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09ANNUAL REPORT

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08

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Table of Contents

INVESTOR RELATIONS

CORPORATE GOVERNANCE

CONTACT US

ChAIRmANS mESSAGE

FINANCIAL SUmmARY

mANAGEmENT REPORT

CORPORATE SOCIAL RESPONSIBILITIES

hIGhLIGhTS

ORGANIZATIONAL ChART

AUDITED FINANCIAL STATEmENTS

BOARD OF DIRECTORS, SUPERVISORY BOARD AND SENIOR mANAGEmENT

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6

2009 2008 %Changes

Results for the year (In millions of RMB) (Restated)Operating Income 209,065 157,044 33.13%

- o Head Oice1 25,201 21,895 15.10%

- o Financial Services 66,663 73,035 -8.72%

- o Non-Financial Services 138,052 78,937 74.89%-Real Estate and Inrastructure 14,426 4,703 206.74%

-Project Contracting 16,602 10,758 54.32%

-Resources 45,437 40,493 12.21%

-Manuacturing 30,905 13,512 128.72%

-Inormation Industry 4,922 2,774 77.45%

-rading and Services 25,761 6,698 284.62%

-Unallocated 1,491 2,695 -44.69%

-Elimination -22,341 -19,518 14.46%

Profit after Provision for Impairment Losses 35,378 25,850 36.86%

-o Head Oice1 21,118 14,259 48.11%

-o Financial Services 20,973 19,245 8.98%

-o Non-Financial Services 11,824 6,164 91.83%

-Real Estate and Inrastructure 3,609 1,788 101.83% -Project Contracting 739 635 16.48%

-Resources 3,173 2,521 25.88%

-Manuacturing 2,400 910 163.55%

-Inormation Industry 1,077 269 299.88%

-rading and Services 826 40 1943.81%

-Unallocated 1,951 3,816 -48.88%

-Elimination -20,488 -17,634 16.19%

Net Profit Attributable to Shareholders of the Company 18,892 14,249 32.59%

1. Reers to CITIC GROUP (dened asthe Company in the consolidated nancial statements set out in page [ 70 ] to [ 119 ] ).

Canges in Operating Incoe

(millions of RmB)

Changes in Prot after Provision

for Ipairent Losses

(millions of RmB)

Distribution of Operating Incoe

Distribution of Prot afterProvision for Impairment Losses

Growt of Operating Incoe

(millions of RmB)

Growth of Prot after Provision for

Ipairent Losses

(millions of RmB)

160,000

21,

895

73,

035

78,

937

25,

201

66,

663

138,

052

100,000

40,000

140,000

80,000

20,000

120,000

60,000

0

25,000

14,

259

19,

245

6,

164

21,

118

20,

973

11,

824

15,000

10,000

5,000

20,000

0

30,000

20,000

10,000

40,00035,378

25,85026,549

9,9877,662

0

200,000

150,000

100,000

50,000

250,000209,065

157,044

122,25181,78865,557

0

2008

28.81%

59.66%

44.71%

1.53%

12.40%

41.36%

0.64%10.89%

2009

2008

3.49%

21.17%

37.54%

44.26%

32.78%

8.78%

37.80%

14.18%

2009

Non-inancial ServicesFinancial ServicesHead Oice Unallocated

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7ANNUAL REPORT 2009

2009 2008 %ChangesAt the Balance sheet date (In millions of RMB) (Restated)Total Asse ts 2,153,837 1,624,102 32.62%-o Head Oice 205,576 195,435 5.19%-o Financial Services 1,806,554 1,320,014 36.86%-o Non-Financial Services 338,930 291,141 16.41%

-Real Estate and Inrastructure

109,744 91,222 20.31%-Project Contracting 16,222 16,414 -1.17%-Resources 99,534 80,293 23.96%-Manuacturing 60,569 48,036 26.09%-Inormation Industry 24,555 23,272 5.51%-rading and Services 28,306 31,903 -11.28%

-Unallocated 24,810 12,214 103.13%-Elimination -222,034 -194,702 14.04%Total L iabilities 1,932,480 1,433,436 34.81%-o Head Oice 69,655 85,537 -18.57%-o Financial Services 1,682,217 1,199,961 40.19%-o Non-Financial Services 213,557 168,075 27.06%

-Real Estate and Inrastructure 67,428 46,736 44.27%-Project Contracting 14,682 15,314 -4.13%-Resources 63,800 57,186 11.57%-Manuacturing

37,147 20,156 84.30%-Inormation Industry 11,668 10,652 9.54%-rading and Services 18,833 18,032 4.44%

-Unallocated 39,269 44,328 -11.41%-Elimination -72,219 -64,466 12.03%Equity Attributable to Shareholders of the Company 135,219 108,728 24.36%

Financial Ratios % % +(-)%Net Proit Growth 32.59% -10.22% 42.81%Return on Average otal Assets2 1.00% 0.97% 0.03%Return on Average Equity3 15.49% 13.75% 1.74%Liability to Asset Ratio4 89.72% 88.26% 1.46%

Canges in Total Liabilities

(millions of RmB)

Distribution of Total Liabilities Growt in Equity Attributable to

Sareolders of te Copany(millions of RmB)

2. Calculated by dividing net proit by the average o total assets as at the beginning and end o the year.3. Calculated by dividi ng net proit attributable to shareholders o the company by the average o equity attributable to shareholders o the company

as at the beginning and end o the year.4. Calculated by dividing total liabilities by total assets as at the end o the year.

2008

2009

1.96%3.48%

83.91%10.65%

11.22%

2.96%

5.71%

80.11%85,

537

1,

199,

961

168,

075

69,

655

1,

682,

217

213,

557

1,400,000

200,000

600,000

1,000,000

1,800,000

1,200,000

1,600,000

800,000

400,000

0

120,000

80,000

40,000

20,000

60,000

100,000

140,000

160,000135,219

108,72898,478

45,59543,425

0

Canges in Total Assets

(millions of RmB)

Distribution of Total Assets Growt in Total Assets

(millions of RmB)

2008

2009

1.04%

14.27%

8.65%

76.04%

0.66%16.01%

10.75%

72.58%

2,000,000

195,

435

1,

320,

014

291,

141

205,

576

1,

806,

554

338,

930

1,400,000

200,000

600,000

1,000,000

1,800,000

1,200,000

1,600,000

800,000

400,000

0

2,000,000

1,500,000

1,000,000

500,000

2,500,0002,153,837

1,624,102

1,318,761

927,173782,687

0

Non-inancial ServicesFinancial ServicesHead Oice Unallocated

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1414 CITIC Group

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15ANNUAL REPORT 2009

2009 marks the 60th anniversary o the ounding o the

Peoples Republic o China and the 30th birthday o CIIC

Group. Hit by an international nancial crisis not seen orages, China met its worst economic diculties since the

beginning o the new century, and CIIC Group the most

severe challenges. Despite an extremely hostile climate, we

celebrated a record year, all o our major economic indica-

tors up over 30%, much higher than GDP growth rate dur-

ing the same period. Tis was achieved through a whole

host o countermeasures aiming at reorm, innovation,

integration and development, measures that have brought

the organization to the next level o overall protability,

core competencies and sustainability.

Tese are hard-won achievements. We owe them to each

and everyone in the organization, who stood united to

navigate the crisis, and the community or its unailing sup-

port. My heartelt thanks to them all.

Over the past three decades, CIIC Group has grown into

Chinas largest conglomerate while ullling its historic re-

sponsibility o piloting Chinas economic reorm and show-

casing the countrys opening programme. Looking into

the uture, we will explore and build a business model that

ts our needs as a large conglomerate. We will operate in a

more systematic, routinized, specialized and sophisticated

way, enhancing existing strengths and creating new ones.

Our shi rom just being big to also being strong in pursuit

o sustainability will help us better serve Chinas economic

and social development as an enterprise directly under the

central government.

2010 is crucial as Chinas perormance during the year will

bring much to bear on its 12th Five Year Programme. CI-

IC Group will develop its own plan or the next ve years,which will set orth goals and priorities, emphasize strate-

gic management and balance business growth. Our ocuses

include, among other things, the shi o growth pattern,

business restructuring, eciency, synergy, independent in-

novation, balanced growth and sustainability. Our eorts at

reorm and integration will continue, with an emphasis on

governance structure and resource allocation, to channel

resources to key business areas and endeavours. Execution,

in particular implementation and supervision o major in-

vestments and projects, will be enhanced to ensure goals are

met. Comprehensive risk management will be launched.

Te philosophy, processes and saeguards o risk manage-

ment will become part o business and management prac-

tices, and critical missions will be given special attention to

ensure sae operations and healthy development.

Drawing on its ne traditions, CIIC Group has marched

into the New Year. As we become more competitive, we

have new horizons to explore. owards a world-class con-

glomerate, one with clear overall strengths and core com-

petencies, and a leader in its elds, we are right on track.

Kong Dan

Cairan of CITIC Group


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FebruaryCIIC Group issued the rst tranche o the 2009 medium-term notes in Chinas

inter-bank bond market, an RMB3 billion ve-year MN issue at 3.85%.

March

Section W9 o the Algeria East-West Expressway, constructed by the CIIC-

CRCC (China Railway Construction Corporation) Consortium and the largest

overseas contract ever awarded to a Chinese company, opened to trac ahead

o schedule.

