The directors have pleasure in presenting to shareholders their report for the year ended 31 December 2015.

Principal Activities

The Company is China’s largest conglomerate. The principal activity of the Company is investment holding and its subsidiaries are engaged in financial services, resources and energy, manufacturing, engineering contracting and real estate as well as other businesses both in China and overseas.

Dividends

The directors declared an interim dividend of HK$0.10 per share (2014: HK$0.015 per share) for the year ended 31 December 2015 which was paid on 2 October 2015. The directors recommended, subject to approval of the shareholders at the forthcoming annual general meeting of the Company to be held on 8 June 2016 (the “2016 AGM”), the payment of a final dividend of HK$0.20 per share (2014: HK$0.20 per share) in respect of the year ended 31 December 2015, payable on Wednesday, 29 June 2016 to shareholders on the Company’s register of members at the close of business on 17 June 2016. This represents a total distribution for the year of HK$8,727 million.

Business Review

The business review of the Group for the year ended 31 December 2015 and the material factors underlying its results and financial position are set out in the sections headed Chairman’s Letter to Shareholders, Our Businesses and Financial Review respectively of this annual report.

Description of the principal risks and uncertainties facing the Group can be found in the Risk Management section of this annual report. Particulars of important events affecting the Company that have occurred since the end of the financial year 2015 (if any) and the likely future development in the Company’s business can also be found in this annual report.

In addition, an account of the Company’s performance by reference to environmental and social-related policies is provided in the Environmental, Social and Governance Report of this annual report.

Subscription of Preferred Shares, Sale of Shares, Subscription of New Shares and Conversion of Preferred Shares

On 20 January 2015, the Company entered into a subscription agreement and agreed to allot and issue to Chia Tai Bright Investment Company Limited (“CT Bright”) 3,327,721,000 fully paid convertible preferred shares of the Company for a total consideration of HK$45,922,549,800 (the “Preferred Shares Subscription”). The preferred shares may be converted into the ordinary shares of the Company at the conversion price initially being HK$13.80 per ordinary share, subject to adjustment in accordance with the terms of the amendments to the Company’s Articles of Association in light of the issue of the preferred shares. The proceeds will be used to further develop the Company’s businesses and to invest in emerging opportunities in sectors well matched to the Company and China’s development and as additional working capital for the daily operations of the Group. The introduction of CT Bright as a strategic investor shall benefit the Company in such aspects: (1) globalisation and diversification of shareholding structure and improvement of corporate governance practices; (2) raising of capital to further develop the Company’s businesses and invest in emerging opportunities; (3) further access to business opportunities in the Asia Pacific region and the global market; and (4) strengthen the capital base of the Company and enhance its capabilities and flexibility in financing.

On the same day, CITIC Polaris Limited, a wholly-owned subsidiary of CITIC Group Corporation (“CITIC Group”) and one of the controlling shareholders of the Company, entered into a share purchase agreement and agreed to sell 2,490,332,363 fully paid ordinary shares of the Company to CT Bright for a total consideration of HK$34,366,586,609 (the “Sale of Shares”). Completion of the Preferred Shares Subscription is conditional upon the completion of the Sale of Shares. Details of the Preferred Shares Subscription and the Sale of Shares are set out in the Company’s announcement dated 20 January 2015 and the Company’s circular dated 16 February 2015.

At the extraordinary general meeting of the Company held on 16 March 2015, the proposed Preferred Shares Subscription and the proposed amendments to the Company’s Articles of Association with effect immediately upon the issue of the preferred shares were approved by the Company’s shareholders.

Completion of the Sale of Shares and the Preferred Shares Subscription took place on 30 April 2015 and 3 August 2015 respectively. Further details are set out in the Company’s announcements dated 30 April 2015, 15 July 2015 and 3 August 2015.

On 17 July 2015, the Company and Xin Ma Apparel International Limited (“Youngor”), a wholly-owned subsidiary of Youngor Group Co., Ltd, entered into a subscription agreement pursuant to which Youngor had conditionally agreed to subscribe for 859,218,000 new ordinary shares (the “Subscription Shares”) of the Company at the subscription price of HK$13.95 per share (the “Subscription”). The Subscription Shares were issued under the general mandate granted to the directors by a resolution of the shareholders passed at the Company’s annual general meeting held on 2 June 2015. The Subscription is to increase the public float percentage to a level which enables the full conversion of the preferred shares. The net proceeds of HK$11,986,091,100 from the Subscription will be used for general corporate purposes. Details of the Subscription are set out in the Company’s announcement dated 17 July 2015.

Completion of the Subscription took place on 12 August 2015 and further details of which are set out in the Company’s announcement dated 12 August 2015.

On 13 August 2015, the Company received a conversion notice from CT Bright for the conversion of the preferred shares in the amount of HK$45,922,549,800 in full. As a result of the conversion of the preferred shares at the conversion price of HK$13.80 per ordinary share, the Company allotted and issued a total of 3,327,721,000 ordinary shares to CT Bright on 14 August 2015. Details of the conversion of the preferred shares are set out in the Company’s announcement dated 14 August 2015.

Share Capital and Reserves

Movements in the share capital and reserves of the Company and the Group during the year are set out in Note 44 to the consolidated financial statements.

Donations

Donations made by the Company and its subsidiary companies during the year are set out in the “Environmental, Social and Governance Report” of this annual report.

Fixed Assets

Movements in fixed assets during the year are set out in Note 32 to the consolidated financial statements.

Major Customers and Suppliers

During the year, both the aggregate percentage of purchases from the Company and its subsidiary companies’ five largest suppliers and the aggregate percentage of sales to the Company and its subsidiary companies’ five largest customers were less than 30%.

None of the directors, their associates nor any shareholders (which to the best knowledge and belief of the directors own more than 5% of the Company’s issued shares) had interest during the year in the above suppliers or customers.

Subsidiary Companies

The name of the principal subsidiaries, the place of incorporation and shares issued are set out in Note 57 to the consolidated financial statements.

Borrowings, Debt Instruments Issued and Perpetual Capital Securities

Particulars of borrowings, debt instruments issued and perpetual capital securities of the Company and its subsidiary companies as at 31 December 2015 are set out in Notes 41, 42 and 44 to the consolidated financial statements.

Equity-linked Agreements

The equity-linked agreements entered into by the Company during the year are disclosed in the preceding section headed “Subscription of Preferred Shares, Sale of Shares, Subscription of New Shares and Conversion of Preferred Shares”.

