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  • Corporate Governance
  • Report of The Directors

REPORT OF THE DIRECTORS

The directors have pleasure in presenting to shareholders their report for the year ended 31 December 2020.

Principal Activities

CITIC Limited is one of China’s largest conglomerates and its subsidiaries are engaged in comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation both in China and overseas.

Subsidiary Companies

The name of the principal subsidiaries, their place of incorporation, principal activities and shares issued are set out in note 59 to the consolidated financial statements.

Business Review

A fair review, discussion and analysis of the Group’s business as required by Schedule 5 to the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), including 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”. An account of the principal risks and uncertainties facing the Group is provided in the “Risk Management”. Particulars of important events affecting CITIC Limited that have occurred since the end of the financial year 2020 (if any) and the likely future development in CITIC Limited’s business can also be found in this annual report. The above discussions form an integral part of the Report of the Directors.

In addition, an account of CITIC Limited’s performance by reference to environmental and social-related policies is provided in the “Environmental, Social and Governance Report”.

Dividends

On 28 August 2020, the directors declared an interim dividend of HK$0.10 per share (2019: HK$0.18 per share) for the year ended 31 December 2020 which was paid on 3 November 2020. At the board meeting held on 30 March 2021, the directors recommended a final dividend (“2020 Final Dividend”) of HK$0.388 per share (2019: HK$0.285 per share) in respect of the year ended 31 December 2020. Subject to approval of the shareholders at the forthcoming annual general meeting of CITIC Limited to be held on 9 June 2021 (the “2021 AGM”), the proposed final dividend will be paid on Tuesday, 3 August 2021 to shareholders on CITIC Limited’s register of members at the close of business on Friday, 18 June 2021. This represents a total distribution for the year of HK$14,196 million.

The proposed 2020 Final Dividend will be payable in cash to each shareholder in HK Dollars (“HKD”) unless an election is made to receive the same in Renminbi (“RMB”).

Shareholders will be given the option to elect to receive all (but not part) of the 2020 Final Dividend in RMB at the average benchmark exchange rate of HKD to RMB as published by the People’s Bank of China during the five business days ending on 9 June 2021 (inclusive), being the date of the 2021 AGM. To make such election, shareholders should complete the Dividend Currency Election Form, which is expected to be despatched to shareholders in late June 2021 as soon as practicable after the record date of 18 June 2021 to determine shareholders’ entitlement to the proposed 2020 Final Dividend, and return it to CITIC Limited’s Share Registrar, Tricor Tengis Limited, at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong not later than 4:30 p.m. on Monday, 12 July 2021.

Shareholders who are minded to elect to receive all (but not part) of their dividends in RMB by cheques should note that (i) they should ensure that they have an appropriate bank account to which the RMB cheques for dividend can be presented for payment; and (ii) there is no assurance that RMB cheques can be cleared without material handling charges or delay in Hong Kong or that RMB cheques will be honoured for payment upon presentation outside Hong Kong. The cheques are expected to be posted to the relevant shareholders by ordinary post on Tuesday, 3 August 2021 at the shareholders’ own risk.

If no election is made by a shareholder or no duly completed Dividend Currency Election Form in respect of that shareholder is received by CITIC Limited’s Share Registrar by 4:30 p.m. on Monday, 12 July 2021, such shareholder will automatically receive the 2020 Final Dividend in HKD. All dividend payments in HKD will be made in the usual way on Tuesday, 3 August 2021.

If shareholders wish to receive the 2020 Final Dividend in HKD in the usual way, no additional action is required.

Shareholders should seek professional advice with their own tax advisers regarding the possible tax implications of the proposed dividend payment.

Donations

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

Share Capital and Reserves

Movements in the share capital and reserves of CITIC Limited and the Group during the year are set out in note 45 to the consolidated financial statements.

Fixed Assets

Movements in fixed assets during the year are set out in note 31 to the consolidated financial statements.

Major Customers and Suppliers

During the year, both the aggregate percentage of purchases from the Group’s five largest suppliers and the aggregate percentage of sales to the Group’s five largest customers were less than 30% of the total purchases and sales of the Group respectively.

