Group Financial Results

Revenue

In 2018, CITIC Limited recorded revenue of HK$533,285 million, an increase of HK$82,749 million, or 18%, from the previous year.

The financial services segment recorded revenue of HK$202,949 million, a year-on-year growth of 6.8%. The banking business remained the principal source of income for the Group as CITIC Bank placed more resources to credit assets and accelerated the development of its intermediary business, leading to the growth in both net interest income and non-interest income.

The resources and energy business reported revenue of HK$78,722 million, an increase of HK$15,266 million, or 24%, from last year. Owing to the increased downstream demand and customer development, the trading businesses of iron ore, niobium product and coal recorded growth. The Sino Iron Project reported revenue of approximately HK$12,700 million, representing an increase of approximately 30% as compared with last year. Revenue growth was also recorded in our crude oil business, which was driven by the rise in crude oil prices.

The manufacturing business reported revenue of HK$121,939 million, an increase of HK$24,507 million, or 25%, from last year. Through acquisitions, our special steel business reported growth in sales volume along with product structural optimisation and improvement, contributing a year-on-year increase in revenue of 29%; The aluminium wheels and castings business recorded an increase in both sales volume and price, while further expanding market share. Both the heavy equipment business and robotics and intelligent equipment business grew steadily during the year.

The engineering contracting business reported revenue of HK$19,700 million, an increase of HK$5,047 million, or 34%, from last year. This was mainly due to the rapid development of the EPC and survey and design businesses. Pending Projects and the value of signed new contracts also recorded year-on-year increases.

The real estate business reported revenue of HK$8,968 million, an increase of HK$5,741 million, or 178%, from last year. This was mainly due to the sale of residential units in the Kadooria project in Hong Kong and the settlement of a land development project, CITIC Coast New Town in Shantou.

Revenue from other businesses amounted to HK$100,920 million, a year-on-year increase of HK$19,247 million, or 24%. Our McDonald’s business in mainland China and Hong Kong realised rapid increase in number of retail outlets and became one of the drivers of our revenue growth. The sales of equipment and mobile handsets, together with our environmental protection, publication and other businesses, also experienced rapid growth.

Expected credit losses and other impairment losses

In 2018, expected credit losses and other impairment losses of HK$75,570 million were recorded, a decrease of 4.3% from the year before. CITIC Bank accounted for HK$68,937 million of these losses, including HK$56,530 million expected credited losses in its loans and advances to customers.

Net finance charges

The finance costs of the Group in 2018 amounted to HK$12,294 million, a year-on-year increase of HK$797 million, or 6.9%. Although total debts were effectively controlled during the year, the average debt level increased compared with last year.

In 2018, the finance income of the Group amounted to HK$2,729 million, mainly from interest income on bank deposits in the operation management segment, a year-on-year increase of HK$1,317 million, or 93%.

Interest expense capitalised

In 2018, the Group recorded capitalised interest expenses of HK$175 million, a decrease of 52% as compared with last year, mainly due to the completion of some mainland China real estate projects.

Income tax

In 2018, income tax of the Group was HK$18,944 million, an increase of HK$1,257 million as compared with last year. This was consistent with the increase in profit before taxation.