management and control measures; and improving the completeness and effectiveness of its risk management and internal control practices across the CITIC Limited Group.

Corporate Governance

CITIC Limited is committed to maintaining high standards of corporate governance. The board of directors believes that good corporate governance practices are important to promote investor confidence and protect the interests of our shareholders.

Board composition and changes

On 29 January 2019, Mr. Wu Youguang resigned as a non-executive director of CITIC Limited.

On 21 February 2019, Mr. Pu Jian resigned as an executive director, vice president, a member of the executive committee and vice chairman of the strategy and investment management committee of CITIC Limited.

On 28 March 2019, Ms. Lee Boo Jin resigned as an independent non-executive director and a member of the nomination committee of CITIC Limited. On the same day, Mr. Gregory Lynn Curl was appointed as an independent non-executive director and a member of the nomination committee of CITIC Limited.

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On 5 June 2019, Mr. Paul Chow Man Yiu retired as an independent non-executive director of CITIC Limited by rotation and did not offer himself for re-election. Following his retirement, he ceased to act as a member of the remuneration committee of CITIC Limited.

On 30 March 2020, Mr. Chang Zhenming resigned as chairman of the board and executive director, chairman of nomination committee, chairman of strategic committee and chairman of executive committee of CITIC Limited. On the same day, Mr. Zhu Hexin was appointed as chairman of the board and executive director, chairman of nomination committee, chairman of strategic committee and chairman of executive committee of CITIC Limited.

On 25 August 2020, Mr. Wang Jiong resigned as an executive director, vice chairman and president, a member of the nomination committee, a member of the strategic committee, vice chairman of the executive committee and chairman of the strategy and investment management committee of CITIC Limited; and Ms. Yan Shuqin resigned as a non-executive director, a member of the nomination committee and a member of the strategic committee of CITIC Limited. On the same day, Mr. Xi Guohua was appointed as an executive director, vice chairman and president, a member of the nomination committee, a member of the strategic committee, vice chairman of the executive committee and chairman of the strategy and investment management committee of CITIC Limited; and Ms. Yu Yang was appointed as a non-executive director, a member of the nomination committee and a member of the strategic committee of CITIC Limited.

On 3 May 2021, Mr. Shohei Harada resigned as an independent non-executive director and a member of the strategic committee of CITIC Limited. On the same day, Mr. Toshikazu Tagawa was appointed as an independent non-executive director and a member of the strategic committee of CITIC Limited.

Board committees

As at the date of this Offering Circular, the board had the following committees:

Audit and risk management committee

The audit and risk management committee oversees the relationship with the external auditor, and reviews CITIC Limited's financial reporting, annual audit and half-year report. The committee acts on behalf of the board in providing oversight of CITIC Limited's financial reporting system, risk management and internal control systems, reviews and monitors the effectiveness of the internal audit function, and reviews CITIC Limited's policies and practices on corporate governance. The committee currently consists of two nonexecutive directors and three independent non-executive directors. The chairman of the committee is Mr. Francis Siu Wai Keung, an independent non-executive director. Mr. Francis Siu Wai Keung has the relevant professional qualification and expertise in financial reporting matters. The audit and risk management committee holds four regular meetings each year (at least two of which are with CITIC Limited's external auditor). At invitation of the audit and risk management committee, other directors, senior management and other relevant persons, as well as experts or consultants with relevant experience or expertise may also attend the meetings. The audit and risk management committee members also meet in separate private sessions with the external and internal auditors without the presence of executive directors and management at least once a year.

The authority, role and responsibilities of the audit and risk management committee are set out in written terms of reference. The committee reviews its terms of reference at least once a year to ensure they remain in line with the requirements of the Hong Kong Stock Exchange's Corporate Governance Code (the " CG Code "). Amendments to the terms of reference are submitted to the board for approval. The terms of reference are available on CITIC Limited's website[1] and the Hong Kong Stock Exchange's website.

Under its terms of reference, the audit and risk management committee shall:

review and monitor the integrity of CITIC Limited's financial information and provide oversight of the financial reporting system;
monitor the effectiveness of external audit and oversee the appointment, remuneration and terms of engagement of CITIC Limited's external auditor, as well as its independence;
1 https://www.citic.com/en/investor_relation/corporate_governance/AC_ToR_Eng.pdf
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oversee CITIC Limited's internal audit, risk management and internal control systems, including the resources for CITIC Limited's internal audit, risk management, accounting and financial reporting functions, staff qualifications and experience, as well as arrangements for concerns raised by staff on financial reporting, internal control and other matters (" whistle-blowing ");
undertake corporate governance functions delegated from the board, including
(a) reviewing CITIC Limited's policies and practices on corporate governance and making recommendations to the board as well as CITIC Limited's compliance with the CG Code and disclosure in the corporate governance report;
(b) reviewing and monitoring:
- (i) the training and continuous professional development of directors and senior management;
- (ii) CITIC Limited's policies and practices on compliance with legal and regulatory requirements;
- (iii) the code of conduct and compliance manual (if any) applicable to employees and directors; and
- (iv) CITIC Limited's whistle-blowing policy and system; and
undertake other authorities delegated by the board.

The joint company secretary, Mr. Choy Wing Kay, Ricky acts as the secretary to the committee. The committee is supported by a working group which consists of representatives from Audit and Compliance Department, Financial Control Department, Office of the Board of Directors and other departments of CITIC Limited. The working group provides services to the committee to ensure that sufficient resources are made available for the committee to perform its duties. An agenda and committee papers are sent to the committee members at least three days prior to each regular meeting. The draft and final version of minutes are circulated to all committee members for their comments and records within a reasonable time after the meeting. Full minutes of the meetings are kept by the joint company secretary.

The chairman of the committee summarises the activities of the committee and issues arising and reports to the board after each audit and risk management committee meeting.

Nomination committee

The nomination committee was established by the board with written terms of reference in compliance with the CG Code. The terms of reference are available on CITIC Limited's website[2] and the Hong Kong Stock Exchange's website.

The nomination committee reports directly to the board and its principal duties are:

to review the structure, size, composition and diversity of the board at least annually and make recommendations on any proposed changes to the board;
to identify and nominate qualified candidates to become board members and/or to fill casual vacancies for the approval of the board;
to assess the independence of independent non-executive directors;
to make recommendations to the board on the appointment or re-appointment of directors and succession planning for directors; and
to review the board diversity policy and the director nomination policy on an annual basis, and make recommendation on any required changes to the board.
2 https://www.citic.com/en/investor_relation/corporate_governance/NC_ToR_Eng.pdf
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The nomination committee currently comprises two executive directors, one non-executive director and four independent non-executive directors, and is chaired by Mr. Zhu Hexin, the chairman of the board. The committee meets at least annually and at such other times as it shall require. The joint company secretary, Mr. Choy Wing Kay, Ricky acts as the secretary to the committee. The committee is provided with sufficient resources enabling it to perform its duties, and it can seek independent professional advice at CITIC Limited's expense if necessary.

Remuneration committee

The principal role of the remuneration committee is to determine the remuneration packages of individual executive directors and senior management including salaries, bonuses, benefits in kind, pension rights and compensation payments (including any compensation payable for loss or termination of office or appointment). The remuneration committee reviews and approves the management's remuneration proposals with reference to the board's corporate goals and objectives, salaries paid by comparable companies, regulations promulgated by national regulatory authorities on the remuneration of directors and senior management, time commitment and responsibilities and employment conditions elsewhere in the Group, so as to align management incentives with shareholder interests.

The committee currently comprises three independent non-executive directors and a non-executive director. The chairman of the committee is Mr. Anthony Francis Neoh, an independent non-executive director. The committee meets at least once a year. A joint company secretary serves as the secretary of the committee. The terms of reference are available on CITIC Limited's website[3] and the Hong Kong Stock Exchange's website.

Strategic committee

A strategic committee has been established to accommodate the strategic development of CITIC Limited and enhance its core competitiveness, make and implement the development plan of CITIC Limited, improve the investment-related decision making procedures and procure well-advised and efficient decision making.

The strategic committee shall be accountable to and report to the board and its powers and functions are:

considering the major strategic directions of CITIC Limited and making proposals to the board;
considering the mid-to-long term development plan and 5-year development plan of CITIC Limited and making proposals to the board;
considering the impact of the macro economic conditions on the development of various business sectors of CITIC Limited and making proposals to the board; and
other matters in connection with strategy planning pursuant to authorization of the board.

The committee is chaired by Mr. Zhu Hexin, the chairman of the board, and other members include an executive director, Mr. Xi Guohua (being vice chairman and president of CITIC Limited), three nonexecutive directors, Mr. Song Kangle, Ms. Yu Yang and Mr. Yang Xiaoping, and two independent nonexecutive directors, Mr. Anthony Francis Neoh and Mr. Toshikazu Tagawa. Mr. Li Rucheng (being a former non-executive director of CITIC Limited) serves as a consultant to the committee.

Special Committee

A special committee has been established to deal with all matters relating to all investigations (including enquiries) of, and proceedings involving, CITIC Limited and its directors, arising from the 2008 forex incident, including but not limited to by the Market Misconduct Tribunal, the Securities and Futures

3 https://www.citic.com/en/investor_relation/corporate_governance/RC_ToR_Eng.pdf

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Commission and the Commercial Crime Bureau of the Hong Kong Police Force. On 24 September 2019, the Special Committee of CITIC Limited was dissolved.

The following is the composition of the four board committees:

Director Zhu Hexin .................................. Xi Guohua .................................. Li Qingping ................................ Song Kangle ............................... Liu Zhuyu................................... Peng Yanxiang ........................... Yu Yang ..................................... Liu Zhongyuan ........................... Yang Xiaoping ........................... Francis Siu Wai Keung .............. Xu Jinwu .................................... Anthony Francis Neoh Gregory Lynn Curl ..................... Toshikazu Tagawa .....................		Board Committee	Board Committee
	Audit and Risk Management Committee M M C M M	Nomination Committee C M M M M M M	Remuneration Committee M M M C	Strategic Committee
				C M M M M M M

C Chairman of the relevant board committees

M Member of the relevant board committees

Management Committees

Executive Committee

The executive committee is the highest authority of the management of CITIC Limited accountable to the board. The functions and powers of the executive committee are:

to formulate CITIC Limited's material strategic plans;
to formulate CITIC Limited's annual material investment and financing plans (including reviewing material investment plans, feasibility studies, proposed disposals/divestments, mergers and acquisitions and other significant transactions of CITIC Limited);
to review CITIC Limited's annual business plan and finance plans;
to review monthly reports of CITIC Limited, and to submit to the board, before each month-end, the monthly report for the previous month;
to manage and monitor CITIC Limited's core activities;
to appoint and remove mid-level and above key personnel (other than personnel above the rank of assistant to general manager, and those appointed and removed by the board);
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to approve internal rules on day-to-day operations of CITIC Limited;
to review and approve proposals to establish and adjust CITIC Limited's management and organisational structure; and
to discharge other powers and functions conferred on it by the board.

The first three items and other matters within the authority of the board should be submitted for approval by the board, and thereafter implemented by the executive committee.

The committee is chaired by Mr. Zhu Hexin, the chairman of the board, and other members are Mr. Xi Guohua (being executive director, vice chairman and president of CITIC Limited, and also serves as vice chairman of the committee), Mr. Ren Shengjun (serving as vice chairman of the committee), Ms. Li Qingping (being executive director and vice president of CITIC Limited), Mr. Cui Jun, Mr. Liu Zhengjun (being vice president of CITIC Limited), Mr. Wang Guoquan (being vice president of CITIC Limited appointed on 23 December 2020), Mr. Xu Zuo (being vice president of CITIC Limited) and Mr. Fang Heying (being vice president of CITIC Limited appointed on 23 December 2020).

Strategy and Investment Management Committee

CITIC Limited has established the strategy and investment management committee as a sub-committee under the executive committee to enhance strategy management, to prevent investment risks and to promote high-quality development. The principal responsibilities of the strategy and investment management committee are to:

study and draw up CITIC Limited's integral development, medium and long-term development plan and industries investment guideline, approve development strategies and plans of its subsidiaries;
establish a mechanism of empowered operation and management, and to organise and implement it; and
organise and implement the full life-circle management of investment activities within the CITIC Limited group.

The committee is led by the chairman of the committee Mr. Xi Guohua (being executive director, vice chairman and president of CITIC Limited), and the vice chairmen of the committee, Mr. Liu Zhengjun (being vice president of CITIC Limited) and Mr. Xu Zuo (being vice president of CITIC Limited), and other members of the committee include Mr. Zhang Youjun (being assistant president of CITIC Limited), Mr. Cao Guoqiang (being chief financial officer of CITIC Limited), Mr. Liang Huijiang (being chief investment officer of CITIC Limited), responsible persons of the strategic development department, financial control department, legal and compliance functions and treasury department.

Asset and Liability Management Committee

CITIC Limited has established the asset and liability management committee (the " ALCO ") as a subcommittee under the executive committee to be in charge of monitoring and controlling the financial risks of CITIC Limited. The principal responsibilities of the ALCO are to:

monitor and control the asset and liability financial position of CITIC Limited on a regular basis;
monitor and control the following issues of CITIC Limited:
asset and liability structure
counterparties
currencies
interest rates
commodities
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commitments and contingent liabilities
review financing plans and manage the cash flow of CITIC Limited on the basis of the annual budget; and
establish hedging policies and approve the use of new financial instruments for hedging.

The acting chairman of the committee is Mr. Cao Guoqiang (being chief financial officer of CITIC Limited), and other members include responsible persons of the financial control department, treasury department, strategic development department, the office of the board of directors and legal and compliance functions.

Competition

CITIC Limited Group's businesses face intense competition in each of its operating markets. Its financial services business faces competition from domestic and international commercial banks and other financial institutions; its engineering contracting business faces competition from global companies in the industry as well as the challenges from large Chinese state-owned enterprises and private companies; its advanced intelligent manufacturing, advanced materials, new consumption, new-type urbanisation and other businesses face competition in terms of resources, technology, price and service.

Environment

CITIC Limited Group conducts engineering contracting, resource exploration, trading in relation to resources and mining, as well as other businesses in the PRC and overseas. In addition, export of machinery and auto parts and other products of CITIC Limited Group from the PRC are also growing. These businesses are subject to the PRC and the relevant country's environmental regulations and rules, and failure to comply with such environmental laws and regulations may adversely affect CITIC Limited Group's business operations.

The environment team within CITIC Limited Group's different subsidiaries are always working closely with and alongside regulators to ensure that all projects obtained all the necessary approvals and fulfil all requirements before operation begins.

Insurance

CITIC Limited Group is covered by a range of insurance policies underwritten by reputable insurance companies for each of its businesses. Save as set out in the Risk Factors (see " Risk factors – CITIC Limited Group's business may not be adequately insured ") , CITIC Limited Group believes that its operations and assets are covered with adequate insurance provided by reputable independent insurance companies and with commercially reasonable deductibles and limits on coverage.

Notwithstanding CITIC Limited Group's insurance coverage, damage to buildings, facilities, equipment, plants, mills, natural resource sites or other properties or assets as a result of occurrences such as fire, floods, water damage, explosion, power loss, typhoons, earthquakes and other natural disasters could nevertheless have a material adverse effect on CITIC Limited Group's financial condition and results of operations.

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DIRECTORS AND SENIOR MANAGEMENT OF CITIC LIMITED

Board of Directors and Senior Management of CITIC Limited

The board of directors of CITIC Limited currently has 14 directors, comprising three executive directors, six non-executive directors and five independent non-executive directors. Non-executive directors (including independent non-executive directors) comprise almost four-fifths of the board, of which independent non-executive directors represent at least one-third of the board, as required under Rule 3.10A of the HKSE Rules.

Board of Directors

ZHU Hexin (Executive Director and Chairman)

Age 53: an executive director, chairman of the board, chairman of the nomination committee, strategic committee and executive committee of CITIC Limited since 30 March 2020. Mr. Zhu is responsible for the leadership and effective functioning of the board, ensuring that key issues are addressed by the board. He provides the strategic direction for CITIC Limited. Mr. Zhu is currently the chairman of CITIC Group and CITIC Corporation Limited. Mr. Zhu has been appointed as the chairman of the board and non-executive director of CITIC Bank with effect from 21 June 2021. Mr. Zhu was vice president of Bank of Communications, executive director and vice president of Bank of China, vice governor of Sichuan Province, vice president of the PBoC. He has over 20 years' extensive knowledge and experience in the financial industry. He graduated from Shanghai University of Finance and Economics with a degree of bachelor in engineering, majored in economic information management system. He is a senior economist.

XI Guohua (Executive Director, Vice Chairman and President)

Age 58: an executive director, vice chairman and president, a member of the nomination committee, a member of the strategic committee, vice chairman of the executive committee and chairman of the strategy and investment management committee of CITIC Limited since 25 August 2020. Mr. Xi is currently the vice chairman and president of CITIC Group and CITIC Corporation Limited, and a member of the National Committee of the Chinese People's Political Consultative Conference. He formerly served as director of CRRC Zhuzhou Institute Co., Ltd., vice president of China Northern Locomotive & Rolling Stock Industry (Group) Corporation, executive director and CEO of China CNR Corporation Limited, executive director, vice chairman and CEO of CRRC Corporation Limited, vice chairman and president of CRRC Group Co., Ltd., chairman of Xinxing Cathay International Group Co., Ltd., and director and president of China FAW Group Corporation Limited. Mr. Xi has engaged in industry for more than 35 years and has accumulated a lot of practical experience. Mr. Xi graduated from the Electrical Engineering Department of Shanghai Institute of Railway, majoring in electric drive for locomotives. He holds a master's degree in management and a doctor's degree in engineering. He is a professoriate senior engineer.

LI Qingping (Executive Director)

Age 59: an executive director of CITIC Limited since 2015. Ms. Li is the vice president and a member of the executive committee of CITIC Limited. She is currently executive director and vice president of CITIC Group, executive director and vice president of CITIC Corporation Limited. She was formerly chairperson and executive director, president of CITIC Bank, general manager of the International Department of Agricultural Bank of China, general manager of Guangxi Branch, and director of the Retail Business Department. Ms. Li is a senior economist with over 30 years' experience in the banking industry, with particular emphasis on international business and retail business. She graduated from Nankai University in International Finance Programme with a master's degree in Economics.

SONG Kangle (Non-executive Director)

Age 58: a non-executive director of CITIC Limited since 2016. Mr. Song is a member of the strategic committee. He worked in several posts in the Ministry of Finance (the " MOF ") as staff member, senior staff member, principal staff member, deputy director, consultant at director level, associate counsel, deputy director general and counsel at director general level in various departments, such as the Department of Human Resource Development, the Department of External Financing, the Department of External Affairs, the Department of Enterprise and the Department of Asset Management. He graduated from the School of Public Finance and Taxation of Liaoning Institute of Finance and Economics (now known as Dongbei

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University of Finance and Economics) with a bachelor's degree in public finance and China Europe International Business School of Shanghai Jiao Tong University. He is a postgraduate degree holder.

LIU Zhuyu (Non-executive Director)

Age 59: a non-executive director of CITIC Limited since 2017. Mr. Liu is a member of the remuneration committee. He has served several posts in the MOF as senior staff member, principal staff member, deputy director and director at the Department of Industry, Transportation and Finance, director at the Economic Trade Department of the MOF, deputy inspector at the Beijing Supervision & Inspection Office, deputy director at the State Equity & Corporate Finance Department and director general at the Network Information Center, director general of the Department of Treasury and Treasury Payment Center of the MOF. Mr. Liu graduated from Hubei Institute of Finance and Economics (now known as Zhongnan University of Economics and Law). He is a senior accountant and also a certified public accountant.

PENG Yanxiang (Non-executive director)

Age 59: a non-executive director of CITIC Limited since 2018. Mr. Peng is a member of the audit and risk management committee. Mr. Peng is currently a non-executive director of CITIC Group. He worked in several posts in the MOF as assistant engineer, engineer, deputy director, senior engineer, director of Computing Center, deputy chief engineer (director level), deputy director general and director general of Network Information Center. He graduated from the Beijing Institute of Technology. He is a senior engineer. He worked and studied at TKC Corp. in Japan from February 1987 to February 1988 and acquired bookkeeping qualification.

YU Yang (Non-executive Director)

Age 56: a non-executive director, a member of the nomination committee and the strategic committee of CITIC Limited since 25 August 2020. Ms. Yu is currently a non-executive director of CITIC Group and CITIC Corporation Limited. She worked in several posts in the MOF as assistant engineer of Computing Center, engineer of Xingcai Company, deputy general manager and general manager of Zhongcaixin company, deputy director of Comprehensive Department, director of office, director of secretariat of Network Information Center Office, and chief engineer of Network Information Center (deputy director general level). Ms. Yu graduated from Shandong University in computer science with a bachelor's degree in engineering. She is a senior engineer.

LIU Zhongyuan (Non-executive Director)

Age 52: a non-executive director of CITIC Limited since 2014. Mr. Liu is currently director-general of Equity & Fixed-Income Investment Department of the National Council for Social Security Fund. He was formerly an officer and division chief of the General Office and General Planning and Trial Department, National Economic System Reform Commission; division chief and deputy director of the Secretary and Administration Department, Economic System Reform Office of the State Council; deputy director and director of the Secretariat Office of the National Council for Social Security Fund; director and deputy director-general of the Equity Management Department of the National Council for Social Security Fund; deputy director-general of the Equity Management Department (Private Equity Investment Department) of the National Council for Social Security Fund; director-general of the Overseas Investment Department of the National Council for Social Security Fund. Mr. Liu has a doctorate degree in economics from the Department of Economics at Renmin University of China.

YANG Xiaoping (Non-executive Director)

Age 57: a non-executive director of CITIC Limited since 2015. Mr. Yang is a member of the audit and risk management committee and the strategic committee. He is currently the senior vice chairman of the CP Group, the vice chairman and CEO of CPG China, an executive director and the vice chairman of C.P. Lotus Corporation, CEO of CT Bright Holdings Limited, a non-executive director of Ping An Insurance (Group) Company of China Ltd., Honma Golf and Chery Holding Group Co., Ltd., the co-chairman of the board of China Minsheng Investment (Group) Corp. Ltd. and an independent director of Jingdong Digits Technology Holding Co., Ltd. Mr. Yang is also a member of the 12[th] National Committee of Chinese People's Political Consultative Conference, vice president of China Rural Research Institute of Tsinghua University, vice president of Global Co-Development Research Institute of Tsinghua University and president of Beijing Association of Foreign Investment Enterprises. Mr. Yang graduated from the School

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of Economics and Management of Tsinghua University with a doctoral degree and has both studying and working experience in Japan.

Francis SIU Wai Keung (Independent Non-executive Director)

Age 67: an independent non-executive director of CITIC Limited since 2011. Mr. Siu is the chairman of the audit and risk management committee and a member of the remuneration committee and the nomination committee. He is an independent non-executive director of China Communications Services Corporation Limited and China International Capital Corporation Limited. He is also the chairman and an independent non-executive director of BHG Retail Trust Management Pte. Ltd. He has been reappointed as a nonexecutive director of the Financial Reporting Council for a term of two years to 30 September 2023. Mr. Siu retired as an independent non-executive director of Beijing Gao Hua Securities Company Limited with effect from 27 October 2021. He joined KPMG Manchester, UK in 1979 and returned to Hong Kong in 1986 and became a partner of KPMG Hong Kong in 1993. From 2000 to 2002, he was a senior partner of KPMG Shanghai Office. From 2002 to March 2010, he was a senior partner of KPMG Beijing Office, and a senior partner of Northern Region, KPMG China.

XU Jinwu (Dr.-Ing.) (Independent Non-executive Director)

Age 72: an independent non-executive director of CITIC Limited since 2012. Dr. Xu is a member of the audit and risk management committee, the remuneration committee and the nomination committee. He is the vice president of The Chinese Society for Metals (中國金屬學會) and the chairman of the Metallurgical Equipment Committee of The Chinese Society for Metals ( 中國金屬學會冶金設備分會 ). He was appointed as the president of University of Science and Technology Beijing in 2004 and retired in 2013. He served as an independent director of Ningbo Donly Transmission Equipment Co., Ltd. from January 2006 to January 2012 and Xinyu Iron & Steel Co., Ltd. from April 2006 to April 2009.

Anthony Francis NEOH (Independent Non-executive Director)

Age 75: an independent non-executive director of CITIC Limited since 2014. Mr. Neoh is the chairman of the remuneration committee, and a member of the audit and risk management committee, the nomination committee and the strategic committee. He was until October 2016, a member of the International Advisory Council of the CSRC. He also previously served as chief advisor to the CSRC, a member of the Hong Kong Special Administrative Region Basic Law Committee under the Standing Committee of the National People's Congress, chairman of the Hong Kong Securities and Futures Commission, a member of the Hong Kong Stock Exchange Council and its Listing Committee, and chaired its Disciplinary Committee and Debt Securities Group, and Deputy Judge of the Hong Kong High Court. From 1996 to 1998, he was chairman of the Technical Committee of the International Organization of Securities Commissions. He was appointed as Queen's Counsel (now retitled as Senior Counsel) in Hong Kong in 1990. Mr. Neoh graduated from the University of London with a degree in Law in 1976. He is a barrister of England and Wales and admitted to the State Bar of California. In 2003, he was conferred the Degree of Doctor of Laws, honoris causa , by the Chinese University of Hong Kong. He was formerly elected Honorary Fellow of the Hong Kong Securities Institute and Academician of the International Euro-Asian Academy of Sciences in 2009. In 2013, he was awarded the Degree of Doctor of Social Science, honoris causa , by the Open University of Hong Kong and in 2016, he was also awarded the Degree of Doctor of Social Science, honoris causa , by Lingnan University. Mr. Neoh is an independent non-executive director of Industrial and Commercial Bank of China Limited. The term of appointment of Mr. Neoh as the chairman of the Independent Police Complaints Council ended on 31 May 2021. He was formerly a non-executive director of Global Digital Creations Holdings Limited. He also previously served as an independent non-executive director of Link Asset Management Limited (manager of Link Real Estate Investment Trust), China Shenhua Energy Company Limited, Bank of China Limited, China Life Insurance Company Limited and New China Life Insurance Company Ltd.

Gregory Lynn CURL (Independent Non-executive Director)

Age 73: an independent non-executive director of CITIC Limited since 2019. Mr. Curl is a member of the nomination committee. Mr. Curl joined Temasek International as president on 1 September 2010, following his retirement from Bank of America (" BAC ") in March 2010. He brings with him a banking career of over 30 years. During his time with BAC, Mr. Curl served in a number of senior executive capacities including vice chairman of corporate development, and last held the position of chief risk officer. He is a member of the International Advisory Council of the China Banking and Insurance Regulatory Commission. He is also

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a director of Post Holdings, Inc. (listed on the New York Stock Exchange), Rivulis Irrigation Ltd (Israeli company) and Rivulis Pte Ltd (Singapore private company). Mr. Curl was appointed as an independent non-executive director of CITIC Limited in May 2011 and was re-designated as a non-executive director in August 2014 by reason of a shareholding interest held by Temasek group in a subsidiary of CITIC Pacific Limited (further details of which are set out in the CITIC Limited's announcement dated 25 August 2014). Such shareholding interest has since been disposed. Mr. Curl held such position until September 2014. He was also a director of the University of Virginia's Jefferson Scholars Foundation, The Enstar Group, Inc., Grupo Financiero Santander Serfin, and a non-executive director of China Construction Bank Corporation. Mr. Curl received a bachelor's degree in Political Science from Southwest Missouri State University and a master's degree in Government from the University of Virginia. He was named a Woodrow Wilson Fellow in 1970 and was a Philip Dupont Scholar and a McIntire Fellow at the University of Virginia.

Toshikazu TAGAWA (Independent Non-executive Director)

Age 68: an independent non-executive director and a member of the strategic committee of CITIC Limited since 3 May 2021. Mr. Tagawa joined Audit Firm Asahi & Co. (now known as KPMG AZSA LLC) in November 1979, where he performed audit engagements. From November 1984 to June 2008, he worked as a tax professional at Ernst & Young (" EY ") New York office for 18 years, EY San Francisco office for 4 years and Arthur Andersen New York office for 2 years, and became an EY US tax partner in 1996. From July 2008 to June 2010, he was stationed as a tax partner at EY Tax Co. in Japan. From July 2010 to June 2012, Mr. Tagawa was stationed as a tax partner at Shanghai office of EY China, managing tax engagements of the Japanese Business Services in China. Mr. Tagawa retired from EY US in June 2012. From July 2012 to April 2015, he assumed the position of Managing Director of the Financial Services Department of Ernst & Young ShinNihon LLC. From May 2015 to December 2020, he was appointed as a director and CFO of "Japan SR Association" which managed Super Rugby Japan team. He was appointed as a member of the Audit & Supervisory Board of Sumitomo Mitsui DS Asset Management Co., Ltd. as of June 2016 and CEO of Ranzan USA Corp. as of September 2018. Mr. Tagawa graduated from Kobe University of Commerce (now known as University of Hyogo) with a bachelor degree in Business Administration in March 1977. From September 2016 to March 2019, he was a visiting professor in the Faculty of Economics at Musashi University. Mr. Tagawa is a licensed certified public accountant.

Senior Management

REN Shengjun

Age 57: vice chairman of the executive committee of CITIC Limited since 2020. Mr. Ren formerly served as a member of the business committee, general manager of the planning and financial management department (director level), president of Shanghai Branch and president of Shenzhen Branch of The ExportImport Bank of China. He also served as executive director, vice president of China Taiping Insurance Group Ltd., China Taiping Insurance Group (HK) Company Limited and China Taiping Insurance Holdings Company Limited. He is chairman of the supervisory board of CITIC Group and CITIC Corporation Limited. He graduated from Central University of Finance and Economics with a master degree in management. He is a senior accountant.

CUI Jun

Age 57: a member of the executive committee of CITIC Limited since 2018. Mr. Cui currently serves as leader of the Discipline Inspection and Supervision Group of CITIC Group for The Central Commission for Discipline Inspection of the CPC and The National Supervisory Commission. He formerly served as presiding judge of the second economic tribunal, presiding judge of the second civil tribunal, vice president of High People's Court of Heilongjiang Province, chief of Supervision Department of Heilongjiang Province, executive deputy secretary of CPC Party Discipline Inspection Commission and deputy director general of Supervision Commission of Heilongjiang Province, and the secretary of the CPC Party Discipline Inspection Commission of CITIC Group. He graduated from Jilin University in jurisprudence with a master's degree and doctorate in law.

LIU Zhengjun

Age 56: vice president of CITIC Limited and a member of the executive committee since 2018. He has been appointed as chairman of CITIC Asset Operation Corporation Ltd. since April 2019, chairman of CITIC Asset Management Corporation Ltd. since September 2019, chairman of CITIC Trust Corporation

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Ltd since 21 December 2020. Mr. Liu formerly served as a non-executive director and chairman of the board of AsiaSat, a non-executive director of CITIC Telecom International Holdings Limited, staff member, deputy director, director of Jinan Regional Office of National Audit Office of the People's Republic of China (" CNAO "), director general of Department of Public Finance Audit of CNAO, director general of Changchun Regional Office of CNAO, director general of Department of Non-profit Government Agencies Audit of CNAO, director general of Law Department of CNAO. He graduated from Nankai University in finance with a master's degree and doctorate in economics.

WANG Guoquan

Age 49: vice president of CITIC Limited and a member of the executive committee with effect from 23 December 2020. He has been appointed as a non-executive director of CITIC Telecom International Holdings Limited since 4 March 2021, and chairman and a non-executive director of the board of AsiaSat since 11 March 2021. Mr. Wang previously served as the deputy general manager of China Telecom Hebei Branch and since 2012, he has successively served as the general manager of Hebei Branch of China Telecom and the general manager of marketing department of China Telecom Group Co., Ltd.; from December 2018, he served as the deputy general manager of China Telecom Group Co., Ltd. and from August 2019, he served as an executive director of China Telecom Corporation Limited. Mr. Wang graduated from Renmin University of China with an executive master of business administration.

XU Zuo

Age 56: vice president of CITIC Limited and a member of the executive committee since 2019. Mr. Xu started his career in Bohai aluminium Co., Ltd in 1987. He participated in the establishment of Dicastal Wheel Manufacturing Co., Ltd. in 1988, and has successively held the posts of senior manager, assistant to president, vice president, president and vice chairman. Currently he is vice president of CITIC Group, chairman of CITIC Dicastal, chairman of supervisory and advisory board meeting of the KSM Castings Group GmbH in Germany. Mr. Xu has over 30 years' working experience in automotive parts manufacturing, over 20 years' experience in the international market development, overseas acquisitions and restructuring. He graduated from Renmin University of China, with an executive master of business administration. He is a professor and also a senior economist.

FANG Heying

Age 55: vice president of CITIC Limited and a member of the executive committee since 23 December 2020. Mr. Fang previously worked in Zhejiang bank school and Shanghai Pudong Development Bank; from December 1996, he successively served as vice president of Hangzhou Branch, president of Suzhou Branch, director of financial market business of head office of CITIC Bank, etc.; in November 2014, he served as vice president of CITIC Bank, and as the chief financial officer since January 2017; he is an executive director of CITIC Bank as from September 2018; and president of CITIC Bank as from March 2019. Mr. Fang graduated from Peking University with an executive master of business administration. He is a senior economist.

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DIRECTORS' INTERESTS IN SECURITIES

As at 30 June 2021, none of the directors of CITIC Limited had nor were they taken or deemed to have, under Part XV of the Securities and Futures Ordinance (" SFO "), any interests or short positions in the shares, underlying shares and debentures of CITIC Limited or any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept by CITIC Limited pursuant to section 352 of the SFO or as otherwise notified to CITIC Limited and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in the Listing Rules.

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SHAREHOLDERS' INTERESTS IN SECURITIES

Substantial Shareholders

As at 30 June 2021, substantial shareholders of CITIC Limited (other than directors of CITIC Limited) who had interests or short positions in the shares or underlying shares of CITIC Limited which would fall to be disclosed to CITIC Limited under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by CITIC Limited under section 336 of the SFO, or which were notified to CITIC Limited and the Hong Kong Stock Exchange, were as follows:

Name CITIC Group(1).......................... CITIC Glory Limited ("CITIC Glory")(2)................................ CITIC Polaris Limited ("CITIC Polaris")(3).............................. Chia Tai Bright Investment Company Limited ("CT Bright")(4) ............................................... CT Brilliant Investment Holdings Limited ("CT Brilliant")(5)............................ Charoen Pokphand Group Company Limited ("CPG")(6). ITOCHU Corporation ("ITOCHU")(7).......................	Nature of interest/capacity Interests in a controlled corporation and interests in a section 317 concert party agreement Beneficial owner Beneficial owner and interests in a section 317 concert party agreement Beneficial owner and interests in a section 317 concert party agreement Interests in a controlled corporation and interests in a section 317 concert party agreement Interests in a controlled corporation and interests in a section 317 concert party agreement Interests in a controlled corporation and interests in a section 317 concert party agreement	Number of ordinary shares held 22,728,222,755 (Long position) 7,446,906,755 (Long position) 22,728,222,755 (Long position) 22,728,222,755 (Long position) 5,818,053,363 (Short position) 22,728,222,755 (Long position) 5,818,053,363 (Short position) 22,728,222,755 (Long position) 5,818,053,363 (Short position) 22,728,222,755 (Long position) 5,818,053,363 (Short position)	Approximate percentage to the total number of issued shares
			78.13% (Long position) 25.60% (Long position) 78.13% (Long position) 78.13% (Long position) 20.00% (Short position) 78.13% (Long position) 20.00% (Short position) 78.13% (Long position) 20.00% (Short position) 78.13% (Long position) 20.00% (Short position)

(1) CITIC Group is deemed to be interested in 22,728,222,755 shares: (i) by attribution of the interests of its two wholly-owned subsidiaries, CITIC Polaris (9,463,262,637 shares) and CITIC Glory (7,446,906,755 shares); and (ii) because CITIC Group is a party to the Share Purchase Agreement and the Preferred Shares Subscription Agreement which, reading together, constitute an agreement to which section 317(1) of the SFO applies, and accordingly CITIC Group has aggregated its interests in the shares with the interests of the other parties to the Share Purchase Agreement and the Preferred Shares Subscription Agreement. For clarity, CITIC Group's interest in CITIC Limited did not increase, decrease, or otherwise change in the past year. The discrepancy

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between CITIC Group's interest disclosed in this Offering Circular (22,728,222,755 shares) and its interest disclosed in the offering circular dated 31 May 2019 (26,055,943,755 shares) was caused by a revision of calculation methodology adopted by CITIC Group for the purpose of aligning CITIC Group's disclosure of interest with the disclosures of the other parties to the Share Purchase Agreement and the Preferred Shares Subscription Agreement. The revised calculation methodology has been agreed among the parties to the Share Purchase Agreement and the Preferred Shares Subscription Agreement.

(2) CITIC Glory is beneficially interested in 7,446,906,755 shares of CITIC Limited.
(3) CITIC Polaris is deemed to be interested in 22,728,222,755 shares: (i) by including 9,463,262,637 shares it holds as beneficial owner; and (ii) because CITIC Polaris is a party to the Share Purchase Agreement which, reading together with the Preferred Shares Subscription Agreement, constitute an agreement to which section 317(1) of the SFO applies, and accordingly CITIC Polaris has aggregated its interests in the shares with the interests of the other parties to the Share Purchase Agreement and the Preferred Shares Subscription Agreement. For clarity, CITIC Polaris' interest in CITIC Limited did not increase, decrease, or otherwise change in the past year. The discrepancy between CITIC Polaris' interest disclosed in this Offering Circular (22,728,222,755 shares) and its interest disclosed in the offering circular dated 31 May 2019 (18,609,037,000 shares) was caused by a revision of calculation methodology adopted by CITIC Polaris for the purpose of aligning CITIC Polaris' disclosure of interest with the disclosures of the other parties to the Share Purchase Agreement and the Preferred Shares Subscription Agreement. The revised calculation methodology has been agreed among the parties to the Share Purchase Agreement and the Preferred Shares Subscription Agreement.
(4) CT Bright is deemed to be interested in 22,728,222,755 shares: (i) by including 5,818,053,363 shares it holds as beneficial owner; and (ii) because CT Bright is a party to the Share Purchase Agreement and the Preferred Shares Subscription Agreement which, reading together, constitute an agreement to which section 317(1) of the SFO applies, and accordingly CT Bright has aggregated its interests in the shares with the interests of the other parties to the Share Purchase Agreement and the Preferred Shares Subscription Agreement. CT Bright has a short position of 5,818,053,363 shares because it is under an obligation to deliver a maximum of 5,818,053,363 shares to CITIC Polaris if CITIC Polaris' right of first refusal under the Share Purchase Agreement is exercised in full.
(5) CT Brilliant is deemed to be interested in 22,728,222,755 shares and to have a short position of 5,818,053,363 shares as a shareholder of CT Bright directly holding 50 per cent. equity interest in CT Bright.
(6) CPG is deemed to be interested in 22,728,222,755 shares and to have a short position of 5,818,053,363 shares as a shareholder of CT Bright indirectly holding 50 per cent. equity interest in CT Bright through CT Brilliant, its wholly-owned subsidiary.
(7) ITOCHU is deemed to be interested in 22,728,222,755 shares and to have a short position of 5,818,053,363 shares as a shareholder of CT Bright directly holding 50 per cent. equity interest in CT Bright.
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TAXATION

The following is a general description of certain tax considerations relating to the Notes and is based on law, published practice and relevant interpretations thereof in effect as at the date of this Offering Circular, all of which are subject to change (which could be made on a retroactive basis), and does not constitute legal or taxation advice. It does not purport to be a complete analysis of all tax considerations which may be relevant to a decision to purchase, own or dispose of any Notes.

Prospective holders of Notes who are in any doubt as to their tax position or who may be subject to tax in any jurisdiction are advised to consult their own professional advisers.

Hong Kong

Withholding Tax

No withholding tax is payable in Hong Kong in respect of payments of principal or interest on the Notes or in respect of any capital gains arising from the sale of the Notes.

Profits Tax

Hong Kong profits tax is chargeable on every person carrying on a trade, profession or business in Hong Kong in respect of profits arising in or derived from Hong Kong from such trade, profession or business (excluding profits arising from the sale of capital assets).

Under the Inland Revenue Ordinance (Cap. 112 of the Laws of Hong Kong) (the " Inland Revenue Ordinance ") as it is currently applied, Hong Kong profits tax may be charged on revenue profits arising on the sale, disposal or redemption of the Notes where such sale, disposal or redemption is or forms part of a trade, profession or business carried on in Hong Kong.

Interest on the Notes may be subject to profits tax in Hong Kong in the following circumstances:

(i) interest on the Notes is derived from Hong Kong and is received by or accrues to a corporation carrying on a trade, profession or business in Hong Kong;
(ii) interest on the Notes is derived from Hong Kong and is received by or accrues to a person, other than a corporation, carrying on a trade, profession or business in Hong Kong and is in respect of the funds of that trade, profession or business;
(iii) interest on the Notes is received by or accrues to a financial institution (as defined in the Inland Revenue Ordinance) and arises through or from the carrying on by the financial institution of its business in Hong Kong; or
(iv) interest on the Notes is received by or accrues to a corporation, other than a financial institution, and arises through or from the carrying on in Hong Kong by the corporation of its intra-group financing business (within the meaning of Section 16(3) of the Inland Revenue Ordinance).

Sums received by or accrued to a financial institution by way of gains or profits arising through or from the carrying on by the financial institution of its business in Hong Kong from the sale, disposal or redemption of the Bearer Notes may be subject to Hong Kong profits tax. Sums received by or accrued to a corporation, other than a financial institution, by way of gains or profits arising through or from the carrying on in Hong Kong by the corporation of its intra-group financing business (within the meaning of Section 16(3) of the Inland Revenue Ordinance) from the sale, disposal or other redemption of the Bearer Notes may be subject to Hong Kong profits tax.

Sums derived from the sale, disposal or redemption of the Bearer Notes may be subject to Hong Kong profits tax where received by or accrued to a person, other than a corporation, who carries on a trade, profession or business in Hong Kong and the sum has a Hong Kong source unless otherwise exempted. Similarly, such sums in respect of Registered Notes received by or accrued to either the aforementioned person, corporation and/or financial institution may be subject to Hong Kong profits tax if such sums have a Hong Kong source unless otherwise exempted. The source of such sums will generally be determined by having regard to the manner in which the Notes are acquired and disposed of.

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In certain circumstances, Hong Kong profits tax exemptions (such as concessionary tax rates) may be available. Investors are advised to consult their own tax advisors to ascertain the applicability of any exemptions to their individual position.

Stamp Duty

Stamp duty will not be payable on the issue of Bearer Notes provided either:

(i) such Bearer Notes are denominated in a currency other than the currency of Hong Kong and are not repayable in any circumstances in the currency of Hong Kong; or
(ii) such Bearer Notes constitute loan capital (as defined in the Stamp Duty Ordinance (Cap. 117 of the Laws of Hong Kong) (the " SDO ")).

If stamp duty is payable it is payable by the Issuer on the issue of Bearer Notes at a rate of 3 per cent. of the market value of the Bearer Notes at the time of issue. No stamp duty will be payable on any subsequent transfer of Bearer Notes.

No stamp duty is payable on the issue of Registered Notes. Stamp duty may be payable on any transfer of Registered Notes if the relevant transfer is required to be registered in Hong Kong. Stamp duty will, however, not be payable on any transfer of Registered Notes provided that either:

(i) the Registered Notes are denominated in a currency other than the currency of Hong Kong and are not repayable in any circumstances in the currency of Hong Kong; or
(ii) the Registered Notes constitute loan capital (as defined in the SDO).

If stamp duty is payable in respect of the transfer of Registered Notes it will be payable at the rate of 0.26 per cent. (of which 0.13 per cent. is payable by the seller and 0.13 per cent. is payable by the purchaser) normally by reference to the consideration or its value, whichever is higher. In addition, stamp duty is payable at the fixed rate of HK$5 on each instrument of transfer executed in relation to any transfer of the Registered Notes if the relevant transfer is required to be registered in Hong Kong.

PRC Taxation

Pursuant to the New EIT Law and its implementation regulations, enterprises that are established under laws of foreign countries and regions (including Hong Kong, Macau and Taiwan) but whose "de facto management body" are within the territory of China shall be PRC tax resident enterprises for the purpose of the New EIT Law and they shall pay enterprise income tax at the rate of 25 per cent. in respect of their income sourced from both within and outside China. If relevant PRC tax authorities decide, in accordance with applicable tax rules and regulations, that the "de facto management body" of the Issuer is within the territory of PRC, the Issuer may be held to be a PRC tax resident enterprise for the purpose of the New EIT Law and be subject to enterprise income tax at the rate of 25 per cent. for its income sourced from both within and outside PRC.

As confirmed by the Issuer, as of the date of the Offering Circular, the Issuer has not been notified or informed by the PRC tax authorities that it is considered as a PRC tax resident enterprise for the purpose of the New EIT Law. However, there is no assurance that the Issuer will not be treated as a PRC tax resident enterprise under the New EIT Law and related implementation regulations in the future.

Pursuant to the New EIT Law and its implementation regulations, any non-resident enterprise without establishment within the PRC or its incomes have no actual connection to its establishment inside the PRC, shall pay enterprise income tax at the rate of 10 per cent. on the incomes sourced inside the PRC, and such income tax shall be withheld by sources with the PRC payer acting as the obligatory withholder, who shall withhold the tax amount from each payment or payment due. Accordingly, in the event the Issuer is deemed to be a PRC tax resident enterprise by the PRC tax authorities in the future, the Issuer shall withhold income tax from the payments of interest in respect of the Notes for any non-PRC enterprise Noteholder. However, despite the potential withholding of PRC tax by the Issuer, the Issuer has agreed to pay additional amounts to holders of the Notes so that holders of the Notes would receive the full amount of the scheduled payment, as further set out in the Terms and Conditions of the Notes. In addition, if the Issuer is treated as a PRC tax resident enterprise under the New EIT Law and related implementation regulations in the future, any gain realised by the non-resident enterprise Noteholders from the transfer of the Notes may be regarded as being

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derived from sources within the PRC and accordingly would be subject to up to 10 per cent. of PRC withholding tax.

The Proposed Financial Transactions Tax ("FTT")

On 14 February 2013, the European Commission published a proposal (the " Commission's Proposal ") for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the " Participating Member States "). However, Estonia has since stated that it will not participate.

The Commission's Proposal has very broad scope and could, if introduced, apply to certain dealings in the Notes (including secondary market transactions) in certain circumstances.

Under the Commission's Proposal the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain dealings in the Notes where at least one party is a financial institution, and at least one party is established in a Participating Member State. A financial institution may be, or be deemed to be, "established" in a Participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a Participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a Participating Member State.

However, the FTT proposal remains subject to negotiation between Participating Member States. It may therefore be altered prior to any implementation, the timing of which remains unclear. Additional EU Member States may decide to participate.

Prospective holders of the Notes are advised to seek their own professional advice in relation to the FTT.

Foreign Account Tax Compliance Act

Pursuant to certain provisions of the U.S. Internal Revenue Code of 1986, commonly known as FATCA, a "foreign financial institution" may be required to withhold on certain payments it makes (" foreign passthru payments ") to persons that fail to meet certain certification, reporting, or related requirements. The issuer may be a foreign financial institution for these purposes. A number of jurisdictions (including Hong Kong) have entered into, or have agreed in substance to, intergovernmental agreements with the United States to implement FATCA (" IGAs "), which modify the way in which FATCA applies in their jurisdictions. Under the provisions of IGAs as currently in effect, a foreign financial institution in an IGA jurisdiction would generally not be required to withhold under FATCA or an IGA from payments that it makes. Certain aspects of the application of the FATCA provisions and IGAs to instruments such as the Notes, including whether withholding would ever be required pursuant to FATCA or an IGA with respect to payments on instruments such as the Notes, are uncertain and may be subject to change. Even if withholding would be required pursuant to FATCA or an IGA with respect to payments on instruments such as the Notes, such withholding would not apply to foreign passthru payments made prior to the date that is two years after the date on which final regulations defining foreign passthru payments are published in the U.S. Federal Register, and Notes characterised as debt (or which are not otherwise characterised as equity and have a fixed term) for U.S. federal tax purposes that are issued on or prior to the date that is six months after the date on which final regulations defining "foreign passthru payments" are filed with the U.S. Federal Register generally would be "grandfathered" for purposes of FATCA withholding unless materially modified after such date (including by reason of a substitution of the issuer). However, if additional notes (as described under " Terms and Conditions-Further Issues ") that are not distinguishable from previously issued Notes are issued after the expiration of the grandfathering period and are subject to withholding under FATCA, then withholding agents may treat all Notes, including the Notes offered prior to the expiration of the grandfathering period, as subject to withholding under FATCA. Holders should consult their own tax advisors regarding how these rules may apply to their investment in the Notes. In the event any withholding would be required pursuant to FATCA or an IGA with respect to payments on the Notes, no person will be required to pay additional amounts as a result of the withholding.

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PRC CURRENCY CONTROLS

The following is a general description of certain currency controls in the PRC and is based on the law and relevant interpretations thereof in effect as at the date of this Offering Circular, all of which are subject to change, and does not constitute legal advice. It does not purport to be a complete analysis of all applicable currency controls in the PRC relating to the Notes. Prospective holders of Notes who are in any doubt as to PRC currency controls are advised to consult their own professional advisers.

Current Account Items

Under PRC foreign exchange control regulations, current account items refer to any transaction for international receipts and payments involving goods, services, earnings and other frequent transfers.

Prior to July 2009, all current account items were required to be settled in foreign currencies with limited exceptions. Following progressive reforms, Renminbi settlement of imports and exports of goods and of services and other current account items became permissible nationwide in 2012.

Since July 2013, the procedures for cross-border Renminbi trade settlement under current account items have been simplified and trades through e-commerce can also be settled under in Renminbi under the current regulatory regime. A cash pooling arrangement for qualified multinational enterprise group companies was introduced in late 2014, under which a multinational enterprise group can process crossborder Renminbi payments and receipts for current account items on a collective basis for eligible member companies in the group. In addition, the eligibility requirements for multinational enterprise groups have been lowered and the cap for net cash inflow has been increased in September 2015.

The regulations referred to above are subject to interpretation and application by the relevant PRC authorities. Local authorities may adopt different practices in applying these regulations and impose conditions for settlement of current account items.

Capital Account Items

Under PRC foreign exchange control regulations, capital account items include cross-border transfers of capital, direct investments, securities investments, derivative products and loans. Capital account payments are generally subject to approval of, and/or registration or filing with, the relevant PRC authorities.

Until recently, settlement of capital account items, for example, the capital contribution of foreign investors to foreign invested enterprises in the PRC, were generally required to be made in foreign currencies. Under progressive reforms, foreign enterprises are now permitted to use Renminbi to settle all capital account items that can be settled in foreign currencies. Cross-border Renminbi payment infrastructure and trading facilities are being improved. Approval, registration and filing requirements specifically for capital account payments in Renminbi are being removed gradually.

PRC entities are also permitted to borrow Renminbi-denominated loans from foreign lenders (which are referred to as " foreign debt ") and lend Renminbi-denominated loans to foreign borrowers (which are referred to as " outbound loans "), as long as such PRC entities have the necessary quota, approval or registration. PRC entities may also denominate security or guarantee arrangements in Renminbi and make Renminbi payments thereunder to parties in the PRC as well as other jurisdictions (which is referred to as " cross-border security "). Under current rules promulgated by the State Administration of Foreign Exchange of the PRC (" SAFE ") and the PBoC, foreign debts borrowed, outbound loans extended, and the cross-border security provided by a PRC onshore entity (including a financial institution) in Renminbi shall, in principle, be regulated under the current PRC foreign debt, outbound loan and cross-border security regimes applicable to foreign currencies. After piloting in the free trade zones, the PBoC and SAFE launched a nation-wide system of macro-prudential management on cross-border financing in 2016, which provides for a unified regime for financings denominated in both foreign currencies and Renminbi.

Since September 2015, qualified multinational enterprise groups can extend Renminbi-denominated loans to, or borrow Renminbi-denominated loans from, eligible offshore member entities within the same group by leveraging the cash pooling arrangements. The Renminbi funds will be placed in a special deposit account and may not be used to invest in stocks, financial derivatives, or non-self-use real estate assets, or purchase wealth management products or extend loans to enterprises outside the group.

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The securities markets, specifically the Renminbi Qualified Foreign Institutional Investor (" RQFII ") regime and the China Interbank Bond Market (" CIBM "), have been further liberalised for foreign investors. The PBoC has relaxed the quota control for RQFII, and has also expanded the list of eligible foreign investors in CIBM, removed quota restriction, and granted more flexibility for the settlement agents to provide the relevant institutions with more trading facilities (for example, in relation to derivatives for hedging foreign exchange risk).

Interbank foreign exchange market is also opening-up. In January 2016, CFETS set forth qualifications, application materials and procedure for foreign participating banks (which needs to have a relatively large scale of Renminbi purchase and sale business and international influence) to access the inter-bank foreign exchange market.

Recent reforms introduced were aimed at controlling the remittance of Renminbi for payment of transactions categorised as capital account items. There is no assurance that the PRC government will continue to gradually liberalise the control over Renminbi payments of capital account item transactions in the future. The relevant regulations are relatively new and will be subject to interpretation and application by the relevant PRC authorities. Further, if any new PRC regulations are promulgated in the future which have the effect of permitting or restricting (as the case may be) the remittance of Renminbi for payment of transactions categorised as capital account items, then such remittances will need to be made subject to the specific requirements or restrictions set out in such rules.

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CLEARANCE AND SETTLEMENT

The information set out below is subject to any change in or reinterpretation of the rules, regulations and procedures of Euroclear or Clearstream, the CMU or DTC (together, the " Clearing Systems ") currently in effect. The information in this section concerning the Clearing Systems has been obtained from sources that the Issuer believes to be reliable, but neither the Issuer nor the Arrangers or any Dealer takes any responsibility for the accuracy thereof. Investors wishing to use the facilities of any of the Clearing Systems are advised to confirm the continued applicability of the rules, regulations and procedures of the relevant Clearing System. Neither the Issuer nor any other party to the Agency Agreement will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Notes held through the facilities of any Clearing System or for maintaining, supervising or reviewing any records relating to, or payments made on account of, such beneficial ownership interests.

The relevant Pricing Supplement will specify the Clearing System(s) applicable for each Series.

The Clearing Systems

Euroclear and Clearstream

Euroclear and Clearstream each holds securities for participating organisations and facilitates the clearance and settlement of securities transactions between their respective participants through electronic book-entry changes in accounts of such participants. Euroclear and Clearstream provide to their respective participants, among other things, services for safekeeping, administration, clearance and settlement of internationallytraded securities and securities lending and borrowing. Euroclear and Clearstream participants are financial institutions throughout the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organisations. Indirect access to Euroclear or Clearstream is also available to others, such as banks, brokers, dealers and trust companies which clear through or maintain a custodial relationship with a Euroclear or Clearstream participant, either directly or indirectly.

Distributions of principal with respect to book-entry interests in the Notes held through Euroclear or Clearstream will be credited, to the extent received by any Paying Agent, to the cash accounts of Euroclear or Clearstream participants in accordance with the relevant system's rules and procedures.

CMU

The CMU is a central depositary service provided by the Central Moneymarkets Unit of the Hong Kong Monetary Authority (the " HKMA ") for the safe custody and electronic trading between the members of this service (" CMU Members ") of Exchange Fund Bills and Notes Clearing and Settlement Service securities and capital markets instruments (together, " CMU Instruments ") which are specified in the CMU Reference Manual as capable of being held within the CMU.

The CMU is only available to CMU Instruments issued by a CMU Member or by a person for whom a CMU Member acts as agent for the purposes of lodging instruments issued by such persons. Membership of the CMU is open to all financial institutions regulated by the HKMA, Securities and Futures Commission, Insurance Authority or Mandatory Provident Fund Schemes Authority. For further details on the full range of the CMU's custodial services, please refer to the CMU Reference Manual.

The CMU has an income distribution service which is a service offered by the CMU to facilitate the distribution of interest, coupon or redemption proceeds (collectively, the " income proceeds ") by CMU Members who are paying agents to the legal title holders of CMU Instruments via the CMU system. Furthermore, the CMU has a corporate action platform which allows an issuer (or its agent) to make an announcement/notification of a corporate action and noteholders to submit the relevant certification. For further details, please refer to the CMU Reference Manual.

An investor holding an interest through an account with either Euroclear or Clearstream in any Notes held in the CMU will hold that interest through the respective accounts which Euroclear and Clearstream each have with the CMU.

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DTC

DTC is a limited purpose trust company organised under the laws of the State of New York, a "banking organisation" under the laws of the State of New York, a member of the US Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic computerised book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organisations. Indirect access to DTC is available to others, such as banks, securities brokers, dealers and trust companies, that clear through or maintain a custodial relationship with a DTC direct participant, either directly or indirectly.

Book-Entry Ownership

Bearer Notes

The Issuer has made applications to Euroclear and Clearstream for acceptance in their respective bookentry systems in respect of any Series of Bearer Notes. The Issuer may also apply to have Bearer Notes accepted for clearance through the CMU. In respect of Bearer Notes, a temporary Global Note and/or a permanent Global Note will be deposited with a common depositary for Euroclear and Clearstream or a sub-custodian for the CMU. Transfers of interests in a temporary Global Note or a permanent Global Note will be made in accordance with the normal market debt securities operating procedures of the CMU, Euroclear and Clearstream. Each Global Note will have an International Securities Identification Number (" ISIN ") and a Common Code or a CMU Instrument Number, as the case may be. Investors in Notes of such Series may hold their interests in a Global Note only through Euroclear or Clearstream or the CMU, as the case may be.

Registered Notes

The Issuer has made applications to Euroclear and Clearstream for acceptance in their respective bookentry systems in respect of the Registered Notes to be represented by a Restricted Global Certificate or an Unrestricted Global Certificate. The Issuer may also apply to have Notes represented by a Restricted Global Certificate or an Unrestricted Global Certificate accepted for clearance through the CMU. Each Restricted Global Certificate and Global Certificate deposited with a common depositary for Euroclear and/or Clearstream will have an ISIN and a Common Code or, lodged with a sub-custodian for the CMU, will have a CMU Instrument Number.

The Issuer, and a relevant US agent appointed for such purpose that is an eligible DTC participant, may make application to DTC for acceptance in its book-entry settlement system of the Registered Notes represented by a Restricted Global Certificate. Each such Restricted Global Certificate will have a CUSIP number.

Each Restricted Global Certificate will be subject to restrictions on transfer contained in a legend appearing on the front of such Global Certificate, as set out under " Transfer Restrictions ". In certain circumstances, as described below in " Transfers of Registered Notes ", transfers of interests in a Restricted Global Certificate may be made as a result of which such legend may no longer be required.

In the case of a Tranche of Registered Notes to be cleared through the facilities of DTC, the Custodian, with whom the Restricted Global Certificates are deposited, and DTC, will electronically record the nominal amount of the Restricted Notes held within the DTC system. Investors may hold their beneficial interests in a Restricted Global Certificate directly through DTC if they are participants in the DTC system, or indirectly through organisations which are participants in such system.

Payments of the principal of, and interest on, each Restricted Global Certificate registered in the name of DTC's nominee will be to, or to the order of, its nominee as the registered owner of such Restricted Global Certificate. The Issuer expects that the nominee, upon receipt of any such payment, will immediately credit DTC participants' accounts with payments in amounts proportionate to their respective beneficial interests in the nominal amount of the relevant Restricted Global Certificate as shown on the records of DTC or the nominee. The Issuer also expects that payments by DTC participants to owners of beneficial interests in such Restricted Global Certificate held through such DTC participants will be governed by standing

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instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such DTC participants. Neither the Issuer nor any Paying Agent or any Transfer Agent will have any responsibility or liability for any aspect of the records relating, to or payments made on account of, ownership interests in any Restricted Global Certificate or for maintaining, supervising or reviewing any records relating to such ownership interests.

All Registered Notes will initially be in the form of an Unrestricted Global Certificate and/or a Restricted Global Certificate. Individual Certificates will only be available, in the case of Notes initially represented by a Global Certificate, in amounts specified in the applicable Pricing Supplement.

Payments through DTC

Payments in US dollars of principal and interest in respect of a Restricted Global Certificate registered in the name of a nominee of DTC will be made to the order of such nominee as the registered holder of such Note. Payments of principal and interest in a currency other than US dollars in respect of Notes evidenced by a Restricted Global Certificate registered in the name of a nominee of DTC will be made or procured to be made by the Paying Agent in such currency in accordance with the following provisions. The amounts in such currency payable by the Paying Agent or its agent to DTC with respect to Notes held by DTC or its nominee will be received from the Issuer by the Paying Agent who will make payments in such currency by wire transfer of same day funds to the designated bank account in such currency of those DTC participants entitled to receive the relevant payment who have made an irrevocable election to DTC, in the case of payments of interest, on or prior to the third business day in New York City after the Record Date for the relevant payment of interest and, in the case of payments of principal, at least 12 business days in New York City prior to the relevant payment date, to receive that payment in such currency. The Paying Agent will convert amounts in such currency into US dollars and deliver such US dollar amount in same day funds to DTC for payment through its settlement system to those DTC participants entitled to receive the relevant payment who did not elect to receive such payment in such currency. The Agency Agreement sets out the manner in which such conversions are to be made.

Transfers of Registered Notes

Transfers of interests in Global Certificates within Euroclear, Clearstream, CMU and DTC will be in accordance with the usual rules and operating procedures of the relevant clearing system. The laws of some states in the United States require that certain persons take physical delivery in definitive form of securities. Consequently, the ability to transfer interests in a Restricted Global Certificate to such persons may be limited. Because DTC can only act on behalf of participants, who in turn act on behalf of indirect participants, the ability of a person having an interest in a Restricted Global Certificate to pledge such interest to persons or entities that do not participate in DTC, or otherwise take actions in respect of such interest, may be affected by the lack of a physical certificate in respect of such interest.

Beneficial interests in an Unrestricted Global Certificate may only be held through Euroclear, Clearstream or the CMU. In the case of Registered Notes to be cleared through Euroclear, Clearstream, the CMU and/or DTC, transfers may be made at any time by a holder of an interest in an Unrestricted Global Certificate to a transferee who wishes to take delivery of such interest through a Restricted Global Certificate for the same Series of Notes. Any such transfer made thereafter of the Notes represented by such Unrestricted Global Certificate will only be made upon request through Euroclear, Clearstream or the CMU by the holder of an interest in the Unrestricted Global Certificate to the Issuing and Paying Agent of details of that account at DTC, Euroclear, Clearstream or the CMU, as the case may be to be credited with the relevant interest in the Restricted Global Certificate. Transfers at any time by a holder of any interest in the Restricted Global Certificate to a transferee who takes delivery of such interest through an Unrestricted Global Certificate will only be made upon delivery to any Transfer Agent of a certificate setting forth compliance with the provisions of Regulation S and giving details of the account at Euroclear, Clearstream, the CMU or DTC, as the case may be to be credited and debited, respectively, with an interest in each relevant Global Certificate.

Subject to compliance with the transfer restrictions applicable to the Registered Notes described above and under " Transfer Restrictions ", cross-market transfers among DTC, and directly or indirectly through Euroclear or Clearstream or CMU accountholders, will be effected by the relevant clearing system in accordance with its rules and through action taken by the Custodian, the Registrar and the Issuing and Paying Agent.

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On or after the Issue Date for any Series, transfers of Notes of such Series between accountholders in Euroclear, Clearstream and/or the CMU and transfers of Notes of such Series between participants in DTC will generally have a settlement date three business days after the trade date (T+3). The customary arrangements for delivery versus payment will apply to such transfers.

Cross-market transfers between accountholders in Euroclear, Clearstream or the CMU and DTC participants will need to have an agreed settlement date between the parties to such transfer. Because there is no direct link between DTC, on the one hand, and Euroclear, Clearstream and the CMU, on the other, transfers of interests in the relevant Global Certificates will be effected through the Issuing and Paying Agent, the Custodian, the relevant Registrar and any applicable Transfer Agent receiving instructions (and where appropriate certification) from the transferor and arranging for delivery of the interests being transferred to the credit of the designated account for the transferee. Transfers will be effected on the later of (i) three business days after the trade date for the disposal of the interest in the relevant Global Certificate resulting in such transfer and (ii) two business days after receipt by the Issuing and Paying Agent or the Registrar, as the case may be, of the necessary certification or information to effect such transfer. In the case of cross-market transfers, settlement between Euroclear, Clearstream or the CMU accountholders and DTC participants cannot be made on a delivery versus payment basis. The securities will be delivered on a free delivery basis and arrangements for payment must be made separately.

For a further description of restrictions on transfer of Registered Notes, see " Transfer Restrictions ".

DTC has advised the Issuer that it will take any action permitted to be taken by a holder of Registered Notes (including, without limitation, the presentation of Restricted Global Certificates for exchange as described above) only at the direction of one or more participants in whose account with DTC interests in Restricted Global Certificates are credited and only in respect of such portion of the aggregate nominal amount of the relevant Restricted Global Certificates as to which such participant or participants has or have given such direction. However, in the circumstances described above, DTC will surrender the relevant Restricted Global Certificates for exchange for Individual Certificates (which will, in the case of Restricted Notes, bear the legend applicable to transfers pursuant to Rule 144A).

Although Euroclear, Clearstream, the CMU and DTC have agreed to the foregoing procedures in order to facilitate transfers of beneficial interests in the Global Certificates among participants and accountholders of DTC, Clearstream, Euroclear and the CMU, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. Neither the Issuer, nor any Paying Agent nor any Transfer Agent will have any responsibility for the performance by Euroclear, Clearstream, the CMU or DTC or their respective direct or indirect participants or accountholders of their respective obligations under the rules and procedures governing their operations.

While a Restricted Global Certificate is lodged with DTC or the Custodian, Restricted Notes represented by Individual Certificates will not be eligible for clearing or settlement through Euroclear, Clearstream, the CMU or DTC.

Individual Certificates

Registration of title to Registered Notes in a name other than a depositary or its nominee for Clearstream, the CMU and Euroclear or for DTC will be permitted only (i) in the case of Restricted Global Certificates in the circumstances set forth in " Summary of Provisions Relating to the Notes while in Global Form – Exchange – Restricted Global Certificates " or (ii) in the case of Unrestricted Global Certificates in the circumstances set forth in " Summary of Provisions Relating to the Notes while in Global Form – Exchange – Unrestricted Global Certificates ". In such circumstances, the Issuer will cause sufficient individual Certificates to be executed and delivered to the Registrar for completion, authentication and despatch to the relevant Noteholder(s). A person having an interest in a Global Certificate must provide the Registrar with:

(i) a written order containing instructions and such other information as the Issuer and the Registrar may require to complete, execute and deliver such Individual Certificates; and
(ii) in the case of a Restricted Global Certificate only, a fully completed, signed certification substantially to the effect that the exchanging holder is not transferring its interest at the time of such exchange, or in the case of a simultaneous resale pursuant to Rule 144A, a certification that the transfer is being made in compliance with the provisions of Rule 144A. Individual Certificates
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issued pursuant to this paragraph (ii) shall bear the legends applicable to transfers pursuant to Rule 144A.

Pre-issue Trades Settlement

It is expected that delivery of Notes will be made against payment therefor on the relevant Issue Date, which could be more than three business days following the date of pricing. Under Rule 15c6- 1 of the Exchange Act, trades in the US secondary market generally are required to settle within three business days (" T+3 "), unless the parties to any such trade expressly agree otherwise. Accordingly, in the event that an Issue Date is more than three business days following the relevant date of pricing, purchasers who wish to trade Registered Notes in the United States between the date of pricing and the date that is three business days prior to the relevant Issue Date will be required, by virtue of the fact that such Notes initially will settle beyond T+3, to specify an alternative settlement cycle at the time of any such trade to prevent a failed settlement. Settlement procedures in other countries will vary. Purchasers of Notes may be affected by such local settlement practices and, in the event that an Issue Date is more than three business days following the relevant date of pricing, purchasers of Notes who wish to trade Notes between the date of pricing and the date that is three business days prior to the relevant Issue Date should consult their own adviser.

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TRANSFER RESTRICTIONS

Restricted Notes

Each purchaser of Restricted Notes, by accepting delivery of this Offering Circular, will be deemed to have represented, agreed and acknowledged that:

It is (a) a QIB, (b) acquiring such Restricted Notes for its own account, or for the account of one or more QIBs, and (c) aware, and each beneficial owner of the Restricted Notes has been advised, that the sale of the Restricted Notes to it is being made in reliance on Rule 144A.
(i) The Restricted Notes have not been and will not be registered under the Securities Act and may not be offered, sold, pledged or otherwise transferred except (a) in accordance with Rule 144A to a person that it, and any person acting on its behalf, reasonably believes is a QIB purchasing for its own account or for the account of one or more QIBs, (b) in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S, or (c) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available) in each case in accordance with any applicable securities laws of any State of the United States and (ii) it will, and each subsequent holder of the Restricted Notes is required to, notify any purchaser of the Restricted Notes from it of the resale restrictions on the Restricted Notes.
The Restricted Notes, unless the Issuer determines otherwise in accordance with applicable law, will bear a legend (the " Rule 144A Legend ") in or substantially in the following form:

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933 (THE " SECURITIES ACT "), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT (" RULE 144A ") TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A " QIB ") THAT IS ACQUIRING THIS NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE QIBS, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER RULE 144 UNDER THE SECURITIES ACT (" RULE 144 "), IF AVAILABLE, OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALES OF THE NOTES.

It understands that the Issuer, each Registrar, the relevant Dealer(s) and their affiliates, and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements. If it is acquiring any Notes for the account of one or more QIBs, it represents that it has sole investment discretion with respect to each of those accounts and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of each such account.
It understands that the Restricted Notes will be represented by a Restricted Global Certificate. Before any interest in a Restricted Global Certificate may be offered, sold, pledged or otherwise transferred to a person who takes delivery in the form of an interest in the Unrestricted Global Certificate or as the case may be, Global Note, it will be required to provide a Transfer Agent with a written certification (in the form provided in the Agency Agreement) as to compliance with applicable securities laws.

