HAITONG SECURITIES CO., LTD. 海通證券股份有限公司 Annual Report 2018 年度報告 2018 Annual Report CONTENTS Section I DEFINITIONS AND MATERIAL RISK WARNINGS 3 Section II COMPANY PROFILE AND KEY FINANCIAL INDICATORS 7 Section III SUMMARY OF THE COMPANY’S BUSINESS 23 Section IV REPORT OF THE BOARD OF DIRECTORS 29 Section V SIGNIFICANT EVENTS 76 Section VI CHANGES IN ORDINARY SHARES AND PARTICULARS ABOUT SHAREHOLDERS 110 Section VII PREFERENCE SHARES 120 Section VIII DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES 121 Section IX CORPORATE GOVERNANCE 162 Section X CORPORATE BONDS 200 Section XI FINANCIAL REPORT 209 Section XII DOCUMENTS AVAILABLE FOR INSPECTION 210 Section XIII INFORMATION DISCLOSURES OF SECURITIES COMPANY 211 2 | HAITONG SECURITIES CO., LTD. | Annual Report 2018 (H Share) IMPORTANT NOTICE The Board, the Supervisory Committee, Directors, Supervisors and senior management of the Company warrant the truthfulness, accuracy and completeness of contents of this annual report (the “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 36th meeting of the sixth session of the Board. Mr. Qu Qiuping, an executive Director, and Mr. Zhang Ming and Mr. Feng Lun, independent non-executive Directors were unable to attend the Board meeting in person due to business trips, and had appointed Mr. Zhou Jie, an executive Director, and Mr. Xiao Suining, an independent non-executive Director, to vote on their behalves respectively. None of the Directors or Supervisors has made any objection to this Report. BDO China Shu Lun Pan Certified Public Accountants LLP (Special General Partnership) and Deloitte Touche Tohmatsu (Deloitte Touche Tohmatsu and Deloitte Touche Tohmatsu Certified Public Accountants LLP (Special General Partnership)) have audited the annual financial reports of the Company prepared in accordance with PRC GAAP and IFRS respectively, and each issued a standard and unqualified audit report of the Company. All financial data in this Report are denominated in RMB unless otherwise indicated. Mr. Zhou Jie, the Chairman of the Company, Mr. Zhang Xinjun, the Chief Financial Officer, and Mr. Ma Zhong, the head of the accounting department warrant the truthfulness, accuracy and completeness of the financial report contained in this Report. The Board considered the profit distribution proposal or proposal on transfer of capital reserve funds into share capital for the Reporting Period, which are as follows: On the basis of the total share capital of 11,501,700,000 A Shares and H Shares as at 31 December 2018, a cash dividend of RMB1.50 for every 10 shares (inclusive of tax) will be distributed to holders of A Shares and H Shares whose names appear on the register of members of the Company on the record date, with a total amount of cash dividend of RMB1,725,255,000.00. The retained profits of the Company of RMB19,993,726,924.22 following the cash dividend distribution will be carried forward to the next year. 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 data. 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 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. | Annual Report 2018 (H Share) | 3 SECTION I DEFINITIONS AND MATERIAL 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 “Articles” the articles of association of Haitong Securities “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 Law” the Company Law of the People’s Republic of China “Company” or “Haitong Securities” Haitong Securities Co., Ltd. “CSRC” the China Securities Regulatory Commission “Director(s)” the director(s) of Haitong Securities “ETF” exchange traded fund “EUR” 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) 4 | HAITONG SECURITIES CO., LTD. | Annual Report 2018 (H Share) SECTION I DEFINITIONS AND MATERIAL RISK WARNINGS “H Share(s)” ordinary shares of the Company with a nominal value of RMB1.00 each, which are subscribed for and traded in HK dollars and are listed on the Hong Kong Stock Exchange “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 ( Leasing (Shanghai)” 海通恆信融資租賃（上海）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 UT” Haitong UniTrust International Leasing Co., Ltd. (海通恒信 國際租賃股份有限公司) “Haitong Xinchuang” Haitong Xinchuang Investment Management Co., Ltd. (海通 新創投資管理有限公司) “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) “HFT Investment” HFT Investment Management Co., Ltd. (海富通基金管理有 限公司) “HK$”, “HKD” or “HK dollars” the lawful currency of Hong Kong HAITONG SECURITIES CO., LTD. | Annual Report 2018 (H Share) | 5 SECTION I DEFINITIONS AND MATERIAL RISK WARNINGS “Hong Kong Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited “Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China “HT Asset Management” Shanghai Haitong Securities Asset Management Company Ltd. (上海海通證券資產管理有限公司) “IFRS” International Financial Reporting Standards “IPO” initial public offering “Model Code” the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Hong Kong Listing Rules “NEEQ” National Equities Exchange and Quotations (全國中小企業 股份轉讓系統) “NSSF” the National Council for Social Security Fund of the PRC “PPP” public-private partnership “QDII” Qualified Domestic Institutional Investor “QFII” Qualified Foreign Institutional Investor “Reporting Period” from 1 January 2018 to 31 December 2018 “RMB” or “Renminbi” the lawful currency of the PRC “RQFII” Renminbi Qualified Foreign Institutional Investor “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) as amended, supplemented or otherwise modified from time to time “Shanghai Weitai Properties” Shanghai Weitai Properties Management Co., Ltd. (上海惟 泰置業管理有限公司) “SSE” the Shanghai Stock Exchange “Supervisor(s)” the supervisor(s) of Haitong Securities 6 | HAITONG SECURITIES CO., LTD. | Annual Report 2018 (H Share) SECTION I DEFINITIONS AND MATERIAL RISK WARNINGS “Supervisory Committee” the supervisory committee of Haitong Securities “SZSE” the Shenzhen Stock Exchange “US$”, “USD” or “U.S. dollars” the lawful currency of the United States of America “WIND” Wind Information Co., Ltd. “WOFE” Wholly Owned Foreign Enterprises II. MATERIAL RISK WARNINGS The business of the Group is highly dependent on the overall economic and market conditions in jurisdictions where it 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, behaviours of the investors and the international economic conditions. The Group is exposed to various risks in its business operations, primarily including (i) policy risks, whereby the operations of securities firms in general may be 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) international