Save as disclosed above and the Share Option Plan adopted by the Company as described below, no other equity-linked agreements were entered into during the year or subsisted at the end of the year.

Directors

The directors of the Company as at the date of this report are:

Executive Directors
Mr Chang Zhenming (Chairman)
Mr Wang Jiong (Vice Chairman and President)
Ms Li Qingping (appointed on 24 December 2015)
Mr Pu Jian (appointed on 24 December 2015)
Non-executive Directors
Mr Yu Zhensheng
Mr Yang Jinming
Mr Liu Yeqiao
Mr Song Kangle (appointed on 18 March 2016)
Mr Liu Zhongyuan
Mr Yang Xiaoping (appointed on 3 August 2015)
Mr Li Rucheng (appointed on 18 March 2016)
Independent Non-executive Directors
Mr Francis Siu Wai Keung
Dr Xu Jinwu
Mr Anthony Francis Neoh
Ms Lee Boo Jin
Mr Noriharu Fujita (appointed on 3 August 2015)
Mr Paul Chow Man Yiu (appointed on 18 March 2016)

Mr Dou Jianzhong and Mr Zhang Jijing retired as executive directors of the Company with effect from 14 May 2015 and 24 December 2015 respectively. Ms Cao Pu retired as non-executive director of the Company with effect from 18 March 2016. Mr Alexander Reid Hamilton retired as an independent non-executive director of the Company by rotation and did not seek re-election at the annual general meeting held on 2 June 2015. Mr Dou, Mr Zhang, Ms Cao and Mr Hamilton have confirmed that they have no disagreement with the board and nothing relating to the affairs of the Company needs to be brought to the attention of the shareholders of the Company.

In accordance with Article 95 of the Company’s articles of association, Ms Li Qingping, Mr Pu Jian, Mr Yang Xiaoping and Mr Noriharu Fujita who were appointed as directors of the Company during the year 2015, and Mr Song Kangle, Mr Li Rucheng and Mr Paul Chow Man Yiu who were appointed as directors of the Company on 18 March 2016 shall hold office only until the 2016 AGM and all, being eligible, offer themselves for re-election. In addition, pursuant to Article 104(A) of the Company’s articles of association, Mr Wang Jiong, Mr Yang Jinming and Mr Anthony Francis Neoh shall retire by rotation and all, being eligible, offer themselves for re-election at the 2016 AGM.

The biographical details of directors and senior management as at the date of this report are set out in the Board of Directors and Senior Management sections of this annual report.

Directors of Subsidiaries

The list of directors who have served on the boards of the subsidiaries of the Company during the year and up to the date of this report is available on the Company’s website.

Directors’ Material Interests in Transactions, Arrangements or Contracts

Save as disclosed in the sections headed “Connected Transactions” and “Non-exempt Continuing Connected Transactions” below and “Material Related Party” in Note 48 to the consolidated financial statements, no transactions, arrangements or contracts of significance in relation to the Company’s business to which the Company’s subsidiaries, fellow subsidiaries or its holding company was a party or were parties and in which a director of the Company or his or her connected entity had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

Directors’ Service Contracts

None of the directors proposed for re-election at the forthcoming annual general meeting has a service contract with the Group which is not determinable by the Group within one year without payment of compensation (other than statutory compensation).

Permitted Indemnity

Pursuant to the Company’s Articles of Association and subject to the provisions of the Companies Ordinance (Cap 622 of the Laws of Hong Kong), every director or other officer of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities which he/she may sustain or incur in or about the execution of the duties of his/her office or otherwise in relation thereto. As disclosed in the “Corporate Governance” section of this annual report, the Company has arranged Directors & Officers Liability and Company Reimbursement Insurance for its directors and officers with a combined aggregate limit of liability of HK$1 billion.

Related Party Transactions

The Company and its subsidiaries entered into certain transactions in the ordinary course of business and on normal commercial terms which were “Material Related Party Transactions”, the details of which are set out in Note 48 to the consolidated financial statements of the Company. Some of these transactions also constitute “Connected Transactions” and “Continuing Connected Transactions” under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) as summarised below.

Connected Transactions

Set out below is information in relation to certain connected transactions involving the Company and/or its subsidiaries, particulars of which were previously disclosed in the announcements of the Company and are required under the Listing Rules to be disclosed in this annual report and the consolidated financial statements of the Company. The full text of each announcement can be found on http://www.citic.com/InvestorRelations/Announcements.

  • As disclosed in the preceding section headed “Subscription of Preferred Shares, Sale of Shares, Subscription of New Shares and Conversion of Preferred Shares”, the Company, CITIC Group Corporation (“CITIC Group”, the controlling shareholder of the Company), Chia Tai Bright Investment Company Limited (“CT Bright”), CPG Overseas Company Limited (“CPG Overseas”) and ITOCHU Corporation (“ITOCHU”) entered into a subscription agreement (the “Preferred Shares Subscription Agreement”) on 20 January 2015, pursuant to which, the Company agreed to allot and issue, and CT Bright agreed to subscribe for 3,327,721,000 fully paid convertible preferred shares of the Company for a total consideration of HK$45,922,549,800 (the “Preferred Shares Subscription”). On the same date, CITIC Polaris Limited (a wholly-owned subsidiary of CITIC Group), CITIC Group, CT Bright, CPG Overseas and ITOCHU entered into a share purchase agreement (the “Share Purchase Agreement”), pursuant to which, CITIC Polaris Limited agreed to sell and CT Bright agreed to purchase 2,490,332,363 shares of the Company, representing 10% of the total issued shares of the Company as at the date of signing the Share Purchase Agreement, for a total consideration of HK$34,366,586,609 (the “Sale of Shares”). Whilst CT Bright was not a connected person of the Company when it entered into the Preferred Shares Subscription Agreement, completion of the Preferred Shares Subscription is, amongst other things, conditional upon the completion of the Sale of Shares. Accordingly, the proposed transaction contemplated under the Preferred Shares Subscription Agreement was treated as a connected transaction of the Company and was subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

    Completion of the Sale of Shares and the Preferred Shares Subscription took place on 30 April 2015 and 3 August 2015 respectively. On 13 August 2015, the Company received a conversion notice from CT Bright for the conversion of the preferred shares in the amount of HK$45,922,549,800 in full. On 14 August 2015, the Company allotted and issued a total of 3,327,721,000 ordinary shares to CT Bright at the conversion price of HK$13.80 per ordinary share.