Borrowings, Debt Instruments Issued and Perpetual Capital Securities

Particulars of borrowings, debt instruments issued and perpetual capital securities of CITIC Limited and its subsidiary companies as at 31 December 2020 are set out in notes 42 and 43 to the consolidated financial statements.

Equity-linked Agreements

Save as disclosed below in the section headed “Share Option Plan Adopted by CITIC Limited”, no equity-linked agreements that will or may result in CITIC Limited issuing shares or that require CITIC Limited to enter into any agreements that will or may result in CITIC Limited issuing shares were entered into by CITIC Limited during the year or subsisted at the end of the year.

Directors

The directors of CITIC Limited during the year and up to the date of this report are:

Executive Directors
Mr Zhu Hexin (Chairman) (appointed on 30 March 2020)
Mr Chang Zhenming (Chairman) (resigned on 30 March 2020)
Mr Xi Guohua (Vice Chairman and President) (appointed on 25 August 2020)
Mr Wang Jiong (Vice Chairman and President) (resigned on 25 August 2020)
Ms Li Qingping

Non-executive Directors
Mr Song Kangle
Ms Yan Shuqin (resigned on 25 August 2020)
Mr Liu Zhuyu
Mr Peng Yanxiang
Ms Yu Yang (appointed on 25 August 2020)
Mr Liu Zhongyuan Mr Yang Xiaoping

Independent Non-executive Directors
Mr Francis Siu Wai Keung
Dr Xu Jinwu
Mr Anthony Francis Neoh
Mr Shohei Harada
Mr Gregory Lynn Curl

Mr Chang Zhenming, Mr Wang Jiong and Ms Yan Shuqin have confirmed that they have no disagreement with the board and nothing relating to their resignations that need to be brought to the attention of the shareholders of CITIC Limited.

Mr Zhu Hexin (the chairman of the board) who was appointed by the board as director of CITIC Limited on 30 March 2020 was re-elected as director at the annual general meeting held on 19 June 2020. Pursuant to Article 95 of the articles of association of CITIC Limited, Mr Xi Guohua and Ms Yu Yang who were appointed by the board as directors of CITIC Limited on 25 August 2020 shall hold office only until the next following annual general meeting, or if earlier, the next following extraordinary general meeting of CITIC Limited and, being eligible, offer themselves for re-election. In addition, pursuant to Article 104(A) of CITIC Limited’s articles of association, Mr Song Kangle, Mr Liu Zhuyu, Mr Peng Yanxiang, Mr Liu Zhongyuan and Dr Xu Jinwu shall retire by rotation at the 2021 AGM and, all being eligible, have offered themselves for re-election at the 2021 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 CITIC Limited during the year and up to the date of this report is available on CITIC Limited’s website at www.citic.com.

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 Parties” in note 49 to the consolidated financial statements, no transactions, arrangements or contracts of significance in relation to CITIC Limited’s business to which CITIC Limited’s subsidiaries, fellow subsidiaries or its holding company was a party or were parties and in which a director of CITIC Limited 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).

Management Contracts

No contracts concerning the management and/or administration of the whole or any substantial part of the business of CITIC Limited were entered into during the year or existed at the end of the year.

Permitted Indemnity

Pursuant to CITIC Limited’s articles of association and subject to the provisions of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), every director or other officers of CITIC Limited shall be entitled to be indemnified out of the assets of CITIC Limited 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. CITIC Limited has arranged Directors & Officers Liability and Company Reimbursement Insurance for its directors and officers to protect them against potential costs and liabilities arising from claims brought against them.

Related Party Transactions

CITIC Limited and its subsidiaries entered into certain transactions in the ordinary course of business and on normal commercial terms which were “Material Related Party”, the details of which are set out in note 49 to the consolidated financial statements of CITIC Limited. Some of these transactions also constituted “Connected Transactions” and/or “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 of CITIC Limited during the year under review, particulars of which were previously disclosed by way of announcements and are required under the Listing Rules to be disclosed in this annual report.

