Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong 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.

This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities. This announcement does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or the securities law of any state of the United States or other jurisdiction. The securities are being offered and sold outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act (the "Regulation S") and may not be offered, sold or otherwise transferred within the United States or to, or for the account and benefit of, U.S. Persons (as defined in Regulation S) absent registration or an exemption from registration under the Securities Act. No public offering of the securities will be made in the United States or in any other jurisdiction where such an offering is restricted or prohibited.

This announcement and the listing document referred to herein have been published for information purposes only as required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and do not constitute an invitation or offer to acquire, purchase or subscribe for securities. Neither this announcement nor anything referred to herein (including the listing document) forms the basis for any contract or commitment whatsoever. For the avoidance of doubt, the publication of this announcement and the listing document referred to herein shall not be deemed to be an offer of securities made pursuant to a prospectus issued by or on behalf of the Issuer (as defined below) and the Guarantor (as defined below) for the purposes of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong nor shall it constitute an advertisement, invitation or document containing an invitation to the public to enter into or offer to enter into an agreement to acquire, dispose of, subscribe for or underwrite securities for the purposes of the Securities and Futures Ordinance (Cap. 571) of Hong Kong.

Notice to Hong Kong investors: The Issuer and the Guarantor confirm that the Bonds (as defined below) are intended for purchase by professional investors (as defined in Chapter 37 of the Listing Rules) only and have been listed on The Stock Exchange of Hong Kong Limited on that basis. Accordingly, the Issuer and the Guarantor confirm that the Bonds are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.

PUBLICATION OF OFFERING CIRCULAR

Orient ZhiSheng Limited

(incorporated in the British Virgin Islands with limited liability)

(the "Issuer")

Issue of U.S.$300,000,000 Floating Rate Guaranteed Bonds due 2028 (the "Bonds")

(Stock Code: 5953)

Unconditionally and Irrevocably Guaranteed by

东方证券
—DFZQ—

(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)

(the "Guarantor")

This announcement is issued pursuant to Rule 37.39A of the Listing Rules.

Please refer to the offering circular dated 24 September 2025 (the "Offering Circular") appended herein in relation to the issuance of the Bonds. As disclosed in the Offering Circular, the Bonds are intended for purchase by professional investors (as defined in Chapter 37 of the Listing Rules) only and have been listed on The Stock Exchange of Hong Kong Limited on that basis.

The Offering Circular does not constitute a prospectus, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it circulated to invite offers by the public to subscribe for or purchase any securities.

The Offering Circular must not be regarded as an inducement to subscribe for or purchase any securities of the Issuer or the Guarantor, and no such inducement is intended.

Shanghai, PRC
30 September 2025

As at the date of this announcement, the sole director of the Issuer is Ms. Lu Yuanyuan.

As at the date of this announcement, the Board of Directors of the Guarantor comprises Mr. Gong Dexiong, Mr. Lu Weiming and Mr. Lu Dayin as Executive Directors; Mr. Yang Bo, Mr. Shi Lei, Ms. Li Yun, Mr. Xu Yongmiao and Mr. Ren Zhixiang as Non-executive Directors; Mr. Wu Hong, Mr. Feng Xingdong, Mr. Luo Xinyu, Mr. Chan Hon and Mr. Zhu Kai as Independent Non-executive Directors; and Mr. Sun Weidong as Employee Director.

OFFERING CIRCULAR DATED 24 SEPTEMBER 2025

IMPORTANT NOTICE

NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE UNITED STATES OR TO ANY U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT). THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE NON-U.S. PERSONS OUTSIDE THE UNITED STATES

IMPORTANT: You must read the following before continuing. The following applies to the attached offering circular (the "Offering Circular") following this page, and you are therefore advised to read this carefully before reading, accessing or making any other use of the attached Offering Circular. In accessing the attached Offering Circular, you agree to be bound by the following terms and conditions, including any modifications to them from time to time, each time you receive any information from us as a result of such access.

Restrictions: The attached document is being furnished in connection with an offering exempt from registration under the United States Securities Act of 1933, as amended (the "Securities Act") solely for the purpose of enabling a prospective investor to consider the purchase of the securities described herein.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES AND THE GUARANTEE DESCRIBED HEREIN HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES AND THE GUARANTEE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES, OR TO OR FOR THE ACCOUNT AND BENEFIT OF, U.S. PERSONS, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THIS OFFERING IS MADE SOLELY TO NON-U.S. PERSONS IN OFFSHORE TRANSACTIONS PURSUANT TO REGULATION S UNDER THE SECURITIES ACT.

THE OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER AND IN PARTICULAR, MAY NOT BE FORWARDED TO ANY ADDRESS WITHIN THE UNITED STATES OR TO ANY U.S. PERSON, ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. IF YOU HAVE GAINED ACCESS TO THIS TRANSMISSION CONTRARY TO ANY OF THE FOREGOING RESTRICTIONS, YOU ARE NOT AUTHORISED AND WILL NOT BE ABLE TO PURCHASE ANY OF THE SECURITIES DESCRIBED HEREIN.

Confirmation of your representation: In order to be eligible to view the Offering Circular or make an investment decision with respect to the securities, investors must be non-U.S. Persons outside the United States. This Offering Circular is being sent to you at your request and by accepting the e-mail and accessing the Offering Circular, you shall be deemed to have represented to Orient Securities (Hong Kong) Limited, Industrial and Commercial Bank of China (Asia) Limited, ICBC International Securities Limited, Industrial and Commercial Bank of China Limited, Singapore Branch, Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch, Standard Chartered Bank, The Hongkong and Shanghai Banking Corporation Limited, China Minsheng Banking Corp., Ltd. Hong Kong Branch, China CITIC Bank International Limited, ABCI Capital Limited and CMB Wing Lung Bank Limited (collectively, the "Joint Global Coordinators"), and DBS Bank Ltd., Industrial Bank Co., Ltd. Hong Kong Branch, Bank of China (Hong Kong) Limited, Gaotai Junan Securities (Hong Kong) Limited, Haitong International Securities Company Limited, Shenwan Hongyuan Securities (H.K.) Limited, Hua Xia Bank Co., Limited Hong Kong Branch, Huatai Financial Holdings (Hong Kong) Limited, CMBC Securities Company Limited and Dongying Securities (Hong Kong) Company Limited (together with the Joint Global Coordinators, collectively, the "Joint Bookrunners" and "Joint Lead Managers"), that (1) you and any clients you represent are non-U.S. Persons outside the United States and that the e-mail address that you gave the Joint Lead Managers and to which this e-mail has been delivered is not located in the United States, its territories or possessions and does not belong to a U.S. Person; and (2) that you consent to delivery of the Offering Circular and any amendments or supplements thereto by electronic transmission.

Except with respect to eligible investors in jurisdictions where such offer is permitted by law, nothing in this electronic transmission constitutes an offer or an invitation by or on behalf of any of the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers or either Orient ZhiSheng Limited (the "Issuer") or DFZQ (東京商泰優保有限公司) (the "Guarantor") to subscribe for or purchase any of the securities described therein, and access has been limited so that it shall not constitute in the United States or elsewhere a general solicitation or general advertising (as defined in Regulation D under the Securities Act) or directed selling efforts (as defined in Regulation S under the Securities Act). If a jurisdiction requires that the offering be made by a licensed broker or dealer and any of the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers or their respective affiliates is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by such Joint Global Coordinator, Joint Bookrunner or Joint Lead Manager or such affiliates on behalf of such Joint Global Coordinator, Joint Bookrunner or Joint Lead Manager in such jurisdiction.

You are reminded that the attached Offering Circular has been delivered to you on the basis that you are a person into whose possession the Offering Circular may be lawfully delivered in accordance with the laws of jurisdiction in which you are located and you may not, nor are you authorised to, deliver or disclose the contents of the Offering Circular, electronically or otherwise, to any other person. If you have gained access to this transmission contrary to the foregoing restrictions, you are not allowed to purchase any of the securities described in the attached Offering Circular.

The attached Offering Circular has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and, consequently, none of the Issuer, the Guarantor, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee (as defined in the attached Offering Circular), the Agents (as defined in the attached Offering Circular) or any person who controls any of them or any director, officer, employee or agent of any of them or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the Offering Circular distributed to you in electronic format and the hard copy version. A hard copy version will be provided to you upon request.

PROHIBITION OF SALES TO EEA RETAIL INVESTORS - The Bonds are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area ("EEA"). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II") Directive 2014/65/EU (as amended, "MiFID II"); (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended, the "Insurance Distribution Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II. Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the "PRIIPs Regulation") for offering or selling the Bonds or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Bonds or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.

PROHIBITION OF SALES TO UK RETAIL INVESTORS - The Bonds are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom (the "UK"). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (the "EUWA"); (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (the "FSMA") and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA. Consequently no key information document required by the PRIIPs Regulation as it forms part of domestic law by virtue of the EUWA (the "UK PRIIPs Regulation") for offering or selling the Bonds or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the Bonds or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.

Actions that You May Not Take: If you receive this document by e-mail, you should not reply by e-mail to this document, and you may not purchase any securities by doing so. Any reply e-mail communications, including those you generate by using the "Reply" function on your e-mail software, will be ignored or rejected.

You are responsible for protecting against viruses and other destructive items. If you receive this document by e-mail, your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature.

ORIENT ZHISHENG LIMITED

(incorporated in the British Virgin Islands with limited liability)

U.S.$300,000,000 FLOATING RATE GUARANTEED BONDS DUE 2028 UNCONDITIONALLY AND IRREVOCABLY GUARANTEED BY

(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))

(SEHK Stock Code: 03958)

Issue Price: 100.00 per cent.

The floating rate guaranteed bonds due 2028 in aggregate principal amount of U.S.$300,000,000 (the "Bonds") will be issued by Orient Zhihheng Limited (the "Issuer") and will be unconditionally and irrevocably guaranteed (the "Guarantor") by DFZQ (東方證券股份有限公司) (the "Company" or "Guarantor"). The Issuer is an indirect wholly-owned subsidiary of the Guarantor.

The Bonds will bear interest on their outstanding principal amount from and including 29 September 2025 (the "Issue Date") at the rate which is equal to Compensated SOFR Index (as defined in the terms and conditions of the Bonds (the "Terms and Conditions of the Bonds") plus 0.39 per cent. per annum, payable in arrear on 29 March, 29 June, 29 September and 29 December in each year (each, an "Interest Payment Date"), subject to adjustment in accordance with the Terms and Conditions of the Bonds.

The Bonds will constitute direct, unconditional, unsubordinated and (subject to Condition 5(a) of the Terms and Conditions of the Bonds) unsecured obligations of the Issuer which will at all times rank part of the deferred tax preference or priority among themselves and rank in each part given with all other present and future unsecured and unsubordinated obligations of the Issuer, save for each exception as may be provided by provisions of applicable laws and subject to Condition 5(a) of the Terms and Conditions of the Bonds. The Guarantor will constitute direct, unconditional, unsubordinated and (subject to Condition 5(a) of the Terms and Conditions of the Bonds) unsecured obligations of the Guarantor which will at all times rank at least part of the deferred tax preference or priority among themselves and rank in each part given with all other present and future unsecured and unsubordinated obligations of the Issuer, save for each exception as may be provided by provisions of applicable laws and subject to Condition 5(a) of the Terms and Conditions of the Bonds.

All payments of principal, premium (if any) and interest by or on behalf of the Issuer or the Guarantor in respect of the Bonds or under the Guarantor of the Bonds, or the case may be, will be made free and clear of, and without withholding or deduction for taxes of the British Virgin Islands, Hong Kong or the PRC or the return described in "Terms and Conditions of the Bonds – Issuance".

Unless previously redeemed, or purchased and cancelled, the Bonds will be redeemed at their principal amount on the Interest Payment Date falling on, or nearest to 29 September 2028 (the "Matarily Date"). The Bonds may be redeemed at the option of the Issuer in whole, but not in part, at any time at their principal amount, together with interest accrued to but excluding the date fixed for redemption in the event of certain changes affecting taxes of the British Virgin Islands, Hong Kong or the PRC, or further described in Condition 5(b) of the Terms and Conditions of the Bonds. On or after 29 August 2028, the Issuer may at any time redeem all, but not some only of the Bonds at 100 per cent. of their principal amount, together with interest accrued to, but excluding, the date fixed for redemption, or further described in Condition 5(c) of the Terms and Conditions of the Bonds. On or after 29 December 2028, the Guarantees of a Relevant Issuer (as defined in the Terms and Conditions of the Bonds) of the Issuer (as defined in the Terms and Conditions of the Bonds) of any Bond will have the right, at such Holder's option, to require the Issuer to redeem all, but not some only of the Holder's Bonds on the Put Settlement Date (as defined in the Terms and Conditions of the Bonds) at (01 per cent. (in the case of a redemption for a Change of Control Triggering Event (as defined in the Terms and Conditions of the Bonds)) or (00 per cent. (in the case of a redemption for a No Registration Event (as defined in the Terms and Conditions of the Bonds)) of their principal amount, together with accrued interest up to but excluding the Put Settlement Date, or further described in Condition 5(c) of the Terms and Conditions of the Bonds. See "Terms and Conditions of the Bonds – Redemption and purchase".

Application will be made to The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") for the listing of, and permission is deal to, the Bonds by way of debt issues to professional investors (as defined in Chapter 17 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited) ("Professional Investors") only. This document is for distribution to Professional Investors only.

Notice to Hong Kong investors: The Issuer and the Guarantor confirm that the Bonds are intended for purchase by Professional Investors only and will be listed on the Hong Kong Stock Exchange on that basis. Accordingly, the Issuer and the Guarantor confirm that the Bonds are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.

The Hong Kong Stock Exchange has not reviewed the contents of this document, other than to ensure that the prescribed form disclaimer and responsibility statements, and a statement limiting distribution of this document to Professional Investors only have been reproduced in this document. Listing of the Bonds on the Hong Kong Stock Exchange is not to be taken as an indication of the commercial merits or credit quality of the Bonds, the Issuer or the Guarantor or the Group (as defined below) or quality of disclosure in this document. Hong Kong Exchanges and Clearing Limited and the Hong Kong Stock Exchange take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss or damage arising from or in reliance upon the whole or any part of the contents of this document.

An application has been made to the Luxembourg Stock Exchange (the "LuxSE") to list the Bonds on the official list of the Luxembourg Stock Exchange (the "Official List") and for the Bonds to be admitted to trading on the Professional Segment of the Euro MTF Market of the Luxembourg Stock Exchange (the "Euro MTF Market"). This Offering Circular constitutes a prospectus for the purposes of Part IV of the Luxembourg law on prospectuses for securities dated 18 July 2019 (the "Prospectus Law") and the rules and regulations of the LuxSE (the "LuxSE Rules"). The Euro MTF market is not a regulated market for the purposes of Directive 2014/65/EG (as amended, "MIFID II") of the European Parliament and of the Council on markets in financial instruments. This Offering Circular comprises information about the European Parliament, the Group and the Bonds for the purposes of Part 2 of the LuxSE Rules. This Offering Circular does not constitute a prospectus for the purposes of article 3 of Regulation (EU) 2013/1129 (the "Prospectus Regulation"). This Offering Circular may only be used for the purposes for which they have been published. The Bonds may not be offered to the public or indirectly to the public unless the requirements of the Prospectus Regulation and the Prospectus Law have been satisfied. The LuxSE assumes no responsibility on the correctness of any of the statements made or opinions expressed, or reports contained in this Offering Circular. Admission to trading on the Professional Segment of the Euro MTF market or listing on the Official List of the LuxSE is not to be taken as an indication of the merits of the Issuer, the Guarantor, the Group or the Bonds.

The Guarantor has been assigned a rating of "Bad", "No Moody's Investors Service, Inc. ("Moody's") with a stable outlook and a rating of "BBB" by S&P Global Ratings ("S&P") with a stable outlook. The Bonds are expected to be assigned a rating of "Bad" by Moody's. A rating is not a recommendation to buy, sell or hold securities, does not address the likelihood or timing of prepayment and may be subject to revision, qualification, suspension or withdrawal at any time by the assigning rating organization. A revision, qualification, suspension or withdrawal of any rating assigned to the Bonds may adversely affect the market price of the Bonds.

Investing in the Bonds involves certain risks. See "Risk Factors" beginning on page 13.

The Bonds and the Guarantor have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any other jurisdiction. The Bonds and the Guarantor may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons (as defined in Regulation E under the Securities Act ("Regulation E") except pursuant to an exemption form, or in a transaction of the Object to the registration requirements of the Securities Act. The Bonds and the Guarantor may only be offered and sold to non-U.S. Persons in offshore transactions in compliance with Regulation E. For a description of certain restrictions on resales and transfers, see "Subscription and Sale".

The denomination of the Bonds will be U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof.

The Guarantor has made an application for the pre-issuance registration of the offering of the Bonds (the "Pre-Issuance Registration") with the National Development and Reform Commission (the "NDRC") in accordance with the Administrative Measures for the Examination and Registration of Medium and Long-term Foreign Debts of Enterprises (NDBC Guide No. 36) (正常中日对外借进收支运营类固定(规定借资所得开发自货专项保障)) (the "NDRC Measures") promulgated by the NDBC on 3 January 2023 and became effective on 10 February 2023. The Guarantor has received the Certificate of Examination and Registration of Foreign Debts Borrowed by Enterprises (正常借用外借出收支运营项) dated 16 September 2025 from the NDBC in connection with the Pre-Issuance Registration. Pursuant to the requirements of the NDBC Measures, the Guarantor will undertake to file or cause to be filed with the NDBC the requisite information and documents in relation to the costs of the Bonds within the relevant prescribed timeframe after the Issue Date, including but not limited to the initial post-issuance filing in respect of the Bonds with the NDBC within 10 Shanghai Business Days (as defined in the Terms and Conditions of the Bonds) after the Issue Date (the "NDBC Post-Issuance Filing") and comply with all applicable PRC laws and regulations in relation to the NDBC Post-Issuance Filing in accordance with the NDBC Measures. The Guarantor will undertake to file or cause to be filed with the Shanghai Branch of the State Administration of Foreign Exchange ("SAFE") for deed of guarantee to be dated on or about 29 September 2025 (the "Deed of Guarantor") in accordance with, and within the time period prescribed by, the Provisions on the Foreign Exchange Administration Rules on Cross-border Security (西南商场外商贸项目) promulgated by SAFE on 12 May 2014 which came into effect on 1 June 2014 (the "Cross-border Security Registration") and not its reasonable endeavours to complete the Cross-border Security Registration and obtain a registration record from SAFE (or any other document evidencing the completion of registration issued by SAFE) on or before the Registration Deadline (being the day falling 150 Registration Business Days (as defined in the Terms and Conditions of the Bonds) after the Issue Date).

The Bonds will be represented initially by interests in a global certificate (the "Global Certificate") in registered form which will be registered in the form of a treatment of, and shall be deposited on or about the Issue Date with, a common depository for Euroclear Bank SANN ("Euroclear") and Clearseman Banking S.A. ("Clearssteam"). Beneficial interests in the Global Certificate will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearseman. Except as described in the Global Certificate, certificates for Bonds will not be issued in exchange for interests in the Global Certificate. See "Summary of Provisions relating to the Bonds in Global Form".

Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers

Orient Securities (Hong Kong)

ICBC (Asia)

ICBC International

ICBC Singapore

Shanghai Pudong Development Bank Hong Kong Branch

Standard Chartered Bank

HSBC

China Minsheng Banking Corp., Ltd. Hong Kong Branch

China CITIC Bank International

ABC International

CMB Wing Lung Bank Limited

DBS Bank Ltd.

Joint Bookrunners and Joint Lead Managers

Industrial Bank Co., Ltd. Hong Kong Branch

Bank of China (Hong Kong)

Guotai Junan International

Haitong International

Shenwan Hongyuan Securities (H.K.)

Hua Xia Bank Co., Limited Hong Kong Branch

Dongxing Securities (Hong Kong)

Huaai International

Huanai International

Offering Circular dated 24 September 2025

NOTICE TO INVESTORS

THIS OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE THE OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS OFFERING CIRCULAR NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER, THE GUARANTOR OR ANY OF THEIR RESPECTIVE SUBSIDIARIES OR THAT THE INFORMATION SET OUT IN THIS OFFERING CIRCULAR IS CORRECT AS AT ANY DATE SUBSEQUENT TO THE DATE OF THIS OFFERING CIRCULAR.

Hong Kong Exchanges and Clearing Limited and the Hong Kong Stock Exchange take no responsibility for the contents of this Offering Circular, 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 Offering Circular. This Offering Circular includes particulars given in compliance with the Hong Kong Listing Rules (as defined below) for the purpose of giving information with regard to the Issuer, the Guarantor and the Group. The Issuer and the Guarantor each accepts full responsibility for the accuracy of the information contained in this Offering Circular and confirms, having made all reasonable enquiries, that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

Each of the Issuer and the Guarantor, having made all reasonable enquiries, confirms that (i) this Offering Circular contains all information with respect to the Issuer, the Guarantor and each of the Guarantor's subsidiaries taken as a whole (the "Group"), the Bonds and the Guarantee, which is material in the context of the issue and offering of the Bonds and the giving of the Guarantee (including all information which, according to the particular nature of the Issuer, the Guarantor and the Group taken as a whole and of the Bonds and the Guarantee, is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the Issuer, the Guarantor and the Group taken as a whole and of the rights attaching to the Bonds and the Guarantee); (ii) this Offering Circular does not contain any untrue statement of a material fact; (iii) there are no other facts in relation to the Issuer, the Guarantor and the Group taken as a whole, the Bonds and the Guarantee the omission of which would in the context of the issue of the Bonds make any statement in this Offering Circular misleading in any material respect; (iv) the statements of intention, opinion, belief or expectation, to the extent material, contained in this Offering Circular are honestly and reasonably made or held and have been reached after considering all relevant circumstances by the Issuer and the Guarantor; and (v) all reasonable enquiries have been made by the Issuer and the Guarantor to ascertain such facts included in this Offering Circular and to verify the accuracy of all such statements.

This Offering Circular does not purport to summarise all of the terms, conditions, covenants and other provisions contained in the trust deed (the "Trust Deed"), the deed of guarantee (the "Deed of Guarantee") or the agency agreement (the "Agency Agreement") relating to the Bonds and the Guarantee and other transaction documents described herein. The information provided is not all-inclusive. The market information in this Offering Circular has been obtained by the Issuer and the Guarantor from publicly available sources deemed by them to be reliable.

This Offering Circular has been prepared by the Issuer and the Guarantor solely for use in connection with the proposed offering of the Bonds and the giving of the Guarantee described in this Offering Circular. None of the Issuer, the Guarantor, the Joint Global Coordinators, the Joint Bookrunners and the Joint Lead Managers (each as defined below) is making an offer to sell the Bonds in any jurisdictions except where an offer or sale is permitted. The distribution of this Offering Circular and the offering of the Bonds in certain jurisdictions may be restricted by law. None of the Issuer, the Guarantor, the Joint Global Coordinators, the Joint Bookrunners and the Joint Lead Managers represents that this Offering Circular may be lawfully distributed, or that the Bonds may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by the Issuer, the Guarantor or any of the Joint Global Coordinators, the Joint Bookrunners or the Joint Lead Managers which is intended to permit a public offering of the Bonds or the distribution of this Offering Circular in any jurisdiction where action for that purpose is required. Accordingly, no Bonds may be offered or sold, directly or indirectly, and neither this Offering Circular nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations.

Persons into whose possession this Offering Circular comes are required by the Issuer, the Guarantor, Orient Securities (Hong Kong) Limited, Industrial and Commercial Bank of China (Asia) Limited, ICBC International Securities Limited, Industrial and Commercial Bank of China Limited, Singapore Branch, Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch, Standard Chartered Bank, The Hongkong and Shanghai Banking Corporation Limited, China Minsheng Banking Corp., Ltd. Hong Kong Branch, China CITIC Bank International Limited, ABCI Capital Limited and CMB Wing Lung Bank Limited (collectively, the "Joint Global Coordinators"), and DBS Bank Ltd., Industrial Bank Co., Ltd. Hong Kong Branch, Bank of China (Hong Kong) Limited, Guotai Junan Securities (Hong Kong) Limited, Haitong International Securities Company Limited, Shenwan Hongyuan Securities (H.K.) Limited, Hua Xia Bank Co., Limited Hong Kong Branch, Huatai Financial Holdings (Hong Kong) Limited, CMBC Securities Company Limited and Dongxing Securities (Hong Kong) Company Limited (together with the Joint Global Coordinators, collectively, the "Joint Bookrunners" and "Joint Lead Managers") to inform themselves about and to observe any such restrictions. No action is being taken to permit a public offering of the Bonds or the distribution of this Offering Circular in any jurisdiction where action would be required for such purposes. There are restrictions on the offer and sale of the Bonds and the circulation of documents relating thereto, in certain jurisdictions, including the United States, the European Economic Area, the United Kingdom, the People's Republic of China, Hong Kong, Singapore, Japan and the British Virgin Islands, to persons connected therewith. For a description of certain further restrictions on offers, sales and resales of the Bonds and distribution of this Offering Circular, see "Subscription and Sale".

Each prospective purchaser of the Bonds must comply with all applicable laws and regulations in force in any jurisdiction in which it purchases, offers or sells the Bonds or possesses or distributes this Offering Circular and must obtain any consent, approval or permission required under any regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers or sales, and none of the Issuer, the Guarantor, the Joint Global Coordinators, the Joint Bookrunners and the Joint Lead Managers shall have any responsibility therefor.

No person has been or is authorised to give any information or to make any representation concerning the Issuer, the Guarantor, the Group, the Bonds or the Guarantee other than as contained herein and, if given or made, any such other information or representation should not be relied upon as having been authorised by the Issuer, the Guarantor, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee or the Agents (as defined in the Terms and Conditions of the Bonds) or any of their respective affiliates, advisers, directors, employees, officers, agents and representatives.

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This Offering Circular does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire securities.

No representation or warranty, express or implied, is made or given by the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents or any of their respective affiliates, advisers, directors, employees, officers, agents and representatives as to the accuracy, completeness or sufficiency of the information contained in this Offering Circular, and nothing contained in this Offering Circular is, or shall be relied upon as, a promise, representation or warranty by the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents or any of their respective affiliates, advisers, directors, employees, officers, agents and representatives. None of the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents or any of their respective affiliates, advisers, directors, employees, officers, agents and representatives has independently verified any of the information contained in this Offering Circular (financial, legal or otherwise) or can give any assurance that the information is accurate, truthful or complete or accept any responsibility for any acts or omissions of the Issuer or the Guarantor or any other person in connection with the issue and offering of the Bonds.

Prospective investors in the Bonds should rely only on the information contained in this Offering Circular. None of the Issuer, the Guarantor, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents or any of their respective affiliates, advisers, directors, employees, officers, agents and representatives has authorised the provision of information different from that contained in this Offering Circular, to give any information or to make any representation not contained in or not consistent with this Offering Circular or any other information supplied in connection with the offering of the Bonds or the giving of the Guarantee and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer, the Guarantor, any of the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents or any of their respective affiliates, advisers, directors, employees, officers, agents and representatives. The information contained in this Offering Circular is accurate in all material respects only as at the date of this Offering Circular, regardless of the time of delivery of this Offering Circular or of any sale of the Bonds. Neither the delivery of this Offering Circular nor any sale made hereunder shall under any circumstances imply that there has not been a change in affairs of the Issuer, the Guarantor, the Group or any of them or that the information set forth herein is correct in all material respects as at any date subsequent to the date thereof. None of the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee or the Agents or their respective affiliates, advisers, directors, employees, officers, agents and representatives undertakes to review the financial condition and affairs of the Issuer or the Guarantor following the date of this Offering Circular, nor to advise any investor or potential investor in the Bonds of any information coming to the attention of the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents or any of their respective affiliates, advisers, directors, employees, officers, agents and representatives.

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Each person receiving this Offering Circular acknowledges that such person has not relied on the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents or any of their respective affiliates, advisers, directors, employees, officers, agents and representatives in connection with its investigation of the accuracy or completeness of such information or its investment decision. To the fullest extent permitted by law, none of the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents or any of their respective affiliates, advisers, directors, employees, officers, agents and representatives accepts any responsibility whatsoever for the contents of this Offering Circular or for any other statement made or purported to be made by the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee or the Agents or any of their respective affiliates, advisers, directors, employees, officers, agents and representatives or on its or their behalf in connection with the Issuer, the Guarantor, the Group, the Guarantee or the issue and offering of the Bonds. Each of the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents and each of their respective affiliates, advisers, directors, employees, officers, agents and representatives accordingly disclaims all and any liability whether arising in tort or contract or otherwise which it might otherwise have in respect of this Offering Circular or any such statement. None of the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents or any of their respective affiliates, advisers, directors, employees, officers, agents and representatives undertakes to review the financial condition or affairs of the Issuer, the Guarantor or the Group for so long as the Bonds remain outstanding, nor to advise any investor or potential investor of the Bonds of any information coming to the attention of any of the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents or any of their respective affiliates, advisers, directors, employees, officers, agents and representatives.

IN CONNECTION WITH THE ISSUE OF THE BONDS, ANY OF THE JOINT LEAD MANAGERS (OR ANY PERSON ACTING ON BEHALF OF THE STABILISATION MANAGER), PROVIDED THAT CHINA CITIC BANK INTERNATIONAL LIMITED SHALL NOT BE APPOINTED AND ACTING AS THE STABILISATION MANAGER, MAY OVER-ALLOT BONDS OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE BONDS AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISATION MANAGER (OR ANY PERSON ACTING ON BEHALF OF THE STABILISATION MANAGER) WILL UNDERTAKE STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE BONDS IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE BONDS AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE BONDS. ANY STABILISATION ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE STABILISATION MANAGER (OR ANY PERSON ACTING ON BEHALF OF THE STABILISATION MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.

Neither this Offering Circular nor any other information supplied in connection with the offering of the Bonds (a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as a recommendation by the Issuer, the Guarantor, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents or any of their respective affiliates, advisers, directors, employees, officers, agents or representatives that any recipient of this Offering Circular, or any other information supplied in connection with the offering of the Bonds, should purchase the Bonds. In making an investment decision, investors must rely on their own independent examination of the Issuer, the Guarantor, the Group and the terms of the offering, including the merits and risks involved. Prospective investors should not construe anything in this Offering Circular as legal, business or tax advice. Each prospective investor should determine for itself the relevance of the information contained in this Offering Circular and consult its own legal, business and tax advisors as needed to make its investment decision and determine whether it is legally able to purchase the Bonds under applicable laws or regulations.

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None of the Issuer, the Guarantor, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents or any of their respective affiliates, advisers, directors, employees, officers, agents or representatives is or are making any representation to investors regarding the legality of an investment in the Bonds under any legal, investment or similar laws or regulations. Investors should not consider any information in this Offering Circular to be legal, business or tax advice. Investors should consult their own attorney, business adviser and/or tax adviser for legal, business and tax advice regarding an investment in the Bonds. See “Risk Factors” for a discussion of certain factors to be considered in connection with an investment in the Bonds.

This Offering Circular has been prepared by the Issuer and the Guarantor solely for use in connection with the proposed offering of the Bonds. The Issuer and the Guarantor reserve the right to withdraw the offering of the Bonds at any time. The Issuer, the Guarantor, the Joint Global Coordinators, the Joint Bookrunners and the Joint Lead Managers also reserve the right to reject any offer to purchase, in whole or in part, for any reason, or to sell less than all of, the Bonds offered hereby. You should read this Offering Circular before making a decision whether to purchase the Bonds.

The contents of this Offering Circular have not been reviewed by any regulatory authority in any jurisdiction. You are advised to exercise caution in relation to the offering of the Bonds. If you are in any doubt about any of the contents of this Offering Circular, you should obtain independent professional advice.

Notice to capital market intermediaries and prospective investors pursuant to paragraph 21 of the Hong Kong SFC Code of Conduct – Important Notice to Prospective Investors

Prospective investors should be aware that certain intermediaries in the context of this offering of the Bonds, including certain Joint Lead Managers, are “capital market intermediaries” (together, “CMIs”) subject to Paragraph 21 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (the “SFC Code”). This notice to prospective investors is a summary of certain obligations the SFC Code imposes on such CMIs, which require the attention and cooperation of prospective investors. Certain CMIs may also be acting as “overall coordinators” (together, “OCs”) for this offering and are subject to additional requirements under the SFC Code.

Prospective investors who are the directors, employees or major shareholders of the Issuer, the Guarantor, a CMI or its group companies would be considered under the SFC Code as having an association (an “Association”) with the Issuer, the Guarantor, the CMI or the relevant group company. Prospective investors associated with the Issuer, the Guarantor or any CMI (including its group companies) should specifically disclose this when placing an order for the Bonds and should disclose, at the same time, if such orders may negatively impact the price discovery process in relation to this offering. Prospective investors who do not disclose their Associations are hereby deemed not to be so associated. Where prospective investors disclose their Associations but do not disclose that such order may negatively impact the price discovery process in relation to this offering, such order is hereby deemed not to negatively impact the price discovery process in relation to this offering.

Prospective investors should ensure, and by placing an order prospective investors are deemed to confirm, that orders placed are bona fide, are not inflated and do not constitute duplicated orders (i.e. two or more corresponding or identical orders placed via two or more CMIs). If a prospective investor is an asset management arm affiliated with any Joint Lead Manager, such prospective investor should indicate when placing an order if it is for a fund or portfolio where the Joint Lead Manager or its group company has more than 50 per cent. interest, in which case it will be classified as a “proprietary order” and subject to appropriate handling by CMIs in accordance with the SFC Code and should disclose, at the same time, if

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such "proprietary order" may negatively impact the price discovery process in relation to this offering. Prospective investors who do not indicate this information when placing an order are hereby deemed to confirm that their order is not a "proprietary order". If a prospective investor is otherwise affiliated with any Joint Lead Manager, such that its order may be considered to be a "proprietary order" (pursuant to the SFC Code), such prospective investor should indicate to the relevant Joint Lead Manager when placing such order. Prospective investors who do not indicate this information when placing an order are hereby deemed to confirm that their order is not a "proprietary order". Where prospective investors disclose such information but do not disclose that such "proprietary order" may negatively impact the price discovery process in relation to this offering, such "proprietary order" is hereby deemed not to negatively impact the price discovery process in relation to this offering.

Prospective investors should be aware that certain information may be disclosed by CMIs (including private banks) which is personal and/or confidential in nature to the prospective investor. By placing an order, prospective investors are deemed to have understood and consented to the collection, disclosure, use and transfer of such information by the Joint Lead Managers and/or any other third parties as may be required by the SFC Code, including to the Issuer, the Guarantor, any OCs, relevant regulators and/or any other third parties as may be required by the SFC Code, it being understood and agreed that such information shall only be used for the purpose of complying with the SFC Code, during the bookbuilding process for this offering. Failure to provide such information may result in that order being rejected.

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CERTAIN DEFINITIONS, CONVENTIONS AND CURRENCY PRESENTATION

This Offering Circular has been prepared using a number of conventions, which investors should consider when reading the information contained herein.

This Offering Circular summarises certain documents and other information, and investors should refer to them for a more complete understanding of what is discussed in those documents. In making an investment decision, each investor must rely on its own examination of the Issuer, the Guarantor, the Group and the terms of the offering and the Bonds, including the merits and risks involved.

Unless otherwise indicated, all references in this Offering Circular to the “Group” are to the Guarantor and its subsidiaries.

Unless otherwise indicated, all references in this Offering Circular to “Hong Kong” are to the Hong Kong Special Administrative Region of China and all references to “China” or the “PRC” are to the People’s Republic of China and, for the purpose of this Offering Circular only, excluding Hong Kong, Macau and Taiwan. “PRC Government” or the “State” means the central government of the PRC, including all political subdivisions (including provincial, municipal and other regional or local governmental entities) and instrumentalities thereof, or, where the context requires, any of them.

Unless otherwise specified or the context requires, all references in this Offering Circular to “Renminbi” or “RMB” are to the lawful currency of the PRC; references herein to “Hong Kong dollars” or “HK$” are to the lawful currency of Hong Kong; and references herein to “U.S. dollars” or “U.S.$” are to the lawful currency of the United States of America.

Solely for your convenience, this Offering Circular contains translations of certain Renminbi amounts into U.S. dollars at specified rates. Unless indicated otherwise, the translation of Renminbi into U.S. dollars has been made at the rate of RMB7.1636 to U.S.$1.00, the noon buying rate in effect on 30 June 2025 as set forth in the H.10 weekly statistical release of the Board of Governors of the Federal Reserve System of the United States (the “Federal Reserve Board”). Further information on exchange rates is set forth in “Exchange Rate Information” in this Offering Circular. No representation is made that the Renminbi amounts referred to in this Offering Circular could have been or could be converted into U.S. dollars at any particular rate or at all.

In this Offering Circular, where information has been presented in thousands or millions of units, amounts may have been rounded. Accordingly, totals of columns or rows of numbers in tables may not be equal to the apparent total of the individual items and the actual numbers may differ from those contained herein due to rounding. References to information in billions of units are to the equivalent of a thousand million units.

The English names of the PRC nationals, entities, departments, facilities, laws, regulations, certificates, titles and the like are translations of their Chinese names and are included for identification purposes only. In the event of any inconsistency, the Chinese name prevails.

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PRESENTATION OF FINANCIAL INFORMATION

This Offering Circular contains the audited consolidated financial information of the Guarantor as at and for the years ended 31 December 2022, 2023 and 2024 and the unaudited interim condensed consolidated financial information of the Guarantor as at 30 June 2025 and for the six months ended 30 June 2024 and 2025.

The consolidated financial information of the Guarantor as at and for the years ended 31 December 2022 and 2023 has been extracted from the audited consolidated financial statements of the Guarantor for the year ended 31 December 2023 (the “2023 Audited Financial Statements”), which have been audited by Deloitte Touche Tohmatsu, Certified Public Accountants (“DTT”), the former independent auditors of the Guarantor, in accordance with the International Standards on Auditing (“ISAs”) issued by the International Auditing and Assurance Standards Board (“IAASB”). The consolidated financial information of the Guarantor as at and for the year ended 31 December 2024 has been extracted from the audited consolidated financial statements of the Guarantor for the year ended 31 December 2024 (the “2024 Audited Financial Statements”), which have been audited by KPMG, Certified Public Accountants (“KPMG”), the current independent auditors of the Guarantor, in accordance with ISAs issued by IAASB. Such financial information should be read in conjunction with the 2023 Audited Financial Statements and the 2024 Audited Financial Statements (together, the “Audited Financial Statements”) and the notes thereto included elsewhere in this Offering Circular. The Audited Financial Statements were prepared and presented in accordance with the IFRS Accounting Standards issued by the International Accounting Standards Board (“IASB”).

The unaudited interim condensed consolidated financial information of the Guarantor as at 30 June 2025 and for the six months ended 30 June 2024 and 2025 has been extracted from the unaudited interim condensed consolidated financial statements of the Guarantor for the six months ended 30 June 2025 (the “Unaudited Consolidated Financial Statements”), which have been reviewed by KPMG, in accordance with the International Standard on Review Engagement 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity (“ISRE 2410”) issued by IAASB. Such financial information should be read in conjunction with the Unaudited Consolidated Financial Statements and the notes thereto included elsewhere in this Offering Circular. The Unaudited Consolidated Financial Statements were prepared and presented in accordance with the IFRS Accounting Standard 34 (“IAS 34”), Interim Financial Reporting, issued by IASB.

The Unaudited Consolidated Financial Statements have not been audited and should not be relied upon by potential investors to provide the same quality of information associated with information that has been subject to an audit, and should not be taken as an indication of the expected financial condition or results of operations of the Guarantor for the full financial year ending 31 December 2025. Potential investors should exercise caution when using such information to evaluate the Group’s financial condition and results of operations. In addition, the historical financial information of the Group should not be taken as an indication of future financial performance.

On 8 July 2025, the Ministry of Finance issued the Q&A on the Implementation of Accounting Treatment for Standard Warehouse Receipt Transactions (the “Q&A”). The Q&A stipulates that enterprises which frequently enter into contracts to buy and sell standard warehouse receipts on futures trading platforms for the purpose of earning price differences without taking delivery of the underlying commodities corresponding to the such receipts, those contracts shall be treated as financial instruments and accounted for in accordance with the Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments. If an enterprise disposes of the standard warehouse receipts shortly after acquiring them pursuant to the aforementioned contracts, it shall not recognise sales revenue. Instead,

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the difference between the consideration received and the carrying amount of the disposed standard warehouse receipts shall be recognised as investment income. Standard warehouse receipts held by an enterprise and not yet disposed of at the end of the period shall be presented as other current assets.

Considering the practical guidance issued by the Ministry of Finance and the economic substance of transactions, effective on 1 January 2025, the Guarantor voluntarily made a change in accounting policy related to the above-mentioned Q&A. The impact of this change in accounting policy has been applied retrospectively, and comparative figures have been adjusted accordingly. Please see “Notes to the Unaudited Condensed Consolidated Interim Financial Statements – 4. Changes in Accounting Policies” of the Unaudited Consolidated Financial Statements for further information. As a result, the presentation of certain accounting items in the Unaudited Consolidated Financial Statements may not be comparable to the financial information in the consolidated financial statements of the Guarantor for the previous periods. In addition, the Ministry of Finance and other relevant PRC government authorities may promulgate new accounting standards and requirements in relation to financial statements from time to time. There can be no assurance that the accounting policies or presentation of the financial statements of the Guarantor would not be materially and adversely affected by other new accounting standards or requirements in relation to financial statements promulgated by the Ministry of Finance or any other relevant PRC government authorities in the future.

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INDUSTRY AND MARKET DATA

Market data and certain industry forecast and statistics in this Offering Circular have been obtained from both public and private sources, including market research, publicly available information and industry publications. Although this information is believed to be reliable, it has not been independently verified by the Issuer, the Guarantor, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents or any of their respective affiliates, advisers, directors, employees, officers, agents and representatives and none of the Issuer, the Guarantor, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Trustee, the Agents or their respective affiliates, advisers, directors, employees, officers, agents and representatives makes any representation as to the accuracy or completeness of that information. Such information may not be consistent with other information compiled within or outside the PRC. In addition, third-party information providers may have obtained information from market participants and such information may not have been independently verified.

FORWARD-LOOKING STATEMENTS

This Offering Circular contains forward-looking statements that are, by their nature, subject to significant risks and uncertainties. These forward-looking statements include, but not limited to, statements relating to:

the general economic, market and business conditions in the PRC and other jurisdictions in which the Group operates;
the business and operating strategies, plans, objectives and goals and its ability to implement such strategies and achieve its plans, objectives and goals, and the future business development of the Group;
future developments, trends and conditions in the industry and markets in which the Group operates;
market competition, and actions and development of competitors and the Group’s ability to compete under these conditions;
the Group’s ability to enter into new markets and expand its operations;
the Group’s expectations with respect to its ability to acquire and maintain regulatory qualifications required to operate its business;
costs of bank loans and other forms of financing, and the Group’s ability to secure adequate financing;
the Group’s estimated capital expenditure;
the Group’s financial condition and performance;
fluctuations in our brokerage fee and commission income;
changes in currency exchange rates;
general political and economic conditions, including those related to the PRC;
any changes in the laws, rules and regulations of the central and local governments in the PRC and other relevant jurisdictions and the rules, regulations and policies of the relevant governmental authorities relating to all aspects of the Group’s business; and
macroeconomic policies of the PRC Government to manage economic growth.

In some cases, forward-looking statements may be identified by such terminology as “may”, “will”, “should”, “could”, “would”, “expect”, “intend”, “plan”, “anticipate”, “going forward”, “ought to”, “seek”, “project”, “forecast”, “believe”, “estimate”, “predict”, “potential” or “continue” or the negative of these terms or other comparable terminology. Such statements reflect the current views of the Issuer or the Guarantor with respect to future events, operations, results, liquidity and capital resources and are not guarantees of future performance, some of which may not materialise or may change. Although the Issuer and the Guarantor believe that the expectations reflected in these forward-looking statements are

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reasonable, there is no assurance that those expectations will prove to be correct, and investors are cautioned not to place undue reliance on such statements. Additional factors that could cause actual performance or achievements to differ materially include, but are not limited to, those discussed under "Risk Factors" and elsewhere in this Offering Circular. The Issuer and the Guarantor undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Offering Circular might not occur and the Issuer's and the Guarantor's actual results could differ materially from those anticipated in these forward-looking statements.

All forward-looking statements contained in this Offering Circular are qualified by reference to the cautionary statements set forth in this section.

These forward-looking statements speak only at the date of this Offering Circular. The Issuer and the Guarantor expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in their expectations with regard thereto or any change of events, conditions or circumstances, on which any such statement was based.

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GLOSSARY

This glossary contains explanations of certain technical terms used in this Offering Circular in connection with our business. These terms and their meanings may not always correspond to standard industry meaning or usage of these terms.

“AMAC” the Asset Management Association of China (中國證券投資基金業協會)

“A Share(s)” the domestic shares of the Guarantor, with a nominal value of RMB1.00 each, which are listed and traded on the Shanghai Stock Exchange

“Articles of Association” the articles of association of the Guarantor

“AUM” asset-under-management

“Beijing Stock Exchange” the Beijing Stock Exchange (北京證券交易所)

“Board” or “Board of Directors” the board of directors of the Guarantor

“CFA” China Futures Association

“CPC” Communist Party of China

“China Securities Finance Corporation” China Securities Finance Corporation Limited (中國證券金融股份有限公司), a joint stock company established under the direction of the State Council to provide, among other functions, margin and securities intermediation service to support the margin financing and securities lending businesses of PRC securities firms

“China Universal” China Universal Asset Management Company Limited (匯添富基金管理股份有限公司), an investee company of the Guarantor

“our Company” or “Company” or “Orient Securities” or “Guarantor” or “DFZQ” DFZQ (東方證券股份有限公司), a joint stock company incorporated in the PRC with limited liability under the corporate name “東方證券股份有限公司”, converted from our predecessor, Orient Securities Limited Liability Company (東方證券有限責任公司), on 8 October 2003, conducting business in Hong Kong as “東方證券” under Part 16 of the Companies Ordinance (in Chinese) and “DFZQ” (in English), and was registered as a non-Hong Kong company under the Chinese corporate name approved as “東方證券股份有限公司”, the A Shares and H Shares of which have been listed on the Shanghai Stock Exchange since 23 March 2015 (Stock Code: 600958) and on the Hong Kong Stock Exchange since 8 July 2016 (Stock Code: 3958), and except where the context otherwise requires includes its predecessors

“Company Law” the Company Law of the People’s Republic of China

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“CSDCC”
China Securities Depositary and Clearing Corporation Limited (中國證券登記結算有限責任公司)

“CSRC”
the China Securities Regulatory Commission (中國證券監督管理委員會)

“Director(s)”
the director(s) of the Guarantor

“ETF(s)”
exchange-traded fund(s)

“FICC”
fixed-income, currencies and commodities

“GDP”
gross domestic product

“Group”, “our Group”, “we” or “us”
the Guarantor and its subsidiaries

“H Share(s)”
the overseas listed foreign shares of the Guarantor with a nominal value of RMB1.00 each, which are listed and traded in Hong Kong dollars on the Hong Kong Stock Exchange

“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

“IPO”
initial public offering

“LuxSE”
the Luxembourg Stock Exchange

“Macau”
the Macau Special Administrative Region of the PRC

“NDRC”
the National People’s Congress of the PRC (中華人民共和國發展和改革委員會)

“NEEQ”
National Equities Exchange and Quotations (全國中小企業股份轉讓系統)

“Orient Finance Holdings”
Orient Finance Holdings (Hong Kong) Limited (東方金融控股(香港)有限公司), a wholly-owned subsidiary of the Guarantor

“Orient Futures”
Orient Securities Futures Co., Ltd. (上海東證期貨有限公司), a wholly-owned subsidiary of the Guarantor

“Orient Securities Asset Management”
Shanghai Orient Securities Asset Management Co., Ltd. (上海東方證券資產管理有限公司), a wholly-owned subsidiary of the Guarantor

“Orient Securities Capital Investment”
Shanghai Orient Securities Capital Investment Co., Ltd. (上海東方證券資本投資有限公司), a wholly-owned subsidiary of the Guarantor

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“Orient Securities Innovation”
Shanghai Orient Securities Innovation Investment Co., Ltd. (上海東方證券創新投資有限公司), a wholly-owned subsidiary of the Guarantor

“Orient Securities International”
Orient Securities International Financial Group Co., Ltd. (東證國際金融集團有限公司), a wholly-owned subsidiary of Orient Finance Holdings

“PBOC”
People’s Bank of China

“SAC”
the Securities Association of China (中國證券業協會)

“SAFE”
the State Administration of Foreign Exchange of the PRC (中國國家外匯管理局)

“Securities Law”
the Securities Law of the People’s Republic of China

“SFC”
the Securities and Futures Commission

“SFO”
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

“Shanghai Futures Exchange”
the Shanghai Futures Exchange (上海期貨交易所)

“Shanghai SASAC”
Shanghai State-owned Assets Supervision and Administration Commission of the State Council (上海市國有資產監督管理委員會)

“Shanghai Stock Exchange” or “SSE”
the Shanghai Stock Exchange (上海證券交易所)

“Shenergy Group”
Shenergy (Group) Company Limited (申能(集團)有限公司)

“Shenzhen Stock Exchange” or “SZSE”
the Shenzhen Stock Exchange (深圳證券交易所)

“State Council”
State Council of the PRC (中華人民共和國國務院)

“Supervisor(s)”
member(s) of our Supervisory Committee

“Supervisory Committee”
the supervisory committee of the Guarantor

“U.S.” or “United States”
the United States of America, its territories, its possessions and all areas subject to its jurisdiction

“Wind”
Wind Information Co., Ltd. (上海萬得資訊技術股份有限公司), a company with limited liability incorporated in the PRC and a service provider of financial data, information and software, being an independent third party of the Guarantor

Page

NOTICE TO INVESTORS i
CERTAIN DEFINITIONS, CONVENTIONS AND CURRENCY PRESENTATION vii
PRESENTATION OF FINANCIAL INFORMATION viii
INDUSTRY AND MARKET DATA x
FORWARD-LOOKING STATEMENTS xi
GLOSSARY xiii
SUMMARY 1
THE ISSUE 4
SUMMARY FINANCIAL INFORMATION OF THE GUARANTOR 9
RISK FACTORS 13
EXCHANGE RATE INFORMATION 47
USE OF PROCEEDS 49
CAPITALISATION AND INDEBTEDNESS 50
TERMS AND CONDITIONS OF THE BONDS 51
SUMMARY OF PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM 84
OUR CORPORATE STRUCTURE 86
DESCRIPTION OF THE ISSUER 87
DESCRIPTION OF THE GROUP 88
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT 123
PRC REGULATIONS 133
TAXATION 162
SUBSCRIPTION AND SALE 166
RATINGS 174
LEGAL MATTERS 175
GENERAL INFORMATION 176
INDEX TO FINANCIAL STATEMENTS F-1

SUMMARY

This summary highlights certain information contained in this Offering Circular and does not contain all the information that you should consider before investing in the Bonds. You should carefully read this Offering Circular in its entirety, including the sections entitled “Forward-Looking Statements” and “Risk Factors”, as well as the financial statements and related notes thereto included elsewhere in this Offering Circular before making an investment decision.

THE ISSUER

The Issuer was incorporated as a BVI business company with limited liability on 23 June 2015 under the laws of the British Virgin Islands (company number: 1879045). The registered office of the Issuer is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. The Issuer is authorised to issue a maximum of 50,000 ordinary shares of a single class with a par value of U.S.$1.00 each. The Issuer has one share in issue, which is held by Orient Finance Holdings. None of the equity securities of the Issuer is listed or dealt on any stock exchange and no listing or permission to deal in such securities is being or is proposed to be sought. The Issuer has no subsidiaries.

THE GROUP

Overview

Our Company is a leading capital markets service provider in the PRC with strong state-owned background, distinguished investment expertise, and dually listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange. According to Wind, as at 30 June 2025, our market capitalisation was RMB77.51 billion. We provide all-round and one-stop financial services to our clients covering securities, futures, asset management, investment banking, investment consultancy and securities research.

Adhering to our mission of serving the national strategy and supporting real economy development, we focus on five major areas including technology finance, green finance, inclusive finance, pension finance and digital finance, takes “collectivisation, digitalisation, and internationalisation” as strategic drivers and maintain a customer-centric approach while comprehensively deepening reforms and promoting transformation. We have established three major business systems, namely, comprehensive wealth management, comprehensive investment banking and comprehensive institutional business, and developed four major business segments, namely, wealth and asset management, investment banking and alternative investment, institutional and sales trading, and international and other businesses. These business systems and segments have fostered differentiated competitive advantages in asset management, wealth management, futures business and proprietary investment. Our revenue model primarily comprises fee and commission income, interest income from providing financial products or services to customers, and investment income from securities or equity investments.

As at 30 June 2025, we had 172 securities branches in total, covering 86 cities in China. According to the published annual reports of Chinese securities companies, we ranked 11 in terms of net capital, 11 in terms of net assets, and 11 in terms of total assets as at and for the year ended 31 December 2024.

As at 30 June 2025, our total assets amounted to RMB437.36 billion, representing an increase of 4.70 per cent. as compared with 31 December 2024. For the six months ended 30 June 2025, our total revenue, other income and net gains and losses was RMB12.32 billion, and our profit was RMB3.46 billion.

Recent Development

Resignation and Appointment of Non-Executive Director

On 18 July 2025, the Board of Directors received a written resignation letter from Mr. XIE Weiqing, a non-executive director of the Company. Due to work adjustment, Mr. XIE Weiqing has tendered his resignation as a non-executive director of the sixth session of the Board and as a member of the audit committee of the Board. Mr. XIE Weiqing will no longer hold any position in the Company and its subsidiaries upon his resignation. The resignation of Mr. XIE Weiqing took effect when his resignation letter was delivered to the Board.

On 29 August 2025, the Company announced that the Board agreed to nominate Mr. LIU Wei as a non-executive Director to the sixth session of the Board and elect Mr. LIU as a member of the audit committee of the Company, who shall commence from the date of consideration and approval at the general meeting until the expiry of the term of office of the sixth session of the Board. Upon appointment, the Company will enter into a service contract with Mr. LIU. The proposed appointment of Mr. LIU as a non-executive Director of the Company is subject to consideration and approval by the general meeting of the Company.

Proposed Amendments to Articles of Association and its Annexes and Proposed abolishment of the Supervisory Committee

On 29 August 2025, the Company announced that in order to further improve the corporate governance of the Company, the Company proposed to amend and improve the Articles of Association and its annexes. The amendments include, among others, (i) to abolish the supervisory committee and the Rules of Procedure for the Supervisory Committee of the Company annexed to the Articles of Association, and (ii) to optimise and adjust the terms of business scope according to regulatory opinions, and to supplement the securities and futures business scope stated in the Securities and Futures Business License held by the Company. The proposed amendments to the Articles of Association and its annexes are subject to the consideration and approval by the shareholders of the Company at the general meeting by way of special resolution. The amended Articles of Association and its annexes will take effect from the date of consideration and approval at the general meeting. Prior to that, the existing Articles of Association and its annexes remain effective.

In accordance with the relevant laws and regulations of the PRC, the Company proposed to abolish the supervisory committee and supervisors, and the duties of the supervisory committee as stipulated in the Company Law shall be exercised by the audit committee. The aforesaid adjustments shall take effect upon the approval of the aforesaid resolution on amendments to the Articles of Association and its annexes at the general meeting of the Company, and the existing supervisors and the supervisory committee of the Company shall continue to perform their duties until the effective date of the revised Articles of Association.

A-share Repurchase

On 8 April 2025, the Company announced that in order to protect the value of the Company and the rights and interests of the shareholders, the Company proposed to repurchase A Shares from the secondary market through centralised price bidding (the "Proposed Share Repurchase"). The Proposed Share Repurchase was considered and approved by the Board on 6 May 2025. The period of share repurchase, being no more than three months from the date of consideration and approval by the Board of the Proposed Share Repurchase, ended on 5 August 2025 (the "Share Repurchase Period").

During the Share Repurchase Period, the Company repurchased a total of 26,703,157 A Shares, representing approximately 0.3143 per cent. of its total share capital. The shares were repurchased at prices ranging from RMB9.19 to RMB9.76 per share, for an aggregate consideration of RMB250,088,870.47 (excluding transaction fees). All repurchased shares are currently held in the Company's dedicated buyback securities account. In accordance with the resolutions of the Board, the Company will deal with the repurchased shares as stipulated in the share repurchase plan and any shares not disposed of within three years from the end of the Share Repurchase Period will be cancelled in accordance with the required procedures.

Competitive Strengths

We have strong shareholders' support and standardised corporate governance;
We have distinguished investment management and trading capabilities with a proven track record;
We have a business with a diversified revenue mix and a robust asset structure;
We have strong capital resources as an A+H dual listed company;
We have a prudent, effective and comprehensive risk management system and industry-leading liquidity management capabilities; and
We have a professional and outstanding senior management team and business team.

Business Strategies

Adhere to one overall positioning and continuously promote high-quality development with the characteristics of DFZQ;
Focus on two key areas of comprehensive wealth management and comprehensive investment banking;
Forge three core capability pillars of comprehensive customer group management, digital technology-driven initiatives, and endogenous compliance and risk control;
Create four characteristic advantages of buyer's investment advisory, industrial investment banking, institutional finance, and digital technology; and
Promote five coordinated developments including comprehensive wealth management, comprehensive investment banking, comprehensive institution, energy and finance, domestic sector and offshore sectors.

– 3 –

THE ISSUE

The following contains summary information about the Bonds. Some of the terms described below are subject to important limitations and exceptions. Words and expressions defined in "Terms and Conditions of the Bonds" shall have the same meanings in this summary. For a more comprehensive description of the terms of the Bonds, see "Terms and Conditions of the Bonds" in this Offering Circular.

Issuer	Orient ZhiSheng Limited.
Legal Entity Identifier	549300744J116LZ5PV56.
Guarantor	DFZQ (東方證券股份有限公司).
Guarantee	The Guarantor will in the Deed of Guarantee unconditionally and irrevocably guarantee the due and punctual payment of all sums from time to time payable by the Issuer in respect of the Bonds.
Issue	U.S.$300,000,000 in aggregate principal amount of floating rate guaranteed bonds due 2028.
Issue Price	100.00 per cent.
Form and Denomination	The Bonds will be issued in registered form in the denomination of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof.
Interest	The Bonds will bear interest on their outstanding principal amount from and including 29 September 2025 at the rate which is equal to Compounded SOFR Index plus 0.59 per cent. per annum, payable in arrear on 29 March, 29 June, 29 September and 29 December in each year, subject to adjustment in accordance with the Terms and Conditions of the Bonds.
Issue Date	29 September 2025.
Maturity Date	The Interest Payment Date falling on, or nearest to 29 September 2028.
Status of the Bonds	The Bonds will constitute direct, unconditional, unsubordinated and (subject to Condition 3(a) of the Terms and Conditions of the Bonds) unsecured obligations of the Issuer which will at all times rank pari passu without any preference or priority among themselves and rank at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, save for such exceptions as may be provided by provisions of applicable laws and subject to Condition 3(a) of the Terms and Conditions of the Bonds.

Status of the Guarantee
The Guarantee will constitute direct, unconditional, unsubordinated and (subject to the provisions of Condition 3(a) of the Terms and Conditions of the Bonds) unsecured obligations of the Guarantor which will at all times rank at least pari passu with all other present and future unsecured and unsubordinated obligations of the Guarantor, save for such exceptions as may be provided by provisions of applicable laws and subject to Condition 3(a) of the Terms and Conditions of the Bonds.

Negative Pledge
The Bonds will contain a negative pledge provision, as further described in Condition 3(a) of the Terms and Conditions of the Bonds.

Events of Default
The Bonds will contain certain events of default provisions as further described in Condition 8 of the Terms and Conditions of the Bonds.

Taxation
All payments of principal, premium (if any) and interest by or on behalf of the Issuer or the Guarantor in respect of the Bonds or under the Guarantee, as the case may be, shall be made free and clear of, and without withholding or deduction for, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by the British Virgin Islands, Hong Kong or the PRC or, in any such case, any political subdivision thereof or any authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law. In such event, the Issuer or, as the case may be, the Guarantor, shall, subject to the exceptions specified in Condition 7 of the Terms and Conditions of the Bonds, pay such additional amounts as will result in receipt by the Bondholders after such withholding or deduction of the same amounts as would have been received by them had no such withholding or deduction been required.

Notification to SAFE
The Guarantor will undertake to file or cause to be filed with the Shanghai Branch of SAFE the Deed of Guarantee in accordance with, and within the time period prescribed by, the Provisions on the Foreign Exchange Administration Rules on Cross-border Security (跨境擔保外匯管理規定), promulgated by SAFE on 12 May 2014, which came into effect on 1 June 2014 (the “Cross-border Security Registration”), and use its reasonable endeavours to complete the Cross-border Security Registration and obtain a registration record from SAFE (or any other document evidencing the completion of registration issued by SAFE) on or before the Registration Deadline.

“Registration Deadline” means the day falling 150 Registration Business Days after the Issue Date.

Notification to NDRC

The Guarantor will undertake to file or cause to be filed with the NDRC the requisite information and documents in relation to the issue of the Bonds within the relevant prescribed timeframes after the Issue Date in accordance with the NDRC Measures including but not limited to the NDRC Post-Issuance Filing and comply with all applicable PRC laws and regulations in relation to the NDRC Post-Issuance Filing in accordance with NDRC Measures.

Final Redemption

Unless previously redeemed, or purchased and cancelled, the Bonds will be redeemed at their principal amount on the Interest Payment Date falling on, or nearest to 29 September 2028.

Redemption for Tax Reasons

The Bonds may be redeemed at the option of the Issuer in whole, but not in part, at any time, on giving not less than 30 nor more than 60 days' notice to the Bondholders (which notice shall be irrevocable) at their principal amount (together with interest accrued to but excluding the date fixed for redemption) if immediately prior to the giving of such notice, the Issuer (or the Guarantor, as the case may be) satisfies the Trustee that (i) the Issuer (or, if the Guarantee were called, the Guarantor) has or will become obliged to pay Additional Tax Amounts as provided or referred to in Condition 7 as a result of any change in, or amendment to, the laws or regulations of Hong Kong, the British Virgin Islands or the PRC or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective on or after 24 September 2025, and (ii) such obligation cannot be avoided by the Issuer (or the Guarantor, as the case may be) taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer (or the Guarantor, as the case may be) would be obligated to pay such Additional Tax Amounts if a payment in respect of the Bonds (or the Guarantee, as the case may be) were then due, as further described in Condition 5(b) of the Terms and Conditions of the Bonds.

Redemption for Relevant Events

At any time following the occurrence of a Relevant Event, the Holder of any Bond will have the right, at such Holder's option, to require the Issuer to redeem all, but not some only of such Holder's Bonds on the Put Settlement Date at 101 per cent. (in the case of a redemption for a Change of Control Triggering Event) or 100 per cent. (in the case of a redemption for a No Registration Event) of their principal amount, together with accrued interest up to but excluding such Put Settlement Date, as further described in Condition 5(c) of the Terms and Conditions of the Bonds.

Redemption at the Option of the Issuer
On or after 29 August 2028, the Issuer may at any time redeem all, but not some only, of the Bonds at 100 per cent. of their principal amount, together with interest accrued to, but excluding, the date fixed for redemption, as further described in Condition 5(d) of the Terms and Conditions of the Bonds.

Clearing Systems
The Bonds will be represented initially by beneficial interests in the Global Certificate, which will be registered in the name of a nominee of, and deposited on the Issue Date with, a common depositary for Euroclear and Clearstream. Beneficial interests in the Global Certificate will be shown on and transfers whereof will be effected only through records maintained by Euroclear and Clearstream. Except as described in the Global Certificate, certificates for the Bonds will not be issued in exchange for beneficial interests in the Global Certificate.

ISIN
XS3168197377.

Common Code
316819737.

Governing Law
English law.

Trustee
Citicorp International Limited.

Principal Paying Agent
Citibank, N.A., London Branch.

Transfer Agent
Citibank, N.A., London Branch.

Registrar
Citicorp International Limited.

Calculation Agent
Citibank, N.A., London Branch.

Listing
Application will be made to the Hong Kong Stock Exchange for the listing of, and permission to deal in, the Bonds by way of debt issues to Professional Investors only.

Application has been made to the LuxSE to list the Bonds on the Official List of the Luxembourg Stock Exchange and for the Bonds to trading on the Professional Segment of the Euro MTF Market.

Further Issues
The Issuer may from time to time, without the consent of the Bondholders and in accordance with the Trust Deed, create and issue further bonds having the same terms and conditions as the Bonds in all respects (or in all respects except for the issue date, the first payment of interest and the timing for complying with the requirements set out in the Terms and Conditions of the Bonds in relation to the Cross-border Security Registration and the NDRC Post-Issuance Filing) so as to be consolidated to form a single series with the Bonds, as further described in Condition 15 of the Terms and Conditions of the Bonds.

Use of Proceeds
See “Use of Proceeds”.

Rating
The Guarantor has been assigned a rating of “Baa2” by Moody’s with a stable outlook and a rating of “BBB-” by S&P with a stable outlook. The Bonds are expected to be assigned a rating of “Baa2” by Moody’s.

Selling Restrictions
The Bonds and the Guarantee have not been and will not be registered under the Securities Act or under any state securities laws of the United States and will be subject to customary restrictions on transfer and resale. Subject to certain exceptions, the Bonds may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons. The Bonds and the Guarantee are being offered only outside the United States in reliance on Regulation S of the Securities Act. See “Subscription and Sale”.

SUMMARY FINANCIAL INFORMATION OF THE GUARANTOR

The following tables set forth the summary consolidated financial information of the Guarantor as at and for the periods indicated.

The consolidated financial information of the Guarantor as at and for the years ended 31 December 2022 and 2023 has been extracted from the 2023 Audited Financial Statements, which have been audited by DTT, the former independent auditors of the Guarantor, in accordance with ISAs issued by IAASB. The consolidated financial information of the Guarantor as at and for the year ended 31 December 2024 has been extracted from the 2024 Audited Financial Statements, which have been audited by KPMG, the current independent auditors of the Guarantor, in accordance with ISAs issued by IAASB. Such financial information should be read in conjunction with the Audited Financial Statements and the notes thereto included elsewhere in this Offering Circular. The Audited Financial Statements were prepared and presented in accordance with IFRS Accounting Standards issued by IASB.

The unaudited interim condensed consolidated financial information of the Guarantor as at 30 June 2025 and for the six months ended 30 June 2024 and 2025 has been extracted from the Unaudited Consolidated Financial Statements, which have been reviewed by KPMG, in accordance with ISRE 2410 issued by IAASB. Such financial information should be read in conjunction with the Unaudited Consolidated Financial Statements and the notes thereto included elsewhere in this Offering Circular. The Unaudited Consolidated Financial Statements were prepared and presented in accordance with IAS 34, Interim Financial Reporting, issued by IASB.

The Unaudited Consolidated Financial Statements have not been audited and should not be relied upon by potential investors to provide the same quality of information associated with information that has been subject to an audit, and should not be taken as an indication of the expected financial condition or results of operations of the Guarantor for the full financial year ending 31 December 2025. Potential investors should exercise caution when using such information to evaluate the Group's financial condition and results of operations. In addition, the historical financial information of the Group should not be taken as an indication of future financial performance.

See also "Presentation of Financial Information".

SUMMARY OF CONSOLIDATED STATEMENT OF PROFIT OR LOSS

	For the Year Ended 31 December			For the Six Months Ended 30 June
	2022	2023	2024	2024	2025
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
	(audited)	(audited)	(audited)	(unaudited)	(unaudited)
Revenue
Commission and fee income	8,878,552	10,298,336	9,988,145	4,462,488	5,129,012
Interest income	5,685,794	6,064,164	5,558,875	2,776,347	2,765,256
	14,564,346	16,362,500	15,547,020	7,238,835	7,894,268
Net investment gains	1,900,081	2,387,769	4,926,135	2,275,382	4,020,355
Other income, gains and losses, net	6,642,936	5,527,120	7,210,452	211,505	410,008
Total revenue, other income and net gains and losses	23,107,363	24,277,389	27,683,607	9,725,722	12,324,631
Depreciation and amortisation	(778,054)	(809,398)	(799,307)	(403,693)	(391,226)
Staff costs	(4,638,113)	(4,564,804)	(5,031,727)	(1,877,911)	(2,477,036)
Commission and fee expenses	(844,499)	(3,363,740)	(4,553,442)	(1,981,346)	(2,242,901)
Interest expenses	(4,045,617)	(4,299,827)	(4,237,545)	(2,082,326)	(2,303,021)
Other operating expenses	(9,037,388)	(7,652,584)	(9,184,395)	(1,023,106)	(961,873)
Impairment losses under expected credit loss model, net of reversal	(832,930)	(1,030,199)	(461,328)	(312,138)	3,765
Other impairment losses	(218,726)	(221,947)	(214,686)	1,115	(271)
Total expenses	(20,395,327)	(21,942,499)	(24,482,430)	(7,679,405)	(8,372,563)
Share of results of associates	665,984	584,250	458,077	224,758	341,562
Profit before income tax	3,378,020	2,919,140	3,659,254	2,271,075	4,293,630
Income tax expense	(367,688)	(162,536)	(308,807)	(159,397)	(830,727)
Profit for the year/period	3,010,332	2,756,604	3,350,447	2,111,678	3,462,903
Attributable to:
Equity holders of the Company	3,010,558	2,753,755	3,350,208	2,111,371	3,463,071
Non-controlling interests	(226)	2,849	239	307	(168)
	3,010,332	2,756,604	3,350,447	2,111,678	3,462,903

10 -

SUMMARY OF CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	As at 31 December			As at 30 June
	2022	2023	2024	2025
	RMB'000 (audited)	RMB'000 (audited)	RMB'000 (audited)	RMB'000 (unaudited)
Assets
Cash and bank balances	121,862,060	104,093,142	103,093,101	96,696,398
Clearing settlement funds	29,106,272	35,314,411	15,177,207	19,845,992
Deposits with exchanges and financial institutions	4,343,234	3,241,547	27,654,365	31,263,450
Derivative financial assets	1,017,334	1,877,650	1,965,131	3,526,185
Advances to customers	19,498,899	21,071,801	28,047,525	27,765,643
Account receivables	908,399	670,759	973,364	1,824,289
Reverse repurchase agreements	8,610,881	5,437,734	3,984,103	3,015,069
Financial assets at fair value through profit or loss	83,763,730	97,069,644	90,189,331	116,338,016
Debt instruments at fair value through other comprehensive income	76,862,096	90,813,713	110,519,911	94,429,620
Equity instruments at fair value through other comprehensive income	3,721,658	6,298,178	19,634,600	26,629,092
Debt instruments measured at amortised cost	3,164,972	1,586,591	1,586,905	1,575,495
Investments in associates	6,241,920	6,253,974	6,128,123	6,060,012
Right-of-use assets	639,915	557,334	1,072,423	975,138
Investment properties	265,583	165,413	30,936	5,521
Property and equipment	2,130,467	2,739,369	2,602,196	2,572,291
Other intangible assets	246,043	286,724	272,393	240,895
Goodwill	32,135	32,135	32,135	32,135
Deferred tax assets	1,908,541	2,079,575	1,490,513	676,590
Other assets	3,742,820	4,100,768	3,282,113	3,886,351
Total assets	368,066,959	383,690,462	417,736,375	437,358,182
Liabilities
Placements from banks and financial institutions	8,352,456	25,670,059	39,194,625	29,327,263
Short-term financing bill payables	8,300,603	2,797,700	-	-
Short-term debt instruments	-	-	5,678,905	4,130,895
Account payables to brokerage clients	123,041,420	111,570,987	113,637,365	120,249,508
Repurchase agreements	62,299,523	73,716,143	85,916,300	100,150,319
Financial liabilities at fair value through profit or loss	18,539,311	15,301,834	14,708,501	20,185,009
Derivative financial liabilities	308,446	874,202	1,092,582	3,803,744
Contract liabilities	64,505	147,405	157,209	48,569
Current tax liabilities	233,603	102,664	93,183	200,661
Accrued staff costs	2,129,721	1,704,042	2,370,667	2,734,220
Borrowings	2,008,823	1,700,024	1,549,417	1,748,727
Lease liabilities	645,777	547,475	1,058,950	959,876
Debt securities issued	55,802,403	60,157,845	60,734,318	59,190,632
Deferred tax liabilities	77,936	35,936	218	44,241
Other liabilities	8,864,143	10,603,949	10,144,319	9,749,527
Total liabilities	290,668,670	304,930,265	336,336,559	352,523,191
Shareholders' equity
Share capital	8,496,645	8,496,645	8,496,645	8,496,645
Treasury stock	-	(299,780)	(310,896)	(561,002)
Other equity instrument	5,000,000	5,000,000	5,000,000	5,000,000
Reserves	55,051,415	56,791,270	60,059,496	61,870,413
Retained earnings	8,838,412	8,757,396	8,151,495	10,026,027
Equity attributable to equity holders of the Company	77,386,472	78,745,531	81,396,740	84,832,083
Non-controlling interests	11,817	14,666	3,076	2,908
Total equity	77,398,289	78,760,197	81,399,816	84,834,991
Total equity and liabilities	368,066,959	383,690,462	417,736,375	437,358,182

11 -

SUMMARY OF CONSOLIDATED STATEMENT OF CASH FLOWS

| | For the Year Ended
31 December | | | For the Six Months Ended
30 June | |
| --- | --- | --- | --- | --- | --- |
| | 2022 | 2023 | 2024 | 2024 | 2025 |
| | RMB’000
(audited) | RMB’000
(audited) | RMB’000
(audited) | RMB’000
(unaudited) | RMB’000
(unaudited) |
| Net cash generated from/(used in) operating activities | 19,762,089 | 14,044,838 | 22,731,322 | 514,675 | (12,843,799) |
| Net cash (used in)/generated from investment activities | (16,020,970) | (13,070,887) | (24,465,629) | 1,664,050 | 13,972,548 |
| Net cash generated from/(used in) financing activities | 160,682 | (4,135,876) | (1,710,761) | (8,465,200) | (1,175,651) |
| Net increase/(decrease) in cash and cash equivalents | 3,901,801 | (3,161,925) | (3,445,068) | (6,286,475) | (46,902) |
| Cash and cash equivalents at the end of the year/period | 26,154,534 | 23,090,236 | 19,744,675 | 16,797,526 | 20,038,164 |

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RISK FACTORS

An investment in the Bonds is subject to a number of risks. Investors should carefully consider all of the information in this Offering Circular and, in particular, the risks described below, before deciding to invest in the Bonds. The following describes some of the significant risks that could affect the Group and the value of the Bonds. Some risks and uncertainties may be unknown to the Group and other risks, currently believed to be immaterial, could in fact be material. Any of these could materially and adversely affect the business, financial condition, results of operations and prospects of the Group. The market price of the Bonds could decline due to any of these risks, and investors may lose part or all of their investment. Neither the Issuer nor the Guarantor represents that the statements below regarding the risk factors of holding any Bonds are exhaustive. Prospective investors should also read the detailed information set out elsewhere in this Offering Circular and reach their own views prior to making any investment decisions. This Offering Circular also contains forward-looking statements that involve risks and uncertainties. The actual results of the Group could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks described below and elsewhere in this Offering Circular.

RISKS RELATING TO OUR BUSINESS AND INDUSTRY

General economic and market conditions could adversely affect our business.

Our business is highly dependent on economic and market conditions in China and other jurisdictions where we operate. General economic and political conditions, such as macroeconomic and monetary policies, legislation and regulations on the financial and securities industries, upward and downward trends in the market, business and financial sectors, currency and interest rate fluctuations, availability of short-term and long-term market funding sources and cost of funding, could affect our business. As a securities firm, our business is directly affected by the inherent risks associated with the securities markets, including market volatility, changes in investment sentiment, fluctuations in trading volume, liquidity changes, and the creditworthiness or the perceived creditworthiness of the securities industry in the marketplace. The majority of our revenue is derived from China. As a result, any material and adverse changes in general economic conditions in China may have a material and adverse effect on our business, financial condition and results of operations.

Our results of operations are primarily affected by the volatility in the PRC securities markets. The PRC stock market experienced significant fluctuations in recent years, and there can be no assurance that such volatility would not continue in the future. Unfavourable global economic and financial conditions, such as financial instability in the U.S. and the imposition of new bilateral tariffs between China and the U.S., have also had a material impact on the market conditions in China, which, in turn, may affect our results of operations and financial condition.

We also derive a certain proportion of our total revenue, other income and net gains and losses from debt financing, equity and bond investments, futures brokerage and derivative investments. As a result, any material and adverse changes in equity and debt markets, futures markets and derivative markets may have a material and adverse effect on our business, financial condition and results of operations. In addition, in the ordinary course of our business, we hold financial assets at fair value through profit or loss and financial assets held under resale agreements. General economic and market conditions affect the value of these financial assets. Any material and adverse changes in the value of these financial assets may have a material and adverse effect on our business, financial condition and results of operations.

In addition, downturns in general economic conditions and adverse market conditions could materially and adversely affect our business, results of operations, financial condition and prospects in various ways, including but not limited to the following:

the demand of our clients for securities trading could decrease, resulting in a decline in our revenue from our securities brokerage business;
the value and returns on financial assets we hold for securities trading and investment and the value of investment portfolio for our asset management products may be adversely affected by market volatility;
we may face increased default risks that a client or counterparty may fail to perform its contractual obligations; and
our financing cost may increase due to the limited access to liquidity and the capital markets, and therefore restricting our ability to raise funding to develop our business.

Our business may be adversely affected by regulatory changes and measures in China and other jurisdictions where we operate.

We are subject to extensive regulation in China and Hong Kong as a securities firm. These regulations limit the types of products and services we may offer by imposing capital requirements and restrict our business activities by stipulating the types of securities we may invest in. Relevant regulatory authorities conduct periodic inspections, examinations and inquiries in respect of our compliance with relevant regulatory requirements. For example, CSRC periodically evaluates and assigns a regulatory rating to each securities firm, including us, based on firm's risk management capabilities, competitiveness and compliance with regulatory requirements. In addition, we may be subject to various regulations, inspections and restrictions imposed by relevant regulatory authorities in other countries and jurisdictions where we operate our business. Although we had certain noncompliance incidents that did not have any material and adverse impact on our business, financial condition and results of operations in the past, our potential failure to comply with the applicable regulatory requirements could result in sanctions, fines, penalties or other disciplinary actions, including, among other things, a downgrade of our regulatory rating and limitations or prohibitions on our future business activities, which may limit our ability to conduct pilot programs and launch new businesses, and harm our reputation. We have received AA or A regulatory rating for 16 consecutive years (AA rating being the highest rating ever received by PRC securities firms), when CSRC started publishing the classification evaluation results for securities firms. However, there is no assurance that we will be able to maintain such regulatory rating in the future. A downgrade of our regulatory ratings may limit our ability to conduct certain businesses or obtain certain business permits or approvals for our new businesses or cause us to be subject to a higher risk capital reserve ratio or a higher securities investor protection fund reserve ratio. Any future incidents of non-compliance may have a material adverse effect on our business, financial condition, results of operations, reputation and prospects.

Rules and regulations applicable to our business are evolving rapidly. New rules and regulations, and changes in the interpretation or enforcement of existing rules and regulations may directly impact our business strategies, competitiveness and prospects. Changes in the rules and regulations may impose more stringent requirements or additional limitations on the business that we conduct, require us to modify our existing business practices and lead to additional compliance costs or introduce and increase competition for our business. Our failure to adapt to the changing regulatory environment and maintain our compliance and competitiveness may have a material adverse effect on our business, financial condition, results of operations and prospect.

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The PRC Government (including but not limited to the Shanghai Municipal Government and Shanghai SASAC) has no obligation to pay any amount under the Bonds.

The PRC Government (including but not limited to the Shanghai Municipal Government and Shanghai SASAC) is not an obligor and shall under no circumstances have any obligation arising out of or in connection with the Bonds in lieu of the Issuer or the Guarantor. The payment obligations under the Bonds remain the sole obligation of the Issuer and the Guarantor. This position has been reinforced by the Circular of the National Development and Reform Commission and the Ministry of Finance on Improvement of Market Regulatory Regime and Strict Prevention of Foreign Debt Risks and Local Government Indebtedness Risks (國家發展改革委財政部關於完善市場約束機制嚴格防範外債風險和地方債務風險的通知) promulgated on 11 May 2018 and took effect on the same day.

The repayment obligations under the Bonds remain the sole obligation of the Issuer and the Guarantor. Any ownership or control by the PRC Government (including but not limited to the Shanghai Municipal Government and Shanghai SASAC) does not necessarily correlate to, or provide any assurance as to, the Issuer's, the Guarantor's or the Group's financial condition. Similar to other companies beneficially controlled by the PRC Government, the Issuer, the Guarantor and the Group may be generally perceived to have access to liquidity support from their beneficial controlling shareholder in light of the ownership structure and the nature of the beneficial controlling shareholder, particularly in the event that the Issuer, the Guarantor or the Group becomes financially distressed. However, the PRC Government as the ultimate shareholder of the Issuer and the Guarantor only has limited liability in the form of its equity contribution in the Guarantor. As such, the PRC Government (including but not limited to the Shanghai Municipal Government and Shanghai SASAC) is under no contractual obligation to pay any amount under the Bonds, the Trust Deed or the Deed of Guarantee if both the Issuer and the Guarantor fail to meet their obligations under these instruments, and, as a result, no financial support from any PRC governmental entity may materialise. The Issuer and the Guarantor should rely upon the cash flow generated from their operations and external borrowings to satisfy their cash needs for servicing their outstanding indebtedness and for financing their operating activities. Investments in the Bonds are on the credit risk of the Issuer and the guarantee of the Guarantor. In the event that the Issuer and the Guarantor do not fulfil their obligations under the Bonds, Bondholders will only be able to claim as an unsecured creditor against the Issuer and the Guarantor and their respective assets, and not any other person including the PRC Government (including but not limited to the Shanghai Municipal Government and Shanghai SASAC).

We are subject to strict capital adequacy, risk management, liquidity and other regulatory requirements that may restrict our business activities.

We are subject to capital adequacy, risk indicator, liquidity and other requirements imposed by CSRC, SAC, and other regulatory authorities and self-regulatory organisations. According to CSRC's requirements, risk coverage ratio (net capital/sum of all risk capital reserve×100 per cent.) may not fall below 100 per cent., the capital leverage ratio (core net capita/total on-and off-balance sheet assets×100 per cent.) may not fall below 8 per cent., the liquidity coverage ratio (high-quality liquid assets/the next 30 days net cash outflows×100 per cent.) may not fall below 100 per cent. and the net stable funding ratio (stable funds available/required stable funds×100 per cent.) may not fall below 100 per cent. Pursuant to CSRC's Administrative Measures for Risk Control Indicators of Securities Firms, or the Risk Control Indicator Measures, we have established a dynamic net capital monitoring mechanism to comply with statutory regulatory standards on risk control indicators with net capital as the core. During the years ended 31 December 2022, 2023 and 2024 and the six months ended 30 June 2025, we were in compliance with regulatory requirements using major risk control indicators with a focus on net capital.

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These requirements may restrict the scope and scale of our business activities, and may require us to adjust our existing business in order to become eligible for new and innovative products and services. Our failure to meet such requirements could lead to sanctions, fines, penalties or other disciplinary actions, including a downgrade of our regulatory rating and limitations or prohibitions on our future business activities, which may have a material adverse effect on our business, financial condition, results of operations, reputation and prospects.

We may not be able to compete effectively in the PRC securities industry.

The PRC securities industry is highly competitive. According to CSRC, there were approximately 150 registered securities firms in the PRC as at 31 December 2024. We also face intense competition from other financial institutions, such as commercial banks, fund management companies, insurance companies, trust companies, futures companies and asset management companies.

Wealth and asset management business. In this business segment, we compete with public fund management companies, banks, trust companies, other securities firms, and insurance institutions in wealth management. Rapid industry evolution and regulatory changes require us to clearly define our strategic positioning and leverage our resources and unique strengths to achieve differentiated development. Heightened competition poses the risk of client attrition and revenue pressure.
Investment banking and alternative investment business. In this business segment, we compete primarily with other PRC securities firms and commercial banks, as well as alternative investment institutions. Success in this segment depends on brand reputation, marketing and distribution capabilities, service quality, financial strength, and competitive pricing. Increasing competition may result in reduced underwriting and advisory fees, lower investment returns, and greater challenges in sourcing high-quality deals.
Institutional and sales trading business. In this business segment, our principal competitors include other securities firms, funds, innovative investment institutions, and securities research organisations. The expansion of online trading platforms and the entry of internet-based financial companies may potentially impact our yields, trading margins, and overall profitability in this business segment.
International and other businesses. In this business segment, we face competition from both domestic and international securities firms, as well as global financial technology companies. These competitors may have advantages in terms of capital resources, technological innovation, broader product offerings, and international networks. Heightened competition may erode our market share and limit revenue growth in overseas markets.

Some of our competitors may have certain competitive advantages over us, including greater financial resources, stronger brand recognition, broader product and service offerings and wider branch network coverage. Failure by us to effectively compete may have an adverse effect on our business, financial condition, results of operations and prospects.