AprilCIIC Pacic Ltd. underwent a management change. Mr. Chang Zhenming,

President o CIIC Group was appointed Chairman and CEO o CIIC Pa-

cic.

MayCIIC Group, CIIC Guoan Group and Baiyin Nonerrous Metals Co., Ltd.

jointly ounded CIIC Mining echnology Development Co., Ltd. to carry out

venture prospecting and develop mineral resources.

JuneCITIC Group raised its stake in Macarthur Coal Limited, an Australian listedcompany, by 13,809,328 shares to 22.44% and remained the companys largest

shareholder.

July

CSRC (China Securities Regulatory Commission) approved the merge o CI-

IC Fund Management into China Asset Management (China AMC). As o the

end o 2009, China AMC was an apparent industry leader, its AUM topping

RMB300 billion.

CIIC Group was on the Fortune Global 500 list or the rst time, ranking the

415th.

China Investment Corporation took a 40% interest in CIIC Capital Hold-

ings Ltd. in consideration o HKD1.86 billion. Aer the transaction, CIIC

Pacic Ltd. and CIIC International Financial Holdings Ltd. each held 27.5%

o CIIC Capital Holdings Ltd.

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AugustAsia Satellite elecommunications Holding Co., Ltd. successully launched the

anti-jamming AsiaSat 5 to replace the older AsiaSat 2.

September

CIIC Guoan Group issued two MNs, including an RMB1 billion ve-year is-

sue at 203bps above one-year term deposit rate and an RMB1 billion seven-year

issue at 220bps above the same (the issuer had an option to adjust the spread

above the undamental rate and the investor a put option at the end o the 5th

year).

October

CIIC Group celebrated its 30th anniversary in a variety o ways and through

a series o events.

China CIIC Bank Corporation Ltd. (CNCB) acquired a 70.32% stake in

CIIC International Financial Holdings Ltd., marking the completion o the

Groups eort to consolidate its commercial banking portolio.

CIIC Guoan Football team won the Chinese Super League 2009 championship.

CIIC Pacic Ltd. transerred a 14.5% interest in Cathay Pacic Airways Ltd.

December

China CIIC Bank Corporation Ltd. (CNCB) announced that BBVA was to

raise its stake in CNCB rom 10.07% to15% by exercising its call option on the

Bank. Aer the transaction, CIIC Groups shareholding in CNCB decreased

to 61.78%. Te transaction will strengthen the long-term strategic partnership

between the two sides.

CIIC Guoan Group signed an Equity ranser Agreement with Suntime Inter-national echno-Economic Cooperation (Group) Co., Ltd. to acquire a 21.69%

stake in CIIC Guoan Wine Industry Co., Ltd. the latter held. Aer the acquisi-

tion, CIIC Guoan Group was to become CIIC Guoan Wines largest share-

holder with a 42.65% stake.

Te Board o Directors o CNCB reviewed and approved a nancing scheme

that would allow the Bank raise up to RMB25 billion in 2010 through public o-

erings o subordinated debts or hybrid capital bonds to boost its ier 2 capital.

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2009 marks the 30th anniversary o the ounding o CIIC Group. During the

past year, the Group took a series o measures against a complicated and challeng-

ing business climate, which include, among others, timely adjusting investment

plans in certain areas; deusing the crisis arising rom CIIC Pacics AUD utures

contracts; consolidating commercial banking and engineering contracting port-

olios; and establishing a Risk Management Department at the Group level. Tese

measures constituted an eective response to the international nancial crisis and

provided valuable experience or problem solving amidst extreme complexities.

With notable improvement in its key business indicators, CIIC Group achieved a

sound momentum o rapid and sustained growth in 2009.

As o the end o 2009, consolidated total assets o CIIC Group stood at

RMB2.1538 trillion, an increase o 32.6% over the beginning o the year; consoli-

dated net assets RMB135.2 billion, up 24.4%; operating income RMB209.1 billion,

up 33.1% year-on-year (yoy); total prot RMB35.4 billion, up 36.9% yoy; and

consolidated net prot RMB18.9 billion, up 32.6% yoy. In 2009, CIIC Group got

on the Fortune Global 500 list or the rst time, ranking the 415th.


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CIIC Group oers a broad range o nancial services including

commercial banking, investment banking, trust, insurance, und

management, asset management and utures, which provide the

advantage o comprehensive services and synergy with strong

brand recognition in the market place. In 2009, CIIC Holdings

drove collaboration among nancial services and integrated oper-

ations urther: a team organizing comprehensive nancial services

oered by subsidiaries and aliates was set up and disseminated

the experiences emerging rom the Hangzhou regional joint meet-

ing. A platorm on which public subsystems are shared continued

to be built and operated.

As o the end o 2009, total assets o CIIC Groups nancial ser-

vices stood at RMB1.8066 trillion, an increase o 36.9% compared

to the beginning o the year; operating income in 09 RMB66.7

billion, a decrease o 8.7% yoy; and net prot RMB21 billion, an

increase o 9% yoy.

Financial Services Financial Services:P&L Indicators and Changes

(RMB 100 million)

(2005-2009)

Ttal prfit

operating incme

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Commercial banking is a major pillar o CIIC Groups

nancial services. Te Group controls China CIIC

Bank Co. Ltd., a listed company, in Mainland China,

which owns 100% o CIIC Ka Wah Bank through

CIIC International Financial Holdings Ltd. in Hong

Kong.

(1) Commercial banking in Mainland China. CI-

IC Bank made considerable improvement in all busi-

ness lines in 2009. It continued to lead the corporate

banking market among small- and medium-sized joint

stock commercial banks, with corporate savings top-

ping RMB1 trillion, corporate loans RMB800 billion,

and a solid 5.6% market share in international settle-

ment. Its share in retail banking grew steadily, with as-

CIIC Banks premier wealth management service

Commercial Banking

sets under management nearing RMB80 billion, credit

card issuance 9 million, prot more than doubled, and

personal savings RMB200 billion. Fee-based income

exceeded RMB4 billion. As o the end o 2009, total

assets o CIIC Bank stood at approximately RMB1.8

trillion, an increase o 34.5% over the beginning o the

year; and net prot in 09 RMB14.32 billion. Te Bank

witnessed a drop in both the ratio and balance o non-

perorming loans. Provision coverage ratio continued

to rise. Capital adequacy ratio was in line with regula-

tory requirements.

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Key Financial Indicators o CIIC Bank (2006-2008) (In RMB100 million)

Indicator 2005 2006 2007 2008 2009

otal assets 5,949.93 7,068.59 10,112.36 13,192.55 17750.31

Net assets(note) 237.13 318.25 841.36 1,190.51 1027.98

Operating income 135.40 178.30 278.38 416.80 408.01

Net prot 31.48 37.26 82.90 132.62 143.20

Capital adequacy ratio 8.11% 9.41% 15.27% 14.32% 10.14%

Core capital adequacy ratio 5.72% 6.57% 13.14% 12.32% 9.17%

NPL ratio 4.14% 2.50% 1.48% 1.36% 0.90%

Provision coverage ratio 79.88% 84.62% 110.01% 150.03% 162.28%

(2) Commercial banking overseas. In accordance with the stra-

tegic planning o CIIC Group, CIIC Bank acquired a 70.32%

stake in CIIC International Financial Holdings at 1.43x P/B,

representing a successul restructuring o the Groups commer-

cial banking portolio. While allowing CIIC Bank to carry out

international operations, the deal injected capital and vitality

In 2009, the securities business o CIIC Group continued to per-

orm well. CIIC Securities became the market share leader in un-

derwriting, brokerage, research and sales and trading. Te overseas

market was explored, and a second-round capitalization o CIIC

Securities International completed. Having raised RMB9 billion,

Mianyang Industry Fund became the largest RMB industry und in

China. In 2009, CIIC Securities continued to be the industry No.1

in both operating income (RMB22.01 billion, up 24.3% yoy) and net

prot (RMB8.98 billion, up 23% yoy).

Investment Banking

into CIIC Ka Wah Bank, a subsidiary o CIFH. It will also a-

cilitate uture collaboration to explore cross-border structured

nance. Having absorbed the losses on Lehman Minibond Se-

ries, CIIC Ka Wah Bank recorded a net prot o over HKD900

million in 2009.

China Securities Co., Ltd., CIIC-Kington Securities Co.,

Ltd. and CIIC Wantong Securities Co., Ltd. were CIIC Se-

curit ies key subsidiaries. As o the end o 2009, China Securities

had RMB66.01 billion o total assets and RMB7.31 billion o net

assets; and net prot in 09 was RMB2.62 billion. CIIC-Kington


assets; and net prot in 09 was RMB990 million. CIIC Wantong


assets; and net prot in 09 was RMB520 million.

Note:

1. Excluding the eect o the retroactive adjustment occurring rom CIIC Bank

s purchase o 70.32% stake in CIIC International Financial Holdings,the net assets attributable to shareholders in 2008 amounted to RMB95.3 billion.

2. CIIC International Financial Holdings was not taken into consideration in terms o capital adequacy ratio, core capital adequacy ratio, NPL ratio or provisioncoverage ratio in accordance with relevant regulations.

