CITIC Pacific
Encyclopedia
CITIC Pacific is a Hong Kong
-based conglomerate
holding company
headquartered in the CITIC Tower
, Admiralty, Hong Kong
. It is 58% owned by the state-owned Citic Group
in Beijing and has shareholders around the world.
manufacturing, property and iron ore mining, which supplies the raw material
needed in the making of special steel and property development in mainland China. CITIC Pacific's operating segments include special steel, iron ore mining, property, civil infrastructure, power generation and other business areas. CITIC Pacific's subsidiaries include CITIC Pacific Mining, CITIC Pacific Special Steel, Dah Chong Hong Holdings Limited (DCH Holdings) and CITIC Telecom International. DCH Holdings is a distributor of motor vehicles, food and consumer products. CITIC Telecom International owns and operates a telecoms hub that provides interoperability, interconnections and value-added services.
On March 3 2011, CITIC Pacific announced its results for the full-year ended 31 December 2010. Profit attributable to shareholders was HK$8,915 million, the second highest in CITIC Pacific’s history. All operating business segments performed well, in particular special steel. The increase in profit was also driven by the gains from sales of assets, which totalled HK$3,008 million.
The Sino Iron project is being developed by CITIC Pacific Mining, a wholly owned subsidiary of CITIC Pacific. It is located at Cape Preston, 100 kilometres southwest of Karratha on the coast of Western Australia’s North Western region of the Pilbara. The Sino Iron project will mine magnetite iron ore that once processed, can be exported for use in the steelmaking process, where it is a desirable quality product for steel mills, including those of CITIC Pacific in China.
The Sino Iron project will help satisfy demand from China’s steelmaking industry by providing a reliable source of high quality iron concentrate. The products from the Sino Iron project will not only be used in CITIC Pacific’s special steel mills in China, but also in other Chinese steel mills. One of the advantages of magnetite concentrate is its high iron content and low impurities compared to traditional iron ore products.
As one of CITIC Pacific's main businesses, CITIC Pacific Special Steel is the largest manufacturer dedicated to the production of special steel in China with two operating steel plants – Xingcheng Special Steel and Xin Yegang. Through expansion, the company’s annual steel producing capacity increased to eight million tonnes at the end of 2010. This will grow to nine million tonnes by the end of 2011. The two steel plants are ideally located to cover the main markets for special steel in eastern and central China. Major products include the following categories: bar steel, wire steel, mid to thick wall seamless steel tubes, special steel plates and special forging steel. These are widely used in various industries, including auto components, machinery manufacturing, oil and petrochemicals, transportation, energy, railways and shipbuilding.
On the property line of business, most of CITIC Pacific’s properties are large-scale projects with locations in mainland China. These include Shanghai’s Lu Jia Zui New Financial District project, the Sichuan Beilu Station and The Centre in Jiading, which form part of the city’s new railway transport system. Zhujiajiao New Town in Shanghai and Noble Manor in Yangzhou are large-scale residential developments offering comprehensive community facilities. Our Shenzhou Peninsula project on Hainan Island will benefit from the government’s plan to promote the island as an international tourism destination.CITIC Pacific 2010 Annual Report
with a contract value of A$9 billion against the Australian dollar, taken out to cover against a A$1.6 billion prospective acquisition and capital expenditure. Losses were incurred on the contracts when the currency declined from 98.5% against the US dollar to less than 70%. Its parent company
, CITIC
pledged its support to this subsidiary.
The board
became aware of this on 7 September 2008, and disclosure was made to the financial market
s after trading in its shares was suspended on 20 October. The company and the Hong Kong Securities and Futures Commission faced questions by legislators about the severe delays in their disclosure, considering the company made a pursuant to a proposed acquisition
, that as at 9 September 2008, "the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2007". When the shares resumed trading, the share price had fallen by some 75% since the previous close.
As a result of the revelations, two officers were forced to resign in disgrace. Due to her involvement in the loss, the chairman's daughter was demoted. The chairman claimed his daughter Frances Yung
had not informed him about the situation before its discovery. Managing Director Henry Fan
temporarily stepped down from the Executive Council
and the chairmanship of the Mandatory Provident Fund Schemes Authority, and all other major public positions he held with effect 24 October 2008.
