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HAITONG SECURITIES CO., LTD. 海通證券股份有限公司 INTERIM REPORT 2018 I NTERI m R E p ORT 2018 中期報告 (A joint stock limited company incorporated in the People’s Republic of China with limited liability) Stock Code: 6837 * For identification purpose only CONTENTS Important Notice 02 Section I. Definitions and Important Risk Warnings 03 Section II. Company Profile and Key Financial Indicators 08 Section III. Summary of the Company’s Business 15 Section IV. Report of the Board of Directors 21 Section V. Significant Events 62 Section VI. Changes in Ordinary Shares and Particulars about Shareholders 89 Section VII. Preference Shares 95 Section VIII. Particulars about Directors, Supervisors and Senior Management 96 Section IX. Corporate Bonds 100 Section X. Financial Report 109 Section XI. Documents Available for Inspection 110 Section XII. Information Disclosure of Securities Company 111 02 HAITONG SECURITIES CO., LTD. Interim Report 2018 (H Share) IMPORTANT NOTICE The Board, the Supervisory Committee, Directors, Supervisors and senior management of the Company represent and warrant that the truthfulness, accuracy and completeness of contents of this interim report (the “Report”) and that there is no false representation, misleading statements contained herein or material omission of this Report, for which they will assume joint and several liabilities. This Report was considered and approved at the 31st meeting of the sixth session of the Board and the 19th meeting of the sixth session of the Supervisory Committee. Mr. Feng Lun, an independent non- executive Director, was unable to attend the Board meeting in person due to business trip, and had appointed Mr. Xiao Suining, an independent non-executive Director, to vote on his behalf. None of the Directors or Supervisors has any objection to this Report. Deloitte Touche Tohmatsu has reviewed the 2018 unaudited interim financial report of the Company which was prepared in accordance with IFRS and issued standard and unqualified auditor’s review report for the Company. All the data in this Report has been presented in RMB unless otherwise indicated. Mr. Zhou Jie, Chairman of the Company, Mr. Zhang Xinjun, Chief Financial Officer, and Mr. Ma Zhong, head of the accounting department, hereby warrant the truthfulness, accuracy and completeness of the financial report contained in this Report. The Company had no profit distribution proposal or proposal on conversion of capital reserve funds into share capital for the first half of 2018. Forward-looking statements, including future plans and development strategies, may be included in this Report. All statements contained herein other than statements of historical fact are, or may be deemed to be, forward-looking statements. Neither the Company nor any of its subsidiaries undertakes any obligation to publicly update or revise any forward-looking statement as a result of new information. Investors should be reminded of the risks of investments and not place undue reliance on forward-looking statements. No appropriation of funds on a non-operating basis by the Company’s controlling shareholders, if any, or their respective related parties has occurred during the Reporting Period. The Company did not provide external guarantees in violation of the stipulated decision-making procedures during the Reporting Period. HAITONG SECURITIES CO., LTD. Interim Report 2018 (H Share) 03 Section I DEFINITIONS AND IMPORTANT RISK WARNINGS I. DEFINITIONS In this Report, unless the context otherwise requires, the following terms and expressions have the meanings set forth below: “A Share(s)” domestic shares of the Company, with a nominal value of RMB1.00 each, which are listed and traded on the Shanghai Stock Exchange “ABS” Asset-backed Securities “Articles of Association” or the articles of association of Haitong Securities “Articles” “Board” the board of directors of Haitong Securities “China” or “PRC” the People’s Republic of China, and for the purposes of this Report only, excluding Hong Kong, Macau Special Administrative Region and Taiwan “Code” the Corporate Governance Code and Corporate Governance Report set out in Appendix 14 to the Hong Kong Listing Rules “Company” or Haitong Securities Co., Ltd. “Haitong Securities” “Company Law” the Company Law of the People's Republic of China “CSRC” the China Securities Regulatory Commission “Director(s)” the director(s) of Haitong Securities “EUR” or “Euro” the official currency of the Eurozone “Fortune HFT” Shanghai Fortune HFT Asset Management Co., Ltd. (上海富誠 海富通資產管理有限公司) “Fullgoal Fund” Fullgoal Fund Management Co., Ltd. (富國基金管理有限公司) “Group” the Company and its subsidiaries “Gui’an UT” Gui’an