Notes To The Consolidated Financial Statements
CITIC Limited (the “Company”) was incorporated in Hong Kong, the shares of which are listed on the Main Board of the Stock Exchange of Hong Kong Limited. The address of its registered office is 32nd Floor, CITIC Tower, 1 Tim Mei Avenue, Central Hong Kong.
The Company and its subsidiaries (collectively referred to as the “Group”) are principally engaged in comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption, new-type urbanisation, etc.
The parent and the ultimate holding company of the Company is CITIC Group Corporation (“CITIC Group”). In 2023, CITIC Group transferred 5.01% of the issued shares of the Company to China CITIC Financial Asset Management Co., Ltd. (formerly known as “China Huarong Asset Management Co., Ltd.”). As at 31 December 2023, the equity interests held by CITIC Group in the Company through its overseas wholly-owned subsidiaries was 53.12% (31 December 2022: 58.13%).
The Company and its subsidiaries (collectively referred to as the “Group”) are principally engaged in comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption, new-type urbanisation, etc.
The parent and the ultimate holding company of the Company is CITIC Group Corporation (“CITIC Group”). In 2023, CITIC Group transferred 5.01% of the issued shares of the Company to China CITIC Financial Asset Management Co., Ltd. (formerly known as “China Huarong Asset Management Co., Ltd.”). As at 31 December 2023, the equity interests held by CITIC Group in the Company through its overseas wholly-owned subsidiaries was 53.12% (31 December 2022: 58.13%).
(a)
Basis of preparation
These financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRS”), which in collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKAS”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and the requirements of the Hong Kong Companies Ordinance. These financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. Material accounting policies adopted by the Group are disclosed below.The HKICPA has issued certain amendments or interpretations to HKFRSs. The Group has adopted those amendments or interpretations to the HKFRSs issued by the HKICPA that are first effective for the year ended 31 December 2023 (see Note 2(b)(ii)).
(b)
Changes in material accounting policies
(i)
Changes in presentation currency
The Group has changed its presentation currency from Hong Kong dollars (“HK$”) to Renminbi (“RMB”) for the preparation of the financial statements for the year ended 31 December 2023. Since the Group mainly operates its business in the People’s Republic of China (“PRC”) and most of the Group’s transactions are denominated and settled in RMB, the Board believes it is more appropriate to adopt RMB as its presentation currency for the Group’s financial statements. Furthermore, the Board considers that the change of presentation currency enables the shareholders and potential investors of the Company to have a more accurate picture of the Group’s financial performance. The change in presentation currency has been applied retrospectively.(ii)
New and amended HKFRSs
The Group has applied the following new and amended HKFRSs issued by the HKICPA to these financial statements for the year ended 31 December 2023:- HKFRS 17, Insurance contracts
- Amendments to HKAS 8, Definition of accounting estimates
- Amendments to HKAS 1, Disclosure of accounting policies
- Amendments to HKAS 12, Deferred tax related to assets and liabilities arising from a single transaction
- Amendments to HKAS 12, International tax reform – Pillar Two model rules
HKFRS 17 Insurance Contracts
The Group has adopted HKFRS 17 Insurance Contracts (“HKFRS 17”) replacing HKFRS 4 Insurance Contract with a date of initial application as 1 January 2023, which resulted in changes in accounting policies. The Group has adjusted the consolidated financial statements retrospectively and the amounts previously recognised in the Accounts.
The Group’s joint venture, CITIC-Prudential Life Insurance Co., Ltd. (“CITIC-Prudential”), did not adopt HKFRS 9 Financial Instruments (“HKFRS 9”). CITIC-Prudential has adopted HKFRS 9 and HKFRS 17 starting from 1 January 2023. For HKFRS 17, CITIC-Prudential restated the comparative figures, and the Group also restated the impact for the investment in CITIC-Prudential using the equity method in previous periods. For HKFRS 9, Citic-Prudential has restated the classification and measurement, including impairment, of financial instruments which are not terminated, for recognition as at 1 January 2023 in accordance with the convergence requirements. Citic-Prudential has not restated the comparative figures of financial statements, and recognised the difference between the original carrying value of the financial instruments and the new carrying amount as determined in accordance with HKFRS 9 on 1 January 2023 in undistributed profit and investment-related reserves on 1 January 2023. The Group has also adjusted the impact for the investment in CITIC-Prudential using the equity method accordingly and does not restate the relevant comparative information in previous periods.
The impact of the adoption of HKFRS 17 by the Group on key financial indicators for the comparative period, as disclosed below:
| Before the adoption of HKFRS 17 31 December 2022 | Impact of the adoption of HKFRS 17 | After the adoption of HKFRS 17 31 December 2022 | |
|---|---|---|---|
| Total assets | 10,540,676 | 1,367 | 10,542,043 |
| Total liabilities | 9,370,366 | – | 9,307,366 |
| Total ordinary shareholders’ funds | 658,742 | 1,367 | 660,109 |
The amendments provide further guidance on the distinction between changes in accounting policies and changes in accounting estimates. The amendments do not have a material impact on these financial statements as the Group’s approach in distinguishing changes in accounting policies and changes in accounting estimates is consistent with the amendments.
Amendments to HKAS 1, Disclosure of accounting policies
The amendments require entities to disclose material accounting policy information and provide guidance on applying the concept of materiality to accounting policy disclosure. The Group has revisited the accounting policy information it has been disclosing and considered it is consistent with the amendments.
Amendments to HKAS 12, Deferred tax related to assets and liabilities arising from a single transaction
The amendments narrow the scope of the initial recognition exemption such that it does not apply to transactions that give rise to equal and offsetting temporary differences on initial recognition such as leases and decommissioning liabilities. For leases and decommissioning liabilities, the associated deferred tax assets and liabilities are required to be recognised from the beginning of the earliest comparative period presented, with any cumulative effect recognised as an adjustment to retained earnings or other components of equity at that date. For all other transactions, the amendments are applied to those transactions that occur after the beginning of the earliest period presented.
Prior to the amendments, the Group did not apply the initial recognition exemption to lease transactions and had recognised the related deferred tax, except that the Group previously determined the temporary difference arising from a right-of-use asset and the related lease liability on a net basis on the basis they arise from a single transaction. Following the amendments, the Group has determined the temporary differences in relation to right-of-use assets and lease liabilities separately. The change primarily impacts disclosures of components of deferred tax assets and liabilities, but does not impact the overall deferred tax balances presented in the consolidated statement of financial position as the related deferred tax balances qualify for offsetting under HKAS 12.
Amendments to HKAS 12, International tax reform – Pillar Two model rules
The amendments introduce a temporary mandatory exception from deferred tax accounting for the income tax arising from tax laws enacted or substantively enacted to implement the Pillar Two model rules published by the Organisation for Economic Co-operation and Development (“OECD”) (income tax arising from such tax laws is hereafter referred to as “Pillar Two income taxes”), including tax laws that implement qualified domestic minimum top-up taxes described in those rules. The amendments also introduce disclosure requirements about such tax. They are immediately effective upon issuance and require retrospective application.
The Group has applied the temporary mandatory exception to the recognition and disclosure of deferred income tax assets and liabilities related to the Pillar Two income tax.
(c)
New HKICPA guidance on the accounting implications of the abolition of the MPF-LSP offsetting mechanism
In June 2022, the Hong Kong SAR Government (the “Government”) gazette the Hong Kong Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Ordinance 2022, abolishing the offsetting mechanism of mandatory provident fund (“MPF”), which will come into effect from 1 May 2025.In July 2023, the HKICPA published “Accounting implications of the abolition of the MPF-LSP offsetting mechanism in Hong Kong” that provides accounting guidance relating to the offsetting mechanism and the abolition of the mechanism.
This change in accounting policy upon the cessation in applying the practical expedient does not have any material impact on the Group’s financial statements for the year ended 31 December 2023.
(d)
Functional currency and presentation currency
The functional currency of the Company is HK$. The functional currencies of subsidiaries are determined in accordance with the primary economic environment in which they operate, and are translated into RMB for the preparation of the consolidated financial statements (see Note 2(j)). The financial statements of the Group are presented in RMB (see Note 2(b)(i)) and, unless otherwise stated, expressed in million of RMB.(e)
Basis of measurement
The consolidated financial statements for the year ended 31 December 2023 comprise the Company and its subsidiaries and the Group’s interest in associates and joint ventures.The measurement basis used in the preparation of the consolidated financial statements is the historical cost basis except that the following assets and liabilities are stated at their fair values as explained in the accounting policies set out below:
(f)
Use of estimates and judgement
The preparation of these consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Judgements made by management that have significant effect on the consolidated financial statements and major sources of estimation uncertainty are discussed in Note 3.
(g)
Subsidiaries and non-controlling interests
(i)
Business combinations involving entities under common control
A business combination involving entities under common control is a business combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory. The assets acquired and liabilities assumed are measured based on their carrying amounts in the consolidated financial statements of the ultimate controlling party at the combination date. The difference between the carrying amount of the net assets acquired and the consideration paid for the combination (or the total face value of shares issued) is adjusted against the capital reserve. Any cost directly attributable to the combination is recognised in profit or loss when incurred. The combination date is the date on which one combining entity obtains control of other combining entities.(ii)
Business combinations not involving entities under common control
A business combination not involving entities under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the business combination. Where (1) the aggregate of the acquisition date fair value of assets transferred (including the acquirer’s previously held equity interest in the acquiree), liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the acquiree, exceeds (2) the acquirer’s interest in the acquisition date fair value of the acquiree’s identifiable net assets, the difference is recognised as goodwill. If (1) is less than (2), the difference is recognised in profit or loss for the current period. The costs of equity or debt securities as a part of the consideration for the acquisition are included in the carrying amounts of these equity or debt securities upon initial recognition. Other acquisition-related costs are expensed when incurred. Any difference between the fair value and the carrying amount of the assets or liabilities transferred as consideration is recognised in profit or loss. The acquiree’s identifiable assets, liabilities and contingent liabilities, if the recognition criteria are met, are recognised by the Group at their acquisition date fair value. The acquisition date is the date on which the acquirer obtains control of the acquiree.The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis. Non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation are measured at either fair value or the present ownership interests’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets. All other components of non-controlling interests are measured at their acquisition date fair value, unless another measurement basis is required by HKFRS.
For a business combination not involving entities under common control and achieved in stages, the Group remeasures its previously-held equity interest in the acquiree to its fair value at the acquisition date. The difference between the fair value and the carrying amount is recognised in profit or loss for the current period; the amount recognised in other comprehensive income relating to the previously-held equity interest in the acquiree are transferred to profit or loss in the period in which the acquisition occurs.
(iii)
Consolidated financial statements
The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Company and its subsidiaries which includes structured entities controlled by the Group.Subsidiaries are entities over which the Group has control. The Group controls an entity when it is exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
When assessing whether the Group has power, only substantive rights are considered including the substantive rights held by the Group and other parties.
An investment in a subsidiary is consolidated into the consolidated financial statements of the Group from the date that control commences until the date that control ceases.
Where a subsidiary was acquired during the reporting period, through a business combination involving entities under common control, the financial statements of the subsidiary are included in the consolidated financial statements as if the combination had occurred at the date the ultimate controlling party first obtained control. Therefore, the opening balances and the comparative figures of the consolidated financial statements are restated. In the preparation of the consolidated financial statements, the subsidiary’s assets, liabilities and results of operations are included in the consolidated statement of financial position and the consolidated statement of comprehensive income, respectively, based on their carrying amounts, from the date that common control was established.
Where a subsidiary was acquired during the reporting period, through a business combination involving entities not under common control, the identifiable assets, liabilities and results of operations of the subsidiaries are consolidated into the consolidated financial statements from the date that control commences, based on the fair value of those identifiable assets and liabilities at the acquisition date.
Non-controlling interests are presented in the consolidated statement of financial position within equity, separately from equity attributable to the ordinary shareholders of the Company. Non-controlling interests in the results of the Group are presented on the face of the consolidated statement of comprehensive income as an allocation of the total profit or loss and total comprehensive income for the year between non-controlling interests and the ordinary shareholders of the Company. Loans from holders of non-controlling interests and other contractual obligations towards these holders are presented as financial liabilities in the consolidated statement of financial position in accordance with Note 2(k).
When the amount of loss for the current period attributable to the non-controlling interest of a subsidiary exceeds the non-controlling interest’s portion of the opening balance of shareholders’ equity of the subsidiary, the excess is allocated against the non-controlling interests.
When the accounting period or accounting policies of a subsidiary are different from those of the Group, the Group makes necessary adjustments to the financial statements of the subsidiary based on the Group’s own accounting period or accounting policies. Intra-group balances, transactions and cash flows, and any unrealised profit or loss arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised losses resulting from intra-group transactions are recognised fully in profit or loss when evidence of impairment of assets being provided.
If there is a difference between the accounting entity of the Group and the accounting entity of the Company or a subsidiary on measuring the same transaction, the transaction will be adjusted from the perspective of the Group.
Where the Group acquires a non-controlling interest from a subsidiary’s non-controlling shareholders or disposes of a portion of an interest in a subsidiary without a change in control, the difference between the amount by which the non-controlling interests are adjusted and the amount of the consideration paid or received is adjusted to the reserve (capital reserve) in the consolidated statement of financial position.
When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain or loss being recognised in profit or loss, and the Group derecognises assets, liabilities, non-controlling interests and other related items in shareholders’ equity in relation to that subsidiary. Any interest retained in that former subsidiary at the date when control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a financial asset (see Note 2(k)) or, when appropriate, the cost on initial recognition of an investment in an associate or joint venture (see Note 2(h)).
(iv)
Investment in subsidiaries
In the Company’s statement of financial position, an investment in a subsidiary is stated at cost less impairment losses (see Note 2(v)).The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable.
(h)
Associates and joint ventures
An associate is an entity in which the Group or the Company has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the Group or the Company has joint control, whereby the Group or the Company has the rights to its net assets and obligations for its liabilities.In the consolidated financial statements, An interest in an associate or a joint venture is accounted for using the equity method. They are initially recognised at cost, which includes transaction costs, adjusted for any excess of the Group’s share of the acquisition-date fair values of the investee’s identifiable net assets over the cost of the investment (if any). Thereafter, the investment is adjusted for the post acquisition change in the Group’s share of the investee’s net assets and any impairment loss relating to the investment (see Note 2(v)). Any acquisition-date excess of the Group’s share of the fair value of the investee’s identifiable net assets over cost, the Group’s share of the post-acquisition, post-tax results of the investees and any impairment losses for the year are recognised in profit or loss, whereas the Group’s share of the post-acquisition, post-tax items of the investees’ other comprehensive income is recognised in other comprehensive income of the Group. The Group’s interest in associate or joint venture is included in the consolidated financial statements from the date that significant influence or joint control commences until the date that significant influence or joint control ends.
When the Group’s share of losses exceeds its interest in the associate or the joint venture, the Group’s interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the investee. For this purpose, the Group’s interest is the carrying amount of the investment under the equity method together with the Group’s long-term interests that in substance form part of the Group’s net investment in the associate or the joint venture.
Unrealised profits and losses resulting from transactions between the Group and its associate and joint venture are eliminated to the extent of the Group’s interest in the investee, except where unrealised losses provide evidence of an impairment of the asset transferred, in which case they are recognised immediately in profit or loss. If an investment in an associate becomes an investment in a joint venture or vice versa, retained interest is not remeasured. Instead, the investment continues to be accounted for under the equity method.
When the Group ceases to have significant influence over an associate or joint control over a joint venture, it is accounted for as a disposal of the entire interest in that investee, with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former investee at the date when significant influence or joint control is lost is recognised at fair value and this amount is regarded as the cost on initial recognition of a financial asset (see Note 2(k)).
In the Company’s statement of financial position, an investment in an associate or joint venture is stated at cost less impairment losses (see Note 2(v)).
(i)
Goodwill
Goodwill represents the excess of the consideration transferred, including the amount of assets transferred (including the acquirer’s previously held equity interest in the acquiree), liabilities incurred or assumed, and the equity securities issued by the acquirer at the date of acquisition, over the fair value of the Group’s share of the identifiable net assets acquired, when the excess is positive, otherwise it’s recognised directly in profit or loss.Impairment losses on goodwill cannot be reversed in the future.
(j)
Translation of foreign currencies
Foreign currency transactions are, on initial recognition, translated by applying the foreign exchange rates ruling at the transaction dates. Monetary items denominated in foreign currencies are translated at the foreign exchange rates ruling at the reporting date, the resulting exchange differences are recognised in profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates ruling at the transaction dates. Non-monetary items that are measured at fair value in a foreign currency are translated using the foreign exchange rates ruling at the dates the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as fair value through other comprehensive income are recognised in other comprehensive income.The financial statements of the Group’s subsidiaries with a foreign functional currency are translated into RMB for the preparation of the Group’s consolidated financial statements. The assets and liabilities in these financial statements are translated into RMB at the foreign exchange rates ruling at the reporting date. The equity items, except for “retained earnings”, are translated to RMB at the foreign exchange rates at the dates on which such items arose.
Income and expenses in the profit or loss are translated into RMB at the foreign exchange rates at the transaction dates or the rates approximate to. The resulting exchange differences are presented as “Reserves” (exchange reserve) in the consolidated statement of financial position within the shareholder’s equity. The effect of exchange rate changes on cash and cash equivalents held or due in a foreign currency are reported in the statement of cash flows.
Upon disposal of a foreign operation, the cumulative amount of the translation differences recognised in shareholders’ equity which relates to that foreign operation is transferred to profit or loss in the period in which the disposal occurs.
(k)
Financial instruments
Financial instruments refer to a contract that forms one party’s financial asset and another party’s liabilities or equities. Financial assets and financial liabilities are recognised when the Group becomes a party of the financial instrument contracts.(i)
Financial assets
(1)
Classification and Measurement
The Group classifies its financial assets into the following categories based on their business model and the contractual cash flow characteristics:- Financial assets at amortised cost;
- Financial assets at fair value through other comprehensive income (“FVOCI”);
- Financial assets at fair value through profit or loss (“FVPL”).
Debt instruments
Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s perspective, and are measured at the following three categories:
-
Amortised cost:
-
FVOCI:
-
FVPL:
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting the liabilities. A financial instrument is an equity instrument if, and only if, both conditions (i) and (ii) below are met: (i) The financial instrument includes no contractual obligation to deliver cash or another financial asset to another entity, or to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the Group; (ii) If the financial instrument will or may be settled in the Group’s own equity instruments, it is a non-derivative instrument that includes no contractual obligations for the Group to deliver a variable number of its own equity instruments; or a derivative that will be settled only by the Group exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments.
The Group subsequently measures all equity investments at FVPL, except where the Group has elected, at initial recognition, to irrevocably designate an equity investment at FVOCI. When this election is made, fair value gains and losses are recognised in other comprehensive income (“OCI”) and are not subsequently reclassified to profit or loss, including on disposal. Dividends, when representing a return on such investments, are recognised in profit or loss when the Group’s right to receive payments is established.
(2)
Impairment
The Group assesses on a forward-looking basis the expected credit losses (“ECL”) associated with its financial assets at amortised cost, debt instrument at FVOCI, lease receivables and contract assets, loan commitments and financial guarantee contracts for the issuer which are not measured at fair value through profit or loss.When calculating the probability-weighted present value of the difference between the contractual and forecasted cash flows to be received, the Group takes reasonable and supportable information such as the past events, current conditions and forecasts of future economic conditions into consideration and uses probabilities of default as the weightings. The difference is recognised as the ECL.
At each financial position date, the Group calculates the ECL of financial instruments in different stages. Stage 1 refers to financial instruments that have not had a significant increase in credit risk since initial recognition; Stage 2 refers to financial instruments that have had a significant increase in credit risk since initial recognition but that do not have objective evidence of impairment; Stage 3 refers to financial assets for which there are objective evidence of impairment at the reporting date since initial recognition. For these assets at Stage 1, 12-month ECL are recognised and for assets at stage 2 and 3, life-time ECL are recognised. For financial assets with low credit risks as at the balance date, the Group recognises 12-month ECL based on the assumption that the credit risks have not significantly increased after initial recognition.
For financial assets in stage 1 and stage 2, interest income is calculated based on the gross carrying amount of the asset, that is, without deduction for credit allowance, and the effective interest rates. For financial assets in stage 3, interest income is calculated on the net carry amount, that is, net of credit allowances, and the effective interest rates.
The Group recognises the provision and reversal of ECL in profit or loss. For debt instrument at FVOCI, the Group makes relevant adjustments to other comprehensive income at the same time as recognising ECL in profit and loss.
For account and bills receivables and contract assets whether there is significant financing component or not, the Group recognises life-time ECL.
(3)
Derecognition
The Group derecognises a financial asset if one of the following conditions is met:- The contractual rights to receive the cash flows from the financial asset expire;
- The financial asset has been transferred and the Group transfers substantially all the risks and rewards of ownership of such financial asset;
- The financial asset has been transferred, the Group has not retained any control over the financial asset, even if the Group neither transfers nor retains substantially all the risks and rewards of ownerships of the financial asset.
As part of its operations, the Group securitises financial assets, generally through the sale of these assets to structured entities which issue securities to investors. When the securitisation of financial assets qualifies for de-recognition, the relevant financial assets are de-recognised in their entirety and a new financial asset or liabilities is recognised regarding the interest in the unconsolidated securitisation vehicles that the Group acquired. When the securitisation of financial assets does not qualify for de-recognition, the relevant financial assets are not derecognised, and the consideration paid by third parties are recorded as a financial liability. When the securitisation of financial assets partially qualifies for de-recognition, where the Group has not retained control, it derecognises these financial assets. Otherwise, the Group continues to recognise these financial assets to the extent of its continuing involvement and recognises an associated liability.
The de-recognition of financial assets sold on condition of repurchase is determined by the economic substance of the transaction. If a financial asset is sold under an agreement to repurchase the same or substantially the same asset at a fixed price or at the sale price plus a reasonable return, the Group will not derecognise the asset. If a financial asset is sold together with an option to repurchase the financial asset at its fair value at the time of repurchase (in case of transferor sells such financial asset), the Group will derecognise the financial assets.
(4)
Modification of investment in financial assets
The Group sometimes renegotiates or otherwise modifies the contractual cash flows of loans to customers. When this happens, the Group assesses whether or not the new terms are substantially different to the original terms. The Group does this by considering, among others, the following factors:- If the borrower is in financial difficulty, whether the modification merely reduces the contractual cash flows to amounts the borrower is expected to be able to pay.
- Whether any substantial new terms are introduced, such as a profit share/equity-based return that substantially affects the risk profile of the loan.
- Significant extension of the loan term when the borrower is not in financial difficulty.
- Significant change in the interest rate.
- Change in the currency the loan is denominated in.
- Insertion of collateral, other security or credit enhancements that significantly affect the credit risk associated with the loan.
If the terms are not substantially different, the renegotiation or modification does not result in derecognition, and the Group recalculates the gross carrying amount based on the revised cash flows of the financial assets and recognises a modified cash flows at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets).
(ii)
Financial liabilities
The financial liabilities are classified into those measured at amortised cost and those at fair value through profit or loss at initial recognition. Financial liabilities at FVPL is applied to derivatives, financial liabilities held for trading and financial liabilities designated as such at initial recognition.The Group’s major financial liabilities are those measured at amortised cost which are measured initially at fair value less transaction costs and are measured subsequently using the effective interest method.
Financial liabilities or a portion thereof, are derecognised when their current obligation are fully or partially expired. The difference between the carrying amount of the derecognised portion and the consideration is recognised in profit or loss.
(iii)
Financial guarantee contracts
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of:- the amount determined in accordance with the expected credit loss model under HKFRS 9 with Note 3(b); and
- the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of HKFRS 15 Revenue from Contracts with Customers (“HKFRS 15”).
Where guarantees in relation to loans or other payables of associates and joint ventures are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment.
(iv)
Fair value measurement principles
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique.If there is no publicly available latest traded price nor a quoted market price on a recognised stock exchange or a price from a broker/dealer for non-exchange-traded financial instruments, or if the market for it is not active, the fair value of the instrument is estimated using valuation techniques that provide a reliable estimate of prices which could be obtained in actual market transactions.
Where discounted cash flow techniques are used, estimated future cash flows are based on management’s best estimates and the discount rate is based on the relevant government yield curve as at the financial position date plus an adequate constant credit spread. Where other pricing models are used, inputs are based on market data at the financial position date.
(v)
Offsetting
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.(vi)
Derivatives
Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into and are subsequently remeasured at fair value. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.Certain derivatives are embedded in hybrid contracts, such as the conversion option in a convertible bond. If the hybrid contract contains a host that is a financial asset, then the Group assesses the entire contract as described in the financial assets section above for classification and measurement purposes. Otherwise, the embedded derivatives are treated as separate derivatives when:
- Their economic characteristics and risks are not closely related to those of the host contract;
- A separate instrument with the same terms would meet the definition of a derivative; and
- The hybrid contract is not measured at fair value through profit or loss.
The method of recognising the resulting fair value gain or loss depends on whether the derivative is designated and qualifies as a hedging instrument, and if so, the nature of the item being hedged.
(l)
Hedging
At the inception of the hedging, the Group documents the economic relationship between hedging instruments and hedged items as well as risk management goals and strategies of various hedging transactions. When a hedge no longer meets the criteria for hedge accounting or the Group’s risk management goals, the Group terminates the use of hedge accounting prospectively. Situations for the Group to terminate the use of hedge accounting include hedging instrument expires, or is sold, terminated and settled.(i)
Fair value hedge
A fair value hedge refers to a hedge of the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment, or a component of any such item. Such changes in fair value are attributable to a particular risk and could affect profit or loss or other comprehensive income. Among them, the circumstances affecting other comprehensive income are limited to the hedge of the exposure to changes in the fair value of equity instruments designated at fair value through other comprehensive income not held for trading.The gain or loss on the hedging instrument is recognised in profit or loss (or other comprehensive income, if the hedging instrument hedges a non-trading equity instrument at FVOCI or a component thereof). The gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the recognised hedged item not measured at fair value and is recognised in profit or loss. However, if the hedged item is a non-trading equity instrument at FVOCI or a component thereof, those amounts remain in other comprehensive income.
(ii)
Cash flow hedge
A cash flow hedge refers to a hedge of the exposure to changes in cash flow. Such changes in cash flow are attributable to a particular risk associated with all, or a component of, a recognised asset or liability or a highly probable forecast transaction and could affect profit or loss.The effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income as cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognised in profit or loss.
If a hedged forecast transaction subsequently results in the recognition of a non-financial item or becomes a firm commitment for which fair value hedge accounting is applied, the amount that has been accumulated in the cash flow hedge reserve is removed and included directly in the initial cost or other carrying amount of the asset or the liability. In other cases, the amount that has been accumulated in the cash flow hedge reserve is reclassified to profit or loss in the same period(s) as the hedged cash flows affect profit or loss.
If the cash flow hedge reserve recognised in other comprehensive income is a loss, and all or part of the loss is not expected to be reversed in the future. The portion that is not expected to be reversed will be transferred from other comprehensive income and recognised in profit or loss.
When an entity discontinues the use of hedge accounting for a cash flow hedge, if the hedged future cash flows are still expected to occur, the amount that has been accumulated in the cash flow hedge reserve remains there until the period that the hedged item has the impact in profit or loss; otherwise, that amount is immediately reclassified to profit or loss.
(iii)
Hedge of a net investment in a foreign operation
A hedge of net investment in a foreign operation refers to hedge of the foreign exchange exposure arising from net investment in a foreign operation. The “net investment in a foreign operation” refers to an enterprise’s equity proportion in the net assets in a foreign operation.Hedge of a net investment in a foreign operation is accounted for similarly to cash flow hedges. The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income; and the ineffective portion is recognised in profit or loss. The cumulative gain or loss on the hedging instrument relating to the effective portion of the hedge is reclassified to profit or loss on the disposal or partial disposal of the foreign operation.
(iv)
Hedge effectiveness testing
In order to qualify for hedge accounting, the Group continuously evaluate whether the hedging relationship is effective from the hedge date and after.The hedge relationship meets hedging effectiveness requirements if the hedging meets the following conditions:
- There is an economic relationship between the hedged item and the hedging instrument;
- The effect of credit risk does not dominate the value changes that result from that economic relationship; and
- The hedge ratio of the hedging relationship is equal to the ratio between the actual number of hedged items and the actual number of hedging instruments.
(m)
Financial assets held/sold under resale/repurchase agreements
Financial assets held under resale agreements are transactions that the Group acquires financial assets which will be resold at a predetermined price in the future date under resale agreements. Financial assets sold under repurchase agreements are transactions that the Group sells financial assets which will be repurchased at a predetermined price in the future date under repurchase agreements.The cash advanced or received is recognised as amounts held under the resale and repurchase agreements in the statement of financial position. Assets held under resale agreements are recorded in memorandum accounts as off-balance sheet items. Assets sold under repurchase agreements continue to be recognised in the statement of financial position.
The difference between the resale and repurchase consideration, and that between the purchase and sale consideration, are amortised over the period of the respective transaction using the effective interest method and are included in interest income and interest expense respectively.
(n)
Margin financing and securities lending services
Margin financing and securities lending services refer to the lending of funds by the Group to customers for purchase of securities, or lending of securities by the Group to customers, for which the customers provide the Group with collateral.The Group recognises margin accounts at initial recognition, and recognises interest income accordingly. Securities lent are not derecognised, but still accounted for as the original financial assets, and interest income is recognised accordingly.
Securities trading on behalf of margin financing or securities lending customers are accounted for as securities brokerage business.
For impairment of financial assets arising from margin financing and securities lending, refer to Note 2(k).
(o)
Investment properties
Investment properties are interests in land and/or buildings which are held to earn rentals or for capital appreciation or both. Investment properties are initially measured at cost. Land held under operating leases is classified and accounted for as investment property when the rest of the definition of investment property is met.Subsequent expenditures related to investment properties are recognised in the cost of investment properties provided it is probable that the economic benefits will flow to the Group and the costs can be measured reliably; otherwise, subsequent expenditures are recognised in profit or loss in the period in which they are incurred.
Investment properties transfer to property, plant and equipment or intangible assets at the commencement of owner-occupation. The carrying amount of property, plant and equipment and intangible assets are based on the fair value of investment properties on the day of conversion. The difference between the fair value and the previous carrying amount is recognised in profit or loss for the current period. When owner-occupied properties transfer to investment properties that will be carried at fair value, if the fair value at the date of conversion is less than the previous carrying amount, the difference is recognised in profit or loss for the current period; If the fair value at the date of conversion is greater than the previous carrying amount, the difference is recognised directly in equity, unless there was an impairment loss recognised for the same property in prior years and a portion of the increase is recognised in profit or loss to the extent of that impairment loss.
Investment properties are stated in the statement of financial position at fair values which are reviewed annually. Any gain or loss arising from a change in fair value or from the retirement or disposal of an investment property is recognised in profit or loss.
(p)
Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses (Note 2(v)).Assets in the course of construction for production, rental or administrative purposes are carried at cost, less any impairment losses. Cost includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of overheads and borrowing costs capitalised (see Note 2(dd)).
Construction-in-progress represents property, plant and equipment under construction and is transferred to fixed assets when ready for its intended use.
No depreciation is made on construction-in-progress until it is ready for its intended use. Deprecation policies are set out below.
Property, plant and equipment are depreciated at rates sufficient to write off their cost, less impairment losses, if any, to their estimated residual values, over their estimated useful lives on a straight line basis as follows:
| – | Plant and buildings | 4 – 50 years |
| – | Machinery and equipment | 2 – 33 years |
| – | Office and other equipment, vehicles and vessels and others | 2 – 33 years |
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
The recoverable amount of an asset is the greater of its fair value less costs of disposal and value in use.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
(q)
Land use rights
Land use rights are presented under right-of-use (“ROU”) assets.Land use rights are stated at cost less accumulated amortisation and accumulated impairment losses (if any). Land use rights are amortised on a straight-line basis over the respective periods of grant, usually within 10 to 50 years.
Impairment losses on land use rights are accounted for in accordance with the accounting policies as set out in Note 2(v).
(r)
Intangible assets (other than goodwill)
Intangible assets acquired by the Group are stated at cost less accumulated amortisation (where the estimated useful life is finite) and if any, impairment losses (see Note 2(v)).Amortisation of intangible assets with finite useful lives is charged to profit or loss over the assets’ estimated useful lives. The following intangible assets are amortised from the date they are available for use as follows:
The following intangible assets are amortised from the date they are available for use as follows:
| – | Mining assets | Over the estimated useful lives using the unit-of-production method |
| – | Franchise rights | Over the estimated useful lives of the Franchise right |
| – | Software and others | Over the estimated useful lives |
An intangible asset with an indefinite useful life shall not be amortised. Any conclusion that the useful life of an intangible asset is indefinite is reviewed annually to determine whether events and circumstances continue to support the indefinite useful life assessment for that asset. If they do not, the change in the useful life assessment from indefinite to finite is accounted for prospectively from the date of change and in accordance with the policy for amortisation of intangible assets with finite lives as set out above.
(s)
Inventories
(i)
Advanced intelligent manufacturing, advanced materials
Inventories of the advanced intelligent manufacturing and advanced materials segments are carried at the lower of cost and net realisable value.Cost is calculated using the first-in first-out, specific identification or weighted average cost formula as appropriate, and comprises all costs of purchase, costs of conversion (including systematically allocated production overhead) and other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories is recognised in profit or loss in the period in which the reversal occurs.
(ii)
New-type urbanisation
Inventories in respect of property development activities under the new-type urbanisation segment are carried at the lower of cost and net realisable value. Cost and net realisable values are determined as follows:-
Property under development
-
Completed property held for sale
(t)
Leases
Leases are recognised as a ROU asset and a corresponding liability by the lessee at the commencement date.Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.
(i)
Lease liabilities
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:- fixed payments (including in-substance fixed payments), less any lease incentives receivable;
- variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date;
- amounts expected to be payable by the group under residual value guarantees;
- the exercise price of a purchase option if the group is reasonably certain to exercise that option; and
- payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the ROU asset in a similar economic environment with similar terms and collateral conditions.
To determine the incremental borrowing rate, the Group:
- where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received;
- uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases, which does not have recent third party financing; and
- makes adjustments specific to the lease, e.g. term, country, currency and security.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
(ii)
ROU assets
ROU assets are measured at cost comprising the following:- the amount of the initial measurement of lease liability;
- any lease payments made at or before the commencement date less any lease incentives received;
- any initial direct costs; and
- restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment.
Lease income from operating leases where the Group is a lessor is recognised in income on a straightline basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognised as expense over the lease term on the same basis as lease income. The respective leased assets are included in the statement of financial position based on their nature. As leassor, the Group recognises finance leases as finance lease receivables, which are measured at amortised cost. The Group did not need to make any adjustments to the accounting for assets held as lessor as a result of adopting the new leasing standard.
(u)
Repossessed assets
In the recovery of impaired loans and advances, the Group may take possession of assets held as collateral through court proceedings or voluntary delivery of possession by the borrowers. Where it is intended to achieve an orderly realisation of the impaired assets and the Group is no longer seeking repayment from the borrower, repossessed assets are reported in “other assets”.When the Group seizes assets to compensate for the losses of loans and advances and interest receivables, the repossessed assets are initially recognised at fair value, plus any taxes paid for the seizure of the assets, litigation fees and other expenses incurred for collecting the repossessed assets are included in the carrying value of repossessed assets. Repossessed assets are measured at the lower of cost and net realisable value, the amount of any write-down of inventories to net realisable value shall be recognised as an expense in the period the write-down occurs.
(v)
Impairment of non-financial assets
Internal and external sources of information are reviewed at financial position date to identify indications that the following assets may be impaired or, except in the case of goodwill, an impairment loss previously recognised no longer exists or may have decreased:- property, plant and equipment (other than properties carried at revalued amounts);
- ROU assets;
- investments in subsidiaries, associates and joint ventures;
- goodwill; and
- intangible assets
In addition, for goodwill and intangible assets that are not yet available for use and intangible assets that have indefinite useful lives, the recoverable amount is estimated annually whether or not there is any indication of impairment.
Calculation of recoverable amount
The recoverable amount of an asset is the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).
Recognition of impairment losses
An impairment loss is recognised in profit or loss whenever the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill (if any) allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs of disposal (if measurable) or value in use (if determinable).
Reversals of impairment losses
If, in a subsequent period, the amount of impairment loss of the non-financial asset except for goodwill decreases and the decrease can be linked objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the profit or loss. A reversal of impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognised in prior periods.
An impairment loss in respect of goodwill is not reversable.
(w)
Employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Group in exchange for service rendered by employees or for termination of employment relationship, which include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits, etc.(i)
Short-term employee benefits
During the accounting period when an employee has rendered service to the Group, the Group recognises the undiscounted amount of short-term employee benefits as a liability and as an expense, unless another HKFRS requires or permits the inclusion of the benefits in the cost of an asset. Short-term employee benefits include wages, bonuses and social security contributions such as medical insurance, work-related injury insurance and maternity insurance, housing provident funds, labour union fee and staff and workers’ education fee, which are all calculated based on the regulated benchmark and ratio.(ii)
Defined contribution retirement schemes
Employees of the Group’s subsidiaries in Hong Kong are offered the option to enroll in one of the Mandatory Provident Fund (“MPF”) Master Trust Schemes under the CITIC Group MPF Scheme. The MPF Master Trust Schemes are defined contribution schemes and are administered in accordance with the terms and provisions of the respective trust deeds and are subject to the Mandatory Provident Fund Schemes Ordinance.Employees of the Group’s subsidiaries in Chinese mainland are required to participate in defined contribution retirement schemes and make contributions according to the respective regulations. Employees of the Group’s subsidiaries in Chinese mainland are also eligible to participate in the enterprise annuity plan established by the Group according to the relevant requirements.
Employees of the Group’s overseas subsidiaries are required to make contributions subject to the relevant regulations in the countries/jurisdiction in which the overseas subsidiaries operate.
The contributions are charged to profit and loss for the current period on an accrual basis.
(iii)
Defined benefit plan obligations
The defined benefit plans of the Group are supplementary retirement benefits provided to eligible employees in Chinese mainland China and Hong Kong.(iv)
Termination benefits
When the Group terminates the employment with employees before the employment contracts expire, or provides compensation under an offer to encourage employees to accept voluntary redundancy, a provision is recognised with a corresponding expense in profit or loss at the earlier of the following dates:- When the Group cannot unilaterally withdraw the offer of termination benefits because of an employee termination plan or a curtailment proposal;
- When the Group has a formal detailed restructuring plan involving the payment of termination benefits and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.
(x)
Provisions and contingent liabilities
(i)
Contingent liabilities assumed in business combinations
Contingent liabilities assumed in a business combination which are present obligations at the date of acquisition are initially recognised at fair value, provided the fair value can be reliably measured. After their initial recognition at fair value, such contingent liabilities are measured at the higher of the amount initially recognised, less accumulated amount of income recognised in accordance with the Group’s principles of revenue recognition where appropriate, and the amount that would be determined in accordance with Note 2(x)(ii).(ii)
Other provisions and contingent liabilities
Provisions are recognised for other liabilities of uncertain timing or amount when the Group has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors pertaining to a contingency such as the risks, uncertainties and time value of money are taken into account as a whole in reaching the best estimate. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
(y)
Revenue recognition
The revenue of the Group mainly consists of income from customers, interest income, fee and commission income, etc.(i)
Income from customers
The Group recognises revenue when it satisfies a performance obligation by transferring a promised good to a customer, which is when the customer obtains control of a good, has the ability to direct the use of, and obtain substantially all of the remaining benefits from that good. If the control of the goods and services is transferred over a period of time, the Group recognises revenue by reference to the extent of progress toward completion in fulfilling its performance obligations during the entire contract period.For the amounts of revenue recognised for goods transferred and services provided, the Group recognises any unconditional rights to consideration separately as a receivable and the rest as a contract asset, and recognises provisions for loss allowance of the receivable and the contract asset using ECL model; if the consideration received or receivable exceeds the obligation performed by the Group, a contract liability is recognised. The Group presents a net contract asset or a net contract liability under each contract.
Contract costs include costs to fulfill a contract and of obtaining a contract. The cost incurred for providing services by the Group is recognised as the costs to fulfill a contract, and is amortised based on the progress towards completion of the service provided when recognising revenue. The incremental cost incurred by the Group to obtain contract is recognised as the costs of obtaining a contract. For costs of obtaining a contract that will be amortised within one year, the Group recognises it in profit and loss when incurred. For the costs of obtaining a contract that will be amortised for more than one year period, it is amortised in profit and loss based on same progress towards completion as recognising revenue. The Group recognises the excess of the carrying amounts of contract costs over the expected remaining consideration less any costs not yet recognised as an impairment loss. As at the financial position date, the Group presents the costs to fulfill and of obtaining a contract, in the net amount after deducting relevant asset impairment provisions, as inventories.
Specific accounting policies are as follows:
(1)
Sales of goods
Revenue from the sale of goods is recognised when the goods are transferred to and accepted by a customer.When volume discounts are provided to customers, the Group, based on historical experiences, estimates the volume discounts using the expected value method, and recognises revenue net of the estimated volume discounts.
When the customer has a right to return the product within a given period, the Group recognises provisions for returns using the expected value method based on historical experience, as a deduction of the revenue. The Group recognises provisions for the expected refunds to customers; meanwhile, other assets are recognised according to the carry amount of the goods expected to be returned, deducting the expected cost for taking the related goods back.
The Group offers warranties for specific products. If the duration and terms of the warranties are offered in accordance with the requirements of laws and regulations and the Group does not provide any additional services or warranties, such warranties are not recognised as separate performance obligation.