Meanwhile, with China has taken steps to open up its financial industry and eased limits on foreign stakes in securities firms, new competitors may enter the securities industry, which could further intensify the market competition. On 28 April 2018, CSRC issued Administrative Measures for Foreign-Invested Securities Companies (《外商投資證券公司管理辦法》) (amended on 27 March 2025), abolishing the restriction of the proportion of shares or equity owned by overseas shareholders. At the same time, the scope of business of joint venture securities companies will be gradually broadened, allowing newly

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established joint venture securities companies to apply for securities business in an orderly manner according to their own situation. The process of increasing the holding ratio of foreign-funded institutions and even seeking wholly-owned holding of securities companies has been significantly accelerated. Up to now, a number of foreign-controlled securities companies have been set up, approved by CSRC. As a result, our business, financial condition and results of operations may be adversely affected.

Our institutional and sales trading business accounts for sizeable portion of our overall business, and we may incur substantial losses from market volatility or sub-optimal investment strategies.

For the year ended 31 December 2024 and the six months ended 30 June 2025, segment revenue, other income and net gains and losses derived from our institutional and sales trading business, which includes proprietary investment, client-oriented services, market-making business, research services and custodian business, amounted to RMB7.1 billion and RMB5.1 billion, representing 25.7 per cent. and 41.0 per cent. of our total revenue, other income and net gains and losses, respectively. We primarily trade equity and fixed income securities for our own account. In addition, we also conduct market neutral proprietary trading business with derivatives. The performance of our proprietary trading business depends on market conditions and our investment decisions and judgments. We closely monitor the market value and financial performance of our investment portfolio, and actively adjust such portfolio to allocate assets based on market conditions and internal risk management guidelines. However, our investment decisions are based on human judgments, which involve management discretion and assumptions. If our decision-making process fails to effectively control losses or capture investment gains, or our forecasts do not conform to sudden changes in market conditions, or if we do not effectively manage our exposure to concentration risks from particular assets or asset classes, our proprietary trading business may not achieve the investment returns we anticipate. In addition, we may suffer losses in an adverse market environment despite our active management of our investment portfolio. If any of the above happens, we could suffer material losses, which would materially and adversely affect our business, financial condition and results of operations.

Our brokerage commission and fee income may decrease.

Brokerage commission and fee income represent a significant portion of our revenue. Our brokerage business depends on trading volume, which is significantly affected by external factors, such as general economic conditions, macroeconomic and monetary policies, market conditions and fluctuations in interest rates, all of which are beyond our control. Trading volume is also affected by the size of our client base and the frequency that they trade through us. If we fail to maintain and increase our client base, or fail to increase their trading activities through us, our brokerage commission and fee income may be adversely affected.

Revenue from our brokerage business also depends on our brokerage commission rate, which is primarily driven by competition. There is constant pressure to further lower the brokerage and commission rate in the securities industry, especially for the standardised brokerage business that may be offered online. Some of our competitors have actively promoted their online brokerage services and continued to lower their retail brokerage commission rates in recent years. If more competitors expand their online brokerage businesses, retail brokerage commission rates in the industry will likely further decrease. In April 2015, CSDCC amended the securities account policy by removing the prior "one-person-one-account" restriction in the same market (namely, the Shanghai Stock Exchange and the Shenzhen Stock Exchange). This allowed individual investors to open multiple A-share securities accounts within the same market, subject to a then-maximum of 20 accounts per investor per market. This policy change enabled investors, including our clients, to more conveniently compare the fees and commission rates charged by different securities firms and to transfer accounts as needed. Subsequently, in October 2016, CSDCC further

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amended the regulation, reducing the maximum number of A-share securities accounts that may be opened by an individual investor in the same market from 20 accounts to three. We cannot assure prospective investors that this account number limitation will not be relaxed or further revised in the future. The changes in the number of permissible securities accounts held by investors may lead to a decrease in the number of clients who use our brokerage services and/or the volume of trades by such clients, which may pose a significant challenge for us in retaining existing clients and attracting new clients. As a result, we may face increased downward pressure on our brokerage commission and fee income and will need to provide better services and products to retain and attract clients.

Any negative development in the securities market that affects the trading volume or commission rate could lead to a decrease of our revenue from brokerage business, and in turn have a material adverse effect on our business, financial condition, results of operations and prospects.

We may fail to realise profits from our private equity investments and may lose some or all of the capital invested.

We engage in private equity investment business with our own capital through our wholly owned subsidiary, Orient Securities Capital Investment, and make direct equity investments through several funds set up by this subsidiary. We aim to earn investment returns from dividends and interests paid by our portfolio companies and generate capital gains through IPOs or disposal of equities in our portfolio companies. To make a sound investment decision, we need to carefully identify and select a target company based on its business, operations and industry. In general, this selection process involves a systematic forecast of the portfolio companies' growth, profitability and sustainability. However, we may make unsound investment decisions due to our failure to identify fraudulent or inaccurate or misleading statements from the portfolio companies in the course of our due diligence, or we may inaccurately project the portfolio companies' or the relevant industry's growth prospects and profitability, which could lead us to overvalue the portfolio companies and prevent us from making a profit on such investments or even incur substantial losses on such investments.

The ability of our private equity funds established via the subsidiary of Orient Securities Capital Investment to dispose of investments is dependent on the stock market, the regulatory environment and our ability to identify potential buyers. At the time of our disposal, if we experience stock market volatility or face undesirable regulatory environment for public offerings, our private equity funds may sometimes be forced to sell stakes in the investee companies at undesirable prices or defer the sale, potentially for a substantial length of time, exposing our investment returns to market risks during the intended disposal period. In addition, failure of the portfolio companies to meet expectations on profitability could also affect our ability to exit our investments at the desired rate of return or at all. We also make private equity investment in companies that aim to be listed on NEEQ. Currently, the market size and liquidity of NEEQ is still limited, and stagnation in the development of NEEQ market may adversely affect our private equity investments in such companies. We expect to continue to make capital investments in our current and future private equity funds if we continue to meet the relevant net capital and risk indicators requirements. Contributing capital to these funds is risky, and we may lose some or the entire principal amount of our investments.

In addition, we have limited control over some of the portfolio companies in which we have invested. We are subject to the risk that our portfolio companies may make business, financial or management decisions, or that the majority stakeholders or the management of the company may take decisions or otherwise act in a manner, that does not serve our interests. Furthermore, our portfolio companies may fail to abide by their agreements with us, for which we may have limited or no recourse. If any of the foregoing were to occur, the value of our investments could decrease and thus our financial condition, results of operations and cash flow could be materially and adversely affected.

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We may not be able to expand our client base and branch network.

The securities brokerage business is highly competitive and we need to maintain our client base and attract new clients from our competitors in order to maintain or grow our market share. Similar to other securities firms, we serve clients of our securities brokerage business and manage client relationships primarily through our securities branches. As at 30 June 2025, we had 172 securities branches, covering 86 cities in China. The securities branches we have recently established are primarily Type-B and Type-C branches, which have low requirements on size, opening fees and on-site employees, among which, Type-C branches do not provide on-site trading service and do not require machinery facilities, facilitating our rapid establishment of operation branches at low cost. However, we cannot guarantee we will succeed in further expanding our branch network due to changes in regulatory policies, difficulties in managing a large number of retail brokerage staff and other unforeseeable reasons. In addition, as a result of intense competition, we may face increased pressures on declining fee and commission rates, and will need to provide better and customised services and products to differentiate ourselves and to retain and attract clients. If we are unable to expand our branch network and address the needs of our clients by offering competitive rates, maintaining high quality client service, continuing product innovation and providing value added services, or if we otherwise fail to meet our clients' demands or expectations, we may lose our existing clients to our competitors or fail to attract new clients, which may in turn have a material and adverse effect on our business, financial condition, results of operations and prospects.

We may suffer significant losses from our credit exposure.

The amount and duration of our credit exposure has been increasing over the past several years in tandem with our business growth and the increasing number of counterparties to which we have credit exposure. We have net long trading positions in various fixed income securities as part of our investment, and face credit risks that the issuers of the relevant securities may default. We also face credit risks in our role as counterparty in derivative contracts. In addition, we conduct over-the-counter ("OTC") trades with our clients as a counterparty to provide them with customised products or services, such as interest rate swaps, OTC options and equity return swaps. Because there is no exchange or clearing agent for these contracts, we may be subject to the credit risk of non-performance of the counterparty. Any material non-payment or non-performance by a client or counterparty could adversely affect our financial position, results of operations and cash flows. For example, concerns about, or a default by, one institution could lead to significant liquidity problems, losses or defaults by other institutions, which in turn could adversely affect us. Although we regularly review our credit exposure to specific clients or counterparties and to specific industries that we believe may present credit concerns, default risks may arise from events or circumstances that are difficult to detect or foresee. We may also fail to attain all relevant information with respect to the credit risks of our clients and counterparties.

Our securities financing businesses, including margin financing and securities lending, collateralised stock repurchase, and repurchase agreements transactions, as well as our futures brokerage business, are subject to the risk that a client may fail to perform its payment obligations or that the value of collaterals held by us to secure the obligations might become inadequate. In our securities financing businesses, we may enforce liquidation of collateral if our clients are unable to meet their obligations as scheduled, or whose collateral ratios are lower than our minimum threshold due to fluctuations in market prices of the collateral while failing to replenish the value of collateral. In our futures brokerage business, we require our clients to maintain a certain amount of account balance for their futures trading. We conduct automatic valuations for clients' account balances on each trading day, and, in the event of an insufficient account balance, we require clients to replenish their account balance or may enforce to liquidate their positions. Such mandatory liquidation mechanism may trigger disputes between clients and us and may subject us to significant legal expenses or litigation risks. In addition, the ability to carry out forced liquidation of client

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positions is adversely affected by market volatility. If the market price of securities which we hold as collateral decreases sharply for an extended period, the value of the collateral may fall below the value of our margin loans when we are unable to liquidate clients' positions in a timely manner due to the daily price fluctuation limit on the A share market and relevant A share stock suspensions, resulting in significant losses. Moreover, similar to other securities firms, we also accept restricted stocks as collateral for our collateralised stock repurchase business. Even though such arrangement is in compliance with the relevant measures released respectively by the Shanghai Stock Exchange and the Shenzhen Stock Exchange and does not contravene relevant PRC laws and regulations, we may encounter difficulties in the enforcement of collateral consisting of restricted stocks prior to the expiration of the restricted period, as we may not be able to sell such restricted securities in a timely manner. In addition, we also need to make accurate risk assessment of our clients. We may be required to implement more stringent internal risk management measures and may further increase our credit risk exposures. Our risk profile evaluation of our securities financing clients may be subject to discretionary judgment on a case-by-case basis. In the event that we fail to effectively manage our credit exposure through our risk management policies and procedures, we may experience financial losses that could materially and adversely affect our business, financial condition and results of operations.

Our derivative transactions are subject to various risks and may expose us to unexpected risks and potential losses.

We engage in various derivatives transactions in the market to hedge the interest rate exposure that arises from our asset and liability positions and reduce the impact of price volatility of our investment portfolio. However, as the derivatives market in China is evolving, our ability to hedge the market risks associated with our businesses is constrained by the limited availability of derivative products and changes of regulatory environment. Therefore, we may not be able to successfully use available derivative instruments to reduce our exposure to fluctuations in interest rates, foreign exchange rates, equity market performance and the prices of our investment products.

Derivative transactions are part of our trading and investment activities. Derivative contracts we enter into expose us to unexpected market, credit and operational risks and could cause us to suffer unexpected losses. While a transaction remains unfinished or experiences any delay in settlement, we are subject to heightened credit and operational risks. In the event of default, we may find it more difficult to enforce the contract. In addition, as China's derivative market is evolving, the secondary market for derivatives is volatile and may have limited liquidity. We may also be inexperienced in dealing with new products or making appropriate judgments in trading derivative products. Currently, substantially all of our derivative transactions are hedged by counter directional derivatives, or designed to hedge our other equity or fixed income investments, and are not for speculative investment. However, we may in the future gradually engage in speculative derivative transactions for our investment trading account. We may not fully understand, and may not be able to fully control, any risks relating to derivative transactions. Any unexpected loss from derivative transactions could have a material adverse effect on our business, financial condition and results of operations.

Our investment banking and alternative investment business is affected by regulations and policies affecting securities market transactions.

For the year ended 31 December 2024 and the six months ended 30 June 2025, segment revenue, other income and net gains and losses from our investment banking and alternative investment business amounted to RMB1.5 billion and RMB1.0 billion, respectively, representing 5.4 per cent. and 8.1 per cent. of our total revenue, other income and net gains and losses, respectively.

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Transactions we are involved in are subject to uncertainties in regulatory approvals. The primary offering of securities in China, especially IPOs, and certain types of M&A transactions of listed companies, are subject to a merit-based review and approval process conducted by various regulatory authorities. The result and timing of these reviews are beyond our control and may cause substantial delays to, or the termination of, securities offerings underwritten by us or M&A transactions advised on by us. We may experience delays in, or terminations of, securities offerings underwritten and sponsored by us as a result of unfavourable market conditions such as the market volatility which resulted in a short halt of approval of A share IPO by the CSRC. A significant decline in the approval rate of the securities offerings underwritten or sponsored by us or M&A transactions advised by us could harm our reputation, erode client confidence and reduce our underwriting, sponsors and advisory fee income, because we receive most of our fees only after the successful completion of a securities offering or M&A transaction.

In addition, when acting as a sponsor in securities offerings or a financial advisor for M&A transactions, we may be subject to regulatory sanctions, fines, penalties or other disciplinary actions or other legal liabilities for conducting inadequate due diligence in connection with an offering or the post-transaction compliance supervision, fraud or misconduct committed by issuers, their agents, other sponsors, parties of M&A transactions or us, misstatements and omissions in disclosure documents, or other illegal or improper activities that occur during the course of the underwriting or providing of financial advisory service.

Furthermore, the PRC regulatory requirements towards investment banking businesses continue to change, including the implementation of a compensation regime in which sponsor institutions are required to commit to compensate investors for their losses resulting from untruthful disclosures in IPOs before issuers' compensation liability is determined. In addition, PRC securities firms are facing increasing challenges in terms of deal execution, client development, pricing and distribution capabilities. If we are unable to adjust our business practices and strategies to meet these new challenges, we may not be able to compete effectively in the securities industry, which could in turn materially adversely affect income from our investment banking business.

Poor investment performance of our asset management schemes and mutual funds may materially and adversely affect our asset management business.

For the year ended 31 December 2024 and the six months ended 30 June 2025, segment revenue, other income and net gains and losses from our wealth and asset management business amounted to RMB17.7 billion and RMB5.1 billion, representing 63.9 per cent. and 41.0 per cent. of our total revenue, other income and net gains and losses, respectively. We mainly engage in securities asset management business through Orient Securities Asset Management, a wholly-owned subsidiary of the Guarantor. As at 30 June 2025, the total scale of assets under the entrusted management of Orient Securities Asset Management amounted to RMB233.781 billion, and a total of 271 products were managed. We receive asset management fees based on the size of each asset management scheme under our management. In addition, we may earn performance fees for certain asset management schemes. Investment performance affects our AUM and is one of the most important factors in maintaining our existing clients and attracting new clients, maintaining our fund ratings for new funds or asset management schemes, and competing for new asset management businesses. If our funds do not perform satisfactorily to our clients or we fail to outperform our competitors, existing clients might withdraw funds from our asset management business, which will lower our asset management fee income. Any of these could adversely affect the amount of asset management fees or performance fees received by us, and in turn have a material and adverse effect on our business, financial condition, results of operations and prospects. Furthermore, we use our own capital to subscribe for certain of our asset management products, the poor investment performance of which may adversely affect our investment management segment revenue. Any of the above could have a material and adverse effect on our business, financial condition, results of operations and prospects.

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In addition, our asset management fees or market share may decrease due to the increased competition from other securities companies, fund management companies, insurance companies, trust companies, commercial banks and other financial institutions in China. Furthermore, the introduction of Mainland-Hong Kong Mutual Recognition of Funds allowed approved fund products to be offered abroad, which in turn may increase competition. Market volatility, adverse economic conditions, or our failure to outperform our competitors or the market in terms of investments returns, may reduce our AUM or affect the performance of the assets or funds we manage, which could adversely affect the amount of management or performance fees we receive.

We may be subject to liability and reputational damage for distribution of financial products issued by financial institutions.

We distribute, through our branch network and online platform, financial products issued by financial institutions. The structure of some financial products, such as trust schemes, may be complex and involve various risks, including credit risks, interest risks, liquidity risks and other risks. Although as a third-party distributor, we are not liable for any investment loss or default directly derived from the financial products we distributed to our clients, we may be subject to client complaints, litigation and regulatory investigation which could have an adverse effect on our reputation and business. For example, we may not be able to identify and quantify the risks of these financial products, and our sales employees may fail to disclose such risks to our clients, in which case, our clients may invest in financial products that are too risky for their risk tolerance and investment preference, and may suffer a significant loss. This may also subject us to client complaints and litigation risks. As a result, our reputation, client relationships, business and prospects would be materially and adversely affected.

Significant interest rate fluctuations could affect our financial condition and results of operations.

Our exposure to interest rate risk is primarily associated with our interest income, interest expenses and fixed income investments. We earn interest income from brokerage and securities financing business, including margin financing and securities lending, collateralised stock repurchase and repurchase agreement transactions, bank balances, including cash balance held on behalf of brokerage clients as well as our own cash balance, and other business. We also make interest payments on accounts payable to brokerage clients, financial assets sold under repurchase agreements and various debt financing, including borrowings, due to banks and other financial institutions, short-term financing bills, income certificates, corporate bonds and subordinated bonds. In addition, we hold net fixed income securities positions, whose market prices are directly affected by the prevailing interest rates. Significant interest rate fluctuations could reduce our interest income or returns on fixed income investments, or increase our interest expenses, any of which could materially and adversely affect our business, financial condition and results of operations.

The level of our indebtedness and potential unavailability of credit may materially adversely affect our business.

We rely on bank and other external borrowings and bond issuances to fund a significant portion of our working capital requirements. Our financial condition, liquidity and business operations will be adversely affected to the extent we are not able to service or repay our debt in a timely manner because of the lack or unavailability of internal resources or inability to obtain alternative financing. Even if we are able to meet our debt service obligations, the amount of debt we borrow could also adversely affect us in a number of ways, including by:

limiting our ability to obtain any necessary financing in the future for working capital, strategic investment, debt service requirements, or other purposes;
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limiting our flexibility in planning for, or reacting to, changes in our business;
placing us at a competitive disadvantage relative to our competitors who have lower levels of debt;
affecting our credit ratings and increasing our financing cost;
making us more vulnerable to a downturn in our business or the economy generally;
subjecting us to the risk of being forced to refinance our debts at higher interest rates; and
requiring us to use a substantial portion of our cash to pay principal and interest on our debt, instead of contributing those funds to other purposes such as working capital and other capital requirements.

A significant decrease in our internal or external liquidity could adversely affect our business and reduce client confidence in us.

Maintaining adequate liquidity is crucial to our business operations as we continue to expand our collateralised stock repurchase, investment management, and other business activities with substantial cash requirements. We meet our liquidity needs primarily through cash generated from operating activities and debt financing. A reduction in our liquidity could reduce the confidence of our clients or counterparties in us, which may result in the loss of business and client accounts. In addition, we will need to satisfy various liquidity requirements in order to maintain or expand our scope of business, especially innovative products and services. Failure in the future to comply with the mandatory liquidity requirements, or any heightened requirements for specific business, may result in self-regulatory measures imposed by SAC. Any of these could have a material adverse effect on our business development and reputation.

Factors that may adversely affect our liquidity position include increased regulatory capital requirements, substantial investments, loss of market or client confidence or other regulatory changes. These situations may arise due to circumstances that we may be unable to control, such as a general market disruption or an operational problem that affects our counterparties or us, or the perception among market participants that we, or other market participants, are experiencing liquidity risk. Furthermore, our ability to sell assets may be impaired if other market participants are seeking to sell similar assets at the same time, as is likely to occur in a liquidity crunch or other market crisis. When cash generated from our operating activities is not sufficient to meet our liquidity or regulatory capital needs, we must seek external financing. During periods of disruption in the credit and capital markets, potential sources of external financing could be limited and our borrowing costs could increase. Such financing may not be available on acceptable terms or even not at all due to unfavourable market conditions and disruptions in the credit and capital markets.

A failure to identify and address conflicts of interest appropriately could adversely affect our business.

As we expand the scope of our business and our client base, it is critical for us to be able to address potential conflicts of interest, including situations where two or more interests within our business naturally exist but are in competition or conflict. We have extensive internal control and risk management procedures that are designed to identify and address conflicts of interest. However, appropriately identifying and dealing with potential conflicts of interest is complex and difficult. Conflicts of interest may exist between (i) our departments; (ii) us and our clients; (iii) our clients; (iv) us and our employees; or (v) our clients and our employees. Our failure to manage conflicts of interest could harm our reputation and erode client confidence in us. In addition, potential or perceived conflicts of interest may also give rise to litigation or regulatory actions. Any of the foregoing could materially and adversely affect our business, financial condition and results of operations.

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Our business may be adversely affected if there is any significant disruption in the operations of our overseas operations.

We conduct international business mainly through our wholly-owned subsidiaries, Orient Finance Holdings, Orient Securities International and their subsidiaries, as well as the Singapore subsidiary of Orient Futures. Since the listing of our H Shares, we have been placing more reliance on the business of Orient Finance Holdings and Orient Securities International. Orient Finance Holdings conducts brokerage business, asset management business, investment banking business and margin financing business regulated by the SFC in accordance with the SFO through Orient Securities International, its wholly-owned subsidiary and various licensed companies. Orient Securities International conducts securities brokerage, futures brokerage, asset management, investment banking, margin financing and other businesses through wholly-owned subsidiaries licensed by the SFC. Our overseas business depends on, to a large extent, the results of operations of Orient Finance Holdings and Orient Securities International and their wholly-owned subsidiaries. However, we cannot assure investors that Orient Finance Holdings and Orient Securities International and their subsidiaries will continue to experience the same level of growth or profitability in the future. A variety of external factors that could significantly affect our operations in Hong Kong include, but are not limited to, changes in the general economic and market conditions in Hong Kong and compliance with various regulatory and legal requirements in Hong Kong. For example, the Hong Kong economy has experienced significant downturns in the past, including in connection with the outbreak of Severe Acute Respiratory Syndrome in 2003, the global financial crisis in 2008, the market volatility in the second half of 2011, social unrests in 2014 and 2019 and the Coronavirus disease 19 ("COVID-19") pandemics in 2020. These economic downturns resulted in substantial losses in the securities markets, significant deterioration in customers' asset quality and increases in the cost of funding in the overseas markets. Any significant disruption in the operations of our overseas operations could have an adverse effect on our business, financial condition, results of operations and prospects.

Our international businesses are highly regulated in Hong Kong.

Our international business is subject to various applicable laws, regulations and codes of relevant regulatory authorities, in particular, the relevant regulatory authorities in Hong Kong. From time to time, the Hong Kong regulatory regime for the financial services industry (for example, the Securities and Futures Ordinance (Cap. 571) of Hong Kong and the Money Lenders Ordinance (Cap. 163) of Hong Kong) has implemented changes in such rules and regulations, some of which have resulted in additional costs to or restrictions on our international business activities. If we fail to comply with the applicable rules and regulations, we may become subject to enquiries and/or investigations by the relevant regulatory bodies and if the results of any investigations or enquiries are severe or proved to involve serious misconduct, we may be subject to penalties including fines and/or restrictions on our international business activities. In extreme cases, we may be hampered or prevented from conducting our international business in a normal manner and some or all of our operation licences may become suspended or revoked. Where penalties are substantial or protracted litigation is involved, there may also be an adverse impact on our reputation and financial position, and in some cases, there may be material and adverse impact on our business, financial condition, results of operations and prospects.

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We face additional risks as we expand our product and service offerings.

We are committed to providing new products and services in order to strengthen our leading market position in China's securities industry. We will continue to expand our product and service offerings as permitted by relevant regulatory authorities, transact with new clients not in our traditional client base and enter into new markets. These activities expose us to new and increasingly challenging risks, including, but not limited to:

we may have insufficient experience or expertise in offering new products and services and dealing with new counterparties and clients;
we may be subject to stricter regulatory scrutiny, or increased tolerance of credit risks, market risks, compliance risks and operational risks;
we may suffer from reputational concerns arising from dealing with less sophisticated counterparties and clients;
we may be unable to provide clients with adequate levels of service for our new products and services;
we may be unable to hire additional qualified personnel to support the offering of a broader range of products and services;
our new products and services may not be accepted by our clients or meet our profitability expectations;
our new products and services may be quickly copied by our competitors so that their attractiveness to our clients may be diluted;
we may be unable to obtain sufficient financing from internal and external sources to support our business expansion;
we may not be successful in enhancing our risk management capabilities and IT systems to identify and mitigate the risks associated with these new products and services, new clients and new markets;
we may have difficulties in managing overseas operations, including the compliance with various regulatory and legal provisions in different jurisdictions;
various approval or licensing provisions;
challenges in providing products, services and supports in overseas markets;
challenges in managing distribution channels and overseas distribution network effectively;
the accounting treatment differences between various jurisdictions;
potential adverse effects of taxation;
exchange losses; and
local political and economic instability or civil strife.
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If we are unable to achieve the intended results with respect to our offering of new products and services, our business, financial condition, results of operations and prospects could be materially and adversely affected.

We may pursue joint ventures or acquisitions that could present unforeseen integration difficulties or costs and may not enhance our business as we expect.

We have in the past pursued joint ventures and other acquisition transactions aimed at entering new business lines, developing our expertise in specific areas, and expanding the geographic scope and scale of our operations. Acquisitions and joint ventures involve a number of risks and present financial, managerial and operational challenges, including potential disruption of our ongoing business and distraction of management, difficulties with integrating IT, financial and human resources systems, hiring additional management and other critical personnel and increasing the scope, geographic diversity and complexity of our operations. We may not be able to realise any anticipated benefits or achieve the synergies we expect from these acquisitions or joint ventures. Our clients may react unfavourably to our acquisition and joint venture strategy, and we may incur additional liabilities due to acquisitions and set-up of joint ventures. We may also be unable to enforce contractual and legal rights effectively due to the limited intellectual property right protection provided by the laws, or as a result of any changes in the laws, regulations and policies of local governments, which could adversely affect our business, financial condition, results of operations and prospects.

Our risk management policies and procedures and internal controls, as well as the risk management tools available to us, may not fully protect us against various risks inherent in our business.

We follow our comprehensive internal risk management framework and procedures to manage our risk exposures, primarily including market risk, credit risk, liquidity risk, compliance risk and operational risk. Our risk management policies, procedures and internal controls may not be adequate or effective in mitigating our risk exposures or protecting us against unidentified or unanticipated risks. In particular, some methods of managing risks are based upon observed historical market behavior and our experience in the securities industry. These methods may fail to predict future risk exposures, which could be significantly greater than those indicated by our historical measures. Other risk management methods depend upon an evaluation of available information regarding operating and market conditions and other matters, which may not be accurate, complete, up to date or properly evaluated. In addition, in markets that are rapidly developing, the information and experience that we rely on for our risk management methods may become quickly outdated as markets and regulations continue to evolve. Deficiencies in our risk management and internal control systems and procedures may adversely affect our ability to identify or report our deficiencies or non-compliance. Any of these may have a material adverse effect on our business, financial condition and results of operations.

Our operations depend on key management and professional staff and our business may suffer if we are unable to retain or replace them.

The success of our business is dependent to a large extent on the stability of our senior management and our ability to attract and retain key personnel who possess in-depth knowledge and understanding of the securities and financial markets. If there are significant personnel changes in our senior management, we may not be able to execute our existing business strategy effectively or may have to change our existing business direction, which may materially adversely affect our business prospects. The aforementioned key personnel include members of our mid-level management, experienced investment and trading managers, risk management officers, research analysts, IT specialists, licensed sponsor representatives and other personnel. Therefore, we devote considerable resources to recruiting and retaining these personnel.

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However, the market for quality professionals is highly competitive and we face increasing competition in recruiting and retaining these individuals as other securities firms and financial institutions are competing for the same pool of talent. Intense competition may require us to offer higher compensation and other benefits in order to attract and retain qualified professionals, which could materially and adversely affect our financial condition and results of operations. As a result, we may be unable to attract or retain these personnel to achieve our business objectives and the failure to do so could severely disrupt our business and adversely affect our prospects.

We may not be able to detect and prevent fraud or other misconduct committed by our employees, representatives, agents, clients or other third parties.

We may be exposed to fraud or other misconduct committed by our employees, representatives, agents, clients or other third parties that could subject us to financial losses and sanctions imposed by governmental or self-regulatory authorities, as well as adversely affect our reputation.

Our internal control procedures are designed to monitor our operations and ensure overall compliance. However, our internal control procedures may be unable to identify all incidents of non-compliance or suspicious transactions in a timely manner or at all, particularly with respect to our innovative products or services, which may be more complex and new to us. Furthermore, it is not always possible to detect and prevent fraud and other misconduct, and the precautions we take to prevent and detect such activities may not be effective. There can be no assurance that fraud or other misconduct will not occur in the future and there can be no assurance that we will detect and prevent such fraud or misconduct. If such fraud or other misconduct does occur, it may cause negative publicity. Our failure to detect and prevent fraud and other misconduct may have a material adverse effect on our business, reputation, financial condition and results of operations.

We may fail to detect money laundering and other illegal or improper activities in our business operations on a timely basis.

We are required to comply with applicable anti-money laundering and anti-terrorism laws and regulations in China and Hong Kong. These laws and regulations require financial institutions to establish sound internal control policies and procedures with respect to anti-money laundering monitoring and reporting activities. Such policies and procedures require us to, among other things, establish or designate an independent anti-money laundering department, establish a client identification system in accordance with relevant rules, record the details of client activities and report suspicious transactions to relevant authorities. We have adopted policies and procedures aimed at detecting and preventing the use of our business platforms to facilitate money laundering activities and terrorist acts. Such policies and procedures may not completely eliminate instances in which we may be used by other parties to engage in money laundering and other illegal or improper activities. In the event that we fail to fully comply with applicable laws and regulations, the relevant government agencies may freeze our assets or impose fines or other penalties on us. There can be no assurance that there will not be failures in detecting money laundering or other illegal or improper activities which may adversely affect our business, financial condition, results of operations and reputation.

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We are subject to the risks arising from any failures or inadequacies of our IT systems.

Our operations rely heavily on the ability of our IT systems to record and process accurately a large number of transactions across numerous and diverse markets and different business segments in a timely manner. Our system for processing securities transactions is highly automated. A prolonged disruption to, or failure of, our information processing or communications systems would limit our ability to process transactions. This would impair our ability to service our clients and execute trades on behalf of clients and for our own account, which could materially and adversely affect our competitiveness, financial condition and results of operations.

The proper functioning of our core IT systems, online trading platform, data processing system, client relationship management system, mobile apps, risk management and legal and compliance system and other data processing systems, together with the communication networks between our headquarters and branches, are critical to our business and our ability to compete effectively. We have established multitier back-up systems to carry on principal functions or restore our systems in the event of a catastrophe or failure of our systems, including those caused by human errors. However, there can be no assurance that our operations will not be materially disrupted if any of our systems fail. In addition, if the capacity of our trading system is unable to process all trading orders when the securities market experiences high volatility, we may be subject to client complaints, litigation or adverse effects on our reputation.

The securities industry is characterised by rapidly changing technology. Online trading platforms and mobile apps are becoming increasingly popular among our clients due to their convenience and user-friendliness. We rely heavily on technology, and plan to expand and upgrade our online trading platform and mobile apps, to provide a wide range of brokerage and securities financing services. However, our technology operations are vulnerable to disruptions from human error, natural disasters, power failure, computer viruses, spam attacks, unauthorised access and other similar events, and we may not be able to adapt to the evolving technology in the industry. Disruptions to, or instability of, our technology or external technology, or failure to timely upgrade our online or mobile platforms could harm our business, reputation and prospects.

Our technology and information systems may be subject to cyber-attack.

Various key processes in our business depend on the operation of our IT and related computer systems, including our trading platform, mobile apps, risk management system, data processing system, and storage of confidential personal data and other information of our clients. Our IT and related computer systems may be damaged or interrupted by human error, unauthorised access such as a cyber-attack, natural hazards or disasters and similarly disruptive events. While we devote significant resources to maintaining adequate levels of physical and cyber-security in respect of our IT and related computer systems, our resources and technical sophistication may not be adequate to prevent all types of cyber-attacks or other disruptions or failures to our IT and related computer systems. A cyber-attack or IT and related computer systems failure could adversely impact our daily operations and lead to the loss of sensitive information, including our own proprietary information and that of our customers. Our business continuity procedures, disaster recovery systems and security measures to protect against network or IT and computer systems failure or disruption may not be effective, and we may not anticipate, prevent or mitigate a material adverse effect on our business, financial condition and results of operations in the event of such failure or disruption. Any or all of the above could harm our reputation and result in competitive disadvantages, litigation, lost revenues, additional costs and liability, which in turn could have a material adverse effect on our business, financial condition, results of operations and prospects.

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Our business may be susceptible to the operational failure of third parties.

We face the risk of operational failure or termination of any of the clearing agents, exchanges, clearing houses or other financial intermediaries we use to facilitate our securities transactions. Any operational failure or termination of the particular financial intermediaries that we use could adversely affect our ability to execute transactions, service our clients and manage our exposure to risk. In addition, as our inter connectivity with our clients grows, we will increasingly face the risk of operational failure with respect to our clients' systems such as personal computers, mobile devices and tablets, as well as connectivity to and compatibility with our clients' systems. Any operational failure may lead to loss of our clients and give rise to complaints, litigation, liability and negative publicities, and in turn have a material adverse effect on our business reputation, financial condition, results of operations and reputation.

Our operations may be adversely affected if we fail to obtain or maintain necessary approvals for conducting a particular business or offering specific products.

We operate in a highly regulated financial industry where many aspects of our business depend upon obtaining and maintaining the necessary approvals, licenses, permits or qualifications from relevant PRC regulators, such as CSRC, and self-regulatory organizations, such as SAC. We are required to comply with the relevant regulatory requirements when applying for approvals, licenses or permits for conducting new businesses or offering new products. As China's legal system and financial service industry continue to evolve, changes in the relevant laws and regulations or in their interpretation or enforcement may make them more difficult to comply with, or adversely affect the type and scope of businesses we are permitted to engage in. In addition, further regulatory approvals, licenses, permits or qualifications may be required for new products and services in the future, and some of our current approvals, licenses, permits or qualifications are subject to periodic renewal. If any of our business activities fails to meet the regulatory requirements, or if we fail to obtain or renew the required permits, licenses, approvals or qualifications, our business, financial condition and results of operations may be materially adversely affected.

We may be subject to litigation and regulatory investigations and proceedings and may not always be successful in defending ourselves against such claims or proceedings.

The securities industry faces substantial litigation and regulatory risks, including the risk of lawsuits and other legal actions relating to information disclosure, sales, distribution or underwriting practices, product design, fraud and misconduct, as well as protection of personal and confidential information of our clients. We may from time to time be subject to arbitration claims and lawsuits in the ordinary course of our business. We or our employees may also be subject to inquiries, investigations and proceedings by regulatory and other governmental agencies. Actions brought against us, with or without merits, may result in administrative measures, settlements, injunctions, fines, penalties, negative publicities or other results adverse to us that could have material adverse effect on our reputation, business, financial condition, results of operations and prospects. Even if we are successful in defending ourselves against these actions, the costs of such defense may be significant. In market downturns, the number of legal claims and amount of damages sought in litigation and regulatory proceedings may increase. In addition, our affiliated organizations may also encounter litigation, regulatory investigations and proceedings for the practices in their business operations. Our clients may also be involved in litigation, investigation or other legal proceedings, some of which may relate to transactions that we have advised, whether or not there has been any fault on our part. A significant judgment or regulatory action against us, or a disruption in our business arising from adverse adjudications in proceedings against our directors, officers or employees, or negative publicity involving us, would have a material adverse effect on our liquidity, reputation, business, financial condition, results of operations and prospects.

We may be subject to liability and regulatory action if we are unable to protect personal data and confidential information of our clients.

We are subject to various laws, regulations and rules governing the protection of personal data and confidential information of our clients. We routinely transmit and receive personal data and confidential information of our clients through the Internet, by email and other electronic means. Third parties may have the technology or expertise to breach the security of our transaction data and we may not be able to ensure that our vendors, service providers, counterparties or other third parties have appropriate measures in place to protect the confidentiality of such information. In addition, there is no assurance that our employees who have access to personal data and confidential information of our clients will not improperly use such data or information. If we fail to protect our clients' personal data and confidential information, the competent authorities may issue sanctions against us and we may have to provide economic compensation for losses arising from such failure. In addition, incidents of mishandling personal information or failure to protect the confidential information of our clients could bring reputational harm to us, which may materially and adversely affect our reputation, business and prospects.

The presentation of certain accounting items in the Unaudited Consolidated Financial Statements may not be comparable to the financial information in the consolidated financial statements of the Guarantor for the previous periods.

On 8 July 2025, the Ministry of Finance issued the Q&A. The Q&A stipulates that enterprises which frequently enter into contracts to buy and sell standard warehouse receipts on futures trading platforms for the purpose of earning price differences without taking delivery of the underlying commodities corresponding to the such receipts, those contracts shall be treated as financial instruments and accounted for in accordance with the Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments. If an enterprise disposes of the standard warehouse receipts shortly after acquiring them pursuant to the aforementioned contracts, it shall not recognise sales revenue. Instead, the difference between the consideration received and the carrying amount of the disposed standard warehouse receipts shall be recognised as investment income. Standard warehouse receipts held by an enterprise and not yet disposed of at the end of the period shall be presented as other current assets.

In addition, the Ministry of Finance and other relevant PRC government authorities may promulgate new accounting standards and requirements in relation to financial statements from time to time. There can be no assurance that the accounting policies or presentation of the financial statements of the Guarantor would not be materially and adversely affected by other new accounting standards or requirements in relation to financial statements promulgated by the Ministry of Finance or any other relevant PRC government authorities in the future.

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RISKS RELATING TO CONDUCTING BUSINESS IN CHINA

Economic, political and social conditions in China and government policies could affect our business and prospects.

A substantial majority of our assets are located in China, and a substantial majority of our revenue is derived from our businesses in China. Accordingly, our financial condition, results of operations and prospects are, to a material extent, subject to economic, political and legal developments in China. The PRC economy differs from the economies of developed countries in many respects, including, among other things, government involvement, level of economic development, growth rate, foreign exchange controls and resources allocation.

Although the PRC economy has been transitioning from a planned economy to a more market-oriented economy for more than three decades, a substantial portion of productive assets in China is still owned by the PRC Government. The PRC Government also exercises significant control over the economic growth of the PRC through allocating resources, controlling payments of foreign currency denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. In recent years, the PRC Government has implemented measures emphasising the utilisation of market forces in economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance practices in business enterprises. Some of these measures benefit the overall PRC economy, but may negatively affect us. For example, our financial condition and results of operations may be adversely affected by government policies on the securities markets in China or changes in tax regulations applicable to us. If the business environment in China deteriorates, our business in China may also be materially and adversely affected.

China has been one of the world's fastest growing economies as measured by GDP growth in the past 30 years and has become the world's second largest economy by gross GDP since 2010. However, there is no assurance that China's economy can sustain historical growth rates in the future. The global crisis in financial services and credit markets in 2008 caused a slowdown in the growth of the global economy. In 2015, the PRC Government adopted intensive reforms with the primary aim of restructuring and rebalancing the PRC economy towards a more sustainable model by focusing more on domestic consumption and moving away from investment and export fuelled growth. Since December 2019, the growth in consumption and investments has been slowed down by the outbreak of COVID-19. China's economic operation has recovered steadily since 2020 and reported a GDP of RMB120.47 trillion, RMB129.43 trillion and RMB134.91 trillion in 2022, 2023 and 2024, respectively. The year-on-year growth in 2024 was 5.0 per cent. If China's economy growth slows down, our business, financial condition, results of operations and prospects can be materially and adversely affected.

The future performance of the PRC's economy is not only affected by the economic and monetary policies of the PRC Government, but has been, and in the future will continue to be, materially affected by geo-political, economic and market conditions, including factors such as the liquidity of the global financial markets, the level and volatility of debt and equity prices, interest rates, currency and commodities prices, investor sentiment, inflation, and the availability and cost of capital and credit.

The global macroeconomic environment is facing challenges, including the escalation of the European sovereign debt crisis since 2011, the end of quantitative easing by the U.S. Federal Reserve and the economic slowdown in the Eurozone in 2014, the recent Russian-Ukrainian conflicts since February 2022, the ongoing Israeli-Hamas conflict since October 2023, and U.S.-China trade war since February 2025. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world's leading economies,

including the United States and China. There have been concerns over unrest and terrorist threats in the Middle East, Europe and Africa, which have resulted in volatility in oil, commodity and other markets, and over the conflicts involving Russia, Ukraine, Israeli and Hamas. There have also been concerns over the trade war between the United States and the PRC. There have also been concerns on the intensified potential conflicts in relation to territorial disputes in various regions. Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China.

A severe or prolonged deterioration of geopolitical environment, potential acts of terrorism, wars, threats of war and social unrest, for example, the recent Russian/Ukraine conflicts, could materially and adversely affect the economic growth of China and thus affecting our business, results of operations and financial condition.

Changes in the economic, political and social conditions in the PRC and government policies adopted by the PRC Government could adversely affect our business and prospects.

The PRC economy differs from the economies of most developed countries in many respects, including with respect to government involvement, level of development, economic growth rate, control of foreign exchange and allocation of resources. The PRC economy has been transitioning from a planned economy to a more market-oriented economy. In recent years, the PRC Government has implemented a series of measures emphasising market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises.

However, a large portion of productive assets in China continue to be owned by the PRC Government. The PRC Government continues to play a significant role in regulating industrial development, the allocation of resources, production, pricing and management, and there can be no assurance that the PRC Government will continue to pursue the economic reforms or that any such reforms will not have an adverse effect on our business.

Our operations and financial results could also be affected by changes in political, economic and social conditions or the relevant policies of the PRC Government, such as changes in laws and regulations (or the interpretation thereof). Our operations and financial results, as well as our ability to satisfy the obligations under the Bonds, as the case may be, could also be materially and adversely affected by changes to or introduction of measures to control changes in the rate or method of taxation and the imposition of additional restrictions on currency conversion.

As a substantial part of our businesses are conducted, and a substantial part of our assets are located, in the PRC, our operations are governed principally by PRC laws and regulations. The PRC legal system is based on written statutes while prior court decisions can be cited as reference. Since 1979, the PRC government has promulgated laws and regulations in relation to economic matters such as foreign investment, corporate organisation and governance, commerce, taxation, foreign exchange and trade, with a view to developing a comprehensive system of commercial law. However, these recently enacted laws and regulations may not be able to cover all aspects of economic activities in the PRC. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their non-binding nature, the interpretation and enforcement of these laws and regulations may vary from case to case. In addition, as the PRC laws or regulations are evolving, we may not be aware of our violation of these policies and rules until sometime after the violation. Furthermore, litigation may be protracted and result in substantial costs and diversion of resources and management's attention. See also "Risk Factors - Risks relating to Our Business and Industry - We may be subject to litigation and regulatory investigations and proceedings and may not always be successful in defending ourselves against such claims or proceedings".

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Future fluctuations in the value of the Renminbi could have a material adverse effect on our financial condition and results of operations.

While we generate most of our revenue in the PRC, we also offer securities products and services in Hong Kong to overseas customers. A portion of our revenue, expenses and bank borrowings are denominated in Hong Kong dollars and U.S. dollars, although our functional currency is the Renminbi. As a result, fluctuations in exchange rates, for example, between the Renminbi, Hong Kong dollar and U.S. dollar, could affect our profitability and may result in foreign currency exchange losses of our foreign currency-denominated assets and liabilities.

The exchange rate of the Renminbi against the U.S. dollar and other currencies fluctuates and is affected by, among other things, changes in the PRC's and international political and economic conditions and the PRC Government's fiscal and currency policies. Since 1994, the conversion of the Renminbi into foreign currencies, including the Hong Kong dollar and U.S. dollar, has been based on rates set daily by the PBOC based on the previous business day's inter-bank foreign exchange market rates and exchange rates in global financial markets. In August 2015, the PBOC changed the way it calculates the Renminbi's daily mid-point against the U.S. dollar to take into account market-maker quotes before announcing such daily midpoint. This change resulted in a depreciation in the value of the Renminbi at approximately 1.9 per cent. Relative to the U.S. dollar in August 2015 and further subsequent depreciation against major currencies. The International Monetary Fund announced on 30 September 2016 that, effective from 1 October 2016, the Renminbi will be added to its Special Drawing Rights currency basket. Such change and additional future changes may increase the volatility in the trading value of the Renminbi against foreign currencies. Since October 2016, the RMB against the U.S. dollar has generally continued the trend to depreciate. Following the gradual appreciation of Renminbi in 2017, Renminbi experienced a recent depreciation in value against U.S. dollar following a fluctuation in the first half of 2018. In August 2019, the PBOC on 5 August 2019 set the Renminbi's daily reference rate above 7 per U.S. dollar for the first time in over a decade amidst an uncertain trade and global economic climate. Since June 2020, Renminbi has been experiencing another round of appreciation against U.S. dollar. However, as at 31 August 2023, the Renminbi was around 4.2 per cent. weaker against the U.S. dollar than it was a year ago. By the end of 2024, Renminbi has been experiencing depreciation against U.S. dollar, and China is contending with a weakening yuan in anticipation of U.S. president Donald Trump following through with his tariff threats. The RMB/U.S.$ exchange rate is expected to face depreciation pressure in 2025. There has historically been significant international pressure on the PRC Government to adopt a more flexible currency policy, which could result in further appreciation or depreciation of the Renminbi against the U.S. dollar. However, in light of the recent depreciation of the Renminbi against the U.S. dollar, there have also been calls on the PRC Government to take measures to maintain stability of the exchange rate of the Renminbi. There can be no assurance that the Renminbi will not experience significant appreciation or depreciation against the U.S. dollar in the future. Any significant increase in the value of the Renminbi against foreign currencies could reduce the value of our foreign currency-denominated revenue and assets.

Any future occurrence of force majeure events, natural disasters or outbreaks of contagious diseases in the PRC may materially and adversely affect our business, financial condition and results of operations.

Any future occurrence of force majeure events, natural disasters or outbreaks of epidemics and contagious diseases may materially and adversely affect our business, financial condition and results of operations. An outbreak of an epidemic or contagious disease could result in a widespread health crisis and restrict the level of business activities in affected areas, which may, in turn, materially and adversely affect our business. Moreover, the PRC has experienced natural disasters such as earthquakes, floods and droughts in the past few years. Any future occurrence of severe natural disasters in the PRC may materially and

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adversely affect its economy and therefore our business. We cannot assure investors that any future occurrence of natural disasters or outbreaks of epidemics and contagious diseases or the measures taken by the PRC Government or other countries in response to such contagious diseases, will not seriously disrupt our operations or those of our customers, which may materially and adversely affect our business, financial condition and results of operations.

The PRC Government's control of currency conversion may adversely affect the value of investors' investments.

Most of our revenue is denominated in Renminbi, which is also the reporting currency. Renminbi is not a freely convertible currency. A portion of our cash may be required to be converted into other currencies in order to meet our foreign currency needs, including payments of interest, principal and premium on the Bonds. However, the PRC Government may restrict future access to foreign currencies for current account transactions at its discretion. If this were to occur, we might not be able to pay interest, principal and premium to the holders of the Bonds in foreign currencies. On the other hand, foreign exchange transactions under capital accounts in the PRC continue to be not freely convertible and require the approval of the SAFE. These limitations could affect our ability to obtain foreign currencies through equity financing, or to obtain foreign currencies for capital expenditure.

There can be no assurance of the accuracy or comparability of facts and statistics contained in this Offering Circular with respect to the PRC, its economy or the relevant industry.

Certain facts and other statistics in this Offering Circular relating to the PRC, its economy or the relevant industry in which we operate have been directly or indirectly derived from official government publications and certain other public industry sources and although we believe such facts and statistics are accurate and reliable, we cannot guarantee the quality or the reliability of such source materials. They have not been prepared or independently verified by the Issuer, the Guarantor, the Joint Lead Managers, the Trustee, the Agents or any of its or their respective affiliates, employees, directors, agents, advisers or representatives, and, therefore, none of the Issuer, the Guarantor, the Joint Lead Managers, the Trustee, the Agents or any of its or their respective affiliates, employees, directors, agents, advisers or representatives makes any representation as to the completeness, accuracy or fairness of such facts or other statistics, which may not be consistent with other information compiled within or outside the PRC. Due to possibly flawed or ineffective collection methods or discrepancies between published information and market practice and other problems, the statistics herein may be incomplete, inaccurate or unfair or may not be comparable to statistics produced for other economies or the same or similar industries in other countries and should not be unduly relied upon. Furthermore, there is no assurance that they are stated or compiled on the same basis or with the same degree of accuracy as may be the case elsewhere. In all cases, investors should give consideration as to how much weight or importance they should attach to or place on such facts or other statistics.

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RISKS RELATING TO THE BONDS AND THE GUARANTEE

Any failure to complete the relevant filings under the NDRC Measures within the prescribed timeframes following the completion of the issuance of the Bonds may have adverse consequences for the Issuer, the Guarantor and/or the investors of the Bonds.

According to the NDRC Measures issued by the NDRC, which came into effect on 10 February 2023, domestic enterprises and/or their overseas controlled entities or branches shall obtain the Certificate of Examination and Registration of Foreign Debts Borrowed by Enterprises (企業借用外債審核登記證明) before borrowing any foreign debt and notify the particulars of such issue within prescribed timeframes after such issue. The NDRC Measures's interpretation and the administration of the NDRC Measures may be subject to a certain degree of executive and policy discretion by the NDRC. The Guarantor has completed the pre-issue registration with respect to the Bonds with the NDRC on 16 September 2025 and will submit the issue information to the NDRC after the Issue Date. However, there is no assurance that the Guarantor will be able to comply with the NDRC requirements to provide the notification of the Bonds to the NDRC within the prescribed timeframes. If any enterprise borrows foreign debts in violation of the NDRC Measures, the NDRC will take disciplinary actions such as holding an interview and giving a public warning against the relevant enterprise and its principal liable person. If any application documents to apply for foreign debt approval submitted by enterprises contain concealing, false record, misleading statement, or material omission, the NDRC will give a warning to relevant enterprise and its principal liable person. If the approval is obtained by concealment, deception, bribery, or any other improper means, such approval will be revoked. For any enterprise failing to comply with filing and reporting requirements under the NDRC Measures, the NDRC will order such enterprise to take rectification actions within a prescribed time limit; and if the circumstances are severe or the enterprise fails to take rectification action within the prescribed time limit, the NDRC will give a warning to the relevant enterprise and its principal liable person. Therefore, there is no assurance that the failure to comply with the NDRC requirements would not result in any adverse consequences for the Issuer and the Guarantor, the Bonds or the investors in the Bonds. There is also no assurance that the registration with the NDRC will not be revoked or amended in the future or that future changes in PRC laws and regulations will not have a negative impact on the performance or validity and enforceability of the Bonds in the PRC. Potential investors of the Bonds are advised to exercise due caution when making their investment decisions.

Any failure to complete the relevant registration with SAFE within the prescribed timeframe following the completion of the issue of the Bonds may have adverse consequences for the Issuer, the Guarantor and/or the investors of the Bonds.

Pursuant to the Deed of Guarantee, the Guarantor will unconditionally and irrevocably guarantee the due payment of all sums expressed to be payable by the Issuer under the Bonds and the Trust Deed. The Guarantor is required to submit the Deed of Guarantee to local SAFE within 15 business days upon the execution of the Deed of Guarantee for registration and in accordance with the Provisions on the Foreign Exchange Administration of Cross-Border Guarantees (跨境擔保外匯管理規定) promulgated by SAFE on 12 May 2014 which came into effect on 1 June 2014. Although the non-registration does not render the Guarantee ineffective or invalid under PRC law, SAFE may impose penalties on the Guarantor if registration is not carried out within the stipulated time frame. If the Guarantor fails to complete registration with SAFE, there may be logistical hurdles at the time of remittance of funds (if any cross-border payment is to be made by the Guarantor under the Deed of Guarantee) as domestic banks may require evidence of registration with SAFE in connection with the Deed of Guarantee in order to effect such remittance, although this does not affect the validity of the Guarantee itself.

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The Issuer has limited financial resources.

The Issuer is an indirect offshore subsidiary of the Guarantor. As at the date of this Offering Circular, the Issuer has not engaged and will not engage, in any activities other than those incidental to its incorporation and establishment as an indirect wholly-owned subsidiary of the Guarantor, those relating to the issue of bonds (including the proposed issue of the Bonds) and those relating to the on-lending of the proceeds thereof to the Guarantor and its subsidiaries. The Issuer does not and will not have any material assets other than amounts due to it from the Guarantor or its subsidiaries, and its ability to make payments under the Bonds depends on receipt of timely remittances from the Guarantor or its subsidiaries from whom the amounts are due from. If the Issuer does not receive sufficient payment from the Guarantor or its subsidiaries when any amount is due from it as a result of any redemption (including redemption upon maturity and upon occurrence of a Relevant Event as described in the Terms and Conditions of the Bonds), the Issuer will not be able to fulfil its obligations under the Bonds.

The Bonds and the Guarantee will be unsecured obligations.

The Bonds and the Guarantee will be unsecured obligations of the Issuer and the Guarantor, respectively. The payment of the principal and interest of the Bonds and the payment under the Guarantee may be adversely affected if:

the Issuer or the Guarantor enters into bankruptcy, liquidation, reorganisation or other winding-up proceedings; or
there is a default in or acceleration of payment under the Issuer's or the Guarantor's existing or future secured indebtedness or other unsecured indebtedness.

If any of these events were to occur, Bondholders' rights to receive payment pursuant to the Bonds and the Guarantee may be subordinated to those of the creditors of the Issuer or the Guarantor as a result of rule of law or secured priority in payment. There can be no assurance that the Issuer or the Guarantor will have sufficient cash to pay amounts due on the Bonds after it satisfies the obligations due to other creditors.

The Trustee may request holders of Bonds to provide an indemnity and/or security and/or pre-funding to its satisfaction.

In certain circumstances (including, without limitation, the giving of notice to the Issuer pursuant to Condition 8 (Events of Default) of the Terms and Conditions of the Bonds and the taking of any actions, steps and/or proceedings pursuant to Condition 13 (Enforcement) of the Terms and Conditions of the Bonds), the Trustee may (at its sole discretion) request holders of the Bonds to provide an indemnity and/or security and/or pre-funding to its satisfaction before it takes any action on behalf of holders of Bonds. The Trustee shall not be obliged to take any such action if not indemnified and/or secured and/or pre-funded to its satisfaction. Negotiating and agreeing to an indemnity and/or security and/or pre-funding can be a lengthy process and may impact on when any such action can be taken. The Trustee may not be able to take action, notwithstanding the provision of an indemnity or security or pre-funding to it, in breach of the terms of the Trust Deed and in such circumstances or where there is uncertainty or dispute as to the applicable laws or regulations or in its opinion it would not have the power to take such action and, to the extent permitted by the agreements and the applicable law, it will be for the holders of the Bonds to take such action directly.

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The Issuer may be treated as a PRC resident enterprise for PRC tax purposes, in which case the Issuer may be subject to PRC income taxes on its worldwide income, and interest payable by the Issuer to foreign investors may be subject to PRC withholding tax and gains on the sale of the Bonds may be subject to PRC tax.

Under the PRC Enterprise Income Tax Law ("EIT Law"), which became effective on 1 January 2008 and was subsequently amended on 24 February 2017 and 29 December 2018, and its Implementing Regulation which became effective on 1 January 2008 and was subsequently amended on 23 April 2019 and 6 December 2024, enterprises organised under the laws of jurisdictions outside the PRC with their "de facto management bodies" located within the PRC are deemed to be "resident enterprises for PRC tax purposes," and are therefore subject to PRC enterprise income tax at the rate of 25 per cent. in respect of their income sourced from both within and outside China. The Implementing Regulation defines the term "de facto management body" as a management body that exercises substantial and overall control and management over the production and operations, personnel, accounting and properties of an enterprise. In addition, the Notice on Issues Concerning the Determination of Chinese-controlled Enterprises Incorporated Overseas as Resident Enterprises on the Basis of Their De Facto Management Bodies issued by the State Administration of Taxation ("SAT") (國家稅務總局關於境外註冊中資控股企業依據實際管理機構標準認定為居民企業有關問題的通知) on 22 April 2009 provides that a foreign enterprise controlled by a PRC company or a PRC Group would be classified as a "resident enterprise" with a "de facto management body" located within the PRC if all of the following requirements are satisfied: (i) the senior management and core management departments in charge of daily operations are located mainly within the PRC; (ii) financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (iii) major assets, accounting books, company seals and minutes and files of board and shareholders' meetings are located or kept within the PRC; and (iv) at least half of the enterprise's directors with voting rights, or senior management, reside within the PRC.

There is no assurance that the Issuer will not be treated as a "resident enterprise" under the EIT Law, any aforesaid circulars or any amended regulations in the future. If the Issuer is treated as a PRC resident enterprise for PRC enterprise income tax purposes, among other things, it would be subject to the PRC enterprise income tax at the rate of 25 per cent. on its taxable income. Furthermore, if the Issuer is treated as a PRC resident enterprise, payments of interest by the Issuer may be regarded as derived from sources within the PRC and therefore the Issuer may be obligated to withhold PRC income tax at 10 per cent. on payments of interest on the Bonds to non-PRC resident enterprise investors without an establishment within the PRC or whose income has no connection to its establishment with the PRC. In the case of non-PRC resident individual investors, the tax may be withheld at a rate of 20 per cent. In addition, as the Guarantor is a PRC tax resident, in the event that the Guarantor is required to fulfil its obligations under the Guarantee by making interest payments on behalf of the Issuer, the Guarantor will be required to withhold a 10 per cent. PRC income tax in the case of non-PRC resident enterprises or 20 per cent. in the case of non-PRC resident individuals if such payments are regarded as derived from sources within the PRC.

In addition, if the Issuer is treated as a PRC resident enterprise, any gain realised on the transfer of the Bonds by non-PRC resident investors may be regarded as derived from sources within the PRC and accordingly may be subject to a 10 per cent. PRC income tax in the case of non-PRC resident enterprises or 20 per cent. in the case of non-PRC resident individuals. The PRC tax on interest or gains may be reduced or exempted under applicable tax treaties between the PRC and the Bondholder's home country. For example, according to an arrangement between the PRC and Hong Kong for the avoidance of double-taxation, Bondholders who are Hong Kong residents, including both enterprise holders and individual holders, may be exempted from PRC income tax on capital gains derived from a sale or exchange of the Bonds.

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On 23 March 2016, the Ministry of Commerce of the People's Republic of China and SAT issued the Circular of Full Implementation of Replacing Business Tax with Value-Added Tax Reform (Caishui [2016] No. 36) (“Circular 36”), which introduced a new value-added tax (“VAT”) from 1 May 2016. According to Circular 36, VAT is applicable where the entities or individuals provide financial services such as providing the loans within the PRC. The services are treated as being sold within the PRC where either the service provider or the service recipient is located in the PRC. It is further clarified under Circular 36 that the loans refer to the activity of lending capital for another’s use and receiving the interest income thereon. Based on the definition of loans under Circular 36, the issuance of Bonds may be treated as the Bondholders providing the loans to the Issuer, which thus may be regarded as the financial services for VAT purposes. In the event the Issuer is deemed to be a PRC resident enterprise in the PRC by the PRC tax authorities, the Bondholders may be regarded as providing the financial services within the PRC and consequently, the amount of interest payable by the Issuer to any non-resident Bondholders may be subject to withholding of VAT and related local levies at the rate of 6.72 per cent. Circular 36 and laws and regulations pertaining to VAT are relatively new, the interpretation and enforcement of such laws and regulations involve uncertainties.

If a Bondholder, being a non-resident enterprise or non-resident individual, is required to pay any PRC income tax on gains on the transfer of the Bonds, the value of the relevant Bondholder’s investment in the Bonds may be materially and adversely affected.

If the Issuer and/or the Guarantor is required to withhold PRC tax (including VAT) from interest payments on the Bonds or the Guarantee, the Issuer and the Guarantor will be required, subject to certain exceptions, to pay such additional amounts as will result in receipt by the holders of the Bonds of such amounts as would have been received had no such withholding been required. In certain circumstances, the Issuer and/or the Guarantor may have the option to redeem the Bonds prior to their maturity upon the requirement to pay such additional amounts arising, and a Bondholder may not be able to reinvest the redemption proceeds in comparable securities at the same rate of return of the Bonds. In addition, the requirement to pay additional amounts will increase the cost of servicing interest payments on the Bonds and could have an adverse effect on the Group’s financial condition.

The Bonds will be subject to optional redemption by the Issuer and may have a lower market value than bonds that cannot be redeemed.

The Bonds may be redeemed at the option of the Issuer in whole, but not in part, at any time, at their principal amount, together with interest accrued up to the date fixed for redemption if, subject to certain conditions, as a result of a change in tax law, the Issuer (or if the Guarantee were called, the Guarantor) has or will become obliged to pay Additional Tax Amounts, as further described in Condition 5(b) (Redemption for taxation reasons) of the Terms and Conditions of the Bonds. In addition, according to Condition 5(d) (Redemption at the Option of the Issuer) of the Terms and Conditions of the Bonds, on or after 29 August 2028, the Issuer has the option to redeem all, but not some only, of the Bonds at 100 per cent. of their principal amount, together with interest accrued to, but excluding, the date fixed for redemption. Such an optional redemption feature is likely to limit the market value of the Bonds, and the market value of the Bonds generally will not rise substantially above the price at which they can be redeemed. The Issuer may be expected to redeem the Bonds when its cost of borrowing (taking into account costs of exercising such optional redemption) is lower than its costs under the Bonds. At those times, a Bondholder may not be able to reinvest the redemption proceeds at an effective interest rate to achieve the returns it would have been able to achieve had there been no redemption. A prospective investor should consider reinvestment risk in light of other investments available at that time.

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The Issuer may not be able to redeem the Bonds upon the due date for redemption thereof.

The Issuer may, on the occurrence of a Relevant Event (as defined under the Terms and Conditions of the Bonds), be required to redeem Bonds of any Holder, and will be required to redeem the Bonds and at maturity. If such an event were to occur, the Issuer may not have sufficient cash in hand and may not be able to arrange financing to redeem the Bonds in time, or on acceptable terms, or at all. The ability to redeem the Bonds in such event may also be limited by the terms of other debt instruments. The Issuer's failure to repay, repurchase or redeem tendered Bonds could constitute an event of default under the Bonds, which may also constitute a default under the terms of other indebtedness of the Group.

Credit ratings may not reflect all risks. Any downgrade in our credit ratings could adversely affect our business or liquidity.

The Bonds are expected to be assigned a rating of "Baa2" by Moody's. In addition, the Guarantor has been assigned a rating of "Baa2" by Moody's with a stable outlook and a rating of "BBB-" by S&P with a stable outlook. The ratings represent opinions of the rating agencies and their assessment of the ability of the Issuer and the Guarantor to perform their respective obligations under the Bonds and the Guarantee and credit risks in determining the likelihood that payments will be made when due under the Bonds. The ratings may not fully reflect the potential impact of all risks relating to the structure, market and other factors in relation to the Bonds as discussed above, and there may be other factors that may affect the value of the Bonds.

A rating is not a recommendation to buy, sell or hold the Bonds and may be subject to revision, suspension or withdrawal at any time by the rating agency. The rating agency may also amend or fully replace the method it uses for assigning credit ratings.

The Guarantor's rating may be affected by changes in its results of operations, capital structure or other factors, which will mean certain risks for the investors. In addition, there can be no assurance that a rating will remain unchanged during a specific range of time, or the rating agency will not downgrade or withdraw a rating based on its assessment of the future developments or as a result of the adoption of a different rating methodology. Any adverse revision to the Guarantor's corporate ratings or the sovereign ratings of the PRC by rating agencies may adversely affect the Group's business, financial performance and market price of the Bonds. For example, in December 2023, Moody's changed its outlook on China's long-term foreign-currency issuer default rating to "negative" from "stable", reflecting Moody's expectation that economy-wide debt in the PRC will continue to rise as potential growth slows. Further, in April 2025, Fitch downgraded the long-term foreign-currency issuer default rating of the PRC to "A (Stable)" from "A+ (Negative)", reflecting Fitch's expectations of a continued weakening of China's public finances and a rapidly rising public debt trajectory during the country's economic transition. As a result, each of Moody's and Fitch has changed their respective rating outcomes on a number of PRC issuers, including but not limited to government-owned corporate entities and subsidiaries. There can be no assurance that similarly adverse ratings developments may not occur in the future. If any further adverse ratings developments occur, our corporate ratings could be adversely affected. Further, the Guarantor's ability to obtain financing or to access capital markets may also be limited, thereby lowering its liquidity.

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If any of the Guarantor or its subsidiaries is unable to comply with the restrictions and covenants in its respective debt agreements, or the Bonds, there could be a default under the terms of these agreements, or the Bonds, which could cause repayment of the relevant debt to be accelerated.

If the Issuer or the Guarantor is unable to comply with the restrictions and covenants in the Bonds, or if any of the Guarantor or its subsidiaries is unable to comply with its current or future debt obligations and other agreements, there could be a default under the terms of these agreements. In the event of a default under these agreements, the holders of the debt could terminate their commitments to lend to the Guarantor or its relevant subsidiary, accelerate repayment of the debt, declare all amounts borrowed due and payable or terminate the agreements, as the case may be. Furthermore, some of the Group's debt agreements, and the Bonds, contain (or may in the future contain) cross-acceleration or cross-default provisions. As a result, the default by the Guarantor or such subsidiary under one debt agreement may cause the acceleration of repayment of debt, including the Bonds, or result in a default under its other debt agreements, including the Bonds. If any of these events occur, there can be no assurance that the assets and cash flows of the Guarantor and its subsidiaries would be sufficient to repay in full all of their indebtedness, or that they would be able to find alternative financing. Even if alternative financing could be obtained, there can be no assurance that it would be on terms that are favourable or commercially acceptable to the Guarantor or its subsidiaries.

Modifications and waivers may be made in respect of the Terms and Conditions of the Bonds, the Trust Deed, the Agency Agreement and the Deed of Guarantee by the Trustee or less than all of the holders of the Bonds that may be adverse to the interests of individual holders of the Bonds.

The Terms and Conditions of the Bonds contain provisions for calling meetings of holders of Bonds to consider matters affecting their interests generally. These provisions permit defined majorities to bind all holders of the Bonds, including those holders of the Bonds who do not attend and vote at the relevant meeting and those holders of the Bonds who vote in a manner contrary to the majority. There is a risk that the decision of the majority of holders of the Bonds may be adverse to the interests of the individual holders of the Bonds.

The Terms and Conditions of the Bonds also provide that the Trustee may (but shall not be obliged to), without the consent of holders of the Bonds, agree to any modification of any of the Terms and Conditions of the Bonds or any provisions of the Trust Deed, the Agency Agreement or the Deed of Guarantee (other than in respect of certain reserved matters) which in the opinion of the Trustee will not be materially prejudicial to the interests of holders of the Bonds and to any modification of any of the Terms and Conditions of the Bonds or any provisions the Trust Deed, the Agency Agreement or the Deed of Guarantee which in the opinion of the Trustee is of a formal, minor or technical nature or is to correct a manifest error or to comply with any mandatory provision of applicable law.

In addition, the Trustee may (but shall not be obliged to), without the consent of the holders of the Bonds, authorise or waive any proposed breach or breach of the Bonds, the Trust Deed, the Agency Agreement or the Deed of Guarantee (other than a proposed breach or breach relating to the subject of certain reserved matters) if, in the opinion of the Trustee, the interests of the holders of Bonds will not be materially prejudiced thereby.

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The insolvency laws of the British Virgin Islands and the PRC and other local insolvency laws may differ from those of another jurisdiction with which the holders of the Bonds are familiar.

Because the Issuer is incorporated under the laws of the British Virgin Islands and the Guarantor is incorporated under the laws of the PRC, as applicable, any insolvency proceeding relating to the Issuer and the Guarantor would likely involve insolvency laws of the British Virgin Islands or the PRC, as applicable, the procedural and substantive provisions of which may differ from comparable provisions of the local insolvency laws of jurisdictions with which the holders of the Bonds are familiar.

The Bonds may not be a suitable investment for all investors.

Each potential investor in the Bonds must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:

have sufficient knowledge and experience to make a meaningful evaluation of the Bonds, the merits and risks of investing in the Bonds and the information contained in this Offering Circular;
have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Bonds and the impact such investment will have on its overall investment portfolio;
have sufficient financial resources and liquidity to bear all of the risks of an investment in the Bonds;
understand thoroughly the terms of the Bonds and be familiar with the behaviour of any relevant indices and financial markets; and
be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

A potential investor should not invest in the Bonds which are complex financial instruments unless it has the expertise (either alone or with the help of a financial adviser) to evaluate how the Bonds will perform under changing conditions, the resulting effects on the value of the Bonds and the impact this investment will have on the potential investor's overall investment portfolio.

Additionally, the investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (a) the Bonds are legal investments for it, (b) the Bonds can be used as collateral for various types of borrowing and (c) other restrictions apply to its purchase of the Bonds. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of the Bonds under any applicable risk-based capital or similar rules.

Investors may experience difficulties in enforcing judgments obtained from non-PRC courts against us.

The Terms and Conditions of the Bonds and the transaction documents are governed by English law and the Issuer and the Guarantor have submitted to the exclusive jurisdiction of the Hong Kong courts. However, most companies in the Group are incorporated in the PRC and a substantial amount of the Group's assets and companies are located in the PRC.

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It is understood that the enforcement of foreign judgments in the PRC is still subject to uncertainties. In addition, the mechanisms for enforcement of rights under the corporate governance framework to which the Group is subject are also relatively undeveloped and untested. The PRC has not entered into treaties or arrangements providing for the recognition and enforcement of judgments made by the courts in most other jurisdictions.

On 18 January 2019, the Supreme People's Court of the PRC and the Hong Kong government signed the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and the Hong Kong Special Administrative Region (關於內地與香港特別行政區法院相互認可和執行民商事案件判決的安排) (the "2019 Arrangement"). The 2019 Arrangement has been implemented in Hong Kong by the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645), which came into operation on 29 January 2024. In the Mainland, the Supreme People's Court promulgated a judicial interpretation to implement the 2019 Arrangement on 26 January 2024 (the "Judicial Interpretation"). The 2019 Arrangement applies to judgments made on or after 29 January 2024.

Unlike other bonds issued in the international capital markets where holders of such bonds would typically not be required to submit to an exclusive jurisdiction, the Bondholders will be deemed to have submitted to the exclusive jurisdiction of the Hong Kong courts. Thus, the Bondholders' ability to initiate a claim outside Hong Kong will be limited.

Under the 2019 Arrangement, where the Hong Kong court has given a legally effective judgment in a civil and commercial matter, any party concerned may apply to the relevant People's Court of the Mainland for recognition and enforcement of the judgment, subject to the provisions, limits, procedures and other terms and requirements of the 2019 Arrangement and the Judicial Interpretation. The recognition and enforcement of a Hong Kong court judgment could be refused if the relevant People's Court of the Mainland consider that the enforcement of such judgment is contrary to the basic principles of law of the Mainland or the social and public interests of the Mainland. While it is expected that the relevant People's Courts of the Mainland will recognise and enforce a judgment given by a Hong Kong court and governed by English law, there can be no assurance that such courts will do so for all such judgments as there is no established practice in this area.

The Issuer may issue additional Bonds in the future.

The Issuer may, from time to time, and without the consent of the Bondholders and in accordance with the Trust Deed, create and issue further bonds having the same terms and conditions as the Bonds in all respects (or in all respects except for the issue date, the first payment of interest and the timing for complying with the requirements set out in the Terms and Conditions of the Bonds in relation to the Cross-border Security Registration and the NDRC Post-Issue Filing) (see "Terms and Conditions of the Bonds – Further Issues") so that such further issue will be consolidated and form a single series with the Bonds. There can be no assurance that such future issuance or capital raising activity will not adversely affect the market price of the Bonds.

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The Bonds will initially be represented by the Global Certificate and holders of a beneficial interest in the Global Certificate must rely on the procedures of the relevant Clearing system(s).

The Bonds will initially be represented by the Global Certificate. Such Global Certificate will be deposited with a common depositary for Euroclear and Clearstream (each of Euroclear and Clearstream, a “Clearing System”). Except in the circumstances described in the Global Certificate, investors will not be entitled to receive definitive certificates. The relevant Clearing System(s) will maintain records of the beneficial interests in the Global Certificate. While the Bonds are represented by the Global Certificate, investors will be able to trade their beneficial interests only through the Clearing Systems.

While the Bonds are represented by the Global Certificate, the Issuer, failing whom the Guarantor, will discharge its payment obligations under the Bonds by making payments to the common depositary for Euroclear and Clearstream for distribution to their account holders. A holder of a beneficial interest in the Global Certificate must rely on the procedures of the relevant Clearing System to receive payments under the Bonds. None of the Issuer or the Guarantor has any responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Certificate.

Holders of beneficial interests in the Global Certificate will not have a direct right to vote in respect of the Bonds. Instead, such holders will be permitted to act only to the extent that they are enabled by the relevant Clearing System to appoint appropriate proxies. Similarly, holders of beneficial interests in the Global Certificate will not have a direct right thereunder to take enforcement action against the Issuer or the Guarantor in the event of a default under the Bonds but will have to rely upon their rights under the Trust Deed.

Bondholders should be aware that a definitive certificate which has a principal amount that is not an integral multiple of the minimum specified denomination may be illiquid and difficult to trade.

In relation to any Bond which has a principal amount consisting of a minimum specified denomination plus a higher integral multiple of another smaller amount, it is possible that the Bonds may be traded in amounts in excess of the minimum specified denomination that are not integral multiples of such minimum specified denomination. In such a case a Bondholder who, as a result of trading such amounts, holds a principal amount of less than the minimum specified denomination will not receive a definitive certificate in respect of such holding (should definitive certificates be printed) and would need to purchase a principal amount of Bonds such that it holds an amount equal to one or more specified denominations. If definitive certificates are issued, holders should be aware that a definitive certificate which has a principal amount that is not an integral multiple of the minimum specified denomination may be illiquid and difficult to trade.

The obligations of the Guarantor under the Guarantee are structurally subordinated to the liabilities and obligations of its subsidiaries.

The Guarantor’s ability to perform its obligations under the Guarantee is effectively dependent on the cash flow of its subsidiaries. Any claim by the Trustee against the Guarantor in relation to the Guarantee will be effectively subordinated to all existing and future obligations of the Guarantor subsidiaries (which have not provided any guarantee under the Bonds), and all claims by creditors of such subsidiaries will have priority to the assets of such entities over the claims of the Trustee under the Guarantee.

The use of Secured Overnight Financing Rate (“SOFR”) as a reference rate is subject to important limitations.

The rate of interest on the Bonds will be calculated on the basis of Compounded SOFR Index (as further described under Condition 4 (Interest) of the Terms and Conditions of the Bonds).

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In June 2017, the New York Federal Reserve's Alternative Reference Rates Committee (the "ARRC") announced SOFR as its recommended alternative to U.S. dollar London Interbank Offered Rate ("LIBOR"). However, the composition and characteristics of SOFR are not the same as those of LIBOR. SOFR is a broad U.S. Treasury repo financing rate that represents overnight secured funding transactions. This means that SOFR is fundamentally different from LIBOR for two key reasons. First, SOFR is a secured rate, while LIBOR is an unsecured rate. Second, SOFR is an overnight rate, while LIBOR represents interbank funding over different maturities. As a result, there can be no assurance that SOFR will perform in the same way as LIBOR would have at any time, including, without limitation, as a result of changes in interest and yield rates in the market, market volatility or global or regional economic, financial, political, or regulatory events. For example, since publication of SOFR began in April 2018, daily changes in SOFR have, on occasion, been more volatile than daily changes in comparable benchmark or other market rates. As SOFR is an overnight funding rate, interest on the Bonds will be calculated on the basis of compounding SOFR during the relevant interest period. As a consequence of this calculation method, the amount of interest payable on each interest payment date will only be known a short period of time prior to the relevant interest payment date. Bondholders therefore will not know in advance the interest amount which will be payable on the Bonds. Although the Federal Reserve Bank of New York has published historical indicative SOFR information going back to 2014, such prepublication of historical data inherently involves assumptions, estimates and approximations. Bondholders should not rely on any historical changes or trends in SOFR as an indicator of future changes in SOFR. The Federal Reserve Bank of New York notes on its publication page for SOFR that use of SOFR is subject to important limitations and disclaimers, including that the Federal Reserve Bank of New York may alter the methods of calculation, publication schedule, rate revision practices or availability of SOFR at any time without notice. In addition, SOFR is published by the Federal Reserve Bank of New York based on data received from other sources, and none of the Issuer, the Guarantor, the Trustee or the Agents has any control over its determination, calculation or publication. There can be no guarantee that SOFR will not be discontinued or fundamentally altered in a manner that is materially adverse to the interests of the Bondholders. If the manner in which SOFR is calculated is changed or if SOFR is discontinued, that change or discontinuance may result in a reduction or elimination of the amount of interest payable on the Bonds and a reduction in the trading prices of the Bonds which would negatively impact the Bondholders who could lose part of their investment.

The Terms and Conditions of the Bonds provide for certain fallback arrangements in the event that a SOFR Benchmark Transition Event (as defined in the Terms and Conditions of the Bonds) occurs, which is based on the ARRC recommended language. There is however no guarantee that the fallback arrangements will operate as intended at the relevant time or operate on terms commercially acceptable to all Bondholders. Any of the fallbacks may result in interest payments that are lower than, or do not otherwise correlate over time with, the payments that would have been made on the Bonds if SOFR had been provided by the Federal Reserve Bank of New York in its current form. Investors should consult their own independent advisers and make their own assessment about the potential risks in making any investment decision with respect to the Bonds.

The market continues to develop in relation to SOFR as a reference rate for the Bonds.

Investors should be aware that the market continues to develop in relation to SOFR as a reference rate in the capital markets and its adoption as an alternative to U.S. dollar LIBOR. Market participants and relevant working groups are exploring alternative reference rates based on SOFR (which seek to measure the market's forward expectation of a SOFR rate over a designated term). The market or a significant part thereof may adopt an application of SOFR that differs significantly from that set out in the Terms and Conditions of the Bonds. In addition, the manner of adoption or application of SOFR in the bond markets may differ materially compared with the application and adoption of SOFR in other markets, such as the

derivatives and loan markets. Investors should carefully consider how any mismatch between the adoption of SOFR in the bond, loan and derivatives markets may impact any hedging or other financial arrangements which they may put in place in connection with any acquisition, holding or disposal of Bonds. In addition, the development of SOFR as an interest reference rate for the bond markets, as well as continued development of SOFR-based rates, indices and averages for such markets and the market infrastructure for adopting such rates, could result in reduced liquidity or increased volatility or could otherwise affect the market price of the Bonds. Similarly, if SOFR does not prove widely used in securities such as the Bonds, investors may not be able to sell the Bonds at all or the trading price of the Bonds may be lower than those of bonds linked to indices that are more widely used. The use of SOFR as a reference rate for bonds is nascent, and may be subject to change and development, both in terms of the substance of the calculation and in the development and adoption of market infrastructure for the issuance and trading of bonds referencing such rates. The Bonds may have no established trading market when issued, and an established trading market may never develop or may not be very liquid which, in turn, may reduce the trading price of the Bonds or mean that investors in the Bonds may not be able to sell the Bonds at all or may not be able to sell the Bonds at prices that will provide them with a yield comparable to similar investments that have a developed secondary market, and may consequently suffer from increased pricing volatility and market risk. Investors should consider these matters when making their investment decision with respect to the Bonds.

RISKS RELATING TO THE MARKET GENERALLY

A trading market for the Bonds may not develop.

The Bonds will be a new issue of securities for which there is currently no trading market. There can be no assurance as to the liquidity of the Bonds or that an active trading market will develop. If such a market were to develop, the Bonds could trade at prices that may be higher or lower than the initial issue price depending on many factors, including prevailing interest rates, the Group's operations and the market for similar securities. Although application will be made for the listing of, and permission to deal in, the Bonds on the Hong Kong Stock Exchange and application has been made to the LuxSE to list the Bonds on the Official List of the Luxembourg Stock Exchange and for the Bonds to trading on the Professional Segment of the Euro MTF Market, no assurance can be given as to the liquidity of, or trading marked for, the Bonds. None of the Joint Global Coordinators, the Joint Bookrunners nor Joint Lead Managers are obligated to make a market in the Bonds, and if any Joint Global Coordinator, Joint Bookrunner or Joint Lead Manager does so, it may discontinue such market-making activity at any time without notice. Further, the Bonds may be allocated to a limited number of investors, in which case liquidity may be limited. In addition, the Bonds are being offered pursuant to exemptions from registration under the Securities Act and, as a result, the holders of the Bonds will only be able to resell the Bonds in transactions that have been registered under the Securities Act or in transactions not subject to or exempt from registration under the Securities Act. Please see "Subscription and Sale". None of the Issuer or the Guarantor can predict or give any assurance as to whether an active trading market for the Bonds will develop or be sustained or whether there will be any disruptions to trading in the Bonds that may result in volatility in prices.

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A small number of investors may purchase a significant percentage of the Bonds and may therefore be able to significantly influence matters which require to be voted on by the Bondholders. Additionally, this may reduce the liquidity of the Bonds in the secondary trading market.

A small number of investors may purchase a significant percentage of the Bonds in this offering. Any holder of a significant portion of the Bonds may therefore be able to significantly influence matters which require to be voted on by the Bondholders. Additionally, the interests of these substantial investors may be different from the interests of the other holders of the Bonds and the significant portion of the Bonds to be held by them may reduce the liquidity of the Bondholders in the secondary trading market.

Investors in the Bonds may be subject to foreign exchange risks.

The Bonds will be denominated and payable in U.S. dollars. An investor who measures investment returns by reference to a currency other than U.S. dollars would be subject to foreign exchange risks by virtue of an investment in the Bonds, due to, among other things, economic, political and other factors over which none of the Issuer or the Guarantor has any control. Depreciation of the U.S. dollar against such currency could cause a decrease in the effective yield of the Bonds below their stated coupon rates and could result in a loss when the return on the Bonds is translated into such currency. In addition, there may be tax consequences for investors as a result of any foreign currency gains resulting from any investment in the Bonds.

The liquidity and price of the Bonds following the offering may be volatile.

The price and trading volume of the Bonds may be highly volatile. Factors such as variations in the Group's revenue, earnings and cash flows and proposals of new investments, strategic alliances and/or acquisitions, interest rates and fluctuations in prices for comparable companies or any adverse change in the credit rating, revenues, earnings or results of operations could cause the price of the Bonds to change. Any such developments may result in large and sudden changes in the volume and price at which the Bonds will trade. There can be no assurance that these developments will not occur in the future.

International financial markets and world economic conditions may adversely affect the market price of the Bonds.

The market price of the Bonds may be adversely affected by declines in the international financial markets and world economic conditions. The market for Chinese securities is, to varying degrees, influenced by economic and market conditions in other markets, especially those in Asia. Although economic conditions are different in each country, investors' reactions to developments in one country can affect the securities markets and the securities of issuers in other countries, including the PRC. Since the sub-prime mortgage crisis in 2008, the international financial markets have experienced significant volatility. If similar developments occur in the international financial markets in the future, the market price of the Bonds could be adversely affected.

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EXCHANGE RATE INFORMATION

PRC

PBOC sets and publishes daily a base exchange rate with reference primarily to the supply and demand of Renminbi against a basket of currencies in the market during the prior day. PBOC also takes into account other factors, such as the general conditions existing in the international foreign exchange markets.

On 21 July 2005, the PRC Government introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. On the same day, the value of the Renminbi appreciated by 2.0 per cent. against the U.S. dollar. The PRC Government has since made and in the future may make further adjustments to the exchange rate system. On 18 May 2007, PBOC enlarged, effective on 21 May 2007, the floating band for the trading prices in the inter-bank spot exchange market of Renminbi against the U.S. dollar from 0.3 per cent. to 0.5 per cent. around the central parity rate. This allows the Renminbi to fluctuate against the U.S. dollar by up to 0.5 per cent. above or below the central parity rate published by PBOC. The floating band was further widened to 1.0 per cent. on 16 April 2012. These changes in currency policy resulted in the Renminbi appreciating against the U.S. dollar by approximately 26.9 per cent. from 21 July 2005 to 31 December 2013. On 14 March 2014, PBOC further widened the floating band against the U.S. dollar to 2.0 per cent.