Prospective purchasers are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.

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SUBSCRIPTION AND SALE

Summary of Dealer Agreement

Subject to the terms and on the conditions contained in the amended and restated dealer agreement dated 20 December 2021 made between the Issuer, the Arrangers and the Permanent Dealers (together, the " Dealer Agreement "), the Notes will be offered on a continuous basis by the Issuer to the Permanent Dealers. However, the Issuer has reserved the right to sell Notes directly on its own behalf to Dealers that are not Permanent Dealers and otherwise. The Notes may be resold at prevailing market prices, or at prices related thereto, at the time of such resale, as determined by the relevant Dealer. The Notes may also be sold by the Issuer through the Dealers, acting as agents of the Issuer. The Dealer Agreement also provides for Notes to be issued in syndicated Tranches that are underwritten by two or more Dealers.

The Issuer will pay each Dealer a commission as agreed between them in respect of Notes subscribed by it. The Issuer has agreed to reimburse the Arrangers for certain of their expenses incurred in connection with the establishment of the Programme and the Dealers for certain of their activities in connection with the Programme. The commissions in respect of an issue of Notes on a syndicated basis will be stated in the relevant Subscription Agreement. The Issuer may agree, through the relevant Dealers, a rebate or commission to certain private banks based on the principal amount of the Notes purchased by the clients of such private banks. If a rebate or commission is agreed for a particular drawdown it shall be stated in the relevant Pricing Supplement.

The Issuer has agreed to indemnify the Dealers against certain liabilities in connection with the offer and sale of the Notes. The Dealer Agreement entitles the Dealers to terminate any agreement that they make to subscribe Notes in certain circumstances prior to payment for such Notes being made to the Issuer.

The relevant Dealers and certain of their respective affiliates may have performed certain investment banking and advisory services for the Issuer and/or its affiliates from time to time for which they have received customary fees and expenses and may, from time to time, engage in transactions with and perform services for the Issuer and/or its affiliates in the ordinary course of their business.

The relevant Dealers and certain of their respective affiliates may purchase the Notes and be allocated Notes for asset management and/or proprietary purposes and not with a view to distribution.

The relevant Dealers or certain of their respective affiliates may purchase the Notes for their own account and enter into transactions, including credit derivatives, such as asset swaps, repackaging and credit default swaps relating to the Notes and/or other securities of the Issuer or its subsidiaries or associates at the same time as the offer and sale of the Notes or in secondary market transactions. Such transactions would be carried out as bilateral trades with selected counterparties and separately from any existing sale or resale of the Notes to which this Offering Circular relates (notwithstanding that such selected counterparties may also be purchasers of the Notes).

If a jurisdiction requires that the offering be made by a licensed broker or dealer and the Dealers or any affiliate of the Dealers is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by that Dealer or its affiliate on behalf of the Issuer in such jurisdiction.

Selling Restrictions

United States

The Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States except (i) to QIBs in reliance on Rule 144A under the Securities Act; (ii) in accordance with Regulation S under the Securities Act; (iii) or pursuant to an exemption from the registration requirements of the Securities Act. Terms used in this paragraph have the meaning given to them by Regulation S under the Securities Act (" Regulation S ").

The Notes in bearer form are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or, in the case of bearer Notes issued in compliance with the D Rules, to a United States person, except in certain transactions permitted by U.S. Treasury regulations. Terms used in this paragraph have the meaning given to them by the U.S. Internal Revenue Code of 1986, as amended, and U.S. Treasury regulations thereunder.

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Until 40 days after the commencement of the offering of any Series of Notes, an offer or sale of such Notes within the United States by any dealer, whether or not participating in the offering, may violate the registration requirements of the Securities Act if such offer and sale is made otherwise than in accordance with Rule 144A or another exemption from the requirements of the Securities Act.

Dealers may arrange for the resale of Notes to QIBs pursuant to Rule 144A and each such purchaser of Notes is hereby notified that the Dealers may be relying on the exemption from the registration requirements of the Securities Act provided by Rule 144A.

Each issuance of Index Linked Notes or Dual Currency Notes shall be subject to such additional U.S. selling restrictions as the Issuer and the relevant Dealer may agree as a term of the issuance and purchase of such Notes, which additional selling restrictions shall be set out in the applicable Pricing Supplement.

Prohibition of Sales to EEA Retail Investors

Unless the Pricing Supplement in respect of any Notes specifies the "Prohibition of Sales to EEA Retail Investors" as "Not Applicable", each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any Notes which are the subject of the offering contemplated by this Offering Circular as completed by the Pricing Supplement in relation thereto to any retail investor in the EEA. For the purposes of this provision:

(a) the expression " retail investor " means a person who is one (or more) of the following:
(i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or
(ii) a customer within the meaning of the Insurance Distribution Directive, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or
(iii) not a qualified investor as defined in the Prospectus Regulation; and
(b) the expression " offer " includes the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes.

Public Offer Selling Restrictions under the Prospectus Regulation

If the Pricing Supplement in respect of any Notes specifies the "Prohibition of Sales to EEA Retail Investors" as "Not Applicable", in relation to each Member State of the EEA, each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this Offering Circular as completed by the Pricing Supplement in relation thereto to the public in that Member State except that it may make an offer of such Notes to the public in that Member State:

(i) if the Pricing Supplement in relation to the Notes specifies that an offer of those Notes may be made other than pursuant to Article 1(4) of the Prospectus Regulation in that Member State (a " Non-exempt Offer "), following the date of publication of a prospectus in relation to such Notes which has been approved by the competent authority in that Member State or, where appropriate, approved in another Member State and notified to the competent authority in that Member State, provided that any such prospectus has subsequently been completed by the Pricing Supplement contemplating such Non-exempt Offer, in accordance with the Prospectus Regulation, in the period beginning and ending on the dates specified in such prospectus or pricing supplement, as applicable and the Issuer has consented in writing to its use for the purpose of that Non-exempt Offer;
(ii) at any time to any legal entity which is a qualified investor as defined in the Prospectus Regulation;
(iii) at any time to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation), subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or
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(iv) at any time in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of Notes referred to in (ii) to (iv) above shall require the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.

For the purposes of this provision, the expression an " offer of Notes to the public " in relation to any Notes in any Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes and the expression " Prospectus Regulation " means Regulation (EU) 2017/1129.

Prohibition of Sales to UK Retail Investors

Unless the Pricing Supplement in respect of any Notes specifies the "Prohibition of Sales to UK Retail Investors" as "Not Applicable", each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any Notes which are the subject of the offering contemplated by this Offering Circular as completed by the Pricing Supplement in relation thereto to any retail investor in the UK. For the purposes of this provision:

(i) the expression " retail investor " means a person who is one (or more) of the following:
(a) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the EUWA; or
(b) a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or
(c) not a qualified investor as defined in Article 2 of the UK Prospectus Regulation, and
(ii) the expression an " offer " includes the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes.

Public Offer Selling Restrictions under the UK Prospectus Regulation

If the Pricing Supplement in respect of any Notes specifies the "Prohibition of Sales to UK Retail Investors" as "Not Applicable", each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this Offering Circular as completed by the Pricing Supplement in relation thereto to the public in the UK except that it may make an offer of such Notes to the public in the UK:

(i) if the Pricing Supplement in relation to the Notes specifies that an offer of those Notes may be made other than pursuant to Section 86 of the FSMA (a " Public Offer "), following the date of publication of a prospectus in relation to such Notes which either (i) has been approved by the Financial Conduct Authority, or (ii) is to be treated as if it had been approved by the Financial Conduct Authority in accordance with the transitional provision in Regulation 74 of the Prospectus (Amendment etc.) (EU Exit) Regulations 2019, provided that any such prospectus has subsequently been completed by the Pricing Supplement contemplating such Public Offer, in the period beginning and ending on the dates specified in such prospectus or Pricing Supplement, as applicable, and the Issuer has consented in writing to its use for the purpose of that Public Offer;
(ii) at any time to any legal entity which is a qualified investor as defined in Article 2 of the UK Prospectus Regulation;
(iii) at any time to fewer than 150 natural or legal persons (other than qualified investors as defined in Article 2 of the UK Prospectus Regulation) in the UK, subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or
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(iv) at any time in any other circumstances falling within Section 86 of the FSMA,

provided that no such offer of Notes referred to in (ii) to (iv) shall require the Issuer or any Dealer to publish a prospectus pursuant to Section 85 of the FSMA or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation.

For the purposes of this provision, the expression " an offer of Notes to the public " in relation to any Notes means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes and the expression " UK Prospectus Regulation " means the Prospectus Regulation as it forms part of domestic law by virtue of the EUWA.

Selling Restrictions Addressing Additional United Kingdom Securities Laws

Each Dealer has represented, warranted and agreed that:

(i) in relation to any Notes which have a maturity of less than one year, (a) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (b) it has not offered or sold and will not offer or sell any Notes other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Notes would otherwise constitute a contravention of Section 19 of the FSMA by the relevant Issuer;
(ii) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and
(iii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to such Notes in, from or otherwise involving the United Kingdom.

The Netherlands

If the Pricing Supplement in respect of any Notes specifies "Prohibition of Sales to EEA Retail Investors" as "Not Applicable", each Dealer has represented and agreed that it will not make an offer of Notes which are the subject of the offering contemplated by this Offering Circular to the public in the Netherlands unless such offer is made exclusively to legal entities which are qualified investors (as defined in the Prospectus Directive and which includes authorised discretionary asset managers acting for the account of retail investors under a discretionary investment management contract) in the Netherlands.

For the purposes of this provision, the expression "an offer of Notes to the public" in the Netherlands in relation to any Notes means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in the Netherlands by any measure implementing the Prospectus Directive in the Netherlands, the expression "Prospectus Directive" means Directive 2003/7 1/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Netherlands, and includes any relevant implementing measure in the Netherlands, and the expression "2010 PD Amending Directive" means Directive 2010/73/EU). If the Pricing Supplement in respect of any Notes specifies "Prohibition of Sales to EEA Retail Investors" as "Not Applicable", each Dealer has represented and agreed, and each further Dealer appointed under the Programme in respect of such Notes will be required to represent and agree, that the Notes (or any interest therein) are not and may not, directly or indirectly, be offered, sold, pledged, delivered or transferred in the Netherlands, on their issue date or at any time thereafter, and neither this Offering Circular nor any other document in relation to any offering of the Notes (or any interest therein) may be distributed or circulated in the Netherlands, other than to qualified investors as defined in the Prospectus Regulation, provided that these parties acquire the Notes for their own account or that of another qualified investor. However, the Notes may be offered free of any restrictions in the Netherlands provided that each such Notes has a minimum denomination in excess of EUR100,000 (or the equivalent thereof in non-Euro currency) and subject to compliance with the relevant requirements under the PRIIPs Regulation.

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PRC

Each Dealer has represented, warranted and agreed that the offer of the Notes is not an offer of securities within the meaning of the PRC Securities Law or other pertinent laws and regulations of the People's Republic of China and the Notes are not being offered or sold and may not be offered or sold, directly or indirectly, in the PRC (for such purposes, not including the Hong Kong and Macau Special Administrative Regions or Taiwan), except as permitted by the securities laws of the PRC.

Hong Kong

In relation to each Tranche of Notes issued by the Issuer, each Dealer has represented and agreed that:

(i) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes except for Notes which are a "structured product" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the " SFO ") other than (a) to "professional investors" as defined in the SFO and any rules made under the SFO; or (b) in other circumstances which do not result in the document being a "prospectus" as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong (the " C(WUMP)O ") or which do not constitute an offer to the public within the meaning of the C(WUMP)O; and
(ii) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" as defined in the SFO and any rules made under the SFO.

Japan

The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended, the " Financial Instruments and Exchange Act "). Accordingly, each Dealer has represented and agreed that it has not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell any Notes in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organised under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and other relevant laws and regulations of Japan.

Singapore

Each Dealer has acknowledged, and each further Dealer appointed under the Programme will be required to acknowledge, that this Offering Circular has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered or sold any Notes or caused such Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell such Notes or cause such Notes to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this Offering Circular or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of such Notes, whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289 of Singapore) (the " SFA ")) pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
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(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

securities or securities-based derivative contracts (each a term defined in Section 2(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within 6 months after that corporation or that trust has acquired any Notes pursuant to an offer made under Section 275 of the SFA except:

(i) to an institutional investor or to a relevant person or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
(ii) where no consideration is or will be given for the transfer;
(iii) where the transfer is by operation of law;
(iv) as specified in Section 276(7) of the SFA; or
(v) as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018.

Singapore SFA Product Classification: In connection with Section 309B of the Securities and Futures Act (Chapter 289) of Singapore as modified or amended from time to time (the " SFA ") and the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the " CMP Regulations 2018 "), unless otherwise specified before an offer of Notes, the Issuer has determined, and hereby notifies all persons (including all relevant persons (as defined in Section 309A(1) of the SFA)), that the Notes are 'prescribed capital markets products' (as defined in the CMP Regulations 2018).

General

These selling restrictions may be modified by the agreement of the Issuer and the relevant Dealers following a change in a relevant law, regulation or directive. Any such modification will be set out in the Pricing Supplement issued in respect of the issue of Notes to which it relates or in a supplement to this Offering Circular.

No representation is made that any action has been taken in any jurisdiction that would permit a public offering of any of the Notes, or possession or distribution of this Offering Circular or any other offering material or any Pricing Supplement, in any country or jurisdiction where action for that purpose is required.

Each Dealer has agreed that it will comply with all relevant laws, regulations and directives in each jurisdiction in which it purchases, offers, sells or delivers Notes or has in its possession or distributes this Offering Circular, any other offering material or any Pricing Supplement and none of the Issuer nor any other Dealer shall have responsibility therefor.

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FORM OF PRICING SUPPLEMENT

The form of Pricing Supplement that will be issued in respect of each Tranche, subject only to the deletion of non-applicable provisions, is set out below:

[This Pricing Supplement is for distribution to professional investors (as defined in Chapter 37 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited) (the " Professional Investors ") only.

Notice to Hong Kong investors: The Issuer confirms that the Notes are intended for purchase by Professional Investors only and will be listed on The Stock Exchange of Hong Kong Limited (the " Hong Kong Stock Exchange ") on that basis. Accordingly, the Issuer confirms that the Notes are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.

The Hong Kong Stock Exchange has not reviewed the contents of this Pricing Supplement, other than to ensure that the prescribed form disclaimer and responsibility statements, and a statement limiting distribution of this Pricing Supplement to Professional Investors only have been reproduced in this Pricing Supplement. Listing of the Programme and the Notes on the Hong Kong Stock Exchange is not to be taken as an indication of the commercial merits or credit quality of the Programme, the Notes, the Issuer, the CITIC Limited Group or quality of disclosure in this Pricing Supplement. Hong Kong Exchanges and Clearing Limited and the Hong Kong Stock Exchange take no responsibility for the contents of this document, 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 document.

This Pricing Supplement, together with the Offering Circular, include particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Issuer and the CITIC Limited Group. The Issuer accepts full responsibility for the accuracy of the information contained in this Pricing Supplement and the Offering Circular and confirms, having made all reasonable enquiries, that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading.][4]

[ MiFID II product governance / Professional investors and ECPs only target market – Solely for the purposes of [the/each] manufacturer['s/s'] product approval process, the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterparties and professional clients only, each as defined in Directive 2014/65/EU (as amended, " MiFID II "); and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. Any person subsequently offering, selling or recommending the Notes (a " distributor ") should take into consideration the manufacturer['s/s'] target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturers['s/s'] target market assessment) and determining appropriate distribution channels.][5]

[ UK MIFIR product governance/Professional investors and ECPs only target market – Solely for the purposes of [the/each] manufacturer['s/s'] product approval process, the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is only eligible counterparties, as defined in the FCA Handbook Conduct of Business Sourcebook, and professional clients, as defined in Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (" UK MiFIR "); and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. Any [person subsequently offering, selling or recommending the Notes (a " distributor ")] [distributor] should take into consideration the manufacturer['s/s'] target market assessment; however, a distributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturer['s/s'] target market assessment) and determining appropriate distribution channels.][6]

4 Applicable for Notes to be listed on the Hong Kong Stock Exchange only.

5 To be included if there are one or more EU MiFID manufacturers.

6 To be included if there are one or more UK MiFIR manufacturers.

173 -

[ PRIIPS REGULATION - PROHIBITION OF SALES TO EEA RETAIL INVESTORS - The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (" EEA "). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of [Directive 2014/65/EU (as amended, " MiFID II ")/ MiFID II ]; (ii) a customer within the meaning of Directive (EU) 2016/97, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129. Consequently, no key information document required by Regulation (EU) No 1286/2014 (as amended, the " PRIIPs Regulation ") for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.]

[ PROHIBITION OF SALES TO UK RETAIL INVESTORS – The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom (" UK "). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (" EUWA "); (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (" FSMA ") and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the EUWA. Consequently, no key information document required by Regulation (EU) No 1286/2014 as it forms part of domestic law by virtue of the EUWA (the " UK PRIIPs Regulation ") for offering or selling the Notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.]

[In connection with Section 309B of the Securities and Futures Act (Chapter 289) of Singapore (the " SFA ") and the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the " CMP Regulations 2018 "), the Issuer has determined, and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA), that the Notes are [prescribed capital markets products] / [capital markets products other than prescribed capital markets products] (as defined in the CMP Regulations 2018).][7]

Pricing Supplement dated [•]

Issue of [ Aggregate Nominal Amount of Tranche ] [ Title of Notes ]

under the U.S.$9,000,000,000 Medium Term Note Programme

This document constitutes the Pricing Supplement relating to the issue of Notes described herein. Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the Offering Circular dated 20 December 2021. This Pricing Supplement contains the final terms of the Notes and must be read in conjunction with such Offering Circular [as so supplemented].

[The following alternative language applies if the first tranche of an issue which is being increased was issued under an Offering Circular with an earlier date.

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the " Conditions ") set forth in the Offering Circular dated 20 December 2021. This Pricing Supplement contains the final terms of the Notes and must be read in conjunction with the Offering Circular dated 20 December 2021 [and the supplemental Offering Circular dated [ • ]], save in respect of the Conditions which are extracted from the Offering Circular dated 20 December 2021 and are attached hereto.]

7 For any Notes to be offered to Singapore investors, the Issuer to consider whether it needs to re-classify the Notes pursuant to Section 309B of the SFA prior to the launch of the offer.

174 -

[Include whichever of the following apply or specify as "Not Applicable" (N/A). Note that the numbering should remain as set out below, even if "Not Applicable" is indicated for individual paragraphs or subparagraphs. Italics denote directions for completing the Pricing Supplement.]

1.	(i)	Issuer:	CITIC Limited
2.	[(i)]	Series Number:	[•]
	[(ii)	Tranche Number: (If fungible with	[•]
		an existing Series, details of that
		Series, including the date on which
		the Notes become fungible).]
3.	Specified Currency or Currencies:		[•]
4.	Aggregate Nominal Amount:
	[(i)]	Series:	[•]
	[(ii)	Tranche:	[•]]
5.	[(i)]	Issue Price:	[•] per cent. of the Aggregate Nominal Amount
			[plus accrued interest from [insert date] (in the
			case of fungible issues only, if applicable)]
	[(ii)	Net proceeds:	[•] (Required only for listed issues)]
	[(iii)	Private Bank Rebate/Commission:	[Applicable/Not Applicable]]
	[(iv)	Use of proceeds:	[•] (Required if different from the Offering
			Circular)]
6.	(i)	Specified Denominations:	[•]8 9
	(ii)	Calculation Amount	[If only one Specified Denomination, insert the
			Specified Denomination. If more than one
			Specified Denomination, insert the highest
			common factor] [Note: There must be a
			common factor in the case of two or more
			Specified Denominations]
7.	(i)	Issue Date:	[•]
	(ii)	Interest Commencement Date:	[Specify/Issue date/Not Applicable]
8.	Maturity Date:		[Specify date or (for Floating Rate Notes)
			Interest Payment Date falling in or nearest to
			the relevant month and year]10

8 Notes (including Notes denominated in sterling) in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise constitutes a contravention of section 19 of the FSMA and which have a maturity of less than one year and must have a minimum redemption value of £100,000 (or its equivalent in other currencies).
9 If the specified denomination is expressed to be €50,000 (or €100,000, to the extent that Directive 2010/73/EU has been implemented in the relevant Member State) or its equivalent and multiples of a lower principal amount (for example €1,000), insert the additional wording as follows: €50,000 (or €100,000, to the extent that Directive 2010/73/EU has been implemented in the relevant Member State) and integral multiples of [€1,000] in excess thereof up to and including [€99,000]/[€199,000]. No notes in definitive form will be issued with a denomination above [€99,000]/[€199,000].
10 Note that for Renminbi or Hong Kong dollar denominated Fixed Rate Notes where the Interest Payment Dates are subject to modification it will be necessary to use the second option here.
175 -
Interest Basis:
Redemption/Payment Basis:
Change of Interest or Redemption/ Payment Basis:
Put/Call Options:
(i) Status of the Notes:

[[ • ] per cent. Fixed Rate] [[ specify reference rate] +/- [ • ] per cent. Floating Rate ] [Zero Coupon] [Other ( specify )] (further particulars specified below)

  - [Redemption at par] [Dual Currency] [Instalment] [Other ( _specify_ )]

  - [ _Specify details of any provision for convertibility of Notes into another interest or redemption/payment basis_ ]

  - [Investor Put] [Issuer Call] [(further particulars specified below)]

  - Senior

(ii) Date of Board Resolutions [ • ] approving the issuance of the Notes:
Listing:
[Hong Kong/Other ( specify )/None] ( For Notes to be listed on the Hong Kong Stock Exchange, insert the expected effective listing date of the Notes )
Method of distribution:
[Syndicated/Non-syndicated]

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE

Fixed Rate Note Provisions:
- [Applicable/Not Applicable] ( If not applicable, delete the remaining sub-paragraphs of this paragraph )
(i) Rate[(s)] of Interest: [ • ] per cent. per annum [payable [annually/ semi-annually/quarterly/monthly] in arrear]
(ii) Interest Payment Date(s): [ • ] in each year [adjusted in accordance with [ specify Business Day Convention and any applicable Business Centre(s) for the definition of " Business Day "]/not adjusted ]
(iii) Fixed Coupon Amount[(s)]: [ • ] per Calculation Amount[11] (iv) Broken Amount: [ • ] per Calculation Amount, payable on the Interest Payment date falling [in/on] [ • ]
(v) Day Count Fraction (Condition [30/360/Actual/Actual/(ICMA/ISDA)/Actual/ 5(i)): 365 (fixed)/other]
(vi) Determination Date(s) (Condition [ • ] in each year. [ Insert regular interest 5(k)): payment dates, ignoring issue date or maturity date in the case of a long or short first or last
- [ • ] in each year [adjusted in accordance with [ specify Business Day Convention and any applicable Business Centre(s) for the definition of " Business Day "]/not adjusted ]
- [ • ] per Calculation Amount, payable on the Interest Payment date falling [in/on] [ • ]
11 For Renminbi or Hong Kong dollar denominated Fixed Rate Notes where the Interest Payment Dates are subject to modification the following alternative wording is appropriate: "Each Fixed Coupon Amount shall be calculated by multiplying the product of the Rate of Interest and the Calculation Amount by the Day Count Fraction and rounding the resultant figure to the nearest CNY0.01, CNY0.005 for the case of Renminbi denominated Fixed Rate Notes to the nearest HK$0.01, HK$0.005 for the case of Hong Kong dollar denominated Fixed Rate Notes, being rounded upwards".
176 -

coupon. N. B only relevant where Day Count Fraction is Actual/Actual (ICMA). ]

(vii) Other terms relating to the method of [Not Applicable/ give details ] calculating interest for Fixed Rate Notes:

Floating	Rate Provisions:	Rate Provisions:		[Applicable/Not Applicable] (If not applicable,
				delete the remaining sub-paragraphs of this
				paragraph.)
(i)	Interest	Period(s):		[•]
(ii)	Specified Interest Payment Dates:			[•]
(iii)	Interest	Period Date(s):		[•]
				(Not applicable unless different from Interest
				Payment Date)
(iv)	Business Day Convention:			[Floating Rate Convention/Following Business
				Day Convention/Modified Following Business
				Day Convention/Preceding Business Day
				Convention/other (give details)]
(v)	Business Centre(s) (Condition 5(k)):			[•]
(vi)	Manner	in which	the Rate(s) of	[Screen Rate Determination/ISDA
	Interest	is/are to be determined:		Determination/ other (give details)]
(vii)	Party responsible for calculating the			[•]
	Rate(s)	of Interest and Interest
	Amount(s) (if not [•] as Calculation
	Agent):
(viii)	Screen	Rate	Determination
	(Condition 5(b)(ii)(B)):
	•	Reference Rate:		[•]
				(Either EURIBOR, HIBOR, SOFR Benchmark
				or other, although additional information is
				required if other)
	•	Interest	Determination	[•]
		Date:
				(the day falling two Business Days in London
				for the Specified Currency prior to the first day
				of such Interest Accrual Period if the Specified
				Currency is not Sterling, euro or Hong Kong
				Dollars or first day of each Interest Accrual
				Period if the Specified Currency is Sterling or
				Hong Kong dollar or the day falling two
				TARGET Business Days prior to the first day of
				such Interest Accrual Period if the Specified
				Currency is euro)
	•	Relevant Screen Page:		[•]
				[(In the case of EURIBOR, if not Reuters Page
				EURIBOR 01 ensure it is a page which shows

177 -
a composite rate or amend the fallback provisions appropriately )]
• Party responsible for [●] ( Specify where this is not the Calculation calculation of Rate of Agent ) Interest:
• SOFR: [Applicable/Not Applicable] • SOFR Benchmark [Simple SOFR Average/Compounded Daily SOFR/Compounded SOFR Index]
• Compounded [Not Applicable/SOFR Lag/SOFR Observation Daily SOFR Shift/SOFR Payment Delay/SOFR Lockout] ( Only applicable in the case of Compounded Daily SOFR )
• Lookback Days [Not Applicable/[●] U.S. Government Securities Business Day(s)] ( Only applicable in the case of SOFR Lag )
• SOFR Observation [Not Applicable/[●] U.S. Government Shift Days Securities Business Day(s)] ( Only applicable in the case of SOFR Observation Shift or Compounded SOFR Index )
• Interest Payment [Not Applicable/[●] U.S. Government Delay Days Securities Business Day(s)] ( Only applicable in the case of SOFR Payment Delay )
• SOFR Rate Cut[Not Applicable/The day that is the [●] U.S. Off Date Government Securities Business Day(s) prior to the end of each Interest Accrual Period] ( Only applicable in the case of Simple SOFR Average, Compounded Daily SOFR: SOFR Payment Delay or Compounded Daily SOFR: SOFR Lockout )
• SOFR IndexStart [Not Applicable/[●] U.S. Government Securities Business Day(s)]
```
 - ( _Only applicable in the case of Compounded SOFR Index_ )
```
- SOFR IndexEnd [Not Applicable/[●] U.S. Government Securities Business Day(s)]
  - ( Only applicable in the case of Compounded SOFR Index )
(ix) ISDA Determination (Condition 5(b)(ii)(A)):
Floating Rate Option: [ • ]
178 -
Designated Maturity: [ • ]
• Reset Date: [ • ] • ISDA Definitions: 2006 (if different to those set out in the Conditions, please specify)
(x) Margin(s): [+/-] [ • ] per cent. per annum
(xi) Minimum Rate of Interest: [ • ] per cent. per annum
(xii) Maximum Rate of Interest: [ • ] per cent. per annum
(xiii) Day Count Fraction (Condition 5(k)):

[ • ]

(xiv) Fall back provisions, rounding [Benchmark Discontinuation (General) provisions, denominator and any (Condition 5(n))/Benchmark Discontinuation other terms relating to the method of (SOFR) (Condition 5(o))/ specify other if calculating interest on Floating Rate different from those set out in the Conditions ] Notes, if different from those set out in the Conditions:
Zero Coupon Note Provisions:

[Applicable/Not Applicable] ( If not applicable, delete the remaining sub-paragraphs of this paragraph )

(i) Amortisation Yield (Condition [ • ] per cent. per annum 6(b)):
(ii) Any other formula/basis of [ • ] determining amount payable:
Dual Currency Note Provisions:

[Applicable/Not Applicable] ( If not applicable, delete the remaining sub-paragraphs of this paragraph )

(i) Rate of Exchange/Method of [ Give details ] calculating Rate of Exchange:
(ii) Party, if any, responsible for [ • ] calculating the Rate(s) of Interest and/or Interest Amount(s) (if not [ • ] as Calculation Agent):
(iii) Provisions applicable where [ • ] calculation by reference to Rate of Exchange impossible or impracticable:
(iv) Person at whose option Specified [ • ] Currency(ies) is/are payable:

PROVISIONS RELATING TO REDEMPTION

Call Option: [Applicable/Not Applicable] ( If not applicable, delete the remaining sub-paragraphs of this paragraph )

(i) Optional Redemption Date(s):

[ • ]

179 -

(ii) Optional Redemption Amount(s) of [ • ] per Calculation Amount each Note and method, if any, of calculation of such amount(s): (iii) If redeemable in part: (a) Minimum Redemption [ • ] per Calculation Amount Amount: (b) Maximum Redemption [ • ] per Calculation Amount Amount: (iv) Notice period: [ • ] 21. Put Option: [Applicable/Not Applicable] ( If not applicable, delete the remaining sub-paragraphs of this paragraph ) (i) Optional Redemption Date(s): [ • ] (ii) Optional Redemption Amount(s) of [ • ] per Calculation Amount each Note and method, if any, of calculation of such amount(s): (iii) Notice period: [ • ] 22. Final Redemption Amount of each Note: [ • ] per Calculation Amount 23. Early Redemption Amount:

(i) Early Redemption Amount(s) of [ • ] each Note payable on redemption for taxation reasons (Condition 6(c)) or an event of default (Condition 10) and/or the method of calculating the same (if required or if different from that set out in the Conditions):

GENERAL PROVISIONS APPLICABLE TO THE NOTES

Form of Notes:

[Bearer Notes/Exchangeable Bearer Notes/ Registered Notes] [ Delete as appropriate ]

[temporary Global Note exchangeable for a permanent Global Note which is exchangeable for Definitive Notes in the limited circumstances specified in the permanent Global Note]

[temporary Global Note exchangeable for Definitive Notes on [ • ] days' notice][12]

12 If the Specified Denominations of the Notes in paragraph 6 includes language substantially to the following effect: [€50,000]/[€100,000] and integral multiples of [€1,000] in excess thereof up to and including [€99,000]/[€199,000] the Temporary Global Note shall not be exchangeable on [ • ] days notice.

180 -

		[permanent Global Note exchangeable for	[permanent Global Note exchangeable for
		Definitive Notes in the limited circumstances
		specified in the permanent Global Note]
25.	Financial Centre(s) (Condition 7(h)) or other	[Not Applicable/Give details. Note that this
	special provisions relating to payment dates:	item relates to the date and place	of payment,
		and not interest period end dates, to which item
		16(ii), 17(iv) and 19(vii) relate]
26.	Talons for future Coupons or Receipts to be	[Yes/No.If yes, give details]
	attached to Definitive Notes (and dates on
	which such Talons mature):
27.	Details relating to Instalment Notes: amount	[Not Applicable/give details]
	of each Instalment, date on which each
	payment is to be made and consequences (if
	any) of failure to pay, including any right of
	the Issuer to forfeit the Notes and interest due
	on late repayment:
28.	Redenomination, renominalisation and	[Not Applicable/The provisions]	[annexed to
	reconventioning provisions:	this Pricing Supplement] apply]
29.	Consolidation provisions:	[Not Applicable/The provisions]	[annexed to
		this Pricing Supplement] apply]
30.	Other terms or special conditions:	[Not Applicable/give details]
DISTRIBUTION
31.	(i) If syndicated, names of Managers:	[Not Applicable/give names] [include date and
		description of subscription agreement]
	(ii) Stabilisation Manager (if any):	[Not Applicable/give name(s)]
32.	If non-syndicated, name of Dealer:	[Not Applicable/give name]
33.	Whether TEFRA D/C Rules applicable or	[TEFRA D/TEFRA C/TEFRA not	applicable]
	TEFRA Rules not applicable:
34.	Prohibition of Sales to EEA Retail Investors:	[Applicable/Not Applicable](If	the Notes
		clearly do not constitute "packaged" products
		or the Notes do constitute "packaged" products
		and a key information document will be
		prepared, "Not Applicable"	should be
		specified. If the Notes may	constitute
		"packaged" products and no key	information
		document will be prepared, "Applicable"
		should be specified.)
35.	Prohibition of Sales to UK Retail Investors:	[Applicable/Not Applicable](If	the Notes
		clearly do not constitute "packaged" products
		or the Notes do constitute "packaged" products
		and a key information document will be
		prepared in the UK, "Not Applicable" should be
		specified. If the Notes may	constitute
		"packaged" products and no key	information
		document will be prepared, "Applicable"
		should be specified.)

181 -
Additional selling restrictions: [Not Applicable/ give details ] OPERATIONAL INFORMATION 37. ISIN Code: [ • ] 38. Common Code: [ • ] 39. CMU Instrument Number: [ • ] 40. LEI: 2549006I3Q3M98KHOT11 41. Any clearing system(s) other than Euroclear, [Not Applicable/ give name(s) and number(s) Clearstream and the CMU and the relevant identification number(s): 42. Delivery: Delivery [against/free of] payment 43. Additional Paying Agent(s) (if any): [ • ] GENERAL 44. The aggregate principal amount of Notes [Not Applicable/[U.S.$][ • ]] issued has been translated into [U.S. dollars] at the rate of [ • ], producing a sum of (for Notes not denominated in [U.S. dollars]): 45. In the case of Registered Notes, specify the [ • ] location of the office of the Registrar if other than New York: 46. In the case of Bearer Notes, specify the [ • ] location of the office of the Issuing and Paying Agent if other than London: 47. Ratings: The Notes to be issued have been rated:

[S&P: [ • ]] [Moody's: [ • ]] [Other: [ • ]]

( The above disclosure should reflect the rating allocated to Notes of the type being issued under the Programme generally or, where the issue has been specifically rated, that rating. )

[PURPOSE OF PRICING SUPPLEMENT

This Pricing Supplement comprises the final terms required for issue and listing on the [Hong Kong Stock Exchange] of the Notes described herein pursuant to the U.S.$9,000,000,000 Medium Term Note Programme of CITIC Limited.]

182 -

[STABILISING

In connection with this issue, [insert name of Stabilisation Manager] (the " Stabilisation Manager ") (or persons acting on behalf of the Stabilisation Manager) may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilisation Manager (or persons acting on its behalf) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the allotment of the Notes. Any stabilisation action or overallotment must be conducted by the relevant Stabilisation Manager (or persons acting on its behalf) in accordance with all applicable laws and rules.]

RESPONSIBILITY

The Issuer accepts responsibility for the information contained in this Pricing Supplement.

Signed on behalf of the Issuer:

By: ........................................................................... Duly authorised

183 -

DOCUMENTS INCORPORATED BY REFERENCE

This Offering Circular should be read and construed in conjunction with the following:

(a) each relevant Pricing Supplement;
(b) any interim (whether on a pro-forma basis or otherwise) consolidated financial information of CITIC Limited Group published from time to time subsequent to the date of this Offering Circular (if any);
(c) the most recently published annual report and audited consolidated financial statements and any unaudited interim consolidated financial statements of CITIC Limited published from time to time subsequent to the date of this Offering Circular (including any relevant audit reports, if any);
(d) any interim consolidated financial information of CITIC Corporation Limited published from time to time subsequent to the date of this Offering Circular (including any relevant audit reports, if any); and
(e) all amendments and supplements from time to time to this Offering Circular,

each of which shall be deemed to be incorporated in, and to form part of, this Offering Circular and which shall be deemed to modify or supersede the contents of this Offering Circular to the extent that a statement contained in any such document is inconsistent with such contents. Copies of all such documents which are so deemed to be incorporated in, and to form part of, this Offering Circular will be available free of charge during usual business hours on any weekday (Saturdays and public holidays excepted) from the specified offices of the Paying Agents (except for documents specified in (d) above, which will be available from the specified office of the Issuer) set out at the end of this Offering Circular. See " General Information " for a description of the financial information and statements currently published by CITIC Limited Group.

184 -

GENERAL INFORMATION

Application has been made to the Hong Kong Stock Exchange for the listing of the Programme, under which the Notes may be issued by way of debt issues to Professional Investors only. Separate application will be made for the listing of the Notes on the Hong Kong Stock Exchange. The issue price of Notes to be issued under the Programme and listed on the Hong Kong Stock Exchange will be expressed as a percentage of their nominal amount. Transactions will normally be effected for settlement in the relevant specified currency and for delivery by the end of the second trading day after the date of the transaction. It is expected that dealings will, if permission is granted to deal in and for the listing of such Notes, commence on or about the date of listing of the relevant Notes. Notes to be listed on the Hong Kong Stock Exchange are required to be traded with a board lot size of at least HKD500,000 (or equivalent in other currencies).
The Issuer has obtained all necessary consents, approvals and authorisations in Hong Kong in connection with the establishment and update of the Programme. The establishment of the Programme was authorised by resolution of the Board of Directors of the Issuer passed on 6 April 2011 and the update of the Programme was authorised by resolution of the Board of Directors of the Issuer and the Executive Committee of the Board of Directors of the Issuer on 25 November 2015 and 6 December 2021, respectively.
Save as disclosed in this Offering Circular, there has been no material adverse change in the financial or trading position of the Issuer or of CITIC Limited Group since 30 June 2021.
None of the Issuer or CITIC Limited Group is involved in any litigation, arbitration or administrative proceedings relating to claims which are material in the context of the issue of the Notes and, so far as the Issuer or any member of CITIC Limited Group is aware, no such litigation, arbitration or administrative proceedings are pending or threatened.
Each Bearer Note having a maturity of more than one year, Receipt, Coupon and Talon will bear the following legend: "Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code".
Notes have been accepted for clearance through the Euroclear and Clearstream systems. The Issuer may also apply to have Notes accepted for clearance through the CMU. The relevant CMU instrument number will be set out in the relevant Pricing Supplement. In addition, the Issuer may make an application for Registered Notes to be accepted for trading in book-entry form by DTC. The relevant ISIN, the Common Code, CUSIP, and (where applicable) the identification number for any other relevant clearing system for each series of Notes will be specified in the applicable Pricing Supplement. If the Notes are to clear through an additional or alternative clearing system the appropriate information will be set out in the relevant Pricing Supplement.
For so long as Notes may be issued pursuant to this Offering Circular, copies of the following documents will, when published, be available, during usual business hours on any weekday (Saturdays and public holidays excepted), for inspection at the head office of the Issuer at 32[nd] Floor, CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong and (in respect of the documents referred to in sub-paragraphs (i), (ii) and (vi)) at the specified office of the Paying Agents:
(i) the Trust Deed (which includes the form of the Global Notes, the definitive Bearer Notes, the Certificates, the Coupons, the Receipts and the Talons);
(ii) the Agency Agreement;
(iii) the Memorandum and Articles of Association of the Issuer;
(iv) the audited consolidated financial statements of the Issuer for the year ended 31 December 2020;
(v) the unaudited interim consolidated financial statements of the Issuer for the six months ended 30 June 2021; and
185 -
(vi) a copy of this Offering Circular together with any supplement (including any Pricing Supplement save that a Pricing Supplement relating to an unlisted Series of Notes will only be available for inspection by a holder of any such Notes and such holder must produce evidence satisfactory to the Issuer and the relevant Paying Agent as to its holding of Notes and identity) to this Offering Circular or further Offering Circular.
186 -

INDEX TO FINANCIAL STATEMENTS

AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF CITIC LIMITED FOR THE YEAR ENDED 31 DECEMBER 2020 Consolidated Income Statement ........................................... Consolidated Statement of Comprehensive Income ............. Consolidated Balance Sheet ................................................. Consolidated Statement of Changes in Equity ..................... Consolidated Cash Flow Statement ...................................... Notes to the Consolidated Financial Statements…………... Independent Auditor's Report ............................................... REVIEWED INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF CITIC LIMITED FOR THE SIX MONTHS ENDED 30 JUNE 2021 Consolidated Income Statement ........................................... Consolidated Statement of Comprehensive Income ............. Consolidated Balance Sheet ................................................. Consolidated Statement of Changes in Equity ..................... Consolidated Cash Flow Statement ...................................... Notes to the Consolidated Financial Statements…………... Independent Auditor's Report ...............................................	Page
	this Offering Circular 2020 Annual Report / 2021 Interim Report F-3 170 F-4 171 F-5 172 F-7 174 F-9 176 F-11 178 F-197 364 F-208 30 F-210 32 F-211 33 F-213 35 F-215 37 F-217 39 F-309 131

AUDITED
CONSOLIDATED
FINANCIAL
STATEMENTS OF CITIC LIMITED FOR THE
YEAR ENDED 31 DECEMBER 2020
Consolidated Income Statement ...........................................
Consolidated Statement of Comprehensive Income .............
Consolidated Balance Sheet .................................................
Consolidated Statement of Changes in Equity .....................
Consolidated Cash Flow Statement ......................................
Notes to the Consolidated Financial Statements…………...
Independent Auditor's Report ...............................................
REVIEWED
INTERIM
CONSOLIDATED
FINANCIAL STATEMENTS OF CITIC LIMITED
FOR THE SIX MONTHS ENDED 30 JUNE 2021
Consolidated Income Statement ...........................................
Consolidated Statement of Comprehensive Income .............
Consolidated Balance Sheet .................................................
Consolidated Statement of Changes in Equity .....................
Consolidated Cash Flow Statement ......................................
Notes to the Consolidated Financial Statements…………...
Independent Auditor's Report ...............................................

**Page **

this Offering
Circular
2020 Annual
Report / 2021
Interim Report
F-3
170
F-4
171
F-5
172
F-7
174
F-9
176
F-11
178
F-197
364
F-208
30
F-210
32
F-211
33
F-213
35
F-215
37
F-217
39
F-309
131

(1) The audited consolidated financial statements of CITIC Limited for the year ended 31 December 2020 set out herein are reproduced from CITIC Limited's annual report for the year ended 31 December 2020 including the page numbers and page references set forth in such annual report.

(2) The reviewed interim consolidated financial statements of CITIC Limited for the six months ended 30 June 2021 set out herein are reproduced from CITIC Limited's interim report for the six months ended 30 June 2021 including the page numbers and page references set forth in such interim report.

F-1

CITIC LIMITED ANNUAL REPORT 2020

Contents of Financial Statements and Notes

170 Consolidated Income Statement 171 Consolidated Statement of Comprehensive Income

275 31 Fixed assets 281 32 ROU assets and lease liabilities 284 33 Intangible assets 286 34 Goodwill 287 35 Income tax in the balance sheet 290 36 Assets classified as held for sale 291 37 Deposits from banks and non-bank financial institutions 292 38 Placements from banks and non-bank financial institutions

172 Consolidated Balance Sheet
174 Consolidated Statement of Changes in Equity 176 Consolidated Cash Flow Statement
178 Notes to the Consolidated Financial Statements

178	1	General information	292	38	Placements from banks a
178	2	Significant accounting policies			institutions
212	3	Critical accounting estimates and judgements	293	39	Trade and other payable
227	4	Taxation	294	40	Financial assets sold und
227	5	Revenue			agreements
230	6	Costs of sales and services	295	41	Deposits from customers
231	7	Other net income	296	42	Bank and other loans
231	8	Expected credit losses	298	43	Debt instruments issued
232	9	Impairment losses	307	44	Provisions
234	10	Net finance charges	308	45	Share capital and reserve
235	11	Profit before taxation	311	46	Movement of allowances
236	12	Income tax expense	313	47	Contingent liabilities and
237	13	Benefits and interests of directors	317	48	Financial risk manageme
241	14	Individuals with highest emoluments	343	49	Material related parties
242	15	Dividends	348	50	Structured entities
242	16	Earnings per share	352	51	Supplementary informati cash flow statement
243	17	Other comprehensive gain/(loss)	354	52	Major transactions with n
244	18	Segment reporting			interests
249	19	Cash and deposits	355	53	Balance sheet and reserv
251	20	Placements with banks and non-bank			Company
		financial institutions	357	54	Major business combinat
251	21	Derivative financial instruments	358	55	Post balance sheet event
253	22	Trade and other receivables	358	56	Comparative amounts
256	23	Contract assets and contract liabilities	358	57	Approval of the consolid
257	24	Inventories			statements
258	25	Financial assets held under resale agreements	359	58	Possible impact of amen
259	26	Loans and advances to customers and other			standards and interpre
		parties			yet adopted
263	27	Investment in financial assets	360	59	Principal subsidiaries, ass
268	28	Subsidiaries			ventures
270	29	Interests in associates
273	30	Interests in joint ventures	364	Independent Auditor’s Report

293 39 Trade and other payables 294 40 Financial assets sold under repurchase agreements
295 41 Deposits from customers 296 42 Bank and other loans 298 43 Debt instruments issued 307 44 Provisions 308 45 Share capital and reserves 311 46 Movement of allowances for impairment losses 313 47 Contingent liabilities and commitments 317 48 Financial risk management and fair values 343 49 Material related parties 348 50 Structured entities 352 51 Supplementary information to the consolidated cash flow statement
354 52 Major transactions with non-controlling interests
355 53 Balance sheet and reserve movement of the Company
357 54 Major business combinations 358 55 Post balance sheet events 358 56 Comparative amounts 358 57 Approval of the consolidated financial statements
359 58 Possible impact of amendments, new standards and interpretations issued but not yet adopted
360 59 Principal subsidiaries, associates and joint ventures

169

— F-2 —

CITIC LIMITED ANNUAL REPORT 2020

Consolidated Income Statement

For the year ended 31 December 2020

	Note	For the year ended 31 December 2020 2019 HK$ million HK$ million 336,985 330,267 (164,967) (160,125) 172,018 170,142 44,814 42,770 (5,636) (6,807) 39,178 35,963 323,808 344,076 17,945 16,316 341,753 360,392 552,949 566,497 (276,305) (283,148) 6,363 9,944 (96,927) (88,722) (3,649) (7,024) (88,647) (103,894) (675) (756) 10,533 8,083 3,960 5,474 107,602 106,454 1,266 2,264 (11,150) (12,703) (9,884) (10,439) 97,718 96,015 (16,790) (17,827) 80,928 78,188 56,628 53,903 24,300 24,285 80,928 78,188 1.95 1.85
		2020
		HK$ million
Interest income Interest expenses		336,985
		(164,967)
Net interest income	5(a)	172,018
Fee and commission income Fee and commission expenses		44,814
		(5,636)
Net fee and commission income	5(b)	39,178
Sales of goods and services Other revenue	5(c) 5(d)	323,808
		17,945
		341,753
Total revenue Cost of sales and services Other net income Expected credit losses Impairment losses Other operating expenses Net valuation loss on investment properties Share of profits of associates, net of tax Share ofprofits ofjoint ventures, net of tax	6,11 7 8 9 11	552,949
		(276,305)
		6,363
		(96,927)
		(3,649)
		(88,647)
		(675)
		10,533
		3,960
Profit before net finance charges and taxation Finance income Finance costs		107,602

		1,266
		(11,150)
Net finance charges	10	(9,884)
Profit before taxation Income tax	11 12	97,718
		(16,790)
Profit for theyear		80,928
Attributable to: – Ordinary shareholders of the Company – Non-controllinginterests
		56,628
		24,300
Profit for theyear		80,928
Earnings per share for profit attributable to ordinary shareholders of the Company during the year: Basic and diluted earningsper share (HK$)	16
		1.95

The notes on pages 178 to 363 form part of these consolidated financial statements.

170

— F-3 —

CITIC LIMITED ANNUAL REPORT 2020

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2020

Note	Note	For the year ended 31 December 2020 2019 HK$ million HK$ million 80,928 78,188 (5,839) 1,948 943 780 (618) (588) 448 85 59,738 (19,027) 57 1,117 (44) (436) 54,685 (16,121) 135,613 62,067 94,249 43,656 41,364 18,411 135,613 62,067
		2020
		HK$ million
Profit for theyear		80,928
Other comprehensive gain/(loss) for the year 17 Items that may be reclassified subsequently to profit or loss: Fair value changes on financial assets at fair value through other comprehensive income Loss allowance changes on financial assets at fair value through other comprehensive income Cash flow hedge: net movement in the hedging reserve Share of other comprehensive income of associates and joint ventures Exchange differences on translation of financial statements and others Items that will not be reclassified subsequently to profit or loss: Reclassification of owner-occupied property as investment property: revaluation gain Fair value changes on investments in equity instruments designated at fair value through other comprehensive income


		(5,839)
		943
		(618)
		448
		59,738


		57
		(44)
Other comprehensivegain/(loss) for theyear		54,685
Total comprehensive income for theyear		135,613
Attributable to: -Ordinary shareholders of the Company -Non-controllinginterests
		94,249
		41,364
Total comprehensive income for theyear		135,613

The notes on pages 178 to 363 form part of these consolidated financial statements.

171

— F-4 —

CITIC LIMITED ANNUAL REPORT 2020

Consolidated Balance Sheet

As at 31 December 2020

		As at 31	December
		2020		2019
	Note	HK$ million	HK$ million
Assets
Cash and deposits	19	755,386		740,434
Placements with banks and non-bank financial institutions	20	198,513		226,686
Derivative financial instruments	21	47,804		19,580
Trade and other receivables	22	169,723		167,427
Contract assets	23	13,619		11,504
Inventories	24	80,370		54,735
Financial assets held under resale agreements	25	143,029		11,117
Loans and advances to customers and other parties	26	5,206,155	4,366,639
Investments in financial assets	27
– Financial assets at amortised cost		1,156,496	1,040,997
– Financial assets at fair value through profit or loss		528,293		403,776
– Debt investments at fair value through other
comprehensive income		860,255		701,936
– Equity investments at fair value through other
comprehensive income		8,023		7,020
Assets classified as held for sale	36	–		28,819
Interests in associates	29	131,040		123,345
Interests in joint ventures	30	50,287		40,963
Fixed assets	31	167,840		150,075
Investment properties	31	38,455		37,555
Right-of-use assets	32	37,915		36,494
Intangible assets	33	15,877		11,977
Goodwill	34	21,133		21,203
Deferred tax assets	35	74,164		58,729
Other assets		36,451		28,913
Total assets		9,740,828	8,289,924

172

— F-5 —

CITIC LIMITED ANNUAL REPORT 2020

Consolidated Balance Sheet

As at 31 December 2020

As at 31 December 2020 2019 Note HK$ million HK$ million	As at 31 December 2020 2019 Note HK$ million HK$ million
Liabilities Borrowing from central banks 266,611 Deposits from banks and non-bank financial institutions 37 1,370,439 Placements from banks and non-bank financial institutions 38 74,308 Financial liabilities at fair value through profit or loss 12,423 Derivative financial instruments 21 49,808 Trade and other payables 39 160,943 Contract liabilities 23 28,092 Financial assets sold under repurchase agreements 40 94,774 Deposits from customers 41 5,427,694 Employee benefits payables 36,176 Income tax payable 35 13,448 Bank and other loans 42 163,604 Debt instruments issued 43 973,858 Lease liabilities 32 18,267 Liabilities directly associated with assets classified as held for sale 36 – Provisions 44 15,172 Deferred tax liabilities 35 11,444 Other liabilities 15,125	268,256 1,061,380 107,400 1,436 20,763 148,908 21,380 127,766 4,541,841 33,357 13,989 151,312 823,964 17,435 20,674 11,155 9,963 14,454
Total liabilities 8,732,186	7,395,433
Equity 45 Share capital 381,710 Reserves 292,566	381,710 209,816
Total ordinary shareholders’ funds 674,276 Non-controllinginterests 334,366	591,526 302,965
Total equity 1,008,642	894,491
Total liabilities and equity 9,740,828	8,289,924

Approved and authorised for issue by the board of directors on 30 March 2021.

Director: Zhu Hexin Director: Xi Guohua

The notes on pages 178 to 363 form part of these consolidated financial statements.

173

— F-6 —

CITIC LIMITED ANNUAL REPORT 2020

Consolidated Statement of Changes in Equity

For the year ended 31 December 2020

	Note	Share capital	Capital reserve Hedging reserve	Capital reserve Hedging reserve	Investment related reserves	General reserve	Retained earnings	Exchange reserve Total	Exchange reserve Total	Non- controlling interests	Total equity
		HK$	HK$ HK$		HK$	HK$	HK$	HK$ HK$		HK$	HK$
		million	million million		million	million	million	million million		million	million
		(Note 45(a))	(Note 45(c)(i)) (Note 45(c)(ii))		(Note 45(c)(iii))	(Note 45(c)(iv))		(Note 45(c)(v))
Balance at 1 January 2020		381,710	(59,953) 1,723		4,546	51,145	255,807	(43,452) 591,526		302,965	894,491
Profit for the year Other comprehensive (loss)/income for theyear	17	–	–	–	–	–	56,628	–	56,628	24,300	80,928
		–	–	(523) (2,762) –			–	40,906	37,621	17,064	54,685
Total comprehensive (loss)/income for theyear		–	–	(523) (2,762) –			56,628	40,906	94,249	41,364	135,613
Capital injection by non-controlling interests Transfer of profits to general reserve Dividends paid to ordinary shareholders of the Company Dividends paid to non-controlling interests Redemption of other equity instruments by subsidiaries Acquisition of subsidiaries Disposal of subsidiaries Transactions with non-controlling interests Disposal of equity investments at fair value through other comprehensive income Others	15 51(d) 54 51(b) 52	–	–	–	–	–	–	–	–	742	742
		–	–	–	–	7,069	(7,069) –		–	–	–
		–	–	–	–	–	(11,200) –		(11,200) –		(11,200)
		–	–	–	–	–	– –		– (9,987) (9,987)
		–	–	–	–	–	– –		– (1,295) (1,295)
		–	–	–	–	–	– –		– 6,148 6,148
		–	–	–	–	–	– –		– (4,787) (4,787)
		–	(506) –		–	–	– –		(506) (808) (1,314)
		–	– –		(27) –		27 –		– – –
		–	207 –		– –		– –		207 24 231
Other changes in equity		–	(299) –		(27) 7,069		(18,242) –		(11,499) (9,963) (21,462)
Balance at 31 December 2020		381,710	(60,252) 1,200		1,757	58,214	294,193	(2,546) 674,276		334,366	1,008,642

174

— F-7 —

CITIC LIMITED ANNUAL REPORT 2020

Consolidated Statement of Changes in Equity

For the year ended 31 December 2020

	Note	Share capital HK$ million (Note 45(a))	Capital reserve Hedging reserve HK$ HK$ million million (Note 45(c)(i)) (Note 45(c)(ii))	Capital reserve Hedging reserve HK$ HK$ million million (Note 45(c)(i)) (Note 45(c)(ii))	Investment related reserves HK$ million (Note 45(c)(iii))	General reserve HK$ million (Note 45(c)(iv))	Retained earnings Exchange reserve Total Non- controlling interests Total equity HK$ HK$ HK$ HK$ HK$ million million million million million (Note 45(c)(v))	Retained earnings Exchange reserve Total Non- controlling interests Total equity HK$ HK$ HK$ HK$ HK$ million million million million million (Note 45(c)(v))	Retained earnings Exchange reserve Total Non- controlling interests Total equity HK$ HK$ HK$ HK$ HK$ million million million million million (Note 45(c)(v))	Retained earnings Exchange reserve Total Non- controlling interests Total equity HK$ HK$ HK$ HK$ HK$ million million million million million (Note 45(c)(v))	Retained earnings Exchange reserve Total Non- controlling interests Total equity HK$ HK$ HK$ HK$ HK$ million million million million million (Note 45(c)(v))
Balance at 31 December 2018 Changes in accounting policies		381,710 –	(62,239) 2,253 – –		905 –	45,354 –	221,409 (30,847) 558,545 252,115 810,660 (162) – (162) (282) (444)
Balance at 1 January 2019		381,710	(62,239) 2,253		905	45,354	221,247	(30,847) 558,383		251,833
Profit for the year Other comprehensive (loss)/income for theyear	17	– –	– –	– – (530) 2,888		– –	53,903 –
Total comprehensive (loss)/income for theyear		–	–	(530) 2,888		–	53,903	(12,605) 43,656		18,411
Capital injection by non-controlling interests Issue of other equity instruments by subsidiaries Transfer of profits to general reserve Dividends paid to ordinary shareholders of the Company Dividends paid to non-controlling interests Redemption of other equity instruments by subsidiaries Acquisition of subsidiaries Disposal of subsidiaries Transactions with non-controlling interests Disposal of equity investments at fair value through other comprehensive income Others	51(d) 15 51(d) 51(b)	– – – – – – – – – – –	– – – – – – – – 2,202 – 84	– – – – – – – – – – –	– – – – – – – 108 – 645 –	– – 5,791 – – – – – – – –	– – – – (5,791) – (12,799) – – – – – – – (108) – – – (645) – – –
Other changes in equity		–	2,286	–	753	5,791	(19,343) –		(10,513) 32,721		22,208 894,491
Balance at 31 December 2019		381,710	(59,953) 1,723		4,546	51,145	255,807	(43,452) 591,526		302,965

The notes on pages 178 to 363 form part of these consolidated financial statements.

175

— F-8 —

CITIC LIMITED ANNUAL REPORT 2020

Consolidated Cash Flow Statement

For the year ended 31 December 2020

	For the year ended 31 December	For the year ended 31 December
	2020	2019
	Note HK$ million	HK$ million
Cash flows from operating activities
Profit before taxation	97,718	96,015
Adjustments for:
– Depreciation and amortisation	11(b) 19,772	21,806
– Expected credit losses	8 96,927	88,722
– Impairment losses	9 3,649	7,024
– Net valuation loss on investment properties	675	756
– Net valuation loss/(gain) on investments	580	(831)
– Share of profits of associates and joint ventures, net of tax	(14,493)	(13,557)
– Interest expenses on debts instruments issued	5(a) 23,457	24,574
– Finance income	10 (1,266)	(2,264)
– Finance costs	10 11,150	12,703
– Net gain on investments in financial assets	(13,417)	(10,475)
– Net gain on disposal of subsidiaries, associates
andjoint ventures	(4,718)	(3,751)
Changes in working capital	220,034	220,722
Decrease/(increase) in deposits with central banks
and non-bank financial institutions	36,047	(32,147)
Increase in placements with banks and non-bank
financial institutions	(5,729)	(20,380)
Decrease/(increase) in trade and other receivables	3,144	(56,899)
Increase in contract assets	(2,115)	(436)
(Increase)/decrease in inventories	(25,610)	7,333
(Increase)/decrease in financial assets held under
resale agreements	(123,933)	1,523
Increase in loans and advances to customers and
other parties	(623,187)	(510,536)
(Increase)/decrease in investments in financial assets
held for trading purposes	(15,652)	24,368
Increase in other assets	(6,690)	(27,372)
Increase in deposits from banks and non-bank
financial institutions	226,884	198,096
Decrease in placements from banks and non-bank
financial institutions	(37,006)	(19,791)
Increase/(decrease) in financial liabilities at fair value
through profit or loss	8,526	(276)
Increase/(decrease) in trade and other payables	1,386	(18,933)
Increase in contract liabilities	6,712	2,959
Decrease in financial assets sold under repurchase
agreements	(38,892)	(7,928)
Increase in deposits from customers	573,890	471,209
Decrease in borrowing from central banks	(15,498)	(51,726)
Increase in other liabilities	30,429	1,047
Increase in employee benefits payables	2,819	1,419
Increase inprovisions	4,017	1,442
Cash generated from operating activities	219,576	183,694
Income taxpaid	(26,351)	(23,612)
Net cashgenerated from operating activities	193,225	160,082

176

— F-9 —

CITIC LIMITED ANNUAL REPORT 2020

Consolidated Cash Flow Statement

For the year ended 31 December 2020

		For the year ended 31 December	For the year ended 31 December
		2020	2019
	Note	HK$ million	HK$ million
Cash flows from investing activities
Proceeds from disposal and redemption of
financial investments		3,043,255	2,239,189
Proceeds from disposal of fixed assets, intangible assets
and other assets		1,032	1,689
Proceeds from disposal of associates and joint ventures		2,157	1,348
Net cash received from disposal of subsidiaries	51(b)	6,446	1,082
Dividends received from equity investments,
associates and joint ventures		5,317	6,613
Payments for purchase of financial investments		(3,292,092)	(2,519,759)
Payments for additions of fixed assets, intangible
assets and other assets		(20,885)	(19,626)
Net cash received from/(payment) for acquisition of
subsidiaries		2,897	(981)
Net cash payment for acquisition of associates
andjoint ventures		(4,294)	(6,066)
Net cash used in investing activities		(256,167)	(296,511)
Cash flows from financing activities
Capital injection received from non-controlling interests		672	679
Transaction with non-controlling interests	52	(942)	494
Proceeds from new bank and other loans	51(c)	121,798	127,134
Repayment of bank and other loans and debt
instruments issued	51(c)	(951,030)	(685,251)
Proceeds from new debt instruments issued	51(c)	930,718	661,283
Issue of other equity instruments by subsidiaries	51(d)	–	46,701
Principal and interest elements of lease payment	51(c)	(6,150)	(6,673)
Interest paid on bank and other loans and debt
instruments issued	51(c)	(36,566)	(37,043)
Dividends paid to non-controlling interests		(9,987)	(8,369)
Dividends paid to ordinary shareholders of the Company	15	(11,200)	(12,799)
Redemption of other equityinstruments bysubsidiaries	51(d)	(1,295)	(2,076)
Net cashgenerated from financing activities		36,018	84,080
Net decrease in cash and cash equivalents		(26,924)	(52,349)
Cash and cash equivalents at 1 January		463,038	522,808
Effect of exchange changes		16,588	(7,421)
Cash and cash equivalents at 31 December	51(a)	452,702	463,038

The notes on pages 178 to 363 form part of these consolidated financial statements.

177

— F-10 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

1 General information

CITIC Limited (the “Company”) was incorporated in Hong Kong, the shares of which are listed on the Main Board of the Stock Exchange of Hong Kong Limited. The address of its registered office is 32nd Floor, CITIC Tower, 1 Tim Mei Avenue, Central Hong Kong.

The Company and its subsidiaries (collectively referred to as the “Group”) are principally engaged in comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption, new-type urbanisation.

The parent and the ultimate holding company of the Company is CITIC Group Corporation (“CITIC Group”). As at 31 December 2020, the equity interests held by CITIC Group in the Company through its overseas wholly-owned subsidiaries was 58.13% (31 December 2019: 58.13%).

2 Significant accounting policies

(a) Basis of preparation

These financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRS”), which in collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKAS”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and accounting principles generally accepted in Hong Kong. These financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. A summary of the significant accounting policies adopted by the Group is set out below.

The HKICPA has issued a number of amendments to HKFRS that are first effective for the current accounting period of the Group. None of these had a significant effect on the consolidated financial statements of the Group.

178

— F-11 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(a) Basis of preparation (Continued)

(i) Definition of Material – Amendments to HKAS 1 and HKAS 8

The HKICPA has made amendments to HKAS 1 Presentation of Financial Statements and HKAS 8 Accounting Policies, Changes in Accounting Estimates and Errors which use a consistent definition of materiality throughout International Financial Reporting Standards and the Conceptual Framework for Financial Reporting, clarify when information is material and incorporate some of the guidance in HKAS 1 about immaterial information.

(ii) Definition of a Business – Amendments to HKFRS 3

The amended definition of a business requires an acquisition to include an input and a substantive process that together significantly contribute to the ability to create outputs. The definition of the term ‘outputs’ is amended to focus on goods and services provided to customers, generating investment income and other income, and it excludes returns in the form of lower costs and other economic benefits.

(iii) Interest Rate Benchmark Reform – Amendments to HKFRS 7, HKFRS 9 and HKAS 39 The amendments made to HKFRS 7 Financial Instruments: Disclosures, HKFRS 9 Financial Instruments (“HKFRS 9”) and HKAS 39 Financial Instruments: Recognition and Measurement provide certain reliefs in relation to interest rate benchmark reforms. The reliefs relate to hedge accounting and have the effect that the reforms should not generally cause hedge accounting to terminate. However, any hedge ineffectiveness should continue to be recorded in the income statement.

(iv) Revised Conceptual Framework for Financial Reporting

The HKICPA has issued a revised Conceptual Framework which will be used in standard-setting decisions with immediate effect. Key changes include:

increasing the prominence of stewardship in the objective of financial reporting;
reinstating prudence as a component of neutrality
defining a reporting entity, which may be a legal entity, or a portion of an entity;
revising the definitions of an asset and a liability;
removing the probability threshold for recognition and adding guidance on derecognition;
adding guidance on different measurement basis, and
stating that profit or loss is the primary performance indicator and that, in principle, income and expenses in other comprehensive income should be recycled where this enhances the relevance or faithful representation of the financial statements.

179

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CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(b) Functional currency and presentation currency

The functional currency of the Company is Hong Kong dollars (“HK$”). The functional currencies of subsidiaries are determined in accordance with the primary economic environment in which they operate, and are translated into HK$ for the preparation of the consolidated financial statements (see Note 2 (h)). The financial statements of the Group are presented in HK$ and, unless otherwise stated, expressed in million of HK$.

(c) Basis of measurement

The measurement basis used in the preparation of the consolidated financial statements is the historical cost basis except that the following assets and liabilities are stated at their fair values as explained in the accounting policies set out below:

investment properties (see Note 2 (l));
financial assets and liabilities at fair value through profit or loss (see Note 2 (i));
financial assets at fair value through other comprehensive income (see Note 2 (i)); and
fair value hedged items (see Note 2 (j)(i)).

(d) Use of estimates and judgement

The preparation of these consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are reviewed on an ongoing basis. Actual results may differ from these estimates.

Judgements made by management that have significant effect on the financial statements and estimates with a significant risk of material adjustment in subsequent period are described in Note 3. Revisions to accounting estimates are recognised in the period which the estimates are revised and in any future periods affected.

180

— F-13 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(e) Subsidiaries and non-controlling interests
(i) 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 reserve. Any cost directly attributable to the combination is recognised in profit or loss when incurred. The combination date is the date on which one combining entity obtains control of other combining entities.
(ii) 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 the 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. If (1) is less than (2), the difference is recognised in profit or loss for the current period. The costs of 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 acquisitionrelated costs are expensed when incurred. Any difference between the fair value and the carrying amount of the assets or liabilities transferred as consideration is recognised in profit or loss. The acquiree’s identifiable assets, 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.

The Group recognises any non-controlling interest in the acquiree on an acquisition-byacquisition basis. Non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation are measured at either fair value or the present ownership interests’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets. All other components of non-controlling interests are measured at their acquisition date fair value, unless another measurement basis is required by HKFRS.

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. The difference between the fair value and the carrying amount is recognised in profit or loss for the current period; the amount recognised in other comprehensive income relating to the previously-held equity interest in the acquiree are transferred to profit or loss in the period in which the acquisition occurs.

181

— F-14 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(e) Subsidiaries and non-controlling interests (Continued)

(iii) Consolidated financial statements

The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Company and its subsidiaries which includes structured entities controlled by the Group.

Subsidiaries are entities over which the Group has control. The Group controls an entity when it is exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

When assessing whether the Group has power, only substantive rights are considered including the substantive rights held by the Group and other parties.

An investment in a subsidiary is consolidated into the consolidated financial statements of the Group 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 the ultimate controlling party first obtained control. Therefore the opening balances and the comparative figures of the consolidated financial statements are restated. In the preparation of the consolidated financial statements, the subsidiary’s assets, liabilities and results of operations are included in the consolidated balance sheet and the consolidated statement of comprehensive income, respectively, based on their carrying amounts, from the date that common control was established.

Where a subsidiary was acquired during the reporting period, through a business combination involving entities not under common control, the identifiable assets, liabilities and results of operations of the subsidiaries are consolidated into the consolidated financial statements from the date that control commences, based on the fair value of those identifiable assets and liabilities at the acquisition date.

Non-controlling interests are presented in the consolidated balance sheet within equity, separately from equity attributable to the ordinary shareholders of the Company. Noncontrolling interests in the results of the Group are presented on the face of the consolidated statement of comprehensive income as an allocation of the total profit or loss and total comprehensive income for the year between non-controlling interests and the ordinary shareholders of the Company. Loans from holders of non-controlling interests and other contractual obligations towards these holders are presented as financial liabilities in the consolidated balance sheet in accordance with Note 2 (i).

182

— F-15 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(e) Subsidiaries and non-controlling interests (Continued)

(iii) Consolidated financial statements (Continued)

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

When the accounting period or accounting policies of a subsidiary are different from those of the Group, the Group makes necessary adjustments to the financial statements of the subsidiary based on the Group’s own accounting period or accounting policies. Intra-group balances, transactions and cash flows, and any unrealised profit or loss arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised losses resulting from intra-group transactions are recognised fully in profit or loss when evidence of impairment of assets being provided.

If there is a difference between the accounting entity of the Group and the accounting entity of the company or a subsidiary on measuring the same transaction, the transaction will be adjusted from the perspective of the Group.

Where the Group 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 reserve (capital reserve) in the consolidated balance sheet.

When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain or loss being recognised in profit or loss, and the Group derecognises assets, liabilities, non-controlling interests and other related items in shareholders’ equity in relation to that subsidiary. Any interest retained in that former subsidiary at the date when control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a financial asset (see Note 2 (i)) or, when appropriate, the cost on initial recognition of an investment in an associate or joint venture (see Note 2 (f)).

(iv) Investment in subsidiaries

In the Company’s balance sheet, an investment in a subsidiary is stated at cost less impairment losses (see Note 2 (s)).