  • On 24 August 2015, CITIC Group and CITIC Telecom International Holdings Limited (“CITIC Telecom”, a subsidiary of the Company) agreed to implement the acquisition arrangement (the “Acquisition Arrangement”), whereby CITIC Group has proposed to sell, and CITIC Telecom has proposed to bid (or to procure its subsidiary including CITIC Telecom International CPC Limited to bid) for, in an open tender process at China Beijing Equity Exchange (北京產權交易所), up to 39% equity interest (the “Sale Interest”) in CITIC Networks Co., Ltd. (中信網絡有限公司 ) (“CITIC Networks”, a wholly-owned subsidiary of CITIC Group) from CITIC Group (the “Acquisition”).

    Under the Acquisition Arrangement, assuming the Sale Interest equals to the maximum 39% equity interest in CITIC Networks, the corresponding intended consideration for the Sale Interest is set at RMB1,170 million (the “Proposed Consideration”) which, the parties acknowledged, will be subject to adjustment with reference to an independent appraisal of the Sale Interest as filed with and approved by the Ministry of Finance of the PRC (the “Appraised Consideration”). At present, CITIC Telecom intends to only proceed with the bidding and the Acquisition if the Appraised Consideration does not exceed RMB1,287 million, being 110% of the Proposed Consideration. If CITIC Telecom (or its subsidiary) is successful in the open tender process, the purchase price in winning the bid (the “Final Consideration”) shall be payable in cash by CITIC Telecom (or its subsidiary).

    The obligation of CITIC Telecom (or its subsidiary) to submit the bidding application to China Beijing Equity Exchange is subject to certain conditions precedent, including inter alia, the obtaining of requisite consents and approvals of the relevant regulatory authorities in Hong Kong or elsewhere being fulfilled or waived by CITIC Telecom on or before 30 June 2017, or such later date as CITIC Group and CITIC Telecom may agree in writing.

    Under the Acquisition Arrangement, CITIC Group agreed to procure CITIC Networks to implement certain reorganisation, such that all assets and business not related to the nation-wide optical fibre backbone network of the PRC (the “China Express Network”) shall be hived off from CITIC Networks (the “Reorganisation”). It is expected that upon completion of the Reorganisation, CITIC Networks shall then hold China Express Network together with the telecoms licenses as its main asset and engage mainly in the operation of the China Express Network.

    Subject to CITIC Telecom (or its subsidiary) having been confirmed and determined by China Beijing Equity Exchange as the successful transferee in the open tender process, CITIC Group and CITIC Telecom (or its subsidiary) will enter into a share transfer agreement and obtain the necessary consents and approvals of the relevant PRC governmental authorities to effect the Acquisition.

    In connection with the Acquisition, on 24 August 2015, CITIC Group and CITIC Telecom entered into a share subscription agreement (the “Share Subscription Agreement”) whereby CITIC Group has conditionally agreed to subscribe (or to procure its wholly-owned subsidiaries as its nominees to subscribe) for not more than 520,713,219 new shares of CITIC Telecom (the “Subscription Shares”) at the subscription price of HK$3.00 per Subscription Share (the “Share Subscription”), subject to the terms and conditions of the Share Subscription Agreement.

    The total consideration of the Share Subscription (the “Subscription Consideration”) would be the Hong Kong dollar equivalent for the amount of the Final Consideration (to be converted at the central parity exchange rate between RMB and Hong Kong dollar as published by the People’s Bank of China as of the date of the payment of the Subscription Consideration), but in any event not exceeding HK$1,562,139,658.

    CITIC Group is the controlling shareholder of the Company which in turn is the indirect holding company of CITIC Telecom. Therefore, CITIC Group is a connected person of the Company and CITIC Telecom. The Company is not a party to the Acquisition and the Share Subscription (collectively, the “Transactions”) but because CITIC Telecom is its subsidiary, the Transactions constitute connected transactions of the Company.

  • On 16 October 2015, CITIC Holdings Co., Ltd., (“CITIC Holdings”, an indirect wholly-owned subsidiary of the Company) entered into a shareholders agreement (“Joint Venture Agreement”) with CPG Overseas, SII International Holding Ltd. (“SII International”), ITOCHU, China Mobile International Holdings Limited (“China Mobile”) and Wealth Partner Global Limited (“Wealth Partner”), pursuant to which, all parties agreed to set up a joint venture company F2F Cayman Islands Holdings Limited (the “Joint Venture”) in order to operate cross-border e-commerce business in the People’s Republic of China. According to the Joint Venture Agreement, CITIC Holdings, CPG Overseas, SII International, ITOCHU, China Mobile and Wealth Partner agreed to make the capital contribution in cash in the proportion of 16%, 16%, 16%, 16%, 16% and 20% respectively through the subscription for ordinary shares of the Joint Venture at a price of US$1 per share with a total aggregate investment amount of US$483,880,000.

    CPG Overseas and ITOCHU each holds 50% equity interests in but do not individually have control over CT Bright, which in turn holds 20% equity interests in the Company. The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) has confirmed to the Company that as the transaction was conducted with both beneficial shareholders of CT Bright, the transaction contemplated under the Joint Venture Agreement would constitute a connected transaction of the Company and was subject to the reporting and announcement requirements under the Listing Rules.

Non-Exempt Continuing Connected Transactions

Set out below is information in relation to certain non-exempt continuing connected transactions involving the Company and/or its subsidiaries, particulars of which were previously disclosed in the announcements of the Company and are required under the Listing Rules to be disclosed in this annual report and the consolidated financial statements of the Company. The full text of each announcement can be found on http://www.citic.com/InvestorRelations/Announcements.

  • On 30 September 2014, the Company entered into the following framework agreements (collectively the “Framework Agreements”) with CITIC Group setting out the basis upon which members of the Group continue to carry out the transactions contemplated under the Framework Agreements with CITIC Group and/or its associates (the “Connected Persons”) upon completion of the acquisition of 100% of the total issued share capital of CITIC Corporation Limited on 25 August 2014. CITIC Group, being the controlling shareholder of the Company, is a connected person of the Company under the Listing Rules and therefore the entering into of the Framework Agreements by the Company with CITIC Group and the transactions contemplated under the Framework Agreements constitute continuing connected transactions of the Company under the Listing Rules.