On 11 August 2015, PBOC announced to improve the central parity quotations of Renminbi against the U.S. dollar by authorising market-makers to provide central parity quotations to the China Foreign Exchange Trading Centre daily before the opening of the interbank foreign exchange market with reference to the interbank foreign exchange market closing rate of the previous day, the supply and demand for foreign exchange as well as changes in major international currency exchange rates. For three conservative days commencing 11 August 2015, the PBOC devalued the Renminbi against the U.S. dollar, leading to declines in the value of the Renminbi versus the U.S. dollar of up to 2.8 per cent. in currency markets and representing the largest single-day drop in the value of the Renminbi since 1994. On 11 December 2015, CFETS, a sub-institutional organisation of the PBOC, published the CFETS Renminbi exchange rate index for the first time which weighs the Renminbi based on 13 currencies, to guide the market in order to measure the Renminbi exchange rate from a new perspective. In December 2016, the CFETS announced that starting on 1 January 2017, the number of currencies in the CFETS currency basket will be increased to 24 from 13. The 11 currencies to be added, including the Korean won, the South African rand and the Mexican peso, will have a 21.09 per cent. weighting in the currency basket, while the U.S. dollar's weight in the basket will be reduced to 0.224 from 0.264. In August 2019, the PBOC on 5 August 2019 set the Renminbi's daily reference rate above 7 per U.S. dollar for the first time in over a decade amidst an uncertain trade and global economic climate. The PRC government may make further adjustments to the exchange rate system in the future.

Although PRC governmental policies were introduced in 1996 to reduce restrictions on the convertibility of the Renminbi into foreign currency for current account items, conversion of the Renminbi into foreign currency for capital items, such as foreign direct investment, loans or security, requires the approval of SAFE and other relevant authorities.

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The table below sets forth for the periods indicated, certain information concerning the exchange rates between Renminbi and U.S. dollars. For periods after 1 January 2010, the exchange rates reflect the exchange rates as set forth in the H.10 statistical release of the Federal Reserve Board.

Period	Renminbi per U.S. Dollar Noon Buying Rate^{(1)}
	End	Average^{(2)}	High	Low
		(RMB per U.S.$1.00)
2020	6.5250	6.8878	7.1348	6.5250
2021	6.3726	6.4382	6.5716	6.3435
2022	6.8972	6.7518	7.3048	6.3084
2023	7.0999	7.0896	7.3430	6.7010
2024	7.2993	7.1933	7.2993	7.0106
2025
March	7.2567	7.2493	7.2843	7.2273
April	7.2706	7.2968	7.3499	7.2675
May	7.1991	7.2166	7.2706	7.1798
June	7.1636	7.1804	7.1975	7.1636
July	7.2002	7.1741	7.2002	7.1541
August	7.1304	7.1727	7.1415	7.1304
September (through 12 September)	7.1242	7.1297	7.1415	7.1184

Notes:
(1) Exchange rates between Renminbi and U.S. dollar represent the noon buying rates as set forth in the H.10 statistical release of the Federal Reserve Board.
(2) Annual averages have been calculated from month-end rates. Monthly averages have been calculated using the average of the daily rates during the relevant period.

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USE OF PROCEEDS

The gross proceeds from the issuance of the Bonds, before deducting underwriting commissions and other estimated expenses in connection with this offering, will be U.S.$300,000,000. The net proceeds from the issue of the Bonds will be used for refinancing the Group's medium- to long-term bonds due October 2025.

CAPITALISATION AND INDEBTEDNESS

The following table set forth the consolidated capitalisation and indebtedness of the Group as derived from its unaudited condensed consolidated financial statements as at 30 June 2025 and on an actual basis and as adjusted to give effect to the offering of the Bond before deducting fees and expenses payable. The table should be read in conjunction with the Group's unaudited condensed consolidated financial statements as at 30 June 2025 and the notes thereto.

As at 30 June 2025

	Actual		As Adjusted
	RMB (unaudited)	U.S.$^{(1)} (unaudited)	RMB (unaudited)	U.S.$^{(1)} (unaudited)
	(in '000)
Debts:
Account payables to brokerage clients	120,249,508	16,786,184	120,249,508	16,786,184
Repurchase agreements	100,150,319	13,980,445	100,150,319	13,980,445
Borrowings	1,748,727	244,113	1,748,727	244,113
Placements from banks and financial institutions	29,327,263	4,093,928	29,327,263	4,093,928
Short-term debt instruments	4,130,895	576,651	4,130,895	576,651
Bonds Payable	59,190,632	8,262,694	59,190,632	8,262,694
Lease liabilities	959,876	133,994	959,876	133,994
Bonds to be issued^{(2)}	-	-	2,149,080	300,000
Total debts	315,757,220	44,078,009	317,906,300	44,378,009
Equity:
Share capital	8,496,645	1,186,086	8,496,645	1,186,086
Treasury stock	(561,002)	(78,313)	(561,002)	(78,313)
Other equity instrument	5,000,000	697,973	5,000,000	697,973
Reserves	61,870,413	8,636,777	61,870,413	8,636,777
Retained earnings	10,026,027	1,399,579	10,026,027	1,399,579
Equity attributable to equity holders of the Company	84,832,083	11,842,102	84,832,083	11,842,102
Non-controlling interests	2,908	406	2,908	406
Total Equity	84,834,991	11,842,508	84,834,991	11,842,508
Total Capitalisation^{(3)}	400,592,211	55,920,517	402,741,291	56,220,517

Notes:
(1) Based on the exchange rate of RMB7.1636 to U.S.$1.00, the noon buying rate in effect on 30 June 2025 as set forth in the H.10 weekly statistical release of the Board of the Governors of the Federal Reserve System of the United States.
(2) Refers to the aggregate principal amount of the Bonds before deducting fees and expenses payable.
(3) Total capitalisation represents the sum of total debts and total equity.

In the ordinary course of our business, we may, from time to time, consider various financing opportunities and incur additional debt, including bank borrowings and bond issuances.

Except as disclosed in this Offering Circular, there has been no material change in the consolidated capitalisation or indebtedness of the Group since 30 June 2025.

TERMS AND CONDITIONS OF THE BONDS

The following, subject to modification and other than the words in italics, is the text of the terms and conditions of the Bonds which will appear on the reverse of each of the definitive certificates evidencing the Bonds and be incorporated by reference into the Global Certificate:

The issue of the U.S.$300,000,000 floating rate guaranteed bonds due 2028 (the “Bonds”, which expression includes any further bonds issued pursuant to Condition 15 (Further issues) and forming a single series therewith) was authorised by a resolution of the sole director of Orient ZhiSheng Limited (the “Issuer”) passed on 22 September 2025, the resolutions of the board of directors of the Guarantor (as defined below) passed on 27 March 2024 and the resolutions of the shareholders of the Guarantor passed on 10 May 2024, and the guarantee of the Bonds was authorised by the resolutions of the board of Directors of DFZQ (東方證券股份有限公司) (the “Guarantor”) passed on 28 March 2025 and the resolutions of the shareholders of the Guarantor passed on 23 May 2025. The Bonds are constituted by a trust deed (as amended or supplemented from time to time, the “Trust Deed”) dated on or about 29 September 2025 among the Issuer, the Guarantor and Citicorp International Limited (the “Trustee” which expression shall include all persons for the time being the trustee or trustees under the Trust Deed) as trustee for the Holders (as defined below) of the Bonds. These terms and conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed, which includes the form of the Bonds.

The Bonds have the benefit of a deed of guarantee (as amended or supplemented from time to time, the “Deed of Guarantee”) dated on or about 29 September 2025 entered into by the Guarantor and the Trustee relating to the Bonds. The Bonds are the subject of an agency agreement (as amended or supplemented from time to time, the “Agency Agreement”) dated on or about 29 September 2025 relating to the Bonds among the Issuer, the Guarantor, Citicorp International Limited as registrar (the “Registrar”, which expression includes any successor registrar appointed from time to time in connection with the Bonds), Citibank, N.A., London Branch as principal paying agent (the “Principal Paying Agent”, which expression includes any successor principal paying agent appointed from time to time in connection with the Bonds), as transfer agent (the “Transfer Agent”, which expression includes any successor or additional transfer agent appointed from time to time in connection with the Bonds), as calculation agent (the “Calculation Agent”, which expression includes any successor or additional calculation agent appointed from time to time in connection with the Bonds), the other agents named therein and the Trustee.

Copies of the Trust Deed, the Deed of Guarantee and the Agency Agreement are available for inspection following prior written request and satisfactory proof of holding at all reasonable time during usual business hours at the principal office of the Trustee (being at the Issue Date at 40/F, Champion Tower, Three Garden Road, Central, Hong Kong) and at the specified office of the Principal Paying Agent. “Agents” means the Principal Paying Agent, the Registrar, the Transfer Agents, the Calculation Agent and any other agent or agents appointed from time to time with respect to the Bonds. All capitalised terms that are not defined in these terms and conditions (these “Conditions”) will have the meanings given to them in the Trust Deed. Certain provisions of these Conditions are summaries of the Trust Deed and the Agency Agreement and are subject to their detailed provisions. The Bondholders (as defined below) are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Deed of Guarantee and those provisions of the Agency Agreement applicable to them. Copies of the Trust Deed, the Deed of Guarantee and the Agency Agreement will be mailed to the Bondholders upon the receipt by the Trustee of such request from such Bondholders and the proof of holding at such Bondholders’ cost.

1 FORM, DENOMINATION, STATUS AND GUARANTEE OF THE BONDS

(a) Form and Denomination

The Bonds are in registered form in the denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof (an “Authorised Denomination”).

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(b) Status of the Bonds

The Bonds constitute direct, unconditional, unsubordinated and (subject to the provisions of Condition 3(a) (Negative Pledge)) unsecured obligations of the Issuer which will at all times rank pari passu without any preference or priority among themselves and rank at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, save for such exceptions as may be provided by provisions of applicable laws and subject to Condition 3(a) (Negative Pledge).

The Guarantor has in the Deed of Guarantee unconditionally and irrevocably guaranteed the due and punctual payment of all sums from time to time payable by the Issuer in respect of the Bonds. Such guarantee (the “Guarantee of the Bonds”) constitutes direct, unconditional, unsubordinated and (subject to the provisions of Condition 3(a) (Negative Pledge)) unsecured obligations of the Guarantor which will at all times rank at least pari passu with all other present and future unsecured and unsubordinated obligations of the Guarantor, save for such exceptions as may be provided by provisions of applicable laws and subject to Condition 3(a) (Negative Pledge).

2 REGISTER, TITLE AND TRANSFERS

(a) Register

The Registrar will maintain a register (the “Register”) in respect of the Bonds in accordance with the provisions of the Agency Agreement. In these Conditions, the “Holder” of a Bond means the person in whose name such Bond is for the time being registered in the Register (or, in the case of a joint holding, the first named thereof) and “Bondholder” shall be construed accordingly. A certificate (each, a “Bond Certificate”) will be issued to each Bondholder in respect of its registered holding. Each Bond Certificate will be numbered serially with an identifying number which will be recorded in the Register.

(b) Title

The Holder of each Bond shall (except as ordered by a court of competent jurisdiction or as otherwise required by law) be treated as the absolute owner of such Bond for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing on the Bond Certificate relating thereto (other than the endorsed form of transfer) or any notice of any previous loss or theft of such Bond Certificate) and no person shall be liable for so treating such Holder.

Upon issue, the Bonds will be represented by a global certificate (the “Global Certificate”) registered in the name of a nominee of, and deposited with a common depositary for Euroclear Bank SA/NV and Clearstream Banking S.A. The Conditions are modified by certain provisions contained in the Global Certificate. See “Summary of Provisions Relating to the Bonds in Global Form”.

Except in the limited circumstances described in the Global Certificate, owners of interests in Bonds represented by the Global Certificate will not be entitled to receive definitive Bond Certificates in respect of their individual holdings of Bonds. The Bonds are not issuable in bearer form.

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Subject to the Agency Agreement and Condition 2(f) (Closed periods) and Condition 2(g) (Regulations concerning transfers and registration) below, a Bond may be transferred upon surrender of the relevant Bond Certificate, with the endorsed form of transfer duly completed, at the specified office of the Registrar or any Transfer Agent, together with such evidence as the Registrar or (as the case may be) such Transfer Agent may require to prove the title of the transferor and the authority of the individuals who have executed the form of transfer; provided, however, that a Bond may not be transferred unless the principal amount of Bonds transferred and (where not all of the Bonds held by a Holder are being transferred) the principal amount of the balance of Bonds not transferred are Authorised Denominations. In the case of a transfer of part only of a holding of Bonds represented by one Bond Certificate, a new Bond Certificate shall be issued to the transferee in respect of the part transferred and a further new Bond Certificate in respect of the balance of the holding not transferred shall be issued to the transferor. In the case of a transfer of Bonds to a person who is already a Holder, a new Bond Certificate representing the enlarged holding shall only be issued against surrender of the Bond Certificate representing the existing holding.

Transfers of interests in the Bonds evidenced by the Global Certificate will be effected in accordance with the rules of the relevant clearing systems.

(d) Registration and delivery of Bond Certificates

Within five business days of the surrender of a Bond Certificate and delivery of the completed and signed form of transfer in accordance with Condition 2(c) (Transfers) above, the Registrar will register the transfer in question and deliver a new Bond Certificate of a like principal amount to the Bonds transferred to each relevant Holder at its specified office or (as the case may be) the specified office of any Transfer Agent or (at the request and risk of any such relevant Holder) by uninsured first class mail (airmail if overseas) to the address specified for the purpose by such relevant Holder, unless such Holder requests otherwise and pays in advance to the relevant Transfer Agent or the Registrar (as the case may be) the costs of such other method of delivery and/or such insurance as it may specify. In this Condition 2(d) (Registration and delivery of Bond Certificates), “business day” means a day, other than a Saturday or Sunday, on which commercial banks are open for general business (including dealings in foreign currencies) in the city where the Registrar or (as the case may be) the relevant Transfer Agent has its specified office.

(e) No charge

The transfer of a Bond will be effected without charge by or on behalf of the Issuer, the Registrar or any Transfer Agent but against such indemnity and/or security and/or prefunding as the Registrar or (as the case may be) such Transfer Agent may require in respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such transfer.

(f) Closed periods

Bondholders may not require transfers to be registered (i) during the period of seven days ending on (but excluding) the due date for any payment of principal (or premium (if any)) in respect of that Bond; (ii) during the period of seven days ending on (and including) any Record Date (as defined in Condition 6(a)(ii) (Interest)); (iii) during the period of 15 days prior to (and including) any date on which Bonds may be called for redemption by the Issuer pursuant to Condition 5(b) (Redemption for tax reasons) or Condition 5(d) (Redemption at the Option of the Issuer); or (iv) after any such Bond has been put for redemption pursuant to Condition 5(c) (Redemption for Relevant Events).

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(g) Regulations concerning transfers and registration

All transfers of Bonds and entries on the Register are subject to the detailed regulations concerning the transfer of Bonds scheduled to the Agency Agreement. The regulations may be changed by the Issuer with the prior written approval of the Trustee and the Registrar, and by the Registrar with the prior written approval of the Trustee. A copy of the current regulations will be mailed (free of charge to the Holder and at the Issuer's (failing which, the Guarantor's) expense) by the Registrar to any Bondholder who requests in writing a copy of such regulations.

3 COVENANTS

(a) Negative Pledge

So long as any Bond remains outstanding (as defined in the Trust Deed), neither the Issuer nor the Guarantor shall, and each of the Issuer and the Guarantor shall procure that none of their respective Subsidiaries (other than any Listed Subsidiary and its Subsidiaries) will, create or have outstanding any Security Interest upon the whole or any part of its present or future undertaking, assets or revenues to secure any Relevant Indebtedness or Guarantee of Relevant Indebtedness without at the same time or prior thereto (i) according to the Bonds equally and rateably the same security on substantially identical terms as is created or subsisting to secure any such Relevant Indebtedness or Guarantee of Relevant Indebtedness or (ii) providing such other security for the Bonds as the Trustee may in its absolute discretion consider to be not materially less beneficial to the interests of the Bondholders or as may be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Bondholders.

(b) Limitation on the Issuer's Activities

For so long as any Bond remains outstanding, the Issuer shall not, and the Guarantor shall procure that the Issuer will not, conduct any business or any activities other than the issue of bonds and the lending of the proceeds thereof to any of the Guarantor's Subsidiaries and affiliates and any other activities reasonably incidental thereto.

The Guarantor undertakes that it will (i) file or cause to be filed with the Shanghai Branch of SAFE, the Deed of Guarantee in accordance with, and within the time period prescribed by, the Provisions on the Foreign Exchange Administration Rules on Cross-border Security (跨境擔保外匯管理規定) promulgated by SAFE on 12 May 2014 which came into effect on 1 June 2014 ("Cross-border Security Registration"), (ii) use its reasonable endeavours to complete the Cross-border Security Registration and obtain a registration record from SAFE (or any other document evidencing the completion of registration issued by SAFE) on or before the Registration Deadline (as defined below), (iii) before the Registration Deadline, use its reasonable endeavours to provide the Trustee with (1) copies of the relevant SAFE registration record or any other document evidencing the completion of registration issued by SAFE (the "Registration Documents") and (2) a certificate substantially in the form set out in the Trust Deed signed by an Authorised Signatory (as defined in the Trust Deed) of the Guarantor confirming the completion of the Cross-border Security Registration and certifying that the copies of Registration Documents delivered as aforesaid are each true and complete copies of the originals. In addition, the Guarantor shall procure that within 10 Shanghai Business Days after copies of the Registration Documents are delivered to the Trustee, the Issuer gives notice to the Bondholders (in accordance with Condition 16 (Notices)) confirming the completion of the Cross-border Security Registration.

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The Trustee shall have no obligation to monitor, assist with or ensure the registration of the Deed of Guarantee with SAFE on or before the Registration Deadline or to verify the accuracy, validity and/or genuineness of any documents in relation to or in connection with the Cross-border Security Registration and/or the Registration Documents or to give notice to the Bondholders confirming the completion of the Cross-border Security Registration, and shall not be liable to Bondholders or any other person for not doing so.

(d) NDRC Post-Issuance Filing and Notification

The Guarantor undertakes to file or cause to be filed with the NDRC the requisite information and documents in relation to the issue of the Bonds within the relevant prescribed timeframes after the Issue Date in accordance with the Administrative Measures for the Review and Registration of Medium- and Long-term Foreign Debts of Enterprises (企業中長期外債審核登記管理辦法(國家發展和改革委員會令第56號)) (“Order 56”) issued by the NDRC with effect from 10 February 2023 and any implementation rules, regulations, certificates, circulars or notices in connection therewith as issued by the NDRC from time to time, including but not limited to the initial post-issuance filing in respect of the Bonds with the NDRC within 10 Shanghai Business Days after the Issue Date (“NDRC Post-Issuance Filing”) and complying with all applicable PRC laws and regulations in relation to the NDRC Post-Issuance Filing in accordance with Order 56.

The Guarantor shall within 10 Shanghai Business Days after submission of such NDRC Post-Issuance Filing provide the Trustee with (i) copies of the documents evidencing the completion of the NDRC Post-Issuance Filing (the “Filing Documents”) and (ii) a certificate substantially in the form set out in the Trust Deed signed by an Authorised Signatory of the Guarantor confirming the submission of the NDRC Post-Issuance Filing and certifying that the copies of the Filing Documents pursuant to (i) of this paragraph are each true and complete copies of the originals. In addition, the Guarantor shall procure that within 10 Shanghai Business Days after the documents comprising the Filing Documents are delivered to the Trustee, the Issuer gives notice to the Bondholders (in accordance with Condition 16 (Notices)) confirming the completion of the NDRC Post-Issuance Filing.

The Trustee shall have no obligation to monitor, assist with or ensure the completion of the NDRC Post-Issuance Filing on or before the deadline referred to above or to verify the accuracy, validity and/or genuineness of any documents in relation to or in connection with the NDRC Post-Issuance Filing or to give notice to the Bondholders confirming the completion of the NDRC Post-Issuance Filing, and shall not be liable to Bondholders or any other person for not doing so.

(e) Financial Statements

So long as any Bond remains outstanding (as defined in the Trust Deed), the Guarantor shall furnish the Trustee with:

(A) a Compliance Certificate of the Guarantor (on which the Trustee may rely conclusively as to such compliance) within 14 days of a written request by the Trustee and at the time of provision of the audited annual financial statements of the Group;

(B) as soon as practicable after their date of publication and in any event not more than 120 days after the end of each financial year, a copy of the audited annual financial statements (audited by an internationally recognised firm of independent accountants) of the Group; and

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(C) as soon as practicable after their date of publication and in any event not more than 90 days after the end of each financial period, a copy of the unaudited semi-annual consolidated financial statements of the Group;

and if such statements referred to in Condition 3(e)(B) or Condition 3(e)(C) above shall be in the Chinese language, together with an English translation of the same translated by (i) an internationally recognised firm of independent accountants or (ii) a professional translation service provider, and checked by an internationally recognised firm of independent accountants, together in any such case with a certificate in English signed by an Authorised Signatory of the Guarantor certifying that such translation is complete and accurate (and the Trustee shall not be obliged to check or verify any such translation and may rely conclusively without liability to any Bondholder or any other person on such certificate and the accuracy and completeness of any such translation), provided that, if at any time the Capital Stock of the Guarantor are listed for trading on a recognised stock exchange, the Guarantor may furnish the Trustee, as soon as they are available but in any event not more than 10 Shanghai Business Days after such financial or other reports of the Guarantor are filed with the stock exchange on which the Guarantor's shares are at any time listed for trading, with true and correct copies of any financial or other report filed with such stock exchange in lieu of the reports identified in Conditions 3(e)(B) and 3(e)(C) above (provided that the obligation to provide Compliance Certificates as set out in this Condition 3(e) (Financial Statements) and in the Trust Deed shall continue and not be affected by this proviso) and if such financial or other report referred to in this proviso shall be in the Chinese language, together with an English translation of the same translated by (i) an internationally recognised firm of independent accountants or (ii) a professional translation service provider, and checked by an internationally recognised firm of independent accountants, together in any such case with a certificate in English signed by an Authorised Signatory of the Guarantor certifying that such translation is complete and accurate (and the Trustee shall not be obliged to check or verify any such translation and may rely conclusively without liability to any Bondholder or any other person on such certificate and the accuracy and completeness of any such translation).

So long as any Bond remains outstanding (as defined in the Trust Deed), the Issuer shall furnish the Trustee with a Compliance Certificate of the Issuer (on which the Trustee may rely conclusively as to such compliance) within 14 days of a written request by the Trustee and at the time of provision of the audited annual financial statements of the Group by the Guarantor.

(f) Rating Maintenance

For so long as any Bond remains outstanding (as defined in the Trust Deed), save with the approval of an Extraordinary Resolution of the Bondholders, the Issuer shall maintain a rating on the Bonds by at least one Rating Agency.

(g) Definition

In these Conditions:

"Capital Stock" means any and all shares, interests (including joint venture interests), participations or other equivalents (however designated) of capital stock of a corporation or any and all equivalent ownership interests in a Person (other than a corporation);

"Compliance Certificate" means a certificate in English of the Issuer or the Guarantor, as the case may be, signed by an Authorised Signatory of the Issuer or, as the case may be, by an Authorised

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Signatory of the Guarantor that, having made all reasonably enquiries, to the best of the knowledge, information and belief of the Issuer or, as the case may be, the Guarantor as at a date (the "Certification Date") not more than five days before the date of the certificate, (i) no Relevant Event (as defined below), Event of Default or Potential Event of Default had occurred since the Certification Date of the last such certificate or (if none) the date of the Trust Deed or, if such an event had occurred, giving details of it; and (ii) each of the Issuer and the Guarantor has complied with all their respective obligations under the Trust Deed, the Deed of Guarantee and the Bonds;

"Guarantee" means, in relation to any Indebtedness of any Person, any obligation of another Person to pay such Indebtedness including (without limitation):

(i) any obligation to purchase such Indebtedness;

(ii) any obligation to lend money, to purchase or subscribe shares or other securities or to purchase assets or services in order to provide funds for the payment of such Indebtedness;

(iii) any indemnity against the consequences of a default in the payment of such Indebtedness; and

(iv) any other agreement to be responsible for such Indebtedness;

"Group" means the Guarantor and its Subsidiaries, taken as a whole;

"Hong Kong" means the Hong Kong Special Administrative Region of the People's Republic of China;

"Indebtedness" means any indebtedness of any Person for money borrowed or raised including (without limitation) any indebtedness for or in respect of:

(i) amounts raised by acceptance under any acceptance credit facility;

(ii) amounts raised under any note purchase facility;

(iii) the amount of any liability in respect of leases or hire purchase contracts which would, in accordance with applicable law and generally accepted accounting principles, be treated as finance or capital leases;

(iv) the amount of any liability in respect of any purchase price for assets or services the payment of which is deferred for a period in excess of 60 days; and

(v) amounts raised under any other transaction (including, without limitation, any forward sale or purchase agreement) having the commercial effect of a borrowing;

"Listed Subsidiary" means any Subsidiary of the Guarantor, the Voting Shares of which are at the relevant time listed or dealt in or traded on any internationally recognised stock exchange;

"Material Subsidiary" at any time shall mean any Subsidiary of the Guarantor:

(i) whose revenue or (in the case of a Subsidiary which itself has Subsidiaries) consolidated revenue, as shown by its latest audited income statement are at least 10 per cent. of the consolidated revenue as shown by the latest audited consolidated income statement of the Guarantor and its Subsidiaries; or

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(ii) whose gross profit or (in the case of a Subsidiary which itself has Subsidiaries) consolidated gross profit, as shown by its latest audited income statement are at least 10 per cent. of the consolidated gross profit as shown by the latest audited consolidated income statement of the Guarantor and its Subsidiaries including, for the avoidance of doubt, the Guarantor and its consolidated Subsidiaries' share of profits of Subsidiaries not consolidated and of jointly controlled entities and after adjustments for minority interests; or

(iii) whose gross assets or (in the case of a Subsidiary which itself has Subsidiaries) consolidated gross assets, as shown by its latest audited balance sheet are at least 10 per cent. of the amount which equals the amount included in the consolidated gross assets of the Guarantor and its Subsidiaries as shown by the latest audited consolidated balance sheet of the Guarantor and its Subsidiaries including, for the avoidance of doubt, the investment of the Guarantor in each Subsidiary whose accounts are not consolidated with the consolidated audited accounts of the Guarantor and after adjustment for minority interests; or

(iv) to which is transferred the whole or substantially the whole of the assets of a Subsidiary which immediately prior to such transfer was a Material Subsidiary, provided that the Material Subsidiary which so transfers its assets shall forthwith upon such transfer cease to be a Material Subsidiary and the Subsidiary to which the assets are so transferred shall cease to be a Material Subsidiary at the date on which the first audited accounts (consolidated, if appropriate) of the Guarantor prepared as of a date later than such transfer are issued unless such Subsidiary would continue to be a Material Subsidiary on the basis of such accounts by virtue of the provisions of paragraphs (i), (ii) or (iii) above of this definition; provided that, in relation to paragraphs (i), (ii) and (iii) above of this definition:

(a) in the case of a corporation or other business entity becoming a Subsidiary after the end of the financial period to which the latest consolidated audited accounts of the Guarantor relate, the reference to the then latest consolidated audited accounts of the Guarantor for the purposes of the calculation above shall, until consolidated audited accounts of the Guarantor for the financial period in which the relevant corporation or other business entity becomes a Subsidiary are published be deemed to be a reference to the then latest consolidated audited accounts of the Guarantor adjusted to consolidate the latest audited accounts (consolidated in the case of a Subsidiary which itself has Subsidiaries) of such Subsidiary in such accounts;

(b) if at any relevant time in relation to the Guarantor or any Subsidiary which itself has Subsidiaries no consolidated accounts are prepared and audited, revenue, gross profit or gross assets of the Guarantor and/or any such Subsidiary shall be determined on the basis of pro forma consolidated accounts prepared for this purpose by the Guarantor;

(c) if at any relevant time in relation to any Subsidiary, no accounts are audited, its revenue, gross profit or gross assets (consolidated, if appropriate) shall be determined on the basis of pro forma accounts (consolidated, if appropriate) of the relevant Subsidiary prepared for this purpose by the Guarantor; and

(d) if the accounts of any subsidiary (not being a Subsidiary referred to in proviso (a) above) are not consolidated with those of the Guarantor, then the determination of whether or not such subsidiary is a Material Subsidiary shall be based on a pro forma consolidation of its accounts (consolidated, if appropriate) with the consolidated accounts (determined on the basis of the foregoing) of the Guarantor;

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A certificate signed by an Authorised Signatory of the Guarantor stating that, in his/her opinion, a Subsidiary is or is not, or was or was not, a Material Subsidiary shall, in the absence of manifest error, be conclusive and binding on all parties. The certificate shall, if there is a dispute as to whether any Subsidiary of the Guarantor is or is not a Material Subsidiary, be accompanied by a report by an internationally recognised firm of accountants addressed to the Guarantor as to proper extraction of the figures used by the Guarantor in determining the Material Subsidiaries of the Guarantor and mathematical accuracy of the calculation;

"NDRC" means the National Development and Reform Commission of the PRC or its local counterparts;

"Person" means any individual, company, corporation, firm, partnership, joint venture, association, organisation, state or agency of a state or other entity, whether or not having separate legal personality;

"Potential Event of Default" means an event or circumstance which could with the giving of notice, lapse of time, issue of a certificate and/or fulfilment of any other requirement or condition provided for in Condition 8 (Events of Default) become an Event of Default;

"PRC" means the People's Republic of China which, for the purpose of these Conditions, shall exclude Hong Kong, Macau Special Administrative Region of the People's Republic of China and Taiwan;

"Rating Agency" means (i) S&P Global Ratings, and its successors ("S&P"), (ii) Moody's Investors Service, Inc., a subsidiary of Moody's Corporation, and its successors ("Moody's"), or (iii) Fitch Ratings, Inc. and its successors ("Fitch"); and if one or more of S&P, Moody's or Fitch shall not make a rating of the Bonds publicly available, any internationally recognised securities rating agency or agencies, as the case may be, selected by the Issuer and notified in writing to the Trustee, which shall be substituted for S&P, Moody's or Fitch's or any combination thereof, as the case may be;

"Registration Business Day" means a day, other than a Saturday, Sunday or a day on which SAFE is authorised or obligated by law or executive order to remain closed;

"Registration Deadline" means the day falling 150 Registration Business Days after the Issue Date;

"Relevant Indebtedness" means any present or future indebtedness incurred outside the PRC which is in the form of or represented by any bond, note, debenture, debenture stock, loan stock, certificate or other similar securities (which for the avoidance of doubt, does not include any loans) which is, or is capable of being, listed, quoted or traded on any stock exchange or in any securities market (including, without limitation, any over-the-counter market) except for any unsecured promissory instrument with less than one year in tenor issued in the form of commercial paper;

"SAFE" means the State Administration of Foreign Exchange or its local branch;

"Security Interest" means any mortgage, charge, pledge, lien or other similar security interest including, without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction;

"Shanghai Business Day" means a day, other than a Saturday, Sunday or public holiday, on which commercial banks are generally open for business in Shanghai;

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"Subsidiary" means, in relation to any Person (the "first Person") at any particular time, any other Person (the "second Person"):

(i) whose affairs and policies the first Person controls or has the power to control, whether by ownership of share capital, contract, the power to appoint or remove members of the governing body of the second Person or otherwise; or

(ii) whose financial statements are, in accordance with applicable law and generally accepted accounting principles, consolidated with those of the first Person;

For the purposes of this definition, "control" means the right to appoint and/or remove all or the majority of the members of the board of directors or other governing body of a Person, whether obtained directly or indirectly, and whether obtained by ownership of share capital, the possession of voting rights, contract or otherwise.

"Voting Shares" means, with respect to any Person, the Capital Stock having the general voting power under ordinary circumstances to vote on the election of the members of the board of directors or other governing body of such Person (irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

4 INTEREST

(a) Interest Rate and Interest Payment Dates

The Bonds bear interest on their outstanding principal amount from and including 29 September 2025 (the "Issue Date") at the rate which is equal to Compounded SOFR Index plus 0.59 per cent. per annum (the "Rate of Interest"), payable in arrear on 29 March, 29 June, 29 September and 29 December in each year (each, an "Interest Payment Date").

If any Interest Payment Date would otherwise fall on a day which is not a business day (as defined below), it shall be postponed to the next day which is a business day unless it would thereby fall into the next calendar month, in which event it shall be brought forward to the immediately preceding business day.

The Rate of Interest and amount of interest to be paid on the Bonds for each Interest Period (as defined in Condition 4(d) (Interest Period and Calculation of Broken Interest)) will be calculated by the Calculation Agent and determined by the Calculation Agent on the relevant Interest Determination Date unless otherwise provided in these Conditions.

For the purposes of these Conditions:

"business day" means any weekday that is a U.S. Government Securities Business Day and is not a legal holiday in New York and is not a date on which banking institutions in New York are authorised or required by law or regulation to be closed;

"Compounded SOFR Index" means, for the applicable Interest Period, compounded average of daily SOFR reference rates for each day during the relevant SOFR Observation Period as calculated by the Calculation Agent as follows:

$$
\left(\frac {\text {SOFR Index} _ {\text {End}}}{\text {SOFR Index} _ {\text {Start}}} - 1\right) \times \left(\frac {360}{d _ {c}}\right)
$$

with the resulting percentage being rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with 0.000005 being rounded upwards) (e.g. 9.876541 per cent. (or 0.09876541) being rounded down to 9.87654 per cent. (or 0.0987654) and 9.876545 per cent. (or 0.09876545) being rounded up to 9.87655 per cent. (or 0.0987655)) and where:

“$\mathbf{d}_{\mathbf{c}}$” means the number of calendar days in the applicable SOFR Observation Period;

“SOFR Index” means, in respect of a U.S. Government Securities Business Day, the SOFR Index value as published on the SOFR Administrator’s Website at the SOFR Index Determination Time on such U.S. Government Securities Business Day, provided that in the event that the value originally published by the SOFR Administrator at or about the SOFR Index Determination Time on any U.S. Government Securities Business Day is subsequently corrected and such corrected value is published by the SOFR Administrator on the original date of publication, then such corrected value, instead of the value that was originally published, shall be deemed the SOFR Index value as of the SOFR Index Determination Time in relation to such U.S. Government Securities Business Day; and:

(1) if the value specified above does not appear and a SOFR Benchmark Transition Event and its related Benchmark Replacement Date (as defined in Condition 4(g) (Benchmark Replacement)) have not occurred, the “Compounded SOFR Index” shall be calculated on any Interest Determination Date with respect to an Interest Period, in accordance with Condition 4(b) (SOFR Index Unavailable); or

(2) if the value specified above does not appear and a SOFR Benchmark Transition Event and its related Benchmark Replacement Date have occurred, the provisions set forth in Condition 4(g) (Benchmark Replacement) shall apply;

“SOFR IndexEnd” means, in respect of an Interest Period, the SOFR Index value on the date that is five U.S. Government Securities Business Days prior to the Interest Payment Date for such Interest Period (or in the final Interest Period, the Maturity Date);

“SOFR IndexStart” means, in respect of an Interest Period, the SOFR Index value on the date that is five U.S. Government Securities Business Days prior to the first day of the relevant Interest Period;

“Interest Determination Date” means, with respect to a Rate of Interest and Interest Period, the day falling five U.S. Government Securities Business Days prior to the last day of such Interest Period;

“SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York (currently, being https://www.newyorkfed.org/), or any successor source;

“SOFR Benchmark Transition Event” means the occurrence of a Benchmark Event with respect to the then-current Benchmark;

“SOFR Index Determination Time” means, in relation to any U.S. Government Securities Business Day, approximately 3:00 p.m. (New York City time) on such U.S. Government Securities Business Day;

“SOFR Observation Period” means, in respect of each Interest Period, the period from (and including) the date falling the number of SOFR Observation Shift Days prior to the first day of the relevant Interest Period to (but excluding) the date falling the number of SOFR Observation Shift Days prior to the Interest Payment Date for such Interest Period;

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"SOFR Observation Shift Days" means five U.S. Government Securities Business Days; and

"U.S. Government Securities Business Day" means any day except for a Saturday, a Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.

(b) SOFR Index Unavailable

If, on the relevant U.S. Government Securities Business Day, the SOFR Index value does not appear as specified in "SOFR Index" above and a SOFR Benchmark Transition Event and its related Benchmark Replacement Date have not occurred, the "Compounded SOFR Index" shall be calculated on any Interest Determination Date with respect to an Interest Period, in accordance with the formula described below in the term "SOFR Observation Shift".

For the purposes of these Conditions:

"SOFR" means, with respect to any U.S. Government Securities Business Day, the reference rate determined by the Calculation Agent in accordance with the following provision:

(A) the Secured Overnight Financing Rate published at the SOFR Determination Time on the SOFR Administrator's Website;

(B) if the reference rate specified in (A) above does not appear and a SOFR Benchmark Transition Event and its related Benchmark Replacement Date have not occurred, the SOFR reference rate shall be the reference rate published on the SOFR Administrator's Website for the first preceding U.S. Government Securities Business Day for which SOFR was published on the SOFR Administrator's Website; or

(C) if the reference rate specified in (A) above does not appear and a SOFR Benchmark Transition Event and its related Benchmark Replacement Date have occurred, the provisions set forth in Condition 4(g) (Benchmark Replacement) shall apply;

"SOFR Observation Shift" means the percentage calculated by the Calculation Agent in accordance with the following:

$$
\left(\prod_{i=1}^{d_n} \left(1 + \frac{SOFR_i \times n_i}{360}\right) - 1\right) \times \frac{360}{d}
$$

"SOFR_i", for any U.S. Government Securities Business Day "i" in the relevant SOFR Observation Period, is equal to the SOFR reference rate for that U.S. Government Securities Business Day "i";

"d" means the number of calendar days in the relevant SOFR Observation Period;

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“d₀” means the number of U.S. Government Securities Business Days in the relevant SOFR Observation Period;

“i” means a series of whole numbers ascending from one to d₀, representing each U.S. Government Securities Business Day from (and including) the first U.S. Government Securities Business Day in the relevant SOFR Observation Period (each, a “U.S. Government Securities Business Day “i”);

“nᵢ”, for any U.S. Government Securities Business Day “i”, means the number of calendar days from (and including) such U.S. Government Securities Business Day “i” up to (but excluding) the following U.S. Government Securities Business Day; and

“SOFR Determination Time” means approximately 3:00 p.m. (New York City time) on the immediately following the relevant U.S. Government Securities Business Day.

Each Bond will cease to bear interest from the due date for redemption unless, upon due presentation, payment of principal is improperly withheld or refused, in which case, it shall continue to bear interest in accordance with this Condition 4 (Interest) (both before and after judgment) until whichever is the earlier of (a) the day on which all sums due in respect of such Bond up to that day are received by or on behalf of the relevant Bondholder and (b) the day which is seven days after the Principal Paying Agent or the Trustee has notified the Bondholders that it has received all sums due in respect of the Bonds up to such seventh day (except to the extent that there is failure in the subsequent payment to the relevant Bondholders under these Conditions).

(d) Interest Period and Calculation of Broken Interest

In these Conditions, the period beginning on and including the Issue Date and ending on but excluding the first Interest Payment Date (or the relevant payment date if the Bonds become payable on a date other than an Interest Payment Date) and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next succeeding Interest Payment Date (or the relevant payment date if the Bonds become payable on a date other than an Interest Payment Date) is called an "Interest Period".

The relevant day-count fraction will be determined on the basis of the actual number of days in the Interest Period divided by 360.

Interest in respect of any Bond shall be calculated per U.S.$1,000 in principal amount of the Bonds (the "Calculation Amount"). The amount of interest payable per Calculation Amount for any period shall be equal to the product of the rate of interest specified above, the Calculation Amount and the day-count fraction for the relevant period, rounding the resulting figure to the nearest cent (half a cent being rounded upwards).

(e) Publication of Rate of Interest and Amount of Interest Payable per Calculation Amount

The Calculation Agent will cause the Rate of Interest, the amount of interest payable per Calculation Amount for each Interest Period and the relevant Interest Payment Date to be notified to the Bondholders, Principal Paying Agent, Trustee and the Registrar and, if the Bonds are listed on a stock exchange and the rules of such exchange or other relevant authority so requires, the Issuer will notify such exchange or other relevant authority, as soon as possible after their determination.

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(f) Calculation Agent

The Issuer may replace the Calculation Agent by giving to the Trustee and the Calculation Agent at least 30 days' notice, and the Calculation Agent may resign as calculation agent at any time by giving the Issuer and the Trustee at least 30 days' notice. The Issuer may also appoint an additional Calculation Agent under the Bonds. All determinations made by the Issuer or its designee (as defined below) and all calculations made by the Calculation Agent shall, in the absence of manifest error, be conclusive for all purposes and binding on the Holders. In the event that any then acting Calculation Agent is unable or unwilling to act, or that such Calculation Agent fails to calculate Compounded SOFR Index for any Interest Period, or that the Issuer proposes to remove such Calculation Agent, the Issuer shall (with not less than five business days' prior written notice to the Trustee (or such shorter period agreed by the Trustee)) appoint a leading bank or financial institution engaged in the interbank market (or, if appropriate, money, swap or over-the-counter index options market) that is most closely connected with the calculation or determination to be made by the Calculation Agent (acting through its principal office or any other office actively involved in such market) to act as an additional calculation agent and make such determination. Notwithstanding any other provision of these Conditions, in the event there are provisions in these Conditions, the Agency Agreement, the Trust Deed or the ISDA Definitions that require the Calculation Agent to exercise discretion, such references shall be deemed to be references to the Calculation Agent acting upon instruction of the Issuer or the Issuer shall (with not less than five business days' prior written notice to the Trustee (or such shorter period agreed by the Trustee)) appoint a leading bank or financial institution engaged in the interbank market (or, if appropriate, money, swap or over-the-counter index options market) that is most closely connected with the calculation or determination to be made by the Calculation Agent (acting through its principal office or any other office actively involved in such market) to make the relevant determination, or the Issuer shall appoint another entity to act as calculation agent as soon as reasonably practicable after being notified by the Calculation Agent of its inability to exercise such discretion, and the existing Calculation Agent shall be released of its obligations in respect of thereof without liability. The termination of the appointment of the Calculation Agent (whether by the Issuer or by the resignation of such Calculation Agent) shall not be effective unless there exists at least one Calculation Agent appointed under the Bonds.

(g) Benchmark Replacement

(i) Benchmark Replacement: If the Issuer or any of its designees determine on or prior to the relevant Reference Time that a Benchmark Event and its related Benchmark Replacement Date have occurred with respect to the then current Benchmark, the Issuer shall notify the Bondholders, the Trustee and the Agents in writing and the Benchmark Replacement will replace the then-current Benchmark for all purposes relating to the Bonds in respect of all determinations on such date and for all determinations on all subsequent dates. Neither the Trustee nor the Agents shall have any responsibility for making such determination.

(ii) Benchmark Replacement Conforming Changes: In connection with the implementation of a Benchmark Replacement, the Issuer or any of its designees will have the right to make Benchmark Replacement Conforming Changes from time to time. For the avoidance of doubt, the Trustee and any of the Agents shall, at the direction and expense of the Issuer but subject to the receipt by the Trustee and the Agents of the notice pursuant to Condition 4(g)(i) (Benchmark Replacement), effect such consequential amendments to the Trust Deed, the Agency Agreement and these Conditions as may be required to give effect to this Condition 4(g) (Benchmark Replacement), provided that the Trustee and the Agents shall not be obliged so to concur if in the opinion of the Trustee or the Agents doing so would impose more onerous

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obligations upon it or expose it to any additional discretions, duties, responsibilities or liabilities or reduce or amend the protective provisions afforded to the Trustee and the Agents in these Conditions, the Trust Deed or the Agency Agreement (including, for the avoidance of doubt, any supplemental trust deed or supplemental agency agreement) in any way. Bondholders' consent shall not be required in connection with effecting any such changes, including the execution of any documents or any steps to be taken by the Trustee or any of the Agents (if required). Further, none of the Trustee, the Calculation Agent, the Principal Paying Agent, the Registrar or the Transfer Agent shall be responsible or liable for any determinations, decisions or elections made by the Issuer or any of its designees with respect to any Benchmark Replacement or Benchmark Replacement Conforming Changes or any other changes and shall be entitled to rely conclusively on any certifications provided to each of them in this regard.

(iii) Decisions and Determinations: Any determination, decision or election that may be made by the Issuer or any of its designees pursuant to this Condition 4(g) (Benchmark Replacement), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection:

(A) will be conclusive and binding absent manifest error;
(B) will be made in the sole discretion of the Issuer or any of its designees, as applicable; and
(C) notwithstanding anything to the contrary in the documentation relating to the Bonds, shall become effective without consent from the Bondholders or any other party.

Neither the Trustee nor the Agents shall be responsible or liable for any determinations, decisions or elections made by the Issuer or its designee pursuant to this Condition 4(g) (Benchmark Replacement) or any other changes, and the Trustee and the Agents shall be entitled to rely conclusively on any certifications provided to it in this regard. Notwithstanding anything included in the ISDA Definitions and these Conditions, to the contrary, the Issuer and the Guarantor agree that each of the Trustee and the Agents will have no obligation to exercise any discretion (including, but not limited to, determinations of alternative or substitute benchmarks, successor reference rates, screen pages, interest adjustment factors/fractions or spreads, market disruptions, benchmark amendment conforming changes, selection and polling of reference banks), and to the extent the Trust Deed, the Agency Agreement and/or these Conditions require the Calculation Agent to exercise any such discretions and/or make such determinations, such references shall be construed as the Issuer or its designee exercising such discretions and/or determinations and/or actions and not the Calculation Agent.

For the purposes of these Conditions (and unless otherwise stated):

"Benchmark" means, initially, Compounded SOFR Index; provided that if the Issuer or any of its designees determine on or prior to the Reference Time that a Benchmark Event and its related Benchmark Replacement Date have occurred with respect to Compounded SOFR Index (including any daily published component used in the calculation thereof) or the then-current Benchmark, then "Benchmark" means the applicable Benchmark Replacement;

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"Benchmark Event" means the occurrence of one or more of the following events with respect to the then-current Benchmark (including the daily published component used in the calculation thereof):

(A) a public statement or publication of information by or on behalf of the administrator of the Benchmark (or such component) announcing that such administrator has ceased or will cease to provide the Benchmark (or such component), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark (or such component); or

(B) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark (or such component), the central bank for the currency of the Benchmark (or such component), an insolvency official with jurisdiction over the administrator for the Benchmark (or such component), a resolution authority with jurisdiction over the administrator for the Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for the Benchmark, which states that the administrator of the Benchmark (or such component) has ceased or will cease to provide the Benchmark (or such component) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark (or such component); or

(C) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark announcing that the Benchmark is no longer representative.

The occurrence of a Benchmark Event shall be determined by the Issuer or its designees and promptly notified to the Trustee and the Agents. For the avoidance of doubt, neither the Trustee nor the Agents shall have any responsibility for making such determination; "Benchmark Replacement" means the first alternative set forth in the order below that can be determined by the Issuer or any of its designees as of the Benchmark Replacement Date:

(A) the sum of:

(i) the alternate reference rate that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark (including any daily published component used in the calculation thereof); and

(ii) the Benchmark Replacement Adjustment;

(B) the sum of:

(i) the ISDA Fallback Rate; and

(ii) the Benchmark Replacement Adjustment; or

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(i) the alternate reference rate that has been selected by the Issuer or any of its designees as the replacement for the then-current Benchmark (including any daily published component used in the calculation thereof) giving due consideration to any industry-accepted reference rate as a replacement for the then-current Benchmark (including any daily published component used in the calculation thereof) for U.S. dollar-denominated floating rate bonds at such time; and

(ii) the Benchmark Replacement Adjustment;

“Benchmark Replacement Adjustment” means the first alternative set forth in the order below that can be determined by the Issuer or any of its designees as of the Benchmark Replacement Date:

(A) the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement;

(B) if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, the ISDA Fallback Adjustment; or

(C) the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Issuer or any of its designees giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark (including any daily published component used in the calculation thereof) with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated floating rate bonds at such time;

“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the timing and frequency of determining rates and making payments of interest, rounding of amounts or tenors, and other administrative matters) the Issuer or any of its designees decide may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market practice (or, if the Issuer or any of its designees decide that adoption of any portion of such market practice is not administratively feasible or if the Issuer or any of its designees determine that no market practice for use of the Benchmark Replacement exists, in such other manner as the Issuer or any of its designees determine is reasonably necessary);

“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark (including any daily published component used in the calculation thereof):

(A) in the case of sub-paragraph (A) or (B) of the definition of “Benchmark Event”, the later of:

(i) the date of the public statement or publication of information referenced therein; and

(ii) the date on which the administrator of the Benchmark permanently or indefinitely ceases to provide the Benchmark (or such component); or

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(B) in the case of sub-paragraph (C) of the definition of "Benchmark Event", the date of the public statement or publication of information referenced therein.

For the avoidance of doubt, if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination;

“designee” means a designee as selected and separately appointed by the Issuer in writing;

“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time, including the 2021 ISDA Interest Rate Derivatives Definitions (as amended or supplemented from time to time);

“ISDA Fallback Adjustment” means the spread adjustment (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark;

“ISDA Fallback Rate” means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark (including any daily published component used in the calculation thereof) for the applicable tenor excluding the applicable ISDA Fallback Adjustment;

“Reference Time” with respect to any determination of the Benchmark means (a) if the Benchmark is Compounded SOFR Index, the SOFR Index Determination Time, or (b) if the Benchmark is not Compounded SOFR Index, the time determined by the Issuer or any of its designees after giving effect to the Benchmark Replacement Conforming Changes;

“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto; and

“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.

(h) Certificates to be final: All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 4 (Interest), whether by the Calculation Agent or the Trustee, shall be binding on the Issuer, the Guarantor, the Trustee, the Agents and all Bondholders and no liability to the Issuer, the Guarantor, the Trustee, the Agents and all Bondholders or any other person shall attach to the Trustee or any Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions.

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REDEMPTION AND PURCHASE

(a) Final redemption

(b) Redemption for tax reasons

(i) the Issuer (or, if the Guarantee of the Bonds were called, the Guarantor) has or will become obliged to pay Additional Tax Amounts (as defined in Condition 7 (Taxation)) as a result of any change in, or amendment to, the laws or regulations of the British Virgin Islands, Hong Kong or the PRC or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective on or after 24 September 2025; and

(ii) such obligation cannot be avoided by the Issuer (or the Guarantor, as the case may be) taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer (or the Guarantor, as the case may be) would be obligated to pay such Additional Tax Amounts if a payment in respect of the Bonds (or the Guarantee of the Bonds, as the case may be) were then due.

Prior to the publication of any notice of redemption pursuant to this Condition 5(b) (Redemption for tax reasons), the Issuer shall deliver or procure that there is delivered to the Trustee:

(A) a certificate signed by an Authorised Signatory of the Issuer or, as the case may be, a certificate signed by an Authorised Signatory of the Guarantor stating that the obligation referred to in Condition 5(b)(i) above cannot be avoided by the Issuer (or the Guarantor, as the case may be) taking reasonable measures available to it; and

(B) an opinion in form and substance satisfactory to the Trustee of independent legal advisers of recognised standing to the effect that the Issuer or the Guarantor (as the case may be) has or will become obliged to pay such Additional Tax Amounts as a result of such change or amendment.

The Trustee shall be entitled to accept and rely upon such certificate and opinion as sufficient evidence of the satisfaction of the circumstances set out in Condition 5(b)(i) and Condition 5(b)(ii) above, in which event such evidence shall be conclusive and binding on the Bondholders and the Trustee shall be protected and shall have no liability to any Bondholder or any other person for so accepting and relying on such certificate and opinion.

Upon the expiry of any such notice as is referred to in this Condition 5(b) (Redemption for tax reasons), the Issuer shall be bound to redeem the Bonds in accordance with this Condition 5(b) (Redemption for tax reasons).

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At any time following the occurrence of a Relevant Event (as defined below), the Holder of any Bond will have the right, at such Holder’s option, to require the Issuer to redeem all, but not some only of that Holder’s Bonds on the Put Settlement Date (as defined below) at 101 per cent. (in the case of a redemption for a Change of Control Triggering Event) or 100 per cent. (in the case of a redemption for a No Registration Event) of their principal amount, together with accrued interest up to but excluding such Put Settlement Date. In order to exercise such right, the Holder of the relevant Bond must deposit at the specified office of any Paying Agent a duly completed and signed notice of redemption, in the form for the time being current, obtainable from the specified office of any Paying Agent (a “Put Exercise Notice”), together with the Bond Certificates evidencing the Bonds to be redeemed, by not later than 30 days following a Change of Control Triggering Event, or, if later, 30 days following the date upon which notice thereof is given to Bondholders by the Issuer or the Guarantor in accordance with Condition 16 (Notices).

The “Put Settlement Date” shall be the 45th day (in the case of a redemption for a Change of Control Triggering Event) or the seventh day (in the case of a redemption for a No Registration Event) after the expiry of such period of 30 days as referred to above.

A Put Exercise Notice, once delivered, shall be irrevocable and the Issuer shall redeem the Bonds subject to the Put Exercise Notices delivered as aforesaid on the Put Settlement Date.

The Issuer or the Guarantor shall give notice to Bondholders in accordance with Condition 16 (Notices) and to the Trustee and the Principal Paying Agent in writing by not later than 14 days (in the case of a redemption for a Change of Control Triggering Event) or five days (in the case of a redemption for a No Registration Event) following the first day on which it becomes aware of the occurrence of a Relevant Event, which notice shall specify the procedure for exercise by Holders of their rights to require redemption of the Bonds pursuant to this Condition 5(c) (Redemption for Relevant Events).

The Trustee and the Agents shall not be required to take any steps to ascertain whether a Relevant Event has occurred and shall not be responsible or liable to Bondholders, the Issuer, the Guarantor or any other person for any loss or liability arising from any failure to do so.

In this Condition 5(c) (Redemption for Relevant Events):

(A) a “Change of Control” occurs when:

(i) the Guarantor ceases to own or control, directly or indirectly, 100 per cent. of the issued share capital of the Issuer; or

(ii) any Person or Persons, acting as a group, other than a Permitted Holder, acquiring ownership or control directly or indirectly or in combination (through controlled Subsidiaries) of more than 50 per cent. of the voting rights of the issued share capital of the Guarantor;

a “Change of Control Triggering Event” means the occurrence of both a Change of Control and a Rating Decline. No Change of Control Triggering Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated;

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“issued share capital” means issued and outstanding ordinary shares having voting rights, but does not include ordinary or preference shares without voting rights;

“Permitted Holder” means any of the Persons directly or indirectly controlled by the government of the PRC;

a “Person”, as used in this Condition 5(c) (Redemption for Relevant Events), includes any individual, company, corporation, firm, partnership, joint venture, undertaking, association, organisation, trust, state or agency of a state (in each case whether or not being a separate legal entity);

“Rating Category” means (i) with respect to S&P, any of the following categories: “BB,” “B,” “CCC,” “CC,” “C” and “D” (or equivalent successor categories); (ii) with respect to Moody’s, any of the following categories: “Ba,” “B,” “Caa,” “Ca,” “C” and “D” (or equivalent successor categories); (iii) with respect to Fitch, any of the following categories: “BB,” “B,” “CCC,” “CC,” “C” and “D” (or equivalent successor categories); and (iv) the equivalent of any such category of S&P, Moody’s or Fitch used by another Rating Agency. In determining whether the rating of the Bonds has decreased by one or more gradations, gradations within Rating Categories (“+” and “-” for S&P “1,” “2” and “3” for Moody’s and “+” and “-” for Fitch; or the equivalent gradations for another Rating Agency) shall be taken into account (e.g., with respect to S&P, a decline in a rating from “BB+” to “BB,” as well as from “BB-” to “B+,” will constitute a decrease of one gradation);

“Rating Date” means, in connection with a Change of Control Triggering Event, that date which is 90 calendar days prior to the earlier of (i) a Change of Control and (ii) a public notice of the occurrence of a Change of Control or of the intention by the Issuer or any other Person or Persons to effect a Change of Control;

“Rating Decline” means, in connection with a Change of Control Triggering Event, the occurrence on, or within six months after, the date, or public notice of the occurrence of, a Change of Control or the intention by the Issuer or any other Person or Persons to effect a Change of Control (which period shall be extended (by no more than an additional three months after the consummation of the Change of Control) so long as the rating of the Bonds is under publicly announced consideration for possible downgrade by any of the Rating Agencies) of any of the events listed below, in the event the Bonds are on the Rating Date:

(i) (A) (x) rated by three Ratings Agencies and (y) rated Investment Grade by at least two of such Rating Agencies, and (B) cease to be rated Investment Grade by at least two of such Rating Agencies;

(ii) (A) (x) rated by two but not more Ratings Agencies and (y) rated Investment Grade by each such Rating Agency, and (B) cease to be rated Investment Grade by both such Rating Agencies;

(iii) (A) (x) rated by one Ratings Agency and (y) rated Investment Grade by such Rating Agency, and (B) cease to be rated Investment Grade by such Rating Agency;

(iv) (A) (x) rated by three Ratings Agencies and (y) rated below Investment Grade by at least two of such Rating Agencies, and (B) the rating by at least two of such Rating Agencies shall be decreased by one or more gradations (including gradations within Rating Categories as well as between Rating Categories);

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(v) (A) (x) rated by two but not more Ratings Agencies and (y) rated below Investment Grade by any such Rating Agency, and (B) the rating by such Rating Agency shall be decreased by one or more gradations (including gradations within Rating Categories as well as between Rating Categories);

(vi) (A) (x) rated by one Ratings Agency and (y) rated below Investment Grade by such Rating Agency, and (B) the rating by such Rating Agency shall be decreased by one or more gradations (including gradations within Rating Categories as well as between Rating Categories); or

(vii) not rated by any Rating Agency.

(B) a “No Registration Event” occurs when the Registration Conditions are not complied with on or before the Registration Deadline;

(C) “Registration Conditions” means the receipt by the Trustee of (i) copies of the Registration Documents and (ii) a certificate substantially in the form set out in the Trust Deed signed by an Authorised Signatory of the Guarantor confirming the completion of the Cross-border Security Registration and certifying that each of the copies of the Registration Documents delivered are true and complete copies of the originals; and

(D) a “Relevant Event” will be deemed to occur if:

(i) there is a No Registration Event; or

(ii) there is a Change of Control Triggering Event.

(d) Redemption at the Option of the Issuer

On or after 29 August 2028, the Issuer may redeem the Bonds at any time by giving not less than 30 nor more than 60 days’ irrevocable notice to the Bondholders (in accordance with Condition 16 (Notices)) and to the Trustee and the Principal Paying Agent in writing (which notice shall be irrevocable), redeem all, but not some only, of the Bonds at 100 per cent. of their principal amount, together with interest accrued to, but excluding, the date fixed for redemption.

(e) No other redemption

The Issuer shall not be entitled to redeem the Bonds otherwise than as provided in Condition 5(a) (Final redemption) to Condition 5(d) (Redemption at the Option of the Issuer) (both inclusive).

(f) Purchase

The Issuer, the Guarantor or any of their respective Subsidiaries may at any time purchase Bonds in the open market or otherwise and at any price. The Bonds so purchased, while held by or on behalf of the Issuer, the Guarantor or any of their respective Subsidiaries, shall not entitle the Bondholder to vote at any meetings of the Bondholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the Bondholders or for the purposes of, among other things, Condition 8 (Events of Default), Condition 12(a) (Meetings of Bondholders) and Condition 13 (Enforcement).

(g) Cancellation

All Bonds so redeemed or purchased by the Issuer, the Guarantor or any of their respective Subsidiaries shall be cancelled and may not be reissued or resold.

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(h) Redemption on non-business day

If any date fixed for redemption in accordance with Conditions 5(b) (Redemption for tax reasons), 5(c) (Redemption for Relevant Events) and 5(d) (Redemption at the Option of the Issuer) would otherwise fall on a day which is not a business day (as defined in Condition 4(a) (Interest Rate and Interest Payment Dates)), it shall be postponed to the next day which is a business day unless it would thereby fall into the next calendar month, in which event it shall be brought forward to the immediately preceding business day.

6 PAYMENTS

(a) Method of Payment

(i) Principal and premium: Payments of principal and premium (if any) shall be made (subject to surrender of the relevant Bond Certificates at the specified office of any Paying Agent or of the Registrar if no further payment falls to be made in respect of the Bonds represented by such Bond Certificates) in the manner provided in Condition 6(a)(ii) (Interest).

(ii) Interest: Interest on each Bond shall be paid to the person shown as the Holder on the Register at the close of business on the fifth Payment Business Day (as defined below) before the due date for payment thereof (the "Record Date"). Payments of interest on each Bond shall be made in U.S. dollars by transfer to the registered account of the Holder of such Bond. Upon application by the Holder to the specified office of the Registrar or any Transfer Agent before the Record Date, or at the discretion of the relevant Agent, such payment of interest may be made by transfer to a U.S. dollar account maintained by the payee with a bank.

So long as the Global Certificate is held on behalf of Euroclear Bank SA/NV and Clearstream Banking S.A. or any other clearing system, each payment in respect of the Global Certificate will be made to the person shown as the holder in the Register at the close of business of the relevant clearing system on the Clearing System Business Day before the due date for such payments, where "Clearing System Business Day" means a weekday (Monday to Friday, inclusive) except 25 December and 1 January.

(iii) If the amount of principal being paid upon surrender of the relevant Bond Certificate is less than the outstanding principal amount of such Bond Certificate, the Registrar will annotate the Register with the amount of principal so paid and will (if so requested in writing by the Issuer or a Bondholder) issue a new Bond Certificate with a principal amount equal to the remaining unpaid outstanding principal amount. If the amount of premium (if any) or interest being paid is less than the amount then due, the Registrar will annotate the Register with the amount of premium (if any) or interest so paid.

(b) Payments subject to fiscal laws

All payments will be subject in all cases to (i) any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 7 (Taxation) and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986, as amended (the "Code") or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or any law implementing an intergovernmental approach thereto. No commission or expenses shall be charged to the Bondholders in respect of such payments.

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Where payment is to be made by transfer to an account in U.S. dollars, payment instructions (for value the due date or, if that is not a Payment Business Day, for value the first following day which is a Payment Business Day) will be initiated on the due date for payment (or, if that date is not a Payment Business Day, on the first following day which is a Payment Business Day), or, in the case of payments of principal where the relevant Bond Certificate has not been surrendered at the specified office of any Paying Agent or of the Registrar, on a Payment Business Day on which the Principal Paying Agent or the Registrar (as the case may be) is open for business and on which the relevant Bond Certificate is surrendered.

(d) Delay in Payment

Bondholders will not be entitled to any interest or other payment for any delay after the due date in receiving the amount due on a Bond if the due date is not a Payment Business Day, if the Bondholder is late in surrendering or cannot surrender its Bond Certificate (if required to do so) or if a transfer made in accordance with Condition 6(a)(ii) (Interest) reaches the registered account of the relevant Holder after the due date for payment.

(e) Non-Payment Business Days

If any date for payment in respect of any Bond is not a Payment Business Day, the Holder shall not be entitled to payment until the next following Payment Business Day nor to any interest or other sum in respect of such postponed payment. In this Condition 6 (Payments), “Payment Business Day” means a day (other than a Saturday or a Sunday or a public holiday) on which commercial banks and foreign exchange markets are open for business in New York City and the city in which the specified office of the Principal Paying Agent is located and, in the case of presentation of a Bond Certificate, (if surrender of the relevant Bond Certificate is required) the relevant place of presentation and where payment is to be made by transfer to an account maintained with a bank in U.S. dollars, on which foreign exchange transactions may be carried on in U.S. dollars in New York City.

7 TAXATION

All payments of principal, premium (if any) and interest by or on behalf of the Issuer or the Guarantor in respect of the Bonds or under the Guarantee of the Bonds, as the case may be, shall be made free and clear of, and without withholding or deduction for, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by the British Virgin Islands, Hong Kong or the PRC or, in any such case, any political subdivision thereof or any authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law.

Where such withholding or deduction is made by the Issuer or, as the case may be, the Guarantor, by or within the PRC at the aggregate rate applicable on 24 September 2025 (the “Applicable Rate”), the Issuer or, as the case may be, the Guarantor will increase the amounts paid by it to the extent required, so that the net amount received by Bondholders equals the amounts which would otherwise have been receivable by them had no such withholding or deduction been required.

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If the Issuer or, as the case may be, the Guarantor is required to make a deduction or withholding (i) by or within the PRC in excess of the Applicable Rate, or (ii) by or within the British Virgin Islands or Hong Kong, the Issuer or, as the case may be, the Guarantor shall pay such additional amounts (“Additional Tax Amounts”) as will result in receipt by the Bondholders after such withholding or deduction of such amounts as would have been received by them had no such withholding or deduction been required, except that no such Additional Tax Amounts shall be payable in respect of any Bond:

(i) Other connection: to a Holder (or to a third party on behalf of a Holder) which is liable to such taxes, duties, assessments or governmental charges in respect of such Bond by reason of its having some connection with the British Virgin Islands, Hong Kong or the PRC by which such taxes, duties, assessments or charges have been imposed, levied, collected, withheld or assessed other than the mere holding of the Bond; or

(ii) Lawful avoidance of withholding: to a Holder (or to a third party on behalf of a Holder) who would not be liable for or subject to such withholding or deduction by making a declaration of identity, non-residence or other similar claim for exemption to the relevant tax authority if, after having been requested to make such a declaration or claim, such Holder fails to do so within any applicable period prescribed by such relevant tax authority; or

(iii) Surrender more than 30 days after the Relevant Date: in respect of which the Bond Certificate representing it is surrendered (where required to be surrendered) more than 30 days after the Relevant Date except to the extent that the relevant Bondholder would have been entitled to such Additional Tax Amounts if it had presented such Bond for payment on the last day of such period of 30 days.

“Relevant Date” means whichever is the later of (a) the date on which the payment in question first becomes due, and (b) if the full amount payable has not been received by the Principal Paying Agent in accordance with the provision of the Agency Agreement on or prior to such due date, the date on which the full amount has been received and notice to that effect has been given to the Bondholders.

Any reference in these Conditions to principal, premium (if any) or interest shall be deemed to include any Additional Tax Amounts in respect of principal, premium (if any) or interest (as the case may be) which may be payable under this Condition 7 (Taxation) or any undertaking given in addition to or in substitution of this Condition 7 (Taxation) pursuant to the Trust Deed.

If the Issuer or the Guarantor becomes subject at any time to any taxing jurisdiction other than the British Virgin Islands, Hong Kong or the PRC, references in these Conditions to the British Virgin Islands, Hong Kong or the PRC shall be construed as references to the British Virgin Islands, Hong Kong or, as the case may be, the PRC, and/or such other jurisdiction.

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EVENTS OF DEFAULT

If any of the following events (each an “Event of Default”) occurs, then the Trustee at its discretion may and, if so requested in writing by Holders of at least 25 per cent. of the aggregate principal amount of the Bonds then outstanding or if so directed by an Extraordinary Resolution shall (provided that in any such case the Trustee having first been indemnified and/or provided with security and/or pre-funded to its satisfaction), give written notice to the Issuer and the Guarantor that the Bonds are, and they shall immediately become, due and payable at 100 per cent. of their principal amount together (if applicable) with accrued interest without further action or formality:

(a) Non-payment: the Issuer or the Guarantor (i) fails to pay any amount of principal or premium (if any) in respect of the Bonds or the Guarantee of the Bonds, as the case may be, on the due date for payment thereof or (ii) fails to pay any amount of interest in respect of the Bonds or the Guarantee of the Bonds, as the case may be, within seven days after the due date for payment thereof; or

(b) Breach of other obligations: the Issuer or the Guarantor defaults in the performance or observance of any of its other obligations under or in respect of the Bonds, the Trust Deed or the Deed of Guarantee (other than those referred to in Condition 8(a) (Non-payment)) and such default (i) is in the opinion of the Trustee incapable of remedy or (ii) being a default which in the opinion of the Trustee is capable of remedy remains unremedied for 60 days after written notice of such default shall have been given by the Trustee to the Issuer or the Guarantor, as the case may be; or

(c) Cross-acceleration: (i) failure to pay upon final maturity (after giving effect to the expiration of any applicable grace period therefor) the principal of any Indebtedness of the Issuer, the Guarantor or any of their respective Subsidiaries, (ii) any such Indebtedness becomes due and payable prior to its stated maturity otherwise than at the option of the Issuer, the Guarantor or (as the case may be) or the relevant Subsidiary or (provided that no event of default, howsoever described, has occurred) any person entitled to such Indebtedness; or (iii) the Issuer, the Guarantor or any of their respective Subsidiaries fails to pay when due any amount payable by it under any guarantee of any Indebtedness; provided, however, that no such event set forth in clause (i), (ii) or (iii) shall constitute an Event of Default unless the aggregate outstanding Indebtedness to which all such events relate exceeds US$60,000,000 (or its equivalent in any other currency); or

(d) Enforcement Proceedings: a distress, attachment, execution or other legal process is levied, enforced or sued out on or against the whole or any material part of the property, assets or revenues of the Issuer, the Guarantor or any of the Material Subsidiaries and such legal process is not discharged within 60 days after the date thereof; or

(e) Security enforced: a secured party takes possession, or a receiver, manager or other similar officer is appointed, of the whole or any material part of the undertaking, assets and revenues of the Issuer, the Guarantor or any of their respective Material Subsidiaries and such action is not discharged within 60 days after the date thereof; or

(f) Insolvency, etc.: (i) the Issuer, the Guarantor or any of the Material Subsidiaries becomes insolvent or is unable to pay its debts as they fall due, (ii) an administrator or liquidator of the Issuer, the Guarantor or any of the Material Subsidiaries or the whole or any material part of the undertaking, assets and revenues of the Issuer, the Guarantor or any of the Material

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Subsidiaries is appointed (or application for any such appointment is made), (iii) the Issuer, the Guarantor or any of the Material Subsidiaries takes any action for a readjustment or deferment of any of its obligations or makes a general assignment or an arrangement or composition with or for the benefit of its creditors or declares a moratorium in respect of any of its Indebtedness or any Guarantee of any Indebtedness given by it or (iv) the Issuer, the Guarantor or any of the Material Subsidiaries ceases or threatens to cease to carry on all or any material part of its business, except (a) in the case of any Material Subsidiary, where the cessation is for the purpose of and followed by a solvent winding up, dissolution, reconstruction, amalgamation, merger or consolidation whereby the business, undertaking and assets of such Material Subsidiary are transferred to or otherwise vested in the Issuer, the Guarantor and/or another Subsidiary or (b) on terms approved by an Extraordinary Resolution of the Bondholders; or

(g) Winding up, etc.: an order is made by a competent court or an effective resolution is passed for the winding up, liquidation or dissolution of the Issuer, the Guarantor or any of the Material Subsidiaries, except (i) in the case of any Material Subsidiary, for the purpose of and followed by a solvent winding up, dissolution, reconstruction, merger or consolidation whereby the business, undertaking and assets of such Subsidiary are transferred to or otherwise vested in the Issuer, the Guarantor and/or another Subsidiary, (ii) on terms approved by an Extraordinary Resolution of the Bondholders, or (iii) a disposal of a Material Subsidiary of the Issuer or the Guarantor on an arm's length basis where the assets (whether in cash or otherwise) resulting from such disposal is vested in Issuer, the Guarantor or any of their respective Subsidiaries; or

(h) Government intervention: (i) all or any material part of the undertaking, assets and revenues of the Issuer, the Guarantor or any of the Material Subsidiaries is condemned, seized or otherwise appropriated by any person acting under the authority of any national, regional or local government or (ii) the Issuer, the Guarantor or any of the Material Subsidiaries is prevented by any such person from exercising normal control over all or any material part of its undertaking, assets and revenues; or

(i) Analogous event: any event occurs which under the laws of the British Virgin Islands or the PRC has an analogous effect to any of the events referred to in Condition 8(e) (Security enforced) to Condition 8(h) (Government intervention) (both inclusive); or

(j) Authorisations and consents: any action, condition or thing at any time required to be taken, fulfilled or done in order (i) to enable the Issuer and the Guarantor lawfully to enter into, exercise their respective rights and perform and comply with their respective obligations under and in respect of the Bonds, the Trust Deed, the Deed of Guarantee or the Agency Agreement, (ii) to ensure that those obligations are legal, valid, binding and enforceable and (iii) to make the Bonds, the Trust Deed, the Deed of Guarantee or the Agency Agreement admissible in evidence in the courts of the British Virgin Islands or the PRC is not taken, fulfilled or done; or

(k) Unlawfulness: it is or will become unlawful for any of the Issuer or the Guarantor to perform or comply with any of its obligations under or in respect of the Bonds, the Trust Deed or the Agency Agreement; or

(l) Unenforceability of Guarantee of the Bonds: the Guarantee of the Bonds is unenforceable or invalid or shall for any reason cease to be in full force and effect or is claimed to be unenforceable, invalid or not in full force and effect by the Guarantor.

9 PRESCRIPTION

Claims against the Issuer and the Guarantor for payment in respect of the Bonds shall be prescribed and become void unless made within 10 years (in the case of principal or premium (if any)) or five years (in the case of interest) from the appropriate Relevant Date in respect of them.

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10 REPLACEMENT OF BOND CERTIFICATES

If any Bond Certificate is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specified office of the Registrar or the Transfer Agent, subject to all applicable laws and stock exchange requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer or such Agent may require. Mutilated or defaced Bond Certificates must be surrendered before replacements will be issued.

11 TRUSTEE AND AGENTS

Under the Trust Deed, the Trustee is entitled to be indemnified and/or secured and/or pre-funded to its satisfaction and to be relieved from responsibility in certain circumstances and to be paid its fees, costs, expenses, indemnity payments and all other amounts in priority to the claims of the Bondholders. In addition, the Trustee is entitled to enter into business transactions with the Issuer and/or the Guarantor or any entity related to the Issuer and/or the Guarantor without accounting for any profit.

In the exercise of its rights, powers and discretions under these Conditions and the Trust Deed, the Trustee will have regard to the interests of the Bondholders as a class and will not be responsible for any consequence for individual Holders of Bonds as a result of such Holders being connected in any way with a particular territory or taxing jurisdiction.

In acting under the Agency Agreement and in connection with the Bonds, the Agents act solely as agents of the Issuer and the Guarantor and (to the extent provided therein) the Trustee and do not assume any obligations towards or relationship of agency or trust for or with any of the Bondholders.

The initial Agents and their initial specified offices are listed below. The Issuer and the Guarantor reserve the right (with the prior written approval of the Trustee) at any time to vary or terminate the appointment of any Agent and to appoint additional or successor agents; provided, however, that the Issuer and the Guarantor shall at all times maintain (i) a registrar with its specified office outside Hong Kong and (ii) a principal paying agent.

Notice of any change in any of the Agents or in their specified offices shall promptly be given by the Issuer to the Bondholders.

12 MEETINGS OF BONDHOLDERS; MODIFICATION AND WAIVER

(a) Meetings of Bondholders

The Trust Deed contains provisions for convening meetings of Bondholders to consider matters relating to the Bonds, including the modification of any provision of these Conditions or the Trust Deed. Any such modification may be made if sanctioned by an Extraordinary Resolution. Such a meeting may be convened by the Issuer, the Guarantor or the Trustee and shall be convened by the Trustee upon the request in writing of Bondholders holding at least 10 per cent. of the aggregate principal amount of the outstanding Bonds and subject to the Trustee being indemnified and/or secured and/or prefunded to its satisfaction against all costs and expenses. The quorum at any meeting convened to vote on an Extraordinary Resolution will be two or more persons holding or representing more than 50 per cent. of the aggregate principal amount of the outstanding Bonds or, at any adjourned meeting, two or more persons being or representing Bondholders whatever the

principal amount of the Bonds held or represented; provided, however, that certain proposals (including any proposal to modify the maturity date of the Bonds or any date fixed for payment of principal, premium or interest in respect of the Bonds, to reduce or cancel the amount of principal, premium or interest payable on any date in respect of the Bonds, to alter the method of calculating the amount of any payment in respect of the Bonds or the date for any such payment, to change the currency of payments under the Bonds, to modify or cancel the Guarantee of the Bonds, to change the quorum requirements relating to meetings or the majority required to pass an Extraordinary Resolution (each, a "Reserved Matter") or to amend the definition of Reserved Matter) may only be sanctioned by an Extraordinary Resolution passed at a meeting of Bondholders at which two or more persons holding or representing not less than 75 per cent. or, at any adjourned meeting, not less than 25 per cent. of the aggregate principal amount of the outstanding Bonds form a quorum. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Bondholders, whether present or not.

In addition, a resolution (A) in writing signed by or on behalf of holders holding not less than 90 per cent. of the aggregate principal amount of the Bonds outstanding or (B) passed by Electronic Consent shall for purposes be as valid and effective as an Extraordinary Resolution passed at a meeting of Bondholders duly convened and held. Bondholders who for the time being are entitled to receive notice of a meeting of Bondholders under the Trust Deed will take effect as if it were an Extraordinary Resolution. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Bondholders. A resolution passed in writing or by Electronic Consent will be binding on all Bondholders whether or not they participated in such resolution.

(b) Modification and waiver

The Trustee may (but shall not be obliged to), without the consent of the Bondholders agree to (i) any modification of these Conditions, the Trust Deed, the Deed of Guarantee, the Bonds or the Agency Agreement (other than in respect of a Reserved Matter) which is, in the opinion of the Trustee, not materially prejudicial to the interests of Bondholders and (ii) any modification of the Bonds, the Deed of Guarantee, the Agency Agreement, or the Trust Deed which is, in its opinion, of a formal, minor or technical nature or is to correct a manifest error or to comply with any mandatory provisions of law.

In addition, the Trustee may (but shall not be obliged), without the consent of the Bondholders authorise or waive any proposed breach or breach of the Bonds, the Deed of Guarantee or the Trust Deed (other than a proposed breach or breach relating to the subject of a Reserved Matter) if, in the opinion of the Trustee, the interests of the Bondholders will not be materially prejudiced thereby.

Unless the Trustee agrees otherwise, any such authorisation, waiver or modification shall be notified by the Issuer to the Bondholders as soon as practicable thereafter and shall be binding on all Bondholders.

Notwithstanding anything to the contrary in these Conditions, the Trust Deed or the Agency Agreement, whenever the Trustee is required or entitled by the terms of these Conditions, the Trust Deed, the Deed of Guarantee or the Agency Agreement to exercise any discretion or power, take any action, make any decision or give any direction or certification, the Trustee is entitled, prior to exercising any such discretion or power, taking any such action, making any such decision, or giving

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any such direction or certification, to seek directions from the Bondholders by way of an Extraordinary Resolution and to be indemnified and/or secured and/or pre-funded to its satisfaction against all action, proceedings, claims and demands to which in its opinion it may be or become liable and all costs, charges, damages, expenses (including legal expenses) and liabilities which in its opinion may be incurred by it in connection therewith, and the Trustee is not responsible for any loss or liability incurred by any person as a result of any delay in it exercising such discretion or power, taking such action, making such decision, or giving such direction or certification where the Trustee is seeking such directions or in the event that the directions sought are not forthcoming.

(d) Certificates and Reports

The Trustee may rely without liability to Bondholders, the Issuer, the Guarantor or any other person on any report, information, confirmation, certificate from or any opinion or advice of any accountants, auditors, lawyers, valuers, auctioneers, surveyors, brokers, financial advisers, financial institution or any other expert, whether or not addressed to it and whether their liability in relation thereto is limited (by its terms or by any engagement letter relating thereto or in any other manner) by reference to a monetary cap, methodology or otherwise. The Trustee may accept and shall be entitled to rely on any such report, confirmation, information, certificate, advice or opinion and, in such event, such report, confirmation, information, certificate, advice or opinion shall be binding on the Issuer, the Guarantor and the Bondholders.

(e) Trustee not Responsible

The Trust Deed provides that the Trustee shall not be responsible for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of the Trust Deed, the Deed of Guarantee, the Bonds, the Agency Agreement or any other document relating thereto, any licence, consent or other authority for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, performance, enforceability or admissibility in evidence of the Trust Deed, the Deed of Guarantee, Agency Agreement or any other document relating thereto. In addition, the Trust Deed states that the Trustee shall not be responsible for the effect of the exercise of any of its powers, rights, duties and discretions hereunder or thereunder, save to the extent resulting directly from its own gross negligence, wilful misconduct or fraud.

(f) Responsibility for Statements

The Trust Deed provides that the Trustee shall not be responsible for, or for investigating any matter which is the subject of, any recital, statement, representation, warranty or covenant of any person contained in the Trust Deed, the Deed of Guarantee, the Agency Agreement, any offering document in relation to the Bonds or any other agreement or document relating to the transactions contemplated in the Trust Deed, the Deed of Guarantee, the Agency Agreement, or under such other agreement or document and shall be entitled to assume the accuracy and correctness thereof or for the execution, legality, effectiveness, adequacy, genuineness, validity or enforceability or admissibility in evidence of any such agreement or other document or any security constituted thereby or pursuant thereto. Each Bondholder shall be solely responsible for making and continuing to make its own independent appraisal and investigation into the financial condition, creditworthiness, condition, affairs, status and nature of the Issuer and the Guarantor, and the Trustee shall not at any time have any responsibility for the same and each Bondholder shall not rely on the Trustee in respect thereof.

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13 ENFORCEMENT

The Trustee may at any time, at its absolute discretion and without notice, institute such proceedings and/or take such actions or steps as it thinks fit to enforce its rights under the Trust Deed or the Deed of Guarantee in respect of the Bonds, but it shall not be bound to do so unless:

(a) it has been so requested in writing by the Holders of at least 25 per cent. of the aggregate principal amount of the outstanding Bonds or has been so directed by an Extraordinary Resolution; and

(b) it has been indemnified and/or provided with security and/or pre-funded to its satisfaction.

No Bondholder may proceed directly against the Issuer or the Guarantor unless the Trustee, having become bound to do so, fails to do so within a reasonable time and such failure is continuing.

14 INDEMNIFICATION

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility. The Trustee is entitled to enter into business transactions with the Issuer and/or the Guarantor and/or any entity related to the Issuer and/or the Guarantor without accounting for any profit.

Whenever the Trustee is required or entitled by the terms of the Trust Deed, the Deed of Guarantee, the Agency Agreement or these Conditions to exercise any discretion or power, take any action, make any decision or give any direction, the Trustee is entitled, prior to exercising any such discretion or power, taking any such action, making any such decision or giving any such direction, to seek directions from the Bondholders by way of Extraordinary Resolution, and the Trustee shall not be responsible for any loss or liability incurred by the Issuer, the Bondholders or any other person as a result of any delay in it exercising such discretion or power, taking such action, making such decision or giving such direction as a result of seeking such direction from the Bondholders or in the event that no direction is given to the Trustee by the Bondholders.

None of the Trustee or any of the Agents shall be responsible for the performance by the Issuer and any other person appointed by the Issuer and/or the Guarantor in relation to the Bonds of the duties and obligations on their part expressed in respect of the same and, unless it has written notice from the Issuer or the Guarantor to the contrary, the Trustee and each Agent shall be entitled to assume that the same are being duly performed. None of the Trustee or any Agent shall be liable to any Bondholder, the Issuer, the Guarantor or any other person for any action taken by the Trustee or such Agent in accordance with the instructions of the Bondholders. The Trustee shall be entitled to rely on any direction, request or resolution of Bondholders given by Bondholders holding the requisite principal amount of Bonds outstanding or passed at a meeting of Bondholders convened and held in accordance with the Trust Deed.

The Trustee shall have no obligation to monitor whether an Event of Default or a Potential Event of Default or a Relevant Event has occurred, and shall not be liable to the Bondholders or any other person for not doing so.

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15 FURTHER ISSUES

The Issuer may from time to time, without the consent of the Bondholders and in accordance with the Trust Deed, create and issue further bonds having the same terms and conditions as the Bonds in all respects (or in all respects except for the issue date, the first payment of interest and the timing for complying with the requirements set out in these Conditions in relation to the Cross-border Security Registration and the NDRC Post-Issue Filing) so as to be consolidated to form a single series with the Bonds, provided that (a) the Guarantor shall undertake to comply with Conditions 3(c) (SAFE Filing and Notification) and 3(d) (NDRC Post-Issuance Filing and Notification) with respect to such new bonds and the Issue Date as used therein shall be deemed to mean the initial issue date of such new bonds and (b) either (i) the Deed of Guarantee with respect to the existing Bonds may be amended without consent from any Bondholders to reflect the issuance of such new bonds or (ii) the Guarantor may enter into a new deed of guarantee with respect to such new bonds in favour of the Trustee having the same terms and conditions as the Deed of Guarantee with respect to the existing Bonds. Any further securities forming a single series with the outstanding Bonds shall be constituted by a deed supplemental to the Trust Deed.

16 NOTICES

Notices to the Bondholders will be validly given if sent to them at their respective addresses on the Register. Any such notice shall be deemed to have been given on the fourth day after the date of being sent. The Issuer shall also ensure that notices are duly published in a manner that complies with the rules and regulations of any stock exchange or other relevant authority on which the Bonds are for the time being listed. Any such notice shall be deemed to have been given on the date of such publication or, if published more than once, on the first date on which publication is made.