(2)
Services rendered to customers
Revenue for construction services of the Group is recognised over the period of the contract by reference to the progress towards completion. Progress towards completion is calculated based on actual costs incurred as to the end of each period as a proportion to the total forecasted costs of the contract. As at each financial position date, the Group reassesses the progress towards completion to reflect the changes in obligation performed.Revenue for other services provided by the Group is recognised based on the pattern of performance obligation of specific services, either over the period in which the services are rendered or at the point of service completion. For revenue recognised over the period by reference to the progress towards completion, progress towards completion is calculated based on actual costs incurred as to the end of each period as a proportion to the total forecasted costs of the contract. As at each financial position date, the Group reassesses the estimate of the progress towards completion to reflect the changes in obligation performed.
(ii)
Interest income
Interest income is recognised according to HKFRS 9, refer to Note 2(k) financial instruments for details.The effective interest method is a method of calculating the amortised cost of financial assets and liabilities and of allocating the interest income and interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial instrument. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument (for example, call and similar options, etc.) but does not consider future credit losses. The calculation includes all fees and interests paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.
(iii)
Fee and commission income
Fee and commission income is recognised when the Group fulfills its performance obligation, either over time or at a point in time when a customer obtains control of the service according to HKFRS 15, refer to Note 2(y)(i)(2). Origination or commitment fees received by the Group which result in the creation or acquisition of a financial asset are deferred and recognised as an adjustment to the effective interest rate according to HKFRS 9, refer to Note 2(k). If the commitment expires without the Group making a loan or anticipating will not, the fee is recognised as revenue on expiry.(z)
Income tax
Income tax for the year comprises current tax and deferred tax.The balance sheet liability method is adopted whereby deferred tax is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts. However, deferred tax is not recognised for:
- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences;
- taxable temporary differences arising on the initial recognition of goodwill;
- temporary differences related to investment in subsidiaries, associates and joint venture to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future and
- those related to the income taxes arising from tax laws enacted or substantively enacted to implement the Pillar Two model rules published by the Organisation for Economic Co-operation and Development.
Deferred tax assets are recognised to the extent that their future utilisation is probable. Deferred tax arising from revaluation of investment properties is recognised on the rebuttable presumption that the recovery of the carrying amount of the properties would be through sale and calculated at the applicable tax rates.
Current tax assets and liabilities are offset, and deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
(aa)
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are also included as a component of cash and cash equivalents for the purpose of the cash flow statement.The Group includes deposit held at call with banks with contractual obligation to use for specified purposes as a component of cash and cash equivalents.
(bb)
Related parties
(a)
A person, or a close member of that person’s family, is related to the Group if that person:
(i)
has control or joint control over the Group;
(ii)
has significant influence over the Group; or
(iii)
is a member of the key management personnel of the Group or the Group’s parent.
(b)
An entity is related to the Group if any of the following conditions applies:
(i)
The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others);
(ii)
One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);
(iii)
Both entities are joint ventures of the same third party;
(iv)
One entity is a joint venture of a third entity and the other entity is an associate of the third entity (one entity is an associate of a third entity and the Group is a joint venture of the third party);
(v)
The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;
(vi)
The entity is controlled or jointly controlled by a person identified in (a);
(vii)
A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity);
(viii)
The entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group.
Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.
(cc)
Segment reporting
Reportable segments are identified based on operating segments which are determined based on the structure of the Group’s internal organisation, management requirements and internal reporting system. An operating segment is a component of the Group that meets the following respective conditions:- engages in business activities from which it may earn revenues and incur expenses;
- whose operating results are regularly reviewed by the Group’s management to make decisions about resource to be allocated to the segment and assess its performance; and
- for which financial information regarding financial position, results of operations and cash flows are available.
- the nature of products and services;
- the nature of production processes;
- the type or class of customers;
- the methods used to distribute the products or provide the services; and
- the nature of the regulatory environment
(dd)
Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.(ee)
Disposal groups held for sale and discontinued operations
Disposal groups are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. Disposal groups (except for certain assets as explained below) are stated at the lower of carrying amount and fair value less costs to sell. Deferred tax assets, financial assets (other than investments in subsidiaries and associates) and investment properties, which are classified as held for sale, would continue to be measured in accordance with the policies set out else in Note 2.A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which represents a separate major line of business or geographic area of operations, or is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively with a view to resale.
When an operation is classified as discontinued, a single amount is presented in the income statement comprising the total of: (1) the post-tax profit or loss of the discontinued operation and; (2) the post-tax gain or loss recognised on the measurement to fair value less costs to sell, or on the disposal, of the assets or disposal group(s) constituting the discontinued operation.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the actual results. The estimates and associated key assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
The Group determines the business model for managing financial assets at the level of financial asset portfolio. The factors considered include evaluation and reporting of financial asset performance to key management personnel, risks affecting the performance of financial assets and their management methods, and the way related business management personnel receive payments.
When assessing whether the contractual cash flow of financial assets is consistent with the basic lending arrangement, the Group has the following main judgments: whether the principal may be subject to change in the duration or amount of money due to prepayments during the duration; whether interests is only included currency time value, credit risk, other basic borrowing risks, and considerations for costs and profits. For example, whether the amount paid in advance reflect only the outstanding principal and interest on the outstanding principal, as well as reasonable compensation for early termination of the contract.
A number of significant judgements are also required in applying the accounting requirements for measuring ECL, such as:
The recoverable amount of an asset (asset group) is the greater of its fair value less costs to sell and its present value of expected future cash flows. Since a market price of the asset (the asset group) cannot be obtained reliably, the fair value of the asset cannot be estimated reliably. In assessing value in use, significant judgements are exercised over the asset’s production, selling price, related operating expenses and discount rate to calculate the present value. All relevant materials which can be obtained are used for estimation of the recoverable amount, including the estimation of the production, selling price and related operating expenses based on reasonable and supportable assumptions.
Management periodically reviews changes in technology and industry conditions, asset retirement activity, residual values to determine adjustments to estimated remaining useful lives and depreciation rates. In determining the lease term of ROU assets, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
Deferred tax assets, which principally relate to tax losses and deductible temporary differences, are recognised when the future taxable profit will be available against such deferred tax assets. Hence, it requires formal assessment by management regarding the future profitability to utilise the deferred tax assets. The outcome of their actual utilisation may be different.
Where the Group enters into structured transactions by which it transferred financial asset to structured entities, the Group analyses whether the substance of the relationship between the Group and these structured entities indicates that it controls these structured entities to determine whether the Group needs to consolidate these structured entities. This will determine whether the following de-recognition analysis should be conducted at the consolidated level or at the entity level from which the financial assets was transferred.
The Group analyses the contractual rights and obligations in connection with such transfers to determine whether the de-recognition criteria are met based on the following considerations:
There are a number of ongoing disputes between the Company, Sino Iron and Korean Steel (“CITIC Parties”) on the one hand, and Mineralogy and Mr. Clive Palmer (the ultimate beneficial holder of shares in Mineralogy) (“Mr. Palmer”) on the other hand, arising from the MRSLAs and other project agreements. Set out below are the details of those disputes considered to be material.
FCD Indemnity Disputes
Mineralogy and Mr. Palmer have commenced proceedings to pursue claims pursuant to an indemnity given by the Company under the Fortescue Coordination Deed (“FCD”). Mineralogy and Mr. Palmer allege that the CITIC Parties’ failure to make certain royalty payments caused them losses for which they are indemnified pursuant to the indemnity contained in the FCD.
After commencing this proceeding, Mr. Palmer joined Mineralogy as a second plaintiff and Sino Iron and Korean Steel as second and third defendants.
On 10 November 2023, Mineralogy and Mr. Palmer filed their sixth amended statement of claim. That statement of claim alleges that as the CITIC Parties did not pay to Mineralogy royalty on products produced by Sino Iron and Korean Steel (“Royalty Component B”) when it was due for payment under the MRSLAs, Mineralogy did not provide funds to the manager of the Yabulu Refinery, Queensland Nickel Pty Ltd. (“QNI”), to enable it to continue managing and operating the Yabulu Refinery, and consequently, QNI was placed into administration in January 2016 and liquidation in April 2016.
Mineralogy and Mr. Palmer allege that if the CITIC Parties had paid Royalty Component B on time, Mineralogy would have provided the funds required to meet QNI’s cashflow deficits at the times necessary to enable QNI to continue to manage and operate the Yabulu Refinery. Mineralogy and Mr. Palmer plead that QNI required funding of AUD91,100,000 by the quarter ending 30 September 2017.
Mineralogy and Mr. Palmer claim that the liquidation of QNI led to the diminution in value of the Yabulu Refinery, and a consequential diminution in value of the shares of its joint venture owners, QNI Metals Pty Ltd. and QNI Resources Pty Ltd. The shares in those companies are ultimately beneficially owned by Mr. Palmer. Mineralogy and Mr. Palmer claim that the CITIC Parties are liable for those losses pursuant to an indemnity provision in the FCD.
On 2 February 2024, the CITIC Parties filed their substituted defence in response to Mineralogy and Mr. Palmer’s sixth amended statement of claim. The CITIC Parties plead a number of defences, including construction arguments, causation, mitigation, quantification of loss and Anshun estoppel and abuse of process.
Following the filing of Mineralogy and Mr. Palmer’s sixth amended statement of claim and the CITIC Parties’ substituted defence, Mineralogy and Mr. Palmer filed and served an updated reply on 5 March 2024. The reply contains allegations that certain conduct of the CITIC Parties, specifically alleged activities of the Fulcrum Group, has the effect of disentitling the CITIC Parties from obtaining relief claimed in the form of a permanent stay of the proceeding on grounds of Anshun estoppel or abuse of process (“Fulcrum Allegations”).
On 25 March 2024, Mineralogy and Mr. Palmer indicated that they intend to file a minute of proposed seventh amended statement of claim. At a directions hearing on 26 March 2024, Justice Lundberg provisionally listed a hearing on 21 May 2024, at which any application for leave to amend the statement of claim and any interlocutory disputes arising from requests for discovery would be heard.
A number of interlocutory applications in this proceeding have not yet been determined, including interlocutory applications filed by Mineralogy and Mr. Palmer on 23 January 2023 to be relieved of certain discovery obligations, to strike out certain paragraphs of the CITIC Parties’ further re-amended defence (which was then current but has since been replaced by the substituted defence) and to obtain discovery from the CITIC Parties of documents related to the Fulcrum Allegations made by Mineralogy and Mr. Palmer in their reply. These applications, if pressed by Mineralogy and Mr. Palmer prior to the hearing on 21 May 2024, are likely to be heard at that hearing (at least in so far as they relate to discovery).
Pursuant to orders made by Justice K Martin in September 2020, this proceeding will be heard together with Proceeding CIV 1267/2018 as described below. Orders previously made in this proceeding that damages would be determined separately and subsequently to liability have been vacated. This means that all issues will be heard and determined together in a single trial.
No trial date has been set for this proceeding.
On 10 November 2023, Mineralogy filed its third amended statement of claim. In that statement of claim, Mineralogy claims that as the CITIC Parties failed to pay Royalty Component B when it was due for payment under the MRSLAs, Mineralogy (on which Palmer Petroleum was allegedly completely reliant for funding) did not provide funds to Palmer Petroleum to pay for services rendered to it by a contractor, and in July 2016, Palmer Petroleum was wound up in insolvency.
Mineralogy claims that, if the CITIC Parties had paid Royalty Component B in accordance with their obligations, Mineralogy would have provided such of those funds to Palmer Petroleum and Palmer Petroleum would have paid for the services rendered by the contractor, discharged the contractor’s statutory demand, and/or had sufficient funding to meet its working capital requirements, operate its business, and engage in the business of owning, exploring, developing and exploiting petroleum prospecting licences in Papua New Guinea. Mineralogy alleges that as a consequence of Palmer Petroleum being wound up, it ceased conducting its business and the relevant petroleum prospecting licences were cancelled.
Mineralogy pleads that Palmer Petroleum, or alternatively Blaxcell Limited, suffered a diminution in value equivalent to the sale value of oil that allegedly would have been recoverable from within the area of the relevant petroleum prospecting licences. Mineralogy claims that it suffered loss equivalent to the diminution in value of its shareholding in Palmer Petroleum, or alternatively Blaxcell Limited, and that the CITIC Parties are liable for that loss pursuant to an indemnity provision in the FCD.
On 2 February 2024, the CITIC Parties filed their substituted defence in response to Mineralogy’s third amended statement of claim. The CITIC Parties plead a number of defences, including construction arguments, causation, mitigation, quantification of loss and Anshun estoppel and abuse of process.
Following the filing of Mineralogy’s third amended statement of claim and the CITIC Parties’ substituted defence, Mineralogy filed and served an updated reply on 8 March 2024. The reply includes the Fulcrum Allegations as described above.
On 25 March 2024, Mineralogy indicated that it intends to file a minute of proposed fourth amended statement of claim. At a directions hearing on 26 March 2024, Justice Lundberg provisionally listed a hearing on 21 May 2024, at which any application for leave to amend the statement of claim and any interlocutory disputes arising from requests for discovery would be heard.
A number of interlocutory applications in this proceeding have not yet been determined, including interlocutory applications filed by Mineralogy on 23 January 2023 to be relieved of certain discovery obligations, to strike out certain paragraphs of the CITIC Parties’ re-amended defence (which was then current but has since been replaced by the substituted defence) and to obtain discovery from the CITIC Parties of documents related to the Fulcrum Allegations made by Mineralogy in its reply. These applications, if pressed by Mineralogy prior to the directions hearing on 21 May 2024,are likely to be heard at that hearing (at least in so far as they relate to discovery).
Pursuant to orders made by Justice K Martin in September 2020, this proceeding will be heard together with Proceeding CIV 2072/2017. Orders previously made in this proceeding that damages would be determined separately and subsequently to liability have been vacated. This means that all issues will be heard and determined together in a single trial.
No trial date has been set for this proceeding.
Mine Continuation Proposals Disputes
The CITIC Parties commenced a proceeding against Mineralogy and Mr. Palmer in the Federal Court of Australia, which was transferred to the Supreme Court of Western Australia on 10 June 2019 (“Proceeding CIV 1915/2019”). The proceeding related to the failure and refusal of Mineralogy to:
The CITIC Parties commenced a new proceeding (“Proceeding CIV 2326/2021”) on 8 December 2021, in which they sought orders for specific performance in relation to a refined tenure request addressed to Mineralogy on 29 November 2021. That tenure request was in the alternative to the tenure in respect of which relief was sought in Proceeding CIV 1915/2019. On 29 December 2021, Justice K Martin ordered that Proceeding CIV 1915/2019 and Proceeding CIV 2326/2021 be consolidated and proceed as one action (“Consolidated 2017 MCPs Proceedings”).
The primary trial in the Consolidated 2017 MCPs Proceedings occurred before Justice K Martin from 21 February 2022 to 29 April 2022. The primary trial was to determine all issues in the Consolidated 2017 MCPs Proceedings other than the quantification of any loss or damage suffered by the CITIC Parties.
On 7 March 2023, Justice K Martin delivered his reasons in the Consolidated 2017 MCPs Proceedings and on 10 March 2023 made orders consequent upon his reasons. His Honour dismissed most of the CITIC Parties’ claims. However, Justice K Martin made the following key findings relevant to mine continuation:
At a hearing on 21 April 2023, Justice K Martin made orders deferring the CITIC Parties’ Programme of Works damages claim until after the determination of the appeals referred to below. His Honour also ordered the CITIC Parties to pay Mineralogy’s and Mr. Palmer’s costs of the Consolidated 2017 MCPs Proceedings up to and including the 21 April 2023 hearing, except in relation to Mr. Palmer’s unsuccessful application to stay the trial, for which Mr. Palmer must pay the CITIC Parties’ costs.
Unless approval can be obtained to allow extension of the mine pit and establishment of additional storage areas for waste rock and tailings, constraints on pit size and waste and tailings storage capacity will ultimately force the suspension of operations. In the short term, these constraints are reflected in reduced concentrate production for calendar year 2024.
On 1 May 2023, the Court of Appeal ordered that Proceeding CACV 35/2023 and Proceeding CACV 37/2023 be consolidated (“Consolidated 2017 MCPs Appeals”).
The appeals have been listed for a hearing before the Court of Appeal from 12 to 15 August 2024 and 19 to 21 August 2024.
In this proceeding, the CITIC Parties seek relief including:
The State of Western Australia is a party to the proceeding because it is a party to the State Agreement, but no relief is sought against it.
On 11 March 2024, Mineralogy filed its amended defence. Mineralogy’s amended defence includes a pleading that, because Mineralogy asserts the CITIC Parties have breached certain project agreements, they are not entitled to the relief claimed. The alleged breaches include that:
On 23 January 2024, Mineralogy applied for a stay of this proceeding pending the outcome of the 2017 MCPs Consolidated Appeals referred to above.
On 14 February 2024, the CITIC Parties applied for orders striking out certain paragraphs of Mineralogy’s defence (which was then current but has since been replaced by the amended defence) and on 15 February 2024, applied for orders expediting the hearing of this proceeding.
Mineralogy’s stay application and the CITIC Parties’ strike out and expedition applications were heard on 20 and 21 March 2024, and the Court’s decision remains reserved.
No trial date has been set for this proceeding.
Fulcrum Conspiracy Claim
On 5 October 2023, Mineralogy and Mr. Palmer commenced a proceeding against Helen Dillon, Chen Zeng, Sino Iron, Korean Steel and the Company (“Proceeding CIV 2137/2023”) claiming that the defendants engaged in conduct for “Fulcrum Purposes”, to apply commercial pressure on Mineralogy and Mr. Palmer to renegotiate certain project agreements, recoup certain additional costs of developing the Sino Iron Project from Mineralogy and seek to sterilise Mineralogy’s other valuable mining tenements. On 28 November 2023, Mineralogy and Mr. Palmer filed a notice of discontinuance in Proceeding CIV 2137/2023.
On 15 December 2023, Mineralogy and Mr. Palmer commenced a proceeding against Helen Dillon, Chen Zeng, Sino Iron, Korean Steel and the Company (together, the “CITIC Defendants”) as well as Allens, a law firm advising the CITIC Defendants, and FBIS International Issues Management Pty Ltd., a service provider to certain of the CITIC Defendants (“Proceeding CIV 2425/2023”). Mineralogy and Mr. Palmer claim that the defendants engaged in the Fulcrum Purposes to apply commercial pressure on Mineralogy and Mr. Palmer to achieve outcomes similar to those pleaded in Proceeding CIV 2137/2023 (see above).
Mineralogy and Mr. Palmer bring claims including for breach of contract and the torts of collateral abuse of process, conspiracy to injure by unlawful means and conspiracy to injure by lawful means. Unconscionable conduct under the Australian Consumer Law is also pleaded as conduct alleged to give rise to the unlawful means conspiracy. Mineralogy and Mr. Palmer also claim that, pursuant to the FCD, the Company is obliged to indemnify Mr. Palmer for the alleged loss suffered by Mr. Palmer said to be in relation to the CITIC Parties’ failure to perform their obligations under the MRSLAs. Mineralogy and Mr. Palmer claim that as a consequence of the defendants’ conduct, they suffered damages which are said to include costs Mineralogy and Mr. Palmer incurred in prosecuting and defending the legal processes and otherwise taking steps in respect of the Fulcrum Purposes, as well as the inability of Mr. Palmer to devote his attention and resources to “other profitable endeavours” and AUD200,000,000 on account of the inability to pursue the “Minimum Royalty Claim”. Mineralogy and Mr.Palmer allege that they did not pursue the “Minimum Royalty Claim” in a previous proceeding as a consequence of the pressure exerted on them for the Fulcrum Purposes. The plaintiffs also seek exemplary damages of approximately AUD500,000,000, aggravated damages and interest on the amounts claimed.
On 17 January 2024, the CITIC Defendants and Allens each filed an application for summary judgment in their favour, to strike out Mineralogy and Mr. Palmer’s statement of claim in this proceeding (which was then current but has since been replaced by the second amended statement of claim) and to temporarily stay this proceeding. Also on 17 January 2024, Allens filed an application for a permanent stay or dismissal of this proceeding.
Two days after filing an amended statement of claim on 18 February 2024, Mineralogy and Mr. Palmer applied for orders to file a further amended statement of claim, and the second amended statement of claim was filed on 20 March 2024.
The Court has programmed the filing of submissions and any further affidavits by Allens, the CITIC Defendants and Mineralogy and Mr. Palmer, should Allens wish to proceed with their permanent stay or dismissal application after Mineralogy and Mr. Palmer have filed their second amended statement of claim.
The Court has also programmed the filing of submissions and any further affidavits by the CITIC Defendants, Allens and Mineralogy and Mr. Palmer, should the CITIC Defendants and Allens wish to proceed with amended summary judgment and strike out applications after Mineralogy and Mr. Palmer have filed their second amended statement of claim.
The Allens application for a permanent stay or dismissal of this proceeding, if it proceeds, will be heard on 2 May 2024. If that application does not proceed, there will be a directions hearing on that date.
No trial date has been set for this proceeding.
On 30 January 2013, MCC announced that it had incurred costs over the value of the contract and had provided additional funding of US$858 million to MCC Mining (Western Australia) Pty Ltd. (“MCC WA”), its wholly-owned subsidiary company responsible for delivering MCC’s obligations under the contract.
As at the date of issuance of these financial statements, MCC has not claimed any additional costs from Sino Iron or its subsidiary companies, other than minor contract variations in the normal course of operations, and the Group believes it has satisfied all of its obligations under the contract.
Under the contract, the Group has a right to claim liquidated damages from MCC WA for certain delays in the completion of their project scope at a daily amount of 0.15% of the value of the main contract (approximately US$5 million per day, with a cap of approximately US$530 million in total). As at balance sheet date the cumulative days of delay that has been incurred has resulted in the contractual cap to the liquidated damages being reached.
As set out in the Company’s announcement dated 24 December 2013, Sino Iron and MCC WA entered into a supplemental contract pursuant to which Sino Iron will take over the management of the construction and commissioning of the remaining four production lines of the Sino Iron Project. An independent audit will opine on various matters including the contract price for the hand over pursuant to the supplemental contract and related fees and expenses, the value of the supporting services provided by Sino Iron to MCC WA in carrying out its responsibilities under the contract, the extent of the works completed by MCC WA in respect of the first two production lines, and the liability of MCC WA in respect of the extensive delays on completion of the works under the contract. By reference to such findings of the independent audit, Sino Iron and MCC WA expect to enter into further negotiations to determine the amount of liabilities to be borne between the parties. Outcomes are not yet known as at 31 December 2023.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the actual results. The estimates and associated key assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
(a)
Classification of financial assets
The critical judgments the Group has in determining the classification of financial assets include analysis of business models and characteristics of contractual cash flows.The Group determines the business model for managing financial assets at the level of financial asset portfolio. The factors considered include evaluation and reporting of financial asset performance to key management personnel, risks affecting the performance of financial assets and their management methods, and the way related business management personnel receive payments.
When assessing whether the contractual cash flow of financial assets is consistent with the basic lending arrangement, the Group has the following main judgments: whether the principal may be subject to change in the duration or amount of money due to prepayments during the duration; whether interests is only included currency time value, credit risk, other basic borrowing risks, and considerations for costs and profits. For example, whether the amount paid in advance reflect only the outstanding principal and interest on the outstanding principal, as well as reasonable compensation for early termination of the contract.
(b)
Measurement of ECL
Measurement of ECL for financial assets at amortised cost and FVOCI is an area that requires the use of complex models and significant assumptions about future economic conditions and credit behaviour (e.g. the likelihood of customers defaulting and the resulting losses). Explanation of the inputs, assumptions and estimation techniques used in measuring ECL is further detailed in Note 50(a).A number of significant judgements are also required in applying the accounting requirements for measuring ECL, such as:
- Determining criteria for significant increase in credit risk;
- Choosing appropriate models and assumptions for the measurement of ECL;
- Establishing the number and relative weightings of forward-looking scenarios for each type of product and the associated ECL; and
- Establishing groups of similar financial assets for the purposes of measuring ECL.
(c)
Provision for inventories
The Group reviews the carrying amounts of inventories at each financial position date to determine whether the inventories are carried at lower of cost and net realisable value. The Group estimates the net realisable value, based on the current market situation and historical experience on similar inventories. Any change in the assumptions would increase or decrease the amount of inventories write-down or the related reversals of write-down. The change in the write-down would affect the Group’s profit or loss during the year.(d)
Impairment of non-financial assets
As described in Note 2(v), assets such as fixed assets, intangible assets, goodwill, ROU assets and interests in associates and joint ventures are reviewed at each financial position date to determine whether the carrying amount exceeds the recoverable amount of the assets. If any such indication exists, an impairment loss is recognised.The recoverable amount of an asset (asset group) is the greater of its fair value less costs to sell and its present value of expected future cash flows. Since a market price of the asset (the asset group) cannot be obtained reliably, the fair value of the asset cannot be estimated reliably. In assessing value in use, significant judgements are exercised over the asset’s production, selling price, related operating expenses and discount rate to calculate the present value. All relevant materials which can be obtained are used for estimation of the recoverable amount, including the estimation of the production, selling price and related operating expenses based on reasonable and supportable assumptions.
(e)
Fair value of financial instruments
For financial instruments without active market, the Group determines fair values using valuation techniques which include discounted cash flow models, as well as other types of valuation models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, credit spreads, foreign currency exchange rates, etc. Where discounted cash flow techniques are used, estimated cash flows are based on management’s best estimates and the discount rate used is a market rate at the end of each reporting period applicable for an instrument with similar terms and conditions. Where other pricing models are used, inputs are based on observable market data at the end of each reporting period. Where market data are not available, management needs to make estimates on such unobservable market inputs based on assumptions. Changes in assumptions about these factors could affect the estimated fair value of financial instruments.(f)
Depreciation
Depreciation of operating assets constitutes a substantial operating cost for the Group. The cost of fixed assets is charged as depreciation expense over the estimated useful life of the respective assets using the straight-line method. The cost of ROU assets is charged as depreciation expense generally over the shorter of the asset’s useful life and the lease term on a straight-line basis.Management periodically reviews changes in technology and industry conditions, asset retirement activity, residual values to determine adjustments to estimated remaining useful lives and depreciation rates. In determining the lease term of ROU assets, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
(g)
Income taxes
Significant judgement is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.Deferred tax assets, which principally relate to tax losses and deductible temporary differences, are recognised when the future taxable profit will be available against such deferred tax assets. Hence, it requires formal assessment by management regarding the future profitability to utilise the deferred tax assets. The outcome of their actual utilisation may be different.
(h)
Assets acquired/liabilities assumed in business combination
Assets acquired/liabilities assumed in business combination are recognised at fair value in connection with the Group’s acquisition of an entity. The fair values of the acquired assets/assumed liabilities are determined based on valuation methodologies and techniques that involved the use of a third-party valuation firm’s expertise. The judgements and assumptions used in that valuation of assets and liabilities along with the assumptions on the useful lives of acquired assets have an effect on the consolidated financial statements.(i)
De-recognition of financial assets
In its normal course of business, the Group transfers financial assets through various types of transactions including regular way sales and transfers, securitisation, financial assets sold under repurchase agreements and etc. The Group applies significant judgement in assessing whether it has transferred these financial assets which qualify for a full or partial de-recognition.Where the Group enters into structured transactions by which it transferred financial asset to structured entities, the Group analyses whether the substance of the relationship between the Group and these structured entities indicates that it controls these structured entities to determine whether the Group needs to consolidate these structured entities. This will determine whether the following de-recognition analysis should be conducted at the consolidated level or at the entity level from which the financial assets was transferred.
The Group analyses the contractual rights and obligations in connection with such transfers to determine whether the de-recognition criteria are met based on the following considerations:
- whether it has transferred the rights to receive contractual cash flows from the financial assets or the transfer qualified for the “pass through” of those cash flows to independent third parties;
- the extent to which the associated risks and rewards of ownership of the financial assets are transferred by using appropriate models. Significant judgement is applied in the Group’s assessment with regard to the parameters and assumptions applied in the models, estimated cash flows before and after the transfers, the discount rates used based on current market interest rates, variability factors considered and the allocation of weightings in different scenarios;
- where the Group neither retained nor transferred substantially all of the risks and rewards associated with their ownership, the Group analyses whether the Group has relinquished its controls over these financial assets, and if the Group has continuing involvement in these transferred financial assets.
(j)
Control and consolidation
The Group makes significant judgement to assess whether or not to consolidate structured entities. When performing this assessment, the Group:- assesses its contractual rights and obligations in light of the transaction structures, and evaluates the Group’s power over the structured entities;
- performs independent analyses and tests on the variable returns from the structured entities, including but not limited to commission income and asset management fees earned, retention of residual income, and, if any, liquidity and other support provided to the structured entities; and
- assesses its ability to exercise its power to influence the variable returns assessed whether the Group acts as a principal or an agent through analysis of the scope of the Group’s decision-making authority, remuneration entitled, other interests the Group holds, and the rights held by other parties.
(k)
Mineralogy Pty Ltd. (“Mineralogy”) disputes
Each of Sino Iron Pty Ltd. (“Sino Iron”), Korean Steel Pty Ltd. (“Korean Steel”) and Balmoral Iron Pty Ltd. (“Balmoral Iron”), subsidiary companies of the Company, has entered into a Mining Right and Site Lease Agreement (“MRSLA”) with Mineralogy. Among other things, those agreements, together with other project agreements, provide Sino Iron, Korean Steel and Balmoral Iron the right to develop and operate the Group’s Sino Iron project in Western Australia (“Sino Iron Project”) and to take and process one billion tonnes each of magnetite ore for that purpose. Before Balmoral Iron can exercise its one billion tonne mining right, it will need to submit and have approved by the State of Western Australia project proposals for its project, among other things.There are a number of ongoing disputes between the Company, Sino Iron and Korean Steel (“CITIC Parties”) on the one hand, and Mineralogy and Mr. Clive Palmer (the ultimate beneficial holder of shares in Mineralogy) (“Mr. Palmer”) on the other hand, arising from the MRSLAs and other project agreements. Set out below are the details of those disputes considered to be material.
FCD Indemnity Disputes
Mineralogy and Mr. Palmer have commenced proceedings to pursue claims pursuant to an indemnity given by the Company under the Fortescue Coordination Deed (“FCD”). Mineralogy and Mr. Palmer allege that the CITIC Parties’ failure to make certain royalty payments caused them losses for which they are indemnified pursuant to the indemnity contained in the FCD.
(i)
Queensland Nickel FCD Indemnity Claim
On 29 June 2017, Mr. Palmer commenced a proceeding against the Company in the Supreme Court of Western Australia (“Proceeding CIV 2072/2017”) claiming damages in the sum of AUD2,324,000,000 (now reduced in the sixth amended statement of claim to AUD1,800,438,000). The amount claimed relates to losses allegedly suffered by Mr. Palmer in relation to the nickel and cobalt refinery business located at Yabulu in North Queensland (“Yabulu Refinery”), which was carried on by the Queensland Nickel group of companies controlled by Mr. Palmer.After commencing this proceeding, Mr. Palmer joined Mineralogy as a second plaintiff and Sino Iron and Korean Steel as second and third defendants.
On 10 November 2023, Mineralogy and Mr. Palmer filed their sixth amended statement of claim. That statement of claim alleges that as the CITIC Parties did not pay to Mineralogy royalty on products produced by Sino Iron and Korean Steel (“Royalty Component B”) when it was due for payment under the MRSLAs, Mineralogy did not provide funds to the manager of the Yabulu Refinery, Queensland Nickel Pty Ltd. (“QNI”), to enable it to continue managing and operating the Yabulu Refinery, and consequently, QNI was placed into administration in January 2016 and liquidation in April 2016.
Mineralogy and Mr. Palmer allege that if the CITIC Parties had paid Royalty Component B on time, Mineralogy would have provided the funds required to meet QNI’s cashflow deficits at the times necessary to enable QNI to continue to manage and operate the Yabulu Refinery. Mineralogy and Mr. Palmer plead that QNI required funding of AUD91,100,000 by the quarter ending 30 September 2017.
Mineralogy and Mr. Palmer claim that the liquidation of QNI led to the diminution in value of the Yabulu Refinery, and a consequential diminution in value of the shares of its joint venture owners, QNI Metals Pty Ltd. and QNI Resources Pty Ltd. The shares in those companies are ultimately beneficially owned by Mr. Palmer. Mineralogy and Mr. Palmer claim that the CITIC Parties are liable for those losses pursuant to an indemnity provision in the FCD.
On 2 February 2024, the CITIC Parties filed their substituted defence in response to Mineralogy and Mr. Palmer’s sixth amended statement of claim. The CITIC Parties plead a number of defences, including construction arguments, causation, mitigation, quantification of loss and Anshun estoppel and abuse of process.
Following the filing of Mineralogy and Mr. Palmer’s sixth amended statement of claim and the CITIC Parties’ substituted defence, Mineralogy and Mr. Palmer filed and served an updated reply on 5 March 2024. The reply contains allegations that certain conduct of the CITIC Parties, specifically alleged activities of the Fulcrum Group, has the effect of disentitling the CITIC Parties from obtaining relief claimed in the form of a permanent stay of the proceeding on grounds of Anshun estoppel or abuse of process (“Fulcrum Allegations”).
On 25 March 2024, Mineralogy and Mr. Palmer indicated that they intend to file a minute of proposed seventh amended statement of claim. At a directions hearing on 26 March 2024, Justice Lundberg provisionally listed a hearing on 21 May 2024, at which any application for leave to amend the statement of claim and any interlocutory disputes arising from requests for discovery would be heard.
A number of interlocutory applications in this proceeding have not yet been determined, including interlocutory applications filed by Mineralogy and Mr. Palmer on 23 January 2023 to be relieved of certain discovery obligations, to strike out certain paragraphs of the CITIC Parties’ further re-amended defence (which was then current but has since been replaced by the substituted defence) and to obtain discovery from the CITIC Parties of documents related to the Fulcrum Allegations made by Mineralogy and Mr. Palmer in their reply. These applications, if pressed by Mineralogy and Mr. Palmer prior to the hearing on 21 May 2024, are likely to be heard at that hearing (at least in so far as they relate to discovery).
Pursuant to orders made by Justice K Martin in September 2020, this proceeding will be heard together with Proceeding CIV 1267/2018 as described below. Orders previously made in this proceeding that damages would be determined separately and subsequently to liability have been vacated. This means that all issues will be heard and determined together in a single trial.
No trial date has been set for this proceeding.
(ii)
Palmer Petroleum FCD Indemnity Claim
On 16 February 2018, Mineralogy commenced a proceeding against the CITIC Parties in the Supreme Court of Western Australia (“Proceeding CIV 1267/2018”) in which it claims damages in the sum of AUD2,675,400,000. That amount is alleged to represent the diminution in the value of Mineralogy’s shares in Palmer Petroleum Pty Ltd. (now Aspenglow Pty Ltd.) (“Palmer Petroleum”) or Blaxcell Limited stemming from the inability of those companies to develop certain petroleum prospecting licences in Papua New Guinea. Mineralogy is the holder and beneficial owner of all of the shares in Palmer Petroleum and Blaxcell Limited.On 10 November 2023, Mineralogy filed its third amended statement of claim. In that statement of claim, Mineralogy claims that as the CITIC Parties failed to pay Royalty Component B when it was due for payment under the MRSLAs, Mineralogy (on which Palmer Petroleum was allegedly completely reliant for funding) did not provide funds to Palmer Petroleum to pay for services rendered to it by a contractor, and in July 2016, Palmer Petroleum was wound up in insolvency.
Mineralogy claims that, if the CITIC Parties had paid Royalty Component B in accordance with their obligations, Mineralogy would have provided such of those funds to Palmer Petroleum and Palmer Petroleum would have paid for the services rendered by the contractor, discharged the contractor’s statutory demand, and/or had sufficient funding to meet its working capital requirements, operate its business, and engage in the business of owning, exploring, developing and exploiting petroleum prospecting licences in Papua New Guinea. Mineralogy alleges that as a consequence of Palmer Petroleum being wound up, it ceased conducting its business and the relevant petroleum prospecting licences were cancelled.
Mineralogy pleads that Palmer Petroleum, or alternatively Blaxcell Limited, suffered a diminution in value equivalent to the sale value of oil that allegedly would have been recoverable from within the area of the relevant petroleum prospecting licences. Mineralogy claims that it suffered loss equivalent to the diminution in value of its shareholding in Palmer Petroleum, or alternatively Blaxcell Limited, and that the CITIC Parties are liable for that loss pursuant to an indemnity provision in the FCD.
On 2 February 2024, the CITIC Parties filed their substituted defence in response to Mineralogy’s third amended statement of claim. The CITIC Parties plead a number of defences, including construction arguments, causation, mitigation, quantification of loss and Anshun estoppel and abuse of process.
Following the filing of Mineralogy’s third amended statement of claim and the CITIC Parties’ substituted defence, Mineralogy filed and served an updated reply on 8 March 2024. The reply includes the Fulcrum Allegations as described above.
On 25 March 2024, Mineralogy indicated that it intends to file a minute of proposed fourth amended statement of claim. At a directions hearing on 26 March 2024, Justice Lundberg provisionally listed a hearing on 21 May 2024, at which any application for leave to amend the statement of claim and any interlocutory disputes arising from requests for discovery would be heard.
A number of interlocutory applications in this proceeding have not yet been determined, including interlocutory applications filed by Mineralogy on 23 January 2023 to be relieved of certain discovery obligations, to strike out certain paragraphs of the CITIC Parties’ re-amended defence (which was then current but has since been replaced by the substituted defence) and to obtain discovery from the CITIC Parties of documents related to the Fulcrum Allegations made by Mineralogy in its reply. These applications, if pressed by Mineralogy prior to the directions hearing on 21 May 2024,are likely to be heard at that hearing (at least in so far as they relate to discovery).
Pursuant to orders made by Justice K Martin in September 2020, this proceeding will be heard together with Proceeding CIV 2072/2017. Orders previously made in this proceeding that damages would be determined separately and subsequently to liability have been vacated. This means that all issues will be heard and determined together in a single trial.
No trial date has been set for this proceeding.
Mine Continuation Proposals Disputes
(i)
2017 Mine Continuation Proposals Proceedings
The continued operation of the Sino Iron Project requires it to extend beyond the footprint it currently occupies. The 2017 mine continuation proposals address that need, and include proposals to extend the constrained mine pit, and increase the storage capacity for waste rock and tailings, which are necessary by-products of the mining process. The mining tenements upon which the Sino Iron Project is currently conducted, and those into which the CITIC Parties wish to extend in order to continue operation, are all held by Mineralogy.The CITIC Parties commenced a proceeding against Mineralogy and Mr. Palmer in the Federal Court of Australia, which was transferred to the Supreme Court of Western Australia on 10 June 2019 (“Proceeding CIV 1915/2019”). The proceeding related to the failure and refusal of Mineralogy to:
- submit the 2017 mine continuation proposals for the Sino Iron Project to the State of Western Australia under the State Agreement;
- grant further tenure which is reasonably required for the Sino Iron Project;
- take steps to secure the re-purposing of general-purpose leases for the Sino Iron Project; and
- submit a Programme of Works for the Sino Iron Project to the State of Western Australia.
The CITIC Parties commenced a new proceeding (“Proceeding CIV 2326/2021”) on 8 December 2021, in which they sought orders for specific performance in relation to a refined tenure request addressed to Mineralogy on 29 November 2021. That tenure request was in the alternative to the tenure in respect of which relief was sought in Proceeding CIV 1915/2019. On 29 December 2021, Justice K Martin ordered that Proceeding CIV 1915/2019 and Proceeding CIV 2326/2021 be consolidated and proceed as one action (“Consolidated 2017 MCPs Proceedings”).
The primary trial in the Consolidated 2017 MCPs Proceedings occurred before Justice K Martin from 21 February 2022 to 29 April 2022. The primary trial was to determine all issues in the Consolidated 2017 MCPs Proceedings other than the quantification of any loss or damage suffered by the CITIC Parties.
On 7 March 2023, Justice K Martin delivered his reasons in the Consolidated 2017 MCPs Proceedings and on 10 March 2023 made orders consequent upon his reasons. His Honour dismissed most of the CITIC Parties’ claims. However, Justice K Martin made the following key findings relevant to mine continuation:
- Mineralogy is obliged to either submit, or consent to the CITIC Parties submitting, the Programme of Works;
- Mineralogy is contractually obliged to assist, and cooperate with, the CITIC Parties, including in relation to the submission of project proposals under the State Agreement. However, the Court declined to require Mineralogy to submit the 2017 mine continuation proposals in the form before the Court, for reasons including that those proposals presumed the use of tenure outside areas which Mineralogy had previously agreed to provide;
- Mineralogy is required to honestly consider, and not unreasonably refuse, requests for additional tenure that is reasonably requested and reasonably required. His Honour found that the CITIC Parties’ most recent tenure request lacked certain features required to meet that test, and so declined to order Mineralogy to grant the tenure the subject of that request. However, his Honour confirmed that an area outside the site lease areas, to the south of the current tailings storage facility, and that is held by Mineralogy, is necessary for future tailings and waste storage for the Sino Iron Project; and
- Mineralogy is not required to take steps to re-purpose the general purpose leases, for reasons including because Mineralogy had not granted the CITIC Parties tenure over all of those general purpose leases.
At a hearing on 21 April 2023, Justice K Martin made orders deferring the CITIC Parties’ Programme of Works damages claim until after the determination of the appeals referred to below. His Honour also ordered the CITIC Parties to pay Mineralogy’s and Mr. Palmer’s costs of the Consolidated 2017 MCPs Proceedings up to and including the 21 April 2023 hearing, except in relation to Mr. Palmer’s unsuccessful application to stay the trial, for which Mr. Palmer must pay the CITIC Parties’ costs.
