(A joint stock company incorporated in the People's Republic of China with limited liability) Stock Code: 6178 2019 ANNUAL REPORT / Everbright Securities Company Limited/2019 Annual Report Contents 3 SECTION I Definitions and Warning of Material Risks 7 SECTION II Company Profile and Key Financial Indicators 18 SECTION III Summary on the Business of the Company 22 SECTION IV Report of the Board 61 SECTION V Significant Events 77 SECTION VI Changes in Ordinary Shares and Particulars about Shareholders 85 SECTION VII Particulars about Directors, Supervisors, Senior Management and Employee 102 SECTION VIII Corporate Governance 129 SECTION IX Relevant Information on Corporate Bonds F-1 SECTION X Financial Report A-1 APPENDIX / Everbright Securities Company Limited / IMPORTANT NOTICE I. The Board, the Supervisory Committee, Directors, Supervisors and senior management of the Company warrant that this annual report is true, accurate and complete and does not contain any false records, misleading statements or material omission and jointly and severally assume legal responsibility as to the contents herein. II. This report was reviewed and passed at the 22nd meeting of the fifth session of the Board of the Company. The number of Directors that should attend the Board meeting was 12 and the number of Directors having voted at the Board meeting was 12. None of the Directors or Supervisors has made any objection to this report. III. Unless otherwise specified, the financial data disclosed in this report are prepared in accordance with the International Financial Reporting Standards and have been audited by Ernst & Young, whom then issued a standard unqualified audit report thereon. Unless otherwise stated, the financial data set out in this report are denominated in RMB. IV. Yan Jun, the person-in-charge of the Company and Mr. Liu Qiuming, the person-in-charge of accounting affairs, and Mr. He Mannian, the head of accounting department, declare that they warrant the truthfulness, accuracy and completeness of the financial statements contained in this annual report. V. The profit distribution proposal or proposal on transfer of capital reserve into share capital reviewed by the Board for the Reporting Period The Company’s profit distribution proposal for 2019 that was considered and approved at the 22nd meeting of the fifth session of the Board of the Company is set forth as follows: On the basis of a total share capital of 4,610,787,639 A Shares and H Shares in issue as of December 31, 2019, cash dividend of RMB0.37 per 10 shares (tax inclusive) will be distributed to all holders of A Shares and H Shares, with total cash dividend amounting to RMB170,599,142.64. The above distribution proposal will be proposed at the general meeting of the Company for consideration and is subject to the approval by the Company’s shareholders at the general meeting before implementation. VI. Forward-looking statements included in this report, including future plans and development strategies, do not constitute substantial commitment of the Company to investors. Investors should be reminded of the investment risk. VII. There was no appropriation of funds on a non-recurring basis by the Company’s controlling shareholders or their related parties during the Reporting Period. VIII. The Company has not provided any external guarantees in violation of the prescribed decision-making procedures during the Reporting Period. IX. The Company prepared this annual report in both English and Chinese versions. In the event of any discrepancies in interpretation between the English version and Chinese version, the Chinese version shall prevail. 2 2019 Annual Report SECTION I DEFINITIONS AND WARNING OF MATERIAL RISKS I. Definitions In this report, unless the context otherwise requires, the following terms and expressions shall have the meanings set forth below: A Shares domestic shares of the Company, with a nominal value of RMB1.00 each, which are listed on the SSE and traded in RMB Articles of Association articles of association of the Company Asset securitization, ABS financing through issuance of tradable securities backed by specific asset portfolios or cash flows AUM Assets under management Board, Board of Directors the board of Directors of the Company China or PRC the People’s Republic of China excluding, for the purpose of this annual report, Hong Kong, Macau and Taiwan collateralized stock repurchase a transaction in which a qualified borrower pledges his shares or other securities held as collaterals to obtain financing funds from a qualified lender, and agrees to repay the funds on a future date to