So long as the Bonds are represented by the Global Certificate and the Global Certificate is held on behalf of Euroclear Bank SA/NV or Clearstream Banking S.A. or any Alternative Clearing System (as defined in the Trust Deed), notices to Bondholders shall be given by delivery of the relevant notice to Euroclear Bank SA/NV or Clearstream Banking S.A. or the Alternative Clearing System, for communication by it to entitled accountholders in substitution for notification as required by the Conditions, and such notice shall be deemed to be received by the Bondholders on the date of delivery of such notice to Euroclear Bank SA/NV or Clearstream Banking S.A. or the Alternative Clearing System.

17 CURRENCY INDEMNITY

If any sum due from the Issuer or the Guarantor in respect of the Bonds or any order or judgment given or made in relation thereto has to be converted from the currency (the "first currency") in which the same is payable under these Conditions or such order or judgment into another currency (the "second currency") for the purpose of (a) making or filing a claim or proof against the Issuer or the Guarantor, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation to the Bonds, the Issuer and the Guarantor shall indemnify the Trustee and each Bondholder, on the written demand of the Trustee or such Bondholder addressed to the Issuer and the Guarantor and delivered to the Issuer and the Guarantor, against any loss suffered as a result of any discrepancy between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at which the Trustee or such Bondholder may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof.

This indemnity constitutes a separate and independent obligation of each of the Issuer and the Guarantor and shall give rise to a separate and independent cause of action.

18 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

No person shall have any right to enforce any term or condition of the Bonds under the Contracts (Rights of Third Parties) Act 1999 except and to the extent (if any) that the Bonds expressly provide for such Act to apply to any of their terms.

19 GOVERNING LAW AND JURISDICTION

(a) Governing law

The Bonds, the Trust Deed, the Deed of Guarantee and the Agency Agreement and any non-contractual obligations arising out of or in connection with them are governed by, and shall be construed in accordance with, English laws.

(b) Jurisdiction

The courts of Hong Kong are to have exclusive jurisdiction to settle any disputes that may arise out of or in connection with the Bonds, the Trust Deed, the Agency Agreement, the Deed of Guarantee and accordingly any legal action or proceedings arising out of or in connection with any Bonds, the Trust Deed, the Agency Agreement, and the Deed of Guarantee (“Proceedings”) may be brought in such courts. The Issuer and the Guarantor have in the Trust Deed, and the Guarantor has in the Deed of Guarantee, irrevocably submitted to the jurisdiction of such courts and waived any objection to Proceedings in any such courts whether on the ground of venue or on the ground that the Proceedings have been brought in an inconvenient forum.

(c) Waiver of immunity

To the extent that the Issuer or the Guarantor has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit, proceeding, execution or attachment (whether in aid of execution, before judgement or otherwise) from jurisdiction of any court or from set-off or any legal process (including any immunity from non-exclusive jurisdiction or from service of process or, except as provided below, from any execution to satisfy a final judgment or from attachment or in aid of such execution or otherwise) with respect to itself or any of its property, each of the Issuer and the Guarantor agrees not to assert any such right or claim and irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction.

(d) Agent for Service of Process

Each of the Issuer and the Guarantor has in the Trust Deed irrevocably appointed Orient Finance Holdings (Hong Kong) Limited at 28/F-29/F, No. 100 Queen’s Road Central, Hong Kong to receive service of process in any Proceedings in Hong Kong based on any of the Bonds, the Trust Deed or the Deed of Guarantee.

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SUMMARY OF PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM

The Global Certificate contains provisions which apply to the Bonds while they are in global form, some of which modify the effect of the terms and conditions of the Bonds set out in this Offering Circular. Terms defined in the Terms and Conditions of the Bonds have the same meaning in the paragraphs below. The following is a summary of certain of those provisions.

The Bonds will be represented by the Global Certificate which will be registered in the name of a nominee of, and deposited with, a common depositary on behalf of Euroclear and Clearstream.

Under the Global Certificate, the Issuer, for value received, promises to pay such principal and interest on the Bonds to the holder of the Bonds on such date or dates as the same may become payable in accordance with the Terms and Conditions of the Bonds.

Owners of interests in the Bonds in respect of which the Global Certificate is issued will be entitled to have title to the Bonds registered in their names and to receive individual definitive Certificates if either Euroclear or Clearstream, or any other clearing system (an "Alternative Clearing System") is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so. In such circumstances, the Issuer will cause sufficient individual definitive Certificates to be executed and delivered to the Registrar for completion, authentication and despatch to the relevant holders of the Bonds. A person with an interest in the Bonds in respect of which the Global Certificate is issued must provide the Registrar not less than 30 days' notice at its specified office of such holder's intention to effect such exchange and a written order containing instructions and such other information as the Issuer and the Registrar may require to complete, execute and deliver such individual definitive Certificates.

PAYMENT

So long as the Bonds are represented by the Global Certificate, each payment in respect of the Global Certificate will be made to, or to the order of, the person whose name is entered on the Register at the close of business on the record date which shall be the Clearing System Business Day immediately prior to the date for such payments, where "Clearing System Business Day" means a weekday (Monday to Friday, inclusive) except 25 December and 1 January.

CALCULATION OF INTEREST

So long as the Bonds are represented by a Global Certificate and such Global Certificate is held on behalf of a clearing system, the Issuer has promised, inter alia, to pay interest in respect of such Bonds from the Issue Date in arrear at the rates, on the dates for payment and in accordance with the method of calculation provided for in the Terms and Conditions of the Bonds, save that the calculation is made in respect of the total aggregate amount of the Bonds represented by such Global Certificate, together with such other sums and additional amounts (if any) as may be payable under the Terms and Conditions of the Bonds, in accordance with the Terms and Conditions of the Bonds.

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TRUSTEE'S POWERS

In considering the interests of the Bondholders while the Global Certificate is registered in the name of a nominee for a clearing system, the Trustee may, to the extent it considers it appropriate to do so in the circumstances, but without being obliged to do so, (a) have regard to any information as may have been made available to it by or on behalf of the relevant clearing system or its operator as to the identity of its accountholders (either individually or by way of category) with entitlements in respect of the Bonds and (b) consider such interests on the basis that such accountholders were the holder of the Bonds in respect of which such Global Certificate is issued.

NOTICES

So long as the Bonds are represented by the Global Certificate and the Global Certificate is held on behalf of Euroclear or Clearstream or any Alternative Clearing System, notices to Bondholders may be given by delivery of the relevant notice to Euroclear or Clearstream or such Alternative Clearing System, for communication by it to entitled accountholders entitled to an interest in the Bonds in substitution for notification as required by the Terms and Conditions of the Bonds.

BONDHOLDER'S REDEMPTION

The Bondholder's redemption option in Condition 5(c) of the Terms and Conditions of the Bonds may be exercised by the holder of the Global Certificate giving notice to the Principal Paying Agent of the principal amount of Bonds in respect of which the option is exercised within the time limits specified in the Terms and Conditions of the Bonds.

ISSUER'S REDEMPTION

The option of the Issuer provided for in Conditions 5(b) and 5(d) of the Terms and Conditions of the Bonds shall be exercised by the Issuer giving notice to the Bondholders within the time limits set out in and containing the information required by the Terms and Conditions of the Bonds.

TRANSFERS

Transfers of beneficial interests in the Bonds represented by the Global Certificate will be effected through the records of Euroclear and Clearstream (or any Alternative Clearing System) and their respective participants in accordance with the rules and procedures of Euroclear and Clearstream (or any Alternative Clearing System) and their respective direct and indirect participants.

CANCELLATION

Cancellation of any Bond represented by the Global Certificate will be effected by a reduction in the principal amount of the Bonds in the register of Bondholders and the Global Certificate on its presentation to or to the order of the Registrar for annotation (for information only) in Schedule A to the Global Certificate.

MEETINGS

For the purposes of any meeting of Bondholders, the holder of the Bonds represented by the Global Certificate shall (unless the Global Certificate represents only one Bond) be treated as two persons for the purposes of any quorum requirements of a meeting of Bondholders and as being entitled to one vote in respect of each U.S.$1,000 in principal amount of Bonds for which the Global Certificate is issued.

OUR CORPORATE STRUCTURE

The following chart sets forth our shareholding structure, principal subsidiaries and affiliates as at the date of this Offering Circular.

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DESCRIPTION OF THE ISSUER

OVERVIEW

BUSINESS ACTIVITIES

The Issuer is a wholly-owned subsidiary of Orient Finance Holdings, which in turn is a wholly-owned subsidiary of the Company. As at the date of this Offering Circular, the Issuer has not engaged and will not engage, in any activities other than those incidental to its incorporation and establishment as an indirect wholly-owned subsidiary of the Company, those relating to the issue of bonds (including the proposed issue of the Bonds) and those relating to the on-lending of the proceeds thereof to the Company and its subsidiaries.

DIRECTORS

Ms. LU, Yuanyuan (盧媛媛) is the sole director of the Issuer. The business address of the sole director is 28-29F, 100 Queen's Road Central, Hong Kong.

FINANCIAL INFORMATION

Under British Virgin Islands laws, the Issuer is not required to publish condensed or annual financial statements. The Issuer has not published and does not propose to publish, any financial statements. However, as required by section 98 of the Business Companies Act of the British Virgin Islands (As Revised), the Issuer is required to keep proper books of accounts as are necessary to give a true and fair view of the state of the Issuer's affairs and to explain its transactions. Effective from 1 January 2023, the Issuer is also required to file a financial annual return with its registered agent within nine months after the end of each year to which the financial annual return relates.

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DESCRIPTION OF THE GROUP

OVERVIEW

Wealth and Asset Management

Our wealth and asset management business mainly provides clients with services such as securities brokerage, financial products, investment advisory, margin financing and securities lending, asset management as well as futures business.

Wealth Management: We conduct wealth management business mainly through the wealth management committee and its subordinate first-level departments and branches.
Asset Management: We mainly engage in securities asset management business through Orient Securities Asset Management, a wholly-owned subsidiary of the Company; engage in fund management business through China Universal, an associate of which the Company is the largest shareholder holding 35.412 per cent. of the shares; and engage in private equity investment business through Orient Securities Capital Investment, a wholly-owned subsidiary of the Company.
Futures Business: We mainly engage in futures business through Orient Futures, a wholly-owned subsidiary of the Company.

Investment Banking and Alternative Investment

Our investment banking and alternative investment business mainly includes services provided to customers such as stock underwriting and sponsoring, bond underwriting, financial advisory, and diversified corporate solutions as well as alternative investment.

Investment Banking: We mainly engage in investment banking business through the investment banking management committee and its first-tier departments, as well as the fixed income business department.
Alternative Investments: We primarily engage in alternative investment business through Orient Securities Innovation, a wholly-owned subsidiary of the Company.

Institutional and Sales Trading

Our institutional and sales trading business mainly consists of proprietary investment, client-oriented services, market-making business, research services and custodian business. Among them, proprietary investment includes investment transactions such as in equity, fixed income, commodities and foreign exchange; client-oriented services include OTC derivatives and FICC agency services.

Proprietary Investment: We conduct both equity and non-equity proprietary investment businesses primarily through the securities investment business department and the fixed income business department.
Client-oriented Business: We mainly conduct client-oriented business through the financial derivatives department and the fixed income business department.
Market-making Business: We conduct equity and non-equity market-making business mainly through the securities investment business department, the financial derivatives business department, and the fixed income business department.
Research Services: We primarily provide securities research and other services through the securities research institute.
Custody Business: We conduct our custody business primarily through the custodian business department.

International and Other Businesses

Our international and other businesses mainly include the international business and other businesses. Among them, the international business mainly relies on overseas platforms such as Orient Finance Holdings, Orient Securities International and their subsidiaries, as well as the Singapore subsidiary of Orient Futures for business layout, and conducts businesses such as securities and futures brokerage, asset management, investment banking, and margin financing.

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AWARDS

Our solid financial performance, stable operational management and strong innovation achievements have been widely recognised. We have won various awards, including among others:

Year	Award	Authority
2022	Golden Fund Top Company Award	Shanghai Securities News
	2022 Chinese Securities Industry All-round Wealth Management Broker Junding Award	Securities Times
	2022 China Securities Industry “Wealth Management Brand Junding Award”
	Principal Broker Junding Award
	Investment Advisory Team Junding Award
	2022 China Securities Industry Bond Investment Bank Junding Award
	Five-Year Golden Bull Securities Firm Collective Asset Manager (2022) Award	China Securities Journal
	Outstanding Wealth Management Securities Firm Award	China Fund
	Best Fund Investment Advisory Firm of the Year
	Outstanding Innovative Wealth Management Securities Firm Award
	Industry Contribution Golden Advisory Award	Xinhua Finance
	Fund Investment Advisory Golden Advisory Award
	Jinding Award for Securities Firm with Best Comprehensive Strength in Wealth Management	National Business Daily
	Jinding Award for Securities Firm with the Best Fund Investment Advisory Services

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Year	Award	Authority
	• Core Trader	China Foreign Exchange Trading Center
	• Trader in Bond Market
	• Trader in Derivatives Market
	• Bond Underwriting and Distribution (Underwriter) Innovation Award
	• Standard Bond Forward Proprietary Settlement Excellence Award	Shanghai Clearing House
	• Outstanding Promoter of Innovative Business
	• Outstanding Underwriter of Policy-based Financial Bonds
2023	• Best IR Hong Kong Listed Company (A + H Shares)	New Fortune
	• Best Investment Advisory Team
	• Outstanding Organization Award
	• Best ESG Information Disclosure Award
	• 2022 Golden Award for Information Disclosure	China Securities Journal
	• Fund Investment Advisory Institution Golden Bull Award
	• 2023 Securities Company Golden Bull Award – Golden Bull Growth Wealth Management Team	Xinhua Finance
	• Fund Investment Advisory Institution Golden Advisory Award
	• Fund Investment Advisory Services Golden Advisory Award
	• Fund Investment Advisory Communication Golden Advisory Award

Year
Award
Authority

2023 Chinese Securities Industry All-round Wealth Management Broker Junding Award
Securities Times
Chinese Securities Industry Fund Investment Advisory Junding Award
2023 Chinese Securities Industry Fund Investment Advisory Team Junding Award
China Fund
2023 Chinese Securities Industry Top 20 Securities Branch Junding Award
Sales Innovation Award
Business Innovation Award
Best Contribution Award for the 10th Anniversary of the Listing of Treasury Bond Futures (2013-2023)
China Financial Futures Exchange
Bronze Award for Outstanding Market Maker of Stock Index Options
Outstanding Option Market Maker
Outstanding ETF Liquidity Provider
SZSE
Stock and Options Market Development Contribution Award
SSE
Gold Award for Market Making Business
Shanghai Futures Exchange
2023 Carbon Neutrality Enterprise Innovation Award and Contribution Award by
China Energy Conservation Association
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Year	Award	Authority
2024	• Excellent Practice Case of Sustainable Development of Listed Companies in 2024	China Association for Public Companies
	• Best Practice Case of the Board of Directors of Listed Companies in 2024
	• Best Practice Case of the Board of Directors Office
	• Best Practice Case of Investor Relations
	• Second Prize of the Development of Financial Technology in 2023	People’s Bank of China
	• Third Prize of the Development of Financial Technology
	• “ESG Financial Award of the Year” of the Cailianshe Lucui Jinshan Award in 2024	Cailian Press
	• The Seventh Best IR Hong Kong Stock Company (A + H Stocks)	New Fortune
	• Top Ten Golden Bull Securities Companies in 2024	China Securities Journal
	• ESG Golden Bull Award of the Securities Industry
	• The 15th Tianma Award for Investor Relations Management of Chinese Listed Companies	Securities Times
	• Top 13 Securities Listed Companies in the Brand Value List of Chinese Listed Companies in 2024	National Business Daily
	• Golden Tripod Award for the Classic Case of the Best Rural Revitalization in 2024
	• “High-quality Development Financial Institution” of the Ninth Times Finance Golden Kumquat Award	Times Weekly, Times Finance

– 93 –

Year
Award
Authority

“Outstanding Securities Company of the Year 2024” in the Golden Sail Case of the Capital Market
“Golden Shell Award for Outstanding and Supreme Securities Company in 2024” in the 2024 Golden Shell Asset Management Competitiveness Case

21st Century Business Herald

RECENT DEVELOPMENTS

Resignation and Appointment of Non-Executive Director

Proposed Amendments to Articles of Association and its Annexes and Proposed abolishment of the Supervisory Committee

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A-share Repurchase

COMPETITIVE STRENGTHS

We are a leading capital markets service provider in China with distinguished investment expertise. We have built successful investment management and trading as well as wealth management businesses by leveraging our strong foundation in Shanghai and nationwide network. We believe the following strengths have contributed to our success and differentiated us from our competitors.

We have strong shareholders' support and standardised corporate governance

We have maintained a long-term stable base of shareholders which provides active support to the Company in business development and system and mechanism reform, and offers major support in capital operation, market-oriented system reform and other material matters. Our state-owned background coupled with the support we have received from our shareholders provide important support to our business development and contribution to our industry-leading position. As Shanghai is one of the most important financial centres in the world, government support for the financial sector has been much stronger as compared to other industries. In particular, according to the arrangement of the Shanghai Municipal Government, Shenergy Group, a company wholly owned by Shanghai SASAC, has been our largest shareholder ever since our establishment. As at 30 June 2025, Shenergy Group held 26.63 per cent. of our equity interest. As the largest shareholder of the Company, Shenergy Group provides long-term and unwavering support to the innovative development, business development and operation and system reform of the Company. The background of our shareholders in energy industry strongly enhances our position and visionary thinking in serving the real economy, guarding the national energy security and financial security, and implementing the "dual-carbon" strategy. This is a natural advantage for us to specialise in "energy investment banking and green investment banking". We have formulated a work plan for energy investment bank, issued a green finance action plan, and established a Green Finance Working Group for promoting the deep integration of energy and finance, and further solidifying the foundation for the development of green finance. In recent years, Shenergy Group, together with other shareholders, has provided significant support to the Company on major issues such as optimisation of the senior management team and market-oriented mechanism reform. Our state-owned background has enhanced our customers' confidence in our products and services, broadened our customer base, strengthened our work relationships with the government and has provided us with more business opportunities.

As a public company listed in both Mainland China and Hong Kong, we have operated our business in a standard manner and in strict compliance with the requirements under the relevant laws, regulations and regulatory documents in the places where the shares of the Company are listed. We improve and refine our corporate governance structure, compliance and risk control system and internal control management system in accordance with the requirements of the governance codes for A shares and H shares listed companies. The general meeting, the Board, the Supervisory Committee and the management team perform their respective duties diligently and give full play to the leading core and political core functions of the Company's party committee.

We have distinguished investment management and trading capabilities with a proven track record

We have comprehensive service capabilities covering all functions and the whole industry chain, including particularly outstanding investment ability. After years of cultivation, we have built a brand with a long-term advantage in areas including asset management, publicly offered funds, fixed income, and futures brokerage. The operating results of Orient Securities Asset Management ranks high in the industry, and the "Dong Fang Hong (東方紅)" brand enjoys a good reputation in the market. China Universal has developed stable and top-class comprehensive capabilities and has ranked among the top in the industry in terms of size of active equity business. The Company's fixed-income business has delivered solid long-term results, and its interest rate bond underwriting, bond market-making and trading have always ranked among the top in the market, while its carbon finance business has developed innovatively. By strengthening the application of financial technology, Orient Futures maintains a competitive market share.

We have always emancipated our mind and kept abreast of the times. We have seized the opportunity of A + H stock listing at an early stage, promoted reform and innovation of our business model, have taken the lead in the industry in implementing wealth management transformation and sales trading transformation, and has been the first to obtain the qualifications of Swap Connect, Listed Securities Market Making, fund advisory services, and personal pension, etc. We have also established a flexible market-oriented mechanism and a target-oriented operation mechanism ahead of industry peers.

We have a business with a diversified revenue mix and a robust asset structure

We have leading edge businesses with a balanced business portfolio. We have established integrated business lines to provide comprehensive financial services and have continued to reduce our reliance on traditional brokerage services and securities trading business. For the six months ended 30 June 2025, before elimination of inter-segment balances, our key business segments, namely, wealth and asset management, investment banking and alternative investment, institutional and sales trading, international and other businesses, contributed approximately 41.0 per cent., 8.1 per cent., 41.0 per cent. and 19.9 per cent., respectively, to our total revenue, other income and net gains and losses. We continue to provide a wide variety of financial products and services to meet various clients' needs and continue to optimise the revenue mix.

We also seek to distinguish ourselves from other PRC securities firms with a robust asset structure. We conduct both equity and non-equity proprietary investment businesses. Over the years, we have maintained a comprehensive asset profile which will ensure the Company's sustainable overall profitability irrespective of market volatility throughout the various phases of the securities industry cycle.

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We have strong capital resources as an A+H dual listed company

As an A+H dual listed company, we have access to the capital markets in both Mainland China and Hong Kong, which allows us significant flexibility in capital raising and in turn strongly supports our business development and expansion.

We fully utilise the capital markets to strengthen our capital resources. In March 2015, we raised RMB10 billion through our A-share IPO on the Shanghai Stock Exchange under stock code "600958", upon which our registered capital increased to RMB5.3 billion. In July 2016, we raised HK$7.6 billion through our H-share IPO under stock code "03958", upon which our registered capital increased to RMB6.2 billion. In February 2017, we planned a RMB11 billion A-share private placement. In December 2017, we raised RMB11 billion through private placement of 780 million A-share, upon which our registered capital increased to RMB7.0 billion. In May 2022, we raised RMB12.7 billion through private placement of 1,502.9 million A-share, upon which our registered capital increased to RMB8.5 billion.

With such strong capital resources, we have obtained strong reputation and credibility in the industry. In May 2017, we obtained our first Moody's long-term issuer rating of Baa3 as the 5th Moody's investment grade rated securities firm in China. In July 2017, we were selected to be the first batch of four securities firms with Bond Connect quotation qualifications. In October 2018, we became qualified for securities investment fund custody business. In March 2021, Moody's announced to upgrade our long-term issuer rating to Baa2 with stable outlook. As at the date of this Offering Circular, our long-term issuer rating assessed by Moody's is Baa2 with a stable outlook. We are one of the only two securities companies that received a rating upgrade and now has the second highest rating among the eleven securities companies in the PRC.

We have a prudent, effective and comprehensive risk management system and industry-leading liquidity management capabilities

We have always adhered to the operating concept of "compliance as the foundation, risk control as the core", with a steady compliance and risk control culture as the core, sound systems as the basis and professional management tools as the support. Thus, a closed-loop compliance and risk management system of "culture - people - systems - tools" has been formed. Our compliance and risk management work has been sound and effective, with risk control indicators remaining at a relatively safe level. We have received the classification evaluation of Class A securities company for 16 consecutive years (AA rating of Class A for 4 consecutive years) and been included in the "White List" of securities companies.

We have facilitated the effective and in-depth implementation of the plan for vertical management of compliance and risk control, further fulfilled the responsibility of top leaders, strengthened the linkage between compliance management and performance assessment, continuously developed a digital public opinion early warning system, and enhanced risk measurement and analysis capabilities. We have also strengthened the control of the stop-loss mechanism for high-risk businesses, promoted the refined measurement of major professional risks, and focused on audit and rectification to create a closed-loop management.

We add value through liquidity management. We have industry-leading liquidity management capabilities. Our liquidity management is achieved through a variety of effective measures and systems, including a complete and well-designed system, a solid model with a well-diversified maturity profile, a platform for the vast talent pool, sufficient credit through peer partnership, strengthened reserves to prepare against potential risks, diversified funding sources with ample quota for financing and risk minimisation through systematic management. As at 31 December 2022, 2023 and 2024 and 30 June 2025, the liquidity coverage

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ratio of the Company was 218.50 per cent., 203.97 per cent., 202.82 per cent. and 192.24 per cent., respectively, and the net stable funding ratio of the Company was 139.09 per cent., 131.89 per cent., 148.83 per cent. and 139.38 per cent., respectively. As at 30 June 2025, we had received a total of 77 banks' credits, with a total amount of RMB373.36 billion, representing an increase of RMB12.10 billion as compared to 31 December 2024; among these banks' credits, credit facilities from Chinese banks and public listed banks amounted to RMB367.53 billion, representing an increase of RMB19.49 billion as compared to 31 December 2024. As at 30 June 2025, our current major debt financing instruments included a total of RMB64.60 billion bonds in domestic exchange traded bond market.

We have a professional and outstanding senior management team and business team

Our senior management members have worked in the securities and finance industry for many years with in-depth insight and extensive management experience in the finance and securities industry, providing strong support for the long-term sustainable development of the Company. We have professional, high-quality and relatively stable business teams which have gathered rich market experience and outstanding professional abilities through years of operation. We also have a pool of steadily growing future leaders and talents to lay a solid foundation of talents for our innovative development.

We have focused on strengthening the management of our cadre team, revised the cadre management policies, implemented democratic evaluations of cadres, and effectively managed cadre appointment and removal. We have also continuously iterated and innovated our approach to recruiting outstanding talents, leading to successful efforts in rejuvenating the cadre team with a younger workforce. We have strengthened the construction of the "three abilities" mechanism, steadily promoted the change of employee ranking system and structural promotion, demotion and salary adjustment, practiced the guidelines for steady remuneration of regulatory authorities, and revised and improved our remuneration management and other related systems. Taking the return of investment banking as an opportunity, we have further improved the organisational structure and corresponding mechanism of investment banking business.

We have consistently attached great importance to building a strong talent team and are firmly committed to the strategy of "strengthening the company through talents", and transformed talent, the "primary resource", into the "primary driving force" for high quality development. We have strengthened the talent-related policies and supporting mechanisms, deepened the work chain of "attracting, cultivating, utilising and retaining" talents, enhanced internal training and external recruitment, continuously introduced, cultivated, employed and retained key talents, leading talents and high-end talents, and built a comprehensive and excellent team of financial cadres and talents with "purity, professionalism and combat effectiveness", so as to provide solid talent support for high-quality development.

BUSINESS STRATEGIES

We aim to build a first-class modern investment bank with domestic competitiveness and international influence, making greater contributions to the construction of a financial powerhouse and Shanghai's "Five Centers". Guided by the above philosophy, we take "collectivisation, digitalisation, and internationalisation" as strategic drivers and propose the "12345" development path and main tasks. We plan to achieve our goals through the following strategies.

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99 -

Adhere to one overall positioning and continuously promote high-quality development with the characteristics of DFZQ

In order to achieve the strategic goal of building a first-class enterprise in the industry, we adhere to the general tone of seeking progress while maintaining stability, scientifically assesses the market situation, accurately grasps development opportunities, continuously consolidates our core competitive advantages, and promotes steady growth in its business performance. We adhere to the path of high-quality development with the characteristics of DFZQ, take comprehensive deepening of reform as the leading factor, focus on building a complete, scientific, standardised, intensive and professional business system and management structure, and lay a solid foundation for our high-quality development. We will continuously strengthen our capital operation capabilities, risk management and control capabilities, and value creation capabilities, comprehensively enhance our core competitiveness and brand value, and accelerate our progress towards a listed securities and financial group with industry leadership and international influence.

Focus on two key areas of comprehensive wealth management and comprehensive investment banking

Wealth Management

For the securities brokerage business, we will strive to give full play to our role as a social wealth manager, focus on customer base management, deepen the construction of the three-force mechanism of "headquarters driving, policy penetration and branch capacity", and build a co-constructed, co-governed, and shared digital wealth management ecosystem centered on the four transformation elements of customers, products, teams, and channels. We will promote the growth of customer scale and quality through acquiring high-quality customers, high-efficiency conversion, and retaining customers with high-value returns. We will improve the development of buy-side investment advisory services, anchored by robust investment capabilities and precise advisory services, and take the implementation of "quick-win projects" as a breakthrough to form an O2O synergy between online and offline channels. In addition, we will continuously improve the "headquarters-branch-business department" three-level structure management model, transforming to a regional comprehensive operation model led by branch companies.

For the fund investment advisory business, we will continue to adhere to the core principles of "buy-side investment adviser", further strengthening portfolio research and strategy development, enriching our product and style offerings, and enhancing differentiated service capabilities. At the same time, we will continue to reinforce team building and system support, and advance the transformation of fund investment advisory business from "product-based delivery" to "solution-based delivery". We aim to build a leading integrated fund investment advisory service platform in the industry, providing clients with professional, prudent, and long-term asset allocation services.

For the credit trading business, we will create a new growth point in profitability through structural optimisation, refined management, and strengthened risk control. Meanwhile, we will continue to promote the risk mitigation and liquidation of collateralized stock business.

Investment Banking

For the equity financing business, we will focus on two strategic areas – technology and energy, and by leveraging policy guidance and industry trends, we will further strengthen our differentiated competitive edge. In hard technology, we will prioritise key industries such as next-generation information technology, biopharmaceuticals, advanced manufacturing and new materials to deliver comprehensive financial solutions throughout the entire life cycle of technology and innovation enterprises. In the energy sector, we, building on the industrial ecosystem and resources of Shenergy Group, will capitalise on its competitive advantages and strive to establish ourselves as a distinctive brand in energy investment banking.

For the bond financing business, we will continue to adhere to the three linkage service model: "investment + investment banking + investment research", deeply tapping the diversified financing needs of customers, providing clients with full-chain, full-cycle comprehensive financial services, improving the quality and efficiency of customer service and ability of execution of innovations. At the same time, we remain committed to cultivating relationships with high-quality regional clients while expanding coverage in key national strategic zones, thereby driving steady growth in both business scale and competitive positioning.

For the financial advisory services, we will remain focusing on industrial M&A and cross-border M&A, and participating in M&A transactions with significant scale and market influence. In addition, we will also actively develop innovative business opportunities such as the transfer of control rights of listed companies and financial advisory services for bankruptcy reorganization, through which we will give priority to obtaining business opportunities for the future capital operation of listed companies; we will pay attention to the internationalisation needs of our high quality listed company clients, and provide comprehensive financial services through domestic and overseas linkage to meet the clients' needs for financing in overseas markets and global strategic layout.

Forge three core capability pillars of comprehensive customer group management, digital technology-driven initiatives, and endogenous compliance and risk control

Customer Group Management: We will focus on the general direction of customer demand in the wealth management market, emphasising customer management. We will build and expand both online and offline customer acquisition channels, and strengthen customer life-cycle services. We will deepen the construction of the three forces mechanism of "driving force from headquarters, penetration force from policies and supporting force from branches". We will focus on the four transformation elements of customers, products, teams and channels.
Digital Technology-driven Initiatives: We will strive to build a co-constructed, co-governed, and shared digital wealth management ecosystem centered on the four transformation elements of customers, products, teams, and channels. Taking the productisation of products and services as a key focus, we will comprehensively improve the professional level of asset management and solution design, conduct in-depth analysis of changes in the market environment and customer needs, respond quickly to connect with services, and upgrade digitalisation and AI capabilities. Concurrently, we will rigorously strengthen our compliance and risk control framework, expedite the development of a digital custody system, and continuously elevate the digital capabilities and operational efficiency of our custody services.
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Endogenous Compliance and Risk Control: We have always upheld the risk management concept of "high-quality development", and strive to realise the organic integration and convergence among risk management, compliance management and internal control. In order to scientifically guide and rationally allocate resources, we aim to prepare plans for asset and liability allocation, risk appetite, risk tolerance and risk limit according to market conditions, corporate strategy and industry development on an annual basis, and implements a dynamic adjustment mechanism to cater for our business development. We intend to strengthen the coordination between the risk management culture and corporate culture as well as party discipline and integrity standards, and consolidate the risk management awareness of all of our employees through multiple approaches to improve the level of risk management. We will continuously enhance the training and recruitment of risk management personnel to keep our members meeting regulatory requirements. We will adhere to the organic integration of risk management with performance appraisal and accountability mechanisms and specify performance assessment standards to effectively ensure that our various business developments comply with regulatory requirements.

Create four characteristic advantages of buyer's investment advisory, industrial investment banking, institutional finance, and digital technology

Buyer's Investment Advisory: We will continue to uphold the core concept of "buy-side investment advisory", with customer demand as the direction and professional services as the basis, and constantly improve the introduction of products, portfolio research, advisory services and other capabilities, to set up a market-wide benchmark of fund investment advisory services, and contribute to the preservation and enhancement of the value of residents' wealth value.
Industrial Investment Banking: We will focus on the development of industrial investment banking and focus on industry segments, strengthen industrial mindset, highlight value discovery, and utilise our professional advantages and resource endowments to empower enterprises.
Institutional Finance: We will continue to enhance the efficiency of our institutional business, deepen analysis for institutional customers' needs, and strengthen cross-departmental collaboration mechanisms to increase collaborative revenue. We will focus on strengthening the high-frequency collection of client needs by institutional sales team and immediate feedback to the research team, forming a research service model that combines an independent research perspective and also fully meets client needs.
Digital Technology: We will continue to promote the construction of digital finance, strengthen the digital transformation efforts, use digital thinking to deeply transform the business model and management model, apply digital technology methods to empower operational decision-making, resource allocation, business transformation, risk management, product development and other aspects, and comprehensively enhance the level of technology-driven operations.

Promote five coordinated developments including comprehensive wealth management, comprehensive investment banking, comprehensive institution, energy and finance, domestic sector and offshore sectors

Compressive Wealth Management: We insist on returning to the essence of wealth management, firmly transforming from charging for channel services to acting as a buyer-side investment advisor, strengthening the comprehensive customer group operation ability, enhancing the service level of customer asset allocation, and satisfying the needs for diversified and professional wealth management;
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Compressive Investment Banking: We will focus on the three major characteristics of science and innovation investment banking, energy investment banking and merger and acquisition investment banking, deeply connecting with the strategy of building Shanghai International Science and Innovation Centre, deeply serving the extensive layout of Shenergy Group in the energy industry, and deeply tapping the Company's pioneering advantages in the field of financial advisory for mergers and acquisitions of state-owned enterprises, so as to push forward the characteristic development of the investment banking business;
Compressive Institutions: We will deepen the “Unified Orient (一個東方)” layout, comprehensively improve the coverage of various types of institutional clients, deepen the value exploration of individual institutional clients, implement total quantity management and classified accounting, and form a strong synergy of institutional client services;
Energy and Finance: We will deepen the construction of energy investment banking. We will actively respond to the national development strategy of “peaking carbon emissions” and “carbon neutrality” as well as industrial policies, focus on serving energy enterprises and assist in developing the circular economy; and
Domestic and Offshore Sectors: We aim to promote the coordinated development of domestic and overseas institutions, collaboratively building a one-stop cross-border financial service system, so as to accelerate the integration of digitalisation and internationalisation, driving our global progress to achieve leapfrog development.

OUR BUSINESS

Our major business segments include (i) wealth and asset management, (ii) investment banking and alternative investment, (iii) institutional and sales trading, and (iv) international and other businesses. The following table shows the composition of each business segment:

Wealth and Asset Management	Investment Banking and Alternative Investment	Institutional and Sales Trading	International and Other Businesses
• Wealth management	• Investment banking	• Proprietary investment	• International Business
• Asset management	• Alternative investment	• Client-oriented services	• Other Business
• Futures business		• Market-making business
		• Research services
		• Custodian business

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The following table sets forth the breakdown of our total revenue, other income and net gains and losses by business segment for the years ended 31 December 2022 and 2023:

	For the year ended 31 December
	2022		2023
	RMB’000	%	RMB’000	%
Investment management	3,200,361	13.8	2,302,784	9.5
Brokerage and securities financing	12,315,681	53.3	13,630,171	56.1
Securities sales and trading	5,449,588	23.6	5,894,384	24.3
Investment banking	1,958,439	8.5	1,622,482	6.7
Headquarters and other(1)	4,906,920	21.2	5,523,081	22.7
Inter-segment balances elimination(1)(2)	(4,723,626)	(20.4)	(4,695,513)	(19.3)
Total	23,107,363	100.0	24,277,389	100.0

Notes:
(1) In 2023, the management of the Group enhanced the disclosure of segment information by extending the internal transfer pricing mechanism to cover the headquarter segment for the year ended 31 December 2023. Comparative figures are re-presented accordingly.
(2) Inter-segment balances eliminations mainly include amount due from/to another segment arising from investing activities carried out by a segment for another segment.

The following table sets forth the breakdown of our total revenue, other income and net gains and losses by business segment for the year ended 31 December 2024 and for the six months ended 30 June 2024 and 2025:

	For the year ended		For the six months ended 30 June
	31 December 2024		2024		2025
	RMB’000	%	RMB’000	%	RMB’000	%
Wealth and asset management	17,694,509	63.9	4,373,463	45.0	5,052,448	41.0
Investment banking and alternative investment	1,491,653	5.4	743,933	7.6	992,555	8.1
Institutional and sales trading	7,103,971	25.7	3,891,837	40.0	5,055,255	41.0
International and other operations	5,594,808	20.2	3,412,973	35.1	2,450,635	19.9
Inter-segment balances elimination(1)	(4,201,334)	(15.2)	(2,696,484)	(27.7)	(1,226,262)	(10.0)
Total	27,683,607	100.0	9,725,722	100.0	12,324,631	100.0

Notes:
(1) Inter-segment balances eliminations mainly include amount due from/to another segment arising from investing activities carried out by a segment for another segment.
(2) In 2024, the management of the Group began to allocate resources and assess the business segment's performance based on the updated operating segment classification. The Group's business segment is re-presented accordingly.

Wealth and Asset Management

Wealth Management

We conduct wealth management business mainly through the wealth management committee and its subordinate first-level departments and branches. We have optimised the organisational structure of our wealth management committee, adhered to the principle of “collaboration between headquarters and branches + in-depth cultivation of regions”, established four branches in Shanghai, Beijing, Fujian and Shenzhen, constructed a client-centered wealth management integrated service platform, and continued to promote the in-depth transformation of our wealth management business towards a “buy-side investment adviser” model and provide support in organisational structure for the efficiency of capital market to serve inclusive finance and pension finance. By strategically developing innovative business models and diversified business scenarios that are closely aligned with the interests of investors, we have made every effort to build an all-round business synergy matrix covering securities trading agency, publicly offered products distribution, publicly offered fund investment advisory, institutional wealth management, private wealth management, and personal pension.

Securities Brokerage Business

In terms of customer base development, as at 30 June 2025, we had a total of 172 securities branches, covering 86 cities; we had 3.139 million customer capital accounts, representing an increase of 7.52 per cent. from the beginning of the year; and our total assets under custody amounted to RMB959.3 billion, representing an increase of 9.21 per cent. from the beginning of the year. We have implemented a strategy focused on the North Star metrics of “AUM + MAU”, guiding branch networks to proactively adjust business models. We have organised multiple performance-driven campaigns and “Good Start” specialised marketing initiatives to incentivise branches and employees, promoting the reasonable growth in customer scale and steady improvement in quality. We have highly emphasised and continued to deepen our strategic deployment in trading services through technology-driven resource integration to establish our core competitiveness. A fully functional, user-friendly standardised trading platform has been developed, complemented by customised solutions for professional institution clients including quantitative private funds and QFIIs. For the six months ended 30 June 2025, we added 228 thousand new client accounts and attracted RMB24.5 billion in newly onboarded assets, representing an increase of 90 per cent. and 45 per cent., respectively as compared with the same period in 2024; our branches’ market share in equity and fund trading reached 1.35 per cent., representing an increase of 0.44 percentage point year-on-year.

In terms of product sales, we have actively expanded various channels. We have been selected as a key cooperative securities firm by multiple banks, jointly carried out marketing activities during peak season with depository institutions, vigorously implemented brand promotion, and enhanced our influence. Focusing on the key directions of our business, we have optimised our product matrix, enriched the agency sales of publicly offered fund, launched a total of more than 100 private equity products, and launched a preferred fund brand “Orient Winner 50”, which provides customised wealth management solutions. In addition, we have also actively developed ETF portfolio strategies, and built an ETF tool platform, so as to enhance the promotion of ETF business, with remarkable results achieved. For the six months ended 30 June 2025, we have successfully issued the first ETF securities settlement product with a fundraising scale of RMB623 million, and achieved fundraising scale of RMB478 million for the floating-rate products of Orient Securities Asset Management. For the year ended 31 December 2024 and the six months ended 30 June 2025, our sales scale of non-monetary products amounted to RMB20.956 billion and RMB11.728 billion respectively, representing an increase of 26.20 per cent. and 24.54 per cent. as compared with the same period last year. As at 30 June 2025, the holding size of our non-monetary products amounted to RMB56.583 billion, representing an increase of 1.36 per cent. from the beginning of the year.

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The following table sets forth the types and amounts of all the financial products we distributed during the periods indicated, including Over-the-Counter (OTC) products:

	For the year ended 31 December		For the six months ended 30 June
	2023	2024	2024	2025
	(in RMB100 million)
Publicly offered funds (including monetary funds)	1,206.14	1,376.02	541.62	873.50
Collective asset management products	0.01	0.02	-	-
Trust schemes	19.38	46.07	20.76	19.87
Private equity investment fund products	7.85	2.16	1.08	4.76
Other financial products	74.43	43.02	21.29	8.60
Total	1,307.81	1,467.29	584.75	906.74

In terms of private wealth management, we have continued to advance the initial offering and ongoing marketing of private fund products. We have successfully rolled out six types of previously untapped strategies, including index-linked floating return products, quantitative hedge funds, CTA, A500 Enhanced Index Funds, CSI 1000 Enhanced Index Funds, and Fixed Income+. This initiative has essentially established a private fund product system covering low, medium, and high risk-return profiles, thereby significantly enriching and refining our private fund product offerings. As at 30 June 2025, we had 8,985 retail high-net-worth clients, representing an increase of 12.13 per cent. from the beginning of the year, and the total size of assets reached RMB207.025 billion, representing an increase of 11.28 per cent. from the beginning of the year.

In terms of securities investment advisory, we have continuously strengthened our investment advisory brand recognition and expanded our market influence. We have launched a pilot program for our securities investment advisory business, collaborating with relevant departments to conduct comprehensive staff training and selection, gradually establishing a professional and influential securities investment advisory team. We have launched an investment advisory section within our APP, realising the online operation of the entire process including product development, review, client contracting and service delivery. We have also initiated the development of a securities investment advisory platform, completed the first phase of the project, and established three basic operational functions of the platform, namely personnel management, product management, and fee management.

In terms of trading support, we have successfully shifted to and launched our next-generation low-latency centralised trading system, covering accounts, over-the-counter trading, options trading, securities settlement trading, margin financing and securities lending, and centralised trading businesses, comprehensively improving our business processing efficiency, customer service experience, and trading performance indicators. By focusing on customers, we have enriched our trading tools and enhanced our service matrix. We have promoted professional program trading services and deployed a pre-trade risk control platform, introduced algorithmic strategies and launched the "Winner T0" strategy within its APP, integrated and optimised professional trading systems to enhance service efficiency; improved the performance of intelligent and premium quotation systems to meet customers' diversified needs. We have also improved the securities settlement system and realised the trading of ETF securities settlement products, and provided comprehensive trading support for QFII clients and domestic clients, facilitating the introduction of new business lines. Furthermore, we have promoted options and IB businesses, strengthening business synergy with the subsidiary Orient Futures.

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In terms of digital finance, focusing on scenario applications and APP function optimisation, we have enhanced digital operation capabilities, and are committed to building a digital wealth management model empowered by technology and driven by investment advisory services. Centering on customer needs, we have comprehensively improved the service capabilities of core scenarios such as market condition, trading, wealth management, and accounts on the Oriental Winner APP. We have created one-stop intelligent trading services for wealth management, launched services such as the Winner T0 strategic trading tool, Winner 50 fund strategy pool, investment advisory zone and Winner account, so as to enhance customers' investment efficiency and sense of gain. Moreover, we have dynamically matched customer needs to provide customised services, offering customers an exclusive experience.

In the future, we will strive to give full play to our role as a social wealth manager, focus on customer base management, deepen the construction of the three-force mechanism of "headquarters driving, policy penetration and branch capacity", and build a co-constructed, co-governed, and shared digital wealth management ecosystem centered on the four transformation elements of customers, products, teams, and channels. We will promote the growth of customer scale and quality through acquiring high-quality customers, high-efficiency conversion, and retaining customers with high-value returns. We will improve the development of buy-side investment advisory services, anchored by robust investment capabilities and precise advisory services, and take the implementation of "quick-win projects" as a breakthrough to form an O2O synergy between online and offline channels. In addition, we will continuously improve the "headquarters-branch-business department" three-level structure management model, transforming to a regional comprehensive operation model led by branch companies.

Fund Investment Advisory Business

We have remained committed to our "customer-centric" philosophy and focused on enhancing our product offerings, investment strategies, and service capabilities to drive the high-quality growth of our fund investment advisory business.

Firstly, the portfolio strategy system is improving. A total of 28 portfolio strategies were launched under the fund investment advisory business, covering three major product lines: namely the "Yue" series, the "Ding" series, and the customised series, which fully meet the diverse and personalised investment needs of customers. This has gradually shaped a service model centred on standardised portfolios, complemented by customised solutions.

Secondly, the scale and customer base remained stable. As at 30 June 2025, the holding size of our fund investment advisory business amounted to RMB14.925 billion and the number of existing clients amounted to 110.4 thousand with a client retention rate of 52.83 per cent., a reinvestment rate of 75.95 per cent. and an average service usage duration of 805 days, indicating continued improvement in long-term client satisfaction.

Thirdly, investment research and advisory services have been continuously strengthened. Leveraging the "Dongfang Morning Brief (東方早知道)" morning meeting as a platform, we have continued to enhance our investment research service mechanism by fostering collaboration between the research department and front-line business teams, thereby optimising advisory strategies and upgrading the client engagement framework.

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In the future, we will continue to adhere to the core principles of “buy-side investment adviser”, further strengthening portfolio research and strategy development, enriching our product and style offerings, and enhancing differentiated service capabilities. At the same time, we will continue to reinforce team building and system support, and advance the transformation of fund investment advisory business from “product-based delivery” to “solution-based delivery”. We aim to build a leading integrated fund investment advisory service platform in the industry, providing clients with professional, prudent, and long-term asset allocation services.

Credit Trading Business

In terms of the margin financing and securities lending business, we have upheld the “three goods and three excellences” principles, with a focus on serving high-net-worth clients, improving the pricing mechanism for margin financing, responding proactively to branch-level needs, and expanding our client and business base. We have continued to iterate our new-generation trading system, introducing credit conditional orders for clients and building a smart credit data platform. Risk management was further enhanced through optimised collateral management and strengthened intelligent risk controls, ensuring stable business operations and the security of client assets. As at 30 June 2025, the balance of our margin financing and securities lending amounted to RMB26.916 billion, and the market share was 1.45 per cent., with an average maintenance guarantee ratio of 278.44 per cent.

In terms of the collateralised stock business, we have continued to adhere to the principles of “risk control and scale reduction” and made every effort to promote the risk disposal of the collateralised stock business. As at 30 June 2025, the outstanding balance of our collateralised stock business amounted to RMB2.778 billion, all of which was contributed with proprietary funds, representing a decrease of 4.11 per cent. from the end of last year, and the risk was further eliminated.

In the future, we will create a new growth point in profitability through structural optimisation, refined management, and strengthened risk control. Meanwhile, we will continue to promote the risk mitigation and liquidation of collateralised stock business.

Asset Management

We mainly engage in securities asset management business through Orient Securities Asset Management, a wholly-owned subsidiary of the Company. We engage in fund management business through China Universal, an associate of which the Company is the largest shareholder holding 35.412 per cent. of the shares. We also engage in private equity investment business through Orient Securities Capital Investment, a wholly-owned subsidiary of the Company.

Securities Asset Management Business

Orient Securities Asset Management has promoted its transformation and development at a fast pace. In terms of investment and research system, the platform-based, integrated and multi-strategy construction was actively promoted. In terms of product system, a comprehensive market-aligned review was conducted to further improve the product matrix. In terms of sales system, we have improved service capabilities through demand-driven client segmentation and tailored product strategies, shifting from personnel-driven to strategy-driven models.

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Orient Securities Asset Management's several products have registered outstanding results, contributing to the stabilisation and rebound of the overall management scale. In particular, Dong Fang Hong Core Value (東方紅核心價值) raised RMB1.991 billion, rendering it the first floating rate fund that completed fundraising for reaching the limit for fundraising scale, and its fundraising scale ranked first among all equity-oriented hybrid funds at initial offering during the six months ended 30 June 2025; Dong Fang Hong Yingfeng FOF (東方紅盈豐FOF) raised more than RMB6.5 billion, which was the largest FOF product launched in recent 3 years as at 30 June 2025 and the largest publicly offered fund issued during the six months ended 30 June 2025. Orient Securities Asset Management has profound traditional businesses with long-term outperformance in active equity, leading bond investment capabilities and outstanding performance in fixed income and long-term results. Emerging businesses exhibit robust performance, with dividend low volatility index ranking the first among the best and FOF products registering outstanding performance. As at 30 June 2025, the absolute return of equity-based funds was 80.32 per cent. for the last ten years, ranking second in the industry (source: Galaxy Securities Fund Research Centre - Long-term Assessment Ranking of Capability in Active Management of Equity Investment). The absolute rate of return of fixed income funds for the last seven years was 35.98 per cent., ranking among the top 20 per cent. in the industry (source: Guotai Haitong Securities Research Institute - Performance Rankings of Equity and Fixed Income Assets of Fund Managers).

As at 30 June 2025, the total scale of assets under the entrusted management of Orient Securities Asset Management amounted to RMB233.781 billion, and a total of 271 products were managed. Among them, the management scale of publicly offered funds was RMB179.136 billion, and a total of 116 products were managed. The following table sets forth the scale of assets under management (AUM) of the Group by product type:

| | As at
31 December 2024 | As at
30 June 2025 |
| --- | --- | --- |
| | (RMB100 million) | |
| Collective asset management scheme | 203.07 | 208.80 |
| Single asset management scheme | 246.53 | 280.66 |
| Specialized asset management scheme | 54.40 | 56.99 |
| Publicly offered funds issued by securities dealers | 1,661.69 | 1,791.36 |
| Total | 2,165.68 | 2,337.81 |

Going forward, Orient Securities Asset Management will focus on the development strategy of dual-engine strategy driven by public and private funds. Through continuous improvement of product line layout, promotion of multi-dimensional investment and research capability building, optimisation of capital structure and customer service capabilities, as well as such internal management mechanisms as continuous intensive cost reduction, enhancement of fintech empowerment, and strengthening the stable operation of compliance and risk control system. These efforts aim to boost operating performance, achieve steady growth in our operations, and consolidate its industry competitiveness.

Fund Management Business

In accordance with the requirements of the "Year of Reform and Progress" in 2025, China Universal adheres to the business philosophy of "all for the long term" and the value of "customer first", and steadily moves towards the goal of building a first-class investment institution. On the basis of regularised investment, it continues to build a people-oriented multi-strategy investment system, strengthens the focus on performance benchmarks, and effectively improves investor returns. Meanwhile, China Universal has actively increased the scale and proportion of equity investments, continuously improved its active equity

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fund product line, and launched the first batch of new-type floating fee funds; it has kept improving equity index product lines such as the STAR Market series, Stock Connect series, and free cash flow series, and actively supported the development of new productive forces. It continues to improve its customer service system, accurately match customer needs, and provide good consultative companionship and services. It has successfully issued two public REITs: China Universal Jiuzhoutong Pharmaceutical Warehousing and Logistics REIT (锦添富九州通醫藥倉儲物流REIT) is the first national pharmaceutical warehousing and logistics REIT, and China Universal Shanghai Real Estate Rental Housing REIT (锦添富上海地產租賃住房REIT) is the first national REITs project involving the conversion of commercial properties to guaranteed rental housing, fully demonstrating the functional positioning of publicly offered funds in serving people's livelihood security and the real economy. China Universal Shanghai and Shenzhen 300ETF entered the Brazilian market, becoming the first ETF connectivity product between SSE and Brazil's B3 (Brasil Bolsa Balcão) (巴西證券期貨交易所) and marking China Universal's new chapter of internationalisation and strengthening global strategic cooperation. China Universal attaches great importance to digital finance development, continuously promotes the intelligent transformation and upgrading of business, has taken the lead in the industry to complete the private deployment of the DeepSeek series of open-source models, and has successfully launched the "DeepSeek in Cash Treasure (DeepSeek in 現金寶)" service.

As at 30 June 2025, the total assets under management of China Universal amounted to approximately RMB1.26 trillion, representing an increase of over 8.7 per cent. from the beginning of the year, of which, the scale of publicly offered funds excluding monetary funds reached approximately RMB550 billion, representing an increase of approximately 11 per cent. from the beginning of the year. For the six months ended 30 June 2025, China Universal launched a total of 22 publicly offered funds with an aggregate issuance scale of approximately RMB11.2 billion, continuously enriching its product and strategy matrix.

In the future, China Universal will resolutely adhere to the guidance of the Action Plan for Promoting High-Quality Development of Public Funds (《推動公募基金高質量發展行動方案》), expedite the development of a first-class investment institution, strengthen core investment research capabilities, and enhance investor service capabilities. Taking the productisation of products and services as a key focus, it will comprehensively improve the professional level of asset management and solution design, conduct in-depth analysis of changes in the market environment and customer needs, respond quickly to connect with services, and upgrade digitalization and AI capabilities. It will also strive to enhance organisational and team management, and accelerate the achievement of strategic goals. Moreover, it will stay true to its founding mission, live up to trust, and substantially enhance investor returns, taking concrete actions to advance high-quality development.

Private Equity Investment Fund

Orient Securities Capital Investment has focused its efforts on two key areas, technological innovation and mergers and acquisitions. On the fundraising side, we have emphasised the strategic significance of fund-of-funds, collaborated with outstanding managers, and expanded the scale of our fund-of-funds business in an orderly manner. We have also strongly supported our business teams in establishing merger and acquisition funds. On the investment side, we have conducted in-depth analysis of industry dynamics, focused on high-quality sectors such as semiconductors, robotics and AI, new energy, and biopharmaceuticals, and made precise investments in the upstream and downstream of the industrial chain. Additionally, we have integrated resources from business teams, quality control, and risk management to strengthen post-investment management, ensuring timely and effective risk warnings. By adhering to the principle of "retreating to advance", we have actively explored diversified exit strategies, and resolutely liquidated risky assets.

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As at 30 June 2025, Orient Securities Capital Investment managed 58 funds with a total scale of RMB18.910 billion, with 4 new funds added, involving a new scale of RMB1.180 billion. There were 128 projects under investment, with an investment amount of RMB7.029 billion, including 5 listed projects. For the six months ended 30 June 2025, our IPO applications of 2 target companies were approved, while our IPO applications of other 3 target companies were submitted and accepted for review.

In the future, Orient Securities Capital Investment will actively respond to the national call, closely focus on the two main themes of scientific and technological innovation and mergers and acquisitions by guiding private equity investment funds to invest in the field of scientific and technological innovation. This will help create a favorable financial ecosystem that supports scientific and technological innovation, which supports science and technology enterprises to grow and thrive.

Futures Business

We mainly engage in futures business through Orient Futures, a wholly-owned subsidiary of the Company.

Orient Futures actively responded to challenges in the external environment by implementing multiple measures to promote business development and management optimisation. In terms of business, Orient Futures has steadily expanded its brokerage business, risk management services, and digital transformation. First, it has improved its customer structure, consolidated and expanded its brokerage business. By continuously introducing different types of customer groups, such as financial institutions, industrial customers, and high-net-worth individuals, we have expanded our business scale and consolidated our operating foundation, thereby achieving effective growth in market share. Second, it accelerated its overseas expansion to provide global clients with personalised risk hedging and investment solutions, thereby enhancing its global market competitiveness. Third, it advanced financial technology-enabled industrial services through four major financial technology innovation platforms, including Finoview Intelligent Investment Research Platform (繁微智能投研平台), Orient Swift Trans-Action Platform High-speed Trading System (東方雨燕極速交易系統), CommoSmart Commodity Trade Management Platform (大宗精靈商品貿易平台), and Zhida All-Scenario APP (智達全場景應用程序). These initiatives aimed to continuously improve overall business efficiency and service quality while enhancing client satisfaction. In terms of internal management, Orient Futures has strengthened risk and compliance management, optimized operational processes, reduced operational costs, and improved resource utilization. Additionally, Orient Futures has actively responded to national calls by supporting agricultural development through public welfare initiatives and deeply engaging in the national rural revitalization strategy. As at 30 June 2025, Orient Futures ranked third in the industry in terms of market share of agency trading volume and customer equity scale, and ranked fourth in the industry in terms of net profit.

Orient Futures will continue to adhere to its principles of prudent management and innovative development, striving to become a first-class integrated derivatives service provider with whole life-cycle risk management capabilities, research and technology-driven intelligent service capabilities, and international resource integration and coordination capabilities.

Investment Banking and Alternative Investment

Investment Banking

We mainly engage in investment banking business through the investment banking management committee and its first-tier departments, as well as the fixed income business department.

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Equity Financing Business

For the six months ended 30 June 2025, we completed 10 equity financing transactions. According to Wind, our issuance volume ranked sixth in the industry. Among these transactions, we acted as a lead underwriter of 1 IPO project and 9 follow-on offerings. Guided by the commitment to advancing high-quality financial development, we have continued to refine our industrial investment banking model and strengthen our ability to serve high-caliber technology and innovation enterprises. Our client base has spanned multiple sectors, including capital-market services, advanced manufacturing, TMT and new materials.

In the future, we will focus on two strategic areas – technology and energy, and by leveraging policy guidance and industry trends, will further strengthen our differentiated competitive edge. In hard technology, we will prioritise key industries such as next-generation information technology, biopharmaceuticals, advanced manufacturing and new materials to deliver comprehensive financial solutions throughout the entire life cycle of technology and innovation enterprises. In the energy sector, we, building on the industrial ecosystem and resources of Shenergy Group, will capitalise on our competitive advantages and strive to establish ourselves as a distinctive brand in energy investment banking.

Bond Financing Business

According to Wind data statistics, for the years ended 31 December 2022, 2023 and 2024 and for the six months ended 30 June 2024 and 2025, the total underwriting size of our bond underwriting business was RMB336.3 billion, RMB383.8 billion, RMB520.4 billion, RMB216.2 billion and RMB277.9 billion, respectively, ranking 7th, 8th, 6th and 9th in the market, respectively.

In terms of interest rate bonds, we continued to expand our underwriting business and the total underwriting volume rose 48.08 per cent. year-on-year. The business ranking improved and we ranked first among securities dealers in the underwriting of book-entry interest-bearing treasury bonds and financial bonds issued by China Development Bank (CDB) and Agricultural Development Bank of China (ADBC). As one of the only two Class A underwriters of book-entry interest-bearing treasury bonds among securities firms, we underwrote more than RMB170 billion of government bonds during the six months ended 30 June 2025, of which over 18 per cent. was special government bonds, directly supporting China's "Major National Strategies and Security Capability in Key Areas" and "Large-scale Equipment Renewal and Trade-in of Consumer Goods" initiatives.

In terms of bonds for science and technology innovation, we have leveraged our own advantages and actively participated in and underwrote bonds for science and technology innovation issued by multiple enterprises. Among them, we have helped CDB successfully issue its first bonds for science and technology innovation, ranking among the top in underwriting volume among securities firms. We have taken practical actions to increase support for the capital demand for sci-tech innovation purposes and contributed to the continuous reduction of financing costs.

In addition, we vigorously explored other special bond varieties, and underwrote and issued multiple green bonds, corporate bonds for rural revitalisation, small and micro-enterprise financial bonds, corporate bonds for small and micro-enterprises, financial bonds for Agriculture, Rural Areas and Farmers and sustainable linked bonds. These issuances provided dedicated funding for major projects in technology innovation, green carbon neutrality initiatives, and rural revitalisation, thereby supporting the high-quality development of the real economy. Adhering to a prudent and compliant operating philosophy with rigorous risk control, we have maintained a zero-default track record across all bond projects.

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The table below sets forth the breakdown of bonds underwritten by us as the lead underwriter:

	For the year ended 31 December		For the six months ended 30 June
	2023	2024	2024	2025
	(in RMB100 million)
Corporate debentures:
Number of underwriting as the lead underwriter .	367	347	172	195
Amount underwritten as the lead underwriter . . .	1,351.38	1,135.30	577.69	603.40
Corporate bonds:
Number of underwriting as the lead underwriter .	10	5	2	0
Amount underwritten as the lead underwriter . . .	29.78	10.79	3.77	0
Financial bonds:
Number of underwriting as the lead underwriter .	40	67	23	50
Amount underwritten as the lead underwriter . . .	290.07	644.32	221.12	482.76
Asset-backed securities:
Number of underwriting as the lead underwriter .	116	177	45	24
Amount underwritten as the lead underwriter . . .	181.35	248.54	61.28	50.67
Debt financing instruments of non-financial enterprises:
Number of underwriting as the lead underwriter .	124	179	91	97
Amount underwritten as the lead underwriter . . .	402.16	544.91	238.80	241.97
Local government bonds:
Number of underwriting as the lead underwriter .	98	170	77	91
Amount underwritten as the lead underwriter . . .	215.74	366.99	171.29	128.30
Total:
Number of underwriting as the lead underwriter .	755	945	410	457
Amount underwritten as the lead underwriter . . .	2,470.47	2,950.85	1,273.95	1,507.09

In the future, we will continue to adhere to the three linkage service model: "investment + investment banking + investment research", deeply tapping the diversified financing needs of customers, providing clients with full-chain, full-cycle comprehensive financial services, improving the quality and efficiency of customer service and ability of execution of innovations. At the same time, we remain committed to cultivating relationships with high-quality regional clients while expanding coverage in key national strategic zones, thereby driving steady growth in both business scale and competitive positioning.

Financial Advisory Services

We have actively responded to the policy call by placing strong importance on M&A and restructuring-related financial advisory services. Multiple measures have been implemented to expand business scale and enhance market positioning, including but not limited to strengthening brand development and establishing benchmark projects; focusing on sci-tech innovation-driven M&As, with a strategic emphasis on sectors representing new quality productive forces; continuing to deepen expertise in industrial M&As and leveraging our traditional strengths in cross-border M&As. We have demonstrated strong execution capabilities in large-scale M&A transactions, most notably serving as the independent financial advisor to Guotai Junan to merge with Haitong Securities, which was the largest A + H bilateral market absorption merger in the history of China's capital market, and the largest M&A project in the international investment banking sector since 2008. In terms of technological innovation M&A, we have successfully facilitated or completed multiple high-profile deals, including advising Sanyou Medical (a listed company on the STAR Market) on its acquisition of Shuimu Tianpeng, assisting RoboTouch (a ChiNext-listed firm) in its acquisition of Germany's ficonTEC, and guiding Ferrotec (another ChiNext company) in its

acquisition of Fulehua. We are also actively advancing several industrial M&A projects involving clients such as Huakang Pharmaceutical and Delphi Automotive. Furthermore, we also continue to support multiple listed companies in their transformation through M&As focused on new quality productive forces and cross-border transactions.

We will remain focusing on industrial M&A and cross-border M&A, and participating in M&A transactions with significant scale and market influence. In addition, we will also actively develop innovative business opportunities such as the transfer of control rights of listed companies and financial advisory services for bankruptcy reorganisation, through which we will give priority to obtaining business opportunities for the future capital operation of listed companies; we will pay attention to the internationalisation needs of our high quality listed company clients, and provide comprehensive financial services through domestic and overseas linkage to meet the clients' needs for financing in overseas markets and global strategic layout.

Alternative Investments

We primarily engage in alternative investments business through Orient Securities Innovation, a wholly-owned subsidiary of the Company.

Orient Securities Innovation has conducted in-depth research and analysis of macroeconomic conditions, industry trends, and risk-return characteristics of various assets, dynamically optimising asset allocation across different maturities, risk levels and return objectives to continuously enhance return stability. In the equity investment business, through its strategic focus on "investing in early, small-sized and hard-core technology enterprises", it injected new momentum into domestic industrial upgrading and strengthening supply chain resilience. Orient Securities Innovation has consistently explored investment opportunities with clear exit paths, including strategic placements and private placements of listed companies. It has diligently implemented post-investment management for existing projects, focusing on facilitating exits through methods such as transfers, mergers and acquisitions, and share repurchases by major shareholders. As at 30 June 2025, Orient Securities Innovation had 105 existing equity investment projects with an aggregate balance of RMB4.390 billion, and had participated in 10 co-investment projects on the STAR Market with a total investment of RMB549 million. In the special assets investment business, Orient Securities Innovation has pursued progress amid changes, continuously exploring innovative business opportunities while deepening professional judgment capabilities. It has strengthened active project management and value enhancement capabilities, improved digitalisation of post-investment management, and expanded diversified cooperation networks and exit channels. Adopting a prudent allocation approach during market downturns, it has captured structural investment opportunities. As at 30 June 2025, Orient Securities Innovation had 31 existing special asset investment projects with an aggregate balance of RMB2.271 billion.

Looking ahead, Orient Securities Innovation will focus on the principle of "professional specialisation, differentiated breakthroughs, and prudent operations". It will deepen its engagement in equity investment business and special assets investment business, enhance the incremental contribution from innovative businesses, strengthen risk management, and achieve high-quality development.

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Institutional and Sales Trading

Proprietary Investment

We conduct both equity and non-equity proprietary investment businesses primarily through the securities investment business department and the fixed income business department.

In terms of equity proprietary trading, we have strengthened our layout of “multi-asset, multi-strategy and all-weather” investment and adhered to the concept of “prosperity value”. Through effective dynamic asset allocation and refined investment, we have effectively controlled drawdowns and achieved relatively strong performance contributions overall. Specifically, our high-dividend strategy has focused on high-quality individual stocks with solid fundamentals, dynamically optimising the portfolio structure in response to changes in prosperity levels; our trading investment strategy has been proactive and effective, delivering favourable absolute returns with low volatility; the continuous optimisation of quantitative models has been pursued, with innovative deployment of market-neutral multi-strategies; our swap facility dedicated accounts have maintained stable operations.

In terms of proprietary non-equity, our fixed income investments have maintained stable growth in scale while continuing to optimise the portfolio structure. In 2024, our spot securities trading volume in the interbank market increased by 9.56 per cent. year-on-year, and our trading volume of interest rate swaps increased by 66.38 per cent. year-on-year. For the six months ended 30 June 2025, our interest rate swap trading volume increased by 221.32 per cent. year-on-year, and non-equity ETF trading volume grew by 158 per cent. year-on-year. We ranked among the top securities firms in terms of spot securities trading volume in the interbank market, total trading volume of bonds and the interest rate swap trading volume. The proprietary operations of bulk commodity business effectively enhanced returns through optimised asset allocation across low-, medium- and high-risk strategies; carbon finance innovation businesses were successively implemented, boosting trading activity in the carbon market with transaction volume increasing nearly fivefold year-on-year; while the proprietary foreign exchange trading continuously diversified its strategies by reducing directional exposure and achieving steady income growth. Over the years, we have independently developed the Super Investment Management Platform (SIMP), which has achieved full-asset strategy pricing and automated trading, ensuring timely, efficient, secure and stable transaction processes. Through the application of AI and other technologies, we have significantly improved investment and trading efficiency.

In the future, for proprietary equity business, we will continue to strengthen research on market trends and various investment assets, and actively seek to increase trading investment assets when market conditions are expected to improve. Centered on the layout of “multi-asset, multi-strategy and all-weather” investment and guided by the “prosperity value” philosophy, we will expand weakly correlated strategies to diversify absolute return sources and achieve steady sustainable returns. For proprietary non-equity investments, we will further promote refined investment operations, adhere to non-directional transformation by shifting from traditional allocation strategies to more flexible and diversified trading strategies, with a focus on “fixed income + investment opportunities”; enhance credit risk prevention and control, incorporate ESG into the investment research framework, and emphasise green bond investments; intensify efforts to advance the SIMP system development and explore applications of AI large language models in proprietary investments.

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Client-oriented Business

We mainly conduct client-oriented business through the financial derivatives department and the fixed income business department.

In respect of OTC derivatives, we have enhanced risk controls, reduced the proportion of volatile businesses so as to improve the stability of returns. Meanwhile, through in-depth client needs analysis and strengthened post-trade management, we have driven profit growth. Optimised group synergy and business models and brokerage business launched in collaboration with the wealth management committee, effectively achieved premium resource integration and significantly increased business revenue. Specifically, in terms of the OTC options business, we have significantly reduced the Greeks exposure and tail risks, with a significant increase in the proportion of low-risk transactions and the transaction volume reaching RMB5.963 billion during the six months ended 30 June 2025; as for the total return swaps business, we focused on low-risk business models, with index enhancement products maintaining stable profitability. For the six months ended 30 June 2025, the transaction volume reached RMB21.2 billion, respectively.

In terms of the FICC agency business, client-oriented revenue and its proportion were further enhanced. During the six months ended 30 June 2025, the equity-bond-commodity strategy index business demonstrated rapid growth. Breakthroughs were made in customised service models for financial institutions. Foreign exchange operations remained stable while continuously expanding business scenarios, diversifying trading strategies, and broadening counterparty networks, driving steady profit growth. Investment advisory business recorded steady growth both in terms of revenue and scale, with performance in line with customer needs.

In the future, we will continue to enhance the efficiency of our OTC derivatives business, deepen analysis for institutional customers' needs, and strengthen cross-departmental collaboration mechanisms to increase collaborative revenue. For OTC options, we will strictly control overall business scale and risk exposure while enriching product lines and cultivating new growth drivers. Total return swaps business will develop more diversified product systems, improve the diversity and effectiveness of monitoring metrics, and enhance operational efficiency. FICC customer services will continue expanding business scope and product varieties, collaborating with branch offices and overseas subsidiaries to extend service coverage, so as to advance the development of client-oriented services.

Market-making Business

We conduct equity and non-equity market-making business mainly through the securities investment business department, the financial derivatives business department, and the fixed income business department.

We have been engaged in stock market-making business and provided market-making services to SMEs listed on the STAR Market, the NEEQ, and the Beijing Stock Exchange. During the six months ended 30 June 2025, for the STAR Market, we refined single-stock market-making strategies and risk management, providing services for 10 stocks and earning a Category A rating as a market maker for the STAR Market from the Shanghai Stock Exchange. For the Beijing Stock Exchange projects, we have maintained stable operations with rigorous selection of high-quality targets for market making and strategic placements, achieving returns that significantly outperformed the BSE 50 Index.

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We are a full-licensed main market-maker for equity options, ranking among the top in the industry in terms of trading volume with all varieties basically remained AA ratings, and maintaining the level of the first echelon in the industry. As at 30 June 2025, the number of funds for which we conduct market-making reached over 310, with an increase of over 29 per cent. as compared with that of the end of last year, and most of our varieties remained AA/A ratings on the SSE, while our collaboration programs on A500ETF has significantly enhanced capital intermediary business. In terms of market-making for commodity futures and commodity options, we have achieved outstanding performance in some of our varieties and actively expanded the width and depth of our commodity asset market-making business. We have achieved sound development in our market-making business and adhered to independent development of core system through continuous full-chain optimisation, hardware upgrades, and strategy iteration. The business sustained a robust profit model positively correlated with market volume and volatility, achieving substantial year-on-year growth in our market-making business during the six months ended 30 June 2025.

We have maintained a leading position in bond market-making business. During the six months ended 30 June 2025, the market-making of financial bonds of the three major policy banks continuously remained among the top two in the market; In the Shanghai Stock Exchange, the market-making of interest rate bonds and corporate bonds ranked first and fourth respectively in the whole market, and SZSE interest rate bonds and credit bonds were both rated Class A ratings. The trading volume of quotations to overseas clients through Bond Connect and Global Connect ranked among the top in the market, and that of Swap Connect achieved a year-on-year increase of 184 per cent. To seize opportunities in the ETF market, we have intensified our ETF market-making efforts. We have provided market-making services for 17 bond ETFs and 1 gold ETF during the six months ended 30 June 2025, representing an increase of 10 compared to that of last year, with trading volume rising 158 per cent. year-on-year; the ETFs under our market-making services consistently received ratings above Class A every month. Furthermore, in response to the construction of the "Sci-Tech Innovation Board" for the bond market, we have offered a package of services for sci-tech innovation bonds. We have provided market-making quotes for 174 sci-tech innovation bonds during the six months ended 30 June 2025, nearly double the number from the same period last year, becoming the only market maker in the industry that has continuously provided market making and quotes for all three CDB Sci-Tech Innovation Bonds since their listing. We have also taken the lead in launching the "Orient Securities Yangtze River Delta Sci-Tech Innovation Bond Basket (東方證券長三角地區科創債籃子)" and the "Orient Securities CDB Sci-Tech Innovation Bond Basket (東方證券國開科創債籃子)" to enhance the liquidity of sci-tech innovation bonds through various means, fostering deep integration of technology and finance, and effectively supporting high-quality development in the technology innovation sector.

In the future, we will enhance our capabilities of investment research and increase the coverage of companies on the STAR Market and the Beijing Stock Exchange, as well as deepen research into market making strategies. We will enhance the advantages of equity option market-making business, increase the investment in system and development resources, seize the market opportunities to rapidly enhance the industry influence of our product assets, and prepare for cross-border assets business while promoting our fund market-making business into the top tier. Bond market-making will be guided by client demand, empowered by technology, to sustain comprehensive industry leadership.

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Research Services

We primarily provide securities research and other services through the securities research institute.

The securities research institute has significantly improved its research quality and capabilities by implementing a tripartite approach focusing on team building, research system construction, and research planning management. We have actively strengthened research planning capabilities, establishing a securities research framework guided by macroeconomics, centered on strategy, and grounded in industry and company analysis, striving to deepen insights into financial markets and contribute to capital market development. Concurrently, we have enhanced client research services and research compliance controls, improving the daily operational efficiency of the institute.

The securities research institute is committed to strengthening internal and external services. Internally, we empower investment banking business with industry research, institutional business with securities research, and wealth management business with wealth research. On the external front, we actively expand our client base beyond public funds to include diverse institutional clients such as banks, insurance companies, and private funds.

During the six months ended 30 June 2025, we published 832 research reports, and provided 9,548 online and offline research roadshows for institutional customers; we achieved a revenue of RMB128 million from public offering commissions (including special accounts, social security, and annuity seats), with a trading volume of publicly offered funds accounting for 2.26 per cent.

In the future, the securities research institute will develop into a comprehensive research institute with equal emphasis on three major sectors, being industrial think tank research, industry securities research, and global wealth research, instead of the previous model of relying solely on securities research, to provide more comprehensive services to various clients and internal departments. Meanwhile, we will continue to strengthen research in green finance and technological innovation to serve national strategic initiatives.

Custody Business

We conduct our custody business primarily through our custodian business department.

We have continuously improved our process systems to faithfully fulfill our custodian duties and effectively safeguard the legitimate rights and interests of investors. By deepening internal collaboration mechanisms within the group, strengthening business empowerment for branch institutions, and establishing a categorised and tiered service system, we have optimised front-middle-back office service chains, enhanced both standardised and customised service capabilities, and consistently improved customer satisfaction. Through digitalisation, we have reinforced risk control measures and refined a grid-based risk prevention system. As at 30 June 2025, the scale of our securities custody and outsourcing services increased by 8 per cent. compared to the beginning of the year, demonstrating steady and positive business development.

Looking ahead, we will intensify our focus on client needs, enhance group-wide collaboration, and proactively build a business ecosystem to deliver services with distinctive Eastern characteristics. We will accelerate the expansion of our ETF custody business, closely aligning with market dynamics and investor demand to inject new vitality into business growth. Concurrently, we will rigorously strengthen our compliance and risk control framework, expedite the development of a digital custody system, and continuously elevate the digital capabilities and operational efficiency of our custody services.

International and Other Businesses

As our international business platform, Orient Securities International has established various wholly-owned subsidiaries licensed by the SFC to make a comprehensive layout in businesses including securities and futures brokerage, asset management, investment banking, and financial markets. During the six months ended 30 June 2025, its Hong Kong subsidiaries overall demonstrated a positive trend of “steady progress and improvements in both quality and efficiency”. The intermediary business made comprehensive progress, becoming a key driver of business growth, and achieved continuous optimization and improvement in its profit structure. Among which, the brokerage business accelerated wealth management transformation by capitalising on the rising trend in Hong Kong’s primary and secondary markets, improving customer quality and base, and actively exploring high-net-worth clients, as well as bond, family office, and trust clients. Its custodial client assets grew 25 per cent. year-to-date and Hong Kong stock trading volume doubled year-on-year. The asset management business adopted a client-oriented approach, achieving a steady growth in scale of 14 per cent. and obtained approval from the SFC to provide virtual asset advisory services to professional investors under its existing Type 4 license. The investment banking business demonstrated remarkable results from its integrated cross-border operating model, completing the underwriting of 45 bond projects with total underwriting amount increasing by 2 times year-on-year. In equity capital markets, we completed the underwriting for the Hong Kong IPO listing of Auntea Jenny, contributing to a surge of 4.5 times year-on-year in our total underwriting amount. The proprietary investment business in financial markets has reinforced its investment model focusing on configuration, maintaining a portfolio structure with high credit ratings and achieving favorable investment returns. Sales transactions are mainly driven by client needs, with the number of clients continuing to grow rapidly and the types and scale of financial services and products expanding in an orderly manner.

The Singapore subsidiary of Orient Futures has been actively advancing its international expansion, systematically developing brokerage operations across Southeast Asia, South America, and select European regions to steadily broaden its business footprint. Despite facing highly volatile market conditions, the subsidiary has maintained overall business stability through operational innovation and flexible management strategies. We have launched an overseas version of our Finoview intelligent investment research platform, providing global clients with comprehensive data integration and in-depth research support for international products. Simultaneously, we have strengthened our cross-border service capabilities, enhancing our competitive edge in offering clients integrated domestic and international business solutions.

Looking ahead, we will advance our internationalisation strategy in a systematic and pragmatic manner. Orient Securities International remains committed to building core competencies and enhancing synergistic efficiencies, adhering to strict compliance standards, strengthening client base, enhancing business capabilities, and promoting in-depth integration of domestic and overseas businesses, in order to maintain good profitability and promote the quality development of international businesses. Meanwhile, the Singapore subsidiary of Orient Futures will concentrate on three strategic pillars, namely, agile adaptation to market changes, technology-driven efficiency enhancement, and rigorous risk segregation. By expanding licensing capabilities and global footprint, the subsidiary aims to deliver more comprehensive multi-asset financial products and services to clients worldwide.

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CLIENTS

We serve a diverse base of institutional and retail clients across a spectrum of industrial sectors. Our clients range from large state-owned enterprises, multinational corporations and small and medium enterprises clients to high net worth individuals and retail clients. Our clients are primarily located in the PRC. The improving overseas network layout will help us provide overseas services and expand its clients' source.

MARKET AND COMPETITION

With the rapid development of capital markets in the PRC, competition within the securities industry has grown increasingly intense. The securities industry in the PRC is currently undergoing a new phase of structural upgrading and innovative development. While securities firms may differ to some extent in capital strength, competitive measures and technological sophistication, no significant gaps have yet emerged; securities firms are still closely matched in their business scope and revenue structures, resulting in homogenised competition. Our business lines are broadly similar to those of other domestic securities firms, and we face direct competition with peers across all business activities.

In addition to competition among securities firms, we also face competition from other financial institutions such as banks and trusts. The scope of competition now extends to investment and financing services, financial advisory, asset securitisation, venture capital and other fields. Furthermore, as market access in China's capital markets continues to open up, the entry threshold for foreign securities companies has been lowered. A number of well-known international brokerage firms have already established a presence in China's securities industry through wholly-owned subsidiaries or joint ventures with domestic securities firms, posing further challenges to domestic players.

We expect that competition in China's financial services sector will continue to intensify, which will in turn accelerate transformation, innovation and the differentiated development of domestic securities firms.

RISK MANAGEMENT

The Group is committed to the philosophy of "the philosophy of high-quality development". The Group focuses on building management mechanisms for overall risk and internal controls and fostering a risk management culture. The Group strives to realise organic integration and interlinking of risk management, compliance management and internal control. The Group has established a substantially mature and endogenous overall risk management system and an effective internal control mechanism, which covers all businesses, departments, branches and employees and runs through the processes of decision-making, execution, supervision and feedback.

The risk management implemented by the Group fully covers market risk, credit risk, liquidity risk, operational risk, technology risk, reputation risk, compliance risk, legal risk and ethical risk, etc., realizing the management control on the overall risk assessment and supervision.

The Group has established a risk management mechanism for risk identification and assessment, risk monitoring and measurement, risk analysis and response, and it has adopted a combination of qualitative and quantitative risk measurement methods to enhance its professional management capability for various types of risk. The Group implements a multi-perspective risk review mechanism for comprehensive risk management, strictly reviews all new businesses and products, and dynamically monitors all important risks in daily business operations; and evaluates various risks and risk tolerance in the Group's business process through sensitivity analysis, stress testing and dynamic monitoring.

A comprehensive risk management system is inseparable from a complete information technology system. In recent years, the Group has continuously increased its investment in information technology. Through the construction of a unified risk control platform, a dynamic management system for risk control indicators and various specific risk management information systems, the Group has continuously promoted the practical application of information technology in risk management, and the timeliness and accuracy of risk management have been effectively improved.

The Group is committed to establishing a robust and effective risk management system that features “three lines of defence” approach. The first line of defence is the check-and-balance mechanism of two-person, dual roles, dual responsibilities and position separation in the important front-line positions in each operational department, branch and subsidiary; the second line is inspection and supervision on the compliance and risk management affairs by relevant functional management departments within their range of duties; the third line is effective risk supervision performed by risk supervision and management departments on the risk management affairs of each functional management departments.

Pursuant to the requirements of the Rules for the Risk Management of Securities Firms (《證券公司全面風險管理規範》) and own operations, we have set up a multiple-level risk management structure, comprising: (i) the Board, (ii) the Supervisory Committee, (iii) the management, and (iv) risk management function for each business department, branch and subsidiary.

INTELLECTUAL PROPERTY

We have not been subject to any material infringement of our intellectual property rights or allegations of infringements by third parties as at the date of this Offering Circular.

INSURANCE

We purchase insurances for certain assets, such as vehicles. We do not purchase any business interruption insurance, which is consistent with the industry practices in the PRC.

We believe that we have purchased necessary and sufficient insurance for our operation and business in accordance with the industry practices. In addition, our policies contain such restrictive terms as standard deductibles, exclusions and benefit limits. Therefore, the insurance may not be able to cover all of our losses, and we cannot guarantee that we will not incur or suffer any loss or claim beyond the benefit limit or coverage of the policy. All of our policies are underwritten by an insurance company with a good reputation, and we review the policies each year.

EMPLOYEES

We believe that professional employees are important cornerstones for our long-term growth. As at 30 June 2025, we had a total of 8,082 employees (including brokers), including 6,086 in the Company and 1,996 in its wholly-owned and controlling subsidiaries.

We implement a market-oriented and performance-based remuneration system to ensure that remuneration aligns with the value of positions, performance contributions and market levels. We always adhere to the concept of stable operation, and closely integrates remuneration management with risk management. We have formulated an incentive and restraint mechanism that aligns with risk levels, characteristics and duration to ensure the effective implementation of comprehensive risk management. This approach ensures effective coordination between the remuneration restraint mechanism and compliance management, preventing compliance risks arising from excessive and short-term incentives. We incorporate professional

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conduct, honest practice, compliance and risk control, social responsibility performance, quality of customer services and long-term interests of shareholders into its remuneration management. At the same time, we establish and improve remuneration management system tailored to business characteristics, enhancing our ability to serve the real economy and national strategies. We practice the industry culture of "compliance, integrity, professionalism and stability", and integrates it into remuneration management. We rely on high-quality talents with both integrity and ability to create value for the Company and the society, and promote the sustainable development of the Company and the industry. We have continued to deepen the two-way linkage between remuneration, economic benefits and labour efficiency levels, continuously optimised and standardized the order of income distribution, deepened the performance concept of value contribution and performance output and continued to improve the performance incentive mechanism and improve its incentive and restraint mechanisms.

Pursuant to the applicable laws and regulations, we enter into a labour contract with each of our employees to establish an employment relationship. The labour contract contains the provisions relating to a contract term, working hours, rest and vacation, labour remuneration and insurance benefits, labour protection and conditions, as well as modification and termination of the contract.

In accordance with the applicable laws and regulations, we establish various social insurance schemes (pension insurance, medical insurance, unemployment insurance, work-related injury insurance and maternity insurance) and housing provident fund for our employees. We have made contributions to the above social insurance and housing provident fund on time and in full. Meanwhile, we, in accordance with the applicable PRC regulations, have also established a corporate annuity system and supplementary medical insurance system to provide employees with supplementary pension and medical benefits.

We have continued to focus on the medium and long-term mission of "focusing on capacity building and systematically creating a strong engine for talent development", and by taking into consideration of our strategic objectives, the evolving needs of leadership development at various levels, and industry culture-building requirements, we have implemented diversified training programs with distinctive characteristics, including flagship initiatives such as the Inaugural Political Education Training Program for Cadres, the "Orient Spark" internal trainer development program, and the "Orient Securities Forum" exchange and sharing platform. Through continuous innovation in training forms and an unwavering focus on value creation, we have effectively strengthened the political competency and operational execution capabilities of our leadership teams, while significantly enhancing participants' sense of professional achievement and organisational value.

As at the date of this Offering Circular, we have not experienced any strike, protest or other serious labour dispute that may severely damage our business or public image.