  1. On 23 March 2020, CITIC United Asia (Beijing) Management and Consultation Co., Ltd. (“CITIC United”, an indirect wholly-owned subsidiary of CITIC Limited) entered into a capital injection agreement with CITIC Titanium Industry Co., Ltd (“CITIC Titanium”, an indirect non-wholly-owned subsidiary of CITIC Limited in which CITIC Star Thrive Investments Limited (“CITIC Star Thrive”) held 76.37% equity interests) upon completion of the public solicitation made by CITIC Titanium at Dalian Property Rights Exchange. Pursuant to the capital injection agreement, CITIC United agreed to subscribe for 84,000,000 new shares issued by CITIC Titanium at a consideration of RMB286,020,000, i.e. RMB3.405 per share of CITIC Titanium (the “Capital Injection”). In addition, CITIC Titanium also entered into agreements with each of the seven independent third-party investors pursuant to which CITIC Titanium would be issuing 84,000,000 new shares to the independent third-party investors.

    CITIC Star Thrive is a 60% indirectly-owned subsidiary of CITIC Limited. CITIC Group Corporation (“CITIC Group”) is the controlling shareholder of CITIC Limited and indirectly owns a further 40% equity interests in CITIC Star Thrive other than through its interest in CITIC Limited. CITIC Titanium is therefore a connected subsidiary of CITIC Limited. Accordingly, the Capital Injection constitutes a connected transaction of CITIC Limited under the Listing Rules.

    Upon completion of the aforesaid issue of new shares, the equity interests in CITIC Titanium controlled by CITIC Limited via its subsidiaries become 67.65%, and CITIC Titanium remains an indirect non-wholly- owned subsidiary of CITIC Limited.
  2. On 2 April 2020, Joint Stock Company ŽĎAS, a.s. (“ZDAS”, a wholly-owned subsidiary of CITIC Group) entered into an engineering, procurement and construction contract (“EPC Contract”) with Public Joint Stock Company Magnitogorsk Iron and Steel Works pursuant to which ZDAS agreed to act as the general contractor for the implementation of the thermal power plant construction project (the “Thermal Power Plant Complex Project”) in Russia. In order to better perform the EPC Contract, on 23 November 2020, CITIC Construction Co., Ltd. (“CITIC Construction”, a wholly-owned subsidiary of CITIC Limited), entered into a cooperation agreement with ZDAS, pursuant to which CITIC Construction agreed to supply and provide, and ZDAS agreed to purchase, products including electrical equipment, electrical materials and water system, and on-site services in relation to such supplied products at a consideration of EUR31,291,000 (approximately HK$288 million), for the implementation of part of the Thermal Power Plant Complex Project.

CITIC Group is the controlling shareholder of CITIC Limited. ZDAS is therefore an associate of CITIC Group and a connected person of CITIC Limited. Accordingly, the transactions contemplated under the cooperation agreement constitute a connected transaction of CITIC Limited under the Listing Rules.

Non-Exempt Continuing Connected Transactions

During the year under review, the Group engaged in the following non-exempt continuing connected transactions with CITIC Group Corporation (“CITIC Group”) and/or its associates (the “Connected Persons”), particulars of which were previously disclosed in the announcements of CITIC Limited and are required under the Listing Rules to be disclosed in this annual report and the consolidated financial statements of CITIC Limited.

1. Financial Assistance Framework Agreement — financial assistance provided by the Group to the Connected Persons in the form of entrusted loans or commercial loans

The Financial Assistance Framework Agreement dated 30 November 2016 ended on 31 December 2019. Considering the business development needs of the Group and CITIC Group, CITIC Limited entered into a new financial assistance framework agreement (“New Financial Assistance FA”) with CITIC Group on 20 November 2019 under which the Group would continue to provide financial assistance to the Connected Persons in the form of entrusted loans, commercial loans and financing guarantee services. Details of the above were set out in CITIC Limited’s announcement dated 20 November 2019.

New Financial Assistance FA

     

Period

commencing from 1 January 2020 and ending on 31 December 2022

Maximum Daily Balance

for year ended 31/12/2020

RMB10,000,000,000

for year ending 31/12/2021

RMB11,000,000,000

for year ending 31/12/2022

RMB12,000,000,000

The maximum daily balance of the financial assistance under New Financial Assistance FA for the year ended 31 December 2020 was approximately RMB1,636,050,000.