    1. Sales Framework Agreement (“Sales FA”) — sale of manganese ore by the Group to the Connected Persons

      • Period:
        commencing from 25 August 2014 and ending on 31 December 2016
      • Annual Caps:
        for year ended 31/12/2015 RMB660,000,000
        for year ending 31/12/2016 RMB720,000,000

      The transaction amount under the Sales FA for the year ended 31 December 2015 was approximately RMB272,560,694.88.

    2. Advertising and Promotion Framework Agreement — provision of advertising and promotion services by the Group to the Connected Persons

      The term of the above agreement expired on 31 December 2014. As both parties intended to continue to carry out the relevant transactions, the Company and CITIC Group entered into a new advertising and promotion framework agreement (“Advertising and Promotion FA”) on 30 March 2015.

      • Period:
        commencing from 30 March 2015 and ending on 31 December 2017
      • Annual Caps:
        for year ended 31/12/2015 RMB400,000,000
        for year ending 31/12/2016 RMB450,000,000
        for year ending 31/12/2017 RMB550,000,000

      There were no transactions under the Advertising and Promotion FA for the year ended 31 December 2015.

    3. Financial Assistance Framework Agreement (“Financial Assistance FA”) — financial assistance provided by the Group to the Connected Persons in the form of entrusted loans or commercial loans

      The maximum daily balance of the financial assistance was adjusted under the Supplemental Agreement dated 30 March 2015 (the “Supplemental Agreement”), details of which are set out in the Company’s announcement dated 30 March 2015.

      • Period:
        commencing from 25 August 2014 and ending on 31 December 2016
      • Revised Maximum Daily Balance:
        for year ended 31/12/2015 RMB6,830,000,000
        for year ending 31/12/2016 RMB8,830,000,000

      The maximum daily balance of the financial assistance under the Supplemental Agreement to the Financial Assistance FA for the year ended 31 December 2015 was approximately RMB1,465,614,192.

  • Reference is made to the announcement dated 8 December 2014 and the circular dated 2 January 2015 issued by China CITIC Bank Corporation Limited (“CITIC Bank”, a non wholly-owned subsidiary of the Company), with respect to, among other things, the asset transfer framework agreement (the “Asset Transfer FA”) entered into on 8 December 2014 between CITIC Bank and CITIC Group in relation to the transfer of loan and other related assets between CITIC Bank and the Connected Persons.

    Under the Asset Transfer FA, the asset transfer transactions with the Connected Persons, including but not limited to CITIC Factoring Corporation Ltd. and CITIC Futong Financial Leasing Co., Ltd., constitute continuing connected transactions of the Company. Details of the above are set out in the Company’s announcement dated 30 March 2015.

    • Annual Caps:
      for year ended 31/12/2015 RMB10,000,000,000
      for year ending 31/12/2016 RMB11,000,000,000
      for year ending 31/12/2017 RMB12,600,000,000

    The transaction amount for the asset transfer transactions under the Asset Transfer FA for the year ended 31 December 2015 was approximately RMB4,074,923,100.

The independent non-executive directors of the Company have reviewed the aforesaid continuing connected transactions for the year ended 31 December 2015 (the “Transactions”) and confirm that:

  • the Transactions have been entered into in the ordinary and usual course of business of the Group;
  • the Transactions have been entered into on normal commercial terms or better; and
  • the Transactions were entered into according to the relevant agreements governing them on terms that are fair and reasonable and in the interests of the shareholders of the Company as a whole.

The Company’s auditor was engaged to report on the Group’s continuing connected transactions in accordance with Hong Kong Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” and with reference to Practice Note 740 “Auditor’s Letter on Continuing Connected Transactions under the Hong Kong Listing Rules” issued by the Hong Kong Institute of Certified Public Accountants. The auditor issued an unqualified letter containing findings and conclusions in respect of the continuing connected transactions disclosed by the Group in accordance with Rule 14A.56 of the Listing Rules. A copy of the auditor’s letter has been provided by the Company to the Stock Exchange.

Share Option Plan Adopted by the Company

  1. CITIC Pacific Share Incentive Plan 2000

    The Company adopted the CITIC Pacific Share Incentive Plan 2000 (the “Plan 2000”) on 31 May 2000 which expired on 30 May 2010. The major terms of the Plan 2000 are as follows:

    • The purpose of the Plan 2000 is to promote the interests of the Company and its shareholders by (i) providing the participants with additional incentives to continue and increase their efforts in achieving success in the business of the Company, and (ii) attracting and retaining the best available personnel to participate in the on-going business operation of the Company.
    • The participants of the Plan 2000 are any director, executive or employee of the Company or its subsidiaries as invited by the board.
    • The maximum number of shares over which options may be granted under the Plan 2000 shall not exceed 10% of (i) the Company’s shares in issue from time to time or (ii) the Company’s shares in issue as at the date of adopting the Plan 2000, whichever is the lower.
    • The total number of shares issued and to be issued upon exercise of the options granted to each participant (including both exercised and outstanding options) in any 12-month period must not exceed 1% of the Company’s shares in issue.
    • The exercise period of any option granted under the Plan 2000 must not be more than ten years commencing on the date of grant.
    • The acceptance of an offer of the grant of the option must be made within 28 days from the date of grant with a non-refundable payment of HK$1.00 from the grantee.
    • The exercise price determined by the board will be at least the higher of (i) the closing price of the Company’s shares as stated in the daily quotations sheet of the Stock Exchange on the date of grant; (ii) the average closing price of the Company’s shares as stated in the Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date of grant and (iii) the nominal value of the Company’s shares.
    • The life of the Plan 2000 is ten years.

    The Plan 2000 ended on 30 May 2010.

    During the period between the adoption of the Plan 2000 and its expiry, the Company granted six lots of share options:

    All options granted and accepted under the Plan 2000 can be exercised in whole or in part within 5 years from the date of grant.

    All share options at the exercise price of HK$18.20 per share, HK$19.90 per share, HK$22.10 per share, HK$47.32 per share, HK$22.00 per share and HK$20.59 per share expired at the close of business on 27 May 2007, 31 October 2009, 19 June 2011, 15 October 2012, 18 November 2014 and 13 January 2015 respectively.