On 3 April 2009, trading in CITIC Pacific shares was once again suspended, and the Hong Kong Police searched the company's office as part of an investigation into whether the company directors had made false statements about the foreign-exchange contracts, as well as company announcements made between July 2007 and March 2009, or had conspired to defraud. On 8 April, chairman Larry Yung resigned, citing the effect of the Commercial Crimes Bureau's visit to the company on public opinion; Managing Director Henry Fan resigned at the same time. They were replaced by Chang Zhenming
, the Chairman of the CITIC Group.
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
-based conglomerate
Conglomerate (company)
A conglomerate is a combination of two or more corporations engaged in entirely different businesses that fall under one corporate structure , usually involving a parent company and several subsidiaries. Often, a conglomerate is a multi-industry company...
holding company
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...
headquartered in the CITIC Tower
CITIC Tower
CITIC Tower is an office building on Tim Mei Avenue, Admiralty, Hong Kong. It is the corporate headquarters of CITIC Pacific Ltd, a conglomerate publicly traded on the Hong Kong Stock Exchange and listed on the Hang Seng Index, and also a subsidiary of the CITIC Group.This 33-storey prestigious...
, Admiralty, Hong Kong
Admiralty, Hong Kong
Admiralty is the eastern extension of central business district of the Central on the Hong Kong Island of Hong Kong. It is located on the eastern end of the Central and Western District, bordered by Wan Chai to the east and Victoria Harbour to the north. The name of Admiralty refers to the former...
. It is 58% owned by the state-owned Citic Group
CITIC
Not to be confused with Citigroup, another large financial services company.Not to be confused with CIT Group, another large financial services company....
in Beijing and has shareholders around the world.
Business areas
CITIC Pacific is a diversified company with a primary focus on special steelSteel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
manufacturing, property and iron ore mining, which supplies the raw material
Raw material
A raw material or feedstock is the basic material from which a product is manufactured or made, frequently used with an extended meaning. For example, the term is used to denote material that came from nature and is in an unprocessed or minimally processed state. Latex, iron ore, logs, and crude...
needed in the making of special steel and property development in mainland China. CITIC Pacific's operating segments include special steel, iron ore mining, property, civil infrastructure, power generation and other business areas. CITIC Pacific's subsidiaries include CITIC Pacific Mining, CITIC Pacific Special Steel, Dah Chong Hong Holdings Limited (DCH Holdings) and CITIC Telecom International. DCH Holdings is a distributor of motor vehicles, food and consumer products. CITIC Telecom International owns and operates a telecoms hub that provides interoperability, interconnections and value-added services.
On March 3 2011, CITIC Pacific announced its results for the full-year ended 31 December 2010. Profit attributable to shareholders was HK$8,915 million, the second highest in CITIC Pacific’s history. All operating business segments performed well, in particular special steel. The increase in profit was also driven by the gains from sales of assets, which totalled HK$3,008 million.
The Sino Iron project is being developed by CITIC Pacific Mining, a wholly owned subsidiary of CITIC Pacific. It is located at Cape Preston, 100 kilometres southwest of Karratha on the coast of Western Australia’s North Western region of the Pilbara. The Sino Iron project will mine magnetite iron ore that once processed, can be exported for use in the steelmaking process, where it is a desirable quality product for steel mills, including those of CITIC Pacific in China.
The Sino Iron project will help satisfy demand from China’s steelmaking industry by providing a reliable source of high quality iron concentrate. The products from the Sino Iron project will not only be used in CITIC Pacific’s special steel mills in China, but also in other Chinese steel mills. One of the advantages of magnetite concentrate is its high iron content and low impurities compared to traditional iron ore products.
As one of CITIC Pacific's main businesses, CITIC Pacific Special Steel is the largest manufacturer dedicated to the production of special steel in China with two operating steel plants – Xingcheng Special Steel and Xin Yegang. Through expansion, the company’s annual steel producing capacity increased to eight million tonnes at the end of 2010. This will grow to nine million tonnes by the end of 2011. The two steel plants are ideally located to cover the main markets for special steel in eastern and central China. Major products include the following categories: bar steel, wire steel, mid to thick wall seamless steel tubes, special steel plates and special forging steel. These are widely used in various industries, including auto components, machinery manufacturing, oil and petrochemicals, transportation, energy, railways and shipbuilding.