LAWS AND REGULATIONS

Licensing Requirements

We conduct our business mainly in the PRC and are, therefore, subject to the regulatory requirements of the PRC. We have complied with the relevant PRC regulatory requirements and guidelines in all material respects and obtained all the important consents and licences necessary for our operations in accordance with the PRC laws and regulations. We renew all business licences according to relevant law and regulations form time to time. As at the date of this Offering Circular, all of our employees and brokers had obtained the relevant licences as required for their business activities. As at the date of this Offering Circular, neither the Company nor any of our directors have been investigated by competent authorities, imposed coercive measures by a judiciary authority or disciplinary department, transferred to a judicial

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authority or held criminally liable, investigated or imposed administrative penalties by the CSRC, banned from access to market, identified as an unsuitable person, punished by other administrative departments, or publicly condemned by a stock exchange.

In accordance with the regulatory requirements of the laws in Hong Kong, our subsidiaries established in Hong Kong, including but not limited to Orient Securities (Hong Kong) Limited, Orient Futures (Hong Kong) Limited, Orient Asset Management (Hong Kong) Limited and Orient Capital (Hong Kong) Limited, must obtain the necessary licences or permits for operation according to the relevant laws before conducting relevant businesses in Hong Kong. As at the date of this Offering Circular, we have complied with the relevant Hong Kong regulatory requirements and guidelines in all material respects and obtained the permits and licences necessary for our operations in accordance with the laws and regulations of Hong Kong.

Legal Proceedings

We may become a party to legal proceedings arising in the ordinary course of our business. As at the date of this Offering Circular, there is no legal proceeding pending or threatened against us or our directors that could, individually or in the aggregate, have a material adverse effect on our business, financial condition or results of operations.

Regulatory Non-compliances

We are subject to various regulatory requirements and guidelines promulgated by the regulatory bodies in the PRC and Hong Kong, including but not limited to the CSRC, SFC, the Shanghai Stock Exchange, the Shenzhen Stock Exchange, the Hong Kong Stock Exchange and NEEQ and their respective local authorities and offices, self-regulatory organisations in our industry, including but not limited to the AMAC and the SAC. We or our employees may be involved in regulatory non-compliance incidents from time to time. However, no administrative penalties have been imposed for major violations of laws and regulations since 2022.

Regulatory Inspection

The CSRC and other regulatory authorities from time to time conduct inspection, review and inquiry on our compliance with laws, regulations and guidelines. In particular, such inspections relate to, among others, our risk management mechanism establishment and operation, our asset management, financing and investment banking businesses as well as internal management of employees. For the years ended 31 December 2022, 2023 and 2024 and the six months ended 30 June 2025, the inspection, review and inquiry by the regulatory authorities did not subject us to any administrative penalties or regulatory measures that have any material and adverse impact on our business, financial condition and results of operations.

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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

DIRECTORS

The Company’s Board comprises fifteen directors. The members of the Board as at the date of this Offering Circular are as follows:

Name	Year of Birth	Position
Gong Dexiong (龔德雄)	1969	Chairman, Executive Director and CPC Party Committee Secretary
Lu Weiming (魯偉銘)	1971	Vice Chairman, Executive Director and President
Lu Dayin (盧大印)	1972	Executive Director, Vice President (in charge of affairs) and Deputy CPC Party Committee Secretary
Yang Bo (楊波)	1974	Non-executive Director
Shi Lei (石磊)	1982	Non-executive Director
Li Yun (李芸)	1964	Non-executive Director
Xu Yongmiao (徐永淼)	1977	Non-executive Director
Ren Zhixiang (任志祥)	1969	Non-executive Director
Wu Hong (吳弘)	1956	Independent Non-executive Director
Feng Xingdong (馮興東)	1977	Independent Non-executive Director
Luo Xinyu (羅新宇)	1974	Independent Non-executive Director
Chan Hon (陳漢)	1960	Independent Non-executive Director
Zhu Kai (朱凱)	1974	Independent Non-executive Director
Sun Weidong (孫維東)	1968	Employee Director

Gong Dexiong (龔德雄), born in 1969, a member of the CPC, is a holder of an executive master’s degree in business administration and an economist, and currently serves as the vice president of Shenergy Group, the secretary of the CPC Party Committee, chairman and an executive Director of the Company, the executive director and general manager of Shenergy Investment Management Co., Ltd., and the chairman of Shenergy Property & Casualty Insurance Co., Ltd. Mr. GONG served as the deputy director of the Pudong business outlet of the securities department, head of the investment research section of the securities department, and deputy manager of the securities department of Shanghai International Trust & Investment Corporation; the deputy secretary of the CPC Party Committee, secretary of the discipline inspection commission, deputy general manager of Shanghai Securities Company Limited and the chairman of Hicend Futures Company Limited; the general manager of the finance management department of Shanghai International Group Co., Ltd.; the general manager, secretary of the CPC Party Committee and vice chairman and chairman of Shanghai Securities Company Limited; the chairman and chief executive officer of Shanghai Guotai Junan Securities Asset Management Co., Ltd.; the vice president and member of the CPC Party Committee of Guotai Junan Securities Co., Ltd., and has concurrently served as the president of the asset management business committee, the chairman of Guotai Junan Capital Management Co., Ltd., the chairman, general manager, chairman of the executive committee and president of the wealth management business committee of Guotai Junan Innovation Investment Co., Ltd. and other positions. He has been serving as the vice president of Shenergy Group since April 2023, the secretary of the CPC Party Committee of the Company since September 2023, an executive Director of the Company since October 2023 and the chairman of the Company since November 2024.

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Lu Weiming (魯偉銘), born in 1971, a member of the CPC, is a holder of a master's degree in economics and an economist. Currently, he is a vice chairman and executive Director of the Company, and the chairman and the secretary of the CPC Party Committee of China Universal Asset Management Co., Ltd. He served as the salesman and the project manager of business office of the transaction department of Guotai Securities Co., Ltd. from July 1994 to March 1998, the deputy general manager of the securities investment department under the transaction business department of the Company, the assistant to the general manager, deputy general manager, deputy general manager (in charge of affairs) and general manager of the fixed income business department of the Company, an assistant to the president of the Company, and a vice president of the Company and other positions from March 1998 to March 2022, the president of the Company from March 2022 to December 2024, an executive Director of the Company since June 2022 and a vice chairman of the Company since December 2024.

Lu Dayin (盧大印), born in 1972, a member of the CPC, is a holder of doctorate degree in management and a senior economist. Currently, he is the deputy secretary of the CPC Party Committee, an executive Director and vice president (in charge of affairs) of the Company, the secretary of the CPC Party Committee and chairman of Orient Futures, the chairman of Orient Futures International (Singapore) Pte Ltd. And the chairman of Orient Finance Holdings. Mr. Lu served as an assistant to manager and deputy manager of the business outlet of Shenyin & Wanguo Securities Co., Ltd. from July 1994 to June 2001, an assistant to general manager and deputy general manager of the information technology center of the Company, the deputy general manager (in charge of affairs) of e-commerce business department of the Company, the deputy general manager of brokerage business department of the Company, the deputy general manager and general manager of Orient Futures and other positions from June 2001 to January 2021, the chief information officer of the Company from November 2021 to January 2025, and has been serving as the secretary of the CPC Party Committee of Orient Futures since November 2020, the chairman of Orient Futures since December 2020, an executive Director of the Company since November 2024, and a vice president of the Company (in charge of affairs) since December 2024.

Yang Bo (楊波), born in 1974, a member of the CPC, is a holder of a master's degree in business administration. Currently, he is a non-executive Director of the Company, vice president and secretary of the board of directors of Shenergy Company Limited, executive director of Chengdu Chengyi Venture Capital Management Co., Ltd., vice chairman of Huaneng Shanghai Shi Dongkou Power Generation Co., Ltd., vice chairman of Huaneng Shanghai Combined Cycle Power Co., Ltd., and chairman of the supervisory committee of Shanghai Heavy Duty Gas Turbine Test Power Station Co., Ltd. Mr. Yang served as senior director of Shanghai Branch of ING Bank, head of the business department of Xiashang Investment Consulting Company (夏商投資諮詢公司), senior manager of Shanghai Representative Office of ABN AMRO Investment Management Asia Limited (荷銀投資管理亞洲有限公司), senior manager of corporate finance department of DBS Bank Shanghai Branch, senior client manager of corporate finance department, member of asset liability risk management committee and member of branch management committee of Fortis Bank Shanghai Branch from July 1997 to August 2007, deputy general manager of Shenergy Group Finance Co., Ltd., Party Branch secretary and general manager of Shanghai ICY Capital Co., Ltd. (上海誠毅投資管理有限公司), general manager of Shanghai Shenergy ICY Equity Investment Co., Ltd. (上海申能誠毅股權投資有限公司), General Party Branch Secretary and general manager of Shenergy Group Finance Co., Ltd. and other positions from August 2007 to December 2023, vice president of Shenergy Company Limited since December 2023 and secretary of the board of directors of Shenergy Company Limited since January 2024.

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Shi Lei (石磊), born in 1982, a member of the CPC, is a holder of a bachelor's degree and a senior accountant. Currently, he is a non-executive Director of the Company, director of finance division of Shanghai Tobacco Group Co., Ltd., director of Haitong Securities Co., Ltd., director of Shanghai Tobacco Group Beijing Cigarette Factory Co., Ltd., director of Taicang Haiyan Tobacco Flakes Co., Ltd., Shanghai Tobacco Group, director of Shanghai Tobacco Trading Center Co., Ltd., director of Shanghai Haiyan Tobacco Sugar and Wine Co., Ltd., director of Shanghai Haiyan Investment Management Co., Ltd., supervisor of Shanghai Tobacco Group Songjiang Tobacco Sugar and Wine Co., Ltd., supervisor of Shanghai Tobacco Group Huangpu Tobacco Sugar and Wine Co., Ltd., supervisor of Shanghai Tobacco Group Putuo Tobacco Sugar and Wine Co., Ltd., and supervisor of Shanghai Tobacco Group Qingpu Tobacco Sugar and Wine Co., Ltd. Mr. Shi served as auditor, assistant section chief, deputy section chief (in charge of affairs) and assistant director of the audit department of Shanghai Tobacco Group Co., Ltd. from July 2004 to April 2017, deputy general manager of Shanghai Tobacco Group Jing'an Tobacco Sugar and Wine Co., Ltd., and deputy general manager of Shanghai Tobacco Group Huangpu Tobacco Sugar and Wine Co., Ltd. from April 2017 to October 2019, deputy director of the Finance Department of Shanghai Tobacco Group Co., Ltd. from October 2019 to August 2022, and Director of the Finance Department of Shanghai Tobacco Group Co., Ltd. since August 2022.

Li Yun (李芸), born in 1964, a member of the CPC, is a holder of a master's degree in economics, and a senior editor. She currently serves as a non-executive Director of the Company, the secretary of the CPC Party Committee and the president of Shanghai United Media Group, the chairman of Shanghai Zhongyuan Capital Management Co., Ltd. (上海翠源資本管理有限公司), a director of China Universal, the chairman of Real Power Capital, and the chairman of Shanghai Ruiyi Investment Management Company Limited (上海瑞壹投資管理有限公司). Ms. Li served as the secretary of the CPC youth league committee and a teacher of Shanghai Fourth Teacher Training College (上海第四師範學校), deputy director, director and deputy secretary of the school department of the Luwan District Committee of the Communist Youth League, deputy director of the Luwan District Women's Federation, deputy director of the Luwan District Committee Office, and secretary of the Party Working Committee of Wuliqiao Street in Luwan District and other positions from January 1984 to May 2001, a standing committee member and the director of publicity department of Luwan District Party Committee and a standing committee member and the director of publicity department of Minhang District Party Committee from May 2001 to July 2008, the deputy secretary of the CPC Party Committee and the secretary of the Discipline Inspection Commission of Jiefang Press Group (解放日報報業集團), the secretary of the CPC Party Committee of Jiefang Daily (解放日報), the deputy secretary of the CPC Party Committee of Shanghai United Media Group (上海報業集團), the secretary of the CPC Party Committee and the president of Jiefang Daily from July 2008 to November 2021, and the secretary of the CPC Party Committee and the president of Shanghai United Media Group since November 2021.

Xu Yongmiao (徐永淼), born in 1977, a member of the CPC, is a holder of a master's degree in business administration. He currently serves as a non-executive Director of the Company, the deputy general manager and a member of the CPC Party Committee of Shanghai Branch of China Post Group Corporation Limited, a director of Beijing Yingge Barcode Technology Development Co., Ltd. (北京英格條碼技術發展有限公司), and an executive director and general manager of Shanghai Post Science Research Institute. From July 1999 to May 2014, he served as assistant general manager and director of Operation Service Department of Guangzhou Express Company (廣州速遞公司), deputy director of Marketing Department and director of Express Delivery Business Department of Guangdong Province Postal Logistics Bureau and the Express Delivery Bureau (廣東省郵政物流局、速遞局), deputy manager and general manager of Express Delivery Business Department of Guangdong Postal Express & Logistics Co., Ltd. (廣東省郵政速遞物流有限公司), and general manager of Maoming Branch of Guangdong Postal Express & Logistics Co., Ltd. (廣東省郵政速遞物流有限公司) and other positions. From May 2014 to January 2022, he served as deputy general manager and general manager of Marketing Department and general manager of market

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management department of China Postal Express & Logistics Company Limited, and the general manager of the marketing department of the post office and the general manager of the delivery department of China Post Group Corporation. He has served as the deputy general manager and a member of the CPC Party Committee of Shanghai Branch of China Post Group Corporation since January 2022.

Ren Zhixiang (任志祥), born in 1969, a member of the CPC, is a holder of a doctorate degree in economics. He currently serves as a non-executive Director of the Company, the deputy secretary of the CPC Party Committee and director and general manager of Zheneng Capital Holdings Co., Ltd., the vice chairman of Zheshang Property and Casualty Insurance Co., Ltd., a director of China Zheshang Bank Co., Ltd. and the chairman of Zhejiang Zheneng Financial Leasing Co., Ltd. and the chairman of Shanghai Puneng Financial Leasing Co., Ltd. He served as an office clerk, engineer and secretary of the CPC youth league committee of Zhejiang Water Conservancy and Hydropower Engineering Bureau from August 1995 to August 2001, a senior researcher and deputy general manager of investment banking division of Zhejiang International Trust & Investment Company Ltd. from June 2004 to February 2007, a senior director of asset management department, the chief economist, deputy director and director of strategy management and legal department of Zhejiang Provincial Energy Group Co., Ltd. from February 2007 to October 2019, the deputy secretary of the CPC Party Committee and general manager of Zheneng Capital Holdings Co., Ltd. since October 2019, and a director of Zheneng Capital Holdings Co., Ltd. since June 2020.

Wu Hong (吴弘), born in 1956, a member of the CPC, is a holder of a bachelor's degree in laws. He currently serves as an independent non-executive Director of the Company, a professor and a doctoral supervisor of East China University of Political Science and Law, an independent director of Shanghai Pudong Development Bank Co., Ltd., the chairman of supervisory committee of Keboda Technology Co., Ltd., and a lawyer of Shanghai SG & CO Lawyers. He has been working in East China University of Political Science and Law since July 1984, and used to serve as the dean of School of Economic Laws of East China University of Political Science and Law and other positions.

Feng Xingdong (高興東), born in 1977, a member of the CPC, is a holder of a doctorate degree in statistics. He currently serves as an independent non-executive Director of the Company, the dean, a professor of statistics and doctoral supervisor of School of Statistics and Management of Shanghai University of Finance and Economics. He served as an assistant professor of statistics and an associate professor of statistics of School of Statistics and Management of Shanghai University of Finance and Economics from June 2011 to June 2015, a professor and doctoral supervisor of School of Statistics and Management of Shanghai University of Finance and Economics since July 2015, and the dean of School of Statistics and Data Science of Shanghai University of Finance and Economics since November 2019.

Luo Xinyu (羅新宇), born in 1974, a member of the CPC, is a holder of a bachelor's degree and a master's degree in business administration. He is currently an independent non-executive Director of the Company, the general manager (president) of Shanghai State-owned Capital Operation Research Institute Co., Ltd., chairman of Shanghai State-owned Capital Training Center Co., Ltd., a director of Shanghai Pudong Technology Investment Co., Ltd., a director of Hangzhou Industrial Investment Group Co., Ltd., a director of Ningbo Development Investment Group Co., Ltd., a director of Dalian State-owned Assets Management Co., Ltd., an independent director of Huatai Securities (Shanghai) Asset Management Co., Ltd., a director of Shanghai Yangpu State-owned Assets Management Co., Ltd., a director of Luoyang Guohong Investment Holdings Group Co., Ltd., a supervisor of Shanghai Guosheng Guxian Venture Capital Investment Management Co., Ltd., an executive director of Shanghai Shengzhizi Corporate Management Co., Ltd., and an executive director of Shanghai Guoyan Corporate Management Co., Ltd., and a director of Luoyang Industrial Holding Group Co., Ltd. From July 1998 to July 2004, he served as a reporter from China Youth Daily, and a reporter from Xinhua News Agency Shanghai Branch. From July 2004 to July

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2009, he served as the general manager of the membership department of Shanghai United Assets and Equity Exchange. From July 2009 to April 2020, he successively served as the deputy director of the board office and the strategy and investment decision committee of Shanghai Guosheng (Group) Co., Ltd. and served as the general manager (president) of Shanghai State-owned Capital Operation Research Institute Co., Ltd. since June 2018.

Chan Hon (陳漢), born in 1960, is a holder of a bachelor's degree. He is currently an independent non-executive Director of the Company and a consultant of Nixon Peabody CWL. From January 1993 to May 1997, he served as a lawyer at Allen & Overy LLP from June 1997 to November 2016, he served as a legal counsel of investment banking at Credit Suisse, a legal counsel at ING Bank in Hong Kong, and the head of the Compliance and Legal Department for Deutsche Bank's China operations. He has served as a consultant of Nixon Peabody CWL since January 2017.

Zhu Kai (朱凱), born in 1974, a member of the CPC, is a holder of a doctorate degree in accounting. He currently serves as an independent non-executive Director of the Company, the vice dean, professor and doctoral supervisor of the Graduate School of Shanghai University of Finance and Economics, assistant to the president of Dongbei University of Finance and Economics (on secondment). He served as a lecturer in the Accounting Department of the Business School of Nanjing University from July 1999 to January 2001, and as a vice dean of the School of Accounting of Shanghai University of Finance and Economics from February 2016 to September 2023. He has served as a lecturer, associate professor and professor in the School of Accounting of Shanghai University of Finance and Economics since April 2004 and a vice dean of the Graduate School of Shanghai University of Finance and Economics since December 2023.

Sun Weidong (孫維東), born in 1968, a member of the CPC, is a holder of a master's degree in business administration. He currently serves as an employee representative Director and the director of trade union office of the Company. He served as a programmer of Shanghai Daji Data Solutions Co., Ltd. (上海大計數據處理公司), the computer supervisor of Shanghai branch of Dalian Liantong Securities Company (大連連通證券公司), the department manager of product sales department of Shanghai Dewei Economic Technology Company Limited (上海德威經濟技術有限公司) and the department manager of Shanghai headquarter of Three Gorges Securities (三峽證券) from August 1991 to December 1998, the assistant to general manager of the information technology center of the Company, deputy general manager of the operational management headquarters of the Company, deputy general manager (in charge of affairs) of the internet financial headquarters of the Company and other positions from December 1998 to May 2024. He has served as the director of trade union office of the Company since May 2024 and an employee representative Director of the Company since November 2024.

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SUPERVISORS

The Supervisory Committee of the Company comprises seven supervisors. The table below sets forth the information regarding the Company's supervisors as at the date of this Offering Circular:

Name	Year of Birth	Position
Liu Wei (劉煥)	1973	Chairman of Supervisory Committee
Du Xinhong (杜心紅)	1970	Shareholder Representative Supervisor
Shen Guangjun (沈廣軍)	1979	Shareholder Representative Supervisor
Ling Yun (凌雲)	1975	Shareholder Representative Supervisor
Ruan Fei (阮雯)	1971	Employee Representative Supervisor
Ding Yan (丁艷)	1979	Employee Representative Supervisor
Zhang Yun (張雲)	1982	Employee Representative Supervisor

Liu Wei (劉煥), born in 1973, a member of the CPC, is a holder of a master's degree in law, a senior economist and a political engineer. He is currently the chairman of the Supervisory Committee of the Company, the chief auditor and general counsel of Shenergy Group, the director of Shenergy Co., Ltd., and the director of Shanghai Shenergy ICY Capital Co., Ltd. (上海申能誠毅股權投資有限公司). He served as an assistant judge of Huangpu District People's Court of Shanghai from July 1996 to December 2001, an assistant judge, deputy chief of the General Section of the Office, director of the Office of the President, judge and deputy director of the Office of the Shanghai High People's Court from December 2001 to May 2013, a deputy director of the organization department office, deputy director of the comprehensive cadre department and researcher of Shanghai Municipal Committee from May 2013 to September 2017, general manager of human resources department and minister of organization department of CPC Party Committee of Shenergy Group and other positions from September 2017 to April 2021, the secretary of the CPC Party Committee of Shenergy Co., Ltd. from April 2021 to November 2024. He has served as a director of Shenergy Co., Ltd. since May 2023, General Counsel of Shenergy Group since August 2024, chief auditor of Shenergy Group since September 2024, and chairman of the Supervisory Committee of the Company since November 2024.

Du Xinhong (杜心紅), born in 1970, a member of the CPC, is a holder of a master's degree in economics, a professor level senior economist and an accountant. She is currently the shareholder representative supervisor of the Company, general manager of the financial management department of Shenergy Group and the chairman of Shanghai Shenergy Financial Leasing Co., Ltd. (上海申能融資租賃有限公司). She served as a Deputy Director of the Business Department and manager of the International Business Department of the Shanghai Pudong Branch of the Agricultural Bank of China from July 1992 to November 2000, deputy director of fund management of the Financial Department of Shenergy Group, Assistant general manager, deputy general manager, secretary of General Party Branch and general manager of Shenergy Group Finance Co., Ltd., deputy Party Secretary, Party Secretary and general manager of Shenergy Financial Business Division from November 2000 to December 2023. She has served as the general manager of the Financial Management Department of Shenergy Group since December 2023.

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Shen Guangjun (沈廣軍), born in 1979, a member of the CPC, is a holder of a master's degree in accounting. Currently, he is a shareholder representative Supervisor of the Company, the chief financial officer of Shanghai Construction Group Co., Ltd., a supervisor of Shanghai Construction Environmental Technology Co., Ltd., a director of Shanghai Pudong BOC Fullerton Community Bank Co., Ltd., a director of Shanghai Tower Construction & Development Co., Ltd., a director of SCG America (上海建工(美國)有限公司), a director of Shanghai Construction Engineering Real Estate Co., Ltd. (上海建工房產有限公司), a chairman of Shanghai Construction Overseas (Holdings) Limited, and a chairman of Windex Investments Limited. He served as the general manager, deputy chief accountant, assistant to the president (assistant to the dean) and deputy chief accountant (in charge of affairs) of asset and finance department of Shanghai Municipal Engineering Design General Institute (Group) Co., Ltd. from April 2004 to June 2019; the chief accountant of the overseas business department of Shanghai Construction Group Co., Ltd. from June 2019 to March 2021, and the deputy chief accountant of Shanghai Construction Group Co., Ltd. since March 2021.

Ling Yun (凌雲), born in 1975, a member of the CPC, is a holder of a bachelor's degree in business administration. He currently serves as a shareholder representative Supervisor of the Company, the deputy general manager of the planning and finance department of Shanghai Jinqiao Export Processing Zone Development Co., Ltd., and serves as the chief financial officer of Shanghai Zongshun Construction and Development Co., Ltd., the chief financial officer of Shanghai Zong'ao Construction and Development Co., Ltd., and the chief financial officer of Shanghai Zongnuo Construction and Development Co., Ltd. Previously, he served as the accounting supervisor of the planning and finance department and assistant to the general manager of Shanghai Jinqiao Export Processing Zone Development Co., Ltd. from June 2007 to January 2018 and the deputy general manager of the planning and finance department of Shanghai Jinqiao Export Processing Zone Development Co., Ltd. since January 2018.

Ruan Fei (阮斐), born in 1971, a member of the CPC, is a holder of a master's degree in finance, and is a senior accountant and senior economist. Currently, she is the deputy secretary of the discipline inspection commission of the Company, an employee representative Supervisor, the secretary to the Supervisory Committee, office director of the Supervisory Committee and director of the discipline inspection office of the Company. She served as a researcher of the development research department of China Worldbest Group Co., Ltd. from January 1997 to June 1998, a researcher of the securities research institute, the assistant to office director and deputy office director of the Company and other positions from June 1998 to March 2012, the secretary to the Supervisory Committee and office director of the Supervisory Committee of the Company since March 2012, the director of the discipline inspection office of the Company since December 2012, the employee representative Supervisor of the Company since March 2021 and the deputy secretary of the discipline inspection commission of the Company since January 2024.

Ding Yan (丁鵬), born in 1979, a member of the CPC, is a holder of a master's degree in economic laws and a master's degree in science, and an economist. Currently, she is an employee representative Supervisor of the Company, the general manager of the audit department of the Company, a director of Orient Securities Capital Investment, and a supervisor of China Universal. She served as a clerk and deputy chief clerk of the banking management department and the office of People's Bank of China, Shanghai branch, the deputy chief clerk, chief clerk and section chief of the secretariat of general management department and the anti-money laundering division of financial services department II of People's Bank of China, Shanghai headquarters from August 2001 to January 2017, the assistant to general manager, deputy general manager and deputy general manager (in charge of affairs) of the audit center of the Company from January 2017 to September 2022, an employee representative Supervisor of the Company since March 2021 and the general manager of the audit center of the Company since October 2022.

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Zhang Yun (張雲), born in 1982, a member of the CPC, is a holder of a master's degree in management science and engineering. He is currently an employee representative Supervisor, and general manager of risk management department of the Company. He served as senior consultant of Risk System and Data for Business Development Department of Shanghai Amarsoft Information & Technology Co., Ltd. (上海安碩信息技术股份有限公司) from June 2009 to November 2011, risk management officer, deputy general manager and general manager of the Risk Management Department of Sinolink Securities Co., Ltd. (國金證券股份有限公司) from December 2011 to March 2023. He has served as the general manager of risk management department since March 2023 and the employee representative Supervisor of the Company since November 2024.

SENIOR MANAGEMENT

The Company's senior management team consists of six members. The table below sets forth information regarding the Company's senior management as at the date of this Offering Circular:

Name	Year of Birth	Position
Lu Dayin (盧大印)	1972	Executive Director, Vice President (in charge of affairs) and Deputy CPC Party Committee Secretary
Shu Hong (舒宏)	1967	Vice President and Chief Financial Officer
Zhang Jianhui (張建輝)	1968	Vice President
Chen Gang (陳剛)	1976	Vice President
Wu Zezhi (吳澤智)	1978	Vice President
Jiang Helei (蔣鶴磊)	1974	Chief Compliance Officer and Chief Risk Officer
Wang Rufu (王如富)	1973	Secretary to the Board

For Mr. Lu Dayin's profile, please see "Directors, Supervisors and Senior Management - Directors".

Shu Hong (舒宏), born in 1967, a member of CPC, is a holder of a master's degree in business administration and an engineer. Currently, he is a vice president, chief financial officer, party secretary of wealth management committee and president of the Company. Mr. Shu Hong served as the manager for the computer network center system development department of Shenyin & Wanguo Securities Co., Ltd. from January 1993 to October 1998, and the head and general manager of the information technology center of Orient Securities Limited Liability Company (東方證券有限責任公司) from October 1998 to March 2004. He also served as the assistant to president and general manager of the information technology center, the assistant to president and general manager of the brokerage business department, the director of IT technology and assistant to president, operating controller and assistant to president, and operating controller of the Company from December 2001 to April 2014 and the chief information officer of the Company from June 2019 to November 2021. Mr. Shu has been serving as vice president of the Company since April 2014, as the chief financial officer of the Company since November 2021 and as the party secretary of wealth management committee and president of the Company since November 2024.

Zhang Jianhui (張建輝), born in 1968, a member of the CPC, is a holder of a master's degree in economics and business administration, an economist and an accountant. Currently, he is a vice president of the Company, chairman of Orient Finance Holdings, chairman and general manager of Orient Securities International, a non-employee representative director of China Securities Credit Investment Co., Ltd. and a supervisor of Shanghai ICY New Energy Venture Capital Investment Co., Ltd. Mr. Zhang served as a clerk of Shanghai Pudong Development Bank from March 1994 to March 1998, the assistant to the general manager of the fund and financial management department of Orient Securities Limited Liability Company from March 1998 to July 2003, the deputy general manager and general manager for Liaoning

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administrative department, the deputy general manager (in charge of affairs) and general manager of the fund and financial management department of the Company from July 2003 to June 2015, the chief financial officer of the Company from May 2014 to November 2021, and concurrently served as the general manager of the planned financial management department of the Company from June 2015 to August 2019 and the general manager of the fund management department from August 2020 to November 2021. Mr. Zhang has been serving as the vice president of the Company since July 2015.

Chen Gang (陳剛), born in 1976, a member of the CPC, is a holder of a doctorate degree in management science and engineering. He is currently Vice President, director of Securities Research Institute, and general manager of Institutional Client Headquarters of the Company, director of Orient Finance Holdings and director of Orient Securities International. He served as a researcher of Central China Securities from October 2003 to January 2004, a staff member of Shanghai Yuji Industrial Co., Ltd. (上海裕基實業有限公司) from January 2004 to April 2004, a researcher of Shanghai Richen Asset Management Co., Ltd. (上海融昌資產管理有限公司) from April 2004 to November 2004, an investment manager of Shanghai Yuji Industrial Co., Ltd. from November 2004 to September 2005, an industry researcher, an assistant to the director and an executive director of the Company's securities research institute from September 2005 to May 2012, the general manager of the securities research institute of Everbright Securities Company Limited (光大證券股份有限公司) from May 2012 to February 2014, the proposed director of the Company's securities research institute from February 2014 to March 2014, the director of the Company's securities research institute since March 2014, the chief research officer of the Company from July 2023 to December 2024, and the vice president and general manager of Institutional Client Headquarters of the Company since December 2024.

Wu Zezhi (吳澤智), born in 1978, a member of the CPC, is a holder of a doctorate degree in statistics. Currently, he is the Vice President, and the general manager of the fixed-income business department of the Company, a director of Orient Finance Holdings and a director of Orient Securities International. He served as the business manager and senior investment manager of the fixed-income business department of the Company from April 2005 to October 2010, the assistant to the general manager of the fixed-income business department of the Company from October 2010 to January 2013, the deputy general manager of the fixed-income business department of the Company from January 2013 to April 2020, the joint general manager of the fixed-income business department of the Company from April 2020 to August 2021, the general manager of the financial derivatives business department of the Company from March 2021 to December 2023, the general manager of the securities investment business department of the Company from July 2023 to January 2025, the general manager of the fixed-income business department of the Company since August 2021, and the chief investment officer of the Company from July 2023 to December 2024, and the Vice President of the Company since December 2024.

Jiang Helei (蔣鶴磊), born in 1974, is a holder of a master's degree in economics. Currently, he is the chief compliance officer and chief risk officer of the Company, a director of Orient Securities Asset Management, a director of Orient Futures and a director of Orient Securities Innovation. He served as the clerk of the planning and finance department of Shanghai Baoshan Steel Group Co. Ltd. (上海寶山鋼鐵集團有限公司) from July 1996 to September 1998, a project manager at research and development department and the M&A & reorganization department of the Shanghai Yashang Enterprise Consulting Co., Ltd. (上海亞商企業諮詢股份有限公司) from September 1998 to November 2000, a staff at the inspection office of Shanghai Securities Regulatory Bureau of the CSRC (中國證監會上海證管辦稽查處) from November 2000 to November 2001, a deputy senior staff at the No. 2 investigation office of Shanghai Securities Regulatory Bureau of the CSRC from November 2001 to March 2004, a senior staff of the No. 1 investigation office of Shanghai Securities Regulatory Bureau of the CSRC from March 2004 to October 2004, a senior staff, deputy researcher and deputy director at the No. 2 regulatory office of Shanghai Securities Regulatory Bureau of the CSRC from October 2004 to April 2013, a researcher at the No. 1

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regulatory office of Shanghai Securities Regulatory Bureau of the CSRC from April 2013 to January 2016, a researcher at the No. 2 inspection office of Shanghai Securities Regulatory Bureau of the CSRC from January 2016 to October 2016 (concurrently serving as the vice president and chief secretary of Shanghai Securities Association (上海市證券同業公會) from March 2014 to June 2016), the deputy general manager of Shanghai Boweiyicheng Investment (Group) Co., Ltd. (上海博威益誠投資(集團)有限公司) from November 2016 to October 2020, the deputy general manager of Oriental Huayu Capital Management Co., Ltd. (東方華宇資本管理有限公司) from November 2020 to March 2021, and the vice president and chief compliance officer of Shanghai Jiyu Fund Sales Co., Ltd. (上海基煜基金銷售有限公司) from April 2021 to July 2022. Mr. Jiang has served as the chief risk officer of the Company since September 2022 and as the chief compliance officer of the Company since October 2022, and the general manager of the compliance and legal management headquarters of the Company from December 2023 to May 2024.

Wang Rufu (王如富), born in 1973, a member of the CPC, is a holder of a master's degree in engineering and a certified public accountant. Currently, he is the secretary to the Board, the joint company secretary and the director of board office of the Company, a supervisor of China Universal and a director of Shanghai ICY New Energy Venture Capital Investment Co., Ltd. He served as the comprehensive planning specialist of the planning and coordination department and the strategic management specialist of the development and coordination office of Shenyin & Wanguo Securities from August 2002 to April 2004, the assistant to the general manager of the planning and development department and the deputy director (in charge of affairs) of the secretariat of Kinghing Securities from May 2004 to October 2005, the senior researcher of the securities market strategy of the research institute of the Company from October 2005 to March 2008, the senior director, assistant to the director and deputy director (securities affairs representative) of the Board office from March 2008 to October 2014, the director of the Board office of the Company since October 2014, the secretary to the Board of the Company since November 2016, and the joint company secretary since November 2019.

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PRC REGULATIONS

THE PRC LEGAL SYSTEM

The PRC legal system is based on the PRC Constitution and is made up of written laws, regulations, directives and local laws and laws resulting from international treaties entered into by the PRC Government. In general, court judgments do not constitute binding precedents. However, they are used for the purposes of judicial reference and guidance.

The National People's Congress of the PRC ("NPC") and the Standing Committee of the NPC are empowered by the PRC Constitution to exercise the legislative power of the State. The NPC has the power to amend the PRC Constitution and enact and amend basic laws governing state agencies and civil, criminal and other matters. The Standing Committee of the NPC is empowered to enact and amend all laws except for the laws that are required to be enacted and amended by the NPC.

The State Council is the highest organ of the State administration and has the power to enact administrative rules and regulations. The ministries and commissions under the State Council are also vested with the power to issue orders, directives and regulations within the jurisdiction of their respective departments. All administrative rules, regulations, directives and orders promulgated by the State Council and its ministries and commissions must be consistent with the PRC Constitution and the national laws enacted by the NPC and the Standing Committee of the NPC. In the event that a conflict arises, the Standing Committee of the NPC has the power to annul administrative rules, regulations, directives and orders. The People's Congresses or their standing committees of the comparatively larger cities may, in light of the specific local conditions and actual needs, formulate local regulations, provided that they do not contradict the PRC Constitution, the national laws, the administrative regulations and the local regulations of their respective provinces or autonomous regions, and they shall submit the regulations to the standing committees of the people's congresses of the provinces or autonomous regions for approval before implementation.

At the regional level, the provincial and municipal congresses and their respective standing committees may enact local rules and regulations and the people's governments may promulgate administrative rules and directives applicable to their own administrative areas. These local rules and regulations must be consistent with the PRC Constitution, the national laws and the administrative rules and regulations promulgated by the State Council.

The State Council, provincial and municipal governments may also enact or issue rules, regulations or directives in new areas of the law for experimental purposes or in order to enforce the law.

After gaining sufficient experience with experimental measures, the State Council may submit legislative proposals to be considered by the NPC or the Standing Committee of the NPC for enactment at the national level.

The PRC Constitution vests the power to interpret laws in the Standing Committee of the NPC. The Supreme People's Court, in addition to its power to give general interpretation on the application of laws in judicial proceedings, also has the power to interpret specific cases. The State Council and its ministries and commissions are also vested with the power to interpret rules and regulations that they have promulgated. At the regional level, the power to interpret regional rules and regulations is vested in the regional legislative and administrative bodies which promulgated such laws.

Under the PRC Constitution and the Law of Organisation of the People's Courts, the PRC Judicial System is made up of the Supreme People's Court, the local courts, military courts and other special courts. The local courts are comprised of the basic courts, the intermediate courts and the higher courts.

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The basic courts are organised into civil, criminal, economic, administrative and other divisions. The intermediate courts are organised into divisions similar to those of the basic courts, and are further organised into other special divisions, such as the intellectual property division. The higher level courts supervise the basic and intermediate courts. The people's procuratorates also have the right to exercise legal supervision over the civil proceedings of courts of the same level and lower levels. The Supreme People's Court is the highest judicial body in the PRC. It supervises the administration of justice by all other courts. The Supreme People's Court has established circuit courts to accept relevant cases within the regions under their circuit jurisdictions. Circuit courts are hearing organs dispatched by the Supreme People's Court. The judgments, rulings and decisions rendered by circuit courts are judgments, rulings and decisions by the Supreme People's Court.

The courts employ a two-tier appellate system. A party may appeal against a judgment or order of a local court to the court at the next higher level. Second judgments or orders given at the next higher level and the first judgments or orders given by the Supreme People's Court are final. If, however, the Supreme People's Court or a court at a higher level finds an error in a judgment which has been given by any court at a lower level, or the president of a court finds an error in a judgment which has been given in the court over which he presides, the case may then be retried in accordance with the judicial supervision procedures.

The Civil Procedure Law of the PRC, which was first adopted on 9 April 1991 and was subsequently amended on 28 October 2007, 31 August 2012, 1 July 2017, 24 December 2021 and 1 September 2023, sets forth the criteria for instituting a civil action, the jurisdiction of the courts, the procedures to be followed for conducting a civil action and the procedures for enforcement of a civil judgment or order. All parties to a civil action conducted within the PRC must comply with the Civil Procedure Law. Generally, a civil case is initially heard by a local court of the municipality or province in which the defendant resides. The parties to a contract may, by express agreement, select a jurisdiction where civil actions may be brought, provided that the jurisdiction is either the plaintiff's or the defendant's place of residence, the place of execution or implementation of the contract or the place of the object of the contract. However, such selection cannot violate the stipulations of grade jurisdiction and exclusive jurisdiction in any case.

A foreign individual or enterprise generally has the same litigation rights and obligations as a citizen or legal person of the PRC. If a foreign country's judicial system limits the litigation rights of PRC citizens and enterprises, the PRC courts may apply the same limitations to the citizens and enterprises of that foreign country within the PRC. If any party to a civil action refuses to comply with a judgment or order made by a court or an award granted by an arbitration panel in the PRC, the aggrieved party may apply to the court to request for enforcement of the judgment order or award. The time limit imposed on the right to apply for such enforcement is two years. If a person fails to satisfy a judgment made by the court within the stipulated time, the court will, upon application by either party, mandatorily enforce the judgment.

A party seeking to enforce a judgment or order of a court against a party who is not located within the PRC and does not own any property in the PRC may apply to a foreign court with proper jurisdiction for recognition and enforcement of the judgment or order. A foreign judgment or ruling may also be recognised and enforced by a court in accordance with the PRC enforcement procedures if the PRC has entered into, or acceded to, an international treaty with the relevant foreign country which provides for such recognition and enforcement, or if the judgment or ruling satisfies the court's examination in accordance with the principal of reciprocity, unless the court finds that the recognition or enforcement of such judgment or ruling will result in a violation of the basic legal principles of the PRC, its sovereignty or security, or for reasons of social and public interests.

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REGULATORY ENVIRONMENT OF THE PRC

Overview

The Company is a securities firm in the PRC and is primarily engaged in the business of securities and futures. The Company is subject to the regulations of the CSRC and other authorities. The securities and futures business of the Company is subject to the applicable regulations of the PRC in the areas at industry entry, business regulation, corporate governance and risk control. Our operations shall also comply with other general regulations of the PRC, including laws, regulations, rules and other regulatory documents in respect of foreign exchange control, taxation and anti-money laundering.

Major Regulatory Authorities and Self-Regulatory Organizations

The operations of the Company are mainly supervised and regulated by the following authorities in the PRC:

CSRC

The CSRC is the major regulatory authority in the securities and futures industry, which is responsible for the unified supervision and management of the securities and futures markets of the PRC and for maintaining the market order thereof, and to secure their lawful operations in accordance with the laws, regulations and within the authorization of the State Council. According to the Securities Law (《證券法》) (amended on 28 December 2019 and effective from 1, March 2020) and the Administrative Regulations on Futures Trading (amended on 1 March 2017) (《期貨交易管理條例》), the main duties of the CSRC include: to formulate the regulations and rules in relation to the supervision and regulation of the securities and futures markets and to exercise the rights of examination, approval or verification according to law; to supervise and regulate the issuance, listing, trading, registration, deposit and settlement of securities and other related activities and the listing, trading, settlement and delivery of futures and related activities; to supervise and regulate the securities activities of securities issuers, listed companies, securities companies, securities investment fund management companies, securities service organizations, stock exchanges and securities registration and settlement organizations, as well as futures activities of market participants, including futures exchanges, futures companies, other futures business institutions, non-futures companies clearing member, futures margin security depository management companies, futures margin depository banks, settlement houses and so forth; to legally determine and supervise the qualification standards and codes of conduct of participants engaged in securities and futures businesses; to legally supervise the disclosure of information in relation to the issuance, listing and trading of securities and information on futures trading; to legally guide and supervise the activities of the SAC and the CFA; to investigate activities in violation of laws and administrative regulations in relation to the securities and futures markets; to conduct external and international cooperative transactions in relation to the supervision and management of the securities and futures industries; and to perform other duties stipulated by the relevant laws and administrative regulations.

Stock Exchanges

According to the Securities Law, a stock exchange is a self-regulatory legal entity which provides venues and facilities for the centralized trading of securities and organizes and supervises the trading of securities. The Shanghai Stock Exchange, the Shenzhen Stock Exchange and the Beijing Stock Exchange are the three major stock exchanges in the PRC.

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Futures Exchanges

Under the Administrative Regulations on Futures Trading (《期货交易管理條例》), a futures exchange is a non-profit self-regulatory legal entity which provides venues and facilities for the centralized trading of futures and organizes and supervises the trading of futures. The main duties of a futures exchange include: to provide venues, facilities and services for trading; to design futures trading contracts and to arrange the listing of futures trading contracts; to organize and supervise the trading, clearing and settlement of futures; to provide centralized performance guarantees for futures trading; to supervise and manage its members in accordance with its articles of association and trading rules; and to perform other duties as specified by the CSRC.

SAC

According to the relevant provisions of the Securities Law, the SAC is a self-regulatory organization of the securities industry and is a non-profit public legal entity. Securities companies shall join the SAC. The main duties of the SAC include: to educate and advise its members to comply with the securities laws and administrative rules; to protect the lawful rights and interests of its members and forward their proposals and requests to the securities supervision and management authorities; to collect and compile information of securities activities for the members' reference; to formulate rules of the SAC with which the members shall comply, and to organize training programs and seminars for futures practitioners and its members; to mediate disputes arising from securities business between its members or between members and their clients; to organize for its members the study of development, operation and other matters of the securities industry; to monitor and investigate the conduct of members and take disciplinary actions against them for violation of laws, administrative rules or its articles of association in accordance with relevant provisions; and to perform other duties stipulated in the articles of association of the SAC.

CFA

Pursuant to the relevant provisions of the Administration Regulations on Futures Trading (《期货交易管理條例》), the CFA is a self-regulatory organization of the futures industry and is a non-profit public legal entity. Futures companies and other organizations specializing in the business of futures shall join the CFA. The main duties of the CFA include: to educate and advise its members to comply with the laws, regulations and policies in relation to futures; to formulate self-regulatory rules binding on its members and to supervise and examine the conduct of its members and take disciplinary actions against the violation of its articles of association or self-regulatory rules in accordance with relevant provisions; to accredit, manage and de-register the qualifications of futures practitioners; to deal with complaints of clients in relation to the futures business and to mediate disputes between members or between members and their clients; to protect the lawful rights and interests of its members and forward their proposals and requests to the futures supervision and management authorities of the State Council; to organize training and seminars for futures practitioners; to organize for its members the study of development, operation and other matters of the futures industry; and to perform other duties stipulated in the articles of association of the CFA.

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AMAC

Pursuant to the relevant provisions of the Law of the People's Republic of China on Securities Investment Fund (《中華人民共和國證券投資基金法》) (the “Securities Investment Fund Law”) (amended on 24 April 2015 with immediate effect), AMAC is a self-regulatory organization of the securities investment fund industry and is a public legal entity. Fund managers and fund custodians shall join AMAC, and fund service organizations may join AMAC. The main duties of AMAC include: to educate and advise its members to comply with the laws and administrative rules governing securities investments and to protect the lawful rights and interests of the investors; to protect the lawful rights and interests of its members and to submit their proposals and requests; to formulate and implement self-regulatory rules, to supervise and investigate the practices of its members and practitioners, and to take disciplinary actions against the violation of the self-regulatory rules and its articles of association in accordance with relevant provisions; to formulate practice standards and business rules and to organize the qualification examinations, qualification management and professional training for fund practitioners; to provide membership service, organize seminars, promote innovation and launch propaganda and investor education activities in the securities industry; to mediate disputes arising from fund business between members or between members and their clients; to handle the registration and filing of non-publicly offered funds in accordance with the law; and to perform other duties stipulated in its articles of association.

Other Industry Organizations

Other major industry organizations include PBOC, SAFE, CSDCC, China Securities Investor Protection Fund Corporation Limited (中國證券投資者保護基金有限責任公司), China Futures Market Monitoring Centre Co., Ltd. (中國期貨市場監控中心有限責任公司), China Financial Futures Exchange (中國金融期貨交易所), National Association of Financial Market Institutional Investors (中國銀行間市場交易商協會), National Financial Regulatory Administration (中國金融監督管理總局), National Equities Exchange and Quotations Company Limited (全國中小企業股份轉讓系統有限責任公司) and China Securities Finance Corporation (中國證券金融股份有限公司).

Intra-Group Lending

Prior to 1 September 2015, lending and borrowing, overt or in a disguised form, among non-financial institutions was prohibited, according to Article 61 of the General Principals of Loans (貸款通則) promulgated by the PBOC in 1996. There was a risk that intra-Group lending may be deemed not in compliance with the General Principals of Loans, and the PBOC could cancel the certain intra-Group loans and impose a fine equal to one to five times of its income accrued from such loans on the lending party.

On 6 August 2015, the Supreme People's Court issued the Regulations on Application of Laws to Certain Issues For Hearing of Private Lending Cases (最高人民法院關於審理民間借貸案件適用法律若干問題的規定) (“Regulations”), which became effective on 1 September 2015 (amended on 19 August 2020 and 29 December 2020). Pursuant to the Regulations, subject to certain exceptions, an intra-Group lending entered into for production or operating purposes is valid and recognised by the PRC courts. However, the validity of such lending may still be challenged if the lender (not being a financial institution) regularly conducts lending business or its lending activities become its primary business, as such loans would no longer be made for production or business operation purposes.

External Security Regime

Cross-Border Guarantee Laws

On 12 May 2014, the SAFE promulgated the Foreign Exchange of Cross-border Guarantee Measures (《跨境擔保外匯管理規定》). The Foreign Exchange of Cross-border Guarantee Measures, which came into force on 1 June 2014, replaced previous regulations regarding cross-border security and introduced a number of significant changes, including: (i) abolishing prior SAFE approval and quota requirements for cross-border security; (ii) requiring SAFE registration for two specific types of cross-border security; (iii) removing eligibility requirements for providers of cross-border security; (iv) providing that the validity of any cross-border security agreements are no longer subject to SAFE approval, registration, filing, and any other SAFE administrative requirements; and (v) removing the SAFE verification requirement for performance of cross-border security. A cross-border guarantee is a form of security under the Foreign Exchange of Cross-border Guarantee Measures. The Foreign Exchange of Cross-border Guarantee Measures classify cross-border security into three types:

Nei Bao Wai Dai (NBWD, 內保外貸): security/guarantee provided by an onshore security provider for a debt owed by an offshore debtor to an offshore creditor.
Wai Bao Nei Dai (WBND, 外保內貸): security/guarantee provided by an offshore security provider for a debt owed by an onshore debtor to an onshore creditor.
Other Types of Cross-border Security (其他形式跨境擔保): any cross-border security/guarantee other than Nei Bao Wai Dai and Wai Bao Nei Dai.

Under the SAFE Regulations, the local SAFE will go through a procedural review (as opposed to a substantive approval process) of the application for registration. Upon completion of the review, the local SAFE will issue a registration notice or record to the Company to confirm the completion of the registration.

Regulation on The Issuance of Foreign Bonds

The NDRC issued the NDRC Measures on 5 January 2023, which came into effect on 10 February 2023 and repealed the National Development and Reform Commission on Pushing Forth Administrative Reform for Filing and Registration for Issuance of Foreign Debt by Enterprises (《國家發展改革委關於推進企業發行外債備案登記制管理改革的通知》) on the same day. According to the NDRC Measures, an enterprise shall undergo formalities for approval and registration procedure managed by the NDRC to obtain the Examination and Registration Certificate. Without prior approval and registration, no foreign debt may be borrowed. The NDRC Measures further (i) tightens requirements on the condition of enterprises for borrowing foreign debt; (ii) clarifies the penalties and legal liability of non-compliant enterprises, relevant intermediaries and responsible persons; (iii) broadens the scope of responsibility of such enterprises, intermediary or person; and (iv) increases the legal consequences for non-compliant entities. The NDRC Measures also prohibit foreign debt proceeds from being used to threaten information and data security, to increase local government's hidden debts, or for speculative purposes. Under the NDRC Measures, an enterprise shall, (i) within 10 working days after the borrowing of each foreign debt, submit the information on the borrowed foreign debt to the NDRC, (ii) within 10 working days after the expiration of the Examination and Registration Certificate, file a report with the NDRC on the status of the borrowed foreign debt, (iii) within five working days prior to the end of January and end of July each year, file a report with the NDRC detailing the deployment of proceeds as of the applicable period, the status of payment obligations, as well as material information pertaining to the Issuer's (or the Guarantor's, as the case may be) operations and (iv) file the requisite information and documents upon the occurrence of any material event that may affect the enterprise's due performance of its debt obligations.

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Industry Entry Requirements

Industry Entry Requirements of Securities Companies

Establishment

The Securities Law and the Regulations on Supervision and Administration of Securities Companies (《證券公司監督管理條例》) (effective from 1 June 2008 and amended on 29 July 2014), explicitly set out the scope of business, industry entry standards, organizations, business rules of securities companies and other requirements for the operations of securities companies. The establishment of a securities company shall be approved by the CSRC and the securities company shall obtain a business license by meeting the following conditions:

its articles of association shall comply with the laws and administrative regulations;
its major shareholders shall have sustainable profitability, good reputation and no record of major violation of laws or regulations in the last three years and shall have net assets not less than RMB200 million;
it shall have the necessary registered capital required by the Securities Law; for a securities firm operating securities brokerage, securities investment consultation and financial advisory business in relation to securities trading and securities investment, the minimum registered capital shall be RMB50 million; for companies operating one of the areas at securities underwriting and sponsorship, proprietary securities trading, securities asset management or other securities businesses, the minimum registered capital shall be RMB100 million; for companies operating two or more of the areas at securities underwriting and sponsorship, proprietary securities trading, securities asset management or other securities businesses, the minimum registered capital shall be RMB500 million. The registered capital of a securities firm shall be paid-in capital;
its directors, supervisors and senior management shall have the required qualifications, while other personnel involved in the securities business shall possess proper professional qualifications, and no less than three of the senior officers shall have served as senior officers for no less than two years in the securities industry; and
it shall have effective risk management and internal control systems; it shall have proper premises and facilities for operation; and it shall fulfil other conditions stipulated by laws, administrative rules and the CSRC.

According to the Administrative Provisions on Equities of Securities Companies (《證券公司股權管理規定》) (effective from 5 July 2019 and amended on 18 March 2021 and 27 March 2025), the CSRC shall examine and approve its registered capital and equity structure at the time of establishment of a securities company, and various types of stakeholders of the securities companies shall satisfy the relevant criteria. According to the Administrative Provisions on Equities of Securities Companies, the number of securities companies in which the shareholders of a securities company and the controlling shareholders and actual controllers of the shareholders participate shall not exceed two, and the number of securities companies controlled by them shall not exceed one. But the following conditions shall not be included in the number of equity interests or controlling interests in securities companies:

directly holding and indirectly controlling less than 5 per cent. of the equity of securities companies;
holding shares in other securities companies through the securities companies under its control;
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other securities companies controlled by securities companies;
transitional arrangements for the implementation of mergers and acquisitions of securities companies;
the General Office of the State Council of the PRC authorizes to hold stock equity of securities companies; and
other circumstances as identified by the CSRC.

According to Administrative Measures on Foreign-funded Securities Companies (《外商投資證券公司管理辦法》) promulgated by the CSRC (as issued on 28 April 2018 with immediate effect and amended on 20 March 2020 and 27 March 2025) which stipulates the conditions and procedures for the formation of foreign-invested securities companies, foreign investors who lawfully hold 5 per cent. or more of the shares in a listed domestically-funded securities firm through securities trading on a stock exchange or who jointly hold 5 per cent. or more of the shares in a listed domestically-funded securities firm with others by agreement or other arrangements shall comply with the Securities Law and the relevant provisions of the CSRC on examination and approval for acquisition of listed company and change in securities company.

Establishment of a foreign-funded securities company shall, in addition to compliance with the Company Law, the Securities Law, the Administrative Regulations on Supervision and Administration of Securities Companies and the criteria for establishment of securities company stipulated by the CSRC with approval by the State Council, satisfy the following criteria:

the overseas shareholder(s) satisfy(ies) the qualification criteria stipulated in Administrative Measures on Foreign-funded Securities Companies, and its/their capital contribution ratio and capital contribution method comply with the relevant provisions of these Measures;
the preliminary scope of business is compatible with the securities business experience of the controlling shareholder or the largest shareholder; and
any other prudential criteria stipulated by the CSRC.

The following conditions shall be met for a foreign shareholder of a foreign-invested securities company:

the country or region in which the foreign shareholder is based has complete securities laws and regulation system, of which the relevant financial regulatory authorities have entered into memorandum of understanding with the CSRC or institutions recognized by the CSRC in respect of securities regulation cooperation, and the regulation cooperation relationship has been maintained in an effective way;
the shareholder is a financial institution legally incorporated in the country or region in which it is based, and the respective financial indicators of the shareholder for the last three years satisfy the requirements of the national or regional laws and of the regulatory authorities in that country or region;
the shareholder is engaged in securities business for over five years, receives no material punishment during the last three years from the regulatory authorities, administrative or legal authorities of the country or region in which it is based, and not being investigated by relevant authorities due to involvement in material violation of laws and regulations;
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the shareholder has well-established internal control system;
the shareholder enjoys good international reputation and operating results, with its business scale, revenue and profit for the last three years ranking in advanced position in international market and with its long-term credit for the last three years maintained at a high level; and
other prudent requirements stipulated by the CSRC.

According to the Special Administrative Measures for Access of Foreign Investment (Negative List) (Edition 2024) (《外商投資准入特別管理措施(負面清單)(2024年版)》）(effective from 1 November 2024) (the “Negative List (Edition 2024)”), the limit on the foreign shareholding proportion of securities companies does not exist.

Business scope

According to the provisions of the Securities Law, a securities firm can conduct any or all of the following businesses with approval from the CSRC: securities brokerage; securities investment consultation; financial advisory in relation to securities trading and securities investment; securities underwriting and sponsorship; margin financing and securities lending; market-making transactions of securities; proprietary securities trading; and other securities business.

According to the provisions of the Regulations on the Examination and Approval of the Scope of Business of Securities Companies (Provisional) (《證券公司業務範圍審批暫行規定》）(effective from 1 December 2008 and amended on 7 December 2017, 30 October 2020 and 27 March 2025), securities companies under common control of an entity or individual or securities companies with control relationship shall not engage in the same business, unless effective measures are in place for division of operation regions or client bases and there is no competition between the companies. Unless otherwise specified by the CSRC, the scope of business of a securities company shall be approved by the CSRC upon its establishment in accordance with the statutory requirements, and no more than four types of new businesses shall be approved. A securities firm shall obtain approval from the CSRC for any change in its scope of business. Changing business scope includes increasing business types and reducing business types. No more than two additional types of business can be applied for increasing business types at once. Subject to approval by the CSRC, a securities company may operate businesses not prohibited by the Securities Law, the Regulations on Supervision and Administration of Securities Companies and the rules and regulations and normative documents of the CSRC.

Material changes

According to the provisions of the Securities Law (《證券法》）(amended on 28 December 2019 and effective from 1, March 2020), a securities firm shall obtain approval from the CSRC if it has any of the following acts:

change of securities business scope;
change of major shareholders or actual controllers of the company;
merger, division, suspension of business, dissolution and bankruptcy.
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According to the Administrative Provisions on Equities of Securities Companies (《證券公司股權管理規定》) (effective from 5 July 2019, amended on 18 March 2021 and 27 March 2025), when a securities company change its shareholders holding 5 per cent. or more of its equity or change its actual controlling party, the securities company shall apply to the CSRC for approval pursuant to the law. Where the change in registered capital or equity of a securities company does not fall under the circumstances set out in the preceding statement, the securities companies shall complete change registration formalities with the company registration authority within five working days, and file records with the CSRC branch at its locality. This provision shall not apply to equity changes of securities companies which occur on a stock exchange or the NEEQ.

According to the Announcement on Cancellation or Adjustment of Some Administrative Approval Items of Securities Companies (《關於取消或調整證券公司部分行政審批項目等事項的公告》) (effective from 1 March 2020), the CSRC and its branches no longer accept the administrative approval items of securities companies cancelled by the Securities Law initiated by the administrative counterpart.

Establishment of subsidiaries, branches and securities business units

According to the provisions of the Regulations on Formation of Subsidiaries of Securities Companies (Provisional) (《證券公司設立子公司試行規定》) (amended on 11 October 2012 and 27 March 2025), subject to the approval of the CSRC, securities companies may establish wholly-owned subsidiaries and invest jointly in the establishment of subsidiaries with other investors who meet the requirements for shareholders of securities companies stipulated in the Securities Law. However, a securities firm and its subsidiaries or subsidiaries under the control of the same securities firm, shall not operate similar businesses having conflicts of interest or which are in competition.

Pursuant to the provisions of the Regulatory Requirements on Branches of Securities Companies (《證券公司分支機構監管規定》) (effective from 30 October 2020), branches of a securities firm refer to branches and securities business units established by such securities firm in the PRC for business operation. The establishment, acquisition and de-registration of branches of securities companies shall file records with the CSRC branch at its locality. Securities companies shall meet the following requirements in order to establish or acquire branches: having a sound governance structure and effective internal management and being able to control the risks of their existing branches and the branches to be established; having risk control indicators in compliance with relevant rules for the previous year and those indicators remaining in compliance after the additional branches are established; having not received any administrative or criminal penalties for any material breach of rules or regulations for the past two years and having not had any material regulatory measures imposed on them for the previous year, and not being subject to any investigation for any branch related activities based on any alleged material breach of rules or regulations; having a secure and stable information technology system and no material information technology incident having occurred during the previous year; and existing branches are under effective management; and other prudent requirements stipulated by the CSRC.

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Entry Requirements for Futures Companies

Establishment

According to the Administrative Regulations on Futures Trading (《期貨交易管理條例》）and the Administrative Regulations on Futures Trading and the Administrative Measures for Futures Companies (《期貨公司監督管理辦法》) (effective from 29 October 2014, subsequently amended on 7 December 2017 and 4 June 2019), the establishment of futures companies shall be approved by the CSRC subject to the following conditions:

the minimum registered capital shall be RMB100 million;
directors, supervisors and senior management shall be qualified for their positions, while practitioners shall have futures practice qualifications;
the number of staff with futures practice qualifications shall not be less than 15, and the number of senior management staff with practice qualifications shall not be less than three;
the articles of association of the company shall comply with the requirements of laws and administrative regulations;
major shareholders and the de facto controller shall have sustainable profitability, good reputation, and shall not have a record of material violation of laws or regulations in the past three years;
premises and operation facilities shall be in compliance with requirements;
sound risk management and internal control systems; and other conditions as stipulated by the CSRC.

According to the Provisions on Issues Relating to the Regulation of Controlling Interests and Equity Interests in Futures Companies (《關於規範控股、參股期貨公司有關問題的規定》) (effective from 1 June 2008), an entity shall not hold controlling interests and equity interests in more than two futures companies and shall not hold controlling interests in more than one futures company.

Material changes

According to the provisions of the Administrative Measures for Futures Companies (《期貨公司監督管理辦法》), approval of the CSRC shall be obtained for changes of shareholdings in any of the following situations: change of controlling shareholders or the largest shareholder; shareholding of an individual shareholder or the aggregate shareholding of associated shareholders, involving foreign shareholders, is increased to 5 per cent. or above. Save as aforesaid, an approval from the local branch office of the CSRC where the company is located shall be obtained if the shareholding of an individual shareholder or the aggregate shareholding of associated shareholders in the futures company is to be increased to 5 per cent. or above.

According to the Negative List (Edition 2024), the limit on the foreign shareholding proportion had been cancelled.

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In accordance with the State Council Decisions on the Cancellation and Adjustment of Various Administrative Approval Items (《國務院關於取消和調整一批行政審批項目等事項的決定》) (issued on 23 October 2014 with immediate effect), the change of legal representative, domicile or place of business, or establishment or close of domestic branches, or change in the scope of business of a domestic branch by futures companies is no longer subject to administrative approval of a local branch of the CSRC.

In accordance with the State Council Decisions on the Cancellation and Adjustment of Various Administrative Approval Items (《國務院關於取消和調整一批行政審批項目等事項的決定》) (issued on 24 February 2015 with immediate effect), the appointment of directors, supervisors and senior management of futures companies is no longer subject to qualifications approval of a local branch of the CSRC.

Regulation of Operations of Securities Companies

The Company and its subsidiaries primarily engage in securities and related business, including but not limited to, securities brokerage, margin financing and securities lending, securities investment consultation, financial advisory business relating to securities trading and securities investment activities, proprietary securities trading, distribution of financial products of securities investment funds, intermediary business for futures companies, distribution of financial products, stock options market-making, securities underwriting and sponsorship, securities asset management, publicly-raised securities investment and management, private equity investment, and alternative investment.

Securities Brokerage

According to the provisions of the Administrative Measures on Securities Brokerage Services (《證券經紀業務管理辦法》) (effective from 28 February 2023), a securities firm engaging in securities brokerage business shall be in compliance with the following regulations:

it shall perform the following duties in accordance with the law:

(I) carrying out marketing activities in a regulated manner;

(II) fully understanding investors and performing suitability management obligations;

(III) implementing the requirements of the real-name account system;

(IV) performing anti-money laundering obligations;

(V) managing and monitoring investors' opening and use of accounts, fund transfer and securities trading, etc.;

(VI) ensuring the safety and continuity of the trading of investors;

(VII) carrying out investor education;

(VIII) preventing illegal and irregular securities trading activities;

(IX) maintaining the normal market order; and

(X) other duties as prescribed by the CSRC, stock exchanges and the CSDCC;

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it shall act in good faith, earnestly safeguard the safety of investor's property, and guarantee the legitimate rights and interests of investors such as the right to information and the right to fair trading;
it shall adhere to the principles of giving priority to the interests of investors and treating investors in a fair manner and prevent conflict of interests between companies and investors and between investors; and
it shall conduct unified management of the accounts, assets, systems, personnel, premises, etc. involved in securities brokerage services, and shall adopt measures to identify, monitor and dispose of various types of risks.

Futures Brokerage

The provisions of the Administrative Regulations on Futures Trading (《期貨交易管理條例》) set out a licensing system that applies to the business of futures companies. The CSRC is responsible for the issuance of licenses according to the types of business of commodity futures and financial futures. Apart from domestic futures brokerage business, futures companies may also apply to conduct business of overseas futures brokerage, futures investment consultation and other futures business as specified by the CSRC. Futures trading shall strictly comply with the deposits system. A futures company engaged in brokerage business shall accept orders of clients and trade futures in its own name for clients, and the clients shall be solely liable for the transaction results.

Futures Intermediary Business

According to the Interim Measures on Provision of Intermediary Business to Futures Companies by Securities Companies (《證券公司為期貨公司提供中間介紹業務試行辦法》) (trial from 20 April 2007, amended on 12 August 2022 and 27 March 2025), a securities firm providing intermediary business service to futures companies shall obtain relevant qualifications. Securities companies shall only engage in the provision of intermediary business service to their wholly owned or controlling futures companies, or futures companies with which they are under common control of the same entity. Securities companies and futures companies shall be independent from each other. Securities companies shall employ adequate qualified practitioners to carry out futures intermediary business. Staff participating in the futures intermediary business in securities companies shall not take part in futures trading. Securities companies shall not, directly or indirectly, raise funds or provide guarantees for futures trading clients.

Distribution of Financial Products

According to the Administrative Provisions on the Distribution of Financial Products by Securities Companies (《證券公司代銷金融產品管理規定》) (promulgated on 12 November 2012 with immediate effect and amended on 20 March 2020), a securities firm engaging in the distribution of financial products shall obtain relevant qualifications to carry out the distribution of financial products. Its personnel engaging in the distribution of financial products shall obtain the relevant securities qualifications. A securities firm shall centralize the regulation of distribution of financial products and assess the eligibility of the client. The information given on the financial products shall be comprehensive, fair and accurate. A securities firm is also required to set up a client feedback system.

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Sales of Securities Investment Funds

According to the provisions of the Measures for the Supervision and Administration of Sales Agencies of Publicly Offered Securities Investment Funds (《公開募集證券投資基金銷售機構監督管理辦法》) (promulgated on 28 August 2020 and effective from 1 October 2020), a securities firm shall register with the local office of the CSRC where the company operates and obtain the relevant qualifications before engaging in the sale of securities investment funds. A securities firm shall establish a specialized funds sales department, and staff participating in the sale of securities investment funds shall be qualified to carry out such activities. It shall establish, improve and effectively implement the internal control and risk management system for the fund sales business, improve the internal accountability mechanism, and ensure that the fund sales business complies with the laws and regulations and the provisions of the CSRC.

Securities Investment Consultation

According to the provisions of the Provisional Measures on Management of Investment Consultations on Securities and Futures (《證券、期貨投資諮詢管理暫行辦法》) (effective from 1 April 1998), a firm which engages in securities investment consultation business shall obtain the required qualifications and a business license from the CSRC; practitioners of securities investment consultation shall obtain the relevant securities investment consultation qualifications and work under a qualified securities investment consulting institution before engagement in securities investment consultation business.

According to the Regulations on the Securities Investment Advisor Business (Provisional) (《證券投資顧問業務暫行規定》) (effective from 1 January 2011 and amended on 30 October 2020), a securities firm and its investment advisors shall provide securities investment advisory service in good faith and shall not jeopardize the interests of clients by acting in favor of the company and its associates, investment advisors and their related parties, or other particular clients.

The Provisions on the Release of Securities Research Reports (Provisional) (《發佈證券研究報告暫行規定》) (effective from 1 January 2011 and amended on 20 March 2020) stipulate that the publishing of securities research reports by securities companies and securities investment advisory agencies shall abide by laws, administrative regulations and other relevant requirements, follow the principles of independence, objectiveness, fairness and prudence, effectively prevent conflicts of interest, and treat objects under issuance in a fair manner. They shall also be prohibited from disseminating false, untrue and misleading information and from engaging in or participating in insider trading or securities market manipulation.

Margin Financing and Securities Lending

According to the provisions of the Management Measures on Margin Financing and Securities Lending of Securities Companies (《證券公司融資融券業務管理辦法》) (effective from 1 July 2015), a securities firm that applies for the qualification to engage in margin financing and securities lending business must satisfy the following conditions:

it shall have the qualification to engage in the securities brokerage business;
it shall have a sound system of corporate governance and effective internal controls in place to identify, control and prevent any potential operational risks and internal management risks;
it shall have not been subject to any investigation or rectification for any breach of rules or regulations by the CSRC during the past two years;

it shall have a sound financial position, with each of its risk control indicators in compliance with the relevant requirements for the recent two years and its registered capital and net capital are also in compliance with the requirements subsequent to the commencement of the margin financing and securities lending business;
its clients' assets remain secured and intact with effective measures in place for clients' third-party fund depository, and clients' particulars remain true and intact;
it shall maintain a comprehensive feedback mechanism that ensures the prompt and proper resolution of any disputes with its clients;
it shall maintain a client eligibility evaluation system in compliance with the regulations and self-regulatory requirements to ensure that the client is qualified to invest in the relevant products;
it shall maintain a resilient information security system, with no material incidents during the past year due to any management issues, and the systems designed for the margin financing and securities lending business shall have passed the tests of stock exchanges and securities registration and clearing institutions;
it shall have an appropriate number of senior management and professionals who are responsible for the margin financing and securities lending business; and
any other conditions stipulated by the CSRC.

Securities companies engaging in margin financing and securities lending shall open various accounts in their own name at securities registrars, including a special securities lending account, margin guarantee account, margin settlement account and margin capital settlement account. Such securities companies shall also open accounts at commercial banks, such as a special margin financing account and margin capital guarantee account. Securities firms shall, with reference to third-party custody of clients' transaction settlement funds, enter into a margin custody agreement with their clients and commercial banks. The capital and securities provided by securities companies to their clients are limited to those capital and securities in the special margin financing account and special securities lending account.

Before providing margin financing and securities lending service to its clients, a securities firm shall collect information about its clients, including making credit investigation into its clients, knowing their identities, property status, income situations, securities investment experience, risk appetites and records of honesty and compliance. It shall also deal with client suitability management properly and keep records of such information in written or electronic form. A securities firm shall not open a credit account for anyone who meets any of the following conditions: failure to submit the required information; having less than half a year experience in securities trading; lacking the adequate risk bearing capability; less than RMB0.5 million of its average daily securities assets for the most recent 20 trading days; having records of major breaches of contracts; or being the shareholder or connected person of the company.

The term for margin financing and securities lending agreed between securities companies and their clients shall not exceed the time limit permitted by the relevant stock exchange. Securities companies may negotiate with their clients in respect of the rates at which the margin financing and securities lending services will be provided.

Amounts attributed to the margin financing and securities lending business by a securities firm shall not exceed four times of its net capital. A comprehensive management system, operating procedures, as well as a risk identification, evaluation and control system shall also be established.

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Collateralized Stock Repurchase

According to the Measures on Collateralized Stock Repurchase and Registration and Settlement Business (《股票質押式回購交易及登記結算業務辦法》) (effective from 30 June 2017, and amended in 28 March 2025) promulgated jointly by CSDCC and the Shanghai Stock Exchange and the Shenzhen Stock Exchange respectively, the Shanghai Stock Exchange and the Shenzhen Stock Exchange shall implement the trading permissions management of securities companies that participate in collateralized stock repurchase. Securities companies shall establish client qualification examination systems and perform due diligence with respect to their clients. Examination contents shall include identity, financial status, business status, credit status, guarantee status, usage of funds, risk tolerance and cognition of the securities market. Securities companies shall provide to their clients a comprehensive introduction of the business rules and a full disclosure of the risks, and shall require the clients to sign The Risk Disclosure Statement.

Securities Repurchase

According to the Measures on Securities Repurchase and Registration and Settlement Business (《約定購回式證券交易及登記結算業務辦法》) promulgated jointly by CSDCC and each of the Shanghai Stock Exchange and the Shenzhen Stock Exchange on 10 December 2012 and amended on 28 March 2025, respectively, the Shanghai Stock Exchange and the Shenzhen Stock Exchange shall implement the trading permissions management of securities companies that participate in securities repurchase. Securities companies shall establish a client qualification examination system. Examination contents shall include credit status, asset scale, risk tolerance and cognition of the securities market. Securities companies shall provide to their clients a comprehensive introduction of the business rules and a full disclosure of the risks.

Secondary Offering Business

Pursuant to the provisions of the Trial Measures on Supervision and Administration of the Secondary Offering Business (《轉融通業務監督管理試行辦法》) (implemented on 26 October 2011 and amended on 7 December 2017 and 30 October 2020), a secondary offering business refers to a business in which a securities finance company lends its funds or securities owned by itself or legally raised and its securities to a securities firm for conducting margin financing and securities lending activities. To conduct a secondary offering business, a securities finance company shall, in its own name, open a securities account, a guaranteed securities account and a securities settlement account specific for a secondary offering business with the securities registration and settlement authority. A securities financial company shall also set up a client credit assessment mechanism to evaluate the credit of securities companies and determine and adjust the credit line based on the evaluation. Furthermore, a securities financial company shall charge deposits at a certain rate from securities companies for the secondary offering business.

Proprietary Securities Trading

Provisions of the Regulations on Supervision and Management of Securities Companies and the Guidelines on Proprietary Business of Securities Companies (《證券公司證券自營業務指引》) (effective from 11 November 2005) and the Regulations on Supervision and Management of Securities Companies (《證券公司監督管理條例》) (effective from 29 July 2014) stipulate that securities companies engaged in proprietary securities trading shall be limited to the trading of publicly offered stocks, debentures, warrants, securities investment funds or other securities approved by the securities regulatory authorities of the State Council. A securities firm engaged in a proprietary securities trading business shall be registered under the name of the proprietary securities account holder. Risk control indicators, such as the proportion of the total value of proprietary securities to the net capital of the company, the proportion of the value of a single security to the net capital of the company, and the proportion of the amount of a single security to the total amount of issued securities, shall each comply with the regulations of the CSRC.

According to the List of Securities Investment Products for the Proprietary Business of Securities Companies (《證券公司證券自營投資品種清單》), which is the Appendix to Regulations on Investment Scopes of Proprietary Business of Securities Companies and Relevant Matters (《關於證券公司證券自營業務投資範圍及有關事項的規定》) (effective from 1 June 2011 and amended on 16 November 2012 and 20 March 2020), securities companies engaged in proprietary securities trading business are permitted to invest in the following securities:

securities that have been or may be legally listed, traded and transferred on a domestic stock exchange;
securities that have been listed and transferred on the NEEQ;
private placement bonds that have been or may be legally listed and transferred on qualified regional equity trading markets, and stocks that have been listed and transferred on qualified regional equity trading markets;
securities that have been or may be legally traded on the domestic interbank market; and
securities issued with the approval of the national financial regulatory authority or its authorized bodies or after filing with the national financial regulatory authority or its authorized bodies and traded over the counter at domestic financial institutions.

Securities Asset Management

According to the Administrative Measures on Private Offering Asset Management Business of Securities and Futures Business Organisations (《證券期貨經營機構私募資產管理業務管理辦法》), which be implemented with effect from 22 October 2018 and amended on 1 March 2023, and the Circular on Strengthening Supervision on Asset Management Business of Securities Companies (《關於加強證券公司資產管理業務監管的通知》) (effective from 14 March 2013), securities and futures business organisation engaging in private offering asset management business shall be subject to approval by the CSRC pursuant to the law, unless otherwise stipulated by laws, administrative regulations and the CSRC. Securities companies may set up a single asset management plan for a single investor, or set up a collective asset management plan for multiple investors. The number of investors of a collective asset management plan shall not be less than two, and shall not exceed 200.

The Administrative Regulations on Asset-backed Securitization of Securities Companies and Subsidiaries of Fund Management Companies (《證券公司及基金管理公司子公司資產證券化業務管理規定》) (promulgated on 19 November 2014 with immediate effect), allows securities companies and subsidiaries of fund management companies which are qualified for client asset management to conduct the asset-backed securitization business.

Pursuant to the Interim Provisions on Operation and Management of Private Asset Management Business of Securities and Futures Operation Institutions (《證券期貨經營機構私募資產管理業務運作管理暫行規定》) (promulgated on 14 July 2016 with effect from 18 July 2016), securities companies (i) shall neither sell asset management plans in breach of rules, nor engage in such acts as inappropriate publicity, misleading or deceiving investor, or, in any means guaranteeing to the investors that their principal will not suffer any loss or promising a minimum return, (ii) shall establish a structured asset management plan and shall not violate the principle of "sharing of interests and risks and matching risks with returns", (iii) shall not entrust any individual or unqualified third party with the provisions of investment advice, and managers shall not be exempted from legal liability on the grounds of such entrustment, and (iv) shall not engage in or participate in private asset management business with a "cash-pooling feature".

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Management of Publicly Offered Securities Investment Funds

it shall have standardized corporate governance, sound internal control mechanism and good risk control; its management capacity, asset quality and financial status shall be good, and it shall have good business conditions in the latest three years and the capability of continuous profitability; its asset-liability and leverage levels shall be appropriate, and it shall have the capital strength compatible with its publicly offered fund management business;
it shall have good integrity and compliance records and have no record of major violation of laws and regulations or major dishonesty record in the latest three years; it shall not have been given criminal punishment due to an intentional crime and it has not elapsed since the completion of the criminal punishment; it shall not be under investigation or under rectification for being suspected of a major violation of laws and regulations; its main regulatory indicators in the latest 12 months shall comply with the regulatory requirements;
it shall have three years or more of experience in securities asset management, and the securities products under its management shall operate in a standardized and stable manner and perform well, and there shall be no major irregularities or risk events;
it shall have internal management system, business premises, security facilities, system equipment and other business-related facilities that satisfy the relevant requirements;
it shall have directors, supervisors and senior executives in compliance with laws, administrative regulations and the provisions of the CSRC as well as staff members for the research, investment, operation, sales and compliance positions relating to the publicly offered fund management business, and the number of employees who have obtained the qualification for fund practice shall not be less than 30 in principle; its organizational structure and the division of posts shall be reasonably established with clear responsibilities;
it shall have a clear and effective restraint mechanism for maintaining the independence of the publicly offered fund management business, preventing risk transmission and improper tunneling, etc.; and
other conditions as prescribed by the CSRC.

Securities companies engaging in management of publicly offered securities investment funds shall comply with laws, administrative regulations, provisions of the CSRC and self-regulation rules, fulfill their duties, perform the obligations of good faith, prudence and diligence, employ fund assets for the interests of fund unitholders, protect the legitimate rights and interests of fund unitholders, and shall not harm the interests of the State, public interest and the legitimate rights and interests of others.

The Securities Investment Funds Law also stipulates matters such as registration for mutual funds, trading of fund units, scope of investment fund and its restriction, protection of fund holders' rights and information disclosure, etc.

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The Administrative Measures on Operations of subscription convening publicly-offered of Securities Investment Funds (《公開募集證券投資基金運作管理辦法》) which came into effect on 8 August 2014 has set up provisions on public fund offering, the subscription convening publicly-offered, redemption and trading of fund unit, the investment of fund assets, the distribution of fund income, the subscription convening publicly-offered of fund share holders' meetings, and other fund operational activities.

The Administrative Measures on Information Disclosure for Publicly Offered Securities Investment Funds (《公開募集證券投資基金信息披露管理辦法》) (came into effect on 1 September 2019 and amended on 20 March 2020) regulates the category of the information that the fund information disclosure obligors of a publicly-offered fund should disclose of, and the format, media, methods and timeliness requirements thereto.

Private Equity Fund Business

Pursuant to the Provisions of Management Practices for Private Equity Fund Subsidiaries of a Securities Companies (《證券公司私募投資基金子公司管理規範》) (as promulgated on 30 December 2016 with immediate effect and amended on 10 May 2024) issued by the SAC, securities companies which establish private equity fund subsidiaries shall act in accordance with the requirements of the relevant regulatory authorities. In principle, each securities company shall not establish more than one private equity fund subsidiary. Securities companies shall establish wholly-owned private equity fund subsidiaries with their own funds. The private equity fund subsidiary may establish secondary management subsidiaries based on its business development needs. The secondary management subsidiaries shall not establish any other institutions. The shareholding or capital contribution ratio of the private equity fund subsidiary to the secondary management subsidiaries shall be no less than 35 per cent., and it shall possess management control rights that are not inferior to those of the partner. If the private equity fund subsidiary has multiple secondary management subsidiaries, the business scope of each secondary management subsidiary should be clear and unambiguous, and there must be no horizontal competition or unfair competition, to prevent conflicts of interest and interest transfer.

Alternative Investment

According to the Regulations on Investment Scopes of Securities Investment and Trading Business of Securities Companies and Relevant Matters (《關於證券公司證券自營業務投資範圍及有關事項的規定》) and the Management Criteria for Alternate Investment Subsidiaries of a Securities Firm (《證券公司另類投資子公司管理規範》) (promulgated on 30 December 2016 with immediate effect and amended on 10 May 2024) securities companies may establish alternative investment subsidiaries to engage in investment on financial products and equity which are excluded on the List of Securities Investment Products for the Securities Investment and Trading of Securities Companies (《證券公司證券自營投資品種清單》). Alternative subsidiaries shall not engage in businesses other than investment businesses; securities companies shall explicitly part the business scopes between alternative subsidiaries and other subsidiaries to avoid conflicts of interests and transfer of benefits; alternative subsidiaries shall not be financed, shall not provide guarantees and loans, and shall not act as a contributory which bears joint liability of an investee enterprise.

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Securities Underwriting and Sponsorship

According to the regulations of the Administrative Measures for the Sponsorship of the Offering and Listing of Securities (《證券發行上市保薦業務管理辦法》) (effective from 1 December 2008, and amended on 12 June 2020, 14 June 2009, 7 December 2017, 12 June 2020, 17 February 2023 and 27 March 2025), securities companies shall apply for the sponsoring institution qualification from the CSRC to sponsor the offering and listing business of securities. In order to fulfil sponsorship responsibilities, sponsoring institutions shall designate an individual with good conduct and professional ability to be responsible for sponsorship duties. Issuers shall employ securities companies which have obtained sponsoring institution qualification to perform the sponsorship duties for the following matters: initial public offerings and listing, publicly offering shares to unspecified qualified investors and listing on the Beijing Stock Exchange, issuance of new shares or convertible corporate bonds by listing companies, public offering of depository receipts and other conditions identified by the CSRC.

Any securities firm applying for sponsoring institution qualification shall meet the following requirements:

its registered capital and net capital shall comply with regulations;
it shall have comprehensive systems of corporate governance and internal control and indicators of risk control in line with relevant regulations;
its sponsor business shall have sound mechanisms of business procedures, internal risk assessment and control, as well as a reasonable internal structure, proper research and sales capabilities, and other background support;
it shall have a strong sponsor business team, with reasonable professional structure, and the number of professionals shall not be less than 35, among which, the number of personnel who have engaged in sponsor-related businesses during the past three years shall not be less than 20;
the number of its professionals who have qualified as sponsor representatives shall not be less than four;
it has not been subject to any administrative penalties for any material breach of laws and regulations during the past two years and has not been subject to significant regulatory measures or under investigation by relevant authorities or industry self-regulatory organisations due to suspected major violations of laws and regulations in the past one year; and
it shall meet other requirements of the CSRC.

In addition, the Views of the CSRC on Further Promoting IPO Reform (《中國證監會關於進一步推進新股發行體制改革的意見》) (promulgated on 30 November 2013 with immediate effect) further stipulated that sponsor institutions and securities service institutions shall undertake in public offering and listing documents that if false, or misleading statements are made, or a material omission occurs in the documents issued, prepared and produced by issuers for initial public offerings which result in losses to investors, then sponsor institutions and securities service organizations must compensate the losses of investors in accordance with the law.

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According to the Administrative Measures for the Issuance and Trading of Corporate Bonds (《公司債券發行與交易管理辦法》) (effective from 15 January 2015, amended on 26 February 2021 and 20 October 2023), the issuance of corporate bonds shall be underwritten by securities companies with qualification to engage in securities underwriting business. When underwriting corporate bonds, underwriters shall be in compliance with the Administrative Measures for the Issuance and Trading of Corporate Bonds and applicable regulations on due diligence, risk control and internal control issued by the CSRC and the SAC, to formulate a strict risk management system, and to internal control system and enhance pricing and placing management.

Lead Brokerage in the National Equities Exchanges and Quotations

According to the Administrative Measures on National Equities Exchange and Quotations Company Limited (Provisional) (《全國中小企業股份轉讓系統有限責任公司管理暫行辦法》) (effective from 31 January 2013 and amended on 7 December 2017), securities companies may act as lead broker in the NEEQ. The lead brokerage business includes recommending the listing of shares of joint stock companies, continuously supervising listed companies, trading shares of joint stock companies on behalf of investors, providing market-making service for the transfer of shares, and other businesses as specified by the National Equities Exchange and Quotations Company Limited.

Under the supervision of the National Equities Exchange and Quotations Company Limited, lead brokers, law firms, accounting firms and other institutions and personnel providing services in relation to the transfer of shares shall act in good faith and diligently perform their legal duties in strict compliance with laws, regulations and industry standards, and shall also be responsible for the truthfulness, accuracy and completeness of documents they issue.