Unless approval can be obtained to allow extension of the mine pit and establishment of additional storage areas for waste rock and tailings, constraints on pit size and waste and tailings storage capacity will ultimately force the suspension of operations. In the short term, these constraints are reflected in reduced concentrate production for calendar year 2024.
(ii)
2017 Mine Continuation Proposals Appeals
On 31 March 2023, the CITIC Parties appealed Justice K Martin’s decision in the Consolidated 2017 MCPs Proceedings (“Proceeding CACV 35/2023”). The CITIC Parties’ grounds of appeal include that Justice K Martin erred for reasons including that:- there is no requirement in the State Agreement or the project agreements for the CITIC Parties to pay additional monetary consideration for areas reasonably required for the Project, including because Mineralogy has been paid for those areas;
- Mineralogy’s failure to submit the 2017 mine continuation proposals was a breach of its obligations under the State Agreement and certain project agreements;
- his Honour applied the wrong contractual standard when evaluating the CITIC Parties’ tenure request, as the standard was whether the tenure was ‘reasonably required’, and not a higher standard;
- the 2017 mine continuation proposals and the CITIC Parties’ tenure request were divisible, and not holistic global packages, and their licence request was accompanied by the required level of detail;
- Mineralogy had sufficient technical information and time to consider the CITIC Parties’ tenure request, and Mineralogy’s refusal to agree to the tenure request constituted a breach of the State Agreement and certain project agreements; and
- injunctive relief compelling Mineralogy to conditionally surrender and apply for the re-grant of certain general purpose leases should have been ordered.
On 1 May 2023, the Court of Appeal ordered that Proceeding CACV 35/2023 and Proceeding CACV 37/2023 be consolidated (“Consolidated 2017 MCPs Appeals”).
The appeals have been listed for a hearing before the Court of Appeal from 12 to 15 August 2024 and 19 to 21 August 2024.
(iii)
2023 Mine Continuation Proposals Proceedings
On 27 November 2023, the CITIC Parties commenced a proceeding in the Supreme Court of Western Australia seeking to compel Mineralogy to submit the 2023 mine continuation proposals for the Sino Iron Project to the State of Western Australia under the State Agreement (“Proceeding CIV 2336/2023”). The areas over which the activities the subject of the 2023 mine continuation proposals are to be carried out are a subset of the areas the subject of the 2017 mine continuation proposals, and are confined to areas over which Mineralogy has already provided access to Sino Iron and Korean Steel. The proceeding alleges that Mineralogy was obliged to consider and approve the 2023 mine continuation proposals. Approval of the 2023 mine continuation proposals will support the continued operation of the Sino Iron Project for an interim period by addressing constraints to the project’s mine pit and waste and tailings storage capacity.In this proceeding, the CITIC Parties seek relief including:
(a)
declarations that Mineralogy’s failure and refusal to consider, approve and submit the 2023 mine continuation proposals is in breach of the State Agreement and certain project agreements;
(b)
orders for specific performance or injunctions requiring Mineralogy to join them in submitting the 2023 mine continuation proposals to the State; and
(c)
damages for breach of contract.
The State of Western Australia is a party to the proceeding because it is a party to the State Agreement, but no relief is sought against it.
On 11 March 2024, Mineralogy filed its amended defence. Mineralogy’s amended defence includes a pleading that, because Mineralogy asserts the CITIC Parties have breached certain project agreements, they are not entitled to the relief claimed. The alleged breaches include that:
(a)
the conduct of the CITIC Parties as alleged by Mineralogy in Proceeding CIV 2072/2017 (i.e. the Fulcrum Allegations as described above) constituted acts or the contemplation of acts that adversely affected the interests of Mineralogy in the project area and represented a failure to act in good faith towards Mineralogy in relation to the performance of the MRSLAs;
(b)
the CITIC Parties have not paid Mineralogy the amounts claimed in the FCD Indemnity Disputes (referred to above); and
(c)
the CITIC Parties have allegedly failed to permit Mineralogy to observe all measurement, sampling and assaying procedures under the MRSLAs.
On 23 January 2024, Mineralogy applied for a stay of this proceeding pending the outcome of the 2017 MCPs Consolidated Appeals referred to above.
On 14 February 2024, the CITIC Parties applied for orders striking out certain paragraphs of Mineralogy’s defence (which was then current but has since been replaced by the amended defence) and on 15 February 2024, applied for orders expediting the hearing of this proceeding.
Mineralogy’s stay application and the CITIC Parties’ strike out and expedition applications were heard on 20 and 21 March 2024, and the Court’s decision remains reserved.
No trial date has been set for this proceeding.
Fulcrum Conspiracy Claim
On 5 October 2023, Mineralogy and Mr. Palmer commenced a proceeding against Helen Dillon, Chen Zeng, Sino Iron, Korean Steel and the Company (“Proceeding CIV 2137/2023”) claiming that the defendants engaged in conduct for “Fulcrum Purposes”, to apply commercial pressure on Mineralogy and Mr. Palmer to renegotiate certain project agreements, recoup certain additional costs of developing the Sino Iron Project from Mineralogy and seek to sterilise Mineralogy’s other valuable mining tenements. On 28 November 2023, Mineralogy and Mr. Palmer filed a notice of discontinuance in Proceeding CIV 2137/2023.
On 15 December 2023, Mineralogy and Mr. Palmer commenced a proceeding against Helen Dillon, Chen Zeng, Sino Iron, Korean Steel and the Company (together, the “CITIC Defendants”) as well as Allens, a law firm advising the CITIC Defendants, and FBIS International Issues Management Pty Ltd., a service provider to certain of the CITIC Defendants (“Proceeding CIV 2425/2023”). Mineralogy and Mr. Palmer claim that the defendants engaged in the Fulcrum Purposes to apply commercial pressure on Mineralogy and Mr. Palmer to achieve outcomes similar to those pleaded in Proceeding CIV 2137/2023 (see above).
Mineralogy and Mr. Palmer bring claims including for breach of contract and the torts of collateral abuse of process, conspiracy to injure by unlawful means and conspiracy to injure by lawful means. Unconscionable conduct under the Australian Consumer Law is also pleaded as conduct alleged to give rise to the unlawful means conspiracy. Mineralogy and Mr. Palmer also claim that, pursuant to the FCD, the Company is obliged to indemnify Mr. Palmer for the alleged loss suffered by Mr. Palmer said to be in relation to the CITIC Parties’ failure to perform their obligations under the MRSLAs. Mineralogy and Mr. Palmer claim that as a consequence of the defendants’ conduct, they suffered damages which are said to include costs Mineralogy and Mr. Palmer incurred in prosecuting and defending the legal processes and otherwise taking steps in respect of the Fulcrum Purposes, as well as the inability of Mr. Palmer to devote his attention and resources to “other profitable endeavours” and AUD200,000,000 on account of the inability to pursue the “Minimum Royalty Claim”. Mineralogy and Mr.Palmer allege that they did not pursue the “Minimum Royalty Claim” in a previous proceeding as a consequence of the pressure exerted on them for the Fulcrum Purposes. The plaintiffs also seek exemplary damages of approximately AUD500,000,000, aggravated damages and interest on the amounts claimed.
On 17 January 2024, the CITIC Defendants and Allens each filed an application for summary judgment in their favour, to strike out Mineralogy and Mr. Palmer’s statement of claim in this proceeding (which was then current but has since been replaced by the second amended statement of claim) and to temporarily stay this proceeding. Also on 17 January 2024, Allens filed an application for a permanent stay or dismissal of this proceeding.
Two days after filing an amended statement of claim on 18 February 2024, Mineralogy and Mr. Palmer applied for orders to file a further amended statement of claim, and the second amended statement of claim was filed on 20 March 2024.
The Court has programmed the filing of submissions and any further affidavits by Allens, the CITIC Defendants and Mineralogy and Mr. Palmer, should Allens wish to proceed with their permanent stay or dismissal application after Mineralogy and Mr. Palmer have filed their second amended statement of claim.
The Court has also programmed the filing of submissions and any further affidavits by the CITIC Defendants, Allens and Mineralogy and Mr. Palmer, should the CITIC Defendants and Allens wish to proceed with amended summary judgment and strike out applications after Mineralogy and Mr. Palmer have filed their second amended statement of claim.
The Allens application for a permanent stay or dismissal of this proceeding, if it proceeds, will be heard on 2 May 2024. If that application does not proceed, there will be a directions hearing on that date.
No trial date has been set for this proceeding.
(l)
Metallurgical Corporation of China (“MCC”) claim
MCC was appointed as the EPC (engineering, procurement and construction) contractor for the processing area and related facilities at the Sino Iron Project. The fixed price contract amount was US$3.4 billion.On 30 January 2013, MCC announced that it had incurred costs over the value of the contract and had provided additional funding of US$858 million to MCC Mining (Western Australia) Pty Ltd. (“MCC WA”), its wholly-owned subsidiary company responsible for delivering MCC’s obligations under the contract.
As at the date of issuance of these financial statements, MCC has not claimed any additional costs from Sino Iron or its subsidiary companies, other than minor contract variations in the normal course of operations, and the Group believes it has satisfied all of its obligations under the contract.
Under the contract, the Group has a right to claim liquidated damages from MCC WA for certain delays in the completion of their project scope at a daily amount of 0.15% of the value of the main contract (approximately US$5 million per day, with a cap of approximately US$530 million in total). As at balance sheet date the cumulative days of delay that has been incurred has resulted in the contractual cap to the liquidated damages being reached.
As set out in the Company’s announcement dated 24 December 2013, Sino Iron and MCC WA entered into a supplemental contract pursuant to which Sino Iron will take over the management of the construction and commissioning of the remaining four production lines of the Sino Iron Project. An independent audit will opine on various matters including the contract price for the hand over pursuant to the supplemental contract and related fees and expenses, the value of the supporting services provided by Sino Iron to MCC WA in carrying out its responsibilities under the contract, the extent of the works completed by MCC WA in respect of the first two production lines, and the liability of MCC WA in respect of the extensive delays on completion of the works under the contract. By reference to such findings of the independent audit, Sino Iron and MCC WA expect to enter into further negotiations to determine the amount of liabilities to be borne between the parties. Outcomes are not yet known as at 31 December 2023.
The statutory income tax rate of the Company and its subsidiaries located in Hong Kong for the year ended 31 December 2023 is 16.5% (2022: 16.5%).
Except for the preferential tax treatments, the income tax rate applicable to the Group’s other subsidiaries in Chinese Mainland for the year ended 31 December 2023 is 25% (2022: 25%).
Taxation for other overseas subsidiaries is charged at the rates of taxation prevailing in the countries/ jurisdiction in which the overseas subsidiaries operate.
Except for the preferential tax treatments, the income tax rate applicable to the Group’s other subsidiaries in Chinese Mainland for the year ended 31 December 2023 is 25% (2022: 25%).
Taxation for other overseas subsidiaries is charged at the rates of taxation prevailing in the countries/ jurisdiction in which the overseas subsidiaries operate.
As a multi-industry conglomerate, the Group is principally engaging in comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption, new-type urbanisation.
For comprehensive financial services segment, revenue mainly comprises net interest income, net fee and commission income and net trading gain (Notes 5(a), 5(b) and 5(d) ). For non-comprehensive financial services segment, revenue mainly comprises income from sales of goods and services rendered to customers (Note 5(c)).
The Group’s customer base is diversified and there is no single customer with which transactions have exceeded 10% of the Group’s revenue.
For comprehensive financial services segment, revenue mainly comprises net interest income, net fee and commission income and net trading gain (Notes 5(a), 5(b) and 5(d) ). For non-comprehensive financial services segment, revenue mainly comprises income from sales of goods and services rendered to customers (Note 5(c)).
The Group’s customer base is diversified and there is no single customer with which transactions have exceeded 10% of the Group’s revenue.
(a)
Net interest income
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Interest income arising from (note): Deposits with central banks, banks and non-bank financial institutions | 16,719 | 14,302 |
| Placements with banks and non-bank financial institutions | 8,089 | 6,346 |
| Financial assets held under resale agreements | 2,799 | 2,285 |
| Investments in financial assets | ||
| – Financial assets at amortised cost | 36,073 | 40,018 |
| – Debt investments at fair value through other comprehensive income (“FVOCI”) | 22,153 | 19,598 |
| Loans and advances to customers and other parties | 244,128 | 241,057 |
| Margin financing and securities lending | 8,343 | 6,484 |
| Others | 610 | 288 |
| 338,914 | 330,378 | |
| Interest expenses arising from: | ||
| Borrowing from central banks | (4,282) | (4,974) |
| Deposits from banks and non-bank financial institutions | (21,687) | (23,099) |
| Placements from banks and non-bank financial institutions | (4,717) | (3,369) |
| Financial assets sold under repurchase agreements | (10,625) | (5,007) |
| Deposits from customers | (115,452) | (102,754) |
| Debt instruments issued | (29,753) | (30,430) |
| Customer brokerage deposits | (1,675) | (1,303) |
| Lease liabilities | (553) | (523) |
| Others | (1,651) | (1,350) |
| (190,395) | (172,809) | |
| Net interest income | 148,519 | 157,569 |
Notes:
Interest income includes interest income accrued on credit-impaired financial assets of RMB715 million for the year ended 31 December 2023 (2022: RMB462 million).
Interest income includes interest income accrued on credit-impaired financial assets of RMB715 million for the year ended 31 December 2023 (2022: RMB462 million).
(b)
Net fee and commission income
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Bank card fees | 16,799 | 16,480 |
| Trustee commission and fees | 8,857 | 16,057 |
| Agency fees and commission | 5,897 | 5,582 |
| Guarantee and advisory fees | 5,686 | 5,768 |
| Commission on securities brokerage | 12,163 | 9,819 |
| Commission on fund management | 7,642 | 6,137 |
| Commission on investment banking | 6,750 | 7,130 |
| Settlement and clearing fees | 2,251 | 2,136 |
| Commission on asset management | 2,340 | 2,203 |
| Commission on futures brokerage | 3,594 | 2,114 |
| Others | 1,067 | 484 |
| 73,046 | 73,910 | |
| Fee and commission expenses | (11,456) | (8,656) |
| Net fee and commission income | 61,590 | 65,254 |
(c)
Sales of goods and services
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Sales of goods | 372,072 | 351,297 |
| Services rendered to customers | ||
| – Revenue from construction contracts | 16,356 | 21,089 |
| – Revenue from other services | 29,152 | 29,456 |
| 417,580 | 401,842 | |
(d)
Other revenue
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Net trading (loss)/gain under comprehensive financial services segment (note (i)) | (8,109) | 20,434 |
| Net gain on financial investments under comprehensive financial services segment | 58,018 | 17,320 |
| Others | 3,234 | 1,019 |
| 53,143 | 38,773 | |
(i)
Net trading (loss)/gain under comprehensive financial services segment
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Net trading (loss)/gain: | ||
| – debt securities and certificates of deposits | 844 | (756) |
| – foreign currencies | 2,981 | (977) |
| – derivatives | (11,934) | 22,167 |
| (8,109) | 20,434 | |
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Costs of goods sold | 341,469 | 322,130 |
| Costs of services rendered | ||
| – Costs of construction contracts | 13,574 | 14,572 |
| – Costs of other services | 17,764 | 19,176 |
| 372,807 | 355,878 | |
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Net gain on disposal/deemed disposal of subsidiaries, associates and joint ventures | 74 | 10,977 |
| Net gain/(loss) on financial investments under non-comprehensive financial services segment | 2,949 | (194) |
| Net foreign exchange gain | 535 | 444 |
| Others | 5,099 | 5,116 |
| 8,657 | 16,343 | |
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Expected credit losses (reversed from)/charged on: | ||
| – deposits and placements with banks and non- bank financial institutions | (39) | 2 |
| – receivables(excluding prepayments) | 4,651 | 5,023 |
| – loans and advances to customers and other parties | 49,572 | 57,097 |
| – investments in financial assets | ||
| • financial assets at amortised cost | 2,467 | 2,220 |
| • debt investments at FVOCI | 1,250 | 716 |
| – impairment provision of credit commitments and guarantees provided | 1,041 | 7,999 |
| – others | 6,673 | 5,948 |
| 65,615 | 79,005 | |
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Impairment losses charged on/(reversed from): | ||
| – inventories | 3,403 | 403 |
| – interests in associates | 635 | 2,581 |
| – interests in joint ventures | – | 15 |
| – fixed assets (note) | (338) | 70 |
| – prepayments | 23 | 12 |
| – goodwill (Note 35) | 26 | 4,363 |
| – others | 846 | 140 |
| 4,595 | 7,584 | |
Notes:
Iron Ore Project
The Group’s Iron Ore Project comprises the Sino Iron Project in Australia and its associated marketing operations in Singapore. Whenever events or circumstances indicate impairment may have occurred, the Group tests whether assets attributable to the Group’s Iron Ore Project have suffered any impairment.
The recoverable amount of the Sino Iron Project is based on the fair value less costs of disposal methodology which is based on cash flow projections that incorporate best estimates of selling prices, ore grades, exchange rates, production rates, future capital expenditure and production costs over the life of the mine. In line with normal practice in the mining industry, the cash flow projections are based on long term mine plans covering the expected life of the operation. Therefore, the projections cover periods well in excess of five years. Assumptions about selling prices, operating and capital costs, exchange rates, quantity of resources and discount rates are particularly important; the determination of the recoverable amount is relatively sensitive to changes in these important assumptions.
In accordance with the Group’s accounting policy, management has identified one CGU, the Sino Iron Project. For the purposes of testing for impairment, the carrying amount of the Sino Iron Project is to be compared with its recoverable amount when indication of impairment exit. Impairment is recognised when the carrying amount of the project exceeds its recoverable amount.
As at 31 December 2023, management performed an impairment indication assessment with the consideration of the production profile of the Sino Iron Project forecast Iron ore prices, exchange rate between Australia dollar and US dollar and Interest rates of loans risk free. According to the assessment, no further impairment indication was identified and thus, no impairment test was undertaken for the Sino Iron Project as at 31 December 2023.
When an impairment test is undertaken, the fair value of CGU must be estimated for recognition and measurement or for disclosure purposes.
The disclosure is based on the following fair value measurement hierarchy:
Iron Ore Project
The Group’s Iron Ore Project comprises the Sino Iron Project in Australia and its associated marketing operations in Singapore. Whenever events or circumstances indicate impairment may have occurred, the Group tests whether assets attributable to the Group’s Iron Ore Project have suffered any impairment.
The recoverable amount of the Sino Iron Project is based on the fair value less costs of disposal methodology which is based on cash flow projections that incorporate best estimates of selling prices, ore grades, exchange rates, production rates, future capital expenditure and production costs over the life of the mine. In line with normal practice in the mining industry, the cash flow projections are based on long term mine plans covering the expected life of the operation. Therefore, the projections cover periods well in excess of five years. Assumptions about selling prices, operating and capital costs, exchange rates, quantity of resources and discount rates are particularly important; the determination of the recoverable amount is relatively sensitive to changes in these important assumptions.
In accordance with the Group’s accounting policy, management has identified one CGU, the Sino Iron Project. For the purposes of testing for impairment, the carrying amount of the Sino Iron Project is to be compared with its recoverable amount when indication of impairment exit. Impairment is recognised when the carrying amount of the project exceeds its recoverable amount.
As at 31 December 2023, management performed an impairment indication assessment with the consideration of the production profile of the Sino Iron Project forecast Iron ore prices, exchange rate between Australia dollar and US dollar and Interest rates of loans risk free. According to the assessment, no further impairment indication was identified and thus, no impairment test was undertaken for the Sino Iron Project as at 31 December 2023.
When an impairment test is undertaken, the fair value of CGU must be estimated for recognition and measurement or for disclosure purposes.
The disclosure is based on the following fair value measurement hierarchy:
- Quoted prices (unadjusted) in active markets for identical or similar CGU (level 1);
- Inputs other than quoted prices included within level that are observable for the CGU, either directly (as prices) or indirectly (derived from prices) (level 2); and
- Inputs for the CGU that are not based on observable market data (unobservable inputs) (level 3 inputs).
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Finance costs | ||
| – Interest on bank and other loans | 8,969 | 4,590 |
| – Interest on debt instruments issued | 3,570 | 4,184 |
| – Interest on lease liabilities | 241 | 206 |
| 12,780 | 8,980 | |
| Less: interest expense capitalised (note) | (926) | (727) |
| 11,854 | 8,253 | |
| Other finance charges | 318 | 219 |
| 12,172 | 8,472 | |
| Finance income | (1,832) | (1,407) |
| 10,340 | 7,065 | |
Notes:
Capitalisation rates applied to funds borrowed are 4.40% ~ 4.74% per annum for the year ended 31 December 2023 (2022: 1.60% ~ 4.85%).
Capitalisation rates applied to funds borrowed are 4.40% ~ 4.74% per annum for the year ended 31 December 2023 (2022: 1.60% ~ 4.85%).
Profit before taxation is arrived at after charging below costs and expenses in cost of sales and services and other operating expenses:
(a)
Staff costs
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Salaries and bonuses (note (i)) | 63,770 | 59,288 |
| Contributions to defined contribution retirement schemes (note (ii)) | 8,780 | 7,046 |
| Others | 13,101 | 12,302 |
| 85,651 | 78,636 | |
Notes
(i)
The increase in salaries and bonuses mainly comes from the impact of the addition of consolidated subsidiaries, including CITIC Securities Co., Ltd. (“CITIC Securities”), Shanghai Zhongte Pacific Steel Co., Ltd. (“Pacific Steel”, formerly known as “Shanghai Electric Group Steel Pipe Co., Ltd.”), and Nanjing Steel Group Co., Ltd. (“Nanjing Steel Group”).
(ii)
The Group substantially completed the transfer of the management of existing retirees to external organisations in 2011. In accordance with the government requirements, the Group is also obliged to pay for certain of such retirees’ post-retirement benefits in the future. This benefit plan is accounted for as a long-term defined benefits obligation and does not have any plan assets.
The Group’s obligation for this benefit plan is calculated using actuarial method and recognised as a liability. The service cost amounting to RMB44 million was recognised for the year ended 31 December 2023 (2022: RMB54 million). Actuarial assumptions mainly include discount rate and future mortality. Reasonable changes in actuarial assumptions would not have a significant impact on the consolidated financial statements of the Group.
The Group’s obligation for this benefit plan is calculated using actuarial method and recognised as a liability. The service cost amounting to RMB44 million was recognised for the year ended 31 December 2023 (2022: RMB54 million). Actuarial assumptions mainly include discount rate and future mortality. Reasonable changes in actuarial assumptions would not have a significant impact on the consolidated financial statements of the Group.
(b)
Other items
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Amortisation | 4,097 | 2,961 |
| Depreciation | 18,962 | 17,279 |
| Lease charges | 894 | 676 |
| Tax and surcharges | 3,481 | 3,377 |
| Property management fees | 1,031 | 908 |
| Non-operating expenses | 710 | 473 |
| Professional fees (other than auditors’ remuneration) | 1,758 | 1,342 |
| Auditors’ remuneration | ||
| – Audit services | 187 | 181 |
| – Non-audit services | 58 | 81 |
| 31,178 | 27,278 | |
(a)
Income tax expense in the income statement
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Current tax – Chinese mainland | ||
| Provision for enterprise income tax | 15,103 | 29,654 |
| Land appreciation tax | 267 | 323 |
| 15,370 | 29,977 | |
| Current tax – Hong Kong | ||
| Provision for Hong Kong profits tax | 490 | 169 |
| Current tax – Overseas | ||
| Provision for the year | 408 | 493 |
| 16,268 | 30,639 | |
| Deferred tax | ||
| Origination and reversal of temporary differences | 1,745 | (9,170) |
| 18,013 | 21,469 | |
(b)
Reconciliation between tax expense and accounting profit at applicable tax rates
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Profit before taxation | 123,287 | 127,292 |
| Less: Share of profits of | ||
| – associates | (5,695) | (6,494) |
| – joint ventures | (3,708) | (4,672) |
| 113,884 | 116,126 | |
| Notional tax on profit before taxation calculated at statutory tax rate of 16.5% | 18,791 | 19,161 |
| Effect of different tax rates in other jurisdictions | 10,236 | 11,755 |
| Tax effect of unused tax losses not recognised | 891 | 241 |
| Tax effect of non-deductible expenses | 4,882 | 6,881 |
| Tax effect of non-taxable income (note) | (15,911) | (15,664) |
| Others | (876) | (905) |
| Actual tax expense | 18,013 | 21,469 |
Notes:
The non-taxable income mainly contains interest income arising from PRC government bonds and local government bonds and dividends from equity investments.
The non-taxable income mainly contains interest income arising from PRC government bonds and local government bonds and dividends from equity investments.
(a)
Directors’ emoluments
Emoluments paid or receivable in respect of a person’s services as a director, whether of the Company or its subsidiary undertaking for the year ended 31 December 2023 are set out as follows:| For the year ended 31 December 2023 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Emoluments paid or receivable in respect of a person's services as a director, whether of the Company or its subsidiary | Emoluments paid or receivable in respect of director's other services in connection with the management of the affairs of the Company or its subsidiary undertaking | Total | ||||||||
| Fees | Salary | Discretionary bonuses | Housing allowance | Estimated money value of other benefits | Social securities in Chinese mainland | Employer’s contribution to a retirement benefit scheme | Remunerations paid or receivable in respect of accepting office as committee member | |||
| Name of Current Directors | ||||||||||
| Executive Directors: | ||||||||||
| Xi Guohua (i) | – | 0.36 | 0.39 | – | – | 0.15 | 0.09 | – | – | 0.99 |
| Liu Zhengjun (i) (ii) | – | 0.32 | 0.34 | – | – | 0.15 | 0.09 | – | – | 0.90 |
| Wang Guoquan (formerly known as Wang Guoquan) (i) (ii) | – | 0.32 | 0.34 | – | – | 0.15 | 0.09 | – | – | 0.90 |
| Non-executive Directors | ||||||||||
| Yu Yang | – | – | – | – | – | – | – | – | – | – |
| Zhang Lin | – | – | – | – | – | – | – | – | – | – |
| Li Yi (formerly known as Li Ruyi) | – | – | – | – | – | – | – | – | – | – |
| Yue Xuekun (ii) | – | – | – | – | – | – | – | – | – | – |
| Yang Xiaoping | 0.34 | – | – | – | – | – | – | 0.14 | – | 0.48 |
| Mu Guoxin (ii) | – | – | – | – | – | – | – | – | – | – |
| Li Zimin (ii) | – | – | – | – | – | – | – | – | – | – |
| Independent Non-executive Directors: | ||||||||||
| Francis Siu Wai Keung | 0.34 | – | – | – | – | – | – | 0.25 | – | 0.59 |
| Xu Jinwu | 0.34 | – | – | – | – | – | – | 0.23 | – | 0.57 |
| Anthony Francis Neo | 0.34 | – | – | – | – | – | – | 0.23 | – | 0.57 |
| Gregory Lynn Curl | 0.34 | – | – | – | – | – | – | 0.05 | – | 0.39 |
| Toshikazu Tagawa | 0.34 | – | – | – | – | – | – | – | – | 0.34 |
| Name of Former Directors | ||||||||||
| Zhu Hexin (i)(ii) | – | 0.36 | 0.39 | – | – | 0.15 | 0.10 | – | – | 1.00 |
| Tang Jiang (iii) | – | – | – | – | – | – | – | – | – | – |
| 2.04 | 1.36 | 1.46 | – | – | 0.60 | 0.37 | 0.90 | – | 6.73 | |
Notes:
(i)
The emoluments for the year ended 31 December 2023 in respect of Mr. Zhu Hexin, Mr. Xi Guohua, Mr. Liu Zhengjun and Mr. Wang Guoquan (formerly known as Wang Guoquan) have not been finalised in accordance with the regulations of the relevant local authorities.
(ii)
Changes in directors during the year ended 31 December 2023:
(1)
From 15 March 2023, Mr. Liu Zhengjun and Mr. Wang Guoquan (formerly known as Wang Guoquan) serve as the executive directors of the Company. From 9 January 2023, Mr. Yue Xuekun serves as the non-executive directors of the Company. From 26 October 2023, Mr. Mu Guoxin serves as the non-executive directors of the Company. From 29 December 2023, Mr. Li Zimin serves as the non-executive director of the Company.
(2)
From 13 December 2023, Mr. Zhu Hexin resigned as the executive director of the Company.
(iii)
On 26 March 2023, Mr. Tang Jiang passed away.
Emoluments paid or receivable in respect of a person’s services as a director, whether of the Company or its subsidiary undertaking for the year ended 31 December 2022 are set out as follows:
| For the year ended 31 December 2022 (Restated) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Emoluments paid or receivable in respect of a person's services as a director, whether of the Company or its subsidiary | Emoluments paid or receivable in respect of director's other services in connection with the management of the affairs of the Company or its subsidiary undertaking | Total | ||||||||
| Fees | Salary | Discretionary bonuses | Housing allowance | Estimated money value of other benefits | Social securities in Chinese mainland | Employer’s contribution to a retirement benefit scheme | Remunerations paid or receivable in respect of accepting office as committee member | |||
| Name of Current Directors | ||||||||||
| Executive Directors: | ||||||||||
| Zhu Hexin (i) | – | 0.38 | 0.50 | – | – | 0.15 | 0.07 | – | – | 1.10 |
| Xi Guohua (i) | – | 0.38 | 0.50 | – | – | 0.15 | 0.07 | – | – | 1.10 |
| Non-executive Directors | ||||||||||
| Yu Yang | – | – | – | – | – | – | – | – | – | – |
| Zhang Lin (ii) | – | – | – | – | – | – | – | – | – | – |
| Li Yi (formerly known as Li Ruyi) (ii) | – | – | – | – | – | – | – | – | – | – |
| Yang Xiaoping | 0.33 | – | – | – | – | – | – | 0.13 | – | 0.46 |
| Tang Jiang (ii)(iii) | – | – | – | – | – | – | – | – | – | – |
| Independent Non-executive Directors: | ||||||||||
| Francis Siu Wai Keung | 0.33 | – | – | – | – | – | – | 0.24 | – | 0.57 |
| Xu Jinwu | 0.33 | – | – | – | – | – | – | 0.21 | – | 0.54 |
| Anthony Francis Neo | 0.33 | – | – | – | – | – | – | 0.21 | – | 0.54 |
| Gregory Lynn Curl | 0.33 | – | – | – | – | – | – | 0.04 | – | 0.37 |
| Toshikazu Tagawa | 0.33 | – | – | – | – | – | – | – | – | 0.33 |
| Name of Former Directors | ||||||||||
| Li Qingping (i)(ii) | – | 0.19 | 0.16 | – | 0.03 | 0.11 | 0.06 | – | – | 0.55 |
| Song Kangle (ii) | – | – | – | – | – | – | – | – | – | – |
| Peng Yanxiang (ii) | – | – | – | – | – | – | – | – | – | – |
| 1.98 | 0.95 | 1.16 | – | 0.03 | 0.41 | 0.20 | 0.83 | – | 5.56 | |
Notes:
(i)
The emoluments for the year ended 31 December 2022 in respect of Mr. Zhu Hexin, Mr. Xi Guohua, and Ms. Li Qingping is restated based on the final results confirmed by the national authority.
(ii)
Changes in directors during the year ended 31 December 2022:
(1)
From 4 January 2022, Mr. Zhang Lin and Mr. Tang Jiang serve as the non-executive directors of the Company. From 30 November 2022, Ms. Li Yi (formerly known as Li Ruyi) serves as the non-executive director of the Company.
(2)
From 21 October 2022, Ms. Li Qingping resigned as the executive director of the Company. From 30 November 2022, Mr. Song Kangle and Mr. Peng Yanxiang resigned as the non-executive directors of the Company.
(iii)
On 26 March 2023, Mr. Tang Jiang passed away.
(b)
Other benefits and interests
For the year ended 31 December 2023, no retirement benefits, payments or benefits in respect of termination of directors’ services were paid or made, directly or indirectly, to the directors; nor are any payable (2022: None). No consideration was provided to or receivable by third parties for making available directors’ services (2022: None). There are no loans, quasi-loans or other dealings in favour of the directors, their controlled bodies corporate and connected entities (2022: None).No director of the Company had a material interest, directly or indirectly, in any significant transactions, arrangements and contracts in relation to the Company’s business to which the Company was or is a party that subsisted at the end of the year or at any time during the year ended 31 December 2023 (2022: None).
For the year ended 31 December 2023, none of the five highest paid individuals are directors (2022: None) whose emoluments are disclosed in Note 13. The aggregate of the emoluments in respect of these five individuals (2022: five) are as follows:
The emoluments of the five individuals (2022: five) with the highest emoluments are within the following bands:
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Salaries and other emoluments | 14.12 | 19.63 |
| Discretionary bonuses | 57.38 | 39.76 |
| Retirement scheme contributions | 1.39 | 1.25 |
| 72.89 | 60.64 | |
| For the year ended 31 December | ||
|---|---|---|
| 2023 Number of individuals | 2022 Number of individuals | |
| RMB9,500,001- RMB10,000,000 | – | 2 |
| RMB11,000,001- RMB11,500,000 | – | 1 |
| RMB12,000,001- RMB12,500,000 | – | 1 |
| RMB12,500,001- RMB13,000,000 | – | – |
| RMB13,000,001- RMB13,500,000 | 1 | – |
| RMB14,000,001- RMB14,500,000 | 2 | – |
| RMB15,000,001- RMB15,500,000 | 1 | – |
| RMB15,500,001- RMB16,000,000 | 1 | – |
| RMB17,500,001- RMB18,000,000 | – | 1 |
| 5 | 5 | |
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| 2022 Final dividend paid: HK$0.451 (2021 Final: HK$0.456) per share | 11,988 | 11,328 |
| 2023 Interim dividend paid: RMB0.18 (2022 Interim: HK$0.20) per share | 5,236 | 5,082 |
| 2023 Final dividend proposed: RMB0.335 (2022 Final:HK$0.451) per share | 9,745 | 11,988 |
Basic earnings per share for the year ended 31 December 2023 is calculated by dividing profit attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares.
Diluted earnings per share for the year ended 31 December 2023 is calculated by dividing adjusted profit attributable to the ordinary shareholders of the Company based on assuming conversion of all potentially dilutive shares by the adjusted weighted average number of ordinary shares.
In 2019, China CITIC Bank Corporation Limited (“CITIC Bank”), a subsidiary of the Group, issued convertible bonds, the specific terms of which are disclosed in Note 45(f). The Group has subscribed 65.97% of the convertible bonds, the convertible bonds issued by CITIC Bank has no dilutive effect on earnings per share of the Company.
In 2022, CITIC Pacific Special Steel Group Co., Ltd. (“CITIC Special Steel”), a subsidiary of the Group, issued convertible bonds, the specific terms of which are disclosed in Note 45(f). The convertible bonds issued by CITIC Special Steel has a dilutive effect on profit attributable to ordinary shareholders of the Company, the calculation results of which are listed as below:
Diluted earnings per share for the year ended 31 December 2023 is calculated by dividing adjusted profit attributable to the ordinary shareholders of the Company based on assuming conversion of all potentially dilutive shares by the adjusted weighted average number of ordinary shares.
In 2019, China CITIC Bank Corporation Limited (“CITIC Bank”), a subsidiary of the Group, issued convertible bonds, the specific terms of which are disclosed in Note 45(f). The Group has subscribed 65.97% of the convertible bonds, the convertible bonds issued by CITIC Bank has no dilutive effect on earnings per share of the Company.
In 2022, CITIC Pacific Special Steel Group Co., Ltd. (“CITIC Special Steel”), a subsidiary of the Group, issued convertible bonds, the specific terms of which are disclosed in Note 45(f). The convertible bonds issued by CITIC Special Steel has a dilutive effect on profit attributable to ordinary shareholders of the Company, the calculation results of which are listed as below:
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Profit attributable to ordinary shareholders of the Company | 57,594 | 64,931 |
| Less: im pact on profit attributable to ordinary shareholders of the Company assuming above convertible bonds converted | (95) | (115) |
| Profit attributable to ordinary shareholders of the Company (adjusted) | 57,499 | 64,816 |
| Weighted average number of ordinary shares (in million) | 29,090 | 29,090 |
| Basic earnings per share (RMB) | 1.98 | 2.23 |
| Diluted earnings per share (RMB) | 1.98 | 2.23 |
Components of other comprehensive gain/(loss)
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Items that may be reclassified subsequently to profit or loss: | ||
| Fair value gains/(loss) on financial assets at FVOCI | 7,203 | (2,644) |
| Less: Net amounts previously recognised in other comprehensive income transferred to profit or loss in the current year | (732) | (7,707) |
| Tax effect | (1,328) | 1,940 |
| 5,143 | (8,411) | |
| Change of loss allowance on debt instruments at FVOCI | (70) | 441 |
| Less: Net amounts previously recognised in other comprehensive income transferred to profit or loss in the current year | – | – |
| Tax effect | 10 | (28) |
| (60) | 413 | |
| (Loss)/gains arising from cash flow hedge | (194) | 1,326 |
| Less: Net amounts previously recognised in other comprehensive income transferred to profit or loss in the current year | (17) | (140) |
| Tax effect | – | (93) |
| (211) | 1,093 | |
| Share of other comprehensive loss of associates and joint ventures | (2,776) | (2,854) |
| Exchange differences on translation of financial statements and others | 1,132 | 4,267 |
| Items that will not be reclassified subsequently to profit or loss: | ||
| Reclassification of owner-occupied property as investment property: revaluation (loss)/gain | (2) | 23 |
| Less: Tax effect | – | – |
| (2) | 23 | |
| Fair value changes on investments in equity instruments designated at FVOCI | (187) | 225 |
| Less: Tax effect | 49 | (5) |
| (138) | 220 | |
| 3,088 | (5,249) | |
The Group has presented five reportable operating segments which are comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and new-type urbanisation. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, whose financial performance is regularly reviewed by the board of directors to make decisions about resource to be allocated to the segment and assess its performance, and for which financial information regarding financial position, financial performance and cash flows is available. The details of these five reportable segments are as follows:
Segment assets are those assets that are attributable to a segment, and segment liabilities are those liabilities that are attributable to a segment.
Revenue and expenses are allocated to the reportable segments with reference to revenue generated by those segments and the expenses incurred by those segments or which otherwise arise from the depreciation of assets attributable to those segments.
The measure used for reporting segment profit is “profit for the year”. To arrive at segment results, the Group’s profit is further adjusted for items not specifically attributed to individual segments, such as share of results of associates and joint ventures.
Inter-segment pricing is based on similar terms as those available to other external parties.
Information regarding the Group’s reportable segments as provided to the board of directors for the purposes of resources allocation and assessment of segment performance for the years ended 31 December 2023 and 2022 is set out below:
- Comprehensive financial services: this segment includes banking, securities, trust, insurance and asset management services.
- Advanced intelligent manufacturing: this segment includes manufacturing of heavy machineries, specialised robotics, aluminium wheels, aluminium casting parts and other products.
- Advanced materials: this segment includes exploration, processing and trading of resources and energy products, including iron ore, copper and crude oil, as well as manufacturing of special steels.
- New consumption: this segment includes motor, food and consumer products business, telecommunication services, publication services, modern agriculture, and others.
- New-type urbanisation: this segment includes development, sale and holding of properties, contracting and design services, infrastructure services, environmental services, commercial aviation services and others.
(a)
Segment results, assets and liabilities
For the purposes of assessing segment performance and allocating resources among segments, the board of directors monitors the results, assets and liabilities, revenue and expenses attributable to each reportable segment on the following bases:Segment assets are those assets that are attributable to a segment, and segment liabilities are those liabilities that are attributable to a segment.
Revenue and expenses are allocated to the reportable segments with reference to revenue generated by those segments and the expenses incurred by those segments or which otherwise arise from the depreciation of assets attributable to those segments.
The measure used for reporting segment profit is “profit for the year”. To arrive at segment results, the Group’s profit is further adjusted for items not specifically attributed to individual segments, such as share of results of associates and joint ventures.
Inter-segment pricing is based on similar terms as those available to other external parties.