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CIIC Securities: Key Business Indicators (2005-2009) (RMB100 million)

Indicator 2005 2006 2007 2008 2009

otal assets 203.16 639.21 1,896.54 1368.88 2068.07

Net assets 56.46 124.92 515.99 552.22 615.99


otal prot 3.79 33.99 199.04 95.61 133.02

Net prot 4 24.35 123.89 73.05 89.84

CIIC rust Co., Ltd. pioneered several medium- and long-term trust unds; provided Beijing, ianjin and

Chongqing with tens o billions o yuan worth o inrastructure nancing; invested in agribusiness, establishing

CIIC Guoyuan Agricultural rust Fund; and made headway in SME nancing, asset management and equity

rust

Upholding the customer-rst philosophy, staf o CIIC rust climbed up Mount Everest to sign contracts with customers.

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24

CIIC Group oers und management services through China Asset Management Co., Ltd., a subsidiary

o CIIC Securities, and CIIC Prudential Fund Management Co., Ltd., a 49%-held subsidiary o CIIC

rust.

In 2009, CIIC Securities completed the merger o CIIC Fund Management and China AMC. As o the end

o 2009, China AMC remained the industry leader in AUM (over RMB300 billion); its net prot in 09 was

RMB1.11 billion.

CIIC Prudential Fund Management, o which CIIC rust and Prudential plc each holds 49%, had RMB22.8

billion o AUM. Its key business indicators hit historic highs: operating income in 09 stood at RMB224 mil-

lion, and net prot RMB47.01 million.

Fund Management

CIIC Prudential Lie Insurance Co., Ltd., a joint venture between CIIC Group and UK-based Prudential

plc, increased selling through agents and other ways, and developed a more balanced product structure. Ac-

cording to the new accounting rules, the company recorded a premium income o RMB2.398 billion, a net

prot o RMB87.47 million, and an embedded value o RMB3.32 billion. It is the rst prot-making year or

the company, whose lie insurance portolio will continue to run in the black.

Insurance

investment. Operating income in 09 stood at RMB2.08 billion, an increase o 3.5% yoy; net prot RMB960

million, up 2.8% yoy; and trust assets RMB206.8 billion. CIIC rusts perormance on these measures was

among the best in the industry.

Indicator 2005 2006 2007 2008 2009


Incl. ee income 0.61 1.68 6.37 13.91 11.05

Net prot 0.58 1.30 6.58 9.33 9.59

rust assets 140.83 385.51 1961.64 1607.79 2067.81

CIIC rust: Key Business Indicators (2005-2009) (RMB100 million)

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CIIC Group maintained a good momentum o growth

in asset management, equity investment, utures and

other nancial services.

CIIC Asset Management Co., Ltd. was actively pro-

moting its strategic restructuring. While continuing

with market-based acquisition and disposition o non-

perorming assets, the company made initial success in

providing pawn service as well as short-term nancing

or SMEs through Zhonganxinbang Asset Manage-

ment Co., Ltd., and made progress in preparations or a

new nancial leasing company. Its operating income in

09 reached RMB 335 million, and net prot RMB36.54

million, an increase o 59.8% yoy.

Other Financial Services

As o the end o 2009, CIIC Kingview Capital Man-

agement Co., Ltd. managed RMB3.573 billion o equi-

ty und assets; operating income stood at RMB34.507

million, and net prot RMB23.45 million.

With a 40% interest, China Investment Corporation

became CIIC Capital Holdings Ltd.s new sharehold-

er. CIIC Capital Holdings, a subsidiary o CIFH, had

USD2.8 billion o AUM. CIIC International Assets

Management Ltd. was pushing ahead direct invest-

ment and special unds management services.

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26

Te non-nancial portolio o CIIC Group covers real estate

and civil inrastructure, engineering contracting, energy and re-

sources, manuacturing, inormation technology, and trade and

services. CIIC Group responded to a hostile market climate with

a series o measures which included enhancing the management

o CIIC Pacic, restructuring business portolio and tightening

risk control, thanks to which all business lines grew in a healthy

way in 2009 and registered gratiying results.

Non-Financial Businesses

As o the end o 2009, total assets o CIIC Groups non-nan-

cial businesses stood at RMB363.7 billion, an increase o 19.9%

compared to the beginning o the year, operating income in 09

RMB139.5 billion, up 70.9% yoy, and total prot RMB13.8 billion,

up 38% yoy.

CIIC own Built by CIIC Real Estate.

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Project Equity interest Land area (mu) Equity land area (mu)

Lot X1, Yizhuang, Beijing 80% 2,271 1,817

Urban West, Dujiangyan 70% 4,071 2,850

CIIC Shudu, Chengdu 100% 7,343 7,343

Liping-Baiyin Lake, Jinggangshan 100% 2,327 2,327

Boao, Hainan 100% 183,000 183,000

CIIC Real Estate: Main Primary Land Development Projects (2009)

As o the end o 2009, total assets o the real estate and

civil inrastructure stood at RMB109.7 billion, an in-

crease o 20.3% compared to the beginning o the year;

operating income in 09 RMB14.4 billion, an up 206.7%

yoy; and total prot RMB3.6 billion, up 101.8% yoy.

(1) Real estate. Real estate is one o CIIC Groups

key business areas. In 2009, CIIC Real Estate Co., Ltd.

ollowed a well-paced approach, adjusting its land re-

serve layout and increasing investment in key cities in-

cluding Shanghai, ianjin, Guangzhou, Shenzhen and

Dalian. Te company launched 10 new projects, with a

gross oor area (GFA) o 7.935 million m2; and trans-

Real Estate and Civil Inrastructure

erred and exited rom our projects, with a GFA o

225,000 m2. Management processes were standardized,

with the city assessment and decision-making system

and project investment decision-making process es-

tablished and total budgetary management introduced.

In 2009, oor space newly constructed was 3.097 mil-

lion m2, oor space completed 1.233 million m2, and

residential property sold and pre-sold 1.806 million m2

or RMB18.99 billion, with RMB15.81 billion already

received. A total o 838 mu o land under primary de-

velopment was transerred or RMB1.31 billion. Oper-

ating income in 09 amounted to RMB10.85 billion, and

net prot RMB1 billion.

Real Estate and Civil Inrastructure:

P&L Indicators and Changes (RMB 100 million)

(2005-2009)

Ttal prfitoperating incme

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CIIC Real Estate: Main Primary Land Development Projects (2009)

Project ype StatusEquityinterest

Planned investment(RMB100 million)

Floor space(10,000 m2)

CIIC own, Beijing Residential/Apartment/Hotel/Oce

Construction inProgress (CIP)

100% 224.72 178.10

Dalian PortHotel/Commercial/

OceIn plan 80% 186.33 122.69

Asian Games own, Guangzhou Residential In plan 20% 584.00 438.00

Central Business District, ianjinResidential/Apartment/

Hotel/OceIn plan 51% 196.36 121.60

Shanyu Lake, NanhaiResidential/Villa/Hotel/

Apartment CIP 50% 168.02 162.94

CIIC Bay, ZhuhaiResidential/Apartment/

CommercialCIP 100% 83.36 78.07

Ligang South Bay, Guangzhou Residential In plan 100% 62.99 60.29

CIIC New own, ChangshaResidential/Villa/

Commercial/HotelCIP 100% 57.29 183.00

Baocheng Zone 26, ShenzhenResidential/Apartment/

Commercial

CIP 100% 55.72 53.00

CIIC own, ChangchunResidential/Villa/

Commercial/Exhibitioncentre/Apartment

CIP 60% 92.22 159.62

CIIC Forest Lake, Dongguan Residential/Villa CIP 100% 45.57 71.90

CIIC Future own, Chengdu Residential CIP 100% 26.19 58.20

Riverside own, Mixed-use project In plan 100% 93.98 86.09

Huizhou Residential In plan 100% 24.92 57.36

Qingjian Lake, Suzhou Residential/Villa In plan 100% 20.22 21.94

CIIC Juntai, ianjin Residential/Villa CIP 70% 23.98 18.30

Shengbo, Shanghai Residential In plan 51% 30.65 13.12

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CIIC Pacic continued to view its real estate investments in Mainland China as a core business. Focused on

Shanghai, other major cities in the Yangtze River Delta and Shenzhou Peninsula o Wanning, Hainan, it had a

total developable oor space o 5.09 million m2 and invested property o 221,000 m2. In 2009, its development

projects on the mainland went smoothly: the Lujiazui New Financial District project in Pudong, Shanghai was

to be completed; and residential properties in Shanghai, Wuxi, Yangzhou and Jiangyin sold well. Te companys

main property holdings in Hong Kong include CIIC ower and DCH Commercial Centre, with a oor space o

285,000 m2, and the Discovery Bay project to be developed with a oor space o 231,000 m2. In 2009, its real estate

business made a net prot o HKD920 million.

(2) Civil inrastructure. Te civil inrastructure busi-

ness o CIIC Group mainly includes expressways,

ports and undersea tunnels with investment rom andoperated by CIIC.

A consortium ormed by CIIC Inrastructure Invest-

ment Co., Ltd., a subsidiary o CIIC East China Group,

CIIC Construction and Chongqing Expressway

Group won the bid or and has begun construction o

the Jiangnan Expressway in Chongqing with a total in-

vestment o RMB8.5 billion. Te Chongqing-Guizhou

Expressway and Chengdu-Chongqing Expressway in-vested by CIIC East China Group ran smoothly: the

toll revenue growth in 2009 o Chongqing-Guizhou

Expressway was the highest among expressways in

Chongqing. In 2009, CIIC Daxie Development Co.,

Ltd. accelerated its business transition. Te business

structure o CIIC Port Investment Co., Ltd.s lique-

ed oil products terminals took shape: a 300,000 ton

oil terminal, the largest in China, and the 50,000 ton

Guanwai Liquid Chemicals erminal were built. Te

operating income o CIIC East China Group in 09was RMB2.47 billion, and net prot RMB570 million.