2. Asset Transfer Framework Agreement

The original Asset Transfer Framework Agreement (the “Original Asset Transfer FA”) dated 8 December 2014 made between China CITIC Bank Corporation Limited (“CITIC Bank”, a non-wholly owned subsidiary of CITIC Limited) and CITIC Group in relation to the transfer of loan and other related assets between CITIC Bank and the Connected Persons which constituted continuing connected transactions of CITIC Limited, ended on 31 December 2017. A new asset transfer framework agreement (the “New Asset Transfer FA”) was entered into on 24 August 2017 between CITIC Bank and CITIC Group for renewal of the Original Asset Transfer FA, details of which were set out in CITIC Limited’s announcements dated 23 November 2017 and 6 December 2017.

New Asset Transfer FA

 

Annual Cap

for year ended 31/12/2020

RMB13,000,000,000

There were no transactions under the New Asset Transfer FA for the year ended 31 December 2020.

3. Aluminium Alloy Hub Procurement Framework Agreement (“Aluminium Alloy Hub Procurement FA”) — procurement of aluminium alloy hubs by the Group from the Connected Persons

The Aluminium Alloy Hub Procurement FA was entered into on 28 March 2018 between CITIC Limited and CITIC Group, details of which were set out in CITIC Limited’s announcement dated 28 March 2018.

Period

commencing from 28 March 2018 and ended on 31 December 2020

Annual Cap

for year ended 31/12/2020

RMB430,000,000

The transaction amount under the Aluminium Alloy Hub Procurement FA for the year ended 31 December 2020 was approximately RMB54,270,671.46(Note).

4. Raw Materials, Equipment and Accessories Sales Framework Agreement (“Raw Materials, Equipment and Accessories Sales FA”) — sales of raw materials, equipment and accessories by the Group to the Connected Persons

The Raw Materials, Equipment and Accessories Sales FA was entered into on 28 March 2018 between CITIC Limited and CITIC Group, details of which were set out in CITIC Limited’s announcement dated 28 March 2018.

Period

commencing from 28 March 2018 and ended on 31 December 2020

Annual Cap

for year ended 31/12/2020

- Raw Materials

RMB550,000,000

- Equipment and Accessories

RMB38,000,000

Total Annual Caps

RMB588,000,000

The transaction amounts under the Raw Materials, Equipment and Accessories Sales FA for the year ended 31 December 2020 were approximately RMB11,955,334.78Notefor the sales of raw materials and approximately RMB1,416,982.76Notefor the sales of equipment and accessories.

Note: In November 2020, the Ministry of Finance has issued the “Notice regrading State-owned Financial Institutions Focusing on Main Businesses, Compressing Levels and Other Related Matter” (Caijin [2020] No. 111). Taking into account relevant regulatory requirements, the financial results of CITIC Dicastal Co., Ltd. are consolidated into the financial statements of the Group as from 1 November 2020.
 

The independent non-executive directors of CITIC Limited have reviewed the aforesaid continuing connected transactions for the year ended 31 December 2020 (collectively the “Transactions”) and confirmed that:

  1. the Transactions have been entered into in the ordinary and usual course of business of the Group;
  2. the Transactions have been entered into on normal commercial terms or better; and
  3. 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 CITIC Limited as a whole.

CITIC Limited’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 CITIC Limited to The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”).

Share Option Plan Adopted by CITIC Limited

CITIC Pacific Share Incentive Plan 2011

The CITIC Pacific Share Incentive Plan 2000 adopted by CITIC Limited on 31 May 2000 for a term of ten years expired on 30 May 2010. CITIC Limited 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:

  1. The purpose of the Plan 2011 is to promote the interests of CITIC Limited 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 the Group.
  2. 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 CITIC Limited as the board may in its discretion select.
  3. 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 30 March 2021, the total number of shares available for issue under the Plan 2011 is 364,944,416 shares.
  4. 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 CITIC Limited 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 CITIC Limited’s shares in issue, such further grant shall be subject to separate approval by the shareholders of CITIC Limited in general meeting.
  5. 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.
  6. 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.
  7. The subscription price determined by the board will be at least the higher of (i) the nominal value of CITIC Limited’s shares; (ii) the closing price of CITIC Limited’s shares as stated in the Hong Kong Stock Exchange’s daily quotations sheet on the date of offer of the grant; and (iii) the average of the closing prices of CITIC Limited’s shares as stated in the Hong Kong Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date of offer of the grant.
  8. The life of the Plan 2011 is ten years and shall be valid and effective until 11 May 2021.

