2016Annual Report
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2016 6030 Annual Report www.cs.ecitic.com 2016 Annual Report This annual report is printed on environmental friendly paper. IMPORTANT NOTICE The Board and the Supervisory Committee and the Directors, Supervisors and Senior Management warrant the truthfulness, accuracy and completeness of contents of this report and that there is no false representation, misleading statement contained herein or material omission from this report, for which they will assume joint and several liabilities. This report was considered and approved at the 11th Meeting of the Sixth Session of the Board. All Directors attended this meeting of the Board. No Director raised any objection to this report. The Company’s domestic and international financial statements for the year were audited by PricewaterhouseCoopers Zhong Tian LLP and PricewaterhouseCoopers Hong Kong, respectively. Auditor’s reports with standard unqualified audit opinions were issued accordingly. Mr. ZHANG Youjun, head of the Company, Mr. GE Xiaobo, the Chief Financial Officer, and Ms. KANG Jiang, head of the Company’s accounting department, warrant that the financial statements set out in this report are true, accurate and complete. The Company’s 2016 profit distribution plan considered and approved by the Board is to distribute a cash dividend of RMB3.5 for every 10 shares (tax inclusive). This proposal is subject to the approval of the general meeting of the Company. Forward looking statements, including future plans and development strategies, contained in this report do not constitute a substantive commitment to investors by the Company. Investors should be aware of investment risks. There was no appropriation of funds of the Company by controlling shareholder(s) or its/their related parties for non-operating purposes. The Company had made no guarantee to external parties against the stipulated decision-making process. The Company prepared this report in both English and Chinese versions. In the event of any discrepancies between the English version and the Chinese version, the Chinese version shall prevail. Contents Contents Definitions 2 Corporate Governance Report 130 Material Risk Factors 6 Environmental, Social and 170 Company Information 7 Governance Report Financial Summary 19 Independent Auditor’s Report 180 Chairman’s Statement 24 and Notes to Financial Management Discussion and 26 Statements Analysis Documents Available for 303 Report of the Board 72 Inspection Significant Events 82 Appendix 1: Organization 304 Changes in Share Capital and 106 Chart Information on Substantial Appendix 2: Index of 305 Shareholders Information Disclosure Directors, Supervisors, Senior 114 Management and Employees Definitions Unless the context otherwise requires, the following expressions have the following meanings in this report: “A Shareholder(s)” holder(s) of A Shares “A Shares” the domestic share(s) in the ordinary share capital of the Company with a nominal value of RMB1.00 each, which are listed on the Shanghai Stock Exchange (stock code: 600030) “Board” the board of directors of the Company “China AMC” China Asset Management Company Limited “China CITIC Bank” China CITIC Bank Corporation Limited “CITIC Buyout Fund” CITIC Buyout Fund Management Co., Ltd. “CITIC Futures” CITIC Futures Company Limited “CITIC Global Trade” CITIC Global Trade (Shanghai) Co., Ltd. “CITIC Group” CITIC Group Corporation “CITIC Holdings” CITIC Holdings Limited “CITIC Pacific” CITIC Pacific Limited “CITIC PE Fund” CITIC Private Equity Funds Management Company Limited “CITIC Real Estate” CITIC Real Estate Co., Ltd “CITIC Securities (Shandong)” CITIC Securities (Shandong) Co., Ltd. “CITIC Securities Finance 2013” CITIC Securities Finance 2013 Co., Ltd. “CITIC Securities Finance MTN” CITIC Securities Finance MTN Co., Ltd. “CITIC Securities Investment” CITIC Securities Investment Limited “CITIC Trust” CITIC Trust Co., Ltd. “Company” or “CITIC Securities” CITIC Securities Company Limited “Company Law” the Company Law of the People’s Republic of China 02 CITIC Securities Company Limited 2016 Annual Report “connected transaction(s)” has the meaning ascribed to it under the Hong Kong Listing Rules currently in effect and as amended from time to time “CSCL” China Securities Co., Ltd. “CSDCC” China Securities Depository and Clearing Corporation Limited “CSI” CITIC Securities International Co., Ltd. “CSRC” China Securities Regulatory Commission “Director(s)” the director(s) of the Company “ECT” E-Capital Transfer Co., Ltd. “GoldStone Fund” CITIC GoldStone Fund Management Company Limited “GoldStone Haorui” Qingdao GoldStone Haorui Investment Company Limited “GoldStone Investment” GoldStone Investment Co., Ltd. “GoldStone