    None of the share options granted under the Plan 2000 were exercised or cancelled, but options for 400,000 shares have lapsed during the year ended 31 December 2015. A summary of the movements of the share options under the Plan 2000 during the year ended 31 December 2015 is as follows:

    Employees of the Company under continuous contracts (as defined in the Employment Ordinance), other than the directors

  2. CITIC Pacific Share Incentive Plan 2011

    As the Plan 2000 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. The major terms of the Plan 2011 are as follows:

    • The purpose of the Plan 2011 is to promote the interests of the Company and its shareholders by (i) providing the eligible participants with additional incentives to continue and increase their efforts in achieving success in the business of the Group, and (ii) attracting and retaining the best available personnel to participate in the on-going business operation of Group.
    • The eligible participants of the Plan 2011 are any employee, executive director, non-executive director, independent non-executive director or officer, consultant or representative of any member of the Company as the board may in its discretion select.
    • The total number of 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 shares in issue as at the date of adopting the Plan 2011. As at 24 March 2016, the total number of shares available for issue under the Plan 2011 is 364,944,416 shares.
    • The total number of shares issued and to be issued upon exercise of options (whether exercised or outstanding) in any 12-month period granted to each participant must not exceed 1% of the shares of the Company in issue. Where any further grant of options to a participant would result in the shares issued and to be issued upon exercise of all options granted and to be granted to such person (including exercised, cancelled and outstanding options) in the 12-month period up to and including the date of such further grant representing in aggregate over 1% of the Company’s shares in issue, such further grant shall be subject to separate approval by the shareholders of the Company in general meeting.
    • The exercise period of any option granted under the Plan 2011 must not be more than ten years commencing on the date of offer of the grant.
    • The acceptance of an offer of the grant of the option must be made within 28 days from the date of grant with a non-refundable payment of HK$1.00 from the grantee.
    • The subscription price determined by the board will be at least 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 Stock Exchange’s daily quotations sheet on the date of offer of the grant; and (iii) the average of the closing prices of the Company’s shares as stated in the Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date of offer of the grant.
    • The Plan 2011 shall be valid and effective until 11 May 2021.

    No share options were granted under the Plan 2011 during the year ended 31 December 2015.

Share Option Plan Adopted by Subsidiaries of the Company

CITIC Telecom International Holdings Limited (“CITIC Telecom”)

CITIC Telecom adopted a share option plan (the “CITIC Telecom Share Option Plan”) on 17 May 2007. The major terms of the CITIC Telecom Share Option Plan are as follows:

  • The purpose of the CITIC Telecom Share Option Plan is to attract and retain the best quality personnel for the development of CITIC Telecom’s businesses; to provide additional incentives to CITIC Telecom Directors, Officers and Employees (as defined here below); and to promote the long term financial success of CITIC Telecom by aligning the interests of grantees to shareholders of CITIC Telecom.
  • The grantees of the CITIC Telecom Share Option Plan are any person employed by CITIC Telecom or any of its subsidiaries and any person who is an officer or director (whether executive or non-executive) of CITIC Telecom or any of its subsidiaries (collectively the “CITIC Telecom Directors, Officers and Employees”) as the board of CITIC Telecom may, in its absolute discretion, select.
  • The total number of shares of CITIC Telecom (the “CITIC Telecom Shares”) issued and to be issued upon exercise of options (whether exercised or outstanding) in any 12-month period granted to each grantee must not exceed 1% of the CITIC Telecom Shares in issue. Where any further grant of options to a grantee would result in the CITIC Telecom Shares issued and to be issued upon exercise of all options granted and to be granted to such person (including exercised, cancelled and outstanding options) in the 12-month period up to and including the date of such further grant representing in aggregate over 1% of the CITIC Telecom Shares in issue, such further grant shall be subject to separate approval by the shareholders of CITIC Telecom in general meeting.
  • The exercise period of any option granted under the CITIC Telecom Share Option Plan must not be more than ten years commencing on the date of grant.
  • The acceptance of an offer of the grant of the options must be made within 28 days from the date of grant with a non-refundable payment of HK$1.00 from the grantee.
  • The subscription price determined by the board of CITIC Telecom will not be less than the higher of (i) the closing price of CITIC Telecom’s shares as stated in the daily quotations sheet of the Stock Exchange on the date of grant; and (ii) the average closing price of CITIC Telecom’s shares as stated in the Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date of grant.
  • The CITIC Telecom Share Option Plan shall be valid and effective till 16 May 2017.

As approved at the annual general meeting of CITIC Telecom held on 25 April 2014, the mandate limit is refreshed so that taking into account the overriding limit of the CITIC Telecom Share Option Plan, the total number of the CITIC Telecom Shares which may be issued upon the exercise of all options to be granted under the CITIC Telecom Share Option Plan, together with all outstanding options granted and yet to be exercised under the CITIC Telecom Share Option Plan, shall not exceed 333,505,276 CITIC Telecom Shares, being 10% of the number of the CITIC Telecom Shares in issue as at the date of approval of the refreshment of the mandate limit. As at 24 March 2016, the maximum number of CITIC Telecom Shares available for issue under the CITIC Telecom Share Option Plan is 132,430,919, representing approximately 3.91% of the CITIC Telecom Shares in issue.

Since the adoption of the CITIC Telecom Share Option Plan, CITIC Telecom has granted the following share options:

Upon completion of the rights issue of CITIC Telecom on 7 June 2013, the exercise price and the number of shares to be allotted and issued upon full exercise of the subscription rights attaching to the outstanding share options of CITIC Telecom as at 6 June 2013 have been adjusted (the “Adjustments”) in the following manner:

The closing price of CITIC Telecom Shares immediately before the grant on 24 March 2015 was HK$2.59. All options granted on 24 March 2015 were accepted except for options for 398,000 CITIC Telecom Shares.

The grantees were CITIC Telecom Directors, Officers and Employees. None was granted to the directors, chief executives or substantial shareholders of the Company

The share options granted on 23 May 2007 have expired at the close of business on 22 May 2012 and the first 50% of the share options granted on 17 September 2009 have expired at the close of business on 16 September 2015. The remaining options granted and accepted under the CITIC Telecom Share Option Plan can be exercised in whole or in part within 5 years from the date of commencement of the exercise period.

As at 1 January 2015, options for 94,478,688 CITIC Telecom Shares were outstanding under the CITIC Telecom Share Option Plan. During the year ended 31 December 2015, options for 26,667,686 CITIC Telecom Shares were exercised and options for 1,807,245 CITIC Telecom Shares have lapsed and options for 398,000 CITIC Telecom Shares were cancelled. As at 31 December 2015, options for 67,388,757 CITIC Telecom Shares under the CITIC Telecom Share Option Plan were exercisable.