CIIC Pacic has a 71% interest in the Eastern Harbour

unnel and a 35% in the Western Harbour unnel in

Hong Kong. In 2009, the daily average trac through

the Eastern unnel was 62,987 vehicles, representing

27% o the market; and that through the Western un-

nel 48,222 vehicles, 21% o the market.

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30

As CIIC Group consolidated the assets, human resources and

business lines in engineering contracting, CIIC Construction,

a world-class contractor, emerged as the implementing entity

o the Groups entire engineering contracting portolio. As o

the end o 2009, total assets o engineering contracting stood at

RMB16.2 billion, down by 1.2% compared to the beginning o

the year; operating income in 09 RMB16.6 billion, up 54.3% yoy;

and total prot RMB700 million, up 16.5% yoy.

With painstaking eorts o all parties concerned, the Algerian

Expressway invested and constructed by CIIC Construction

opened to trac ahead o schedule; 26.6% o the Social Housing

Project in Angola has been completed; the Termal Power Plant

Project in Brazil was progressing smoothly and expected to be

completed by June 2010; the Social Housing Project in Venezuela

was moving ahead according to plan; the Diesel Engine Plant in

Myanmar was completed at the end o 2009; design o the Ce-

ment Plant in Belarus was completed and the procurement went

well; Lines 1 and 2 o the Subway in ehran were issued Comple-

tion Certicates, and Phase I o the Northern Section went into

operation. All o these projects won high praises rom the heads

o state or government as well as the people o the host countries.

Issues with regard to the quality and delay o the Coking Project

in Brazil were well addressed. Aer constructive communica-

tion and negotiation with the owner, risks were under eective

control and the construction continued. CIIC Construction

has invested in and is the General Contractor o the Jiangnan

Expressway in Chongqing. In 2009, RMB29.327 billion worth

o new contracts were signed, bringing in an operating income

o RMB15.94 billion, an increase o 55.1% yoy, and a net prot

o RMB450 million, up 3.1%. CIIC Construction ranked 59th

among the op International Contractors in 2009 and was the

6th largest in China.

Engineering Contracting

Engineering Contracting:

P&L Indicators and Changes(RMB 100 million)

(2005-2009)

Ttal prfit

operating incme

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Sector

New contracts(RMB100 million)

Contracts in progress(RMB100 million)

2009 2008 2009 2008

Civil Buildings 117.19 3.45 401.29 355.36

ransportation 173.69 156.58 350.69 263.15

Industrial Manuacturing 0 41.01 51 50.93

Metallurgy & Chemicals 0 1.5 31.41 31.36

Energy & Electricity 2.39 3.16 34.69 32.45

otal 293.27 205.7 869.08 733.25

Construction Contracts o CIIC Construction (2009)

Central and Southern China Municipal Engineering Design & Research Institute (CSCMEDRI) and Wuhan Ar-

chitectural Design Institute (WADI), subsidiaries o CIIC Group, are competitive and inuential engineering

design institutes in China. CSCMEDRI ocuses on urban design and was a market leader in terms o overall

strength in 2009. WADI, which mostly designs large-scale building complexes, was among the op 60 Engineer-

ing Designers in China or a third year in a row with business activities in 25 countries.

Te Social Housing Project in Angola invested and constructed by CIIC Construction.

Note:1. Contracts in progress reer to the total o uncompleted contracts;2. New contracts include signed contracts yet to come into eect.

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32

Te iron ore project in Australia invested by CIIC Pacic.

CIIC Group enjoys economy o scale and competitive edge in

the energy and resources sector, covering petroleum, coalmines,

power generation, iron ore, manganese ore, salt lakes, alumini-

um, erroalloy and superconductor materials. Despite the nega-

tive impact o dramatic price uctuations in primary products as

a result o the global crisis, the relevant subsidiaries responded

with calm and kept the business going.

CIIC Resources Holdings Ltd. strengthened risk control and

market position in 2009 and realized an operating income o

HKD19.43 billion, an increase o 3.5% yoy, and a net prot o

HKD120 million, down by 43.4%. Te Karazhanbas Oileld in

Kazakhstan reduced capital expenditure and increased produc-

Energy and Resources

tion through an improved operation and management. In 2009,

crude oil production reached 1.867 million tons, an increase o

2.1% yoy. Drilling operations have begun at the Yuedong Oild-

eld in Liaohe, which is expected to produce oil in 2010. Devel-

opment o the Bembele Manganese Project in Gabon sped up.

CIIC Metal Co., Ltd. continued to expand and strengthen long-

term strategic partnerships with leading steel producers in Chi-

na by improving technological development capabilities and the

quality o service. Its erroniobium import accounted or 73.9%

o the national total, and iron ore import 7.5 million tons. Op-

erating income in 09 stood at RMB8.17 billion, and net prot

RMB380 million.

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Despite market uctuations, CIIC United Asia In-

vestments Ltd. registered an operating income o

HKD11.23 billion in 09, and a net prot o HKD110

million, a decrease o 36.9% yoy. China Platinum Co.,

Ltd. realised an operating income o HKD8.5 billion,

an increase o 2.1% yoy, and a net prot o HKD270

million, up 2.1%.

Te Gansu-based Baiyin Nonerrous Metals Co., Ltd.,

jointly invested by CIIC Group and CIIC Guoan

Group, made headway in capacity expansion and reno-

vation o existing mines and smelting acilities. Its op-

erating income in 09 stood at RMB8.99 billion, and net

prot RMB350 million.

In 2009, Qinghai CIIC Guoan Sci-tech Development

Co., Ltd., a subsidiary o CIIC Guoan Group, gen-

erated a revenue o RMB690 million and a net prot

o RMB210 million. Its Research Centre or Compre-

hensive Use and Development o Salt Lake Resources

in Qinghai was designated by the National Develop-

ment and Reorm Commission as a joint engineering

research centre between the central and local govern-

ments.

CIIC Pacic pressed ahead with its iron ore project

in Australia. It is the largest overseas magnetite invest-

ment ever made by a Chinese company, and, when

completed, will oer a steady long-term supply o pre-

mium raw materials to Chinas major steel producers

including the mills under CIIC Pacic.

Energy and Resources:

P&L Indicators and Changes(RMB 100 million)

(2005-2009)

Ttal prfit

operating incme

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34

Te manuacturing business o CIIC Group, which includes

heavy machinery, special steels, cement, power batteries and

auto parts, registered a good momentum o growth. As o the

end o 2009, total assets o manuacturing stood at RMB60.6 bil-

lion, an increase o 26.1% compared to the beginning o the year,

operating income in 09 RMB30.9 billion, up 128.7% yoy, and to-

tal prot RMB2.4 billion, an increase o 163.6% yoy.

CIIC Heavy Industries Co., Ltd. has become one o the worlds

largest mining and cement machinery manuacturers. By build-

ing an R&D centre that encompasses engineering, products and

processes, the company has brought its innovation capability to

the next level. Its Heavy Mining Equipment Lab is the rst Key

National Laboratory set up by a heavy machinery manuacturer.

Eorts to orge a New CIIC HIC were accelerated: a cutting-

edge platorm or advanced equipment manuacturing was built;

the main body o its central piece, an 18,500 ton oil hydraulic

press, was at the nal stage o installation. In 2009, order intake

was worth RMB11.04 billion, and accumulated backlog o orders

RMB21.7 billion. Operating income was RMB5.88 billion, an in-

crease o 17.5% yoy, and net prot RMB410 million, up 31.4%

yoy. By all business indicators, the company achieved a record

perormance.

Manuacturing

Sectors

Output (M) Output value (RMB10,000)

2008 2007 2008 2007

Coal (mines) 21619.2 20804.4 96986.6 76081.0

Metallurgy 36404.9 28776.9 121546.9 83438.2

Building materials 123195.7 88990.6 261617.0 212012.2

Electricity 5680.7 1745.2 19594.7 23970.0

Non-errous chemicals 12065.6 17484.0 51165.4 67806.4

Others 1040.8 2316.5 21598.4 34158.8

otal 200006.9 160117.6 572509.0 497466.6

Key Products o CIIC Heavy Industries (2009)

Manuacturing:

P&L Indicators and Changes

(RMB 100 million)

(2005-2009)

Ttal prfit

operating incme

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A workshop o Dicastal Wheel Manuacturing Co., Ltd.

Tanks to eective risk control, innovation, restructur-

ing and market expansion, Dicastal Wheel Manuac-

turing Co., Ltd. achieved rapid growth in production

and sales which hit historic highs and entrenched its

leadership in global aluminium wheel manuactur-

ing. Te company recorded an operating income o

RMB3.56 billion in 2009, and a net prot o RMB110

million.

o ensure a steady long-term supply o raw materials

to the Pearl River Delta, Macau Cement Manuactur-

ing Co., Ltd. has secured quality resources in Heng

County, Guangxi Province, and is building a 6 million

ton clinker plant.