Over-the-Counter Market Business

As the provisions of the Administrative Measures of Securities Companies on Over-the-Counter Market (for Trial Implementation) (《證券公司櫃檯市場管理辦法(試行)》) (effective from 15 August 2014) stipulate, securities companies shall engage in over-the-counter business in accordance with the provisions and be subject to the governance of the SAC. Apart from private equity products which are subject to prior approval and filing as explicitly required by financial regulatory authorities, private equity products issued, sold and transferred by securities companies in over-the-counter markets are subject to filing after the issuance, selling and transfer. Products issued, sold and transferred by securities companies in over-the-counter markets include but are not limited to: products such as asset management plans and corporate debt financing instruments established or underwritten by securities companies or their subsidiaries by way of private placing; products established by other institutions such as banks, insurance companies and trust companies and issued, sold and transferred by securities companies; and financial derivatives and other products as allowed by the CSRC and the SAC.

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Corporate Governance and Risk Control

Corporate Governance and Risk Control of Securities Companies

Corporate governance

Securities companies shall comply with the corporate governance requirements regarding the composition, operation, convening and voting procedures of shareholders' meetings, the board of directors and the supervisory committee as set out in the Company Law, the Securities Law, the Regulations on Supervision and Management of Securities Companies (《證券公司監督管理條例》) and the Rules for Governance of Securities Companies (《證券公司治理準則》) (as amended on 1 January 2013 with immediate effect, amended on 20 March 2020 and 27 March 2025). Securities companies shall establish a sound corporate governance structure. The corporate governance structure of securities companies includes proper decision-making processes and rules of procedures, a highly efficient and rigorous business operating system, a sound and effective internal control and feedback system, and effective incentive and restraint mechanisms. If a securities company establishes an audit committee composed of directors in the board of directors in accordance with the Company Law and the company's articles of association, and exercises the functions and powers of the board of supervisors, it shall not establish a board of supervisors or supervisors.

A securities firm that engages in two or more businesses in securities brokerage, asset management, margin financing and securities lending, securities underwriting and sponsoring shall have a remuneration and nomination committee, an audit committee and a risk control committee under its board of directors to perform the duties and exercise the rights as specified in the articles of association of the company. The persons in charge of the remuneration and nomination committee and the audit committee shall be independent directors.

Measures for the Supervision and Administration of Directors, Supervisors, Senior Executives and Practitioners of Securities or Fund Operators (《證券基金經營機構董事、監事、高級管理人員及從業人員監督管理辦法》) (released on 18 February 2022 and effective from 1 April 2022, amended on 27 March 2025) specifies the administration of appointment and practice of directors, supervisors, senior executives and practitioners. A securities shall, when appointing any director, supervisor, senior executive or person-in-charge of a branch, file the appointment for record with the local branch of the CSRC according to law. Directors, supervisors, senior executives and practitioners of a securities shall comply with laws and regulations and the provisions of the CSRC, observe the articles of association and industry standards, scrupulously abide by good faith, diligently perform their duties and practice honestly and shall not damage the national interests, public interests and the legitimate rights and interests of investors.

Risk control

Pursuant to the Administrative Measures for Risk Control Indicators of Securities Companies (《證券公司風險控制指標管理辦法》) (effective from 1 October 2016 and amended on 20 March 2020), a securities company shall calculate the risk control indicators such as its net capital, risk coverage ratio, capital leverage, liquidity coverage ratio and net stable funding ratios and prepare the calculation sheets of net capital, risk capital reserves, total on-balance-sheet and off-balance sheet assets, liquidity coverage rate, net stable funding rate and risk control indicators in accordance with relevant provisions and in compliance with the principle of prudence and the principle of substance over form. The Administrative Measures for Risk Control Indicators of Securities Companies stipulates a warning standard and a minimum regulatory standard for risk control indicators that securities companies are required to comply with. The CSRC may make adjustments to the standards for risk control indicators, calculation requirements and the ratio of risk capital reserves of a particular business according to the governance structure, the internal control level and the status quo of risk control of the securities companies.

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On 1 October 2016, CRSC promulgated the Provisions on the Calculation Standard for Risk Control Indicators of Securities Companies (《證券公司風險控制指標計算標準規定》) (amended on 23 January 2020 and 13 September 2024), which provides different basis of calculation for different risk capital reserves of securities companies based on their different businesses and different types of securities companies.

Pursuant to the Norms for the Comprehensive Risk Management of Securities Companies (《證券公司全面風險管理規範》) (promulgated on 30 December 2016 with immediate effect and amended on 28 March 2025), securities companies shall implement comprehensive risk management to avoid risks such as liquidity risks, market risks, credit risks, operation risks and reputation risks in business operation, shall establish and improve a comprehensive risk management system that is in line with their development strategies, including feasible management systems, a sound organizational framework, a reliable information technology system, a quantitative risk indicators system, a team of professionals and an effective risk response mechanism and shall evaluate regularly the comprehensive risk management system and improve risk management promptly based on the evaluation results.

Pursuant to the provisions of the Guidelines for the Liquidity Risk Management of Securities Companies (《證券公司流動性風險管理指引》) (effective from 30 December 2016), securities companies shall strengthen liquidity risk management and establish a sound liquidity risk management system for effective identification, measurement, monitoring and control of liquidity risks.

Pursuant to the provisions of the Regulations on Risk Settlement of Securities Companies (《證券公司風險處置條例》) (effective from 6 February 2016 and amended on 20 July 2023), the securities regulatory authorities of the State Council shall organize, coordinate and supervise the risk settlement of securities companies. In the event that risk control indicators don't meet relevant requirements or there are situations that may impact sustainable business operation or any major risk is found, the securities regulatory authorities of the State Council may take risk settlement measures such as rectification, custody, takeover, administrative restructuring, revocation, bankruptcy, liquidation and reorganization, etc.

Pursuant to Measures for the Compliance Management of Securities Companies and Securities Investment Fund Management Companies (《證券公司和證券投資基金管理公司合規管理辦法》) (effective from 1 October 2017 and amended on 20 March 2020), the compliance management of securities companies shall cover all businesses, departments, branches, subsidiaries at all levels and all staff, and shall be carried out throughout various stages such as decision-making, implementation, supervision and feedback. The securities Company shall have a compliance director, who shall, as a senior manager, directly report to the board of directors and examine, supervise and inspect the operation compliance and management activities of the securities Company as well as the staff's practices.

Classified regulation

Pursuant to the provisions of the Regulations on Classification of Securities Companies (《證券公司分類監管規定》) (amended on 6 July 2017 and 10 July 2020), the CSRC classifies securities companies into five types and eleven categories as A (AAA, AA, A), B (BBB, BB, B), C (CCC, CC, C), D and E, based on the risk control capability, competitiveness and continuous compliance of securities companies for prudent regulation purpose. "Regulatory points" system is one of the systems adopted by the CSRC to assess the continuous compliance of securities companies: certain incidents leading to the imposition of penalties will result in the CSRC deducting the corresponding amount of "regulatory points", which may ultimately have negative effects on the securities companies' regulatory rating. However, when determining the regulatory rating of a securities company, the CSRC will not only consider the deduction in regulatory points but will also take into consideration its risk management capability (mainly assessed

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on the basis of the securities companies' capital adequacy, corporate governance and continuous compliance management, comprehensive risk control, safety of IT system, protection of clients' interest and information disclosure) and market competitiveness (industry-wide ranking of aspects such as net income, net profit, brokerage business, investment banking business, assent management business, comprehensive strength and innovation capacity) and assess the condition of the securities companies as a whole.

Pursuant to the principle of classified regulation, the CSRC sets up different standards on risks control indicators and calculating proportions for different types of securities companies and treats them differently in respect of regulation resource allocation and the frequency of on-site and off-site inspections.

Corporate Governance and Risk Control of Futures Companies

Corporate governance

The provisions of the Supervisory and Administrative Measures for Futures Companies (《期货公司监督管理辦法》) (effective from 6 June 2019) stipulate that the CSRC implements the management system on the qualifications of directors, supervisors, senior management and other futures practitioners of futures companies. The business, personnel, assets, and finance of a futures company shall be strictly separated from those of its controlling shareholders and de facto controller, and they should have independent operations and accounting; a futures company shall have a board of supervisors or supervisors, and shall appoint a chief risk officer, etc.

Risk control

According to the Supervision and Administrative Measures for Futures Companies (《期货公司监督管理辦法》), the Administrative Measures on Futures Trading (《期货交易管理條例》), and the Administrative Measures for Risk Monitoring Indicators of Futures Companies (《期货公司風險监管指標管理辦法》) (promulgated on 18 April 2017 and amended on 12 August 2022), futures companies shall establish effective operations systems and procedures related to risk management, internal control and futures margin depository so as to effectively isolate risks among different business as well as to ensure the safety of clients' assets and transactions. A futures company engaging in futures brokerage and other futures business at the same time shall strictly implement the systems for the separation of business and capital, while mixed operations are prohibited. Futures companies shall maintain a chief risk officer responsible for monitoring and inspecting compliance and risk management in its operation and management. The CSRC may dynamically adjust the standard of futures companies' risk management indicators and its calculation requirements based on industry opinions, together with consideration of the development of the futures market and futures industry with respect to the principle of prudent supervision.

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Classified regulation

Pursuant to the provisions of the Regulations on Classification of Futures Companies (《期貨公司分類監管規定》) (effective from 12 April 2011, and amended on 15 February 2019 and 12 August 2022), the CSRC classifies futures companies into five types and eleven categories as A (AAA, AA, A), B (BBB, BB, B), C (CCC, CC, C), D and E, based on the risk management capability, the capability of serving the real economy, market competitiveness and continuous compliance of futures companies for prudent regulation purposes. According to the principle of classified regulation, the CSRC set up various standards on margin proportions of futures investors for different types of futures companies and treats them differently in respect of regulation resource allocation and the frequency of on-site and off-site inspections, and stipulate different risk capital provision computation ratios for different types of futures companies.

Corporate Governance and Risk Control of Asset Management Company

Corporate governance

Pursuant to the Securities Investment Funds Law (《證券投資基金法》) and Measures for Supervision and Administration of Publicly Offered Securities Investment Fund Managers (《公開募集證券投資基金管理人監督管理辦法》) (effective from 20 June 2022 and amended on 27 March 2025), as the subsidiary of a securities company, an asset management company shall establish a governance structure with sound organisational structure, clear division of responsibilities, effective checks and balances, and reasonable incentives and constraints, in accordance with laws, administrative regulations, and the regulations of the CSRC, to ensure independent and standardised operation. They shall adhere to a prudent business philosophy, and their business development should be matched with their corporate governance, personnel reserves, investment research and customer service capabilities, information technology system tolerance, risk management and internal control levels, and business support capabilities, to effectively protect the long-term interests of fund holders.

Risk control

Pursuant to the Securities Investment Funds Law (《證券投資基金法》) and Measures for Supervision and Administration of Publicly Offered Securities Investment Fund Managers (《公開募集證券投資基金管理人監督管理辦法》) (effective from 20 June 2022 and amended on 27 March 2025), as the subsidiary of a securities company, an asset management company shall, in accordance with the regulations of the CSRC, establish a comprehensive, scientifically sound, tightly controlled, and efficiently operating internal control mechanism and risk management system. They shall implement centralised and unified management of public fund management and other related businesses, establish firewall mechanisms in personnel, business, and venue aspects, maintain legal and compliant business operations, and ensure sound and effective internal controls.

Pursuant to the Administrative Measures on Private Offering Asset Management Business of Securities and Futures Business Organisations (《證券期貨經營機構私募資產管理業務管理辦法》), which was implemented with effect from 22 October 2018 and amended on 1 March 2023, when engaging in private asset management business, securities and futures institutions shall implement centralised operation management, establish and improve internal control and compliance management systems, take effective measures to separate private asset management business from other business of the company, control the improper flow and use of sensitive information, and prevent insider trading, trading using undisclosed information, conflicts of interest, and interest transfer.

Corporate Governance and Risk Control of Sponsoring Institution

Corporate governance

Pursuant to provisions of the Regulations on Formation of Subsidiaries of Securities Companies (Provisional) (《證券公司設立子公司試行規定》) (as amended on 11 October 2012 and 27 March 2025), as the subsidiary of a securities firm, a company engaged in securities sponsoring and underwriting business shall establish a sound corporate governance structure, sound risk management system, compliance management system and internal control system, and a securities firm shall not take advantage of its capacity as controlling shareholder to damage the legal rights and interests of its subsidiaries and their clients. Chinese Wall systems should be established between a securities firm and its subsidiaries to avoid potential risk transference or conflicts of interests.

Risk control

According to provisions of the Measures for the Administration of the Sponsorship of the Offering and Listing of Securities (《證券發行上市保薦業務管理辦法》) (effective from 14 June 2009 and amended on 7 December 2017, 12 June 2020, 17 February 2023 and 27 March 2025), a sponsoring institution shall establish a sound internal control system for sponsorship and establish as well as improve the due diligence system, guidance system, internal auditing system for documents of application, system of continuing supervision over the issuer after the listing of securities, continuing training system for sponsor representatives and sponsorship-related personnel as well as a working paper system and maintain separate working papers for sponsorship work related to each project.

Corporate Governance and Risk Control of Private Equity Subsidiaries

Corporate governance

Pursuant to provisions of the Regulations for Private Equity Fund Subsidiaries of Securities Companies (《證券公司私募投資基金子公司管理規範》) (as promulgated on 30 December 2016 with immediate effect and amended on 10 May 2024) issued by the SAC, securities companies shall establish a sound and effective internal control mechanism, effectively fulfill the management responsibilities of the parent company, exercise unified control over subsidiaries, and enhance their self-discipline ability; securities companies shall incorporate the compliance and risk management of their private equity fund subsidiaries into their unified system, strengthen capital constraints on these subsidiaries, achieve full coverage of compliance and risk management for the subsidiaries, and prevent conflicts of interest and transfer of benefits; private equity fund subsidiaries shall adhere to the principles of prudent operation, honesty and trustworthiness, and diligence and responsibility when conducting business.

Risk control

Pursuant to provisions of the Regulations for Private Equity Fund Subsidiaries of Securities Companies (《證券公司私募投資基金子公司管理規範》), securities companies shall urge their private equity fund subsidiaries and secondary management subsidiaries to establish and improve internal control systems, risk management systems, and compliance management systems, establish and implement effectiveness evaluation mechanisms and internal accountability mechanisms for the aforementioned systems, and construct monitoring mechanisms, stress testing systems, and risk disposal mechanisms for the business risks of private fund subsidiaries.

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Other Regulations

Foreign Exchange Control

The lawful currency of the PRC is Renminbi, which is subject to foreign exchange controls and is not freely convertible. SAFE, under the authority of the PBOC, is responsible for the administration of all matters relating to foreign exchange, including the enforcement of foreign exchange control regulations.

According to provisions of the Regulations on the Foreign Exchange Management of the People's Republic of China (《中華人民共和國外匯管理條例》) (the “Foreign Exchange Management Regulations”), (amended on 5 August 2008 with immediate effect), international payments and transfers are classified into current account items and capital account items. In the PRC, current international payments and transfers are not subject to approval from foreign exchange administration, while capital account items are.

According to the Foreign Exchange Management Regulations, current account foreign exchange income may, in accordance with the relevant provisions of the state, be retained or sold to any financial institution engaged in foreign exchange settlement and sales business. Where any foreign exchange income on capital account shall be retained or sold to a financial institution engaged in foreign exchange settlement and sales business, approval shall be obtained from the relevant foreign exchange administrative authority, other than where no approval is required under state provisions. PRC enterprises (including foreign-invested enterprises) which require foreign exchange for transactions relating to current account items, may, without the approval of SAFE, effect payment from their foreign exchange account or convert and pay at the designated foreign exchange banks, with the provision of valid receipts and proof of transactions. Foreign invested enterprises which need foreign exchange for the distribution of profits to shareholders, and PRC enterprises, which in accordance with regulations are required to pay dividends to shareholders in foreign exchange, may with the provision of shareholders' resolutions of such PRC enterprises or board resolutions on the distribution of profits, and with the submission of other required supporting documents, effect payment from their foreign exchange account or convert and pay at the designated foreign exchange banks. Convertibility of foreign exchange in respect of capital account items, such as private equity investment and capital contribution, is still subject to restriction, and prior approval from SAFE or the relevant branch.

According to the Foreign Exchange Management Regulations and the Circular of the State Administration of Foreign Exchange on Distributing the Administrative Measures for Registration of Foreign Debts (《國家外匯管理局關於發佈<外債登記管理辦法>的通知》) (amended on 9 June 2016), the State exercises scale management on administer foreign debts. Foreign currency borrowings shall be handled in accordance with relevant provisions of the state and registered as foreign debts with the relevant foreign exchange administrative authority.

On 9 June 2016, the SAFE promulgated the Circular on Reforming and Regulating Policies on the Management of the Settlement of Foreign Exchange of Capital Accounts (《國家外匯管理局關於改革和規範資本項目結匯管理政策的通知》) (the “SAFE Circular 16”). The SAFE Circular 16 unifies the Discretionary Foreign Exchange Settlement for all the domestic institutions. The Discretionary Foreign Exchange Settlement refers to the foreign exchange capital in the capital account which has been confirmed by the relevant policies subject to the Discretionary Foreign Exchange Settlement (including foreign exchange capital, foreign loans and funds remitted from the proceeds from the overseas listing) can be settled at the banks based on the actual operational needs of the domestic institutions. The proportion of Discretionary Foreign Exchange Settlement of the foreign exchange capital is temporarily determined as 100 per cent.

Furthermore, SAFE Circular 16 and the SAFE Notice on Further Deepening the Reform to Facilitate Cross-border Trade and Investment (《國家外匯管理局關於進一步深化改革促進跨境貿易投資便利化的通知》) (as promulgated on 4 December 2023) stipulates that the use of foreign exchange incomes of capital accounts by foreign-invested enterprises shall follow the principles of authenticity and self-use within the business scope of enterprises. The foreign exchange incomes of capital accounts and capital in Renminbi obtained by the FIE from foreign exchange settlement shall not be used for the following purposes:

directly or indirectly used for the payment beyond the business scope of the enterprises or the payment prohibited by relevant laws and regulations;
unless otherwise specified, directly or indirectly used for securities investment or other investment and wealth management (except for wealth management products and structured deposits with risk rating results of not higher than Grade II);
used for granting loans to non-connected enterprises (except for circumstances where it is specified in the scope of business, or in four areas, namely, Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone, Guangzhou Nansha New Area of the China (Guangdong) Pilot Free Trade Zone, Yangpu Economic Development Zone of the China (Hainan) Pilot Free Trade Zone, and Beilun District of Ningbo City, Zhejiang Province; and
used for purchasing residential real estate not for self-use (except for enterprises engaging in real estate development and leasing operation).

Information Disclosure

The Notice on the Relevant Issues Regarding Information Disclosure of Securities Companies (《關於證券公司信息公示有關事項的通知》) (effective from 25 July 2006), sets forth the specific requirements on information disclosure by securities companies, including methods, requirements and contents of information disclosure.

Provisions on Strengthening the Supervision and Administration of Listed Securities Companies (《關於加強上市證券公司監管的規定》) (amended on 17 September 2020 and 10 May 2024), requires timely disclosure of regular reports and interim reports by listed securities companies within the prescribed period. Meanwhile, it requires that listed companies shall establish a sound information management system in accordance with the characteristics of the securities industry in the PRC, their practices and general regulations regarding information disclosure by listed companies.

Anti-Money Laundering

Securities companies shall comply with the requirements related to anti-money laundering stipulated in the Anti-Money Laundering Law of the People's Republic of China (《中華人民共和國反洗錢法》) (effective from 1 January 2007 and amended on 8 November 2024), the Provisions on Anti-Money Laundering of Financial Institutions (《金融機構反洗錢規定》) (effective from 1 January 2007), and the Measures on Administration of Identification of Clients and Preservation of Client Identities Information and Trading Records of Financial Institutions (《金融機構客戶身份識別和客戶身份資料及交易記錄保存管理辨法》), (effective from 1 August 2007).

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The Measures on Anti-Money Laundering by the Securities and Futures Industry (《證券期貨業反洗錢工作實施辦法》), enacted by the CSRC, effective from 1 October 2010 and amended on 12 August 2022, further regulates the anti-money laundering regulations for the securities and futures industries, as well as the anti-money laundering responsibilities of the institutions engaging in sales of funds in their business operation. Securities and futures entities shall also establish and enhance internal control systems for anti-money laundering.

The Financial Action Task Force on Money Laundering ("FATF"), is an inter-governmental body established in 1989 with the objective of setting standards and promoting effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. The FATF monitors the progress of its members in implementing necessary measures, reviewing money laundering and terrorist financing techniques and countermeasures, and promoting the adoption and implementation of appropriate measures globally. The PRC became a member of the FATF in 2007, and the first mutual evaluation report was adopted in June 2007 with a follow-up report published in March 2012.

International Convention for the Suppression of the Financing of Terrorism (《制止向恐怖主義提供資助的國際公約》)

The International Convention for the Suppression of the Financing of Terrorism was adopted by Resolution 54/109 on 9 December 1999 at the 54th session of the General Assembly of the United Nations. This convention aims to prevent, prosecute and punish the financing of terrorist activities and to promote inter-governmental co-operation to achieve this purpose. The government of the PRC ratified this convention on 28 February 2006 with some reservations.

The United Nations Convention Against Corruption (《聯合國反腐敗的公約》)

The PRC is a party to the United Nations Convention against Corruption, a multilateral convention adopted by the General Assembly of the United Nations on 31 October 2003. This convention requires parties to implement anti-corruption measures affecting their laws, constitution and practices, to measures aimed at promoting the prevention, detection and sanctioning of corruption, as well as to strengthen the cooperation between ratifying parties on these matters. The government of the PRC ratified this convention on 27 October 2005, with reservation on paragraph 2 of Article 66.

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TAXATION

The following summary of certain tax consequences of the purchase, ownership and disposition of the Bonds is based upon applicable laws, regulations, rulings and decisions in effect at the date of this Offering Circular, all of which are subject to change (possibly with retroactive effect). This discussion does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of the Bonds and does not purport to deal with consequences applicable to all categories of investors, some of which may be subject to special rules. Neither these statements nor any other statements in this Offering Circular are to be regarded as advice on the tax position of any Bondholder or any persons acquiring, selling or otherwise dealing in the Bonds or on any tax implications arising from the acquisition, sale or other dealings in respect of the Bonds. Persons considering the purchase of the Bonds should consult their own tax advisers concerning the possible tax consequences of buying, holding or selling any Bonds under the laws of their country of citizenship, residence or domicile.

BRITISH VIRGIN ISLANDS

The Issuer is exempt from all provisions of the Income Tax Ordinance of the British Virgin Islands.

Payments of principal, premium or interest in respect of the Bonds to persons who are not resident in the British Virgin Islands are not subject to British Virgin Islands tax or withholding tax.

Capital gains realised with respect to the Bonds by persons who are not persons resident in the British Virgin Islands are also exempt from all provisions of the Income Tax Ordinance of the British Virgin Islands.

No estate, inheritance, succession or gift tax, rate, duty, levy or other charge is payable by persons who are not resident in the British Virgin Islands with respect to the Bonds.

All instruments relating to transactions in respect of the Bonds are exempt from payment of stamp duty in the British Virgin Islands. This assumes that the Issuer does not hold an interest in real estate in the British Virgin Islands.

HONG KONG

Withholding Tax

No withholding tax is payable in Hong Kong in respect of payments of principal or interest on the Bonds or in respect of any capital gains arising from the sale of the Bonds.

Profits Tax

Hong Kong profits tax is chargeable on every person carrying on a trade, profession or business in Hong Kong in respect of profits arising in or derived from Hong Kong from such trade, profession or business (excluding profits arising from the sale of capital assets).

Interest on the Bonds may be deemed to be profits arising in or derived from Hong Kong from a trade, profession or business carried on in Hong Kong in the following circumstances:

(i) interest on the Bonds is derived from Hong Kong and is received by or accrues to a corporation carrying on a trade, profession or business in Hong Kong;

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(ii) interest on the Bonds is derived from Hong Kong and is received by or accrues to a person, other than a corporation, carrying on a trade, profession or business in Hong Kong and is in respect of the funds of that trade, profession or business;

(iii) interest on the Bonds is received by or accrues to a financial institution (as defined in the Inland Revenue Ordinance (Cap. 112) of Hong Kong (the "IRO")) and arises through or from the carrying on by the financial institution of its business in Hong Kong; or

(iv) interest on the Bonds is received by or accrues to a corporation, other than a financial institution, and arises through or from the carrying on in Hong Kong by the corporation of its intra-group financing business (within the meaning of section 16(3) of the IRO).

Sums received by or accrued to a financial institution by way of gains or profits arising through or from the carrying on by the financial institution of its business in Hong Kong from the sale, disposal or redemption of Bonds will be subject to Hong Kong profits tax. Sums received by or accrued to a corporation, other than a financial institution, by way of gains or profits arising through or from the carrying on in Hong Kong by the corporation of its intra-group financing business (within the meaning of section 16(3) of the IRO) from the sale, disposal or other redemption of Bonds will be subject to Hong Kong profits tax.

Sums derived from the sale, disposal or redemption of Bonds will be subject to Hong Kong profits tax where received by or accrued to a person, other than a financial institution, who carries on a trade, profession or business in Hong Kong and the sum has a Hong Kong source unless otherwise exempted. The source of such sums will generally be determined by having regard to the manner in which the Bonds are acquired and disposed of.

In addition, with effect from 1 January 2024, pursuant to various foreign-sourced income exemption legislation in Hong Kong (the "FSIE Amendments"), certain specified foreign-sourced income (including interest, dividend, disposal gain or intellectual property income, in each case, arising in or derived from a territory outside Hong Kong) accrued to an MNE entity (as defined in the FSIE Amendments) carrying on a trade, profession or business in Hong Kong is regarded as arising in or derived from Hong Kong and subject to Hong Kong profits tax when it is received in Hong Kong. The FSIE Amendments also provide for relief against double taxation in respect of certain foreign-sourced income and transitional matters.

In certain circumstances, Hong Kong profits tax exemptions (such as concessionary tax rates) may be available. Investors are advised to consult their own tax advisors to ascertain the applicability of any exemptions to their individual position.

Stamp Duty

No Hong Kong stamp duty will be chargeable upon the issue or transfer of a Bond.

PRC

The following summary accurately describes the principal PRC tax consequences of ownership of the Bonds by beneficial owners who, or which, are not residents of mainland China for PRC tax purposes. These holders or beneficial owners are referred to as non-PRC Holders. Non-PRC Holders include (a) non-PRC resident individuals, and (b) non-PRC resident enterprises, which are entities that are either located outside the PRC without establishments within the PRC, or entities with establishments within the PRC but their income from holding the Bonds have no connection with their establishments within the PRC. In considering whether to invest in the Bonds, investors should consult their individual tax advisers with regard to the application of PRC tax laws to their particular situations as well as any tax consequences arising under the laws of any other tax jurisdiction.

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Income Tax

Under the PRC EIT Law and its Implementing Regulation, which became effective on 1 January 2008 and was subsequently amended on 24 February 2017 and 29 December 2018, enterprises organised under the laws of jurisdictions outside the PRC with their “de facto management bodies” located within the PRC are deemed to be “resident enterprises for PRC tax purposes”, and are therefore subject to PRC enterprise income tax at the rate of 25 per cent. in respect of their income sourced from both within and outside China. The Implementing Regulation defines the term “de facto management body” as a management body that exercises substantial and overall control and management over the production and operations, personnel, accounting and properties of an enterprise. In addition, the Notice on Issues Concerning the Determination of Chinese-controlled Enterprises Incorporated Overseas as Resident Enterprises on the Basis of Their De Facto Management Bodies issued by the SAT (國家稅務總局關於境外註冊中資控股企業依據實際管理機構標準認定為居民企業有關問題的通知) on 22 April 2009 provides that a foreign enterprise controlled by a PRC company or a PRC Group would be classified as a “resident enterprise” with a “de facto management body” located within the PRC if all of the following requirements are satisfied: (i) the senior management and core management departments in charge of daily operations are located mainly within the PRC; (ii) financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (iii) major assets, accounting books, company seals and minutes and files of board and shareholders’ meetings are located or kept within the PRC; and (iv) at least half of the enterprise’s directors with voting rights, or senior management, reside within the PRC.

There is no assurance that the Issuer will not be treated as a “resident enterprise” under the EIT Law, any aforesaid circulars or any amended regulations in the future. If the Issuer is treated as a PRC resident enterprise for PRC enterprise income tax purposes, among other things, it would be subject to the PRC enterprise income tax at the rate of 25 per cent. on its taxable income. Furthermore, if the Issuer is treated as a PRC resident enterprise, payments of interest by the Issuer may be regarded as derived from sources within the PRC and therefore the Issuer may be obligated to withhold PRC income tax at 10 per cent. on payments of interest on the Bonds to non-PRC resident enterprise investors without an establishment within the PRC or whose income has no connection to its establishment with the PRC. In the case of non-PRC resident individual investors, the tax may be withheld at a rate of 20 per cent. In addition, as the Guarantor is a PRC tax resident, in the event that the Guarantor is required to fulfil its obligations under the Guarantee by making interest payments on behalf of the Issuer, the Guarantor will be required to withhold a 10 per cent. PRC income tax in the case of non-PRC resident enterprises or 20 per cent. in the case of non-PRC resident individuals if such payments are regarded as derived from sources within the PRC.

In addition, if the Issuer is treated as a PRC resident enterprise, any gain realised on the transfer of the Bonds by non-PRC resident investors may be regarded as derived from sources within the PRC and accordingly may be subject to a 10 per cent. PRC income tax in the case of non-PRC resident enterprises or 20 per cent. in the case of non-PRC resident individuals. The PRC tax on interest or gains may be reduced or exempted under applicable tax treaties between the PRC and the Bondholder’s home country. For example, according to an arrangement between the PRC and Hong Kong for the avoidance of double-taxation, Bondholders who are Hong Kong residents, including both enterprise holders and individual holders, may be exempted from PRC income tax on capital gains derived from a sale or exchange of the Bonds.

Stamp Duty

No PRC stamp duty will be imposed on non-resident holders either upon issuance of the Bonds or upon a subsequent transfer of Bonds to the extent that the register of holders of the Bonds is maintained outside the PRC and the issue and sale of the Bonds is made outside the PRC.

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VAT

On 23 March 2016, the Ministry of Commerce of the People's Republic of China and SAT issued the Circular 36, which introduced a new VAT from 1 May 2016. According to Circular 36, VAT is applicable where the entities or individuals provide financial services such as providing the loans within the PRC. The services are treated as being sold within the PRC where either the service provider or the service recipient is located in the PRC. It is further clarified under Circular 36 that the loans refers to the activity of lending capital for another's use and receiving the interest income thereon. Based on the definition of loans under Circular 36, the issuance of Bonds may be treated as the Bondholders providing the loans to the Issuer, which thus may be regarded as the financial services for VAT purposes. In the event the Issuer is deemed to be a PRC resident enterprise in the PRC by the PRC tax authorities, the Bondholders may be regarded as providing the financial services within the PRC and consequently, the amount of interest payable by the Issuer to any non-resident Bondholders may be subject to withholding of VAT and related local levies at the rate of 6.72 per cent. Circular 36 and laws and regulations pertaining to VAT are relatively new, the interpretation and enforcement of such laws and regulations involve uncertainties.

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SUBSCRIPTION AND SALE

The Issuer and the Guarantor have entered into a subscription agreement with the Joint Lead Managers dated 24 September 2025 (the “Subscription Agreement”) pursuant to which and subject to certain conditions contained in the Subscription Agreement, the Issuer has agreed to sell to the Joint Lead Managers, and each of the Joint Lead Managers has agreed to, severally and not jointly, subscribe and pay for the aggregate principal amount of the Bonds at an issue price in the amount set forth opposite its name below.

Joint Lead Managers	Principal Amount of Bonds
1. Orient Securities (Hong Kong) Limited	U.S.$20,000,000
2. Industrial and Commercial Bank of China (Asia) Limited	U.S.$20,000,000
3. ICBC International Securities Limited	U.S.$20,000,000
4. Industrial and Commercial Bank of China Limited, Singapore Branch	U.S.$20,000,000
5. Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch	U.S.$20,000,000
6. Standard Chartered Bank	U.S.$20,000,000
7. The Hongkong and Shanghai Banking Corporation Limited	U.S.$20,000,000
8. China Minsheng Banking Corp., Ltd. Hong Kong Branch	U.S.$20,000,000
9. China CITIC Bank International Limited	U.S.$20,000,000
10. ABCI Capital Limited	U.S.$20,000,000
11. CMB Wing Lung Bank Limited	U.S.$20,000,000
12. DBS Bank Ltd.	U.S.$8,000,000
13. Industrial Bank Co., Ltd. Hong Kong Branch	U.S.$8,000,000
14. Bank of China (Hong Kong) Limited	U.S.$8,000,000
15. Guotai Junan Securities (Hong Kong) Limited	U.S.$8,000,000
16. Haitong International Securities Company Limited	U.S.$8,000,000
17. Shenwan Hongyuan Securities (H.K.) Limited	U.S.$8,000,000
18. Hua Xia Bank Co., Limited Hong Kong Branch	U.S.$8,000,000
19. Huatai Financial Holdings (Hong Kong) Limited	U.S.$8,000,000
20. CMBC Securities Company Limited	U.S.$8,000,000
21. Dongxing Securities (Hong Kong) Company Limited	U.S.$8,000,000
Total	U.S.$300,000,000

The Subscription Agreement provides that the Issuer and the Guarantor will jointly and severally indemnify the Joint Lead Managers against certain liabilities in connection with the offer and sale of the Bonds. The Subscription Agreement provides that the obligations of the Joint Lead Managers are subject to certain conditions precedent and entitles the Joint Lead Managers to terminate it in certain circumstances prior to payment being made to the Issuer.

In connection with the issue of the Bonds, the Joint Lead Managers acting as stabilization manager(s) (the “Stabilisation Manager(s)”) (or persons acting on behalf of the Stabilisation Manager(s)), provided that China CITIC Bank International Limited shall not be appointed and acting as the Stabilisation Manager, may over-allot the Bonds or effect transactions with a view to supporting the market price of the Bonds at a level higher than that which might otherwise prevail. However, stabilisation may not necessarily occur. Any loss or profit sustained as a consequence of any such over-allotment or stabilisation shall be for the account of the Joint Lead Managers.

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The Joint Lead Managers and their respective affiliates are full-service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities (“Banking Services or Transactions”). The Joint Lead Managers and their respective affiliates may have, from time to time, performed, and may in the future perform, various Banking Services or Transactions with the Issuer and the Guarantor, for which they have received or will receive fees and expenses.

The Joint Lead Managers and their respective affiliates may purchase the Bonds and allocate the Bonds for asset management and/or proprietary purposes but not with a view to distribution. Such entities may hold or sell such Bonds or purchase further Bonds for their own account in the secondary market or deal in any other securities of the Issuer or the Guarantor, and therefore, they may offer or sell the Bonds or other securities otherwise than in connection with the offering of the Bonds. Accordingly, references herein to the Bonds being “offered” should be read as including any offering of the Bonds to the Joint Lead Managers and/or their respective affiliates, or affiliates of the Issuer or the Guarantor for their own account. Such entities are not expected to disclose such transactions or the extent of any such investment, otherwise than in accordance with any legal or regulatory obligation to do so. Furthermore, it is possible that only a limited number of investors may subscribe for a significant proportion of the Bonds. If this is the case, liquidity of trading in the Bonds may be constrained (see “Risk Factors – Risks relating to the Bonds and the Guarantee – A trading market for the Bonds may not develop”). The Issuer, the Guarantor and the Joint Lead Managers are under no obligation to disclose the extent of the distribution of the Bonds amongst individual investors.

In the ordinary course of their various business activities, the Joint Lead Managers and their respective affiliates make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Issuer and/or the Guarantor, including the Bonds and could adversely affect future trading prices of the Bonds offered hereby. The Joint Lead Managers and their respective affiliates may make investment recommendations and/or publish or express independent research views (positive or negative) in respect of the Bonds or other financial instruments of the Issuer or the Guarantor, and may recommend to their clients that they acquire long and/or short positions in the Bonds or other financial instruments of the Issuer or the Guarantor.

If a jurisdiction requires that the offering be made by a licensed broker or dealer and any of the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers or their respective affiliates is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by such Joint Global Coordinator, Joint Bookrunner, Joint Lead Manager or such affiliate on behalf of such Joint Global Coordinator, Joint Bookrunner or Joint Lead Manager in such jurisdiction.

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Notice to capital market intermediaries and prospective investors pursuant to paragraph 21 of the Hong Kong SFC Code of Conduct – Important Notice to CMIs (including private banks)

This notice to CMIs (including private banks) is a summary of certain obligations the SFC Code imposes on CMIs, which require the attention and cooperation of other CMIs (including private banks). Certain CMIs may also be acting as OCs for this offering and are subject to additional requirements under the SFC Code.

CMIs are informed that the marketing and investor targeting strategy for this offering includes institutional investors, sovereign wealth funds, pension funds, hedge funds, family offices and high net worth individuals, in each case, subject to the selling restrictions and, if applicable, any MiFID II product governance and UK MiFIR product governance language set out elsewhere in this Offering Circular.

CMIs should ensure that orders placed are bona fide, are not inflated and do not constitute duplicated orders (i.e. two or more corresponding or identical orders placed via two or more CMIs). CMIs should enquire with their investor clients regarding any orders which appear unusual or irregular. CMIs should disclose the identities of all investors when submitting orders for the Bonds (except for omnibus orders where underlying investor information may need to be provided to any OCs when submitting orders). Failure to provide underlying investor information for omnibus orders, where required to do so, may result in that order being rejected. CMIs should not place “X-orders” into the order book.

CMIs should segregate and clearly identify their own proprietary orders (and those of their group companies, including private banks as the case may be) in the order book and book messages.

CMIs (including private banks) should not offer any rebates to prospective investors or pass on any rebates provided by the Issuer or the Guarantor. In addition, CMIs (including private banks) should not enter into arrangements which may result in prospective investors paying different prices for the Bonds.

The SFC Code requires that a CMI disclose complete and accurate information in a timely manner on the status of the order book and other relevant information it receives to targeted investors for them to make an informed decision. In order to do this, those Joint Lead Managers in control of the order book should consider disclosing order book updates to all CMIs.

When placing an order for the Bonds, private banks should disclose, at the same time, if such order is placed other than on a “principal” basis (whereby it is deploying its own balance sheet for onward selling to investors). Private banks who do not provide such disclosure are hereby deemed to be placing their order on such a “principal” basis. Otherwise, such order may be considered to be an omnibus order pursuant to the SFC Code. Private banks should be aware that placing an order on a “principal” basis may require the relevant affiliated Joint Lead Manager(s) (if any) to categorise it as a proprietary order and apply the “proprietary orders” requirements of the SFC Code to such order.

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In relation to omnibus orders, when submitting such orders, CMIs (including private banks) that are subject to the SFC Code should disclose underlying investor information in respect of each order constituting the relevant omnibus order (failure to provide such information may result in that order being rejected). Underlying investor information in relation to omnibus orders should consist of:

The name of each underlying investor;
A unique identification number for each investor;
Whether an underlying investor has any “Associations” (as used in the SFC Code);
Whether any underlying investor order is a “Proprietary Order” (as used in the SFC Code);
Whether any underlying investor order is a duplicate order.

Underlying investor information in relation to omnibus order should be sent to: [email protected], [email protected], [email protected], [email protected], [email protected], [email protected], [email protected], [email protected], [email protected], [email protected], [email protected], [email protected], [email protected] and [email protected].

To the extent information being disclosed by CMIs and investors is personal and/or confidential in nature, CMIs (including private banks) agree and warrant: (A) to take appropriate steps to safeguard the transmission of such information to any OCs; and (B) that they have obtained the necessary consents from the underlying investors to disclose such information to any OCs. By submitting an order and providing such information to any OCs, each CMI (including private banks) further warrants that they and the underlying investors have understood and consented to the collection, disclosure, use and transfer of such information by any OCs and/or any other third parties as may be required by the SFC Code, including to the Issuer, the Guarantor, relevant regulators and/or any other third parties as may be required by the SFC Code, for the purpose of complying with the SFC Code, during the bookbuilding process for this offering. CMIs that receive such underlying investor information are reminded that such information should be used only for submitting orders in this offering. The Joint Lead Managers may be asked to demonstrate compliance with their obligations under the SFC Code, and may request other CMIs (including private banks) to provide evidence showing compliance with the obligations above (in particular, that the necessary consents have been obtained). In such event, other CMIs (including private banks) are required to provide the relevant Joint Lead Manager with such evidence within the timeline requested.

By placing an order, prospective investors (including any underlying investors in relation to omnibus orders) are deemed to represent to the Joint Lead Managers that it is not a Sanctions Restricted Person. A “Sanctions Restricted Person” means an individual or entity (a “Person”): (a) that is, or is directly or indirectly owned or controlled by a Person that is, described or designated in (i) the most current “Specially Designated Nationals and Blocked Persons” list (which as of the date hereof can be found at: http://www.treasury.gov/ofac/downloads/sdnlist.pdf) or (ii) the Foreign Sanctions Evaders List (which as of the date hereof can be found at: http://www.treasury.gov/ofac/downloads/fse/fselist.pdf) or (iii) the most current “Consolidated list of persons, groups and entities subject to EU financial sanctions” (which as of the date hereof can be found at: https://data.europa.eu/data/datasets/consolidated-list-of-persons-groups-and-entities-subject-to-eu-financial-sanctions?locale=en); or (b) that is otherwise the subject of any sanctions administered or enforced by any Sanctions Authority, other than solely by virtue of the following (i)-(vi) to the extent that it will not result in violation of any sanctions by the CMIs: (i) their inclusion in the most current “Sectoral Sanctions Identifications” list (which as of the date hereof can

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be found at: https://www.treasury.gov/ofac/downloads/ssi/ssilist.pdf) (the "SSI List"), (ii) their inclusion in Annexes 3, 4, 5 and 6 of Council Regulation No. 833/2014, as amended by Council Regulation No. 960/2014 (the "EU Annexes"), (iii) their inclusion in any other list maintained by a Sanctions Authority, with similar effect to the SSI List or the EU Annexes, (iv) them being the subject of restrictions imposed by the U.S. Department of Commerce's Bureau of Industry and Security ("BIS") under which BIS has restricted exports, re-exports or transfers of certain controlled goods, technology or software to such individuals or entities; (v) them being an entity listed in the Annex to the new Executive Order of 3 June 2021 entitled "Addressing the Threat from Securities Investments that Finance Certain Companies of the People's Republic of China" (known as the Non-SDN Chinese Military-Industrial Complex Companies List), which amends the Executive Order 13959 of 12 November 2020 entitled "Addressing the threat from Securities Investments that Finance Chinese Military Companies"; or (vi) them being subject to restrictions imposed on the operation of an online service, Internet application or other information or communication services in the United States directed at preventing a foreign government from accessing the data of U.S. persons; or (c) that is located, organized or a resident in a comprehensively sanctioned country or territory, including Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, the Donetsk's People's Republic of Luhansk People's Republic. "Sanctions Authority" means: (a) the United Nations; (b) the United States; (c) the European Union (or any of its member states); (d) the United Kingdom; (e) the People's Republic of China; (f) any other equivalent governmental or regulatory authority, institution or agency which administers economic, financial or trade sanctions; and (g) the respective governmental institutions and agencies of any of the foregoing including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury, the United States Department of State, the United States Department of Commerce and His Majesty's Treasury.

General

None of the Issuer, the Guarantor nor the Joint Lead Managers makes any representation that any action has been or will be taken in any jurisdiction by the Joint Lead Managers or the Issuer or the Guarantor that would permit a public offering of the Bonds, or possession or distribution of the Offering Circular (in proof or final form) or any other offering or publicity material relating to the Bonds (including roadshow materials and investor presentations), in any country or jurisdiction where action for that purpose is required. Each of the Joint Lead Managers will comply to the best of its knowledge and belief in all material respects with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Bonds or has in its possession or distributes the Offering Circular (in proof or final form) or any such other material, in all cases at its own expense. The Issuer, the Guarantor and the Joint Lead Managers will have no responsibility for, and the Joint Lead Managers will obtain any consent, approval or permission required by it for, the acquisition, offer, sale or delivery by it of Bonds under the laws and regulations in force in any jurisdiction to which it is subject or in or from which it makes any acquisition, offer, sale or delivery of the Bonds. The Joint Lead Managers are not authorised to make any representation or use any information in connection with the issue, subscription and sale of the Bonds other than as contained in, or which is consistent with, the Offering Circular (in final form) or any amendment or supplement to it.

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United States

The Bonds and the Guarantee have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. Each Joint Lead Manager has represented that it will not offer or sell the Bonds and the Guarantee (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the Issue Date, within the United States or to, or for the account or benefit of, U.S. persons, and it will have sent to each dealer to which it sells the Bonds and the Guarantee during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Bonds and the Guarantee within the United States or to, or for the account or benefit of, U.S. persons.

Terms used in this paragraph have the meanings given to them by Regulation S.

The Bonds and the Guarantee are being offered and sold outside of the United States to non-U.S. persons in reliance on Regulation S.

In addition, until 40 days after the commencement of the offering of the Bonds and the Guarantee, an offer or sale of the Bonds and the Guarantee within the United States by a dealer that is not participating in the offering may violate the registration requirements of the Securities Act.

Prohibition of Sales to EEA Retail Investors

Each Joint Lead Manager has represented and agreed that it has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any Bonds to any retail investor in the European Economic Area ("EEA"). For the purposes of this provision, the expression "retail investor" means a person who is one (or more) of the following:

(a) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); or
(b) a customer within the meaning of Directive (EU) 2016/97 (as amended, the "Insurance Distribution Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II.

Prohibition of Sales to UK Retail Investors

Each Joint Lead Manager has represented and agreed that it has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any Bonds to any retail investor in the United Kingdom. For the purposes of this provision, the expression "retail investor" means a person who is one (or more) of the following:

(a) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 ("EUWA"); or
(b) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (the "FSMA") and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA.

United Kingdom

Each Joint Lead Manager has represented, warranted and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the Bonds in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer or the Guarantor; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Bonds in, from or otherwise involving the United Kingdom.

Singapore

Each Joint Lead Manager has acknowledged that this Offering Circular has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each Joint Lead Manager has represented and agreed that it has not offered or sold any Bonds or caused such Bonds to be made the subject of an invitation for subscription or purchase, will not offer or sell any Bonds or cause the Bonds to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this Offering Circular or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Bonds, whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act 2001 of Singapore, as modified or amended from time to time (the "SFA")) under Section 274 of the SFA, or (ii) to a an accredited investor (as defined in Section 4(A) of the SFA) pursuant to and in accordance with the conditions specified in Section 275 of the SFA.

Hong Kong

Each Joint Lead Manager has represented and agreed that (a) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Bonds other than (i) to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the "SFO") and any rules made under the SFO; or (ii) in other circumstances which do not result in the document being a "prospectus" as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong (the "C(WUMP)O") or which do not constitute an offer to the public within the meaning of the C(WUMP)O; and (b) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Bonds, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Bonds which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" as defined in the SFO and any rules made under the SFO.

PRC

Each Joint Lead Manager has represented, warranted and agreed that the Bonds are not being offered or sold and may not be offered or sold, directly or indirectly, in the PRC (for such purposes, not including the Hong Kong, Macau or Taiwan), except as permitted by applicable laws of the PRC.

172 -

Japan

The Bonds have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended, the “Financial Instruments and Exchange Act”). Accordingly, each Joint Lead Manager has represented and agreed that it has not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell any Bonds in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organised under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and other relevant laws and regulations of Japan.

British Virgin Islands

Each Joint Lead Manager has represented, warranted and agreed that no invitation has been made or will be made, directly or indirectly, to any person in the British Virgin Islands or to the public in the British Virgin Islands to purchase the Bonds and the Bonds are not being offered or sold and may not be offered or sold, directly or indirectly, in the British Virgin Islands, except as otherwise permitted by the British Virgin Islands laws.

This Offering Circular does not constitute, and there will not be, an offering of the Bonds to any person in the British Virgin Islands.

173 -

RATINGS

The Guarantor has been assigned a rating of "Baa2" by Moody's with a stable outlook and a rating of "BBB-" by S&P with a stable outlook. The Bonds are expected to be rated "Baa2" by Moody's. The ratings reflect the rating agencies' assessment of the likelihood of timely payment of the principal of and interest on the Bonds. The ratings do not constitute recommendations to purchase, hold or sell the Bonds inasmuch as such ratings do not comment as to market price or suitability for a particular investor. We cannot assure you that the ratings will remain in effect for any given period or that the ratings will not be revised by such rating agencies in the future if in their judgment circumstances so warrant. Each such rating should be evaluated independently of any other rating on the Bonds, on other of our securities, or on us.

174 -

175 -

LEGAL MATTERS

Certain legal matters with respect to the Bonds will be passed upon for the Issuer and the Guarantor by Linklaters as to matters of English law, Hong Kong law and Luxembourg law. Certain legal matters regarding the Bonds will be passed upon for the Joint Global Coordinators, the Joint Bookrunners and the Joint Lead Managers by Davis Polk & Wardwell with respect to matters of English law and Hong Kong law. Certain legal matters will be passed upon for the Issuer and the Guarantor by Grandall Law Firm (Shanghai) as to PRC law. Certain legal matters will be passed upon for the Joint Global Coordinators, the Joint Bookrunners and the Joint Lead Managers by Commerce & Finance Law Offices as to PRC law. Certain legal matters will be passed upon for the Issuer and the Guarantor by Ogier as to British Virgin Islands law.

GENERAL INFORMATION

Clearing Systems: The Bonds will be lodged and cleared through Euroclear and Clearstream. The ISIN and Common Code for the Bonds are XS3168197377 and 316819737, respectively.
LEI: The Issuer’s Legal Entity Identifier (LEI) is 549300744J116LZ5PV56.
Authorisations: The Issuer has obtained all necessary consents, approvals and authorisations in connection with the issue of the Bonds and the execution, delivery and performance of its obligations under the Bonds, the Trust Deed and the Agency Agreement. The issue of the Bonds was authorised by the resolutions of the sole director of the Issuer on 22 September 2025, the resolutions of the Board of the Guarantor on 27 March 2024 and the resolutions of the shareholders of the Guarantor on 10 May 2024. The Issuer is not required to obtain any consents or approval of any regulatory authorities or other relevant authorities in the BVI in connection with the issue of the Bonds.

Save for the Cross-border Security Registration and the NDRC Post-Issuance Filing, the Guarantor has obtained all necessary consents, approvals and authorisations in connection with the giving of the Guarantee of the Bonds and the execution, delivery and performance of its obligations under the Trust Deed, the Deed of Guarantee and the Agency Agreement. The giving of the Guarantee was authorised by the resolutions of the Board of the Guarantor on 28 March 2025 and the resolutions of the shareholders of the Guarantor on 23 May 2025.

No Material Adverse Change: As at the date of this Offering Circular, save as disclosed in this Offering Circular, there has been no material adverse change in the financial or trading position or prospects of the Issuer, the Guarantor and the Group since 30 June 2025.
Litigation: As at the date of this Offering Circular, none of the Issuer, the Guarantor or any other member of the Group is involved in any litigation or arbitration proceedings that the Issuer or the Guarantor, as the case may be, believes are material in the context of the Bonds, nor is any of the Issuer or the Guarantor aware that any such proceedings are pending or threatened.
Available Documents: Copies of the Trust Deed, the Agency Agreement and the Deed of Guarantee will be available for inspection from the Issue Date at the principal office of the Trustee at 40/F, Champion Tower, 3 Garden Road, Central, Hong Kong during normal business hours, so long as any of the Bonds is outstanding, and so long as the Bonds are listed in the Official List of the LuxSE and admitted to trading on the Professional Segment of the Euro MTF market and the LuxSE Rules so require, physical or electronic copies of the following documents are available free of charge or may be inspected during normal business hours at the Issuer’s office at 28F-29/F, 100 Queen’s Road Central, Central, Hong Kong:

(a) this Offering Circular;
(b) the Audited Financial Statements;
(c) the Unaudited Consolidated Financial Statements;
(d) the Trust Deed;
(e) the Agency Agreement;
(f) the Deed of Guarantee;
(g) the memorandum and articles of association of the Issuer; and
(h) the Articles of Association.

176 -

Independent Auditor’s Reports and Review Report: The 2023 Audited Financial Statements and the 2024 Audited Financial Statements included elsewhere in the Offering Circular have been prepared in accordance with the IFRS Accounting Standards issued by the IASB and audited by DTT and KPMG, respectively. The Unaudited Consolidated Financial Statements included elsewhere in the Offering Circular have been prepared in accordance with the IAS 34, Interim Financial Reporting, issued by IASB and reviewed by KPMG.
Listing of the Bonds: Application will be made to the Hong Kong Stock Exchange for the listing of, and permission to deal in, the Bonds by way of debt issues to Professional Investors only and such permission is expected to become effective on 30 September 2025. Application has been made to the LuxSE to list the Bonds on the Official List of the Luxembourg Stock Exchange and for the Bonds to trading on the Professional Segment of the Euro MTF Market.
Notices regarding the Bonds: In respect of the Bonds admitted to trading on a market operated by the LuxSE and listed in the Official List of the LuxSE and as long as the rules of such exchange so require, all notices regarding the Bonds will be published on the LuxSE website (www.luxse.com). For the avoidance of doubt, the content of the websites included in this Offering Circular are for information purposes only and does not form part of this Offering Circular.

– 177 –

INDEX TO FINANCIAL STATEMENTS

Unaudited Consolidated Financial Statements(1)

Report on Review of Condensed Consolidated Interim Financial Report. F-2
Condensed Consolidated Statement of Profit or Loss F-4
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income F-5
Condensed Consolidated Statement of Financial Position F-6
Condensed Consolidated Statement of Changes in Equity F-8
Condensed Consolidated Statement of Cash Flows F-10
Notes to the Unaudited Condensed Consolidated Interim Financial Statements F-14

2024 Audited Financial Statements(2)

Independent Auditor’s Report F-81
Consolidated Statement of Profit or Loss F-90
Consolidated Statement of Profit or Loss and Other Comprehensive Income F-91
Consolidated Statement of Financial Position F-92
Consolidated Statement of Changes in Equity F-94
Consolidated Statement of Cash Flows F-96
Notes to the Consolidated Financial Statements F-100

2023 Audited Financial Statements(3)

Independent Auditor’s Report F-255
Consolidated Statement of Profit or Loss F-261
Consolidated Statement of Profit or Loss and Other Comprehensive Income F-262
Consolidated Statement of Financial Position F-263
Consolidated Statement of Changes in Equity F-265
Consolidated Statement of Cash Flows F-267
Notes to the Consolidated Financial Statements F-271

Notes:

(1) The independent review report on the condensed consolidated interim financial statement of the Guarantor as at and for the six months ended 30 June 2025 set out herein is reproduced from the Guarantor’s interim results announcement for the six months ended 30 June 2025 published on 29 August 2025. Page references referred to in the report are to pages set out in such annual report.

(2) The independent auditor’s report on the consolidated financial statement of the Guarantor as at and for the year ended 31 December 2024 set out herein is reproduced from the Guarantor’s annual report for the year ended 31 December 2024 published on 17 April 2025. Page references referred to in the report are to pages set out in such annual report.

(3) The independent auditor’s report on the consolidated financial statement of the Guarantor as at and for the year ended 31 December 2023 set out herein is reproduced from the Guarantor’s annual report for the year ended 31 December 2023 published on 17 April 2024. Page references referred to in the report are to pages set out in such annual report.

(4) In the Guarantor’s annual report for the years ended 31 December 2023 and 2024 and the Guarantor’s interim report for the six months ended 30 June 2025, references to “Orient Securities Company Limited” are to DFZQ.

Report on Review of Condensed Consolidated Interim Financial Report

To the Board of Directors of Orient Securities Company Limited
(Incorporated in the People's Republic of China with limited liability)

INTRODUCTION

We have reviewed the accompanying interim financial report set out on pages 156 to 232, which comprises the condensed consolidated statement of financial position of Orient Securities Company Limited (the "Company") and its subsidiaries (collectively, the "Group") as at 30 June 2025 and the related condensed consolidated statement of profit or loss, statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the six-month period ended at 30 June 2025 and explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of an interim financial report to be in compliance with the relevant provisions thereof and IAS 34, Interim Financial Reporting, issued by the International Accounting Standards Board. The directors of the Company are responsible for the preparation and presentation of the interim financial report in accordance with IAS 34 Interim Financial Reporting.

Our responsibility is to express a conclusion, based on our review, on the interim financial report and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

SCOPE OF REVIEW

We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity, issued by the International Auditing and Assurance Standards Board. A review of the interim financial report consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.

Interim Report 2025 DFZQ

Report on Review of Condensed Consolidated Interim Financial Report

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial report as at 30 June 2025 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting.

KPMG

Certified Public Accountants

8th Floor, Prince's Building

10 Chater Road

Central, Hong Kong

29 August 2025

Interim Report 2025 DFZQ 155

F-3 -

Condensed consolidated statement of profit or loss

For the six months ended 30 June 2025 - unaudited

(Expressed in thousands of Renminbi, unless otherwise stated)

	Note	Six months ended 30 June
		2025
(Unaudited)	2024
(Unaudited)
(Restated)
Revenue
Commission and fee income	6	5,129,012	4,462,488
Interest income	7	2,765,256	2,776,347
		7,894,268	7,238,835
Net investment gains	8	4,020,355	2,275,382
Other income, gains and losses, net	9	410,008	211,505
Total revenue, other income and net gains and losses		12,324,631	9,725,722
Depreciation and amortisation	10	(391,226)	(403,693)
Staff costs	11	(2,477,036)	(1,877,911)
Commission and fee expenses		(2,242,901)	(1,981,346)
Interest expenses	12	(2,303,021)	(2,082,326)
Other operating expenses	13	(961,873)	(1,023,106)
Impairment losses under expected credit loss model, net of reversal	14	3,765	(312,138)
Other impairment losses		(271)	1,115
Total expenses		(8,372,563)	(7,679,405)
Share of results of associates		341,562	224,758
Profit before income tax		4,293,630	2,271,075
Income tax expense	15	(830,727)	(159,397)
Profit for the period		3,462,903	2,111,678
Attributable to:
Equity holders of the Company		3,463,071	2,111,371
Non-controlling interests		(168)	307
		3,462,903	2,111,678
Earnings per share attributable to shareholders of the Company
(Expressed in RMB Yuan per share)
- Basic	16	0.40	0.24

The accompanying notes form part of this interim financial report.

Interim Report 2025 DFZQ

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the six months ended 30 June 2025 - unaudited

(Expressed in thousands of Renminbi, unless otherwise stated)

	Six months ended 30 June
	2024 (Unaudited)	2024 (Unaudited)
Profit for the period	3,462,903	2,111,678
Other comprehensive income, net of income tax:
Items that will not be reclassified subsequently to profit or loss:
Fair value gain on investments in equity instruments at fair value through other comprehensive income	673,971	609,405
Hedging instruments for fair value hedges	-	(27,897)
Income tax relating to items that will not be reclassified to profit or loss	(167,446)	(145,541)
	506,525	435,967
Share of other comprehensive income of associates	(6,165)	-
Subtotal	500,360	435,967
Items that may be reclassified subsequently to profit or loss:
Fair value gain on debt instruments measured at fair value through other comprehensive income	2,232,314	2,275,562
- net fair value changes during the period	(1,523,265)	(1,427,137)
- reclassification adjustment to profit or loss on disposal
Charge for impairment losses for debt instruments measured at fair value through other comprehensive income	3,530	12,085
Income tax relating to items that may be reclassified subsequently to profit or loss	(162,131)	(218,152)
	550,448	642,358
Share of other comprehensive income of associates, net of related income tax	(5,901)	(1,249)
Exchange differences arising on translation	19,017	(5,237)
Others	8,195	-
Subtotal	571,759	635,872
Other comprehensive income for the period, net of income tax	1,072,119	1,071,839
Total comprehensive income for the period	4,535,022	3,183,517
Attributable to:
Equity holders of the Company	4,535,190	3,183,210
Non-controlling interests	(168)	307
	4,535,022	3,183,517

The accompanying notes form part of this interim financial report.

Interim Report 2025 DFZQ

Condensed Consolidated Statement of Financial Position

As at 30 June 2025 – unaudited

(Expressed in thousands of Renminbi, unless otherwise stated)

| | Note | As at
30 June
2025
(Unaudited) | As at
31 December
2024
(Audited)
(Restated) |
| --- | --- | --- | --- |
| Cash and bank balances | 17 | 96,696,398 | 103,093,101 |
| Clearing settlement funds | 19 | 19,845,992 | 15,177,207 |
| Deposits with exchanges and financial institutions | 20 | 31,263,450 | 27,654,365 |
| Derivative financial assets | 21 | 3,526,185 | 1,965,131 |
| Advances to customers | 22 | 27,765,643 | 28,047,525 |
| Account receivables | 23 | 1,824,289 | 973,364 |
| Reverse repurchase agreements | 24 | 3,015,069 | 3,984,103 |
| Financial assets at fair value through profit or loss | 25 | 116,338,016 | 90,189,331 |
| Debt instruments at fair value through
other comprehensive income | 26 | 94,429,620 | 110,519,911 |
| Equity instruments at fair value through other comprehensive
income | 27 | 26,629,092 | 19,634,600 |
| Debt instruments measured at amortised cost | 28 | 1,575,495 | 1,586,905 |
| Investments in associates | 29 | 6,060,012 | 6,128,123 |
| Right-of-use assets | | 975,138 | 1,072,423 |
| Investment properties | | 5,521 | 30,936 |
| Property and equipment | 32 | 2,572,291 | 2,602,196 |
| Other intangible assets | | 240,895 | 272,393 |
| Goodwill | | 32,135 | 32,135 |
| Deferred tax assets | 33 | 676,590 | 1,490,513 |
| Other assets | 34 | 3,886,351 | 3,282,113 |
| Total assets | | 437,358,182 | 417,736,375 |

The accompanying notes form part of this interim financial report.

Interim Report 2025 DFZQ

Condensed Consolidated Statement of Financial Position

As at 30 June 2025 – unaudited

(Expressed in thousands of Renminbi, unless otherwise stated)

| | Note | As at
30 June
2025
(Unaudited) | As at
31 December
2024
(Audited) |
| --- | --- | --- | --- |
| Placements from banks and financial institutions | 35 | 29,327,263 | 39,194,625 |
| Short-term debt instruments | 36 | 4,130,895 | 5,678,905 |
| Account payables to brokerage clients | 37 | 120,249,508 | 113,637,365 |
| Repurchase agreements | 38 | 100,150,319 | 85,916,300 |
| Financial liabilities at fair value through profit or loss | 39 | 20,185,009 | 14,708,501 |
| Derivative financial liabilities | 21 | 3,803,744 | 1,092,582 |
| Contract liabilities | | 48,569 | 44,877 |
| Current tax liabilities | | 200,661 | 93,183 |
| Accrued staff costs | | 2,734,220 | 2,370,667 |
| Borrowings | 40 | 1,748,727 | 1,549,417 |
| Lease liabilities | | 959,876 | 1,058,950 |
| Debt securities issued | 41 | 59,190,632 | 60,734,318 |
| Deferred tax liabilities | 33 | 44,241 | 218 |
| Other liabilities | 42 | 9,749,527 | 10,256,651 |
| Total liabilities | | 352,523,191 | 336,336,559 |
| Share capital | 43 | 8,496,645 | 8,496,645 |
| Treasury stock | | (561,002) | (310,896) |
| Other equity instrument | 45 | 5,000,000 | 5,000,000 |
| Reserves | 46 | 61,870,413 | 60,059,496 |
| Retained earnings | | 10,026,027 | 8,151,495 |
| Equity attributable to equity holders of the Company | | 84,832,083 | 81,396,740 |
| Non-controlling interests | | 2,908 | 3,076 |
| Total equity | | 84,834,991 | 81,399,816 |
| Total equity and liabilities | | 437,358,182 | 417,736,375 |

Approved and authorised for issue by the Board of Directors on 29 August 2025.

Gong Dexiong
Chairman of the Board

Lu Dayin
Executive Director

The accompanying notes form part of this interim financial report.

Interim Report 2025 DFZQ

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2025 - unaudited

(Expressed in thousands of Renminbi, unless otherwise stated)

Equity attributable to equity holders of the Company

	Note	Reserves											Non-controlling interests	Total equity
		Share capital	Treasury stock	Other equity instrument	Capital reserve	Surplus reserve	General reserve	Investment revaluation reserve	Translation reserve	Hedge reserve	Retained earnings	Subtotal
As at 1 January 2025		8,496,645	(310,896)	5,000,000	39,534,520	5,032,049	13,249,808	2,232,418	8,745	1,956	8,151,495	81,396,740	3,076	81,399,816
Profit/(loss) for the period		-	-	-	-	-	-	-	-	-	3,463,071	3,463,071	(168)	3,462,903
Other comprehensive income for the period		-	-	-	-	-	-	1,053,102	19,017	-	-	1,072,119	-	1,072,119
Total comprehensive income for the period		-	-	-	-	-	-	1,053,102	19,017	-	3,463,071	4,535,190	(168)	4,535,022
Repurchase of A shares		-	(250,106)	-	-	-	-	-	-	-	-	(250,106)	-	(250,106)
Appropriation to surplus reserve		-	-	-	-	62,761	-	-	-	-	(62,761)	-	-	-
Appropriation to general reserve		-	-	-	-	-	684,302	-	-	-	(684,302)	-	-	-
Distribution to holders of other equity instrument	44	-	-	-	-	-	-	-	-	-	-	-	-	-
Dividends recognised as distribution	44	-	-	-	-	-	-	-	-	-	(843,446)	(843,446)	-	(843,446)
Transfer to retained earnings for cumulative fair value change of equity instruments at fair value through other comprehensive income upon disposal		-	-	-	-	-	-	(14)	-	(1,956)	1,970	-	-	-
Other		-	-	-	(6,295)	-	-	-	-	-	-	(6,295)	-	(6,295)
As at 30 June 2025 (Unaudited)		8,496,645	(561,002)	5,000,000	39,528,225	5,094,810	13,934,110	3,285,506	27,762	-	10,026,027	84,832,083	2,908	84,834,991

The accompanying notes form part of this interim financial report.

Interim Report 2025 DFZQ

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2025 - unaudited

(Expressed in thousands of Renminbi, unless otherwise stated)

Equity attributable to equity holders of the Company

	Note	Share capital	Treasury stock	Other equity instrument	Reserves						Retained earnings	Subtotal	Non-controlling interests	Total equity
					Capital reserve	Surplus reserve	Investment revaluation reserve	Translation reserve	Hedge reserve
As at 1 January 2024		8,496,645	(299,780)	5,000,000	39,534,520	4,618,006	12,134,542	489,687	2,190	12,325	8,757,396	78,745,531	14,666	78,760,197
Profit for the period		-	-	-	-	-	-	-	-	-	2,111,371	2,111,371	307	2,111,678
Other comprehensive income for the period		-	-	-	-	-	-	1,098,000	(5,237)	(20,924)	-	1,071,839	-	1,071,839
Total comprehensive income for the period		-	-	-	-	-	-	1,098,000	(5,237)	(20,924)	2,111,371	3,183,210	307	3,183,517
Repurchase of A shares		-	(11,116)	-	-	-	-	-	-	-	-	(11,116)	-	(11,116)
Appropriation to surplus reserve		-	-	-	-	295,657	-	-	-	-	(295,657)	-	-	-
Appropriation to general reserve		-	-	-	-	-	662,846	-	-	-	(662,846)	-	-	-
Distribution to holders of other equity instrument	44	-	-	-	-	-	-	-	-	-	(237,500)	(237,500)	-	(237,500)
Dividends recognised as distribution	44	-	-	-	-	-	-	-	-	-	(1,269,270)	(1,269,270)	-	(1,269,270)
Transfer to retained earnings for cumulative fair value change of equity instruments at fair value through other comprehensive income upon disposal		-	-	-	-	-	-	32,806	-	-	(32,806)	-	-	-
Other		-	-	-	-	-	-	-	-	4,253	(4,253)	-	(4,133)	(4,133)
As at 30 June 2024 (Unaudited)		8,496,645	(310,896)	5,000,000	39,534,520	4,913,663	12,797,388	1,620,493	(3,047)	(4,346)	8,366,435	80,410,855	10,840	80,421,695

The accompanying notes form part of this interim financial report.

Interim Report 2025 DFZQ

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2025 - unaudited

(Expressed in thousands of Renminbi, unless otherwise stated)

	Six months ended 30 June
	2025
(Unaudited)	2024
(Unaudited)
OPERATING ACTIVITIES
Profit before income tax	4,293,630	2,271,075
Adjustments for:
Interest expenses	2,303,021	2,082,326
Share of results of associates	(341,562)	(224,758)
Depreciation and amortisation	391,226	403,693
Impairment losses under expected credit loss model, net of reversal	(3,765)	312,138
Other impairment losses	271	(1,115)
Losses/(gains) on disposal of property and equipment, right-of-use assets and investment properties	1,569	(20,222)
Foreign exchange gains, net	(233,551)	(15,269)
Net realised gains and income arising from financial assets at fair value through profit or loss	-	(103,323)
Net realised gains and income arising from debt instruments at fair value through other comprehensive income	(2,885,690)	(2,825,970)
Dividend income arising from equity instruments at fair value through other comprehensive income	(620,017)	(277,596)
Net realised losses arising from financial liabilities at fair value through profit or loss	92,008	60,510
Net realised gains and interest income from debt instruments measured at amortised cost	(23,640)	(23,704)
Unrealised fair value change of financial assets at fair value through profit or loss	(527,180)	310,096
Unrealised fair value change of financial liabilities at fair value through profit or loss	(350,781)	(32,791)
Unrealised fair value change of derivative financial instruments	481,350	(967,955)
Other net investment gains	-	(29,569)
Operating cash flows before movements in working capital	2,576,889	917,566

The accompanying notes form part of this interim financial report.

Interim Report 2025 DFZQ

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2025 - unaudited

(Expressed in thousands of Renminbi, unless otherwise stated)

	Six months ended 30 June
	2025
(Unaudited)	2024
(Unaudited)
Operating cash flows before movements in working capital	2,576,889	917,566
Decrease/(increase) in advances to customers	280,936	(2,108,682)
Decrease in reverse repurchase agreements	971,874	1,344,131
Increase in financial assets at fair value through profit or loss and derivative financial assets	(27,663,909)	(1,959,611)
(Increase)/decrease in restricted deposits and deposits with exchanges and financial institutions	(834,381)	688,406
(Increase)/decrease in bank balances and clearing settlement funds held on behalf of customers	(753,297)	15,976,603
Increase in account receivables and other assets	(1,203,558)	(408,391)
(Decrease)/increase in other liabilities and contract liabilities	(300,641)	972,389
Increase/(decrease) in account payables to brokerage clients	6,612,143	(15,980,484)
Increase/(decrease) in financial liabilities at fair value through profit or loss and derivatives financial liabilities	4,569,584	(632,792)
Increase in repurchase agreements	14,153,869	3,008,348
(Decrease)/increase placements from banks and other financial institutions	(9,935,238)	37,669
Cash (used in)/generated from operations	(11,525,729)	1,855,152
Income taxes paid	(194,880)	(236,379)
Interest paid	(1,123,190)	(1,104,098)
Net cash (used in)/generated from operating activities	(12,843,799)	514,675

The accompanying notes form part of this interim financial report.

Interim Report 2025 DFZQ

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2025 - unaudited

(Expressed in thousands of Renminbi, unless otherwise stated)

	Note	Six months ended 30 June
		2025
(Unaudited)	2024
(Unaudited)
INVESTING ACTIVITIES
Dividends and interest received from investments		2,263,695	2,193,926
Proceeds on disposal of property and equipment and investment properties		6,459	162,358
Proceeds on disposal or redemption of:
financial assets at fair value through profit or loss		-	11,346,603
equity instruments at fair value through other comprehensive income		833,548	443,432
debt instruments at fair value through other comprehensive income		192,738,622	159,421,512
debt instruments measured at amortised cost		-	-
Capital injection in associates		(35,000)	-
Purchases of:
financial assets at fair value through profit or loss		-	(10,635,748)
equity instruments at fair value through other comprehensive income		(7,154,069)	(7,487,227)
debt instruments at fair value through other comprehensive income		(174,769,326)	(153,799,229)
Purchases of property and equipment and other intangible assets		(133,168)	(125,430)
Proceeds from disposal of or capital reduction from associates and others		221,787	149,524
Cash outflow from hedging instrument		-	(5,671)
Net cash generated from investing activities		13,972,548	1,664,050

The accompanying notes form part of this interim financial report.

Interim Report 2025 DFZQ

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2025 - unaudited

(Expressed in thousands of Renminbi, unless otherwise stated)

	Note	Six months ended 30 June
		2025
(Unaudited)	2024
(Unaudited)
FINANCING ACTIVITIES
Proceeds from issuance of debt securities, short-term financing
bills payable and income certificates designated at fair value
through profit and loss		21,943,538	13,895,867
Repayments on debt securities issued, short-term financing
bill payables and income certificates designated at fair value
through profit and loss		(21,039,717)	(19,354,125)
Proceeds from borrowings		4,290,333	1,048,166
Repayments of borrowings		(4,064,963)	(1,491,102)
Repayments of lease liabilities		(180,287)	(180,479)
Dividends paid to shareholders		(843,446)	(1,269,270)
Interest paid on debt securities issued, short-term
financing bills payable and income certificates designated
at fair value through profit and loss		(980,868)	(1,038,949)
Interest paid on borrowings		(35,541)	(43,319)
Interest paid on lease liabilities		(14,594)	(16,740)
Payment for repurchase of A-shares		(250,106)	(11,116)
Payments on capital returned to non-controlling shareholders		-	(4,133)
Net cash used in financing activities		(1,175,651)	(8,465,200)
Net decrease in cash and cash equivalents		(46,902)	(6,286,475)
Cash and cash equivalents at beginning of the period	18	19,744,675	23,090,236
Effect of foreign exchange rate changes		340,391	(6,235)
Cash and cash equivalents at end of the period	18	20,038,164	16,797,526

The accompanying notes form part of this interim financial report.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

1. GENERAL INFORMATION

東方證券股份有限公司, formerly known as Orient Securities Limited Liability Company (東方證券有限責任公司), was a limited liability company established on 10 December 1997. On 8 October 2003, upon approval from the China Securities Regulatory Commission ("CSRC") and the Shanghai Municipal Government, Orient Securities Limited Liability Company was converted into a joint stock limited liability company, and was renamed as 東方證券股份有限公司(the "Company"). On 23 March 2015, the Company became listed on the Shanghai Stock Exchange with the stock code of 600958. On 8 July 2016, the Company became listed on The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") with the stock code of 03958.

The registered office of the Company is located at Orient Securities Building, No. 119, South Zhongshan Road, Shanghai, the People's Republic of China ("PRC").

The Company and its subsidiaries (the "Group") are principally engaged in securities and futures brokerage, margin financing and securities lending, securities investment advisory, securities proprietary trading, asset management, agency sale of financial products, securities underwriting and sponsorship, and other business activities approved by the CSRC.

The condensed consolidated interim financial statements are presented in Renminbi ("RMB"), which is also the functional currency of the Company.

2. BASIS OF ACCOUNTING

These interim financial statements for the six months ended 30 June 2025 have been prepared in accordance with IAS 34, "Interim Financial Reporting", as well as with all applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited.

The condensed consolidated interim financial information should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 December 2024 ("last annual financial statements"). They do not include all of the information required for a complete set of financial statements prepared in accordance with International Financial Reporting Standards ("IFRS"). However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in Group's financial position and performance since the last annual financial statements.

The interim financial report has been prepared in accordance with the same accounting policies adopted in last annual financial statements, except for the accounting policy changes that are expected to be reflected in the 2025 annual financial statements. Details of any changes in accounting policies are set out in Note 4.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements For the six months ended 30 June 2025 (Expressed in thousands of Renminbi, unless otherwise stated)

3. USE OF JUDGEMENTS AND ESTIMATES

The preparation of condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, and income and expenses. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainties were the same as those that applied to the Group’s consolidated financial statements for the year ended 31 December 2024.

4. CHANGES IN ACCOUNTING POLICIES

Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended 31 December 2024.

(i) The Group has applied the amendments to IAS 21, The effects of changes in foreign exchange rates – Lack of exchangeability issued by the International Accounting Standards Board (“IASB”) to this interim financial report for the current accounting period. The amendments do not have a material impact on this interim report as the Group has not entered into any foreign currency transactions in which the foreign currency is not exchangeable into another currency.

(ii) Voluntary Change in Accounting Policy

The Group voluntarily made a change in accounting policy related to physical settlement of contracts to buy or sell bulk commodities that fail the own-use exception. Previously, for contracts involving the sale of bulk commodities, the Group recognised sales revenue and cost of sales when the customer obtained the control of the commodity. Considering the practical guidance issued by the relevant regulatory authority and the economic substance of these transactions, effective on 1 January 2025, such transactions are accounted for as settlement of the sales contracts without recognising any sales revenue or cost of sales. The impact of this change in accounting policy has been applied retrospectively, and comparative figures have been adjusted accordingly.

The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements For the six months ended 30 June 2025 (Expressed in thousands of Renminbi, unless otherwise stated)

5. SEGMENT REPORTING

Information reported to the Board of Directors, being the chief operating decision maker (hereinafter refer to as the "CODM") of the Company, for the purposes of resource allocation and assessment of segment performance focuses on the nature of products sold and services provided by the Group, which is also consistent with the Group's basis of organisation, whereby the businesses are organised and managed separately as individual strategic business units that offer different products and serve different markets. Segment information is measured in accordance with the accounting policies and measurement criteria adopted by each segment when reporting to CODM, which are consistent with the accounting and measurement criteria in the preparation of the condensed consolidated interim financial statements. The inter-segment revenue and expenses arising from internal use of funds are determined by internal transfer price. In 2024, the management of the Group began to allocate resources and assess the segment's performance based on the updated operating segment classification. Comparative figures are re-presented accordingly.

Specifically, the Group's reportable and operating segments are as follows:

(a) The Wealth and Asset Management segment primarily includes services such as securities brokerage, financial products distribution, investment advisory services, margin financing and securities lending, futures business, and asset management services;

(b) The Investment Banking and Alternative Investment segment includes equity underwriting and sponsorship, bond underwriting, financial advisory services, corporate diversified solutions, and alternative investment businesses;

(c) The Institutional and Sales Trading segment consists of proprietary investments, client-driven businesses, market-making activities, research services, and custody services. Proprietary investments involve trading in equities, fixed income, commodities, and foreign exchange. Client-driven business includes OTC derivatives and FICC-based client services (Fixed Income, Currencies, and Commodities);

(d) The International and Other Operations segment mainly focuses on international business conducted through overseas subsidiaries and platforms, including securities and futures brokerage, asset management, investment banking, and margin financing operations. Other non-core business activities are also included in this category.

Inter-segment transactions, if any, are conducted with reference to the prices charged to third parties and there was no change in the basis during the six months ended 30 June 2025 and 2024.

Segment profit/loss represents the profit earned/loss incurred by each segment without allocation of income tax expenses. This is the measure reported to the CODM for the purposes of resource allocation and performance assessment.

Segment assets/liabilities are allocated to each segment. Inter-segment balances eliminations mainly include amount due from/to another segment arising from activities carried out by one segment for another segment.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

5. SEGMENT REPORTING (Continued)

The segment information provided to the CODM for the six months ended 30 June 2025 and 2024 are as follows:

Operating segment

	Wealth and asset management RMB'000	Investment banking and alternative investment RMB'000	Institutional and sales trading RMB'000	International and other operations RMB'000	Segment total RMB'000	Eliminations RMB'000	Consolidated total RMB'000
For the six months ended 30 June 2025
Unaudited
Segment revenue and results
Segment revenue and net investment gains	4,955,993	981,347	4,956,461	2,245,319	13,139,120	(1,224,497)	11,914,623
Segment other income, gains and losses, net	96,455	11,208	98,794	205,316	411,773	(1,765)	410,008
Segment revenue, other income and net gains and losses	5,052,448	992,555	5,055,255	2,450,635	13,550,893	(1,226,262)	12,324,631
Segment expenses	(4,338,381)	(401,781)	(2,225,288)	(2,623,761)	(9,589,211)	1,216,648	(8,372,563)
Segment results	714,067	590,774	2,829,967	(173,126)	3,961,682	(9,614)	3,952,068
Share of results of associates	78,304	57,378	-	205,880	341,562	-	341,562
Profit/(loss) before income tax	792,371	648,152	2,829,967	32,754	4,303,244	(9,614)	4,293,630
As at 30 June 2025
Unaudited
Segment assets and liabilities
Segment assets	182,403,335	9,658,881	200,069,820	71,500,019	463,632,055	(26,273,873)	437,358,182
Segment liabilities	136,902,078	344,033	137,071,700	85,543,419	359,861,230	(7,338,039)	352,523,191
For the six months ended 30 June 2025
Unaudited
Other segment information
Amounts included in the measure of segment profit or loss or segment assets:
Depreciation and amortisation	214,634	21,861	27,898	129,854	394,247	(3,021)	391,226
Charge for impairment losses	68,444	(259)	3,642	(75,321)	(3,494)	-	(3,494)
Capital expenditure	181,971	2,054	192	91,165	275,382	-	275,382

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

5. SEGMENT REPORTING (Continued)

Operating segment (Continued)

	Wealth and asset management RMB'000	Investment banking and alternative investment RMB'000	Institutional and sales trading RMB'000	International and other operations RMB'000	Segment total RMB'000	Eliminations RMB'000	Consolidated total RMB'000
For the six months ended 30 June 2024
Unaudited
Segment revenue and results
Segment revenue and net investment gains	4,283,213	677,266	3,892,403	3,357,819	12,210,701	(2,696,484)	9,514,217
Segment other income, gains and losses, net	90,250	66,667	(566)	55,154	211,505	-	211,505
Segment revenue, other income and net gains and losses
Segment expenses	4,373,463	743,933	3,891,837	3,412,973	12,422,206	(2,696,484)	9,725,722
	(4,402,831)	(643,303)	(2,063,294)	(2,120,616)	(9,230,044)	1,550,639	(7,679,405)
Segment results	(29,368)	100,630	1,828,543	1,292,357	3,192,162	(1,145,845)	2,046,317
Share of results of associates	238,418	8,623	-	(29,825)	217,216	7,542	224,758
Profit/(loss) before income tax	209,050	109,253	1,828,543	1,262,532	3,409,378	(1,138,303)	2,271,075
As at 30 June 2024
Unaudited
Segment assets and liabilities
Segment assets	155,615,236	12,587,158	168,232,270	55,211,439	391,646,103	(24,099,249)	367,546,854
Segment liabilities	105,574,052	2,326,265	112,030,689	71,634,854	291,565,860	(4,440,701)	287,125,159
For the six months ended 30 June 2024
Unaudited
Other segment information
Amounts included in the measure of segment profit or loss or segment assets:
Depreciation and amortisation	216,035	26,330	27,286	134,042	403,693	-	403,693
Charge for impairment losses	297,240	82	12,806	895	311,023	-	311,023
Capital expenditure	312,411	1,317	8,248	644,427	966,403	-	966,403

The Group's non-current assets are mainly located in the PRC (country of domicile). The Group's revenue are substantially derived from its operations in the PRC.

