INTERIM REPORT 2019 2019 INTERIM REPORT www.cs.ecitic.com I M P O R T A N T N O T I C E The Board and the Supervisory Committee of the Company and the Directors, Supervisors and Senior Management warrant the truthfulness, accuracy and completeness of contents of this interim report and that there is no false representation, misleading statement contained herein or material omission from this interim report, for which they will assume joint and several liabilities. This interim report was considered and approved at the 44th Meeting of the Sixth Session of the Board. All Directors attended the meeting. No Director raised any objection to this interim report. The 2019 interim financial statements of the Company were unaudited. PricewaterhouseCoopers Zhong Tian LLP and PricewaterhouseCoopers issued review opinions in accordance with the China and international review standards, respectively. Mr. ZHANG Youjun, head of the Company, Mr. LI Jiong, the person-in-charge of accounting affairs and Ms. KANG Jiang, head of the Company’s accounting department, warrant that the financial statements set out in this interim report are true, accurate and complete. There was no profit distribution plan or plan of conversion of the capital reserve into the share capital of the Company for the first half of 2019. Forward looking statements, including future plans and development strategies, contained in this interim 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 the related/connected parties for non-operating purposes. The Company had made no guarantee to external parties in violation of the stipulated decision-making process. The Company prepared this interim report in both English and Chinese languages. In the event of any discrepancies between the English version and Chinese version of this interim report, the Chinese version shall prevail. C O N T E N T S 02 Definitions 05 Company Information and Major Financial Indicators 11 Management Discussion and Analysis 43 Significant Events 63 Changes in Ordinary Shares and Information on Shareholders 69 Directors, Supervisors, Senior Management and Employees 72 Corporate Governance 73 Unaudited Interim Condensed Consolidated Financial Statements 172 Documents Available for Inspection 173 Appendix: Index of Information Disclosure DEFINITIONS Unless the context otherwise requires, the following expressions have the following meanings in this interim report: “A Share(s)” 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 SSE (stock code: 600030) “A Shareholder(s)” holder(s) of A Shares “Board” the board of the Company “China AMC” China Asset Management Company Limited (華夏基金管理有限公司) “CITIC Corporation Limited” CITIC Corporation Limited (中國中信有限公司) “CITIC Futures” CITIC Futures Company Limited (中信期貨有限公司) “CITIC Global Trade” CITIC Global Trade (Shanghai) Co., Ltd. (中信寰球商貿(上海)有限公司) “CITIC GoldStone Fund” CITIC GoldStone Fund Management Company Limited “CITIC Group” CITIC Group Corporation (中國中信集團有限公司) “CITIC Limited” CITIC Limited (中國中信股份有限公司) “CITIC PE Fund” CITIC Private Equity Funds Management Co., Ltd. (中信產業投資基金管理有限 公司) “CITIC Securities Finance MTN” CITIC Securities Finance MTN Co., Ltd. “CITIC Securities Investment” CITIC Securities Investment Limited (中信証券投資有限公司) “CITIC Securities (Shandong)” CITIC Securities (Shandong) Co., Ltd. (中信証券(山東)有限責任公司) “CLSA” the brand name of the offshore business of the Company “CLSA B.V.” Crédit Agricole Securities Asia B.V., a private limited company incorporated under the laws of the Netherlands and becoming a wholly-owned subsidiary of CSI on 31 July 2013 “Company” or “CITIC Securities” CITIC Securities Company Limited (中信証券股份有限公司) “Company Law” the Company Law of the People’s Republic of China 02 CITIC Securities Company Limited 2019 Interim Report DEFINITIONS “connected transaction(s)” has the same meaning ascribed to it under the Hong Kong Listing Rules currently in effect and as amended from time to time “CSDCC” China Securities Depository and Clearing Corporation Limited “CSI” CITIC Securities International Co., Ltd. (中信証券國際有限公司) “CSRC” China Securities Regulatory Commission “Financial Holdings Limited” Guangzhou Yuexiu Financial Holdings Group Limited (廣州越秀金融控股集團有 限公司) “GoldStone Investment” GoldStone Investment Co., Ltd. (金石投資有限公司) “GoldStone Zexin” GoldStone Zexin Investment Management Co., Ltd. (金石澤信投資管理有限公司) “Group” CITIC Securities Company Limited and its subsidiaries “Guangzhou