The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable.

183

— F-16 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(f) Associates and joint ventures

An associate is an entity in which the Group has significant influence, but not control or joint control, over its management, including participation in the financial and operating policy decisions.

A joint venture is an arrangement whereby the Group and other parties contractually agree to share control of the arrangement, and have rights to the net assets of the arrangement.

An investment in an associate or a joint venture is accounted for in the consolidated financial statements of the Group under the equity method. The Group uses the equity method on the basis of an adjustment to the financial statements of associate or joint venture in accordance with the Group’s accounting policies, unless an associate or joint venture does not apply HKFRS 9 temporarily by applying the temporary exemption of HKFRS 9 until annual periods beginning 1 January 2021. Under the equity method, the investment is initially recorded at cost, adjusted for any excess of the Group’s share of the acquisition-date fair values of the investee’s identifiable net assets over the cost of the investment (if any). Thereafter, the investment is adjusted for the post acquisition change in the Group’s share of the investee’s net assets and any impairment loss relating to the investment (see Note 2 (s)). Any acquisition-date excess of the Group’s share of the fair value of the investee’s identifiable net assets over cost, the Group’s share of the post-acquisition, post-tax results of the investees and any impairment losses for the year are recognised in profit or loss, whereas the Group’s share of the post-acquisition, post-tax items of the investees’ other comprehensive income is recognised in other comprehensive income of the Group. The Group’s interest in associate or joint venture is included in the consolidated financial statements from the date that significant influence or joint control commences until the date that significant influence or joint control ends.

When the Group’s share of losses exceeds its interest in the associate or the joint venture, the Group’s interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the investee. For this purpose, the Group’s interest is the carrying amount of the investment under the equity method together with the Group’s long-term interests that in substance form part of the Group’s net investment in the associate or the joint venture.

Unrealised profits and losses resulting from transactions between the Group and its associate and joint venture are eliminated to the extent of the Group’s interest in the investee, except where unrealised losses provide evidence of an impairment of the asset transferred, in which case they are recognised immediately in profit or loss. If an investment in an associate becomes an investment in a joint venture or vice versa, retained interest is not remeasured. Instead, the investment continues to be accounted for under the equity method.

When the Group ceases to have significant influence over an associate or joint control over a joint venture, it is accounted for as a disposal of the entire interest in that investee, with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former investee at the date when significant influence or joint control is lost is recognised at fair value and this amount is regarded as the cost on initial recognition of a financial asset (see Note 2 (i)).

In the Company’s balance sheet, investments in associates and joint ventures are stated at cost less impairment losses (see Note 2 (s)).

184

— F-17 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(g) 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.

Impairment losses on goodwill can not be reversed in the future.

(h) 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. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as fair value through other comprehensive income are recognised in other comprehensive income.

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

Income and expenses in the profit or loss are translated into HK$ at the foreign exchange rates at the transaction dates or the rates approximate to. The resulting exchange differences are presented as “Reserves” (exchange reserve) in the consolidated balance sheet within the shareholder’s equity. The effect of exchange rate changes on cash and cash equivalents held or due in a foreign currency are reported in the statement of cash flows.

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.

(i) Financial instruments

Financial instruments refer to a contract that forms one party’s financial asset and another party’s liabilities or equities. Financial assets and financial liabilities are recognised when the Group becomes a party of the financial instrument contracts.

185

— F-18 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(i) Financial instruments (Continued)

(i) Financial assets

(1) Classification and Measurement

The Group classifies its financial assets into the following categories based on their business model and the contractual cash flow characteristics:

Financial assets at amortised cost;
Financial assets at fair value through other comprehensive income (“FVOCI”);
Financial assets at fair value through profit or loss (“FVPL”).

At initial recognition, the Group measures a financial asset at its fair value. For financial assets that are at FVPL, the transaction costs are expensed in profit or loss; for financial assets with other categories, the transaction costs are recognised in the initial carrying amounts. For trade and other receivables arising from rendering goods or services with no significant financing component, the Group measures their initial carrying amount as the cash flows that the Group is entitled and expected to receive.

Debt instruments

Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s perspective, and are measured at the following three categories:

Amortised cost:

The business model the Group manages these financial assets is to collect the contractual cash flows where those cash flows’ characteristics are consistent with those of the basic loans arrangement, i.e, the contractual cash flows of these financial assets at certain date represent solely payments of principal and interest based on the principal amount (“SPPI”), and that are not designated at FVPL. Interest income from these financial assets is recognised using the effective interest rate method.

FVOCI:

The business model the Group manages these financial assets is to collect contractual cash flows and to sell the assets, and those cash flows’ characteristics are consistent with those of the basic loans arrangements, i.e, the contractual cash flows of these financial assets at certain date represent solely payments of principal and interest based on the principal amount (“SPPI”), and that are not designated at FVPL. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, foreign exchange gains and losses and interest income on the instrument’s amortised cost which are recognised in profit or loss.

FVPL:

Assets that do not meet the criteria for amortised cost or FVOCI are at FVPL. The Group may also irrevocably designate financial assets at fair value through profit or loss if doing so significantly reduces or eliminates a mismatch created by assets and liabilities being measured on different bases.

186

— F-19 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(i) Financial instruments (Continued)

(i) Financial assets (Continued)

(1) Classification and Measurement (Continued)

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting the liabilities. A financial instrument is an equity instrument if, and only if, both conditions (i) and (ii) below are met: (i) The financial instrument includes no contractual obligation to deliver cash or another financial asset to another entity, or to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the Group; (ii) If the financial instrument will or may be settled in the Group’s own equity instruments, it is a non-derivative instrument that includes no contractual obligations for the Group to deliver a variable number of its own equity instruments; or a derivative that will be settled only by the Group exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments.

The Group subsequently measures all equity investments at FVPL, except where the Group has elected, at initial recognition, to irrevocably designate an equity investment at FVOCI. When this election is made, fair value gains and losses are recognised in other comprehensive income (“OCI”) and are not subsequently reclassified to profit or loss, including on disposal. Dividends, when representing a return on such investments, are recognised in profit or loss when the Group’s right to receive payments is established.

(2) Impairment

The Group assesses on a forward-looking basis the expected credit losses (“ECL”) associated with its financial assets at amortised cost, debt instrument at FVOCI, lease receivables and contract assets, loan commitments and financial guarantee contracts for the issuer which are not measured at fair value through profit or loss.

When calculating the probability-weighted present value of the difference between the contractual and forecasted cash flows to be received, the Group takes reasonable and supportable information such as the past events, current conditions and forecasts of future economic conditions into consideration and uses probabilities of default as the weightings. The difference is recognised as the ECL.

At each balance sheet date, the Group calculates the ECL of financial instruments in different stages. Stage 1 refers to financial instruments that have not had a significant increase in credit risk since initial recognition; Stage 2 refers to financial instruments that have had a significant increase in credit risk since initial recognition but that do not have objective evidence of impairment; Stage 3 refers to financial assets for which there are objective evidence of impairment at the reporting date since initial recognition. For these assets at Stage 1, 12-month ECL are recognised and for assets at stage 2 and 3, life-time ECL are recognised. For financial assets with low credit risks as at the balance date, the Group recognises 12-month ECL based on the assumption that the credit risks have not significantly increased after initial recognition.

187

— F-20 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(i) Financial instruments (Continued)

(i) Financial assets (Continued)
(2) Impairment (Continued)

For financial assets in stage 1 and stage 2, interest income is calculated based on the gross carrying amount of the asset, that is, without deduction for credit allowance, and the effective interest rates. For financial assets in stage 3, interest income is calculated on the net carry amount, that is, net of credit allowances, and the effective interest rates.

The Group recognises the provision and reversal of ECL in profit or loss. For debt instrument at FVOCI, the Group makes relevant adjustments to other comprehensive income at the same time as recognizing ECL in profit and loss.

For account and bills receivables and contract assets whether there is significant financing component or not, the Group recognises life-time ECL.

(3) Derecognition

The Group derecognises a financial asset if one of the following conditions is met:

The contractual rights to receive the cash flows from the financial asset expire;

– The financial asset has been transferred and the Group transfers substantially all the risks and rewards of ownership of such financial asset;

The financial asset has been transferred, the Group has not retained any control over the financial asset, even if the Group neither transfers nor retains substantially all the risks and rewards of ownerships of the financial asset.

For the Group’s equity instruments not held for trading purposes and designated at FVOCI, when they are derecognised, the difference between the carrying amount and the consideration is recognised in retained earnings, also, the cumulative gains or losses previously recognised in other comprehensive income are recycled to the retained earnings; for other financial assets measured at FVOCI, the difference between the carrying amount and the consideration is recognised in profit and loss, also, the cumulative gains or losses previously recognised in other comprehensive income are recycled to profit and loss.

188

— F-21 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(i) Financial instruments (Continued)

(i) Financial assets (Continued)

(3) Derecognition (Continued)

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. When the securitisation of financial assets qualifies for de-recognition, the relevant financial assets are de-recognised 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 does 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 partially qualifies for de-recognition, where the Group has not retained control, it derecognises these financial assets. Otherwise the Group continues to recognise these financial assets to the extent of its continuing involvement and recognises an associated liability.

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 assets.

189

— F-22 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(i) Financial instruments (Continued)

(i) Financial assets (Continued)
(4) Modification of investment in financial assets

The Group sometimes renegotiates or otherwise modifies the contractual cash flows of loans to customers. When this happens, the Group assesses whether or not the new terms are substantially different to the original terms. The Group does this by considering, among others, the following factors:

If the borrower is in financial difficulty, whether the modification merely reduces the contractual cash flows to amounts the borrower is expected to be able to pay.
Whether any substantial new terms are introduced, such as a profit share/equitybased return that substantially affects the risk profile of the loan.
Significant extension of the loan term when the borrower is not in financial difficulty.
Significant change in the interest rate.
Change in the currency the loan is denominated in.
Insertion of collateral, other security or credit enhancements that significantly affect the credit risk associated with the loan.

If the terms are substantially different, the Group derecognises the original financial asset and recognises a ‘new’ asset at fair value and recalculates a new effective interest rate for the asset. The date of renegotiation is consequently considered to be the date of initial recognition for impairment calculation purposes, including for the purpose of determining whether a significant increase in credit risk has occurred. However, the Group also assesses whether the new financial asset recognised is deemed to be credit-impaired at initial recognition, especially in circumstances where the renegotiation was driven by the debtor being unable to make the originally agreed payments. Differences in the carrying amount are also recognised in profit or loss as a gain or loss on derecognition.

If the terms are not substantially different, the renegotiation or modification does not result in derecognition, and the Group recalculates the gross carrying amount based on the revised cash flows of the financial assets and recognises a modified cash flows at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets).

190

— F-23 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(i) Financial instruments (Continued)

(ii) Financial liabilities

The financial liabilities are classified into those measured at amortised cost and those at fair value through profit or loss at initial recognition. Financial liabilities at FVPL is applied to derivatives, financial liabilities held for trading and financial liabilities designated as such at initial recognition.

The Group’s major financial liabilities are those measured at amortised cost which are measured initially at fair value less transaction costs and are measured subsequently using the effective interest method.

Financial liabilities or a portion thereof, are derecognised when their current obligation are fully or partially expired. The difference between the carrying amount of the derecognised portion and the consideration is recognised in profit or loss.

(iii) 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.

(iv) 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.

191

— F-24 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(i) Financial instruments (Continued)

(v) Derivatives

Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into and are subsequently remeasured at fair value. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.

Certain derivatives are embedded in hybrid contracts, such as the conversion option in a convertible bond. If the hybrid contract contains a host that is a financial asset, then the Group assesses the entire contract as described in the financial assets section above for classification and measurement purposes. Otherwise, the embedded derivatives are treated as separate derivatives when:

Their economic characteristics and risks are not closely related to those of the host contract;
A separate instrument with the same terms would meet the definition of a derivative; and
The hybrid contract is not measured at fair value through profit or loss.

These embedded derivatives are separately accounted for at fair value, with changes in fair value recognised in the statement of profit or loss unless the Group chooses to designate the hybrid contracts at fair value through profit or loss.

The method of recognizing the resulting fair value gain or loss depends on whether the derivative is designated and qualifies as a hedging instrument, and if so, the nature of the item being hedged.

192

— F-25 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(j) Hedging

At the inception of the hedging, the Group documents the economic relationship between hedging instruments and hedged items as well as risk management goals and strategies of various hedging transactions. When a hedge no longer meets the criteria for hedge accounting or the Group’s risk management goals, the Group terminates the use of hedge accounting prospectively. Situations for the Group to terminate the use of hedge accounting include hedging instrument expires, or is sold, terminated and settled.

(i) Fair value hedge

A fair value hedge refers to a hedge of the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment, or a component of any such item. Such changes in fair value are attributable to a particular risk and could affect profit or loss or other comprehensive income. Among them, the circumstances affecting other comprehensive income are limited to the hedge of the exposure to changes in the fair value of equity instruments designated at fair value through other comprehensive income not held for trading.

For a fair value hedge, the gain or loss on the hedging instrument is recognised in profit or loss (or OCI, if hedging an equity instrument at FVTOCI) and the hedging gain or loss on the hedged item adjusts the carrying amount of the hedged item and is recognised in profit or loss. However, if the hedged item is an equity instrument at FVTOCI, those amounts remain in OCI.

(ii) Cash flow hedge

A cash flow hedge refers to a hedge of the exposure to changes in cash flow. Such changes in cash flow are attributable to a particular risk associated with all, or a component of, a recognised asset or liability or a highly probable forecast transaction and could affect profit or loss.

The effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income as cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognised in profit or loss.

If a hedged forecast transaction subsequently results in the recognition of a non-financial item or becomes a firm commitment for which fair value hedge accounting is applied, the amount that has been accumulated in the cash flow hedge reserve is removed and included directly in the initial cost or other carrying amount of the asset or the liability. In other cases the amount that has been accumulated in the cash flow hedge reserve is reclassified to profit or loss in the same period(s) as the hedged cash flows affect profit or loss.

193

— F-26 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(j) Hedging (Continued)

(ii) Cash flow hedge (Continued)

If the cash flow hedge reserve recognised in other comprehensive income is a loss, and all or part of the loss is not expected to be reversed in the future. The portion that is not expected to be reversed will be transferred from other comprehensive income and recognised in profit or loss.

When an entity discontinues the use of hedge accounting for a cash flow hedge, if the hedged future cash flows are still expected to occur, the amount that has been accumulated in the cash flow hedge reserve remains there until the period that the hedged item has the impact in profit or loss; otherwise, that amount is immediately reclassified to profit or loss.

(iii) Hedge of a net investment in a foreign operation

A hedge of net investment in a foreign operation refers to hedge of the foreign exchange exposure arising from net investment in a foreign operation. The “net investment in a foreign operation” refers to an enterprise’s equity proportion in the net assets in a foreign operation.

Hedge of a net investment in a foreign operation is accounted for similarly to cash flow hedges. The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income; and the ineffective portion is recognised in profit or loss. The cumulative gain or loss on the hedging instrument relating to the effective portion of the hedge is reclassified to profit or loss on the disposal or partial disposal of the foreign operation.

(iv) Hedge effectiveness testing

In order to qualify for hedge accounting, the Group continuously evaluate whether the hedging relationship is effective from the hedge date and after.

The hedge relationship meets hedging effectiveness requirements if the hedging meets the following conditions:

There is an economic relationship between the hedged item and the hedging instrument;
The effect of credit risk does not dominate the value changes that result from that economic relationship; and
The hedge ratio of the hedging relationship is equal to the ratio between the actual number of hedged items and the actual number of hedging instruments.

194

— F-27 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(k) Financial assets held/sold under resale/repurchase agreements

Financial assets held under resale agreements are transactions that the Group acquires financial assets which will be resold at a predetermined price in the future date under resale agreements. Financial assets sold under repurchase agreements are transactions that the Group sells financial assets which will be repurchased at a predetermined price in the future date under repurchase agreements.

The cash advanced or received is recognised as amounts held under the resale and repurchase agreements in the balance sheet. Assets held under resale agreements are recorded in memorandum accounts as off-balance sheet items. Assets sold under repurchase agreements continue to be recognised in the balance sheet.

The difference between the resale and repurchase consideration, and that between the purchase and sale consideration, are amortised over the period of the respective transaction using the effective interest method and are included in interest income and interest expense respectively.

(l) Investment properties

Investment properties are interests in land and/or buildings which are held to earn rentals or for capital appreciation or both. Investment properties are initially measured at cost. Land held under operating leases is classified and accounted for as investment property when the rest of the definition of investment property is met.

Subsequent expenditures related to investment properties are recognised in the cost of investment properties provided it is probable that the economic benefits will flow to the Group and the costs can be measured reliably; otherwise subsequent expenditures are recognised in profit or loss in the period in which they are incurred.

Investment properties transfer to property, plant and equipment or intangible assets at the commencement of owner-occupation. The carrying amount of property, plant and equipment and intangible assets are based on the fair value of investment properties on the day of conversion. The difference between the fair value and the previous carrying amount is recognised in profit or loss for the current period. When owner-occupied properties transfer to investment properties that will be carried at fair value, if the fair value at the date of conversion is less than the previous carrying amount, the difference is recognised in profit or loss for the current period; If the fair value at the date of conversion is greater than the previous carrying amount, the difference is recognised directly in equity, unless there was an impairment loss recognised for the same property in prior years and a portion of the increase is recognised in profit or loss to the extent of that impairment loss.

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.

195

— F-28 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(m) Property, plant and equipment

Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses (Note 2 (s)).

Assets in the course of construction for production, rental or administrative purposes are carried at cost, less any impairment losses. Cost includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of overheads and borrowing costs capitalised (see Note 2 (aa)).

Construction-in-progress represents property, plant and equipment under construction and is transferred to fixed assets when ready for its intended use.

No depreciation is made on construction-in-progress until it is ready for its intended use. Deprecation policies are set out below.

Property, plant and equipment are depreciated at rates sufficient to write off their cost, less impairment losses, if any, to their estimated residual values, over their estimated useful lives on a straight line basis as follows:

–	Plant and buildings	5 – 70 years
–	Machinery and equipment	3 – 33 years
–	Office and other equipment, vehicles and vessels and others	2 – 33 years

Assets’ useful lives and residual values are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

The recoverable amount of an asset is the greater of its fair value less costs of disposal and value in use.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

196

— F-29 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(n) Land use rights

Land use rights are presented under right-of-use (“ROU”) assets.

Land use rights are stated at cost less accumulated amortisation and accumulated impairment losses (if any). Land use rights are amortised on a straight-line basis over the respective periods of grant, usually within 10 to 50 years.

Impairment losses on land use rights are accounted for in accordance with the accounting policies as set out in Note 2 (s).

(o) Intangible assets (other than goodwill)

Intangible assets acquired by the Group are stated at cost less accumulated amortisation (where the estimated useful life is finite) and if any, impairment losses (see Note 2 (s)).

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:

– Mining assets

Over the estimated useful lives using the unit-of-production method

Both the period and method of amortisation are reviewed annually.

An intangible asset with an indefinite useful life shall not be amortised. 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.

197

— F-30 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(p) Inventories
(i) Advanced intelligent manufacturing, advanced materials

Inventories of the advanced intelligent manufacturing and advanced materials segments are carried at the lower of cost and net realizable 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 (including systematically allocated production overhead) and other costs incurred in bringing the inventories to their present location and condition.

Net realizable 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.

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 realizable 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 writedown of inventories is recognised in profit or loss in the period in which the reversal occurs.

(ii) New-type urbanisation

Inventories in respect of property development activities under the New-type urbanisation 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, 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 2 (aa)). 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.

198

— F-31 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(q) Leases

Leases are recognised as a ROU asset and a corresponding liability by the lessee at the commencement date.

Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.

(i) Lease liabilities

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

fixed payments (including in-substance fixed payments), less any lease incentives receivable
variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date
amounts expected to be payable by the group under residual value guarantees
the exercise price of a purchase option if the group is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the ROU asset in a similar economic environment with similar terms, security and conditions.

To determine the incremental borrowing rate, the Group:

where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received
uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases, which does not have recent third party financing, and
makes adjustments specific to the lease, e.g. term, country, currency and security.

199

— F-32 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(q) Leases (Continued)

(i) Lease liabilities (Continued)

The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and the ROU asset is adjusted accordingly.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

(ii) ROU assets

ROU assets are measured at cost comprising the following:

the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date less any lease incentives received;
any initial direct costs; and
restoration costs.

ROU assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the ROU asset is depreciated over the underlying asset’s useful life.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment.

Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognised as expense over the lease term on the same basis as lease income. The respective leased assets are included in the balance sheet based on their nature. As leassor, the Group recognises finance leases as finance lease receivables, which are measured at amortised cost. The Group did not need to make any adjustments to the accounting for assets held as lessor as a result of adopting the new leasing standard.

200

— F-33 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(r) Repossessed assets

In the recovery of impaired loans and advances, the Group may take possession of assets held as collateral through court proceedings or voluntary delivery of possession by the borrowers. Where it is intended to achieve an orderly realisation of the impaired assets and the Group is no longer seeking repayment from the borrower, repossessed assets are reported in “other assets”.

When the Group seizes assets to compensate for the losses of loans and advances and interest receivables, the repossessed assets are initially recognised at fair value, plus any taxes paid for the seizure of the assets, litigation fees and other expenses incurred for collecting the repossessed assets are included in the carrying value of repossessed assets. Repossessed assets are measured at the lower of cost and net realizable value, the amount of any write-down of inventories to net realizable value shall be recognised as an expense in the period the write-down occurs.

(s) Impairment of non-financial assets

Internal and external sources of information are reviewed at balance sheet date to identify indications that the following assets may be impaired or, except in the case of goodwill, an impairment loss previously recognised no longer exists or may have decreased:

property, plant and equipment (other than properties carried at revalued amounts);
ROU assets;
investments in subsidiaries, associates and joint ventures;
goodwill; and
intangible assets.
If any such indication exists, the asset’s recoverable amount is estimated.

In addition, for goodwill and intangible assets that are not yet available for use and intangible assets that have indefinite useful lives, the recoverable amount is estimated annually whether or not there is any indication of impairment.

201

— F-34 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(s) Impairment of non-financial assets (Continued)

Calculation of recoverable amount

The recoverable amount of an asset is the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cashgenerating unit).

Recognition of impairment losses

An impairment loss is recognised in profit or loss whenever the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill (if any) allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs of disposal (if measurable) or value in use (if determinable).

Reversals of impairment losses

If, in a subsequent period, the amount of impairment loss of the non-financial asset except for goodwill decreases and the decrease can be linked objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the profit or loss. A reversal of impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognised in prior periods.

An impairment loss in respect of goodwill is not reversible.

202

— F-35 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(t) Employee benefits

Employee benefits refer to all forms of consideration or compensation given by the Group in exchange for service rendered by employees or for termination of employment relationship, which include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits.

(i) Short-term employee benefits

During the accounting period when an employee has rendered service to the Group, the Group recognises the undiscounted amount of short-term employee benefits as a liability and as an expense, unless another HKFRS requires or permits the inclusion of the benefits in the cost of an asset. Short-term employee benefits include wages, bonuses and social security contributions such as medical insurance, work-related injury insurance and maternity insurance, housing provident funds, labour union fee and staff and workers’ education fee, which are all calculated based on the regulated benchmark and ratio.
(ii) Defined contribution retirement schemes
Employees of the Group’s subsidiaries in Hong Kong are offered the option to enroll in one of the Mandatory Provident Fund (“MPF”) Master Trust Schemes under the CITIC Group MPF Scheme. The MPF Master Trust Schemes are defined contribution schemes and are administered in accordance with the terms and provisions of the respective trust deeds and are subject to the Mandatory Provident Fund Schemes Ordinance.

Employees of the Group’s subsidiaries in the People’s Republic of China (the “PRC”) are required to participate in defined contribution retirement schemes and make contributions according to the respective regulations. Employees of the Group’s subsidiaries in the PRC are also eligible to participate in the enterprise annuity plan established by the Group according to the relevant requirements.

Employees of the Group’s overseas subsidiaries are required to make contributions subject to the relevant regulations in the countries/jurisdiction in which the overseas subsidiaries operate.

The contributions are charged to profit and loss for the current period on an accrual basis.

(iii) Post-employment benefits: Defined benefit plans

The defined benefit plans of the Group are supplementary retirement benefits provided to the domestic employees.

203

— F-36 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(t) Employee benefits (Continued)

(iv) Termination benefits

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.
(u) Financial guarantees issued, provisions and contingent liabilities

(i) Financial guarantee contracts

Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of

the amount determined in accordance with the expected credit loss model under HKFRS 9 with Note 3 (b); and
the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of HKFRS 15 Revenue from Contracts with Customers (“HKFRS 15”).

The fair value of financial guarantees is determined based on the present value of the difference in cash flows between the contractual payments required under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.

Where guarantees in relation to loans or other payables of associates and joint ventures are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment.

(ii) 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 measured at the higher of the amount initially recognised, less accumulated amount of income recognised in accordance with the Group’s principles of revenue recognition where appropriate, and the amount that would be determined in accordance with Note 2 (u)(iii).

204

— F-37 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(u) Financial guarantees issued, provisions and contingent liabilities (Continued)

(iii) 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.

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.

(v) Revenue recognition

The Group recognises revenue when it satisfies a performance obligation by transferring a promised good to a customer, which is when the customer obtains control of a good, has the ability to direct the use of, and obtain substantially all of the remaining benefits from that good. If the control of the goods and services is transferred over a period of time, the Group recognises revenue by reference to the extent of progress toward completion in fulfilling its performance obligations during the entire contract period.

For the amounts of revenue recognised for goods transferred and services provided, the Group recognises any unconditional rights to consideration separately as a receivable and the rest as a contract asset, and recognises provisions for loss allowance of the receivable and the contract asset using ECL model; if the consideration received or receivable exceeds the obligation performed by the Group, a contract liability is recognised. The Group presents a net contract asset or a net contract liability under each contract.

205

— F-38 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(v) Revenue recognition (Continued)

Contract costs include costs to fulfill a contract and of obtaining a contract. The cost incurred for providing services by the Group is recognised as the costs to fulfill a contract, and is amortised based on the progress towards completion of the service provided when recognizing revenue. The incremental cost incurred by the Group to obtain contract is recognised as the costs of obtaining a contract. For costs of obtaining a contract that will be amortised within one year, the Group recognises it in profit and loss when incurred. For the costs of obtaining a contract that will be amortised for more than one year period, it is amortised in profit and loss based on same progress towards completion as recognizing revenue. The Group recognises the excess of the carrying amounts of contract costs over the expected remaining consideration less any costs not yet recognised as an impairment loss. As at the balance sheet date, the Group presents the costs to fulfill and of obtaining a contract, in the net amount after deducting relevant asset impairment provisions, as inventories.

The Group recognises revenue for each of its activities in the income statement in accordance with below policies:

(i) Interest income

Interest income is recognised according to HKFRS 9, refer to Note 2 (i) financial instruments for details.

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.

(ii) Fee and commission income

Fee and commission income is recognised 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.

206

— F-39 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(v) Revenue recognition (Continued)

(iii) Sales of goods

Revenue from the sale of goods is recognised when the goods are transferred to and accepted by a customer.

When volume discounts are provided to customers, the Group, based on historical experiences, estimates the volume discounts using the expected value method, and recognises revenue net of the estimated volume discounts.

When the customer has a right to return the product within a given period, the Group recognises provisions for returns using the expected value method based on historical experience, as a deduction of the revenue. The Group recognises provisions for the expected refunds to customers; meanwhile, other assets are recognised according to the carry amount of the goods expected to be returned, deducting the expected cost for taking the related goods back.

The Group offers warranties for specific products. If the duration and terms of the warranties are offered in accordance with the requirements of laws and regulations and the Group does not provide any additional services or warranties, such warranties are not recognised as separate performance obligation.

(iv) Services rendered to customers

Revenue for construction services of the Group is recognised over the period of the contract by reference to the progress towards completion. Progress towards completion is calculated based on actual costs incurred as to the end of each period as a proportion to the total forecasted costs of the contract. As at each balance sheet date, the Group reassesses the progress towards completion to reflect the changes in obligation performed.

Revenue for other services provided by the Group is recognised based on the pattern of performance obligation of specific services, either over the period in which the services are rendered or at the point of service completion. For revenue recognised over the period by reference to the progress towards completion, progress towards completion is calculated based on actual costs incurred as to the end of each period as a proportion to the total forecasted costs of the contract. As at each balance sheet date, the Group reassesses the estimate of the progress towards completion to reflect the changes in obligation performed.

207

— F-40 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(w) 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.

(x) 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.

208

— F-41 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(y) Related parties

(a) A person, or a close member of that person’s family, is related to the Group if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or the Group’s parent.
(b) An entity is related to the Group if any of the following conditions applies:
(i) 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).
(ii) 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).
(iii) Both entities are joint ventures of the same third party.
(iv) 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).
(v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) 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).
(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group.

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.

209

— F-42 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(z) 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:

engages 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.

Business segments are identified based on the Group’s internal management requirements as well as following aspects. 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 products and services;
the nature of production processes;
the type or class of customers;
the methods used to distribute the products or provide the 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.

During the year ended 31 December 2020, the Group has made strategic adjustment to the Group’s business segment based on the 14th Five-Year Plan. The segment reporting for 2019 has been restated accordingly.

210

— F-43 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

2 Significant accounting policies (Continued)

(aa) Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(bb) Disposal groups held for sale and discontinued operations

Disposal groups are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. Disposal groups (except for certain assets as explained below) are stated at the lower of carrying amount and fair value less costs to sell. Deferred tax assets, financial assets (other than investments in subsidiaries and associates) and investment properties, which are classified as held for sale, would continue to be measured in accordance with the policies set out else in Note 2.

A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which represents a separate major line of business or geographic area of operations, or is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively with a view to resale.

When an operation is classified as discontinued, a single amount is presented in the income statement comprising the total of:(1) the post-tax profit or loss of the discontinued operation and;(2) the post-tax gain or loss recognised on the measurement to fair value less costs to sell, or on the disposal, of the assets or disposal group(s) constituting the discontinued operation.

211

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CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical 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.

(a) Classification of financial assets

The critical judgments the Group has in determining the classification of financial assets include analysis of business models and characteristics of contractual cash flows.

The Group determines the business model for managing financial assets at the level of financial asset portfolio. The factors considered include evaluation and reporting of financial asset performance to key management personnel, risks affecting the performance of financial assets and their management methods, and the way related business management personnel receive payments.

When assessing whether the contractual cash flow of financial assets is consistent with the basic lending arrangement, the Group has the following main judgments: whether the principal may be subject to change in the duration or amount of money due to prepayments during the duration; whether interests is only included currency time value, credit risk, other basic borrowing risks, and considerations for costs and profits. For example, whether the amount paid in advance reflect only the outstanding principal and interest on the outstanding principal, as well as reasonable compensation for early termination of the contract.

(b) Measurement of ECL

Measurement of ECL for financial assets at amortised cost and FVOCI is an area that requires the use of complex models and significant assumptions about future economic conditions and credit behaviour (e.g. the likelihood of customers defaulting and the resulting losses). Explanation of the inputs, assumptions and estimation techniques used in measuring ECL is further detailed in Note 48 (a).

A number of significant judgements are also required in applying the accounting requirements for measuring ECL, such as:

Determining criteria for significant increase in credit risk;
Choosing appropriate models and assumptions for the measurement of ECL;
Establishing the number and relative weightings of forward-looking scenarios for each type of product and the associated ECL; and
Establishing groups of similar financial assets for the purposes of measuring ECL.

Detailed information about the judgements and estimates made by the Group in the above areas is set out in Note 48 (a).

212

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CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical accounting estimates and judgements (Continued)

(c) Provision for inventories

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 realizable value. The Group estimates the net realizable 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 2 (s), assets such as fixed assets, intangible assets, ROU assets and interests in associates and joint ventures 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.

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) 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.

213

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CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical accounting estimates and judgements (Continued)

(f) Depreciation

Depreciation of operating assets constitutes a substantial operating cost for the Group. The cost of fixed assets is charged as depreciation expense over the estimated useful life of the respective assets using the straight-line method. The cost of ROU assets is charged as depreciation expense generally over the shorter of the asset’s useful life and the lease term on a straight-line basis.

Management periodically reviews changes in technology and industry conditions, asset retirement activity, residual values to determine adjustments to estimated remaining useful lives and depreciation rates. In determining the lease term of ROU assets, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

(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.

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. The outcome of their actual utilisation may be different.

(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.

214

— F-47 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical accounting estimates and judgements (Continued)

(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 judgement 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.

215

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CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical accounting estimates and judgements (Continued)

(j) Control and consolidation

The Group makes significant judgement 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 decisionmaking authority, remuneration entitled, other interests the Group holds, and the rights held by other parties.

The Group holds less than 50% shares and voting rights in certain subsidiaries. When assessing whether it has substantive control over these investees, the Group has taken certain factors into account including the size of the Group’s shareholding relative to other shareholders, dispersion of the voting rights of the other shareholders, the Group’s relationship with other investors, any history of any other shareholders collaborating to exercise their votes collectively or to out vote the Group; the group’s relationship with the key management personnel of the investees, whether the Group has the right to appoint or approve the majority of the board seats and other key management personnel of the investees, whether the Group controls certain assets such as licences or trademarks that are critical to the operations of the investees, whether the Group and other shareholders’ rights over the investees are substantive, and any other contractual arrangements. The Group considers factors that are applicable to a specific individual investee on an ongoing basis when determining whether it has substantive rights over the investees.

216

— F-49 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical accounting estimates and judgements (Continued)

(k) Metallurgical Corporation of China (“MCC”) claim

MCC was appointed as the EPC (engineering, procurement and construction) contractor for the processing area and related facilities at the Group’s Sino Iron project in Western Australia (“Sino Iron Project”). The fixed price contract amount was US$3.4 billion.

On 30 January 2013, MCC announced that it had incurred costs over the value of the contract and had provided additional funding of US$858 million to MCC Mining (Western Australia) Pty Ltd (“MCC WA”), its wholly owned subsidiary company responsible for delivering MCC’s obligations under the contract.

As at the date of issuance of the financial statement, MCC has not claimed any additional costs from Sino Iron Pty Ltd (“Sino Iron”) or its subsidiary companies, other than minor contract variations in the normal course of operations, and the Group believes it has satisfied all of its obligations under the contract.

Under the contract, the Group has a right to claim liquidated damages from MCC WA for certain delays in the completion of their project scope at a daily amount of 0.15% of the value of the main contract (approximately US$5 million per day, with a cap of approximately US$530 million in total). As at balance sheet date the cumulative days delay that has been incurred has resulted in the contractual cap to the liquidated damages being reached.

As set out in the Company’s announcement dated 24 December 2013, Sino Iron and MCC WA entered into a supplemental contract pursuant to which Sino Iron will take over the management of the construction and commissioning of the remaining four production lines of the Sino Iron Project. An independent audit will opine on various matters including the contract price for the hand over pursuant to the supplemental contract and related fees and expenses, the value of the supporting services provided by Sino Iron to MCC WA in carrying out its responsibilities under the contract, the extent of the works completed by MCC WA in respect of the first two production lines, and the liability of MCC WA in respect of the extensive delays on completion of the works under the contract. By reference to such findings of the independent audit, Sino Iron and MCC WA expect to enter into further negotiations to determine the amount of liabilities to be borne between the parties. Outcomes are not yet known as at 31 December 2020.

217

— F-50 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical accounting estimates and judgements (Continued)

(l) Mineralogy Pty Ltd (“Mineralogy”) disputes

Each of Sino Iron and Korean Steel Pty Ltd (“Korean Steel”), subsidiary companies of the Company, has entered into a Mining Right and Site Lease Agreement (“MRSLA”) with Mineralogy. Among other things, those agreements, together with other project agreements, provide Sino Iron and Korean Steel the right to develop and operate the Sino Iron Project and to take and process one billion tonnes each of magnetite ore for that purpose.

Option Agreement Dispute

The Company is a party to an option agreement (“Option Agreement”) with Mineralogy and Mr. Clive Palmer pursuant to which the Company has options to acquire up to four further companies, each holding the right to mine one billion tonnes of magnetite ore in the vicinity of the Sino Iron Project. The Company exercised the first option under the Option Agreement on 13 April 2012. The remaining options have now lapsed. Following the exercise of the first option, Mineralogy and Mr. Palmer alleged that the Option Agreement had been repudiated by the Company, purported to accept that repudiation and stated that the Option Agreement was at an end.

The Company and its affected subsidiaries, Sino Iron and Korean Steel (together referred to as the “CITIC Parties”), commenced a legal proceeding in relation to the dispute in the Supreme Court of Western Australia. On 30 September 2015, the Court made declarations by consent, including that the Company had not repudiated the Option Agreement in the manner asserted by Mineralogy and Mr. Palmer.

Notwithstanding the making of these declarations, Mineralogy and Mr. Palmer have not taken the actions necessary to permit completion of the transaction resulting from the Company’s exercise of the first option under the Option Agreement. On 31 March 2016, the CITIC Parties commenced a proceeding in the Supreme Court of Western Australia in relation to the Option Agreement (“Proceeding CIV 1514/2016”) to seek orders compelling Mineralogy to take the steps necessary to complete the transfer of a further company having the right to mine one billion tonnes of magnetite ore. On 26 February 2018, Justice K Martin granted leave for Cape Preston Resource Holdings Pty Ltd to be added as a plaintiff to the proceeding and for the writ to be amended for that purpose.

On 29 November 2020, the Company accepted the nomination of Balmoral Iron on the basis of certain representations and subject to certain conditions concerning guarantees, indemnities and warranties which had been proffered by Mineralogy and Mr. Palmer in the preceding weeks.

218

— F-51 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical accounting estimates and judgements (Continued)

(l) Mineralogy Pty Ltd (“Mineralogy”) disputes (Continued)

Option Agreement Dispute (Continued)

In their latest statement of claim filed on 1 December 2020, the CITIC Parties and Cape Preston Resource Holdings Pty Ltd seek, among other things:

(a) a declaration that the Option Agreement remains in full force and effect;
(b) specific performance by Mineralogy and Mr. Palmer of the Option Agreement; and
(c) an order that Mineralogy and Mr. Palmer complete the first option by taking the steps required under the Option Agreement, including by entering into certain transaction documents in the form submitted to the court by the CITIC Parties.

The trial took place on 7 to 9 and 15 December 2020. As the issues in dispute had narrowed, the principal remaining issue for determination at trial was the form of the takeover agreement and the project Agreements to be entered into by the further company to complete the exercise of the first option.

Justice K Martin has reserved his decision.

FCD Indemnity Disputes

Mineralogy and Mr. Palmer have commenced and threatened to commence proceedings to pursue claims pursuant to an indemnity given by the Company under the Fortescue Coordination Deed (“FCD”) to Mineralogy and Mr. Palmer. That indemnity extends to losses suffered by Mineralogy and Mr. Palmer in relation to the failure by Sino Iron and Korean Steel to perform their obligations under the project agreements.

(i) Queensland Nickel FCD Indemnity Claim

On 29 June 2017, the final day of the trial in Proceeding CIV 1808/2013, Mr. Palmer commenced a proceeding against the Company in the Supreme Court of Western Australia (“Proceeding CIV 2072/2017”) claiming damages in the sum of AUD2,324,000,000 (now reduced by an amended statement of claim to AUD1,806,438,000). This amount is alleged to represent the reduction in the value of the assets of the joint venture business carried on by the Queensland Nickel group of companies controlled by Mr. Palmer. The joint venture business was a nickel and cobalt refinery located at Yabulu in North Queensland.

219

— F-52 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical accounting estimates and judgements (Continued)

(l) Mineralogy Pty Ltd (“Mineralogy”) disputes (Continued)

FCD Indemnity Disputes (Continued)

(i) Queensland Nickel FCD Indemnity Claim (Continued) As Sino Iron and Korean Steel had not paid amounts sought by Mineralogy on account of the royalty on products produced by Sino Iron and Korean Steel (“Royalty Component B”), Mr. Palmer claims that Mineralogy did not, and was unable to, provide the funds to Queensland Nickel Pty Limited to enable it to continue managing and operating the joint venture business. Mr. Palmer alleges that Queensland Nickel Pty Limited was subsequently placed in administration, followed by liquidation, because it did not receive those funds from Mineralogy.

After commencing this proceeding, Mr. Palmer joined Mineralogy as a second plaintiff and Sino Iron and Korean Steel as second and third defendants.

On 14 February 2020, Mineralogy and Mr. Palmer provided an incomplete list of documents to the CITIC Parties, which relate to the categories of documents identified for discovery. Mineralogy and Mr. Palmer provided further discovery on 23 July 2020.

On 24 September 2020, Justice K Martin ordered that:

(a) this proceeding be heard together with Proceeding CIV 1267/2018; and
(b) damages be determined separately and subsequently to liability.

On 3 March 2021, Mineralogy and Mr. Palmer filed an application for leave to amend their statement of claim to introduce an allegation that the CITIC Parties’ purpose in failing to pay Royalty Component B was to apply commercial pressure upon Mineralogy and Mr. Palmer to agree to alter the contractual relationship between the parties. In Mineralogy and Mr. Palmer’s view, that alleged purpose amounts to the commission of the tort of collateral abuse of process and unconscionable conduct in contravention of section 21 of the Australian Consumer Law. The CITIC Parties reject those allegations and intend to defend the application. The application is listed for a hearing or a directions hearing on 15 April 2021.

No trial date has been set for this proceeding.

220

— F-53 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical accounting estimates and judgements (Continued)

(l) Mineralogy Pty Ltd (“Mineralogy”) disputes (Continued)

FCD Indemnity Disputes (Continued)

(ii) Palmer Petroleum FCD Indemnity Claim

On 16 February 2018, Mineralogy commenced another proceeding against the CITIC Parties in the Supreme Court of Western Australia (“Proceeding CIV 1267/2018”) in which it claims damages in the sum of AUD2,675,400,000. The statement of claim pleads that Mineralogy had agreed to provide:

(a) from December 2009, funding; and
(b) in or about 2013, all future working capital,

to its wholly owned subsidiary, Palmer Petroleum Pty Ltd (now named Aspenglow Pty Ltd) (“Palmer Petroleum”). As Sino Iron and Korean Steel had not paid Royalty Component B from the fourth quarter of 2013 to the second quarter of 2016, it is claimed that Mineralogy did not, and was unable to, provide the funds to Palmer Petroleum.

On 24 April 2018, the CITIC Parties filed and served their defence, which is in similar terms to their defence in Proceeding CIV 2072/2017. The CITIC Parties have pleaded a number of defences including that there has been no breach of the project agreements, construction arguments, causation and mitigation.

On 14 February 2020, Mineralogy provided an incomplete list of documents to the CITIC Parties, which relate to the categories of documents identified for discovery. The CITIC Parties are waiting for Mineralogy to provide a list of further discovery in the prescribed form, which was due on 24 July 2020.

On 24 September 2020, Justice K Martin ordered that:

(a) this proceeding be heard together with Proceeding CIV 2072/2017; and
(b) damages be determined separately and subsequently to liability.

221

— F-54 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical accounting estimates and judgements (Continued)

(l) Mineralogy Pty Ltd (“Mineralogy”) disputes (Continued)

FCD Indemnity Disputes (Continued)

(ii) Palmer Petroleum FCD Indemnity Claim (Continued) On 3 March 2021, Mineralogy filed an application for leave to amend its statement of claim to introduce an allegation that the CITIC Parties’ purpose in failing to pay Royalty Component B was to apply commercial pressure upon Mineralogy and Mr. Palmer to agree to alter the contractual relationship between the parties. In Mineralogy’s view, that alleged purpose amounts to the commission of the tort of collateral abuse of process and unconscionable conduct in contravention of section 21 of the Australian Consumer Law. The CITIC Parties reject those allegations and intend to defend the application. The application is listed for a hearing or a directions hearing on 15 April 2021.

No trial date has been set for this proceeding.

Mine Continuation Proposals/Tenure Dispute

The CITIC Parties commenced a proceeding against Mineralogy and Mr. Palmer in the Federal Court of Australia (“Proceeding WAD 471/2018”). Following a cross-vesting application by the defendants, the proceeding was transferred to the Supreme Court of Western Australia and admitted to the Commercial Managed Cases List of Justice K Martin on 10 June 2019 (“Proceeding CIV 1915/2019”). The proceeding relates to the failure and refusal of Mineralogy to:

(a) submit mine continuation proposals for the Sino Iron Project to the State of Western Australia under the state agreement (“State Agreement”);
(b) grant further necessary tenure for the Sino Iron Project;
(c) take steps to secure the re-purposing of general purpose leases for the Sino Iron Project; and
(d) submit a Programme of Works for the Sino Iron Project to the State of Western Australia.

The CITIC Parties bring claims for breach of contract, of unconscionable conduct under the Australian Consumer Law, and in estoppel. Mr. Palmer is sued as an accessory to the unconscionable conduct claim. The CITIC Parties seek orders requiring Mineralogy to take the four steps listed above, and to pay the CITIC Parties damages for its failure and refusal to do so. Damages are also sought from Mr. Palmer. The State of Western Australia is joined to the proceeding as a necessary party, because it is a party to the State Agreement, but no relief is sought against it.

222

— F-55 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical accounting estimates and judgements (Continued)

(l) Mineralogy Pty Ltd (“Mineralogy”) disputes (Continued)

Mine Continuation Proposals/Tenure Dispute (Continued)

Mediation was conducted in late 2019 but was unsuccessful.

On 10 March 2020, Mineralogy and Mr. Palmer filed their further amended defences. The amendments allege breaches of various project agreements, and that Mineralogy and Mr. Palmer have allocated parts of certain tenements to other projects. On 23 March 2020, the CITIC Parties filed their reply.

On 24 April 2020, the CITIC Parties filed an application to strike out aspects of Mineralogy’s further amended defence which related to purported breaches of the CITIC Parties’ obligations in relation to (1) the standard of work in connection with the design and construction of the Sino Iron Project, (2) the Option Agreement, (3) the FCD, and (4) the site remediation fun (“Site Remediation Fund”). On 18 May 2020, Justice K Martin heard the CITIC Parties’ application. On 1 September 2020, Justice K Martin struck out the pleas relating to the standard of work (without leave to replead) and the pleas relating to the Option Agreement and the FCD (with leave to replead). Justice K Martin said he would revisit the Site Remediation Fund pleas following the determination of the trial in the Site Remediation Fund proceeding (see below).

On 17 September 2020, Mineralogy filed its latest further amended pleading which removed the pleas relating to the standard of work, the Option Agreement and the FCD.

On 14 December 2020, Mineralogy provided discovery. Mr. Palmer has, to date, failed to do so, without explanation. The CITIC Parties have provided three tranches of documents by way of discovery and expect to complete their discovery obligations (subject to the obligation to give ongoing discovery) before the next directions hearing.

On 5 January 2021, Mineralogy and Mr. Palmer filed an application to permanently stay the proceeding, alleging that the proceeding has been brought for an illegitimate or collateral purpose (namely, to apply commercial pressure upon Mineralogy and Mr. Palmer to agree to alter the contractual relationship between the parties) and is an abuse of process.

On 26 February 2021, the CITIC Parties filed an application to summarily dismiss or strike out Mineralogy and Mr. Palmer’s permanent stay application. The CITIC Parties’ application is listed for hearing on 15 April 2021.

No trial date has been set for this proceeding.

223

— F-56 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical accounting estimates and judgements (Continued)

(l) Mineralogy Pty Ltd (“Mineralogy”) disputes (Continued)

Minimum Production Royalty Disputes

The MRSLAs required each of Sino Iron and Korean Steel to produce a minimum of six million tonnes of product by 21 March 2013, unless prevented from doing so by:

(a) an act, matter or thing outside their control;
(b) Mineralogy doing, or failing to do an act (under the MRSLAs or otherwise); or
(c) a failure to obtain all government approvals necessary to allow them to do so (provided Sino Iron and Korean Steel used best endeavours to obtain such approvals in a timely manner).

If Sino Iron and Korean Steel failed to do so, they were each required, within one month of that date, to pay Mineralogy the equivalent of the Mineralogy Royalty payable on the amount of magnetite ore required to produce six million tonnes of iron ore concentrate (“Minimum Production Royalty”). The Minimum Production Royalty has been the subject of earlier proceedings, including Proceeding CIV 1808/2013, Proceeding CIV 2303/2015, Proceeding CIV 3011/2017 and Proceeding CIV 3166/2017.

On 11 December 2018, Mineralogy and Mr. Palmer commenced a new proceeding against the CITIC Parties and Sino Iron Holdings Pty Ltd (“SIH”) in the Supreme Court of Western Australia (“Proceeding CIV 3129/2018”), in which the claim for the Minimum Production Royalty was again revived. In their statement of claim in Proceeding CIV 3129/2018, Mineralogy and Mr. Palmer pleaded that each of Sino Iron and Korean Steel failed to produce at least six million tonnes of product by 21 March 2013 (and were not prevented from doing so for any of the reasons set out in clause 6.3 (a) of the MRSLAs), and accordingly became liable to pay the Minimum Production Royalty by 21 April 2013. In the event that Mineralogy and Mr. Palmer were unsuccessful against Sino Iron and Korean Steel, Mineralogy and Mr. Palmer also pursued a separate claim against the company pursuant to the guarantee and indemnity in the FCD. Mineralogy sought relief, including:

(a) orders that each of Sino Iron and Korean Steel pay Mineralogy AUD6,865,985 plus US$87,104,633, plus default interest;
(b) an order that the Company pay Mineralogy AUD13,731,970 plus US$174,209,266, plus interest (pursuant to the guarantee under the FCD);
(c) orders for specific performance of the MRSLAs and the FCD; and
(d) a declaration that Sino Iron and Korean Steel have acted in breach of their obligation of good faith.

224

— F-57 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical accounting estimates and judgements (Continued)

(l) Mineralogy Pty Ltd (“Mineralogy”) disputes (Continued)

Minimum Production Royalty Disputes (Continued)

If the Court were to find in favour of Mineralogy, Mineralogy could recover the judgment sum from either Sino Iron and Korean Steel, on the one hand, or from the company, on the other. However, it could not recover the same loss from multiple parties.

In the event that Mineralogy was estopped or precluded from seeking the above relief in Proceeding CIV 3129/2018, Mr. Palmer also sought payment by the company of US$187,941,236 pursuant to the guarantee and indemnity in the FCD.

On 23 January 2019, the CITIC Parties and SIH filed and served an application to stay or permanently dismiss Proceeding CIV 3129/2018, or strike out the statement of claim, on grounds including that it was an abuse of process. That application was heard on 25 September 2019. Justice K Martin delivered his reasons for decision on 13 February 2020, finding in favour of the CITIC Parties. His Honour found that Proceeding CIV 3129/2018 was an abuse of process of the court by Mineralogy and Mr. Palmer and on 20 February 2020 his Honour ordered that the proceeding be permanently stayed.

On 4 March 2020, Mineralogy and Mr. Palmer filed notices of appeal against the decision by Justice K Martin to permanently stay Proceeding CIV 3129/2018. The appeals are Proceedings CACV 27/2020 and CACV 29/2020 respectively. Mineralogy and Mr. Palmer argue, among other things, that it was not open for Justice K Martin to find that the commencement of Proceeding CIV 3129/2018 was an abuse of process.

The appeals were heard by the Supreme Court of Western Australia Court of Appeal on 22 and 23 March 2021. The Court reserved its decision in each appeal.

Site Remediation Fund Dispute

(a) Mineralogy will establish the Site Remediation Fund, which will be maintained in a separate interest-bearing trust account, designated as a trust account, and Sino Iron and Korean Steel will make contributions into the Site Remediation Fund; and
(b) for each Operating Year, Mineralogy will “determine an annual charge on account of future Site Remediation Costs … having regard to … Mineralogy’s best prevailing estimate of the amount of future Site Remediation Costs … and the number of years remaining until Mine Closure”.

225

— F-58 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

3 Critical accounting estimates and judgements (Continued)

(l) Mineralogy Pty Ltd (“Mineralogy”) disputes (Continued)

Site Remediation Fund Dispute (Continued) On 22 October 2018, Mineralogy commenced a proceeding against the CITIC Parties in the Supreme Court of Western Australia (“Proceeding CIV 2840/2018”) concerning the Site Remediation Fund. Mineralogy claimed that the CITIC Parties are required to contribute AUD529,378,207 into the Site Remediation Fund established under the MRSLAs, as security for the performance of their obligations relating to the protection of the environment and rehabilitation.

While the CITIC Parties have always acknowledged their site remediation obligations and their obligations under clauses 20.5 and 20.6 of the MRSLAs, they disputed the amount claimed by Mineralogy. Among other arguments, the CITIC Parties considered that the amount demanded by Mineralogy was not an “annual charge” as required by clause 20.6 (e) of the MRSLAs. Further, the CITIC Parties did not consider that the amount demanded was a “best prevailing estimate” of future site remediation costs, as required by clause 20.6 (e) of the MRSLAs.

The CITIC Parties filed a defence and counterclaim in Proceeding CIV 2840/2018 seeking, among other things, orders appointing a trustee in place of Mineralogy and a declaration that the annual charge to be made by Sino Iron and Korean Steel in the operating year commencing on 1 July 2018 is AUD6,000,000 or such other amount determined by the Court.

The trial took place between 16 and 24 November 2020. On 24 February 2021, Justice K Martin published his reasons for decision. His Honour held that Mineralogy’s claim should be dismissed, and that the CITIC Parties’ counterclaim should be dismissed. His Honour found, consistent with the submissions of the CITIC Parties, that the formulation of an “annual charge” pursuant to clause 20.6 (e) requires Mineralogy to take its best prevailing estimate, subtract the amount already in the Site Remediation Fund, and then divide that amount by the number of years remaining until mine closure.

In its application to adjourn the hearing of the appeals against Justice K Martin’s decision to permanently stay the Minimum Production Royalty proceeding (Proceedings CACV 27/2020 and CACV 29/2020), Mineralogy and Mr. Palmer indicated that Mineralogy intends to appeal the decision of Justice K Martin in Proceeding CIV 2840/2018. No appeal has been commenced at this time.

226

— F-59 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

4 Taxation

The statutory income tax rate of the Company and its subsidiaries located in Hong Kong for the year ended 31 December 2020 is 16.5% (2019: 16.5%).

Except for the preferential tax treatments, the income tax rate applicable to the Group’s other subsidiaries in Mainland China for the year ended 31 December 2020 is 25% (2019: 25%).

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

5 Revenue

As a multi-industry conglomerate, the Group is principally engaging in comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption, new-type urbanisation.

For financial services segment, revenue mainly comprises net interest income, net fee and commission income and net trading gain (Notes 5 (a), 5 (b) and 5 (d)). For non-financial services segment, revenue mainly comprises income from sales of goods and services rendered to customers (Note 5 (c)).

The Group’s customer base is diversified and there is no single customer with which transactions have exceeded 10% of the Group’s revenue.

227

— F-60 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

5 Revenue (Continued)

(a) Net interest income

	For the year ended 31 December 2020 2019 HK$ million HK$ million 9,877 9,143 5,524 7,167 921 947 42,873 44,084 23,675 23,365 254,076 245,543 39 18 336,985 330,267 (6,506) (9,244) (26,982) (28,290) (2,963) (4,046) (2,558) (1,959) (101,809) (91,071) (23,457) (24,574) (542) (625) (150) (316) (164,967) (160,125) 172,018 170,142
	2020
	HK$ million
Interest income arising from(note): 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 in financial assets – Financial assets at amortised cost – Debt investments at FVOCI Loans and advances to customers and other parties Others
	9,877
	5,524
	921

	42,873
	23,675
	254,076
	39
	336,985
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 Lease liabilities Others
	(6,506)
	(26,982)
	(2,963)
	(2,558)
	(101,809)
	(23,457)
	(542)
	(150)
	(164,967)
Net interest income	172,018

Note:

Interest income includes interest income accrued on credit-impaired financial assets of HK$577 million for the year ended 31 December 2020 (2019: HK$411 million).

228

— F-61 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

5 Revenue (Continued)

(b) Net fee and commission income

enue(Continued) Net fee and commission income
	For the year ended 31 December 2020 2019 HK$ million HK$ million
	2020
	HK$ million
Guarantee and advisory fees Bank card fees (note) Settlement and clearing fees Agency fees and commission Trustee commission and fees Others	5,409	5,571 17,228 1,501 8,380 9,856 234
	16,515
	1,315
	8,479
	12,832
	264
Fee and commission expenses	44,814	42,770 (6,807) 35,963
	(5,636)
Net fee and commission income	39,178

Note:

According to the requirement of “Notice on strictly implementing accounting standards and effectively strengthening 2020 annual reports work” issued by the Ministry of Finance, State-owned Assets Supervision and Administration Commission of the State Council, China Banking and Insurance Regulatory Commission and China Securities Regulatory Commission, the Group recognised credit card installment income, which originally accounted in fee and commission income, as interest income and restated the comparatives.

(c) Sales of goods and services

Sales of goods and services	Sales of goods and services
For the year ended 31 December
2020	2019
HK$ million	HK$ million
Sales of goods 268,964 Services rendered to customers – Revenue from construction contracts 24,984	293,731 22,853
– Revenue from other services 29,860	27,492
323,808	344,076

229

— F-62 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

5 Revenue (Continued)

(d) Other revenue

enue(Continued) Other revenue	enue(Continued) Other revenue
For the year ended 31 December
2020	2019
HK$ million	HK$ million
Net trading gain (note (i)) 3,726 Net gain on investments in financial assets under financial services segment 14,082 Others 137	5,967 10,222 127
17,945	16,316

(i)	Net trading gain For the year ended 31 December 2020 2019 HK$ million HK$ million Trading profit/(loss): – debt securities and certificates of deposits 1,792 3,148 – foreign currencies 2,350 2,532 – derivatives (416) 287
	3,726 5,967

6 Costs of sales and services

Costs of sales and services	Costs of sales and services
For the year ended 31 December
2020	2019
HK$ million	HK$ million
Costs of goods sold 235,319 Costs of services rendered – Costs of construction contracts 22,528	244,888 20,341
– Costs of other services 18,458	17,919
276,305	283,148

230

— F-63 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

7 Other net income

Other net income	Other net income
For the year ended 31 December
2020	2019
HK$ million	HK$ million
Net gain on disposal/deemed disposal of subsidiaries, associates and joint ventures 4,718 Net (loss)/gain on investments in financial assets under non-financial services segment (816) Net foreign exchange (loss)/gain (864) Others 3,325	3,751 2,100 116 3,977
6,363	9,944

8 Expected credit losses

Expected credit losses	Expected credit losses
For the year ended 31 December 2020 2019 HK$ million HK$ million
Expected credit losses charged on/(reversed from): – deposits and placements with banks and non-bank financial institutions 10 – financial assets held under resale agreements 10 – account and bills receivables and other receivables 2,749 – loans and advances to customers and other parties 79,477 – investments in financial assets • financial assets at amortised cost 8,486 • debt investments at FVOCI 1,186 – impairment provision of credit commitments and guarantees provided 1,280 – others 3,729	(19) 48 1,444 78,951 4,060 772 1,261 2,205
96,927	88,722

231

— F-64 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

9 Impairment losses

Impairment losses
	For the year ended 31 December
	2020	2019
	HK$ million	HK$ million
Impairment losses charged on/(reversed from):
– inventories	18	1,720
– interests in associates	1,470	4,285
– interests in joint ventures	224	75
– fixed assets (note)	445	26
– intangible assets (note)	62	22
– prepayments	1	(1)
– goodwill	647	202
– others	782	695
	3,649	7,024

Note:

Iron Ore Project

The Group’s Iron Ore Project comprises the Sino Iron Project in Australia and its associated marketing operations in Singapore. Whenever events or circumstances indicate impairment may have occurred, the Group tests whether assets attributable to the Group’s Iron Ore Project have suffered any impairment.

The recoverable amount of the Sino Iron Project is based on the fair value less costs of disposal methodology which is based on cash flow projections that incorporate best estimates of selling prices, ore grades, exchange rates, production rates, future capital expenditure and production costs over the life of the mine. In line with normal practice in the mining industry, the cash flow projections are based on long term mine plans covering the expected life of the operation. Therefore, the projections cover periods well in excess of five years. Assumptions about selling prices, operating and capital costs, exchange rates, quantity of resources and discount rates are particularly important; the determination of the recoverable amount is relatively sensitive to changes in these important assumptions.

In accordance with the Group’s accounting policy, management has identified one CGU, the Sino Iron Project. For the purposes of testing for impairment, the carrying amount of the Sino Iron Project is to be compared with its recoverable amount when indication of impairment exit. Impairment is recognised when the carrying amount of the project exceeds its recoverable amount.

232

— F-65 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

9 Impairment losses (Continued)

Note (Continued):

An impairment assessment was undertaken on the Sino Iron Project by the Group as at 30 June 2019, with an update assessment on 31 December 2019 and no impairment was changed during the year ended 31 December 2019.

As at 31 December 2020, management performed an impairment indication assessment with the consideration of forecast iron ore prices, risk free interest rates, the production profile of the Sino Iron Project and exchange rate between Australian dollar and US dollar. According to the assessment, no impairment indication was identified and thus, no impairment test was undertaken for the Sino Iron Project as at 31 December 2020.

When an impairment test is undertaken, the fair value of CGU must be estimated for recognition and measurement or for disclosure purposes.

The disclosure is based on the following fair value measurement hierarchy:

Quoted prices (unadjusted) in active markets for identical or similar CGU (level 1);
Inputs other than quoted prices included within level that are observable for the CGU, either directly (as prices) or indirectly (derived from prices) (level 2); and
Inputs for the CGU that are not based on observable market data (unobservable inputs) (level 3 inputs).

The CGU’s fair value hierarchy is Level 3.

233

— F-66 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

10 Net finance charges

Net finance charges
	For the year ended 31 December
	2020	2019
	HK$ million	HK$ million
Finance costs
– Interest on bank and other loans	5,076	6,207
– Interest on debt instruments issued	5,946	5,786
– Interest and finance chargespaid/payable for lease liabilities	392	684
	11,414	12,677
Less: interest expense capitalised (note)	(567)	(349)
	10,847	12,328
Other finance charges	303	375
	11,150	12,703
Finance income	(1,266)	(2,264)
	9,884	10,439

Note:

Capitalisation rates applied to funds borrowed are 1.60% – 5.18% per annum for the year ended 31 December 2020 (2019: capitalisation rate of 2.60% – 5.65%).

234

— F-67 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

11 Profit before taxation

Profit before taxation is arrived at after charging below costs and expenses in cost of sales and services and other operating expenses:

(a) Staff costs

Staff costs	Staff costs
For the year ended 31 December
2020	2019
HK$ million	HK$ million
Salaries and bonuses 41,998	49,316
Contributions to defined contribution retirement schemes 4,152	5,248
Others 10,243	9,491
56,393	64,055

(b) Other items

	For the year ended 31 December	For the year ended 31 December
	2020	2019
	HK$ million	HK$ million
Amortisation	2,125	2,387
Depreciation	17,647	19,419
Lease charges	924	1,680
Tax and surcharges	2,799	2,673
Property management fees	1,108	1,372
Non-operating expenses	700	1,075
Professional fees (other than auditors’ remuneration)	1,057	1,356
Auditors’ remuneration
– Audit services	159	179
– Non-audit services	66	67
	26,585	30,208

235

— F-68 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

12 Income tax expense

(a) Income tax expense in the income statement

ome tax expense Income tax expense in the income statement
	For the year ended 31 December
	2020	2019
	HK$ million	HK$ million
Current tax – Mainland China
Provision for enterprise income tax	24,986	24,116
Land appreciation tax	113	118
Current tax – Hong Kong	25,099	24,234
Provision for Hong Kong profits tax	641	1,625
Current tax – Overseas
Provision for theyear	183	191
Deferred tax	25,923	26,050
Origination and reversal of temporarydifferences	(9,133)	(8,223)
	16,790	17,827

The particulars of the applicable income tax rates are disclosed in Note 4.

(b) Reconciliation between tax expense and accounting profit at applicable tax rates

	For the year ended 31 December 2020 2019 HK$ million HK$ million 97,718 96,015 (10,533) (8,083) (3,960) (5,474) 83,225 82,458 13,732 13,606 7,667 7,059 1,207 900 6,100 4,188 (11,766) (8,086) (150) 160 16,790 17,827
	2020
	HK$ million
Profit before taxation Less: Share of profits of – associates –joint ventures	97,718

	(10,533)
	(3,960)
	83,225
Notional tax on profit before taxation calculated at statutory tax rate of 16.5% Effect of different tax rates in other jurisdictions Tax effect of unused tax losses not recognised Tax effect of non-deductible expenses Tax effect of non-taxable income (note) Others	13,732
	7,667
	1,207
	6,100
	(11,766)
	(150)
Actual tax expense	16,790

Note:

The non-taxable income mainly contains interest income arising from PRC government bonds and local government bonds and dividends from equity investments.

236

— F-69 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

13 Benefits and interests of directors

(a) Directors’ emoluments

Emoluments paid or receivable in respect of a person’s services as a director, whether of the Company or its subsidiary undertaking for the year ended 31 December 2020 are set out as follows:

==> picture [444 x 464] intentionally omitted <==

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

For the year ended 31 December 2020
Emoluments paid or receivable in respect of a person’s services as a director, whether of the Company or its subsidiary Emoluments
paid or
receivable in
respect of
director’s
Remunerations other services
paid or in connection
receivable in with the
respect management
Estimated Social Employer’s of accepting of the affairs of
money value securities contribution office as the Company
Discretionary Housing of other in China to a retirement committee or its subsidiary
Fees Salary bonuses allowance benefits mainland benefit scheme member undertaking Total
HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million
Name of Current Directors
Executive Directors:
Zhu Hexin [i, ii] – 0.27 0.20 – – 0.06 0.06 – – 0.59
Xi Guohua [i, ii] – 0.18 0.13 – – 0.04 0.03 – – 0.38
Li Qingping [i] – 0.40 0.30 – 0.04 0.08 0.10 – – 0.92
Non-executive Directors:
– – – – – – – – – –
Song Kangle
– – – – – – – – – –
Liu Zhuyu
– – – – – – – – – –
Peng Yanxiang
– – – – – – – – – –
Yu Yang [ ii]
– – – – – – – – – –
Liu Zhongyuan
Yang Xiaoping 0.38 – – – – – – 0.15 – 0.53
Independent Non-executive Directors:
Francis Siu Wai Keung 0.38 – – – – – – 0.28 – 0.66
Xu Jinwu 0.38 – – – – – – 0.25 – 0.63
Anthony Francis Neoh 0.38 – – – – – – 0.25 – 0.63
Shohei Harada 0.38 – – – – – – – – 0.38
Gregory Lynn Curl 0.38 – – – – – – 0.05 – 0.43
Name of Former Directors
Chang Zhenming [ i, ii] – 0.10 0.08 – 0.01 0.08 0.10 – – 0.37
Wang Jiong [ i, ii] – 0.26 0.20 – 0.03 0.04 0.08 – – 0.61
– – – – – – – – – –
Yan Shuqin [ ii]
2.28 1.21 0.91 – 0.08 0.30 0.37 0.98 – 6.13
----- End of picture text -----

237

— F-70 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

13 Benefits and interests of directors (Continued)

(a) Directors’ emoluments (Continued)

Notes:

(i) The emoluments for the year ended 31 December 2020 in respect of Mr. Zhu Hexin, Mr. Chang Zhenming, Mr. Xi Guohua, Mr. Wang Jiong and Ms. Li Qingping have not been finalised in accordance with the regulations of the relevant local authorities.
(ii) Changes in directors during the year ended 31 December 2020:
(1) On 25 August 2020, Mr. Xi Guohua was appointed as Executive Director, Vice Chairman and President of the Company, and Mr. Wang Jiong resigned as Executive Director, Vice Chairman and President of the Company.
(2) On 25 August 2020, Ms. Yu Yang was appointed as Non-executive Director of the Company, and Ms. Yan Shuqin resigned as Non-executive Director of the Company.
(3) On 30 March 2020, Mr. Zhu Hexin was appointed as Chairman of the Board and Executive Director of the Company, and Mr. Chang Zhenming resigned as Chairman of the Board and Executive Director of the Company.