CIIC Guoan MGL Co., Ltd. continued to lead the in-

dustry in technology and scale. It has been appointed

by Beijing Public ransport Holdings Ltd. to provide

batteries to its all-electric buses.

With an annual capacity o over 7 million tons, CIIC

Pacic is Chinas largest special steel producer. In 2009,

especially at the beginning o the year when market de-

mand was weak, CIIC Pacic Special Steel Company,

consisting o Jiangyin Xingcheng Special Steel, Hubei

Daye Special Steel and Shijiazhuang Steel, ocused on

improving independent innovation capabilities while

accelerating the execution o new projects, realizing a

net prot o HKD1.42 billion.

CIIC Machinery Manuacturing Co., Ltd. took solid

steps to overcome business slump and keep the business

running. Trough total cost management and total qual-

ity management, the company cut its losses. Following the

government call to build large power generators while

shutting down smaller ones, it has completed the acquisi-

tion o small generator capacities. Under the guidance o

the Group headquarters, it has developed a preliminary

plan to reorm itsel and turn a prot.

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36

Te ocus o CIIC Groups I business is digital V. As o the

end o 2009, total I assets stood at RMB24.6 billion, an increase

o 5.5% compared to the beginning o the year, operating income

in 09 RMB4.9 billion, up 77.5% yoy, and total prot RMB1.1 bil-

lion, up 299.9% yoy.

Te Pentium One backbone network o CIIC Networks Co,.

Ltd. operated smoothly. Great Wall Broadband Network Service

Co., Ltd. increased its income and stopped losses. Valued-added

services were oered through Chongqing CIIC Networks digi-

tal channels, and district- and county-level networks integrated.

Te Network had 1.6 million subscribers including1.13 million

Inormation echnology

digital subscribers, 300,000 more than the year beore. Having

integrated all networks within the province, Henan CIIC Net-

works boasted 3.17 million subscribers, up 500,000 yoy.

CIIC Guoan Inormation Industry Co., Ltd., a subsidiary o

CIIC Guoan Group, has urther integrated cable networks

and digitized content. By the end o 2009, it had 21.48 million

subscribers including 10.96 million digital subscribers; its cable

business recorded a net prot o RMB185 million in the year, an

increase o 56% yoy. Pre-IPO preparation or Jiangsu Provincial

Network and Wuhan Broadcast Network has begun.

AsiaSat ai Po Earth Station

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CIIC ianjin Investment Holding Co., Ltd. orged ahead with nancial

back-oce outsourcing and document delivery services. China CIIC

Press explored airport bookstore ranchises: it has won 21 ranchises at

airports including Beijing Capital International Airport and Hangzhou

Xiaoshan International Airport. It continued to lead in business publica-

tion and was awarded as a Class I Press in Social Sciences by the General

Administration o Press and Publication in 2009. CIIC Oshore Heli-

copter Co., Ltd. carried out an increasing number o missions and its share

in the oshore oileld aviation service market remained over 65%. CIIC

ravel Co., Ltd. urther explored the tourism market and became the rst

travel agency in China that organizes travellers rom dierent regions o

the Mainland China to visit aiwan.

rade and Service

With the successul launch o the anti-jamming AsiaSat 5, one o the highest-power

satellites in Asia, Asia Satellite elecommunications Holding Co., Ltd. consolidated

its market leadership. AsiaSat 5 has now replaced AsiaSat 2 successully.

A leading telecom company in Asia, CIIC 1616 Holdings Ltd. provides telecoms

hubbing and other value-added services or corporate and individual clients in 62

countries and over 440 international telecom operators. Its prot continued to grow

in 2009. Operating income reached HKD2.72 billion and net prot HKD370 mil-

lion. In February, 2010, the company acquired, with consideration paid in both cash

and shares, a 20% interest in Companhia de elecommunicacoes de Macau rom

CIIC Pacic, whose holding in CIIC 1616 increased rom 52.6% to 60.65%.

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38

In the light o current situations and uture needs, CIIC Group has identied its guidelines in 2010: it will ollow

the principles o the Central Economic Work Conerence; carry orward its ne traditions and seize opportuni-

ties; tap into its overall strength and synergy; begin to build a systematic, routinized, specialized and sophisticated

operational and management regime and enhance risk management to elevate the overall competitiveness o the

Group. In accordance with these objectives, CIIC Group and its subsidiaries and aliates will ocus on the ol-

lowing aspects:

(1) Development o the 12th Five Year Programme

An outline or the development o CIIC Group during the 12th Five Year Programme period which will allow or

compliance, guidance, implementation and adjustment will be developed. A systematic study o strategic issues

concerning sustainable growth o the Group will be conducted, which will identiy the Groups objectives, priori-

ties and tasks in the next ve years. In line with the Group master plan and their own resources and capabilities,

subsidiaries and aliates will develop their own ve-year plans which will include resh ideas and measures to

make their core business more protable and competitive.

(2) Reorm and integration

o meet the Groups strategic goals and objectives, internal resources will be urther integrated, and business

structure optimized, to build a systematic, routinized, specialized and sophisticated operational and management

regime eaturing clear objectives, scientic decision-making, eective allocation, smooth unctioning, rules to

ollow, controllable risks, well-dened responsibilities and well-deserved reward and punishment. While subsid-

iaries will operate in a more specialized and protable way, the overall strength and synergy o the Group will be

given ull play, helping achieve sustained, steady and balanced growth.

Focuses in 2010

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(3) Implementation and supervision o major investments and contracted projects

Many CIIC projects including the expressway in Algeria, social housing project in Angola, and iron ore resourc-

es in Australia, are at critical junctures. Te implementation and supervision o major projects will be enhanced:

the system or dynamic management o major projects will be improved, and tracking, inspection and risk man-

agement and control tightened, to ensure quality and progress; emergency response in major projects will be

improved; and comprehensive inspection and evaluation as well as whole process supervision and management

will be conducted to ensure the projects are matched by outcome.

(4) Risk management in all aspects o operations

Comprehensive risk management will be introduced, and the philosophy and processes o risk management will

be made an integral part o the Groups business and management practices. Te risk management unction will

be enhanced: risk management and internal control systems will be improved, a risk management inormation

system established, and a risk culture developed, which will combine to constitute a risk management architec-

ture that covers all operations, all employees and all processes. It will make risk management CIIC Groups new

strategic advantage.

(5) Acceleration o the shi in business model

Steady and rapid business growth will go hand in hand with the shi in business model; the latter provides de-

velopment opportunities as well as vibrancy and sustainability. Perormance assessment and remuneration man-

agement systems at subsidiaries will be improved, and benchmarking introduced, to encourage subsidiaries to

change the way they do business, specically to shi away rom relying on growth in size and investment to

relying on better resource eciency, advances in technology and innovations in products, services, processes and

management.

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CORPORATE SOCIAL

RESPONSIBILITIES

40 CITIC Group

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42

Keenly aware that it can never develop without the support o

the government and the community, CIIC Group has sought

to promote social good in a variety o ways thus contributing

to developing a harmonious society. In 2009, we invested nearly

RMB100 million in such social programmes as aid to ibet, pov-

erty reduction, aorestation as well as disaster relie, education,

charity and environmental protection, which helped build up a

positive corporate image.

Aid to ibet. CIIC Group provides partnership assis-

tance to Xainza County, ibet Autonomous Region. In 2009,

CIIC spent RMB15.4 million and completed a number o aid

programmes, including the settlement programme or nomadic

livestock armers, road hardening and development o a crime

prevention and control system. CIIC Nagqu Hotel will open or

business in 2010. Local inrastructure, transportation, nomadic

settlement and production and living standards were greatly im-

proved and our eorts were highly praised by the government

and people o Xainza.

Poverty Reduction. We extend targeted assistance to Yu-

anyang County and Pingbian County o Honghe Hani and Yi

Autonomous Preecture, Yunnan Province. In 2009, Chairman

Kong Dan, ormer Chairman Wang Jun and Vice Chairman and

President Chang Zhenming o CIIC Group took a eld trip to

Honghe Preecture and made a grant and donation o RMB7.05

million. Our eorts to help build local industries went well,

which considerably improved the production and living stan-

dards o the local people.

Aorestation. Our Huangyangtan Sand Control Project in

Xuanhua County, Hebei Province is under way. CIIC Huang-

yangtan Eco-technologies Co., Ltd. was established to make the

best o the 20,000 mu premium articial pasture grown and

maintained over the past eight years and the over 100,000 mu

natural pasture rehabilitated through enclosure. A number o

industries including livestock arming, pomology and olericul-

ture and eco-tourism were explored. While helping to nance

desertication control, they also contributed to local economic

development.

Disaster Relie. In 2009, CIIC Group donated RMB6 mil-

lion to ood-stricken Hunan, Hubei, Jiangxi and Guangxi; RMB3

million to the snowstorm-hit Xainza County, ibet Autonomous

Region; and RMB5 million to the regions in aiwan aected by

typhoon Morakot, helping the disaster-stricken populations re-

sume production and rehabilitate in a speedy manner.

Education. CIIC Group and its subsidiaries have invested

heavily in building Hope Schools, nancing poor students and

providing university scholarships in support o education. In

2009, the Group took an active part in the reconstruction o ar-

eas hit by the Wenchuan earthquake, donating RMB25 million

to build a CIIC kindergarten in Dujiangyan City and CIIC

Hongshi Elementary School in Pi County.