A summary of the movements of the share options during the year ended 31 December 2015 is as follows:

A. Employees of the Company/CITIC Telecom under continuous contracts (as defined in the Employment Ordinance)

B. Others(4)

  • Notes:
  • (1) The weighted average closing price of CITIC Telecom Shares immediately before the dates on which the options were exercised was HK$3.19.
  • (2) These are in respect of options granted to employees under continuous contracts who had not accepted the options. These options were cancelled during the year ended 31 December 2015.
  • (3) These are in respect of options granted to some employees under continuous contracts who have subsequently resigned. Such options have lapsed during the year ended 31 December 2015.
  • (4) These are in respect of options granted to independent non-executive directors of CITIC Telecom who are not employees under continuous contracts. None of these options were exercised, cancelled or lapsed during the year ended 31 December 2015.

The average fair value of an option of the lot granted on 24 March 2015 on one ordinary share of CITIC Telecom measured at the date of grant of 24 March 2015 was HK$0.673 based on the following assumptions using the binomial option pricing model:

– Taking into account the probability of early exercise behaviour, the average expected term of the grant for directors and employees was determined to be 6.0 years and 4.1 years respectively;
– Expected volatility of CITIC Telecom’s share price at 40% per annum (based on historical movements of CITIC Telecom’s share prices);
– Expected annual dividend yield of 4.0%;
– Expected post-vesting exit rate of 0% per annum for directors and 15.0% per annum for employees;
– Early exercise assumption for directors and employees to exercise their options when the share price is at least 250% and 161% of the exercise price respectively; and
– Risk-free interest rate of 1.18% and 1.30% for the first 50% and the remaining 50% of the options respectively (based on linearly interpolated yields of the Hong Kong Exchange Fund Notes at the grant date).

The result of the binomial option pricing model can be materially affected by changes in these assumptions so an option’s actual value may differ from the estimated fair value of the options due to limitations of the model.

The total expense recognised in CITIC Telecom Group’s consolidated income statement for the year ended 31 December 2015 in respect of the above grant of options was HK$28,120,000.

Dah Chong Hong Holdings Limited (“DCH Holdings”)

DCH Holdings adopted a share option scheme (the “DCHH Scheme”) on 28 September 2007. The major terms of the DCHH Scheme are as follows:

  • The purpose of the DCHH Scheme is to attract and retain the best quality personnel for the development of DCH Holdings’ businesses; to provide additional incentives to the employees of the DCH Holdings group and to promote the long term financial success of DCH Holdings by aligning the interests of grantees to DCH Holdings’ shareholders.
  • The participants of the DCHH Scheme are any employee of the DCH Holdings group as the board of DCH Holdings may in its absolute discretion select.
  • The maximum number of shares over which share options may be granted under the DCHH Scheme and any other schemes of DCH Holdings shall not in aggregate exceed 10% of (i) the shares of DCH Holdings in issue immediately following the commencement of dealings in DCH Holdings’ shares on the Stock Exchange or (ii) the shares of DCH Holdings in issue from time to time, whichever is the lower. As at 24 March 2016, the maximum number of shares available for issue under the DCHH Scheme is 114,400,000, representing approximately 6.24% of the issued shares of DCH Holdings. Share options lapsed in accordance with the terms of the DCHH Scheme or any other schemes of DCH Holdings will not be counted for the purpose of calculating the 10% limit.
  • The total number of shares issued and to be issued upon exercise of share options (whether exercised or outstanding) in any 12-month period granted to each grantee must not exceed 1% of the shares of DCH Holdings in issue.
  • The exercise period of any share option granted under the DCHH Scheme must not be more than 10 years commencing on the date of grant.
  • The acceptance of an offer of the grant of the share option must be made within 28 days from the date of grant with a non-refundable payment of HK$1 from the grantee.
  • The subscription price determined by the board of DCH Holdings will not be less than whichever is the higher of (i) the closing price of DCH Holdings’ shares as stated in the Stock Exchange’s daily quotations sheets on the date of grant; and (ii) the average closing price of DCH Holdings’ shares as stated in the Stock Exchange’s daily quotations sheets for the 5 business days immediately preceding the date of grant.
  • The DCHH Scheme shall be valid and effective till 27 September 2017, after which no further share options will be granted.

Since the adoption of the DCHH Scheme, DCH Holdings has granted the following share options:

* Subject to a vesting scale

The share options granted on 7 July 2010 were accepted and fully vested on the date of grant and are then exercisable in whole or in part within 5 years from the date of grant. The closing price of the shares of DCH Holdings immediately before the grant on 7 July 2010 was HK$4.69 per share. The share options had expired by the close of business on 6 July 2015.

Of the share options granted on 8 June 2012, 24,250,000 were accepted and 200,000 were not as at the latest date of acceptance pursuant to the scheme rules (i.e. 5 July 2012). The share options granted are subject to a vesting scale. 25% of the options granted will vest on the first anniversary of the date of grant. A further 25% will vest on the second anniversary of the date of grant and the remaining 50% of the share options granted will vest on the third anniversary of the date of grant. The vested options are exercisable in whole or in part within 5 years from the date of grant. The closing price of the shares of DCH Holdings immediately before the grant on 8 June 2012 was HK$7.49 per share. The remaining contractual life of the share options is 1.4 years.

Of the share options granted on 30 April 2014, 27,850,000 were accepted and 350,000 were not as at the latest date of acceptance pursuant to the scheme rules (i.e. 28 May 2014). The share options granted are subject to a vesting scale. 25% of the options granted will vest on the first anniversary of the date of grant. A further 25% will vest on the second anniversary of the date of grant and the remaining 50% of the share options granted will vest on the third anniversary of the date of grant. The vested options are exercisable in whole or in part within 5 years from the date of grant. The closing price of the shares of DCH Holdings immediately before the grant on 30 April 2014 was HK$4.91 per share. The remaining contractual life of the share options is 3.3 years.

The grantees were certain directors or employees of DCH Holdings group working under continuous contracts (as defined in the Employment Ordinance). None were granted to the directors, chief executives or substantial shareholders of the Company.

(a) Employees of the DCH Holdings group working under continuous contracts (as defined in the Employment Ordinance)

(b) Others(4)

  • Notes:
  • These are in respect of share options granted to former employees of DCH Holdings group whose employment was terminated other than for cause or misconduct.
  • The weighted average closing price of the shares of DCH Holdings immediately before the dates on which the share options were exercised was HK$5.06.