238

— F-71 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

13 Benefits and interests of directors (Continued)

(a) Directors’ emoluments (Continued)

Emoluments paid or receivable in respect of a person’s services as a director, whether of the Company or its subsidiary undertaking for the year ended 31 December 2019 are set out as follows:

	For the year ended 31 December 2019
	Emoluments paid or receivable in respect of a person’s services as a director, whether of the Company or its subsidiary Emoluments paid or receivable in respect of director’s other services in connection with the management of the affairs of the Company or its subsidiary undertaking Total Fees Salary Discretionary bonuses Housing allowance Estimated money value of other benefits Social securities in China mainland Employer’s contribution to a retirement benefit scheme Remunerations paid or receivable in respect of accepting office as committee member HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million
Name of Current Directors Executive Directors: Chang Zhenmingi – 0.40 0.45 – 0.03 0.15 0.08 – – 1.11 Wang Jiongi – 0.40 0.45 – 0.03 0.14 0.08 – – 1.10 Li Qingpingi – 0.36 0.40 – 0.03 0.15 0.08 – – 1.02 Non-executive Directors: Song Kangle – – – – – – – – – – Yan Shuqin – – – – – – – – – – Liu Zhuyu – – – – – – – – – – Peng Yanxiang – – – – – – – – – – Liu Zhongyuan – – – – – – – – – – Yang Xiaoping 0.38 – – – – – – 0.15 – 0.53 Independent Non-executive Directors: Francis Siu Wai Keung 0.38 – – – – – – 0.35 – 0.73 Xu Jinwu 0.38 – – – – – – 0.25 – 0.63 Anthony Francis Neoh 0.38 – – – – – – 0.25 – 0.63 Shohei Harada 0.38 – – – – – – – – 0.38 Gregory Lynn Curlii 0.29 – – – – – – 0.04 – 0.33 Name of Former Directors Wu Youguangii 0.03 – – – – – – – – 0.03 Pu Jianii – 0.09 0.10 – 0.01 0.04 0.02 – – 0.26 Lee Boo Jinii 0.09 – – – – – – 0.01 – 0.10 Paul Chow Man Yiuii 0.16 – – – – – – 0.02 – 0.18
2.47 1.25 1.40 – 0.10 0.48 0.26 1.07 – 7.03

239

— F-72 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

13 Benefits and interests of directors (Continued)

(a) Directors’ emoluments (Continued)

Notes:

(i) The emoluments for the year ended 31 December 2019 in respect of Mr. Chang Zhenming, Mr. Wang Jiong and Ms. Li Qingping were finalised in accordance with the regulations of the relevant local authorities. Further disclosure of which will be made as and when the relevant approval is obtained. Besides the emoluments mentioned above, the Company’s Remuneration Committee agrees the executive directors are entitled to allowances for working overseas and cross-border commuting: HK$0.219 million for Mr. Chang Zhenming, HK$0.219 million for Mr. Wang Jiong, HK$0.197 million for Ms. Li Qingping and HK$0.084 million for Pu Jian.
(ii) Changes in directors during the year ended 31 December 2019:
(1) In June 2019, Mr. Paul Chow Man Yiu retired as Independent Non-executive Director of the Company.
(2) In March 2019, Mr Gregory Lynn Curl was appointed as Independent Non-executive Director of the Company, and Ms. Lee Boo Jin resigned as Independent Non-executive Director of the Company.
(3) In February 2019, Mr. Pu Jian resigned as Executive Director of the Company.
(4) Mr. Wu Youguang was appointed as Non-executive Director of the Company in March 2018 and subsequently resigned in January 2019.

(b) Other benefits and interests

For the year ended 31 December 2020, no retirement benefits, payments or benefits in respect of termination of directors’ services were paid or made, directly or indirectly, to the directors; nor are any payable (2019: None). No consideration was provided to or receivable by third parties for making available directors’ services (2019: None). There are no loans, quasi-loans or other dealings in favour of the directors, their controlled bodies corporate and connected entities (2019: None).

No director of the Company had a material interest, directly or indirectly, in any significant transactions, arrangements and contracts in relation to the Company’s business to which the Company was or is a party that subsisted at the end of the year or at any time during the year ended 31 December 2020 (2019: None).

240

— F-73 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

14 Individuals with highest emoluments

For the year ended 31 December 2020, none of the five highest paid individuals are directors (2019: none) whose emoluments are disclosed in Note 13. The aggregate of the emoluments in respect of these five individuals (2019: five) are as follows:

For the year ended 31 December	For the year ended 31 December
2020	2019
HK$ million	HK$ million
Salaries and other emoluments 13.80	13.65
Discretionary bonuses 71.06 Retirement scheme contributions 0.14	65.33 0.48
85.00	79.46

The emoluments of the 5 individuals (2019: five) with the highest emoluments are within the following bands:

		For the year ended 31 December	For the year ended 31 December
		2020	2019
		Number of	Number of
		individuals	individuals
HK$11,500,001	to HK$12,000,000	1	–
HK$13,000,001	to HK$13,500,000	1	1
HK$14,000,001	to HK$14,500,000	–	1
HK$14,500,001	to HK$15,000,000	1	1
HK$16,000,001	to HK$16,500,000	–	1
HK$18,000,001	to HK$18,500,000	1	–
HK$21,000,001	to HK$21,500,000	–	1
HK$27,000,001	to HK$27,500,000	1	–
		5	5

241

— F-74 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

15 Dividends

Dividends	Dividends
For the year ended 31 December
2020	2019
HK$ million	HK$ million
2019 Final dividend paid: HK$0.285 (2018 Final: HK$0.26) per share 8,291 2020 Interim dividend paid: HK$0.10 (2019 Interim: HK$0.18) per share 2,909 2020 Final dividend proposed: HK$0.388 (2019 Final: HK$0.285)per share 11,287	7,563 5,236 8,291

16 Earnings per share

The calculation of basic earnings per share and diluted earnings per share are based on the profit attributable to ordinary shareholders of the Company of HK$56,628 million for the year ended 31 December 2020 (2019: HK$53,903 million) calculated as follows:

For the year ended 31 December 2020 2019 HK$ million HK$ million	For the year ended 31 December 2020 2019 HK$ million HK$ million
Profit attributable to ordinaryshareholders of the Company 56,628	53,903
Weighted average number of ordinaryshares (in million) 29,090	29,090

Diluted earnings per share for the year ended 31 December 2020 and 2019 are same with basic earnings per share. As at 31 December 2020, there are no share options or other equity securities of the Company in issue which if exercised would have a dilutive effect on the issued ordinary share capital as at 31 December 2020 (31 December 2019: Nil).

The basic earnings per share and diluted earnings per share for the year ended 31 December 2020 are HK$1.95 (2019: HK$1.85).

242

— F-75 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

17 Other comprehensive gain/(loss)

Components of other comprehensive gain/(loss)

	For the year ended 31 December 2020 2019 HK$ million HK$ million (4,576) 5,031 (3,281) (2,487) 2,018 (596) (5,839) 1,948 1,245 1,055 – – (302) (275) 943 780 (785) (665) 69 21 98 56 (618) (588) 448 85 59,738 (19,027) 57 1,485 – (368) 57 1,117 (44) (690) – 254 (44) (436) 54,685 (16,121)
	2020
	HK$ million
Items that may be reclassified subsequently to profit or loss: Fair value (loss)/gains on financial assets at FVOCI Less: Net amounts previously recognised in other comprehensive income transferred to profit or loss in the current year Tax effect
	(4,576)
	(3,281)
	2,018
	(5,839)
Allowance change for impairment losses on debt investments at FVOCI Less: Net amounts previously recognised in other comprehensive income transferred to profit or loss in the current year Tax effect	1,245
	–
	(302)
	943
Loss arising from cash flow hedge Less: Net amounts previously recognised in other comprehensive loss transferred to profit or loss in the current year Tax effect	(785)
	69
	98
	(618)
Share of other comprehensive income of associates andjoint ventures	448
Exchange differences on translation of financial statements and others	59,738
Items that will not be reclassified subsequently to profit or loss: Reclassification of owner-occupied property as investment property: revaluation gain Less: Tax effect
	57
	–
	57
Fair value loss on investments in equity instruments designated at FVOCI Less: Tax effect	(44)
	–
	(44)
	54,685

243

— F-76 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

18 Segment reporting

The Group has presented five reportable operating segments which are comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation. During the year ended 31 December 2020, the Group has made strategic adjustment based on the 14th Five-Year Plan. The Segment reporting for 2019 has been restated accordingly. 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 five reportable segments are as follows:

Comprehensive financial services: this segment includes banking, trust, asset management, securities and insurance services.
Advanced intelligent manufacturing: this segment includes manufacturing of heavy machineries, specialised robotics, aluminium wheels, aluminium casting parts and other products.
Advanced materials: this segment includes exploration, processing and trading of resources and energy products, including crude oil, coal and iron ore, as well as manufacturing of special steels.
New consumption: this segment includes motor and food and consumer products business, telecommunication services, publication services, modern agriculture, and others.
New-type urbanisation: this segment includes development, sale and holding of properties, contracting and design services, infrastructure services, environmental 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 and liabilities, revenue and expenses 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.

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.

244

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CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

18 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 2020 and 2019 is set out below:

	For the year ended 31 December 2020 Comprehensive financial services Advanced intelligent manufacturing Advanced materials New consumption New-type urbanisation Operation management Elimination Total HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million
Revenue from external customers	229,103 13,759 195,754 70,056 44,224 53 – 552,949
Inter-segment revenue	(14) 222 345 91 1,246 163 (2,053) –
Reportable segment revenue	229,089 13,981 196,099 70,147 45,470 216 (2,053) 552,949
Disaggregation of revenue:
– Net interest income (Note 5 (a))	171,965 – – – – 114 (61) 172,018
– Net fee and commission
income(Note 5 (b))	39,201 – – – – 1 (24) 39,178
– Sales of goods (Note 5 (c))	– 13,364 192,735 55,896 7,531 – (562) 268,964
– Services rendered to customers-
construction contracts (Note 5 (c))	– 520 – – 25,233 – (769) 24,984
– Services rendered to customers-
others (Note 5 (c))	– 97 3,364 14,251 12,706 14 (572) 29,860
– Other revenue (Note 5 (d))	17,923 – – – – 87 (65) 17,945
Share of profits/(losses) of associates,
net of tax	4,233 307 1,466 121 4,424 (18) – 10,533
Share of profits/(losses) of joint
ventures, net of tax	1,234 (1) (265) 87 2,837 68 – 3,960
Finance income (Note 10)	– 157 249 89 1,021 853 (1,103) 1,266
Finance costs (Note 10)	– (300) (2,067) (1,053) (1,372) (7,797) 1,439 (11,150)
Depreciation and amortisation
(Note 11 (b))	(7,193) (583) (6,615) (3,860) (1,448) (73) – (19,772)
Expected credit losses (Note 8)	(94,167) (103) 16 (277) (1,812) (584) – (96,927)
Impairment losses (Note 9)	(575) (136) (1,073) (313) (1,552) – – (3,649)
Profit/(loss) before taxation	76,087 588 14,421 1,770 11,711 (6,880) 21 97,718
Income tax (Note 12)	(10,650) 35 (2,958) (492) (1,791) (920) (14) (16,790)
Profit/(loss) for the year	65,437 623 11,463 1,278 9,920 (7,800) 7 80,928
Attributable to:
– Ordinary shareholders of
the Company	43,516 453 10,149 894 9,409 (7,800) 7 56,628
– Non-controlling interests	21,921 170 1,314 384 511 – – 24,300

245

— F-78 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

18 Segment reporting (Continued)

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

==> picture [444 x 228] intentionally omitted <==

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

||||||||||
|---|---|---|---|---|---|---|---|---|
|As at 31 December 2020|
|Comprehensive|Advanced|
|financial|intelligent|Advanced|New|New-type|Operation|
|services|manufacturing|materials|consumption|urbanisation|management|Elimination|Total|
|HK$ million|HK$ million|HK$ million|HK$ million|HK$ million|HK$ million|HK$ million|HK$ million|
|Reportable segment assets|9,113,747|58,719|239,155|76,157|309,736|161,818|(218,504)|9,740,828|
|Including:|
|–|
|Interests in associates (Note 29)|47,156|1,050|22,361|10,151|48,360|1,962|131,040|
|Interests in joint ventures|
|(Note 30)|14,878|7|7,144|1,875|24,742|1,641|–|50,287|
|Reportable segment liabilities|8,353,514|39,574|250,098|38,529|138,696|236,525|(324,750)|8,732,186|
|Including:|
|Bank and other loans|
|(Note 42) (note)|2,382|15,867|53,753|10,301|39,217|82,529|(40,878)|163,171|
|Debt instruments issued|
|(Note 43) (note)|872,734|–|772|3,496|360|121,736|(30,567)|968,531|

----- End of picture text -----

Note:

The amount is the principal excluding interest accrued.

246

— F-79 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

18 Segment reporting (Continued)

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

For the year ended 31 December 2019 (Restated)

	Comprehensive	Advanced
	financial	intelligent	Advanced	New	New-type	Operation
	services	manufacturing	materials	consumption	urbanisation	management	Elimination	Total
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Revenue from external customers	222,316	35,942	178,399	89,017	40,718	105	–	566,497
Inter-segment revenue	212	306	48	95	148	24	(833)	–
Reportable segment revenue	222,528	36,248	178,447	89,112	40,866	129	(833)	566,497
Disaggregation of revenue:
– Net interest income (Note 5 (a))	170,223	–	–	–	–	111	(192)	170,142
– Net fee and commission
income(Note 5 (b))	35,985	–	–	–	–	7	(29)	35,963
– Sales of goods (Note 5 (c))	–	34,158	175,903	74,019	9,750	–	(99)	293,731
– Services rendered to customers-
construction contracts (Note 5 (c))	–	1,002	–	–	21,875	–	(24)	22,853
– Services rendered to customers-
others (Note 5 (c))	–	1,088	2,544	15,093	9,241	–	(474)	27,492
– Other revenue (Note 5 (d))	16,320	–	–	–	–	11	(15)	16,316
Share of profits/(losses) of associates,
net of tax	3,249	63	744	3	4,295	(271)	–	8,083
Share of profits of joint ventures,
net of tax	1,194	–	1,555	295	2,303	127	–	5,474
Finance income (Note 10)	–	264	287	71	1,427	1,499	(1,284)	2,264
Finance costs (Note 10)	–	(509)	(2,610)	(1,668)	(1,425)	(8,139)	1,648	(12,703)
Depreciation and amortisation
(Note 11 (b))	(6,972)	(1,315)	(6,296)	(5,932)	(1,238)	(53)	–	(21,806)
Expected credit losses (Note 8)	(88,009)	(58)	(22)	(92)	(578)	37	–	(88,722)
Impairment losses (Note 9)	(1,735)	(79)	(45)	(371)	(4,200)	(594)	–	(7,024)
Profit/(loss) before taxation	73,683	1,360	12,035	3,465	10,514	(5,045)	3	96,015
Income tax (Note 12)	(10,150)	(163)	(2,416)	(1,014)	(1,968)	(2,101)	(15)	(17,827)
Profit/(loss) for the year	63,533	1,197	9,619	2,451	8,546	(7,146)	(12)	78,188
Attributable to:
– Ordinary shareholders of
the Company	42,845	1,132	7,925	1,134	8,025	(7,146)	(12)	53,903
– Non-controlling interests	20,688	65	1,694	1,317	521	–	–	24,285

247

— F-80 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

18 Segment reporting (Continued)

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

			As	at 31	December	2019 (Restated)
	Comprehensive	Advanced
	financial	intelligent	Advanced		New	New-type	Operation
	services	manufacturing	materials	consumption		urbanisation	management	Elimination	Total
	HK$ million	HK$ million	HK$ million	HK$ million		HK$ million	HK$ million	HK$ million	HK$ million
Reportable segment assets	7,703,980	27,930	227,711		98,713	277,700	162,748	(208,858)	8,289,924
Including:
Interests in associates (Note 29)	42,267	4,787	22,024		8,700	43,807	1,760	–	123,345
Interests in joint ventures (Note 30)	9,871	–	6,490		1,825	21,121	1,656	–	40,963
Reportable segment liabilities	7,027,882	14,932	233,401		69,029	129,800	228,377	(307,988)	7,395,433
Including:
Bank and other loans
(Note 42) (note)	3,927	7,342	53,264		11,673	31,874	83,431	(40,833)	150,678
Debt instruments issued
(Note 43) (note)	725,589	141	670		3,493	352	115,644	(27,860)	818,029

Note:

The amount is the principal excluding interest accrued.

248

— F-81 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

18 Segment reporting (Continued)

(b) Geographical information

An analysis of the Group’s revenue and total assets by geographical area are as follows:

	Revenue from external customers	Revenue from external customers	Reportable segment assets	Reportable segment assets
	For the year ended	31 December	As at 31 December
	2020	2019	2020	2019
	HK$ million	HK$ million	HK$ million	HK$ million
Mainland China	464,968	454,970	9,078,635	7,643,658
Hong Kong, Macau and
Taiwan	46,430	46,494	543,279	538,872
Overseas	41,551	65,033	118,914	107,394
	552,949	566,497	9,740,828	8,289,924

19 Cash and deposits

Cash and deposits
	As at 31 December
	2020	2019
	HK$ million HK$ million
Cash	7,108	7,144
Bank deposits	57,468	50,916
Balances with central banks (note (i)):
– Statutory deposit reserve funds (note (ii))	439,860	397,724
– Surplus deposit reserve funds (note (iii))	67,975	108,958
– Fiscal deposits (note (iv))	1,246	2,109
– Foreign exchange reserves (note (v))	3,802	3,438
Deposits with banks and non-bank financial institutions	177,241	169,119
	754,700	739,408
Accrued interest	841	1,185
Less: allowance for impairment losses on deposits with banks	755,541	740,593
and non-bank financial institutions (Note 46)	(155)	(159)
	755,386	740,434

249

— F-82 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

19 Cash and deposits (Continued)

Notes:

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

As at 31 December 2020, the statutory deposit reserve funds placed by CITIC Bank with the People’s Bank of China was calculated at 9% (31 December 2019: 9.5%) of eligible RMB deposits for domestic branches of CITIC Bank and at 9% (31 December 2019: 9.5%) of eligible RMB deposits from overseas financial institutions respectively. In addition, CITIC Bank is required to deposit an amount equivalent to 5% (31 December 2019: 5%) of its foreign currency deposits from domestic branch customers as statutory deposit reserve funds as at 31 December 2020.

As at 31 December 2020, the statutory RMB deposit reserve rate applicable to Zhejiang Lin’an CITIC Rural Bank Corporation Limited, a subsidiary of CITIC Bank, according to the corresponding regulations of the People’s Bank of China, was at 6% (31 December 2019: 7.5%).

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 2020, the statutory deposit reserve funds placed by CITIC Finance with the People’s Bank of China was calculated at 6% (31 December 2019: 6%) of eligible RMB deposits from the customers of CITIC Finance. As at 31 December 2020, CITIC Finance is also required to deposit an amount equivalent to 5% (31 December 2019: 5%) of its foreign currency deposits from the customers as statutory deposit reserve funds.

(iii) The surplus deposit reserve funds are maintained with the People’s Bank of China for the purposes of clearing.
(iv) Fiscal deposits placed with the People’s Bank of China are not available for use in the Group’s daily operations, and are non-interest bearing.
(v) 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. The reserve is payable on a monthly basis at 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.
(vi) In addition to the statutory deposit reserve funds, fiscal deposits and foreign exchange reserves, HK$7,687 million (31 December 2019: HK$2,635 million) included in cash and deposits as at 31 December 2020 were restricted in use, mainly including guaranteed pledged bank deposits and guaranteed deposits.

250

— F-83 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

20 Placements with banks and non-bank financial institutions

	As at 31 December
	2020	2019
	HK$ million HK$ million
Banks	94,601	93,860
Non-bank financial institutions	102,414	131,555
	197,015	225,415
Accrued interest	1,614	1,361
	198,629	226,776
Less: allowance for impairment losses (Note 46)	(116)	(90)
	198,513	226,686
Analysed by remaining maturity:
– Within 1 month	99,818	139,968
– Between 1 month and 1 year	89,830	69,316
– Over 1year	7,367	16,131
	197,015	225,415
Accrued interest	1,614	1,361
	198,629	226,776
Less: allowance for impairment losses (Note 46)	(116)	(90)
	198,513	226,686

21 Derivative financial instruments

The Group’s subsidiaries under the financial services segment act as an intermediary to offer derivative products including forwards, swaps and option transactions. 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 to manage its own asset and liability and structural positions. Derivatives, except for those which are designated as hedging instruments, are held for trading. Derivatives classified as held for trading are for trading and customer initiated transactions purpose, and those for risk management purposes but do not meet the criteria for hedge accounting.

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.

251

— F-84 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

21 Derivative financial instruments (Continued)

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 provide a basis for comparison with fair values of derivatives recognised on the consolidated statement of financial position but do not necessarily indicate the amounts of future cash flows involved or the current fair values of the derivatives and, therefore, do not indicate the Group’s exposure to credit or market risks. Hedging instruments are derivatives used as hedge accounting, and non-hedging instruments are derivatives not used as hedge accounting.

As at 31 December

	As at 31 December
	2020	2019
	Nominal amount Assets Liabilities Nominal amount	Assets	Liabilities
	HK$ million HK$ million HK$ million HK$ million	HK$ million	HK$ million
Hedging instruments
Fair value hedge (Note 2 (j)(i)):
– Interest rate derivatives	– – – 3,227	16	18
– Currency derivatives	464 – 10 807	–	71
Cash flow hedge (Note 2 (j)(ii)):
– Interest rate derivatives	13,182 – 2,068 13,382	4	1,666
– Currency derivatives	1,059 – 16 231	–	5
– Other derivatives	1,302 72 51 1,406	356	29
Non-hedging instruments
– Interest rate derivatives	3,633,451 11,163 10,856 3,218,877	5,792	5,760
– Currency derivatives	2,351,464 36,175 36,313 1,691,109	13,175	12,345
– Precious metals derivatives	22,866 362 99 14,194	237	817
– Other derivatives	11,274 32 395 9,928	–	52
	6,035,062 47,804 49,808 4,953,161	19,580	20,763

252

— F-85 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

21 Derivative financial instruments (Continued)

(a) Nominal amount analysed by remaining maturity

ivative financial instruments(Continued) Nominal amount analysed by remaining maturity
As at 31	December
2020	2019
HK$ million	HK$ million
Within 3 months 2,321,724	1,962,082
Between 3 months and 1 year 2,457,596 Between 1 year and 5 years 1,220,322 Over 5years 35,420	1,958,516 1,011,931 20,632
6,035,062	4,953,161

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

(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 and Insurance 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 2020, the credit risk weighted amount for counterparty was HK$27,546 million (31 December 2019: HK$16,333 million).

22 Trade and other receivables

Trade and other receivables	Trade and other receivables
As at 31 December 2020 2019 HK$ million HK$ million
Account and bills receivables (note (a)) 58,587 Advanced payments and settlement accounts (note (b)) 20,772 Prepayments, deposits and other receivables (note (c)) 100,051	51,393 39,290 83,207
179,410 Less: allowance for impairment losses (Note 46) (9,687)	173,890 (6,463)
169,723	167,427

As at 31 December 2020, the amount of the Group’s prepayments, deposits and other receivables expected to be recovered or recognised as expense after more than one year is HK$5,385 million (31 December 2019: HK$7,382 million). The remaining trade and other receivables are expected to be recovered or recognised as expense within one year.

253

— F-86 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

22 Trade and other receivables (Continued)

(a) Account and bills receivables

(i) Account and bills receivables at amortised cost by overdue analysis

The Group applies the HKFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all account and bills receivables. As at the balance sheet date, the analysis of account and bills receivables at amortised cost of the Group based on the days overdue is as follows:

==> picture [421 x 140] intentionally omitted <==

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

|||||
|---|---|---|---|
|As at 31 December 2020|
|Expected|Gross|Loss|
|credit loss|carrying|allowance|
|rate|amount|provision|
|HK$ million|HK$ million|
|Current|2%|27,174|(611)|
|Up to 3 months overdue|2%|1,548|(33)|
|3 months to 1 year overdue|4%|2,431|(106)|
|Over 1 year overdue|47%|10,274|(4,808)|
|41,427|(5,558)|

----- End of picture text -----

==> picture [421 x 133] intentionally omitted <==

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

|||||
|---|---|---|---|
|As at 31 December 2019|
|Expected|Gross|Loss|
|credit loss|carrying|allowance|
|rate|amount|provision|
|HK$ million|HK$ million|
|Current|1%|24,253|(281)|
|Up to 3 months overdue|11%|2,305|(249)|
|3 months to 1 year overdue|6%|815|(51)|
|Over 1 year overdue|30%|9,605|(2,899)|
|36,978|(3,480)|

----- End of picture text -----

Note:

Each business unit has its own defined credit policy that is specific to the respective business environment and market practice.

254

— F-87 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

22 Trade and other receivables (Continued)

(a) Account and bills receivables (Continued)

(ii) Account and bills receivables at amortised cost by ageing analysis

As at 31 December 2020 and 2019, the ageing analysis of account and bills receivables at amortised cost of the Group based on invoice date is as follows:

As at 31 December
2020	2019
HK$ million HK$	million
Within 1 year 29,618 Over 1year 11,809	26,884 10,094
41,427	36,978
Less: allowance for impairment losses (Note 46) (5,558)	(3,480)
35,869	33,498

(iii) As at 31 December 2020, the carrying amount of bills receivables at FVOCI was HK$17,160 million (31 December 2019: HK$14,415 million).
(iv) The movements in the allowance for impairment losses on trade and other receivables during the years ended 31 December 2020 and 2019 are disclosed in Note 46.
(b) Advanced payments and settlement accounts

	As at 31 December
	2020	2019
	HK$ million HK$	million
Advanced payments and settlement accounts	20,772	39,290
Less: allowance for impairment losses (Note 46)	(377)	(307)
	20,395	38,983
Prepayments, deposits and other receivables
	As at 31 December
	2020	2019
	HK$ million HK$	million
Prepayments, deposits and other receivables	100,051	83,207
Less: allowance for impairment losses (Note 46)	(3,752)	(2,676)
	96,299	80,531

(c) Prepayments, deposits and other receivables

255

— F-88 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

23 Contract assets and contract liabilities

The Group has recognised the following assets and liabilities related to contracts with customers:

	As at 31 December
	2020	2019
	HK$ million HK$	million
Contract assets	13,636	11,511
Less: Allowance for impairment losses (note(a))	(17)	(7)
Total contract assets	13,619	11,504
Advances from contracts with customers	28,092	21,380
Total contract liabilities	28,092	21,380

(a) Assessment of allowance for impairment losses of contract

As at 31 December
2020	2019
HK$ million HK$	million
Expected credit loss rate (note) 0.12% Gross carrying amount 13,636 Loss allowanceprovision (17)	0.06% 11,511 (7)

Note:

The ECL rate here is the average rate of loss allowance provision divided by gross carrying amount.

(b) Revenue recognised during the year that related to carried-forward contract liabilities

	For the	year ended 31 December	year ended 31 December
		2020	2019
	HK$	million	HK$ million
Revenue from contracts with customers		15,106	7,480

As at 31 December 2020, transaction price allocated to unsatisfied contracts of the Group amounted at HK$110,068 million (2019: HK$76,132 million), of which HK$41,218 million is expected to be recognised as revenue in the next year (2019: HK$28,491 million) and the remaining HK$68,850 million is expected to be recognised after more than one year(2019: HK$47,641 million).

256

— F-89 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

24 Inventories

Inventories
	As at 31	December
	2020		2019
	HK$ million	HK$	million
Raw materials	8,567		6,384
Work-in-progress	8,116		5,898
Finished goods	20,370		16,340
Properties:
– Properties under development	29,414		14,818
– Properties held-for-sale	5,717		5,166
– Others	4,747		3,371
Others	3,439		2,758
	80,370		54,735

The analysis of the amount of inventories recognised as an expense and included in profit or loss is as follows:

For the year ended 31 December	For the year ended 31 December
2020	2019
HK$ million	HK$ million
Carrying amount of inventories sold 235,319 Write-down of inventories (Note 46) 628	244,888 2,323
Reversal of write-down of inventories (Note 46) (610)	(603)
235,337	246,608

As at 31 December 2020, the Group’s inventories included an amount of HK$34,322 million expected to be recovered after more than one year (31 December 2019: HK$18,546 million).

257

— F-90 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

25 Financial assets held under resale agreements

	As at 31 December
	2020	2019
	HK$ million HK$	million
Analysed by counterparties:
– Banks	72,173	11,164
– Non-bank financial institutions	70,904	5
	143,077	11,169
Accrued interest	18	1
	143,095	11,170
Less: allowance for impairment losses (Note 46)	(66)	(53)
	143,029	11,117

Analysed by types of collateral:

As at 31 December 2020, the collateral of the Group’s financial assets held under resale agreements are securities and notes (31 December 2019: all securities).

Analysed by remaining maturity:

As at 31 December 2020, the Group’s financial assets held under resale agreements will expire within one month (31 December 2019: within one month).

258

— F-91 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

26 Loans and advances to customers and other parties

(a) Loans and advances to customers and other parties analysed by nature


	2020
	HK$ million
Loans and advances to customers and other parties at amortised cost Corporate loans: – Loans – Discounted bills – Finance lease receivables


	2,543,662
	7,947
	51,910
	2,603,519
Personal loans: – Residential mortgages – Credit cards – Personal consumption – Business loans
	1,088,732
	576,969
	243,052
	337,643
	2,246,396
Accrued interest	4,849,915

	15,182
Less: allowance for impairment losses (Note 46)	4,865,097

	(156,218)
Carrying amount of loans and advances to customers and otherparties at amortised cost	4,708,879
Loans and advances to customers and other parties at FVPL Personal loans

	8,465
Loans and advances to customers and other parties at FVOCI Corporate loans: – Loans 3,203 – Discounted bills 485,608
Carrying amount of loans and advances to customers and otherparties at FVOCI 488,811
Total carrying amount of loans and advances 5,206,155
Allowance for impairment losses on loans and advances to customers and otherparties at FVOCI (Note 46) (653)

259

— F-92 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

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

(b) Assessment method of allowance for impairment losses

As at 31 December 2020

	Stage 1	Stage 2	Stage 3 (note)	Total Gross loans and advances at stage 3 as a percentage of gross total loans and advances
	HK$ million	HK$ million	HK$ million	HK$ million
Loans and advances at amortised cost Accrued interest Less: allowance for impairment losses	4,627,830	127,027	95,058	4,849,915 1.78%
	13,169	1,799	214	15,182
	(51,887)	(39,607)	(64,724)	(156,218)
Carrying amount of loans and advances at amortised cost	4,589,112	89,219	30,548	4,708,879
Carrying amount of loans and advances at FVOCI	488,704	97	10	488,811
Total carrying amount of loans and advances for which allowance for impairment losses is recognised 5,077,816		89,316	30,558	5,197,690
Allowance for impairment losses of loans and advances at FVOCI (640)		(5)	(8)	(653)

260

— F-93 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

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

(b) Assessment method of allowance for impairment losses (Continued)

As at 31 December 2019

	Stage 1 HK$ million	Stage 2 HK$ million	Stage 3 (note) HK$ million	Total Gross loans and advances at stage 3 as a percentage of gross total loans and advances HK$ million
Loans and advances at amortised cost Accrued interest Less: allowance for impairment losses	3,948,280 10,513 (43,509)	110,636 863 (30,234)	77,902 12 (60,258)	4,136,818 1.73% 11,388 (134,001) 4,014,205 344,715 4,358,920 (521)
Carrying amount of loans and advances at amortised cost	3,915,284	81,265	17,656
Carrying amount of loans and advances at FVOCI	344,630	53	32
Total carrying amount of loans and advances for which allowance for impairment losses is recognised 4,259,914		81,318	17,688
Allowance for impairment losses of loans and advances at FVOCI (505)		–	(16)

Notes: Loans and advances at stage 3 are credit-impaired, details are as follows:

As at 31 December
2020	2019
HK$ million	HK$ million
Secured portion 61,482 Unsecured portion 33,800	46,686 31,260
Total loans and advances that are credit-impaired 95,282 Allowance for impairment losses (64,732)	77,946 (60,274)

As at 31 December 2020, the maximum exposure covered by fair value of pledge and collateral held against these loans and advances amounted to HK$62,425 million (31 December 2019: HK$48,141 million).

261

— F-94 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

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

(c) Overdue loans by overdue period

	Overdue within 3 months HK$ million	As at 31 December Overdue between 3 months and 1 year Overdue between 1 year and 3 years HK$ million HK$ million	As at 31 December Overdue between 3 months and 1 year Overdue between 1 year and 3 years HK$ million HK$ million	2020 Overdue over 3 years HK$ million	Total HK$ million
Unsecured loans	19,616	10,984	538	535	31,673
Guaranteed loans	4,460	9,152	3,224	362	17,198
Secured loans
– Loans secured by collateral	11,021	20,206	14,390	1,196	46,813
– Pledged loans	10,691	788	2,143	346	13,968
	45,788	41,130	20,295	2,439	109,652
		As at 31 December		2019
		Overdue	Overdue
	Overdue	between	between
	within	3 months	1 year and	Overdue
	3 months	and 1 year	3 years	over 3 years	Total
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Unsecured loans	19,179	11,734	1,682	160	32,755
Guaranteed loans	11,558	7,089	4,679	256	23,582
Secured loans
– Loans secured by collateral	27,873	12,429	12,067	2,498	54,867
– Pledged loans	2,723	2,082	1,438	113	6,356
	61,333	33,334	19,866	3,027	117,560

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

262

— F-95 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

27 Investments in financial assets

(a) Analysed by types

estments in financial assets Analysed by types	estments in financial assets Analysed by types

	2020
	HK$ million
Financial assets at amortised cost Debt securities Investment management products managed by securities companies Trust investment plans Certificates of deposit and certificates of interbank deposit Wealth management products Investments in creditor’s rights on assets Others
	838,502
	83,946
	231,843
	5,606
	–
	96
	1,803
Accrued interest	1,161,796

	12,162
Less: allowance for impairment losses (Note 46)	1,173,958

	(17,462)
	1,156,496
Financial assets at FVPL Debt securities Investment management products managed by securities companies Trust investment plans Certificates of deposit and certificates of interbank deposit Wealth management products Investment funds Equity investment Others
	68,495
	3,338
	3,960
	59,329
	6,532
	367,787
	18,546
	306
	528,293
Debt investments at FVOCI (note (i)) Debt securities Certificates of deposit and certificates of interbank deposit Investment management products managed by securities companies
	806,506
	5,192
	40,751
Accrued interest	852,449

	7,806
	860,255
Allowance for impairment losses on debt investments at FVOCI (3,148)
Equity investments at FVOCI (note (i)) Equity investment Investment funds
	7,639
	384
	8,023
	2,553,067

263

— F-96 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

27 Investments in financial assets (Continued)

(a) Analysed by types (Continued)

Notes:

(i) Financial assets measured at FVOCI.

	Equity instruments HK$ million	As at 31 December 2020 Debt instruments Total HK$ million HK$ million	As at 31 December 2020 Debt instruments Total HK$ million HK$ million
Cost/amortised cost Accumulative fair value change in OCI Accrued interest	9,034 (1,011) –	851,767 682 7,806	860,801 (329) 7,806
Carrying amount	8,023	860,255	868,278
Allowance for impairment losses (Note 46)	N/A	(3,148)	(3,148)

		As at 31 December 2019
	Equity instruments	Debt instruments	Total
	HK$ million	HK$ million	HK$ million
Cost/amortised cost	7,931	685,475	693,406
Accumulative fair value change in OCI	(911)	8,512	7,601
Accrued interest	–	7,949	7,949
Carrying amount	7,020	701,936	708,956
Allowance for impairment losses (Note 46)	N/A	(1,820)	(1,820)

264

— F-97 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

27 Investments in financial assets (Continued)

(b) Analysed by counterparties

estments in financial assets(Continued) Analysed by counterparties	estments in financial assets(Continued) Analysed by counterparties
As at 31 December 2020 2019 HK$ million HK$ million
Issued by: – Government 998,531 – Policy banks 140,995 – Banks and non-bank financial institutions 1,228,437 – Corporates 162,058 – Public entities 3,078	753,257 110,331 1,100,440 170,267 405
2,533,099 Accrued interest 19,968	2,134,700 19,029
2,553,067	2,153,729
– Listed in Hong Kong 59,687 – Listed outside Hong Kong 2,010,976 – Unlisted 462,436	55,218 1,586,899 492,583
2,533,099 Accrued interest 19,968	2,134,700 19,029
2,553,067	2,153,729

Bonds traded in China’s inter-bank bond market are “listed outside Hong Kong”.

265

— F-98 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

27 Investments in financial assets (Continued)

Stage 1 HK$ million	Stage 1 HK$ million	As at 31 December 2020	As at 31 December 2020
		Stage 2	Stage 3	Total
		HK$ million	HK$ million	HK$ million
Gross carrying amount of investments in financial assets at amortised cost 1,122,763 Accrued interest 11,925 Less: allowance for impairment losses (4,416)		5,158	33,875	1,161,796
	11,925	237	–	12,162
	(4,416)	(653)	(12,393)	(17,462)
Carrying amount of investments in financial assets at amortised cost	1,130,272	4,742	21,482	1,156,496
Gross carrying amount of debt investments in financial assets at FVOCI Accrued interest	851,754	155	540	852,449
	7,766	1	39	7,806
Carrying amount of debt investments in financial assets at FVOCI	859,520	156	579	860,255
Total carrying amount of investments in financial assets for which allowance for impairment losses is recognised	1,989,792	4,898	22,061	2,016,751
Allowance for impairment losses on debt investments in financial assets at FVOCI	(1,784)	(2)	(1,362)	(3,148)

266

— F-99 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

27 Investments in financial assets (Continued)

(c) Analysed by assessment method of allowance for impairment losses (Continued)

Analysed by assessment met	hod of allowa	nce for impairment losses	nce for impairment losses	(Continued)
	Stage 1 HK$ million	As at 31 December 2019 Stage 2 Stage 3 HK$ million HK$ million		Total HK$ million 1,038,587 11,080 (8,670) 1,040,997 693,987 7,949 701,936 1,742,933 (1,820)
Gross carrying amount of investments in financial assets at amortised cost Accrued interest Less: allowance for impairment losses	1,015,265 10,995 (4,212)	12,709 85 (515)	10,613 – (3,943)
Carrying amount of investments in financial assets at amortised cost	1,022,048	12,279	6,670
Gross carrying amount of debt investments in financial assets at FVOCI Accrued interest	693,626 7,949	138 –	223 –
Carrying amount of debt investments in financial assets at FVOCI	701,575	138	223
Total carrying amount of investments in financial assets for which allowance for impairment losses is recognised	1,723,623	12,417	6,893
Allowance for impairment losses on debt investments in financial assets at FVOCI	(1,486)	(3)	(331)

267

— F-100 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

28 Subsidiaries

The particulars of the principal subsidiaries are set out in Note 59.

The following table lists out the information relating to CITIC Bank, CITIC Heavy Industries Co., Limited (“CITIC Heavy Industries”), CITIC Telecom International Holdings Limited (“CITIC Telecom International”) and CITIC Resources Holdings Limited (“CITIC Resources”), which are listed subsidiaries of the Group and have material non-controlling interests. The summarised financial information below is before elimination of inter-group transactions and balances:

		As at 31	December
	CITIC Bank	CITIC Heavy Industries	CITIC Telecom International	CITIC Resources
	2020	2019 2020 2019	2020 2019	2020	2019
	HK$ million HK$ million HK$ million HK$ million		HK$ million HK$ million	HK$ million	HK$ million
Listed in:	Hong Kong and Shanghai Shanghai		Hong Kong	Hong	Kong
Non-controlling interests percentage	34.03%	34.03% 32.73% 32.73%	41.89% 41.81%	40.50%	40.50%
Total assets	8,924,435 7,535,815 24,015 23,220		18,334 18,376	12,275	12,668
Mainly including:
Cash and deposits	675,539	652,454 2,950 4,103	1,519 1,313	2,356	1,635
Placements with banks and non-
bank financial institutions	200,062	228,345 – –	– –	–	–
Derivative financial assets	47,602	19,109 – –	– –	72	356
Financial assets held under resale
agreements	132,016	11,112 – –	– –	–	–
Loans and advances to customers
and other parties	5,180,595 4,345,489 – –		– –	–	–
Investments in financial assets	2,486,493 2,091,581 811 918		– –	–	–
Fixed assets	40,240	24,975 5,889 5,629	2,705 2,435	3,482	3,004
ROU assets	12,633	12,769 117 32	706 695	94	102

268

— F-101 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

28 Subsidiaries (Continued)

Subsidiaries(Con	tinued)
		As at 31	December
	CITIC Bank	CITIC Heavy Industries	CITIC Telecom International	CITIC Resources
	2020	2019 2020 2019	2020 2019	2020	2019
	HK$ million HK$ million HK$ million HK$ million		HK$ million HK$ million	HK$ million	HK$ million
Total liabilities	(8,259,024) (6,941,336) (14,923) (14,862)		(8,525) (8,950)	(6,508)	(6,475)
Mainly including:
Borrowing from central banks	(266,611)	(268,256) – –	– –	–	–
Deposits from banks and non-bank
financial institutions	(1,382,588) (1,061,781) – –		– –	–	–
Placements from banks and non-
bank financial institutions	(68,623)	(103,306) – –	– –	–	–
Trade and other payables	–	– (2,789) (2,734)	(817) (946)	(114)	(137)
Derivative financial liabilities	(47,299)	(18,795) – –	– –	(14)	(7)
Financial assets sold under
repurchase agreements	(89,434)	(124,849) – –	– –	–	–
Deposits from customers	(5,432,591) (4,547,163) – –		– –	–	–
Bank and other loans	–	– (6,380) (7,352)	(2,303) (2,716)	(4,815)	(5,053)
Lease liabilities	(12,480)	(12,164) (82) (35)	(531) (506)	(86)	(91)
Net assets	665,411	594,479 9,092 8,358	9,809 9,426	5,767	6,193
Equity attributable to
– Ordinary shareholders of
subsidiaries	557,985	493,828 8,698 7,996	9,752 9,377	5,807	6,253
– Non-controlling interests in
subsidiaries	107,426	100,651 394 362	57 49	(40)	(60)
Carrying amount of non-controlling
interests	297,308	268,701 3,241 2,979	4,142 3,970	2,312	2,471

269

— F-102 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

28 Subsidiaries (Continued)

Subsidiaries(Con	tinued)
		For the year ended	31	December
	CITIC Bank	CITIC Heavy Industries	CITIC Telecom International		CITIC Resources
	2020	2019 2020 2019		2020 2019	2020	2019
	HK$ million HK$ million HK$ million HK$ million		HK$ million HK$ million		HK$ million	HK$ million
Revenue	219,303	213,693 7,091 5,960		8,923 9,014	2,850	3,426
Profit/(loss) for the year	55,592	55,724 225 156		1,039 1,020	(361)	631
Total comprehensive income for the
year	47,552	58,229 225 184		1,113 1,045	(422)	414
Profit attributable to non-controlling
interests	21,886	20,700 77 66		444 437	(144)	274
Dividends paid to non-controlling
interests	8,281	6,411 23 10		317 299	–	111
Net cash generated from operating
activities	176,053	133,039 679 535		2,543 2,417	115	655
Net cash (used in)/generated from
investing activities	(244,948)	(287,832) (313) (235)		(773) (466)	930	694
Net cash generated from/(used in)
financing activities	51,596	114,397 (1,861) (496)		(1,581) (1,683)	(363)	(1,659)

29 Interests in associates

As at 31 December

2020 HK$ million	2019 HK$ million
Carrying value 137,012 Less: allowance for impairment losses (Note 46) (5,972)	130,080 (6,735)
131,040	123,345

Notes:

The particulars of the principal associates are set out in Note 59.

270

— F-103 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

29 Interests in associates (Continued)

Summarised financial information of the material associates are disclosed below:

As at 31 December China Overseas Land & Investment Limited CITIC Securities Co., Ltd. Ivanhoe Mines Ltd. 2020 2019 2020 2019 2020 2019 HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million	As at 31 December China Overseas Land & Investment Limited CITIC Securities Co., Ltd. Ivanhoe Mines Ltd. 2020 2019 2020 2019 2020 2019 HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million	As at 31 December China Overseas Land & Investment Limited CITIC Securities Co., Ltd. Ivanhoe Mines Ltd. 2020 2019 2020 2019 2020 2019 HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million	As at 31 December China Overseas Land & Investment Limited CITIC Securities Co., Ltd. Ivanhoe Mines Ltd. 2020 2019 2020 2019 2020 2019 HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million
Listed in: Hong Kong Hong Kong, Shanghai Canada Gross amount of the associates Total assets 1,006,741 852,720 1,251,084 883,836 29,279 28,057 Total liabilities (588,503) (499,218) (1,030,226) (699,137) (1,273) (638)
Net assets 418,238	353,502 220,858	184,699 28,006	27,419
Equity attributable to: – Associates’ shareholders 401,363 – Non-controlling interests in associates 16,875	343,245 215,902 10,257 4,956	180,430 28,084 4,269 (78)	28,081 (662)
418,238	353,502 220,858	184,699 28,006	27,419

271

— F-104 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

29 Interests in associates (Continued)

Summarised financial information of the material associates are disclosed below (Continued):

For the year ended 31 December China Overseas Land & Investment Limited CITIC Securities Co., Ltd. Ivanhoe Mines Ltd. 2020 2019 2020 2019 2020 2019 HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million	For the year ended 31 December China Overseas Land & Investment Limited CITIC Securities Co., Ltd. Ivanhoe Mines Ltd. 2020 2019 2020 2019 2020 2019 HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million	For the year ended 31 December China Overseas Land & Investment Limited CITIC Securities Co., Ltd. Ivanhoe Mines Ltd. 2020 2019 2020 2019 2020 2019 HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million	For the year ended 31 December China Overseas Land & Investment Limited CITIC Securities Co., Ltd. Ivanhoe Mines Ltd. 2020 2019 2020 2019 2020 2019 HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million
Revenue 208,518 Profit for the year 50,762 Other comprehensive (loss)/ income for the year (409) Total comprehensive income/(loss) for the year 50,353 Dividends received from associates 1,118 Reconciled to the Group’s interests in associates Gross amounts of net assets of associates attributable to the associates’ shareholders 401,363 Group’s effective interest 10.00%	187,901 80,662 42,464 17,415 (3,670) (750) 38,794 16,665 1,041 1,122 343,245 215,902 10.00% 15.47%	64,922 – 14,386 (145) 995 (132) 15,381 (277) 796 – 180,430 28,084 16.50% 26.09%	– 152 (37) 115 – 28,081 26.31%
Group’s share of net assets of associates 40,136 Goodwill and others 1,417 Impairment of interests in associates (3,962)	34,325 33,400 1,417 1,256 (2,606) –	29,771 7,327 1,291 (180) – –	7,388 (169) –
Carrying amounts in the consolidated balance sheet 37,591	33,136 34,656	31,062 7,147	7,219
Quoted fair value 18,469	33,252 69,853	56,478 13,120	7,984

Note:

Aggregate information of associates that are not individually material:

As at 31 December
2020	2019
HK$ million	HK$ million
Aggregate carrying amount of individually immaterial associates in the consolidated financial statements 51,646	51,928
Aggregate amount of the Group’s share of those immaterial associates: Profit for the year 3,420 Other comprehensive loss for the year (165)	1,736 (98)
Total comprehensive income for the year 3,255	1,638

272

— F-105 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

30 Interests in joint ventures

Interests in joint ventures
As at 31 December
2020	2019
HK$ million HK$	million
Carrying value 51,963 Less: allowance for impairment losses (Note 46) (1,676)	42,450 (1,487)
50,287	40,963

The particulars of the principal joint ventures are set out in Note 59.

Summarised financial information of the material joint ventures are disclosed below:

		As at 31	December	December
		CITIC Prudential Life
		Insurance Co., Ltd. 中船置業有限公司		上海瑞博置業有限公司
		2020 2019 2020		2019 2020	2019
		HK$ million HK$ million HK$ million	HK$ million HK$ million		HK$ million
Gross amount of the joint
	ventures
Total assets		164,077 116,227 17,651	18,501 24,335		14,317
Total liabilities		(149,415) (105,977) (6,634)	(10,091) (17,131)		(9,100)
Net assets W		14,662 10,250 11,017		8,410 7,204	5,217
Equity attributable to:
–	Joint ventures’ shareholders	14,034 9,680 11,017		8,410 7,204	5,217
–	Non-controlling interests in
	joint ventures	628 570 –		– –	–
		14,662 10,250 11,017		8,410 7,204	5,217

273

— F-106 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

30 Interests in joint ventures (Continued)

Summarised financial information of the material joint ventures are disclosed below (Continued):

	For the year ended 31 December	For the year ended 31 December	For the year ended 31 December
	CITIC Prudential Life
	Insurance Co., Ltd. 中船置業有限公司		上海瑞博置業有限公司
	2020 2019 2020		2019 2020	2019
	HK$ million HK$ million HK$ million	HK$ million HK$ million		HK$ million
Revenue	32,292 28,304 6,369		4,765 89	116
Profit for the year	2,841 2,070 2,054		3,230 1,564	132
Other comprehensive income
for the year	1,343 970 –		– –	–
Total comprehensive income
for the year	4,184 3,040 2,054		3,230 1,564	132
Dividends received from joint
ventures	317 – –		– –	499
Reconciled to the Group’s
interests in joint ventures
Gross amounts of net assets of
joint ventures attributable to
joint ventures’ shareholders	14,034 9,680 11,017		8,410 7,204	5,217
Group’s effective interest	50% 50% 50%		50% 50%	50%
Group’s share of net assets of
joint ventures	7,017 4,840 5,509		4,205 3,602	2,609
Goodwill and others	1,336 1,255 66		49 279	255
Carrying amount in the
consolidated balance sheet	8,353 6,095 5,575		4,254 3,881	2,864

Aggregate information of joint ventures that are not individually material:

As at 31 December
2020	2019
HK$ million HK$	million
Aggregate carrying amount of individually immaterial joint ventures in the consolidated financial statements 32,478	27,750
Aggregate amount of the Group’s share of those joint ventures Profit for the year 770 Other comprehensive loss for theyear (31)	2,703 (49)
Total comprehensive income for theyear 739	2,654

274

— F-107 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

31 Fixed assets

Fixed assets
			Property, plant and equipment
	Plant and buildings	Machinery and equipment	Construction in progress	Office and other equipment	Vehicles and vessels	Others	Total	Investment properties
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Cost or valuation: At 1 January 2020 Exchange adjustments Business combination (Note 54) Disposal of subsidiaries Additions Disposals Transfers Change in fair value of investment properties

	79,137	155,695	13,714	17,233	13,062	7,032	285,873	37,555
	4,508	5,294	809	1,457	427	354	12,849	1,546
	3,413	6,452	524	316	81	656	11,442	–
	(20)	(13)	(1)	(2)	(8)	(4)	(48)	–
	932	2,945	10,852	2,609	610	294	18,242	1,076
	(1,526)	(2,283)	–	(1,323)	(568)	(2,127)	(7,827)	(594)
	1,651	1,298	(6,712)	119	15	3,617	(12)	(453)
	–	–	–	–	–	–	–	(675)
At 31 December 2020	88,095	169,388	19,186	20,409	13,619	9,822	320,519	38,455
Accumulated depreciation, amortisation and impairment losses: At 1 January 2020 Exchange adjustments Business combination (Note 54) Disposal of subsidiaries Charge for the year Disposals Impairment losses (Note 46)

	(23,204)	(89,580)	(925)	(11,871)	(6,699)	(3,519)	(135,798)	–
	(783)	(3,447)	(26)	(750)	(222)	(139)	(5,367)	–
	(656)	(1,712)	–	(176)	(52)	(252)	(2,848)	–
	7	11	–	1	5	4	28	–
	(2,414)	(5,590)	–	(1,714)	(489)	(666)	(10,873)	–
	205	669	–	1,075	350	325	2,624	–
	(117)	(68)	(24)	–	(19)	(217)	(445)	–
At 31 December 2020	(26,962)	(99,717)	(975)	(13,435)	(7,126)	(4,464)	(152,679)	–
Net book value: At 31 December 2020

	61,133	69,671	18,211	6,974	6,493	5,358	167,840	38,455
Represented by: Cost Valuation
	88,095	169,388	19,186	20,409	13,619	9,822	320,519	–
	–	–	–	–	–	–	–	38,455
	88,095	169,388	19,186	20,409	13,619	9,822	320,519	38,455

275

— F-108 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

31 Fixed assets (Continued)

			Property, plant and equipment	Property, plant and equipment	Property, plant and equipment			Land use rights HK$ million	Total HK$ million	Investment properties HK$ million
	Plant and buildings HK$ million	Machinery and equipment HK$ million	Construction in progress HK$ million	Office and other equipment HK$ million	Vehicles and vessels HK$ million	Others HK$ million	Sub-total HK$ million
Cost or valuation: At 31 December 2018 Changes in accounting policies	81,907 (3,916)	168,841 (126)	19,402 –	16,807 –	13,201 (510)	15,802 (180)	315,960 (4,732)	19,637 (19,637)	335,597 (24,369)	32,579 –
At 1 January 2019 Exchange adjustments Disposal of subsidiaries Transfers into assets classified as held for sale (Note 36) Additions Disposals Transfers Change in fair value of investment properties	77,991 (1,488) (3,064) (2,313) 1,504 (1,490) 7,997 –	168,715 (1,758) (8,007) (7,011) 2,959 (2,234) 3,031 –	19,402 (294) (566) (591) 11,269 – (15,506) –	16,807 (346) (296) (331) 2,272 (993) 120 –	12,691 (138) (75) (1) 936 (497) 146 –	15,622 (279) (587) (8,854) 1,102 (600) 628 –	311,228 (4,303) (12,595) (19,101) 20,042 (5,814) (3,584) –	– – – – – – – –	311,228 (4,303) (12,595) (19,101) 20,042 (5,814) (3,584) –	32,579 (513) – – 149 (543) 5,166 717
At 31 December 2019	79,137	155,695	13,714	17,233	13,062	7,032	285,873	–	285,873	37,555 – –
Accumulated depreciation, amortisation and impairment losses: At 31 December 2018 Changes in accounting policies	(23,324) 635	(92,917) 123	(1,189) –	(11,723) –	(6,482) 86	(7,731) 63	(143,366) 907	(2,584) 2,584	(145,950) 3,491
At 1 January 2019 Exchange adjustments Disposal of subsidiaries Transfers into assets classified as held for sale (Note 36) Charge for the year Disposals Impairment losses (Note 46)	(22,689) 432 774 363 (2,366) 570 (288)	(92,794) 865 2,978 4,120 (6,635) 1,596 290	(1,189) 56 – – – 208 –	(11,723) 321 165 198 (1,679) 847 –	(6,396) 64 47 1 (645) 232 (2)	(7,668) 130 229 4,757 (1,326) 385 (26)	(142,459) 1,868 4,193 9,439 (12,651) 3,838 (26)	– – – – – – –	(142,459) 1,868 4,193 9,439 (12,651) 3,838 (26)	– – – – – – –
At 31 December 2019	(23,204)	(89,580)	(925)	(11,871)	(6,699)	(3,519)	(135,798)	–	(135,798)	– 37,555
Net book value: At 31 December 2019	55,933	66,115	12,789	5,362	6,363	3,513	150,075	–	150,075
Represented by: Cost Valuation	79,137 –	155,695 –	13,714 –	17,233 –	13,062 –	7,032 –	285,873 –	– –	285,873 –	– 37,555
	79,137	155,695	13,714	17,233	13,062	7,032	285,873	–	285,873	37,555

276

— F-109 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

31 Fixed assets (Continued)

As at 31 December 2020, the Group was in the process of applying the ownership certificates in respect of certain premises of HK$1,573 million (31 December 2019: HK$14,372 million). The Group anticipates that there would be no significant issues and costs in completing such procedures.

(a) Fair value measurement of investment properties

(i) Property valuation

Investment properties were revalued as at 31 December 2020 and 2019 by the following independent professionally qualified valuers. Management of the Group had discussions with the surveyors on the valuation assumptions and valuation results when the valuation is performed at each balance sheet date.

Properties located in Valuers in 2020 Mainland China and Hong Kong China Enterprise Appraisals Consultation Co., Ltd. Centaline Surveyors Limited Zhong Ming(Beijing) Assets Appraisal International Co.,Ltd. Prudential Surveyors (Hong Kong) Limited YINXIN Appraisal Co., Ltd. Knight Frank Petty Limited China Lianhe Credit Rating Co.,Ltd China United Assets Appraisal Group Jones Lang LaSalle Corporate Appraisal and Advisory Limited Overseas Network Real Estate Appraisal Co., Ltd. Jones Lang LaSalle Corporate Appraisal and Advisory Company Limited

277

— F-110 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

31 Fixed assets (Continued)

(a) Fair value measurement of investment properties (Continued)

(i)

Property valuation(Continued)
Properties located in
Valuers in 2019

Mainland China and Hong Kong
China Enterprise Appraisals Consultation Co., Ltd.
Centaline Surveyors Limited
Zhong Ming(Beijing) Assets Appraisal International Co.,Ltd.
Prudential Surveyors (Hong Kong) Limited
YINXIN Appraisal Co., Ltd.
Knight Frank Petty Limited
Beijing Dexiang Assets Appraisal Co., Ltd.
Overseas
Network Real Estate Appraisal Co., Ltd.
Jones Lang LaSalle Corporate Appraisal and
AdvisoryCompanyLimited

(ii) Fair value hierarchy

The following table presents the fair value of the Group’s properties measured at the balance sheet dates on a recurring basis, categorised into the three-level hierarchy as defined in HKFRS 13, Fair value measurement. The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:

Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available;

Level 3 valuations: Fair value measured using significant unobservable inputs.

278

— F-111 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

31 Fixed assets (Continued)

(a) Fair value measurement of investment properties (Continued)
(ii) Fair value hierarchy (Continued)

Fair value hierarchy(Continued)
	Level 3
	For the year ended 31	December
	2020	2019
	HK$ million	HK$ million
Recurring fair value measurement
Investment properties – Mainland China
At 1 January	23,756	18,067
Exchange adjustments	1,505	(509)
Additions	738	125
Disposals	(364)	(195)
Transfers	(448)	5,236
Change in fair value of investmentproperties	(126)	1,032
At 31 December	25,061	23,756
Investment properties – Hong Kong
At 1 January	13,331	14,068
Exchange adjustments	1	(2)
Additions	338	23
Disposals	(230)	(348)
Transfers	(5)	(70)
Change in fair value of investmentproperties	(548)	(340)
At 31 December	12,887	13,331
Investment properties – Overseas
At 1 January	468	444
Exchange adjustments	40	(2)
Additions	–	1
Change in fair value of investmentproperties	(1)	25
At 31 December	507	468

279

— F-112 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

31 Fixed assets (Continued)

(a) Fair value measurement of investment properties (Continued)
(ii) Fair value hierarchy (Continued)

The Group’s policy is to recognise transfers between levels of fair value hierarchy at the balance sheet date in which they occur. During the year ended 31 December 2020, there were no Level 1 and Level 2 fair value hierarchy (2019: Nil) and no transfers into or out of Level 3 (2019: Nil).

(iii) Valuation techniques and inputs used in Level 3 fair value measurements

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

280

— F-113 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

32 ROU assets and lease liabilities

(a) ROU assets

==> picture [444 x 208] intentionally omitted <==

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

Machinery Office
Plant and and and other Vehicles and Land use
buildings equipment equipment vessels Others Sub-total rights Total
HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million
At 1 January 2020 16,272 13 99 327 909 17,620 18,874 36,494
Exchange adjustments 921 2 4 19 47 993 422 1,415
Additions 5,145 71 11 167 224 5,618 1,335 6,953
Reductions (1,007) (3) – (106) (22) (1,138) (732) (1,870)
Business combination
(Note 54) 154 – 4 16 – 174 508 682
– – – – –
Disposal of subsidiaries (4) (4) (4)
Depreciation charge (4,681) (24) (46) (191) (201) (5,143) (550) (5,693)
Modifications to lease
agreements (73) – – – 11 (62) – (62)
At 31 December 2020 16,727 59 72 232 968 18,058 19,857 37,915
----- End of picture text -----

281

— F-114 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

32 ROU assets and lease liabilities (Continued)

(a) ROU assets (Continued)

	Plant and buildings HK$ million	Machinery and equipment HK$ million	Office and other equipment HK$ million	Vehicles and vessels HK$ million	Others HK$ million	Sub-total HK$ million	Land use rights HK$ million	Total HK$ million
At 31 December 2018 Changes in accounting policies	– 27,280	– 13	– 151	– 524	– 698	– 28,666	– 20,292	– 48,958
At 1 January2019	27,280	13	151	524	698	28,666	20,292	48,958 (761) 8,066 (393) (1,636) (500) (10,022) (7,218)
Exchange adjustments Additions Reductions Transfers Disposal of subsidiaries Transfers into assets classified as held for sale (Note 36) Depreciation charge	(432) 6,109 (282) – (142) (9,926) (6,335)	– 12 (1) – – – (11)	(2) 8 (5) – (4) – (49)	(46) 6 – – (17) – (140)	(16) 358 (1) – – – (130)	(496) 6,493 (289) – (163) (9,926) (6,665)	(265) 1,573 (104) (1,636) (337) (96) (553)
At 31 December 2019	16,272	13	99	327	909	17,620	18,874	36,494

(i) The expense relating to short-term leases (included in cost of goods sold and other operating expenses) and the expense relating to leases of low-value assets that are not shown above as short-term leases (included in other operating expenses) for the year ended 31 December 2020 were HK$786 million (2019: HK$1,071 million).

(ii) The expense relating to variable lease payments not included in lease liabilities (included in other operating expenses) was HK$138 million (2019: HK$609 million).

(iii) The total cash outflow for leases for the year ended 31 December 2020 was HK$7,074 million (2019: HK$8,353 million).

282

— F-115 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

32 ROU assets and lease liabilities (Continued)

(b) Lease liabilities

Lease liabilities analysed by maturity

As at 31 December 2020
2020 2019
HK$ million HK$ million
– Within 1 year 5,234 4,668 – Over 1year 13,033 12,767
18,267 17,435

As at 31 December 2020, the table below presents on maturity date by the undiscounted cash flows of the Group’s lease liabilities:

As at 31 December 2020
2020 2019
HK$ million HK$ million
– Within 1 year 5,402 4,835 – Between 1 and 5 year 11,168 11,420 – Over 5year 3,836 3,545
20,406 19,800

283

— F-116 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

33 Intangible assets

Intangible assets
	For theyear ended 31 December
	Mining assets	Others	Total
	HK$ million	HK$ million	HK$ million
Cost: At 1 January 2020 Exchange adjustments Additions Business combination (Note 54) Disposals of subsidiaries Disposals

	19,282	15,789	35,071
	3	894	897
	903	3,617	4,520
	–	601	601
	–	(7)	(7)
	(2)	(637)	(639)
At 31 December 2020	20,186	20,257	40,443
Accumulated amortisation and impairment losses: At 1 January 2020 Exchange adjustments Charge for the year Business combination (Note 54) Disposals of subsidiaries Disposals Impairment losses (Note 46)

	(17,033)	(6,061)	(23,094)
	(1)	(266)	(267)
	(80)	(1,336)	(1,416)
	–	(119)	(119)
	–	7	7
	–	385	385
	(1)	(61)	(62)
At 31 December 2020	(17,115)	(7,451)	(24,566)
Net book value: At 31 December 2020

	3,071	12,806	15,877

284

— F-117 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

33 Intangible assets (Continued)

	For theyear ended 31 December Mining assets Franchise right Others Total HK$ million HK$ million HK$ million HK$ million 19,316 3,015 14,816 37,147 – (2) (220) (222) 12 – 2,160 2,172 – – (532) (532) – (3,013) (122) (3,135) (46) – (313) (359) 19,282 – 15,789 35,071 (17,023) (262) (5,475) (22,760) – – 79 79 (56) (150) (1,295) (1,501) – – 425 425 – 412 25 437 46 – 202 248 – – (22) (22) (17,033) – (6,061) (23,094) 2,249 – 9,728 11,977	For theyear ended 31 December Mining assets Franchise right Others Total HK$ million HK$ million HK$ million HK$ million 19,316 3,015 14,816 37,147 – (2) (220) (222) 12 – 2,160 2,172 – – (532) (532) – (3,013) (122) (3,135) (46) – (313) (359) 19,282 – 15,789 35,071 (17,023) (262) (5,475) (22,760) – – 79 79 (56) (150) (1,295) (1,501) – – 425 425 – 412 25 437 46 – 202 248 – – (22) (22) (17,033) – (6,061) (23,094) 2,249 – 9,728 11,977	For theyear ended 31 December Mining assets Franchise right Others Total HK$ million HK$ million HK$ million HK$ million 19,316 3,015 14,816 37,147 – (2) (220) (222) 12 – 2,160 2,172 – – (532) (532) – (3,013) (122) (3,135) (46) – (313) (359) 19,282 – 15,789 35,071 (17,023) (262) (5,475) (22,760) – – 79 79 (56) (150) (1,295) (1,501) – – 425 425 – 412 25 437 46 – 202 248 – – (22) (22) (17,033) – (6,061) (23,094) 2,249 – 9,728 11,977
	Mining assets HK$ million	Franchise right HK$ million	Others HK$ million
Cost: At 1 January 2019 Exchange adjustments Additions Disposals of subsidiaries Transfers into assets classified as held for sale (Note 36) Disposals	19,316 – 12 – – (46)	3,015 (2) – – (3,013) –	14,816 (220) 2,160 (532) (122) (313)
At 31 December 2019	19,282	–	15,789
Accumulated amortisation and impairment losses: At 1 January 2019 Exchange adjustments Charge for the year Disposals of subsidiaries Transfers into assets classified as held for sale (Note 36) Disposals Impairment losses (Note 46)	(17,023) – (56) – – 46 –	(262) – (150) – 412 – –	(5,475) 79 (1,295) 425 25 202 (22)
At 31 December 2019	(17,033)	–	(6,061)
Net book value: At 31 December 2019	2,249	–	9,728

Amortisation charge is included in “cost of sales and services” and “other operating expenses” in the consolidated income statement.

285

— F-118 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

34 Goodwill

	For the year ended 31 December 2020 2019 HK$ million HK$ million 22,551 23,971 315 203 (210) (61) – (950) 506 (612) 23,162 22,551 (1,348) (1,086) (647) (202) 3 – (37) (60) (2,029) (1,348) 21,133 21,203
	2020
	HK$ million
Cost: At 1 January Additions Disposals Transfers into assets classified as held for sale (Note 36) Exchange differences

	22,551
	315
	(210)
	–
	506
At 31 December	23,162
Accumulated impairment losses: At 1 January Additions (Note 46) Disposals Exchange differences

	(1,348)
	(647)
	3
	(37)
At 31 December	(2,029)
Net book value: At 31 December

	21,133

286

— F-119 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

34 Goodwill (Continued)

Goodwill is allocated to the Group’s cash-generating units identified in segments as follows:

As at 31	December
2020		2019
HK$ million	HK$	million
Comprehensive financial services 1,529 Advanced intelligent manufacturing 1,037 Advanced materials 261		1,495 767 884
New consumption 12,415 New-type urbanisation 5,891		12,289 5,768
21,133		21,203

In conducting goodwill impairment test, the carrying value of goodwill is allocated to the related asset group or groups of asset groups which are expected to benefit from the synergies of the business combination.

The recoverable amount of an asset group or a group of asset groups is the higher of an asset’s fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. The corresponding impairment loss of an asset group or a group of asset groups will not be recognised if either the fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset is higher than the carrying value.

Based on management’s impairment assessment, impairment loss of HK$647 million was recognised for the year ended 31 December 2020 (2019: HK$202 million).

35 Income tax in the balance sheet

(a) Current income tax in the balance sheet represents:

	As at 31	December
	2020	2019
	HK$ million	HK$ million
Income taxpayable	13,448	13,989

287

— F-120 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

35 Income tax in the balance sheet (Continued)

(b) Deferred tax assets/(liabilities) recognised:

The components of deferred tax assets recognised in the consolidated balance sheet and the movements during the years ended 31 December 2020 and 2019, without taking into consideration the offsetting of balances within the same tax jurisdiction, are as follows:

			Impairment
			loss on
			assets other
			than fixed	Fair value	Fixed
			assets and	changes of	assets and
		Accrued	intangible	financial	intangible
	Tax losses	expenses	assets	instruments	assets	Others	Total
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million HK$ million HK$ million
Deferred tax assets
At 1 January 2019	13,446	3,245	28,288	566	6,446	1,602	53,593
Credited/(charged) to
profit or loss	725	1,098	9,642	113	(1,007)	(127)	10,444
Credited/(charged) to other
comprehensive income	–	30	81	(44)	–	26	93
Disposal of subsidiaries	(3)	(297)	(75)	–	(149)	(13)	(537)
Transfers into assets classified
as held for sale (Note 36)	(9)	(147)	(7)	–	(76)	(56)	(295)
Exchange adjustments and others	(66)	(63)	(788)	(16)	142	(83)	(874)
At 31 December 2019	14,093	3,866	37,141	619	5,356	1,349	62,424
At 1 January 2020	14,093	3,866	37,141	619	5,356	1,349	62,424
Credited/(charged) to
profit or loss	632	247	9,343	154	(1,099)	805	10,082
(Charged)/credited to other
comprehensive income	–	(7)	(4)	76	–	(2)	63
Business combination (Note 54)	–	263	70	–	13	–	346
Disposal of subsidiaries	(53)	–	–	–	–	(109)	(162)
Exchange adjustments and others	12	279	2,947	39	162	17	3,456
At 31 December 2020	14,684	4,648	49,497	888	4,432	2,060	76,209

288

— F-121 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

35 Income tax in the balance sheet (Continued)

(b) Deferred tax assets/(liabilities) recognised (Continued):

The components of deferred tax liabilities recognised in the consolidated balance sheet and the movements during the years ended 31 December 2020 and 2019, without taking into consideration the offsetting of balances within the same tax jurisdiction, are as follows:

		Temporary
	Fair value	differences on
	changes of	fixed assets	Revaluation
	financial	and intangible	of investment
	instruments	assets	properties	Others	Total
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Deferred tax liabilities
At 1 January 2019	(3,604)	(2,175)	(3,768)	(2,791)	(12,338)
(Charged)/credited to profit or loss	(322)	586	100	(2,585)	(2,221)
(Charged)/credited to other
comprehensive income	(242)	–	(368)	157	(453)
Disposal of subsidiaries	–	253	–	31	284
Transfers into assets classified as
held for sale (Note 36)	–	66	–	953	1,019
Exchange adjustments and others	(95)	12	87	47	51
At 31 December 2019	(4,263)	(1,258)	(3,949)	(4,188)	(13,658)
At 1 January 2020	(4,263)	(1,258)	(3,949)	(4,188)	(13,658)
Charged to profit or loss	(5)	(242)	(24)	(678)	(949)
Credited/(charged)credited to other
comprehensive income	2,040	–	–	(10)	2,030
Business combination (Note 54)	–	(245)	–	(72)	(317)
Disposal of subsidiaries	–	16	–	36	52
Exchange adjustments and others	(138)	(68)	(261)	(180)	(647)
At 31 December 2020	(2,366)	(1,797)	(4,234)	(5,092)	(13,489)

289

— F-122 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

35 Income tax in the balance sheet (Continued)

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

As at 31	December
2020		2019
HK$ million	HK$	million
Deductible temporary differences 1,900 Tax losses 30,981		2,562 32,860
32,881		35,422

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 2020, tax losses amounting to HK$10,019million (31 December 2019: HK$14,220 million) that can be carried forward against future taxable income are expiring within 5 years.