Information regarding the Group’s reportable segments as provided to the board of directors for the purposes of resources allocation and assessment of segment performance for the years ended 31 December 2023 and 2022 is set out below:
| For the year ended 31 December 2023 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Comprehensive financial services | Advanced intelligent manufacturing | Advanced materials | New consumption | New-type urbanisation | Operation management | Elimination | Total | |
| Revenue from external customers | 268,048 | 50,434 | 267,513 | 51,422 | 43,367 | 48 | – | 680,832 |
| Inter-segment revenue | 2,200 | 218 | 187 | 122 | 914 | 94 | (3,735) | – |
| Reportable segment revenue | 270,248 | 50,652 | 267,700 | 51,544 | 44,281 | 142 | (3,735) | 680,832 |
| Disaggregation of revenue: | ||||||||
| – Net interest income (Note 5(a)) | 150,583 | – | – | – | – | 91 | (2,155) | 148,519 |
| – Net fee and commission income (Note 5(b)) | 61,700 | – | – | – | – | 4 | (114) | 61,590 |
| – Sales of goods (Note 5(c)) | 4,740 | 49,794 | 266,087 | 37,751 | 14,100 | – | (400) | 372,072 |
| – Services rendered to customers-construction contracts (Note 5(c)) | – | 797 | – | – | 16,053 | – | (494) | 16,356 |
| – Services rendered to customers-others (Note 5(c)) | – | 61 | 1,613 | 13,793 | 14,128 | 47 | (490) | 29,152 |
| – Other revenue (Note 5(d)) | 53,225 | – | – | – | – | – | (82) | 53,143 |
| Share of profits/(losses) of associates, net of tax | 1,561 | 61 | 1,213 | 368 | 2,606 | (114) | – | 5,695 |
| Share of profits of joint ventures, net of tax | 1,372 | 27 | 855 | 36 | 1,377 | 41 | – | 3,708 |
| Finance income (Note 10) | – | 58 | 1,274 | 105 | 1,156 | 700 | (1,461) | 1,832 |
| Finance costs (Note 10) | – | (304) | (3,198) | (636) | (1,840) | (9,205) | 3,011 | (12,172) |
| Depreciation and amortisation (Note 11(b)) | (9,900) | (1,270) | (7,969) | (1,931) | (1,914) | (75) | – | (23,059) |
| Expected credit losses (Note 8) | (61,135) | (469) | (98) | 12 | (4,073) | 148 | – | (65,615) |
| Impairment losses (Note 9) | (286) | (456) | 776 | (216) | (3,803) | (610) | – | (4,595) |
| Profit/(loss) before taxation | 108,186 | 1,903 | 17,035 | 2,012 | 2,471 | (7,548) | (772) | 123,287 |
| Income tax (Note 12) | (13,757) | (169) | (2,163) | (374) | (451) | (1,071) | (28) | (18,013) |
| Profit/(loss) for the year | 94,429 | 1,734 | 14,872 | 1,638 | 2,020 | (8,619) | (800) | 105,274 |
| Attributable to: | ||||||||
| – Ordinary shareholders of the Company | 50,496 | 827 | 12,731 | 1,032 | 2,163 | (8,618) | (1,037) | 57,594 |
| – Non-controlling interests | 43,933 | 907 | 2,141 | 606 | (143) | (1) | 237 | 47,680 |
| Reportable segment assets | 10,609,132 | 60,415 | 363,781 | 55,704 | 338,424 | 46,281 | (142,817) | 11,330,920 |
| Including: | ||||||||
| Interests in associates (Note 32) | 27,306 | 1,116 | 22,950 | 9,645 | 47,833 | 941 | – | 109,791 |
| Interests in joint ventures (Note 33) | 13,412 | 553 | 7,732 | 1,809 | 31,827 | 1,454 | – | 56,787 |
| Reportable segment liabilities | 9,503,628 | 40,137 | 187,807 | 25,452 | 140,810 | 222,535 | (126,231) | 9,994,138 |
| Including: | ||||||||
| Bank and other loans (Note 44)(note) | 10,344 | 6,018 | 90,205 | 6,608 | 54,245 | 125,712 | (58,000) | 235,132 |
| Debt instruments issued (Note 45) (note) | 1,133,946 | – | 5,259 | 3,184 | – | 74,009 | (2,818) | 1,213,580 |
Notes:
The amount is the principal excluding interest accrued.
The amount is the principal excluding interest accrued.
| For the year ended 31 December 2022 (Restated) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Comprehensive financial services | Advanced intelligent manufacturing | Advanced materials | New consumption | New-type urbanisation | Operation management | Elimination | Total | |
| Revenue from external customers | 266,604 | 51,599 | 242,577 | 53,037 | 49,593 | 28 | – | 663,438 |
| Inter-segment revenue | 1,853 | 217 | 585 | 113 | 1,338 | 121 | (4,227) | – |
| Reportable segment revenue | 268,457 | 51,816 | 243,162 | 53,150 | 50,931 | 149 | (4,227) | 663,438 |
| Disaggregation of revenue: | ||||||||
| – Net interest income (Note 5(a)) | 159,304 | – | – | – | – | 115 | (1,850) | 157,569 |
| – Net fee and commission income (Note 5(b)) | 65,300 | – | – | – | – | 4 | (50) | 65,254 |
| – Sales of goods (Note 5(c)) | 5,010 | 50,609 | 241,493 | 40,089 | 14,953 | – | (857) | 351,297 |
| – Services rendered to customers-construction contracts (Note 5(c)) | – | 444 | – | – | 21,388 | – | (743) | 21,089 |
| – Services rendered to customers-others (Note 5(c)) | – | 763 | 1,669 | 13,061 | 14,590 | 27 | (654) | 29,456 |
| – Other revenue (Note 5(d)) | 38,843 | – | – | – | – | 3 | (73) | 38,773 |
| Share of profits/(losses) of associates, net of tax | 2,708 | (6) | 1,338 | (93) | 2,514 | 33 | – | 6,494 |
| Share of profits/(losses) of joint ventures, net of tax | 1,257 | 52 | 911 | (9) | 2,415 | 46 | – | 4,672 |
| Finance income (Note 10) | – | 199 | 528 | 70 | 1,096 | 266 | (752) | 1,407 |
| Finance costs (Note 10) | – | (367) | (1,906) | (467) | (1,465) | (6,114) | 1,847 | (8,472) |
| Depreciation and amortisation (Note 11(b)) | (8,633) | (1,326) | (6,555) | (1,997) | (1,649) | (80) | – | (20,240) |
| Expected credit losses (Note 8) | (72,974) | (136) | (100) | (20) | (5,804) | 29 | – | (79,005) |
| Impairment losses (Note 9) | (255) | (203) | (371) | (584) | (6,132) | (39) | – | (7,584) |
| Profit before taxation | 104,119 | 1,340 | 17,291 | 1,668 | 1,290 | 2,460 | (876) | 127,292 |
| Income tax (Note 12) | (16,855) | (158) | (2,827) | (554) | (437) | (524) | (114) | (21,469) |
| Profit for the year | 87,264 | 1,182 | 14,464 | 1,114 | 853 | 1,936 | (990) | 105,823 |
| Attributable to: | ||||||||
| – Ordinary shareholders of the Company | 48,068 | 531 | 13,004 | 533 | 1,846 | 1,939 | (990) | 64,931 |
| – Non-controlling interests | 39,196 | 651 | 1,460 | 581 | (993) | (3) | – | 40,892 |
| Reportable segment assets | 9,969,800 | 58,955 | 234,215 | 55,397 | 336,976 | 51,174 | (164,474) | 10,542,043 |
| Including: | ||||||||
| Interests in associates (Note 32) | 26,798 | 846 | 22,895 | 6,899 | 46,007 | 1,019 | – | 104,464 |
| Interests in joint ventures (Note 33) | 15,316 | 526 | 7,236 | 1,745 | 34,155 | 1,486 | – | 60,464 |
| Reportable segment liabilities | 8,924,511 | 39,907 | 105,363 | 24,715 | 157,427 | 203,277 | (147,834) | 9,307,366 |
| Including: | ||||||||
| Bank and other loans (Note 44)(note) | 12,716 | 12,840 | 41,813 | 5,670 | 50,270 | 94,793 | (62,014) | 156,088 |
| Debt instruments issued(Note 45) (note) | 1,081,892 | – | 5,011 | 3,129 | – | 86,878 | (1,831) | 1,175,079 |
Notes:
The amount is the principal excluding interest accrued.
The amount is the principal excluding interest accrued.
(b)
Geographical information
An analysis of the Group’s revenue and total assets by geographical area are as follows:| Revenue from external customers For the year ended 31 December | Reportable segment assets As at 31 December | |||
|---|---|---|---|---|
| 2023 | 2022 (Restated) | 2023 | 2022 (Restated) | |
| Chinese mainland | 587,536 | 576,850 | 10,315,696 | 9,636,931 |
| Hong Kong, Macau and Taiwan | 44,246 | 39,874 | 638,695 | 591,800 |
| Overseas | 49,050 | 46,714 | 376,529 | 313,312 |
| 680,832 | 663,438 | 11,330,920 | 10,542,043 | |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Cash | 4,504 | 5,604 |
| Bank deposits | 114,860 | 109,936 |
| Balances with central banks (note (i)): | ||
| – Statutory deposit reserve funds (note (ii)) | 357,686 | 367,350 |
| – Surplus deposit reserve funds (note (iii)) | 52,473 | 104,315 |
| – Fiscal deposits (note (iv)) | 356 | 298 |
| – Foreign exchange reserves (note (v)) | 2,926 | 1,693 |
| Deposits with banks and non-bank financial institutions | 90,423 | 86,207 |
| 623,228 | 675,403 | |
| Accrued interest | 1,966 | 2,022 |
| 625,194 | 677,425 | |
| Less: al lowance for impairment losses on deposits with banks and non-bank financial institutions (Note 48) | (59) | (98) |
| 625,135 | 677,327 | |
Notes:
(i)
The balances with central banks represent deposits placed with central banks by CITIC Bank and CITIC Finance Company Limited (“CITIC Finance”).
(ii)
CITIC Bank and CITIC Finance place statutory deposit reserve funds with the People’s Bank of China and overseas central banks where they have operations. The statutory deposit reserve funds are not available for use in their daily business.
As at 31 December 2023, the statutory deposit reserve funds placed by CITIC Bank with the People’s Bank of China was calculated at 7% (31 December 2022: 7.5%) of eligible RMB deposits for domestic branches of CITIC Bank and at 7% (31 December 2022: 7.5%) of eligible RMB deposits from overseas financial institutions respectively. In addition, CITIC Bank was also required to deposit an amount equivalent to 4% (31 December 2022: 6%) of its foreign currency deposits from domestic branch customers as statutory deposit reserve funds.
As at 31 December 2023, the statutory RMB deposit reserve rate applicable to Zhejiang Lin’an CITIC Rural Bank Corporation Limited in Chinese mainland, a subsidiary of CITIC Bank, according to the corresponding regulations of the People’s Bank of China, was at 5% (31 December 2022: 5%).
The amounts of statutory deposit reserve funds placed with the central banks of overseas countries are determined by respective jurisdictions. The statutory deposit reserve funds are interest bearing except for the foreign currency reserve funds deposits placed with the People’s Bank of China.
As at 31 December 2023, the statutory deposit reserve funds placed by CITIC Finance with the People’s Bank of China was calculated at 5% (31 December 2022: 5%) of eligible RMB deposits from the customers of CITIC Finance. CITIC Finance is also required to deposit an amount equivalent to 6% (31 December 2022: 6%) of its foreign currency deposits from the customers as statutory deposit reserve funds.
As at 31 December 2023, the statutory deposit reserve funds placed by CITIC Bank with the People’s Bank of China was calculated at 7% (31 December 2022: 7.5%) of eligible RMB deposits for domestic branches of CITIC Bank and at 7% (31 December 2022: 7.5%) of eligible RMB deposits from overseas financial institutions respectively. In addition, CITIC Bank was also required to deposit an amount equivalent to 4% (31 December 2022: 6%) of its foreign currency deposits from domestic branch customers as statutory deposit reserve funds.
As at 31 December 2023, the statutory RMB deposit reserve rate applicable to Zhejiang Lin’an CITIC Rural Bank Corporation Limited in Chinese mainland, a subsidiary of CITIC Bank, according to the corresponding regulations of the People’s Bank of China, was at 5% (31 December 2022: 5%).
The amounts of statutory deposit reserve funds placed with the central banks of overseas countries are determined by respective jurisdictions. The statutory deposit reserve funds are interest bearing except for the foreign currency reserve funds deposits placed with the People’s Bank of China.
As at 31 December 2023, the statutory deposit reserve funds placed by CITIC Finance with the People’s Bank of China was calculated at 5% (31 December 2022: 5%) of eligible RMB deposits from the customers of CITIC Finance. CITIC Finance is also required to deposit an amount equivalent to 6% (31 December 2022: 6%) of its foreign currency deposits from the customers as statutory deposit reserve funds.
(iii)
The surplus deposit reserve funds are maintained with the People’s Bank of China for the purposes of clearing.
(iv)
Fiscal deposits placed with the People’s Bank of China are not available for use in the Group’s daily operations, and are non-interest bearing (unless otherwise stipulated by the local People’s Bank of China).
(v)
The foreign exchange reserve is maintained by CITIC Bank with the People’s Bank of China in accordance with the related notice issued by the People’s Bank of China. The reserve is required to be maintained on a monthly basis at 20% of the total contract amount of customers driven forward transactions in the previous month. Such foreign exchange reserve is non-interest bearing and will be maintained for in 12 months according to the notice.
(vi)
In addition to the statutory deposit reserve funds, fiscal deposits and foreign exchange reserves, RMB17,357 million (31 December 2022: RMB8,840 million) included in cash and deposits as at 31 December 2023 were restricted in use, mainly including guaranteed pledged bank deposits, guaranteed deposits and risk reserve.
CITIC Securities, the Group’s subsidiary, maintains segregated deposit accounts with banks and authorised institutions to hold cash on behalf of customers arising from its normal course of business. The Group has recorded the related amounts as cash held on behalf of customers and the corresponding liabilities as customer brokerage deposits (Note 40). In Chinese mainland, the use of cash held on behalf of customers for security and the settlement of their transactions is restricted and governed by relevant third-party deposit regulations issued by the China Securities Regulatory Commission. In Hong Kong, the “Securities and Futures (Client Money) Rules” together with the related provisions of the Securities and Futures Ordinance impose similar restrictions. In other countries and regions, cash held on behalf of customers is supervised by relevant authorities.
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Banks | 88,447 | 56,517 |
| Non-bank financial institutions | 148,150 | 159,939 |
| 236,597 | 216,456 | |
| Accrued interest | 1,288 | 1,038 |
| 237,885 | 217,494 | |
| Less: allowance for impairment losses (Note 48) | (143) | (140) |
| 237,742 | 217,354 | |
| Analysed by remaining maturity: | ||
| – Within 1 month | 70,820 | 43,800 |
| – Between 1 month and 1 year | 164,277 | 130,906 |
| – Over 1 year | 1,500 | 41,750 |
| 236,597 | 216,456 | |
| Accrued interest | 1,288 | 1,038 |
| 237,885 | 217,494 | |
| Less: allowance for impairment losses (Note 48) | (143) | (140) |
| 237,742 | 217,354 | |
The Group’s subsidiaries under the financial services act as an intermediary to offer derivative products including forwards, swaps and option transactions. These derivative positions are managed through entering back-toback deals with external parties to ensure the remaining exposures are within acceptable risk levels. Meanwhile, derivatives are also used for proprietary trading purposes to manage its own asset and liability and structural positions. Derivatives, except for those which are designated as hedging instruments, are held for trading. Derivatives classified as held for trading are for trading and customer initiated transactions purpose, and those for risk management purposes but do not meet the criteria for hedge accounting.
Subsidiaries under non-financial services of the Group enter into forward and swap contracts to hedge their exposure to fluctuations in foreign exchange rates, commodity prices and interest rates.
The following tables and notes provide an analysis of the nominal amounts of derivatives and the corresponding fair values as at the financial position date. The nominal amounts of the derivatives provide a basis for comparison with fair values of derivatives recognised on the consolidated statement of financial position but do not necessarily indicate the amounts of future cash flows involved or the current fair values of the derivatives and, therefore, do not indicate the Group’s exposure to credit or market risks.
Subsidiaries under non-financial services of the Group enter into forward and swap contracts to hedge their exposure to fluctuations in foreign exchange rates, commodity prices and interest rates.
The following tables and notes provide an analysis of the nominal amounts of derivatives and the corresponding fair values as at the financial position date. The nominal amounts of the derivatives provide a basis for comparison with fair values of derivatives recognised on the consolidated statement of financial position but do not necessarily indicate the amounts of future cash flows involved or the current fair values of the derivatives and, therefore, do not indicate the Group’s exposure to credit or market risks.
| As at 31 December | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Nominal amount | Assets | Liabilities | Nominal amount (Restated) | Assets (Restated) | Liabilities (Restated) | |
| Hedging instruments | ||||||
| Fair value hedge | ||||||
| – Interest rate derivatives | 5,216 | 168 | – | 600 | 9 | – |
| – Currency derivatives | 2,001 | 179 | – | 1,976 | 176 | – |
| Cash flow hedge | ||||||
| – Interest rate derivatives | 4,009 | 141 | 34 | 13,026 | 272 | 92 |
| – Currency derivatives | 112 | 3 | 13 | 213 | 5 | 9 |
| – Other derivatives | 46 | 46 | – | 92 | 92 | – |
| Non-hedging instruments | ||||||
| – Interest rate derivatives | 6,882,563 | 24,618 | 24,058 | 4,932,627 | 22,730 | 21,351 |
| – Currency derivatives | 3,422,469 | 31,967 | 29,095 | 3,329,629 | 33,752 | 33,657 |
| – Equity derivatives | 681,454 | 18,337 | 16,413 | 507,788 | 19,696 | 11,611 |
| – Precious metals derivatives | 79,567 | 621 | 1,279 | 35,523 | 250 | 598 |
| – Credit derivatives | 14,167 | 37 | 47 | 12,110 | 79 | 152 |
| – Other derivatives | 794,594 | 1,445 | 2,816 | 855,985 | 3,806 | 4,923 |
| 11,886,198 | 77,562 | 73,755 | 9,689,569 | 80,867 | 72,393 | |
(a)
Nominal amount analysed by remaining maturity
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Within 3 months | 4,014,043 | 3,402,581 |
| Between 3 months and 1 year | 4,607,586 | 3,191,979 |
| Between 1 year and 5 years | 3,028,705 | 2,549,186 |
| Over 5 years | 235,864 | 545,823 |
| 11,886,198 | 9,689,569 | |
(b)
Credit risk weighted amounts
The credit risk weighted amounts are solely in connection with the derivatives held by CITIC Bank, and have been computed in accordance with “Regulation Governing Capital of Commercial Banks (provisional)” promulgated by the former China Banking and Insurance Regulatory Commission in the year of 2012, and depends on the status of the counterparties and the maturity characteristics of the instruments including those customer-driven back-to-back transactions. As at 31 December 2023, the credit risk weighted amount for counterparty was RMB28,225 million (31 December 2022: RMB24,579 million).| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Account and bills receivables (note (a)) | 92,408 | 68,993 |
| Advanced payments and settlement accounts (note (b)) | 25,743 | 22,477 |
| Accounts due from brokers | 24,488 | 26,731 |
| Prepayments, deposits and other receivables (note (c)) | 130,432 | 107,005 |
| 273,071 | 225,206 | |
| Less: allowance for impairment losses (Note 48) | (18,619) | (13,814) |
| 254,452 | 211,392 | |
(a)
Account and bills receivables
(i)
Account and bills receivables at amortised cost by overdue analysis
As at 31 December 2023, the analysis of account and bills receivables at amortised cost of the Group based on the days overdue is as follows:| As at 31 December 2023 | |||
|---|---|---|---|
| Expected credit loss rate | Gross carrying amount | Loss allowance provision | |
| Current | 2% | 56,405 | (1,322) |
| Up to 3 months overdue | 8% | 4,575 | (367) |
| 3 months to 1 year overdue | 8% | 2,827 | (214) |
| Over 1 year overdue | 59% | 15,797 | (9,275) |
| 79,604 | (11,178) | ||
| As at 31 December 2022 (Restated) | |||
|---|---|---|---|
| Expected credit loss rate | Gross carrying amount | Loss allowance provision | |
| Current | 2% | 43,490 | (915) |
| Up to 3 months overdue | 3% | 1,871 | (62) |
| 3 months to 1 year overdue | 5% | 3,181 | (151) |
| Over 1 year overdue | 55% | 15,644 | (8,582) |
| 64,186 | (9,710) | ||
Notes:
Each business unit has its own defined credit policy that is specific to the respective business environment and market practice.
Each business unit has its own defined credit policy that is specific to the respective business environment and market practice.
(ii)
Account and bills receivables at amortised cost by ageing analysis
As at 31 December, the ageing analysis of account and bills receivables at amortised cost of the Group based on invoice date is as follows:| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Within 1 year | 56,085 | 43,764 |
| Over 1 year | 23,519 | 20,422 |
| 79,604 | 64,186 | |
| Less: allowance for impairment losses (Note 48) | (11,178) | (9,710) |
| 68,426 | 54,476 | |
(iii)
As at 31 December 2023, the carrying amount of bills receivables at FVOCI was RMB12,804 million (31 December 2022: RMB4,807 million).
(iv)
The movements in the allowance for impairment losses on trade and other receivables during the years ended 31 December 2023 and 2022 are disclosed in Note 48.
(b)
Advanced payments and settlement accounts
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Advanced payments and settlement accounts | 25,743 | 22,477 |
| Less: allowance for impairment losses (Note 48) | (204) | (206) |
| 25,539 | 22,271 | |
(c)
Prepayments, deposits and other receivables
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Prepayments, deposits and other receivables | 130,432 | 107,005 |
| Less: allowance for impairment losses (Note 48) | (7,237) | (3,898) |
| 123,195 | 103,107 | |
The Group has recognised the following assets and liabilities related to contracts with customers:
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Contract assets | 24,509 | 20,774 |
| Less: Allowance for impairment losses (note(a)) | (197) | (46) |
| Total contract assets | 24,312 | 20,728 |
| Advances from contracts with customers | 31,482 | 29,596 |
| Total contract liabilities | 31,482 | 29,596 |
(a)
Assessment of allowance for impairment losses of contract
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Expected credit loss rate (note) | 0.80% | 0.22% |
| Gross carrying amount | 24,509 | 20,774 |
| Loss allowance provision | (197) | (46) |
Notes:
The ECL rate here is the average rate of loss allowance provision divided by gross carrying amount.
The ECL rate here is the average rate of loss allowance provision divided by gross carrying amount.
(b)
Revenue recognised during the year that related to carried-forward contract liabilities
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Revenue from contracts with customers | 17,444 | 16,716 |
(c)
Revenue to be recognised in relating to unsatisfied performance obligations
As at 31 December 2023, transaction price allocated to unsatisfied contracts of the Group amounted at RMB88,129 million (31 December 2022: RMB82,853 million), of which RMB52,685 million is expected to be recognised as revenue in the next year (31 December 2022: RMB26,920 million) and the remaining RMB35,444 million is expected to be recognised after more than one year (31 December 2022: RMB55,932 million).| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Raw materials | 16,623 | 10,417 |
| Work-in-progress | 11,855 | 8,034 |
| Finished goods | 37,060 | 27,936 |
| Properties: | ||
| – Properties under development | 38,721 | 49,209 |
| – Properties held-for-sale | 21,616 | 3,942 |
| – Others | 5,865 | 5,893 |
| Others | 3,402 | 3,619 |
| 135,142 | 109,050 | |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Analysed by counterparties: | ||
| – Banks | 54,937 | 15,259 |
| – Non-bank financial institutions | 54,644 | 2,903 |
| – Others | 54,481 | 27,451 |
| 164,062 | 45,613 | |
| Accrued interest | 150 | 100 |
| 164,212 | 45,713 | |
| Less: allowance for impairment losses (Note 48) | 771 | – |
| 164,983 | 45,713 | |
As at 31 December 2023, the collateral of the Group’s financial assets held under resale agreements are securities or others (31 December 2022: securities or others).
Analysed by remaining maturity:
As at 31 December 2023, the Group’s financial assets held under resale agreements will expire between 0 year and 5 years (31 December 2022: between 0 year and 5 years).
(a)
Loans and advances to customers and other parties analysed by nature
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Loans and advances to customers and other parties at amortised cost | ||
| Corporate loans | ||
| – Loans | 2,578,201 | 2,419,077 |
| – Discounted bills | 1,784 | 3,704 |
| – Finance lease receivables | 46,818 | 46,566 |
| 2,626,803 | 2,469,347 | |
| Personal loans | ||
| – Residential mortgages | 1,003,320 | 975,807 |
| – Credit cards | 521,260 | 511,101 |
| – Business loans | 459,113 | 378,819 |
| – Personal consumption | 309,256 | 260,436 |
| – Finance lease receivables | 1,591 | 370 |
| 2,294,540 | 2,126,533 | |
| 4,921,343 | 4,595,880 | |
| Accrued interest | 20,188 | 17,385 |
| 4,941,531 | 4,613,265 | |
| Less: allowance for impairment losses (Note 48) | (139,679) | (137,495) |
| Carrying amount of loans and advances to customers and other parties at amortised cost | 4,801,852 | 4,475,770 |
| Loans and advances to customers and other parties at fair value through Profit and loss (“FVPL”) | ||
| Corporate loans | ||
| – Loans | 5,558 | 3,881 |
| Loans and advances to customers and other parties at FVOCI | ||
| Corporate loans | ||
| – Loans | 58,064 | 54,851 |
| – Discounted bills | 514,666 | 508,232 |
| Carrying amount of loans and advances to customers and other parties at FVOCI | 572,730 | 563,083 |
| Total carrying amount of loans and advances | 5,380,140 | 5,042,734 |
| Allowance for impairment losses on loans and advances to customers and other parties at FVOCI (Note 48) | (656) | (629) |
(b)
Assessment method of allowance for impairment losses
| As at 31 December 2023 | ||||
|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 (note) | Total | |
| Loans and advances at amortised cost | 4,753,741 | 96,222 | 71,380 | 4,921,343 |
| Accrued interest | 19,120 | 411 | 657 | 20,188 |
| Less: allowance for impairment losses | (64,268) | (27,217) | (48,194) | (139,679) |
| Carrying amount of loans and advances at amortised cost | 4,708,593 | 69,416 | 23,843 | 4,801,852 |
| Carrying amount of loans and advances at FVOCI | 572,273 | 345 | 112 | 572,730 |
| Total carrying amount of loans and advances for which allowance for impairment losses is recognised | 5,280,866 | 69,761 | 23,955 | 5,374,582 |
| Allowance for impairment losses of loans and advances at FVOCI | (586) | – | (70) | (656) |
| As at 31 December 2022 | ||||
|---|---|---|---|---|
| Stage 1 (Restated) | Stage 2 (Restated) | Stage 3 (note) (Restated) | Total (Restated) | |
| Loans and advances at amortised cost | 4,426,303 | 89,433 | 80,144 | 4,595,880 |
| Accrued interest | 14,547 | 2,125 | 713 | 17,385 |
| Less: allowance for impairment losses | (61,602) | (22,648) | (53,245) | (137,495) |
| Carrying amount of loans and advances at amortised cost | 4,379,248 | 68,910 | 27,612 | 4,475,770 |
| Carrying amount of loans and advances at FVOCI | 562,208 | 720 | 155 | 563,083 |
| Total carrying amount of loans and advances for which allowance for impairment losses is recognised | 4,941,456 | 69,630 | 27,767 | 5,038,853 |
| Allowance for impairment losses of loans and advances at FVOCI | (523) | (27) | (79) | (629) |
Notes:
Loans and advances at stage 3 are credit-impaired, details are as follows:
Loans and advances at stage 3 are credit-impaired, details are as follows:
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Secured portion | 34,988 | 43,326 |
| Unsecured portion | 37,161 | 37,686 |
| Total loans and advances that are credit-impaired | 72,149 | 81,012 |
| Allowance for impairment losses | (48,264) | (53,324) |
As at 31 December 2023, the maximum exposure covered by fair value of pledge and collateral held against these loans and advances amounted to RMB34,094 million (31 December 2022: RMB42,542 million).
(c)
Overdue loans by overdue period
| As at 31 December 2023 | |||||
|---|---|---|---|---|---|
| Overdue within 3 months | Overdue between 3 months and 1 year | Overdue between 1 year and 3 years | Overdue over 3 years | Total | |
| Unsecured loans | 20,105 | 11,922 | 2,091 | 246 | 34,364 |
| Guaranteed loans | 1,558 | 4,243 | 2,600 | 1,018 | 9,419 |
| Secured loans | |||||
| – Loans secured by collateral | 15,564 | 12,520 | 10,618 | 1,053 | 39,755 |
| – Pledged loans | 3,790 | 1,084 | 2,387 | 137 | 7,398 |
| 41,017 | 29,769 | 17,696 | 2,454 | 90,936 | |
| As at 31 December 2022 | |||||
|---|---|---|---|---|---|
| Overdue within 3 months (Restated) | Overdue between 3 months and 1 year (Restated) | Overdue between 1 year and 3 years (Restated) | Overdue over 3 years (Restated) | Total (Restated) | |
| Unsecured loans | 17,097 | 9,365 | 1,696 | 280 | 28,438 |
| Guaranteed loans | 2,892 | 2,341 | 2,365 | 1,989 | 9,587 |
| Secured loans | |||||
| – Loans secured by collateral | 12,441 | 13,046 | 7,091 | 2,337 | 34,915 |
| – Pledged loans | 2,751 | 6,601 | 2,189 | 763 | 12,304 |
| 35,181 | 31,353 | 13,341 | 5,369 | 85,244 | |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Margin accounts | 118,137 | 106,976 |
| Less: allowance for impairment losses | 609 | – |
| Total | 118,746 | 106,976 |
As at 31 December 2023, the Group received collateral with fair value amounted to RMB444,292 million (31 December 2022: RMB431,795 million) in connection with its margin financing business.
(a)
Analysed by types
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Financial assets at amortised cost | ||
| Debt securities | 869,969 | 873,627 |
| Investment management products managed by non-bank financial institutions | 22,908 | 39,628 |
| Trust investment plans | 194,110 | 226,257 |
| Certificates of deposit and certificates of interbank deposit | 1,064 | 3,923 |
| Investments in creditor’s rights on assets | 1,900 | 1,900 |
| Others | 2,087 | 336 |
| 1,092,038 | 1,145,671 | |
| Accrued interest | 12,623 | 10,495 |
| 1,104,661 | 1,156,166 | |
| Less: allowance for impairment losses (Note 48) | (28,622) | (31,570) |
| 1,076,039 | 1,124,596 | |
| Financial assets at FVPL | ||
| Debt securities | 312,247 | 242,970 |
| Investment management products managed by non-bank financial institutions | 12,706 | 19,149 |
| Trust investment plans | 11,432 | 6,315 |
| Certificates of deposit and certificates of interbank deposit | 99,972 | 48,083 |
| Wealth management products | 6,161 | 3,022 |
| Investment funds | 553,540 | 555,883 |
| Equity investment | 258,178 | 224,831 |
| Others | 37,879 | 35,633 |
| 1,292,115 | 1,135,886 | |
| Debt investments at FVOCI (note (i)) | ||
| Debt securities | 934,693 | 822,379 |
| Certificates of deposit and certificates of interbank deposit | 25,872 | 44,525 |
| 960,565 | 866,904 | |
| Accrued interest | 7,238 | 6,463 |
| 967,803 | 873,367 | |
| Equity investments at FVOCI (note (i)) | ||
| Equity investment | 20,183 | 8,997 |
| Others | 227 | 350 |
| 20,410 | 9,347 | |
| 3,356,367 | 3,143,196 | |
| Allowance for impairment losses on debt investments at FVOCI (Note 48) | (3,284) | (3,069) |
Notes:
(i)
Financial assets measured at FVOCI.
| As at 31 December 2023 | |||
|---|---|---|---|
| Equity instruments | Debt instruments | Total | |
| Cost/amortised cost | 20,630 | 960,959 | 981,589 |
| Accumulative fair value change in other comprehensive income | (220) | (394) | (614) |
| Accrued interest | – | 7,238 | 7,238 |
| Carrying amount | 20,410 | 967,803 | 988,213 |
| Allowance for impairment losses (Note 48) | Not applicable | (3,284) | (3,284) |
| As at 31 December 2022 | |||
|---|---|---|---|
| Equity instruments (Restated) | Debt instruments (Restated) | Total (Restated) | |
| Cost/amortised cost | 9,452 | 873,432 | 882,884 |
| Accumulative fair value change in other comprehensive income | (105) | (6,528) | (6,633) |
| Accrued interest | – | 6,463 | 6,463 |
| Carrying amount | 9,347 | 873,367 | 882,714 |
| Allowance for impairment losses (Note 48) | Not applicable | (3,069) | (3,069) |
(b)
Analysed by counterparties
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Issued by: | ||
| – Government | 1,526,497 | 1,162,046 |
| – Policy banks | 75,992 | 109,549 |
| – Banks and non-bank financial institutions | 1,351,070 | 1,490,147 |
| – Corporates | 380,959 | 362,987 |
| – Public entities | 2,064 | 1,593 |
| 3,336,582 | 3,126,322 | |
| Accrued interest | 19,785 | 16,874 |
| 3,356,367 | 3,143,196 | |
| – Listed in Hong Kong | 91,807 | 101,516 |
| – Listed outside Hong Kong | 2,778,478 | 2,534,409 |
| – Unlisted | 466,297 | 490,397 |
| 3,336,582 | 3,126,322 | |
| Accrued interest | 19,785 | 16,874 |
| 3,356,367 | 3,143,196 | |
(c)
Analysed by assessment method of allowance for impairment losses
| As at 31 December 2023 | ||||
|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Gross carrying amount of investments in financial assets at amortised cost | 1,036,744 | 6,081 | 49,213 | 1,092,038 |
| Accrued interest | 12,061 | 488 | 74 | 12,623 |
| Less: allowance for impairment losses | (3,384) | (1,405) | (23,833) | (28,622) |
| Carrying amount of investments in financial assets at amortised cost | 1,045,421 | 5,164 | 25,454 | 1,076,039 |
| Gross carrying amount of debt investments in financial assets at FVOCI | 958,971 | 664 | 930 | 960,565 |
| Accrued interest | 7,104 | 4 | 130 | 7,238 |
| Carrying amount of debt investments in financial assets at FVOCI | 966,075 | 668 | 1,060 | 967,803 |
| Total carrying amount of investments in financial assets for which allowance for impairment losses is recognised | 2,011,496 | 5,832 | 26,514 | 2,043,842 |
| Allowance for impairment losses on debt investments in financial assets at FVOCI | (2,221) | (234) | (829) | (3,284) |
| As at 31 December 2022 | ||||
|---|---|---|---|---|
| Stage 1 (Restated) | Stage 2 (Restated) | Stage 3 (Restated) | Total (Restated) | |
| Gross carrying amount of investments in financial assets at amortised cost | 1,083,385 | 5,159 | 57,127 | 1,145,671 |
| Accrued interest | 10,237 | 138 | 120 | 10,495 |
| Less: allowance for impairment losses | (3,517) | (1,434) | (26,619) | (31,570) |
| Carrying amount of investments in financial assets at amortised cost | 1,090,105 | 3,863 | 30,628 | 1,124,596 |
| Gross carrying amount of debt investments in financial assets at FVOCI | 865,688 | 136 | 1,080 | 866,904 |
| Accrued interest | 6,440 | – | 23 | 6,463 |
| Carrying amount of debt investments in financial assets at FVOCI | 872,128 | 136 | 1,103 | 873,367 |
| Total carrying amount of investments in financial assets for which allowance for impairment losses is recognised | 1,962,233 | 3,999 | 31,731 | 1,997,963 |
| Allowance for impairment losses on debt investments in financial assets at FVOCI | (1,555) | (98) | (1,416) | (3,069) |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Trading deposits | 58,682 | 52,895 |
| Performance deposits | 3,048 | 15,083 |
| Credit deposits | 452 | 1,180 |
| 62,182 | 69,158 | |
The particulars of the principal subsidiaries are set out in Note 61.
The following table lists out the information relating to CITIC Bank, CITIC Securities, CITIC Heavy Industries Co., Limited (“CITIC Heavy Industries”), CITIC Telecom International Holdings Limited (“CITIC Telecom International”) and CITIC Resources Holdings Limited (“CITIC Resources”), which are listed subsidiaries of the Group and have material non-controlling interests. The summarised financial information below is before elimination of inter-group transactions and balances:
The following table lists out the information relating to CITIC Bank, CITIC Securities, CITIC Heavy Industries Co., Limited (“CITIC Heavy Industries”), CITIC Telecom International Holdings Limited (“CITIC Telecom International”) and CITIC Resources Holdings Limited (“CITIC Resources”), which are listed subsidiaries of the Group and have material non-controlling interests. The summarised financial information below is before elimination of inter-group transactions and balances:
| As at 31 December | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| CITIC Bank | CITIC Securities | CITIC Heavy Industries | CITIC Telecom International | CITIC Resources | ||||||
| 2023 | 2022 (Restated) | 2023 | 2022 (Restated) | 2023 | 2022 (Restated) | 2023 | 2022 (Restated) | 2023 | 2022 (Restated) | |
| Listed in: | Hong Kong and Shanghai | Hong Kong and Shanghai | Shanghai | Hong Kong | Hong Kong | |||||
| Non-controlling interests percentage | 34.07% | 34.03% | 80.76% | 81.55% | 32.73% | 32.73% | 42.45% | 42.27% | 40.50% | 40.50% |
| Total assets | 9,052,484 | 8,547,543 | 1,456,211 | 1,311,382 | 18,351 | 19,506 | 15,735 | 16,241 | 10,534 | 11,112 |
| Mainly including: | ||||||||||
| Cash and deposits | 497,517 | 556,215 | 109,773 | 112,402 | 1,202 | 1,632 | 1,564 | 1,774 | 1,345 | 1,903 |
| Cash held on behalf of customers | – | – | 239,019 | 245,723 | – | – | – | – | – | – |
| Placements with banks and non-bank financial institutions | 237,742 | 218,164 | – | – | – | – | – | – | – | – |
| Derivative financial instruments | 44,675 | 44,383 | 32,754 | 36,389 | – | – | – | – | 66 | 92 |
| Financial assets held under resale agreements | 104,773 | 13,730 | 62,209 | 31,483 | – | – | – | – | – | – |
| Loans and advances to customers and other parties | 5,383,750 | 5,038,967 | – | – | – | – | – | – | – | – |
| Margin accounts | – | – | 118,746 | 106,976 | – | – | – | – | – | – |
| Investments in financial assets | 2,592,906 | 2,502,869 | 715,744 | 601,200 | 505 | 508 | – | – | – | – |
| Fixed assets | 38,309 | 34,430 | 9,532 | 9,071 | 3,945 | 4,215 | 1,802 | 2,075 | 3,614 | 3,217 |
| Right-of-use assets | 10,643 | 10,824 | 15,699 | 9,597 | 55 | 20 | 411 | 535 | 44 | 68 |
| Total liabilities | (8,317,809) | (7,861,713) | (1,181,983) | (1,052,793) | (10,113) | (11,663) | (5,890) | (6,887) | (3,428) | (4,175) |
| Mainly including: | ||||||||||
| Borrowing from central banks | (273,226) | (119,422) | – | – | – | – | – | – | – | – |
| Deposits from banks and non-bank financial institutions | (927,887) | (1,143,776) | – | – | – | – | – | – | – | – |
| Placements from banks and non-bank financial institutions | (86,327) | (70,741) | (53,623) | (29,581) | – | – | – | – | – | – |
| Customer brokerage deposits | – | – | (283,821) | (279,402) | – | – | – | – | – | – |
| Trade and other payables | – | – | (198,061) | (205,287) | (3,181) | (2,608) | (834) | (1,074) | (220) | (95) |
| Derivative financial instruments | (41,850) | (44,265) | (32,006) | (28,123) | – | – | – | – | – | – |
| Financial assets sold under repurchase agreements | (463,018) | (256,194) | (283,346) | (214,283) | – | – | – | – | – | – |
| Deposits from customers | (5,467,657) | (5,157,864) | – | – | – | – | – | – | – | – |
| Bank and other loans | – | – | (7,957) | (10,073) | (2,266) | (3,834) | (319) | (847) | (1,622) | (2,307) |
| Lease liabilities | (10,245) | (10,272) | (2,429) | (1,972) | (58) | (21) | (308) | (406) | (37) | (55) |
| Net assets | 734,675 | 685,830 | 274,228 | 258,589 | 8,238 | 7,843 | 9,845 | 9,354 | 7,106 | 6,937 |
| Equity attributable to | ||||||||||
| – Ordinary shareholders of subsidiaries | 602,281 | 550,477 | 268,867 | 253,335 | 8,017 | 7,635 | 9,747 | 9,266 | 7,034 | 6,919 |
| – Non-controlling interests in subsidiaries | 132,394 | 135,353 | 5,361 | 5,254 | 221 | 208 | 98 | 88 | 72 | 18 |
| Carrying amount of non-controlling interests | 337,591 | 322,680 | 225,723 | 214,388 | 2,845 | 2,707 | 4,236 | 4,005 | 2,921 | 2,820 |
| Revenue | 205,570 | 211,109 | 60,068 | 49,640 | 9,557 | 8,827 | 8,994 | 8,692 | 3,445 | 5,043 |
| Profit/(loss) for the year | 68,062 | 62,950 | 20,379 | 16,954 | 394 | 165 | 1,127 | 1,052 | 557 | 1,204 |
| Total comprehensive income for the year | 73,637 | 59,249 | 21,455 | 18,090 | 419 | 178 | 1,152 | 979 | 493 | 1,028 |
| Profit attributable to non-controlling interests | 23,878 | 25,139 | 16,976 | 14,018 | 136 | 68 | 489 | 461 | 262 | 520 |
| Dividends paid to non-controlling interests | 10,871 | 10,292 | 6,935 | 7,355 | 16 | 35 | 354 | 317 | – | – |
| Net cash (used in)/generated from operating activities | (918) | 195,066 | (34,133) | (13,736) | 1,200 | 1,213 | 1,694 | 2,340 | 1,040 | 1,851 |
| Net cash generated from/ (used in) investing activities | 1,887 | (115,873) | (18,198) | (6,363) | (40) | (165) | (141) | (572) | 74 | (740) |
| Net cash (used in)/generated from financing activities | (63,102) | (32,539) | 48,281 | (58,297) | (1,692) | (1,494) | (1,711) | (1,889) | (1,304) | (1,338) |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Carrying value | 118,049 | 112,387 |
| Less: allowance for impairment losses (Note 48) | (8,258) | (7,923) |
| 109,791 | 104,464 | |
Note:
As at 13 April 2022, CITIC Securities has been included in the scope of the consolidation financial statements, and CITIC Securities was an material associate before the combination date.