Securities” Guangzhou Securities Company Limited (廣州證券股份有限公司) “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) “H Shareholder(s)” holder(s) of H Shares “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. (建投中信資產管理有限責任公司) “Jindingxin Microfinance” Qingdao Jindingxin Microfinance Company Limited (青島金鼎信小額貸款股份有 限公司) “Kington Securities” Kington Securities Limited Liability Company (金通證券有限責任公司) “Ministry of Finance” the Ministry of Finance of the People’s Republic of China “New OTC Market” or “NEEQ” National Equities Exchange and Quotations 2019 Interim Report CITIC Securities Company Limited 03 DEFINITIONS “NSSF” National Social Security Fund of the PRC “related party transaction(s)” has the same meaning ascribed to it under the SSE Listing Rules currently in effect and as amended from time to time “Reporting Period” the six months ended 30 June 2019 “PRC” or “China” the People’s Republic of China “PwC Hong Kong” PricewaterhouseCoopers “PwC Zhong Tian” PricewaterhouseCoopers Zhong Tian LLP “Securities Law” the Securities Law of the People’s Republic of China “Senior Management” the senior management of the Company “Share(s)” A Share(s) and H Share(s) “Shenzhen Securities the Shenzhen Securities Regulatory Bureau of the CSRC Regulatory Bureau” “SOE” State-owned enterprise “SSE” Shanghai Stock Exchange “SSE Listing Rules” Rules Governing the Listing of Stocks on Shanghai Stock Exchange “STAR Market” science and technology innovation board market “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. “Yuexiu Financial Holdings” Guangzhou Yuexiu Financial Holdings Group Co., Ltd. (廣州越秀金融控股集團股 份有限公司) 04 CITIC Securities Company Limited 2019 Interim Report COMPANY INFORMATION AND MAJOR FINANCIAL INDICATORS Company Information Company Name in Chinese 中信証券股份有限公司 Company Abbreviation in Chinese 中信証券 Company Name in English CITIC Securities Company Limited Company Abbreviation in English CITIC Securities Co., Ltd. Legal Representative of the Company ZHANG Youjun President of the Company YANG Minghui Authorized Representatives YANG Minghui, ZHENG Jing Registered Capital and Net Capital In RMB Yuan As at the end of the As at the end of Reporting Period last year (30 June 2019) (31 December 2018) Registered Capital 12,116,908,400.00 12,116,908,400.00 Net Capital 95,159,742,582.35 91,996,332,088.63 Note: As at the disclosure date of this interim report, the total number of issued Shares of the Company was 12,116,908,400 Shares, of which 9,838,580,700 Shares were A Shares and 2,278,327,700 Shares were H Shares. Business Qualifications for Each Individual Business of the Company The business scope of the Company covers: securities brokerage (for areas other than Shandong Province, Henan Province, Tiantai and Cangnan Counties of Zhejiang Province); securities investment consulting; financial advisory services related to securities trading and securities investment activities; securities underwriting and sponsorship; securities proprietary business; securities asset management; margin financing and securities lending; provision of intermediate referral services for futures companies; securities investment fund sales agency; distribution of financial products; and stock options market making business. In addition, the Company possesses the following business qualifications: 1. Business qualifications approved or certified by the CSRC: online trading; entrusted wealth management; operation of overseas securities investment management business by qualified domestic institutional investors 2019 Interim Report CITIC Securities Company Limited 05 COMPANY INFORMATION AND MAJOR FINANCIAL INDICATORS (QDII); direct investment; inter-bank market interest rate swap; stock index futures trading in proprietary business and asset management business; stock repo business; pilot business of stock return swap; treasury bonds futures trading in proprietary business and securities asset management business; pilot business of agency services for gold and other precious metal spot contracts and proprietary trading for spot gold contracts; custodian business for securities investment funds; and credit risk mitigation instruments selling business; market making business of treasury bond futures. 2. Business qualifications approved by the stock exchange: market maker of stock exchange fixed income platform; warrants trading; stock-pledged repo business; Southbound Stock Connect business; financing