The Group has no single customer which contributes to 10 percent or more of the Group's revenue for the six months ended 30 June 2025 and 2024.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

6. COMMISSION AND FEE INCOME

	Six months ended 30 June
	2025 RMB’000 (Unaudited)	2024 RMB’000 (Unaudited)
Commission on securities dealing, broking and handling fee income	1,311,610	962,319
Asset and fund management fee income	644,632	744,134
Underwriting, sponsors and financial advisory fee income	770,408	591,701
Commission on futures and options contracts dealing, broking and handling fee income	2,194,848	1,964,447
Consultancy fee income	45,682	38,373
Others	161,832	161,514
Total	5,129,012	4,462,488

7. INTEREST INCOME

	Six months ended 30 June
	2025 RMB’000 (Unaudited)	2024 RMB’000 (Unaudited)
Advances to customers	620,657	533,493
Financial assets held under resale agreements	40,612	70,321
Deposits with exchanges and financial institutions and bank balances	706,616	749,374
Interest income from debt instruments measured at amortised cost	23,640	23,704
Interest income from debt instruments at fair value through other comprehensive income ("FVOCI")	1,368,291	1,399,036
Others	5,440	419
Total	2,765,256	2,776,347

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

8. NET INVESTMENT GAINS

	Six months ended 30 June
	2025 RMB'000 (Unaudited)	2024 RMB'000 (Unaudited)
Net realised gains from disposal of debt instruments at FVOCI	1,517,399	1,426,934
Net realised gains from disposal of financial assets at fair value through profit or loss ("FVTPL")	1,212,312	621,473
Net realised losses arising from financial liabilities at FVTPL	(214,741)	(430,059)
Net realised losses arising from derivative financial instruments	(362,733)	(816,739)
Dividend income from equity instruments at FVOCI	620,017	277,596
Dividend income and interest income from financial assets at FVTPL	1,083,188	1,023,760
Unrealised fair value change of financial assets at FVTPL	527,180	(310,096)
Unrealised fair value change of financial liabilities at FVTPL	350,781	32,791
Unrealised fair value change of derivative financial instruments	(481,350)	411,273
Others	(231,698)	38,449
Total	4,020,355	2,275,382

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

9. OTHER INCOME, GAINS AND LOSSES, NET

	Six months ended 30 June
	2025 RMB'000 (Unaudited)	2024 RMB'000 (Unaudited)
Foreign exchange gains, net	233,551	15,269
Rental income	851	2,152
Government grants	121,295	125,286
Others	54,311	68,798
Total	410,008	211,505

10. DEPRECIATION AND AMORTISATION

	Six months ended 30 June
	2025 RMB'000 (Unaudited)	2024 RMB'000 (Unaudited)
Depreciation of property and equipment	134,645	143,551
Depreciation of right-of-use assets	179,241	179,421
Depreciation of investment properties	256	3,416
Amortisation of other intangible assets	77,084	77,305
Total	391,226	403,693

11. STAFF COSTS

Staff costs mainly include salaries, bonus and allowances amounting to RMB2,129 million and RMB1,533 million for the period ended 30 June 2025 and 2024 respectively.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

12. INTEREST EXPENSES

	Six months ended 30 June
	2025 RMB’000 (Unaudited)	2024 RMB’000 (Unaudited)
Account payables to brokerage clients	23,624	43,058
Financial assets sold under repurchase agreements	873,466	750,484
Borrowings	35,325	44,354
Placements from banks and financial institutions	362,531	249,087
Short-term financing bills payable	74,162	35,624
Debt securities issued	919,319	942,934
Lease liabilities	14,594	16,785
Total	2,303,021	2,082,326

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

13. OTHER OPERATING EXPENSES

	Six months ended 30 June
	2025 RMB'000 (Unaudited)	2024 RMB'000 (Unaudited)
Products distribution expenses	191,769	229,158
Electronic equipment operating expenses	179,359	171,079
Administrative expenses	109,692	127,966
Communication expenses	107,252	133,481
Stock exchanges management fees	67,116	60,978
Tax and surcharges	51,075	41,866
Sundry expenses	45,510	54,664
Advisory expenses	39,305	57,275
Business travel expenses	39,055	52,003
Securities and futures investor protection funds	33,772	31,229
Entertainment expenses	26,537	30,771
Auditor's remuneration	3,973	5,949
Short-term leases and low value assets rental expenses	4,900	5,437
Donation	3,365	2,979
Others	59,193	18,271
Total	961,873	1,023,106

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

14. IMPAIRMENT LOSSES UNDER EXPECTED CREDIT LOSS MODEL, NET OF REVERSAL

	Six months ended 30 June
	2025 RMB'000 (Unaudited)	2024 RMB'000 (Unaudited)
Expected credit losses ("ECL") in respect of
- Reverse repurchase agreements	67,216	301,764
- Advances to customers	1,028	185
- Account receivables and other receivables	(75,798)	(2,160)
- Debt instruments at FVOCI	3,527	12,343
- Debt instruments measured at amortised cost	262	6
Total	(3,765)	312,138

15. INCOME TAX EXPENSE

	Six months ended 30 June
	2025 RMB'000 (Unaudited)	2024 RMB'000 (Unaudited)
Current tax:
- PRC Enterprise Income Tax	280,544	232,245
- Hong Kong Profits Tax	10,116	2,997
	290,660	235,242
Adjustments in respect of current income tax in relation to prior years:
- PRC Enterprise Income Tax	10,205	(4,654)
Deferred tax	529,862	(71,191)
Total	830,727	159,397

Under the Enterprise Income Tax of the PRC and its Implementation Regulation (the "EIT Law"), the tax rate of the Group's PRC subsidiaries is 25%.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

16. EARNINGS PER SHARE

The calculation of basic earnings per share attributable to shareholders of the Company is as follows:

	Six months ended 30 June
	2025
(Unaudited)	2024
(Unaudited)
Earnings for the purpose of basic earnings per share (RMB'000):
Profit for the period attributable to equity holders of the Company	3,463,071	2,111,371
Less: profit attributable to holders of perpetual subordinated bond	(117,774)	(118,750)
Subtotal	3,345,297	1,992,621
Number of shares (in thousand):
Number of issued shares on 1 January	8,461,802	8,463,159
Effect of treasury stock (Note 43)	(4,271)	(1,131)
Weighted average number of ordinary shares in issue	8,457,531	8,462,028
Basic earnings per share (RMB Yuan)	0.40	0.24

For the six months ended 30 June 2025 and 2024, there were no potential ordinary shares in issue.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

17. CASH AND BANK BALANCES

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| House accounts | 16,686,986 | 19,127,541 |
| including: restricted bank deposits (Note a) | 1,725,834 | 2,095,282 |
| Cash held on behalf of clients (Note b) | 80,009,412 | 83,965,560 |
| Total | 96,696,398 | 103,093,101 |

Cash and bank balances comprise cash on hand and demand deposits which bear interest at the prevailing market rates.

Note a: The restricted bank deposits as of 30 June 2025 and 31 December 2024 included pledged bank deposits and other restricted bank deposits.

Note b: The Group maintains bank accounts to hold customers' deposits arising from normal business transactions. The Group has recognised the corresponding amount in account payables to brokerage clients (Note 37).

18. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise the following:

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Cash and bank balances | 16,656,115 | 19,064,050 |
| Clearing settlement funds | 7,700,656 | 7,741,316 |
| Less: clearing settlement funds of
Shanghai Orient Securities Futures Co., Ltd. | (16,000) | (16,000) |
| bank deposits with original maturity of more than three months | (2,576,773) | (4,949,409) |
| restricted bank deposits | (1,725,834) | (2,095,282) |
| Total | 20,038,164 | 19,744,675 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

19. CLEARING SETTLEMENT FUNDS

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Clearing settlement funds held with clearing houses for: | | |
| House accounts | 7,700,656 | 7,741,316 |
| Clients | 12,145,336 | 7,435,891 |
| Total | 19,845,992 | 15,177,207 |

20. DEPOSITS WITH EXCHANGES AND FINANCIAL INSTITUTIONS

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Trading deposits | 29,834,658 | 26,331,883 |
| Credit deposits | 52,669 | 42,396 |
| Performance deposits | 1,376,123 | 1,280,086 |
| Total | 31,263,450 | 27,654,365 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

21. DERIVATIVE FINANCIAL INSTRUMENTS

As at 30 June 2025 (Unaudited)

| | Notional amounts
RMB'000 | Fair Value Assets
RMB'000 | Liabilities
RMB'000 |
| --- | --- | --- | --- |
| Non-hedging instruments | | | |
| Interest rate derivatives | | | |
| Interest rate swaps | 1,618,125,160 | 171,561 | 165,281 |
| Treasury bond futures | 69,802,197 | 1,940 | 869 |
| Collar options | 4,532,775 | 565 | 23,062 |
| Equity derivatives | | | |
| Stock index futures | 8,758,575 | - | - |
| Equity linked derivatives | 4,093,250 | 32,650 | 168,016 |
| Stock index options | 17,019,369 | 67,620 | 203,592 |
| Equity total return swap | 5,096,369 | 62,068 | 126,062 |
| Credit derivatives | | | |
| Credit default swaps | 1,158,000 | 10,331 | 127 |
| Other derivative instruments | | | |
| Non-equity total return swap | 12,168,053 | 143,350 | 115,810 |
| Foreign exchange options | 24,140,454 | 19,412 | 71,002 |
| Foreign exchange swaps | 100,348,973 | 74,575 | 55,339 |
| Foreign exchange forwards | 942,145 | 118 | 18 |
| Commodity futures | 20,317,862 | - | - |
| Commodity options | 46,717,522 | 1,348,264 | 1,428,983 |
| Gold swaps | 20,191,036 | 889 | - |
| Commodity forwards | 26,158,964 | 1,592,842 | 1,445,583 |
| Gold deferred contracts | 80,157 | - | - |
| Standard bond forward | 40,000 | - | - |
| Total | 1,979,690,861 | 3,526,185 | 3,803,744 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

21. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

As at 31 December 2024 (Audited)

	Notional amounts RMB'000	Fair Value Assets RMB'000	Liabilities RMB'000
Non-hedging instruments
Interest rate derivatives
Interest rate swaps	1,285,074,700	123,774	109,530
Treasury bond futures	50,406,459	–	4,383
Collar options	3,070,211	773	57,873
Equity derivatives
Stock index futures	11,411,133	–	–
Equity linked derivatives	5,622,847	410,504	25,773
Stock index options	3,756,767	23,084	109,391
Equity total return swap	5,262,757	72,157	239,300
Credit derivatives
Credit default swaps	1,033,000	12,472	382
Other derivative instruments
Non-equity total return swap	6,142,612	28,082	37,559
Foreign exchange options	9,602,268	–	62,268
Foreign exchange swaps	52,222,313	18,375	3,421
Foreign exchange forward	2,876,689	273,937	153,016
Commodity futures	11,949,734	–	–
Commodity options	26,422,322	719,682	252,241
Gold swaps	5,436,650	2,689	–
Commodity forwards	15,614,518	279,602	37,445
Gold deferred contracts	14,196	–	–
Standard bond forward	260,000	–	–
Total	1,496,179,176	1,965,131	1,092,582

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

22. ADVANCES TO CUSTOMERS

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Loans to margin clients | 27,779,466 | 28,060,402 |
| Less: impairment allowance | (13,823) | (12,877) |
| Total | 27,765,643 | 28,047,525 |

The movements of the impairment allowance are set out below:

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| At the beginning of the period/year | 12,877 | 55,900 |
| Charge for the period/year, net | 1,028 | 732 |
| Write off | - | (44,171) |
| Exchange differences | (82) | 416 |
| At the end of the period/year | 13,823 | 12,877 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

22. ADVANCES TO CUSTOMERS (Continued)

As at 30 June 2025 (Unaudited)

	12-month ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Impairment allowance	2,581	962	10,280	13,823

As at 31 December 2024 (Audited)

	12-month ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Impairment allowance	2,599	95	10,183	12,877

The credit facility limits for margin clients are determined by the discounted market value of the collateral securities accepted by the Group.

The loans to margin clients which are secured by the underlying cash collateral (Note 37) and pledged securities are interest bearing. The Group maintains a list of approved securities for margin lending at a specified loan-to-collateral ratio. Any excess in the lending ratio will trigger a margin call when the customers have to make up the difference.

Loan to margin clients were secured by the customers' securities and cash collateral, which were pledged to the Group as collateral. The undiscounted market values of pledged securities amounted to approximately RMB90,224 million and RMB87,211 million as at 30 June 2025 and 31 December 2024, respectively.

The directors of the Company are of the opinion that the aging analysis does not give additional value in view of the nature of the securities margin financing business. As a result, no aging analysis is disclosed.

The amount of advances to customers pledged due to the repurchase agreements was RMB2,965 million and RMB2,961 million as at 30 June 2025 and 31 December 2024, respectively.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

23. ACCOUNT RECEIVABLES

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Account receivables from/related to: | | |
| - Clearing house | 360,664 | 478,763 |
| - Brokers | 972,345 | 119,404 |
| - Asset management fee and trading seats commission | 325,081 | 295,631 |
| - Advisory and investment banking commission | 173,692 | 86,978 |
| Subtotal | 1,831,782 | 980,776 |
| Less: impairment allowance | (7,493) | (7,412) |
| Total | 1,824,289 | 973,364 |

Aging analysis of account receivables from the revenue recognition dates is as follows:

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Within 1 year | 1,808,375 | 959,172 |
| Between 1 and 2 years | 3,818 | 4,937 |
| Between 2 and 3 years | 9,329 | 6,490 |
| Over 3 years | 2,767 | 2,765 |
| Total | 1,824,289 | 973,364 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

23. ACCOUNT RECEIVABLES (Continued)

The movements of the impairment allowance are set out below:

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| At the beginning of the period/year | 7,412 | 4,139 |
| Charge for the period/year, net | 90 | 3,219 |
| Write off for the period/year | - | - |
| Exchange differences | (9) | 54 |
| At the end of the period/year | 7,493 | 7,412 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

24. REVERSE REPURCHASE AGREEMENTS

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Analysed by collateral type: | | |
| – Stocks | 3,007,090 | 3,128,897 |
| – Bonds | 2,470,991 | 3,350,182 |
| Others | 2,709 | 2,470 |
| Subtotal | 5,480,790 | 6,481,549 |
| Less: impairment allowance | (2,465,721) | (2,497,446) |
| | 3,015,069 | 3,984,103 |
| Analysed by market: | | |
| – Stock exchanges | 3,588,647 | 3,829,101 |
| – Inter-bank market | 1,889,434 | 2,649,978 |
| Others | 2,709 | 2,470 |
| Less: impairment allowance | (2,465,721) | (2,497,446) |
| Total | 3,015,069 | 3,984,103 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

24. REVERSE REPURCHASE AGREEMENTS (Continued)

The movements of the impairment allowance are set out below:

	As at 30 June 2025 RMB'000 (Unaudited)	As at 31 December 2024 RMB'000 (Audited)
At the beginning of the period/year	2,497,446	4,889,101
Charge for the period/year, net	67,216	387,807
Transfer out for the period/year	(98,941)	(2,714,462)
Write off for the period/year	–	(65,000)
At the end of the period/year	2,465,721	2,497,446

As at 30 June 2025 (unaudited)

	12-month ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Impairment allowance	–	–	2,465,721	2,465,721

As at 31 December 2024 (audited)

	12-month ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Impairment allowance	–	–	2,497,446	2,497,446

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

25. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Analysed by type: | | |
| - Debt securities (Note a) | 60,288,448 | 38,990,482 |
| - Equity securities | 7,764,703 | 7,142,556 |
| - Mutual funds | 26,434,926 | 22,280,883 |
| - Other investments (Note b) | 21,849,939 | 21,775,410 |
| Total | 116,338,016 | 90,189,331 |
| Analysed as: | | |
| - Listed | 30,604,262 | 24,059,150 |
| - Unlisted | 85,733,754 | 66,130,181 |
| Total | 116,338,016 | 90,189,331 |

Note a: Debt securities include convertible bonds with contractual terms giving rise to cash flows that are not solely payments of principal and interest on the principal outstanding. Accordingly, they are measured at FVTPL.
Note b: Other investments mainly represent investments in collective asset management schemes issued and managed by the Group, perpetual instruments, wealth management products issued by banks and targeted asset management schemes (or trust investments) managed by non-bank financial institutions.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

26. DEBT INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Analysed by type: | | |
| - Government bonds | 21,321,727 | 27,245,279 |
| - Bonds issued by policy banks | 714,948 | 5,225,684 |
| - Bonds issued by commercial banks and other financial institutions | 6,329,665 | 6,415,593 |
| - Other debt securities (Note) | 66,063,280 | 71,633,355 |
| Total | 94,429,620 | 110,519,911 |
| Analysed as: | | |
| - Listed | 42,787,204 | 57,438,259 |
| - Unlisted | 51,642,416 | 53,081,652 |
| Total | 94,429,620 | 110,519,911 |

Note: Other debt securities mainly comprise bonds and notes issued by corporates.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

26. DEBT INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Continued)

The movements of the impairment allowance are set out below:

	As at 30 June 2025 RMB'000 (Unaudited)	As at 31 December 2024 RMB'000 (Audited)
At the beginning of the period/year	243,305	174,122
Charge for the period/year, net	3,527	69,509
Write off for the period/year	-	(375)
Exchange difference	(121)	49
At the end of the period/year	246,711	243,305

As at 30 June 2025 (unaudited)

	12-month ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Impairment allowance	29,795	-	216,916	246,711

As at 31 December 2024 (audited)

	12-month ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Impairment allowance	78,701	-	164,604	243,305

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

27. EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Analysed by type: | | |
| - Equity securities (Note a) | 12,253,884 | 10,847,983 |
| - Perpetual instruments (Note b) | 11,643,271 | 7,669,118 |
| - Others | 2,731,937 | 1,117,499 |
| Total | 26,629,092 | 19,634,600 |
| Analysed as: | | |
| - Listed (Note c) | 16,748,830 | 13,037,514 |
| - Unlisted (Note d) | 9,880,262 | 6,597,086 |
| Total | 26,629,092 | 19,634,600 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

27. EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Continued)

Note a: The above equity investments include those ordinary shares of the entities listed on the Shanghai Stock Exchange, the Shenzhen Stock Exchange, the Hong Kong Stock Exchange and those equity securities traded on National Equities Exchange and Quotations (the "NEEQ"). These investments are not held for trading, instead, they are held for long-term strategic purposes. The Group has elected to designate these investments in equity instruments as at FVOCI as they believe that recognising short-term fluctuations in these investments' fair value in profit or loss would not be consistent with the Group's strategy of holding these investments for long-term purposes and realising their performance potential in the long run.

Besides, some of the above equity investments represent the Group's equity interest in private entities established in the PRC. The directors of the Company have elected to designate these investments in equity instruments as at FVOCI for the strategy of holding these investments for long-term purposes.

In the current year, the Group disposed of certain investments in equity securities traded on the equity investments listed on stock exchanges as these investments no longer meet the investment objective of the Group.

Note c: Securities traded on stock exchanges are included in the "Listed" category.

Note d: The unlisted perpetual instruments were traded on inter-bank market.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

28. DEBT INSTRUMENTS MEASURED AT AMORTISED COST

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Analysed by type: | | |
| - Government bonds | 957,543 | 957,620 |
| - Bonds issued by commercial banks and other financial institutions | 435,815 | 440,548 |
| - Other debt securities (Note a) | 182,470 | 188,808 |
| Less: impairment allowance | (333) | (71) |
| Total | 1,575,495 | 1,586,905 |
| Analysed as: | | |
| - Listed | 1,139,680 | 1,146,357 |
| - Unlisted (Note b) | 435,815 | 440,548 |
| Total | 1,575,495 | 1,586,905 |

Note a: Other debt securities mainly comprise bonds and notes issued by corporates.
Note b: The unlisted debt securities were traded on inter-bank market.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

28. DEBT INSTRUMENTS MEASURED AT AMORTISED COST (Continued)

The movements of the impairment allowance are set out below:

	As at 30 June 2025 RMB'000 (Unaudited)	As at 31 December 2024 RMB'000 (Audited)
At the beginning of the period/year	71	62
Charge of the period/year, net	262	9
At the end of the period/year	333	71

As at 30 June 2025 (unaudited)

	12-month ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Impairment allowance	333	-	-	333

As at 31 December 2024 (audited)

	12-month ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Impairment allowance	71	-	-	71

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

29. INVESTMENTS IN ASSOCIATES

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Cost of investments in associates | 2,189,006 | 2,337,290 |
| Share of post-acquisition profits and other comprehensive income,
net of dividends received | 4,279,723 | 4,199,279 |
| Less: impairment allowance (Note a) | (408,717) | (408,446) |
| Total | 6,060,012 | 6,128,123 |

Note a: The impairment allowance of investments in associates as at 30 June 2025 and 31 December 2024 related to 2 associates invested by the Group.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

29. INVESTMENTS IN ASSOCIATES (Continued)

At the end of each reporting period, the Group had the following significant associate accounted for using the equity method:

Name of associate	Place and date of establishment	Equity interest held by the Group
		As at 30 June 2025 (Unaudited)	As at 31 December 2024 (Audited)	Principal activities
匯添富基金管理股份有限公司	PRC	35.41%	35.41%	Fund management
China Universal Asset Management Company Limited ("China Universal")	3 February 2005

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

29. INVESTMENTS IN ASSOCIATES (Continued)

The summarised consolidated interim financial information of China Universal, which is an individually significant associate to the Group that is accounted for using equity method, prepared in accordance with IFRSs, is set out below:

China Universal

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Total assets | 14,682,170 | 14,352,665 |
| Total liabilities | 3,859,429 | 3,575,013 |
| Net assets | 10,822,741 | 10,777,652 |
| | Six months ended June 30 | |
| --- | --- | --- |
| | 2025
RMB'000
(Unaudited) | 2024
RMB'000
(Unaudited) |
| Total revenue | 2,340,847 | 2,222,323 |
| Profit for the period | 479,877 | 689,748 |
| Other comprehensive income | (5,889) | 3,413 |
| Total comprehensive income | 473,988 | 693,161 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

29. INVESTMENTS IN ASSOCIATES (Continued)

China Universal (Continued)

Reconciliation of the above consolidated interim financial information to the carrying amount of the interest in above associate recognised in the financial statements is as follows:

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Equity attributable to equity holders of the associate | 10,822,741 | 10,777,652 |
| Proportion of equity interests held by the Group | 35.41% | 35.41% |
| Carrying amount | 3,832,336 | 3,816,237 |

Aggregate information of other associates that are not individually material:

	Six months ended June 30
	2025
RMB'000
(Unaudited)	2024
RMB'000
(Unaudited)
The Group's share of profits/(losses)	171,637	(19,482)
The Group's share of other comprehensive income	(9,980)	360
The Group's share of total comprehensive income	161,657	(19,122)
	As at
30 June
2025
RMB'000
(Unaudited)	As at
31 December
2024
RMB'000
(Audited)
Aggregate carrying amount of the Group's interests in these associates	2,227,676	2,311,887

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements For the six months ended 30 June 2025 (Expressed in thousands of Renminbi, unless otherwise stated)

30. INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES

30.1 Structured entities set up and managed by the Group

The Group served as the investment manager of structured entities (including funds, asset management schemes and limited partnerships), therefore had power over them during the periods. Except for the structured entities the Group has consolidated as disclosed in Note 31, based on the assessment, these structured entities are not controlled by the Group. The Group therefore did not consolidate these structured entities.

The total net assets of unconsolidated funds, asset management schemes and limited partnerships managed by the Group amounted to RMB270,590 million and RMB247,085 million as at 30 June 2025 and 31 December 2024, respectively. The Group classified the investments in unconsolidated funds, asset management schemes and limited partnership managed by the Group as financial assets at FVTPL and investments in associates as at 30 June 2025 and 31 December 2024. As at 30 June 2025 and 31 December 2024, the carrying amounts of the Group's interests in unconsolidated funds, asset management schemes and limited partnerships were RMB2,725 million and RMB3,000 million, respectively, which approximates the maximum risk exposure to the Group. The fund management fee income from the unconsolidated funds, asset management schemes and limited partnerships managed by the Group for the six months ended 30 June 2025 and 2024, were RMB645 million and RMB744 million, respectively.

The table below shows the carrying amount of unconsolidated funds, asset management schemes and limited partnership in which the Group acted as investment manager and held interests and its maximum exposure to loss in relation to those interests as at 30 June 2025 and 31 December 2024.

As at 30 June 2025 (unaudited)

	Carrying amount RMB'000	Maximum exposure RMB'000
Financial assets at fair value through profit or loss	2,211,668	2,211,668
Investments in associates	513,188	513,188
Total	2,724,856	2,724,856

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

30. INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES (Continued)

30.1 Structured entities set up and managed by the Group (Continued)

As at 31 December 2024 (audited)

	Carrying amount RMB'000	Maximum exposure RMB'000
Financial assets at fair value through profit or loss	2,392,114	2,392,114
Investments in associates	607,897	607,897
Total	3,000,011	3,000,011

30.2 Structured entities set up and managed by third party institutions in which the Group holds an interest

The Group also holds interest in structured entities such as funds, asset management schemes, trust schemes, wealth management products that are issued by banks or other financial institutions and limited partnership. These structured entities are not consolidated by the Group. The nature and purpose of these structured entities are to generate fee income from managing assets on behalf of investors. These vehicles are financed through the issue of units to investors.

The table below shows the carrying amount of unconsolidated funds, asset management schemes, trust schemes, wealth management products and limited partnership in which the third party acted as investment manager and the Group held interests and its maximum exposure to loss in relation to those interests as at 30 June 2025 and 31 December 2024.

As at 30 June 2025 (unaudited)

	Carrying amount RMB'000	Maximum exposure RMB'000
Financial assets at fair value through profit or loss	43,238,711	43,238,711
Investments in associates	142,584	142,584
Total	43,381,295	43,381,295

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

30. INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES (Continued)

30.2 Structured entities set up and managed by third party institutions in which the Group holds an interest (Continued)

As at 31 December 2024 (audited)

	Carrying amount RMB'000	Maximum exposure RMB'000
Financial assets at fair value through profit or loss	37,295,103	37,295,103
Investments in associates	139,920	139,920
Total	37,435,023	37,435,023

31. INTERESTS IN CONSOLIDATED STRUCTURED ENTITIES

The Group has consolidated certain structured entities including asset management schemes, funds and limited partnerships. For the structured entities where the Group involves as manager and also as investor, the Group assesses whether the combination of investments it held together with its remuneration creates exposure to variability of returns from the activities of the structured entities that is of such significance that it indicates that the Group is a principal.

Interests in all consolidated asset management schemes, funds and limited partnerships held by the Group amounted to fair value of RMB20,735 million and RMB11,241 million as at 30 June 2025 and 31 December 2024, respectively.

Interests held by other interest holders are included in financial liabilities designated at FVTPL in the condensed consolidated statement of financial position.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

32. PROPERTY AND EQUIPMENT

	Land and buildings RMB'000	Electronic and communication equipment RMB'000	Motor vehicles RMB'000	Office equipment RMB'000	Leasehold improvements RMB'000	Construction in progress RMB'000	Total RMB'000
Unaudited
COST
As at 1 January 2025	1,884,009	1,216,548	35,818	157,319	737,254	772,202	4,803,150
Additions	-	26,668	193	2,972	542	58,419	88,794
Disposals	-	(25,818)	(877)	(7,510)	-	-	(34,205)
Transfer during the period	37,974	36,366	-	392	33,204	(73,025)	34,911
Exchange difference	-	210	-	246	-	-	456
As at 30 June 2025	1,921,983	1,253,974	35,134	153,419	771,000	757,596	4,893,106
ACCUMULATED DEPRECIATION
As at 1 January 2025	447,189	955,934	31,605	119,575	646,651	-	2,200,954
Charge for the period	30,743	65,731	832	7,619	29,720	-	134,645
Eliminated on disposals	-	(21,229)	(850)	(5,723)	-	-	(27,802)
Transfer during the period	12,813	-	-	-	-	-	12,813
Exchange difference	-	157	-	50	(2)	-	205
As at 30 June 2025	490,745	1,000,593	31,587	121,521	676,369	-	2,320,815
CARRYING VALUES
As at 30 June 2025	1,431,238	253,381	3,547	31,898	94,631	757,596	2,572,291

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

32. PROPERTY AND EQUIPMENT (Continued)

	Land and buildings RMB'000	Electronic and communication equipment RMB'000	Motor vehicles RMB'000	Office equipment RMB'000	Leasehold improvements RMB'000	Construction in progress RMB'000	Total RMB'000
COST
As at 1 January 2024	1,885,041	1,177,282	39,832	158,691	701,085	765,409	4,727,340
Additions	3,575	56,540	550	6,105	9,927	78,672	155,369
Disposals	-	(59,093)	(4,564)	(9,247)	-	-	(72,904)
Transfer during the year	(4,607)	41,526	-	1,731	26,242	(71,925)	(7,033)
Exchange difference	-	293	-	39	-	46	378
As at 31 December 2024	1,884,009	1,216,548	35,818	157,319	737,254	772,202	4,803,150
ACCUMULATED DEPRECIATION
As at 1 January 2024	386,315	872,014	33,927	113,694	582,021	-	1,987,971
Charge for the year	64,066	140,923	2,106	14,429	64,721	-	286,245
Eliminated on disposals	(3,192)	(57,240)	(4,428)	(8,565)	-	-	(73,425)
Transfer during the year	-	-	-	-	-	-	-
Exchange difference	-	237	-	17	(91)	-	163
As at 31 December 2024	447,189	955,934	31,605	119,575	646,651	-	2,200,954
CARRYING VALUES
As at 31 December 2024	1,436,820	260,614	4,213	37,744	90,603	772,202	2,602,196

The carrying amount of the Group's property and equipment included leasehold interest in land. As the consideration cannot be allocated reliably between non-lease building element and undivided interest in the underlying leasehold land, therefore, the entire property is classified as property and equipment.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

33. DEFERRED TAXATION

The following is the analysis of the deferred tax balances for financial reporting purposes:

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Deferred tax assets | 676,590 | 1,490,513 |
| Deferred tax liabilities | (44,241) | (218) |
| Total | 632,349 | 1,490,295 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Fienminbi, unless otherwise stated)

33. DEFERRED TAXATION (Continued)

The following are the major deferred tax assets and liabilities recognised and movements during the current period and prior year:

	Financial instruments at FVTFL and derivatives RMB'000	Accrued staff cost RMB'000	Financial instruments at FVOCI RMB'000	Allowance for impairment losses RMB'000	Other RMB'000	Total RMB'000
As at 1 January 2025	(387,167)	532,517	(657,505)	1,577,992	424,458	1,490,295
(Charge)/credit to profit or loss	(185,461)	6,809	1,113	57,701	(410,024)	(529,862)
Charge to other comprehensive income	-	-	(327,427)	-	-	(327,427)
Transfer out upon disposal of equity instruments at FVOCI	-	-	(657)	-	-	(657)
As at 30 June 2025	(572,628)	539,326	(984,476)	1,635,693	14,434	632,349
At 1 January 2024	(617,301)	334,223	(81,314)	1,925,007	483,024	2,043,639
Credit/(charge) to profit or loss	225,566	148,803	16,852	(347,015)	(58,566)	(14,360)
Credit/(charge) to other comprehensive income	3,150	-	(607,590)	-	-	(604,440)
Transfer out upon disposal of equity instruments at FVOCI	1,418	-	14,547	-	-	15,965
Other	-	49,491	-	-	-	49,491
As at 31 December 2024	(387,167)	532,517	(657,505)	1,577,992	424,458	1,490,295

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

34. OTHER ASSETS

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Other receivables | 4,397,769 | 4,158,020 |
| Inventories | 1,598,535 | 1,564,301 |
| Prepayments | 270,063 | 242,005 |
| Others | 947,973 | 552,668 |
| Less: impairment allowance | (3,327,989) | (3,234,881) |
| Total | 3,886,351 | 3,282,113 |

The movements of the impairment allowance are set out below:

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| At the beginning of the period/year | 3,234,881 | 1,950,440 |
| (Reversal of)/charge for the period/year, net | (75,888) | 52 |
| Transfer in | 98,941 | 2,714,462 |
| Recovery/(write off) for the period/year | 70,057 | (1,430,919) |
| Exchange differences | (2) | 846 |
| At the end of the period/year | 3,327,989 | 3,234,881 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

34. OTHER ASSETS (Continued)

As at 30 June 2025 (unaudited)

	12-month ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Impairment allowance	2,722	–	3,325,267	3,327,989

As at 31 December 2024 (audited)

	12-month ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
As at 31 December 2024	8,483	–	3,226,398	3,234,881

35. PLACEMENTS FROM BANKS AND FINANCIAL INSTITUTIONS

	As at 30 June 2025 RMB'000 (Unaudited)	As at 31 December 2024 RMB'000 (Audited)
Placements from banks (Note a)	23,550,054	25,130,563
Placements from China Securities Finance Corporation Limited (Note b)	5,424,784	5,224,352
Placements from Shanghai Gold Exchange (Note c)	352,425	8,839,710
Total	29,327,263	39,194,625

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

35. PLACEMENTS FROM BANKS AND FINANCIAL INSTITUTIONS (Continued)

Note a: As at 30 June 2025, the effective interest rates bearing on the outstanding amount of placements from banks varied from 1.20% to 5.11% (31 December 2024: 1.00% to 5.05%) per annum. The amount of placements from banks were repayable within eight months (31 December 2024: one year) from the end of the reporting period.

Note b: As at 30 June 2025, the effective interest rate of placements from China Securities Finance Corporation Limited varied from 1.68% to 2.18% (31 December 2024: 2.10% to 2.61%) per annum. The amount of placements from China Securities Finance Corporation Limited will be repayable within six months (31 December 2024: within one year) from the end of the reporting period.

Note c: As at 30 June 2025, the effective interest rates of placements from Shanghai Gold Exchange is 2% (31 December 2024: 1.80% to 2.57%) per annum. The amount of placements from Shanghai Gold Exchange were repayable within one month (31 December 2024: within one year) from the end of the reporting period.

36. SHORT-TERM DEBT INSTRUMENTS

| | As at
30 June
2026
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Short-term commercial paper and corporate bonds (Note a) | 4,030,806 | 3,008,107 |
| Income certificates (Note b) | 100,089 | 2,670,798 |
| Total | 4,130,895 | 5,678,905 |
| Analysed by market: | | |
| Stock exchange | 4,030,806 | 3,008,107 |
| Over the counter | 100,089 | 2,670,798 |
| Total | 4,130,895 | 5,678,905 |

Note a: As at 30 June 2025, the yield of the outstanding short-term commercial paper and corporate bond ranged from 1.71% to 1.76% (31 December 2024: 1.99%) per annum.

Note b: As at 30 June 2025, the yields of all the short-term outstanding income certificates issued by the Group ranged from 2.10% to 2.25% (31 December 2024: 2.00% to 2.80%) per annum.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

37. ACCOUNT PAYABLES TO BROKERAGE CLIENTS

The majority of the account payables balances are repayable on demand except for certain balances representing margin deposits and cash collateral received from clients for their trading activities under the normal course of business. Only the excess amounts over the required margin deposits and cash collateral stipulated are repayable on demand.

No aging analysis is disclosed as in the opinion of the directors of the Company, the aging analysis does not give additional value in view of the nature of these businesses.

Account payables to brokerage clients mainly include money held on behalf of clients in the banks and clearing houses by the Group and are interest-bearing at the prevailing market interest rate.

As at 30 June 2025 and 31 December 2024, included in the Group's account payable to brokerage clients were approximately RMB3,917 million and RMB4,464 million, respectively, of margin deposits and cash collateral received from clients for margin financing and securities lending arrangement.

38. REPURCHASE AGREEMENTS

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Analysed by collateral type | | |
| – Bonds | 81,293,869 | 80,198,270 |
| – Funds | 9,807,985 | 1,344,780 |
| – Advances to customers | 2,901,502 | 2,901,947 |
| – Perpetual instruments | 6,146,963 | 1,471,303 |
| Total | 100,150,319 | 85,916,300 |
| Analysed by market | | |
| – Stock exchanges | 46,690,585 | 53,115,946 |
| – Inter-bank market | 45,732,742 | 26,293,066 |
| – Over the counter | 7,726,992 | 6,507,288 |
| Total | 100,150,319 | 85,916,300 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

39. FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Debt securities | 5,986,763 | 7,002,742 |
| Designated at fair value through profit or loss | | |
| - Interests attributable to other holders of consolidated structured entities (Note a) | 258,328 | 288,206 |
| - Income certificates (Note b) | 10,670,317 | 6,978,165 |
| - Placements from banks | 2,973,152 | - |
| - Other (Note c) | 296,449 | 439,388 |
| Total | 20,185,009 | 14,708,501 |

Note b: The income certificates were hybrid contracts containing embedded derivative.

Note c: Other mainly includes structured notes issued by a subsidiary of the Company. The fair value of structured notes is linked to performance of a third-party perpetual bond and asset management schemes. The Group irrevocably designates these financial liabilities as measured at FVTPL to eliminate an accounting mismatch.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

40. BORROWINGS

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Unsecured short-term borrowings repayable within one year | 1,280,479 | 1,081,234 |
| Pledged short-term borrowings | 2,134 | – |
| Pledged long-term borrowings | 466,114 | 468,183 |
| Total | 1,748,727 | 1,549,417 |

As at 30 June 2025, the annual interest rates on the borrowings were in the range of 1.18% to 5.30% (31 December 2024: 3.00% to 5.56%).

41. DEBT SECURITIES ISSUED

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Corporate bonds | 36,525,709 | 34,812,335 |
| Subordinated bonds | 19,982,180 | 20,279,393 |
| Offshore bonds | 2,166,046 | 5,102,574 |
| Income certificates (Note a) | 516,697 | 540,016 |
| Total | 59,190,632 | 60,734,318 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

41. DEBT SECURITIES ISSUED (Continued)

Issues	Currency	Issue amount (Original currency in million)	Issue amount (RMB in million)	Issue date	Maturity date	Coupon rate
17-3 Corporate Bond	RMB	4,000	4,000	03/08/2017	03/08/2027	4.98%
22-1 Corporate Bond	RMB	2,000	2,000	21/07/2022	21/07/2025	2.79%
22-2 Corporate Bond	RMB	1,500	1,500	21/07/2022	21/07/2027	3.18%
22-3 Corporate Bond	RMB	2,000	2,000	25/08/2022	25/08/2027	3.00%
22-4 Corporate Bond	RMB	3,500	3,500	14/12/2022	14/12/2025	3.40%
23-2 Corporate Bond	RMB	2,500	2,500	21/02/2023	21/02/2026	3.13%
23-3 Corporate Bond	RMB	1,600	1,600	21/03/2023	21/03/2028	3.32%
23-4 Corporate Bond	RMB	3,000	3,000	24/05/2023	24/05/2026	2.90%
24-1 Corporate Bond	RMB	1,800	1,800	25/01/2024	25/01/2027	2.73%
24-2 Corporate Bond	RMB	1,000	1,000	08/08/2024	08/08/2029	2.05%
24-3 Corporate Bond	RMB	2,000	2,000	08/08/2024	08/08/2034	2.30%
24-4 Corporate Bond	RMB	3,000	3,000	23/08/2024	23/08/2029	2.18%
24-6 Corporate Bond	RMB	3,000	3,000	17/10/2024	17/10/2029	2.28%
24-8 Corporate Bond	RMB	2,000	2,000	21/11/2024	21/11/2027	2.15%
25-1 Corporate Bond	RMB	2,000	2,000	13/01/2025	15/01/2026	1.64%
25-1 Science and Technology Innovation Bond	RMB	1,000	1,000	13/05/2025	13/05/2028	1.69%
Subtotal			35,900
21-3 Orient Subordinated Bond	RMB	1,500	1,500	16/04/2021	16/04/2026	4.20%
23-1 Orient Subordinated Bond	RMB	3,000	3,000	24/04/2023	24/04/2026	3.30%
23-2 Orient Subordinated Bond	RMB	3,000	3,000	10/08/2023	10/08/2026	3.08%
23-3 Orient Subordinated Bond	RMB	2,800	2,800	30/10/2023	30/10/2026	3.30%
23-4 Orient Subordinated Bond	RMB	700	700	30/10/2023	30/10/2028	3.50%
23-5 Orient Subordinated Bond	RMB	2,000	2,000	23/11/2023	23/11/2026	3.18%
24-1 Orient Subordinated Bond	RMB	2,000	2,000	26/06/2024	26/06/2029	2.33%
24-2 Orient Subordinated Bond	RMB	2,500	2,500	08/07/2024	08/07/2029	2.31%
25-2 Orient Subordinated Bond	RMB	2,200	2,200	17/03/2025	17/03/2030	2.45%
Subtotal			19,700
22-2 Offshore USD Bond	USD	300	2,089	26/10/2022	26/10/2025	5.125%
Subtotal			2,089
Total			57,689

Note a: The amount represents income certificates issued by the Company with maturities of more than one year. As at 30 June 2025, the outstanding income certificates carried yield from 2.15% to 2.58% (31 December 2024: 2.15% to 2.75%) per annum.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

42. OTHER LIABILITIES

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Other account payables | | |
| - Notes payable | 590,388 | 763,826 |
| - Settlement payables | 531,420 | 133,451 |
| - Payables for underwriting and products distribution fees | 187,515 | 200,151 |
| - Others | 281,338 | 74,826 |
| Other payables and accruals | | |
| - Derivatives deposit received from customers | 6,664,983 | 7,431,639 |
| - Futures risk reserve | 299,570 | 284,829 |
| - Acting underwriting securities | - | 385,000 |
| - Value-added taxes and other taxes | 179,548 | 117,752 |
| - Payables for securities and futures investor protection fund | 32,499 | 29,360 |
| - Others | 982,266 | 835,817 |
| Total | 9,749,527 | 10,256,651 |

43. SHARE CAPITAL

All shares issued by the Company are fully paid common shares. The par value is RMB1. The Company's number of shares issued and their nominal value are as follows:

| | Opening
RMB'000 | Addition
RMB'000 | Closing
RMB'000 |
| --- | --- | --- | --- |
| Registered, issued and fully paid ordinary shares
of RMB1 each: | | | |
| Period ended 30 June 2025 (Unaudited) | 8,496,645 | - | 8,496,645 |
| Year ended 31 December 2024 (Audited) | 8,496,645 | - | 8,496,645 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

43. SHARE CAPITAL (Continued)

On 30 October 2023, the Board of Directors of the Company approved "The Proposal to Repurchase the Company's A Shares through Centralised Bidding Transaction" to maintain the Company's market value and to protect the shareholders' interests. These repurchased stocks could be sold through centralised bidding after 12 months or cancelled after 3 years.

On 6 May 2025, the Board of Directors of the Company approved "The Proposal to Repurchase the Company's A Shares through Centralised Bidding Transaction" to maintain the Company's market value and to protect the shareholders' interests. These repurchased stocks could be sold through centralised bidding after 12 months or cancelled after 3 years. As at 30 June 2025, a total of 26,703,157 A shares have been repurchased through centralised bidding transaction at an aggregated consideration of RMB250 million. The details are as follows:

Month of Repurchase	No. of Ordinary shares	Prices per share		Aggregate Consideration paid
		Highest	Lowest
November 2023	30,844,124	RMB9.14	RMB8.81	RMB277 million
December 2023	2,642,300	RMB8.75	RMB8.18	RMB22 million
January 2024	1,356,900	RMB8.33	RMB7.99	RMB11 million
May 2025 – June 2025	26,703,157	RMB9.76	RMB9.19	RMB250 million

44. DIVIDENDS

	Six months ended 30 June
	2025 RMB'000 (Unaudited)	2024 RMB'000 (Unaudited)
Dividends recognised as distribution	843,446	1,269,270
Distribution to holders of other equity instrument	-	237,500
Total	843,446	1,506,770

During the current interim period, a final dividend of RMB1.00 (tax inclusive) per 10 shares in respect of the year ended 31 December 2024 (period ended 30 June 2024: RMB1.50 (tax inclusive) per 10 shares in respect of the year ended 31 December 2023) was proposed by the Board of Directors and approved by the shareholders at the Annual General Meeting of the Company held on 23 May 2025. The aggregate amount of the final dividend declared and paid in the interim period amounted to RMB843,446 thousand (2024: RMB1,269,270 thousand).

During the current interim period, there is no dividend of the Group on perpetual subordinated bond (period ended 30 June 2024: RMB237,500 thousand).

An interim dividend of RMB1.20 (tax inclusive) per 10 shares in respect of the interim period for the six months ended 30 June 2025 (Period for the six months ended 30 June 2024: RMB0.75) was proposed by the Board of Directors.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

45. OTHER EQUITY INSTRUMENT

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Perpetual subordinated bond | 5,000,000 | 5,000,000 |

The Company issued a perpetual subordinated bond with a principal amount of RMB5 billion in August 2020, with the initial interest rate of 4.75% per annum.

The perpetual subordinated bond is unsecured. The interest rate for perpetual subordinated bond is reset every five years. The reset interest rate is determined as the sum of the current base rate and the initial spread plus 300 basis points. The current base rate is defined as the average yield of 5 years treasury from the bond yield curve published on China Bond website 5 working days before the reset date of interest rate. Upon the maturity of every repricing cycle, the Company has the option to extend the maturity of the bond for another repricing cycle or redeem the bond entirely.

The mandatory interest payment events are limited to dividend distributions to ordinary shareholders of the Company and reductions of registered capital within 12 months before the interest payment date.

The perpetual subordinated bond issued by the Company is classified and presented as other equity instrument in the condensed consolidated statement of financial position.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

46. RESERVES

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Capital reserve | 39,528,225 | 39,534,520 |
| Surplus reserve | 5,094,810 | 5,032,049 |
| General reserve | 13,934,110 | 13,249,808 |
| Equity investment revaluation reserve | 1,810,120 | 1,309,773 |
| Debt investment revaluation reserve | 1,434,745 | 890,200 |
| Other investment revaluation reserve | 40,641 | 34,401 |
| Translation reserve | 27,762 | 8,745 |
| Total | 61,870,413 | 60,059,496 |

47. CAPITAL COMMITMENTS AND CONTINGENT LIABILITY

(1) Capital commitments

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Contracted but not provided for | 5,747,641 | 10,723 |

The aforementioned capital commitments mainly represent the securities underwriting commitments of the Group.

(2) Contingent liability

In November 2024, the Company received a legal notice issued by the Shanghai Financial Court in connection with a lawsuit filed by Guangdong Guangzhou Daily Media Co., Ltd. Due to the contract dispute with the Company, the plaintiff is claiming the return of financial advisory fees, compensation for losses, rights – protection costs, totalling RMB328 million, along with related litigation expenses. As of 30 June 2025, the case has not yet come to trial. The management of the Company is of the view that this legal case will not have a material impact on the Group's financial position or operating results at this stage.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

48. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS

(1) Relationship of related parties

Major shareholder of the Company

Following major shareholder holding more than 10% shares of the Company is considered as a related party of the Group:

	Percentage of shares held
	As at
30 June
2025
%
(Unaudited)	As at
31 December
2024
%
(Audited)
申能(集團)有限公司
Shenergy (Group) Company Limited	26.63	26.63

Associates

The details of the associates of the Group are set out in Note 29.

Others

Other related parties include members of the Board of Directors, members of the Board of Supervisors and senior management, close family members of such individuals, and entities controlled or significantly influenced by these individuals.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

48. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(2) Related party transaction and balances

Other than as disclosed elsewhere in these condensed consolidated interim financial statements, the Group had the following material related party transactions and balances:

As at 30 June 2025 and 31 December 2024, the Group had the following material balances with the Company's major shareholder and entities under its control:

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Account payables to brokerage clients | 4,654 | 40,217 |
| Other payables | 2,073 | 794 |
| Other receivables | 908 | - |

For the six months ended 30 June 2025 and 2024, the Group had the following material transactions with the Company's major shareholder and entities under its control:

	Six months ended 30 June
	2025
RMB'000
(Unaudited)	2024
RMB'000
(Unaudited)
Other operating expenses	14,740	10,459
Commission and fee income	1,586	4,742
Other income	1,581	-
Interest expenses	14	15
Net investment gains	-	1

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

48. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(2) Related party transaction and balances (Continued)

As at 30 June 2025 and 31 December 2024, the Group had the following material balances with its associates:

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Account payables to brokerage clients | 124,681 | 43,224 |
| Other receivables | 6,286 | 3,051 |
| Other account payables | – | 496 |

As at June 30, 2025 and December 31, 2024, the Group had the following material investment balances of securities issued by associates:

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Debt instruments at FVOCI | 91,893 | 90,347 |
| Financial assets at FVTPL | 71,732 | 70,634 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

48. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(2) Related party transaction and balances (Continued)

For the six months ended 30 June 2025 and 2024, the Group had the following material transactions with its associates:

	Six months ended 30 June
	2025 RMB'000 (Unaudited)	2024 RMB'000 (Unaudited)
Commission and fee income	25,467	12,166
Interest income	805	1,040
Interest expenses	244	31
Other operating expenses	1	–
Net investment gains	–	1

As at 30 June 2025 and 31 December 2024, the Group had the following material balances with other related parties:

	As at 30 June 2025 RMB'000 (Unaudited)	As at 31 December 2024 RMB'000 (Audited)
Account payables to brokerage clients	23,734	3
Other account payables	132	457
Other receivables	76	892

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

48. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(2) Related party transaction and balances (Continued)

As at June 30, 2025 and December 31, 2024, the Group had the following material investment balances of securities issued by other related parties:

| | As at
30 June
2025
RMB'000
(Unaudited) | As at
31 December
2024
RMB'000
(Audited) |
| --- | --- | --- |
| Financial assets at FVTPL | 524,725 | 682,928 |
| Equity investments at FVOCI | 10,685 | 10,576 |
| Debt instruments at FVOCI | - | 144,030 |

For the six months ended 30 June 2025 and 2024, the Group had the following material transactions with other related parties:

	Six months ended 30 June
	2025
RMB'000
(Unaudited)	2024
RMB'000
(Unaudited)
Interest income	1,052	5,734
Net investment gains	504	9,653
Other operating expenses	154	371
Commission and fee income	116	748
Interest expenses	8	1

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

48. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(3) Key management personnel

During the current interim period, the key management personnel of the Company received the pre-tax salary of RMB4.1175 million from the Company. The final remunerations of key management personnel who received remunerations from the Company during the reporting period are still in the process of being confirmed, and the remaining portion will be disclosed after confirmation.

49. FAIR VALUE OF FINANCIAL INSTRUMENTS

For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Level 1: Inputs are quoted prices (unadjusted) in active market for identical assets or liabilities that the entity can access at the measurement date;

Level 2: Inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

Level 3: Inputs are unobservable inputs for the asset or liability.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

49. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis

The fair value of financial assets and financial liabilities not measured at fair value on a recurring basis is determined by the active market quotation or in accordance with discounted cash flow method.

The key parameters used in discounted cash flow method for financial instruments held by the Group that are not measured at fair value on a recurring basis include interest rates, foreign exchange rates and counterparty credit spreads.

The table below summarizes the carrying amounts and expected fair values of those financial assets and liabilities not presented on the Group’s condensed consolidated statement of financial position at their fair values.

	As at 30 June 2025		As at 31 December 2024
	Carrying amount RMB’000 (Unaudited)	Fair value RMB’000 (Unaudited)	Carrying amount RMB’000 (Audited)	Fair value RMB’000 (Audited)
Financial asset
Debt instruments measured at amortised cost	1,575,495	1,599,652	1,586,905	1,610,773
Financial liability
Debt securities issued
- Corporate bonds	36,525,709	37,250,087	34,812,335	35,716,429
- Subordinated bonds	19,982,180	20,348,076	20,279,393	20,676,902
- Offshore bonds	2,166,046	2,171,117	5,102,574	5,060,420
- Income certificates	516,697	516,375	540,016	539,762
Total	59,190,632	60,285,655	60,734,318	61,993,513

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

49. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis (Continued)

As at 30 June 2025 (unaudited)

| | Level 1
RMB'000 | Level 2
RMB'000 | Level 3
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| Financial asset | | | | |
| Debt instruments measured at amortised cost | – | 1,599,652 | – | 1,599,652 |
| Financial liability | | | | |
| Debt securities issued | – | 60,285,655 | – | 60,285,655 |

As at 31 December 2024 (audited)

| | Level 1
RMB'000 | Level 2
RMB'000 | Level 3
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| Financial asset | | | | |
| Debt instruments measured at amortised cost | 1,159,317 | 451,456 | – | 1,610,773 |
| Financial liability | | | | |
| Debt securities issued | 56,393,331 | 5,600,182 | – | 61,993,513 |

The fair values of financial assets and financial liabilities included in the Level 2 category above have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant input being the discount rate that reflects the credit risk of respective group entities or counterparties.

Except for the above, the directors of the Company consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the Group's condensed consolidated statements of financial position approximate their fair values.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements For the six months ended 30 June 2025 (Expressed in thousands of Renminbi, unless otherwise stated)

49. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of financial assets and financial liabilities that are measured at fair value on a recurring basis

If there is a reliable market quote for a financial instrument, the fair value of the financial instrument is measured based on quoted market price. If a reliable quoted market price is not available, the fair value of the financial instrument is estimated using valuation techniques. For the fair value of financial instruments categorised within Level 2, the valuation techniques applied include discounted cash flow, recent transaction price and net asset value method. The significant observable inputs used in the valuation techniques for Level 2 financial instruments include future cash flows estimated based on applying the interest yield curves, net asset values determined with reference to observable (quoted) prices of underlying investment portfolio and adjustments of related expenses, contractual terms, forward interest rates and forward exchange rates.

For financial instruments categorised within Level 3, fair values are determined by using valuation techniques, including valuation methods such as discounted cash flow model, comparable company analysis and recent financing price method. Determinations to classify fair value measures within Level 3 are generally based on the significance of the unobservable inputs to the overall fair value measurement.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

49. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

As at 30 June 2025 (unaudited)

| | Level 1
RMB'000 | Level 2
RMB'000 | Level 3
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| Financial assets: | | | | |
| Debt instruments at FVOCI | | | | |
| – Debt securities | – | 94,385,226 | 44,394 | 94,429,620 |
| Equity instruments at FVOCI | | | | |
| – Equity securities | 12,144,894 | 930 | 108,060 | 12,253,884 |
| – Perpetual instruments | – | 11,643,271 | – | 11,643,271 |
| – Others | 2,726,983 | 4,954 | – | 2,731,937 |
| Financial assets at FVTPL | | | | |
| – Debt securities | 601,775 | 59,637,173 | 49,500 | 60,288,448 |
| – Equity securities | 4,437,842 | 32,401 | 3,294,460 | 7,764,703 |
| – Funds | 8,608,979 | 17,825,947 | – | 26,434,926 |
| – Other investments | – | 18,224,609 | 3,625,330 | 21,849,939 |
| Derivative financial assets | – | 2,276,540 | 1,249,645 | 3,526,185 |
| Total | 28,520,473 | 204,031,051 | 8,371,389 | 240,922,913 |
| Financial liabilities: | | | | |
| Financial liabilities at FVTPL | – | 9,299,083 | 10,885,926 | 20,185,009 |
| Derivative financial liabilities | – | 2,284,104 | 1,519,640 | 3,803,744 |
| Total | – | 11,583,187 | 12,405,566 | 23,988,753 |

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

49. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

As at 31 December 2024 (audited)

| | Level 1
RMB'000 | Level 2
RMB'000 | Level 3
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| Financial assets: | | | | |
| Debt instruments at FVOCI | | | | |
| – Debt securities | 52,622,444 | 57,839,597 | 57,870 | 110,519,911 |
| Equity instruments at FVOCI | | | | |
| – Equity securities | 10,652,043 | 22,313 | 173,627 | 10,847,983 |
| – Perpetual instruments | 1,247,059 | 6,422,059 | – | 7,669,118 |
| – Others | 1,113,270 | 4,229 | – | 1,117,499 |
| Financial assets at FVTPL | | | | |
| – Debt securities | 11,035,507 | 27,951,601 | 3,374 | 38,990,482 |
| – Equity securities | 3,360,035 | 125,471 | 3,657,050 | 7,142,556 |
| – Funds | 5,395,513 | 16,885,370 | – | 22,280,883 |
| – Other investments | 2,007,416 | 16,593,229 | 3,174,765 | 21,775,410 |
| Derivative financial assets | – | 933,807 | 1,031,324 | 1,965,131 |
| Total | 87,433,287 | 126,777,676 | 8,098,010 | 222,308,973 |
| Financial liabilities: | | | | |
| Financial liabilities at FVTPL | 73,422 | 7,443,633 | 7,191,446 | 14,708,501 |
| Derivative financial liabilities | – | 650,095 | 442,487 | 1,092,582 |
| Total | 73,422 | 8,093,728 | 7,633,933 | 15,801,083 |

In 2025, pursuant to the relevant provisions of the Securities Companies Financial Instruments Valuation Guidelines (2025 Revision) issued by the Securities Association of China, the valuation technique for fixed income investments held by the Group that are listed on securities exchanges or traded on transfer platforms (excluding convertible bonds) was changed from using closing prices to utilising valuation data provided by third-party valuation agencies. Consequently, the fair value hierarchy classification for the aforementioned fixed income investments has been transferred from Level 1 to Level 2.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

49. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

The following table presents the valuation techniques and inputs used for the major financial instruments in Level 3.

Financial instruments	As at 30 June 2025 RMB'000 (Unaudited)	As at 31 December 2024 RMB'000 (Audited)	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable input(s) to fair value
Equity securities/ Associates	3,771,805 (asset)	5,014,477 (asset)	Calculated based on pricing/yield such as price-to-earnings (P/E), price-to-book (P/B) and price-to-sales (P/S) ratio of comparable companies with an adjustment of discount for lack of marketability.	P/E multiples
P/B multiples
P/S multiples
Discount for lack of marketability	The higher the multiples, the higher the fair value.
The higher the discount, the lower the fair value.
Equity securities	85,415 (asset)	81,641 (asset)	The fair value is determined with reference to the quoted market prices with an adjustment of discount for lack of marketability. This discount is determined by option pricing model. The key input is historical volatility of the share prices of the securities.	Discount for lack of marketability	The higher the discount, the lower the fair value.
Equity securities/ Associates	614,560 (asset)	72,943 (asset)	Recent transaction price with an adjustment of discount for lack of marketability.	Discount for lack of marketability	The higher the discount, the lower the fair value.
Debt securities	44,394 (asset)	57,870 (asset)	Future cash flows are discounted by the risk adjusted discount rate of the bonds.	Discount rate	The higher the discount rate, the lower the fair value.
Derivative financial instruments	1,249,645 (asset)
1,519,640 (liability)	1,031,324 (asset)
442,487 (liability)	The option pricing model is used which applies the option exercise price, the price and volatility of the underlying asset, the option exercise time, and the risk-free interest rate.	The volatility of the underlying asset for option	The higher the volatility, the greater the impact on the fair value.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

49. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

Financial instruments	As at 30 June 2025 RMB'000 (Unaudited)	As at 31 December 2024 RMB'000 (Audited)	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable input(s) to fair value
Income certificates designated at FVTPL	10,670,317 (liability)	6,978,165 (liability)	The option pricing model is used which applies the option exercise price, the price and volatility of the underlying asset, the option exercise time, and the risk-free interest rate.	The volatility of the underlying asset for option	The higher the volatility, the greater the impact on the fair value.
Other investments	2,605,569 (asset)
47,838 (liability)	1,839,756 (asset)
51,215 (liability)	The fair value is determined with reference to the net asset value of the underlying investments with an adjustment of discount for the credit risk of various counterparties.	Discount rate	The higher the discount rate, the lower the fair value.
Interests attributable to other holders of consolidated structured entities	167,771 (liability)	162,065 (liability)	Shares of the net value of the structured entities, determined with reference to the net asset value of the structured entities, calculated based on pricing/yield of comparable companies with an adjustment of discount for lack of marketability of underlying investment portfolio and adjustments of related expenses.	P/E multiples
Discount for lack of marketability	The higher the multiples, the higher the fair value.
The higher the discount, the lower the fair value.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

49. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

The following table represents the changes in Level 3 financial instruments for the relevant period.

As at 30 June 2025 (unaudited)

	Equity instruments at FVOCI RMB'000	Debt instruments at FVOCI RMB'000	Financial assets at FVTPL RMB'000	Financial liabilities at FVTPL RMB'000
At the beginning of the period	173,627	57,870	6,835,189	(7,191,446)
Changes in fair value recognised in other comprehensive income	(75,862)	(4,407)	–	–
Changes in fair value recognised in profit or loss	–	–	93,337	28,835
Additions (Note a)	39,465	–	1,043,645	(10,356,248)
Transfer out of Level 3 (Note b)	(29,170)	–	–	–
Disposals	–	(9,069)	(1,002,881)	6,632,933
At the end of the period	108,060	44,394	6,969,290	(10,885,926)
Total (losses)/gains for assets/ liabilities held at the end of the period
– unrealised losses recognised in other comprehensive income	(45,516)	(8,522)	–	–
– unrealised (losses)/gains recognised in profit or loss	–	–	(229,439)	272,090

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

49. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

As at 30 June 2024 (unaudited)

	Equity instruments at FVOCI RMB'000	Debt instruments at FVOCI RMB'000	Financial assets at FVTPL RMB'000	Financial liabilities at FVTPL RMB'000
At the beginning of the period	188,359	–	8,023,490	(7,457,974)
Changes in fair value recognised in other comprehensive income	(55,152)	–	–	–
Changes in fair value recognised in profit or loss	–	–	(1,262,006)	(67,176)
Additions (Note a)	51,588	92,443	784,052	(5,565,349)
Transfer out of Level 3 (Note b)	–	–	(214,184)	–
Disposals	–	–	(225,035)	5,713,080
At the end of the period	184,795	92,443	7,106,317	(7,377,419)
Total (losses)/gains for assets/ liabilities held at the end of the period
– unrealised losses recognised in other comprehensive income	(16,576)	(6,942)	–	–
– unrealised gains/(losses) recognised in profit or loss	–	–	(402,162)	93,586

Note a: These mainly included the issuance of new income certificates containing embedded derivatives, the equity securities traded on the NEEQ with decreased turnover rates and other investments with significant unobservable inputs applied in valuing these investments. The equity securities traded on the NEEQ with decreased turnover rates were transferred from Level 2 to Level 3 in the fair value hierarchy.
Note b: These mainly included equity securities traded on stock exchanges with lock-up periods.

They were transferred from Level 3 to Level 1 when the lock-up period lapsed and became unrestricted.

Interim Report 2025 DFZQ

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2025

(Expressed in thousands of Renminbi, unless otherwise stated)

50. SUBSEQUENT EVENT

(1) Capital increase of subsidiary

On 7 July 2025, the Company completed a capital increase of HKD1 billion to its wholly-owned subsidiary, Orient Finance Holdings (Hong Kong) Limited. The paid-in capital of Orient Finance Holdings (Hong Kong) Limited has been changed from HKD2.754 billion to HKD3.754 billion.

(2) Issuance of corporate bonds

On 22 July 2025, the Company completed the issuance of the third tranche of a corporate bond with total nominal value of RMB2 billion. The corporate bond bears interest at 1.61% per annum with a maturity of 180 days.

On 12 August 2025, the Company completed the issuance of the second tranche of a corporate bond with total nominal value of RMB2.5 billion. The corporate bond bears interest at 1.88% per annum with a maturity of 3 years.

On 21 August 2025, the Company completed the issuance of the first tranche of a perpetual subordinated bond with total nominal value of RMB3 billion. The perpetual subordinated bond bears interest at 2.35% that would be repriced every 5 years. The Company has the option to extend the maturity of the bond for another repricing cycle, or redeem the bond entirely.

(3) Proposed profit distribution

Pursuant to the Board resolution passed on 29 August 2025, it is proposed that cash dividends of RMB1.20 (tax inclusive) be distributed for every 10 shares based on the Company's share capital of 8,496,645 thousand shares as at 30 June 2025 deducting 61,546 thousand shares deposited in the Company's special securities account for repurchase as of 29 August 2025. This proposed distribution of cash dividends is subject to the approval of the Shareholders' general meetings.

Interim Report 2025 DFZQ

Independent Auditor's Report

TO THE SHAREHOLDERS OF 東方證券股份有限公司
(Incorporated in the People's Republic of China with limited liability)

OPINION

We have audited the consolidated financial statements of 東方證券股份有限公司 (the "Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 290 to 454, which comprise the consolidated statement of financial position as at 31 December 2024, and the consolidated statement of profit or loss, consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information and other explanatory information.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2024, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards issued by the International Accounting Standards Board and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) ("IESBA Code") together with any ethical requirements that are relevant to our audit of the consolidated financial statements in the People's Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements and IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Annual Report 2024
DFZQ
281

Independent Auditor's Report

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Expected credit losses for stock-pledged reverse repurchase agreements
Refer to the material accounting policies in Note 3(3), 4(4) and Note 25 to the consolidated financial statements.
Key audit matter	How our audit addressed the key audit matter
The Group uses an expected credit loss (“ECL”) model to measure the loss allowance for stock-pledged reverse repurchase agreements in accordance with IFRS 9, Financial instruments.

The determination of loss allowance for stock-pledged reverse repurchase agreements using the ECL model is subject to the application of a number of key parameters and assumptions, including the credit risk staging, probability of default, loss given default, exposures at default and discount rate. Extensive management judgement is involved in the selection of those parameters and the application of the assumptions. | Our audit procedures to assess ECLs for stock-pledged reverse repurchase agreements included the following:

• understanding and evaluating the design, implementation and operating effectiveness of key financial reporting controls related to the measurement of ECLs for stock-pledged reverse repurchase agreements;

• evaluating the appropriateness of the ECL model, the critical assumptions and key parameters used in the model;

• evaluating the reasonableness of loss given default for selected samples of stock-pledged reverse repurchase agreements that are credit-impaired by checking the financial situation of the borrower and the recoverable amount of collateral. Evaluating management’s assessment of the value of collaterals based on the asset category, status, use of the collateral and market prices; evaluating the timing and means of realisation of collateral, the forecast cash flows and the viability of the Group’s recovery plans; |

Annual Report 2024 DFZQ

Independent Auditor's Report

KEY AUDIT MATTERS (Continued)

Expected credit loss of stock-pledged reverse repurchase agreements (continued)
Refer to the material accounting policies in Note 3(3), 4(4) and Note 25 to the consolidated financial statements.
Key audit matter	How our audit addressed the key audit matter
In particular, management exercises judgement in determining the quantum of loss given default based on a range of factors. These include the financial situation of the borrower, the recoverable amount of collateral. Management considers the impact of various factors including the market price, status and use when assessing the value of collaterals. The enforceability, timing and means of realisation of collateral can also have an impact on the recoverable amount of collateral.

We identified the determination of ECLs for stock-pledged reverse repurchase agreements as a key audit matter due to the significance of these assets to the Group’s consolidated financial statements and the significant management judgement and estimation required in the measurement. | • assessing the calculation accuracy of ECLs for stock-pledged reverse repurchase agreements on a sample basis;
• assessing the reasonableness of the disclosures on ECLs for stock-pledged reverse repurchase agreements against applicable accounting standards. |

Annual Report 2024 DFZQ

Independent Auditor's Report

KEY AUDIT MATTERS (Continued)

Fair value of financial instruments classified as level 3 in the fair value hierarchy
Refer to the material accounting policies in Note 3(3), 4(2) and Note 64 to the consolidated financial statements.
Key audit matter	How our audit addressed the key audit matter
The valuation of the Group’s financial instruments is based on a combination of market data and valuation models which often require a considerable number of inputs. Many of these inputs are obtained from readily available data for liquid markets. Where such observable data is not readily available, as in the case of certain level 3 financial instruments measured at fair value, estimates need to be developed which can involve significant management judgement.

We identified fair value of financial instruments classified as level 3 as a key audit matter because of the degree of complexity involved in the valuation techniques and significant management judgement in determining the inputs used in the valuation models. | Our audit procedures to assess the fair value of financial instruments classified as level 3 included the following:

• understanding and assessing the design, implementation and operating effectiveness of key internal controls over the valuation model and inputs selection approval process for financial instruments;

• inspecting investment agreements entered into during the current year, on a sample basis, to understand the relevant investment terms and identify any conditions that were relevant to the valuation of financial instruments;

• with assistance of KPMG valuation specialist, on a sample basis, evaluating the valuation models, inputs and assumptions used by the Group to value level 3 financial instruments and performing independent valuations of level 3 financial instruments and comparing these valuations with the Group’s valuations; and

• evaluating the reasonableness of the disclosures on fair values of financial instruments classified as level 3 with reference to the requirements of the prevailing accounting standards. |

Annual Report 2024 DFZQ

Independent Auditor's Report

KEY AUDIT MATTERS (Continued)

Consolidation of structured entities
Refer to the material accounting policies in Note 4(3) and Note 36 to the consolidated financial statements.
Key audit matter	How our audit addressed the key audit matter
Structured entities are generally created to achieve a narrow and well defined objective with restrictions around their ongoing activities. The Group may acquire or retain an ownership interest in, or act as a sponsor of, a structured entity through issuing or acquiring a mutual fund, an asset management scheme, a wealth management product, a trust scheme or an asset-backed security.	Our audit procedures to assess the consolidation of structured entities included the following:
• understanding and assessing the design, implementation and operating effectiveness of key internal controls of financial reporting over the consolidation of structured entities;
• Selecting a sample of structured entities for each key product type and performing the following procedures for each item selected:
– inspecting the related contracts, internal documents and disclosed information to investors to understand the purpose of the establishment of the structured entity and the involvement the Group has with the structured entity and to assess management’s judgement over whether the Group has the ability to exercise power over the structured entity;
In determining whether a structured entity is required to be consolidated by the Group, management is required to consider the power the Group is able to exercise over the activities of the entity and its exposure to and ability to influence its own returns from the entity. In certain circumstances, the Group may be required to consolidate a structured entity even though it has no equity interest therein.
The factors which management needs to consider when determining whether a structured entity should be consolidated or not are not purely quantitative and need to be considered collectively.

Annual Report 2024 DFZQ

Independent Auditor's Report

KEY AUDIT MATTERS (Continued)

Consolidation of structured entities (continued)
Refer to the material accounting policies in Note 4(3) and Note 36 to the consolidated financial statements.
Key audit matter	How our audit addressed the key audit matter
We identified the consolidation of structured entities as a key audit matter because it involves significant management judgement in determining whether a structured entity is required to be consolidated by the Group or not and because the impact of consolidating a structured entity on the consolidated statement could be significant.	- evaluating the risk and reward structure of the structured entity including any capital held in the structured entity or guarantees on its returns, arrangements for providing liquidity support, commission paid and distribution of the returns to assess management’s judgement as to exposure, or rights, to variable returns from the Group’s involvement in such an entity;
	- inspecting management’s analysis of the structured entity including qualitative analysis and calculations of the magnitude and variability associated with its economic interests in the structured entity to assess management’s judgement over the Group’s ability to influence its own returns from the structured entity;
	- assessing management’s judgement over whether the structured entity should be consolidated or not;
	- assessing the reasonableness of the disclosures in the financial statements in relation to the consolidation of structured entities with reference to prevailing accounting standards.

Annual Report 2024 DFZQ

Independent Auditor's Report

INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON

The directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRS Accounting Standards and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors of the Company determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

The directors are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group's financial reporting process.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

Annual Report 2024 DFZQ

Independent Auditor's Report

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors of the Company.
Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.

Annual Report 2024 DFZQ

Independent Auditor's Report

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in the independent auditor's report is Pang, Shing Chor, Eric.

KPMG

Certified Public Accountants

8th Floor, Prince's Building

10 Chater Road

Central, Hong Kong

28 March 2025

Annual Report 2024 DFZQ

Consolidated Statement of Profit or Loss

for the year ended 31 December 2024

	NOTES	Year ended 31 December
		2024 RMB'000	2023 RMB'000
Revenue
Commission and fee income	6	9,988,145	10,298,336
Interest income	7	5,558,875	6,064,164
		15,547,020	16,362,500
Net investment gains	8	4,926,135	2,387,769
Other income, gains and losses, net	9	7,210,452	5,527,120
Total revenue, other income and net gains and losses		27,683,607	24,277,389
Depreciation and amortisation	10	(799,307)	(809,398)
Staff costs	11	(5,031,727)	(4,564,804)
Commission and fee expenses	12	(4,553,442)	(3,363,740)
Interest expenses	13	(4,237,545)	(4,299,827)
Other operating expenses	14	(9,184,395)	(7,652,584)
Impairment losses under expected credit loss model, net of reversal	15	(461,328)	(1,030,199)
Other impairment losses		(214,686)	(221,947)
Total expenses		(24,482,430)	(21,942,499)
Share of results of associates		458,077	584,250
Profit before income tax		3,659,254	2,919,140
Income tax expense	16	(308,807)	(162,536)
Profit for the year		3,350,447	2,756,604
Attributable to:
Equity holders of the Company		3,350,208	2,753,755
Non-controlling interests		239	2,849
		3,350,447	2,756,604
Earnings per share attributable to the shareholders of the Company (Expressed in RMB Yuan per share) - Basic	17	0.37	0.30

The accompanying notes form part of these consolidated financial statements.

Annual Report 2024 DFZQ

Consolidated Statement of Profit or Loss and Other Comprehensive Income

for the year ended 31 December 2024

	NOTES	Year ended 31 December
		2024 RMB'000	2023 RMB'000
Profit for the year		3,350,447	2,756,604
Other comprehensive income, net of income tax:
Items that will not be reclassified to profit or loss:
Fair value gains/(losses) on investments in equity instruments at fair value through other comprehensive income	53(4)	1,193,784	(19,640)
Hedging instruments for fair value hedges		(19,496)	(12,810)
Income tax relating to items that will not be reclassified to profit or loss	53(4)	(293,367)	8,113
Share of other comprehensive income of associates	53(4)	(11,882)	-
Subtotal		869,039	(24,337)
Items that may be reclassified subsequently to profit or loss:
Fair value gains/(losses) on debt instruments measured at fair value through other comprehensive income	53(4)	3,365,870	1,465,297
- net fair value changes during the period		(1,761,245)	(842,475)
- reclassification adjustment to profit or loss on disposal
Impairment loss for debt instruments at fair value through other comprehensive income	53(4)	69,265	(79,371)
Income tax impact relating to items that may be reclassified subsequently to profit or loss	53(4)	(865,257)	(119,749)
Share of other comprehensive income of associates	53(4)	5,931	4,518
Exchange differences arising on translation		6,555	14,818
Other		864	(1,620)
Subtotal		821,983	441,418
Other comprehensive income for the year, net of income tax		1,691,022	417,081
Total comprehensive income for the year		5,041,469	3,173,685
Attributable to:
Equity holders of the Company		5,041,230	3,170,836
Non-controlling interests		239	2,849
		5,041,469	3,173,685

The accompanying notes form part of these consolidated financial statements.

Annual Report 2024 DFZQ

Consolidated Statement of Financial Position

as at 31 December 2024

As at 31 December

	NOTES	2024 RMB'000	2023 RMB'000
Cash and bank balances	18	103,093,101	104,093,142
Clearing settlement funds	20	15,177,207	35,314,411
Deposits with exchanges and financial institutions	21	27,654,365	3,241,547
Derivative financial assets	22	1,965,131	1,877,650
Advances to customers	23	28,047,525	21,071,801
Account receivables	24	973,364	670,759
Reverse repurchase agreements	25	3,984,103	5,437,734
Financial assets at fair value through profit or loss	26	90,189,331	97,069,644
Debt instruments at fair value through other comprehensive income	27	110,519,911	90,813,713
Equity instruments at fair value through other comprehensive income	28	19,634,600	6,298,178
Debt instruments measured at amortised cost	29	1,586,905	1,586,591
Investments in associates	30	6,128,123	6,253,974
Right-of-use assets	32	1,072,423	557,334
Investment properties	33	30,936	165,413
Property and equipment	34	2,602,196	2,739,369
Other intangible assets	35	272,393	286,724
Goodwill	37	32,135	32,135
Deferred tax assets	38	1,490,513	2,079,575
Other assets	39	3,282,113	4,100,768
Total assets		417,736,375	383,690,462
Placements from banks and financial institutions	40	39,194,625	25,670,059
Short-term debt instruments	41	5,678,905	2,797,700
Account payables to brokerage clients	42	113,637,365	111,570,987
Repurchase agreements	43	85,916,300	73,716,143
Financial liabilities at fair value through profit or loss	44	14,708,501	15,301,834
Derivative financial liabilities	22	1,092,582	874,202
Contract liabilities	45	157,209	147,405

The accompanying notes form part of these consolidated financial statements.

Annual Report 2024 DFZQ

Consolidated Statement of Financial Position

as at 31 December 2024

As at 31 December

| | NOTES | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- | --- |
| Current tax liabilities | | 93,183 | 102,664 |
| Employee benefits payable | 46 | 2,370,667 | 1,704,042 |
| Borrowings | 47 | 1,549,417 | 1,700,024 |
| Lease liabilities | 48 | 1,058,950 | 547,475 |
| Debt securities issued | 49 | 60,734,318 | 60,157,845 |
| Deferred tax liabilities | 38 | 218 | 35,936 |
| Other liabilities | 50 | 10,144,319 | 10,603,949 |
| Total liabilities | | 336,336,559 | 304,930,265 |
| Share capital | 51 | 8,496,645 | 8,496,645 |
| Treasury stock | 51 | (310,896) | (299,780) |
| Other equity instrument | 52 | 5,000,000 | 5,000,000 |
| Reserves | 53 | 60,059,496 | 56,791,270 |
| Retained earnings | 54 | 8,151,495 | 8,757,396 |
| Equity attributable to equity holders of the Company | | 81,396,740 | 78,745,531 |
| Non-controlling interests | | 3,076 | 14,666 |
| Total equity | | 81,399,816 | 78,760,197 |
| Total equity and liabilities | | 417,736,375 | 383,690,462 |

The consolidated financial statements were approved and authorised for issue by the Board of Directors on 28 March 2025 and signed on its behalf by:

Gong Dexiong
Chairman of the Board

Lu Dayin
Executive Director

The accompanying notes form part of these consolidated financial statements.

Annual Report 2024 DFZQ

Consolidated Statement of Changes in Equity

for the year ended 31 December 2024

	Equity attributable to equity holders of the Company
	Share capital	Treasury stock	Other equity instrument	Reserves						Retained earnings	Subtotal	Non-controlling interests	Total equity
				Capital reserve	Surplus reserve	General reserve	Investment revaluation reserve	Translation reserve	Hedge reserve
NOTES	RMB'000 (Note 01)	RMB'000 (Note 02)	RMB'000 (Note 03)	RMB'000 (Note 04)	RMB'000 (Note 05)	RMB'000 (Note 06)	RMB'000 (Note 07)	RMB'000 (Note 08)	RMB'000 (Note 09)	RMB'000 (Note 54)	RMB'000	RMB'000
As at 1 January 2024	8,496,645	(299,780)	5,000,000	39,534,520	4,618,006	12,134,542	489,687	2,190	12,325	8,757,396	78,745,531	14,666	78,760,197
Profit for the year	-	-	-	-	-	-	-	-	-	3,350,208	3,350,208	239	3,350,447
Other comprehensive income for the year	-	-	-	-	-	-	1,699,089	6,555	(14,622)	-	1,691,022	-	1,691,022
Total comprehensive income for the year	-	-	-	-	-	-	1,699,089	6,555	(14,622)	3,350,208	5,041,230	239	5,041,469
Repurchase of A shares	51	-	(11,116)	-	-	-	-	-	-	-	(11,116)	-	(11,116)
Appropriation to surplus reserve	-	-	-	-	414,043	-	-	-	-	(414,043)	-	-	-
Appropriation to general reserve	-	-	-	-	-	1,115,266	-	-	-	(1,115,266)	-	-	-
Dividends recognised as distribution	55	-	-	-	-	-	-	-	-	(1,903,905)	(1,903,905)	-	(1,903,905)
Distribution to holders of other equity instrument	55	-	-	-	-	-	-	-	-	(475,000)	(475,000)	-	(475,000)
Transfer to retained earnings for cumulative fair value change of equity instruments at fair value through other comprehensive income upon disposal	28	-	-	-	-	-	43,642	-	4,253	(47,895)	-	-	-
Other	-	-	-	-	-	-	-	-	-	-	(11,829)	(11,829)
As at 31 December 2024	8,496,645	(310,896)	5,000,000	39,534,520	5,032,049	13,249,808	2,232,418	8,745	1,956	8,151,495	81,396,740	3,076	81,399,816

The accompanying notes form part of these consolidated financial statements.

Annual Report 2024 DFZQ

Consolidated Statement of Changes in Equity

for the year ended 31 December 2024

Equity attributable to equity holders of the Company

	NOTES	Share capitalRMB'000(Note 51)	Treasury stockRMB'000(Note 51)	Other equity instrumentRMB'000(Note 52)	Reserves						Retained earningsRMB'000(Note 54)	SubtotalRMB'000	Non-controlling interestsRMB'000	Total equityRMB'000
					Capital reserveRMB'000(Note 53)	Surplus reserveRMB'000(Note 53)	General reserveRMB'000(Note 53)	Investment revaluation reserveRMB'000(Note 53)	Translation reserveRMB'000(Note 53)	Hedge reserveRMB'000(Note 53)
As at 1 January 2023		8,496,645	-	5,000,000	39,534,520	4,293,542	11,135,082	100,899	(12,628)	-	8,838,412	77,386,472	11,817	77,398,289
Profit for the year		-	-	-	-	-	-	-	-	-	2,753,755	2,753,755	2,849	2,756,604
Other comprehensive income for the year		-	-	-	-	-	-	411,871	14,818	(9,608)	-	417,081	-	417,081
Total comprehensive income for the year		-	-	-	-	-	-	411,871	14,818	(9,608)	2,753,755	3,170,836	2,849	3,173,685
Repurchase of A shares	51	-	(299,780)	-	-	-	-	-	-	-	-	(299,780)	-	(299,780)
Appropriation to surplus reserve		-	-	-	-	324,464	-	-	-	-	(324,464)	-	-	-
Appropriation to general reserve		-	-	-	-	-	999,460	-	-	-	(999,460)	-	-	-
Distribution to holders of other equity instrument	55	-	-	-	-	-	-	-	-	-	(237,500)	(237,500)	-	(237,500)
Dividends recognised as distribution	55	-	-	-	-	-	-	-	-	-	(1,274,497)	(1,274,497)	-	(1,274,497)
Transfer to retained earnings for cumulative fair value change of equity instruments at fair value through other comprehensive income upon disposal	28	-	-	-	-	-	-	(23,083)	-	-	23,083	-	-	-
Other		-	-	-	-	-	-	-	-	21,933	(21,933)	-	-	-
As at 31 December 2023		8,496,645	(299,780)	5,000,000	39,534,520	4,618,006	12,134,542	489,687	2,190	12,325	8,757,396	78,745,531	14,666	78,760,197

The accompanying notes form part of these consolidated financial statements.

Annual Report 2024 DFZQ

Consolidated Statement of Cash Flows

for the year ended 31 December 2024

	Year ended 31 December
	2024
RMB'000	2023
RMB'000
OPERATING ACTIVITIES
Profit before income tax	3,659,254	2,919,140
Adjustments for:
Interest expenses	4,237,545	4,299,827
Share of results of associates	(458,077)	(584,250)
Depreciation and amortisation	799,307	809,398
Impairment losses under expected credit loss model, net of reversal	461,328	1,030,199
Other impairment losses	214,686	221,947
Gains on disposal of property and equipment, right-of-use assets and investment properties	(16,126)	(138,244)
Foreign exchange (gains)/losses, net	(59,525)	57,866
Net realised losses arising from disposal of associates	18,900	1,891
Net realised gains and income arising from financial assets at fair value through profit or loss	-	(919,438)
Interest income and net realised gains and income arising from debt instruments at fair value through other comprehensive income	(5,117,967)	(3,582,136)
Dividend income arising from equity instruments at fair value through other comprehensive income	(680,328)	(401,020)
Net realised losses arising from financial liabilities at fair value through profit or loss	106,442	110,502
Net realised losses arising from derivative financial instruments	-	47,445
Interest income and net realised gains and income from debt instruments measured at amortised cost	(47,720)	(92,480)
Unrealised fair value change of financial assets at fair value through profit or loss	(574,952)	(77,782)
Unrealised fair value change of financial liabilities at fair value through profit or loss	80,310	54,236
Unrealised fair value change of derivative financial instruments	944,676	(404,764)

The accompanying notes form part of these consolidated financial statements.

Annual Report 2024 DFZQ

Consolidated Statement of Cash Flows

for the year ended 31 December 2024

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Operating cash flows before movements in working capital	3,567,753	3,352,337
Increase in advances to customers	(6,976,872)	(1,576,044)
Decrease in reverse repurchase agreements	1,065,825	1,770,995
Decrease/(increase) in financial assets at fair value through profit or loss and derivative financial assets	6,424,207	(10,534,467)
Increase in restricted deposits and deposits with exchanges and financial institutions	(26,857,997)	(1,690,742)
Decrease in bank balances and clearing settlement funds restricted or held on behalf of customers	20,235,463	11,288,909
Decrease in account receivables and other assets	231,736	199,737
(Decrease)/increase in other liabilities and contract liabilities	(20,701)	1,397,027
Increase/(decrease) in account payables to brokerage clients	2,066,378	(11,470,433)
Decrease in financial liabilities at fair value through profit or loss and derivative financial liabilities	(278,848)	(4,798,403)
Increase in repurchase agreements	12,241,854	11,530,691
Increase in placements from banks and other financial institutions	13,570,022	17,170,018
Cash generated from operations	25,268,820	16,639,625
Income taxes paid	(352,357)	(618,145)
Interest paid	(2,185,141)	(1,976,642)
NET CASH GENERATED FROM OPERATING ACTIVITIES	22,731,322	14,044,838

The accompanying notes form part of these consolidated financial statements.

Annual Report 2024 DFZQ

Consolidated Statement of Cash Flows

for the year ended 31 December 2024

	Year ended 31 December
	2024
RMB'000	2023
RMB'000
INVESTING ACTIVITIES
Dividends and interest received from investments	3,952,311	3,506,584
Proceeds on disposal of property and equipment and investment properties	162,254	236,059
Proceeds on disposal or redemption of:
financial assets at fair value through profit or loss	–	28,765,147
– equity instruments at fair value through other comprehensive income	801,694	1,636,208
– debt instruments at fair value through other comprehensive income	298,703,170	166,920,386
– debt instrument measured at amortised cost	–	1,525,937
Capital injection in associates	(24,500)	(52,000)
Purchases of:
financial assets at fair value through profit or loss	–	(31,030,086)
equity instruments at fair value through other comprehensive income	(12,946,463)	(4,245,179)
debt instruments at fair value through other comprehensive income	(314,984,277)	(179,469,022)
Purchases of property and equipment and other intangible assets	(299,709)	(1,093,554)
Payments for right-of-use assets	–	(2,756)
Proceeds from disposal of or capital reduction in associates	175,562	260,633
Cash outflow from hedging instrument	(5,671)	(29,244)
NET CASH USED IN INVESTING ACTIVITIES	(24,465,629)	(13,070,887)

The accompanying notes form part of these consolidated financial statements.