The particulars of the principal associates are set out in Note 61.
As at 13 April 2022, CITIC Securities has been included in the scope of the consolidation financial statements, and CITIC Securities was an material associate before the combination date.
The particulars of the principal associates are set out in Note 61.
Summarised financial information of the material associates are disclosed below:
| As at 31 December | ||||||
|---|---|---|---|---|---|---|
| China Overseas Land & Investment Limited | CSC Financial Co., Ltd. | Ivanhoe Mines Ltd. | ||||
| 2023 | 2022 (Restated) | 2023 | 2022 (Restated) | 2023 | 2022 (Restated) | |
| Listed in: | Hong Kong | Shanghai | Canada | |||
| Gross amount of the associates | ||||||
| Total assets | 945,892 | 935,254 | 522,752 | 509,206 | 44,285 | 36,487 |
| Total liabilities | (530,692) | (540,156) | (425,226) | (415,910) | (10,538) | (8,313) |
| Net assets | 415,200 | 395,098 | 97,526 | 93,296 | 33,747 | 28,174 |
| Equity attributable to: | ||||||
| – Associates’ shareholders | 395,306 | 376,479 | 97,478 | 93,252 | 34,191 | 28,443 |
| – Non-controlling interests in associates | 19,894 | 18,619 | 48 | 44 | (444) | (269) |
| 415,200 | 395,098 | 97,526 | 93,296 | 33,747 | 28,174 | |
| For the year ended 31 December | ||||||
|---|---|---|---|---|---|---|
| China Overseas Land & Investment Limited | CSC Financial Co., Ltd. | Ivanhoe Mines Ltd. | ||||
| 2023 | 2022 (Restated) | 2023 | 2022 (Restated) | 2023 | 2022 (Restated) | |
| Revenue | 202,524 | 180,322 | 33,979 | 36,471 | – | – |
| Profit for the year | 26,602 | 24,132 | 7,047 | 7,530 | 2,247 | 2,732 |
| Other comprehensive (loss)/income for the year | (284) | (1,473) | 271 | (104) | 432 | 2,201 |
| Total comprehensive income for the year | 26,318 | 22,659 | 7,318 | 7,426 | 2,679 | 4,933 |
| Dividends received from associates | 740 | 1,093 | 196 291 | – | – | |
| Reconciled to the Group’s interests in associates | ||||||
| Gross amounts of net assets of associates attributable to the associates’ shareholders | 395,306 | 376,479 | 97,478 | 93,252 | 34,191 | 28,443 |
| Group’s effective interest | 10.01% | 10.01% | 9.47% | 9.47% | 24.81% | 25.86% |
| Group’s share of net assets of associates | 39,570 | 37,686 | 9,231 | 8,831 | 8,483 | 7,355 |
| Goodwill and others | 1,266 | 1,266 | 3,805 | 3,786 | (157) | (151) |
| Impairment of interests in associates | (3,539) | (3,539) | – | – | – | – |
| Carrying amounts in the consolidated statement of financial position | 37,297 | 35,413 | 13,036 | 12,617 | 8,326 | 7,204 |
| Quoted fair value | 13,661 | 20,160 | 11,257 | 11,238 | 21,710 | 17,071 |
Notes:
Aggregate information of associates that are not individually material:
Aggregate information of associates that are not individually material:
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Aggregate carrying amount of individually immaterial associates in the consolidated statement of financial position | 51,132 | 49,230 |
| Aggregate amount of the Group’s share of those immaterial associates: Profit for the year | 2,091 | 3,073 |
| Other comprehensive loss for the year | (32) | (68) |
| Total comprehensive income for the year | 2,059 | 3,005 |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Carrying value | 58,305 | 61,806 |
| Less: allowance for impairment losses (Note 48) | (1,518) | (1,342) |
| 56,787 | 60,464 | |
Summarised financial information of the material joint ventures are disclosed below:
| As at 31 December | ||||||
|---|---|---|---|---|---|---|
| CITIC-Prudential Life Insurance Co., Ltd. | China Shipbuilding Properties Co., Ltd. | Shanghai Ruibo Real Properties Co., Ltd. | ||||
| 2023 | 2022 (Restated) | 2023 | 2022 (Restated) | 2023 | 2022 (Restated) | |
| Gross amount of the joint ventures | ||||||
| Total assets | 236,287 | 208,757 | 16,260 | 14,049 | 33,221 | 29,771 |
| Total liabilities | (225,093) | (192,319) | (8,819) | (6,781) | (24,223) | (21,256) |
| Net assets | 11,194 | 16,438 | 7,441 | 7,268 | 8,998 | 8,515 |
| Equity attributable to: | ||||||
| – Joint ventures’ shareholders | 10,577 | 15,856 | 7,441 | 7,268 | 8,998 | 8,515 |
| – Non-controlling interests in joint ventures | 617 | 582 | – | – | – | – |
| 11,194 | 16,438 | 7,441 | 7,268 | 8,998 | 8,515 | |
| Revenue | 11,952 | 9,722 | 533 | 3,452 | 3,662 | 63 |
| Net profit | 1,132 | 1,304 | 168 | 1,000 | 435 | 2,336 |
| Other comprehensive income for the year | (6,238) | (5,282) | – | – | – | – |
| Total comprehensive income for the year | (5,106) | (3,978) | 168 | 1,000 | 435 | 2,336 |
| Dividends received from joint ventures | 626 | – | – | – | – | – |
| Reconciled to the Group’s interests in joint ventures | ||||||
| Gross amounts of net assets of joint ventures attributable to joint ventures’ shareholders | 10,577 | 15,856 | 7,441 | 7,268 | 8,998 | 8,515 |
| Group’s effective interest | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% |
| Group’s share of net assets of joint ventures | 5,289 | 7,928 | 3,721 | 3,634 | 4,499 | 4,258 |
| Goodwill and others | 1,156 | 1,138 | 874 | 811 | 253 | 265 |
| Carrying amount in the consolidated statement of financial position | 6,445 | 9,066 | 4,595 | 4,445 | 4,752 | 4,523 |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Aggregate carrying amount of individually immaterial joint ventures in the consolidated statement of financial position | 40,995 | 42,430 |
| Aggregate amount of the Group’s share of individually immaterial joint ventures | ||
| Profit for the year | 2,763 | 2,412 |
| Other comprehensive loss for the year | (586) | (44) |
| Total comprehensive income for the year | 2,177 | 2,368 |
| Property, plant and equipment | ||||||||
|---|---|---|---|---|---|---|---|---|
| Plant and buildings | Machinery and equipment | Construction in progress | Office and other equipment | Vehicles and vessels | Others | Total | Investment properties | |
| Cost or valuation: | ||||||||
| At 1 January 2023 (restated) | 94,467 | 149,277 | 19,662 | 20,409 | 13,881 | 9,584 | 307,280 | 35,407 |
| Exchange adjustments | 369 | 1,626 | (252) | 59 | 57 | 121 | 1,980 | 185 |
| Business combinations | 9,661 | 30,714 | 5,870 | 659 | 482 | 5 | 47,391 | 220 |
| Additions | 563 | 7,055 | 7,690 | 7,846 | 662 | 1,049 | 24,865 | 693 |
| Disposals | (1,676) | (1,632) | (790) | (1,120) | (909) | (999) | (7,126) | (341) |
| Transfers | 2,654 | 5,023 | (12,134) | 648 | 574 | 1,089 | (2,146) | 2,146 |
| Changes in fair value of investment properties | – | – | – | – | – | – | – | (157) |
| At 31 December 2023 | 106,038 | 192,063 | 20,046 | 28,501 | 14,747 | 10,849 | 372,244 | 38,153 |
| Accumulated depreciation, amortisation and impairment losses: | ||||||||
| At 1 January 2023 (restated) | (27,378) | (95,486) | (537) | (12,248) | (6,135) | (5,693) | (147,477) | – |
| Exchange adjustments | (197) | (1,021) | – | (38) | (27) | (77) | (1,360) | – |
| Charge for the year | (3,549) | (7,695) | – | (2,988) | (837) | (1,692) | (16,761) | – |
| Disposals | 883 | 1,239 | 20 | 855 | 629 | 109 | 3,735 | – |
| Impairments (losses)/reversals (Note 48) | (3) | 432 | (20) | (3) | (63) | (5) | 338 | – |
| At 31 December 2023 | (30,244) | (102,531) | (537) | (14,422) | (6,433) | (7,358) | (161,525) | – |
| Net book value: | ||||||||
| At 31 December 2023 | 75,794 | 89,532 | 19,509 | 14,079 | 8,314 | 3,491 | 210,719 | 38,153 |
| Represented by: | ||||||||
| Cost | 106,038 | 192,063 | 20,046 | 28,501 | 14,747 | 10,849 | 372,244 | – |
| Valuation | – | – | – | – | – | – | – | 38,153 |
| 106,038 | 192,063 | 20,046 | 28,501 | 14,747 | 10,849 | 372,244 | 38,153 | |
| Property, plant and equipment | ||||||||
|---|---|---|---|---|---|---|---|---|
| Plant and buildings | Machinery and equipment | Construction in progress | Office and other equipment | Vehicles and vessels | Others | Total | Investment properties | |
| Cost or valuation: | ||||||||
| At 1 January 2022 (restated) | 79,987 | 140,943 | 22,356 | 18,758 | 11,182 | 7,197 | 280,423 | 32,709 |
| Exchange adjustments | 1,445 | 5,762 | 214 | 6 | 795 | 616 | 8,838 | 967 |
| Business combinations | 5,482 | 80 | 1,301 | 460 | 2,182 | 41 | 9,546 | 1,478 |
| Additions | 1,075 | 1,222 | 9,220 | 2,811 | 481 | 1,233 | 16,042 | 1,180 |
| Disposals | (838) | (1,853) | (1,007) | (2,252) | (764) | (959) | (7,673) | (171) |
| Transfers | 7,316 | 3,123 | (12,422) | 626 | 5 | 1,456 | 104 | (104) |
| Changes in fair value of investment properties | – | – | – | – | – | – | – | (652) |
| At 31 December 2022 (restated) | 94,467 | 149,277 | 19,662 | 20,409 | 13,881 | 9,584 | 307,280 | 35,407 |
| Accumulated depreciation, amortisation and impairment losses: | ||||||||
| At 1 January 2022 (restated) | (24,990) | (87,318) | (601) | (12,086) | (5,875) | (4,588) | (135,458) | – |
| Exchange adjustments | (686) | (4,153) | (35) | (51) | (290) | (294) | (5,509) | – |
| Charge for the year | (2,422) | (5,752) | – | (2,220) | (497) | (1,128) | (12,019) | – |
| Disposals | 732 | 1,761 | 121 | 2,110 | 527 | 328 | 5,579 | – |
| Impairment losses (Note 48) | (12) | (24) | (22) | (1) | – | (11) | (70) | – |
| At 31 December 2022 (restated) | (27,378) | (95,486) | (537) | (12,248) | (6,135) | (5,693) | (147,477) | – |
| Net book value: | ||||||||
| At 31 December 2022 (restated) | 67,089 | 53,791 | 19,125 | 8,161 | 7,746 | 3,891 | 159,803 | 35,407 |
| Represented by: | ||||||||
| Cost | 94,467 | 149,277 | 19,662 | 20,409 | 13,881 | 9,584 | 307,280 | – |
| Valuation | – | – | – | – | – | – | – | 35,407 |
| 94,467 | 149,277 | 19,662 | 20,409 | 13,881 | 9,584 | 307,280 | 35,407 | |
(a)
Fair value measurement of investment properties
(i)
Property valuation
Investment properties were revalued by the following independent professionally qualified valuers. Management of the Group had discussions with the valuers on the valuation assumptions and valuation results when the valuation is performed at each financial position date.| Properties located in | Valuers in 2023 |
| Chinese mainland and Hong Kong | China Enterprise Appraisals Consultation Co., Ltd. Knight Frank Petty Limited China United Assets Appraisal Group Jones Lang LaSalle Corporate Appraisal and Advisory Limited Pan-China Assets Appraisal Co.,Ltd. ZhongHe Appraisal Co., Ltd. Centaline Surveyors Limited Prudential Surveyors (Hong Kong) Limited Martin Reynolds AAPI MRICS Savills |
| Overseas | Jones Lang LaSalle Corporate Appraisal and Advisory Company Limited |
| Properties located in | Valuers in 2022 |
| Chinese mainland and Hong Kong | China Enterprise Appraisals Consultation Co., Ltd. Centaline Surveyors Limited Prudential Surveyors (Hong Kong) Limited Knight Frank Petty Limited China United Assets Appraisal Group Jones Lang LaSalle Corporate Appraisal and Advisory Limited Martin Reynolds AAPI MRICS Savills |
| Overseas | Jones Lang LaSalle Corporate Appraisal and Advisory Company Limited |
(ii)
Fair value hierarchy
The following table presents the fair value of the Group’s properties measured at the financial position dates on a recurring basis, categorised into the three-level hierarchy as defined in HKFRS 13, Fair value measurement. The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:Level 1 valuations:
Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date;
Level 2 valuations:
Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available;
Level 3 valuations:
Fair value measured using significant unobservable inputs.
| Level 3 For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 | |
| Recurring fair value measurement | ||
| Investment properties – Chinese mainland | ||
| At 1 January | 23,815 | 21,973 |
| Exchange adjustments | 5 | 16 |
| Business combinations | 219 | 1,329 |
| Additions | 355 | 1,151 |
| Disposals | (301) | (28) |
| Transfers | 2,098 | (104) |
| Changes in fair value of investment properties | (237) | (522) |
| At 31 December | 25,954 | 23,815 |
| Investment properties – Hong Kong | ||
| At 1 January | 11,094 | 10,329 |
| Exchange adjustments | 162 | 946 |
| Additions | 338 | 29 |
| Disposals | (10) | (139) |
| Transfers | 48 | – |
| Change in fair value of investment properties | 74 | (71) |
| At 31 December | 11,706 | 11,094 |
| Investment properties – Overseas | ||
| At 1 January | 498 | 407 |
| Exchange adjustments | 18 | 5 |
| Business combinations | 1 | 149 |
| Disposals | (30) | (4) |
| Change in fair value of investment properties | 6 | (59) |
| At 31 December | 493 | 498 |
| L | ||
|---|---|---|
| ) | ||
(iii)
Valuation techniques and inputs used in Level 3 fair value measurements
The fair value of investment properties located in Chinese mainland is determined by using income capitalisation approach and depreciated replacement cost approach under the circumstances.The income capitalisation approach is the sum of the term value and the reversionary value by discounting the contracted annual rent at the capitalisation rate over the existing lease period; and the sum of average unit market rent at the capitalisation rate after the existing lease period.
Depreciated replacement cost values a property by taking into account of its current cost of replacement or reproduction, less deduction for physical deterioration and all relevant forms of obsolescence and optimisation. The fair value measurement is based on an estimate of the market value for the existing use of the land, plus the depreciated replacement cost.
The fair value of certain of investment properties located in Hong Kong is determined using market comparison approach by reference to recent sales price of comparable properties on a price per square foot basis, adjusted for a premium or a discount specific to the quality of the Group’s buildings compared to the recent sales. Higher premium for higher quality buildings will result in a higher fair value measurement.
The fair value of certain other investment properties located in Hong Kong is determined by using income capitalisation approach and with reference to sales evidence as available in the market.
| For the year ended 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Cost: | ||
| At 1 January | 31,757 | 19,349 |
| Additions | 282 | 11,447 |
| Disposals | – | (22) |
| Exchange differences and others | 197 | 983 |
| At 31 December | 32,236 | 31,757 |
| Accumulated impairment losses: | ||
| At 1 January | (6,134) | (1,697) |
| Additions (Note 48) | (26) | (4,363) |
| Disposals | – | 22 |
| Exchange differences and others | – | (96) |
| At 31 December | (6,160) | (6,134) |
| Net book value: | ||
| At 31 December | 26,076 | 25,623 |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Comprehensive financial services | 12,783 | 12,729 |
| Advanced intelligent manufacturing | 981 | 996 |
| Advanced materials | 512 | 206 |
| New consumption | 11,190 | 11,046 |
| New-type urbanisation | 610 | 646 |
| 26,076 | 25,623 | |
For the comprehensive financial service segment, the Group included CITIC Securities in the consolidation scope, generating goodwill of RMB11,430 million. As at 31 December 2023, the Group allocated such goodwill to CITIC Securities for impairment test, and evaluated whether it was impaired based on the present value of the expected future cash flows. The management determined the growth rate based on historical experience and forecasts of market development. The growth rate of the forecast period was determined according to the budget approved by management, and growth rate of 2% for the stable period was used after the forecast period. The Group adopted 15.13%, which could reflect the overall risks of CITIC Securities, as the pre-tax discount rate. As the calculation showed, the goodwill arising from consolidation of CITIC Securities had not been impaired.
Among the total book value of the Group’s goodwill, an amount of RMB8,806 million was from acquisition of subsidiaries by CITIC Telecom International. The recoverable amounts of the groups of cash-generating units are determined based on value-in-use calculations which is higher than the carrying amount. The calculations use cash flow projections based on financial budgets approved by management covering a three-year period. For the subsequent two years of the model, data from the financial budgets is extrapolated generally using simplified assumptions such as macro-economic and industry assumptions. Cash flows after the first five-year period are extrapolated generally using expected annual long-term growth rates, in order to calculate the terminal value. Key assumptions used for the value-in-use calculations are as follows:
| 2023 | 2022 | |
|---|---|---|
| Telecom Services revenue growth rates | -8.2%~2.4% | 0.1%~7.3% |
| Long-term growth rates | 3.0% | 3.0% |
| Pre-tax discount rates | 10.7%~12.5% | 10.5%~13.4% |
For the new-type urbanisation segment, RMB4,801 million in the original carrying amount of the Group’s goodwill was generated from acquisition of a subsidiary of CITIC Environment Investment Group Co., Ltd. (“CITIC Environment”), and an impairment loss of RMB4,323 million was provided in 2022. As at 31 December 2023, management evaluated whether it was impaired based on the present value of the expected future cash flows. As the calculation showed, there is no further impairment on the goodwill in 2023.
(a)
Current income tax in the statement of financial position represents:
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Income tax payable | 9,234 | 15,727 |
(b)
Deferred tax assets/(liabilities) recognised:
The components of deferred tax assets recognised in the consolidated statement of financial position and the movements during the years ended 31 December 2023 and 2022, without taking into consideration the offsetting of balances within the same tax jurisdiction, are as follows:| Tax losses | Accrued expenses | Impairment loss on assets other than fixed assets and intangible assets | Fair value changes of financial instruments | Fixed assets and intangible assets | Others | Total | |
|---|---|---|---|---|---|---|---|
| Deferred tax assets | |||||||
| At 1 January 2022 (restated) | 11,816 | 4,166 | 48,427 | 571 | 2,815 | 2,283 | 70,078 |
| Charged to profit or loss | (161) | 66 | 5,758 | 3,132 | (424) | 1,209 | 9,580 |
| Charged to other comprehensive income | – | (71) | 9 | 9 | – | 47 | (6) |
| Business combinations | – | 4,679 | 2,952 | 571 | 9 | 354 | 8,565 |
| Exchange adjustments and others | 1,011 | 75 | 62 | 11 | 189 | (156) | 1,192 |
| At 31 December 2022 (restated) | 12,666 | 8,915 | 57,208 | 4,294 | 2,589 | 3,737 | 89,409 |
| At 1 January 2023 (restated) | 12,666 | 8,915 | 57,208 | 4,294 | 2,589 | 3,737 | 89,409 |
| Charged to profit or loss | 155 | 1,940 | (166) | (2,416) | (560) | (439) | (1,486) |
| Charged to other comprehensive income | – | 12 | (4) | 49 | 7 | 190 | 254 |
| Business combinations | 637 | 202 | 32 | – | – | 600 | 1,471 |
| Exchange adjustments and others | 180 | (5) | 55 | 9 | 10 | (16) | 233 |
| At 31 December 2023 | 13,638 | 11,064 | 57,125 | 1,936 | 2,046 | 4,072 | 89,881 |
| Fair value changes of financial instruments | Temporary differences on fixed assets and intangible assets | Revaluation of investment properties | Others | Total | |
|---|---|---|---|---|---|
| Deferred tax liabilities | |||||
| At 1 January 2022 (restated) | (3,005) | (1,520) | (3,853) | (5,978) | (14,356) |
| Charged to profit or loss | (597) | (219) | 121 | 285 | (410) |
| Charged to other comprehensive income | 2,431 | – | – | 61 | 2,492 |
| Business combinations | (3,098) | (1,637) | – | (1,336) | (6,071) |
| Exchange adjustments and others | (6) | (89) | (9) | (283) | (387) |
| At 31 December 2022 (restated) | (4,275) | (3,465) | (3,741) | (7,251) | (18,732) |
| At 1 January 2023 (restated) | (4,275) | (3,465) | (3,741) | (7,251) | (18,732) |
| Charged to profit or loss | (148) | (184) | 180 | (107) | (259) |
| Charged to other comprehensive income | (1,833) | (5) | (1) | (316) | (2,155) |
| Business combinations | – | (586) | (659) | (1,196) | (2,441) |
| Exchange adjustments and others | 237 | 5 | (103) | 147 | 286 |
| At 31 December 2023 | (6,019) | (4,235) | (4,324) | (8,723) | (23,301) |
(c)
Deductible temporary difference and tax losses not recognised as deferred tax assets
The Group has not recognised any deferred tax assets in respect of the following items:| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Deductible temporary differences | 10,683 | 1,686 |
| Tax losses | 28,923 | 20,908 |
| 39,606 | 22,594 | |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Banks | 275,313 | 317,494 |
| Non-bank financial institutions | 614,494 | 781,503 |
| 889,807 | 1,098,997 | |
| Accrued interest | 3,758 | 4,102 |
| 893,565 | 1,103,099 | |
| Analysed by remaining maturity: | ||
| – On demand | 478,396 | 581,640 |
| – Within 3 months | 273,634 | 193,374 |
| – Between 3 months and 1 year | 137,777 | 323,983 |
| 889,807 | 1,098,997 | |
| Accrued interest | 3,758 | 4,102 |
| 893,565 | 1,103,099 | |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Banks | 139,455 | 102,736 |
| Non-bank financial institutions | 10,650 | 5,717 |
| 150,105 | 108,453 | |
| Accrued interest | 388 | 283 |
| 150,493 | 108,736 | |
| Analysed by remaining maturity: | ||
| – Within 3 months | 99,872 | 71,881 |
| – Between 3 months and 1 year | 47,005 | 35,918 |
| – Over 1 year | 3,228 | 654 |
| 150,105 | 108,453 | |
| Accrued interest | 388 | 283 |
| 150,493 | 108,736 | |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Not designated | ||
| Debt instruments | 7,302 | 7,903 |
| Stocks | 10,050 | 9,226 |
| Non-controlling interests in consolidated structured entities and others | 1,158 | 1,306 |
| 18,510 | 18,435 | |
| Financial liabilities designated as at fair value through profit or loss | ||
| Stocks | 47 | – |
| Beneficiary certificates and structured notes | 64,280 | 65,484 |
| Non-controlling interests in consolidated structured entities and others | 5,715 | 10,926 |
| 70,042 | 76,410 | |
| 88,552 | 94,845 | |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Customer brokerage deposits | 282,534 | 279,001 |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Financial liabilities | ||
| Trade and bills payable | 113,124 | 90,278 |
| Settlement accounts | 32,535 | 30,585 |
| Client deposits payables | 134,850 | 134,917 |
| Dividend payables | 1,411 | 498 |
| Other payables | 104,119 | 116,327 |
| 386,039 | 372,605 | |
| Non-financial liabilities | ||
| Advances | 308 | 212 |
| Other taxes payables | 5,601 | 7,131 |
| 5,909 | 7,343 | |
| 391,948 | 379,948 | |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Within 1 year | 93,670 | 74,496 |
| Between 1 and 2 years | 4,997 | 4,849 |
| Between 2 and 3 years | 2,629 | 1,187 |
| Over 3 years | 11,828 | 9,746 |
| 113,124 | 90,278 | |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| By counterparties | ||
| The People’s Bank of China | 391,152 | 217,858 |
| Banks | 194,182 | 104,805 |
| Non-bank financial institutions | 37,939 | 27,693 |
| Others | 121,105 | 119,564 |
| 744,378 | 469,920 | |
| Accrued interest | 193 | 557 |
| 744,571 | 470,477 | |
| By types of collateral | ||
| Debt securities | 553,472 | 308,493 |
| Discounted bills | 93,212 | 69,354 |
| Stock | 31,624 | 30,520 |
| Precious metals | 19,197 | 14,954 |
| Others | 46,873 | 46,599 |
| 744,378 | 469,920 | |
| Accrued interest | 193 | 557 |
| 744,571 | 470,477 | |
(a)
Types of deposits from customers
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Demand deposits | ||
| Corporate customers | 2,149,823 | 1,931,755 |
| Personal customers | 340,432 | 349,013 |
| 2,490,255 | 2,280,768 | |
| Time and call deposits | ||
| Corporate customers | 1,755,882 | 1,854,108 |
| Personal customers | 1,125,384 | 942,803 |
| 2,881,266 | 2,796,911 | |
| Outward remittance and remittance payables | 19,022 | 14,420 |
| Accrued interest | 69,450 | 58,673 |
| 5,459,993 | 5,150,772 | |
(b)
Deposits from customers include pledged deposits for the following items:
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Bank acceptances | 407,634 | 348,926 |
| Letters of credit | 23,736 | 25,132 |
| Guarantees | 21,005 | 17,091 |
| Others | 38,651 | 55,709 |
| 491,026 | 446,858 | |
(a)
Types of loans
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Bank loans | ||
| Unsecured loans | 153,804 | 108,069 |
| Loan pledged with assets (note (d)) | 42,996 | 17,154 |
| 196,800 | 125,223 | |
| Other loans | ||
| Unsecured loans | 36,091 | 30,262 |
| Loan pledged with assets (note (d)) | 2,241 | 603 |
| 38,332 | 30,865 | |
| 235,132 | 156,088 | |
| Accrued interest | 638 | 621 |
| 235,770 | 156,709 | |
(b)
Maturity of loans
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Bank loans | ||
| – Within 1 year or on demand | 54,033 | 51,434 |
| – Between 1 and 2 years | 60,670 | 19,717 |
| – Between 2 and 5 years | 49,774 | 34,628 |
| – Over 5 years | 32,323 | 19,444 |
| 196,800 | 125,223 | |
| Other loans | ||
| – Within 1 year or on demand | 2,803 | 7,688 |
| – Between 1 and 2 years | 1,373 | 17,865 |
| – Between 2 and 5 years | 34,113 | 5,257 |
| – Over 5 years | 43 | 55 |
| 38,332 | 30,865 | |
| 235,132 | 156,088 | |
| Accrued interest | 638 | 621 |
| 235,770 | 156,709 | |
(c)
Bank and other loans are denominated in the following currencies
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| RMB | 88,766 | 48,687 |
| US$ | 55,247 | 41,875 |
| HK$ | 76,150 | 61,554 |
| Other currencies | 14,969 | 3,972 |
| 235,132 | 156,088 | |
| Accrued interest | 638 | 621 |
| 235,770 | 156,709 | |
(d)
As at 31 December 2023, the Group’s bank and other loans of RMB45,236 million (31 December 2022: RMB15,165 million) are pledged with cash and deposits, trade and other receivables, inventories, financial assets held for trading, fixed assets, right of use assets and intangible assets with an aggregate carrying amount of RMB88,451 million (31 December 2022: RMB71,503 million).
(e)
The Group’s banking facilities are subject to the fulfilment of covenants relating to balance sheet ratios or ownership of a minimum shareholding in certain entities of the Group, as are commonly found in lending arrangements with financial institutions. If the Group were to breach the covenants the drawn down facilities would become payable on demand. The Group regularly monitors its compliance with these covenants. Further details of the Group’s management of liquidity risk are set out in Note 50(b). As at 31 December 2023, none of the covenants relating to drawn down facilities have been breached (31 December 2022: Nil).
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Corporate bonds issued (note (a)) | 233,290 | 202,077 |
| Notes issued (note (b)) | 151,813 | 128,709 |
| Subordinated bonds issued (note (c)) | 82,569 | 98,926 |
| Certificates of deposit issued (note (d)) | 1,418 | 1,035 |
| Certificates of interbank deposit issued (note (e)) | 705,273 | 720,080 |
| Convertible corporate bonds (note (f)) | 17,670 | 18,212 |
| Beneficiary certificates (note (g)) | 21,547 | 6,040 |
| 1,213,580 | 1,175,079 | |
| Accrued interest | 7,527 | 7,061 |
| 1,221,107 | 1,182,140 | |
| Analysed by remaining maturity | ||
| – Within 1 year or on demand | 828,068 | 832,239 |
| – Between 1 and 2 years | 121,781 | 61,436 |
| – Between 2 and 5 years | 136,498 | 128,629 |
| – Over 5 years | 127,233 | 152,775 |
| 1,213,580 | 1,175,079 | |
| Accrued interest | 7,527 | 7,061 |
| 1,221,107 | 1,182,140 | |
Notes:
As approved by the relevant regulatory authorities in China, CITIC Pacific Special Steel Group Co., Ltd. made a public offering of RMB5,000 million A-share convertible corporate bonds (the “convertible bonds”) on 25 February 2022. The convertible bonds of CITIC Pacific Special Steel Group Co., Ltd. have a term of 6 years from 25 February 2022 to 24 February 2028, at coupon rates of 0.2% for the first year, 0.4% for the second year, 0.9% for the third year, 1.3% for the fourth year, 1.6% for the fifth year and 2.0% for the sixth year. The conversion of these convertible bonds begins on the first trading day (3 March 2022) after six months upon the completion date of the offering until the maturity date (from 5 September 2022 to 24 February 2028). As at 31 December 2023, convertible bonds were recorded as debt instruments issued of RMB4,776 million and non-controlling interests of RMB693 million, respectively.