Charity. CIIC Automobile worked with Beijing ongren

Hospital to organize a medical team which perormed cataract

surgeries on 345 nancially distressed patients in 2009, who re-gained eyesight thanks to the widely acclaimed programme.

Sports. Inspired by the spirit Guoan, to be No.1, CIIC

Guoan Football eam won the Chinese Super League 2009

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championship, which made CIIC Group proud and

contributed to ootball development in Beijing. Mean-

while, CIIC Go eam jointly set up by CIIC Group

and Beijing Chess Institute won the second place in the

National League (Group A) 2009.

Corporate Social Responsibilities Overseas. In

conducting the many large international engineering

projects it has undertaken, CIIC Group attaches great

importance to its social responsibilities by taking an

active part in local social programmes.

CIIC Construction, a subsidiary o CIIC Group, has

been oering ree medical services, agricultural tech-

CIIC Guoan Football eam won the Chinese Super League 2009 championship.

nical support and technical training to the locals while

doing the Algerian East-West Expressway and Angolan

Social Housing projects. It has participated in local di-

saster rescue and relie and poverty relie, unded local

education and sports, and built cement grinding sta-

tions, ports and docks and other inrastructure which

were delivered to local governments ree o charge,

winning accolades rom the host governments and

local communities. By showcasing the strength and

image o Chinese companies, it helped improve their

international reputation and inuence. It also served

to deepen the riendship between China and people o

the host countries, helping to establish China as a large

responsible developing country and contributing to

riendly relationships, especially economic and trade

ties, with the rest o the world.

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BOARD OF DIRECTORS,

SUPERVISORY BOARD AND

SENIOR mANAGEmENT

44 CITIC Group

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46

Cairan:

Vice Cairen:

Executive Directors:

Directors: (In Alpabetic Order)

Kong Dan

Chang Zhenming

Wang Chuan

Chan Hui Dor Lam

Guo Ketong

Guo Zhirong

Hong Bo

Ju Weimin

Li Kang

Luo Ning

Yung Chi Kin

Mi Zengxin

Dou Jianzhong

Li Shilin

Wen Jinping

Wang Jiong

Zhao Jingwen

Chen Xiaoxian

Wang Dongming

Wang Jianzhi

Xuan Erniu

Xu Yudi

Zeng Chen

Zhang Jijing

Pu Jian

Qiu Yiyong

Ren Qinxin

Sun Xiaowen

Sun Xinguo

Sun Yalei

Sun Yueng

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Vice Presidents:

Chief Financial Ofcer:

Assistant Presidents:

Ju Weimin

Luo Ning

Wang Dongming

President:

Mi Zengxin Zhao Jingwen

Dou Jianzhong Chen Xiaoxian

Li Shilin

Wang Jiong

Chang Zhenming

Part-time Supervisors:

Lin MeiangSupervisors:

Chairman of Supervisory Board: Ding Zhongchi

Han Bin

Zheng Xuexue

Yu Chunhe

Zhang Liwen

Dou Hongquan

Note:

1. On December 9, 2009, Mr. Wang Chuan was relieved o the oce o Vice Chairman.

2. On February 26, 2010, Mr. Guo Ketong assumed the oce o Assistant President.

3. On April 24, 2010, Mr. Li Shilin was relieved o the oce o Executive Director

and Vice President.

4. On April 24, 2010, Mr. Ju Weimin and Mr. Zhang Jijing assumed the oce o Executive

Director and Vice President.

Sun Yalei

Zhang Jijing

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48

Kong Dan Born in May 1947, Chairman o CIIC Group since July 2006.

Senior Economist. Graduated rom the Graduate School o Chinese Academy o

Social Sciences with a masters degree in political economics.

Previous posts: Vice President, President, Vice Chairman o China Everbright

Group; Vice Chairman and President o China International rust & InvestmentCorporation.

Chang Zhenming Born in October 1956, Vice Chairman & President o CIIC Group since July

2006.

Senior Economist. Graduated rom New York Insurance Institute with a mas-

ters degree in business administration.

Previous posts: Vice President o CIIC Industrial Bank; Executive Director

& Vice President o CIIC Group; Vice Chairman & President o China Con-

struction Bank.

Wang Chuan Born in June 1948, Vice Chairman o CIIC Group since July 2004.

Senior Economist. Graduated rom the Correspondence College o Renmin

University o China with a college degree in industrial economy management.

Previous posts: Head o Jilin Branch, Head o the Party Disciplinary Inspection

and Vice President o Agricultural Bank o China; Vice Chairman & President

o China Everbright Bank, Vice Chairman o China Everbright Group.

Yung Chi Kin Born in January 1942, Executive Director o CIIC Group since December 1989.Graduated rom the Department o Electrical Engineering at ianjin University.

Previous posts: General Manager o Sunburst Energy Development Inc.; Chair-

man o CIIC Pacic Ltd.; General Manager, Vice Chairman o CIIC Hong Kong

(Holdings) Ltd.

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Mi Zengxin Born in December 1950, Executive Director and Vice President o CIIC

Group since May 1997.

Senior Engineer. Graduated rom Beijing University o Iron and Steel ech-

nology with a bachelors degree in pressurized metal processing and Beijing

University o echnology with a masters degree in solid mechanics.Previous posts: Vice President o CIIC Development Co., Ltd.; Chie Execu-

tive Ocer o CIISEEL USA Inc.

Li Shilin Born in January 1950, Executive Director & Vice President o CIIC Group

since June 2000.

Graduated rom Shenzhen University with a college degree in corporatemanagement.

Previous posts: General Manager o CIIC Guoan Industrial Development

Co., Ltd.; Deputy General Manager o CIIC Development Co., Ltd.; Gen-

eral Manager, Chairman o CIIC Guoan Group; Assistant President o

China International rust & Investment Corporation.

Dou Jianzhong Born in February 1955, Executive Director & Vice President o CIIC

Group since April 1998.

Senior Economist. Graduated rom Beijing International Business and Eco-

nomics University with a bachelors degree in English and Department o

International Finance o the College o International Economics at LiaoningUniversity with a masters degree in economics.

Previous posts: Vice President, Executive Vice President and President o

CIIC Industrial Bank; Assistant President o China International rust &

Investment Corporation.

Wen Jinping Born in December 1950, Executive Director since November 2000 and Sec-

retary o the Party Discipline Inspection Commission o CIIC Group sinceAugust 2002. Senior Engineer o Political Work.

Graduated rom the College o Economics & Management at Beijing Union

University with a college degree in economic law.

Previous posts: Deputy Director-General, Director-General o Human Re-

sources Department, Secretary o the Party Committee, Director-General o

the Department o Supervision, Assistant President, Head o the Party Disci-

plinary Inspection o China International rust & Investment Corporation.

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50

Born in March 1960, Executive Director & Vice President o CIIC Group

since November 2001.

Graduated rom Shanghai University o Finance & Economics with a mas-

ters degree in nance.

Previous posts: Deputy General Manager o CIIC Shanghai Co., Ltd.;

General Manager, Chairman o CIIC Shanghai (Group) Co., Ltd.; General

Manager, Chairman o CIIC East China (Group) Co., Ltd.; Assistant Presi-

dent o China International rust & Investment Corporation.

Wang Jiong

Born in July 1954, Executive Director & Vice President o CIIC Group

since November 2001.

Graduated rom China University o Political Science and Law with a mas-

ters degree in economic law.Previous posts: Deputy Director-General o the Supervisory Oce, Direc-

tor-General o the Department o Supervision and Legal Department, Assis-

tant President o China International rust & Investment Corporation.

Zhao Jingwen

Born in June 1954, Executive Director & Vice President o CIIC Group

since October 2004.

Senior Economist. Graduated rom Northeastern University o Finance &Economics with a doctors degree in nance.

Previous posts: Deputy Head o Beijing Branch o the Peoples Bank o Chi-

na; Deputy Director-General o Beijing Branch o the State Administration

o Foreign Exchange; Head o Beijing Branch, Vice President and Executive

Vice President o China Merchants Bank.

Chen Xiaoxian

Born in August 1963, Director since March 2000 and CFO o CIIC Group

& Chairman o CIIC rust & Investment Co., Ltd. since December 2002.

Graduated rom Renmin University o China with a masters degree in ac-

counting.

Previous posts: Deputy Director-General, Director-General o the Depart-

ment o Finance; Managing Director o Shortridge Co., Ltd; Chie Accoun-

tant o China International rust & Investment Corporation.

Ju Weimin

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Born in March 1959, Director since March 2002 and Assistant Presi-

dent o CIIC Group & Vice Chairman o CIIC Guoan Group,

Chairman & General Manager o CIIC Networks Co., Ltd. since July

2001.

Graduated rom PLA Academy o Communications (Wuhan) with acollege degree in communications engineering.

Previous posts: General Manager o the First Branch o China Uni-

com; Executive Deputy General Manager, General Manager, Chairman

o CIIC Communications Project Management Co., Ltd.; Chairman &

General Manager o CIIC Network Management Co., Ltd.; Chairman

& General Manager o CIIC Networks Co., Ltd.; Assistant President o

China International rust & Investment Corporation.

Born in August 1951, Director since March 2000, Assistant Presidento CIIC Group & Chairman o CIIC Securities Co., Ltd. since Au-

gust 2001.