As at 1 January 2015, options for 57,090,000 DCH Holdings’ shares were outstanding under the DCHH Scheme. During the year ended 31 December 2015, options for 140,000 shares in DCH Holdings were exercised, options for 8,850,000 DCH Holdings’ shares were lapsed and none of the options were cancelled. As at 31 December 2015, options for 48,100,000 DCH Holdings’ shares under the DCHH Scheme were exercisable.

CITIC Resources Holdings Limited (“CITIC Resources”)

CITIC Resources adopted a share option scheme on 30 June 2004 (the “Old Scheme”) for a term of 10 years, which expired on 29 June 2014. The share options that have been granted under the Old Scheme and remained outstanding as at the date of expiry of the Old Scheme remain valid and exercisable subject to and in accordance with the terms of the Old Scheme.

A summary of the movements of the share options of CITIC Resources under the Old Scheme during the year ended 31 December 2015 is as follows:

  • * The exercise price of the share options is subject to adjustment in case of a rights issue or bonus issue, or other similar changes in the share capital of CITIC Resources.

  • Notes: The share options are subject to the following vesting conditions:
  • (i) 50% of the share options vest and are exercisable with effect from the first anniversary of the date of grant; and
  • (ii) the remaining 50% of the share options vest and are exercisable with effect from the second anniversary of the date of grant.

The grantee was a director of CITIC Resources.

As at 31 December 2015, CITIC Resources had 400,000,000 share options outstanding under the Old Scheme.

To enable CITIC Resources to continue to grant share options as an incentive or reward to eligible persons, a new share option scheme was adopted by CITIC Resources on 27 June 2014 (the “New Scheme”).

Pursuant to the New Scheme, CITIC Resources may grant options to eligible persons to subscribe for shares of CITIC Resources subject to the terms and conditions stipulated therein. A summary of some of the principal terms of the New Scheme is as follows:

  • To allow CITIC Resources (i) to be competitive and to be able to attract, retain and motivate appropriate personnel to assist the CITIC Resources group attain its strategic objectives by offering share options to enhance general remuneration packages; (ii) to align the interests of the directors and employees of the CITIC Resources group with the performance of CITIC Resources and the value of the shares; and (iii) to align the commercial interests of business associates, customers and suppliers of the CITIC Resources group with the interests and success of the CITIC Resources group.
  • The eligible persons include employees and directors of CITIC Resources and any of its subsidiaries (including their respective executive and non-executive directors), business associates and advisers who will provide or have provided services to the CITIC Resources group.
  • The total number of shares which may be issued upon the exercise of all outstanding options granted under the New Scheme and any other schemes of CITIC Resources shall not exceed 10% of the total number of shares of CITIC Resources in issue as at the date of adoption of the New Scheme.
  • The total number of shares issued and to be issued upon the exercise of the options granted to an eligible person (including any exercised, cancelled and outstanding options) in any 12-month period up to and including the date of grant shall not exceed 1% of the total number of shares of CITIC Resources in issue at the date of grant.
  • The period during which an option may be exercised is determined by the board of directors of CITIC Resources at its absolute discretion, except that no option may be exercised after 10 years from the date of grant.
  • The minimum period for which an option must be held before it can be exercised is one year.
  • The exercise price payable in respect of each share of CITIC Resources shall be not less than the greater of (i) the closing price of the shares of CITIC Resources on the Stock Exchange as stated in the Stock Exchange’s daily quotations sheet on the date of grant (which must be a business day); (ii) the average closing price of the shares of CITIC Resources on the Stock Exchange as stated in the Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date of grant; and (iii) the nominal value of the shares of CITIC Resources.
  • The New Scheme remains in force until 26 June 2024 unless otherwise terminated in accordance with the terms stipulated therein.

Share options do not confer rights on the holders to dividends or to vote at shareholders’ meetings.

No share options were granted under the New Scheme during the year ended 31 December 2015.

CITIC Envirotech Ltd. (formerly United Envirotech Ltd) (“CITIC Envirotech”)

CITIC Envirotech is a company incorporated in Singapore and whose shares are listed on the main board of the Singapore Exchange. It became a subsidiary of the Company since April 2015 and changed its name from United Envirotech Ltd to CITIC Envirotech Ltd. on 30 July 2015.

CITIC Envirotech adopted the Employee Share Option Scheme (the “Scheme”) on 2 February 2010. A summary of the Scheme is as follows:

  • The Scheme is primarily a share incentive scheme. It provides CITIC Envirotech with the means to use share options as part of a compensation scheme for attracting as well as promoting long-term staff retention. The objectives of the Scheme are to (a) to motivate each participant to optimise his performance standards and efficiency and to maintain a high level of contribution to the CITIC Envirotech group; (b) to make employee remuneration sufficiently competitive to recruit and retain participants whose contributions are important to the long-term growth and profitability of the CITIC Envirotech group; (c) to instil loyalty to, and a stronger identification by the participants with the long-term development and growth of, CITIC Envirotech; (d) to attract potential employees with relevant skills to contribute to the CITIC Envirotech group and to create value for the shareholders; (e) to align the interests of the participants with the interests of the shareholders; and (f) to give recognition to the contributions made or to be made by the CITIC Envirotech group non-executive directors (including independent directors) to the success of the CITIC Envirotech group.
  • The participants of the Scheme are group employees (including group executive directors) and group non-executive directors (including independent directors) of CITIC Envirotech.

  • The aggregate number of shares in respect of which options may be granted on any date under the Scheme, when added to the amount of shares issued and issuable and/or transferred and transferable in respect of:

    (a) all shares available under the Scheme; and
    (b) all shares, options or awards granted under any other share option or share scheme of CITIC Envirotech then in force,

    shall not exceed 15% of the number of issued shares (excluding treasury shares) of CITIC Envirotech on the day immediately preceding the relevant date of grant (or such other limit as the Singapore Exchange may determine from time to time). The options which have already been granted shall not be invalidated in the event that a reduction of CITIC Envirotech’s capital or a buy back of its shares (if applicable) results in the shares issuable and/or transferable under outstanding options exceeding 15% of CITIC Envirotech’s issued share capital (excluding treasury shares).

    The aggregate number of shares issued and issuable and/or transferred and transferable in respect of all options granted pursuant to the Scheme available to all controlling shareholders and their associates of CITIC Envirotech shall not exceed 25% of the shares available under the Scheme.

