DFZQ — Capital/Financing Update 2017

Aug 7, 2017

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

(A joint stock company incorporated in the People’s Republic of China with limited liability under the Chinese corporate name “ 東方證券股份有限公司 ” and carrying on business in Hong Kong as “ 東方證券 ” (in Chinese) and “DFZQ” (in English))

(Stock Code: 03958)

ANNOUNCEMENT PROPOSED NON-PUBLIC ISSUANCE OF A SHARES AND PROPOSED SUBSCRIPTION OF A SHARES BY EXISTING SHAREHOLDERS

References are made to (i) the announcement of 東方證券股份有限公司 (the “ Company ”) dated February 28, 2017 in relation to, among other things, (1) the Proposed Non-public Issuance of A Shares, (2) connected transaction – proposed subscription of A Shares by substantial shareholder, and (3) the proposed subscription of A Shares by existing shareholders, (ii) the circular of the Extraordinary General Meeting and the H Shares Class Meeting (the “ Circular ”) dated March 30, 2017 of the Company, (iii) the announcement of the Company dated April 14, 2017 in relation to the poll results of the Extraordinary General Meeting, the A Shares Class Meeting and the H Shares Class Meeting held on April 14, 2017, and (iv) the announcement dated May 15, 2017 in relation to the Proposed Non-public Issuance of A Shares and proposed subscription of A Shares by existing shareholders. Unless otherwise defined herein, capitalized terms used in this announcement shall have the same meanings as those defined in the Circular.

In accordance with the relevant laws and regulations of the PRC, the Company and Shanghai Haiyan Investment have reached an agreement of the subscription of the Non-public Issuance of A Shares after negotiation. With authorization of the EGM, A Shares Class Meeting and H Shares Class Meeting, the Board made following adjustment to the proposed Non-public Issuance of A Share:

1. NUMBER OF SHARES TO BE ISSUED

Before Adjustments:

The number for the Non-public Issuance of A Shares to specific target investors shall be not more than 800,000,000 shares (including 800,000,000 shares), where Shenergy Group intends to subscribe for not less than 200,000,000 Shares and not more than 230,000,000 shares in cash under the Non-public Issuance of A Shares, Shanghai Haiyan Investment intends to subscribe for not more than 120,000,000 shares in cash (not more than RMB1.8 billion) under the Non-public Issuance of A Shares. The number of shares to be issued shall be adjusted accordingly if any ex-rights or ex-dividends events of shares of the Company, such as distribution of dividends, bonus issue, and capitalization from capital reserve, occur during the period from the Board’s resolution date of the Non-public Issuance of A Shares to the date of issue. Within the scope of the issue size, the final number for the Issuance shall be determined by the Board under the authorisation granted at the shareholders’ general meeting, A Shareholders’ Class Meeting and H Shareholders’ Class Meeting of the Company with the sponsors (the lead underwriter(s)) through negotiation based on actual subscription made.

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After Adjustments:

The number for the Non-public Issuance of A Shares to specific target investors shall be not more than 800,000,000 shares (including 800,000,000 shares). The Shenergy Group intends to subscribe for not less than 200,000,000 shares and not more than 230,000,000 shares in cash under the Non-public Issuance of A Shares; Shanghai Haiyan Investment intends to subscribe for not less than 30,000,000 Shares and not more than 60,000,000 shares in cash (meanwhile the subscription funds shall be not more than RMB1.2 billion) under the Non-public Issuance of A Shares, and the Shanghai Haiyan Investment holds less than 4.94% of the shares of the Company upon the completion of the Issuance. The number of shares to be issued shall be adjusted accordingly if any ex-rights or ex-dividends events of shares of the Company, such as distribution of dividends, bonus issue, and capitalization from capital reserve, occur during the period from the Board’s resolution date of the Non-public Issuance of A Shares to the date of issue. Within the scope of the issue size, the final number for the Issuance shall be determined by the Board under the authorisation granted at the shareholders’ general meeting, A Shareholders’ Class Meeting and H Shareholders’ Class Meeting of the Company with the sponsors (the lead underwriter(s)) through negotiation based on actual subscription made.

2. LOCK-UP PERIOD FOR THE ISSUANCE OF SHARES

Before Adjustments:

According to the Administrative Measures on Securities Issuance by Listed Company (《上市公 司證券發行管理辦法》), the Implementation Rules for the Non-public Issuance of A Shares by Listed Companies (《上市公司非公開發行股票實施細則》) (Revised in 2017) and the Guidelines on Administrative Approval for Securities Companies No.10 – Increase and Change in Equity Interest of Securities Companies (《證券公司行政許可審核工作指引第10號-證券公司增資擴股和股權變 更》), following the completion of the Non-public Issuance of A Shares,

The shares subscribed by Shenergy Group shall be locked up for 48 months from the date of completion of Issue;

If Shanghai Haiyan Investment holds more than 5% (including 5%) of the shares of the Company upon the completion of the Issuance, the shares subscribed by it shall be locked up for 48 months from the date of completion of Issue; If Shanghai Haiyan Investment holds less than 5% of the shares of the Company upon the completion of the Issuance, the shares subscribed by it shall be locked up for 36 months from the date of completion of the Issuance.

