2020 Annual Report Contents

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2020 Annual Report Contents (a joint stock company incorporated in the People’s Republic of China with limited liability under the Chinese corporate name “恒泰證券股份有限公司” and carrying on business in Hong Kong as “恒投證券” (in Chinese) and “HENGTOU SECURITIES” (in English)) Stock Code: 1476 2020 Annual Report Contents IMPORTANT NOTICE 2 CHAIRMAN’S STATEMENT 3 SECTION 1 DEFINITIONS 4 SECTION 2 MATERIAL RISKS 8 SECTION 3 COMPANY PROFILE 9 SECTION 4 SUMMARY OF ACCOUNTING DATA AND FINANCIAL INDEXES 20 SECTION 5 MANAGEMENT DISCUSSION AND ANALYSIS 27 SECTION 6 REPORT OF THE BOARD OF DIRECTORS 83 SECTION 7 OTHER MATERIAL PARTICULARS 99 SECTION 8 EQUITY (CAPITAL) CHANGES AND SUBSTANTIAL SHAREHOLDERS 108 SECTION 9 DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES 113 SECTION 10 CORPORATE GOVERNANCE REPORT 138 APPENDIX PARTICULARS OF SECURITIES BRANCHES 174 INDEPENDENT AUDITOR’S REPORT 187 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 195 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 197 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 200 CONSOLIDATED STATEMENT OF CASH FLOWS 201 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 203 Important Notice The Board, Supervisory Committee, Directors, Supervisors and senior management of the Company undertake that the content of this report is true, accurate, complete and without any false record, misrepresentation or material omission and are severally and jointly liable therefor. This report has been considered and approved at the eighth meeting of the fourth session of the Board and the eighth meeting of the fourth session of the Supervisory Committee where all the Directors and Supervisors were present, respectively. No Directors, Supervisors or senior management of the Company declared that they could not guarantee or had any objection to the truthfulness, accuracy and completeness of this report. The financial report for 2020 prepared by the Company, in accordance with the International Financial Reporting Standards and China’s Accounting Standard for Business Enterprises, has been audited by Grant Thornton Hong Kong Limited and Grant Thornton Certified Public Accountants, respectively, each of whom had issued a standard unqualified audit report. All amounts set out in this report are stated in RMB unless otherwise stated. Mr. Wu Yigang (the acting chairman of the Board), Mr. Niu Zhuang (the president) and Mr. Sun Hang (the chief financial officer) declared that they undertake the financial statements in this report are true, accurate and complete. The forward-looking statements including future plans and development strategies involved in this report do not constitute the Company’s substantive commitment to investors. The investors are advised to pay attention to investment risks. 2 HENGTOU SECURITIES Chairman’s Statement Year 2020 was the final year of China’s “13th Five-Year Plan” and a year of planning the “14th Five-Year Plan”. As an important component and supportive force for high-quality economic development, the capital market also faced historic development opportunities. Against the unfavourable context of the COVID-19 outbreak, under the leadership of the Communist Party of China Central Committee with Comrade Xi Jinping as the core, in order to make an overall planning for the pandemic prevention and control as well as the economic and social development, the regulation of various domestic macro-policies has been significantly enhanced and a number of financial support policies have been introduced successively, giving strong impetus to the capital market for development. In 2020, the domestic securities market performed well on the whole. The Shanghai Stock Exchange Composite Index rose by 13.87%, the Shenzhen Stock Exchange Component Index rose by 38.73%, the Shenzhen Stock Exchange Small and Medium Enterprise Component Index and the Shenzhen Stock Exchange ChiNext Index rose by 43.91% and 64.96%, respectively. Year 2020 was a critical year for the Company to accelerate its transformation and development and achieve greater progress. Tianfeng Securities Co., Ltd. has completed the acquisition of 26.49% equity interest in the Company, becoming the largest shareholder of the Company, and the corporate governance structure has continuously been optimized and improved. With the support of regulatory authorities and shareholders, and under the guidance of the strategic decisions of the Board, the management led all staff of the Company as a united group to work hard, and various businesses have entered a new stage of development. The Company adjusted the organizational structure of its brokerage business, promoted the implementation of the strategy of transforming its brokerage business into wealth management, and improved the layout of its