No share options were granted under the Plan 2011 during the year ended 31 December 2020.

Share Option Plan Adopted by Subsidiaries of CITIC Limited

CITIC Telecom International Holdings Limited (“CITIC Telecom”)

CITIC Telecom adopted a share option plan (the “CITIC Telecom Share Option Plan”) on 17 May 2007, which was valid and effective till 16 May 2017. The major terms of the CITIC Telecom Share Option Plan are as follows:

  1. 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.
  2. 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.
  1. 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.
  2. 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.
  3. 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.
  4. 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 Hong Kong Stock Exchange on the date of grant; and (ii) the average closing price of CITIC Telecom’s shares as stated in the Hong Kong Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date of grant.

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.

Particulars of the outstanding share options granted under the CITIC Telecom Share Option Plan and their movements during the year ended 31 December 2020 are as follows:

Date of grant

Number of share options

Exercise period

Exercise price per share
HK$

24.03.2015

43,756,250

24.03.2016 – 23.03.2021

2.612

24.03.2015

43,756,250

24.03.2017 – 23.03.2022

2.612

24.03.2017

45,339,500

24.03.2018 – 23.03.2023

2.45

24.03.2017

45,339,500

24.03.2019 – 23.03.2024

2.45

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

The above outstanding 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 2020, options for 64,883,817 CITIC Telecom Shares were outstanding under the CITIC Telecom Share Option Plan. During the year ended 31 December 2020, options for 5,377,000 CITIC Telecom Shares were exercised, options for 1,180,500 CITIC Telecom Shares have lapsed. No share options were granted nor cancelled in 2020. As at 31 December 2020, options for 58,326,317 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 2020 is as follows:

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

Date of grant

Exercise period

Number of share options

Balance as at 01.01.2020

Exercised during the year ended 31.12.2020 (Note 1)

Lapsed during the year ended 31.12.2020 (Note 2)

Balance as at 31.12.2020

24.03.2015

24.03.2016 – 23.03.2021

12,133,067

1,833,500

282,500

10,017,067

24.03.2015

24.03.2017 – 23.03.2022

17,163,250

1,246,000

293,000

15,624,250

24.03.2017

24.03.2018 – 23.03.2023

15,854,500

1,867,000

194,000

13,793,500

24.03.2017

24.03.2019 – 23.03.2024

19,733,000

430,500

411,000

18,891,500

Notes:

  1. The weighted average closing price of CITIC Telecom Shares immediately before the dates on which the options were exercised was HK$2.78.
  2. 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 2020.
CITIC Resources Holdings Limited (“CITIC Resources”)

The share option scheme adopted by CITIC Resources on 30 June 2004 (the “Old Scheme”) for a term of 10 years expired on 29 June 2014. The share options granted under the Old Scheme have been lapsed.

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. The minimum period for which an option must be held before it can be exercised is one year.
  7. 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 Hong Kong Stock Exchange as stated in the Hong Kong 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 Hong Kong Stock Exchange as stated in the Hong Kong 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.
  8. 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 general meetings.

No share options were granted under the New Scheme during the year ended 31 December 2020.

Directors’ Interests in Securities

As at 31 December 2020, 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.

Arrangement to Acquire Shares or Debentures

Save for the share option plans as disclosed above, at no time during the year was CITIC Limited, its subsidiaries, its fellow subsidiaries or its holding company a party to any arrangements to enable the directors of CITIC Limited (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, CITIC Limited or any other body corporate.