36 Assets classified as held for sale

During the year ended 31 December 2019, the Group has decided to dispose approximately 42.31% of its interests in Fast Foods Holdings Limited (“FFHL”). Before disposal, Starry Dream Investments Limited, a wholly-owned subsidiary of the Group, holds 61.54% interests in FFHL which directly holds 52% equity interests in Grand Foods Holdings Limited (“GFHL”), the holding company of McDonald’s mainland China and Hong Kong businesses. The Group’s interests in FFHL will decrease to approximately 19.23% upon disposal and therefore, loss control over FFHL upon the completion of the disposal. As at 31 December 2019, the disposal plan has been approved by the Board of Directors of the Company. The assets and liabilities of FFHL have been classified as assets and liabilities held for sale in the Group’s consolidated financial statements.

On 2 March 2020, Starry Dream Investments Limited entered into a share purchase agreement with CCHL Fast Food Holdings Limited (“CCHL”), a company wholly-owned by a newly established fund of which a wholly-owned subsidiary of CITIC Capital Holdings Limited acts as the general partner. Pursuant to the agreement, the Group agreed to sell and CCHL agreed to purchase 42.31% equity interests in FFHL and CCHL will also be assigned the corresponding portion of outstanding shareholder loans of FFHL in an amount of approximately US$217 million. The total consideration of the disposal is US$533 million. Upon completion of the disposal, the Group’s equity interests in FFHL reduced to 19.23%, and therefore, FFHL and GFHL were no longer consolidated into the financial statements of the Group (Note 51 (b)).

290

— F-123 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

37 Deposits from banks and non-bank financial institutions

	As at 31	December
	2020		2019
	HK$ million	HK$ million
Banks	365,291		186,064
Non-bank financial institutions	1,000,980		872,282
	1,366,271	1,058,346
Accrued interest	4,168		3,034
	1,370,439	1,061,380
Analysed by remaining maturity:
– On demand	768,681		446,790
– Within 3 months	251,155		337,522
– Between 3 months and 1year	346,435		274,034
	1,366,271	1,058,346
Accrued interest	4,168		3,034
	1,370,439	1,061,380

291

— F-124 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

38 Placements from banks and non-bank financial institutions

	As at 31	December
	2020		2019
	HK$ million	HK$ million
Banks	72,485		67,264
Non-bank financial institutions	1,534		39,699
	74,019		106,963
Accrued interest	289		437
	74,308		107,400
Analysed by remaining maturity:
– On demand	–		115
– Within 3 months	26,288		65,989
– Between 3 months and 1 year	40,831		36,334
– Over 1year	6,900		4,525
	74,019		106,963
Accrued interest	289		437
	74,308		107,400

292

— F-125 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

39 Trade and other payables

Trade and other payables
	As at 31	December
	2020		2019
	HK$ million	HK$ million
Trade and bills payables	86,362		73,238
Advances from leasees	453		281
Other taxes payables	7,431		5,720
Settlement accounts	7,083		7,699
Dividend payables	300		278
Otherpayables	59,314		61,692
	160,943		148,908

At the balance sheet date, the ageing analysis of the Group’s trade and bills payable based on the invoice date is as follows:

As at 31	December
2020		2019
HK$ million	HK$	million
Within 1 year 70,965 Between 1 and 2 years 3,343 Between 2 and 3 years 4,668 Over 3years 7,386		57,437 6,893 562 8,346
86,362		73,238

293

— F-126 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

40 Financial assets sold under repurchase agreements

	As at 31	December
	2020		2019
	HK$ million	HK$ million
By counterparties:
The People’s Bank of China	46,591		72,930
Banks	48,183		54,811
	94,774		127,741
Accrued interest	–		25
	94,774		127,766
By types of collateral:
Debt securities	8,288		39,726
Discounted bills	86,486		88,015
	94,774		127,741
Accrued interest	–		25
	94,774		127,766

The Group did not derecognise financial assets transferred as collateral in connection with repurchase agreements. As at 31 December 2020, legal title of these collateral pledged has not been transferred to counterparties.

294

— F-127 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

41 Deposits from customers

(a) Types of deposits from customers

posits from customers Types of deposits from customers
	As at 31 December 2020 2019 HK$ million HK$ million
	2020
	HK$ million
Demand deposits Corporate customers Personal customers		1,862,591 307,582
	2,258,627
	388,658
	2,647,285	2,170,173 1,653,630 672,759
Time and call deposits Corporate customers Personal customers
	1,991,042
	726,173
	2,717,215	2,326,389 7,227 38,052
Outward remittance and remittancepayables
	10,763
Accruedinterest	52,431
	5,427,694	4,541,841

(b) Deposits from customers include pledged deposits for the following items:

As at 31 December 2020 2019 HK$ million HK$ million	As at 31 December 2020 2019 HK$ million HK$ million
Bank acceptances 265,419 Letters of credit 13,112 Guarantees 13,399 Others 124,564	192,095 13,122 23,879 104,172
416,494	333,268

295

— F-128 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

42 Bank and other loans

(a) Types of loans

	As at 31 December 2020 2019 HK$ million HK$ million	As at 31 December 2020 2019 HK$ million HK$ million
	2020
	HK$ million
Bank loans Unsecured loans Loanpledged with assets (note (d))		106,021 16,430

	116,984
	17,842
	134,826	122,451 27,177 1,050
Other loans Unsecured loans Loanpledged with assets (note (d))

	27,517
	828
	28,345	28,227 150,678 634
Accrued interest	163,171

	433
	163,604	151,312
Maturity of loans	As at 31 December 2020 2019 HK$ million HK$ million
	2020
	HK$ million
Bank loans – Within 1 year or on demand – Between 1 and 2 years – Between 2 and 5 years – Over 5years		38,632 17,392 39,479 26,948

	47,714
	17,394
	42,471
	27,247
	134,826	122,451 6,599 13,446 3,065 5,117
Other loans – Within 1 year or on demand – Between 1 and 2 years – Between 2 and 5 years – Over 5years

	13,549
	3,024
	6,398
	5,374
	28,345	28,227 150,678 634
Accrued interest	163,171

	433
	163,604	151,312

(b) Maturity of loans

296

— F-129 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

42 Bank and other loans (Continued)

	As at 31	December
	2020		2019
	HK$ million	HK$ million
RMB	39,330		34,102
US$	46,913		53,178
HK$	61,191		51,766
Other currencies	15,737		11,632
	163,171		150,678
Accrued interest	433		634
	163,604		151,312

(d) As at 31 December 2020, the Group’s bank and other loans of HK$18,670 million (31 December 2019 HK$17,480 million) are pledged with cash and deposits, inventories, trade and other receivables, fixed assets, intangible assets, ROU assets and the equity of subsidiary with an aggregate carrying amount of HK$83,967 million (31 December 2019: HK$70,196 million).
(e) 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 48 (b). As at 31 December 2020, none of the covenants relating to drawn down facilities have been breached (31 December 2019: Nil).

297

— F-130 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

43 Debt instruments issued

Debt instruments issued
	As at 31	December
	2020		2019
	HK$ million	HK$ million
Corporate bonds issued (note (a))	112,959		99,913
Notes issued (note (b))	60,208		113,592
Subordinated bonds issued (note (c))	134,526		97,196
Certificates of deposit issued (note (d))	–		3,109
Certificates of interbank deposit issued (note (e))	645,179		489,886
Convertible corporate bonds (note (f))	15,659		14,333
	968,531		818,029
Accrued interest	5,327		5,935
	973,858		823,964
Analysed by remaining maturity:
– Within 1 year or on demand	668,965		605,729
– Between 1 and 2 years	22,547		19,912
– Between 2 and 5 years	116,344		51,306
– Over 5years	160,675		141,082
	968,531		818,029
Accrued interest	5,327		5,935
	973,858		823,964

The Group did not have any defaults of principal, interest or other breaches with respect to its debt instruments issued during the year ended 31 December 2020 (2019: Nil).

Notes:

(a) Corporate bonds issued

As at 31 December
2020	2019
HK$ million	HK$ million
The Company (note (i)) 67,149 CITIC Corporation Limited (“CITIC Corporation”) (note (ii)) 39,165 CITIC Telecom International (note (iii)) 3,496	63,277 30,100 3,493
CITIC Heavy Industries (note (iv)) – CITIC Pacific Limited’s (“CITIC Pacific”) subsidiaries (note(v)) 3,149	141 2,902
112,959	99,913

298

— F-131 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

43 Debt instruments issued (Continued)

Notes (Continued):

(a) Corporate bonds issued (Continued)
(i) Details of corporate bonds issued by the Company

==> picture [421 x 337] intentionally omitted <==

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

|||||||
|---|---|---|---|---|---|
|As at 31 December 2020|
|Face value in|
|Denominated|denominated|Interest rate|
|currency|currency million|Issue date|Maturity date|per annum|
|US$ Notes2.1|US$|500|2011-04-15|2021-04-15|6.63%|
|US$ Notes2.2|US$|250|2014-06-23|2021-04-15|6.63%|
|US$ Notes1|US$|150|2010-08-16|2022-08-16|6.90%|
|US$ Notes4.1|US$|750|2012-10-17|2023-01-17|6.80%|
|US$ Notes4.2|US$|250|2012-12-11|2023-01-17|6.80%|
|US$ Notes4.3|US$|400|2014-07-18|2023-01-17|6.80%|
|US$ Notes6.1|US$|110|2014-07-18|2024-01-18|4.70%|
|US$ Notes6.2|US$|90|2014-10-29|2024-01-18|4.70%|
|HK$ Notes2|HK$|420|2014-07-25|2024-07-25|4.35%|
|US$ Notes7|US$|280|2015-04-14|2035-04-14|4.60%|
|US$ Notes8|US$|150|2016-02-04|2041-02-04|4.88%|
|US$ Notes9|US$|350|2016-02-04|2036-02-04|4.75%|
|US$ Notes10|US$|90|2016-04-25|2036-04-25|4.65%|
|US$ Notes11|US$|210|2016-04-25|2046-04-25|4.85%|
|US$ Notes12|US$|500|2016-06-14|2021-12-14|2.80%|
|US$ Notes13|US$|750|2016-06-14|2026-06-14|3.70%|
|US$ Notes14|US$|200|2016-09-07|2031-09-07|3.98%|
|US$ Notes15|US$|250|2016-09-07|2046-09-07|4.49%|
|US$ Notes16|US$|750|2017-02-28|2027-02-28|3.88%|
|US$ Notes17|US$|500|2017-02-28|2022-02-28|3.13%|
|US$ Notes18|US$|250|2018-01-11|2023-07-11|3.50%|
|US$ Notes19|US$|500|2018-01-11|2028-01-11|4.00%|
|US$ Notes20|US$|75|2018-03-13|2038-03-13|4.85%|
|US$ Notes21|US$|200|2018-04-18|2048-04-18|5.07%|
|US$ Notes22|US$|300|2020-02-25|2025-02-25|2.45%|
|US$ Notes23|US$|700|2020-02-25|2030-02-25|2.85%|

----- End of picture text -----

299

— F-132 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

43 Debt instruments issued (Continued)

Notes (Continued):

(a) Corporate bonds issued (Continued)

(i) Details of corporate bonds issued by the Company (Continued):

			As at 31 December 2019	As at 31 December 2019
			Face value in
		Denominated	denominated			Interest rate
		currency	currency million	Issue date	Maturity date	per annum
US$ Notes	5	US$	500	2013-04-10	2020-04-10	6.38%
US$ Notes	2.1	US$	500	2011-04-15	2021-04-15	6.63%
US$ Notes	2.2	US$	250	2014-06-23	2021-04-15	6.63%
US$ Notes	1	US$	150	2010-08-16	2022-08-16	6.90%
US$ Notes	4.1	US$	750	2012-10-17	2023-01-17	6.80%
US$ Notes	4.2	US$	250	2012-12-11	2023-01-17	6.80%
US$ Notes	4.3	US$	400	2014-07-18	2023-01-17	6.80%
US$ Notes	6.1	US$	110	2014-07-18	2024-01-18	4.70%
US$ Notes	6.2	US$	90	2014-10-29	2024-01-18	4.70%
HK$ Notes	2	HK$	420	2014-07-25	2024-07-25	4.35%
US$ Notes	7	US$	280	2015-04-14	2035-04-14	4.60%
US$ Notes	8	US$	150	2016-02-04	2041-02-04	4.88%
US$ Notes	9	US$	350	2016-02-04	2036-02-04	4.75%
US$ Notes	10	US$	90	2016-04-25	2036-04-25	4.65%
US$ Notes	11	US$	210	2016-04-25	2046-04-25	4.85%
US$ Notes	12	US$	500	2016-06-14	2021-12-14	2.80%
US$ Notes	13	US$	750	2016-06-14	2026-06-14	3.70%
US$ Notes	14	US$	200	2016-09-07	2031-09-07	3.98%
US$ Notes	15	US$	250	2016-09-07	2046-09-07	4.49%
US$ Notes	16	US$	750	2017-02-28	2027-02-28	3.88%
US$ Notes	17	US$	500	2017-02-28	2022-02-28	3.13%
US$ Notes	18	US$	250	2018-01-11	2023-07-11	3.50%
US$ Notes	19	US$	500	2018-01-11	2028-01-11	4.00%
US$ Notes	20	US$	75	2018-03-13	2038-03-13	4.85%
US$ Notes	21	US$	200	2018-04-18	2048-04-18	5.07%

300

— F-133 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

43 Debt instruments issued (Continued)

Notes (Continued):

(a) Corporate bonds issued (Continued)

(ii) Details of corporate bonds issued by CITIC Corporation

	As at 31 December 2020 Denominated currency Face value in denominated currency million Issue date Maturity date Interest rate per annum
03	CITIC bond-2 RMB 6,000 2003-12-10 2023-12-09 5.10%
05	CITIC bond-2 RMB 4,000 2005-12-07 2025-12-06 4.60%
19	CITIC bond-1 RMB 3,500 2019-02-25 2022-02-25 3.50%
19	CITIC bond-2 RMB 1,500 2019-02-25 2024-02-25 3.85%
19	CITIC bond-3 RMB 2,000 2019-03-19 2029-03-19 4.59%
19	CITIC bond-4 RMB 2,000 2019-04-22 2029-04-22 4.71%
19	CITIC bond-5 RMB 1,800 2019-07-17 2034-07-17 4.60%
19	CITIC bond-6 RMB 700 2019-07-17 2029-07-17 4.46%
19	CITIC bond-7 RMB 500 2019-08-14 2029-08-14 4.38%
19	CITIC bond-8 RMB 2,000 2019-08-14 2039-08-14 4.58%
19	CITIC bond-9 RMB 1,000 2019-11-05 2039-11-05 4.65%
20	CITIC bond-2 RMB 2,000 2020-02-26 2030-02-26 3.88%
20	CITIC bond-3 RMB 1,000 2020-03-23 2030-03-23 4.00%
20	CITIC bond-4 RMB 600 2020-03-23 2040-03-23 4.30%
20	CITIC bond-5 RMB 1,000 2020-04-21 2030-04-21 3.87%
20	CITIC bond-6 RMB 1,500 2020-04-21 2040-04-21 4.16%
20	CITIC bond-8 RMB 1,900 2020-05-11 2040-05-11 4.20%

			As at 31 December 2019	As at 31 December 2019
			Face value in
		Denominated	denominated			Interest rate
		currency	currency million	Issue date	Maturity date	per annum
03	CITIC bond-2	RMB	6,000	2003-12-10	2023-12-09	5.10%
05	CITIC bond-2	RMB	4,000	2005-12-07	2025-12-06	4.60%
17	CITIC corporate bonds-1	RMB	2,000	2017-09-04	2022-09-04	4.60%
19	CITIC bond-1	RMB	3,500	2019-02-25	2022-02-25	3.50%
19	CITIC bond-2	RMB	1,500	2019-02-25	2024-02-25	3.85%
19	CITIC bond-3	RMB	2,000	2019-03-19	2029-03-19	4.59%
19	CITIC bond-4	RMB	2,000	2019-04-22	2029-04-22	4.71%
19	CITIC bond-5	RMB	1,800	2019-07-17	2034-07-17	4.60%
19	CITIC bond-6	RMB	700	2019-07-17	2029-07-17	4.46%
19	CITIC bond-7	RMB	500	2019-08-14	2029-08-14	4.38%
19	CITIC bond-8	RMB	2,000	2019-08-14	2039-08-14	4.58%
19	CITIC bond-9	RMB	1,000	2019-11-05	2039-11-05	4.65%

301

— F-134 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

43 Debt instruments issued (Continued)

Notes (Continued):

(a) Corporate bonds issued (Continued)

(iii) Details of corporate bonds issued by CITIC Telecom International

	Denominated currency	As at Face value in denominated currency million	31 December 2020 Issue date Maturity date	31 December 2020 Issue date Maturity date	Interest rate per annum
Guaranteed bonds	US$	450	2013-03-05	2025-03-05	6.10%
		As at 31 December 2019
		Face value in
	Denominated	denominated			Interest rate
	currency	currency million	Issue date	Maturity date	per annum
Guaranteed bonds	US$	450	2013-03-05	2025-03-05	6.10%
*Corporate bonds issued by CITIC Heavy Industries has been*		*redeemed in 2020.*
		As at 31 December 2019
		Face value in
	Denominated	denominated			Interest rate
	currency	currency million	Issue date	Maturity date	per annum
Corporate bonds	RMB	126	2013-01-25	2020-01-25	5.20%

(iv) Corporate bonds issued by CITIC Heavy Industries has been redeemed in 2020.

(v) Details of corporate bonds issued by CITIC Pacific’s subsidiaries

As at 31 December 2020

	As at 31 December 2020
	Denominated currency Face value in denominated currency million Issue date Maturity date Interest rate per annum
18 Corporate bonds 19 Corporate bonds 20 JLEPC SCP002 20 JLEPC SCP003 20 JLEPC SCP004	RMB 1,000 2018-05-31 2021-05-31 4.90%
	RMB 1,000 2019-05-20 2022-05-20 3.90%
	RMB 250 2020-04-13 2021-01-08 2.48%
	RMB 200 2020-07-27 2021-04-03 3.00%
	RMB 200 2020-08-26 2021-05-23 3.09%
	As at 31 December 2019 Denominated currency Face value in denominated currency million Issue date Maturity date Interest rate per annum RMB 1,000 2018-05-31 2021-05-31 4.90% RMB 1,000 2019-05-20 2022-05-20 3.90% RMB 200 2019-09-05 2020-03-03 3.50% RMB 200 2019-10-22 2020-07-18 3.45% RMB 200 2019-12-05 2020-06-02 3.39%
18 Corporate bonds 19 Corporate bonds 19 JLEPC SCP001 19 JLEPC SCP002 19 JLEPC SCP003

302

— F-135 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

43 Debt instruments issued (Continued)

Notes (Continued):

(b) Notes issued

Notes issued
As at 31 December
2020	2019
HK$ million	HK$ million
CITIC Corporation (note (i)) 13,045 CITIC Bank (note (ii)) 41,844	20,035 89,700
CITIC Offshore Helicopter Company Limited (note (iii)) 360 CITIC Trust Co., Ltd. (note (iv)) 4,959	352 3,505
60,208	113,592

(i) Details of notes issued by CITIC Corporation

		Denominated currency	As at Face value in denominated currency million	31 December 2020 Issue date Maturity date	31 December 2020 Issue date Maturity date	Interest rate per annum
2011	Second tranche medium term note-2	RMB	6,000	2011-11-15	2021-11-16	5.30%
2012	Medium term note-2	RMB	5,000 2012-03-28 2022-03-29 As at 31 December 2019			5.18%
			Face value in
		Denominated	denominated			Interest rate
		currency	currency million	Issue date	Maturity date	per annum
2010	First tranche medium term note	RMB	3,000	2010-06-08	2020-06-10	4.60%
2010	Second tranche medium term note	RMB	4,000	2010-08-20	2020-08-24	4.40%
2011	Second tranche medium term note-2	RMB	6,000	2011-11-15	2021-11-16	5.30%
2012	Medium term note-2	RMB	5,000	2012-03-28	2022-03-29	5.18%

303

— F-136 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

43 Debt instruments issued (Continued)

Notes (Continued):

(b) Notes issued (Continued)

(ii) Details of notes issued by CITIC Bank

	Denominated currency	As at Face value in denominated currency million	31 December 2020 Issue date Maturity date	31 December 2020 Issue date Maturity date	Interest rate per annum
Financial bonds Financial bonds Financial bonds	US$ US$ RMB	550 250 30,000	2017-12-14 2017-12-14 2020-03-18	2022-12-15 2022-12-15 2023-03-18	Three months Libor+1% 3.13% 2.75%
		As at 31 December 2019
		Face value in
	Denominated	denominated			Interest rate
	currency	currency million	Issue date	Maturity date	per annum
17 Financial bonds	RMB	50,000	2017-04-17	2020-04-17	4.20%
Financial bonds	RMB	8,000	2015-11-17	2020-11-17	3.61%
Financial bonds	RMB	7,000	2015-05-21	2020-05-25	3.98%
Financial bonds	US$	700	2017-12-14	2020-12-14	Three months
					Libor+0.9%
Financial bonds	US$	550	2017-12-14	2022-12-15	Three months
					Libor+1%
Financial bonds	RMB	3,000	2017-05-24	2020-05-24	4.40%
Financial bonds	US$	300	2017-12-14	2020-12-14	2.88%
Financial bonds	US$	250	2017-12-14	2022-12-15	3.13%

(iii) Details of notes issued by CITIC Offshore Helicopter Company Limited

		Denominated currency	As at Face value in denominated currency million	31 December 2020 Issue date Maturity date	31 December 2020 Issue date Maturity date	Interest rate per annum
2020	Asset-backed medium-term notes	RMB	305 2020-06-15 2023-06-14 As at 31 December 2019			3.30%
			Face value in
		Denominated	denominated			Interest rate
		currency	currency million	Issue date	Maturity date	per annum
2017	Asset-backed medium-term notes	RMB	315	2017-05-04	2020-03-31	5.18%

304

— F-137 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

43 Debt instruments issued (Continued)

Notes (Continued):

(b) Notes issued (Continued)

(iv) Details of notes issued by CITIC Trust Co., Ltd.

	Denominated currency	As at Face value in denominated currency million	31 December 2020 Issue date Maturity date	31 December 2020 Issue date Maturity date	Interest rate per annum
Guaranteed notes Participation notes Guaranteed notes Guaranteed notes Guaranteed notes	US$ US$ HK$ HK$ US$	300 5 1,200 930 80	2018-03-15 2018-01-22 2020-01-16 2020-07-03 2020-12-30	2021-03-15 2023-01-22 2021-01-13 2021-07-01 2021-04-23	4.75% Non fixed interest rate 2.55% 2.55% 3.79%
		As at 31 December 2019
		Face value in
	Denominated	denominated			Interest rate
	currency	currency million	Issue date	Maturity date	per annum
Guaranteed notes	US$	300	2018-03-15	2021-03-15	4.75%
Participation notes	US$	5	2018-01-22	2023-01-22	Non fixed
					interest rate
Guaranteed notes	US$	150	2019-05-22	2020-05-20	4.75%

(c) Subordinated bonds issued

The balance represents the subordinated debts issued by CITIC Bank or CITIC Bank International Limited (“CBI”), a subsidiary of CITIC Bank. The carrying amount of subordinated debts is as follows:

	As at 31 December
	2020	2019
	HK$ million	HK$ million
Fixed rate notes maturing
– In June 2020 (note (i))	–	2,382
– In February 2029 (note (ii))	3,865	3,860
Fixed rate bonds maturing
– In May 2025 (note (iii))	–	12,838
– In June 2027 (note (iv))	23,748	22,310
– In September 2028 (note (v))	35,638	33,479
– In October 2028 (note (vi))	23,758	22,327
– In August 2030 (note (vii))	47,517	–
	134,526	97,196

305

— F-138 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

43 Debt instruments issued (Continued)

Notes (Continued):

(c) Subordinated bonds issued (Continued)

			Denominated currency	As at Face value in denominated currency million	31 December 2020 Issue date Maturity date	31 December 2020 Issue date Maturity date	Interest rate per annum
(ii)	Subordinated Notes		US$	500	2019-02-28	2029-02-28	4.63%
(iv)	Subordinated Fixed	Rate Bonds	RMB	20,000	2012-06-21	2027-06-21	5.15%
(v)	Subordinated Fixed	Rate Bonds	RMB	30,000	2018-09-13	2028-09-13	4.96%
(vi)	Subordinated Fixed	Rate Bonds	RMB	20,000	2018-10-22	2028-10-22	4.80%
(vii)	Subordinated Fixed	Rate Bonds	RMB	40,000	2020-08-12	2030-08-14	3.87%
				As at 31 December 2019
				Face value in
			Denominated	denominated			Interest rate
			currency	currency million	Issue date	Maturity date	per annum
(i)	Subordinated Notes		US$	304	2010-06-24	2020-06-24	6.88%
(ii)	Subordinated Notes		US$	500	2019-02-28	2029-02-28	4.63%
(iii)	Subordinated Fixed	Rate Bonds	RMB	11,500	2010-05-28	2025-05-28	4.30%
(iv)	Subordinated Fixed	Rate Bonds	RMB	20,000	2012-06-21	2027-06-21	5.15%
(v)	Subordinated Fixed	Rate Bonds	RMB	30,000	2018-09-13	2028-09-13	4.96%
(vi)	Subordinated Fixed	Rate Bonds	RMB	20,000	2018-10-22	2028-10-22	4.80%

(d) Certificates of deposit issued

As at 31 December 2020, these certificates of deposit have expired. These certificates of deposit were issued by CBI with interest rate of 3.13% per annum (31 December 2019: 3.13% per annum).

(e) Certificates of interbank deposit issued

As at 31 December 2020, CITIC Bank issued certain certificates of interbank deposit with a total value of RMB543,008 million (approximately HK$645,179 million) (31 December 2019: RMB438,830 million (approximately HK$489,886 million)). The yield ranges from 1.50% to 3.36% per annum (31 December 2019: 2.59% to 3.67% per annum). The original expiry terms are between 1 month to 1 year (31 December 2019: between 1 month to 1 year).

(f) Convertible corporate bonds

As approved by the relevant regulatory authorities in China, CITIC Bank made a public offering of RMB40,000 million (HK$46,824 million) A-share convertible corporate bonds (the “convertible bonds”) on 4 March 2019. CITIC Corporation, as its parent company, has subscribed RMB26,388 million (HK$30,890 million), 65.97% of the total corporate bonds, which is the same percentage of the Group’s interest in CITIC Bank’s common shares. The convertible bonds of CITIC Bank have a term of six years from 4 March 2019 to 3 March 2025, at coupon rates of 0.3% for the first year, 0.8% for the second year, 1.5% for the third year, 2.3% for the fourth year, 3.2% for the fifth year and 4.0% for the sixth year. The conversion of these convertible bonds begins on the first trading day (8 March 2019) after six months upon the completion date of the offering until the maturity date (from 11 September 2019 to 3 March 2025). As at 31 December 2020, convertible bonds (including accrued interest) were recorded as debt instruments issued of RMB13,270 million (HK$15,767 million) and non-controlling interests of RMB1,067 million (HK$1,213 million), respectively.

306

— F-139 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

44 Provisions

Provisions
		Impairment
		loss of credit
		commitments
	Environmental	and
	restoration	guarantees
	expenditures	provided	Others	Total
	HK$ million	HK$ million	HK$ million	HK$ million
At 1 January 2019	1,419	5,991	2,303	9,713
Exchange differences	(14)	(149)	(45)	(208)
Charge for the year	336	1,261	1,805	3,402
Payments made during the year	(14)	–	(9)	(23)
Disposal of subsidiaries	–	–	(1,729)	(1,729)
At 31 December 2019	1,727	7,103	2,325	11,155
At 1 January 2020	1,727	7,103	2,325	11,155
Exchange differences	157	499	153	809
Charge for the year	151	1,280	291	1,722
Payments made during the year	(3)	–	(38)	(41)
Business combination (Note (54))	–	–	1,527	1,527
At 31 December 2020	2,032	8,882	4,258	15,172

307

— F-140 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

45 Share capital and reserves

(a) Share capital

As at 31 December 2020, the number of ordinary shares in issue of the Company was 29,090,262,630 (31 December 2019: 29,090,262,630).

(b) Share based payment

Share Option Plan

Other than the Plan 2000, certain of the Company’s subsidiaries have issued equity-settled sharebased payments to certain of their employees. The aggregate amount of the share-based payments recognised by these companies is not material to the Group.

The CITIC Pacific Share Incentive Plan 2000 adopted by the Company on 31 May 2000 for a term of ten years expired on 30 May 2010. The Company adopted a new plan, the CITIC Pacific Share Incentive Plan 2011 (the “Plan 2011”) on 12 May 2011, pursuant to which the board may at its discretion offer to grant share options to any eligible participant including any employee, executive director, non-executive director, independent non-executive director or officer, consultant or representative of any member of the Group who shall make payment of HK$1 to the Company on acceptance. The subscription price determined by the board shall not be less than the higher of (i) the nominal value of the Company’s shares; (ii) the closing price of the Company’s shares as stated in the daily quotations sheet of The Stock Exchange of Hong Kong Limited on the date of offer the grant; and (iii) the average of the closing prices of the Company’s shares as stated in the daily quotations sheet of The Stock Exchange of Hong Kong Limited for the five business days immediately preceding the date of offer of the grant. The total number of the Company’s shares which may be issued upon exercise of all options to be granted under the Plan 2011 must not in aggregate exceed 10% of the Company’s shares in issue as at the date of adopting the Plan 2011 (i.e. as at 31 December 2020, the total number of shares available for issue under the Plan 2011 is 364,944,416 shares).

No share options were granted under the Plan 2011 during the year ended 31 December 2020 (2019: Nil).

308

— F-141 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

45 Share capital reserves (Continued)

(i) Capital reserve

Considerations paid to acquire subsidiaries under common control, for instance, in 2014, a total consideration of HK$286,585 million paid by the Company to acquire the shares of CITIC Corporation, are debited against the capital reserve in the Group’s consolidated financial statements. In addition, gains or losses from transactions with non-controlling interests are directly debited or credited to the capital reserve in the Group’s consolidated financial statements.

(ii) Hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedge pending subsequent recognition of the hedged cash flow in accordance with the accounting policy adopted for cash flow hedge in Note 2 (j)(ii).

(iii) Investment related reserves

The investment related reserves comprise the cumulative net change in the fair value of investments in financial assets at FVOCI until the financial assets are derecognised and share of other comprehensive income of associates and joint ventures, and are dealt with in accordance with the accounting policies set out in Note 2 (i)(i) and Note 2 (f) respectively.

(iv) 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.

309

— F-142 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

45 Share capital reserves (Continued)

(c) Nature and purpose of reserves (Continued)

(v) Exchange reserve

The exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of overseas operations as well as the effective portion of any foreign exchange differences arising from hedges of the net investment in these operations. The reserve is dealt with in accordance with the accounting policies set out in Note 2 (h).

(d) 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 2020 (31 December 2019: Nil).

310

— F-143 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

46 Movement of allowances for impairment losses

		For the year ended 31 December 2020	For the year ended 31 December 2020	For the year ended 31 December 2020	For the year ended 31 December 2020
	At 1 January	Charge for the year	Write-offs/ transfer out	Disposal of subsidiaries and Assets classified as held for sale	Exchange differences and others (note(i))	At 31 December
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
				(Note 36)
Allowances for expected credit losses Deposits and placements with banks and non-bank financial institutions (Note 19 and 20) Financial assets held under resale agreements (Note 25) Account and bills receivables and other receivables (Note 22) Loans and advances to customers and other parties (Note 26) Investments in financial assets (Note 27) – Financial assets at amortised cost – Debt investments at FVOCI Credit commitments and guarantees provided (Note 44) Others (note(ii))

	249	10	–	–	12	271
	53	10	–	–	3	66
	6,387	2,749	(117)	(21)	610	9,608
	134,428	79,477	(77,743)	–	20,526	156,688

	8,649	8,486	(716)	–	1,005	17,424
	1,820	1,186	–	–	142	3,148
	7,103	1,280	–	–	499	8,882
	3,959	3,729	(3,875)	–	1,426	5,239
	162,648	96,927	(82,451)	(21)	24,223	201,326
Allowances for impairment losses Inventories (Note 24) Interests in associates (Note 29) Interests in joint ventures (Note 30) Fixed assets (Note 31) Intangible assets (Note 33) Prepayments (Note 22) Goodwill (Note 34) Other assets

	6,690	18	(453)	(67)	477	6,665
	6,735	1,470	(2,309)	–	76	5,972
	1,487	224	(45)	–	10	1,676
	47,640	445	(39)	(16)	91	48,121
	16,682	62	–	(5)	2	16,741
	76	1	(1)	–	3	79
	1,348	647	–	(3)	37	2,029
	2,006	782	(558)	–	113	2,343
	82,664	3,649	(3,405)	(91)	809	83,626
	245,312	100,576	(85,856)	(112)	25,032	284,952

311

— F-144 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

46 Movement of allowances for impairment losses (Continued)

	At 1 January HK$ million	For the year ended 31 December 2019 (Reversal)/ charge for the year Write-offs/ transfer out Disposal of subsidiaries and Assets classified as held for sale Exchange differences and others (note(i)) HK$ million HK$ million HK$ million HK$ million (Note 36)	For the year ended 31 December 2019 (Reversal)/ charge for the year Write-offs/ transfer out Disposal of subsidiaries and Assets classified as held for sale Exchange differences and others (note(i)) HK$ million HK$ million HK$ million HK$ million (Note 36)	For the year ended 31 December 2019 (Reversal)/ charge for the year Write-offs/ transfer out Disposal of subsidiaries and Assets classified as held for sale Exchange differences and others (note(i)) HK$ million HK$ million HK$ million HK$ million (Note 36)	For the year ended 31 December 2019 (Reversal)/ charge for the year Write-offs/ transfer out Disposal of subsidiaries and Assets classified as held for sale Exchange differences and others (note(i)) HK$ million HK$ million HK$ million HK$ million (Note 36)
Allowances for expected credit losses Deposits and placements with banks and non-bank financial institutions (Note 19 and 20) Financial assets held under resale agreements (Note 25) Account and bills receivables and other receivables (Note 22) Loans and advances to customers and other parties (Note 26) Investments in financial assets (Note 27) – Financial assets at amortised cost – Debt investments at FVOCI Credit commitments and guarantees provided (Note 44) Others (note(ii))	273 5 5,462 119,919 4,949 1,185 5,991 12,531	(19) 48 1,444 78,951 4,060 772 1,261 2,205	– – (66) (69,023) (212) (102) – (10,511)	– – (210) – – – – –	(5) – (243) 4,581 (148) (35) (149) (266)
	150,315	88,722	(79,914)	(210)	3,735
Allowances for impairment losses Inventories (Note 24) Interests in associates (Note 29) Interests in joint ventures (Note 30) Fixed assets (Note 31) Intangible assets (Note 33) Prepayments (Note 22) Goodwill (Note 34) Other assets	5,600 2,496 1,448 48,015 16,721 88 1,086 1,552	1,720 4,285 75 26 22 (1) 202 695	(171) (12) (35) (29) (26) (1) – (375)	(425) – – (101) (42) (8) – –	(34) (34) (1) (271) 7 (2) 60 134
	77,006	7,024	(649)	(576)	(141)
	227,321	95,746	(80,563)	(786)	3,594

Note:

(i) Others include recovery of loans written off.

(ii) Movement of allowances for accrued interest of the loans and advances to customers and other parties, investments in financial assets are included in others.

312

— F-145 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

47 Contingent liabilities and commitments

(a) Credit commitments

Credit commitments in connection with the financial services segment of the Group take the form of loan commitments, credit card commitments, 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. 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 drawn down. 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.

	As at 31	December
	2020		2019
	HK$ million	HK$ million
Contractual amount
Loan commitments
With an original maturity of within 1 year	16,797		7,471
With an original maturityof 1year or above	42,173		50,397
	58,970		57,868
Credit card commitments	740,790		608,970
Acceptances	664,777		475,619
Letters of credit	148,767		116,102
Guarantees	143,619		165,729
	1,756,923	1,424,288

313

— F-146 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

47 Contingent liabilities and commitments (Continued)

(b) Credit commitments analysed by credit risk weighted amount

	As at 31	December
	2020	2019
	HK$ million	HK$ million
Credit risk weighted amount on credit commitments	520,212	444,994

Notes:

(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) The credit risk weighted amount refers to the amount as computed in accordance with the rules set out by the China Banking and Insurance Regulatory Commission and depends on the status of counterparties and the maturity characteristics. The risk weighting used is ranging from 0% to 150%.

(c) 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 treasury 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:

		As at 31	December
		2020	2019
		HK$ million	HK$ million
Redemption	commitment for treasurybonds	13,761	12,584

As at 31 December 2020, the original maturities of these bonds vary from 1 to 5 years (31 December 2019: 1 to 5 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 on a backto-back basis for the early redemption of these bonds, which are redeemed by the holders through the Group, but will settle the principal and interest upon maturity.

314

— F-147 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

47 Contingent liabilities and commitments (Continued)

(d) Guarantees provided

Except for guarantees that have been recognised as liabilities, the guarantees issued by the Group at the balance sheet date are as follows:

As at 31	December
2020		2019
HK$ million	HK$	million
Related parties (note) 10,936 Thirdparties 2,063		16,229 2,886
12,999		19,115

As at balance date, the counter guarantees issued to the Group by related parties and third parties mentioned above are as follows:

As at 31	December
2020		2019
HK$ million	HK$	million
Related parties (note) 1,188 Thirdparties 242		5,586 228
1,430		5,814

Note:

As at 31 December 2020, the guarantees provided to related parties by the Group include guarantees provided to former subsidiaries of the Group that were disposed to China Overseas Land & Investment Limited (“China Overseas”) in 2016, amounting to RMB1,000 million (approximately HK$1,188 million) (31 December 2019: RMB5,000 million (approximately HK$5,582 million)). China Overseas has provided counter guarantees to the Group.

The relationship and transaction with related parties are disclosed in Note 49.

315

— F-148 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

47 Contingent liabilities and commitments (Continued)

(e) Outstanding litigation and disputes

The Group is involved in a number of current and pending legal proceedings. The Group provided for liabilities arising from those legal proceedings in which the outflow of economic benefit is probable and can be reliably estimated in the consolidated balance sheet. The Group believes that these accruals are reasonable and adequate.

(i) There are a number of disputes with Mineralogy, and their details are disclosed in Note 3 (l).
(ii) There are some issues in dispute with MCC, and their details are disclosed in Note 3 (k).

(f) Capital commitments

As at the balance sheet date, the Group had the following capital commitments not provided for in these consolidated financial statements:

	As at 31	December
	2020	2019
	HK$ million	HK$ million
Contracted for	27,075	33,183

316

— F-149 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values

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 management

Credit risk refers to the risk of loss caused by default of debtor or counterparty. Credit risk also occurs when the Group makes unauthorised or inappropriate loans and advances to customers, financial commitments or investments. The credit risk exposure of the Group mainly arises from the Group’s loan and advance to customers, treasury business, off-balance sheet item and receivables arising from sale of goods and rendering of services.

The Group has standardised management on the entire credit business process including loan application, and its investigation approval and granting of loan, and monitoring of non-performing loans. Through strictly standardising the credit business process, strengthening the whole process management of pre-loan investigation, credit rating and credit granting, examination and approval, loan review and post-loan monitoring, improving the risk of slow-release of collateral, accelerating the liquidation and disposal of non-performing loans, and promoting the upgrading and transformation of credit management system, the credit risk management level of the Group has been comprehensively improved.

In addition to the credit risk to the Group caused by credit assets, for treasury business, the Group manages the credit risk for treasury business through prudently selecting peers and other financial institutions with comparable credit levels as counterparties, balancing credit risk with returns on investment, comprehensively considering internal and external credit rating information, granting credit hierarchy, and using credit management system to review and adjust credit commitments on a timely basis, etc. In addition, the Group provides off-balance sheet commitment and guarantee business to customers, so it is possible for the Group to make payment on behalf of the customer in case of customer’s default and bear risks similar to the loan. Therefore, the Group applies similar risk control procedures and policies to such business to reduce the credit risk.

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.

317

— F-150 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(a) Credit risk (Continued)

Measurement of ECL

The Group adopts the “ECL model” on its debt instruments which are classified as financial assets measured at amortised cost and at FVOCI, credit commitments and financial guarantees in accordance with the provisions of HKFRS 9.

The Group applies the HKFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for account and bills receivables and contract assets, regardless whether there is significant financing component or not. For other financial assets that are included in the measurement of ECL, the Group evaluates whether the credit risks of related financial assets have increased significantly since initial recognition. The “three-stage” impairment model is used to measure their loss allowances respectively to recognise ECL and their movements:

Stage 1: Financial instruments with no significant increase in credit risk since its initial recognition will be classified as “stage 1” and the Group continuously monitors their credit risk. The loss allowances of financial instruments in stage 1 is measured based on the ECL in the next 12 months, which represents the proportion of the ECL in the lifetime due to possible default events in the next 12 months.

Stage 2: If there is a significant increase in credit risk initial recognition, the Group transfers the related financial instruments to stage 2, but it will not be considered as credit-impaired instruments. The ECL of financial instruments in stage 2 is measured based on the lifetime ECL.

Stage 3: If the financial instruments are credit-impaired after initial recognition, it will be moved to stage 3. The ECL of financial instruments in stage 3 is measured based on the lifetime ECL.

Purchased or originated credit-impaired financial assets refers to financial assets that are creditimpaired at the initial recognition. Loss allowances on these assets are the lifetime ECL.

The Group estimates the ECL in accordance with HKFRS 9, and the key judgments and assumptions adopted by the Group are as follows:

(1) Significant increase in credit risk

On each balance sheet date, the Group evaluates whether the credit risk of the relevant financial instruments has increased significantly since initial recognition. When one or more on quantitative or qualitative threshold, or upper limit are triggered, the credit risk of financial instruments would be considered as increased significantly.

318

— F-151 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(a) Credit risk (Continued)

Measurement of ECL (Continued)

(1) Significant increase in credit risk (Continued)
By setting quantitative and qualitative threshold, and upper limit, the Group determines whether the credit risk of financial instruments has increased significantly since initial recognition. The judgment mainly includes (1) default probability of borrower/debtor increases; (2) significant adverse changes in business, financial or operating conditions of borrowers and in economic conditions; (3) significant increase in other credit risk. For the borrowers who are 30 days (exclusive) to 90 days (inclusive) past due on their contractual payments (including principal and interest), the Group considers that their credit risk has increased significantly and classifies them to stage 2.
(2) Definition of default and credit-impaired assets
When credit impairment occurred, the Group defines that the financial asset is in default. In general, a financial asset that is overdue for more than 90 days is considered to be in default.

When one or more events that adversely affect the expected future cash flow of a financial asset occurs, the financial asset becomes a credit-impaired financial asset. Evidence of creditimpaired financial assets includes the following observable information:

The issuer or borrower/debtor is in significant financial difficulties;
The borrower/debtor is in breach of financial covenant(s) such as default or overdue in repayment of interests or principal etc;
The creditor gives the debtor concession that would not be offered otherwise, considering economic or contractual factors relating to the debtor’s financial difficulties;
It is becoming probably that the borrower/debtor will enter bankruptcy or other debt restructuring;
An active market for that financial asset has disappeared because of financial difficulties from issuer or borrower/debtor;
Financial assets are purchased or originated at a deep discount that reflects the incurred credit losses.

The Group’s default definition has been consistently applied to the modeling of default probability, default risk exposure and default loss rate in the Group’s expected credit loss calculation process.

319

— F-152 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(a) Credit risk (Continued)

Measurement of ECL (Continued)

(3) Inputs for measurement of ECL

The ECL is measured on either a 12-month or lifetime basis depending on whether a significant increase in credit risk has occurred or whether an asset is considered to be credit-impaired. Related definitions are as follows:
The probability of default (“PD”) represents the likelihood of a borrower/debtor defaulting on its financial obligations, either over the next 12 months or over the remaining lifetime of the obligation.
Loss given default (“LGD”) represents the Group’s expectation of the extent of loss on a defaulted exposure. LGD varies by type of counterparty, type and seniority of claim, and availability of collateral or other credit support. LGD is expressed as a percentage loss per unit of exposure at the time of default and is calculated on a 12-month or lifetime basis.
Exposure at default (“EAD”) is based on the amounts that the Group expects to be owned at the time of default, over the next 12 months or over the remaining lifetime of the obligation.

The Group regularly monitors and reviews the assumptions related to the calculation of expected credit losses, including the probability of default and the change in the value of collateral over time.

The Group categorises exposures with similar risk characteristics and estimates the PD, LGD, EAD by the exposures respectively. During the year 31 December 2020, based on data accumulation and assessment of the impact of COVID-19, the Group optimised and updated relevant models and parameters. The Group has obtained sufficient information to ensure its statistical reliability. ECL of the Group is measured based on the continuous asessment and follow-up of individuals and their financial status.

During the reporting period, there were no significant changes in the estimation technology or key assumptions.

320

— F-153 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(a) Credit risk (Continued)

Measurement of ECL (Continued)

(4) Forward-looking information

The assessment of significant increase in credit risk and the calculation of ECL both incorporate forward-looking information. The Group has performed historical analysis and identified the key economic variables impacting credit risk and ECL for each asset portfolio.

These economic variables and their associated impact on the PD vary by financial instruments. Expert judgment has also been applied in this process, forecasts of these economic variables are estimated by the experts of the Group on a yearly basis, and the impact of these economic variables on the PD and the EAD was determined by statistical regression analysis.

In addition to the base economic scenario, the Group determines the possible scenarios and their weighted by a combination of statistical analysis and expert judgment. The Group measures ECL as either a probability weighted 12 months ECL (stage 1) or a probability weight lifetime ECL (stage 2 and stage 3). These probability-weighted ECL are determined by running each scenario through the relevant ECL model and multiplying it by the appropriate scenario weighting.

Macroeconomic scenario and weighting information

The Group has built a macro forecast model, and performed historical analysis and identified the key economic variables impacting credit risk and ECL for each portfolio, such as Gross Domestic Product (“GDP”), registered urban unemployment rate, industrial added value, total retail sales of consumer goods and broad money supply, etc. Due to COVID-19’s impact on the macro economy, the Group reassessed and updated the key economic indicators affecting ECLs and their estimates during the reporting period based on the latest historical data.

321

— F-154 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (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 credit risk exposure of financial instruments for which allowance for impairment losses is recognised is as follows:

	As at 31	December
	2020		2019
	HK$ million	HK$ million
Deposits with central banks, banks and non-bank
financial institutions	748,278		733,290
Placements with banks and non-bank financial
institutions	198,513		226,686
Trade and other receivables	135,276		148,653
Financial assets held under resale agreements	143,029		11,117
Loans and advances to customers and other parties	5,197,690	4,358,920
Investments in financial assets
– At amortised cost	1,156,496	1,040,997
– Debt investments at FVOCI	860,255		701,936
Contract assets	13,619		11,504
Other financial assets	4,110		2,366
	8,457,266	7,235,469
Credit commitments andguaranteesprovided	1,769,922	1,443,403
Maximum credit risk exposure	10,227,188	8,678,872

The maximum credit risk exposure for debt instruments measured at FVPL at the balance sheet date without taking into consideration of any collateral held or other credit enhancement is represented by the balance of each type of debt instruments in the balance sheet without deducting any allowance for impairment losses. A summary of the maximum exposure is as follows:

As at 31	December
2020		2019
HK$ million	HK$ million
Derivative financial instruments 47,804		19,580
Loans and advances to customers and other parties at FVPL 8,465 Investments in financial assets – Financial assets at FVPL (debt instruments) 482,911		7,719 366,373
Maximum credit risk exposure 539,180		393,672

322

— F-155 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(a) Credit risk (Continued)

(ii) Expected credit losses

The following table explains the changes in the gross carrying amount for loans and advances to customers and other parties for the year:

	For Stage 1 HK$ million	the year ended Stage 2 HK$ million	31 December 2020 Stage 3 Total HK$ million HK$ million	31 December 2020 Stage 3 Total HK$ million HK$ million
Balance at 1 January 2020 Movements: Net transfers out from stage 1 Net transfers into stage 2 Net transfers into stage 3 Net increase/(decrease) during the year (note (i)) Write offs Others (note (ii))	4,303,423 (141,769) – – 685,958 – 282,091	111,552 – 26,540 – (15,546) – 6,377	77,946 – – 115,229 (25,644) (77,743) 5,494	4,492,921 (141,769) 26,540 115,229 644,768 (77,743) 293,962
Balance at 31 December 2020	5,129,703	128,923	95,282	5,353,908
	For the year ended		31 December 2019
	Stage 1	Stage 2	Stage 3	Total
	HK$ million	HK$ million	HK$ million	HK$ million
Balance at 1 January 2019	3,959,696	109,399	75,163	4,144,258
Movements:
Net transfers out from stage 1	(129,433)	–	–	(129,433)
Net transfers into stage 2	–	48,017	–	48,017
Net transfers into stage 3	–	–	81,416	81,416
Net increase/(decrease) during
the year (note (i))	563,531	(43,503)	(7,884)	512,144
Write offs	–	–	(69,023)	(69,023)
Others (note (ii))	(90,371)	(2,361)	(1,726)	(94,458)
Balance at 31 December 2019	4,303,423	111,552	77,946	4,492,921

323

— F-156 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(a) Credit risk (Continued)

(ii) Expected credit losses (Continued)

The following table explains the changes in the gross carrying amount for investments in financial assets for the year:

	For Stage 1 HK$ million	the year ended Stage 2 HK$ million	31 December 2020 Stage 3 Total HK$ million HK$ million	31 December 2020 Stage 3 Total HK$ million HK$ million
Balance at 1 January 2020 Movements: Net transfers out from stage 1 Net transfers out from stage 2 Net transfers into stage 3 Net increase/(decrease) during the year (note (i)) Write offs Others (note (ii))	1,727,835 (3,746) – – 151,198 – 118,921	12,932 – (1,728) – (6,160) – 507	10,836 – – 5,474 16,860 (716) 2,000	1,751,603 (3,746) (1,728) 5,474 161,898 (716) 121,428
Balance at 31 December 2020	1,994,208	5,551	34,454	2,034,213
	For the year ended		31 December 2019
	Stage 1	Stage 2	Stage 3	Total
	HK$ million	HK$ million	HK$ million	HK$ million
Balance at 1 January 2019	1,478,556	5,559	3,099	1,487,214
Movements:
Net transfers out from stage 1	(12,954)	–	–	(12,954)
Net transfers into stage 2	–	11,793	–	11,793
Net transfers into stage 3	–	–	1,161	1,161
Net increase/(decrease) during
the year (note (i))	287,477	(4,236)	7,001	290,242
Write offs	–	–	(212)	(212)
Others (note (ii))	(25,244)	(184)	(213)	(25,641)
Balance at 31 December 2019	1,727,835	12,932	10,836	1,751,603

Notes:

(i) Net increase/(decrease) mainly includes changes in carrying amount due to new purchased or originated credit-impaired financial assets or de-recognition excepting for write-off.

(ii) Others includes changes in interest accrual and exchange adjustment.

324

— F-157 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(a) Credit risk (Continued)

(ii) Expected credit losses (Continued)

Movements of the loss allowances for loans and advances to customers and other parties for the year is as follows:

	For Stage 1 HK$ million	the year ended Stage 2 HK$ million	31 December 2020 Stage 3 Total HK$ million HK$ million	31 December 2020 Stage 3 Total HK$ million HK$ million
Balance at 1 January 2020 Movements (note (i)): Net transfers out from stage 1 Net transfers into stage 2 Net transfers into stage 3 Net increase/(decrease) during the year (note (ii)) Write offs Parameters change for the year (note (iii)) Others (note (iv))	44,014 (7,313) – – 12,037 – 186 3,603	30,234 – 4,209 – (5,447) – 8,653 1,963	60,274 – – 50,841 (2,873) (77,743) 19,165 15,068	134,522 (7,313) 4,209 50,841 3,717 (77,743) 28,004 20,634
Balance at 31 December 2020	52,527	39,612	64,732	156,871
	For the year ended		31 December 2019
	Stage 1	Stage 2	Stage 3	Total
	HK$ million	HK$ million	HK$ million	HK$ million
Balance at 1 January 2019	40,325	26,464	53,219	120,008
Movements (note (i)):
Net transfers out from stage 1	(2,648)	–	–	(2,648)
Net transfers into stage 2	–	6,977	–	6,977
Net transfers into stage 3	–	–	48,156	48,156
Net increase/(decrease) during
the year (note (ii))	6,711	(9,095)	(2,118)	(4,502)
Write offs	–	–	(69,023)	(69,023)
Parameters change for the year
(note (iii))	372	6,537	24,059	30,968
Others (note (iv))	(746)	(649)	5,981	4,586
Balance at 31 December 2019	44,014	30,234	60,274	134,522

325

— F-158 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(a) Credit risk (Continued)

(ii) Expected credit losses (Continued)

Movements of the loss allowances for investments in financial assets for the year is as follows:

	For Stage 1 HK$ million	the year ended Stage 2 HK$ million	31 December 2020 Stage 3 Total HK$ million HK$ million	31 December 2020 Stage 3 Total HK$ million HK$ million
Balance at 1 January 2020 Movements (note (i)): Net transfers out from stage 1 Net transfers out from stage 2 Net transfers into stage 3 Net increase/(decrease) during the year (note (ii)) Write offs Parameters change for the year (note (iii)) Others (note (iv))	5,698 (61) – – 295 – (77) 345	518 – (30) – (280) – 406 41	4,274 – – 1,580 4,411 (716) 3,428 778	10,490 (61) (30) 1,580 4,426 (716) 3,757 1,164
Balance at 31 December 2020	6,200	655	13,755	20,610
	For the year ended		31 December 2019
	Stage 1	Stage 2	Stage 3	Total
	HK$ million	HK$ million	HK$ million	HK$ million
Balance at 1 January 2019	3,970	327	1,855	6,152
Movements (note (i)):
Net transfers out from stage 1	(67)	–	–	(67)
Net transfers into stage 2	–	220	–	220
Net transfers into stage 3	–	–	261	261
Net increase/(decrease) during
the year (note (ii))	1,904	(28)	2,149	4,025
Write offs	–	–	(212)	(212)
Parameters change for the year
(note (iii))	(26)	9	307	290
Others (note (iv))	(83)	(10)	(86)	(179)
Balance at 31 December 2019	5,698	518	4,274	10,490

326

— F-159 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(a) Credit risk (Continued)
(ii) Expected credit losses (Continued)
- Notes:
- (i) Movements mainly includes the impacts to ECL due to changes in stages.
- (ii) Net increase/(decrease) mainly includes changes in allowance of impairment due to new purchased or originated creditimpaired financial assets or de-recognition excepting for write-off.
- (iii) Parameters change mainly includes the impacts to ECL due to unwind of discount, regular update on modeling parameters resulting from changes in PD and LGD except for changes in stages.
- (iv) Others includes recoveries of amounts previously written off, changes in interest accrual and exchange adjustment.

(iii) Loans and advances to customers and other parties analysed by industry sector:

As at 31 December

Gross balance HK$ million	2020		2019 Gross balance Loans and advances secured by collateral HK$ million % HK$ million
		Loans and advances secured by collateral
	%	HK$ million
Corporate loans – Real estate 346,701 – Manufacturing 389,283 – Rental and business services 492,938 – Wholesale and retail 188,866 – Water, environment and public utility management 404,887 – Transportation, storage and postal services 160,123 – Construction 119,077 – Production and supply of electric power, gas and water 102,817 – Public management and social organisations 13,130 – Others 380,953			326,183 7% 288,557 290,098 6% 127,970 393,789 8% 213,173 165,088 4% 98,624 300,791 7% 139,303 172,346 4% 79,691 108,029 2% 51,945 73,947 2% 52,616 14,672 1% 7,517 357,563 8% 162,774
	6%	294,392
	7%	182,953
	9%	237,558
	3%	125,297
	8%	161,041
	3%	87,862
	2%	65,382
	2%	50,739
	1%	914
	7%	142,282
2,598,775 Personal loans 2,254,861 Discounted bills 493,555	48%	1,348,420	2,202,506 49% 1,222,170 1,935,065 42% 1,275,969 351,681 8% –

	42%	1,546,447
	9%	–
5,347,191 Accrued interest 15,182	99%	2,894,867	4,489,252 99% 2,498,139 11,388 1% –

	1%	–
5,362,373	100%	2,894,867	4,500,640 100% 2,498,139

327

— F-160 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(a) Credit risk (Continued)
(iv) Loans and advances to customers and other parties analysed by geographical sector:

As at 31	December
2020 Loans and		2019	Loans and
advances			advances
Gross secured by	Gross		secured by
balance collateral	balance		collateral
HK$ million % HK$ million	HK$ million	%	HK$ million
Mainland China 5,121,823 95% 2,793,815	4,297,094	94%	2,404,040
Hong Kong, Macau and Taiwan 218,309 3% 98,355 Overseas 7,059 1% 2,697	189,415 2,743	4% 1%	92,826 1,273
5,347,191 99% 2,894,867	4,489,252	99%	2,498,139
Accrued interest 15,182 1% –	11,388	1%	–
5,362,373 100% 2,894,867	4,500,640	100%	2,498,139

(v) Loans and advances to customers and other parties analysed by type of security

	As at 31	December
	2020	2019
	HK$ million	HK$ million
Unsecured loans	1,337,609	1,090,369
Guaranteed loans	621,160	549,063
Secured loans
– Loans secured by collateral	2,353,265	2,049,804
– Pledged loans	541,602	448,335
	4,853,636	4,137,571
Discounted bills	493,555	351,681
	5,347,191	4,489,252
Accrued interest	15,182	11,388
Gross loans and advances	5,362,373	4,500,640

328

— F-161 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(a) Credit risk (Continued)
(vi) Rescheduled loans and advances to customers and other parties
- Rescheduled loans and advances are those loans and advances which have been restructured or renegotiated because of deterioration in the financial position of the borrower/debtor, or of the inability of the borrower/debtor to meet the original repayment schedule and for which the revised repayment terms are a concession that the Group would not otherwise consider.

	As at 31	December
	2020 % of total	2019	% of total
	Gross loans and	Gross	loans and
	balance advances	balance	advances
	HK$ million	HK$ million
Rescheduled loans and
advances	26,175 0.49%	25,444	0.57%
– Rescheduled loans and
advances overdue more
than 3 months	16,841 0.31%	12,057	0.27%

(vii) 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 2020, 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 2019: Nil).

329

— F-162 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(b) 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 formulates 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:

	Repayable on demand HK$ million	Within 1 year HK$ million	As at 31 December 2020 Between 1 and 5 years More than 5 years HK$ million HK$ million	As at 31 December 2020 Between 1 and 5 years More than 5 years HK$ million HK$ million	Indefinite maturity date HK$ million (note)	Total HK$ million
Total financial assets Total financial liabilities	373,894 (3,715,743)	3,432,386 (3,580,295)	2,291,302 (1,127,948)	2,071,776 (174,575)	873,982 (6,284)	9,043,340 (8,604,845)
Financial asset-liability gap	(3,341,849)	(147,909)	1,163,354	1,897,201	867,698	438,495

			As at 31 December 2019
			Between		Indefinite
	Repayable	Within	1 and	More than	maturity
	on demand	1 year	5 years	5 years	date	Total
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
					(note)
Total financial assets	415,780	2,695,101	1,757,424	2,066,205	734,694	7,669,204
Total financial liabilities	(2,839,200)	(3,410,296)	(829,669)	(179,560)	(5,735)	(7,264,460)
Financial asset-liability gap	(2,423,420)	(715,195)	927,755	1,886,645	728,959	404,744

330

— F-163 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(b) Liquidity risk (Continued)

The table below presents the undiscounted cash flows of the Group’s financial assets and liabilities:

	Repayable on demand HK$ million	Within 1 year HK$ million	As at 31 December 2020 Between 1 and 5 years More than 5 years HK$ million HK$ million	As at 31 December 2020 Between 1 and 5 years More than 5 years HK$ million HK$ million	Indefinite maturity date HK$ million (note)	Total HK$ million
Total financial assets Total financial liabilities	373,894 (3,715,743)	3,667,998 (3,692,094)	2,835,210 (1,266,874)	2,849,358 (210,377)	890,571 (6,385)	10,617,031 (8,891,473)
Financial asset-liability gap	(3,341,849)	(24,096)	1,568,336	2,638,981	884,186	1,725,558

			As at 31 December 2019
			Between		Indefinite
	Repayable	Within	1 and	More than	maturity
	on demand	1 year	5 years	5 years	date	Total
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
					(note)
Total financial assets	415,780	2,944,363	2,250,999	2,769,008	741,097	9,121,247
Total financial liabilities	(2,839,200)	(3,794,768)	(1,148,985)	(203,253)	(5,735)	(7,991,941)
Financial asset-liability gap	(2,423,420)	(850,405)	1,102,014	2,565,755	735,362	1,129,306

Note:

For cash and balances with central banks, the indefinite maturity date amount represented statutory deposit reserve funds and fiscal deposits maintained with the People’s Bank of China. For placements with and loans to banks and non-bank financial institutions, loans and advances to customers and investments, the indefinite maturity date amount represented the balances being impaired or overdue for more than one month. Equity investments were also reported under indefinite maturity date.

331

— F-164 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(b) Liquidity risk (Continued)

Credit Commitments include loan commitments, acceptances, credit card commitments, guarantees, letters of credit and others. The tables below summarise the amounts of credit commitments by remaining contractual maturity.

	Within 1 year HK$ million	As at 31 December 2020 Between 1 and 5 years More than 5 years HK$ million HK$ million	As at 31 December 2020 Between 1 and 5 years More than 5 years HK$ million HK$ million	Total HK$ million
Loan commitments Guarantees Letters of credit Acceptances Credit card commitments	5,636 86,219 148,465 664,777 733,483	15,809 56,372 302 – 7,270	37,525 1,028 – – 37	58,970 143,619 148,767 664,777 740,790
Total	1,638,580	79,753	38,590	1,756,923
		As at 31 December 2019
	Within	Between	More than
	1 year	1 and 5 years	5 years	Total
	HK$ million	HK$ million	HK$ million	HK$ million
Loan commitments	18,254	20,654	18,960	57,868
Guarantees	107,830	54,797	3,102	165,729
Letters of credit	113,833	2,269	–	116,102
Acceptances	475,619	–	–	475,619
Credit card commitments	601,555	7,131	284	608,970
Total	1,317,091	84,851	22,346	1,424,288

332

— F-165 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(c) Interest rate risk

Each of the Group’s operating entities has formulated its own interest risk management policies and procedures covering identification, measurement, monitoring and control of risks. The Group manages interest rate risk to control potential loss from interest rate risk at an acceptable level.

(i)

Asset-liability gap

Interest rate risk arises from mismatch between repricing dates of financial assets and liabilities affected by market interest rate volatility.

	Non-interest bearing HK$ million	As at 31 December 2020 Within 1 year Between 1 and 5 years More than 5 years HK$ million HK$ million HK$ million	As at 31 December 2020 Within 1 year Between 1 and 5 years More than 5 years HK$ million HK$ million HK$ million	As at 31 December 2020 Within 1 year Between 1 and 5 years More than 5 years HK$ million HK$ million HK$ million	Total HK$ million
Total financial assets	565,468	6,656,828	1,339,046	481,998	9,043,340
Total financial liabilities	(223,547)	(7,096,556)	(1,075,224)	(209,518)	(8,604,845)
Financial asset-liability gap	341,921	(439,728)	263,822	272,480	438,495

		As at 31 December 2019
	Non-interest	Within	Between	More than
	bearing	1 year	1 and 5 years	5 years	Total
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Total financial assets	465,307	5,850,476	1,033,296	320,125	7,669,204
Total financial liabilities	(190,602)	(6,102,438)	(775,284)	(196,136)	(7,264,460)
Financial asset-liability gap	274,705	(251,962)	258,012	123,989	404,744

333

— F-166 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(c) Interest rate risk (Continued)

(ii) Effective interest rate

Effective interest rate
As at 31 December
2020 2019
Effective Effective
interest rate HK$ million interest rate	HK$ million
Assets Cash and deposits 1.51%-2.19% 755,386 1.55%-2.00% Placements with banks and non-bank financial institutions 1.90% 198,513 2.82%	740,434 226,686
Financial assets held under resale agreements 1.62% 143,029 2.13% Loans and advances to customers and other parties 5.31% 5,206,155 5.08% Investments in financial assets 3.22%-4.00% 2,553,067 3.66%-4.39%	11,117 4,366,639 2,153,729
Others – 884,678 –	791,319
9,740,828	8,289,924
Liabilities Borrowing from central banks 3.25% 266,611 3.34% Deposits from banks and non- bank financial institutions 2.36% 1,370,439 2.79%	268,256 1,061,380
Placements from banks and non-bank financial institutions 2.39% 74,308 2.84%	107,400
Financial assets sold under repurchase agreements 2.03% 94,774 2.39% Deposits from customers 2.10% 5,427,694 2.08% Bank and other loans 0.85%-8.00% 163,604 1.10%-8.00%	127,766 4,541,841 151,312
Debt instruments issued 2.45%-6.90% 973,858 2.80%-6.95%	823,964
Lease liabilities 2.20%-6.00% 18,267 3.10%-6.00%	17,435
Others – 342,631 –	296,079
8,732,186	7,395,433

334

— F-167 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(c) Interest rate risk (Continued)

(iii) Sensitivity analysis

The Group uses sensitivity analysis to measure the potential effect of changes in interest rates on the Group’s profit or loss. As at 31 December 2020, 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 HK$5,161 million (31 December 2019: decrease or increase by HK$4,376 million).

This sensitivity analysis is based on a static interest rate risk profile of the Group’s financial,4assets 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: (1) 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; (2) there is a parallel shift in the yield curve and in interest rates; and (3) 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.

(d) 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 revenue from the Group’s Sino Iron Project is denominated in US$, which is also the functional currency for this entity. A substantial portion of its development and operating expenditure are denominated in Australian Dollars. The Group entered into plain vanilla forward contracts to manage the foreign currency risks.

The Group funded the Sino Iron Project and the acquisition of bulk cargo vessels by borrowing US$ loans to match the future cash outflows of these assets. The Group’s investments in the Sino Iron Project and bulk cargo vessels (whose functional currency is in US$) have been designated as an accounting hedge against other US$ loans.

335

— F-168 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(d) Currency risk (Continued)

The exposure to currency risk arising from the financial assets and financial liabilities at the balance sheet dates is as follows (expressed in HK$ million):

	HK$	As at US$	31 December RMB	2020 Others	Total
Total financial assets Total financial liabilities	194,230 (270,868)	442,334 (482,330)	8,340,808 (7,798,994)	65,968 (52,653)	9,043,340 (8,604,845)
Financial asset-liability gap	(76,638)	(39,996)	541,814	13,315	438,495

		As at	31 December	2019
	HK$	US$	RMB	Others	Total
Total financial assets	183,551	356,266	7,073,604	55,783	7,669,204
Total financial liabilities	(321,638)	(348,602)	(6,554,096)	(40,124)	(7,264,460)
Financial asset-liability gap	(138,087)	7,664	519,508	15,659	404,744

The Group uses sensitivity analysis to measure the potential effect of changes in foreign currency exchange rates on the Group’s comprehensive income.

Assuming all other risk variables remained constant, a 100 basis points strengthening or weakening of HK$ against US$, RMB and other currencies as at 31 December 2020 would decrease or increase the Group’s total comprehensive income by HK$5,107 million (31 December 2019: decrease or increase by HK$5,379 million).

This sensitivity analysis is based on a static foreign exchange exposure profile of financial assets and financial liabilities and certain simplified assumptions. The analysis is based on the following assumptions: (1) the foreign exchange sensitivity is the gain and loss recognised as a result of 100 basis points fluctuation in the foreign currency exchange rates against HK$; (2) the exchange rates against HK$ for all foreign currencies change in the same direction simultaneously and do not take into account the correlation effect of changes in different foreign currencies; and (3) the foreign exchange exposures calculated include both spot foreign exchange exposures, forward foreign exchange exposures 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.

336

— F-169 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(e) Fair values

(i) Financial instruments carried at fair value
The following table presents the carrying amounts of financial instruments measured at fair value as at the balance sheet date across the three levels of the fair value hierarchy defined in HKFRS 13, Fair value measurement, with the fair value of each financial instrument categorised in its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:
Level 1 (highest level): fair values measured using quoted market for similar active markets for identical financial instruments;
Level 2: fair values measured using quoted prices in active market for similar financial instruments, or using valuation techniques in which all significant inputs are directly or indirectly based on observable market data;
Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.

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.