(a)
Corporate bonds issued
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| The Company (note (i)) | 43,401 | 54,407 |
| CITIC Corporation Limited (“CITIC Corporation”) (note (ii)) | 27,790 | 30,639 |
| CITIC Securities (note (iii)) | 158,415 | 113,502 |
| CITIC Telecom International (note (iv)) | 3,184 | 3,129 |
| CITIC Pacific Limited’s (“CITIC Pacific”) subsidiaries (note (v)) | 500 | 400 |
| 233,290 | 202,077 | |
(i)
Details of corporate bonds issued by the Company
| As at 31 December 2023 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| US$ Notes 6.1 | US$ | 110 | 2014-07-18 | 2024-01-18 | 4.70% |
| HK$ Notes 2 | HK$ | 420 | 2014-07-25 | 2024-07-25 | 4.35% |
| US$ Notes 6.2 | US$ | 90 | 2014-10-29 | 2024-01-18 | 4.70% |
| US$ Notes 7 | US$ | 280 | 2015-04-14 | 2035-04-14 | 4.60% |
| US$ Notes 8 | US$ | 150 | 2016-02-04 | 2041-02-04 | 4.88% |
| US$ Notes 9 | US$ | 350 | 2016-02-04 | 2036-02-04 | 4.75% |
| US$ Notes 10 | US$ | 90 | 2016-04-25 | 2036-04-25 | 4.65% |
| US$ Notes 11 | US$ | 210 | 2016-04-25 | 2046-04-25 | 4.85% |
| US$ Notes 13 | US$ | 750 | 2016-06-14 | 2026-06-14 | 3.70% |
| US$ Notes 14 | US$ | 200 | 2016-09-07 | 2031-09-07 | 3.98% |
| US$ Notes 15 | US$ | 250 | 2016-09-07 | 2046-09-07 | 4.49% |
| US$ Notes 16 | US$ | 750 | 2017-02-28 | 2027-02-28 | 3.88% |
| US$ Notes 19 | US$ | 500 | 2018-01-11 | 2028-01-11 | 4.00% |
| US$ Notes 20 | US$ | 75 | 2018-03-13 | 2038-03-13 | 4.85% |
| US$ Notes 21 | US$ | 200 | 2018-04-18 | 2048-04-18 | 5.07% |
| US$ Notes 22 | US$ | 300 | 2020-02-25 | 2025-02-25 | 2.45% |
| US$ Notes 23 | US$ | 700 | 2020-02-25 | 2030-02-25 | 2.85% |
| US$ Notes 24 | US$ | 700 | 2022-02-17 | 2027-02-17 | 2.88% |
| US$ Notes 25 | US$ | 300 | 2022-02-17 | 2032-02-17 | 3.50% |
| US$ Notes 26 | US$ | 100 | 2022-08-02 | 2027-02-17 | 2.88% |
| As at 31 December 2022 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| US$ Notes 4.1 | US$ | 750 | 2012-10-17 | 2023-01-17 | 6.80% |
| US$ Notes 4.2 | US$ | 250 | 2012-12-11 | 2023-01-17 | 6.80% |
| US$ Notes 4.3 | US$ | 400 | 2014-07-18 | 2023-01-17 | 6.80% |
| US$ Notes 6.1 | US$ | 110 | 2014-07-18 | 2024-01-18 | 4.70% |
| HK$ Notes 2 | HK$ | 420 | 2014-07-25 | 2024-07-25 | 4.35% |
| US$ Notes 6.2 | US$ | 90 | 2014-10-29 | 2024-01-18 | 4.70% |
| US$ Notes 7 | US$ | 280 | 2015-04-14 | 2035-04-14 | 4.60% |
| US$ Notes 8 | US$ | 150 | 2016-02-04 | 2041-02-04 | 4.88% |
| US$ Notes 9 | US$ | 350 | 2016-02-04 | 2036-02-04 | 4.75% |
| US$ Notes 10 | US$ | 90 | 2016-04-25 | 2036-04-25 | 4.65% |
| US$ Notes 11 | US$ | 210 | 2016-04-25 | 2046-04-25 | 4.85% |
| US$ Notes 13 | US$ | 750 | 2016-06-14 | 2026-06-14 | 3.70% |
| US$ Notes 14 | US$ | 200 | 2016-09-07 | 2031-09-07 | 3.98% |
| US$ Notes 15 | US$ | 250 | 2016-09-07 | 2046-09-07 | 4.49% |
| US$ Notes 16 | US$ | 750 | 2017-02-28 | 2027-02-28 | 3.88% |
| US$ Notes 18 | US$ | 250 | 2018-01-11 | 2023-07-11 | 3.50% |
| US$ Notes 19 | US$ | 500 | 2018-01-11 | 2028-01-11 | 4.00% |
| US$ Notes 20 | US$ | 75 | 2018-03-13 | 2038-03-13 | 4.85% |
| US$ Notes 21 | US$ | 200 | 2018-04-18 | 2048-04-18 | 5.07% |
| US$ Notes 22 | US$ | 300 | 2020-02-25 | 2025-02-25 | 2.45% |
| US$ Notes 23 | US$ | 700 | 2020-02-25 | 2030-02-25 | 2.85% |
| US$ Notes 24 | US$ | 700 | 2022-02-17 | 2027-02-17 | 2.88% |
| US$ Notes 25 | US$ | 300 | 2022-02-17 | 2032-02-17 | 3.50% |
| US$ Notes 26 | US$ | 100 | 2022-08-02 | 2027-02-17 | 2.88% |
(ii)
Details of corporate bonds issued by CITIC Corporation
| As at 31 December 2023 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| 05 CITIC bond-2 | RMB | 4,000 | 2005-12-07 | 2025-12-06 | 4.60% |
| 19 CITIC bond-2 | RMB | 1,500 | 2019-02-25 | 2024-02-25 | 3.85% |
| 19 CITIC bond-3 | RMB | 2,000 | 2019-03-19 | 2029-03-19 | 4.59% |
| 19 CITIC bond-4 | RMB | 2,000 | 2019-04-22 | 2029-04-22 | 4.71% |
| 19 CITIC bond-5 | RMB | 1,800 | 2019-07-17 | 2034-07-17 | 4.60% |
| 19 CITIC bond-6 | RMB | 700 | 2019-07-17 | 2029-07-17 | 4.46% |
| 19 CITIC bond-7 | RMB | 500 | 2019-08-14 | 2029-08-14 | 4.38% |
| 19 CITIC bond-8 | RMB | 2,000 | 2019-08-14 | 2039-08-14 | 4.58% |
| 19 CITIC bond-9 | RMB | 1,000 | 2019-11-05 | 2039-11-05 | 4.65% |
| 20 CITIC bond-2 | RMB | 2,000 | 2020-02-26 | 2030-02-26 | 3.88% |
| 20 CITIC bond-3 | RMB | 1,000 | 2020-03-23 | 2030-03-23 | 4.00% |
| 20 CITIC bond-4 | RMB | 600 | 2020-03-23 | 2040-03-23 | 4.30% |
| 20 CITIC bond-5 | RMB | 1,000 | 2020-04-21 | 2030-04-21 | 3.87% |
| 20 CITIC bond-6 | RMB | 1,500 | 2020-04-21 | 2040-04-21 | 4.16% |
| 20 CITIC bond-8 | RMB | 1,900 | 2020-05-11 | 2040-05-11 | 4.20% |
| 21 CITIC bond-1 | RMB | 1,000 | 2021-11-02 | 2026-11-02 | 3.49% |
| 21 CITIC bond-2 | RMB | 2,000 | 2021-11-02 | 2031-11-02 | 3.79% |
| 23 CITIC bond-1 | RMB | 1,200 | 2023-10-23 | 2028-10-23 | 3.16% |
| 23 CITIC bond-2 | RMB | 800 | 2023-10-23 | 2043-10-23 | 3.35% |
| 23 CITIC bond-3 | RMB | 2,000 | 2023-11-02 | 2028-11-02 | 3.19% |
| As at 31 December 2022 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| 03 CITIC bond-2 | RMB | 6,000 | 2003-12-10 | 2023-12-09 | 5.10% |
| 05 CITIC bond-2 | RMB | 4,000 | 2005-12-07 | 2025-12-06 | 4.60% |
| 19 CITIC bond-2 | RMB | 1,500 | 2019-02-25 | 2024-02-25 | 3.85% |
| 19 CITIC bond-3 | RMB | 2,000 | 2019-03-19 | 2029-03-19 | 4.59% |
| 19 CITIC bond-4 | RMB | 2,000 | 2019-04-22 | 2029-04-22 | 4.71% |
| 19 CITIC bond-5 | RMB | 1,800 | 2019-07-17 | 2034-07-17 | 4.60% |
| 19 CITIC bond-6 | RMB | 700 | 2019-07-17 | 2029-07-17 | 4.46% |
| 19 CITIC bond-7 | RMB | 500 | 2019-08-14 | 2029-08-14 | 4.38% |
| 19 CITIC bond-8 | RMB | 2,000 | 2019-08-14 | 2039-08-14 | 4.58% |
| 19 CITIC bond-9 | RMB | 1,000 | 2019-11-05 | 2039-11-05 | 4.65% |
| 20 CITIC bond-2 | RMB | 2,000 | 2020-02-26 | 2030-02-26 | 3.88% |
| 20 CITIC bond-3 | RMB | 1,000 | 2020-03-23 | 2030-03-23 | 4.00% |
| 20 CITIC bond-4 | RMB | 600 | 2020-03-23 | 2040-03-23 | 4.30% |
| 20 CITIC bond-5 | RMB | 1,000 | 2020-04-21 | 2030-04-21 | 3.87% |
| 20 CITIC bond-6 | RMB | 1,500 | 2020-04-21 | 2040-04-21 | 4.16% |
| 20 CITIC bond-8 | RMB | 1,900 | 2020-05-11 | 2040-05-11 | 4.20% |
| 21 CITIC bond-1 | RMB | 1,000 | 2021-11-02 | 2026-11-02 | 3.49% |
| 21 CITIC bond-2 | RMB | 2,000 | 2021-11-02 | 2031-11-02 | 3.79% |
(iii)
Details of corporate bonds issued by CITIC Securities
| As at 31 December 2023 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| 15 CITIC 02 | RMB | 2,500 | 2015-06-24 | 2025-06-25 | 5.10% |
| 19 CS G2 | RMB | 1,000 | 2019-09-05 | 2024-09-10 | 3.78% |
| 20 CS G2 | RMB | 2,000 | 2020-02-19 | 2025-02-21 | 3.31% |
| 20 CS G4 | RMB | 2,000 | 2020-03-06 | 2025-03-10 | 3.20% |
| 20 CS G7 | RMB | 1,000 | 2020-04-09 | 2025-04-14 | 3.10% |
| 20 CS 20 | RMB | 800 | 2020-09-08 | 2030-09-11 | 4.20% |
| 20 CS 24 | RMB | 900 | 2020-10-23 | 2030-10-28 | 4.27% |
| 21 CS 02 | RMB | 4,600 | 2021-01-20 | 2024-01-25 | 3.56% |
| 21 CS 03 | RMB | 3,200 | 2021-01-20 | 2031-01-25 | 4.10% |
| 21 CS 04 | RMB | 1,500 | 2021-02-24 | 2024-03-01 | 3.60% |
| 21 CS 05 | RMB | 3,000 | 2021-02-24 | 2031-03-01 | 4.10% |
| 21 CS 06 | RMB | 2,500 | 2021-03-16 | 2031-03-19 | 4.10% |
| 21 CS 07 | RMB | 1,400 | 2021-04-08 | 2031-04-13 | 4.04% |
| 21 CS 08 | RMB | 1,000 | 2021-06-08 | 2026-06-11 | 3.70% |
| 21 CS 09 | RMB | 2,500 | 2021-06-08 | 2031-06-11 | 4.03% |
| 21 CS 10 | RMB | 1,500 | 2021-07-06 | 2026-07-09 | 3.62% |
| 21 CS 11 | RMB | 1,500 | 2021-07-06 | 2031-07-09 | 3.92% |
| 21 CS 12 | RMB | 3,000 | 2021-08-18 | 2024-08-23 | 3.01% |
| 21 CS 13 | RMB | 1,000 | 2021-08-18 | 2026-08-23 | 3.34% |
| 21 CS 14 | RMB | 4,500 | 2021-09-13 | 2024-09-16 | 3.08% |
| 21 CS 16 | RMB | 2,200 | 2021-09-23 | 2024-09-27 | 3.09% |
| 21 CS 17 | RMB | 1,800 | 2021-09-23 | 2026-09-28 | 3.47% |
| 21 CS 18 | RMB | 2,500 | 2021-10-14 | 2024-10-19 | 3.25% |
| 21 CS 19 | RMB | 2,000 | 2021-10-14 | 2026-10-19 | 3.59% |
| 21 CS 20 | RMB | 3,000 | 2021-11-19 | 2024-11-24 | 3.07% |
| 21 CS 21 | RMB | 3,000 | 2021-12-09 | 2024-12-14 | 2.97% |
| 22 CS 01 | RMB | 500 | 2022-02-11 | 2027-01-29 | 3.20% |
| 22 CS 02 | RMB | 1,000 | 2022-02-11 | 2032-02-06 | 3.69% |
| 22 CS 03 | RMB | 1,000 | 2022-03-08 | 2025-03-11 | 3.03% |
| 22 CS 04 | RMB | 500 | 2022-03-08 | 2027-03-11 | 3.40% |
| 22 CS 05 | RMB | 3,000 | 2022-08-19 | 2025-08-24 | 2.50% |
| 23 CS 10 | RMB | 2,000 | 2023-05-25 | 2026-05-30 | 2.89% |
| 23 CS 11 | RMB | 500 | 2023-06-08 | 2025-06-13 | 2.64% |
| 23 CS 12 | RMB | 2,500 | 2023-06-08 | 2026-06-13 | 2.80% |
| 23 CS G1 | RMB | 3,000 | 2023-02-03 | 2025-02-08 | 2.95% |
| 23 CS G2 | RMB | 1,500 | 2023-02-16 | 2025-02-21 | 2.89% |
| 23 CS G3 | RMB | 3,000 | 2023-02-16 | 2026-02-21 | 3.06% |
| 23 CS G4 | RMB | 2,000 | 2023-03-08 | 2025-03-13 | 3.01% |
| 23 CS G5 | RMB | 2,000 | 2023-03-08 | 2028-03-13 | 3.32% |
| 23 CS G6 | RMB | 2,000 | 2023-04-14 | 2025-04-19 | 2.87% |
| 23 CS G7 | RMB | 2,500 | 2023-04-14 | 2028-04-19 | 3.17% |
| 23 CS G8 | RMB | 3,500 | 2023-05-10 | 2024-05-15 | 2.53% |
| 23 CS G9 | RMB | 3,500 | 2023-05-10 | 2026-05-15 | 2.90% |
| 23 CS 13 | RMB | 2,000 | 2023-07-04 | 2025-07-07 | 2.64% |
| 23 CS 14 | RMB | 500 | 2023-07-04 | 2026-07-07 | 2.75% |
| 23 CS 15 | RMB | 2,500 | 2023-08-09 | 2025-08-14 | 2.54% |
| 23 CS 16 | RMB | 2,000 | 2023-08-09 | 2026-08-14 | 2.72% |
| 23 CS 17 | RMB | 1,000 | 2023-08-25 | 2025-08-30 | 2.53% |
| 23 CS 18 | RMB | 2,000 | 2023-08-25 | 2026-08-30 | 2.70% |
| 23 CS 20 | RMB | 2,500 | 2023-09-07 | 2026-09-12 | 2.93% |
| 23 CS 21 | RMB | 1,800 | 2023-09-15 | 2026-09-20 | 2.86% |
| 23 CS 22 | RMB | 2,200 | 2023-09-15 | 2028-09-20 | 3.10% |
| 23 CS 23 | RMB | 1,300 | 2023-10-16 | 2025-10-19 | 2.80% |
| 23 CS 24 | RMB | 2,700 | 2023-10-16 | 2026-10-19 | 2.90% |
| 23 CS 25 | RMB | 2,500 | 2023-11-02 | 2025-11-07 | 2.78% |
| 23 CS 26 | RMB | 3,500 | 2023-11-02 | 2028-11-07 | 3.10% |
| 23 CS 28 | RMB | 2,500 | 2023-11-16 | 2026-11-21 | 2.87% |
| 23 CS 29 | RMB | 1,000 | 2023-12-15 | 2025-12-20 | 2.80% |
| 23 CS 30 | RMB | 4,000 | 2023-12-15 | 2026-12-20 | 2.90% |
| 23 CS S7 | RMB | 3,000 | 2023-05-25 | 2024-05-24 | 2.47% |
| 23 CS S8 | RMB | 4,000 | 2023-08-16 | 2024-02-21 | 2.12% |
| 23 CS S9 | RMB | 5,000 | 2023-09-06 | 2024-09-11 | 2.45% |
| 23 CS S10 | RMB | 4,000 | 2023-09-13 | 2024-09-18 | 2.52% |
| 23 CS S11 | RMB | 4,000 | 2023-09-22 | 2024-06-27 | 2.53% |
| 23 CS S12 | RMB | 6,000 | 2023-10-26 | 2024-10-31 | 2.72% |
| 23 CS S13 | RMB | 3,000 | 2023-11-08 | 2024-11-13 | 2.70% |
| 23 CS S14 | RMB | 4,000 | 2023-11-22 | 2024-05-29 | 2.64% |
| CITICSCSI16 | US$ | 7 | 2023-07-25 | 2024-07-24 | 5.40% |
| CITICSCSI17 | US$ | 44 | 2023-07-27 | 2024-01-29 | 0.00% |
| CITICSCSI20 | US$ | 10 | 2023-08-16 | 2024-02-16 | 0.00% |
| CITICSCSI24 | US$ | 6 | 2023-09-13 | 2024-03-13 | 0.00% |
| CITICSCSI25 | US$ | 15 | 2023-10-31 | 2024-01-31 | 0.00% |
| CITICSCSI26 | US$ | 5 | 2023-11-20 | 2024-02-20 | 0.00% |
| CITICSCSI27 | RMB | 20 | 2023-11-07 | 2024-02-07 | 0.00% |
| CITICSCSI28 | US$ | 6 | 2023-12-08 | 2024-06-07 | 0.00% |
| CITICSCSI29 | US$ | 6 | 2023-12-12 | 2024-03-12 | 0.00% |
| CITICSCSI30 | US$ | 5 | 2023-12-21 | 2024-03-21 | 5.75% |
| CITICSCSI31 | US$ | 21 | 2023-12-22 | 2024-12-20 | 5.62% |
| CITICSCSI32 | US$ | 5 | 2023-12-29 | 2024-06-28 | 0.00% |
| CITICSCSI33 | US$ | 5 | 2023-12-29 | 2024-12-27 | 0.00% |
| CITICSMTNECP59 | US$ | 20 | 2023-10-19 | 2024-01-24 | 0.00% |
| CITICSMTNECP60 | US$ | 100 | 2023-12-20 | 2024-03-13 | 0.00% |
| As at 31 December 2022 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| 13 CITIC 02 | RMB | 12,000 | 2013-06-07 | 2023-06-07 | 5.05% |
| 15 CITIC 02 | RMB | 2,500 | 2015-06-25 | 2025-06-25 | 5.10% |
| 18 CS G2 | RMB | 600 | 2018-06-15 | 2023-06-15 | 4.90% |
| 19 CS G2 | RMB | 1,000 | 2019-09-10 | 2024-09-10 | 3.78% |
| 20 CS G1 | RMB | 3,000 | 2020-02-21 | 2023-02-21 | 3.02% |
| 20 CS G2 | RMB | 2,000 | 2020-02-21 | 2025-02-21 | 3.31% |
| 20 CS G3 | RMB | 2,200 | 2020-03-10 | 2023-03-10 | 2.95% |
| 20 CS G4 | RMB | 2,000 | 2020-03-10 | 2025-03-10 | 3.20% |
| 20 CS G6 | RMB | 3,300 | 2020-04-14 | 2023-04-14 | 2.54% |
| 20 CS G7 | RMB | 1,000 | 2020-04-14 | 2025-04-14 | 3.10% |
| 20 CS 09 | RMB | 4,500 | 2020-06-02 | 2023-06-02 | 2.70% |
| 20 CS 11 | RMB | 2,000 | 2020-06-19 | 2023-06-19 | 3.10% |
| 20 CS 13 | RMB | 3,000 | 2020-07-14 | 2023-07-14 | 3.58% |
| 20 CS 15 | RMB | 7,500 | 2020-07-28 | 2023-07-28 | 3.49% |
| 20 CS 16 | RMB | 5,200 | 2020-08-07 | 2023-08-07 | 3.55% |
| 20 CS 18 | RMB | 2,800 | 2020-08-24 | 2023-08-24 | 3.48% |
| 20 CS 20 | RMB | 800 | 2020-09-11 | 2030-09-11 | 4.20% |
| 20 CS 24 | RMB | 900 | 2020-10-28 | 2030-10-28 | 4.27% |
| 21 CS 02 | RMB | 4,600 | 2021-01-25 | 2024-01-25 | 3.56% |
| 21 CS 03 | RMB | 3,200 | 2021-01-25 | 2031-01-25 | 4.10% |
| 21 CS 04 | RMB | 1,500 | 2021-03-01 | 2024-03-01 | 3.60% |
| 21 CS 05 | RMB | 3,000 | 2021-03-01 | 2031-03-01 | 4.10% |
| 21 CS 06 | RMB | 2,500 | 2021-03-19 | 2031-03-19 | 4.10% |
| 21 CS 07 | RMB | 1,400 | 2021-04-13 | 2031-04-13 | 4.04% |
| 21 CS 08 | RMB | 1,000 | 2021-06-11 | 2026-06-11 | 3.70% |
| 21 CS 09 | RMB | 2,500 | 2021-06-11 | 2031-06-11 | 4.03% |
| 21 CS 10 | RMB | 1,500 | 2021-07-09 | 2026-07-09 | 3.62% |
| 21 CS 11 | RMB | 1,500 | 2021-07-09 | 2031-07-09 | 3.92% |
| 21 CS 12 | RMB | 3,000 | 2021-08-23 | 2024-08-23 | 3.01% |
| 21 CS 13 | RMB | 1,000 | 2021-08-23 | 2026-08-23 | 3.34% |
| 21 CS 14 | RMB | 4,500 | 2021-09-16 | 2024-09-16 | 3.08% |
| 21 CS 16 | RMB | 2,200 | 2021-09-28 | 2024-09-27 | 3.09% |
| 21 CS 17 | RMB | 1,800 | 2021-09-28 | 2026-09-28 | 3.47% |
| 21 CS 18 | RMB | 2,500 | 2021-10-19 | 2024-10-19 | 3.25% |
| 21 CS 19 | RMB | 2,000 | 2021-10-19 | 2026-10-19 | 3.59% |
| 21 CS 20 | RMB | 3,000 | 2021-11-24 | 2024-11-24 | 3.07% |
| 21 CS 21 | RMB | 3,000 | 2021-12-14 | 2024-12-14 | 2.97% |
| 22 CS 01 | RMB | 500 | 2022-02-16 | 2027-01-29 | 3.20% |
| 22 CS 02 | RMB | 1,000 | 2022-02-16 | 2032-02-06 | 3.69% |
| 22 CS 03 | RMB | 1,000 | 2022-03-11 | 2025-03-11 | 3.03% |
| 22 CS 04 | RMB | 500 | 2022-03-11 | 2027-03-11 | 3.40% |
| 22 CS 05 | RMB | 3,000 | 2022-08-24 | 2025-08-24 | 2.50% |
| CITICSCSI03 | US$ | 26 | 2022-12-20 | 2023-03-20 | 0.00% |
| CITICSCSI01 | US$ | 100 | 2022-11-25 | 2023-02-25 | 0.00% |
| CITICSMTNECP55 | US$ | 60 | 2022-11-11 | 2023-11-10 | 0.00% |
| CITICSMTNECP54 | US$ | 20 | 2022-10-21 | 2023-01-26 | 0.00% |
| CITICSMTNECP53 | US$ | 120 | 2022-09-22 | 2023-09-21 | 4.15% |
| CITICSCSI02 | US$ | 50 | 2022-09-22 | 2023-03-22 | 3.90% |
| CITICSMTNECP52 | US$ | 20 | 2022-09-14 | 2023-03-16 | 0.00% |
| CITICSMTNECP51 | US$ | 120 | 2022-08-16 | 2023-08-15 | 0.00% |
| CITICSMTNECP50 | US$ | 50 | 2022-08-08 | 2023-08-07 | 0.00% |
| CITICSMTNECP49 | US$ | 50 | 2022-08-01 | 2023-07-31 | 0.00% |
| CITICSMTNECP47 | US$ | 40 | 2022-07-27 | 2023-07-26 | 0.00% |
| CITICSMTNECP48 | US$ | 30 | 2022-07-06 | 2023-07-05 | 0.00% |
| CITICSMTNECP44 | US$ | 30 | 2022-05-27 | 2023-05-22 | 2.82% |
| CITICSMTNECP46 | US$ | 50 | 2022-05-27 | 2023-02-27 | 0.00% |
| CITICSMTNECP41 | US$ | 80 | 2022-01-28 | 2023-01-28 | 0.00% |
(iv)
Details of corporate bonds issued by CITIC Telecom International
| As at 31 December 2023 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| Guaranteed bonds | US$ | 450 | 2013-03-05 | 2025-03-05 | 6.10% |
| As at 31 December 2022 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| Guaranteed bonds | US$ | 450 | 2013-03-05 | 2025-03-05 | 6.10% |
(v)
Details of corporate bonds issued by CITIC Pacific’s subsidiaries
| As at 31 December 2023 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| 22 NNISUC 01 | RMB | 200 | 2022-03-14 | 2025-03-14 | 5.20% |
| 23 NNISUC SCP001 | RMB | 300 | 2023-08-28 | 2024-05-24 | 2.90% |
| As at 31 December 2022 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| 22 JLEPC SCP004 | RMB | 200 | 2022-06-16 | 2023-03-10 | 2.50% |
| 22 JLEPC SCP005 | RMB | 200 | 2022-08-29 | 2023-04-19 | 1.90% |
(b)
Notes issued
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| CITIC Bank (note (i)) | 138,311 | 116,344 |
| CITIC Securities (note (ii)) | 12,886 | 11,630 |
| CITIC Trust Co., Ltd. (“CITIC Trust”) (note (iii)) | 616 | 735 |
| 151,813 | 128,709 | |
(i)
Details of notes issued by CITIC Bank
| As at 31 December 2023 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| Financial bonds | US$ | 200 | 2021-02-02 | 2024-02-02 | 0.88% |
| Financial bonds | US$ | 350 | 2021-02-02 | 2026-02-02 | 1.25% |
| Financial bonds | RMB | 20,000 | 2021-06-10 | 2024-06-10 | 3.19% |
| Financial bonds | US$ | 500 | 2021-11-17 | 2024-11-17 | 1.75% |
| Financial bonds | RMB | 30,000 | 2022-04-28 | 2025-04-28 | 2.80% |
| Financial bonds | RMB | 30,000 | 2022-08-05 | 2025-08-05 | 2.50% |
| Financial bonds | RMB | 30,000 | 2023-04-13 | 2026-04-13 | 2.77% |
| Financial bonds | RMB | 10,000 | 2023-03-27 | 2026-03-27 | 2.79% |
| Financial bonds | RMB | 10,000 | 2023-05-16 | 2026-05-16 | 2.68% |
| Financial bonds | RMB | 1,800 | 2023-04-26 | 2024-04-26 | 3.90% |
| As at 31 December 2022 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| Financial bonds | RMB | 30,000 | 2020-03-18 | 2023-03-18 | 2.75% |
| Financial bonds | US$ | 200 | 2021-02-02 | 2024-02-02 | 0.88% |
| Financial bonds | US$ | 350 | 2021-02-02 | 2026-02-02 | 1.25% |
| Financial bonds | RMB | 20,000 | 2021-06-10 | 2024-06-10 | 3.19% |
| Financial bonds | US$ | 500 | 2021-11-17 | 2024-11-17 | 1.75% |
| Financial bonds | RMB | 30,000 | 2022-04-28 | 2025-04-28 | 2.80% |
| Financial bonds | RMB | 30,000 | 2022-08-05 | 2025-08-05 | 2.50% |
(ii)
Details of notes issued by CITIC Securities
| As at 31 December 2023 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| CITIC SEC N2410 | US$ | 200 | 2019-10-17 | 2024-10-24 | 2.88% |
| CITIC SEC N2506 | US$ | 500 | 2020-05-27 | 2025-06-03 | 2.00% |
| CITIC SEC N2504 | US$ | 300 | 2022-04-21 | 2025-04-21 | 3.38% |
| CITIC SEC N2405 | US$ | 175 | 2022-12-07 | 2024-05-14 | 5.15% |
| CITICISIN2502 | US$ | 200 | 2023-02-14 | 2025-02-21 | 5.00% |
| CITICISIN2606 | RMB | 700 | 2023-06-14 | 2026-06-23 | 2.90% |
| CITICISIN2607 | RMB | 2,500 | 2023-07-13 | 2026-07-13 | 3.10% |
| As at 31 December 2022 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| CITIC SEC N2306 | US$ | 500 | 2020-06-03 | 2023-06-03 | 1.75% |
| CITIC SEC N2506 | US$ | 500 | 2020-06-03 | 2025-06-03 | 2.00% |
| CITIC SEC N2410 | US$ | 200 | 2019-10-24 | 2024-10-24 | 2.88% |
| CITIC SEC N2405 | US$ | 175 | 2022-12-14 | 2024-05-14 | 5.15% |
| CITIC SEC N2504 | US$ | 300 | 2022-04-21 | 2025-04-21 | 3.38% |
(iii)
Details of notes issued by CITIC Trust
| As at 31 December 2023 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| Participation notes (note (i)) | US$ | 5 | 2018-01-22 | 2025-01-22 | Non fixed interest rate |
| Participation notes | US$ | 1.54 | 2021-06-25 | No fixed maturity date | Non fixed interest rate |
| Participation notes (note (ii)) | US$ | 270 | 2022-03-30 | 2025-03-30 | Fixed interest rate |
| As at 31 December 2022 | |||||
|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | |
| Participation notes (note (i)) | US$ | 5 | 2018-01-22 | 2025-01-22 | Non fixed interest rate |
| Participation notes | US$ | 1.54 | 2021-06-25 | No fixed maturity date | Non fixed interest rate |
| Participation notes (note (ii)) | US$ | 270 | 2022-03-30 | 2025-03-30 | Fixed interest rate |
Notes:
(i)
As at 31 December 2023, the portion held within the Group amounted to US$4.92 million (As at 31 December 2022: US$4.80 million).
(ii)
As at 31 December 2023, the portion held within the Group amounted to US$185 million (As at 31 December 2022: US$110 million).
(c)
Subordinated bonds issued
The balance represents the subordinated debts issued by CITIC Bank, CITIC Bank International Limited (“CBI”), a subsidiary of CITIC Bank, and CITIC Securities. The carrying amount of subordinated debts is as follows:| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Fixed rate notes maturing | ||
| – In February 2029 (i) | 3,543 | 3,444 |
| – In December 2033 (ii) | 3,543 | – |
| Fixed rate bonds maturing | ||
| – In March 2023 (iii) | – | 1,999 |
| – In February 2024 (iv) | 3,000 | 2,997 |
| – In November 2024 (ix) | 998 | – |
| – In July 2025 (v) | 492 | 499 |
| – In November 2026 (x) | 998 | – |
| – In September 2028 (vi) | – | 29,993 |
| – In October 2028 (vii) | – | 20,000 |
| – In August 2030 (viii) | 39,995 | 39,994 |
| – In December 2033 (xi) | 21,500 | – |
| – In December 2038 (xii) | 8,500 | – |
| 82,569 | 98,926 | |
| As at 31 December 2023 | ||||||
|---|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | ||
| (i) | Subordinated Notes | US$ | 500 | 2019-02-28 | 2029-02-28 | 4.63% |
| (ii) | Subordinated Notes (note(i)) | US$ | 500 | 2023-12-05 | 2033-12-05 | 6.00% |
| (iv) | 21 CS C1 | RMB | 3,000 | 2021-02-03 | 2024-02-08 | 3.97% |
| (v) | 22 CS C1 | RMB | 500 | 2022-07-22 | 2025-07-22 | 3.00% |
| (ix) | 23 CS C1 (note(ii)) | RMB | 1,000 | 2023-11-09 | 2024-11-14 | 2.75% |
| (x) | 23 CS C2 (note(ii)) | RMB | 1,000 | 2023-11-09 | 2026-11-14 | 3.10% |
| (viii) | Subordinated Fixed Rate Bonds | RMB | 40,000 | 2020-08-14 | 2030-08-14 | 3.87% |
| (xi) | Subordinated Fixed Rate Bonds (note(i)) | RMB | 21,500 | 2023-12-19 | 2033-12-19 | 3.19% |
| (xii) | Subordinated Fixed Rate Bonds (note(i)) | RMB | 8,500 | 2023-12-19 | 2038-12-19 | 3.25% |
Note:
(i)
Subordinated fixed rate bonds are issued by CITIC Bank, a subsidiary of the Group.
(ii)
Subordinated fixed rate bonds are issued by CITIC Security, a subsidiary of the Group.
| As at 31 December 2022 | ||||||
|---|---|---|---|---|---|---|
| Denominated currency | Face value in denominated currency million | Issue date | Maturity date | Interest rate per annum | ||
| (i) | Subordinated Notes | US$ | 500 | 2019-02-28 | 2029-02-28 | 4.63% |
| (iii) | 20 CS C1 | RMB | 2,000 | 2020-03-24 | 2023-03-24 | 3.32% |
| (iv) | 21 CS C1 | RMB | 3,000 | 2021-02-03 | 2024-02-08 | 3.97% |
| (v) | 22 CS C1 | RMB | 500 | 2022-07-22 | 2025-07-22 | 3.03% |
| (vi) | Subordinated Fixed Rate Bonds (note) | RMB | 30,000 | 2018-09-13 | 2028-09-13 | 4.96% |
| (vii) | Subordinated Fixed Rate Bonds (note) | RMB | 20,000 | 2018-10-22 | 2028-10-22 | 4.80% |
| (viii) | Subordinated Fixed Rate Bonds | RMB | 40,000 | 2020-08-14 | 2030-08-14 | 3.87% |
Notes:
The subordinated fixed rate bonds are issued by CITIC Bank and redeemed in 2023 before maturity.
The subordinated fixed rate bonds are issued by CITIC Bank and redeemed in 2023 before maturity.
(d)
Certificates of deposit issued
These certificates of deposit were issued by CBI with interest rate of 5.85%~5.90% per annum (31 December 2022: 2.76%~5.37%).(e)
Certificates of interbank deposit issued
As at 31 December 2023, CITIC Bank issued certain certificates of interbank deposit with a total value of RMB705,273 million (31 December 2022: RMB720,080 million). The yield ranges from 2.16% to 2.75% per annum (31 December 2022: 1.65% to 2.68% per annum). The original expiry terms are between one month to one year (31 December 2022: between three month to one year).(f)
Convertible corporate bonds
As approved by the relevant regulatory authorities in China, CITIC Bank made a public offering of RMB40,000 million A-share convertible corporate bonds (the “convertible bonds”) on 4 March 2019. CITIC Corporation, as its parent company, has subscribed RMB26,388 million, 65.97% of the total corporate bonds, which is the same percentage of the Group’s interest in CITIC Bank’s common shares, and it was transferred to CITIC Financial Holdings Co., Ltd. at nil consideration on 22 June 2022. The convertible bonds of CITIC Bank have a term of six years from 4 March 2019 to 3 March 2025, at coupon rates of 0.3% for the first year, 0.8% for the second year, 1.5% for the third year, 2.3% for the fourth year, 3.2% for the fifth year and 4.0% for the sixth year. The conversion of these convertible bonds begins on the first trading day (8 March 2019) after six months upon the completion date of the offering until the maturity date (from 11 September 2019 to 3 March 2025). As at 31 December 2023, convertible bonds (including accrued interest) were recorded as debt instruments issued of RMB13,728 million and non-controlling interests of RMB1,051 million, respectively.As approved by the relevant regulatory authorities in China, CITIC Pacific Special Steel Group Co., Ltd. made a public offering of RMB5,000 million A-share convertible corporate bonds (the “convertible bonds”) on 25 February 2022. The convertible bonds of CITIC Pacific Special Steel Group Co., Ltd. have a term of 6 years from 25 February 2022 to 24 February 2028, at coupon rates of 0.2% for the first year, 0.4% for the second year, 0.9% for the third year, 1.3% for the fourth year, 1.6% for the fifth year and 2.0% for the sixth year. The conversion of these convertible bonds begins on the first trading day (3 March 2022) after six months upon the completion date of the offering until the maturity date (from 5 September 2022 to 24 February 2028). As at 31 December 2023, convertible bonds were recorded as debt instruments issued of RMB4,776 million and non-controlling interests of RMB693 million, respectively.
(g)
Beneficiary certificates
The beneficiary certificates vouchers are issued by CITIC Securities. As at 31 December 2023, the balance of the outstanding beneficiary certificates issued by CITIC Securities with original maturity within one year (including accrued interest) amounted to RMB21,425 million, with coupon rates ranging from 1.99% to 4.00% per annum (31 December 2022: RMB6,027 million, with coupon rates ranging from 1.60% to 4.00% per annum) and the balance of the outstanding beneficiary certificates issued by CITIC Securities with original maturity greater than one year (including accrued interest) amounted to RMB250 million, with coupon rates ranging from 2.50% to 2.80% per annum (31 December 2022: RMB28 million, with coupon rates ranging from 2.00% to 3.40% per annum).| Environmental restoration expenditures | Others | Total | |
|---|---|---|---|
| Provisions (excluding impairment loss of credit commitments and guarantees provided) | |||
| At 1 January 2022 (Restated) | 1,743 | 4,129 | 5,872 |
| Exchange differences | 22 | 9 | 31 |
| Business combinations | – | 889 | 889 |
| (Reversal)/charge for the year | (70) | 162 | 92 |
| Payments made during the year | – | (903) | (903) |
| At 31 December 2022 (Restated) | 1,695 | 4,286 | 5,981 |
| At 1 January 2023 (Restated) | 1,695 | 4,286 | 5,981 |
| Exchange differences | 35 | (2) | 33 |
| Reversal for the year | (190) | (575) | (765) |
| Payments made during the year | – | (1,615) | (1,615) |
| At 31 December 2023 | 1,540 | 2,094 | 3,634 |
| Impairment loss of credit commitments and guarantees provided | Total | ||
| At 1 January 2022 (Restated) | 14,489 | ||
| Exchange differences | 54 | ||
| Decreases | (3,114) | ||
| At 31 December 2022 (Restated) | 11,429 | ||
| At 1 January 2023 (Restated) | 11,429 | ||
| Exchange differences | 27 | ||
| Additions | 1,040 | ||
| At 31 December 2023 | 12,496 | ||
| Total | |||
| At 31 December 2022 (Restated) | 17,410 | ||
| At 31 December 2023 | 16,130 | ||
(a)
Share capital
As at 31 December 2023, the number of ordinary shares in issue of the Company was 29,090,262,630 (31 December 2022: 29,090,262,630).(b)
Nature and purpose of reserves
(i)
Capital reserve
Considerations paid to acquire subsidiaries under common control, for instance, in 2014, a total consideration of RMB226,996 million paid by the Company to acquire the shares of CITIC Corporation, are debited against the capital reserve in the Group’s consolidated financial statements. In addition, gains or losses from transactions with non-controlling interests are directly debited or credited to the capital reserve in the Group’s consolidated financial statements.(ii)
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedge pending subsequent recognition of the hedged cash flow in accordance with the accounting policy adopted for cash flow hedge in Note 2(l)(ii).(iii)
Investment related reserves
The investment related reserves comprise the cumulative net change in the fair value of investments in financial assets at FVOCI until the financial assets are derecognised and share of other comprehensive income of associates and joint ventures, and are dealt with in accordance with the accounting policies set out in Note 2(k)(i) and Note 2(h), respectively.(iv)
General reserve
Pursuant to the relevant notices issued by regulatory bodies, certain subsidiaries under comprehensive financial services segment in Chinese mainland are required to set aside a general reserve to cover potential losses.(v)
Exchange reserve
The exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of overseas operations as well as the effective portion of any foreign exchange differences arising from hedges of the net investment in these operations. The reserve is dealt with in accordance with the accounting policies set out in Note 2(j).(c)
Capital management
The Group’s primary objectives when managing capital are to safeguard the Group’s stability and growth, so that it can continue to provide returns for shareholders.The Group actively and regularly reviews and manages its capital structure, with reference to such financial ratios like debt (total of debt instruments issued and bank and other loans) to total equity ratio, to maintain a balance between the higher shareholders’ returns that might be possible with of borrowings obtained and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions.
Certain subsidiaries under comprehensive financial services segment are subject to capital adequacy requirements imposed by the external regulators. There was no non-compliance of capital requirements as at 31 December 2023 (31 December 2022: Nil).
| For the year ended 31 December 2023 | |||||
|---|---|---|---|---|---|
| At 1 January (Restated) | Charge/ (reversal) | Write-offs/ transfer out | Exchange differences and others (note(i)) | At 31 December | |
| Allowances for expected credit losses | |||||
| Deposits and placements with banks and non-bank financial institutions (Note 19 and 21) | 238 | (39) | – | 3 | 202 |
| Receivables (excluding prepayments) (Note 23) | 13,737 | 4,651 | (38) | 169 | 18,519 |
| Loans and advances to customers and other parties (Note 27) | 137,711 | 49,572 | (61,894) | 14,266 | 139,655 |
| Investments in financial assets (Note 29) | |||||
| – Financial assets at amortised cost | 31,532 | 2,467 | (5,501) | 86 | 28,584 |
| – Debt investments at FVOCI | 3,069 | 1,250 | (1,488) | 453 | 3,284 |
| Credit commitments and guarantees provided (Note 46) | 11,429 | 1,041 | (1) | 27 | 12,496 |
| Others (note(ii)) | 7,356 | 6,673 | (5,105) | 486 | 9,410 |
| 205,072 | 65,615 | (74,027) | 15,490 | 212,150 | |
| Allowances for impairment losses | |||||
| Inventories (Note 25) | 6,514 | 3,403 | (214) | 339 | 10,042 |
| Interests in associates (Note 32) | 7,923 | 635 | (431) | 131 | 8,258 |
| Interests in joint ventures (Note 33) | 1,342 | – | – | 176 | 1,518 |
| Fixed assets (Note 34) | 42,521 | (338) | (33) | 898 | 43,048 |
| Intangible assets | 14,927 | – | (7) | 214 | 15,134 |
| Prepayments (Note 23) | 77 | 23 | – | – | 100 |
| Goodwill (Note 35) | 6,134 | 26 | – | – | 6,160 |
| Other assets | 1,933 | 846 | (539) | 101 | 2,341 |
| 81,371 | 4,595 | (1,224) | 1,859 | 86,601 | |
| 286,443 | 70,210 | (75,251) | 17,349 | 298,751 | |
| For the year ended 31 December 2022 | |||||
|---|---|---|---|---|---|
| At 1 January (Restated) | Charge (Restated) | Write-offs/ transfer out (Restated) | Exchange differences and others (Restated) (note(i)) | At 31 December (Restated) | |
| Allowances for expected credit losses | |||||
| Deposits and placements with banks and non-bank financial institutions (Note 19 and 21) | 235 | 2 | – | 1 | 238 |
| Receivables (excluding prepayments) (Note 23) | 10,447 | 5,023 | (2,293) | 560 | 13,737 |
| Loans and advances to customers and other parties (Note 27) | 126,645 | 57,097 | (58,033) | 12,002 | 137,711 |
| Investments in financial assets (Note 29) | |||||
| – Financial assets at amortised cost | 29,949 | 2,220 | (2,581) | 1,944 | 31,532 |
| – Debt investments at FVOCI | 2,387 | 716 | (138) | 104 | 3,069 |
| Credit commitments and guarantees provided (Note 46) | 14,489 | 7,999 | (11,113) | 54 | 11,429 |
| Others (note(ii)) | 4,316 | 5,948 | (4,354) | 1,446 | 7,356 |
| 188,468 | 79,005 | (78,512) | 16,111 | 205,072 | |
| Allowances for impairment losses | |||||
| Inventories (Note 25) | 6,040 | 403 | (353) | 424 | 6,514 |
| Interests in associates (Note 32) | 4,969 | 2,581 | (40) | 413 | 7,923 |
| Interests in joint ventures (Note 33) | 1,217 | 15 | – | 110 | 1,342 |
| Fixed assets (Note 34) | 39,632 | 70 | (289) | 3,108 | 42,521 |
| Intangible assets | 13,710 | – | – | 1,217 | 14,927 |
| Prepayments (Note 23) | 64 | 12 | – | 1 | 77 |
| Goodwill (Note 35) | 1,697 | 4,363 | (22) | 96 | 6,134 |
| Other assets | 1,836 | 140 | (233) | 190 | 1,933 |
| 69,165 | 7,584 | (937) | 5,559 | 81,371 | |
| 257,633 | 86,589 | (79,449) | 21,670 | 286,443 | |
Notes:
(i)
Others include recovery of loans written off.
(ii)
Movement of allowances for accrued interest of loans and advances to customers and other parties, investments in financial assets are included in others.
(a)
Credit commitments
Credit commitments in connection with the Group take the form of loan commitments, credit card commitments, guarantees, letters of credit and acceptances.Loan commitments represent the undrawn amount of approved loans with signed contracts. Credit card commitments represent the credit card overdraft limits authorised by the Group. Guarantees and letters of credit represent guarantee provided by the Group to guarantee the performance of customers to third parties. Acceptances comprise undertakings by the Group to pay bills of exchange drawn on customers. The Group expects most acceptances to be settled simultaneously with the reimbursement from the customers.
The contractual amounts of credit commitments by category as at the financial position date are set out below. The amounts disclosed in respect of loan commitments and credit card commitments assume that amounts are fully drawn down. The amounts of guarantees, letters of credit and acceptances represent the maximum potential loss that would be recognised as at the financial position date if counterparties failed to perform as contracted.
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Contractual amount | ||
| Loan commitments | ||
| With an original maturity of within 1 year | 13,995 | 16,319 |
| With an original maturity of 1 year or above | 32,773 | 41,642 |
| 46,768 | 57,961 | |
| Credit card commitments | 779,947 | 704,268 |
| Acceptances | 866,662 | 795,833 |
| Letters of credit | 256,241 | 270,837 |
| Guarantees | 237,037 | 186,617 |
| 2,186,655 | 2,015,516 | |
(b)
Credit commitments analysed by credit risk weighted amount
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Credit risk weighted amount on credit commitments | 602,231 | 541,153 |
Notes:
(i)
The above credit risk weighted amount is solely in connection with the credit commitments held by CITIC Bank under the comprehensive financial services segment of the Group.
(ii)
The credit risk weighted amount refers to the amount as computed in accordance with the rules set out by the former China Banking and Insurance Regulatory Commission and depends on the status of counterparties and the maturity characteristics. The risk weighting used is ranging from 0% to 150%.
(c)
Redemption commitment for treasury bonds
As an underwriting agent of PRC treasury bonds, CITIC Bank has the responsibility to buy back those bonds sold by it, should the holders decide to early redeem the bonds held. The redemption price for the bonds at any time before their maturity dates is based on the nominal value plus any interest unpaid and accrued up to the redemption date. Accrued interest payables to the treasury bond holders are calculated in accordance with relevant rules of the Ministry of Finance and the People’s Bank of China. The redemption price may be different from the fair value of similar instruments traded at the redemption date.The redemption obligations below represent the nominal value of treasury bonds underwritten and sold by CITIC Bank, but not yet matured at the financial position date:
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Redemption commitment for treasury bonds | 2,735 | 2,904 |
(d)
Guarantees provided
Except for guarantees that have been recognised as liabilities, the guarantees issued by the Group at the financial position date are as follows:| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Related parties (note) | 7,344 | 6,969 |
| Third parties | 3,600 | 3,200 |
| 10,944 | 10,169 | |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Related parties (note) | 1,114 | 1,000 |
| Third parties | 155 | – |
| 1,269 | 1,000 | |
Notes:
As at 31 December 2023, the guarantees provided to related parties by the Group include guarantees provided to former subsidiaries of the Group that were disposed to China Overseas Land & Investment Limited (“China Overseas”) in 2016, amounting to RMB1,000 million (31 December 2022: RMB1,000 million). China Overseas has provided counter guarantees to the Group.
The relationship and transaction with related parties are disclosed in Note 51.
As at 31 December 2023, the guarantees provided to related parties by the Group include guarantees provided to former subsidiaries of the Group that were disposed to China Overseas Land & Investment Limited (“China Overseas”) in 2016, amounting to RMB1,000 million (31 December 2022: RMB1,000 million). China Overseas has provided counter guarantees to the Group.
The relationship and transaction with related parties are disclosed in Note 51.
(e)
Outstanding litigation and disputes
The Group is involved in a number of current and pending legal proceedings. The Group provided for liabilities arising from those legal proceedings in which the outflow of economic benefit is probable and can be reliably estimated in the consolidated statement of financial position. The Group believes that these accruals are reasonable and adequate.(i)
There are a number of disputes with Mineralogy, and their details are disclosed in Note 3(k).
(ii)
There are some issues in dispute with MCC, and their details are disclosed in Note 3(l).
(f)
Capital commitments
As at the financial position date, the Group had the following capital commitments not provided for in these consolidated financial statements:| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Contracted for | 15,201 | 22,345 |
Exposure to credit, liquidity, interest rate and currency risks arises in the normal course of the business of the Group. The Group has established policies and procedures to identify and analyse these risks, to set appropriate risk limits and controls, and to constantly monitor the risks and limits by means of reliable and up-to-date management information systems. The Group regularly updates and enhances its risk management policies and systems to reflect changes in markets, products and best practice risk management processes. Internal auditors also perform regular audits to ensure compliance with policies and procedures.
The Group’s exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below.
Credit risk refers to the risk of loss caused by default of debtor or counterparty. Credit risk also occurs when the Group makes unauthorised or inappropriate loans and advances to customers, financial commitments or investments. The credit risk exposures of the Group mainly arise from the Group’s loans and advances to customers, bonds, interbank business, receivables, lease receivables, other debt investments, off-balance sheet items such as credit commitments, financing businesses including margin financing and securities lending, and also stock-pledged repo.
The Group has standardised management on the entire credit business process including loan application, and its investigation approval and granting of loan, and monitoring of non-performing loans. Through strictly standardising the credit business process, strengthening the whole process management of pre-loan investigation, credit rating and credit granting, examination and approval, loan review and post-loan monitoring, improving the risk of slow-release of collateral, accelerating the liquidation and disposal of non-performing loans, and promoting the upgrading and transformation of credit management system, the credit risk management level of the Group has been comprehensively improved.
In addition to the credit risk to the Group caused by credit assets, for treasury business, the Group manages the credit risk for treasury business through prudently selecting peers and other financial institutions with comparable credit levels as counterparties, balancing credit risk with returns on investment, comprehensively considering internal and external credit rating information, granting credit hierarchy, and using credit management system to review and adjust credit commitments on a timely basis, etc. In addition, the Group provides off-balance sheet commitment and guarantee business to customers, so it is possible for the Group to make payment on behalf of the customer in case of customer’s default and bear risks similar to the loan. Therefore, the Group applies similar risk control procedures and policies to such business to reduce the credit risk.
The Group’s credit risk of securities financing transactions mainly arises from the provision of false information by customers, failure to repay liabilities at required time limit, violation of contractual agreements on size and structure of positions, violation of regulatory requirements on transactions and involvement of legal disputes on assets provided as collateral. The Company primarily adopts the risk education, credit collection, credit granting, daily marking-to-market, customer risk alert, mandatory liquidation, judicial recourse and other methods to control those credit risks.
The Group is also confronted with credit risk resulting from receivables that arising from sale of goods and rendering of services within the non-comprehensive financial services segments. The relevant subsidiaries have established a credit policy under which individual credit evaluations are performed on all customers to determine the credit limit and terms applicable to the customers. These evaluations focus on the customers’ financial position, the external ratings of the customers and their bank credit records where available.
Measurement of ECL
The Group adopts the “ECL model” on its debt instruments which are classified as financial assets measured at amortised cost and at FVOCI, margin accounts, credit commitments and financial guarantees in accordance with the provisions of HKFRS 9.
The Group applies the HKFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for trade and other receivables and contract assets, regardless of whether there is significant financing component or not. For other financial assets that are included in the measurement of ECL, the Group evaluates whether the credit risks of related financial assets have increased significantly since initial recognition. The “three-stage” impairment model is used to measure their loss allowances respectively to recognise ECL and their movements:
Stage 1: Financial instruments with no significant increase in credit risk since its initial recognition will be classified as “stage 1” and the Group continuously monitors their credit risk. The loss allowances of financial instruments in stage 1 are measured based on the ECL in the next 12 months, which represents the proportion of the ECL in the lifetime due to possible default events in the next 12 months.
Stage 2: If there is a significant increase in credit risk since initial recognition, the Group transfers the related financial instruments to stage 2, but it will not be considered as credit-impaired instruments. The ECL of financial instruments in stage 2 is measured based on the lifetime ECL.