Interests of Substantial Shareholders

As at 31 December 2020, 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, were as follows:

Name

Nature of interest/capacity

Number of ordinary shares held

Approximate percentage to the total number of issued shares

CITIC Group Corporation (“CITIC Group”) (Note 1)

Interests in a controlled corporation and interests in a section 317 concert party agreement

22,728,222,755
(Long position)

78.13%
(Long position)

CITIC Glory Limited (“CITIC Glory”) (Note 2)

Beneficial owner

7,446,906,755

(Long position)

25.60%

(Long position)

CITIC Polaris Limited (“CITIC Polaris”) (Note 3)

Beneficial owner and interests in a section 317 concert party agreement

22,728,222,755

(Long position)

78.13%

(Long position)

Chia Tai Bright Investment Company Limited (“CT Bright”) (Note 4)

Beneficial owner and interests in a section 317 concert party agreement

22,728,222,755

(Long position)

5,818,053,363

(Short position)

78.13%

(Long position)

20.00%

(Short position)

CT Brilliant Investment Holdings Limited (“CT Brilliant”) (Note 5)

Interests in a controlled corporation and interests in a section 317 concert party agreement

22,728,222,755

(Long position)

5,818,053,363

(Short position)

78.13%

(Long position)

20.00%

(Short position)

Charoen Pokphand Group Company Limited (“CPG”) (Note 6)

Interests in a controlled corporation and interests in a section 317 concert party agreement 

22,728,222,755

(Long position)

5,818,053,363

(Short position) 

78.13%

(Long position)

20.00%

(Short position) 

ITOCHU Corporation (“ITOCHU”) (Note 7)

Interests in a controlled corporation and interests in a section 317 concert party agreement

22,728,222,755

(Long position)

5,818,053,363

(Short position) 

78.13%

(Long position)

20.00%

(Short position)

Notes:

  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 between CITIC Group’s interest disclosed in this report (22,728,222,755 shares) and its interest disclosed in the 2019 annual report (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 in CITIC Limited did not increase, decrease, or otherwise change in the past year. The discrepancy between CITIC Polaris’ interest disclosed in this report (22,728,222,755 shares) and its interest disclosed in the 2019 annual report (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% 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 CITIC Limited, set out below is a shareholding statistics chart of the registered shareholders of CITIC Limited as at 31 December 2020:

Number of shares held

Number of shareholders

Percentage

1 to 1,000

3,952

56.168

1,001 to 10,000

2,384

33.883

10,001 to 100,000

642

9.125

100,001 to 1,000,000

51

0.725

1,000,001 to 100,000,000

1

0.014

100,000,001 to 500,000,000

1

0.014

500,000,001 to 2,000,000,000

1

0.014

2,000,000,001 above

4

0.057

Total:

7,036

100

As at 31 December 2020, the total number of ordinary shares in issue of CITIC Limited was 29,090,262,630 and based on the share register records of CITIC Limited, HKSCC Nominees Limited held 9,818,240,949 ordinary shares in entities ranging from 1,000 to 1,000,000,000 ordinary shares and representing 33.75% of the total number of ordinary shares in issue of CITIC Limited.

Purchase, Sale or Redemption of Listed Securities

On 10 April 2020, CITIC Limited fully redeemed the US$500 million 6.375% notes under the Medium Term Note Programme upon maturity. These notes were issued on 10 April 2013 and listed on the Hong Kong Stock Exchange.

Save as disclosed above, neither CITIC Limited nor any of its subsidiary companies has purchased, sold or redeemed any of CITIC Limited’s listed securities during the year ended 31 December 2020.

Sufficiency of Public Float

The Hong Kong Stock Exchange has granted a waiver (the “Waiver”) to CITIC Limited 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, CITIC Limited 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 CITIC Limited and within the knowledge of the directors as at the date of this annual report, CITIC Limited has maintained the prescribed public float under the Waiver.

Auditor

The Group’s consolidated financial statements for the year have been audited by Messrs PricewaterhouseCoopers, Certified Public Accountants and registered PIE Auditor, who will retire and, being eligible, offer themselves for re-appointment. A resolution for the re-appointment of Messrs PricewaterhouseCoopers as auditor of CITIC Limited is to be proposed at the 2021 AGM.

 

By Order of the Board,
Zhu Hexin
Chairman
Hong Kong, 30 March 2021