337

— F-170 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(e) Fair values (Continued)
(i) Financial instruments carried at fair value (Continued)

==> picture [421 x 276] intentionally omitted <==

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

||||||
|---|---|---|---|---|
|As at 31 December 2020|
|Level 1|Level 2|Level 3|Total|
|HK$ million|HK$ million|HK$ million|HK$ million|
|Assets|
|Bills receivables at FVOCI|1,235|15,925|–|17,160|
|Loans and advances to|
|customers and other|
|–|–|
|parties at FVOCI|488,811|488,811|
|Loans and advances to|
|customers and other|
|–|–|
|parties at FVPL|8,465|8,465|
|Derivative financial assets|107|47,666|31|47,804|
|Investments in financial assets|123,444|1,207,733|65,394|1,396,571|
|124,786|1,760,135|73,890|1,958,811|
|Liabilities|
|Financial liabilities at FVPL|(292)|(6,793)|(5,338)|(12,423)|
|Derivative financial liabilities|(372)|(49,436)|–|(49,808)|
|(664)|(56,229)|(5,338)|(62,231)|

----- End of picture text -----

338

— F-171 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(e) Fair values (Continued)

(i) Financial instruments carried at fair value (Continued)

		As at 31 December 2019	As at 31 December 2019
	Level 1	Level 2	Level 3	Total
	HK$ million	HK$ million	HK$ million	HK$ million
Assets
Bills receivables at FVOCI	–	14,415	–	14,415
Loans and advances to
customers and other
parties at FVOCI	–	344,715	–	344,715
Loans and advances to
customers and other
parties at FVPL	–	–	7,719	7,719
Derivative financial assets	117	19,111	352	19,580
Investments in financial assets	138,381	895,670	78,681	1,112,732
	138,498	1,273,911	86,752	1,499,161
Liabilities
Financial liabilities at FVPL	(147)	(244)	(1,045)	(1,436)
Derivative financial liabilities	(263)	(20,500)	–	(20,763)
	(410)	(20,744)	(1,045)	(22,199)

For the year ended 31 December 2020, there were no significant transfers between instruments in different levels (2019: Nil) and no significant changes in valuation techniques for determining the fair values of the instruments (2019: Nil).

339

— F-172 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(e) Fair values (Continued)
(i) Financial instruments carried at fair value (Continued)

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy:

==> picture [421 x 205] intentionally omitted <==

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

||||||||
|---|---|---|---|---|---|---|
|For the year ended 31 December 2020|
|Assets|Liabilities|
|Loans and|
|advances to|Financial|
|customers|liabilities at|
|and other|Derivatives|Investments|fair value|
|parties|financial|in financial|through|
|at FVPL|assets|assets|Total|profit or loss|Total|
|HK$ million|HK$ million|HK$ million|HK$ million|HK$ million|HK$ million|
|At 1 January 2020|7,719|352|78,681|86,752|(1,045)|(1,045)|
|Total (losses)/gains:|–|(321)|1,129|808|40|40|
|– in profit or loss|–|–|(320)|(320)|40|40|
|–|–|–|
|– in other comprehensive losses|(321)|1,449|1,128|
|Net settlements|746|–|(14,416)|(13,670)|(4,333)|(4,333)|
|At 31 December 2020|8,465|31|65,394|73,890|(5,338)|(5,338)|

----- End of picture text -----

==> picture [417 x 211] intentionally omitted <==

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

|||||||||
|---|---|---|---|---|---|---|---|
|For the year ended 31 December 2019|
|Assets|Liabilities|
|Loans and|
|advances to|Financial|
|customers|liabilities at|
|and other|Derivatives|Investments|fair value|Derivatives|
|parties|financial|in financial|through|financial|
|at FVPL|assets|assets|Total|profit or loss|liabilities|Total|
|HK$ million|HK$ million|HK$ million|HK$ million|HK$ million|HK$ million|HK$ million|
|At 1 January 2019|–|530|82,383|82,913|(370)|(1)|(371)|
|–|–|
|Total (losses)/gains:|(177)|1,257|1,080|(14)|(14)|
|– in profit or loss|–|–|881|881|(14)|–|(14)|
|– in other comprehensive|
|(losses)/income|–|(177)|376|199|–|–|–|
|Net settlements|7,719|(1)|(4,959)|2,759|(661)|1|(660)|
|At 31 December 2019|7,719|352|78,681|86,752|(1,045)|–|(1,045)|

----- End of picture text -----

340

— F-173 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(e) Fair values (Continued)

(ii) Fair value of other financial instruments (carried at other than fair value)

The carrying amounts and fair values of the Group’s financial assets and liabilities, other than those with carrying amounts that reasonably approximate to their fair values, are as follows:

	Carrying amount HK$ million	As at 31 December 2020 Fair value Level 1 Level 2 HK$ million HK$ million HK$ million	As at 31 December 2020 Fair value Level 1 Level 2 HK$ million HK$ million HK$ million	As at 31 December 2020 Fair value Level 1 Level 2 HK$ million HK$ million HK$ million	Level 3 HK$ million
Financial assets
Investments in financial assets
– Financial assets at amortised cost	1,156,496	1,143,875	10,132	821,002	312,741
Financial liabilities
Debt instruments issued
– Corporate bonds issued	114,829	110,436	68,086	42,350	–
– Notes issued	61,352	61,352	–	55,953	5,399
– Subordinated bonds issued	136,730	137,980	4,188	133,792	–
– Certificates of interbank
deposit issued	645,180	637,978	–	637,978	–
– Convertible corporate bonds issued	15,767	18,320	–	–	18,320
	973,858	966,066	72,274	870,073	23,719
		As	at 31 December 2019
	Carrying
	amount	Fair value	Level 1	Level 2	Level 3
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Financial assets
Investments in financial assets
– Financial assets at amortised cost	1,040,997	1,057,365	2,448	743,741	311,176
Financial liabilities
Debt instruments issued
– Corporate bonds issued	101,530	100,670	64,254	36,416	–
– Notes issued	115,006	114,362	364	110,454	3,544
– Subordinated bonds issued	99,975	100,400	6,462	93,938	–
– Certificates of deposit
(not for trading purpose)	3,196	3,113	–	3,113	–
– Certificates of interbank
deposit issued	489,886	481,933	–	481,933	–
– Convertible corporate bonds issued	14,371	14,260	–	14,260	–
	823,964	814,738	71,080	740,114	3,544

341

— F-174 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

48 Financial risk management and fair values (Continued)

(e) Fair values (Continued)

(iii) Estimation of fair values

As at the balance sheet date, the Group adopted the following major methods and assumptions in estimating the fair value of financial instruments.

Investments in financial assets and financial liabilities

Fair value is based on quoted market prices as at the balance sheet date for trading financial assets and liabilities (excluding derivatives), financial assets held for investment if there is an active market. If an active market does not exist for financial assets held for investment, the fair value is determined using valuation techniques.

Loans and advances to customers and other parties, bank and other loans Loans and advances to customers and other parties, and bank and other loans are repriced at market rates at least annually. Accordingly, their carrying amounts approximate to their fair values.

Placements with banks and non-bank financial institutions, financial assets held/sold under resale/repurchase agreements

Placements with banks and non-bank financial institutions, financial assets held/sold under resale/repurchase agreements are mainly priced at market interest rates and mature within one year. Accordingly, the carrying amounts approximate to their fair values.

Derivatives

The fair values of foreign currency and interest rate contracts are either based on their listed market prices or by discount cash flow model at the measurement date.

Financial guarantees

The fair values of financial guarantees are 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 the lenders would have charged, had the guarantees not been available, where reliable estimates of such information can be made.

342

— F-175 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

49 Material related parties

(a) Relationship of related parties

(i) In addition to subsidiaries, related parties include parent company, holding company’s fellow entities, associates and joint ventures of the Group.
(ii) CITIC Group, the parent and the ultimate controlling shareholder of the Group, is a state-owned company established in Beijing in 1979.

(b) Related party transactions

(i) Transaction amounts with related parties

==> picture [421 x 215] intentionally omitted <==

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

||||||
|---|---|---|---|---|
|For the year ended 31 December 2020|
|Holding|Associates|
|Parent|company’s|and joint|
|company|fellow entities|ventures|Total|
|HK$ million|HK$ million|HK$ million|HK$ million|
|Sales of goods|–|89|598|687|
|Purchase of goods|–|218|4,468|4,686|
|Interest income (note (2))|–|142|861|1,003|
|Interest expenses|148|699|994|1,841|
|Fee and commission income|17|16|363|396|
|Fee and commission expenses|–|–|201|201|
|Income from other services|–|166|125|291|
|Expenses for other services|–|283|1,021|1,304|
|Interest income from deposits|
|and receivables|–|–|468|468|
|Other operating expenses|58|42|310|410|

----- End of picture text -----

343

— F-176 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

49 Material related parties (Continued)

(b) Related party transactions (Continued)

(i) Transaction amounts with related parties (Continued)

	For	the year ended 31 December 2019	the year ended 31 December 2019
		Holding	Associates
	Parent	company’s	and joint
	company	fellow entities	ventures	Total
	HK$ million	HK$ million	HK$ million	HK$ million
Sales of goods	–	229	587	816
Purchase of goods	–	489	3,290	3,779
Interest income (note (2))	–	81	873	954
Interest expenses	85	717	446	1,248
Fee and commission income	70	5	979	1,054
Fee and commission expenses	–	–	107	107
Income from other services	2	121	310	433
Expenses for other services	–	142	1,275	1,417
Interest income from deposits
and receivables	–	–	427	427
Other operatingexpenses	3	30	207	240

Notes:

(1) These above transactions with related parties were conducted under the normal commercial terms.
(2) Interest rates of loans and advances to the related parties were determined at rates negotiated between the Group and the corresponding related parties on a case by case basis.
(3) 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.

344

— F-177 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

49 Material related parties (Continued)

(b) Related party transactions (Continued)

(ii) Outstanding balances with related parties

==> picture [421 x 423] intentionally omitted <==

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

||||||
|---|---|---|---|---|
|As at 31 December 2020|
|Holding|Associates|
|Parent|company’s|and joint|
|company|fellow entities|ventures|Total|
|HK$ million|HK$ million|HK$ million|HK$ million|
|Trade and other receivables|74|1,202|3,505|4,781|
|Loans and advances to|
|customers and other|
|–|
|parties (note (2))|3,328|7,930|11,258|
|–|–|
|Cash and deposits|23,169|23,169|
|Derivative financial instruments|
|and other assets|95|5|699|799|
|Investments in financial assets|
|– Financial assets at FVPL|–|–|28,842|28,842|
|– Financial assets at|
|amortised cost|–|–|1,210|1,210|
|Trade and other payables|254|12,082|1,404|13,740|
|Deposits from customers|13,294|7,995|21,124|42,413|
|Deposits from bank and non-|
|bank financial institutions|–|–|43,613|43,613|
|Derivative financial instruments|
|and other liabilities|–|–|8|8|
|Bank and other loans|2,727|24,786|–|27,513|
|Off-balance sheet items|
|Entrusted funds|7,221|899|36,320|44,440|
|Funds raised from investors|
|of non-principal guaranteed|
|wealth management|
|products|–|79|10,868|10,947|
|–|–|
|Guarantees provided (note (3))|10,936|10,936|
|Guarantees received|–|–|14,134|14,134|

----- End of picture text -----

345

— F-178 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

49 Material related parties (Continued)

(b) Related party transactions (Continued)

(ii) Outstanding balances with related parties (Continued)

		As at 31 December 2019	As at 31 December 2019
		Holding	Associates
	Parent	company’s	and joint
	company	fellow entities	ventures	Total
	HK$ million	HK$ million	HK$ million	HK$ million
Trade and other receivables	70	1,068	4,471	5,609
Loans and advances to
customers and other
parties (note (2))	–	1,997	6,811	8,808
Cash and deposits	–	–	24,425	24,425
Derivative financial instruments
and other assets	–	1	509	510
Investments in financial assets
– Financial assets at FVPL	–	–	845	845
– Financial assets at
amortised cost	–	–	79	79
Trade and other payables	350	11,937	2,354	14,641
Deposits from customers	2,233	7,913	16,105	26,251
Deposits from bank and non-
bank financial institutions	–	–	25,531	25,531
Derivative financial instruments
and other liabilities	–	–	144	144
Bank and other loans	5,290	21,925	73	27,288
Off-balance sheet items
Entrusted funds	6,380	134	31,233	37,747
Funds raised from investors
of non-principal guaranteed
wealth management
products	–	7	2,893	2,900
Guarantees provided (note (3))	–	–	16,229	16,229
Guarantees received	–	2,076	62,388	64,464

Notes:

(1) The above transactions with related party transactions which were conducted under the normal commercial terms.

(2) Interest rates of loans and advances 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.

346

— F-179 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

49 Material related parties (Continued)

(c) Transactions with other state-owned entities in the PRC

In addition to these related party transactions disclosed in Note 49 (b), transactions with other stateowned entities include but are not limited to the following:

sales and purchases of goods and provision of services;
purchase, sale and leases of property and other assets;
lending and deposit taking;
taking and placing of inter-bank balances;
derivative transactions;
entrusted lending and other custody services;
insurance and securities agency, and other intermediary services;
sale, purchase, underwriting and redemption of bonds issued by other state-owned entities; and
rendering and receiving of utilities and other services.

(d) Key management personnel remuneration

For the year ended 31 December 2020, the aggregate amount of the remuneration before tax paid to directors and executive officers of the Company amounted to HK$6.87 million (2019: HK$7.26 million).

347

— F-180 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

50 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 in which the Group holds an interest

The Group holds an interest in some structured entities through investments in debt securities issued by these structured entities. Such structured entities include wealth management products, investment management products, trust investment plans, asset-backed financings 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, as well as an analysis of the line items in the balance sheet in which the relevant assets are recognised:

Carrying amount	As at 31 December 2020 Investments in financial assets Financial assets at amortised cost Financial assets at FVPL Debt investments at FVOCI Equity investments at FVOCI Total Maximum loss exposure HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million
Wealth management products	– 1,476 – – 1,476 1,476
Investment management
products managed by
securities companies	83,946 3,338 40,751 – 128,035 128,035
Trust investment plans	231,843 3,960 – – 235,803 235,803
Asset-backed securities	103,741 1,942 231,040 – 336,723 336,723
Investment funds	– 367,787 – 384 368,171 368,171
Investments in creditor’s
rights on assets	96 – – – 96 96
Total	419,626 378,503 271,791 384 1,070,304 1,070,304

348

— F-181 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

50 Structured entities (Continued)

(b) Structured entities in which the Group holds an interest (Continued)

			As at 31 December 2019	As at 31 December 2019
		Investments in	financial assets
	Financial		Debt	Equity
	assets at	Financial	investments	investments		Maximum loss
Carrying amount	amortised cost	assets at FVPL	at FVOCI	at FVOCI	Total	exposure
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Wealth management products	33	3,211	–	–	3,244	3,244
Investment management
products managed by
securities companies	208,896	3,159	–	–	212,055	212,055
Trust investment plans	183,442	7,395	–	–	190,837	190,837
Asset-backed securities	113,515	97	147,605	–	261,217	261,217
Investment funds	–	267,812	–	418	268,230	268,230
Investments in creditor’s
rights on assets	570	–	–	–	570	570
Total	506,456	281,674	147,605	418	936,153	936,153

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 the issuance of products to investors. Interest held by the Group includes fees charged by providing management services and investment made by the Group.

349

— F-182 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

50 Structured entities (Continued)

Wealth management products and trust plans

As at 31 December 2020, the aggregate amount of assets held by the unconsolidated non-principalguaranteed wealth management products and trust plans which are sponsored by the Group was HK$2,978,464 million (31 December 2019: HK$3,095,615 million).

As at 31 December 2020, the amount of placements from the Group with non-principal-guaranteed wealth management products sponsored by the Group was HK$21,980 million (31 December 2019: HK$59,724 million); the amount of placements from banks and non-bank financial institutions was HK$302 million (31 December 2019: HK$39,253 million).

During the year ended 31 December 2020, the maximum exposure of the placements from the Group with non-principal guaranteed wealth management products sponsored by the Group was HK$68,620 million (2019: HK$67,067 million), and the Group has no maximum exposure of the placements from these wealth management products (31 December 2019: HK$14,190 million). These transactions were conducted under normal business terms and conditions.

During the year ended 31 December 2020, the amount of fee and commission income recognised from the above mentioned structured entities sponsored by the Group was HK$8,644 million (2019: HK$6,372 million); interest income of HK$1,381 million (2019: HK$1,432 million). The amount of interest expenses was HK$798 million (2019: HK$962 million).

350

— F-183 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

50 Structured entities (Continued)

(d) Transfers of financial assets

The Group entered into transactions which involved transfers of financial assets including securitisation transactions, structured transfers on assets usufruct, transfers of loans including nonperforming loans, and financial assets sold under repurchase agreements.

These transactions were entered into in the normal course of business by which recognised financial assets were transferred to third parties or structured entities. Transfers of assets may give rise to full or partial de-recognition of the financial assets concerned. On the other hand, where transferred assets do not qualify for de-recognition as the Group has retained substantially all the risks and rewards of these assets, the Group continues to recognise the transferred assets.

Details of the financial assets sold under repurchase agreements are set forth in Note 40. Details of securitisation transactions, structured transfers on assets usufruct and loan transfer transactions conducted by the Group for the year ended 31 December 2020 totally HK$61,973 million (2019: HK$87,984 million) are set forth below.

Securitisation transactions and structured transfers on assets usufruct

The Group enters into securitisation transactions by which it transfers loans to structured entities which issue asset-backed securities to investors. The Group assessed among other factors, whether or not to derecognise the transferred assets by evaluating the extent to which it retains the risks and rewards of the assets and whether it has relinquished its controls over these assets based on the criteria as detailed in Note 2 (i) and Note 3.

During the year ended 31 December 2020, the Group entered into securitisation transactions and structured transfers on assets usufruct backed by financial assets transferred with book value before impairment of HK$35,982 million (2019: HK$76,844 million). HK$14,097 million of this balance (2019: HK$50,721 million) was in respect of performing loans and the Group concluded that were all qualified for full de-recognition. The Group did not recognise other assets and other liabilities arising from continuing involvement (2019: HK$6,664 million).

Loan transfers

During the year ended 31 December 2020, the Group also through other types of transactions transferred loans of book value before impairment of HK$25,991 million (2019: HK$11,140 million). Among them HK$24,012 million are non-performing loans (2019: all of the HK$11,140 million are non-performing loans), HK$1,979 million are transfer of normal loans. The Group carried out assessment based on the criteria as detailed in Note 2 (i) and Note 3 and concluded that these transferred assets qualified for full de-recognition.

351

— F-184 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

51 Supplementary information to the consolidated cash flow statement

(a) Cash and cash equivalents held by the Group are as follows:

	As at 31	December
	2020		2019
	HK$ million	HK$ million
Cash	7,108		7,181
Bank deposits on demand	44,769		44,663
Surplus deposit reserve funds	67,975		108,958
Investments in debt securities with original maturities of
three months or less	89,193		71,753
Deposits with banks and non-bank financial institutions
due within three months	132,899		80,535
Placements with banks and non-bank financial institutions
due within three months	110,758		149,948
Cash and cash equivalents in the consolidated cash flow
statement	452,702		463,038

(b) Disposal of subsidiaries

For the year ended 31 December 2020 2019 HK$ million HK$ million	For the year ended 31 December 2020 2019 HK$ million HK$ million
Total assets 34,779 Total liabilities (25,537) Non-controllinginterests (4,787)	33,576 (20,682) (128)
Net assets disposed 4,455 Total consideration 6,367 Release of other comprehensive income relating to interests in disposed subsidiaries (124) Remeasurement at fair value of retained interest in former subsidiaries 1,737	12,766 9,106 (50) 5,747
Gains on disposal/deemed disposal of subsidiaries 3,525	2,037
Net cash inflow is determined as follows: Cash proceeds received – Proceeds from the above disposal of subsidiaries 4,857 – Collection of receivables from previous disposal of subsidiaries 3,143 Less: cash and cash equivalents disposed (1,554)	3,318 – (2,236)
6,446	1,082

352

— F-185 —

CITIC LIMITED ANNUAL REPORT 2020

For the year ended 31 December 2020

Notes to the Consolidated Financial Statements

51 Supplementary information to the consolidated cash flow statement

(Continued)

(c) Reconciliation of financing liabilities

nued) Reconciliation of financing	liabilities
	For the year ended 31 December Bank and other loans Debt instruments issued Interest expense Lease liabilities Total HK$ million HK$ million HK$ million HK$ million HK$ million
At 31 December 2018	155,590 738,723 7,580 292 902,185
Recognised on adoption of HKFRS 16	– – – 27,300 27,300
At 1 December 2019	155,590 738,723 7,580 27,592 929,485
Cash flows	8,758 94,408 (37,043) (6,673) 59,450
(Disposal of subsidiaries)/business
combination	(6,855) – – (147) (7,002)
Transfers into liabilities directly
associated with assets classified as
held for sale (Note 36)	(5,318) – (115) (10,300) (15,733)
Foreign exchange adjustments	(1,640) (15,134) (172) (407) (17,353)
Other non-cash movements	143 32 36,319 7,370 43,864
At 31 December 2019	150,678 818,029 6,569 17,435 992,711
Cash flows	1,852 99,634 (36,566) (6,150) 58,770
(Disposal of subsidiaries)/business
combination	9,585 – – 159 9,744
Foreign exchange adjustments	1,437 50,806 1,573 2,661 56,477
Other non-cash movements	(381) 62 34,184 4,162 38,027
At 31 December 2020	163,171 968,531 5,760 18,267 1,155,729

(d) Issue and redemption of other equity instruments by subsidiaries

In 2019, issuance of other equity instruments by subsidiaries was mainly from CITIC Bank, a subsidiary of the Group, which issued RMB39,993 million (approximately HK$45,488 million) undated capital bonds. CITIC Bank also issued convertible corporate bonds of which the equity portion is RMB1,067 million (approximately HK$1,213 million).

In 2020, redemption of other equity instruments by subsidiaries was from CITIC Envirotech Ltd. (“CITIC Envirotech”, a non-wholly-owned subsidiary of the Group listed in Singapore Exchange Limited), a subsidiary of the Group, which redeemed SGD236 million (approximately HK$1,295 million) (2019: redemption of other equity instruments by subsidiaries was from CBI, a subsidiary of the Group, which redeemed RMB1,825 million (approximately HK$2,076 million)) perpetual capital securities.

353

— F-186 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

52 Major transactions with non-controlling interests

On 6 November 2019, CITIC Envirotech Ltd. issued an announcement that CITIC Envirotech adopted a conditional voluntary offer to implement the delisting plan. A formal offer was issued on 3 January 2020 with approval of CITIC Envirotech General Meeting on 31 December 2019. Upon completion of the exit offer on 17 January 2020, the equity interest owned by the Group in CITIC Envirotech increased from 56.36% to 72.78%. CITIC Envirotech was delisted from the Singapore Exchange Limited on 23 January 2020. In July 2020, with the selective capital reduction by CITIC Environtech taking into effect, the equity interest owned by the Group in CITIC Envirotech increased to 74.02%.

The effect of changes in the ownership interest of CITIC Envirotech on the equity attributable to shareholders of the Company during the year is summarised as follows:

==> picture [467 x 88] intentionally omitted <==

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

|||
|---|---|
|For the year ended|
|31 December 2020|
|HK$ million|
|Decrease in carrying amount of non-controlling interests|871|
|Consideration paid to non-controlling interests|(1,390)|
|Excess of consideration paid recognised with equity|(519)|

----- End of picture text -----

354

— F-187 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

53 Balance sheet and reserve movement of the Company

	As at 31 December 2020 2019 HK$ million HK$ million	As at 31 December 2020 2019 HK$ million HK$ million
	2020
	HK$ million
Non-current assets Fixed assets Intangible assets Interests in subsidiaries Interests in joint ventures Investments in financial assets – Financial assets at fair value throughprofit or loss		6 1 449,153 35 3,732
	4
	1
	453,937
	35

	3,887
	457,864	452,927 67,050 157 3,387
Current assets Amounts due from subsidiaries Trade and other receivables Cash and deposits
	65,460
	45
	12,890
	78,395	70,594 523,521
Total assets	536,259
Current liabilities Bank and other loans Amounts due to subsidiaries and other related parties Trade and other payables Derivative financial instruments Income tax payable Debt instruments issued		11,840 13,257 43 – 960 3,955
	23,626
	12,153
	55
	17
	1,048
	9,843
	46,742	30,055 39,689 60,299 807
Non-current liabilities Long term borrowings Debt instruments issued Derivative financial instruments
	31,355
	58,242
	979
	90,576	100,795 130,850
Total liabilities	137,318
Equity Share capital Reserves		381,710 10,961
	381,710
	17,231
Total ordinary shareholders’ funds	398,941	392,671 523,521
Total liabilities and equity	536,259

The balance sheet of the Company was approved and authorised for issue by the board of directors on 30 March 2021.

Director: Zhu Hexin

Director: Xi Guohua

355

— F-188 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

53 Balance sheet and reserve movement of the Company (Continued)

(a) Reserve movement of the Company

	Share capital HK$ million (Note 45 (a))	Capital reserve HK$ million (Note 45 (c)(i))	Hedging reserve HK$ million (Note 45 (c)(ii))	Retained earnings HK$ million	Total HK$ million
At 31 December 2019	381,710	630	(824)	11,155	392,671
Cash flow hedges:
– Fair value loss during the year	–	–	(189)	–	(189)
– Transfer to net finance charges	–	–	12	–	12
	–	–	(177)	–	(177)
Profit attributable to shareholders of
the Company	–	–	–	17,647	17,647
Dividends paid to ordinary shareholders
of the Company	–	–	–	(11,200)	(11,200)
At 31 December 2020	381,710	630	(1,001)	17,602	398,941
	Share	Capital	Hedging	Retained
	capital	reserve	reserve	earnings	Total
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
	(Note 45 (a))	(Note 45 (c)(i))	(Note 45 (c)(ii))
At 31 December 2018	381,710	630	(603)	11,268	393,005
Cash flow hedges:
– Fair value loss during the year	–	–	(142)	–	(142)
– Transfer to net finance charges	–	–	(79)	–	(79)
	–	–	(221)	–	(221)
Profit attributable to shareholders of
the Company	–	–	–	12,686	12,686
Dividends paid to ordinary shareholders
of the Company	–	–	–	(12,799)	(12,799)
At 31 December 2019	381,710	630	(824)	11,155	392,671

356

— F-189 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

54 Major business combinations

Consolidation of CITIC Dicastal Company Limited (“CITIC Dicastal”)

In November 2020, the Ministry of Finance has issued the “Notice regarding State-owned Financial Institutions Focusing on Main Businesses, Compressing Levels and Other Related Matters” (Caijin [2020] No. 111). Taking into account relevant regulatory requirements, the financial results of CITIC Dicastal are consolidated into the financial statements of the Group as from 1 November 2020.

The consideration paid and fair value of the assets and liabilities acquired as at the acquisition date are listed below.

Consideration:

	HK$ million
Fair value of investmentpreviouslyheld as at acquisition date	4,613
Recognised amounts of identifiable assets acquired and liabilities assumed
Cash and deposits	5,734
Trade and other receivables	8,982
Inventories	6,873
Fixed assets	8,437
Investments in financial assets	1,037
Intangible assets	428
Interests in joint ventures	539
Right-of-use assets	566
Deferred tax assets	262
Other assets	384
Total identifiable assets acquired	33,242

357

— F-190 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

54 Major business combinations (Continued)

Consolidation of CITIC Dicastal Company Limited (“CITIC Dicastal”) (Continued)

Recognised amounts of identifiable assets acquired and liabilities assumed

	HK$ million
Trade and other payables Bank and other loans Provisions Employee benefits payables Lease liabilities Contract liabilities Deferred tax liabilities Income tax payable Other liabilities	(8,873) (9,848) (1,527) (1,342) (142) (92) (252) (77) (633)
Total identifiable liabilities assumed	(22,786) 10,456 (6,053) 210 4,613
Total identifiable net assets of CITIC Dicastal Non-controlling Interest Goodwill
Total net assets acquired

Net cash received from acquisition:

	HK$ million
Total consideration paid in cash	–
Cash and cash equivalents acquired	5,734
	5,734

The revenue and net profit attributable to ordinary shareholders of the Group during the period from 1 November 2020 to 31 December 2020 contributed by CITIC Dicastal was HK$6,765 million and HK$72 million respectively. Had CITIC Dicastal been consolidated from 1 January 2020, the consolidated income statement would show pro-forma revenue and net profit attributable to ordinary shareholders of the Group of approximately HK$575,480 million and HK$56,628 million respectively.

55 Post balance sheet events

The Group does not have any significant events after the balance sheet date that need to be disclosed.

56 Comparative amounts

Reclassifications have been made on some of the comparative amounts to ensure the comparability.

57 Approval of the consolidated financial statements

The consolidated financial statements were approved and authorised for issue by the board of directors on 30 March 2021.

358

— F-191 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

58 Possible impact of amendments, new standards and interpretations issued but not yet adopted

The Group has not applied the following amendments to standards and new standards which are effective for the financial year beginning after 1 January 2020 and which have not been early adopted in these consolidated financial statements.

HKFRS 16 (Amendments) Covid-19-related Rent Concessions[(1)] HKAS 39, HKFRS 4, HKFRS 7, Interest Rate Benchmark Reform – Phase 2 (amendments)[(2)] HKFRS 9 and HKFRS 16 HKAS 16 (Amendments) Property, Plant and Equipment[(3)] HKFRS 3 (Amendments) Reference to the Conceptual Framework[(3)] HKAS 37 (Amendments) Onerous Contracts – Cost of Fulfilling a Contract[(3)] Annual Improvements to HKFRS Annual Improvements to HKFRS Standards 2018-2020[(3)] Standards 2018-2020 Accounting Guideline 5 Merger Accounting for Common Control Combinations[(3)] HKAS 1 (Amendments) Classification of Liabilities as Current or Non–current[(4)] Hong Kong Interpretation 5 (2020) Presentation of Financial Statements – Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause[(4)] HKFRS 17 Insurance Contracts[(4)] HKFRS 10 and HKAS 28 Sale or contribution of assets between an investor (Amendments) and its associate or joint venture[(5)]

(1) Effective for the annual periods beginning on or after 1 June 2020.

(2) Effective for the annual periods beginning on or after 1 January 2021.

(3) Effective for the annual periods beginning on or after 1 January 2022.

(4) Effective for the annual periods beginning on or after 1 January 2023.

(5) In December 2015 the HKICPA decided to defer the application date of this amendment until such time as the HKICPA has finalised its research project on the equity method.

The Group is in the process of making an assessment of the impact of the above new standards and amendments to standards. None of these is expected to have a significant effect on the consolidated financial statements of the Group.

359

— F-192 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

59 Principal subsidiaries, associates and joint ventures

(a) Principal subsidiaries

				Proportion	of ownership	interest
				Attributable	Held by the	Held by
Name of company	Place of incorporation	Principal activity	Shares issued	to the Group	Company	subsidiaries
CITIC Corporation Limited	Mainland China	Investment holding	N/A	100%	100%	0%
中國中信有限公司
CITIC Pacific Limited	British Virgin Islands	Investment holding	51,097	100%	100%	0%
中信泰富有限公司
CITIC Pacific Special Steel Group Co., Ltd.	Mainland China	Special steel production	5,047,143,433	83.85%	0%	83.85%
中信泰富特鋼集團股份有限公司
Dah Chong Hong Holdings	Hong Kong	Consumer goods	1,891,247,220	100%	0%	100.00%
Limited (Note (a))
大昌行集團有限公司(Note (a))
CITIC Mining International Ltd.	Cayman Islands	Resources and energy	1	100%	100%	0%
中信礦業國際有限公司
CITIC Metal Group Ltd.	Hong Kong	Resources and energy	11,800,000,000	100%	0%	100%
中信金屬集團有限公司
CITIC Telecom International	Hong Kong	Telecom services	3,664,616,882	58.11%	0%	58.11%
Holdings Limited
中信國際電訊集團有限公司
CITIC Finance International Limited	Hong Kong	Financial services	N/A	100%	100%	0%
中信財務(國際)有限公司
China CITIC Bank Corporation Limited	Mainland China	Banking industry	48,934,838,569	65.97%	0%	65.97%
中信銀行股份有限公司
CITIC International Financial	Hong Kong	Banking industry	7,502,832,116	65.97%	0%	100%
Holdings Limited
中信國際金融控股有限公司
CITIC Trust Co., Ltd.	Mainland China	Trust industry	N/A	100%	0%	100%
中信信託有限責任公司

Note (a): The listing of Dah Chong Hong Holdings Limited’s shares on the Hong Kong Stock Exchange was withdrawn on 10 January 2020. Dah Chong Hong Holdings Limited is held by the Group’s wholly owned subsidiary CITIC Pacific Limited.

360

— F-193 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

59 Principal subsidiaries, associates and joint ventures (Continued)

(a) Principal subsidiaries (Continued)

Principal subsidiarie	s(Continued)
				Proportion	of ownership	interest
				Attributable	Held by the	Held by
Name of company	Place of incorporation	Principal activity	Shares issued	to the Group	Company	subsidiaries
CITIC Finance Company Limited	Mainland China	Financial services	N/A	94.39%	0%	98.69%
中信財務有限公司
CITIC Consumer Finance Co., Ltd.	Mainland China	Consumer finance	N/A	70%	0%	70%
中信消費金融有限公司
CITIC Resources Holdings Limited	Bermuda	Resources and energy	7,857,727,149	59.50%	0%	59.50%
中信資源控股有限公司
CITIC Australia Pty Limited	Australia	Resources and energy	85,882,017	100%	0%	100%
中信澳大利亞有限公司
CITIC Kazakhstan LLP	Kazakhstan	Resources and energy	N/A	100%	0%	100%
中信哈薩克斯坦有限公司
CITIC Heavy Industries Co., Ltd.	Mainland China	Manufacturing	4,339,419,293	67.27%	0%	67.27%
中信重工機械股份有限公司
CITIC Construction Company Limited	Mainland China	Engineering contracting	N/A	100%	0%	100%
中信建設有限責任公司
CITIC Engineering Design and	Mainland China	Engineering contracting	N/A	100%	0%	100%
Construction Company Limited
中信工程設計建設有限公司
CITIC Urban Development &	Mainland China	Real estate development	N/A	100%	0%	100%
Operation Co., Ltd.
中信城市開發運營有限責任公司
CITIC Heye Investment Co., Ltd.	Mainland China	Real estate development	N/A	100%	0%	100%
中信和業投資有限公司
CITIC Asset Operation Co., Ltd.	Mainland China	Real estate management	N/A	100%	0%	100%
中信資產運營有限公司
CITIC Capital Mansion Co., Ltd.	Mainland China	Real estate management	N/A	100%	0%	100%
中信京城大廈有限責任公司
CITIC Building Property	Mainland China	Real estate management	N/A	100%	0%	100%
Management Co., Ltd.
北京中信國際大廈物業管理有限公司

361

— F-194 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

59 Principal subsidiaries, associates and joint ventures (Continued)

(a) Principal subsidiaries (Continued)

Principal subsidiar	ies(Continued)
				Proportion	of ownership	interest
				Attributable	Held by the	Held by
Name of company	Place of incorporation	Principal activity	Shares issued	to the Group	Company	subsidiaries
CITIC Industrial Investment	Mainland China	Infrastructure and elderly	N/A	100%	0%	100%
Group Corp., Ltd.		service
中信興業投資集團有限公司
CITIC Dicastal Company Limited	Mainland China	Manufacturing	1,971,342,713	42.11%	0%	42.11%
中信戴卡股份有限公司(附註54)
CITIC Environment Investment	Mainland China	Energy conservation	N/A	100%	0%	100%
Group Co., Limited		and environmental
中信環境投資集團有限公司		protection
China Zhonghaizhi Corporation	Mainland China	General aviation	N/A	51.03%	0%	51.03%
中國中海直有限責任公司
CITIC Investment Holdings Limited	Mainland China	Investment holding	N/A	100%	0%	100%
中信投資控股有限公司
CITIC Asia Satellite Holding	British Virgin Islands	Information industry	60,524,465	100%	0%	100%
Company Limited
中信亞洲衛星控股有限公司
CITIC Press Corporation	Mainland China	Publishing	190,151,515	73.50%	0%	73.50%
中信出版集团股份有限公司
CITIC Holdings Co., Ltd.	Mainland China	Service	N/A	100%	0%	100%
中信控股有限責任公司
CITIC Tourism Group Co., Ltd.	Mainland China	Service	N/A	100%	0%	100%
中信旅遊集團有限公司

362

— F-195 —

CITIC LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements

For the year ended 31 December 2020

59 Principal subsidiaries, associates and joint ventures (Continued)

(b) Principal associates

Details of the Group’s interest in principal associates, which are accounted for using the equity method in the consolidated financial statements of the Group are as follows:

				Proportion	of ownership	interest
				Attributable	Held by the	Held by
Name of company	Place of incorporation	Principal activity	Shares issued	to the Group	Company	subsidiaries
China Overseas Land &	Hong Kong	Real estate development	10,954,085,035	10%	0%	10%
Investment Ltd.
中國海外發展有限公司
CITIC Securities Co., Ltd.	Mainland China	Securities related services	12,926,776,029	15.47%	0%	15.47%
中信證券股份有限公司
Ivanhoe Mines Ltd.	Canada	Resources and energy	1,205,894,118	26.09%	0%	26.09%

(c) Principal joint ventures

Details of the Group’s interest in principal joint ventures, which are accounted for using the equity method in the consolidated financial statements of the Group are as follows:

				Proportion	of ownership	interest
				Attributable	Held by the	Held by
Name of company	Place of incorporation	Principal activity	Shares issued	to the Group	Company	subsidiaries
CITIC Prudential Life	Mainland China	Insurance and reinsurance	N/A	50%	0%		50%
Insurance Co., Ltd.
中信保誠人壽保險有限公司
中船置業有限公司	Mainland China	Real estate development	N/A	50%	0%		50%
上海瑞博置業有限公司	Mainland China	Real estate development	N/A	50%	0%		50%

363

— F-196 —

CITIC LIMITED ANNUAL REPORT 2020

Independent Auditor’s Report

For the year ended 31 December 2020

==> picture [78 x 56] intentionally omitted <==

Independent Auditor’s Report To the Members of CITIC Limited

(incorporated in Hong Kong with limited liability)

Opinion

What we have audited

The consolidated financial statements of CITIC Limited (the “Company”) and its subsidiaries (the “Group”) set out on pages 170 to 363, which comprise:

the consolidated balance sheet as at 31 December 2020;
the consolidated income statement for the year then ended;
the consolidated statement of comprehensive income for the year then ended;
the consolidated statement of changes in equity for the year then ended;
the consolidated cash flow statement for the year then ended; and
the notes to the consolidated financial statements, which include a summary of significant accounting policies.

Our opinion

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2020, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and have been properly prepared in compliance with the Hong Kong Companies Ordinance.

364

— F-197 —

CITIC LIMITED ANNUAL REPORT 2020

Independent Auditor’s Report

For the year ended 31 December 2020

Basis for Opinion

We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated 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.

Independence

We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional Accountants (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters identified in our audit are summarised as follows:

Measurement of expected credit losses for loans and advances to customers and other parties and investments in financial assets of China CITIC Bank Corporation Limited (“CITIC Bank”)
Consolidation of structured entities – non-principal guaranteed wealth management products of CITIC Bank
De-recognition of financial assets of CITIC Bank
Impairment of the Sino Iron Project

365

— F-198 —

CITIC LIMITED ANNUAL REPORT 2020

Independent Auditor’s Report

For the year ended 31 December 2020

Key Audit Matter

How our audit addressed the Key Audit Matter

Measurement of expected credit losses for loans and advances to customers and other parties and investments in financial assets of CITIC Bank

Refer to Note 2 (i), Note 3, Note 26 and Note 27 to the consolidated financial statements.

As at 31 December 2020, loans and advances to customers and accrued interest included for the purpose of expected credit loss assessment, as presented in the CITIC Bank’s consolidated balance sheet, amounted to RMB4,478.78 billion (approximately HK$5,321.49 billion), and for which management recognised an impairment allowance of RMB126.25 billion (approximately HK$150.01 billion); investments and accrued interest included for the purpose of expected credit loss assessment amounted to RMB1,679.31 billion (approximately HK$2,016.67 billion), for which management recognised an impairment allowance RMB16.42 billion (approximately HK$19.51 billion).

The balances of loss allowances for the loans and advances to customers and financial investments represent management’s best estimates at the balance sheet date of expected credit losses (“ECL”) under HKFRS 9: Financial Instruments expected credit losses models.

We obtained an understanding of management’s internal control and assessment process of ECL for loans and advances to customers, and financial investments, and assessed the inherent risk of material misstatement by considering the degree of estimation uncertainty and level of other inherent risk factors.

We evaluated and tested the design and operating effectiveness of the internal controls relating to ECL for loans and advances to customers and financial investments, primarily including:

Governance over ECL models, including the selection, approval and application of modelling methodology; and the internal controls relating to the ongoing monitoring and optimisation of the models;
Internal controls relating to significant management judgments and assumptions, including the assess and approval of portfolio segmentation, model selections, parameters estimation, identification of significant increase in credit risk, defaults or credit-impaired loans, forward-looking measurement, and management overlay adjustments;
Internal controls over the accuracy and completeness of key inputs used by the models;
Internal controls relating to estimated future cash flows and calculations of present values of such cash flows for corporate loans and advances and financial investments in stage 3;
Internal controls over the information systems for ECL measurement.
Evaluation and approval of the measurement result of ECL for loans and advances to customers, and financial investments.

366

— F-199 —

CITIC LIMITED ANNUAL REPORT 2020

Independent Auditor’s Report

For the year ended 31 December 2020

Key Audit Matter

How our audit addressed the Key Audit Matter

Measurement of expected credit losses for loans and advances to customers and other parties and investments in financial assets of CITIC Bank (Continued)

Management assesses whether the credit risk of loans and advances to customers and financial investments have increased significantly since their initial recognition, and applies a three-stage impairment model to calculate their ECL. For stages 1 and 2 financial assets, management assesses impairment allowance using risk parameter model that incorporates key parameters, including probability of default, loss given default, exposure at default and discount rates. For stages 3 financial assets, management assesses impairment allowance using both risk parameter model and discounted cash flows model.

The models of ECL involves significant management judgments and assumptions, primarily including:

Segmentation of business operations sharing similar credit risk characteristics, selection of appropriate models and determination of relevant key measurement parameters;
Criteria for determining whether or not there was a significant increase in credit risk, or a default or credit-impaired;
Economic indicators for forward-looking measurement, and the application of economic scenarios and weightings;
Management overlay adjustments due to significant uncertain factors not covered in the models;

The substantive procedures we preformed primarily included:

According to the risk characteristics of assets, we evaluated the segmentation of business operations. We assessed the appropriateness of the modelling methodologies adopted for ECL measurement by comparing with the industry practice. We also examined the coding for model measurement on a sample basis, to tested whether or not the models reflect the modelling methodologies documented by management.

We have examined the accuracy of data inputs for the ECL models, including: (i) covering examination of supporting information on a sample basis, including contractual information, such as maturity dates, and other financial and non-financial information, such as the borrower’s historical and reporting date information, which have been agreed with the underlying data used to generate probability of default and internal credit ratings; (ii) assessment of the reasonableness of the loss given default using historical data and benchmarking against industry practices; and (iii) examination of borrowing contracts and assessment of the reasonableness of exposure at default and discounting rates.

We selected samples, in consideration of the financial information and non-financial information of borrowers, relevant external evidence and other factors, to assess the appropriateness of management’s identification of significant increase in credit risk, defaults and credit-impaired loans.

The estimated future cash flows for corporate loans and advances and financial investments in stage 3.

367

— F-200 —

CITIC LIMITED ANNUAL REPORT 2020

Independent Auditor’s Report

For the year ended 31 December 2020

Key Audit Matter

How our audit addressed the Key Audit Matter

Measurement of expected credit losses for loans and advances to customers and other parties and investments in financial assets of CITIC Bank (Continued)

CITIC Bank established governance processes and controls for the measurement of ECL.

The amount of impairment of the loans and advances to customers and financial investments is significant, and the measurement has a high degree of estimation uncertainty. For measuring ECL, management adopted complex models, employed numerous parameters and data inputs, and applied significant management judgments and assumptions, and involved significant inherent risk. In view of these reasons, we identified this as a key audit matter.

For forward-looking measurements, we assessed management’s selection of economic indicators and their analysis of co-relation with the performance of the credit risk portfolios by using statistical techniques. We further tested the reasonableness of the prediction of economic indicators by comparing with available external expert estimates. In addition, we performed sensitivity analysis of economic scenarios and weightings.

In addition, based on considering the significant uncertain factors, we evaluated the rationality of management overlay adjustments, and examined the accuracy of the relevant mathematical calculations.

For corporate loans and advances and financial investments in stage 3, we examined, on a sample basis, forecasted future cash flows prepared by the Group based on financial information of borrowers and guarantors, latest collateral valuations and other available information together with discount rates in supporting the computation of loss allowance.

Based on our procedures performed, the models, key parameters and data, significant judgements and assumptions adopted in the ECL measurement together with the measurement results were considered acceptable.

368

— F-201 —

CITIC LIMITED ANNUAL REPORT 2020

Independent Auditor’s Report

For the year ended 31 December 2020

Key Audit Matter

How our audit addressed the Key Audit Matter

Consolidation of structured entities – non-principal guaranteed wealth management products of CITIC Bank

Refer to Note 2 (e), Note 3, Note 27 and Note 50 to the consolidated financial statements.

As at 31 December 2020, non-principal guaranteed wealth management products (“WMPs”) issued and managed by CITIC Bank involved structured entities, and amounts for structured entities included in the consolidation scope and those not included were disclosed in Note 27 (a) and Note 50 (b) to the consolidated financial statements.

Management’s decision on whether or not to consolidate structured entities was based on an assessment of the power of CITIC Bank, its variable returns and the ability to exercise its power to influence the variable returns from these structured entities.

We focused on the consolidation assessment and judgement made by management involving the structured entities for non-principal guaranteed WMPs during our audit as whether or not to consolidate these entities involved significant judgement.

We evaluated and tested the design and operating effectiveness of management’s relevant controls over the consolidation of structured entities for nonprincipal guaranteed WMPs. These controls primarily included the review and approval of the contractual terms, the results in variable return calculations, and the consolidation assessment conclusions for these structured entities.

We selected samples of structured entities for nonprincipal guaranteed WMPs and performed the following tests:

assessed the contractual rights and obligations of CITIC Bank in light of the transaction structures, and evaluated the power of CITIC Bank over the structured entities;
performed independent analysis 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;
assessed whether CITIC Bank acted as a principal or an agent through analysis of the scope of the decision-making authority of CITIC Bank, its remuneration entitlement, other interests CITIC Bank held, and the rights held by other parties;
evaluated and examined the appropriateness of disclosures relating to structured entities in the consolidated financial statements.

Based on the procedures performed above, we found management’s judgement relating to the consolidation and disclosure of structured entities for non-principal guaranteed wealth management products were appropriate in all material respects.

369

— F-202 —

CITIC LIMITED ANNUAL REPORT 2020

Independent Auditor’s Report

For the year ended 31 December 2020

Key Audit Matter

How our audit addressed the Key Audit Matter

De-recognition of financial assets of CITIC Bank

Refer to Note 2 (i), Note 3 and Note 50 (d) to the consolidated financial statements.

During the year ended 31 December 2020, CITIC Bank entered into transactions which involved transfers of financial assets including securitisation transactions, structured transfers on assets usufruct, and transfers of non-performing loans.

Management analysed the contractual rights and obligations of CITIC Bank in connection with such transfers, and assessed the extent to which the associated risks and rewards of ownership were transferred by using models to determine whether the de-recognition criteria were met. Where necessary, CITIC Bank assessed whether it had relinquished its control over the transferred financial assets to determine whether the de-recognition criteria were met.

The de-recognition assessment relating to the transfer of financial assets involved significant judgement from management, and as such, we focused our audit on the de-recognition of these financial assets.

We evaluated and tested the design and operating effectiveness of the relevant controls over transfers of financial assets, including the review and approval of the structure designs and contractual terms of the transactions, the approval of models for testing the transfer of risks and rewards of ownership and the key parameters and assumptions used in the models, as well as the review and approval of management’s assessment results.

We selected samples and read through transaction agreements to assess the contractual rights and obligations of CITIC Bank, and whether CITIC Bank 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.

We took samples to analyse and evaluate the rationality of the models, parameters, assumptions and discount rates used in management risk and reward transfer test and check the accuracy of the calculation of management risk and reward transfer.

Based on the procedures performed above, we found management’s assessment over de-recognition of transferred financial assets acceptable.

370

— F-203 —

CITIC LIMITED ANNUAL REPORT 2020

Independent Auditor’s Report

For the year ended 31 December 2020

Key Audit Matter

How our audit addressed the Key Audit Matter

Impairment of the Sino Iron Project

Refer to Note 3 and Note 9 to the consolidated financial statements.

An impairment indication assessment was undertaken on the Sino Iron Project (“the Project”) by management as at 31 December 2020. As a result, management has determined that no impairment indication existed for the Project as at 31 December 2020.

In the impairment indication assessment, management has considered external and internal sources of information as at 31 December 2020, including:

The production profile of the Project (mainly including ore grades, operating cost and production output);
Forward iron ore prices;

In evaluating management’s impairment indication assessment of the Project, we undertook the following procedures:

Assessed whether management’s impairment indication assessment is in accordance with the requirements of accounting standards including consideration of both external and internal sources of information;
Evaluated whether there were significant adverse changes in the economic environment impacting the Project by considering movements in forward consensus iron ore prices, exchange rates and risk-free borrowing rates;
Considered budget vs actual performance during the last 12 months to evaluate whether economic performance of the asset is, or will be, worse than expected;
The risk-free borrowing rates;
Foreign exchange rates, particularly between Australian and United States dollars.

As the impairment indication assessment involves significant judgements, we regard this as a key audit matter.

Held discussions with management and external legal counsels to understand key changes to long term planning estimates or assumptions and implications of outstanding litigations related to the Project, and evaluated their potential impact on forecast cash flows.

Based on the above procedures, we found the judgements made by management to be reasonable and consistent with the audit evidence we obtained.

371

— F-204 —

CITIC LIMITED ANNUAL REPORT 2020

Independent Auditor’s Report

For the year ended 31 December 2020

Other Information

The directors of the Company are responsible for the other information. The other information comprises all of the information included in the annual report other than the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Directors and Audit and Risk Management Committee for the Consolidated Financial Statements

The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors are responsible for assessing the Group’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 the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Audit and Risk Management Committee is responsible for overseeing the Group’s financial reporting process.

372

— F-205 —

CITIC LIMITED ANNUAL REPORT 2020

Independent Auditor’s Report

For the year ended 31 December 2020

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated 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. We report our opinion solely to you, as a body, in accordance with Section 405 of the Hong Kong Companies Ordinance and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs 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 consolidated financial statements.

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

Identify and assess the risks of material misstatement of the consolidated 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 the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ 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 the Group’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 the consolidated 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 the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated 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 the Group 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.

373

— F-206 —

CITIC LIMITED ANNUAL REPORT 2020

Independent Auditor’s Report

For the year ended 31 December 2020

We communicate with Audit and Risk Management Committee 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.

We also provide Audit and Risk Management Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with Audit and Risk Management Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Leung Wai Kin.

PricewaterhouseCoopers Certified Public Accountants

Hong Kong, 30 March 2021

374

— F-207 —

Consolidated Income Statement

For the six months ended 30 June 2021

	Note	Unaudited Six months ended 30 June 2021 2020 HK$ million HK$million 184,307 165,996 (93,473) (82,984) 90,834 83,012 29,107 23,559 (2,803) (2,769) 26,304 20,790 220,712 138,794 15,071 13,206 235,783 152,000 352,921 255,802 (190,106) (116,566) 3,781 3,913 (58,838) (53,025) (676) (1,318) (42,380) (42,377) (224) (110) 6,689 4,836 1,330 501 72,497 51,656 1,424 1,037 (4,784) (6,149) (3,360) (5,112) 69,137 46,544 (10,448) (8,635) 58,689 37,909
		2021
		HK$ million
Interest income Interest expenses		184,307
		(93,473)
Net interest income	5(a)	90,834
Fee and commission income Fee and commission expenses		29,107
		(2,803)
Net fee and commission income	5(b)	26,304
Sales of goods and services Other revenue	5(c) 5(d)	220,712
		15,071
		235,783
Total revenue Cost of sales and services Other net income Expected credit losses Impairment losses Other operating expenses Net valuation loss on investment properties Share of profits of associates, net of tax Share ofprofits ofjoint ventures,net of tax	6,9 7 9	352,921
		(190,106)
		3,781
		(58,838)
		(676)
		(42,380)
		(224)
		6,689
		1,330
Profit before net finance charges and taxation Finance income Finance costs		72,497

		1,424
		(4,784)
Net finance charges	8	(3,360)
Profit before taxation Income tax	9 10	69,137
		(10,448)
Profit for the period		58,689

30 CITIC Limited Half-Year Report 2021

— F-208 —

For the six months ended 30 June 2021

Consolidated Income Statement

		Unaudited
		Six months ended	30 June
		2021	2020
	Note	HK$ million	HK$million
Profit for the period		58,689	37,909
Attributable to:
– Ordinary shareholders of the Company		44,175	27,014
– Non-controllinginterests		14,514	10,895
Profit for the period		58,689	37,909
Earnings per share for profit attributable to ordinary
shareholders of the Company during the period:
Basic and diluted earnings pershare (HK$)	12	1.52	0.93

The notes on pages 39 to 130 form part of these condensed unaudited consolidated interim accounts.

CITIC Limited Half-Year Report 2021 31

— F-209 —

Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2021

Note	Note	Unaudited Six months ended 30 June 2021 2020 HK$ million HK$million 58,689 37,909 555 (1,768) (247) 472 403 (813) 200 (853) 10,630 (15,888) – 59 (12) 37 11,529 (18,754) 70,218 19,155 52,060 14,027 18,158 5,128 70,218 19,155
		2021
		HK$ million
Profit for theperiod		58,689
Other comprehensive gain/(loss) for the period 13 Items that may be reclassified subsequently to profit or loss: Fair value changes on debt instruments at fair value through other comprehensive income Loss allowance changes on debt instruments at fair value through other comprehensive income Cash flow hedge: net movement in the hedging reserve Share of other comprehensive gain/(loss) of associates and joint ventures Exchange differences on translation of financial statements and others Items that will not be reclassified subsequently to profit or loss: Reclassification of owner-occupied property as investment property: revaluation gain Fair value changes on investments in equity instruments designated at fair value through other comprehensive income


		555
		(247)
		403
		200
		10,630


		–
		(12)
Other comprehensivegain/(loss) for theperiod		11,529
Total comprehensive income for the period		70,218
Attributable to: - Ordinary shareholders of the Company - Non-controllinginterests

		52,060
		18,158
Total comprehensive income for the period		70,218

The notes on pages 39 to 130 form part of these condensed unaudited consolidated interim accounts.

32 CITIC Limited Half-Year Report 2021

— F-210 —

Consolidated Balance Sheet

As at 30 June 2021

	Note	30 June 2021 31 December 2020 HK$ million HK$ million (Unaudited) (Audited)
Assets
Cash and deposits	15	704,169 755,386
Placements with banks and non-bank financial institutions		169,753 198,513
Derivative financial instruments	16	30,559 47,804
Trade and other receivables	17	191,289 169,723
Contract assets		16,585 13,619
Inventories		100,866 80,370
Financial assets held under resale agreements		118,984 143,029
Loans and advances to customers and other parties	18	5,535,826 5,206,155
Investments in financial assets	19
– Financial assets at amortised cost		1,310,077 1,156,496
– Financial assets at fair value through profit or loss		653,358 528,293
– Debt investments at fair value through other comprehensive
income		780,219 860,255
– Equity investments at fair value through other comprehensive
income		9,056 8,023
Interests in associates	20	145,985 131,040
Interests in joint ventures	21	52,368 50,287
Fixed assets		170,552 167,840
Investment properties		38,407 38,455
Right-of-use assets		38,542 37,915
Intangible assets		15,859 15,877
Goodwill		21,205 21,133
Deferred tax assets		80,758 74,164
Other assets		45,941 36,451
Total assets		10,230,358 9,740,828

CITIC Limited Half-Year Report 2021 33

— F-211 —

Consolidated Balance Sheet

As at 30 June 2021

	Note	30 June 2021 HK$ million (Unaudited)	31 December 2020 HK$ million (Audited)
Liabilities Borrowing from central banks Deposits from banks and non-bank financial institutions Placements from banks and non-bank financial institutions Financial liabilities at fair value through profit or loss Derivative financial instruments Trade and other payables Contract liabilities Financial assets sold under repurchase agreements Deposits from customers Employee benefits payables Income tax payable Bank and other loans Debt instruments issued Lease liabilities Provisions Deferred tax liabilities Other liabilities	22 16 23 24 25 26	292,287 1,311,503 88,655 4,118 31,190 181,335 30,140 85,140 5,643,341 31,022 12,235 173,676 1,173,519 19,750 14,917 11,938 16,696	266,611 1,370,439 74,308 12,423 49,808 160,943 28,092 94,774 5,427,694 36,176 13,448 163,604 973,858 18,267 15,172 11,444 15,125
Total liabilities		9,121,462	8,732,186
Equity Share capital Reserves	27	381,710 333,358	381,710 292,566
Total ordinary shareholders’ funds Non-controllinginterests		715,068 393,828	674,276 334,366
Total equity		1,108,896	1,008,642
Total liabilities and equity		10,230,358	9,740,828

Approved and authorised for issue by the board of directors on 27 August 2021.

Director: Zhu Hexin Director: Xi Guohua

The notes on pages 39 to 130 form part of these condensed unaudited consolidated interim accounts.

34 CITIC Limited Half-Year Report 2021

— F-212 —

Consolidated Statement of Changes in Equity

For the six months ended 30 June 2021

	Note	Share capital	Capital reserve	Hedging reserve	Investment related reserves	General reserve	Retained earnings	Exchange reserve	Total	Non- controlling interests	Total equity
		HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Six months ended 30 June 2021 (Unaudited) Balance at 1 January 2021

		381,710	(60,252)	1,200	1,757	58,214	294,193	(2,546)	674,276	334,366	1,008,642
Profit for the period Other comprehensivegain for theperiod	9 13	–	–	–	–	–	44,175	–	44,175	14,514	58,689
		–	–	407	437	–	–	7,041	7,885	3,644	11,529
Total comprehensive income for theperiod		–	–	407	437	–	44,175	7,041	52,060	18,158	70,218
Capital injection by non-controlling interests Extract general risk preparation Dividends paid to ordinary shareholders of the Company 11 Dividends paid to non-controlling interests Subsidiaries issue other equity instruments Loss allowance on debt instruments at fair value through other comprehensive income Others		–	–	–	–	–	–	–	–	70	70
		–	–	–	–	10	(10)	–	–	–	–
		–	–	–	–	–	(11,287)	–	(11,287)	–	(11,287)
		–	–	–	–	–	–	–	–	(6,692)	(6,692)
		–	–	–	–	–	–	–	–	47,952	47,952
		–	–	–	20	–	(20)	–	–	–	–
		–	19	–	–	–	–	–	19	(26)	(7)
Other changes in equity		–	19	–	20	10	(11,317)	–	(11,268)	41,304	30,036
Balance at 30 June 2021		381,710	(60,233)	1,607	2,214	58,224	327,051	4,495	715,068	393,828	1,108,896

CITIC Limited Half-Year Report 2021 35

— F-213 —

Consolidated Statement of Changes in Equity

For the six months ended 30 June 2020

	Note	Share capital HK$ million	Capital reserve HK$ million	Hedging reserve HK$ million	Investment related reserves HK$million	General reserve HK$ million	Retained earnings HK$ million	Exchange reserve HK$ million	Total HK$ million	Non- controlling interests HK$million	Total equity HK$ million
Six months ended 30 June 2020 (Unaudited) Balance at 1 January 2020		381,710	(59,953)	1,723	4,546	51,145	255,807	(43,452)	591,526	302,965	894,491 37,909 (18,754)
Profit for the period Other comprehensive loss for theperiod	9 13	– –	– –	– (731)	– (1,655)	– –	27,014 –	– (10,601)	27,014 (12,987)	10,895 (5,767)
Total comprehensive (loss)/income for theperiod		–	–	(731)	(1,655)	–	27,014	(10,601)	14,027	5,128	19,155 347 (8,291) (5,907) (4,787) (513) 61
Capital injection by non-controlling interests Dividends paid to ordinary shareholders of the Company Dividends paid to non-controlling interests Disposal of subsidiaries Transactions with non-controlling interests Others	11	– – – – – –	– – – – (363) 64	– – – – – –	– – – – – –	– – – – – –	– (8,291) – – – –	– – – – – –	– (8,291) – – (363) 64	347 – (5,907) (4,787) (150) (3)
Other changes in equity		–	(299)	–	–	–	(8,291)	–	(8,590)	(10,500)	(19,090)
Balance at 30 June 2020		381,710	(60,252)	992	2,891	51,145	274,530	(54,053)	596,963	297,593	894,556

The notes on pages 39 to 130 form part of these condensed unaudited consolidated interim account

36 CITIC Limited Half-Year Report 2021

— F-214 —

Consolidated Cash Flow Statement

For the six months ended 30 June 2021

	Unaudited	Unaudited
	Six months ended	30 June
	2021	2020
	Note HK$ million	HK$million
Cash flows from operating activities
Profit before taxation	69,137	46,544
Adjustments for:
– Depreciation and amortisation	9(b) 10,313	10,102
– Expected credit losses	58,838	53,025
– Impairment losses	676	1,318
– Net valuation loss on investment properties	224	110
– Net valuation (gain)/loss on investments	(4,121)	331
– Share of profits of associates and joint ventures, net of tax	(8,019)	(5,337)
– Interest expenses on debts instruments issued	5(a) 14,926	11,484
– Finance income	8 (1,424)	(1,037)
– Finance costs	8 4,784	6,149
– Net gain on investments in financial assets	(7,092)	(9,216)
– Netgain on disposal of subsidiaries,associates andjoint ventures	(362)	(4,304)
Changes in working capital	137,880	109,169
Increase in deposits with central banks, banks and non-bank financial institutions	(42,111)	(2,895)
Increase in placements with banks and non-bank financial institutions	(19,312)	(10,331)
(Increase)/Decrease in trade and other receivables	(22,641)	3,533
Increase in contract assets	(2,966)	(915)
Increase in inventories	(20,425)	(5,052)
Decrease/(Increase) in financial assets held under resale agreements	25,592	(31,272)
Increase in loans and advances to customers and other parties	(305,270)	(247,033)
Increase in investments in financial assets held for trading purposes	(36,055)	(29,488)
Increase in other assets	(9,435)	(464)
(Decrease)/Increase in deposits from banks and non-bank financial institutions	(75,623)	47,303
Increase/(Decrease) in placements from banks and non-bank financial institutions	13,572	(23,472)
(Decrease)/Increase in financial liabilities at fair value through profit or loss	(9,386)	5,162
Increase/(Decrease) in trade and other payables	4,096	(19,907)
Increase in contract liabilities	2,048	3,905
Decrease in financial assets sold under repurchase agreements	(10,684)	(7,276)
Increase in deposits from customers	153,699	433,189
Increase/(Decrease) in borrowing from central banks	18,864	(125,359)
(Decrease)/Increase in other liabilities	(6,076)	678
Decrease in employee benefits payables	(5,154)	(5,230)
(Decrease)/Increase inprovisions	(255)	386
Cash (used in)/generated from operating activities	(209,642)	94,631
Income taxpaid	(17,090)	(21,173)
Net cash(used in)/generated from operating activities	(226,732)	73,458

CITIC Limited Half-Year Report 2021

— F-215 —

Consolidated Cash Flow Statement

For the six months ended 30 June 2021

	Unaudited
	Six months ended	30 June
	2021	2020
	HK$ million HK$million
Cash flows from investing activities
Proceeds from disposal and redemption of financial investments	2,030,707	1,281,949
Proceeds from disposal of fixed assets, intangible assets and other assets	695	342
Proceeds from disposal of associates and joint ventures	387	430
Net cash received from disposal of subsidiaries	19	4,694
Dividends received from equity investments, associates and joint ventures	2,072	2,464
Payments for purchase of financial investments	(2,162,949) (1,402,572)
Payments for additions of fixed assets, intangible assets and other assets	(10,096)	(7,877)
Net cash payment for acquisition of subsidiaries	(27)	(2,853)
Net cash payment for acquisition of associates and joint ventures	(7,797)	(1,287)
Net increase in restricted cash	(1,676)	(1,509)
Net cash used in investing activities	(148,665)	(126,219)
Cash flows from financing activities
Capital injection received from non-controlling interests	70	265
Transaction with non-controlling interests	–	(3,535)
Proceeds from new bank and other loans	80,653	51,396
Repayment of bank and other loans and debt instruments issued	(485,703)	(364,030)
Proceeds from new debt instruments issued	603,851	314,164
Subsidiaries issue other equity instruments	47,952	–
Principal and interest elements of lease payment	(2,822)	(3,225)
Interest paid on bank and other loans and debt instruments issued	(19,552)	(18,754)
Dividendspaid to non-controllinginterests	(1,398)	(1,210)
Net cashgenerated/(used in) from financing activities	223,051	(24,929)
Net decrease in cash and cash equivalents	(152,346)	(77,690)
Cash and cash equivalents at 1 January	452,702	463,038
Effect of exchange changes	1,931	(5,290)
Cash and cash equivalents at 30 June	302,287	380,058

The notes on pages 39 to 130 form part of these condensed unaudited consolidated interim accounts.

38 CITIC Limited Half-Year Report 2021

— F-216 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

1 General information

CITIC Limited (the “Company”) was incorporated in Hong Kong, the shares of which are listed on the Main Board of the Stock Exchange of Hong Kong Limited. The Company and its subsidiaries (collectively referred to as the “Group”) are principally engaged in comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation.

The parent and the ultimate holding company of the Company is CITIC Group Corporation (“CITIC Group”).

These condensed unaudited consolidated interim accounts (the “Accounts”) are presented in millions of Hong Kong dollars (“HK$”), unless otherwise stated.

The financial information relating to the year ended 31 December 2020 that is included in the Accounts as comparative information does not constitute the Company’s statutory annual consolidated financial statements for that year but is extracted from those financial statements. Further information relating to these statutory financial statements required to be disclosed in accordance with section 436 of the Hong Kong Companies Ordinance (Cap. 622) is as follows:

The Company has delivered the financial statements for the year ended 31 December 2020 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance (Cap. 622).

The Company’s auditor has reported on those financial statements. The auditor’s report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance (Cap. 622).

2 Basis of preparation

The Accounts have been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” and Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. The Accounts should be read in conjunction with the Company’s annual financial statements for the year ended 31 December 2020, which have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”).

CITIC Limited Half-Year Report 2021 39

— F-217 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

2 Basis of preparation (continued)

The accounting policies adopted in the preparation of the Accounts are consistent with those adopted in the Company’s annual financial statements for the year ended 31 December 2020, except for the following amendments which became effective for the first time for the financial year beginning on or after 1 January 2021:

HKFRS 16 (Amendments)

HKFRS 16 (Amendments) Covid-19-related Rent Concessions HKAS 39, HKFRS 4, HKFRS 7, HKFRS 9 and Interest Rate Benchmark Reform – Phase 2 (amendments) HKFRS 16

Adoption of the amendments does not have a significant impact on the Accounts.

The Group has not applied the following new standard which is not yet effective for the financial year beginning on or after 1 January 2021 and which have not been early adopted in the Accounts:

HKAS 16 (Amendments) Property, Plant and Equipment[(1)] HKFRS 3 (Amendments) Reference to the Conceptual Framework[(1)] HKAS 37 (Amendments) Onerous Contracts – Cost of Fulfilling a Contract[(1)] Annual Improvements to HKFRS Standards Annual Improvements to HKFRS Standards 2018-2020[(1)] 2018-2020 Accounting Guideline 5 Merger Accounting for Common Control Combinations[(1)] HKAS 1 (Amendments) Classification of Liabilities as Current or Non–current[(2)] Hong Kong Interpretation 5 (2020) Presentation of Financial Statements – Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause[(2)] HKFRS 17 Insurance Contracts[(2)] HKFRS 10 and HKAS 28 (Amendments) Sale or contribution of assets between an investor and its associate or joint venture[(3)]

(1) Effective for the annual periods beginning on or after 1 January 2022.

(2) Effective for the annual periods beginning on or after 1 January 2023.

(3) In December 2015 the HKICPA decided to defer the application date of this amendment until such time as the HKICPA has finalised its research project on the equity method.

40 CITIC Limited Half-Year Report 2021

— F-218 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

3 Critical accounting estimates and judgements

In addition to those described below, the accounting estimates and judgements required to be made in preparation of the Accounts are consistent with those set out in the Company’s annual financial statements for the year ended 31 December 2020.

(a) Metallurgical Corporation of China (“MCC”) claim

On 30 January 2013, MCC announced that it had incurred costs over the value of the contract and had provided additional funding of US$858 million to MCC Mining (Western Australia) Pty Ltd. (“MCC WA”), its wholly owned subsidiary company responsible for delivering MCC’s obligations under the contract.

As at the date of issuance of these financial statements, MCC has not claimed any additional costs from Sino Iron Pty Ltd. (“Sino Iron”) or its subsidiary companies, other than minor contract variations in the normal course of operations, and the Group believes it has satisfied all of its obligations under the contract.

Under the contract, the Group has a right to claim liquidated damages from MCC WA for certain delays in the completion of their project scope at a daily amount of 0.15% of the value of the main contract (approximately US$5 million per day, with a cap of approximately US$530 million in total). As at balance sheet date the cumulative days of delay that has been incurred has resulted in the contractual cap to the liquidated damages being reached.

CITIC Limited Half-Year Report 2021 41

— F-219 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

3 Critical accounting estimates and judgements (continued)

(b) Mineralogy Pty Ltd. (“Mineralogy”) disputes

Each of Sino Iron and Korean Steel Pty Ltd. (“Korean Steel”), subsidiary companies of the Company, has entered into a Mining Right and Site Lease Agreement (“MRSLA”) with Mineralogy. Among other things, those agreements, together with other project agreements, provide Sino Iron and Korean Steel the right to develop and operate the Sino Iron Project and to take and process one billion tonnes each of magnetite ore for that purpose.

Option Agreement Dispute

The Company is a party to an Option Agreement (“Option Agreement”) with Mineralogy and Mr. Clive Palmer pursuant to which the Company has options to acquire up to four further companies, each holding the right to mine one billion tonnes of magnetite ore in the vicinity of the Sino Iron Project. The Company exercised the first option under the Option Agreement on 13 April 2012. The remaining options have now lapsed. Following the exercise of the first option, Mineralogy and Mr. Palmer alleged that the Option Agreement had been repudiated by the Company, purported to accept that repudiation and stated that the Option Agreement was at an end.