Stage 3: If a financial asset has shown signs of credit impairment from initial recognition, it will be moved to Stage 3. The expected credit losses of financial assets in Stage 3 are measured based on the lifetime expected credit losses.
Purchased or originated credit-impaired financial assets refers to financial assets that are credit-impaired at the initial recognition. Loss allowances on these assets are the lifetime ECL.
The Group estimates the ECL in accordance with HKFRS 9, and the key judgments and assumptions adopted by the Group are as follows:
By setting quantitative and qualitative threshold, and upper limit, the Group determines whether the credit risk of financial instruments has increased significantly since initial recognition. The judgment mainly includes the number of overdue days, the absolute level and relative level of the change of default probability, the change of credit risk classification and other conditions indicating significant changes in credit risk.
When one or more events that adversely affect the expected future cash flow of a financial asset occurs, the financial asset becomes a credit-impaired financial asset. Evidence of credit-impaired financial assets includes the following observable information:
These economic variables have different impacts on the PD and LGD of different risk groups. Expert judgment has also been applied in this process, forecasts of these economic variables are estimated by the experts of the Group on a semi-annually basis, and the impact of these economic variables on the PD and the LGD was determined by the results of expert judgement.
In addition to the base economic scenario, the Group determines the possible scenarios and their weighted by a combination of statistical analysis and expert judgment. The Group measures ECL as either a probability weighted 12 months ECL (stage 1) or a probability weight lifetime ECL (stage 2 and stage 3). These probability-weighted ECL are determined by running each scenario through the relevant ECL model and multiplying it by the appropriate scenario weighting.
Macroeconomic scenario and weighting information
The Group has performed historical analysis and identified the key economic variables impacting credit risk and ECL for each portfolio, which mainly include Domestic GDP, producer price index, the total retail sales of consumer goods, consumer price index, narrow money supply and per capita disposable income of urban residents, etc. Based on comprehensive considerations of internal and external data, expert forecasts, and the best estimate of future outcomes, the Group makes regular forecasts of the macro indicators in three macro-economic scenarios, i. e., the positive, neutral and negative scenarios, to determine the coefficients for forward-looking adjustments. Neutral is defined as the most likely to happen in the future, as compared to other scenarios. Positive scenario and negative scenario represent the likely scenario that is better off or worse off as compared to the neutral scenario.
The maximum credit risk exposure for debt instruments at the financial position date without taking into consideration of any collateral held or other credit enhancement is represented by the balance of each type of debt instruments in the statement of financial position. A summary of the maximum exposure is as follows:
The following table explains the changes in the gross carrying amount for investments in financial assets using ECL model to assess allowance for impairment loss for the year:
Movements of the loss allowances for loans and advances to customers and other parties using ECL model to assess allowance for impairment loss for the year is as follows:
Movements of the loss allowances for investments in financial assets using ECL model to assess allowance for impairment loss for the year is as follows:
As at 31 December 2023, the Group did not enter into significant enforceable master netting arrangements with counterparties and therefore there were no significant offsettings of any assets and liabilities in the consolidated statement of financial position (31 December 2022: Nil).
Each of the Group’s operating entity formulates liquidity risk management policies and procedures within the Group’s overall liquidity risk management framework and takes into consideration of the business and regulatory requirements applicable to individual entity.
The Group manages liquidity risk by holding liquid assets (including deposits, other short-term funds and securities) of appropriate quality and quantity to ensure that short-term funding requirements are covered within prudent limits. Adequate standby facilities are maintained to provide strategic liquidity to meet unexpected and material demand for payments in the ordinary course of business.
The following tables indicate the analysis by remaining maturities of the Group’s financial assets and liabilities at the financial position date:
The table below presents the undiscounted cash flows of the Group’s financial assets and liabilities by remaining maturities at the financial position date:
Credit Commitments include bank acceptances, credit card commitments, letters of guarantee issued, loan commitments and letters of credit issued. The tables below summarise the amounts of credit commitments by remaining contractual maturity.
This sensitivity analysis is based on a static interest rate risk profile of the Group’s financial assets and financial liabilities and certain simplified assumptions. The analysis only measures the impact of changes in the interest rates within one year, showing how annualised interest income would have been affected by repricing of the Group’s financial assets and financial liabilities within the one-year period. The analysis is based on the following assumptions: (1) all assets and liabilities that reprice or mature within three months and after three months but within one year reprice or mature at the beginning of the respective periods; (2) there is a parallel shift in the yield curve and in interest rates; and (3) there are no other changes to the portfolio, all positions will be retained and rolled over upon maturity. The analysis does not take into account the effect of risk management measures taken by management. Because of its hypothetical nature with the assumptions adopted, actual changes in the Group’s profit before taxation resulting from increases or decreases in interest rates may differ from the results of this sensitivity analysis.
The revenue from the Group’s Sino Iron Project is denominated in US$, and to meet accounting requirements US$ is the functional currency for this entity. A substantial portion of its development and operating expenditure are denominated in Australian Dollars. The Group entered into plain vanilla forward contracts to manage the foreign currency risks.
The Group funded the Sino Iron Project and the acquisition of bulk cargo vessels by borrowing US$ loans to match the future cash outflows of these assets. The Group’s investments in the Sino Iron Project and bulk cargo vessels (whose functional currency is in US$) have been designated as an accounting hedge against other US$ loans.
The exposure to currency risk arising from the financial assets and financial liabilities at the financial position dates is as follows (expressed in RMB million):
The Group uses sensitivity analysis to measure the potential effect of changes in foreign currency exchange rates on the Group’s net exchange gain or loss.
Assuming all other risk variables remained constant, 100 basis points strengthening or weakening of RMB against HK$, US$ and other currencies as at 31 December 2023 would decrease or increase the Group’s total comprehensive income by RMB1,492 million (31 December 2022: decrease or increase by RMB717 million with 100 basis points strengthening or weakening).
This sensitivity analysis is based on a static foreign exchange exposure profile of financial assets and financial liabilities and certain simplified assumptions. The analysis is based on the following assumptions: (i) the foreign exchange sensitivity is the foreign exchange gain or loss recognised as a result of 100 basis points fluctuation in the in the absolute value of the closing (middle) of each foreign currency against RMB; (ii) the exchange rates against RMB for all foreign currencies change in the same direction simultaneously and do not take into account the correlation effect of changes in different foreign currencies; and (iii) the foreign exchange exposures calculated include both spot foreign exchange exposures, forward foreign exchange exposures and options, and all positions will be retained and rolled over upon maturity. The analysis does not take into account the effect of risk management measures taken by management. Because of its hypothetical nature with the assumptions adopted, actual changes in the Group’s comprehensive income resulting from increases or decreases in foreign exchange rates may differ from the results of this sensitivity analysis.
For the year ended 31 December 2023, there were no significant transfers between instruments in different levels (2022: Nil) and no significant changes in valuation techniques for determining the fair values of the instruments (2022: Nil).
The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy:
Investments in financial assets and financial liabilities
Fair value is based on quoted market prices as at the financial position date for trading financial assets and liabilities (excluding derivatives), financial assets held for investment if there is an active market. If an active market does not exist for financial assets held for investment, the fair value is determined using valuation techniques.
Derivatives
The fair values of foreign currency and interest rate contracts are either based on their listed market prices or by discount cash flow model at the measurement date.
Financial guarantees
The fair values of financial guarantees are determined by reference to fees charged in an arm’s length transaction for similar services, when such information is obtainable, or is otherwise estimated by reference to interest rate differentials, by comparing the actual rates charged by lenders when the guarantee is made available with the estimated rates that the lenders would have charged, had the guarantees not been available, where reliable estimates of such information can be made.
The Group’s exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below.
(a)
Credit risk
Credit risk managementCredit risk refers to the risk of loss caused by default of debtor or counterparty. Credit risk also occurs when the Group makes unauthorised or inappropriate loans and advances to customers, financial commitments or investments. The credit risk exposures of the Group mainly arise from the Group’s loans and advances to customers, bonds, interbank business, receivables, lease receivables, other debt investments, off-balance sheet items such as credit commitments, financing businesses including margin financing and securities lending, and also stock-pledged repo.
The Group has standardised management on the entire credit business process including loan application, and its investigation approval and granting of loan, and monitoring of non-performing loans. Through strictly standardising the credit business process, strengthening the whole process management of pre-loan investigation, credit rating and credit granting, examination and approval, loan review and post-loan monitoring, improving the risk of slow-release of collateral, accelerating the liquidation and disposal of non-performing loans, and promoting the upgrading and transformation of credit management system, the credit risk management level of the Group has been comprehensively improved.
In addition to the credit risk to the Group caused by credit assets, for treasury business, the Group manages the credit risk for treasury business through prudently selecting peers and other financial institutions with comparable credit levels as counterparties, balancing credit risk with returns on investment, comprehensively considering internal and external credit rating information, granting credit hierarchy, and using credit management system to review and adjust credit commitments on a timely basis, etc. In addition, the Group provides off-balance sheet commitment and guarantee business to customers, so it is possible for the Group to make payment on behalf of the customer in case of customer’s default and bear risks similar to the loan. Therefore, the Group applies similar risk control procedures and policies to such business to reduce the credit risk.
The Group’s credit risk of securities financing transactions mainly arises from the provision of false information by customers, failure to repay liabilities at required time limit, violation of contractual agreements on size and structure of positions, violation of regulatory requirements on transactions and involvement of legal disputes on assets provided as collateral. The Company primarily adopts the risk education, credit collection, credit granting, daily marking-to-market, customer risk alert, mandatory liquidation, judicial recourse and other methods to control those credit risks.
The Group is also confronted with credit risk resulting from receivables that arising from sale of goods and rendering of services within the non-comprehensive financial services segments. The relevant subsidiaries have established a credit policy under which individual credit evaluations are performed on all customers to determine the credit limit and terms applicable to the customers. These evaluations focus on the customers’ financial position, the external ratings of the customers and their bank credit records where available.
Measurement of ECL
The Group adopts the “ECL model” on its debt instruments which are classified as financial assets measured at amortised cost and at FVOCI, margin accounts, credit commitments and financial guarantees in accordance with the provisions of HKFRS 9.
The Group applies the HKFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for trade and other receivables and contract assets, regardless of whether there is significant financing component or not. For other financial assets that are included in the measurement of ECL, the Group evaluates whether the credit risks of related financial assets have increased significantly since initial recognition. The “three-stage” impairment model is used to measure their loss allowances respectively to recognise ECL and their movements:
Stage 1: Financial instruments with no significant increase in credit risk since its initial recognition will be classified as “stage 1” and the Group continuously monitors their credit risk. The loss allowances of financial instruments in stage 1 are measured based on the ECL in the next 12 months, which represents the proportion of the ECL in the lifetime due to possible default events in the next 12 months.
Stage 2: If there is a significant increase in credit risk since initial recognition, the Group transfers the related financial instruments to stage 2, but it will not be considered as credit-impaired instruments. The ECL of financial instruments in stage 2 is measured based on the lifetime ECL.
Stage 3: If a financial asset has shown signs of credit impairment from initial recognition, it will be moved to Stage 3. The expected credit losses of financial assets in Stage 3 are measured based on the lifetime expected credit losses.
Purchased or originated credit-impaired financial assets refers to financial assets that are credit-impaired at the initial recognition. Loss allowances on these assets are the lifetime ECL.
The Group estimates the ECL in accordance with HKFRS 9, and the key judgments and assumptions adopted by the Group are as follows:
(1)
Significant increase in credit risk
On each financial position date, the Group evaluates whether the credit risk of the relevant financial instruments has increased significantly since initial recognition. When one or more on quantitative or qualitative threshold, or upper limit are triggered, the credit risk of financial instruments would be considered as increased significantly.By setting quantitative and qualitative threshold, and upper limit, the Group determines whether the credit risk of financial instruments has increased significantly since initial recognition. The judgment mainly includes the number of overdue days, the absolute level and relative level of the change of default probability, the change of credit risk classification and other conditions indicating significant changes in credit risk.
(2)
Definition of default and credit-impaired assets
When credit impairment occurred, the Group defines that the financial asset is in default. In general, a financial asset that is overdue for more than 90 days is considered to be in default.When one or more events that adversely affect the expected future cash flow of a financial asset occurs, the financial asset becomes a credit-impaired financial asset. Evidence of credit-impaired financial assets includes the following observable information:
- The issuer or borrower/debtor is in significant financial difficulties;
- The borrower/debtor is in breach of financial covenant(s) such as default or overdue in repayment of interests or principal etc.;
- The creditor gives the debtor concession that would not be offered otherwise, considering economic or contractual factors relating to the debtor’s financial difficulties;
- It is becoming probably that the borrower/debtor will enter bankruptcy or other debt restructuring;
- An active market for that financial asset has disappeared because of financial difficulties from issuer or borrower/debtor;
- Financing financial assets are subject to mandatory liquidation measures and the collateral value is no longer sufficient for financing amounts;
- Violation grade for bond issuers or bonds in the latest external rating;
- Financial assets are purchased or originated at a deep discount that reflects the incurred credit losses.
(3)
Inputs for measurement of ECL
The ECL is measured on either a 12-month or lifetime basis depending on whether a significant increase in credit risk has occurred or whether an asset is considered to be credit-impaired. Related definitions are as follows:- The probability of default (“PD”) represents the likelihood of a borrower/debtor defaulting on its financial obligations, either over the next 12 months or over the remaining lifetime of the obligation.
- Loss given default (“LGD”) represents the Group’s expectation of the extent of loss on a defaulted exposure. LGD varies by type of counterparty, type and seniority of claim, and availability of collateral or other credit support. LGD is expressed as a percentage loss per unit of exposure at the time of default and is calculated on a 12-month or lifetime basis.
- Exposure at default (“EAD”) is based on the amounts that the Group expects to be owed at the time of default, over the next 12 months or over the remaining lifetime of the obligation.
(4)
Forward-looking information
The assessment of significant increase in credit risk and the calculation of ECL both incorporate forward-looking information. The Group has performed historical analysis and identified the key economic variables impacting credit risk and ECL for each asset portfolio.These economic variables have different impacts on the PD and LGD of different risk groups. Expert judgment has also been applied in this process, forecasts of these economic variables are estimated by the experts of the Group on a semi-annually basis, and the impact of these economic variables on the PD and the LGD was determined by the results of expert judgement.
In addition to the base economic scenario, the Group determines the possible scenarios and their weighted by a combination of statistical analysis and expert judgment. The Group measures ECL as either a probability weighted 12 months ECL (stage 1) or a probability weight lifetime ECL (stage 2 and stage 3). These probability-weighted ECL are determined by running each scenario through the relevant ECL model and multiplying it by the appropriate scenario weighting.
Macroeconomic scenario and weighting information
The Group has performed historical analysis and identified the key economic variables impacting credit risk and ECL for each portfolio, which mainly include Domestic GDP, producer price index, the total retail sales of consumer goods, consumer price index, narrow money supply and per capita disposable income of urban residents, etc. Based on comprehensive considerations of internal and external data, expert forecasts, and the best estimate of future outcomes, the Group makes regular forecasts of the macro indicators in three macro-economic scenarios, i. e., the positive, neutral and negative scenarios, to determine the coefficients for forward-looking adjustments. Neutral is defined as the most likely to happen in the future, as compared to other scenarios. Positive scenario and negative scenario represent the likely scenario that is better off or worse off as compared to the neutral scenario.
(i)
Maximum credit risk exposure
The maximum exposure to credit risk as at the financial position date without taking into consideration of any collateral held or other credit enhancement is represented by the net balance of each type of financial assets in the statement of financial position after deducting any impairment allowance. A summary of the maximum credit risk exposure of financial instruments for which allowance for impairment losses is recognised is as follows:| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Deposits with central banks, banks and non-bank financial institutions | 620,631 | 671,723 |
| Placements with banks and non-bank financial institutions | 237,742 | 217,354 |
| Trade and other receivables | 231,150 | 191,430 |
| Financial assets held under resale agreements | 164,983 | 45,713 |
| Loans and advances to customers and other parties | 5,374,582 | 5,038,853 |
| Refundable deposits | 62,182 | 69,158 |
| Margin accounts | 118,746 | 106,976 |
| Investments in financial assets | ||
| – At amortised cost | 1,076,039 | 1,124,596 |
| – Debt investments at FVOCI | 967,803 | 873,367 |
| Cash held on behalf of customers | 239,019 | 245,723 |
| Contract assets | 24,312 | 20,728 |
| Other financial assets | 5,986 | 4,531 |
| 9,123,175 | 8,610,152 | |
| Credit commitments and guarantees provided | 2,197,389 | 2,025,685 |
| Maximum credit risk exposure | 11,320,564 | 10,635,837 |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Derivative financial instruments | 77,562 | 80,867 |
| Loans and advances to customers and other parties at FVPL | 5,558 | 3,881 |
| Investments in financial assets | ||
| – Financial assets at FVPL (debt instruments) | 924,942 | 804,510 |
| Maximum credit risk exposure | 1,008,062 | 889,258 |
(ii)
Expected credit losses
The following table explains the changes in the gross carrying amount for loans and advances to customers and other parties using ECL model to assess allowance for impairment loss for the year:| For the year ended 31 December 2023 | ||||
|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Balance at 1 January 2023 | 5,003,058 | 92,278 | 81,012 | 5,176,348 |
| Movements: | ||||
| Net transfers out from stage 1 | (104,736) | – | – | (104,736) |
| Net transfers into stage 2 | - | 25,746 | - | 25,746 |
| Net transfers into stage 3 | – | – | 78,990 | 78,990 |
| Net increase/(decrease) during the year (note (i)) | 436,662 | (21,286) | (26,889) | 388,487 |
| Write-offs | – | – | (61,895) | (61,895) |
| Others (note (ii)) | 10,150 | 240 | 931 | 11,321 |
| Balance at 31 December 2023 | 5,345,134 | 96,978 | 72,149 | 5,514,261 |
| For the year ended 31 December 2022 | ||||
|---|---|---|---|---|
| Stage 1 (Restated) | Stage 2 (Restated) | Stage 3 (Restated) | Total (Restated) | |
| Balance at 1 January 2022 | 4,710,367 | 89,678 | 75,766 | 4,875,811 |
| Movements: | ||||
| Net transfers out from stage 1 | (110,179) | – | – | (110,179) |
| Net transfers into stage 2 | – | 24,742 | – | 24,742 |
| Net transfers into stage 3 | – | – | 85,437 | 85,437 |
| Net increase/(decrease) during the year (note (i)) | 376,727 | (24,051) | (23,244) | 329,432 |
| Write-offs | – | – | (58,032) | (58,032) |
| Others (note (ii)) | 26,143 | 1,909 | 1,085 | 29,137 |
| Balance at 31 December 2022 | 5,003,058 | 92,278 | 81,012 | 5,176,348 |
| For the year ended 31 December 2023 | ||||
|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Balance at 1 January 2023 | 1,965,750 | 5,433 | 58,350 | 2,029,533 |
| Movements: | ||||
| Business combinations | 1,724 | – | – | 1,724 |
| Net transfers out from stage 1 | (6,511) | – | – | (6,511) |
| Net transfers into stage 2 | – | 4,637 | – | 4,637 |
| Net transfers into stage 3 | – | – | 1,874 | 1,874 |
| Net increase/(decrease) during the year (note (i)) | 46,792 | (2,945) | (3,449) | 40,398 |
| Write-offs | – | – | (6,510) | (6,510) |
| Others (note (ii)) | 7,125 | 112 | 82 | 7,319 |
| Balance at 31 December 2023 | 2,014,880 | 7,237 | 50,347 | 2,072,464 |
| For the year ended 31 December 2022 | ||||
|---|---|---|---|---|
| Stage 1 (Restated) | Stage 2 (Restated) | Stage 3 (Restated) | Total (Restated) | |
| Balance at 1 January 2022 | 1,781,965 | 18,796 | 51,729 | 1,852,490 |
| Movements: | ||||
| Business combinations | 62,713 | 1,578 | – | 64,291 |
| Net transfers out from stage 1 | (3,879) | – | – | (3,879) |
| Net transfers out from stage 2 | – | (10,917) | – | (10,917) |
| Net transfers into stage 3 | – | – | 14,795 | 14,795 |
| Net increase/(decrease) during the year (note (i)) | 111,652 | (3,909) | (5,682) | 102,061 |
| Write-offs | – | – | (2,719) | (2,719) |
| Others (note (ii)) | 13,299 | (115) | 227 | 13,411 |
| Balance at 31 December 2022 | 1,965,750 | 5,433 | 58,350 | 2,029,533 |
Notes:
(i)
Net increase/(decrease) mainly includes changes in carrying amount due to newly purchased or originated credit-impaired financial assets or de-recognition excluding write-offs.
(ii)
Others includes net changes in accrued interest and effect of exchange differences during the year.
Movements of the loss allowances for loans and advances to customers and other parties using ECL model to assess allowance for impairment loss for the year is as follows:
| For the year ended 31 December 2023 | ||||
|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Balance at 1 January 2023 | 62,124 | 22,675 | 53,325 | 138,124 |
| Movements (note (i)): | ||||
| Net transfers out from stage 1 | (3,045) | – | – | (3,045) |
| Net transfers into stage 2 | – | 9,082 | – | 9,082 |
| Net transfers into stage 3 | – | – | 34,776 | 34,776 |
| Net increase/(decrease) during the year (note (ii)) | 6,875 | (4,027) | (7,030) | (4,182) |
| Write-offs | – | – | (61,895) | (61,895) |
| Parameters change for the year (note (iii)) | (1,170) | (149) | 14,257 | 12,938 |
| Others (note (iv)) | 70 | (364) | 14,831 | 14,537 |
| Balance at 31 December 2023 | 64,854 | 27,217 | 48,264 | 140,335 |
| For the year ended 31 December 2022 | ||||
|---|---|---|---|---|
| Stage 1 (Restated) | Stage 2 (Restated) | Stage 3 (Restated) | Total (Restated) | |
| Balance at 1 January 2022 | 51,807 | 25,895 | 49,177 | 126,879 |
| Movements (note (i)): | ||||
| Net transfers out from stage 1 | (2,839) | – | – | (2,839) |
| Net transfers out from stage 2 | – | (1,224) | – | (1,224) |
| Net transfers into stage 3 | – | – | 37,959 | 37,959 |
| Net increase/(decrease) during the year (note (ii)) | 6,230 | (4,602) | (14,162) | (12,534) |
| Write-offs | – | – | (58,033) | (58,033) |
| Parameters change for the year (note (iii)) | 7,408 | 567 | 27,784 | 35,759 |
| Others (note (iv)) | (481) | 2,039 | 10,599 | 12,157 |
| Balance at 31 December 2022 | 62,125 | 22,675 | 53,324 | 138,124 |
| For the year ended 31 December 2023 | ||||
|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Balance at 1 January 2023 | 5,072 | 1,532 | 28,035 | 34,639 |
| Movements (note (i)): | ||||
| Net transfers out from stage 1 | (245) | – | – | (245) |
| Net transfers into stage 2 | – | 717 | – | 717 |
| Net transfers into stage 3 | – | – | 893 | 893 |
| Net increase during the year (note (ii)) | 397 | 63 | 2,543 | 3,003 |
| Write-offs | – | – | (6,510) | (6,510) |
| Parameters change for the year (note (iii)) | 6 | (676) | (351) | (1,021) |
| Others (note (iv)) | 375 | 3 | 52 | 430 |
| Balance at 31 December 2023 | 5,605 | 1,639 | 24,662 | 31,906 |
| For the year ended 31 December 2022 | ||||
|---|---|---|---|---|
| Stage 1 (Restated) | Stage 2 (Restated) | Stage 3 (Restated) | Total (Restated) | |
| Balance at 1 January 2022 | 7,030 | 5,725 | 19,683 | 32,438 |
| Movements (note (i)): | ||||
| Net transfers out from stage 1 | (309) | – | – | (309) |
| Net transfers out from stage 2 | – | (3,602) | – | (3,602) |
| Net transfers into stage 3 | – | – | 8,168 | 8,168 |
| Net increase/(decrease) during the year (note (ii)) | 1,426 | (720) | (1,592) | (886) |
| Write-offs | – | – | (2,719) | (2,719) |
| Parameters change for the year (note (iii)) | (1,200) | 57 | 2,468 | 1,325 |
| Others (note (iv)) | (1,875) | 72 | 2,027 | 224 |
| Balance at 31 December 2022 | 5,072 | 1,532 | 28,035 | 34,639 |
Notes:
(i)
Movements mainly includes the impacts to ECL due to changes in stages.
(ii)
Net increase/(decrease) mainly includes changes in allowance of impairment due to newly purchased or originated creditimpaired financial assets or de-recognition excluding write-offs.
(iii)
Parameters change mainly includes the impacts to ECL due to unwinding of discount, regular update on modeling parameters resulting from changes in PD and LGD excluding changes in stages.
(iv)
Others include changes of impairment losses of accrued interest, recovery of loans written off and effect of exchange differences.
(iii)
Loans and advances to customers and other parties analysed by industry sector:
| As at 31 December | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Gross balance | % | Loans and advances secured by collateral | Gross balance (Restated) | % | Loans and advances secured by collateral (Restated) | |
| Corporate loans | ||||||
| – Real estate | 264,352 | 5% | 170,149 | 280,771 | 5% | 231,897 |
| – Rental and business services | 532,395 | 10% | 148,751 | 495,897 | 9% | 193,562 |
| – Manufacturing | 477,610 | 9% | 179,327 | 407,586 | 8% | 171,457 |
| – Water, environment and public utility management | 432,724 | 8% | 104,234 | 413,399 | 8% | 129,983 |
| – Wholesale and retail | 215,348 | 4% | 100,650 | 177,917 | 3% | 95,000 |
| – Transportation, storage and postal services | 139,241 | 3% | 63,159 | 149,892 | 3% | 79,475 |
| – Construction | 123,776 | 2% | 45,390 | 103,600 | 2% | 54,690 |
| – Production and supply of electric power, gas and water | 98,121 | 1% | 39,809 | 89,708 | 2% | 41,650 |
| – Public management and social organisations | 50,914 | 2% | 18,399 | 8,674 | 1% | 1,930 |
| – Others | 354,160 | 6% | 90,198 | 396,931 | 8% | 117,282 |
| 2,688,641 | 50% | 960,066 | 2,524,375 | 49% | 1,116,926 | |
| Personal loans | 2,294,540 | 40% | 1,510,757 | 2,126,533 | 41% | 1,423,097 |
| Discounted bills | 516,450 | 9% | – | 511,936 | 9% | – |
| 5,499,631 | 99% | 2,470,823 | 5,162,844 | 99% | 2,540,023 | |
| Accrued interest | 20,188 | 1% | - | 17,385 | 1% | – |
| 5,519,819 | 100% | 2,470,823 | 5,180,229 | 100% | 2,540,023 | |
(iv)
Loans and advances to customers and other parties analysed by geographical sector:
| As at 31 December | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Gross balance | % | Loans and advances secured by collateral | Gross balance (Restated) | % | Loans and advances secured by collateral (Restated) | |
| Chinese mainland | 5,290,715 | 95% | 2,374,969 | 4,936,284 | 95% | 2,442,852 |
| Excluding Chinese mainland | 208,916 | 4% | 95,854 | 226,560 | 4% | 97,171 |
| 5,499,631 | 99% | 2,470,823 | 5,162,844 | 99% | 2,540,023 | |
| Accrued interest | 20,188 | 1% | - | 17,385 | 1% | – |
| 5,519,819 | 100% | 2,470,823 | 5,180,229 | 100% | 2,540,023 | |
(v)
Loans and advances to customers and other parties analysed by type of security:
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Unsecured loans | 1,543,908 | 1,381,719 |
| Guaranteed loans | 968,338 | 729,166 |
| Secured loans | ||
| – Loans secured by collateral | 2,057,745 | 2,021,158 |
| – Pledged loans | 413,190 | 518,865 |
| 4,983,181 | 4,650,908 | |
| Discounted bills | 516,450 | 511,936 |
| 5,499,631 | 5,162,844 | |
| Accrued interest | 20,188 | 17,385 |
| Gross loans and advances | 5,519,819 | 5,180,229 |
(vi)
Rescheduled loans and advances to customers and other parties
Rescheduled loans and advances are those loans and advances which have been restructured or renegotiated because of deterioration in the financial position of the borrower/debtor, or of the inability of the borrower/debtor to meet the original repayment schedule and for which the revised repayment terms are a concession that the Group would not otherwise consider.| As at 31 December | ||||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Gross balance | % of total loans and advances | Gross balance (Restated) | % of total loans and advances (Restated) | |
| Rescheduled loans and advances | 17,742 | 0.32% | 14,415 | 0.28% |
| – Rescheduled loans and advancesoverdue more than 3 months | 3,412 | 0.06% | 6,370 | 0.12% |
(vii)
Offsetting
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.As at 31 December 2023, the Group did not enter into significant enforceable master netting arrangements with counterparties and therefore there were no significant offsettings of any assets and liabilities in the consolidated statement of financial position (31 December 2022: Nil).
(b)
Liquidity risk
Liquidity risk arises when there is mismatch between amounts and maturity dates of financial assets and financial liabilities.Each of the Group’s operating entity formulates liquidity risk management policies and procedures within the Group’s overall liquidity risk management framework and takes into consideration of the business and regulatory requirements applicable to individual entity.
The Group manages liquidity risk by holding liquid assets (including deposits, other short-term funds and securities) of appropriate quality and quantity to ensure that short-term funding requirements are covered within prudent limits. Adequate standby facilities are maintained to provide strategic liquidity to meet unexpected and material demand for payments in the ordinary course of business.
The following tables indicate the analysis by remaining maturities of the Group’s financial assets and liabilities at the financial position date:
| As at 31 December 2023 | ||||||
|---|---|---|---|---|---|---|
| Repayable on demand | Within 1 year | Between 1 and 5 years | More than 5 years | Undated (note) | Total | |
| Total financial assets | 633,887 | 3,787,860 | 2,683,132 | 2,218,185 | 1,175,944 | 10,499,008 |
| Total financial liabilities | (3,757,854) | (4,326,465) | (1,574,515) | (150,666) | (20,488) | (9,829,988) |
| Financial asset-liability (gap)/surplus | (3,123,967) | (538,605) | 1,108,617 | 2,067,519 | 1,155,456 | 669,020 |
| As at 31 December 2022 | ||||||
|---|---|---|---|---|---|---|
| Repayable on demand (Restated) | Within 1 year (Restated) | Between 1 and 5 years (Restated) | More than 5 years (Restated) | Undated (Restated) (note) | Total (Restated) | |
| Total financial assets | 669,432 | 3,460,519 | 2,286,924 | 2,185,295 | 1,222,839 | 9,825,009 |
| Total financial liabilities | (3,572,146) | (4,232,094) | (1,159,660) | (159,734) | (21,346) | (9,144,980) |
| Financial asset-liability (gap)/surplus | (2,902,714) | (771,575) | 1,127,264 | 2,025,561 | 1,201,493 | 680,029 |
| As at 31 December 2023 | ||||||
|---|---|---|---|---|---|---|
| Repayable on demand | Within 1 year | Between 1 and 5 years | More than 5 years | Undated (note) | Total | |
| Total financial assets | 633,887 | 4,012,527 | 3,200,400 | 2,634,813 | 1,178,943 | 11,660,570 |
| Total financial liabilities | (3,757,854) | (4,474,085) | (1,709,326) | (178,990) | (20,613) | (10,140,868) |
| Financial asset-liability (gap)/surplus | (3,123,967) | (461,558) | 1,491,074 | 2,455,823 | 1,158,330 | 1,519,702 |
| As at 31 December 2022 | ||||||
|---|---|---|---|---|---|---|
| Repayable on demand (Restated) | Within 1 year (Restated) | Between 1 and 5 years (Restated) | More than 5 years (Restated) | Undated (Restated) (note) | Total (Restated) | |
| Total financial assets | 669,432 | 3,706,222 | 2,753,203 | 2,717,049 | 1,230,596 | 11,076,502 |
| Total financial liabilities | (3,572,146) | (4,344,067) | (1,273,682) | (174,355) | (21,346) | (9,385,596) |
| Financial asset-liability (gap)/surplus | (2,902,714) | (637,845) | 1,479,521 | 2,542,694 | 1,209,250 | 1,690,906 |
Notes:
For cash and balances with central banks, the indefinite maturity date amount represented statutory deposit reserve funds and fiscal deposits maintained with the People’s Bank of China. For loans and advances to customers and other parties, investments in financial assets, the no fixed maturity date amount represented the balances being credit impaired or overdue for more than one month. Equity investments were also reported under no fixed maturity date.
For loans and advances to customers which are overdue with are one month yet are not impaired, the balances are reported under repayable on demand.
For cash and balances with central banks, the indefinite maturity date amount represented statutory deposit reserve funds and fiscal deposits maintained with the People’s Bank of China. For loans and advances to customers and other parties, investments in financial assets, the no fixed maturity date amount represented the balances being credit impaired or overdue for more than one month. Equity investments were also reported under no fixed maturity date.
For loans and advances to customers which are overdue with are one month yet are not impaired, the balances are reported under repayable on demand.
Credit Commitments include bank acceptances, credit card commitments, letters of guarantee issued, loan commitments and letters of credit issued. The tables below summarise the amounts of credit commitments by remaining contractual maturity.
| As at 31 December 2023 | ||||
|---|---|---|---|---|
| Within 1 year | Between 1 and 5 years | More than 5 years | Total | |
| Loan commitments | 4,288 | 11,889 | 30,591 | 46,768 |
| Guarantees | 154,761 | 81,650 | 626 | 237,037 |
| Letters of credit | 255,368 | 873 | – | 256,241 |
| Acceptances | 866,662 | – | – | 866,662 |
| Credit card commitments | 779,947 | – | – | 779,947 |
| Total | 2,061,026 | 94,412 | 31,217 | 2,186,655 |
| As at 31 December 2022 | ||||
|---|---|---|---|---|
| Within 1 year (Restated) | Between 1 and 5 years (Restated) | More than 5 years (Restated) | Total (Restated) | |
| Loan commitments | 16,728 | 18,427 | 22,806 | 57,961 |
| Guarantees | 119,250 | 65,802 | 1,565 | 186,617 |
| Letters of credit | 269,893 | 944 | – | 270,837 |
| Acceptances | 795,833 | – | – | 795,833 |
| Credit card commitments | 704,268 | – | – | 704,268 |
| Total | 1,905,972 | 85,173 | 24,371 | 2,015,516 |
(c)
Interest rate risk
Each of the Group’s operating entities has formulated its own interest risk management policies and procedures covering identification, measurement, monitoring and control of interest risk. The Group manages interest rate risk to control potential loss from interest rate risk at an acceptable level by talking into account market conditions.(i)
Asset-liability gap
Interest rate risk arises from mismatch between repricing dates of financial assets and liabilities affected by market interest rate volatility.| As at 31 December 2023 | |||||
|---|---|---|---|---|---|
| Non-interest bearing | Within 1 year | Between 1 and 5 years | More than 5 years | Total | |
| Total financial assets | 1,090,623 | 7,076,058 | 1,543,608 | 788,719 | 10,499,008 |
| Total financial liabilities | (659,532) | (7,604,083) | (1,421,357) | (145,016) | (9,829,988) |
| Financial asset-liability surplus/(gap) | 431,091 | (528,025) | 122,251 | 643,703 | 669,020 |
| As at 31 December 2022 | |||||
|---|---|---|---|---|---|
| Non-interest bearing (Restated) | Within 1 year (Restated) | Between 1 and 5 years (Restated) | More than 5 years (Restated) | Total (Restated) | |
| Total financial assets | 1,307,774 | 6,139,735 | 1,887,433 | 490,067 | 9,825,009 |
| Total financial liabilities | (791,361) | (7,071,454) | (1,108,855) | (173,310) | (9,144,980) |
| Financial asset-liability surplus/(gap) | 516,413 | (931,719) | 778,578 | 316,757 | 680,029 |
(ii)
Effective interest rate
| As at 31 December | ||||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Effective interest rate | RMB million | Effective interest rate | RMB million (Restated) | |
| Assets | ||||
| Cash and deposits | 0.35%~2.07% | 625,135 | 0.35%~1.75% | 677,327 |
| Placements with banks and non-bank financial institutions | 3.18% | 237,742 | 2.49% | 217,354 |
| Financial assets held under resale agreements | 1.61% | 164,983 | 1.45% | 45,713 |
| Loans and advances to customers and other parties | 4.56% | 5,380,140 | 4.81% | 5,042,734 |
| Investments in financial assets | 2.73%~3.16% | 3,356,367 | 2.66%~3.55% | 3,143,196 |
| Others | 1,566,553 | 1,415,719 | ||
| 11,330,920 | 10,542,043 | |||
| Liabilities | ||||
| Borrowing from central banks | 2.61% | 273,226 | 2.94% | 119,421 |
| Deposits from banks and non-bank financial institutions | 2.12% | 893,565 | 2.09% | 1,103,099 |
| Placements from banks and non-bank financial institutions | 3.00% | 150,493 | 2.41% | 108,736 |
| Financial assets sold under repurchase agreements | 2.13% | 744,571 | 2.00% | 470,477 |
| Deposits from customers | 2.12% | 5,459,993 | 2.06% | 5,150,772 |
| Bank and other loans | 0.13%~10% | 235,770 | 1.28%~7.25% | 156,709 |
| Debt instruments issued | 0.88%~6.10% | 1,221,107 | 2.45%~6.80% | 1,182,140 |
| Others | 1,015,413 | 1,016,012 | ||
| 9,994,138 | 9,307,366 | |||
(iii)
Sensitivity analysis
The Group uses sensitivity analysis to measure the potential effect of changes in interest rates on the Group’s profit or loss. As at 31 December 2023, it is estimated that a general increase or decrease of 100 basis points in interest rates, with all other variables held constant, the Group’s profit before taxation would decrease or increase by RMB6,967 million (31 December 2022: decrease or increase by RMB10,038 million).This sensitivity analysis is based on a static interest rate risk profile of the Group’s financial assets and financial liabilities and certain simplified assumptions. The analysis only measures the impact of changes in the interest rates within one year, showing how annualised interest income would have been affected by repricing of the Group’s financial assets and financial liabilities within the one-year period. The analysis is based on the following assumptions: (1) all assets and liabilities that reprice or mature within three months and after three months but within one year reprice or mature at the beginning of the respective periods; (2) there is a parallel shift in the yield curve and in interest rates; and (3) there are no other changes to the portfolio, all positions will be retained and rolled over upon maturity. The analysis does not take into account the effect of risk management measures taken by management. Because of its hypothetical nature with the assumptions adopted, actual changes in the Group’s profit before taxation resulting from increases or decreases in interest rates may differ from the results of this sensitivity analysis.
(d)
Currency risk
Currency risk arises from the changes in exchange rates on the Group’s foreign currency denominated assets and liabilities. The Group measures its currency risk with foreign currency exposures, and manages currency risk by entering into spot foreign exchange transactions, use of derivatives (mainly foreign forwards and swaps), and matching its foreign currency denominated assets with corresponding liabilities in the same currency.The revenue from the Group’s Sino Iron Project is denominated in US$, and to meet accounting requirements US$ is the functional currency for this entity. A substantial portion of its development and operating expenditure are denominated in Australian Dollars. The Group entered into plain vanilla forward contracts to manage the foreign currency risks.
The Group funded the Sino Iron Project and the acquisition of bulk cargo vessels by borrowing US$ loans to match the future cash outflows of these assets. The Group’s investments in the Sino Iron Project and bulk cargo vessels (whose functional currency is in US$) have been designated as an accounting hedge against other US$ loans.
The exposure to currency risk arising from the financial assets and financial liabilities at the financial position dates is as follows (expressed in RMB million):
| As at 31 December 2023 | |||||
|---|---|---|---|---|---|
| RMB | HK$ | US$ | Others | Total | |
| Total financial assets | 9,629,011 | 271,879 | 521,594 | 76,524 | 10,499,008 |
| Total financial liabilities | (8,878,778) | (281,967) | (611,230) | (58,013) | (9,829,988) |
| Financial asset-liability surplus/(gap) | 750,233 | (10,088) | (89,636) | 18,511 | 669,020 |
| As at 31 December 2022 | |||||
|---|---|---|---|---|---|
| RMB (Restated) | HK$ (Restated) | US$ (Restated) | Others (Restated) | Total (Restated) | |
| Total financial assets | 9,010,024 | 214,928 | 525,864 | 74,193 | 9,825,009 |
| Total financial liabilities | (8,258,334) | (261,822) | (580,184) | (44,640) | (9,144,980) |
| Financial asset-liability surplus/(gap) | 751,690 | (46,894) | (54,320) | 29,553 | 680,029 |
Assuming all other risk variables remained constant, 100 basis points strengthening or weakening of RMB against HK$, US$ and other currencies as at 31 December 2023 would decrease or increase the Group’s total comprehensive income by RMB1,492 million (31 December 2022: decrease or increase by RMB717 million with 100 basis points strengthening or weakening).
This sensitivity analysis is based on a static foreign exchange exposure profile of financial assets and financial liabilities and certain simplified assumptions. The analysis is based on the following assumptions: (i) the foreign exchange sensitivity is the foreign exchange gain or loss recognised as a result of 100 basis points fluctuation in the in the absolute value of the closing (middle) of each foreign currency against RMB; (ii) the exchange rates against RMB for all foreign currencies change in the same direction simultaneously and do not take into account the correlation effect of changes in different foreign currencies; and (iii) the foreign exchange exposures calculated include both spot foreign exchange exposures, forward foreign exchange exposures and options, and all positions will be retained and rolled over upon maturity. The analysis does not take into account the effect of risk management measures taken by management. Because of its hypothetical nature with the assumptions adopted, actual changes in the Group’s comprehensive income resulting from increases or decreases in foreign exchange rates may differ from the results of this sensitivity analysis.