various businesses. The Company insisted on operating in compliance, continuously improved its compliance and risk management system, earnestly implemented various regulatory requirements, and further strengthened the initiative of compliance and risk management. The Company has successfully issued the small public offering bonds, subordinated bonds and private bonds in succession, financing a total of RMB3.45 billion, which has optimized the capital structure of the Company and provided stable mid- and long-term capital support for its future business development. The Company has improved its human resources system and remuneration incentive system, carried out salary and job level adjustments, and enhanced talent recruitment and selection and cultivation, which improved the competitiveness of the Company. In 2021, with the rapid development of the financial market and intensified competition in the industry, the Company will continue to promote business integration, accelerate its transformation and upgrade, and improve its business mode and profitability. The Company will further carry out the transformation of its brokerage business into wealth management business, promote the in-depth integration of financial technology and business based on the application of technology in the financial services system, and produce unique and competitive products in specific professional fields. It will comprehensively enhance its business capabilities and customer service standards, and change the status quo of homogenization in business to build up differentiated core competitive advantages. The Company will comprehensively strengthen the governance of its subsidiaries, further improve its compliance and risk control system, and optimise the construction of human resources system. It will comprehensively enhance its information and operational capabilities to provide technical support for the smooth development of its businesses, and strengthen the construction of back-office professionalism to provide strong support for and ensure its business development. All staff of the Company will unite to meet the opportunities and challenges with a new outlook, strive and forge ahead to make continuous progress and achieve new results in various businesses of the Company. Wu Yigang Acting Chairman Beijing, the PRC 26 March 2021 2020 ANNUAL REPORT 3 Section 1 Denitions In this report, unless the context otherwise requires, the following terms and expressions have the meanings set forth below: APP application, which generally refers to mobile applications Articles of Association the articles of association of the Company, as amended from time to time Baotou Huazi Baotou Huazi Industry Co., Ltd. (包頭華資實業股份有限公司), listed on the Shanghai Stock Exchange (stock code: 600191), a substantial shareholder of the Company Board the board of directors of the Company Company or Hengtou a company established as a limited liability company in the PRC on 28 December Securities 1998 and converted into a joint stock company with limited liability under the PRC laws on 3 November 2008 under the corporate name “恒泰証券股份有限 公司” (Hengtai Securities Co., Ltd), and carrying on business in Hong Kong as “恒投證券” (in Chinese) and “HENGTOU SECURITIES” (in English) as approved by and registered with the Registrar of Companies in Hong Kong on 27 April 2015, and whose H shares are listed on the Main Board of the Hong Kong Stock Exchange Corporate Governance Code the Corporate Governance Code as set out in Appendix 14 to the Listing Rules CSRC the China Securities Regulatory Commission (中國證券監督管理委員會) Director(s) director(s) of the Company Domestic Share(s) ordinary share(s) with a nominal value of RMB1.00 each in the share capital of the Company, which are subscribed for or credited as paid-up in RMB end of Reporting Period 31 December 2020 Finance Street Capital Beijing Finance Street Capital Management Centre (北京金融街資本運營中 心), which holds 62.06% equity interest in Finance Street Investment and a subsidiary of SASAC Xicheng District 4 HENGTOU SECURITIES Section 1 Denitions (Continued) Finance Street Investment Beijing Finance Street Investment (Group) Co., Ltd. (北京金融街投資(集團)有限 公司), formerly known as Beijing Finance Street Construction Group Co., Ltd. (北 京金融街建設集團), a subsidiary of SASAC Xicheng District and a shareholder of the Company Finance Street Xihuan Beijing Finance Street Xihuan Properties Co., Ltd. (北京金融街西環置業有限公司), Properties formerly known as Beijing Xihuan Properties Co., Ltd. (北京西環置業有限公司), a subsidiary of Finance Street Investment and a shareholder of the Company FOF Fund of Fund, a fund which specially invests in other securities investment funds GDP gross domestic product Group the Company and its subsidiaries H Share(s) overseas listed foreign ordinary share(s) with a nominal value of RMB1.00
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