Notwithstanding the making of these declarations, Mineralogy and Mr. Palmer have not taken the actions necessary to permit completion of the transaction resulting from the Company’s exercise of the first option under the Option Agreement. On 31 March 2016, the CITIC Parties commenced a proceeding in the Supreme Court of Western Australia in relation to the Option Agreement (“Proceeding CIV 1514/2016”) to seek orders compelling Mineralogy to take the steps necessary to complete the transfer of a further company having the right to mine one billion tonnes of magnetite ore. On 26 February 2018, Justice K Martin granted leave for Cape Preston Resource Holdings Pty Ltd. to be added as a plaintiff to the proceeding and for the writ to be amended for that purpose.

Mineralogy and Mr. Palmer had previously made allegations of breach, repudiation, frustration and termination of the Option Agreement in their respective defences. However, shortly before the trial, on 22 September 2020, Mineralogy and Mr. Palmer abandoned those pleas, and said that they were willing to complete the first option, but on the basis that the further company had to be Balmoral Iron Pty Ltd. (“Balmoral Iron”). On 29 November 2020, the Company accepted the nomination of Balmoral Iron on the basis of certain representations and subject to certain conditions concerning guarantees, indemnities and warranties which had been proffered by Mineralogy and Mr. Palmer in the preceding weeks.

As the issues in dispute had narrowed, the principal remaining issue for determination at trial was the form of the Takeover Agreement and the project agreements to be entered into by Balmoral Iron.

42 CITIC Limited Half-Year Report 2021

— F-220 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

3 Critical accounting estimates and judgements (continued)

(b) Mineralogy Pty Ltd. (“Mineralogy”) disputes (continued)

Option Agreement Dispute (continued)

On 30 March 2021, Justice K Martin delivered his reasons for decision. His Honour made various findings, including that Mineralogy had long been in breach of its first option performance obligations and that it was appropriate to make orders for specific performance. Among other things his Honour determined that the Option Agreement envisaged some permissible amendments to the Takeover Agreement and project agreements, but any amendments needed to be “benign, necessary and minimal”.

Final orders for specific performance were made by Justice K Martin on 6 May 2021. Those orders annexed the Takeover Agreement and project agreements to be entered into by Balmoral Iron. The Takeover Agreement was signed and exchanged on 27 May 2021 and Cape Preston Resource Holdings Pty Ltd. has applied for Foreign Investment Review Board approval of the acquisition, which is required before completion.

FCD Indemnity Disputes

(i) Queensland Nickel FCD Indemnity Claim

On 29 June 2017, the final day of the trial in Proceeding CIV 1808/2013, Mr. Palmer commenced a proceeding against the Company in the Supreme Court of Western Australia (“Proceeding CIV 2072/2017”) claiming damages in the sum of AUD2,324,000,000 (now reduced by an amended statement of claim to AUD1,800,438,000). This amount is alleged to represent the reduction in the value of the assets of the joint venture business carried on by the Queensland Nickel group of companies controlled by Mr. Palmer. The joint venture business was a nickel and cobalt refinery located at Yabulu in North Queensland.

As Sino Iron and Korean Steel had not paid amounts sought by Mineralogy on account of the royalty on products produced by Sino Iron and Korean Steel (“Royalty Component B”), Mr. Palmer claims that Mineralogy did not, and was unable to, provide the funds to Queensland Nickel Pty Limited to enable it to continue managing and operating the joint venture business. Mr. Palmer alleges that Queensland Nickel Pty Limited was subsequently placed in administration, followed by liquidation, because it did not receive those funds from Mineralogy.

After commencing this proceeding, Mr. Palmer joined Mineralogy as a second plaintiff and Sino Iron and Korean Steel as second and third defendants.

CITIC Limited Half-Year Report 2021 43

— F-221 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

3 Critical accounting estimates and judgements (continued)

(b) Mineralogy Pty Ltd. (“Mineralogy”) disputes (continued)

FCD Indemnity Disputes (continued)
(i) Queensland Nickel FCD Indemnity Claim (continued) On 14 September 2020, Justice K Martin ordered that:
(a) this proceeding be heard together with Proceeding CIV 1267/2018; and
(b) damages be determined separately and subsequently to liability.

On 3 March 2021, Mineralogy and Mr. Palmer filed an application for leave to amend their statement of claim to introduce an allegation that the CITIC Parties’ purpose in failing to pay Royalty Component B was to apply commercial pressure upon Mineralogy and Mr. Palmer to agree to alter the contractual relationship between the parties. In Mineralogy and Mr. Palmer’s view, that alleged purpose amounts to the commission of the tort of collateral abuse of process and unconscionable conduct in contravention of section 21 of the Australian Consumer Law. The CITIC Parties rejected those allegations on various grounds. The application was dismissed by consent on 28 May 2021 following Chief Justice Quinlan’s dismissal of the permanent stay application by Mineralogy and Mr. Palmer in Proceeding CIV 1915/2019, referred to below.

By Court orders made on 4 August 2021, the CITIC Parties are required to file and serve an amended defence in this proceeding by 22 October 2021, and Mineralogy and Mr. Palmer are required to file and serve any amended reply by 3 December 2021. The proceeding is to be listed for a strategic conference before the Case Manager at a date to be fixed in December 2021.

No trial date has been set for this proceeding.

(ii) Palmer Petroleum FCD Indemnity Claim

(a) from December 2009, funding; and
(b) in or about 2013, all future working capital,

to its wholly owned subsidiary, Palmer Petroleum Pty Ltd. (now named Aspenglow Pty Ltd.) (“Palmer Petroleum”). As Sino Iron and Korean Steel had not paid Royalty Component B from the fourth quarter of 2013 to the second quarter of 2016, it is claimed that Mineralogy did not, and was unable to, provide the funding to Palmer Petroleum.

44 CITIC Limited Half-Year Report 2021

— F-222 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

3 Critical accounting estimates and judgements (continued)

(b) Mineralogy Pty Ltd. (“Mineralogy”) disputes (continued)

FCD Indemnity Disputes (continued)

(ii) Palmer Petroleum FCD Indemnity Claim (continued)

On 24 April 2018, the CITIC Parties filed and served their defence, which is in similar terms to their defence in Proceeding CIV 2072/2017. The CITIC Parties have pleaded a number of defences including that there has been no breach of the project agreements, construction arguments, causation and mitigation.

On 14 September 2020, Justice K Martin ordered that:

(a) this proceeding be heard together with Proceeding CIV 2072/2017; and
(b) damages be determined separately and subsequently to liability.

On 3 March 2021, Mineralogy filed an application for leave to amend its statement of claim to introduce an allegation that the CITIC Parties’ purpose in failing to pay Royalty Component B was to apply commercial pressure upon Mineralogy to agree to alter the contractual relationship between the parties. In Mineralogy’s view, that alleged purpose amounts to the commission of the tort of collateral abuse of process and unconscionable conduct in contravention of section 21 of the Australian Consumer Law. The CITIC Parties rejected those allegations on various grounds. The application was dismissed by consent on 28 May 2021 following Chief Justice Quinlan’s dismissal of the permanent stay application by Mineralogy and Mr. Palmer in Proceeding CIV 1915/2019, referred to below.

By Court orders made on 4 August 2021, the CITIC Parties are required to file and serve an amended defence in this proceeding by 22 October 2021, and Mineralogy is required to file and serve any amended reply by 3 December 2021. The proceeding is to be listed for a strategic conference before the Case Manager at a date to be fixed in December 2021.

No trial date has been set for this proceeding.

CITIC Limited Half-Year Report 2021 45

— F-223 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

3 Critical accounting estimates and judgements (continued)

(b) Mineralogy Pty Ltd. (“Mineralogy”) disputes (continued)

Mine Continuation Proposals Dispute

(a) submit mine continuation proposals for the Sino Iron Project to the State of Western Australia under the State Agreement;
(b) grant further necessary tenure for the Sino Iron Project;
(c) take steps to secure the re-purposing of general-purpose leases for the Sino Iron Project; and
(d) submit a Programme of Works for the Sino Iron Project to the State of Western Australia.

The CITIC Parties brought claims for breach of contract, of unconscionable conduct under the Australian Consumer Law, and in estoppel. Mr. Palmer is sued as an accessory to the unconscionable conduct claim. The CITIC Parties seek orders requiring Mineralogy to take the four steps listed above, and to pay the CITIC Parties damages for its failure and refusal to do those things. Damages are also sought from Mr. Palmer. The State of Western Australia is joined to the proceeding as a necessary party because it is a party to the State Agreement, but no relief is sought against it.

Mediation was conducted in late 2019 but was unsuccessful.

On 10 March 2020, Mineralogy and Mr. Palmer filed their further amended defences. The amendments alleged breaches of various project agreements, and that Mineralogy and Mr. Palmer have allocated parts of certain tenements to other projects. On 23 March 2020, the CITIC Parties filed their reply. On 17 September 2020, following a successful application by the CITIC Parties to strike out aspects of Mineralogy’s further amended defence, Mineralogy filed a second further amended defence to remove the defences that were struck out.

46 CITIC Limited Half-Year Report 2021

— F-224 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

3 Critical accounting estimates and judgements (continued)

(b) Mineralogy Pty Ltd. (“Mineralogy”) disputes (continued)

Mine Continuation Proposals Dispute (continued)

On 26 February 2021, the CITIC Parties filed an application to summarily dismiss or strike out Mineralogy and Mr. Palmer’s permanent stay application. On 12 April 2021, Mineralogy and Mr. Palmer amended their points of claim. Among other things, those amendments sought alternative relief that Proceeding CIV 1915/2019 should be permanently stayed to the extent it raises matters the subject of issue, Anshun or abuse of process estoppels arising by reason of judgments in past proceedings between the parties concerning the Port of Cape Preston and the CITIC Parties’ port terminal facilities (in which the CITIC Parties were wholly successful).

The CITIC Parties’ application to summarily dismiss or strike out Mineralogy’s and Mr. Palmer’s permanent stay application was heard by Chief Justice Quinlan on 15 and 21 April 2021. On 28 May 2021, Chief Justice Quinlan summarily dismissed the permanent stay application and the application for discovery within that application. His Honour rejected all the grounds advanced by Mineralogy and Mr. Palmer in support of the permanent stay application, including finding that there was no reasonably arguable basis for Mineralogy and Mr. Palmer to argue Proceeding CIV 1915/2019 should be stayed as an abuse of process.

Mineralogy and Mr. Palmer appealed the decision of Chief Justice Quinlan to dismiss the permanent stay application but, on 1 July 2021, discontinued those appeals.

On 30 June 2021, Mineralogy and Mr. Palmer filed a chamber summons seeking a stay of Proceeding CIV 1915/2019 until after the CITIC Parties obtain approval under the Foreign Acquisitions and Takeovers Act 1975 (Cth) in respect of matters the subject of the specific performance orders or injunctions sought by the CITIC Parties. However, on 15 July 2021, Mineralogy and Mr. Palmer advised the CITIC Parties’ solicitors that they do not intend to pursue that application.

On 23 June 2021, the proceeding was provisionally listed for a trial before Justice K Martin from 31 January 2022 to 29 April 2022.

CITIC Limited Half-Year Report 2021 47

— F-225 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

3 Critical accounting estimates and judgements (continued)

(b) Mineralogy Pty Ltd. (“Mineralogy”) disputes (continued)

Minimum Production Royalty Disputes

The MRSLAs required each of Sino Iron and Korean Steel to produce a minimum of six million tonnes of product by 21 March 2013, unless prevented from doing so by:

(a) an act, matter or thing outside their control;
(b) Mineralogy doing, or failing to do an act (under the MRSLAs or otherwise); or
(c) a failure to obtain all government approvals necessary to allow them to do so (provided Sino Iron and Korean Steel used their best endeavours to obtain such approvals in a timely manner).

If Sino Iron and Korean Steel failed to do so, they were each required, within one month of that date, to pay Mineralogy the equivalent of the Mineralogy Royalty payable on the amount of magnetite ore required to produce six million tonnes of iron ore concentrate (“Minimum Production Royalty”). The Minimum Production Royalty has been the subject of earlier proceedings, including Proceeding CIV 1808/2013, Proceeding CIV 2303/2015, Proceeding CIV 3011/2017 and Proceeding CIV 3166/2017.

On 11 December 2018, Mineralogy and Mr. Palmer commenced a new proceeding against the CITIC Parties and Sino Iron Holdings Pty Ltd. (“SIH”) in the Supreme Court of Western Australia (“Proceeding CIV 3129/2018”), in which the claim for the Minimum Production Royalty was again revived. In their statement of claim in Proceeding CIV 3129/2018, Mineralogy and Mr. Palmer pleaded that each of Sino Iron and Korean Steel failed to produce at least six million tonnes of product by 21 March 2013 (and were not prevented from doing so for any of the reasons set out in clause 6.3 (a) of the MRSLAs), and accordingly became liable to pay the Minimum Production Royalty by 21 April 2013. In the event that Mineralogy and Mr. Palmer were unsuccessful against Sino Iron and Korean Steel, Mineralogy and Mr. Palmer also pursued a separate claim against the Company pursuant to the guarantee and indemnity in the FCD.

Mineralogy sought relief including an order that the Company pay Mineralogy AUD13,731,970 plus US$174,209,266, plus interest (pursuant to the guarantee under the FCD). In the event that Mineralogy was estopped or precluded from seeking relief in Proceeding CIV 3129/2018, Mr. Palmer also sought payment by the Company of US$187,941,236 pursuant to the guarantee and indemnity in the FCD.

48 CITIC Limited Half-Year Report 2021

— F-226 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

3 Critical accounting estimates and judgements (continued)

(b) Mineralogy Pty Ltd. (“Mineralogy”) disputes (continued)

Minimum Production Royalty Disputes (continued)

On 4 March 2020, Justice K Martin’s decision to permanently stay Proceeding CIV 3129/2018 was appealed by Mineralogy (“Proceeding CACV 27/2020”) and Mr. Palmer (“Proceeding CACV 29/2020”). Mineralogy and Mr. Palmer argued, among other things, that it was not open to Justice K Martin to find that the commencement of Proceeding CIV 3129/2018 was an abuse of process.

On 25 June 2021, the Court of Appeal dismissed Proceeding CACV 27/2020. The Court considered that Mineralogy’s claim in Proceeding CIV 3129/2018 was an abuse of process, because allowing Mineralogy to prosecute the proceeding would serve to bring the administration of justice into disrepute. The Court of Appeal also dismissed Mr. Palmer’s appeal in Proceeding CACV 29/2020. The Court agreed that Mr. Palmer’s claim failed to disclose a reasonably arguable cause of action. Given the effect of Mr. Palmer’s claim would have been to avoid the Court’s stay of Proceeding CIV 3129/2018, that claim was also found to have brought the administration of justice into disrepute, and to have comprised an abuse of process.

On 23 July 2021, Mineralogy (“Proceeding P 23/2021”) and Mr. Palmer (“Proceeding P 24/2021”) filed applications with the High Court of Australia seeking special leave to appeal against the decision of the Court of Appeal in Proceeding CACV 27/2020 and Proceeding CACV 29/2020. On 13 August 2021, the CITIC Parties filed responsive submissions in Proceeding P 23/2021 and Proceeding P 24/2021. On 23 August 2021, Mineralogy filed its reply in Proceeding P 23/2021 and, on 20 August 2021, Mr. Palmer filed his reply submissions in Proceeding P 24/2021.

The High Court of Australia has not yet determined the applications by Mineralogy and Mr. Palmer for special leave to appeal.

Site Remediation Fund Disputes

(i) 2018 Site Remediation Fund Dispute
Under clause 20.5 of the MRSLAs, Mineralogy may require Sino Iron and Korean Steel to provide reasonable security for the performance of their obligations under clause 20 of the MRSLAs, relating to the protection of the environment and rehabilitation following Mine Closure. Such security is to be provided by way of contributions by Sino Iron and Korean Steel into a Site Remediation Fund. Clause 20.6 of the MRSLAs provides for the operation of the Site Remediation Fund, and requires that:
(a) Mineralogy will establish the Site Remediation Fund, which will be maintained in a separate interest-bearing trust account, designated as a trust account, and Sino Iron and Korean Steel will make contributions into the Site Remediation Fund; and
(b) for each Operating Year, Mineralogy will “determine an annual charge on account of future Site Remediation Costs … having regard to … Mineralogy’s best prevailing estimate of the amount of future Site Remediation Costs … and the number of years remaining until Mine Closure”.

CITIC Limited Half-Year Report 2021 49

— F-227 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

3 Critical accounting estimates and judgements (continued)

(b) Mineralogy Pty Ltd. (“Mineralogy”) disputes (continued)

Site Remediation Fund Disputes (continued)

(i) 2018 Site Remediation Fund Dispute (continued) On 22 October 2018, Mineralogy commenced a proceeding against the CITIC Parties in the Supreme Court of Western Australia (“Proceeding CIV 2840/2018”) concerning the Site Remediation Fund. Mineralogy claimed that the CITIC Parties were required to contribute AUD529,378,207 into the Site Remediation Fund established under the MRSLAs, as security for the performance of their obligations relating to the protection of the environment and rehabilitation. The CITIC Parties filed a defence and counterclaim in Proceeding CIV 2840/2018 seeking, among other things, orders appointing an independent trustee in place of Mineralogy.

While the CITIC Parties have always acknowledged their site remediation obligations and their obligations under clauses 20.5 and 20.6 of the MRSLAs, they disputed the amount claimed by Mineralogy. Among other arguments, the CITIC Parties considered that the amount demanded by Mineralogy was not an “annual charge” as required by clause 20.6(e) of the MRSLAs. Further, the CITIC Parties did not consider that the amount demanded was a “best prevailing estimate” of future site remediation costs, as required by clause 20.6(e) of the MRSLAs.

The trial took place between 16 and 24 November 2020. On 24 February 2021, Justice K Martin published his reasons for decision. His Honour held that Mineralogy’s claim should be dismissed, and that the CITIC Parties’ counterclaim should also be dismissed. His Honour found, consistent with the submissions of the CITIC Parties, that the formulation of an “annual charge” pursuant to clause 20.6(e) requires Mineralogy to take its best prevailing estimate, subtract the amount already in the Site Remediation Fund, and then divide that amount by the number of years remaining until mine closure.

On 10 June 2021, Mineralogy appealed Justice K Martin’s decision to dismiss Mineralogy’s claim in Proceeding CIV 2840/2018 (“Proceeding CACV 42/2021”). On 23 August 2021, the CITIC Parties filed and served their respondents’ answer to the appellant’s case.

No date has been set for the hearing of the appeal in Proceeding CACV 42/2021.

(ii) 2021/22 Site Remediation Fund contributions sought by Mineralogy Separately, the CITIC Parties received a purported annual charge for the 2021-2022 Operating Year from Mineralogy seeking payment of AUD580,504,721 into the Site Remediation Fund by 31 December 2021. The CITIC Parties have sought further information from Mineralogy in relation to that determination and are considering their response to it in light of the requirements of the MRSLAs and the decision of Justice K Martin in Proceeding CIV 2840/2018.

50 CITIC Limited Half-Year Report 2021

— F-228 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

4 Taxation

The statutory income tax rate of the Company and its subsidiaries located in Hong Kong for the six months ended 30 June 2021 is 16.5% (six months ended 30 June 2020: 16.5%).

Except for the preferential tax treatments, the income tax rate applicable to the Group’s other subsidiaries in Mainland China for the six months ended 30 June 2021 is 25% (six months ended 30 June 2020: 25%).

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

5 Revenue

As a multi-industry conglomerate, the Group is principally engaged in comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation.

For financial services segment, revenue mainly comprises net interest income, net fee and commission income and net trading gain (Notes 5(a), 5(b) and 5(d)). For non-financial services segment, revenue mainly comprises total invoiced value of sales of goods and services rendered to customers (Note 5(c)).

The Group’s customer base is diversified and there is no single customer with which transactions have exceeded 10% of the Group’s revenue.

CITIC Limited Half-Year Report 2021 51

— F-229 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

5 Revenue (continued)

(a) Net interest income

	Six months ended 30 June 2021 2020 HK$ million HK$million 5,091 5,091 2,745 2,864 583 534 23,221 22,026 12,716 11,359 139,947 124,119 4 3 184,307 165,996 (4,107) (3,997) (17,113) (13,678) (1,551) (1,519) (1,122) (1,156) (54,337) (50,790) (14,926) (11,484) (272) (265) (45) (95) (93,473) (82,984) 90,834 83,012
	2021
	HK$ million
Interest income arising from(note): 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 in financial assets – Financial assets at amortised cost – Debt investments at fair value through other comprehensive income (“FVOCI”) Loans and advances to customers and other parties Others
	5,091
	2,745
	583

	23,221
	12,716
	139,947
	4
	184,307
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 Lease liabilities Others
	(4,107)
	(17,113)
	(1,551)
	(1,122)
	(54,337)
	(14,926)
	(272)
	(45)
	(93,473)
Net interest income	90,834

Note:

Interest income includes interest income accrued on credit-impaired financial assets of HK$298 million for the six months ended 30 June 2021 (six months ended 30 June 2020: HK$191 million).

52 CITIC Limited Half-Year Report 2021

— F-230 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

5 Revenue (continued)

(b) Net fee and commission income

	Six months ended 30 June 2021 2020 HK$ million HK$million	Six months ended 30 June 2021 2020 HK$ million HK$million
	2021
	HK$ million
Guarantee and advisory fees Bank card fees Settlement and clearing fees Agency fees and commission Trustee commission and fees Others	3,102	2,786 7,551 750 5,175 7,210 87
	9,343
	1,171
	4,554
	10,746
	191
Fee and commission expenses	29,107	23,559 (2,769)
	(2,803)
Netfee and commission income	26,304	20,790

Six months ended 30 June 2021 2020 HK$ million HK$million	Six months ended 30 June 2021 2020 HK$ million HK$million
Sales of goods 191,298 Services rendered to customers – Revenue from construction contracts 15,853 – Revenue from other services 13,561	117,981 9,131 11,682
220,712	138,794

(d) Other revenue

	Six months ended	30 June
	2021	2020
	HK$ million	HK$million
Net trading gain (note (i))	4,534	2,473
Net gain on investments in financial assets under financial
services segment	9,927	10,641
Net (loss)/gain from securitisation of financial assets	(7)	1
Others	617	91
	15,071	13,206

CITIC Limited Half-Year Report 2021 53

— F-231 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

5 Revenue (continued)

(d) Other revenue (continued)
(i) Net trading gain

Net trading gain
Six months ended	30 June
2021	2020
HK$ million	HK$million
Trading profit: – debt securities and certificates of deposits 2,904	1,320
– foreign currencies 1,509	1,149
– derivatives 121	4
4,534	2,473

6 Costs of sales and services

Costs of sales and services
Six months ended	30 June
2021	2020
HK$ million	HK$million
Costs of goods sold 166,250	100,924
Costs of services rendered – costs of construction contracts 14,761	8,288
– costs of other services 9,095	7,354
190,106	116,566

7 Other net income

Other net income
Six months ended	30 June
2021	2020
HK$ million	HK$million
Net gain on disposal/deemed disposal of subsidiaries, associates and joint ventures 358	4,298
Net gain/(loss) on investments in financial assets under non-financial services segment 484	(1,618)
Net foreign exchange gain/(loss) 913	(82)
Others 2,026	1,315
3,781	3,913

54 CITIC Limited Half-Year Report 2021

— F-232 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

8 Net finance charges

Net finance charges	Net finance charges
Six months ended 30 June 2021 2020 HK$ million HK$million
Finance costs – Interest on bank and other loans 1,919 – Interest on debt instruments issued 2,916 – Interest and finance chargespaid for lease liabilities 120	2,962 3,002 299
4,955 Less: interest expense capitalised (339)	6,263 (250)
4,616 Other finance charges 168	6,013 136
4,784 Finance income (1,424)	6,149 (1,037)
3,360	5,112

9 Profit before taxation

Profit before taxation is arrived at after charging below costs and expenses in cost of sales and services and other operating expenses:

(a) Staff costs

	Six months ended	30 June
	2021	2020
	HK$ million	HK$million
Salaries and bonuses	21,438	19,604
Contributions to defined contribution retirement schemes	2,559	1,406
Others	5,861	4,159
	29,858	25,169

CITIC Limited Half-Year Report 2021 55

— F-233 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

9 Profit before taxation (continued)

(b) Other items

fit before taxation(continued) Other items
	Six months ended	30	June
	2021		2020
	HK$ million	HK$million
Amortisation	1,206		1,050
Depreciation	9,107		9,052
Lease charges	289		344
Tax and surcharges	1,621		1,333
Property management fees	434		522
Non-operating expenses	231		284
Professional fees	482		373
	13,370		12,958

10 Income tax expense

Income tax expense
	Six months ended	30 June
	2021	2020
	HK$ million	HK$million
Current tax – Mainland China
Provision for enterprise income tax	15,190	18,930
Land appreciation tax	205	(5)
Current tax – Hong Kong	15,395	18,925
Provision for Hong Kong profits tax	648	298
Current tax – Overseas
Provision for theperiod	39	105
Deferred tax	16,082	19,328
Origination and reversal of temporarydifferences	(5,634)	(10,693)
	10,448	8,635

The particulars of the applicable income tax rates are disclosed in Note 4.

56 CITIC Limited Half-Year Report 2021

— F-234 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

11 Dividends

Dividends
	Six months ended	30 June
	2021	2020
	HK$ million	HK$million
2020 Final dividend paid: HK$0.388
(2019 Final: HK$0.285) per share	11,287	8,291
2021 Interim dividend proposed: HK$0.15
(2020Interim:HK$0.10) pershare	4,364	2,909

12 Earnings per share

The calculation of basic earnings per share and diluted earnings per share are based on the profit attributable to ordinary shareholders of the Company of HK$44,175 million for the six months ended 30 June 2021 (six months ended 30 June 2020: HK$27,014 million) calculated as follows:

	Six months ended	30 June
	2021	2020
	HK$ million	HK$million
Profit attributable to ordinary shareholders ofthe Company	44,175	27,014
Weighted averagenumberofordinary shares (in million)	29,090	29,090

Diluted earnings per share for the six months ended 30 June 2021 and 2020 are same as basic earnings per share. As at 30 June 2021, there are no share options or other equity securities of the Company in issue which if exercised would have a dilutive effect on the issued ordinary share capital as at 30 June 2021 (30 June 2020: Nil).

The basic and diluted earnings per share for the six months ended 30 June 2021 are HK$1.52 (six months ended 30 June 2020: HK$0.93).

CITIC Limited Half-Year Report 2021 57

— F-235 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

13 Other comprehensive gain/(loss)

Components of other comprehensive gain/(loss)

	Six months ended 30 June 2021 2020 HK$ million HK$million 2,128 1,779 (1,423) (4,169) (150) 622 555 (1,768) (350) 609 – – 103 (137) (247) 472 367 (941) 31 43 5 85 403 (813) 200 (853) 10,630 (15,888) – 59 – – – 59 (17) 37 5 – (12) 37 11,529 (18,754)
	2021
	HK$ million
Items that may be reclassified subsequently to profit or loss: Fair value gains on debt instruments at FVOCI Less: Ne t amounts previously recognised in other comprehensive income transferred to profit or loss in the current period Tax effect
	2,128
	(1,423)
	(150)
	555
Allowance change for impairment (loss)/gain on debt investments at FVOCI Less: Ne t amounts previously recognised in other comprehensive income transferred to profit or loss in the current period Tax effect	(350)
	–
	103
	(247)
Gain/(loss) arising from cash flow hedge Less: Ne t amounts previously recognised in other comprehensive income transferred to profit or loss in the current period Tax effect	367
	31
	5
	403
Share of other comprehensive gain/(loss) of associates and joint ventures	200
Exchange differences on translation of financial statements and others	10,630
Items that will not be reclassified subsequently to profit or loss: Reclassification of owner-occupied property as investment property: revaluation gain Less: Tax effect
	–
	–
	–
Fair value changes on investments in equity instruments designated at FVOCI Less: Tax effect	(17)
	5
	(12)
	11,529

58 CITIC Limited Half-Year Report 2021

— F-236 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

14 Segment reporting

The Group has presented five reportable operating segments which are comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation. The Group has made strategic adjustment based on the 14th Five-Year Plan. The segment reports for the comparison period are restated accordingly. 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 five reportable segments are as follows:

Comprehensive financial services: this segment includes banking, trust, asset management, securities and insurance services.
Advanced intelligent manufacturing: this segment includes manufacturing of heavy machineries, specialised robotics, aluminium wheels, aluminium casting parts and other products.
Advanced materials: this segment includes exploration, processing and trading of resources and energy products, including crude oil, coal and iron ore, as well as manufacturing of special steels.
New consumption: this segment includes motor and food and consumer products business, telecommunication services, publication services, modern agriculture, and others.
New-type urbanisation: this segment includes development, sale and holding of properties, contracting and design services, infrastructure services, environmental services and others.

(a) Segment results, assets and liabilities

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

The measure used for reporting segment profit is “profit for the period”. 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.

CITIC Limited Half-Year Report 2021 59

— F-237 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

14 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 six months ended 30 June 2021 and 2020 is set out below:

	Six months ended 30 June 2021 Comprehensive financial services Advanced intelligent manufacturing Advanced materials New consumption New-type urbanisation Operation management Elimination Total HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million
Revenue from external customers	132,245 23,071 142,504 32,885 22,195 21 – 352,921
Inter-segment revenue	(5) 103 273 55 450 78 (954) –
Reportable segment revenue	132,240 23,174 142,777 32,940 22,645 99 (954) 352,921
Disaggregation of revenue:
– Net interest income (Note 5(a))	90,882 – – – – 55 (103) 90,834
– Net fee and commission income (Note 5(b))	26,311 – – – – – (7) 26,304
– Sales of goods (Note 5(c))	– 22,810 140,728 25,481 2,644 – (365) 191,298
– Services rendered to customers-construction
contracts (Note 5(c))	– 245 – – 15,756 – (148) 15,853
– Services rendered to customers-others
(Note 5(c))	– 119 2,049 7,459 4,245 31 (342) 13,561
– Other revenue(Note 5(d))	15,047 – – – – 13 11 15,071
Share of profits/(losses) of associates, net of tax	3,514 2 573 (11) 2,575 36 – 6,689
Share of profits/(losses) of joint ventures,
net of tax	557 3 340 104 303 23 – 1,330
Finance income (Note 8)	– 54 215 43 1,110 368 (366) 1,424
Finance costs (Note 8)	– (164) (912) (313) (632) (3,361) 598 (4,784)
Depreciation and amortisation (Note 9(b))	(3,908) (690) (3,649) (1,214) (820) (32) – (10,313)
Expected credit losses	(56,561) (84) (26) (15) (2,140) (12) – (58,838)
Impairment losses	(49) (61) (23) (73) 1 (471) – (676)
Profit/(Loss) before taxation	48,497 851 16,186 1,528 3,923 (1,856) 8 69,137
Income tax	(7,043) (109) (1,654) (346) (585) (703) (8) (10,448)
Profit/(Loss) for the period	41,454 742 14,532 1,182 3,338 (2,559) – 58,689
Attributable to:
– Ordinary shareholders of the Company	29,052 344 13,402 791 3,145 (2,559) – 44,175
– Non-controlling interests	12,402 398 1,130 391 193 – – 14,514

60 CITIC Limited Half-Year Report 2021

— F-238 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

14 Segment reporting (continued)

(a) Segment results, assets and liabilities (continued)

==> picture [458 x 183] intentionally omitted <==

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

|||||||||||
|---|---|---|---|---|---|---|---|---|---|
|As at 30 June 2021|
|Comprehensive|Advanced|
|financial|intelligent|Advanced|New|New-type|Operation|
|services|manufacturing|materials|consumption|urbanisation|management|Elimination|Total|
|HK$ million|HK$ million|HK$ million|HK$ million|HK$ million|HK$ million|HK$ million|HK$ million|
|Reportable segment assets|9,578,001|57,608|260,769|75,602|319,719|162,349|(223,690)|10,230,358|
|Including:|
|Interests in associates (Note 20)|56,018|476|25,060|10,431|52,266|1,734|–|145,985|
|Interests in joint ventures (Note 21)|15,675|626|7,203|1,941|25,214|1,709|–|52,368|
|Reportable segment liabilities|8,731,794|35,869|254,281|37,111|150,390|243,057|(331,040)|9,121,462|
|Including:|
|Bank and other loans (Note 25) (note)|6,645|13,896|56,604|8,173|45,213|85,741|(43,067)|173,205|
|Debt instruments issued (Note 26)|(note)|1,079,297|–|2,404|3,498|364|112,896|(31,185)|1,167,274|

----- End of picture text -----

Note:

The amount is the principal excluding interest accrued.

CITIC Limited Half-Year Report 2021

— F-239 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

14 Segment reporting (continued)

(a) Segment results, assets and liabilities (continued)

			Six	months ended 30	June 2020 (restated)	June 2020 (restated)
	Comprehensive	Advanced
	financial	intelligent	Advanced	New	New-type	Operation
	services	manufacturing	materials	consumption	urbanisation	management	Elimination	Total
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Revenue from external customers	116,984	2,896	86,020	35,415	14,454	33	–	255,802
Inter-segment revenue	37	129	130	41	296	42	(675)	–
Reportable segment revenue	117,021	3,025	86,150	35,456	14,750	75	(675)	255,802
Disaggregation of revenue:
– Net interest income (Note 5(a))	83,024	–	–	–	–	57	(69)	83,012
– Net fee and commission income (Note 5(b))	20,795	–	–	–	–	1	(6)	20,790
– Sales of goods (Note 5(c))	–	2,626	84,984	28,699	1,920	–	(248)	117,981
– Services rendered to customers-construction
contracts (Note 5(c))	–	352	–	–	8,992	–	(213)	9,131
– Services rendered to customers-others
(Note 5(c))	–	47	1,166	6,757	3,838	7	(133)	11,682
– Other revenue(Note 5(d))	13,202	–	–	–	–	10	(6)	13,206
Share of profits/(losses) of associates, net of tax	1,959	120	504	(24)	2,110	167	–	4,836
Share of profits/(losses) of joint ventures,
net of tax	505	–	(151)	64	35	48	–	501
Finance income (Note 8)	–	68	125	47	633	713	(549)	1,037
Finance costs (Note 8)	–	(155)	(1,097)	(711)	(648)	(4,266)	728	(6,149)
Depreciation and amortisation (Note 9(b))	(3,416)	(152)	(3,223)	(2,584)	(697)	(30)	–	(10,102)
Expected credit losses	(52,921)	(29)	3	(96)	18	–	–	(53,025)
Impairment losses	(548)	–	(612)	(158)	–	–	–	(1,318)
Profit/(Loss) before taxation	37,787	263	5,216	438	5,303	(2,473)	10	46,544
Income tax	(5,749)	(9)	(1,207)	(452)	(1,049)	(162)	(7)	(8,635)
Profit/(Loss) for the period	32,038	254	4,009	(14)	4,254	(2,635)	3	37,909
Attributable to:
– Ordinary shareholders of the Company	21,948	185	3,530	(31)	4,014	(2,635)	3	27,014
– Non-controlling interests	10,090	69	479	17	240	–	–	10,895

62 CITIC Limited Half-Year Report 2021

— F-240 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

14 Segment reporting (continued)

(a) Segment results, assets and liabilities (continued)

				As at 31 December 2020	As at 31 December 2020
	Comprehensive	Advanced
	financial	intelligent	Advanced	New	New-type	Operation
	services	manufacturing	materials	consumption	urbanisation	management	Elimination	Total
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Reportable segment assets	9,113,747	58,719	239,155	76,157	309,736	161,818	(218,504)	9,740,828
Including:
Interests in associates(Note 20)	47,156	1,050	22,361	10,151	48,360	1,962	–	131,040
Interests in joint ventures(Note 21)	14,878	7	7,144	1,875	24,742	1,641	–	50,287
Reportable segment liabilities	8,353,514	39,574	250,098	38,529	138,696	236,525	(324,750)	8,732,186
Including:
Bank and other loans (Note 25) (note)	2,382	15,867	53,753	10,301	39,217	82,529	(40,878)	163,171
Debt instruments issued(Note 26) (note)	872,734	–	772	3,496	360	121,736	(30,567)	968,531

Note:

The amount is the principal excluding interest accrued.

CITIC Limited Half-Year Report 2021

— F-241 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

14 Segment reporting (continued)

(b) Geographical information

An analysis of the Group’s revenue and total assets by geographical area are as follows:

Revenue from external customers

	Six months ended	30 June	Reportable segment assets
	2021 HK$ million	2020 HK$million	30 June 2021 31 December 2020 HK$ million HK$million
Mainland China	304,389	217,434	9,528,692 9,078,635
Hong Kong, Macau and
Taiwan	26,155	19,287	571,241 543,279
Overseas	22,377	19,081	130,425 118,914
	352,921	255,802	10,230,358 9,740,828

15 Cash and deposits

Cash and deposits
	30 June 2021 31 December 2020 HK$ million HK$million
Cash	7,169 7,108
Bank deposits	49,705 57,468
Balances with central banks (note (i)):
– Statutory deposit reserve funds (note (ii))	468,712 439,860
– Surplus deposit reserve funds (note (iii))	48,998 67,975
– Fiscal deposits (note (iv))	6,327 1,246
– Foreign exchange reserves (note (v))	2,019 3,802
Deposits with banks and non-bank financial institutions	120,236 177,241
Accrued interest	703,166 754,700 1,128 841
Less: al lowance for impairment losses on deposits with banks and non-	704,294 755,541
bank financial institutions	(125) (155)
	704,169 755,386

64 CITIC Limited Half-Year Report 2021

— F-242 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

15 Cash and deposits (continued)

Notes:

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

As at 30 June 2021, the statutory deposit reserve funds placed by CITIC Bank with the People’s Bank of China was calculated at 9% (31 December 2020: 9%) of eligible RMB deposits for domestic branches of CITIC Bank and at 9% (31 December 2020: 9%) of eligible RMB deposits from overseas financial institutions respectively. In addition, CITIC Bank is required to deposit an amount equivalent to 7% (31 December 2020: 5%) of its foreign currency deposits from domestic branch customers as statutory deposit reserve funds as at 30 June 2021.

As at 30 June 2021, the statutory RMB deposit reserve rate applicable to Zhejiang Lin’an CITIC Rural Bank Corporation Limited, a subsidiary of CITIC Bank, was at 6% (31 December 2020: 6%).

As at 30 June 2021, the statutory deposit reserve funds placed by CITIC Finance with the People’s Bank of China was calculated at 6% (31 December 2020: 6%) of eligible RMB deposits from the customers of CITIC Finance. CITIC Finance is also required to deposit an amount equivalent to 7% (31 December 2020: 5%) of its foreign currency deposits from the customers as statutory deposit reserve funds.

(iii) The surplus deposit reserve funds are maintained with the People’s Bank of China for the purposes of clearing.
(iv) Fiscal deposits placed with the People’s Bank of China are not available for use in the Group’s daily operations, and are non-interest bearing. (Except specified by the local People’s Bank of China)
(v) 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. The reserve is payable on a monthly basis at 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.
(vi) In addition to the statutory deposit reserve funds, fiscal deposits and foreign exchange reserves, HK$9,363 million (31 December 2020: HK$7,687 million) included in cash and deposits as at 30 June 2021 were restricted in use, mainly including pledged bank deposits and guaranteed deposits.

CITIC Limited Half-Year Report 2021 65

— F-243 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

16 Derivative financial instruments

The Group’s subsidiaries under the financial services segment act as an intermediary to offer derivative products including forwards, swaps and option transactions. 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 to manage its own asset and liability and structural positions. Derivatives, except for those which are designated as hedging instruments, are held for trading. Derivatives classified as held for trading are for trading and customer-initiated transactions purpose, and those for risk management purposes but do not meet the criteria for hedge accounting.

	30 June 2021 31	December 2020	December 2020
	Nominal amount Assets Liabilities Nominal amount	Assets	Liabilities
	HK$ million HK$ million HK$ million HK$million	HK$million	HK$million
Hedging instruments
Fair value hedge
– Currency derivatives	2,212 13 – 464	–	10
Cash flow hedge
– Interest rate derivatives	16,182 – 1,674 13,182	–	2,068
– Currency derivatives	1,201 7 9 1,059	–	16
– Other derivatives	425 45 12 1,302	72	51
Non-hedging instruments
– Interest rate derivatives	3,219,905 8,544 8,428 3,633,451	11,163	10,856
– Currency derivatives	2,486,491 21,111 21,033 2,351,464	36,175	36,313
– Precious metals derivatives	17,335 721 32 22,866	362	99
– Other derivatives	12,537 118 2 11,274	32	395
	5,756,288 30,559 31,190 6,035,062	47,804	49,808

66 CITIC Limited Half-Year Report 2021

— F-244 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

16 Derivative financial instruments (continued)

(a) Nominal amount analysed by remaining maturity

ivative financial instruments(continued) Nominal amount analysed by remaining maturity
	30 June 31 December
	2021	2020
	HK$ million	HK$million
Within 3 months	2,407,479	2,321,724
Between 3 months and 1 year	2,002,547	2,457,596
Between 1 year and 5 years	1,303,988	1,220,322
Over 5years	42,274	35,420
	5,756,288	6,035,062

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

(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 and Insurance 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 30 June 2021, the credit risk weighted amount for counterparty was HK$24,174 million (31 December 2020: HK$27,546 million).

17 Trade and other receivables

Trade and other receivables
	30 June 2021 31 December 2020 HK$ million HK$million
Account and bills receivables	67,708 58,587
Advanced payments and settlement accounts	53,727 20,772
Prepayments,deposits and other receivables	82,129 100,051
Less: allowance for impairment losses	203,564 179,410 (12,275) (9,687)
	191,289 169,723

As at 30 June 2021, the amount of the Group’s prepayments, deposits and other receivables expected to be recovered or recognised as expense after more than one year is HK$5,228 million (31 December 2020: HK$5,385 million). The remaining trade and other receivables are expected to be recovered or recognised as expense within one year.

CITIC Limited Half-Year Report 2021 67

— F-245 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

18 Loans and advances to customers and other parties

(a) Loans and advances to customers and other parties analysed by nature

	30 June 2021	31 December 2020 HK$million
	HK$ million
Loans and advances to customers and other parties at amortised cost Corporate loans: – Loans – Discounted bills – Finance lease receivables		2,543,662 7,947 51,910


	2,713,512
	10,493
	65,056
	2,789,061	2,603,519
Personal loans: – Residential mortgages – Credit cards – Personal consumption – Business loans		1,088,732 576,969 243,052 337,643
	1,146,117
	610,866
	279,709
	345,757
	2,382,449	2,246,396
Accrued interest	5,171,510	4,849,915 15,182

	15,660
Less: allowance for impairment losses	5,187,170	4,865,097 (156,218)

	(166,814)
Carrying amount of loans and advances to customers and other parties at amortised cost	5,020,356	4,708,879
Loans and advances to customers and other parties at fair value through profit or loss (“FVPL”) Personal loans – Residential mortgages –		8,465
Loans and advances to customers and other parties at FVOCI Corporate loans: – Loans 33,357 – Discounted bills 482,113		3,203 485,608
Carrying amount of loans and advances to customers and other parties at FVOCI 515,470		488,811
Total carrying amount of loans and advances 5,535,826		5,206,155
Allowance for impairment losses on loans and advances to customers and otherparties atFVOCI (814)		(653)

68 CITIC Limited Half-Year Report 2021

— F-246 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

18 Loans and advances to customers and other parties (continued)

(b) Assessment method of allowance for impairment losses

As at 30 June 2021

	Stage 1	Stage 2	Stage 3 (note)	Total Gross loans and advances at stage 3 as a percentage of gross total loans and advances
	HK$ million	HK$ million	HK$ million	HK$ million
Loans and advances at amortised cost Accrued interest Less: al lowance for impairment losses	4,946,878	126,023	98,609	5,171,510 1.74%
	13,834	1,609	217	15,660
	(62,207)	(34,250)	(70,357)	(166,814)
Carrying amount of loans and advances at amortised cost	4,898,505	93,382	28,469	5,020,356
Carrying amount of loans and advances at FVOCI	514,186	1,160	124	515,470
Total carrying amount of loans and advances for which allowance for impairment losses is recognised	5,412,691	94,542	28,593	5,535,826
Allowance for impairment losses of loans and advances at FVOCI (723)		(36)	(55)	(814)

CITIC Limited Half-Year Report 2021 69

— F-247 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

18 Loans and advances to customers and other parties (continued)

(b) Assessment method of allowance for impairment losses (continued)

As at 31 December 2020

==> picture [454 x 339] intentionally omitted <==

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

|||||||
|---|---|---|---|---|---|
|Gross loans|
|and advances|
|at stage 3 as a|
|percentage of|
|gross total loans|
|Stage 1|Stage 2|Stage 3 (note)|Total|and advances|
|HK$ million|HK$ million|HK$ million|HK$ million|
|Loans and advances at|
|amortised cost|4,627,830|127,027|95,058|4,849,915|1.78%|
|Accrued interest|13,169|1,799|214|15,182|
|Less: al lowance for|
|impairment losses|(51,887)|(39,607)|(64,724)|(156,218)|
|Carrying amount of|
|loans and advances at|
|amortised cost|4,589,112|89,219|30,548|4,708,879|
|Carrying amount of loans|
|and advances at FVOCI|488,704|97|10|488,811|
|Total carrying amount of|
|loans and advances for|
|which allowance for|
|impairment losses is|
|recognised|5,077,816|89,316|30,558|5,197,690|
|Allowance for impairment|
|losses of loans and|
|advances at FVOCI|(640)|(5)|(8)|(653)|

----- End of picture text -----

Note:

Loans and advances at stage 3 are credit-impaired, details are as follows:

==> picture [456 x 98] intentionally omitted <==

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

||||
|---|---|---|
|As at|As at|
|30 June 2021|31 December 2020|
|HK$ million|HK$ million|
|Secured portion|68,064|61,482|
|Unsecured portion|30,669|33,586|
|Total|98,733|95,068|
|Allowance for impairment losses|(70,412)|(64,732)|

----- End of picture text -----

As at 30 June 2021 the maximum exposure covered by fair value of pledge and collateral held against these loans and advances amounted to HK$69,803 million (31 December 2020: HK$62,425 million).

70 CITIC Limited Half-Year Report 2021

— F-248 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

18 Loans and advances to customers and other parties (continued)

(c) Overdue loans by overdue period

	Overdue within 3 months HK$ million	As at 30 June 2021 Overdue between 3 months and 1 year Overdue between 1 year and 3 years Overdue over 3 years HK$ million HK$ million HK$ million	As at 30 June 2021 Overdue between 3 months and 1 year Overdue between 1 year and 3 years Overdue over 3 years HK$ million HK$ million HK$ million	As at 30 June 2021 Overdue between 3 months and 1 year Overdue between 1 year and 3 years Overdue over 3 years HK$ million HK$ million HK$ million	Total HK$ million
Unsecured loans	14,883	11,122	786	311	27,102
Guaranteed loans	1,972	4,144	4,902	298	11,316
Secured loans
– Lo ans secured by
collateral	14,070	13,984	20,563	1,014	49,631
– Pledged loans	11,153	1,029	2,127	121	14,430
	42,078	30,279	28,378	1,744	102,479

		As at 31 December		2020
		Overdue	Overdue
	Overdue	between	between 1
	within	3 months and	year and 3	Overdue over
	3 months	1 year	years	3 years	Total
	HK$million	HK$million	HK$million	HK$million	HK$million
Unsecured loans	19,616	10,984	538	535	31,673
Guaranteed loans	4,460	9,152	3,224	362	17,198
Secured loans
– Lo ans secured by
collateral	11,021	20,206	14,390	1,196	46,813
– Pledged loans	10,691	788	2,143	346	13,968
	45,788	41,130	20,295	2,439	109,652

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

CITIC Limited Half-Year Report 2021 71

— F-249 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

19 Investments in financial assets

(a) Analysed by types

	30 June 2021	31 December 2020 HK$million
	HK$ million
Financial assets at amortised cost Debt securities Investment management products managed by securities companies Trust investment plans Certificates of deposit and certificates of interbank deposit Investments in creditor’s rights on assets Others		838,502 83,946 231,843 5,606 96 1,803 1,161,796 12,162 1,173,958 (17,462) 1,156,496 68,495 3,338 3,960 59,329 6,532 367,787 18,546 306 528,293 806,506 5,192 40,751 852,449 7,806 860,255 (3,148) 7,639 384 8,023 2,553,067
	975,858
	73,083
	277,750
	1,994
	97
	487
Accrued interest	1,329,269
	14,976
Less: allowance for impairment losses	1,344,245

	(34,168)
	1,310,077
Financial assets at FVPL Debt securities Investment management products managed by securities companies Trust investment plans Certificates of deposit and certificates of interbank deposit Wealth management products Investment funds Equity investment Others
	108,279
	7,234
	3,155
	39,441
	2,749
	471,772
	19,800
	928
	653,358
Debt investments at FVOCI (note (i)) Debt securities Certificates of deposit and certificates of interbank deposit Investment management products managed by securities companies
	754,633
	5,235
	13,024
Accrued interest	772,892
	7,327
	780,219
Allowance for impairment losses on debt investments at FVOCI	(2,747)
Equity investments at FVOCI (note(i)) Equity investment Investment funds
	8,661
	395
	9,056
	2,752,710

72 CITIC Limited Half-Year Report 2021

— F-250 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

19 Investments in financial assets (continued)

(a) Analysed by types (continued)

Notes:

(i) Financial assets measured at FVOCI

Financial assets measured at FVOCI
	Equity instruments HK$ million	As at 30 June 2021 Debt instruments HK$ million	Total HK$ million
Cost/amortised cost Accumulative fair value change in OCI Accrued interest	10,037 (981) –	771,934 958 7,327	781,971 (23) 7,327
Carryingamount	9,056	780,219	789,275
Allowance for impairment losses	N/A	(2,747)	(2,747)

		As at 31 December 2020
	Equity instruments	Debt instruments	Total
	HK$ million	HK$ million	HK$ million
Cost/amortised cost	9,034	851,767	860,801
Accumulative fair value change in OCI	(1,011)	682	(329)
Accrued interest	–	7,806	7,806
Carryingamount	8,023	860,255	868,278
Allowance for impairment losses	N/A	(3,148)	(3,148)

CITIC Limited Half-Year Report 2021 73

— F-251 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

19 Investments in financial assets (continued)

(b) Analysed by counterparties

Analysed by counterparties
	30 June 31 December
	2021	2020
	HK$ million	HK$million
Issued by:
– Government	1,052,763	998,531
– Policy banks	144,236	140,995
– Banks and non-bank financial institutions	1,358,468	1,228,437
– Corporates	172,050	162,058
– Public entities	2,890	3,078
	2,730,407	2,533,099
Accrued interest	22,303	19,968
	2,752,710	2,553,067
– Listed in Hong Kong	53,063	59,687
– Listed outside Hong Kong	2,200,430	2,010,976
– Unlisted	476,914	462,436
	2,730,407	2,533,099
Accrued interest	22,303	19,968
	2,752,710	2,553,067

Bonds traded in China’s inter-bank bond market are “listed outside Hong Kong”.

74 CITIC Limited Half-Year Report 2021

— F-252 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

19 Investments in financial assets (continued)

		As at 30 June 2021	As at 30 June 2021
	Stage 1	Stage 2	Stage 3	Total
	HK$ million	HK$ million	HK$ million	HK$ million
Gross carrying amount of investments in financial assets at amortised cost Accrued interest Less: al lowance for impairment losses	1,263,767	8,508	56,994	1,329,269
	14,798	80	98	14,976
	(5,956)	(4,159)	(24,053)	(34,168)
Carrying amount of investments in financial assets at amortised cost	1,272,609	4,429	33,039	1,310,077
Gross carrying amount of debt investments in financial assets at FVOCI Accrued interest	772,309	150	433	772,892
	7,250	–	77	7,327
Carrying amount of debt investments in financial assets at FVOCI	779,559	150	510	780,219
Total carrying amount of investments in financial assets for which allowance for impairment losses is recognised	2,052,168	4,579	33,549	2,090,296
Allowance for impairment losses on debt investments in financial assets atFVOCI	(1,567)	(1)	(1,179)	(2,747)

CITIC Limited Half-Year Report 2021 75

— F-253 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

19 Investments in financial assets (continued)

(c) Analysed by assessment method of allowance for impairment losses (continued)

Analysed by assessm	ent method of a	llowance for impairment losses	llowance for impairment losses	(continued)
	Stage 1 HK$million	As at 31 December 2020 Stage 2 Stage 3 HK$million HK$million		Total HK$million 1,161,796 12,162 (17,462) 1,156,496 852,449 7,806 860,255 2,016,751 (3,148)
Gross carrying amount of investments in financial assets at amortised cost Accrued interest Less: al lowance for impairment losses	1,122,763 11,925 (4,416)	5,158 237 (653)	33,875 – (12,393)
Carrying amount of investments in financial assets at amortised cost	1,130,272	4,742	21,482
Gross carrying amount of debt investments in financial assets at FVOCI Accrued interest	851,754 7,766	155 1	540 39
Carrying amount of debt investments in financial assets at FVOCI	859,520	156	579
Total carrying amount of investments in financial assets for which allowance for impairment losses is recognised	1,989,792	4,898	22,061
Allowance for impairment losses on debt investments in financial assets atFVOCI	(1,784)	(2)	(1,362)

76 CITIC Limited Half-Year Report 2021

— F-254 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

20 Interests in associates

Interests in associates
	30 June 2021 HK$ million	31 December 2020 HK$million
Carrying value Less: allowance for impairment losses	152,073 (6,088)	137,012 (5,972)
	145,985	131,040

21 Interests in joint ventures

Interests in joint ventures
	30 June 2021 HK$ million	31 December 2020 HK$million
Carrying value Less: allowance for impairment losses	53,857 (1,489)	51,963 (1,676)
	52,368	50,287

22 Deposits from banks and non-bank financial institutions

Deposits from banks and non-bank financial institutions
30 June 2021 HK$ million	31 December 2020 HK$million 365,291 1,000,980 1,366,271 4,168 1,370,439 768,681 251,155 346,435 1,366,271 4,168 1,370,439
Banks 314,799 Non-bank financial institutions 990,916
1,305,715 Accrued interest 5,788
1,311,503
Analysed by remaining maturity: – On demand 806,955 – Within 3 months 166,094 – Between 3 months and 1year 332,666
1,305,715 Accrued interest 5,788
1,311,503

CITIC Limited Half-Year Report 2021 77

— F-255 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

23 Trade and other payables

	Trade and other payables
		30 June 2021 31 December 2020 HK$ million HK$million
	Account and bills payables	85,604 86,362
	Advances from lessees	245 453
	Other taxes payables	7,247 7,431
	Settlement accounts	6,100 7,083
	Dividend payables	16,881 300
	Otherpayables	65,258 59,314
		181,335 160,943

At the balance sheet date, the ageing analysis of the Group’s trade and bills payable based on the invoice date is as follows:

At the balance sheet date, the ageing analysis of the Group’s trade and bills payable based on the invoice date is as follows:	At the balance sheet date, the ageing analysis of the Group’s trade and bills payable based on the invoice date is as follows:
30 June 31 December
2021	2020
HK$ million HK$million
Within 1 year 69,872	70,965
Between 1 and 2 years 3,725	3,343
Between 2 and 3 years 3,007	4,668
Over 3years 9,000	7,386
85,604	86,362

78 CITIC Limited Half-Year Report 2021

— F-256 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

24 Deposits from customers

(a) Types of deposits from customers

	30 June 2021	31 December 2020 HK$million 2,258,627 388,658 2,647,285 1,991,042 726,173 2,717,215 10,763 52,431 5,427,694
	HK$ million
Demand deposits – Corporate customers – Personal customers
	2,261,119
	423,455
	2,684,574
Time and call deposits – Corporate customers – Personal customers
	2,149,251
	740,679
	2,889,930
Outward remittance and remittancepayables	13,689
Accrued interest	55,148
	5,643,341

(b) Deposits from customers include pledged deposits for the following items:

30 June 2021 HK$ million	31 December 2020 HK$million 265,419 13,112 13,399 124,564 416,494
Bank acceptances 252,115 Letters of credit 20,214 Guarantees 16,595 Others 123,758
412,682

CITIC Limited Half-Year Report 2021 79

— F-257 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

25 Bank and other loans

(a) Types of loans

nk and other loans Types of loans
	30 June 2021	31 December 2020 HK$million 116,984 17,842 134,826 27,517 828 28,345 163,171 433 163,604
	HK$ million
Bank loans Unsecured loans Loanpledged with assets(note(d))
	121,905
	19,406
	141,311
Other loans Unsecured loans Loanpledged with assets(note(d))
	28,926
	2,968
	31,894
Accrued interest	173,205
	471
	173,676

80 CITIC Limited Half-Year Report 2021

— F-258 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

25 Bank and other loans (continued)

(b) Maturity of loans

	30 June 2021	31 December 2020 HK$million 47,714 17,394 42,471 27,247 134,826 13,549 3,024 6,398 5,374 28,345 163,171 433 163,604
	HK$ million
Bank loans – Within 1 year or on demand – Between 1 and 2 years – Between 2 and 5 years – Over 5years
	43,303
	28,656
	40,587
	28,765
	141,311
Other loans – Within 1 year or on demand – Between 1 and 2 years – Between 2 and 5 years – Over 5years
	17,271
	3,019
	6,400
	5,204
	31,894
Accrued interest	173,205
	471
	173,676

CITIC Limited Half-Year Report 2021 81

— F-259 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

25 Bank and other loans (continued)

	30 June 2021 31 December 2020 HK$ million HK$million
RMB	42,684 39,330
US$	59,048 46,913
HK$	57,906 61,191
Other currencies	13,567 15,737
Accrued interest	173,205 163,171 471 433
	173,676 163,604

(d) As at 30 June 2021, the Group’s bank and other loans of HK$22,374 million (31 December 2020: HK$18,670 million) are pledged with cash and deposits, inventories, trade and other receivables, fixed assets, intangible assets, right-of-use assets and the interests in associates with an aggregate carrying amount of HK$89,010 million (31 December 2020: HK$83,967 million).
(e) 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 29(b). As at 30 June 2021, none of the covenants relating to drawn down facilities have been breached (31 December 2020: Nil).

82 CITIC Limited Half-Year Report 2021

— F-260 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

26 Debt instruments issued

==> picture [480 x 295] intentionally omitted <==

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

||||
|---|---|---|
|30 June|31 December|
|2021|2020|
|HK$ million|HK$ million|
|Corporate bonds issued (note (a))|105,603|112,959|
|Notes issued (note (b))|84,100|60,208|
|Subordinated bonds issued (note (c))|136,030|134,526|
|–|
|Certificates of deposit issued (note (d))|1,475|
|Certificates of interbank deposit issued (note (e))|824,061|645,179|
|Convertible corporate bonds (note (f))|16,005|15,659|
|1,167,274|968,531|
|Accrued interest|6,245|5,327|
|1,173,519|973,858|
|Analysed by remaining maturity:|
|– Within 1 year or on demand|851,937|668,965|
|– Between 1 and 2 years|48,858|22,547|
|– Between 2 and 5 years|114,441|116,344|
|– Over 5 years|152,038|160,675|
|1,167,274|968,531|
|Accrued interest|6,245|5,327|
|1,173,519|973,858|

----- End of picture text -----

The Group did not have any defaults of principal, interest or other breaches with respect to its debt instruments issued for the six months ended 30 June 2021 (six months ended 30 June 2020: Nil).

Notes:

(a) Corporate bonds issued

==> picture [456 x 98] intentionally omitted <==

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

||||
|---|---|---|
|30 June|31 December|
|2021|2020|
|HK$ million|HK$ million|
|The Company (note (i))|61,298|67,149|
|CITIC Corporation Limited (“CITIC Corporation”) (note (ii))|39,605|39,165|
|CITIC Telecom International Holdings Limited (“CITIC Telecom International”) (note (iii))|3,498|3,496|
|CITIC Pacific Limited’s (“CITIC Pacific”) subsidiaries (note(iv))|1,202|3,149|
|105,603|112,959|

----- End of picture text -----

CITIC Limited Half-Year Report 2021 83

— F-261 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

26 Debt instruments issued (continued)

Notes (continued):

(a) Corporate bonds issued (continued)

(i) Details of corporate bonds issued by the Company

==> picture [435 x 326] intentionally omitted <==

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

As at 30 June 2021
Face value in
Denominated denominated Interest rate per
currency currency million Issue date Maturity date annum
US$ Notes 2.2 US$ 250 2014-06-23 2021-12-14 6.63%
US$ Notes 1 US$ 150 2010-08-16 2022-08-16 6.90%
US$ Notes 4.1 US$ 750 2012-10-17 2023-01-17 6.80%
US$ Notes 4.2 US$ 250 2012-12-11 2023-01-17 6.80%
US$ Notes 4.3 US$ 400 2014-07-18 2023-01-17 6.80%
US$ Notes 6.1 US$ 110 2014-07-18 2024-01-18 4.70%
US$ Notes 6.2 US$ 90 2014-10-29 2024-01-18 4.70%
HK$ Notes 2 HK$ 420 2014-07-25 2024-07-25 4.35%
US$ Notes 7 US$ 280 2015-04-14 2035-04-14 4.60%
US$ Notes 8 US$ 150 2016-02-04 2041-02-04 4.88%
US$ Notes 9 US$ 350 2016-02-04 2036-02-04 4.75%
US$ Notes 10 US$ 90 2016-04-25 2036-04-25 4.65%
US$ Notes 11 US$ 210 2016-04-25 2046-04-25 4.85%
US$ Notes 12 US$ 500 2016-06-14 2021-12-14 2.80%
US$ Notes 13 US$ 750 2016-06-14 2026-06-14 3.70%
US$ Notes 14 US$ 200 2016-09-07 2031-09-07 3.98%
US$ Notes 15 US$ 250 2016-09-07 2046-09-07 4.49%
US$ Notes 16 US$ 750 2017-02-28 2027-02-28 3.88%
US$ Notes 17 US$ 500 2017-02-28 2022-02-28 3.13%
US$ Notes 18 US$ 250 2018-01-11 2023-07-11 3.50%
US$ Notes 19 US$ 500 2018-01-11 2028-01-11 4.00%
US$ Notes 20 US$ 75 2018-03-13 2038-03-13 4.85%
US$ Notes 21 US$ 200 2018-04-18 2048-04-18 5.07%
US$ Notes 22 US$ 300 2020-02-25 2025-02-25 2.45%
US$ Notes 23 US$ 700 2020-02-25 2030-02-25 2.85%
----- End of picture text -----

84 CITIC Limited Half-Year Report 2021

— F-262 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

26 Debt instruments issued (continued)

Notes (continued):

(a) Corporate bonds issued (continued)

(i) Details of corporate bonds issued by the Company (continued)

				As at 31 December 2020
			Face value in
		Denominated	denominated			Interest rate per
		currency	currencymillion	Issue date	Maturitydate	annum
US$ Notes	2.1	US$	500	2011-04-15	2021-04-15	6.63%
US$ Notes	2.2	US$	250	2014-06-23	2021-04-15	6.63%
US$ Notes	1	US$	150	2010-08-16	2022-08-16	6.90%
US$ Notes	4.1	US$	750	2012-10-17	2023-01-17	6.80%
US$ Notes	4.2	US$	250	2012-12-11	2023-01-17	6.80%
US$ Notes	4.3	US$	400	2014-07-18	2023-01-17	6.80%
US$ Notes	6.1	US$	110	2014-07-18	2024-01-18	4.70%
US$ Notes	6.2	US$	90	2014-10-29	2024-01-18	4.70%
HK$ Notes	2	HK$	420	2014-07-25	2024-07-25	4.35%
US$ Notes	7	US$	280	2015-04-14	2035-04-14	4.60%
US$ Notes	8	US$	150	2016-02-04	2041-02-04	4.88%
US$ Notes	9	US$	350	2016-02-04	2036-02-04	4.75%
US$ Notes	10	US$	90	2016-04-25	2036-04-25	4.65%
US$ Notes	11	US$	210	2016-04-25	2046-04-25	4.85%
US$ Notes	12	US$	500	2016-06-14	2021-12-14	2.80%
US$ Notes	13	US$	750	2016-06-14	2026-06-14	3.70%
US$ Notes	14	US$	200	2016-09-07	2031-09-07	3.98%
US$ Notes	15	US$	250	2016-09-07	2046-09-07	4.49%
US$ Notes	16	US$	750	2017-02-28	2027-02-28	3.88%
US$ Notes	17	US$	500	2017-02-28	2022-02-28	3.13%
US$ Notes	18	US$	250	2018-01-11	2023-07-11	3.50%
US$ Notes	19	US$	500	2018-01-11	2028-01-11	4.00%
US$ Notes	20	US$	75	2018-03-13	2038-03-13	4.85%
US$ Notes	21	US$	200	2018-04-18	2048-04-18	5.07%
US$ Notes	22	US$	300	2020-02-25	2025-02-25	2.45%
US$ Notes	23	US$	700	2020-02-25	2030-02-25	2.85%

CITIC Limited Half-Year Report 2021 85

— F-263 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

26 Debt instruments issued (continued)

Notes (continued):

(a) Corporate bonds issued (continued)

(ii) Details of corporate bonds issued by CITIC Corporation

==> picture [435 x 238] intentionally omitted <==

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

As at 30 June 2021
Face value in
Denominated denominated Interest rate per
currency currency million Issue date Maturity date annum
03 CITIC bond-2 RMB 6,000 2003-12-10 2023-12-09 5.10%
05 CITIC bond-2 RMB 4,000 2005-12-07 2025-12-06 4.60%
19 CITIC bond-1 RMB 3,500 2019-02-25 2022-02-25 3.50%
19 CITIC bond-2 RMB 1,500 2019-02-25 2024-02-25 3.85%
19 CITIC bond-3 RMB 2,000 2019-03-19 2029-03-19 4.59%
19 CITIC bond-4 RMB 2,000 2019-04-22 2029-04-22 4.71%
19 CITIC bond-5 RMB 1,800 2019-07-17 2034-07-17 4.60%
19 CITIC bond-6 RMB 700 2019-07-17 2029-07-17 4.46%
19 CITIC bond-7 RMB 500 2019-08-14 2029-08-14 4.38%
19 CITIC bond-8 RMB 2,000 2019-08-14 2039-08-14 4.58%
19 CITIC bond-9 RMB 1,000 2019-11-05 2039-11-05 4.65%
20 CITIC bond-2 RMB 2,000 2020-02-26 2030-02-26 3.88%
20 CITIC bond-3 RMB 1,000 2020-03-23 2030-03-23 4.00%
20 CITIC bond-4 RMB 600 2020-03-23 2040-03-23 4.30%
20 CITIC bond-5 RMB 1,000 2020-04-21 2030-04-21 3.87%
20 CITIC bond-6 RMB 1,500 2020-04-21 2040-04-21 4.16%
20 CITIC bond-8 RMB 1,900 2020-05-11 2040-05-11 4.20%
----- End of picture text -----

				As at 30 June 2020
			Face value in
		Denominated	denominated			Interest rate per
		currency	currencymillion	Issue date	Maturitydate	annum
03	CITIC bond-2	RMB	6,000	2003-12-10	2023-12-09	5.10%
05	CITIC bond-2	RMB	4,000	2005-12-07	2025-12-06	4.60%
19	CITIC bond-1	RMB	3,500	2019-02-25	2022-02-25	3.50%
19	CITIC bond-2	RMB	1,500	2019-02-25	2024-02-25	3.85%
19	CITIC bond-3	RMB	2,000	2019-03-19	2029-03-19	4.59%
19	CITIC bond-4	RMB	2,000	2019-04-22	2029-04-22	4.71%
19	CITIC bond-5	RMB	1,800	2019-07-17	2034-07-17	4.60%
19	CITIC bond-6	RMB	700	2019-07-17	2029-07-17	4.46%
19	CITIC bond-7	RMB	500	2019-08-14	2029-08-14	4.38%
19	CITIC bond-8	RMB	2,000	2019-08-14	2039-08-14	4.58%
19	CITIC bond-9	RMB	1,000	2019-11-05	2039-11-05	4.65%
20	CITIC bond-2	RMB	2,000	2020-02-26	2030-02-26	3.88%
20	CITIC bond-3	RMB	1,000	2020-03-23	2030-03-23	4.00%
20	CITIC bond-4	RMB	600	2020-03-23	2040-03-23	4.30%
20	CITIC bond-5	RMB	1,000	2020-04-21	2030-04-21	3.87%
20	CITIC bond-6	RMB	1,500	2020-04-21	2040-04-21	4.16%
20	CITIC bond-8	RMB	1,900	2020-05-11	2040-05-11	4.20%

86 CITIC Limited Half-Year Report 2021

— F-264 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

26 Debt instruments issued (continued)

Notes (continued):

(a) Corporate bonds issued (continued)

(iii) Details of corporate bonds issued by CITIC Telecom International

		Denominated currency	As Face value in denominated currency million	at 30 June 2021 Issue date	Maturity date	Interest rate per annum
Guaranteed	bonds	US$	450	2013-03-05	2025-03-05	6.10%
			As at	31 December 2020
			Face value in
		Denominated	denominated			Interest rate per
		currency	currencymillion	Issue date	Maturitydate	annum
Guaranteed	bonds	US$	450	2013-03-05	2025-03-05	6.10%

(iv) Details of corporate bonds issued by CITIC Pacific’s subsidiaries

		Denominated currency	Face value in denominated currency million	As at 30 June 2021 Issue date	Maturity date	Interest rate per annum
19	Corporate bonds	RMB	1,000	2019-05-20	2022-05-20	3.90%
				As at 31 December 2020
			Face value in
		Denominated	denominated			Interest rate per
		currency	currencymillion	Issue date	Maturitydate	annum
18	Corporate bonds	RMB	1,000	2018-05-31	2021-05-31	4.90%
19	Corporate bonds	RMB	1,000	2019-05-20	2022-05-20	3.90%
20	JLEPC SCP002	RMB	250	2020-04-13	2021-01-08	2.48%
20	JLEPC SCP003	RMB	200	2020-07-27	2021-04-03	3.00%
20	JLEPC SCP004	RMB	200	2020-08-26	2021-05-23	3.09%

CITIC Limited Half-Year Report 2021 87

— F-265 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

26 Debt instruments issued (continued)

Notes (continued):

(b) Notes issued

	30 June 2021 31 December 2020 HK$ million HK$ million
CITIC	Corporation (note (i)) 13,194 13,045
CITIC	Bank (note (ii)) 70,542 41,844
CITIC	Offshore Helicopter Company Limited (note (iii)) 364 360
CITIC	Trust Co.,Ltd.(note(iv)) – 4,959
	84,100 60,208

(i) Details of notes issued by CITIC Corporation

Details of notes issued by	CITIC Corporation
	Denominated currency	Face value in denominated currency million	As at 30 June 2021 Issue date	Maturity date	Interest rate per annum
2011 Second tranche
medium term note-2	RMB	6,000	2011-11-15	2021-11-16	5.30%
2012 Medium term
note-2	RMB	5,000	2012-03-28	2022-03-29	5.18%
			As at 31 December 2020
		Face value in
	Denominated	denominated			Interest rate per
	currency	currencymillion	Issue date	Maturitydate	annum
2011 Second tranche
medium term note-2	RMB	6,000	2011-11-15	2021-11-16	5.30%
2012 Medium term
note-2	RMB	5,000	2012-03-28	2022-03-29	5.18%

88 CITIC Limited Half-Year Report 2021

— F-266 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

26 Debt instruments issued (continued)

Notes (continued):

(b) Notes issued (continued)

(ii) Details of notes issued by CITIC Bank

Details of	notes issued by	CITIC Bank
		Denominated currency	As Face value in denominated currency million	at 30 June 2021 Issue date	Maturity date	Interest rate per annum
Financial	bonds	US$	550	2017-12-14	2022-12-15	Three-month
Financial	bonds	US$	250	2017-12-14	2022-12-15	Libor+1% 3.13%
Financial	bonds	RMB	30,000	2020-03-18	2023-03-18	2.75%
Financial	bonds	US$	200	2021-02-02	2024-02-02	0.88%
Financial	bonds	US$	350	2021-02-02	2026-02-02	1.25%
Financial	bonds	RMB	20,000	2021-06-10	2024-06-10	3.19%
			As at	31 December 2020
			Face value in
		Denominated	denominated			Interest rate per
		currency	currencymillion	Issue date	Maturitydate	annum
Financial	bonds	US$	550	2017-12-14	2022-12-15	Three-month
						Libor+1%
Financial	bonds	US$	250	2017-12-14	2022-12-15	3.13%
Financial	bonds	RMB	30,000	2020-03-18	2023-03-18	2.75%

(iii) Details of notes issued by CITIC Offshore Helicopter Company Limited

	Denominated currency	Face value in denominated currency million	As at 30 June 2021 Issue date	Maturity date	Interest rate per annum
2020 Asset-backed
medium-term notes	RMB	305	2020-06-15	2023-06-14	3.30%
			As at 31 December 2020
		Face value in
	Denominated	denominated			Interest rate per
	currency	currencymillion	Issue date	Maturitydate	annum
2020 Asset-backed
medium-term notes	RMB	305	2020-06-15	2023-06-14	3.30%

CITIC Limited Half-Year Report 2021 89

— F-267 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

26 Debt instruments issued (continued)

Notes (continued):

(b) Notes issued (continued)

(iv) Details of notes issued by CITIC Trust Co., Ltd.