release the pledge Company, our Company or Everbright Securities Company Limited (光大證券股份有限公司) Everbright Securities 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 CSRC China Securities Regulatory Commission (中國證券監督管理委員會) Directors the directors of the Company EBSHK Everbright Securities Financial Holdings Limited (光大證券金融控股有限公司), a wholly-owned subsidiary of the Company ESIL Everbright Securities (International) Limited (光大證券（國際）有限公司), a wholly-owned subsidiary of EBSHK ETF exchange-traded fund Everbright Asset Management Shanghai Everbright Securities Asset Management Co., Ltd. (上海光大證券資產 管理有限公司), a wholly-owned subsidiary of the Company Everbright Bank China Everbright Bank Company Limited Everbright Capital Everbright Capital Investment Co., Ltd. (光大資本投資有限公司), a wholly- owned subsidiary of the Company Everbright Development Everbright Development Investment Co., Ltd. (光大發展投資有限公司), a wholly- owned subsidiary of the Company 3 / Everbright Securities Company Limited / SECTION I DEFINITIONS AND WARNING OF MATERIAL RISKS Everbright Easecreate Everbright Easecreate Network Technology Co., Ltd. (光大易創網絡科技股份有 限公司) Everbright Fortune Everbright Fortune Investment Co., Ltd. (光大富尊投資有限公司), a wholly- owned subsidiary of the Company Everbright Futures Everbright Futures Co., Ltd. (光大期貨有限公司), a wholly-owned subsidiary of the Company Everbright Group China Everbright Group Ltd. (中國光大集團股份公司), the largest shareholder of the Company Everbright Leasing Everbright Fortune International Leasing Co., Ltd. (光大幸福國際租賃有限公司), a subsidiary of the Company Everbright Limited China Everbright Limited (中國光大控股有限公司), the second largest shareholder of the Company Everbright Pramerica Everbright Pramerica Fund Management Co., Ltd. (光大保德信基金管理有限公 司), a controlling subsidiary of the Company Everbright SHK Everbright Sun Hung Kai Company Limited (光大新鴻基有限公司), a wholly- owned subsidiary of SHKFGL FOF fund of funds Group, our Group the Company and its subsidiaries H Shares foreign shares of the Company, with a nominal value of RMB1.00 each, which are listed on the Hong Kong Stock Exchange and traded in Hong Kong dollars HK$ or Hong Kong dollars Hong Kong dollars, the lawful currency of Hong Kong or HK dollars 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 Huijin Central Huijin Investment Ltd. (中央匯金投資有限責任公司) IFRS the International Financial Reporting Standards, which include standards, amendments and interpretations promulgated by International Accounting Standards Board, and interpretation issued by the International Accounting Standards Committee (IASC) IPO initial public offering 4 2019 Annual Report SECTION I DEFINITIONS AND WARNING OF MATERIAL RISKS maintenance margin ratio the ratio of all the collateral from the clients of margin financing and securities lending business (including the amount of cash and the market value of securities held in margin securities account) to the margin balance of clients (the sum of the amount of margin loans purchased, the latest market value of securities lent and any accrued interest and fees) margin financing and provision of collateral by investors to securities firms to borrow funds for securities lending securities purchases (margin financing) or to borrow and sell securities (securities lending) MOF Ministry of Finance of the PRC (中華人民共和國財政部) MOM manager of managers, an asset management investment tool MOT moments of truth NEEQ National Equities Exchange and Quotations (全國中小企業股份轉讓系統) PB Prime brokerage PBOC People’s Bank of China, the central bank of the PRC PRC GAAP the PRC Accounting Standards for Business Enterprises QFII Qualified foreign institutional investor REITs Real estate investment trusts related party transaction(s) has the meaning ascribed to it under the SSE Listing Rules currently in effect and as amended from time to time, unless otherwise stated Renminbi or RMB RMB, the lawful currency of the PRC. Amounts are in RMB unless otherwise indicated in this report Reporting Period the year of 2019 (the period from January 1, 2019 to December 31, 2019) Sci-tech Innovation Board The science and technology innovation board launched by the Shanghai Stock Exchange security transactions with a transaction in which a qualified client sells the subject securities at an repurchase agreement agreed price to the securities firm which is the custodian of such securities, and agrees to purchase the subject securities from the securities firm at another agreed price on a future date, and the securities firm will return the relevant yields generated by the subject securities during the period pending for repurchase to the client pursuant to the agreement