UT Financial Leasing (Shanghai) Co., Ltd. (貴安恆信融 資租賃(上海)有限公司) 04 HAITONG SECURITIES CO., LTD. Interim Report 2018 (H Share) Section I DEFINITIONS AND IMPORTANT RISK WARNINGS “H Share(s)” ordinary shares in the share capital of the Company with nominal value of RMB1.00 each, which are listed on the Hong Kong Stock Exchange and traded in HK dollars “Haitong Bank” Haitong Bank, S.A. “Haitong Capital” Haitong Capital Investment Co., Ltd. (海通開元投資有限公司) “Haitong Futures” Haitong Futures Co., Ltd. (海通期貨股份有限公司) “Haitong Innovation Securities” Haitong Innovation Securities Investment Co., Ltd. (海通創新 證券投資有限公司) “Haitong International Holdings” Haitong International Holdings Limited (海通國際控股有限公 司) “Haitong International Securities” Haitong International Securities Group Limited (海通國際證 券集團有限公司), listed on the Hong Kong Stock Exchange, stock code: 665 “Haitong Resource” Shanghai Haitong Resource Management Co., Ltd. (上海海通 資源管理有限公司) “Haitong UniFortune” Haitong UniFortune International Leasing Co., Ltd. (海通恆運 國際租賃有限公司) “Haitong UniTrust Financial Haitong UniTrust Financial Leasing (Shanghai) Corporation (海 Leasing (Shanghai)” 通恆信融資租賃(上海)有限公司) “Haitong UT” Haitong UniTrust International Leasing Co., Ltd. (海通恒信國 際租賃股份有限公司) “Haitong UT Capital” Haitong UT Capital Group Co., Limited (海通恆信金融集團有 限公司) “Haitong UT Holdings” Haitong UT Holdings Limited (海通恆信融資租賃控股有限公司) “Haitong-Fortis PE” Haitong-Fortis Private Equity Fund Management Co., Ltd. (海 富產業投資基金管理有限公司) HAITONG SECURITIES CO., LTD. Interim Report 2018 (H Share) 05 Section I DEFINITIONS AND IMPORTANT RISK WARNINGS “HFT Fund” HFT Fund Management Co., Ltd. (海富通基金管理有限公司) “HK$”, “HKD” or “HK dollars” the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China “Hong Kong Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited “Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited “HT Asset Management” Shanghai Haitong Securities Asset Management Company Ltd. (上海海通證券資產管理有限公司) “IFRS” the International Financial Reporting Standards “IPO” initial public offering “NEEQ” National Equities Exchange and Quotations (全國中小企業股 份轉讓系統) “NSSF” the National Council for Social Security Fund of the PRC “Model Code” the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Hong Kong Listing Rules “PRC GAAP” generally accepted accounting principles in the PRC “Reporting Period” from 1 January 2018 to 30 June 2018 “RMB” or “Renminbi” the lawful currency of the PRC “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) as amended, supplemented or otherwise modified from time to time 06 HAITONG SECURITIES CO., LTD. Interim Report 2018 (H Share) Section I DEFINITIONS AND IMPORTANT RISK WARNINGS “the Shanghai Stock Exchange” the Shanghai Stock Exchange or “SSE” “Shanghai Weitai Properties” Shanghai Weitai Properties Management Co., Ltd. (上海惟泰 置業管理有限公司) “the Shenzhen Stock Exchange” the Shenzhen Stock Exchange or “SZSE” “Supervisor(s)” the supervisor(s) of Haitong Securities “Supervisory Committee” the supervisory committee of Haitong Securities “US$”, “USD” or “U.S. dollars” the lawful currency of the United States of America “QDII” Qualified Domestic Institutional Investor “WOFE” Wholly Owned Foreign Enterprises “Wind Info” Wind Information Co., Ltd. HAITONG SECURITIES CO., LTD. Interim Report 2018 (H Share) 07 Section I DEFINITIONS AND IMPORTANT RISK WARNINGS II. IMPORTANT RISK WARNINGS The business of the Company is highly dependent on the securities market conditions in jurisdictions where the Company operates. Our results of operations may be materially affected by various factors, such as macro-economic environment, cyclical fluctuations of the industry, development stages of the market, behaviour of the investors and the international economic environment. The Company is exposed to various risks in its business operations, primarily including (i) policy risks, whereby the operations of securities firms in general are subject to material adverse effect caused by national macro-control measures, and changes of laws, regulations, regulatory policies or trading rules applicable to securities industry; (ii) compliance risks, whereby the securities firms may be subject to legal punishment or regulatory penalties or may incur significant financial losses due to failure to comply with laws and regulations, regulatory requirements, rules, relevant standards made by the self-regulatory organisations or code of conducts applicable to the securities firms; (iii) credit risks, which may result in loss to the operations of the Company due to the inability of the borrower, counterparty or debt issuer to meet its agreed financial obligations; (iv) market risks, where the Company’s proprietary investments record losses due to adverse fluctuations