(e)
Fair values
(i)
Financial instruments carried at fair value
The following table presents the carrying amounts of financial instruments measured at fair value as at the financial position date across the three levels of the fair value hierarchy defined in HKFRS 13, Fair value measurement, with the fair value of each financial instrument categorised in its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:- Level 1: fair values measured using quoted market for similar active markets for identical financial instruments;
- Level 2: fair values measured using quoted prices in active market for similar financial instruments, or using valuation techniques in which all significant inputs are directly or indirectly based on observable market data;
- Level 3: fair values measured using valuation techniques in which any significant input is not based on observable market data.
- If traded in active markets, fair values of financial assets and financial liabilities with standard terms and conditions are determined with reference to quoted market bid prices and ask prices, respectively;
- If not traded in active markets, fair values of financial assets and financial liabilities are determined in accordance with generally accepted pricing models or discounted cash flow analysis using prices from observable current market transactions for similar instruments. If there are no available observable current market transactions prices for similar instruments, quoted prices from counterparty is used for the valuation, and management performs analysis on these prices. Discounted cash flow analysis using the applicable yield curve for the duration of the instruments is used for derivatives other than options, and option pricing models are used for option derivatives.
| As at 31 December 2023 | ||||
|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total | |
| Assets | ||||
| Bills receivables at FVOCI | – | 12,804 | – | 12,804 |
| Loans and advances to customers and other parties at FVOCI | – | 572,730 | – | 572,730 |
| Loans and advances to customers and other parties at FVPL | – | – | 5,558 | 5,558 |
| Derivative financial assets | 1,464 | 69,761 | 6,337 | 77,562 |
| Investments in financial assets | 555,487 | 1,560,215 | 164,626 | 2,280,328 |
| 556,951 | 2,215,510 | 176,521 | 2,948,982 | |
| Liabilities | ||||
| Financial liabilities at FVPL | (11,616) | (56,308) | (20,628) | (88,552) |
| Derivative financial liabilities | (1,003) | (67,524) | (5,228) | (73,755) |
| (12,619) | (123,832) | (25,856) | (162,307) | |
| As at 31 December 2022 | ||||
|---|---|---|---|---|
| Level 1 (Restated) | Level 2 (Restated) | Level 3 (Restated) | Total (Restated) | |
| Assets | ||||
| Bills receivables at FVOCI | – | 4,807 | – | 4,807 |
| Loans and advances to customers and other parties at FVOCI | – | 563,083 | – | 563,083 |
| Loans and advances to customers and other parties at FVPL | – | – | 3,881 | 3,881 |
| Derivative financial assets | 526 | 73,800 | 6,541 | 80,867 |
| Investments in financial assets | 598,342 | 1,281,235 | 139,023 | 2,018,600 |
| 598,868 | 1,922,925 | 149,445 | 2,671,238 | |
| Liabilities | ||||
| Financial liabilities at FVPL | (17,880) | (45,490) | (31,475) | (94,845) |
| Derivative financial liabilities | (1,154) | (66,825) | (4,414) | (72,393) |
| (19,034) | (112,315) | (35,889) | (167,238) | |
The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy:
| For the year ended 31 December 2023 | |||||||
|---|---|---|---|---|---|---|---|
| Assets | Liabilities | ||||||
| Loans and advances to customers and other parties at FVPL | Derivatives financial assets | Investments in financial assets | Total | Financial liabilities at fair value through profit or loss | Derivatives financial liabilities | Total | |
| At 1 January 2023 | 3,881 | 6,541 | 139,023 | 149,445 | (31,475) | (4,414) | (35,889) |
| Total profit/(losses): | 25 | (2,607) | 1,945 | (637) | 4,872 | 5,021 | 9,893 |
| – in profit or loss | 25 | (2,607) | 1,282 | (1,300) | 4,872 | 5,021 | 9,893 |
| – in other comprehensive losses | – | – | 663 | 663 | – | – | – |
| Net settlements | 1,652 | 2,403 | 23,658 | 27,713 | 5,975 | (5,835) | 140 |
| At 31 December 2023 | 5,558 | 6,337 | 164,626 | 176,521 | (20,628) | (5,228) | (25,856) |
| For the year ended 31 December 2022 | |||||||
|---|---|---|---|---|---|---|---|
| Assets | Liabilities | ||||||
| Loans and advances to customers and other parties at FVPL (Restated) | Derivatives financial assets (Restated) | Investments in financial assets (Restated) | Total (Restated) | Financial liabilities at fair value through profit or loss (Restated) | Derivatives financial liabilities (Restated) | Total (Restated) | |
| At 1 January 2022 | – | – | 32,447 | 32,447 | (212) | – | (212) |
| Total profit/(losses): | – | 2,262 | 6,055 | 8,317 | (449) | 2,545 | 2,096 |
| – in profit or loss | – | 2,262 | 6,272 | 8,534 | (449) | 2,545 | 2,096 |
| – in other comprehensive losses | – | – | (217) | (217) | – | – | – |
| Net settlements | 3,881 | (629) | (4,336) | (1,084) | 2,520 | (2,598) | (78) |
| Business combinations | – | 4,908 | 104,857 | 109,765 | (33,334) | (4,361) | (37,695) |
| At 31 December 2022 | 3,881 | 6,541 | 139,023 | 149,445 | (31,475) | (4,414) | (35,889) |
(ii)
Fair value of other financial instruments (carried at other than fair value)
The carrying amounts and fair values of the Group’s financial assets and liabilities, other than those with carrying amounts that reasonably approximate to their fair values, are as follows:| As at 31 December 2023 | |||||
|---|---|---|---|---|---|
| Carrying amount | Fair value | Level 1 | Level 2 | Level 3 | |
| Financial assets | |||||
| Investments in financial assets | |||||
| – Financial assets at amortised cost | 1,076,039 | 1,082,341 | 8,885 | 854,990 | 218,466 |
| Financial liabilities | |||||
| Debt instruments issued | |||||
| – Corporate bonds issued | 236,477 | 237,942 | 206,139 | 31,803 | – |
| – Notes issued | 154,307 | 154,833 | 4,671 | 150,162 | – |
| – Subordinated bonds issued | 83,397 | 84,351 | 7,255 | 77,096 | – |
| – Certificates of deposit issued (non-trading) | 1,430 | 1,430 | – | – | 1,430 |
| – Certificates of interbank deposit issued | 705,317 | 694,130 | – | 694,130 | – |
| – Convertible corporate bonds issued | 18,504 | 22,315 | – | – | 22,315 |
| – Beneficiary certificates | 21,675 | 21,675 | – | – | 21,675 |
| 1,221,107 | 1,216,676 | 218,065 | 953,191 | 45,420 | |
| As at 31 December 2022 | |||||
|---|---|---|---|---|---|
| Carrying amount (Restated) | Fair value (Restated) | Level 1 (Restated) | Level 2 (Restated) | Level 3 (Restated) | |
| Financial assets | |||||
| Investments in financial assets | |||||
| – Financial assets at amortised cost | 1,124,596 | 1,130,152 | 7,747 | 886,459 | 235,946 |
| Financial liabilities | |||||
| Debt instruments issued | |||||
| – Corporate bonds issued | 205,424 | 206,516 | 171,756 | 34,760 | – |
| – Notes issued | 130,663 | 140,736 | 11,163 | 129,573 | – |
| – Subordinated bonds issued | 100,374 | 101,501 | 3,462 | 98,039 | – |
| – Certificates of deposit issued (nontrading) | 1,047 | 1,047 | – | – | 1,047 |
| – Certificates of interbank deposit issued | 720,096 | 703,847 | – | 703,847 | – |
| – Convertible corporate bonds issued | 18,481 | 22,426 | – | – | 22,426 |
| – Beneficiary certificates | 6,055 | 6,055 | – | – | 6,055 |
| 1,182,140 | 1,182,128 | 186,381 | 966,219 | 29,528 | |
(iii)
Estimation of fair values
As at the financial position date, the Group adopted the following major methods and assumptions in estimating the fair value of financial instruments.Investments in financial assets and financial liabilities
Fair value is based on quoted market prices as at the financial position date for trading financial assets and liabilities (excluding derivatives), financial assets held for investment if there is an active market. If an active market does not exist for financial assets held for investment, the fair value is determined using valuation techniques.
Derivatives
The fair values of foreign currency and interest rate contracts are either based on their listed market prices or by discount cash flow model at the measurement date.
Financial guarantees
The fair values of financial guarantees are determined by reference to fees charged in an arm’s length transaction for similar services, when such information is obtainable, or is otherwise estimated by reference to interest rate differentials, by comparing the actual rates charged by lenders when the guarantee is made available with the estimated rates that the lenders would have charged, had the guarantees not been available, where reliable estimates of such information can be made.
(a)
Relationship of related parties
(i)
In addition to subsidiaries, related parties include parent company, holding company’s fellow entities, associates and joint ventures of the Group.
(ii)
CITIC Group, the parent and the ultimate controlling shareholder of the Group, is a state-owned company established in Beijing in 1979.
(b)
Related party transactions
(i)
Transaction amounts with related parties
| For the year ended 31 December 2023 | ||||
|---|---|---|---|---|
| Parent company | Holding company’s fellow entities | Associates and joint ventures | Total | |
| Sales of goods | – | 164 | 3,030 | 3,194 |
| Purchase of goods | – | 1,272 | 22,970 | 24,242 |
| Interest income (note (2)) | 69 | 109 | 1,540 | 1,718 |
| Interest expenses | 84 | 1,791 | 714 | 2,589 |
| Fee and commission income | 64 | 1 | 15 | 80 |
| Fee and commission expenses | – | 16 | 1 | 17 |
| Income from other services | 23 | 199 | 4,249 | 4,471 |
| Expenses for other services | – | 122 | 133 | 255 |
| Interest income from deposits and receivables | – | – | 576 | 576 |
| Other operating expenses | – | 1,174 | 851 | 2,025 |
| For the year ended 31 December 2022 | ||||
|---|---|---|---|---|
| Parent company (Restated) | Holding company’s fellow entities (Restated) | Associates and joint ventures (Restated) | Total (Restated) | |
| Sales of goods | – | 159 | 1,510 | 1,669 |
| Purchase of goods | – | 1,397 | 17,254 | 18,651 |
| Interest income (note (2)) | 58 | 114 | 2,710 | 2,882 |
| Interest expenses | 61 | 703 | 537 | 1,301 |
| Fee and commission income | 40 | 2 | 36 | 78 |
| Fee and commission expenses | – | – | 12 | 12 |
| Income from other services | 4 | 101 | 2,312 | 2,417 |
| Expenses for other services | – | 72 | 26 | 98 |
| Interest income from deposits and receivables | 10 | – | 463 | 473 |
| Other operating expenses | – | 62 | 1,929 | 1,991 |
Notes:
(1)
These above transactions with related parties were conducted under the normal commercial terms.
(2)
Interest rates of loans and advances to the related parties were determined at rates negotiated between the Group and the corresponding related parties on a case by case basis.
(3)
During the relevant years, CITIC Bank, a subsidiary of the Group, entered into transactions with related parties in the ordinary course of its banking businesses including lending, assets transfer (i.e. issuance of asset-backed securities in the form of public placement), wealth management, investment, deposit, settlement and clearing, off-balance sheet transactions, and purchase, sale and leases of property. These banking transactions were conducted under normal commercial terms and conditions and priced at the relevant market rates prevailing at the time of each transaction.
(ii)
Outstanding balances with related parties
| For the year ended 31 December 2023 | ||||
|---|---|---|---|---|
| Parent company | Holding company’s fellow entities | Associates and joint ventures | Total | |
| Trade and other receivables | 64 | 1,017 | 10,863 | 11,944 |
| Loans and advances to customers and other parties (note (2)) | – | 5,285 | 11,443 | 16,728 |
| Cash and deposits | – | – | 31,170 | 31,170 |
| Derivative financial instruments and other assets | – | 2 | 10,037 | 10,039 |
| Placements with banks and nonbank financial institutions | – | – | 33,881 | 33,881 |
| Investments in financial assets | ||||
| – Financial assets at FVPL | – | – | 4,900 | 4,900 |
| – Debt instruments at FVOCI | 1,023 | – | 1,366 | 2,389 |
| – Equity investments at FVOCI | – | – | 460 | 460 |
| – Financial assets at amortised cost | 985 | – | – | 985 |
| Contract assets | – | 5 | 918 | 923 |
| Financial assets held under resale agreements | – | 1,182 | – | 1,182 |
| Trade and other payables | 481 | 11,410 | 5,953 | 17,844 |
| Deposits from customers | 19,139 | 9,761 | 19,585 | 48,485 |
| Deposits from bank and non-bank financial institutions | – | – | 19,310 | 19,310 |
| Contract liabilities | 135 | 10 | 1,474 | 1,619 |
| Lease liabilities | – | 191 | 20 | 211 |
| Derivative financial instruments and other liabilities | – | 6 | 241 | 247 |
| Bank and other loans | 254 | 33,136 | – | 33,390 |
| Off-balance sheet items | ||||
| Guarantees provided (note (3)) | – | – | 7,344 | 7,344 |
| For the year ended 31 December 2022 | ||||
|---|---|---|---|---|
| Parent company | Holding company’s fellow entities | Associates and joint ventures | Total | |
| Trade and other receivables | 63 | 1,045 | 3,844 | 4,952 |
| Loans and advances to customers and other parties (note (2)) | 3,917 | 5,071 | 15,539 | 24,527 |
| Cash and deposits | – | – | 34,126 | 34,126 |
| Derivative financial instruments and other assets | – | 1 | 3,961 | 3,962 |
| Placements with banks and nonbank financial institutions | – | – | 24,005 | 24,005 |
| Investments in financial assets | ||||
| – Financial assets at FVPL | – | – | 4,817 | 4,817 |
| – Debt instruments at FVOCI | 2,600 | – | – | 2,600 |
| – Financial assets at amortised cost | – | – | 920 | 920 |
| Contract assets | – | 2 | 247 | 249 |
| Financial assets held under resale agreements | – | – | 1,182 | 1,182 |
| Trade and other payables | 172 | 10,799 | 6,396 | 17,367 |
| Deposits from customers | 9,686 | 6,225 | 13,137 | 29,048 |
| Deposits from bank and non-bank financial institutions | – | – | 13,193 | 13,193 |
| Contract liabilities | – | 34 | 759 | 793 |
| Lease liabilities | – | 206 | – | 206 |
| Derivative financial instruments and other liabilities | – | – | 219 | 219 |
| Bank and other loans | 1,488 | 27,393 | – | 28,881 |
| Off-balance sheet items | ||||
| Guarantees provided (note (3)) | – | – | 6,969 | 6,969 |
Notes:
(1)
The above transactions with related party transactions which were conducted under the normal commercial terms.
(2)
Interest rates of loans and advances to the related parties were determined at rates negotiated among the Group and the corresponding related parties on a case by case basis.
(3)
The guarantees provided by the Group to the related parties were based on the terms agreed among the Group and the related parties on a case by case basis.
(c)
Transactions with other state-owned entities in the PRC
In addition to these related party transactions disclosed in Note 51(b), transactions with other stateowned entities include but are not limited to the following:- sales and purchases of goods and provision of services;
- purchase, sale and leases of property and other assets;
- lending and deposit taking;
- taking and placing of inter-bank balances;
- derivative transactions;
- entrusted lending and other custody services;
- insurance and securities agency, and other intermediary services;
- sale, purchase, underwriting and redemption of bonds issued by other state-owned entities; and
- rendering and receiving of utilities and other services.
(d)
Key management personnel remuneration
For the year ended 31 December 2023, the aggregate amount of the remuneration before tax paid to directors and executive officers of the Company amounted to RMB6.70 million (2022: RMB7.00 million).(a)
Structured entities in which the Group holds an interest
The Group holds an interest in some structured entities through investments in debt securities issued by these structured entities. Such structured entities include wealth management products, investment management products, trust investment plans, asset-backed securities and investment funds and the Group does not consolidate these structured entities.The following table sets out an analysis of the carrying amounts of interests held by the Group as at the financial position date in the structured entities, as well as an analysis of the line items in the statement of financial position in which the relevant assets are recognised:
| As at 31 December 2023 Investments in financial assets | |||||
|---|---|---|---|---|---|
| Gross amount | Financial assets at amortised cost | Financial assets at FVPL | Debt investments at FVOCI | Total | Maximum loss exposure |
| Wealth management products | – | 6,161 | – | 6,161 | 6,161 |
| Investment management products managed by non-bank institutions | 22,908 | 12,706 | – | 35,614 | 35,614 |
| Trust investment plans | 194,110 | 11,432 | – | 205,542 | 205,542 |
| Asset-backed securities | 123,158 | 912 | 19,666 | 143,736 | 143,736 |
| Investment funds | – | 553,540 | – | 553,540 | 553,540 |
| Total | 340,176 | 584,751 | 19,666 | 944,593 | 944,593 |
| As at 31 December 2022 Investments in financial assets | |||||
|---|---|---|---|---|---|
| Gross amount | Financial assets at amortised cost (Restated) | Financial assets at FVPL (Restated) | Debt investments at FVOCI (Restated) | Total (Restated) | Maximum loss exposure (Restated) |
| Wealth management products | – | 1,553 | – | 1,553 | 1,553 |
| Investment management products managed by non-bank institutions | 39,628 | 10,712 | – | 50,340 | 50,340 |
| Trust investment plans | 226,257 | 5,346 | – | 231,603 | 231,603 |
| Asset-backed securities | 252,525 | 1,435 | 44,697 | 298,657 | 298,657 |
| Investment funds | – | 462,298 | – | 462,298 | 462,298 |
| Total | 518,410 | 481,344 | 44,697 | 1,044,451 | 1,044,451 |
(b)
Structured entities sponsored by the Group which the Group does not consolidate but holds an interest
The investments issued by unconsolidated structured entities sponsored by the Group are primarily wealth management products, trust plans, investment funds and investment management products. The nature and purpose of these structured entities are for the Group to generate fees from managing assets on behalf of investors. These structured entities are financed through the issuance of products to investors. The interests in unconsolidated structured enties held by the Group mainly include fees charged by providing management services.Wealth management products, trust plans, investment funds and investment management products
As at 31 December 2023, the aggregate amount of assets held by the unconsolidated wealth management products, trust plans, investment funds and investment management products which are sponsored by the Group was RMB6,859,588 million (31 December 2022: RMB6,397,452 million).
During the year ended 31 December 2023, the amount of fee and commission income and net interest income recognised from the above-mentioned structured entities sponsored by the Group was RMB12,777 million (2022: RMB18,741 million) and RMB220 million (2022: RMB72 million).
In order to achieve a smooth transition and steady development of the wealth management business, in 2023, in accordance with the requirements of the “Guiding Opinions on Regulating the Asset Management Business of Financial Institutions”, the Group continue to promote net-value-based reporting of its asset management products and dispose of existing portfolios.
(c)
Transfers of financial assets
The Group entered into transactions which involved securitisation transactions and transfers of nonperforming financial assets.These transactions were entered into in the normal course of business by which recognised financial assets were transferred to third parties or structured entities. Transfers of assets may give rise to full or partial de-recognition of the financial assets concerned. On the other hand, where transferred assets do not qualify for de-recognition as the Group has retained substantially all the risks and rewards of these assets, the Group continues to recognise the transferred assets.
Details of securitisation transactions and non-performing financial assets transfer transactions conducted by the Group for the year ended 31 December 2023 totally RMB45,172 million (2022: RMB34,212 million). Details of the financial assets sold under repurchase agreements are set forth in Note 42.
Securitisation transactions
In 2023, the original book value of financial assets transferred by the Group through asset securitisation transactions was RMB17,510 million (2022: RMB14,994 million), which qualified for full de-recognition (2022: qualified for full de-recognition).
Transfer of loans and other financial assets
In 2023, the Group transferred loans and other financial assets by other means with the original book value of RMB27,662 million (2022: RMB19,218 million), including RMB19,272 million (2022: RMB5,628 million) of non-performing loans, RMB7,990 million (2022: RMB13,590 million) of non-performing structured investments and RMB400 million (2022: Nil) of other financial assets. The Group carried out assessment based on the transfer of risks and rewards of ownership in accordance with Note 2(k) and Note 3(i), and concluded that these transferred assets qualified for full de-recognition.
(a)
Cash and cash equivalents held by the Group are as follows:
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Cash | 4,504 | 5,604 |
| Bank deposits on demand | 94,801 | 99,447 |
| Surplus deposit reserve funds | 52,473 | 104,315 |
| Investments in debt securities and others with original maturities of three months or less | 90,389 | 137,757 |
| Deposits with banks and non-bank financial institutions due within three months | 57,509 | 44,467 |
| Placements with banks and non-bank financial institutions due within three months | 59,707 | 36,219 |
| Cash and cash equivalents in the consolidated cash flow statement | 359,383 | 427,809 |
(b)
Disposal of subsidiaries
The Group has no disposal of significant subsidiaries for the year ended 31 December 2023 (2022: None).(c)
Reconciliation of financing liabilities
| For the year ended 31 December | |||||
|---|---|---|---|---|---|
| Bank and other loans | Debt instruments issued | Interest expense | Lease liabilities | Total | |
| At 31 December 2021 (Restated) | 120,640 | 1,017,672 | 4,968 | 16,975 | 1,160,255 |
| Cash flows | 18,940 | (34,541) | (41,865) | (5,396) | (62,862) |
| Business combination | 7,199 | 195,843 | – | 1,920 | 204,962 |
| Foreign exchange adjustments | 9,584 | 9,543 | 2,226 | 1,286 | 22,639 |
| Other non-cash movements | (275) | (13,438) | 42,353 | 4,743 | 33,383 |
| At 31 December 2022 (Restated) | 156,088 | 1,175,079 | 7,682 | 19,528 | 1,358,377 |
| Cash flows | 34,771 | 41,614 | (43,735) | (6,045) | 26,605 |
| Business combination | 39,246 | 300 | – | 82 | 39,628 |
| Foreign exchange adjustments | 274 | 685 | 1,918 | 41 | 2,918 |
| Other non-cash movements | 4,753 | (4,098) | 42,300 | 6,742 | 49,697 |
| At 31 December 2023 | 235,132 | 1,213,580 | 8,165 | 20,348 | 1,477,225 |
(d)
Issue and redemption of other equity instruments by subsidiaries
In 2023, China CITIC Bank, a subsidiary of the Group, redeemed RMB3,516 million of capital debentures without fixed terms (2022: issued RMB3,990 million of capital debentures without fixed term).In 2023, China CITIC Security, a subsidiary of the Group, issued RMB3,000 million of capital debentures without fixed terms (2022: Nil).
In 2023, subsidiaries of the Group did not issue convertible bonds (2022: CITIC Special Steel, a subsidiary of the Group, issued convertible bonds. For details, please refer to Note 45(f)).
(a)
Acquisition of additional interest in an indirectly hold subsidiary
In 2023, CITIC Financial Holding acquired 0.79% of the issued shares of CITIC Securities for a purchase consideration of RMB1,707 million. The Group recognised a decrease in non-controlling interests of RMB1,707 million, and the equity attributable to shareholders of the Company remained unchange. The effect of changes in the ownership interest of CITIC Securities on the equity attributable to shareholders of the Company during the year is summarised as follows:| 31 December 2023 RMB million | |
|---|---|
| Carrying amount of non-controlling interests acquired | 1,707 |
| Consideration paid to non-controlling interests | (1,707) |
| Excess of consideration paid recognised within equity | – |
(b)
Dilution of interests in subsidiaries without loss of control
In April 2023, CITIC Metal Co., Ltd. (“CITIC Metal”), a subsidiary of the Group, issued new ordinary shares publicly in Shanghai Stock Exchange, acquiring cash amounting to RMB3,194 million. The Group recognised an increase in non-controlling interests of RMB1,738 million and an increase in equity attributable to shareholders of the Company of RMB1,456 million. The effect of changes in the ownership interest of CITIC Metal on the equity attributable to shareholders of the Company during the year is summarised as follows:| 31 December 2023 RMB million | |
|---|---|
| Increase in carrying amount of non-controlling interests | 1,738 |
| Consideration received from non-controlling interests | (3,194) |
| Loss on disposal within equity | (1,456) |
| As at 31 December | ||
|---|---|---|
| 2023 | 2022 (Restated) | |
| Non-current assets | ||
| Fixed assets | 1 | 1 |
| Interests in subsidiaries | 429,203 | 411,028 |
| Interests in associates | – | 7,104 |
| Interests in joint ventures | 32 | 31 |
| Investments in financial assets | ||
| – Financial assets at fair value through profit or loss | 3,226 | 3,126 |
| 432,462 | 421,290 | |
| Current assets | ||
| Amounts due from subsidiaries | 76,133 | 65,959 |
| Trade and other receivables | 105 | 95 |
| Cash and deposits | 2,137 | 2,684 |
| 78,375 | 68,738 | |
| Total assets | 510,837 | 490,028 |
| Current liabilities | ||
| Bank and other loans | 15,854 | 25,854 |
| Amounts due to subsidiaries and other related parties | 12,255 | 11,264 |
| Trade and other payables | 231 | 241 |
| Income tax payable | 2,203 | 1,709 |
| Debt instruments issued | 1,815 | 11,819 |
| 32,358 | 50,887 | |
| Non-current liabilities | ||
| Long term borrowings | 68,032 | 37,215 |
| Debt instruments issued | 42,061 | 43,236 |
| Derivative financial instruments | 34 | 52 |
| 110,127 | 80,503 | |
| Total liabilities | 142,485 | 131,390 |
| Equity | ||
| Share capital | 307,576 | 307,576 |
| Reserves | 60,776 | 51,062 |
| Total ordinary shareholders’ funds | 368,352 | 358,638 |
| Total liabilities and equity | 510,837 | 490,028 |
Director: Xi Guohua
Director: Zhang Wenwu
(a)
Reserve movement of the Company
| As at 31 December | ||||||
|---|---|---|---|---|---|---|
| Share capital (Note 47(a)) | Capital reserve (Note 47(b)(i)) | Hedging reserve (Note 47(b)(ii)) | Retained earnings | Exchange reserve (Note 47(b)(v)) | Total | |
| As at 1 January 2023 | 307,576 | 505 | 57 | 17,001 | 33,499 | 358,638 |
| Other comprehensive income | – | – | (68) | – | 5,489 | 5,421 |
| Profit attributable to shareholders of the Company | – | – | – | 21,517 | – | 21,517 |
| Dividends paid to ordinary shareholders of the Company | – | – | – | (17,224) | – | (17,224) |
| At at 31 December 2023 | 307,576 | 505 | (11) | 21,294 | 38,988 | 368,352 |
| As at 1 January 2022 | 307,576 | 505 | (470) | 15,736 | 3,125 | 326,472 |
| Other comprehensive income | – | – | 527 | – | 30,374 | 30,901 |
| Profit attributable to shareholders of the Company | – | – | – | 17,675 | – | 17,675 |
| Dividends paid to ordinary shareholders of the Company | – | – | – | (16,410) | – | (16,410) |
| At at 31 December 2022 | 307,576 | 505 | 57 | 17,001 | 33,499 | 358,638 |
(a)
Combination of Pacific Steel
The Group held 40% shareholding interest of Pacific Steel, which was originally an associate of the Group. On 6 February 2023, the terms of the transaction of acquiring 60% shareholding of Pacific Steel through Jiangyin Xingcheng Special Steel Works Co., Ltd. (an indirect non-wholly owned subsidiary of the Company) at a total consideration of RMB1,908 million have been achieved. The consideration for the acquisition was settled by cash. Upon completion of the acquisition, Pacific Steel became wholly owned by the Company.The consideration paid for the acquisition and the fair value of identifiable assets, liabilities and noncontrolling interests acquired at the acquisition date are summarised as follows:
Consideration:
| RMB million | |
|---|---|
| Fair value of investment in Pacific Steel held by the Group at the acquisition date | 1,276 |
| Cash | 1,908 |
| 3,184 | |
| Recognised amounts of identifiable assets acquired and liabilities assumed | |
| Cash and deposits | 692 |
| Trade and other receivables | 6,634 |
| Contract assets | 3 |
| Inventory | 4,804 |
| Investment properties | 86 |
| Fixed assets | 10,972 |
| Right-of-use assets | 7 |
| Intangible assets | 2,844 |
| Deferred tax assets | 587 |
| Others | 206 |
| Total identifiable assets acquired | 26,835 |
| Bank and other loans | 9,916 |
| Trade and other payables | 9,126 |
| Contract liabilities | 508 |
| Employee benefits payables | 121 |
| Tax payables | 51 |
| Deferred tax liabilities | 572 |
| Lease liabilities | 4 |
| Others | 155 |
| Total identifiable liabilities assumed | 20,453 |
| Total identifiable net assets | 6,382 |
| Non-controlling interests | (3,191) |
| Total net assets acquired | 3,191 |
| RMB million | |
|---|---|
| Total consideration paid in cash | 1,908 |
| Cash and cash equivalents acquired | (692) |
| 1,216 |
(b)
Combination of Nanjing Steel Group
On 2 April 2023, Hubei Xinyegang Steel Co., Ltd., Nanjing Steel Venture Capital Co., Ltd., Nanjing New Industrial Investment Group Co., Ltd. and Nanjing Steel Group Co., Ltd. reached an agreement in relation to the acquisition of 55.2482% shareholding of Nanjing Steel Group through Hubei Xinyegang (an indirect non-wholly owned subsidiary of the Company) with a total consideration of RMB13,580 million. On 30 November 2023, the acquisition has been approved by the Anti Monopoly Bureau of the State Administration for Market Regulation, and the terms of the transaction have been achieved. The consideration for the acquisition was settled by cash. Upon completion of the acquisition, the Company’s subsidiary Hubei Xinyegang directly owned 55.2482% shareholding of Nanjing Steel Group and Nanjing Steel Group become the subsidiary of the Company.The consideration paid for the acquisition and the fair value of identifiable assets, liabilities and non-controlling interests acquired at the acquisition date are summarised as follows:
Consideration:
| RMB million | |
|---|---|
| Cash | 13,580 |
| 13,580 | |
| Recognised amounts of identifiable assets acquired and liabilities assumed | |
| Cash and deposits | 17,406 |
| Trade and other receivables | 14,583 |
| Inventories | 10,752 |
| Investments in financial assets | 7,363 |
| Interests in joint ventures | 560 |
| Fixed assets | 36,257 |
| Investment properties | 134 |
| Deferred tax assets | 884 |
| Others | 13,264 |
| Total identifiable assets acquired | 101,203 |
| Trade and other payables | 24,066 |
| Contract liabilities | 5,176 |
| Employee benefits payables | 1,093 |
| Tax payables | 259 |
| Bank and other loans | 29,330 |
| Debt instruments issued | 300 |
| Lease liabilities | 78 |
| Deferred tax liabilities | 1,869 |
| Total identifiable liabilities assumed | 62,171 |
| Total identifiable net assets | 39,032 |
| Non-controlling interests | (25,734) |
| Goodwill | 282 |
| Total net assets acquired | 13,580 |
| RMB million | |
|---|---|
| Total consideration paid in cash | 13,580 |
| Cash and cash equivalents acquired | (17,406) |
| (3,826) |
The Group’s revenue and net profit attributable to ordinary shareholders of the Company during the period from the acquisition date to 31 December 2023 contributed by Nanjing Steel Group were RMB5,265 million and RMB47 million, respectively.
Had Pacific Steel and Nanjing Steel Group been consolidated from 1 January 2023, the Group’s consolidated income statement would show pro-forma revenue and net profit attributable to ordinary shareholders of the Company of RMB749,988 million and RMB58,284 million, respectively.
(c)
Business Combination under common control
In 2023, the subsidiaries of the Company acquired CITIC Zhengye Investment Development Co., Ltd.(“CITIC Zhengye Investment”) and CITIC Technology Development Co.LTD.(“CITIC Technology”). The acquisition represents a business combination under common control as the subsidiaries of the Company, CITIC Zhengye Investment and CITIC Technology are ultimately controlled by CITIC Group both before and after the acquisition, and that control is not transitory. The financial statements of CITIC Zhengye Investment and CITIC Technology are included in the Group’s consolidated financial statements as if the combination had occurred from the date when the ultimate controlling shareholder first obtained control. Therefore, the opening balances and the comparative figures of the consolidated financial statements are restated. The Group does not have any significant events after the financial position date that need to be disclosed.
Restatements have been made on some of the comparative amounts to ensure the comparability with current year’s financial statements.
The consolidated financial statements were approved and authorised for issue by the board of directors on 28 March 2024.
The Group has not applied the following amendments to standards and new standards which are effective for the financial year beginning after 1 January 2023 and which have not been early adopted in these consolidated financial statements:
The Group is in the process of making an assessment of the impact of the above new standards and amendments to standards. None of these is expected to have a significant effect on the consolidated financial statements of the Group.
| Amendments to HKAS 1 | Classification of Liabilities as Current or Non-current (1) |
| Amendments to HKAS 1 | Non-current Liabilities with Covenants (1) |
| Amendments to HKFRS 16 | Lease Liability in a Sale and Leaseback (2) |
| Amendments to HKAS 7 and HKFRS 7 | Supplier Finance Arrangements (2) |
| Amendments to HKFRS 10 and HKAS 28 | Sale of contribution of assets between an investor and its associate or joint venture (3) |
(1)
In December 2022, the Hong Kong Institute of Certified Public Accountants (“HKICPA”) deferred the effective date of these amendments to annual reporting period beginning on or after 1 January 2024.
(2)
Effective for the annual reporting periods beginning on or after 1 January 2024.
(3)
In December 2015, the HKICPA decided to defer the application date of these amendment until such time as the HKICPA has finalised its research project on the equity method.
The Group is in the process of making an assessment of the impact of the above new standards and amendments to standards. None of these is expected to have a significant effect on the consolidated financial statements of the Group.
(a)
Principal subsidiaries
| Proportion of ownership interest | ||||||
|---|---|---|---|---|---|---|
| Name of company | Place of incorporation/ Type of legal entity | Principal activity | Shares issued | Attributable to the Group | Held by the Company | Held by subsidiaries |
| CITIC Corporation Limited 中國中信有限公司 | Chinese mainland/ Limited liability | Investment holding | N/A | 100% | 100% | 0% |
| CITIC Financial Holdings Co.,Ltd. 中國中信金融控股有限公司 | Chinese mainland/ Limited liability | Investment holding | N/A | 100% | 0% | 100% |
| CITIC Pacific Limited 中信泰富有限公司 | British Virgin Islands | Investment holding | 51,097 | 100% | 100% | 0% |
| CITIC Pacific Special Steel Group Co., Ltd. 中信泰富特鋼集團股份有限公司 | Chinese mainland/Stock limited company (listed) | Special steel production | 5,047,156,349 | 83.84% | 0% | 83.84% |
| Nanjing Iron and Steel Group Co., Ltd. 南京鋼鐵股份有限公司 | Chinese mainland/Stock limited company (listed) | Production and sales of steel product | 6,165,091,011 | 33.53% | 0% | 59.10% |
| Shanghai Zhongte Pacific Steel Co., Ltd. 上海中特泰富鋼管有限公司 | Chinese mainland/ Limited liability | Sale of steel and consultation on electric power technology | N/A | 83.85% | 0% | 100% |
| Dah Chong Hong Holdings Limited 大昌行集團有限公司 | Hong Kong | Consumer goods | 1,891,247,220 | 100% | 0% | 100% |
| CITIC Mining International Ltd. 中信礦業國際有限公司 | Cayman Islands | Resources and energy | 1 | 100% | 100% | 0% |
| CITIC Metal Group Ltd. 中信金屬集團有限公司 | Hong Kong | Resources and energy | 11,800,000,000 | 100% | 0% | 100% |
| CITIC Telecom International Holdings Limited 中信國際電訊集團有限公司 | Hong Kong (listed) | Telecom services | 3,700,035,382 | 57.55% | 0% | 57.55% |
| CITIC Finance Company International Limited 中信財務(國際)有限公司 | Hong Kong | Financial services | N/A | 100% | 100% | 0% |
| China CITIC Bank Corporation Limited 中信銀行股份有限公司 | Chinese mainland/Stock limited company (listed) | Banking industry | 83,966,865,954 | 65.93% | 0% | 65.93% |
| CITIC Securities Company Limited 中信證券股份有限公司 | Chinese mainland/Stock limited company (listed) | Securities related services | 14,820,546,829 | 19.24% | 0% | 19.24% |
| CITIC International Financial Holdings Limited 中信國際金融控股有限公司 | Hong Kong | Banking industry | 7,502,832,116 | 65.93% | 0% | 100% |
| CITIC Trust Co., Ltd. 中信信託有限責任公司 | Chinese mainland/ Limited liability | Trust services | N/A | 100% | 0% | 100% |
| CITIC Finance Company Limited 中信財務有限公司 | Chinese mainland/ Limited liability | Financial services | N/A | 94.39% | 0% | 98.69% |
| CITIC Consumer Finance Co., Ltd. 中信消費金融有限公司 | Chinese mainland/ Limited liability | Consumer finance | N/A | 70% | 0% | 70% |
| CITIC Resources Holdings Limited 中信資源控股有限公司 | Bermuda (listed) | Resources and energy | 7,857,727,149 | 59.50% | 0% | 59.50% |
| CITIC Australia Pty Limited 中信澳大利亞有限公司 | Australia | Resources and energy | 85,882,017 | 100% | 0% | 100% |
| CITIC Heavy Industries Co., Ltd. 中信重工機械股份有限公司 | Chinese mainland/Stock limited company (listed) | Manufacturing | 4,339,419,293 | 67.27% | 0% | 67.27% |
| CITIC Construction Company Limited 中信建設有限責任公司 | Chinese mainland/ Limited liability | Engineering contracting | N/A | 100% | 0% | 100% |
| CITIC Urban Development & Operation Co., Ltd. 中信城市開發運營有限責任公司 | Chinese mainland/ Limited liability | Real estate development | N/A | 100% | 0% | 100% |
| CITIC Heye Investment Co., Ltd. 中信和業投資有限公司 | Chinese mainland/ Limited liability | Real estate development | N/A | 100% | 0% | 100% |
| CITIC Capital Mansion Co., Ltd. 中信京城大廈有限責任公司 | Chinese mainland/Limited liability | Real estate management | N/A | 100% | 0% | 100% |
| CITIC Building Property Management Co., Ltd. 北京中信國際大廈物業管理有限公司 | Chinese mainland/ Limited liability | Real estate management | N/A | 100% | 0% | 100% |
| CITIC Industrial Investment Group Corp., Ltd. 中信興業投資集團有限公司 | Chinese mainland/ Limited liability | Infrastructure and elderly services | N/A | 100% | 0% | 100% |
| CITIC Dicastal Company Limited 中信戴卡股份有限公司 | Chinese mainland/Stock limited company | Manufacturing | 1,971,342,713 | 42.11% | 0% | 42.11% |
| CITIC Environment Investment Group Co., Limited 中信環境投資集團有限公司 | Chinese mainland/ Limited liability | Energy conservation and environmental protection | N/A | 100% | 0% | 100% |
| China Zhonghaizhi Corporation 中國中海直有限責任公司 | Chinese mainland/ Limited liability | General aviation | N/A | 51.03% | 0% | 51.03% |
| CITIC Investment Holdings Limited 中信投資控股有限公司 | Chinese mainland/ Limited liability | Investment holding | N/A | 100% | 0% | 100% |
| CITIC Asia Satellite Holding Company Limited 中信亞洲衛星控股有限公司 | British Virgin Islands | Information industry | 60,524,465 | 100% | 0% | 100% |
| CITIC Press Corporation 中信出版集團股份有限公司 | Chinese mainland/Stock limited company (listed) | Publishing | 190,151,515 | 73.50% | 0% | 73.50% |
| CITIC Holdings Co., Ltd. 中信控股有限責任公司 | Chinese mainland/Limited liability | Service | N/A | 100% | 0% | 100% |
(b)
Principal associates
Details of the Group’s interest in principal associates, which are accounted for using the equity method in the consolidated financial statements of the Group are as follows:| Proportion of ownership interest | ||||||
|---|---|---|---|---|---|---|
| Name of company | Place of incorporation | Principal activity | Shares issued | Attributable to the Group | Held by the Company | Held by subsidiaries |
| China Overseas Land & Investment Ltd. 中國海外發展有限公司 | Hong Kong (listed) | Real estate development | 10,944,883,535 | 10.01% | 0% | 10.01% |
| China Securities Co., Ltd. 中信建投證券股份有限公司 | Chinese mainland(listed) | Securities related services | 7,756,694,797 | 9.47% | 0% | 9.47% |
| Ivanhoe Mines Ltd. | Canada(listed) | Resources and energy | 1,268,762,524 | 24.81% | 0% | 24.81% |
(c)
Principal joint ventures
Details of the Group’s interest in principal joint ventures, which are accounted for using the equity method in the consolidated financial statements of the Group are as follows:| Proportion of ownership interest | ||||||
|---|---|---|---|---|---|---|
| Name of company | Place of incorporation | Principal activity | Shares issued | Attributable to the Group | Held by the Company | Held by subsidiaries |
| CITIC Prudential Life Insurance Co., Ltd. 中信保誠人壽保險有限公司 | Chinese mainland | Insurance and reinsurance | N/A | 50% | 0% | 50% |
| 中船置業有限公司 | Chinese mainland | Real estate development | N/A | 50% | 0% | 50% |
| 上海瑞博置業有限公司 | Chinese mainland | Real estate development | N/A | 50% | 0% | 50% |