Senior Economist. Graduated rom College o International Studies o

Georgetown University with a masters degree in international nance.

Previous posts: General Manager o the International Department o

China Securities Co., Ltd.; Vice President o China South Securities;

Vice President, President o CIIC Securities Co., Ltd.;

Born in April 1968, Director since April 2006, Assistant President o

CIIC Group & Vice Chairman and General Manager o CIIC Guoan

Group since July 2004.

Graduated rom Renmin University o China with a bachelors degree

in industrial economics & management.

Previous posts: General Manager, Vice Chairman o CIIC Guoan

Inormation Industry Co., Ltd.; General Manager o CIIC Guoan

Group.

Born in September 1955, Director since March 1998, Assistant Presidento CIIC Group & Director-General o Strategy & Planning Department

since September 2005.

Senior Economist. Graduated rom Chinese Academy o Social Sci-

ences Graduate School with a masters degree in quantitative econom-

ics.

Previous posts: Deputy General Manager, General Manager o CIIC

Australia Pty Ltd; Director-General o Strategy & Planning Depart-

ment o China International rust & Investment Corporation.

Luo Ning

Wang Dongming

Sun Yalei

Zhang Jijing

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54

Aer the global nancial crisis in 2008, China resolutely adopt-

ed a proactive scal policy and a moderately relaxed monetary

policy, and implemented a stimulus package aimed at tackling

the crisis and expanding the domestic demand. As a result, the

economy and employment in China was soon stabilized. CIIC

Group adjusted its investment plan in a timely manner accord-

ing to the annual plan ormulated at the beginning o the year

and realised a good improvement o key business indicators. In

order to give shareholders, creditors and the general public a

clearer and uller picture o the Group in terms o its operations,

business development and nancial positions, CIIC Group

continued to attach importance to communicating with stake-

holders both inside and outside the Group. As a result, commu-

nication has become more eective, and nancial inormation

more transparent.

With reerence to the inormation disclosure standards or listed

companies and based on its own situation, CIIC Group not

only disclosed the nancial conditions o the Head Oce in an

all-dimensional way, but also stepped up guidance on inorma-

tion disclosure o its subsidiaries and aliates by speciying the

scope and the practice o disclosure. In the meantime, the Group

honoured its disclosure obligations as a debtor by regularly up-

dating its web portal, chinabond.com.cn and chinamoney.com.

cn on its nancial statements and material matters, communi-

cating with and submitting nancial data to creditor banks and

answering questions rom creditor banks and bondholders.

CIIC Group continued to communicate with shareholders, rel-

evant ministries and departments as well as regulators. At the

headquarters level, senior executives attended important con-

erences, events and orums and received or visited a variety o

nancial institutions and investment agencies. At the same time,

through visits, seminars and thematic briengs, unctional de-

partments kept the relevant government agencies and regulators

inormed about the Groups operations and nancial prole as

well as key subsidiaries and progress o major projects. In 2009,

the Ministry o Finance unveiled a series o regulations concern-

ing the nancial management o nancial holding companies,

which provide specic guidelines or the Group in conducting

nancial management. CIIC Group strictly ollowed these reg-

ulations in inormation reporting and disclosure.

CIIC Group continued to have a good relationship with rating

agencies including Standard & Poors, Moodys, Rating and In-

vestment Inormation, Inc. and China Cheng Xin International

Credit Rating Co. Ltd. Regular meetings were held to provide

the latest inormation on the Groups development strategies, op-

erations and nancial strength. Te ollowing table provides the

relevant ratings and actions:

Investor relations are highly valued and well managed andmore eective avenues o communications are established

to help enhance the image o CIIC Group.

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Rating agency RatingSymbol

(Dec. 31, 2009)Rating Action

S&P

Long-term Foreign CurrencyCounterparty Credit Rating BBB

Upgraded romBBB-/A-3 on Nov.2, 2009.Short-term Foreign Currency

Counterparty Credit RatingA-2

Rating Outlook Positive

Moodys

Long-term Foreign Currency SeniorUnsecured Debt Rating

Baa2Rating Outlook upgraded romStable to Positive on Mar. 1,2010.

Baseline Credit Rating 12

Rating Outlook Stable

R&I

Foreign Currency Issuer Rating BBB+

-Long-term Bond Rating BBB+

Rating Outlook Stable

CCXI

Corporate Credit Rating AAA

-2009 MN (ranche I) Rating AAA

2001/2002/2003 CIIC Bond Rating AAA

2005 Corporate Bond Rating AAA

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CORPORATE GOVERNANCE

56 CITIC Group

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58

A. Governance Structure

CIIC Group

Senior Management

Subsidiaries and Aliates

Board o Directors Board o Supervisors

Sub-committeesBoard o ExecutiveDirectors

Strategy&PlanningDepartment

GeneralOfce

FinanceDepartment

DepartmentoPersonnel&Education

RiskManagementDepartment

DepartmentoSupervision

LegalDepartment

AuditDepartment

DepartmentoManagementInorm

ation

CorporateCultureDepartment

TradeUnion

Investmen

tHoldings

FinancialServices

RealEstate&Inrastructure

Energy&Resources

Trade&Service

EngineeringContracting

Manuactu

ring

IT

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1. Shareholders

Te Company is a conglomerate established upon the

approval o the State Council and with unding rom

the Ministry o Finance o the Peoples Republic o Chi-

na. It is a state-authorized investment organization.

2. Board o Directors, Board o Executive Directors

and Senior Management

(1) Board o Directors

Te Board o Directors consists o 31 members, includ-

ing a Chairman and a Vice Chairman. Te Board o

Executive Directors is a standing body o 11 members

including the Chairman, the Vice Chairman and Ex-

ecutive Directors. At present, all members o the Board

o Executive Directors are appointed or removed by the

State Council.

(2) Board o Executive Directors

Te Board o Executive Directors makes decisions on

such matters as business strategies, nancial budget,

business plans, nancing, investment and asset dis-

position schemes, structure o management bodies,

company rules and policies and remuneration and

incentive schemes; reviews nancial accounts, prot

distribution and loss compensation plans as well as

consolidation, spino, alteration and dissolution plans;

and dras registered capital alteration, bond issue and

Articles o Association amendment schemes.

Tere are several sub-committees under the Board o

Executive Directors. Among them, the Risk Manage-

ment Committee is a specialized body under and re-

porting to the Board o Executive Directors. Te main

responsibilities o the Risk Management Committee

include: reviewing the Comprehensive Risk Manage-

ment Report o the Company; reviewing risk assess-

ment mechanisms or major decisions, major risks

and major business processes; reviewing risk manage-

ment policies and solutions to major risks; evaluating

and discussing risk management systems and policies,

overall risk prole and changes in major business risks,

and providing guidance in this respect.

(3) Senior Management

Te Senior Management is responsible or managing

business operations and making decisions within its

power as authorized by the Board o Directors and the

Board o Executive Directors.

3. Board o Supervisors

Te Board o Supervisors, composed o a Chairman and

several Supervisors, is a supervisory body dispatched

by the State Council. Te Chairman o the Board o Su-

pervisors attends or designates his/her representative

to attend meetings o the Board o Directors and other

relevant meetings as s/he sees t. During the Reporting

Period, the Board o Supervisors oversaw and exam-

ined business operations o the Company, managerial

actions taken by Directors and the Senior Manage-

ment, and business and nancial positions o the Com-

pany, conducted on-site and o-site inspections o the

Companys subsidiaries, and examined and provided

guidance or the Companys internal audit system.

4. Employees

Adhering to the Put People First approach, the

Company pays great attention to the utilization o

employeesinitiative and creativity and has strived to

provide our employees with a competitive remunera-

tion and incentive plan and a wide platorm on which

they can ully demonstrate their talents and capabili-

ties. At the end o 2009, the total number o employees

worldwide was 125,215.

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60

B. Measures to Enhance Corporate Governance

1. Strategic management and control at the Group level to en-

hance operational and investment management capabilities

Te Group headquarters made urther progress in the imple-

mentation o Group-wide strategies. With resource integration,

the strategic positioning and business model o subsidiaries and

business lines were urther claried. By concentrating and opti-

mizing internal resources, the Group was able to complete major

projects o strategic importance.

Business planning and budgetary management were enhanced,

and investments by and operations o subsidiaries standardized.

Major investment management system was improved, and man-

agement o and control over investment activities intensied.

Major projects tracking system was also improved, and super-

vision o key subsidiaries and major projects tightened, so that

associated risks and problems were identied and addressed in

a timely manner.

Perormance assessment and remuneration management or

subsidiaries and aliates were improved. A perormance as-

sessment system that encompassed such indicators as eciency,

scale, quality and synergy encouraged and helped subsidiaries to

develop and compete in a more eective way.

2. Further consolidation to drive specialized operations at sub-

sidiaries and enhance core competencies

During the Reporting Period, the Group completed the consoli-

dation o its commercial banking portolio. China CIIC Bank

acquired a 70.32% stake in CIIC International Financial Hold-

ings Limited. CIICs commercial banking business has become

an integral whole capable o international operations.

By consolidating its engineering contracting assets and business,

CIIC Construction has become the implementing entity o the

Groups entire engineering contracting portolio, which will help

project the CIIC Construction brand and raise overall com-

petitiveness.

