CITIC Pacific Ltd has vowed to further improve its corporate governance after the conglomerate reported a strong turnaround with a net profit of HK$5.95 billion in 2009.

However, the company has no plans to dispose of its interests in the Western Harbour Tunnel and the Eastern Harbour Tunnel, Managing Director Zhang Jijing said yesterday, despite the fact the two tunnels' higher fees caused most drivers to prefer the cheaper tunnel in Hung Hum, leading to regular traffic jams.

The property-to-steel conglomerate posted a net loss of HK$12.7 billion in 2008, partly due to a HK$15.9 billion loss from loss-making currency bets after the blue-chip company entered into some unauthorized currency hedging contracts.

The management has undertaken several initiatives to improve its corporate governance, Chairman Chang Zhenming, who took over the helm from former chairman Larry Yung in April last year, told a press briefing for the group's 2009 operating results.

The company has set up several committees with specific tasks of overseeing the financial operation, handling matters related to asset disposals and reviewing major investment decisions, respectively, Chang said.

CITIC Pacific has also commissioned a consulting firm to conduct a thorough study and assessment of the company's finance functions to help it meet the corporate governance requirements of the Hong Kong stock exchange and provide it with greater clarity on the adequacy of the finance functions in the company, the chairman said.

"We hope to raise the group's corporate governance standard to the highest level," he stressed.

On questions about the group's business model and future strategy, which have been a focus of broad concern among investors and analysts, the chairman said, "I believe CITIC Pacific is, and will continue to be, a company with multiple businesses in a few industries".

"This is a model that works well for us; however, we are not simply an investment holding company with a portfolio of assets, but rather an operating company," he said.

He noted that the group has begun and would continue to focus on three main businesses, namely, special steel manufacturing, iron ore mining and property development on the mainland. Chang said he is optimistic about the prospects for the group's main businesses.

It also restructured the capital structure of its CITIC Capital unit, bringing in the country's sovereign wealth fund, China Investment Corporation, as a major shareholder with a 40 percent stake.

China Daily

(HK Edition 03/11/2010 page3)