	Denominated currency	Face value in denominated currency million	As at 30 June 2021 Issue date Maturity date	As at 30 June 2021 Issue date Maturity date	Interest rate per annum
Participation Notes	US$	5	2018-01-22	2023-01-22	Non fixed interest rate
		As	at 31 December 2020
		Face value in
		denominated
	Denominated	currency			Interest rate
	currency	million	Issue date	Maturitydate	per annum
Guaranteed notes	US$	300	2018-03-15	2021-03-15	4.75%
Participation Notes	US$	5	2018-01-22	2023-01-22	Non fixed
					interest rate
Guaranteed notes	HK$	1,200	2020-01-16	2021-01-13	2.55%
Guaranteed notes	HK$	930	2020-07-03	2021-07-01	2.55%
Guaranteed notes	US$	80	2020-12-30	2021-04-23	3.79%

(c) Subordinated bonds issued

The carrying amount of subordinated debts is as follows:
	30 June 2021 31 December 2020
	HK$ million	HK$ million
Fixed rate notes maturing
-In February 2029 (i)	3,864	3,865
Fixed rate bonds maturing
- In June 2027 (ii)	24,022	23,748
- In September 2028 (iii)	36,048	35,638
- In October 2028 (iv)	24,032	23,758
- In August 2030(v)	48,064	47,517
	136,030	134,526

90 CITIC Limited Half-Year Report 2021

— F-268 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

26 Debt instruments issued (continued)

Notes (continued):

(c) Subordinated bonds issued (continued)

					Denominated currency	Face value in denominated currency million	As at 30 June 2021 Issue date Maturity date	As at 30 June 2021 Issue date Maturity date	Interest rate per annum
(i)	Subordinated	Notes			US$	500	2019-02-28	2029-02-28	4.63%
(ii)	Subordinated	Fixed	Rate	Bonds	RMB	20,000	2012-06-21	2027-06-21	5.15%
(iii)	Subordinated	Fixed	Rate	Bonds	RMB	30,000	2018-09-13	2028-09-13	4.96%
(iv)	Subordinated	Fixed	Rate	Bonds	RMB	20,000	2018-10-22	2028-10-22	4.80%
(v)	Subordinated	Fixed	Rate	Bonds	RMB	40,000	2020-08-12	2030-08-14	3.87%
						As	at 31 December 2020
						Face value in
						denominated
					Denominated	currency			Interest rate
					currency	million	Issue date	Maturitydate	per annum
(i)	Subordinated	Notes			US$	500	2019-02-28	2029-02-28	4.63%
(ii)	Subordinated	Fixed	Rate	Bonds	RMB	20,000	2012-06-21	2027-06-21	5.15%
(iii)	Subordinated	Fixed	Rate	Bonds	RMB	30,000	2018-09-13	2028-09-13	4.96%
(iv)	Subordinated	Fixed	Rate	Bonds	RMB	20,000	2018-10-22	2028-10-22	4.80%
(v)	Subordinated	Fixed	Rate	Bonds	RMB	40,000	2020-08-12	2030-08-14	3.87%

(d) Certificates of deposit issued

These certificates of deposit were issued by CBI with interest rate ranging is from 0.25% to 0.40% per annum (31 December 2020: No certificates of deposit issued).

(e) Certificates of interbank deposit issued

As at 30 June 2021 CITIC Bank issued certain certificates of interbank deposit with a total value of RMB685,684 million (approximately HK$824,061 million) (31 December 2020: RMB543,008 million (approximately HK$645,179 million)). The yield ranges from 2.40% to 3.36% per annum (31 December 2020: 1.50% to 3.36% per annum). The original expiry terms are between three months to one year (31 December 2020: between one month to one year).

(f) Convertible corporate bonds

As approved by the relevant regulatory authorities in China, CITIC Bank made a public offering of RMB40,000 million (HK$46,824 million) A-share convertible corporate bonds (the “convertible bonds”) on 4 March 2019, of which RMB26,388 million (HK$30,890 million) has been subscribed by another subsidiary of the Group. CITIC Limited, as the parent company of CITIC Bank, subscribed for 65.97% in proportion to its shareholding in the Group’s ordinary shares. The convertible bonds have a term of six years from 4 March 2019 to 3 March 2025, at annual coupon rates of 0.3% for the first year, 0.8% for the second year, 1.5% for the third year, 2.3% for the fourth year, 3.2% for the fifth year and 4.0% for the sixth year. The conversion of these convertible bonds begins on the first trading day (8 March 2019) after six months upon the completion date of the offering until the maturity date (from 11 September 2019 to 3 March 2025). As at 30 June 2021, convertible bonds (including accrued interest) were recorded as debt instruments issued of RMB13,385 million (HK$16,086 million) and non-controlling interests of RMB1,067 million (HK$1,213 million), respectively.

CITIC Limited Half-Year Report 2021 91

— F-269 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

27 Share capital and capital management

(a) Share capital

As at 30 June 2021, the number of ordinary shares in issue of the Company was 29,090,262,630 (31 December 2020: 29,090,262,630).

(b) 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.

92 CITIC Limited Half-Year Report 2021

— F-270 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

28 Contingent liabilities and commitments

(a) Credit commitments

Credit commitments in connection with the financial services segment of the Group take the form of loan commitments, credit card commitments, guarantees, letters of credit and acceptances.

30 June 2021 HK$ million	31 December 2020 HK$million
Contractual amount Loan commitments With an original maturity of within 1 year 16,683 With an original maturityof 1year or above 38,597	16,797 42,173
55,280 Credit card commitments 823,392 Acceptances 743,734 Guarantees 246,862 Letters of credit 140,959	58,970 740,790 664,777 148,767 143,619
2,010,227	1,756,923

CITIC Limited Half-Year Report 2021 93

— F-271 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

28 Contingent liabilities and commitments (continued)

(b) Credit commitments analysed by credit risk weighted amount

							30 June	31 December
							2021	2020
							HK$ million	HK$million
Credit	risk	weighted	amount	on	credit	commitments	556,671	520,212

Notes:

(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.

(c) Redemption commitment for treasury bonds

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:

					30 June	31 December
					2021	2020
					HK$ million	HK$million
Redemption	commitment	for	treasury	bonds	14,345	13,761

As at 30 June 2021, the original maturities of these bonds vary from 1 to 5 years (31 December 2020: 1 to 5 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.

94 CITIC Limited Half-Year Report 2021

— F-272 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

28 Contingent liabilities and commitments (continued)

(d) Guarantees provided

In addition to guarantees that have been recognised as liabilities, the guarantees issued by the Group at the balance sheet date are as follows:

the balance sheet date are as follows:
	30 June 2021 HK$ million	31 December 2020 HK$million
Related parties (note) Thirdparties	7,490 1,921	10,936 2,063
	9,411	12,999

As at balance date, the counter guarantees issued to the Group by related parties and third parties mentioned above are as follows:

mentioned above are as follows:
	30 June	31 December
	2021	2020
	HK$ million	HK$million
Related parties (note)	1,202	1,188
Thirdparties	196	242
	1,398	1,430

Note:

As at 30 June 2021, the guarantees provided to related parties by the Group include guarantees provided to former subsidiaries of the Group that were disposed to China Overseas Land & Investment Limited (“China Overseas”) in 2016, amounting to RMB1,000 million(approximately HK$1,202 million) (31 December 2020: RMB1,000 million (approximately HK$1,188 million)). China Overseas which has provided counter guarantees to the Group.

The relationship and transaction with related parties are disclosed in Note 30.

CITIC Limited Half-Year Report 2021 95

— F-273 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

28 Contingent liabilities and commitments (continued)

(e) Outstanding litigation and disputes

(i) There are a number of disputes with Mineralogy, and their details are disclosed in Note 3(b).
(ii) There are some issues in dispute with MCC, and their details are disclosed in Note 3(a).

(f) Capital commitments

As at the balance sheet date, the Group had the following capital commitments not provided for in these consolidated financial statements:

		30 June	31 December
		2021	2020
		HK$ million	HK$million
Contracted	for	26,550	27,075

29 Financial risk management and fair values

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.

96 CITIC Limited Half-Year Report 2021

— F-274 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(a) Credit risk

Credit risk management

Credit risk refers to the risk of loss caused by default of debtor or counterparty. Credit risk also occurs when the Group makes unauthorised or inappropriate loans and advances to customers, financial commitments or investments. The credit risk exposure of the Group mainly arises from the Group’s loans and advances to customers, treasury business, off-balance sheet item and receivables arising from sale of goods and rendering of services.

The Group has standardised management on the entire credit business process including loan application, and its investigation approval and granting of loan, and monitoring of non-performing loans. Through strictly standardising the credit business process, strengthening the whole process management of preloan investigation, credit rating and credit granting, examination and approval, loan review and post-loan monitoring, improving the risk of slow-release of collateral, accelerating the liquidation and disposal of non-performing loans, and promoting the upgrading and transformation of credit management system, the credit risk management level of the Group has been comprehensively improved.

CITIC Limited Half-Year Report 2021 97

— F-275 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(a) Credit risk (continued)

Measurement of the expected credit losses (“ECL”)

Stage 3: If the financial instruments are credit-impaired after initial recognition, it will be moved to stage 3. The ECL of financial instruments in stage 3 is measured based on the lifetime ECL.

Purchased or originated credit-impaired financial assets refers to financial assets that are credit-impaired at the initial recognition. Loss allowances on these assets are the lifetime ECL.

The Group estimates the ECL in accordance with HKFRS 9, and the key judgments and assumptions adopted by the Group are as follows:

98 CITIC Limited Half-Year Report 2021

— F-276 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(a) Credit risk (continued)

Measurement of the expected credit losses (“ECL”) (continued)

(1) Significant increase in credit risk

On each balance sheet date, the Group evaluates whether the credit risk of the relevant financial instruments has increased significantly since initial recognition. When one or more on quantitative or qualitative threshold, or upper limit are triggered, the credit risk of financial instruments would be considered as increased significantly.

By setting quantitative and qualitative threshold, and upper limit, the Group determines whether the credit risk of financial instruments has increased significantly since initial recognition. The judgment mainly includes (1) default probability of borrower/debtor increases; (2) significant adverse changes in business, financial or operating conditions of borrowers and in economic conditions; (3) significant increase in other credit risk. For the borrowers who are 30 days (exclusive) to 90 days (inclusive) past due on their contractual payments (including principal and interest), the Group considers that their credit risk has increased significantly and classifies them to stage 2.

(2) Definition of default and credit-impaired assets

When credit impairment occurred, the Group defines that the financial asset is in default. In general, a financial asset that is overdue for more than 90 days is considered to be in default.

When one or more events that adversely affect the expected future cash flow of a financial asset occurs, the financial asset becomes a credit-impaired financial asset. Evidence of credit-impaired financial assets includes the following observable information:

The issuer or borrower/debtor is in significant financial difficulties;
The borrower/debtor is in breach of financial covenant(s) such as default or overdue in repayment of interests or principal etc.;
The creditor gives the debtor concession that would not be offered otherwise, considering economic or contractual factors relating to the debtor’s financial difficulties;
It is becoming probably that the borrower/debtor will enter bankruptcy or other debt restructuring;
An active market for that financial asset has disappeared because of financial difficulties from issuer or borrower/debtor;
Financial assets are purchased or originated at a deep discount that reflects the incurred credit losses.

CITIC Limited Half-Year Report 2021 99

— F-277 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(a) Credit risk (continued)

Measurement of the expected credit losses (“ECL”) (continued)

(3) Inputs for measurement of ECL
The ECL is measured on either a 12-month or lifetime basis depending on whether a significant increase in credit risk has occurred or whether an asset is considered to be credit-impaired. Related definitions are as follows:
The probability of default (“PD”) represents the likelihood of a borrower/debtor defaulting on its financial obligations, either over the next 12 months or over the remaining lifetime of the obligation.
Loss given default (“LGD”) represents the Group’s expectation of the extent of loss on a defaulted exposure. LGD varies by type of counterparty, type and seniority of claim, and availability of collateral or other credit support. LGD is expressed as a percentage loss per unit of exposure at the time of default and is calculated on a 12-month or lifetime basis.
Exposure at default (“EAD”) is based on the amounts that the Group expects to be owned at the time of default, over the next 12 months or over the remaining lifetime of the obligation.

The Group regularly monitors and reviews the assumptions related to the calculation of expected credit losses, including the PD and the change in the value of collateral over time.

The Group categorises exposures with similar risk characteristics and estimates the PD, LGD, EAD by the exposures respectively. The Group has obtained sufficient information to ensure its statistical reliability. ECL of the Group is measured based on the continuous assessment and follow-up of individuals and their financial status.

During the reporting period, there were no significant changes in the estimation technology or key assumptions.

(4) Forward-looking information

In addition to the base economic scenario, the Group determines the possible scenarios and their weighting by a combination of statistical analysis and expert judgment. The Group measures ECL as either a probability weighted 12 months ECL (stage 1) or a probability weight lifetime ECL (stage 2 and stage 3). These probability-weighted ECL are determined by running each scenario through the relevant ECL model and multiplying it by the appropriate scenario weighting.

100 CITIC Limited Half-Year Report 2021

— F-278 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

29 Financial risk management and fair values (continued)

(a) Credit risk (continued)

Measurement of the expected credit losses (“ECL”) (continued)

Macroeconomic scenario and weighting information

The Group builds its own macro forecasting model, and through historical data analysis, identifies key economic indicators that affect the credit risk and expected credit loss of various business types, such as gross domestic product (GDP), urban registered unemployment rate, industrial added value, total retail sales of consumer goods and broad money supply, etc.

(i) Maximum credit risk exposure

==> picture [431 x 234] intentionally omitted <==

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

||||
|---|---|---|
|30 June|31 December|
|2021|2020|
|HK$ million|HK$ million|
|Deposits with central banks, banks and non-bank financial|
|institutions|697,000|748,278|
|Placements with banks and non-bank financial institutions|169,753|198,513|
|Trade and other receivables|169,498|135,276|
|Financial assets held under resale agreements|118,984|143,029|
|Loans and advances to customers and other parties|5,535,826|5,197,690|
|Investments in financial assets|
|– At amortised cost|1,310,077|1,156,496|
|– Debt investments at FVOCI|780,219|860,255|
|Contract assets|16,585|13,619|
|Other financial assets|7,258|4,110|
|8,805,200|8,457,266|
|Credit commitments and guarantees provided|2,019,638|1,769,922|
|Maximum credit risk exposure|10,824,838|10,227,188|

----- End of picture text -----

CITIC Limited Half-Year Report 2021 101

— F-279 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(a) Credit risk (continued)

(i) Maximum credit risk exposure (continued)

The maximum exposure to credit risk 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 debt instruments in the balance sheet without deducting any allowance for impairment losses. A summary of the maximum exposure is as follows:

==> picture [431 x 114] intentionally omitted <==

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

||||
|---|---|---|
|30 June|31 December|
|2021|2020|
|HK$ million|HK$ million|
|Derivative financial instruments|30,559|47,804|
|–|
|Loans and advances to customers and other parties at FVPL|8,465|
|Investments in financial assets|
|– Financial assets at FVPL (debt instruments)|594,913|482,911|
|Maximum credit risk exposure|625,472|539,180|

----- End of picture text -----

(ii) Expected credit losses

The following table explains the changes in the gross carrying amount for loans and advances to customers and other parties for the period:

==> picture [435 x 257] intentionally omitted <==

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

||||||
|---|---|---|---|---|
|Six months ended 30 June 2021|
|Stage 1|Stage 2|Stage 3|Total|
|HK$ million|HK$ million|HK$ million|HK$ million|
|Balance at 1 January|
|2021|5,129,703|128,923|95,282|5,353,908|
|Movements:|
|Net transfers out|
|from stage 1|(75,534)|–|–|(75,534)|
|Net transfers into|
|stage 2|–|28,108|–|28,108|
|Net transfers into|
|stage 3|–|–|47,426|47,426|
|Net increase/|
|(decrease) during|
|the period (note (i))|346,223|(28,391)|(8,803)|309,029|
|Write offs|–|–|(36,160)|(36,160)|
|Others (note (ii))|74,506|152|1,205|75,863|
|Balance at 30 June|
|2021|5,474,898|128,792|98,950|5,702,640|

----- End of picture text -----

102 CITIC Limited Half-Year Report 2021

— F-280 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(a) Credit risk (continued)

(ii) Expected credit losses (continued)

		Six months ended 30 June 2020	Six months ended 30 June 2020
	Stage 1	Stage 2	Stage 3	Total
	HK$million	HK$million	HK$million	HK$million
Balance at 1 January
2020	4,303,423	111,552	77,946	4,492,921
Movements:
Net transfers out
from stage 1	(80,967)	–	–	(80,967)
Net transfers into
stage 2	–	30,196	–	30,196
Net transfers into
stage 3	–	–	50,771	50,771
Net increase/
(decrease) during
the period (note (i))	266,537	(7,375)	(6,320)	252,842
Write offs	–	–	(25,985)	(25,985)
Others(note(ii))	(77,982)	(2,288)	(1,667)	(81,937)
Balance at 30 June
2020	4,411,011	132,085	94,745	4,637,841

CITIC Limited Half-Year Report 2021 103

— F-281 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(a) Credit risk (continued)

(ii) Expected credit losses (continued)

The following table explains the changes in the gross carrying amount for investments in financial assets for the period:

assets for the period:
	Six months ended 30 June 2021 Stage 1 Stage 2 Stage 3 Total HK$ million HK$ million HK$ million HK$ million
Balance at 1 January
2021	1,994,208 5,551 34,454 2,034,213
Movements:
Net transfers out
from stage 1	(9,207) – – (9,207)
Net transfers out
from stage 2	– 6,535 – 6,535
Net transfers into
stage 3	– – 2,672 2,672
Net increase/
(decrease) during
the period
(note (i))	48,061 (3,245) 19,886 64,702
Write offs	– – – –
Others(note(ii))	25,062 (103) 590 25,549
Balance at 30 June
2021	2,058,124 8,738 57,602 2,124,464

104 CITIC Limited Half-Year Report 2021

— F-282 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(a) Credit risk (continued)
(ii) Expected credit losses (continued)

		Six months ended 30 June 2020	Six months ended 30 June 2020
	Stage 1	Stage 2	Stage	3	Total
	HK$million	HK$million	HK$million		HK$million
Balance at 1 January
2020	1,727,835	12,932	10,836		1,751,603
Movements:
Net transfers out
from stage 1	(1,998)	–		–	(1,998)
Net transfers out
from stage 2	–	(8,845)		–	(8,845)
Net transfers into
stage 3	–	–	10,843		10,843
Net increase/
(decrease) during
the period (note (i))	146,252	(113)	(278)		145,861
Write offs	–	–		–	–
Others(note(ii))	(29,092)	(146)	(303)		(29,541)
Balance at 30 June
2020	1,842,997	3,828	21,098		1,867,923

Notes:

(i) Net increase/(decrease) mainly includes changes in carrying amount due to new purchased or originated credit-impaired financial assets or de-recognition other than write-off.

(ii) Others includes changes in interest accrual and exchange adjustment.

CITIC Limited Half-Year Report 2021 105

— F-283 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(a) Credit risk (continued)
(ii) Expected credit losses (continued)

Movements of the loss allowances for loans and advances to customers and other parties for the period is as follows:

period is as follows:
	Six months ended 30 June 2021 Stage 1 Stage 2 Stage 3 Total HK$ million HK$ million HK$ million HK$ million
Balance at 1 January 2021	52,527 39,612 64,732 156,871
Movements (note (iii)):
Net transfers out from stage 1	714 – – 714
Net transfers into stage 2	– (3,411) – (3,411)
Net transfers into stage 3	– – 31,870 31,870
Net increase/(decrease) during the
period (note (iv))	7,175 (5,791) (1,264) 120
Write offs	– – (36,160) (36,160)
Parameters change for the period
(note (v))	2,095 3,440 3,948 9,483
Others(note(vi))	419 436 7,286 8,141
Balance at 30 June2021	62,930 34,286 70,412 167,628

		Six months ended	30 June 2020
	Stage 1	Stage 2	Stage 3	Total
	HK$million	HK$million	HK$million	HK$million
Balance at 1 January 2020	44,014	30,234	60,274	134,522
Movements (note (iii)):
Net transfers out from stage 1	(3,058)	–	–	(3,058)
Net transfers into stage 2	–	5,682	–	5,682
Net transfers into stage 3	–	–	35,608	35,608
Net increase/(decrease) during the
period (note (iv))	3,956	(1,863)	(3,350)	(1,257)
Write offs	–	–	(25,985)	(25,985)
Parameters change for the period
(note (v))	1,505	7,635	(3,366)	5,774
Others(note(vi))	687	(661)	3,121	3,147
Balance at 30 June2020	47,104	41,027	66,302	154,433

106 CITIC Limited Half-Year Report 2021

— F-284 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(a) Credit risk (continued)

(ii) Expected credit losses (continued)

Movements of the loss allowances for investments in financial assets for the period is as follows:

	Six months ended 30 June 2021 Stage 1 Stage 2 Stage 3 Total HK$ million HK$ million HK$ million HK$ million	Six months ended 30 June 2021 Stage 1 Stage 2 Stage 3 Total HK$ million HK$ million HK$ million HK$ million	Six months ended 30 June 2021 Stage 1 Stage 2 Stage 3 Total HK$ million HK$ million HK$ million HK$ million	Six months ended 30 June 2021 Stage 1 Stage 2 Stage 3 Total HK$ million HK$ million HK$ million HK$ million
Balance at 1 January 2021	6,200	655	13,755	20,610
Movements (note (iii)):
Net transfers out from stage 1	(413)	–	–	(413)
Net transfers out from stage 2	–	1,026	–	1,026
Net transfers into stage 3	–	–	332	332
Net increase/(decrease) during the
period (note (iv))	542	576	11,202	12,320
Write offs	–	–	–	–
Parameters change for the period
(note (v))	37	1,889	(239)	1,687
Others(note(vi))	1,157	14	182	1,353
Balance at 30 June2021	7,523	4,160	25,232	36,915

		Six months ended 30 June 2020
	Stage 1	Stage 2	Stage 3	Total
	HK$million	HK$million	HK$million	HK$million
Balance at 1 January 2020	5,698	518	4,274	10,490
Movements (note (iii)):
Net transfers out from stage 1	(27)	–	–	(27)
Net transfers out from stage 2	–	(237)	–	(237)
Net transfers into stage 3	–	–	4,100	4,100
Net increase/(decrease) during the
period (note (iv))	487	(1)	–	486
Write offs	–	–	–	–
Parameters change for the period
(note (v))	1,540	248	1,300	3,088
Others(note(vi))	(89)	(10)	(129)	(228)
Balance at 30 June2020	7,609	518	9,545	17,672

CITIC Limited Half-Year Report 2021 107

— F-285 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(a) Credit risk (continued)
(ii) Expected credit losses (continued)
- Notes:
- (iii) Movements mainly includes the impacts to ECL due to changes in stages.
- (iv) Net increase/(decrease) mainly includes changes in allowance of impairment due to new purchased or originated credit-impaired financial assets or de-recognition excepting for write-off.
- (v) Parameters change mainly includes the impacts to ECL due to unwinding of discount, regular update on modeling parameters resulting from changes in PD and LGD except for changes in stages.
- (vi) Others includes recoveries of amounts previously written off, changes in interest accrual and exchange adjustment.

(iii) Loans and advances to customers and other parties analysed by industry sector:

	30 June 2021 Loans and	31 December 2020	Loans and
	advances		advances
	secured by Gross		secured by
	Gross balance collateral balance		collateral
	HK$ million % HK$ million HK$million	%	HK$million
Corporate loans
- Real estate	360,765 6% 307,378 346,701	6%	294,392
- Rental and business services	532,163 9% 237,031 492,938	9%	237,558
- Manufacturing	415,701 7% 186,686 389,283	7%	182,953
- Water, environment and public utility
management	443,874 8% 169,514 404,887	8%	161,041
- Wholesale and retail	191,955 3% 122,878 188,866	3%	125,297
- Transportation, storage and postal
services	177,411 3% 91,985 160,123	3%	87,862
- Construction	139,690 2% 74,214 119,077	2%	65,382
- Production and supply of electric
power, gas and water	116,719 2% 61,335 102,817	2%	50,739
- Public management and social
organizations	14,239 1% 1,883 13,130	1%	914
- Others	419,408 7% 151,020 380,953	7%	142,282
	2,811,925 48% 1,403,924 2,598,775	48%	1,348,420
Personal loans	2,382,449 42% 1,593,657 2,254,861	42%	1,546,447
Discounted bills	492,606 9% – 493,555	9%	–
	5,686,980 99% 2,997,581 5,347,191	99%	2,894,867
Accrued interest	15,660 1% – 15,182	1%	–
	5,702,640 100% 2,997,581 5,362,373	100%	2,894,867

108 CITIC Limited Half-Year Report 2021

— F-286 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

29 Financial risk management and fair values (continued)

(a) Credit risk (continued)

(iv) Loans and advances to customers and other parties analysed by geographical sector:

	30 June 2021 Loans and	31 December 2020	Loans and
	advances		advances
	secured by		secured by
	Gross balance collateral Gross balance		collateral
	HK$ million % HK$ million HK$million	%	HK$million
Mainland China	5,439,649 95% 2,892,396 5,121,823	95%	2,793,815
Hong Kong, Macau and Taiwan	216,538 3% 93,334 218,309	3%	98,355
Overseas	30,793 1% 11,851 7,059	1%	2,697
	5,686,980 99% 2,997,581 5,347,191	99%	2,894,867
Accrued interest	15,660 1% – 15,182	1%	–
	5,702,640 100% 2,997,581 5,362,373	100%	2,894,867

(v) Loans and advances to customers and other parties analysed by type of security

Loans and advances to customers and other parties analysed by type of security	Loans and advances to customers and other parties analysed by type of security
30 June 2021 31 December 2020
HK$ million	HK$million
Unsecured loans 1,528,482	1,337,609
Guaranteed loans 668,311	621,160
Secured loans – Loans secured by collateral 2,404,303	2,353,265
– Pledged loans 593,278	541,602
5,194,374	4,853,636
Discounted bills 492,606	493,555
5,686,980	5,347,191
Accrued interest 15,660	15,182
Gross loans and advances 5,702,640	5,362,373

CITIC Limited Half-Year Report 2021 109

— F-287 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(a) Credit risk (continued)

(vi) Rescheduled loans and advances to customers and other parties

Rescheduled loans and advances are those loans and advances which have been restructured or renegotiated because of deterioration in the financial position of the borrower/debtor, or of the inability of the borrower/debtor to meet the original repayment schedule and for which the revised repayment terms are a concession that the Group would not otherwise consider.

repayment terms are a concession	that the Group would not otherwise consider.
	30 June 2021 31 December	2020
	Gross % of total Gross	% of total
	balance loans and balance	loans and
	advances HK$ million HK$million	advances
Rescheduled loans and advances	25,015 0.44% 26,175	0.49%
- Re scheduled loans and advances
overduemore than3months	12,882 0.23% 16,841	0.31%

(vii) Offsetting

As at 30 June 2021, the Group did not enter into significant enforceable master netting arrangements with counterparties and therefore there were no significant offsetting of any assets and liabilities in the consolidated balance sheet (31 December 2020: Nil).

(b) Liquidity risk

Liquidity risk arises when there is mismatch between amounts and maturity dates of financial assets and financial liabilities.

110 CITIC Limited Half-Year Report 2021

— F-288 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

29 Financial risk management and fair values (continued)

(b) Liquidity risk (continued)

The following tables indicate the analysis by remaining maturities of the Group’s financial assets and liabilities:

liabilities:
	Repayable on demand HK$ million	Within 1 year HK$ million	As at 30 Between 1 and 5 years HK$ million	June 2021 More than 5 years HK$ million	Indefinite maturity date HK$ million (note)	Total HK$ million
Total financial assets Total financial liabilities	435,373 (3,827,249)	3,153,113 (3,868,704)	2,261,996 (1,120,867)	2,642,309 (178,765)	988,709 (1,437)	9,481,500 (8,997,022)
Financial asset-liability gap	(3,391,876)	(715,591)	1,141,129	2,463,544	987,272	484,478

			As at 31 December 2020
	Repayable on		Between 1	More than	Indefinite
	demand	Within 1 year	and 5 years	5 years	maturity date	Total
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
					(note)
Total financial assets	373,894	3,432,386	2,291,302	2,071,776	873,982	9,043,340
Total financial liabilities	(3,715,743)	(3,580,295)	(1,127,948)	(174,575)	(6,284)	(8,604,845)
Financial asset-liability gap	(3,341,849)	(147,909)	1,163,354	1,897,201	867,698	438,495

CITIC Limited Half-Year Report 2021 111

— F-289 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(b) Liquidity risk (continued)

The table below presents the undiscounted cash flows of the Group’s financial assets and liabilities according to the remaining period from the balance sheet date to the contract expiration date:

	Repayable on demand HK$ million	Within 1 year HK$ million	As at 30 Between 1 and 5 years HK$ million	June 2021 More than 5 years HK$ million	Indefinite maturity date HK$ million (note)	Total HK$ million
Total financial assets	435,373	3,427,645	2,812,402	3,411,678	1,001,682	11,088,780
Total financial liabilities	(3,827,249)	(4,288,413)	(1,256,600)	(210,451)	(1,437)	(9,584,150)
Financial asset-liability gap	(3,391,876)	(860,768)	1,555,802	3,201,227	1,000,245	1,504,630

			As at 31 December 2020
	Repayable on		Between 1	More than	Indefinite
	demand	Within 1 year	and 5 years	5 years	maturity date	Total
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
					(note)
Total financial assets	373,894	3,667,998	2,835,210	2,849,358	890,571	10,617,031
Total financial liabilities	(3,715,743)	(3,692,094)	(1,266,874)	(210,377)	(6,385)	(8,891,473)
Financial asset-liability gap	(3,341,849)	(24,096)	1,568,336	2,638,981	884,186	1,725,558

Note:

112 CITIC Limited Half-Year Report 2021

— F-290 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

29 Financial risk management and fair values (continued)

(b) 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.

==> picture [458 x 140] intentionally omitted <==

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

||||||
|---|---|---|---|---|
|As at 30 June 2021|
|Between 1 and|More than|
|Within 1 year|5 years|5 years|Total|
|HK$ million|HK$ million|HK$ million|HK$ million|
|Loan commitments|6,180|12,986|36,114|55,280|
|Guarantees|77,973|62,135|851|140,959|
|Letters of credit|245,305|1,554|3|246,862|
|Acceptances|743,685|49|–|743,734|
|Credit card commitments|815,187|8,094|111|823,392|
|Total|1,888,330|84,818|37,079|2,010,227|

----- End of picture text -----

==> picture [454 x 132] intentionally omitted <==

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

||||||
|---|---|---|---|---|
|As at 31 December 2020|
|Between 1 and|More than|
|Within 1 year|5 years|5 years|Total|
|HK$ million|HK$ million|HK$ million|HK$ million|
|Loan commitments|5,636|15,809|37,525|58,970|
|Guarantees|86,219|56,372|1,028|143,619|
|Letters of credit|148,465|302|–|148,767|
|–|–|
|Acceptances|664,777|664,777|
|Credit card commitments|733,483|7,270|37|740,790|
|Total|1,638,580|79,753|38,590|1,756,923|

----- End of picture text -----

CITIC Limited Half-Year Report 2021 113

— F-291 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(c) Interest rate risk

(i) Asset-liability gap

Interest rate risk arises from mismatch between repricing dates of financial assets and liabilities affected by market interest rate volatility.

	Non-interest bearing HK$ million	As at 30 June 2021 Within 1 year Between 1 and 5 years More than 5 years HK$ million HK$ million HK$ million	As at 30 June 2021 Within 1 year Between 1 and 5 years More than 5 years HK$ million HK$ million HK$ million	As at 30 June 2021 Within 1 year Between 1 and 5 years More than 5 years HK$ million HK$ million HK$ million	Total HK$ million
Total financial
assets	748,318	6,788,988	1,451,758	492,436	9,481,500
Total financial
liabilities	(350,926)	(7,364,087)	(1,078,039)	(203,970)	(8,997,022)
Financial asset-
liability gap	397,392	(575,099)	373,719	288,466	484,478

		As at 31 December 2020
	Non-interest		Between 1 and	More than
	bearing	Within 1 year	5 years	5 years	Total
	HK$million	HK$million	HK$million	HK$million	HK$million
Total financial
assets	565,468	6,656,828	1,339,046	481,998	9,043,340
Total financial
liabilities	(223,547)	(7,096,556)	(1,075,224)	(209,518)	(8,604,845)
Financial asset-
liability gap	341,921	(439,728)	263,822	272,480	438,495

114 CITIC Limited Half-Year Report 2021

— F-292 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(c) Interest rate risk (continued)
(ii) Effective interest rate

Effective interest rate
	30 June 2021	31 December 2020
	Effective	Effective
	interest rate HK$ million	interest rate	HK$million
Assets
Cash and deposits	1.50%-1.93% 704,169	1.51%-2.19%	755,386
Placements with banks and
non-bank financial institutions	1.92% 169,753	1.90%	198,513
Financial assets held under resale
agreements	1.91% 118,984	1.62%	143,029
Loans and advances to
customers and other parties	5.05% 5,535,826	5.31%	5,206,155
Investments in financial assets	2.81%-2.99% 2,752,710	3.22%-4.00%	2,553,067
Others	948,916		884,678
	10,230,358		9,740,828
Liabilities
Borrowing from central banks	3.01% 292,287	3.25%	266,611
Deposits from banks and
non-bank financial institutions	2.52% 1,311,503	2.36%	1,370,439
Placements from banks and
non-bank financial institutions	2.46% 88,655	2.39%	74,308
Financial assets sold under
repurchase agreements	2.22% 85,140	2.03%	94,774
Deposits from customers	1.99% 5,643,341	2.10%	5,427,694
Bank and other loans	0.14%-8.00% 173,676	0.85%-8.00%	163,604
Debt instruments issued	2.45%-6.90% 1,173,519	2.45%-6.90%	973,858
Lease liabilities	2.28%-5.20% 19,750	2.20%-6.00%	18,267
Others	333,591		342,631
	9,121,462		8,732,186

CITIC Limited Half-Year Report 2021 115

— F-293 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(c) Interest rate risk (continued)

(iii) Sensitivity analysis

The Group uses sensitivity analysis to measure the potential effect of changes in interest rates on the Group’s profit or loss. As at 30 June 2021, 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 HK$9,302 million (31 December 2020: decrease or increase by HK$5,161 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: (1) 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; (2) there is a parallel shift in the yield curve and in interest rates; and (3) 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.

(d) Currency risk

The revenue from the Group’s Sino Iron Project is denominated in US$, which is also the functional currency for this entity. A substantial portion of its development and operating expenditure are denominated in Australian Dollars. The Group uses plain vanilla forward contracts to manage the foreign currency risks.

116 CITIC Limited Half-Year Report 2021

— F-294 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(d) Currency risk (continued)

The exposure to currency risk arising from the financial assets and financial liabilities at the balance sheet dates is as follows (expressed in equivalent amount of HK$ million):

	HK$	As at 30 June 2021 US$ RMB Others	As at 30 June 2021 US$ RMB Others	As at 30 June 2021 US$ RMB Others	Total
Total financial assets	217,041	464,836	8,737,189	62,434	9,481,500
Total financial liabilities	(280,154)	(503,710)	(8,168,836)	(44,322)	(8,997,022)
Financial asset-liability
gap	(63,113)	(38,874)	568,353	18,112	484,478

		As at 31 December 2020
	HK$	US$	RMB	Others	Total
Total financial assets	194,230	442,334	8,340,808	65,968	9,043,340
Total financial liabilities	(270,868)	(482,330)	(7,798,994)	(52,653)	(8,604,845)
Financial asset-liability
gap	(76,638)	(39,996)	541,814	13,315	438,495

The Group uses sensitivity analysis to measure the potential effect of changes in foreign currency exchange rates on the Group’s comprehensive income.

Assuming all other risk variables remained constant, a 100 basis points strengthening or weakening of HK$ against US$, RMB and other currencies as at 30 June 2021 would decrease or increase the Group’s total comprehensive income by HK$5,476 million (31 December 2020: decrease or increase by HK$5,107 million).

This sensitivity analysis is based on a static foreign exchange exposure profile of financial assets and financial liabilities and certain simplified assumptions. The analysis is based on the following assumptions: (1) the foreign exchange sensitivity is the comprehensive income changes recognised as a result of 100 basis points fluctuation in the foreign currency exchange rates against HK$; (2) the exchange rates against HK$ for all foreign currencies change in the same direction simultaneously and do not take into account the correlation effect of changes in different foreign currencies; and (3) the foreign exchange exposures calculated include both spot foreign exchange exposures, forward foreign exchange exposures 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 comprehensive income resulting from increases or decreases in foreign exchange rates may differ from the results of this sensitivity analysis.

CITIC Limited Half-Year Report 2021 117

— F-295 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(e) Fair values
(i) Financial instruments carried at fair value

The following table presents the carrying amounts of financial instruments measured at fair value as at the balance sheet date across the three levels of the fair value hierarchy defined in HKFRS 13, Fair value measurement, with the fair value of each financial instrument categorised in its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:

Level 1 (highest level): fair values measured using quoted market for similar active markets for identical financial instruments;
Level 2: fair values measured using quoted prices in active market for similar financial instruments, or using valuation techniques in which all significant inputs are directly or indirectly based on observable market data;
Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.

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.

118 CITIC Limited Half-Year Report 2021

— F-296 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

29 Financial risk management and fair values (continued)

(e) Fair values (continued)

(i) Financial instruments carried at fair value (continued)

	Level 1 HK$ million	As at 30 June 2021 Level 2 Level 3 HK$ million HK$ million	As at 30 June 2021 Level 2 Level 3 HK$ million HK$ million	HK$	Total million
Assets
Bills receivables at FVOCI	–	10,659	–		10,659
Loans and advances to customers and
other parties at FVOCI	–	515,470	–	515,470
Derivative financial assets	138	30,421	–		30,559
Investments in financial assets	292,622	1,099,649	50,362	1,442,633
	292,760	1,656,199	50,362	1,999,321
Liabilities
Financial liabilities at FVPL	(356)	(189)	(3,573)		(4,118)
Derivative financial liabilities	(308)	(30,882)	–	(31,190)
	(664)	(31,071)	(3,573)	(35,308)

		As at 31 December 2020
	Level 1	Level 2	Level 3		Total
	HK$million	HK$million	HK$million	HK$	million
Assets
Bills receivables at FVOCI	1,235	15,925	–		17,160
Loans and advances to customers and
other parties at FVOCI	–	488,811	–	488,811
Loans and advances to customers and
other parties at FVPL	–	–	8,465		8,465
Derivative financial assets	107	47,666	31		47,804
Investments in financial assets	123,444	1,207,733	65,394	1,396,571
	124,786	1,760,135	73,890	1,958,811
Liabilities
Financial liabilities at FVPL	(292)	(6,793)	(5,338)		(12,423)
Derivative financial liabilities	(372)	(49,436)	–		(49,808)
	(664)	(56,229)	(5,338)		(62,231)

CITIC Limited Half-Year Report 2021 119

— F-297 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(e) Fair values (continued)
(i) Financial instruments carried at fair value (continued)

For the six months ended 30 June 2021, there were no significant transfers between instruments in different levels (six months ended 30 June 2020: Nil) and no significant changes in valuation techniques for determining the fair values of the instruments (six months ended 30 June 2020: Nil).

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy:

	Loans and advances to customers and other parties at FVPL HK$ million	Loans and advances to customers and other parties at FVPL HK$ million	Six months ended 30 June 2020 Assets Derivatives financial assets Investments in financial assets Total HK$ million HK$ million HK$ million	Six months ended 30 June 2020 Assets Derivatives financial assets Investments in financial assets Total HK$ million HK$ million HK$ million	Six months ended 30 June 2020 Assets Derivatives financial assets Investments in financial assets Total HK$ million HK$ million HK$ million	Six months ended 30 June 2020 Assets Derivatives financial assets Investments in financial assets Total HK$ million HK$ million HK$ million	Six months ended 30 June 2020 Assets Derivatives financial assets Investments in financial assets Total HK$ million HK$ million HK$ million	Liabilities Financial liabilities at fair value through profit or loss Total HK$ million HK$ million	Liabilities Financial liabilities at fair value through profit or loss Total HK$ million HK$ million	Liabilities Financial liabilities at fair value through profit or loss Total HK$ million HK$ million
At 1 January 2021		8,465		31	65,394		73,890		(5,338)	(5,338)
Total gain/(loss):		–		(31)	1,025		994		(3,018)	(3,018)
– in profit or loss		–		–	800		800		(3,018)	(3,018)
– in other comprehensive
income/(loss)		–		(31)	225		194		–	–
Net settlements		(8,465)		–	(16,057)		(24,522)		4,783	4,783
At 30 June 2021		–		–	50,362		50,362		(3,573)	(3,573)

				Six months ended		30 June 2020
			Assets						Liabilities
	Loans and						Financial
advances to							liabilities at
customers and				Investments			fair value		Derivatives
other parties		Derivatives		in financial			through profit		financial
	at FVPL	financial assets		assets	Total		or loss		liabilities	Total
	HK$million	HK$	million	HK$million	HK$million		HK$million		HK$million	HK$million
At 1 January 2020	7,719		352	78,681	86,752		(1,045)		–	(1,045)
Total loss:	–		(282)	(1,631)	(1,913)			–	(2)	(2)
– in profit or loss	–		–	(745)		(745)		–	–	–
– in other
comprehensive
loss	–		(282)	(886)	(1,168)			–	(2)	(2)
Net settlements	(6)		(1)	(15,286)	(15,293)		(4,943)		–	(4,943)
At 30 June 2020	7,713		69	61,764	69,546		(5,988)		(2)	(5,990)

120 CITIC Limited Half-Year Report 2021

— F-298 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

29 Financial risk management and fair values (continued)

(e) Fair values (continued)

(ii) Fair value of other financial instruments (carried at other than fair value)

The carrying amounts and fair values of the Group’s financial assets and liabilities, other than those with carrying amounts that reasonably approximate to their fair values, are as follows:

	Carrying amount HK$ million	Fair value HK$ million	As at 30 June 2021 Level 1 Level 2 HK$ million HK$ million	As at 30 June 2021 Level 1 Level 2 HK$ million HK$ million	Level 3 HK$ million
Financial assets
Investments in financial assets
– Financial assets at amortised cost	1,310,077	1,322,586	10,257	977,114	335,215
Financial liabilities
Debt instruments issued
– Corporate bonds issued	107,114	103,550	62,080	41,470	–
– Subordinated bonds issued	140,007	138,724	4,185	134,539	–
– Ce rtificates of interbank
deposit issued	824,061	809,754	–	809,754	–
– Convertible corporate bonds issued	16,086	18,263	–	–	18,263
	1,087,268	1,070,291	66,265	985,763	18,263

		As	at 31 December 2020
	Carrying
	amount	Fair value	Level 1	Level 2	Level 3
	HK$million	HK$million	HK$million	HK$million	HK$million
Financial assets
Investments in financial assets
– Financial assets at amortised cost	1,156,496	1,143,875	10,132	821,002	312,741
Financial liabilities
Debt instruments issued
– Corporate bonds issued	114,829	110,436	68,086	42,350	–
– Subordinated bonds issued	136,730	137,980	4,188	133,792	–
– Ce rtificates of interbank
deposit issued	645,180	637,978	–	637,978	–
– Convertible corporate bonds issued	15,767	18,320	–	–	18,320
	912,506	904,714	72,274	814,120	18,320

CITIC Limited Half-Year Report 2021 121

— F-299 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

29 Financial risk management and fair values (continued)

(e) Fair values (continued)

(iii) Estimation of fair values

As at the balance sheet date, the Group adopted the following major methods and assumptions in estimating the fair value of financial instruments.

Investments in financial assets and financial liabilities

Loans and advances to customers and other parties, bank and other loans

Loans and advances to customers and other parties, and bank and other loans are repriced at market rates at least annually. Accordingly, their carrying amounts approximate their fair values.

Placements with banks and non-bank financial institutions, financial assets held/sold under resale/ repurchase agreements

Placements with banks and non-bank financial institutions, financial assets held/sold under resale/ repurchase agreements are mainly priced at market interest rates and mature within one year. Accordingly, the carrying amounts approximate their fair values.

Derivatives

The fair values of foreign currency and interest rate contracts are either based on their listed market prices or by discount cash flow model at the measurement date.

Financial guarantees

122 CITIC Limited Half-Year Report 2021

— F-300 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

30 Material related parties

(a) Relationship of related parties

(i) In addition to subsidiaries, related parties include parent company, ultimate controlling shareholder’s fellow entities, associates and joint ventures of the Group.
(ii) CITIC Group, the parent and ultimate controlling shareholder of the Group, is a state-owned company established in Beijing in 1979.

(b) Related party transactions

(i) Transaction amounts with related parties

	Six months ended 30 June 2021 Parent company Ultimate controlling shareholder’s fellow entities Associates and joint ventures Total HK$ million HK$ million HK$ million HK$ million
Sales of goods	– 56 574 630
Purchase of goods	– 321 3,862 4,183
Interest income (note (2))	– 79 526 605
Interest expenses	38 212 880 1,130
Fee and commission income	9 – 307 316
Fee and commission expenses	– – 150 150
Income from other services	1 78 2,631 2,710
Expenses for other services	– 100 556 656
Interest income from deposits and
receivables	– – 233 233
Other operatingexpenses	2 22 346 370

CITIC Limited Half-Year Report 2021 123

— F-301 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

30 Material related parties (continued)

(b) Related party transactions (continued)

(i) Transaction amounts with related parties (continued)

		Six months ended	30 June 2020
		Ultimate
		controlling
		shareholder’s	Associates and
	Parent company	fellow entities	joint ventures	Total
	HK$million	HK$million	HK$million	HK$million
Sales of goods	–	39	520	559
Purchase of goods	–	44	1,776	1,820
Interest income (note (2))	–	76	156	232
Interest expenses	71	420	215	706
Fee and commission income	2	–	257	259
Fee and commission expenses	–	–	76	76
Income from other services	–	43	30	73
Expenses for other services	–	11	532	543
Interest income from deposits and
receivables	–	–	232	232
Other operatingexpenses	3	21	97	121

Notes:

(1) These above transactions with related parties were conducted under the normal commercial terms.

(2) Interest rates of loans and advances to the related parties were determined at rates negotiated between the Group and the corresponding related parties on a case by case basis.

(3) 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.

124 CITIC Limited Half-Year Report 2021

— F-302 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

30 Material related parties (continued)

(b) Related party transactions (continued)

(ii) Outstanding balances with related parties

	As at 30 June 2021 Parent company Ultimate controlling shareholder’s fellow entities Associates and joint ventures Total HK$ million HK$ million HK$ million HK$ million
Trade and other receivables	546 1,091 2,862 4,499
Loans and advances to customers and other
parties (note (2))	– 4,497 9,482 13,979
Cash and deposits	– – 21,107 21,107
Derivative financial instruments and other assets	– – 654 654
Investments in financial assets
– Financial assets at FVPL	– – 31,172 31,172
Trade and other payables	265 12,078 1,825 14,168
Deposits from customers	3,775 5,709 31,968 41,452
Deposits from bank and non-bank financial
institutions	– – 57,138 57,138
Derivative financial instruments and other
liabilities	– – 46 46
Bank and other loans	5,240 21,911 – 27,151
Off-balance sheet items
Entrusted funds	6,451 904 30,170 37,525
Funds raised from investors of non-principal
guaranteed wealth management products	– – 6,764 6,764
Guarantees provided (note (3))	– – 7,490 7,490
Guarantees received	1,743 – 6,744 8,487

CITIC Limited Half-Year Report 2021 125

— F-303 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

30 Material related parties (continued)

(b) Related party transactions (continued)

(ii) Outstanding balances with related parties (continued)

		As at 31 December 2020	As at 31 December 2020
		Ultimate
		controlling
		shareholder’s	Associates and
	Parent company	fellow entities	joint ventures	Total
	HK$million	HK$million	HK$million	HK$million
Trade and other receivables	74	1,202	3,505	4,781
Loans and advances to customers and other
parties (note (2))	–	3,328	7,930	11,258
Cash and deposits	–	–	23,169	23,169
Derivative financial instruments and other
assets	95	5	699	799
Investments in financial assets
– Financial assets at FVPL	–	–	28,842	28,842
– Financial assets at amortised cost	–	–	1,210	1,210
Trade and other payables	254	12,082	1,404	13,740
Deposits from customers	13,294	7,995	21,124	42,413
Deposits from bank and non-bank financial
institutions	–	–	43,613	43,613
Derivative financial instruments and other
liabilities	–	–	8	8
Bank and other loans	2,727	24,786	–	27,513
Off-balance sheet items
Entrusted funds	7,221	899	36,320	44,440
Funds raised from investors of non-principal
guaranteed wealth management products	–	79	10,868	10,947
Guarantees provided (note (3))	–	–	10,936	10,936
Guarantees received	–	–	14,134	14,134

Notes:

(1) The above transactions with related party transactions which were conducted under the normal commercial terms.

(2) Interest rates of loans and advances 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.

126 CITIC Limited Half-Year Report 2021

— F-304 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

30 Material related parties (continued)

(c) Transactions with other state-owned entities in the PRC

In addition to these related party transactions disclosed in Note 30 (b), transactions with other state-owned entities include but are not limited to the following:

sales and purchases of goods and provision of services;
purchase, sale and leases of property and other assets;
lending and deposit taking;
taking and placing of inter-bank balances;
derivative transactions;
entrusted lending and other custody services;
insurance and securities agency, and other intermediary services;
sale, purchase, underwriting and redemption of bonds issued by other state-owned entities; and
rendering and receiving of utilities and other services.

CITIC Limited Half-Year Report 2021 127

— F-305 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

31 Structured entities

(a) The principal guaranteed wealth management products issued and managed by the Group

(b) Structured entities in which the Group holds an interest

Carrying amount	As at 30 June 2021
	Investments in financial assets
	Financial assets at amortised cost Financial assets at FVPL Debt investments at FVOCI Equity investments at FVOCI Total Maximum loss exposure
	HK$ million HK$ million HK$ million HK$ million HK$ million HK$ million
Wealth management products Investment management products managed by securities companies Trust investment plans Asset-backed securities Investment funds Investments in creditor’s rights on assets	– 2,360 – – 2,360 2,360
	73,083 7,234 13,024 – 93,341 93,341
	277,750 3,155 – – 280,905 280,905
	221,215 6,270 171,621 – 399,106 399,106
	– 471,772 – 223 471,995 471,995
	97 – – – 97 97
Total	572,145 490,791 184,645 223 1,247,804 1,247,804

128 CITIC Limited Half-Year Report 2021

— F-306 —

For the six months ended 30 June 2021

Notes to The Consolidated Financial Statements

31 Structured entities (continued)

(b) Structured entities in which the Group holds an interest (continued)

Carrying amount

As at 31 December 2020
Investments in financial assets
Financial
assets at
amortised
cost
Financial
assets
at FVPL
Debt
investments
at FVOCI
Equity
investments
at FVOCI
Total
Maximum
loss
exposure
HK$million
HK$million
HK$million
HK$million
HK$million
HK$million
–
1,476
–
–
1,476
1,476
83,946
3,338
40,751
–
128,035
128,035
231,843
3,960
–
–
235,803
235,803
103,741
1,942
231,040
–
336,723
336,723
–
367,787
–
384
368,171
368,171
96
–
–
–
96
96
419,626
378,503
271,791
384
1,070,304
1,070,304

Wealth management products
Investment management
products managed by
securities companies
Trust investment plans
Asset-backed securities
Investment funds
Investments in creditor’s rights
on assets

Total

Wealth management products and trust plans

As at 30 June 2021, the aggregate amount of assets held by the unconsolidated non-principal-guaranteed wealth management products and trust plans which are sponsored by the Group was HK$2,932,160 million (31 December 2020: HK$2,978,464 million).

As at 30 June 2021, the amount of placements from the Group with non-principal-guaranteed wealth management products sponsored by the Group was HK$3,845 million (31 December 2020: HK$21,980 million); the amount of placements from banks and non-bank financial institutions was HK$3,843 million (31 December 2020: HK$302 million).

During the six months ended 30 June 2021, the maximum exposure of the placements from the Group with non-principal guaranteed wealth management products sponsored by the Group was HK$71,448 million (six months ended 30 June 2020: HK$69,270 million). There was no exposure of placements from banks and non-bank financial institutions (six months ended 30 June 2020 the maximum exposure: Nil). The transactions were conducted in the ordinary course of business under normal terms and conditions and at market rates.

CITIC Limited Half-Year Report 2021 129

— F-307 —

Notes to The Consolidated Financial Statements

For the six months ended 30 June 2021

31 Structured entities (continued)

Wealth management products and trust plans (continued)

During the six months ended 30 June 2021, the amount of fee and commission income recognised from the above mentioned structured entities sponsored by the Group was HK$8,537 million (six months ended 30 June 2020: HK$5,204 million); interest income of HK$681 million (six months ended 30 June 2020: HK$562 million). The amount of interest expenses was HK$380 million (six months ended 30 June 2020: HK$342 million).

(d) Transfers of financial assets

The Group entered into transactions which involved transfers of financial assets including securitisation transactions, structured transfers on assets usufruct, transfers of loans including non-performing loans, and financial assets sold under repurchase agreements for the six months ended 30 June 2021.

These transactions were entered into in the normal course of business by which recognised financial assets were transferred to third parties or structured entities. Transfers of assets may give rise to full or partial derecognition of the financial assets concerned. On the other hand, where transferred assets do not qualify for derecognition as the Group has retained substantially all the risks and rewards of these assets, the Group continues to recognise the transferred assets.

Securitisation transactions, structured transfers on assets usufruct and loan transfer transactions conducted by the Group for the six months ended 30 June 2021 totalled HK$36,827 million (six months ended 30 June 2020: HK$26,043 million).

Securitisation transactions and structured transfers on assets usufruct

During the six months ended 30 June 2021, the Group, through securitisation and by restructuring the rights to receive cash flows, transferred financial assets at the original cost of HK$34,561 million (six months ended 30 June 2020: HK$22,701 million). The Group carried out assessment and concluded that these transferred assets qualified for full de-recognition (six months ended 30 June 2020: same).

Loan transfers

During the six months ended 30 June 2021, the Group also transferred loans of book value before impairment of HK$2,266 million through other types of transactions (six months ended 30 June 2020: HK$3,342 million). HK$2,266 million of this balance (six months ended 30 June 2020: HK$1,395 million) was non-performing loans. The Group carried out assessment based on the transfer of risks and rewards of ownership and concluded that these transferred assets qualified for full derecognition (six months ended 30 June 2020: same).

32 Post balance sheet events

The Group does not have any significant events after the balance sheet date that need to be disclosed.

33 Comparative amounts

Reclassifications have been made on some of the comparative amounts to ensure the comparability.

130 CITIC Limited Half-Year Report 2021

— F-308 —

Report on Review of Interim Financial Information

==> picture [80 x 58] intentionally omitted <==

TO THE BOARD OF DIRECTORS OF CITIC LIMITED

(incorporated in Hong Kong with limited liability)

Introduction

We have reviewed the interim condensed financial information set out on pages 30 to 130, which comprises the consolidated balance sheet of CITIC Limited (the “Company”) and its subsidiaries (together, the “Group”) as at 30 June 2021 and the consolidated income statement, statement of comprehensive income, statement of changes in equity and cash flow statement for the six-month period then ended, and a summary of significant accounting policies and other explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with Hong Kong Accounting Standard 34 “Interim Financial Reporting”. Our responsibility is to express a conclusion on this interim financial information based on our review and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of Certified Public Accountants. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information of the Group is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 “Interim Financial Reporting”.

PricewaterhouseCoopers Certified Public Accountants

Hong Kong, 27 August 2021

CITIC Limited Half-Year Report 2021 131

— F-309 —

ISSUER

CITIC Limited 32[nd] Floor CITIC Tower 1 Tim Mei Avenue Central Hong Kong

ARRANGERS

CLSA Limited The Hongkong and Shanghai UBS AG Level 18 Banking Corporation Limited Hong Kong Branch One Pacific Place Level 17 52[nd] Floor 88 Queensway HSBC Main Building Two IFC Hong Kong 1 Queen's Road 8 Finance Street Central Central Hong Kong Hong Kong DEALERS CLSA Limited Deutsche Bank AG, Hong Standard Chartered Bank Level 18 Kong Branch One Basinghall Avenue One Pacific Place 60/F London ECV 5DD 88 Queensway International Commerce Centre United Kingdom Hong Kong 1 Austin Road West Kowloon Hong Kong

The Hongkong and Shanghai Banking UBS AG Corporation Limited Hong Kong Branch Level 17 52[nd] Floor HSBC Main Building Two IFC 1 Queen's Road 8 Finance Street Central Central Hong Kong Hong Kong TRUSTEE ISSUING AND PAYING ISSUING AND PAYING AGENT AND PAYING AGENT AND PAYING AGENT IN RESPECT OF AGENT IN RESPECT OF EACH SERIES OF EACH SERIES OF UNRESTRICTED NOTES RESTRICTED NOTES OTHER THAN CMU NOTES OTHER THAN CMU NOTES

The Bank of New York The Bank of New York The Bank of New York Mellon, London Branch Mellon, London Branch Mellon One Canada Square One Canada Square 240 Greenwich Street London E14 5AL London E14 5AL New York United Kingdom United Kingdom NY 10286 United States of America

TRANSFER AGENT AND CALCULATION AGENT IN RESPECT OF EACH SERIES OF UNRESTRICTED NOTES OTHER THAN CMU NOTES

TRANSFER AGENT AND CALCULATION AGENT IN RESPECT OF EACH SERIES OF RESTRICTED NOTES OTHER THAN CMU NOTES

The Bank of New York Mellon, The Bank of New York Mellon London Branch 240 Greenwich Street One Canada Square New York London E14 5AL NY 10286 United Kingdom United States of America

REGISTRAR IN RESPECT REGISTRAR IN RESPECT CMU LODGING AND OF EACH SERIES OF OF EACH SERIES OF PAYING AGENT AND UNRESTRICTED NOTES RESTRICTED NOTES REGISTRAR IN RESPECT OTHER THAN CMU NOTES OTHER THAN CMU NOTES OF EACH SERIES OF CMU NOTES

The Bank of New York The Bank of New York Mellon SA/NV, Luxembourg Mellon Branch 240 Greenwich Street Vertigo Building – Polaris New York 2-4 rue Eugène Ruppert NY 10286 L-2453 Luxembourg United States of America

The Bank of New York Mellon, Hong Kong Branch Level 26 Three Pacific Place 1 Queen's Road East Hong Kong

AUDITOR OF THE ISSUER

PricewaterhouseCoopers Certified Public Accountants 22[nd] Floor Prince's Building Central Hong Kong

LEGAL ADVISERS

To the Issuer as to English and Hong Kong law

Clifford Chance 27[th] Floor Jardine House One Connaught Place Central Hong Kong

To the Issuer as to PRC law

To the Dealers and the Trustee as to English law

Linklaters 11[th] Floor Alexandra House Chater Road Central Hong Kong

To the Dealers as to PRC law

Zhong Lun Law Firm 22-31/F, South Tower of CP Center 20 Jin He East Avenue Chaoyang District Beijing 100020 People's Republic of China

Jun He Law Office China Resources Building 20[th] Floor 8 Jianguomenbei Avenue Beijing 100005 People's Republic of China

AI assistant

CITIC Limited — Capital/Financing Update 2021

49082_rns_2021-12-21_60dd3e4f-203e-4330-bd99-b0b371ef7e71.pdf

PUBLICATION OF OFFERING CIRCULAR

U.S.$9,000,000,000 Medium Term Note Programme

21 December 2021

Appendix

IMPORTANT NOTICE

NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE UNITED STATES

CITIC LIMITED 中國中信股份有限公司

U.S.$9,000,000,000 Medium Term Note Programme

ENFORCEABILITY OF JUDGMENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

AVAILABLE INFORMATION

CONTENTS

SUMMARY OF THE PROGRAMME

SUMMARY FINANCIAL INFORMATION

RISK FACTORS

General Risks Relating to the Businesses of CITIC Limited Group

CITIC Limited Group comprises subsidiaries and investee companies operating in various industries, and therefore, is exposed to a wider variety of circumstances compared to companies operating in a single business segment

CITIC Limited Group's business is subject to economic fluctuation in the industries in which it has operations

The global outbreak of the COVID-19 pandemic could affect CITIC Limited Group's results of operations, financial condition and profitability

Intense competition in the markets in which CITIC Limited Group has operations may lead to a decrease in market share and profitability

CITIC Limited Group faces risks arising from the restructuring and realignment of businesses and it may not effectively carry out the business strategy of the integrated CITIC Limited Group

CITIC Limited Group is exposed to the risk of fluctuations in the currency exchange rates

CITIC Limited Group is subject to litigation and regulatory risk

CITIC Limited Group is subject to reputation risk

CITIC Limited Group's historical financial information is not indicative of future results of operations. There can be no assurance that CITIC Limited Group's future growth rate will be maintained at the historical level

Major capital expenditure items of CITIC Limited Group may not be completed on schedule or within budget, if at all, or may not achieve the expected economic or commercial results

Certain businesses and operations of CITIC Limited Group require substantial and steady capital injection; lack of adequate financing may have an adverse effect on CITIC Limited Group's business, financial performance and growth prospects

CITIC Limited Group might experience unexpected difficulties in implementing its development strategy of optimising asset allocation and focusing on its five business segments

CITIC Limited Group's acquisitions or strategic investments may not be integrated or managed effectively, or at all, which in turn could have an adverse effect on CITIC Limited Group's results of operations and financial condition

Part of CITIC Limited Group's businesses comprise operations outside Hong Kong, which are subject to risks in relation to uncertainties of different economies and politics, regulatory actions and safety issues

Failure to maintain an effective quality control system could have an adverse effect on the business and operations of CITIC Limited Group

Reliance on the experience and industry expertise of management personnel, skilled personnel and other qualified staff and intense competition for talent may have an adverse effect on CITIC Limited Group's business and prospects

CITIC Limited Group is subject to risks of technological innovation and update

The lack of permits, licenses, approvals, filings and certificates may be a serious impediment to CITIC Limited Group's business and operations, and is subject to regular inspection, investigation, inquiry and audit of regulatory agencies

CITIC Limited Group does not have land use right certificates, building ownership certificates or consent of the property owner or has not registered with respect to some owned or leased properties

CITIC Limited Group is exposed to the risk of inadequate protection of its intellectual property

CITIC Limited Group's businesses may be exposed to certain risks of increasingly stringent environmental protection policies and heightened expectations in terms of environmental, social and corporate governance

Changes in tax policy may have an adverse effect on CITIC Limited Group's business and financial performance

CITIC Limited Group operates in jurisdictions that may be subject to economic and trade sanctions imposed by the United States, the United Kingdom, the European Union and other jurisdictions, which may subject CITIC Limited Group to legal and regulatory risks

CITIC Limited Group may not be able to detect money laundering and other improper activities, which could expose it to additional liability and negatively affect its business

CITIC Limited Group's businesses and prospects may be materially adversely affected if it fails to maintain its risk management system or if this system proved to be ineffective or inadequate

CITIC Limited Group's financial investment activities may be exposed to credit, currency, interest rate, market and counterparty risks

CITIC Limited Group's business may not be adequately insured

A downgrading of the credit ratings of CITIC Limited may affect the price of the Notes

The comparability of CITIC Limited Group's financial statements and CITIC Limited Group's financial condition and operations may be affected by new and revised Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants

Risks Relating to the Comprehensive Financial Services Business Segment

The banking and trust businesses of CITIC Limited Group are subject to various credit risks

Portfolio Quality of CITIC Limited Group

Loan Portfolio Losses

Loan Security

Certain Loan Clauses

Concentration Risk of Loans

Risks Associated with Certain Industries

The banking, securities and trust businesses of CITIC Limited Group is exposed to interest and exchange rate risk

The banking and securities businesses of CITIC Limited Group is exposed to liquidity risks

The financial services businesses of CITIC Limited Group are subject to operational risks and risks relating to information technology systems

The financial services businesses of CITIC Limited Group are subject to various risks of competition

The financial services business of CITIC Limited Group is subject to risks associated with employee misconduct

The banking business of CITIC Limited Group is required to comply with regulatory requirements relating to capital adequacy ratios

The loan classification criteria adopted by the banking business of CITIC Limited Group is different from criteria applied by banks in certain other countries and regions

CITIC Limited Group's financial services business is subject to extensive regulatory requirements, the non-compliance with which could cause it to incur penalties

The banking regulatory regime in the PRC is continually evolving and CITIC Limited Group is subject to future regulatory changes

Emerging internet finance and mobile finance may impact the operations of the traditional banking business of CITIC Limited Group

The securities business of CITIC Limited Group is exposed to risks brought by market fluctuations

The trust business of CITIC Limited Group is exposed to risks relating to business innovation

The insurance business of CITIC Limited Group is exposed to risks relating to distribution of insurance products

The insurance business of CITIC Limited Group is exposed to risks relating to insurance policy claims

The insurance business of CITIC Limited Group is exposed to certain risks relating to the inability in effective asset management

The insurance business of CITIC Limited Group is exposed to certain risks relating to adverse changes in reinsurance market and the failure of reinsurance companies to perform their contractual obligations

There are risks relating to CITIC Limited Group's other financial businesses

Risks relating to the Advanced Intelligent Manufacturing Business Segment

The advanced intelligent manufacturing business segment of CITIC Limited Group is subject to the risk of changing market demand

CITIC Limited Group's advanced intelligent manufacturing business segment depends on whether it can obtain sufficient raw materials supply at acceptable prices and in a timely manner

The research and development activities of CITIC Limited Group may not bring the expected benefits to CITIC Limited Group

Anti-dumping measures and other non-tariff barriers adopted by countries of destination may affect the export sales of CITIC Limited Group

CITIC Limited Group's advanced intelligent manufacturing business segment may be materially and adversely affected if there is malfunction of equipment, insufficient or suspension of electric power or water

Risks relating to the Advanced Materials Business Segment

CITIC Limited Capital/Financing Update 2021