The shares subscribed by other target investors holding less than 5% (exclusive 5%) of the shares of the Company shall be locked up for 12 months from the date of completion of the Issuance, while the shares subscribed by other target investors holding more than 5% (including 5%) of the shares of the Company shall be locked up for 48 months from the date of completion of the Issuance.

Where there are provisions of laws and regulations on the lock-up period, the provisions shall prevail.

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After Adjustments:

According to the Administrative Measures on Securities Issuance by Listed Company (《上市公 司證券發行管理辦法》), the Implementation Rules for the Non-public Issuance of A Shares by Listed Companies (《上市公司非公開發行股票實施細則》) (Revised in 2017) and the Guidelines on Administrative Approval for Securities Companies No.10 – Increase and Change in Equity Interest of Securities Companies (《證券公司行政許可審核工作指引第10號-證券公司增資擴股和股權變 更》), following the completion of the Non-public Issuance of A Shares,

The shares subscribed by Shenergy Group shall be locked up for 48 months from the date of completion of Issue;

The shares subscribed by Shanghai Haiyan Investment shall be locked up for 36 months from the date of completion of Issue;

The shares subscribed by other target investors holding less than 5% (exclusive 5%) of the shares of the Company shall be locked up for 12 months from the date of completion of the Issuance, while the shares subscribed by other target investors holding more than 5% (including 5%) of the shares of the Company shall be locked up for 48 months from the date of completion of the Issuance.

Where there are provisions of laws and regulations on the lock-up period, the provisions shall prevail.

3. AMOUNT AND USE OF PROCEEDS

Before Adjustments:

The number of A shares to be issued under the Non-public Issuance of A Shares shall not be more than 800 million shares (including 800 million shares) and the proceeds is expected to be not more than RMB12 billion which after deducting the cost of issue shall be used for increasing the capital of the Company, and supplementing the working capital of the Company to expand the business scale so as to improve the competitiveness and the risk resistance capability of the Company.

The key use of proceeds from the Non-public Issuance of A Shares is as follows:

• (1) Supporting brokerage and securities financing business development:①further improving the securities financing service capacity;②promoting the transformation and development of the wealth management business of the Company;

• (2) Investing in sales and trading business development:①continuing to develop the fixed income proprietary business;②investing greater resources in market neutral investment strategy;③further developing NEEQ market-making business;

• (3) Improving investment management service capacity:①strengthening active management capacity of investment management business;②maintaining rapid growth of mutual fund management business;③expanding investment in direct investment and private equity business;

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• (4) Expanding innovative business field:①expanding investment in FICC, OTC market, internet finance, and internationalized business;②expanding investment in building internet platform, trading and information system;

• (5) Advancing collectivized development strategy of the Company; and

• (6) Working capital and other general corporate purposes.

After Adjustments:

The number of A shares to be issued under the Non-public Issuance of A Shares shall not be more than 800 million shares (including 800 million shares) and the proceeds is expected to be not more than RMB12 billion which after deducting the cost of issue shall be used for increasing the capital of the Company, and supplementing the working capital of the Company to expand the business scale so as to improve the competitiveness and the risk resistance capability of the Company.

The key use of proceeds from the Non-public Issuance of A Shares is as follows:

• (1) Supporting brokerage and securities financing business development:①further improving the securities financing service capacity;②promoting the transformation and development of the wealth management business of the Company;

• (2) Investing in sales and trading business development:①continuing to develop the fixed income proprietary business;②investing greater resources in market neutral investment strategy;③further developing NEEQ market-making business;

• (3) Improving investment management service capacity:①strengthening active management capacity of investment management business;②expanding investment in direct investment and private equity business;

• (4) Expanding innovative business field:①expanding investment in FICC, OTC market, internet finance, and internationalized business;②expanding investment in building internet platform, trading and information system;

• (5) Advancing collectivized development strategy of the Company; and

• (6) Working capital and other general corporate purposes.

By order of the Board of Directors PAN Xinjun Chairman

Shanghai, PRC August 7, 2017

As of the date of this announcement, the Board of Directors comprises Mr. PAN Xinjun and Mr. JIN Wenzhong as executive Directors; Mr. WU Jianxiong, Mr. ZHANG Qian, Mr. WU Junhao, Mr. CHEN Bin, Mr. LI Xiang, Mr. XU Jianguo, Ms. HUANG Laifang and Mr. ZHOU Yao as non-executive Directors; and Mr. LI Zhiqiang, Mr. XU Guoxiang, Mr. TAO Xiuming, Mr. WEI Anning and Mr. XU Zhiming as independent nonexecutive Directors.

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