    The number of shares issued and issuable and/or transferred and transferable in respect of all options granted pursuant to the Scheme available to each controlling shareholder or each of his associates of CITIC Envirotech shall not exceed 10% of the shares available under the Scheme.

  • The aggregate number of shares in respect of which options may be offered to a grantee for subscription in accordance with the Scheme shall be determined at the discretion of the remuneration committee of CITIC Envirotech who shall take into account criteria such as rank, past performance, years of service and potential for future development of the participant.
  • If the options remain unexercised after a period of 10 years (executive directors and employees) and 5 years (non-executive directors) from the date of grant, the options expire. Options are forfeited if the employee leaves the group before the options vest.
  • The vesting period is 1 year for non-discount options and 2 years for discounted options.
  • The consideration for the grant of an option is S$1.00.

  • The exercise price is based on the price that is equivalent to the Market Price*; or a price that is set at a discount to the Market Price, provided always that the maximum discount shall not exceed 20% of the Market Price; and the prior approval of shareholders shall have been obtained in a separate resolution.

    * Market Price: a price equal to the average of the last dealt prices for the shares on the Singapore Exchange over the five consecutive trading days, immediately preceding the date of grant of that option, as determined by the remuneration committee of CITIC Envirotech by reference to the daily official list or any other publication published by the Singapore Exchange.

  • The Scheme shall continue to be in force at the discretion of the remuneration committee of CITIC Envirotech, subject to a maximum period of 10 years, commencing on February 2010. Subject to compliance with any applicable laws and regulations in Singapore, the Scheme may be continued beyond the above stipulated period with the approval of the shareholders by ordinary resolution at a general meeting and of any relevant authorities which may then be required. The Scheme may be terminated at any time by the remuneration committee or by resolution of the shareholders at a general meeting subject to all other relevant approvals which may be required and if the Scheme is so terminated, no further options shall be offered by CITIC Envirotech hereunder.

Since the adoption of the Scheme, CITIC Envirotech has granted the following share options:

* This represented the weighted average closing price of the ordinary shares of CITIC Envirotech immediately before the date on which the share options were exercised.

Under the Scheme, the ordinary shares of CITIC Envirotech under option may be exercised in full or a multiple thereof, on the payment of the exercise price.

The grantees were certain directors and employees of CITIC Envirotech. None were granted to the directors, chief executives or substantial shareholders of the Company. As at 1 January 2015, 70,950,000 ordinary shares of CITIC Envirotech under option were outstanding. During the year ended 31 December 2015, 16,174,500 ordinary shares of CITIC Envirotech under option were exercised, and 900,000 ordinary shares of CITIC Envirotech under option were cancelled. As at 31 December 2015, 53,875,500 ordinary shares of CITIC Envirotech under option were exercisable.

A summary of the movements of share options under the Scheme during the year ended 31 December 2015 is as follows:

(a) Directors of CITIC Envirotech

(b) Employees of CITIC Envirotech

No options were granted during the financial year.

Directors’ Interests in Securities

As at 31 December 2015, none of the directors of the Company 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 the Company 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 the Company pursuant to section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as set out in the Listing Rules.

Arrangement to Acquire Shares or Debentures

At no time during the year was the Company, its subsidiaries, its fellow subsidiaries or its holding company a party to any arrangements to enable the directors of the Company (including their spouse and children under 18 years of age) to acquire benefits by means of the acquisition of shares or underlying shares in, or debentures of, the Company or any other body corporate.

Interests of Substantial Shareholders

As at 31 December 2015, substantial shareholders of the Company (other than directors of the Company) who had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company 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 the Company under section 336 of the SFO, or which were notified to the Company, were as follows:

  • Notes:
  • (1) CITIC Group is deemed to be interested in 26,055,943,755 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.
  • (2) CITIC Glory is beneficially interested in 7,446,906,755 shares of the Company.
  • (3) CITIC Polaris is deemed to be interested in 18,609,037,000 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.
  • (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% 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% 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% equity interest in CT Bright.

Shareholding Statistics

Based on the share register records of the Company, set out below is a shareholding statistics chart of the registered shareholders of the Company as at 31 December 2015:

As at 31 December 2015, the total number of ordinary shares in issue of the Company was 29,090,262,630 and based on the share register records of the Company, HKSCC Nominees Limited held 8,086,104,350 ordinary shares in entities ranging from 1,000 to 100,000,000 ordinary shares and representing 27.7966% of the total number of ordinary shares in issue of the Company.

Shares Issued

During the year, the Company issued shares as follows:

  • allotment and issue of 3,327,721,000 fully paid convertible preferred shares to CT Bright on 3 August 2015 for a total consideration of HK$45,922,549,800;
  • allotment and issue of 859,218,000 ordinary shares to Xin Ma Apparel International Limited on 12 August 2015 for a total consideration of HK$11,986,091,100; and
  • allotment and issue of 3,327,721,000 ordinary shares to CT Bright upon full conversion of the preferred shares on 14 August 2015.

Details of the above shares issued are disclosed in the preceding section headed “Subscription of Preferred Shares, Sale of Shares, Subscription of New Shares and Conversion of Preferred Shares” and shown in Note 44 to the consolidated financial statements.

Purchase, Sale or Redemption of Listed Securities

Neither the Company nor any of its subsidiary companies has purchased or sold or redeemed any of the Company’s listed securities during the year ended 31 December 2015.

Sufficiency of Public Float

The Stock Exchange has granted a waiver (the “Waiver”) to the Company from strict compliance with the minimum public float of 25% upon completion of the acquisition of CITIC Corporation Limited (the “Acquisition”) on 25 August 2014. Pursuant to the Waiver, the Company has complied with the public float requirement which is at the higher of such a percentage (being 21.87%) of shares held by the public immediately after completion of the Acquisition. Based on the information that is publicly available to the Company and within the knowledge of the directors as at the date of this annual report, the Company has maintained the prescribed public float under the Waiver.

Auditor

At the close of the 2015 AGM, Messrs KPMG, Certified Public Accountants, retired as auditor of the Company upon expiration of its term of office and Messrs PricewaterhouseCoopers, Certified Public Accountants, was appointed as new auditor of the Company to hold office until the conclusion of the 2016 AGM.

The accounts for the year have been audited by Messrs PricewaterhouseCoopers, Certified Public Accountants, who shall retire and, being eligible, offer themselves for re-appointment.

By Order of the Board,
Chang Zhenming
Chairman
Hong Kong, 24 March 2016