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HALF-YEAR REPORT 2016
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Credit Risk
With the proliferation of new market entities, innovative business models, new products, businesses and
counterparties, credit risks could increase in both width and complexity. In this unpredictable economic climate,
with extensive business operations and counterparties, the Group pays close attention to market developments
and credit risks arising from business partners. If the Group fails to investigate and prevent such risks, they may
have an adverse impact on its operations, financial condition and profitability.
Competitive Markets
CITIC Limited operates in highly competitive markets. Failure to compete in terms of product specifications,
service quality, reliability or price may have an adverse impact on the Group.
– The financial services business faces fierce competition from domestic and international commercial banks
and other financial institutions.
– The engineering contracting business is challenged by global peers as well as China’s large state-owned
enterprises and private companies.
– Resources and energy, manufacturing, real estate operations, and other businesses in different sectors also
face severe competition over resources, technologies, prices and services.
Intensification of competition might result in lower product prices, narrower profit margins as well as loss of
market share for CITIC Limited.
Other External Risks and Uncertainties
Impact of local, national and international laws and regulations
CITIC Limited faces local business risks in different countries and regions. Such risks might have a significant
impact on the financial condition, operations and business prospects of CITIC Limited in the relevant markets.
The investments of CITIC Limited in countries and regions across the world might at present or in future be
affected by changes in local, national or international political, social, legal, tax, regulatory and environmental
requirements from time to time. In addition, new government policies or measures, if introducing changes
in fiscal, tax, regulatory, environmental or other aspects that may affect competitiveness, could result in an
additional or unforeseen increase in operating expenses and capital expenditures, produce risks to the overall
return on investment of CITIC Limited, and delay or impede its business operations and hence adversely affect
revenue and profit.
Impact of new accounting standards
The Hong Kong Institute of Certified Public Accountants (“HKICPA”) issues new and revised Hong Kong Financial
Reporting Standards (“HKFRSs”) from time to time. As the accounting standards continue to evolve, HKICPA
might further issue new and revised HKFRSs in the future. The new accounting policies, if required to be adopted
by CITIC Limited, could have a significant impact on its financial condition and operations.