3. Financial management and nancial risk control

Te size o Groups new loans and guarantees was kept under

strict control. Te debt monitoring system at subsidiaries was

improved, which oered more dynamic monitoring o their

debts, guarantees and pledges and helped reduce credit and

guarantee-related risks.

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Centralized und management or eligible non-nancial subsidiaries was in place to improve capital eciency and

control capital and credit risks.

During the Reporting Period, a set o rules including those governing nancial management and asset evaluation

were substantiated and revised, and the nancial accounting system improved, to prevent nancial risks.

4. Strengthened internal audit and more eective oversight

During the Reporting Period, the Groups internal audit system was urther improved. Te organizational struc-

ture or internal audit was strengthened, with an internal audit and supervisory structure that eatured centralized

management and tiered accountability in place. Audit unctions were set up at nancial subsidiaries and relatively

larger non-nancial subsidiaries with greater auditing needs.

Internal audit and supervision were intensied, covering almost all tier-one subsidiaries. Audit, ollow-up audit

and audit trail helped ensure that problems identied were addressed and corrected.

5. Legal review o major contracts to prevent legal risks

During the Reporting Period, legal risks were circumvented, and legal basis established or major business pro-

grammes, through involvement in project easibility studies, asset investigations, negotiations, draing and

amendment o legal documents and the provision o legal opinions.

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RISK mANAGEmENT

62 CITIC Group

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64

Risk Management

Te Company was aced with the ollowing risks during the Re-

porting Period:

Strategic risks: Faced with many uncertainties in the global

economic recovery, the Company was challenged to assess inter-

national and domestic situations as well as industry and market

trends and to position its development accordingly.

Policy-related risks: Business development at the Company or

its subsidiaries might be aected as the result o changing mac-

ro-policies including monetary, scal, industrial, regional devel-

opment and environmental policies, and changing international

political landscapes.

Financial risks: With business expansion and investment diver-

sication, there was a greater demand or the size and liquidity

o capital rom capital expenditure and day-to-day operations.

Tis might cause higher debt levels and ratios at the Company

or its subsidiaries, resulting in greater diculty in nancing and

higher cost o capital. Amidst many uncertainties in the cur-

rent business climate, the Company or its subsidiaries might see

a gap between expected returns on its investments and the real

results.

Market risks: Given worldwide recessions, which resulted in

private investment and consumption slowdown, weak demand

and overcapacity both at home and abroad, and continued wors-

ening o the global trade environment, the market o the Com-

pany or its subsidiaries might shrink. Worldwide liquidity surge

and high volatility in major currencies pushed international

commodity and domestic real estate prices to historic highs.

Subsidiaries in resources and energy, engineering contracting,

real estate, manuacturing and trade were likely to see violent

swings in market prices. Te Company or its subsidiaries und

positions or investment portolios might suer as result o uc-

tuating prices o capital market products.

Legal risks: With businesses covering a broad range o indus-

tries and geographic locations, the Company had to improve and

adjust its management and practices in line with changing inter-

national and domestic legal and regulatory environments.

Operational risks: As the Company and its subsidiaries busi-

ness grew and developed, their operations might be aected by

external actors such as oreign and domestic social and cultural

environments, natural and geographical conditions and external

emergencies as well as internal management, inormation sys-

tem or human resources issues.

Credit risks: Te Company or its subsidiaries borrowers or

counterparties might be unable or unwilling to honour their

contracted obligations.

Te Company took the ollowing measures against the aore-

mentioned risks:

1. Provide central planning or strategic management and re-

source allocation to improve overall competitiveness and sustain-

ability. Under the umbrella o strategic management, strategies

or industries, business segment growth, products and regions

were claried. Resources were optimized: priority was given to

better positioned, technology intensive and growing businesses

and segments to ensure the realization o overall objectives.

2. Improve the decision-making process and management mech-

anism or major investments with a view to making decisions

more scientic and management more eective. Management

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AUDITED FINANCIAL STATEmENTS

66 CITIC Group

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68

We have audited the accompanying nancial statements o CIIC Group (reerred to as the Citic Group), consisting

o balance sheet and consolidated balance sheet as at 31 December 2009, income statement and consolidated income

statement, statement o changes in owners equity and consolidated statement o changes in owners equity, cash ow

statement and consolidated cash ow statement or the year then ended, and notes to the nancial statements.

Managements Responsibility or the Financial Statements

Te Companys Management is responsible or the preparation o these nancial statements in accordance

with the Accounting Standards or Business Enterprises, the Accounting Regulations or Financial Enter-

prises and the Accounting Regulations or Business Enterprises. Tis responsibility includes: designing,

implementing and maintaining internal controls relevant to the preparation o nancial statements that

are ree rom material misstatement, whether caused by raud or error; selecting and applying appropriate

accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors Responsibilities

Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted

our audit in accordance with Chinese Auditing Standards or Certied Public Accountants. Tose standards

require that we comply with ethical requirements and plan and perorm the audit to obtain reasonable assur-

ance whether the nancial statements are ree rom material misstatement.

An audit involves perorming procedures to obtain audit evidence about the amounts and disclosures in

the nancial statements. Te procedures selected depend on the auditors judgment, including the assess-

ments o the risks o material misstatement o the nancial statements, whether due to raud or error. In

making those risk assessments, the auditor considers internal control relevant to the entitys preparation o

the nancial statements in order to design audit procedures that are appropriate in the circumstances, but

To CITIC Group:

ZhongruiYuehua Shen Zi [2010] No.05855

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AUDITORSREPORTCITIC Group

not or the purpose o expressing an opinion on the eectiveness o the Companys internal control. An

audit also includes evaluating the appropriateness o accounting policies used and the reasonableness o

accounting estimates made by management, as well as evaluating the overall presentation o the nancial

statements.

We believe that the audit evidence we have obtained is sucient and appropriate to provide a basis or

our audit opinion.

Opinion

In our opinion, the nancial statements are in accordance with the Chinese Accounting Standards or

Business Enterprises, the Accounting Regulations or Financial Enterprises and the Accounting Regula-

tions or Business Enterprises and, in all material respects, give a air view o the Citic Groups nancial

position and consolidated nancial position as at 31 December 2009, the results o operations and con-

solidated results o operations, and cash ows and consolidated cash ows or the year then ended.

Certied Public Accountants

Name o CPA: Zhang Fugen

Name o CPA: Jin Zhao

RSM China Certied Public Accountants

Beijing, China

28 April 2010

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70

ASSETS Note 2009 2008

Current Assets:

Cash and deposits 5.(1) 301,216,256 296,998,314

Short-term loans 5.(2) 771,651,740 497,076,748

Receivables 5.(3) 51,229,428 38,523,676

Short-term investments 5.(4) 109,847,106 126,472,283

Other current assets 5.(5) 64,261,533 55,272,361

otal Current Assets 1,298,206,063 1,014,343,382

Long-term Assets:

Medium and long-term loans 5.(2) 522,412,679 305,440,801

Long-term investments 5.(4) 175,554,173 174,777,860

Fixed assets 5.(6) 114,951,654 95,551,953

Other long-term assets 5.(7) 42,712,156 33,987,772

otal Long-term Assets 855,630,662 609,758,386

otal Assets 2,153,836,725 1,624,101,768

CONSOLIDATED BALANCE SHEET

As at 31 December 2009Expressed in thousands o RMB

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CONSOLIDATED BALANCE SHEET (Continued)

CONSOLIDATED BALANCE SHEETCITIC GROUP

As at 31 December 2009Expressed in thousands o RMB

LIABILITIES AND INVESTOR'S EQUITY Note 2009 2008

Current Liabilities:

Short-term deposits rom customers 5.(8) 1,058,651,163 665,379,262

Short-term nancing 5.(9) 36,357,469 44,895,075

Payables 5.(10) 93,949,071 81,501,867

Other current liabilities 5.(11) 3,988,815 12,631,295

Total Current Liabilities 1,192,946,518 804,407,499

Long-term Liabilities:

Long-term deposits rom customers 5.(12) 538,975,070 453,465,289

Medium and long-term borrowings 112,015,361 88,319,408

Long-term bond payables 5.(13) 62,837,454 57,556,303

Other long-term liabilities 5.(14) 25,705,224 29,687,184

Total Long-term Liabilities 739,533,109 629,028,184

Total Liabilities 1,932,479,627 1,433,435,683

Equity

Capital 5.(15) 55,357,720 39,942,191

Reserves 5.(16) 60,969,157 54,537,045

Prot or the year 18,892,122 14,248,703

Equity Attributable to Shareholders o the Company 135,218,999 108,727,939

Minority interests 86,138,099 81,938,146

Total Investor's Equity 221,357,098 190,666,085

Total Liabilities and Investor's Equity 2,153,836,725 1,624,101,768

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72

CONSOLIDATED INCOME STATEMENT

Note 2009 2008

Operating income 5.(17) 209,064,922 157,043,809

Operating costs 5.(18) 142,897,486 98,441,501

Operating expenses 5.(19) 28,302,416 22,079,392

Investment income 6,181,333 4,176,126

Business taxes and surcharges 4,746,455 4,154,647

Operating Prot 39,299,898 36,544,395

Add: non-operating income 1,096,333 646,490

Less: non-operating expenses 388,072 217,574

Prot beore Provision or Impairment Losses 40,008,159 36,973,311

Less: provision or impairment losses 5

Documents

2009nbyw