Zexin” GoldStone Zexin Investment Management Co., Ltd. “Group” the Company and its subsidiaries “H Shareholder(s)” holder(s) of H Shares “H Share(s)” the overseas-listed foreign share(s) in the ordinary share capital of the Company with a nominal value of RMB1.00 each, which are listed on the Stock Exchange of Hong Kong Limited (stock code: 6030) “HKEx” Hong Kong Exchanges and Clearing Limited “Hong Kong Listing Rules” 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 “Jiantou Zhongxin” Jiantou Zhongxin Asset Management Co., Ltd. “Jindingxin Microfinance” Qingdao Jindingxin Microfinance Company Limited “Kington Securities” Kington Securities Limited Liability Company 2016 Annual Report CITIC Securities Company Limited 03 Definitions “Ministry of Finance” the Ministry of Finance of the People’s Republic of China “NSSF” National Council for Social Security Fund of the People’s Republic of China “PwC” PricewaterhouseCoopers Zhong Tian LLP and PricewaterhouseCoopers “PwC Hong Kong” PricewaterhouseCoopers “PwC Zhong Tian” PricewaterhouseCoopers Zhong Tian LLP “Qianhai Equity Exchange” Qianhai Equity Exchange (Shenzhen) Co., Ltd. “Qingdao Blue Ocean Equity Exchange” Qingdao Blue Ocean Equity Exchange Co., Ltd. “related party transaction(s)” for the purpose of Section 6 “Significant Events” and Section 9 “Corporate Governance Report” only, has the meaning ascribed to it under the SSE Listing Rules currently in effect and as amended from time to time, unless otherwise stated “Reporting Period” the twelve months ended 31 December 2016 “SAC” Securities Association of China “SAIC” the State Administration for Industry & Commerce of the People’s Republic of China “Securities Law” the Securities Law of the People’s Republic of China “Senior Management” the senior management of the Company “SFC” the Securities and Futures Commission of Hong Kong “Share(s)” A Share(s) and H Share(s) “Shareholder(s)” holder(s) of the domestic share(s) or the overseas-listed foreign share(s) in the ordinary share capital of the Company with a nominal value of RMB1.00 each, which are listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange, respectively “Shenzhen Bureau of the CSRC” the Shenzhen Securities Regulatory Bureau of the CSRC “SME” small and medium-sized enterprise 04 CITIC Securities Company Limited 2016 Annual Report “SOE” state-owned enterprise “SSE” Shanghai Stock Exchange “SSE Listing Rules” Rules Governing the Listing of Stocks on Shanghai Stock Exchange “Supervisor(s)” the supervisor(s) of the Company “Supervisory Committee” the supervisory committee of the Company “SZSE” Shenzhen Stock Exchange “Wind Info” Wind Information Co., Ltd. “Xiamen Cross-strait Equity Exchange” Xiamen Cross-strait Equity Exchange Co, Ltd. 2016 Annual Report CITIC Securities Company Limited 05 Material Risk Factors The Group’s business is highly dependent on the macroeconomic and market conditions of China and other areas in which the Company operates its business. Therefore, fluctuation in the Chinese and international capital markets will have material impact on the operating results of the Group. The major risks exposed to by the Group include but not limited to: legal and compliance risk caused by possible failure of the business management and standards to align in a timely manner with changes in national laws and the regulations and rules promulgated by the regulatory authorities; strategic risk where the Group may not be able to determine the strategic plan in response to the profound changes in the domestic and overseas capital markets; internal operations and management risks arising from the transformation of the Company’s business model and the emergence of new businesses and new technologies; market risk that may arise from the fluctuating price of the securities held by the Group; credit risk that may arise from the default of its borrower or trading counterparty; liquidity risk where the Group may encounter a shortage of fund in fulfillment of payment obligations; operational risk that may arise from the negligence or omission of the internal process management, information system failure or personnel misconduct; risks such as currency exchange risk that may arise from the operation of international businesses and financial innovative businesses. In particular, credit risk and liquidity risk are the major risks currently being faced by the Group. To cope with the above risks, the Group takes preventive measures through its organizational structure, management system, information technology, and other aspects, while at the same time, optimizes its business process and focuses on strengthening the management of credit risk and liquidity risk. 06 CITIC Securities Company Limited 2016 Annual Report Company Information