On the property line of business, most of CITIC Pacific’s properties are large-scale projects with locations in mainland China. These include Shanghai’s Lu Jia Zui New Financial District project, the Sichuan Beilu Station and The Centre in Jiading, which form part of the city’s new railway transport system. Zhujiajiao New Town in Shanghai and Noble Manor in Yangzhou are large-scale residential developments offering comprehensive community facilities. Our Shenzhou Peninsula project on Hainan Island will benefit from the government’s plan to promote the island as an international tourism destination.CITIC Pacific 2010 Annual Report
2008 foreign exchange losses controversy
In October 2008, the Chairman Larry Yung disclosed that the firm lost HK$15 billion (US$2 billion) due to "unauthorized trades". The unauthorised trades were hedgesHedge (finance)
A hedge is an investment position intended to offset potential losses that may be incurred by a companion investment.A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, many types of...
with a contract value of A$9 billion against the Australian dollar, taken out to cover against a A$1.6 billion prospective acquisition and capital expenditure. Losses were incurred on the contracts when the currency declined from 98.5% against the US dollar to less than 70%. Its parent company
Parent company
A parent company is a company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors; the second company being deemed as a subsidiary of the parent company...
, CITIC
CITIC
Not to be confused with Citigroup, another large financial services company.Not to be confused with CIT Group, another large financial services company....
pledged its support to this subsidiary.
The board
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
became aware of this on 7 September 2008, and disclosure was made to the financial market
Financial market
In economics, a financial market is a mechanism that allows people and entities to buy and sell financial securities , commodities , and other fungible items of value at low transaction costs and at prices that reflect supply and demand.Both general markets and...
s after trading in its shares was suspended on 20 October. The company and the Hong Kong Securities and Futures Commission faced questions by legislators about the severe delays in their disclosure, considering the company made a pursuant to a proposed acquisition
Takeover
In business, a takeover is the purchase of one company by another . In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company.- Friendly takeovers :Before a bidder makes an offer for another...
, that as at 9 September 2008, "the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2007". When the shares resumed trading, the share price had fallen by some 75% since the previous close.
As a result of the revelations, two officers were forced to resign in disgrace. Due to her involvement in the loss, the chairman's daughter was demoted. The chairman claimed his daughter Frances Yung
Frances Yung
Frances Yung Ming Fong was the director of Group Finance Department of CITIC Pacific. She is the deputy chairman of CITIC Pacific Communications Limited and the director of Hong Kong Eastern Harbour Tunnel Company...
had not informed him about the situation before its discovery. Managing Director Henry Fan
Henry Fan
Henry Fan Hung Ling, SBS, JP was the managing director of CITIC Pacific and the vice-chairman of Cathay Pacific Airways. He was the non-official member of Executive Council of Hong Kong from 2007 to 2009. He is the elder brother of Fanny Law, a former Hong Kong Government official. He was...
temporarily stepped down from the Executive Council
Executive Council of Hong Kong
The Executive Council of Hong Kong is a core policy-making organ in the executive branch of the government of Hong Kong.. The Chief Executive of Hong Kong serves as its President.The Executive Council normally meets once a week...
and the chairmanship of the Mandatory Provident Fund Schemes Authority, and all other major public positions he held with effect 24 October 2008.
On 3 April 2009, trading in CITIC Pacific shares was once again suspended, and the Hong Kong Police searched the company's office as part of an investigation into whether the company directors had made false statements about the foreign-exchange contracts, as well as company announcements made between July 2007 and March 2009, or had conspired to defraud. On 8 April, chairman Larry Yung resigned, citing the effect of the Commercial Crimes Bureau's visit to the company on public opinion; Managing Director Henry Fan resigned at the same time. They were replaced by Chang Zhenming
Chang Zhenming
Chang Zhenming is the chairman and of CITIC Group and the chairman and managing director of CITIC Pacific, CITIC's Hong Kong listed subsidiary company. He was the President of China Construction Bank from 2004 to 2006.Mr...
, the Chairman of the CITIC Group.