Annual Report 2024 DFZQ

Consolidated Statement of Cash Flows

for the year ended 31 December 2024

	NOTES	Year ended 31 December
		2024 RMB'000	2023 RMB'000
FINANCING ACTIVITIES
Proceeds from issuance of debt securities, short-term debt instruments and income certificates designated at fair value through profit and loss	65	39,745,234	41,832,927
Repayments on debt securities issued, short-term debt instruments and income certificates designated at fair value through profit and loss	65	(36,364,532)	(41,031,324)
Proceeds from borrowings	65	3,176,103	2,795,179
Repayments of borrowings	65	(3,359,060)	(3,111,317)
Repayments of lease liabilities	65	(362,399)	(381,744)
Dividends paid to ordinary shareholders	65	(1,903,905)	(1,274,496)
Dividends paid to holders of other equity instrument	65	(237,500)	(237,500)
Interest paid on debt securities issued, short-term debt instruments and income certificates designated at fair value through profit and loss	65	(2,260,245)	(2,352,681)
Interest paid on borrowings	65	(87,586)	(55,415)
Interest paid on lease liabilities	65	(33,926)	(19,725)
Payment for repurchase of A-shares		(11,116)	(299,780)
Payments on capital returned to non-controlling shareholders		(11,829)	–
NET CASH USED IN FINANCING ACTIVITIES		(1,710,761)	(4,135,876)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(3,445,068)	(3,161,925)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR		23,090,236	26,154,534
Effect of foreign exchange rate changes		99,507	97,627
TOTAL CASH AND CASH EQUIVALENTS AT END OF THE YEAR	19	19,744,675	23,090,236

The accompanying notes form part of these consolidated financial statements.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

1. CORPORATE INFORMATION

東方證券股份有限公司, formerly known as Orient Securities Limited Liability Company (東方證券有限責任公司), was a limited liability company established on 10 December 1997. Upon approval from the Shanghai Municipal Government on 13 August 2003, and from the China Securities Regulatory Commission ("CSRC") on 12 September 2003, Orient Securities Limited Liability Company was converted into a joint stock limited liability company, and was renamed as 東方證券股份有限公司 (the "Company"). On 23 March 2015, the Company became listed on the Shanghai Stock Exchange with the stock code of 600958. On 8 July 2016, the Company became listed on The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") with the stock code of 03958.

The registered office of the Company is located at Orient Securities Building, No. 119, South Zhongshan Road, Shanghai, the People's Republic of China ("PRC").

The Company and its subsidiaries (the "Group") are principally engaged in securities brokerage; margin financing and securities lending; securities investment consulting; financial advisory services related to securities trading and investment activities; proprietary securities trading; distribution of securities investment funds; introduction services for futures companies; distribution of financial products on behalf of third parties; securities underwriting and sponsorship; stock options market making; custody of securities investment funds; securities asset management; public offering securities investment fund management; commodity futures brokerage, financial futures brokerage, and futures investment consulting; financial product investments, securities investments, investment management and advisory services; equity or debt investments in enterprises using proprietary capital or through direct investment funds, including investments in other funds related to equity/debt investments; provision of financial advisory services related to equity and debt investments for clients, and other business activities approved by the CSRC.

2. BASIS OF PREPARATION

2.1 Basis of preparation

The consolidated financial statements have been prepared in accordance with IFRS Accounting Standards, as issued by the International Accounting Standards Board ("IASB"). In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and by the Hong Kong Companies Ordinance (Cap. 622) for this financial year and the comparative period.

The consolidated financial statements have been prepared under the historical cost convention, except for derivative financial instruments, financial assets/liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive income, which have been measured at fair value, as further explained in the respective accounting policies below. These financial statements are presented in RMB and all values are rounded to the nearest thousand except when otherwise indicated.

Annual Report 2024 DFZQ

F-100 -

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

2. BASIS OF PREPARATION (Continued)

2.2 Amendments to the accounting standards effective in 2024 and adopted by the Group

The Group has adopted the following amendments to the IFRS Accounting Standards issued by the IASB that are first effective for the financial year ended 31 December 2024:

IAS 1 Amendments
Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants

(1) IAS 1 Amendments: Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants

The amendments to IAS 1 (2020) concern the requirements on determining if a liability is current or non-current. In particular, the amendments specify the condition of an entity to classify a liability as non-current requires that a right to defer settlement must exist at the end of the reporting period and have substance, and clarify that classification is unaffected by management's intentions or expectations about whether the entity will exercise its right to defer settlement.

The amendments also specify the classification of liabilities that will or may be settled by issuing an entity's own equity instruments. When a liability includes a counterparty conversion option that involves a transfer of the entity's own equity instruments, the classification of such liability is not affected only when the conversion option is recognised separately from the host liability as an equity component under IAS 32.

The amendments to IAS 1 (2022) specify that only covenants with which an entity must comply on or before the reporting date affect the classification of a liability as current or non-current. Covenants with which the entity must comply after the reporting date (i.e. future covenants) do not affect a liability's classification at that date. However, an entity is required to disclose information regarding the risk that the non-current liabilities subject to future covenants could become repayable within twelve months after the end of the reporting period.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

2. BASIS OF PREPARATION (Continued)

2.3 Standards and amendments relevant to the Group that are not yet effective and have not been adopted before their effective dates in 2024

		Effective for annual periods beginning on or after
IAS 21 Amendments	Lack of Exchangeability	1 January 2025
IFRS 9 and IFRS 7 Amendments	Classification and Measurement of Financial Instruments	1 January 2026
IFRS 18	Presentation and Disclosure in Financial Statements	1 January 2027
IFRS 19	Subsidiaries without Public Accountability: Disclosures	1 January 2027
IFRS 10 and IAS 28 Amendments	Sale or Contribution of Assets between an Investor and its Associate or Joint Venture	Effective date has been deferred indefinitely

The Group anticipates that the adoption of these amendments will not have a significant impact on the Group’s consolidated financial statements.

2.4 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries for the year ended 31 December 2024. The financial statements of the subsidiaries are prepared for the same reporting period as the Company (also referred to as the “Parent”), using consistent accounting policies.

The results of subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated on consolidation in full.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

2. BASIS OF PREPARATION (Continued)

2.4 Basis of consolidation (Continued)

Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if that results in a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

(a) derecognises the assets (including goodwill) and liabilities of the subsidiary;
(b) derecognises the carrying amount of any non-controlling interest;
(c) derecognises the cumulative translation differences recorded in equity;
(d) recognises the fair value of the consideration received;
(e) recognises the fair value of any investment retained;
(f) recognises any resulting surplus or deficit in profit or loss; and
(g) reclassifies the Group’s share of components previously recognised in other comprehensive income (OCI) to profit or loss.

Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in the consolidated statement of profit or loss and within equity in the consolidated statement of financial position separately from the equity attributable to owners of the Parent. An acquisition of non-controlling interests is accounted for as an equity transaction.

3. SIGNIFICANT ACCOUNTING POLICIES

(1) Cash and cash equivalents

Cash and cash equivalents are short term, highly liquid assets, which are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.

Cash and cash equivalents include cash and assets with original maturity of three months or less under cash and bank balances.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(2) Foreign currency transactions and foreign currency translation

The consolidated financial statements are presented in RMB, which is the Company's functional and presentation currency. The recording currency of the Company's subsidiaries is determined based on the primary economic environment in which they operate.

Foreign currency transactions recorded by the entities in the Group are initially recorded using their respective functional currency rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the prevailing functional currency exchange rates at the end of the reporting period. All differences are taken to the statement of profit or loss. Non-monetary items denominated in foreign currencies that are measured at historical costs are translated at the balance sheet date using the spot exchange rates at the date of the transactions.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group's overseas operations are translated into the presentation currency of the Group at the rate of exchange prevailing at the end of the reporting period, and their income and expenses are translated at exchange rates that approximate the exchange rates of the date of the transaction. The exchange differences resulting from foreign currency financial statement translation of subsidiaries are recognised in OCI and accumulated in the foreign exchange translation reserve. The cash flows of overseas operations are translated at the spot exchange rates on the dates of the cash flows.

The effect of exchange rate changes on cash is presented separately in the cash flow statement.

(3) Financial instruments

(a) Initial recognition, classification and measurement of financial instruments

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset.

At initial recognition, the Group measures a financial asset or financial liability at its fair value, in the case of a financial asset or financial liability not at fair value through profit or loss, plus or minus transaction costs that are incremental and directly attributable to the acquisition or issue of the financial asset or financial liability. Transaction costs of financial assets and financial liabilities carried at fair value through profit or loss are expensed in profit or loss.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(3) Financial instruments (Continued)

(a) Initial recognition, classification and measurement of financial instruments (Continued)

Financial assets

Financial assets are classified on the basis of the Group’s business model for managing the asset and the cash flow characteristics of the assets:

(i) Amortised cost;

(ii) Fair value through other comprehensive income (“FVOCI”); or

(iii) Fair value through profit or loss (“FVTPL”).

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

Business model reflects how the Group manages the assets in order to generate cash flows. That is, whether the Group’s objective is solely to collect the contractual cash flows from the assets or is to collect both the contractual cash flows and cash flows arising from the sale of assets. If neither of these is applicable (e.g. financial assets are held for trading purposes), then the financial assets are classified as part of “other” business model and measured at FVTPL. Factors considered by the Group in determining the business model for a group of assets include past experience on how the cash flows for these assets were collected, how the asset’s performance is evaluated and reported to key management personnel, how risks are assessed and managed and how managers are compensated.

Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and sell, the Group assesses whether the financial instruments’ cash flows represent solely payments of principal and interest (“SPPI”). In making this assessment, the Group considers whether the contractual cash flows are consistent with a basic lending arrangement. i.e. interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin that is consistent with a basic lending arrangement. Where the contractual terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset is classified and measured at fair value through profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determine whether their cash flows are SPPI.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(3) Financial instruments (Continued)

(a) Initial recognition, classification and measurement of financial instruments (Continued)

Financial assets (Continued)

The classification requirements for debt instruments and equity instruments are described as below:

Debt Instruments

Debt instruments are those instruments that meet the definition of a financial liability from the issuer's perspective. Classification and subsequent measurement of debt instruments depend on: (i) the Group's business model for managing the asset; and (ii) the cash flow characteristics of asset.

Based on these factors, the Group classifies its debt instruments into one of the following three measurement categories:

(i) Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent SPPI, and that are not designated at FVTPL, are measured at amortised cost.

(ii) FVOCI: Financial assets that are held for collection of contractual cash flows and for selling the assets, where the assets' cash flows represent SPPI, and that are not designated at FVTPL, are measured at FVOCI.

(iii) FVTPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVTPL.

The Group may also irrevocably designate financial assets at FVTPL if doing so significantly reduces or eliminates a mismatch created by assets and liabilities being measured on different bases.

Equity instruments

Equity instruments are instruments that meet the definition of equity from the issuer's perspective; that is, instruments that do not contain a contractual obligation to pay and that evidence a residual interest in the issuer's net assets. Examples of equity instruments include basic ordinary shares.

The Group subsequently measures all equity investments at FVTPL, except where the Group's management has elected, at initial recognition, to irrevocably designate an equity investment at FVOCI.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(3) Financial instruments (Continued)

(a) Initial recognition, classification and measurement of financial instruments (Continued)

Financial liabilities

Financial liabilities are classified as subsequently measured at amortised cost, except for financial liabilities at FVTPL, which is applied to derivatives, financial liabilities held for trading (e.g. short positions in the trading books) and other financial liabilities designated as such at initial recognition.

Contingent consideration recognised by an acquirer in a business combination to which IFRS 3 applies. Such contingent consideration shall subsequently be measured at fair value with changes recognised in profit or loss.

An entity may, at initial recognition, irrevocably designate a financial liability as measured at fair value through profit or loss: (i) it eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as ‘an accounting mismatch’); (ii) a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the Group is provided internally on that basis to the entity’s key management personnel.

(b) Reclassification of financial assets

When the Group changes the business model for managing its financial assets, it shall reclassify all affected financial assets, and apply the reclassification prospectively from the reclassification date. The Group does not restate any previously recognised gains, losses (including impairment gains or losses) or interest. Reclassification date is the first day of the first reporting period following the change in business model that results in an entity reclassifying financial assets.

(c) Fair value of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(3) Financial instruments (Continued)

(c) Fair value of financial instruments (Continued)

The fair values of quoted financial assets and financial liabilities in active markets are based on quoted market prices. If there is no active market, the Group establishes fair value by using valuation techniques. These include the use of market approach, income approach and cost approach. When using valuation techniques, the Group uses observable inputs. Unobservable market inputs would not be used unless relevant observable inputs are not available or not practicable to access.

Default Valuation Adjustments are applied to the Group's financial liabilities at fair value through profit or loss, and assumes that Default Valuation Adjustments stay the same before and after the transfer of the liability. Default Valuation Adjustments refer to risk that enterprises fail to perform the obligation, including but not limited to their own credit risk.

The Group uses the following hierarchy for determining and disclosing the fair values of financial assets and financial liabilities based on the inputs used when determining the fair value:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2: Valuation technique using inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Valuation technique using inputs for the asset or liability that is not based on observable market data (unobservable inputs).

The level of fair value measurement depends on the lowest level of input that is significant to the entire fair value measurement.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(3) Financial instruments (Continued)

(d) Subsequent measurement of financial instruments

Subsequent measurement of financial instruments depends on the categories:

Amortised cost

Interest income is recognised using the effective interest method for financial assets measured subsequently at amortised cost and debt instruments subsequently measured at FVOCI. For financial instruments other than purchased or originated credit-impaired financial assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired. For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset from the next reporting period. If the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset from the beginning of the reporting period following the determination that the asset is no longer credit impaired.

Financial assets at fair value through other comprehensive income

Debt instruments

Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses and interest revenue on the instrument's amortised cost which are recognised in profit or loss. Interest income from these financial assets is included in "interest income" using the effective interest rate method. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in "Net investment gains".

Equity instruments

The equity instrument investments that are held for purposes other than to generate investment returns are designated as FVOCI. When this election is used, fair value gains and losses are recognised in OCI and are not subsequently reclassified to profit or loss, including on disposal. Impairment losses (and reversal of impairment losses) are not reported separately from other changes in fair value. Dividends, when representing a return on such investments, continue to be recognised in profit or loss as net investment gains when the Group's right to receive payments is established, and it is probable that future economic benefits associated with the item will flow to the Group, and the amounts of the dividends can be measured reliably.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(3) Financial instruments (Continued)

(d) Subsequent measurement of financial instruments (Continued)

Financial assets at fair value through profit or loss

Debt instruments

A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented in the profit or loss statement within “Net investment gains” in the period in which it arises.

Equity instruments

Gains and losses on equity investments at FVTPL are included in the “Net investment gains” line in the statement of profit or loss.

Financial liabilities at fair value through profit or loss

Financial liabilities at FVTPL are measured at fair value with all gains or losses recognised in profit or loss of the current period, except for financial liabilities designated as at fair value through profit or loss, where gains or losses on the financial liabilities are treated as follows:

(i) changes in fair value of such financial liabilities due to changes in the Group’s own credit risk are recognised in OCI; and

(ii) other changes in fair value of such financial liabilities are recognised in profit or loss of the current period. If the accounting of changes in the credit risk of the financial liabilities in accordance with (i) will create or enlarge accounting mismatches in profit or loss, the Group recognizes all gains or losses on such financial liabilities (including amounts arising from changes in its own credit risk) in the profit or loss of the current period.

When financial liabilities designated as at FVTPL are derecognised, fair value gains and losses are subsequently reclassified from OCI to retained earnings.

(e) Impairment of financial instruments

The Group assesses on a forward-looking basis the ECL associated with its debt instrument assets carried at amortised cost and FVOCI.

ECL is the weighted average of credit losses with the respective risks of a default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for POCI financial assets).

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(3) Financial instruments (Continued)

(e) Impairment of financial instruments (Continued)

The Group measures the ECL of a financial instrument reflects:

(i) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;

(ii) the time value of money; and

(iii) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

For financial instruments whose impairment losses are measured using the ECL model, the Group assesses whether their credit risk has increased significantly since their initial recognition, and applies a three-stage impairment model to calculate their impairment allowance and recognise their ECL, as follows:

Stage I: The Group measures the loss allowance for a financial instrument at an amount equal to the next 12 months ECL if the credit risk of that financial instrument has not increased significantly since initial recognition.
Stage II: The Group measures the loss allowance for a financial instrument at an amount equal to the lifetime ECL if the credit risk of that financial instrument has increased significantly since initial recognition, but is not yet deemed to be credit-impaired.
Stage III: The Group measures the loss allowance for a financial instrument at an amount equal to the lifetime ECL if the financial instrument is credit-impaired.

The Group applies the impairment requirements for the recognition and measurement of loss allowance for debt instruments that are measured at FVOCI. The loss allowance is recognised in OCI and the impairment loss is recognised in profit or loss, and it should not reduce the carrying amount of the financial asset in the statement of financial position.

The Group has measured the loss allowance for a financial instrument at an amount equal to the lifetime ECL in the previous reporting period, but determines to measure it at an amount equal to the next 12 months ECL at the current reporting date since the credit risk of that financial instrument has increased significantly since initial recognition is no longer met, and the amount of ECL reversal is recognised in profit or loss. Excluding POCI financial assets.

The inputs, assumptions and estimation techniques the Group used in ECL models for its debt instrument assets carried at amortised cost and FVOCI refer to Note 63.2.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(3) Financial instruments (Continued)

(f) Derecognition of financial instruments

A financial asset is derecognised, when one of the following criteria is satisfied:

(i) the contractual rights to receive cash flows from the assets have expired; or
(ii) the Group has transferred its rights to receive cash flows from the asset; or has assumed an obligation to pay them in full without material delay to a third party under a "pass-through" arrangement; and (a) the Group has transferred substantially all the risks and rewards of ownership of the financial asset; or (b) the Group has neither transferred nor retained substantially all the risks and rewards of ownership of the financial asset, but not retain control of the asset.

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability.

When the Group has made substantial modifications to a part of the contract terms of an existing financial liability, the relevant portion of the existing financial liability is derecognised, while the financial liability under modified terms is recognised as a new financial liability.

On derecognition of a financial liability in its entirety or partially, the difference between the carrying amount and the consideration paid (including non-cash assets transferred or new financial liabilities assumed) shall be recognised in profit or loss.

If the Group repurchases a part of a financial liability, the Group shall allocate the previous carrying amount of the financial liability between the part that continues to be recognised and the part that is derecognised based on the relative fair values of those parts on the date of the repurchase. The difference between the carrying amount allocated to the part derecognised and the consideration paid (including any non-cash assets transferred or liabilities assumed) for the part derecognised shall be recognised in profit or loss.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(4) Derivative financial instruments and hedge accounting

Derivative financial instruments

The Group uses derivatives, such as foreign currency contracts to economically hedge its foreign currency risk. Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value and changes therein are generally recognised in profit or loss.

Hedge accounting

At the inception of a hedging relationship, the Group formally designates the hedge instruments and the hedged items, and documents the hedging relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument's effectiveness in offsetting the exposure to changes in the hedged item's fair value or cash flows attributable to the hedged risk. Such hedges are expected to meet the hedge effectiveness in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to analyse the sources of hedge ineffectiveness which are expected to affect the hedging relationship in remaining hedging period. If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio, but the risk management objective for that designated hedging relationship remains the same, the Group would rebalance the hedging relationship.

Certain derivative transactions, while providing effective economic hedges under the Group's risk management positions, do not qualify for hedge accounting and are therefore treated as derivatives held for trading with fair value gains or losses recognised in profit or loss. Hedges which meet the strict criteria for hedge accounting are accounted for in accordance with the Group's accounting policy as set out below.

Fair value hedges

Fair value hedges are hedges of the Group's exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment, or an identified portion of such an asset, liability or unrecognised firm commitment, that is attributable to a particular risk and could affect the profit or loss or OCI. Among them, the circumstances affecting OCI are limited to the hedging for the risk exposure from fair value change of non-trading equity investment designated as at FVOCI. For fair value hedges, the carrying amount of the hedged item is adjusted for gains and losses attributable to the risk being hedged, the derivative is remeasured at fair value and the gains and losses from both are taken to profit or loss or OCI. For hedged items recorded at amortised cost, the difference between the carrying value of the hedged item and the face value is amortised over the remaining term of the original hedge using the effective interest rate method.

When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in profit or loss. The changes in the fair value of the hedging instrument are also recognised in profit or loss.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(4) Derivative financial instruments and hedge accounting (Continued)

Hedge accounting (Continued)

Fair value hedges (Continued)

The Group discontinues fair value hedge accounting when the hedging relationship ceases to meet the qualifying criteria after taking into account any rebalancing of the hedging relationship, including the hedging instrument has expired or has been sold, terminated or exercised. If the hedged items are derecognised, the unamortised fair value is recorded in profit or loss.

(5) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when there is a current legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

(6) Margin financing and securities lending services

Margin financing and securities lending services refer to the lending of funds by the Group to customers for purchase of securities, or lending of securities by the Group to customers, for which the customers provide the Group with collateral.

The Group recognises margin accounts at initial recognition, and recognises interest income accordingly. Securities lent are not derecognised, but still accounted for as the original financial assets, and interest income is recognised accordingly.

Securities trading on behalf of margin financing or securities lending customers are accounted for as securities brokerage business.

For impairment of financial assets arising from margin financing and securities lending, refer to Note 3(3)(e).

(7) Reverse repurchase agreements and repurchase agreements

Financial assets transferred as collateral in connection with repurchase agreements, involving fixed repurchase dates and prices, are not derecognised. They continue to be recorded as original financial assets before transferred. The corresponding liability is included in repurchase agreements.

Consideration paid for financial assets held under agreements to resell are recorded as reverse repurchase agreements, the related collateral accepted is not recognised in the consolidated financial statements.

The difference between the purchase and resale consideration, and that between the sale and repurchase consideration, is amortised over the period of the respective transaction using the effective interest method and is recognised through interest income or expenses.

For impairment of reverse repurchase agreements, refer to Note 3(3)(e) and Note 4(4).

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(8) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and can affect those returns through its power over the investee. When the Group assesses whether it has power over an investee, the Group's voting rights or potential voting rights and other contractual arrangements are considered.

(9) Associates

Associates are all entities over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

The Group's investments in associates are stated in the consolidated statement of financial position at the Group's share of net assets under the equity method of accounting, less any impairment losses. The Group's share of the post-acquisition results and reserves of associates is included in the consolidated statement of profit or loss and consolidated reserves, respectively. Unrealised gains and losses resulting from transactions between the Group and its associates are eliminated to the extent of the Group's investments in the associates.

(10) Joint ventures

Joint ventures are all entities over which the Group has joint control. Joint control, is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The Group's investments in joint ventures are stated in the consolidated statement of financial position at the Group's share of net assets under the equity method of accounting, less any impairment losses. The Group's share of post-acquisition results and reserves of joint ventures is included in the consolidated statement of profit or loss and reserves, respectively. Unrealised gains and losses resulting from transactions between the Group and its joint ventures are eliminated to the extent of the Group's investments in the joint ventures.

(11) Investment properties

Investment properties comprise real estate properties for the purpose of earning rental income and/or for capital appreciation, including buildings that have been leased out. Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure will flow to the Group. Ongoing repairs and maintenance are expensed as incurred.

The Group's investment properties are accounted for using cost model. The initial recognition and subsequent measurement of buildings and properties that are leased out are accounted for using the same measurement and depreciation methods as those for property and equipment.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(11) Investment properties (Continued)

When an investment property is transferred to owner-occupied property, it is reclassified to property and equipment with the carrying amount determined at the carrying amount of the investment property at the date of the transfer. When an owner-occupied property is transferred out for earning rentals or for capital appreciation, the property and equipment is transferred to investment properties with the carrying amount determined at the carrying amount at the date of the transfer.

An investment property shall be derecognised on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. When an investment property is sold, transferred, retired or damaged, the Group recognises the amount of any proceeds on disposal, net of the carrying amount and related expenses, in the consolidated statement of profit or loss.

(12) Property and equipment

(a) Recognition criteria for property and equipment

Property and equipment comprise properties and buildings, transportation vehicles and electronic devices that the Group expects to use for more than one year and other tangible assets that are expected to be used for more than one year.

(b) Property and equipment initially measured at cost

Cost of an item of purchased property and equipment comprises purchase price, tax and any costs directly attributable to bringing the asset to the condition necessary for its intended use and it includes transportation costs, installation and assembly costs, and professional service fees. The cost of a self-constructed asset comprises all costs incurred before the asset is ready for its intended use.

Subsequent expenditure incurred for the property and equipment is included in the cost of the property and equipment if it is probable that economic benefits associated with the asset will flow to the Group and the subsequent expenditure can be measured reliably, while the carrying amount of the replaced part is derecognised. Other subsequent expenditure is recognised in the consolidated income statement in the period in which they are incurred.

Depreciation of property and equipment is calculated on the straight-line basis.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(12) Property and equipment (Continued)

(b) Property and equipment initially measured at cost (Continued)

Estimated useful life, depreciation rate and estimated residual value of each item of property and equipment which are required by the operation of the Group are as follows:

Types of property and equipment	Estimated useful lives	Yearly depreciation rate	Estimated residual value rate
Leasehold land and buildings	30 years	3.23%	3%
Electronic and communication equipment	3–10 years	9.70%–32.33%	3%
Motor vehicles	6 years	16.17%	3%
Office equipment	5 years	19.40%	3%
Leasehold improvements	Over the lease term	nil	nil

The years that property and equipment were already in use upon purchase were excluded when determining the estimated useful lives of these types of property and equipment. The estimated useful lives, the estimated residual value rate and the depreciation method of each type of property and equipment are reviewed, and adjusted if appropriate, at each financial year end. Gains and losses on disposal of property and equipment, the costs of disposal and taxes in connection with such disposal are considered in the determination of the estimated residual value rate.

(c) Impairment of property and equipment

The Group assesses whether there is any indication that assets are impaired at each financial reporting date. When any such indication exists, the Group estimates the recoverable amount. When recoverable amounts of assets are lower than carrying amounts, the Group decreases the carrying amount to recoverable amount, the decreased amount recognised in the consolidated income statement.

An impairment loss recognised for property and equipment is not reversed in subsequent periods.

(d) Disposal of property and equipment

An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from its continued use. Any gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised through profit or loss.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(12) Property and equipment (Continued)

(e) Construction in progress

Costs of construction in progress are determined based on the actual expenditure incurred which include all necessary expenditure incurred during the construction period, borrowing costs eligible for capitalisation and other costs incurred to bring the asset to its intended use.

Items classified as construction in progress are transferred to property and equipment when such assets are ready for their intended use.

(13) Land-use rights and intangible assets

(a) Land-use rights

Land-use rights acquired by the Group are amortised over the period that is confirmed by the land use permit.

(b) Intangible assets

Intangible assets are recognised only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item shall be measured reliably, and measured initially at cost. Intangible assets acquired from business combination and their fair value can be measured reliably are recognised as intangible assets individually and measured at their fair value as at date of combination.

Useful lives of intangible assets are determined as the period that the assets are expected to generate economic benefits for the Group, and when there is no foreseeable limit on the period of time over which the asset is expected to generate economic benefits for the Group, the intangible assets are regarded as having indefinite useful life.

Intangible assets with finite useful lives (i.e. computer software and data assets) that are acquired separately are carried at cost less accumulated amortisation and any accumulated impairment losses. Amortisation for intangible assets with finite useful lives is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimates being accounted for on a prospective basis. Intangible assets with indefinite useful lives (i.e. trading rights) that are acquired separately are carried at cost less any subsequent accumulated impairment losses.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(13) Land-use rights and intangible assets (Continued)

(b) Intangible assets (Continued)

Intangible assets with indefinite useful lives need to be assessed for impairment no matter if there is any impairment evidence. These assets need not to be amortised, and their useful lives shall be reviewed each reporting date. If there is any evidence to support that the useful lives are definite, these intangible assets shall apply the policies of intangible assets with definite useful lives.

Internal research and development expenses are classified as research phase expense and development phase expenses. Expenditure on research phase of an internal project shall be recognised as an expense when it is incurred. Development phase expense can be capitalised only an entity can demonstrate all of the following:

(i) the technical feasibility of completing the intangible asset so that it will be available for use or sale;
(ii) its intention to complete the intangible asset and use or sell it;
(iii) its ability to use or sell the intangible asset;
(iv) how the intangible asset will generate probable future economic benefits. Among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset;
(v) the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
(vi) its ability to measure reliably the expenditure attributable to the intangible asset during its development.

The development phase expenses that do not meet the above conditions shall be recognised in profit or loss when incurred.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(14) Revenue

Revenue is recognised when control over a service is transferred to the customer at the amount of promised consideration to which the Group is expected to be entitled, excluding those amounts collected on behalf of third parties.

Where the contract contains a variable consideration, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the promised services to a customer and includes in the transaction price some or all of the variable consideration estimated, such that revenue is only recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur.

Where the contract contains a financing component which provides a significant financing benefit to the customer for more than 12 months, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction with the customer, and interest income is accrued separately under the effective interest method. Where the contract contains a financing component which provides a significant financing benefit to the Group, revenue recognised under that contract includes the interest expense accreted on the contract liability under the effective interest method. The Group takes advantage of the practical expedient of IFRS 15 and does not adjust the consideration for any effects of a significant financing component if the period of financing is 12 months or less.

Further details of the Group's revenue and other income recognition policies are as follows:

Revenue from underwriting services is recognised when the Group has fulfilled its obligations under the underwriting contract. Depending on contract terms, sponsor fees are recognised progressively over time using a method that depicts the Group's performance, or at a point in time when the service is completed.

Revenue from the securities brokerage services is recognised on the date of the securities transaction.

Revenue from asset management services is recognised when management services are provided in accordance with the asset management contract.

Dividend income is recognised when the Group's right to receive payment has been established.

Other business revenue mainly comes from the bulk commodities sales of the Group's commodities trading subsidiaries.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(14) Revenue (Continued)

The Group recognises sales revenue from bulk commodity goods when fulfil the Group's performance obligations in the contract, that is, the revenue is recognised when the customer obtains control of the relevant bulk commodity goods.

In the process of selling goods, the Group, as the primary obligor, has the primary responsibility of providing goods and performing orders to customers; the Group is exposed to inventory risk before or after the bulk commodity goods have been ordered by a customer; the Group has discretion in establishing prices of bulk commodity goods and exposed to credit risk for the amount receivable from customers in exchange for the other party's goods and commodity risk for inventory. The Group satisfies the performance obligation above and recognised revenue in the gross amount. When the Group acts as an agent, the net amount of the consideration received or receivable after deducting the price payable to other parties shall be recognised as income.

When the Group recognises revenue in accordance with the progress of completed services, the part of unconditional receivables that the Group has acquired will be recognised as accounts receivables, and the rest will be recognised as contract assets. The Group identifies loss allowance on the basis of expected credit losses for accounts receivable and contractual assets; if the Group's received consideration or receivable consideration exceed the completed services, the excess part will be recognised as contractual liabilities. The Group's contractual assets and liabilities under the same contract are shown in net.

(15) Income tax

Income tax comprises current tax and deferred income tax. Current tax is the amount of current income tax payable calculated based on current taxable income. Taxable income is calculated based on the adjustment to the current year pre-tax accounting profit according to the applicable tax laws.

For current income tax liabilities or current income tax assets generated from the current and prior periods, the expected income tax payable or the income tax deduction is calculated according to the applicable tax laws.

The Group measures deferred income tax using balance sheet liability method according to the temporary differences between the carrying amount of an asset or liability at the end of the reporting period and its tax base, and the temporary difference between the carrying amount of an item not recognised as an asset or liability at the end of the reporting period and its tax base.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(15) Income tax (Continued)

All taxable temporary differences are recognised as deferred income tax liabilities, except:

(i) The deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable income or deductible expenses; and

(ii) In respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not be reversed in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, unused tax credits carried forward and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which deductible temporary differences, unused tax credits carried forward and unused tax losses can be utilised, except that deferred income tax asset relating to deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable income or deductible expenses.

Deferred income tax assets and deferred income tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of each reporting period and reflect the corresponding tax effect.

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred income tax asset to be utilised. When it is virtually probable that sufficient taxable income will be available, the reduced amount can be reversed accordingly.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(16) Employee compensation

Employee compensation refers to all forms of consideration and other related expenditure given or incurred by the Group in exchange for services rendered by employees. The benefits payable are recognised as liabilities during the period in which the employees have rendered the services to the Group.

In accordance with the applicable laws and regulations, Chinese Mainland employees of the Group participate in various social insurance schemes including basic pension insurance, medical insurance, unemployment insurance and housing fund schemes administered by the local government authorities. Contributions to these schemes are recognised in profit or loss as incurred.

All eligible employees outside Chinese Mainland participate in the respective local defined contribution schemes. The Group contributes to these defined contribution schemes based on the requirements of the local regulatory bodies. The Group and its employees pay corporate annuities in accordance with the relevant PRC regulations.

(17) Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all the attaching conditions will be complied with. Where the Group receives grants of monetary assets, the grants are recorded at the amount received or receivable. Where the Group receives grants of non-monetary assets, the grants are recorded at the fair value of the non-monetary assets. When fair value cannot be reliably measured, they are recognised at nominal amount.

Government grants for purchasing, building or other development of long-term assets regulated in government documents are recognised as government grants related to assets. Judgments should be made based on the necessary basic conditions for obtaining the government grants when government documents are unclearly stated. Government grants with purchasing, building or other development of long-term assets as basic condition are recognised as government grants related to assets, and the remaining type of grants are recognised as related to income.

Government grants related to income which are to compensate relevant expenditures or losses in future periods are recognised as deferred income and released to profit or loss during the period when the expense is incurred. Government grants that are to compensate the incurred expenses or losses are recognised into profit or loss directly. Government grants related to assets are recognised as deferred income, and released to profit or loss over the expected useful life of the relevant assets by equal annual instalments. Government grants measured at nominal amount are recorded into profit or loss directly.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(18) Leases

As a lessee

(a) Initial measurement of the right-of-use asset and lease liability

Initial measurement of the right-of-use asset

The right-of-use asset is defined as the right of underlying assets in the lease term for the Group as a lessee. The lease term is defined as the non-cancellable period of the lease for the Group as a lessee.

At the commencement date, a lessee shall measure the right-of-use asset at cost. The cost of the right-of-use asset shall comprise:

(i) the amount of the initial measurement of the lease liability;
(ii) any lease payments made at or before the commencement date, less any lease incentives received;
(iii) any initial direct costs incurred by the lessee; and
(iv) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

Initial direct costs are defined as incremental costs that would not have been incurred if a lease had not been obtained.

Initial measurement of the lease liability

At the commencement date, a lessee shall measure the lease liability at the present value of the lease payments that are not paid at that date.

The lease payments shall be discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee shall use the lessee's incremental borrowing rate.

The lessee uses as the discount rate the interest rate implicit in the lease – this is the rate of interest that causes the present value of lease payments and the unguaranteed residual value to equal the sum of the fair value of the underlying asset and any initial direct costs of the lessor.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(18) Leases (Continued)

As a lessee (Continued)

(b) Subsequent measurement of the right-of-use asset and lease liability

Subsequent measurement of the right-of-use asset

At the commencement date, the Group as a lessee shall measure the right-of-use asset at cost and apply the depreciation requirements in IAS 16 Property and equipment in depreciating the right-of-use asset. If the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, the lessee shall depreciate the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the lessee shall depreciate the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. When the recoverable amount is less than the book value of the right-to-use assets, the Group shall write down its book value to the recoverable amount.

Subsequent measurement of the lease liability

After the commencement date, the Group shall recognise interest on the lease liability in profit or loss. Interest on the lease liability in each period during the lease term shall be the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability.

(c) Recognition of short-term leases and leases for which the underlying asset is of low value

Short-term leases are defined as leases with a lease term of less than 12 months from the commencement date. Leases for which the underlying asset is of low value are defined as underlying assets of low value when new. The right-of-use asset and lease liability are not recognised by the Group for short-term leases and leases for which the underlying asset is of low value. The lessee shall recognise the lease payments associated with those leases as an expense.

(19) Inventories

Inventories are recognised at cost for initial recognition. The cost of inventories comprises all costs of purchase, costs of conversion and other costs.

At the balance sheet date, inventories are measured at the lower of cost and net realisable value. When net realisable value is lower than the carrying amount, the Group decreases the carrying amount to net realisable value. The decreased amount is recognised in profit or loss and corresponding allowance is made.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs necessary to make the sale and related taxes.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(20) Impairment of goodwill

The Group assesses goodwill acquired from business combination, no matter there is objective evidence of impairment or not, impairment should be assessed at each annual financial reporting date.

The recoverable amount is the higher of an asset’s fair value less costs of disposal and the present value of the estimated future cash flow expected to be derived from the asset. The Group estimates the recoverable amount on the basis of individual asset. When it is difficult to estimate the recoverable amount individually, the recoverable value of the cash generating units to which the asset belongs will be estimated. The recognition of a group of assets shall base on whether the main cash flow generated by the Group of assets is independent from those generated by other assets or groups of assets.

When recoverable amounts of assets or groups of assets are lower than their carrying amounts, the Group decreases their carrying amount to recoverable amount. The decreased amounts are recognised in profit or loss and corresponding allowances are made.

For impairment test of goodwill, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units when being unable to be allocated to each of the cash-generating units. Cash-generating units or groups of cash-generating units refer to those that can benefit from the synergies of the combination and are not larger than the reportable segment determined by the Group.

When performing impairment test for the (groups of) cash-generating unit to which goodwill is allocated, the Group firstly tests the (groups of) cash-generating unit excluding goodwill, calculates the recoverable amount and recognises relevant impairment losses. The Group then tests the (groups of) cash-generating units including goodwill, and compares the carrying amount and recoverable amount. If the carrying amount exceeds the recoverable amount, the amount of impairment loss is firstly deducted from the carrying amount of goodwill allocated to the (groups of) cash-generating unit, and then from the carrying amount of each of other assets (other than goodwill) within the (groups of) cash-generating unit, on a pro rata basis. An impairment loss recognised for goodwill cannot be reversed in subsequent periods.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(21) Related parties

A party is considered to be related to the Group if:

(a) the party is a person or a close family member of that person and that person

(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a parent of the Group;

(b) the party is an entity where any of the following conditions applies:

(i) the entity and the Group are members of the same group;
(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);
(iii) the entity and the Group are joint ventures of the same third party;
(iv) one entity is a joint venture of a third entity and other entity is an associate of the third entity;
(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;
(vi) the entity is controlled or jointly controlled by a person identified in (a); or
(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(22) Provisions and contingencies

The obligation pertinent to contingencies shall be recognised as provisions when the following conditions are satisfied concurrently:

(i) the obligation is a present obligation of the Group;
(ii) the obligation is probable to cause a future outflow of resources from the Group as a result of performance of the obligation; and
(iii) the amount of the obligation can be reliably measured.

The amount of a provision is initially measured in accordance with the best estimate of the necessary expenses for the performance of the current obligation. To determine the best estimate, the Group takes into full consideration of risks, uncertainty, time value of money and other factors pertinent to the contingencies. The Group reviews the book value of the provisions at the end of the reporting period. If there is substantial evidence that the amount of provisions cannot actually reflect the current best estimate, the Group will adjust the amount in accordance with the current best estimate.

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or, a present obligation that arises from past events but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability.

(23) Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, and non-current assets are not depreciated or amortised. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the noncurrent asset is recognised at the date of derecognition.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(24) Perpetual bonds

Perpetual bonds issued by the Group, which satisfied with the following criteria are classified as equity instruments:

(i) Financial instruments exclude those are settled on a net basis in cash (or other financial assets);

(ii) Financial instruments must or can be settled on own equity: (a) For non-derivative contracts, they exclude those are settled gross by delivery of a variable number of own shares; (b) Derivative contracts that result in the delivery of a fixed amount of cash or other financial assets for a fixed number of an entity's own equity instruments.

Dividends for the perpetual bonds, which are classified as equity instruments, are accounted for as profit distribution.

(25) Profit distribution

After-tax profit for the year is firstly applied to make up for the losses of previous years. Secondly, the Company sets aside 10% of after-tax profit for a statutory reserve under surplus reserves, 10% of after-tax profit for a general risk reserve under general reserves, and according to the requirements of the CSRC, sets aside 10% of after-tax profit for a transaction risk reserve under general reserves.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

4. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these judgements assumptions and estimates could result in outcomes that could require an adjustment to the carrying amounts of the assets or liabilities.

(1) Income tax

Determining provisions for income tax requires the Group to estimate the future tax treatment of certain transactions. The Group carefully evaluates tax implications of transactions in accordance with prevailing tax regulations and provides for taxes accordingly. In addition, deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. This requires significant judgement of the tax treatments of certain transactions and significant estimation of the probability that adequate future taxable profits will be available for the deferred income tax assets to be recovered.

(2) Fair value of financial instruments

If the market for a financial instrument is not active, the Group estimates fair value by using a valuation technique. Valuation techniques include using recent prices in arm's length market transactions between knowledgeable and willing parties, if available, reference to the current fair value of another instrument that is substantially the same, or discounted cash flow analyses and option pricing models. To the extent practicable, valuation technique makes the maximum use of observable market inputs. However, where observable market inputs are not available, management needs to make estimates and use alternatives on such unobservable market inputs.

(3) Consolidation of structured entities

Management makes significant judgment on whether the Group controls and therefore is required to consolidate its structured entities. The decision outcome impacts the financial and operational results of the Group.

When assessing control, the Group considers: 1) the level of power of the Group over the investee; 2) variable returns gained through participation of relevant activities of the investee; and 3) the ability of the Group in using its power over the investee to affect its return.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

4. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued)

(3) Consolidation of structured entities (Continued)

When assessing the level of power over the structured entities, the Group considers the following four aspects:

(i) the degree of participation when establishing the structured entities;
(ii) contractual arrangements;
(iii) activities that take place only at special occasions or events;
(iv) commitments made to the investee from the Group.

When assessing whether there is control over the structured entities, the Group also considers whether it's acting as a principal or as an agent. Aspects of considerations normally include the decision-making power over the structured entities, substantive rights enjoyed by the other third parties, level of reward to the Group, and exposure to variable risks and returns from owning other benefits of the structured entities.

(4) Measurement of the expected credit loss allowance

Expected credit loss measurement

The measurement of the expected credit loss allowance for debt instruments measured at amortised cost and FVOCI is an area that requires the use of models and assumptions about future economic conditions and credit behaviour of the client (such as the likelihood of customers defaulting and the resulting losses).

A number of significant judgements are also required in applying the accounting requirements for measuring expected credit losses (ECL), such as:

Determining criteria for significant increase in credit risk, definition of default and credit impairment;
Choosing appropriate models and assumptions for the measurement of ECL;
Projection of macroeconomic variables for forward-looking scenarios.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

4. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued)

(4) Measurement of the expected credit loss allowance (Continued)

Inputs, assumptions and estimation techniques

The Group assesses ECL after taking into consideration of forward looking factors. For debt securities investments, ECL are the discounted product of the Probability of Default ("PD"), Exposure at Default ("EAD"), and Loss Given Default ("LGD"). For margin accounts, stock-pledged reverse repurchase agreements, ECL are the discounted product of the EAD and Loss Ratio ("LR").

Forward-looking information incorporated in the ECL model

A pervasive concept in measuring ECL in accordance with IFRS9 is that it should consider forward-looking information. The assessment of significant increase in credit risk and the calculation of ECL both incorporated forward-looking information. The Group has performed historical data and identified the key economic variables impacting credit risk and ECL for each financial instrument portfolio. These economic variables and their associated impact on the PD vary by product type. The impact of these economic variables on the PD has been determined by performing statistical regression analysis to understand the impact changes in these variables have had historically on default rates.

Details of the significant accounting judgements and estimates above please refer to Note 63.2.

(5) Classification of financial assets

When the Group determines the classification of financial assets, a number of significant judgements in the business model and the contractual cash flow characteristics of the financial assets are required.

Factors considered by the Group in determining the business model for a group of financial assets include past experience on how the cash flows for these assets were collected, how the asset's performance is evaluated and reported to key management personnel, how risks are assessed and managed and how managers are compensated.

When the Group assesses whether the contractual cash flows of the financial assets are consistent with basic lending arrangements, the main judgements are described as below: whether the principal amount may change over the life of the financial asset (for example, if there are prepayments); whether the interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin and cost, associated with holding the financial asset for a particular period of time.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

5. SEGMENT REPORTING

Information reported to the Board of Directors, being the chief operating decision maker (hereinafter refer to as the "CODM") of the Company, for the purposes of resource allocation and assessment of segment performance focuses on the nature of products sold and services provided by the Group, which is also consistent with the Group's basis of organisation, whereby the businesses are organised and managed separately as individual strategic business units that offer different products and serve different markets. Segment information is measured in accordance with the accounting policies and measurement criteria adopted by each segment when reporting to CODM, which are consistent with the accounting and measurement criteria in the preparation of the consolidated financial statements. The inter-segment revenue and expenses arising from internal use of funds are determined by internal transfer price. In 2024, the management of the Group began to allocate resources and assess the segment's performance based on the updated operating segment classification. Comparative figures are re-presented accordingly.

Specifically, the Group's reportable and operating segments are as follows:

Inter-segment transactions, if any, are conducted with reference to the prices charged to third parties and there was no change in the basis during the year of 2024 and 2023.

Segment profit/loss represents the profit earned/loss incurred by each segment without allocation of income tax expenses. This is the measure reported to CODM for the purposes of resource allocation and performance assessment.

Segment assets/liabilities are allocated to each segment. Inter-segment balances eliminations mainly include amount due from/to another segment arising from activities' carried out by one segment for another segment.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

5. SEGMENT REPORTING (Continued)

The segment information provided to the CODM for the operating segments for the years ended 31 December 2024 and 2023 are as follows:

Operating segment

	Wealth and asset management RMB'000	Investment banking and alternative investment RMB'000	Institutional and sales trading RMB'000	International and other operations RMB'000	Segment total RMB'000	Eliminations RMB'000	Consolidated total RMB'000
For the year ended 31 December 2024
Segment revenue and results
Segment revenue and net investment gains	10,681,865	1,430,730	7,096,353	5,464,769	24,673,717	(4,200,562)	20,473,155
Segment other income, gains and losses, net	7,012,644	60,923	7,618	130,039	7,211,224	(772)	7,210,452
Segment revenue, other income and net gains and losses	17,694,509	1,491,653	7,103,971	5,594,808	31,884,941	(4,201,334)	27,683,607
Segment expenses	(16,734,070)	(982,626)	(4,227,476)	(5,575,962)	(27,520,134)	3,037,704	(24,482,430)
Segment results	960,439	509,027	2,876,495	18,846	4,364,807	(1,163,630)	3,201,177
Share of results of associates	(20,647)	(33,186)	-	511,910	458,077	-	458,077
Profit/(loss) before income tax	939,792	475,841	2,876,495	530,756	4,822,884	(1,163,630)	3,659,254
Other segment information
Amounts included in the measure of segment profit or loss or segment assets:
Depreciation and amortisation	438,594	45,185	55,872	259,656	799,307	-	799,307
Charge for impairment losses	577,313	20,977	66,740	10,984	676,014	-	676,014
Capital expenditure	443,953	100,061	8,259	849,026	1,401,299	-	1,401,299
As at 31 December 2024
Segment assets and liabilities
Segment assets	180,206,863	9,817,264	184,279,888	69,979,507	444,283,522	(26,547,147)	417,736,375
Segment liabilities	131,360,199	737,428	123,530,858	88,317,429	343,945,914	(7,609,355)	336,336,559

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

5. SEGMENT REPORTING (Continued)

Operating segment (Continued)

	Wealth and asset management RMB'000	Investment banking and alternative investment RMB'000	Institutional and sales trading RMB'000	International and other operations RMB'000	Segment total RMB'000	Eliminations RMB'000	Consolidated total RMB'000
For the year ended 31 December 2023
Segment revenue and results
Segment revenue and net investment gains	10,664,875	1,376,749	5,436,418	5,775,447	23,253,489	(4,503,220)	18,750,269
Segment other income, gains and losses, net	5,357,153	266,434	(68,341)	(28,126)	5,527,120	–	5,527,120
Segment revenue, other income and net gains and losses	16,022,028	1,643,183	5,368,077	5,747,321	28,780,609	(4,503,220)	24,277,389
Segment expenses	(15,334,854)	(1,258,998)	(4,285,914)	(4,303,616)	(25,183,382)	3,240,883	(21,942,499)
Segment results	687,174	384,185	1,082,163	1,443,705	3,597,227	(1,262,337)	2,334,890
Share of results of associates	(25,618)	521,143	59,883	(18,002)	537,406	46,844	584,250
Profit/(loss) before income tax	661,556	905,328	1,142,046	1,425,703	4,134,633	(1,215,493)	2,919,140
Other segment information
Amounts included in the measure of segment profit or loss or segment assets:
Depreciation and amortisation	420,007	54,820	59,925	280,415	815,167	–	815,167
Charge for impairment losses	1,224,629	(2)	24,398	3,121	1,252,146	–	1,252,146
Capital expenditure	1,071,330	45,931	210	273,751	1,391,222	–	1,391,222
As at 31 December 2023
Segment assets and liabilities
Segment assets	173,897,348	11,023,581	166,506,084	56,899,948	408,326,961	(24,636,499)	383,690,462
Segment liabilities	121,707,979	846,187	112,149,190	75,262,126	309,965,482	(5,035,217)	304,930,265

The Group's non-current assets are mainly located in the PRC (country of domicile). The Group's revenue is substantially derived from its operations in the PRC.

The Group has no single customer which contributes to 10 percent or more of the Group's revenue for the years ended 31 December 2024 and 2023.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

6. COMMISSION AND FEE INCOME

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Commission on securities broking, dealing and handling fee income	2,219,315	2,312,609
Commission on futures and options contracts broking, dealing and handling fee income	4,667,838	3,604,536
Asset and fund management fee income	1,402,031	2,267,880
Underwriting, sponsors and financial advisory fee income	1,250,686	1,599,352
Consultancy fee income	82,558	72,808
Other	365,717	441,151
Total	9,988,145	10,298,336

The major business types of commission and fee income from customers are as follows:

(1) Brokerage

The Group provides broking, dealing and handling services for securities, futures and options contracts. Commission income is recognised at a point in time on the execution date of the trades at a certain percentage of the transaction value of the trades executed.

(2) Asset management

The Group provides asset management service on diversified and comprehensive investment products to customers. The customers simultaneously receive and consume the benefit provided by the Group, hence the revenue is recognised as a performance obligation satisfied over time. For some products, the Group may also be entitled to a performance fee when meeting certain criteria for the relevant performance period and it is recognised at the end of the relevant performance period, when it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and when the uncertainty associated with the variable consideration is subsequently resolved.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

6. COMMISSION AND FEE INCOME (Continued)

(3) Investment Banking

The Group provides placing, underwriting or sub-underwriting services to customers for their fund raising activities in equity and debt capital markets, and structured products arrangement services. Revenue is recognised at a point in time when the relevant placing, underwriting, sub-underwriting or structured products arrangement activities are completed. The Group also provides sponsoring services to clients for their fund raising activities and corporate advisory services to corporate clients for their corporate actions. The revenue is recognised over time.

Most contracts with customers have original expected duration of less than one year and therefore information about their remaining performance obligations is not disclosed.

7. INTEREST INCOME

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Interest income from advances to customers	1,115,523	1,144,068
Interest income from reverse repurchase agreements	97,176	491,316
Interest income from deposits with exchanges and financial institutions	1,524,216	1,598,262
Interest income from debt instruments measured at amortised cost	47,720	83,059
Interest income from debt instruments at FVOCI	2,773,761	2,739,661
Other interest income	479	7,798
Total	5,558,875	6,064,164

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

8. NET INVESTMENT GAINS

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Net realised gains from disposal of debt instruments at FVOCI	2,344,206	842,475
Net realised gains from disposal of financial assets at FVTPL	2,270,774	235,705
Net realised losses arising from financial liabilities at FVTPL	(898,989)	(600,363)
Net realised losses from disposal of subsidiaries and associates	(18,900)	(1,891)
Net realised gains arising from disposal of debt instrument measured at amortised cost	-	9,421
Net realised losses arising from derivative financial instruments	(1,193,464)	(1,065,583)
Dividend income from equity instruments at FVOCI
- relating to investments derecognised during the year	12,020	30,171
- relating to investments held at the end of the reporting period	668,308	370,849
Dividend income and interest income from financial assets at FVTPL	2,192,214	2,138,675
Unrealised fair value change of financial assets at FVTPL	574,952	77,782
Unrealised fair value change of financial liabilities at FVTPL	(80,310)	(54,236)
Unrealised fair value change of derivative financial instruments	(944,676)	404,764
Total	4,926,135	2,387,769

9. OTHER INCOME, GAINS AND LOSSES, NET

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Bulk commodity trading income	6,878,352	5,197,756
Government grants	165,321	201,633
Foreign exchange gains/losses, net	59,525	(57,866)
Rental income	5,647	4,476
Other	101,607	181,121
Total	7,210,452	5,527,120

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

10. DEPRECIATION AND AMORTISATION

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Depreciation of property and equipment	281,948	294,880
Depreciation of right-of-use assets	359,821	360,732
Depreciation of investment properties	1,467	8,076
Amortisation of other intangible assets	156,071	145,710
Total	799,307	809,398

11. STAFF COSTS

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Salaries, bonus and allowances	4,059,924	3,619,421
Social welfare	849,172	782,336
Contributions to annuity schemes	122,631	163,047
Total	5,031,727	4,564,804

Note: The domestic employees of the Group in the PRC participate in state-managed retirement benefit schemes operated by the respective local government in the PRC. The Group also operates a Mandatory Provident Fund Scheme for all qualified employees in Hong Kong under the Mandatory Provident Fund Schemes Ordinance. Apart from participating in various defined contribution retirement benefit plans organised by municipal and provincial governments in Mainland China, the Group is also required to make monthly contributions to annuity schemes at fixed rates of the employees' salary and bonus for the period. The Group's contributions to these pension plans are charged to profit or loss in the period to which they relate.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

12. COMMISSION AND FEE EXPENSES

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Securities and futures broking and dealing expenses	4,376,159	3,136,192
Underwriting, sponsors and financial advisory fee expenses	82,401	89,046
Other service expenses	94,882	138,502
Total	4,553,442	3,363,740

13. INTEREST EXPENSES

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Debt securities issued	1,933,895	2,143,252
Repurchase agreements	1,515,037	1,494,077
Placements from banks and financial institutions	501,665	358,652
Borrowings	87,539	55,595
Account payables to brokerage clients	84,673	117,953
Short-term debt instruments	80,810	110,438
Lease liabilities	33,926	19,860
Total	4,237,545	4,299,827

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

14. OTHER OPERATING EXPENSES

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Bulk commodity trading expenses	7,018,015	5,193,403
Products distribution expenses	431,463	636,743
Electronic equipment operating expenses	371,702	371,302
Administrative expenses	259,003	329,018
Communication expenses	255,322	215,813
Sundry expenses	200,251	184,776
Stock exchange management fees	137,772	120,187
Advisory expenses	118,173	161,175
Business travel expenses	110,866	142,892
Tax and surcharges	86,588	83,604
Entertainment expenses	70,810	113,400
Securities and futures investor protection funds	56,431	54,664
Donation	23,950	25,715
Auditor's remuneration	11,378	8,219
Short-term leases and low value assets rental expenses	10,835	10,183
Other	21,836	1,490
Total	9,184,395	7,652,584

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

15. IMPAIRMENT LOSSES UNDER EXPECTED CREDIT LOSS MODEL, NET OF REVERSAL

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Expected credit losses in respect of
- Reverse repurchase agreements	387,807	990,715
- Advances to customers	732	2,471
- Account receivables and other receivables	3,271	10,396
- Debt instruments at FVOCI	69,509	26,666
- Debt instruments measured at amortised cost	9	(49)
Total	461,328	1,030,199

16. INCOME TAX EXPENSE

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Current tax:
- PRC Enterprise Income Tax	271,943	466,980
- Hong Kong Profits Tax	11,178	-
Total	283,121	466,980
Adjustments in respect of current income tax in relation to prior years:
- PRC Enterprise Income Tax	11,326	20,226
Deferred tax	14,360	(324,670)
Total	308,807	162,536

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

16. INCOME TAX EXPENSE (Continued)

Under the Enterprise Income Tax of the PRC (the "EIT Law") and the Implementation Regulation of the EIT Law, the tax rate of the Group's PRC subsidiaries is 25% for both years.

For the Company's subsidiaries in Hong Kong, Hong Kong Profits Tax has been provided at the rate of 16.5% on the estimated assessable profits for the year.

The income tax expense for the year can be reconciled to the profit before income tax as follows:

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Profit before income tax	3,659,254	2,919,140
Tax at the statutory tax rate of 25%	914,814	729,785
Effect of share of results of associates	(152,899)	(142,633)
Adjustments for prior years	11,326	20,226
Tax effect of expenses not deductible for tax purpose	53,926	65,756
Tax effect of income not taxable for tax purpose (Note a)	(527,499)	(493,427)
Tax effect of deductible temporary differences and tax losses not recognised	150,576	59,655
Utilisation of tax losses previously not recognised	(13,028)	(38,582)
Effect of different tax rates of subsidiaries operating in other jurisdictions	(10,234)	21,131
Other (Note b)	(118,175)	(59,375)
Income tax expense for the year	308,807	162,536

Note a: Income not taxable for tax purpose mainly includes interest income from government bonds.
Note b: According to the announcement on corporate income tax policy of perpetual bonds (Announcement No. 64, 2019 of the Ministry of Finance and the State Taxation Administration), when an enterprise issues perpetual bonds that meet specified conditions, the current year distribution attributable to perpetual bond paid by the issuer is allowed to be deducted for the purpose of enterprise income tax computation.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

17. EARNINGS PER SHARE

The calculation of basic earnings per share attributable to the shareholders of the Company is as follows:

	Year ended 31 December
	2024
RMB'000	2023
RMB'000
Earnings for the purpose of basic earnings per share:
Profit for the year attributable to equity holders of the Company	3,350,208	2,753,755
Less: profit attributable to holders of perpetual subordinated bond	(237,500)	(237,500)
Subtotal	3,112,708	2,516,255
Number of shares (in thousand):
Number of issued shares on 1 January	8,463,159	8,496,645
Effect of A share and H share rights issue	–	–
Effect of treasury stock (Note 51)	(1,244)	(4,625)
Weighted average number of ordinary shares in issue	8,461,915	8,492,020
Basic earnings per share (RMB Yuan)	0.37	0.30

There were no potential dilutive ordinary shares in issue during the years ended 31 December 2024 and 2023, thus no diluted earnings per share is presented.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

18. CASH AND BANK BALANCES

	As at 31 December
	2024 RMB'000	2023 RMB'000
House accounts	19,127,541	21,115,779
including: restricted bank deposits (Note a)	2,095,282	1,480,962
Cash held on behalf of clients (Note b)	83,965,560	82,977,363
Total	103,093,101	104,093,142

Cash and bank balances comprise cash on hand and demand deposits which bear interest at the prevailing market rates.

Note a: The restricted bank deposits as of 31 December 2024 and 31 December 2023 included risk reserve bank deposits and margin on notes payable.

19. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise the following:

	As at 31 December
	2024 RMB'000	2023 RMB'000
Cash and bank balances	19,064,050	21,083,116
Clearing settlement funds	7,741,316	6,654,860
Less: clearing settlement funds of Orient Securities Futures Co., Ltd.	(16,000)	(8,000)
bank deposits with original maturity of more than three months	(4,949,409)	(3,158,778)
restricted bank deposits (Note 18)	(2,095,282)	(1,480,962)
Total	19,744,675	23,090,236

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

20. CLEARING SETTLEMENT FUNDS

	As at 31 December
	2024 RMB'000	2023 RMB'000
Clearing settlement funds held with clearing houses for:
House accounts	7,741,316	6,654,860
Clients	7,435,891	28,659,551
Total	15,177,207	35,314,411

21. DEPOSITS WITH EXCHANGES AND FINANCIAL INSTITUTIONS

	As at 31 December
	2024 RMB'000	2023 RMB'000
Trading deposits	26,331,883	404,519
Credit deposits	42,396	49,727
Performance bonds	1,280,086	2,787,301
Total	27,654,365	3,241,547

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

22. DERIVATIVE FINANCIAL INSTRUMENTS

	As at 31 December 2024
	Notional amounts RMB'000	Fair Value
		Assets RMB'000	Liabilities RMB'000
Hedging instruments
- Currency derivatives
Foreign exchange forward	-	-	-
Non-hedging instruments
- Interest rate derivatives
Interest rate swaps (i)	1,285,074,700	123,774	109,530
Treasury bond futures (i)	50,406,459	-	4,383
Collar options	3,070,211	773	57,873
- Equity derivatives
Stock index futures (ii)	11,411,133	-	-
Equity linked derivatives	5,622,847	410,504	25,773
Stock index options	3,756,767	23,084	109,391
Equity total return swap	5,262,757	72,157	239,300
- Credit derivatives
Credit default swap	1,033,000	12,472	382
- Other derivative instruments
Non-equity total return swap	6,142,612	28,082	37,559
Foreign exchange options (i)	9,602,268	-	62,268
Foreign exchange swaps (i)	52,222,313	18,375	3,421
Foreign exchange forward	2,876,689	273,937	153,016
Commodity futures (ii)	11,949,734	-	-
Gold swaps	5,436,650	2,689	-
Gold forwards	15,614,518	279,602	37,445
Gold deferred contracts (ii)	14,196	-	-
Commodity options	26,422,322	719,682	252,241
Standard bond forward (ii)	260,000	-	-
Total	1,496,179,176	1,965,131	1,092,582

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

22. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

As at 31 December 2023

| | Notional amounts
RMB'000 | Fair Value
Assets
RMB'000 | Liabilities
RMB'000 |
| --- | --- | --- | --- |
| Hedging instruments | | | |
| - Currency derivatives | | | |
| Foreign exchange forward | 904,761 | 16,434 | - |
| Non-hedging instruments | | | |
| - Interest rate derivatives | | | |
| Interest rate swaps (i) | 870,815,000 | 26,770 | 16,812 |
| Treasury bond futures (ii) | 67,060,207 | - | 84 |
| Collar options | 7,371,130 | 13,694 | 64,510 |
| - Equity derivatives | | | |
| Stock index futures (iii) | 10,892,190 | - | 301 |
| Equity linked derivatives | 29,870,989 | 1,102,221 | 198,154 |
| Stock index options | 21,275,020 | 201,781 | 198,432 |
| Equity total return swap | 12,056,017 | 111,905 | 221,870 |
| - Credit derivatives | | | |
| Credit default swap | 1,339,000 | 17,365 | 314 |
| - Other derivative instruments | | | |
| Non-equity total return swap | 3,969,933 | 9,533 | 4,053 |
| Foreign exchange options (i) | 12,320,687 | 12,728 | 41,294 |
| Foreign exchange swaps (ii) | 29,780,501 | 26,433 | 1,240 |
| Foreign exchange forward | 2,019,619 | 31,323 | - |
| Commodity futures (iii) | 29,572,761 | - | - |
| Gold swaps | 122,422 | 292 | - |
| Gold forwards | 4,959,508 | 248,764 | - |
| Gold deferred contracts (iii) | 480 | - | - |
| Commodity options | 15,792,613 | 58,407 | 127,138 |
| Standard bond forward (ii) | 10,000 | - | - |
| Total | 1,120,132,838 | 1,877,650 | 874,202 |

Annual Report 2024 DFZQ

F-148 -

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

22. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

(i) Interest rate swaps, foreign exchange swaps and foreign exchange options: Daily mark-to-market settlement arrangement was implemented for some transactions of these derivatives. Any gains or losses of the Group's position in these transactions were settled daily.

(ii) Treasury bond futures, commodity futures, gold deferred contracts and standard bond forward: Under the daily mark-to-market settlement arrangement, any gains or losses of the Group's position in these derivatives were settled daily and the corresponding receipts and payments were included in "clearing settlement funds", except that treasury bond futures in Hong Kong market is not under the daily mark-to-market settlement arrangement and is presented in gross.

(iii) Stock index futures: Under the daily mark-to-market settlement arrangement, any gains or losses of the Group's position in stock index futures ("SIF") were settled daily and the corresponding receipts and payments were included in "clearing settlement funds", except that SIF in Hong Kong market is not under the daily mark-to-market settlement arrangement and is presented in gross.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

22. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

Details of the Group's treasury bond futures, commodity futures, gold deferred contracts and standard bond forward are set out below:

As at 31 December

	2024		2023
	Notional amount RMB'000	Fair value RMB'000	Notional amount RMB'000	Fair value RMB'000
Treasury bond futures	50,406,459	11,553	67,060,207	56,854
Less: settlement		15,936		56,938
Net position of treasury bond futures		(4,383)		(84)
Commodity futures	11,949,734	102,489	29,572,761	(2,723)
Less: settlement		102,489		(2,723)
Net position of commodity futures		-		-
Gold deferred contracts	14,196	(89)	480	53
Less: settlement		(89)		53
Net position of gold deferred contracts		-		-
Standard bond forward	260,000	(192)	10,000	366
Less: settlement		(192)		366
Net position of standard bond forward		-		-

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

22. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

Details of the Group's interest rate swaps are set out below:

As at 31 December

	2024		2023
	Notional amount RMB'000	Fair value RMB'000	Notional amount RMB'000	Fair value RMB'000
Interest rate swaps	1,285,074,700	(826,638)	870,815,000	(256,583)
Less: settlement		(840,882)		(266,541)
Net position of interest rate swaps		14,244		9,958

Details of the Group's foreign exchange swaps are set out below:

As at 31 December

	2024		2023
	Notional amount RMB'000	Fair value RMB'000	Notional amount RMB'000	Fair value RMB'000
Foreign exchange swaps	52,222,313	107,980	29,780,501	41,286
Less: settlement		93,026		16,093
Net position of foreign exchange swap		14,954		25,193

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

22. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

Details of the Group's foreign exchange options are set out below:

As at 31 December

	2024		2023
	Notional amount RMB'000	Fair value RMB'000	Notional amount RMB'000	Fair value RMB'000
Foreign exchange options	9,602,268	(62,344)	12,320,687	(28,587)
Less: settlement		(76)		(21)
Net position of foreign exchange options		(62,268)		(28,566)

Details of the Group's SIF are set out below:

As at 31 December

	2024		2023
	Notional amount RMB'000	Fair value RMB'000	Notional amount RMB'000	Fair value RMB'000
SIF	11,411,133	61,013	10,892,190	(22,522)
Less: settlement		61,013		(22,221)
Net position of SIF		-		(301)

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

23. ADVANCES TO CUSTOMERS

	As at 31 December
	2024 RMB'000	2023 RMB'000
Loans to margin clients	28,060,402	21,127,701
Less: impairment allowance	(12,877)	(55,900)
Total	28,047,525	21,071,801

The credit facility limits to margin clients are determined by the discounted market value of the collateral securities accepted by the Group.

Loans to margin clients which are secured by the underlying pledged securities and cash collateral are interest bearing. The Group maintains a list of approved stocks for margin lending at a specified loan-to-collateral ratio. Any excess in the lending ratio will trigger a margin call when the customers have to make up the difference.

Advances to customers were secured by the customers' securities and cash collateral, which were pledged to the Group as collateral. The total undiscounted market values of collaterals held in clients' margin accounts in respect of margin financing business amounted to approximately RMB87,211 million as at 31 December 2024 (31 December 2023: RMB67,734 million).

The directors of the Company are of the opinion that the ageing analysis does not give additional value in view of the nature of margin financing business. As a result, no ageing analysis is disclosed.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

23. ADVANCES TO CUSTOMERS (Continued)

The following table shows reconciliation of loss allowances that has been recognised for advances to customers.

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
As at 1 January 2024	2,034	430	53,436	55,900
– Transfer to lifetime not credit-impaired	(1)	1	–	–
– Transfer to 12m ECL	429	(429)	–	–
– Impairment losses recognised/(reversed)	123	93	516	732
– Write off	–	–	(44,171)	(44,171)
– Foreign exchange differences	14	–	402	416
As at 31 December 2024	2,599	95	10,183	12,877
	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
---	---	---	---	---
As at 1 January 2023	1,121	699	50,938	52,758
– Transfer to lifetime not credit-impaired	(11)	11	–	–
– Transfer to 12m ECL	74	(74)	–	–
– Impairment losses recognised/(reversed)	848	(206)	1,829	2,471
– Write off	–	–	–	–
– Foreign exchange differences	2	–	669	671
As at 31 December 2023	2,034	430	53,436	55,900

Annual Report 2024 DFZQ

– F-154 –

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

24. ACCOUNT RECEIVABLES

	As at 31 December
	2024 RMB'000	2023 RMB'000
Account receivables from/related to:
- Clearing house	478,763	132,812
- Brokers	119,404	106,762
- Asset management fee and trading seats commission	295,631	391,594
- Advisory and investment banking commission	86,978	43,730
Subtotal	980,776	674,898
Less: impairment allowance	(7,412)	(4,139)
Total	973,364	670,759

Aging analysis of account receivables from the revenue recognition dates is as follows:

	As at 31 December
	2024 RMB'000	2023 RMB'000
Within 1 year	959,172	652,356
Between 1 and 2 years	4,937	13,786
Between 2 and 3 years	6,490	4,617
Over 3 years	2,765	-
Total	973,364	670,759

The normal settlement terms of account receivables from clearing house and brokers are within three months after trading date. Trading limits are set for clients. Normal settlement terms of account receivables from asset management fee and trading seats commission, advisory and investment banking commission are determined in accordance with the contract terms, usually within three months after the service is provided.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

24. ACCOUNT RECEIVABLES (Continued)

The following table shows reconciliation of loss allowances that has been recognised for account receivables.

	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
As at 1 January 2024	3,471	668	4,139
– Impairment losses recognised	838	2,381	3,219
– Foreign exchange differences	5	49	54
As at 31 December 2024	4,314	3,098	7,412
	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
---	---	---	---
As at 1 January 2023	4,398	5,873	10,271
– Impairment losses reversed	(950)	(5,205)	(6,155)
– Foreign exchange differences	23	–	23
As at 31 December 2023	3,471	668	4,139

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

24. ACCOUNT RECEIVABLES (Continued)

The table below details the credit risk exposures of the Group's account receivables, which are subject to ECL assessment.

As at 31 December 2024

	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	976,399	4,377	980,776

As at 31 December 2023

	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	674,230	668	674,898

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

25. REVERSE REPURCHASE AGREEMENTS

	As at 31 December
	2024
RMB'000	2023
RMB'000
Analysed by collateral type:
- Stock	3,128,897	6,469,633
- Bonds	3,350,182	3,857,202
- Other	2,470	-
Subtotal	6,481,549	10,326,835
Less: impairment allowance	(2,497,446)	(4,889,101)
Total	3,984,103	5,437,734
Analysed by market:
- Stock exchange	3,829,101	8,334,166
- Inter-bank market	2,649,978	1,992,669
- Other	2,470	-
Less: impairment allowance	(2,497,446)	(4,889,101)
Total	3,984,103	5,437,734

The reverse repurchase agreements are those resale agreements that qualified investors entered into with the Group with a commitment to purchase the specified assets at a future date at an agreed price.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

25. REVERSE REPURCHASE AGREEMENTS (Continued)

The following tables show reconciliation of loss allowances that have been recognised for financial assets (collateralised by stock) held under resale agreements.

| | 12m ECL
RMB'000 | Lifetime ECL
(not credit-impaired)
RMB'000 | Lifetime ECL
(credit-impaired)
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| As at 1 January 2024 | - | - | 4,889,101 | 4,889,101 |
| - Impairment losses recognised | - | - | 387,807 | 387,807 |
| - Transfer out | - | - | (2,714,462) | (2,714,462) |
| - Write off | - | - | (65,000) | (65,000) |
| As at 31 December 2024 | - | - | 2,497,446 | 2,497,446 |
| | 12m ECL
RMB'000 | Lifetime ECL
(not credit-impaired)
RMB'000 | Lifetime ECL
(credit-impaired)
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| As at 1 January 2023 | - | - | 4,930,159 | 4,930,159 |
| - Impairment losses recognised | - | - | 990,715 | 990,715 |
| - Transfer out | - | - | (1,031,773) | (1,031,773) |
| - Write off | - | - | - | - |
| As at 31 December 2023 | - | - | 4,889,101 | 4,889,101 |

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

25. REVERSE REPURCHASE AGREEMENTS (Continued)

The table below details the credit risk exposures of the Group's reverse repurchase agreements, which are subject to ECL assessment.

As at 31 December 2024

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Item
– Stock	–	–	3,128,897	3,128,897
– Bonds	3,350,182	–	–	3,350,182
– Other	2,470	–	–	2,470
Gross carrying amount	3,352,652	–	3,128,897	6,481,549

As at 31 December 2023

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Item
– Stock	–	–	6,469,633	6,469,633
– Bonds	3,857,202	–	–	3,857,202
– Other	–	–	–	–
Gross carrying amount	3,857,202	–	6,469,633	10,326,835

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

26. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

	As at 31 December
	2024 RMB'000	2023 RMB'000
Analysed by type:
- Debt securities (Note a)	38,990,482	44,260,049
- Equity securities	7,142,556	6,916,863
- Funds	22,280,883	15,938,601
- Other investments (Note b)	21,775,410	29,954,131
Total	90,189,331	97,069,644
Analysed as:
- Listed (Note c)	24,059,150	21,239,787
- Unlisted (Note d)	66,130,181	75,829,857
Total	90,189,331	97,069,644

As at 31 December 2024, the Group's pledged collateral of bonds and funds included in FVTPL in connection with its repurchase agreements and securities borrowing amounted to RMB29,665 million (31 December 2023: RMB30,812 million) and RMB5,265 million (31 December 2023: RMB2,658 million), respectively.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

27. DEBT INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

	As at 31 December
	2024
RMB'000	2023
RMB'000
Analysed by type:
- Government bonds	27,245,279	37,329,351
- Bonds issued by policy banks	5,225,684	1,497,672
- Bonds issued by commercial banks and other financial institutions	6,415,593	3,406,222
- Other debt securities (Note a)	71,633,355	48,580,468
Total	110,519,911	90,813,713
Analysed as:
- Listed (Note b)	57,438,259	49,568,073
- Unlisted (Note c)	53,081,652	41,245,640
Total	110,519,911	90,813,713

Note a: Other debt securities mainly comprise bonds and notes issued by corporates.
Note b: Debt securities traded on stock exchanges are included in the "Listed" category.
Note c: The unlisted debt securities were traded on inter-bank market.

As at 31 December 2024, the Group's pledged collateral of bonds included in debt instruments at FVOCI in connection with its repurchase agreements and securities borrowing amounted to RMB50,283 million (31 December 2023: RMB44,956 million) and RMB10,393 million (31 December 2023: RMB7,671 million), respectively.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

27. DEBT INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Continued)

The following table shows reconciliation of loss allowances that have been recognised for debt instruments at FVOCI.

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
As at 1 January 2024	21,694	–	152,428	174,122
– Transfer to lifetime not credit-impaired	–	–	–	–
– Transfer to lifetime credit-impaired	–	–	–	–
– Impairment losses recognised	56,958	–	12,551	69,509
– Write off	–	–	(375)	(375)
– Foreign exchange differences	49	–	–	49
As at 31 December 2024	78,701	–	164,604	243,305
	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
---	---	---	---	---
As at 1 January 2023	18,187	–	235,431	253,618
– Transfer to lifetime not credit-impaired	(13)	13	–	–
– Transfer to lifetime credit-impaired	–	(4,650)	4,650	–
– Impairment losses recognised	3,645	4,637	18,384	26,666
– Write off	–	–	(106,037)	(106,037)
– Foreign exchange differences	(125)	–	–	(125)
As at 31 December 2023	21,694	–	152,428	174,122

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

27. DEBT INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Continued)

The table below details the credit risk exposures of the Group's debt instruments at FVOCI, which are subject to ECL assessment.

As at 31 December 2024

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	110,538,350	–	224,716	110,763,066

As at 31 December 2023

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	90,644,003	–	288,918	90,932,921

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

28. EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

	As at 31 December
	2024
RMB'000	2023
RMB'000
Analysed by type:
- Equity securities (Note a)	10,847,983	4,521,902
- Perpetual instruments (Note b)	7,669,118	1,776,276
- Others	1,117,499	-
Total	19,634,600	6,298,178
Analysed as:
- Listed (Note c)	13,037,514	4,458,619
- Unlisted (Note d)	6,597,086	1,839,559
Total	19,634,600	6,298,178

Note a: The above equity investments include those ordinary shares of the entities listed on the Shanghai Stock Exchange, the Shenzhen Stock Exchange, the Beijing Stock Exchange and the Hong Kong Stock Exchange and those equity securities traded on National Equities Exchange and Quotations (the "NEEQ"). These investments are not held for trading, instead, they are held for long-term strategic purposes. The Group has elected to designate these investments in equity instruments as at FVOCI as it believes that recognising short-term fluctuations in these investments' fair value in profit or loss would not be consistent with the Group's strategy of holding these investments for long-term purposes and realising their performance potential in the long run.

Besides, some of the above equity investments represent the Group's equity interests in private entities established in the PRC. The directors of the Company have elected to designate these investments in equity instruments as at FVOCI for the strategy of holding these investments for long-term purposes.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

28. EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Continued)

Note b: Those perpetual instruments are equity instruments which are not held for trading. Instead, they are held for long-term strategic purposes. The Group has elected to designate these perpetual instruments as at FVOCI as it believes that recognising short-term fluctuations in these investments' fair value in profit or loss would not be consistent with the Group's strategy of holding these investments for long-term purposes and realising their dividend income in the long run. In 2024, the Group disposed of certain perpetual instruments as these investments no longer meet the investment objective of the Group.

Note c: Securities traded on stock exchanges are included in the "Listed" category.

Note d: The unlisted perpetual instruments were traded on inter-bank market.

As at 31 December 2024, the Group's perpetual instruments recorded in equity instruments at FVOCI pledged as collateral for the Group's repurchase agreements amounted to RMB1,668 million (31 December 2023: Nil) and for securities borrowing amounted to RMB950 million (31 December 2023: RMB51 million), respectively.

29. DEBT INSTRUMENTS MEASURED AT AMORTISED COST

	As at 31 December
	2024 RMB'000	2023 RMB'000
Analysed by type:
- Government bonds	957,620	957,585
- Bonds issued by commercial banks and other financial institutions	440,548	440,417
- Other debt securities (Note a)	188,808	188,651
Less: impairment allowance	(71)	(62)
Total	1,586,905	1,586,591
Analysed as:
- Listed (Note b)	1,146,357	279,498
- Unlisted (Note c)	440,548	1,307,093
Total	1,586,905	1,586,591

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

29. DEBT INSTRUMENTS MEASURED AT AMORTISED COST (Continued)

Note a: Other debt securities mainly comprise bonds and notes issued by corporates.

Note b: The debt securities traded on stock exchanges are included in the "Listed" category.

Note c: The unlisted debt securities were traded on inter-bank market.

The following table shows reconciliation of loss allowances that has been recognised for debt instruments measured at amortised cost.

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
As at 1 January 2024	62	–	–	62
– Impairment losses recognised	9	–	–	9
As at 31 December 2024	71	–	–	71
	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
---	---	---	---	---
As at 1 January 2023	111	–	–	111
– Impairment losses reversed	(49)	–	–	(49)
As at 31 December 2023	62	–	–	62

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

29. DEBT INSTRUMENTS MEASURED AT AMORTISED COST (Continued)

The table below details the credit risk exposures of the Group's debt instruments measured at amortised cost, which are subject to ECL assessment:

As at 31 December 2024

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	1,586,976	-	-	1,586,976

As at 31 December 2023

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	1,586,653	-	-	1,586,653

As at 31 December 2024, the Group pledged bonds included in debt instruments measured at amortised cost as collateral in connection with its repurchase agreements amounting to RMB1,398 million (31 December 2023: RMB1,581 million).

Annual Report 2024 DFZQ

F-168 -

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

30. INVESTMENTS IN ASSOCIATES

	As at 31 December
	2024 RMB'000	2023 RMB'000
Cost of unlisted investments in associates	2,337,290	2,649,365
Share of post-acquisition profits and other comprehensive income, net of dividends received	4,199,279	4,001,777
Less: impairment allowance (Note a)	(408,446)	(397,168)
Total	6,128,123	6,253,974

Note a: The impairment allowance of investments in associates as at 31 December 2024 related to three associates invested by the Group. In 2024, there were indications of impairment for OCI International Holdings Limited as a result of the continued decline in its share price and the continued losses from operations. The impairment loss of the other two associates were not material. The Group performed impairment test for OCI International Holdings Limited by comparing its recoverable amounts with its carrying amount. A provision for impairment of approximately RMB124 million was made during the year ended 31 December 2024.

At the end of each reporting period, the Group had the following principal associates accounted for using the equity method:

Name of associates	Place and date of establishment	Equity interest held by the Group as at 31 December
		2024	2023
匯添富基金管理股份有限公司
China Universal Asset Management Company Limited (“China Universal”)	PRC
3 February 2005	35.41%	35.41%	Fund management
東證睿波(上海)投資中心(有限合夥)
Orient Securities Ruibo (Shanghai)
Investment Center LLP. (1)*	PRC
25 June 2015	55.63%	55.63%	Investment management
海寧東證藍海併購投資合夥企業
(有限合夥)
Haining Orient Securities Lanhai
Merger Investment Partnership
LLP. *	PRC
13 July 2016	25.75%	25.75%	Investment management

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

30. INVESTMENTS IN ASSOCIATES (Continued)

Name of associates	Place and date of establishment	Equity interest held by the Group as at 31 December
		2024	2023
東建國際控股有限公司
OCI International Holdings Limited	Cayman Islands
6 June 2015	20.94%	20.94%	Securities investment
誠泰融資租賃(上海)有限公司
Chengtay Financial Leasing
(Shanghai) Co., Ltd.	PRC
11 September 2015	20.19%	20.19%	Leasing
宜興東證睿元股權投資合夥企業
(有限合夥)
Yixing Orient Securities Ruiyuan Equity Investment Partnership LLP. (2)*	PRC
11 March 2020	19.19%	19.19%	Investment management
寧波梅山保稅港區東證夏德投資合夥企業(有限合夥)
Ningbo Meishan Bonded Port Area Orient Securities Xiade Investment Partnership LLP. (2)*	PRC
11 February 2018	18.89%	18.89%	Investment management
南通東證富象股權投資中心
(有限合夥)
Nantong Orient Securities Fuxiang Equity Investment Center LLP. (2)*	PRC
7 November 2017	19.93%	19.93%	Investment management
成都交子東方投資發展合夥企業
(有限合夥)
Chengdu Jiaozi Oriental Investment Development Partnership LLP. (1)*	PRC
17 January 2020	50.00%	50.00%	Leasing and investment management

English translated names are for identification purpose only.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

30. INVESTMENTS IN ASSOCIATES (Continued)

(1) Although the Group's percentages of shareholdings in these investees are 50% or more, they are accounted for as associate as the Group only has significant influence over these investees due to the relevant arrangements stipulated in the articles of association or other agreements.

(2) Although the Group's percentages of shareholdings in these investees are lower than 20%, they are accounted for as associates as the Group has significant influence over these investees due to the relevant arrangements stipulated in the articles of association or other agreements.

The summarised consolidated financial information of China Universal, which is an individually significant associate to the Group that is accounted for using equity method, prepared in accordance with IFRS Accounting Standards, is set out below:

China Universal

	As at 31 December
	2024
RMB'000	2023
RMB'000
Total assets	14,352,665	13,936,772
Total liabilities	3,575,013	4,063,448
Net assets	10,777,652	9,873,324
	Year ended 31 December
---	---	---
	2024
RMB'000	2023
RMB'000
Total revenue	4,827,633	5,371,161
Profit for the year	1,547,141	1,415,499
Other comprehensive income	11,316	9,807
Total comprehensive income	1,558,457	1,425,306

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

30. INVESTMENTS IN ASSOCIATES (Continued)

China Universal (Continued)

Reconciliation of the above consolidated financial information to the carrying amount of the interest in above associate recognised in the consolidated financial statements:

As at 31 December

| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Equity attributable to equity holders of the associate | 10,777,652 | 9,873,324 |
| Proportion of equity interests held by the Group | 35.41% | 35.41% |
| Carrying amount | 3,816,237 | 3,496,013 |

Aggregate information of associates that are not individually material:

Year ended 31 December

| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| The Group's share of (losses)/profits | (89,777) | 83,021 |
| The Group's share of other comprehensive income | (9,958) | 1,045 |
| The Group's share of total comprehensive income | (99,735) | 84,066 |
| Aggregate carrying amount of the Group's interests in these associates | 2,311,887 | 2,757,961 |

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

31. INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES

31.1 Structured entities set up and managed by the Group

The Group served as the investment manager of structured entities (including funds, collective asset management schemes and limited partnerships), therefore had power over them during the years ended 31 December 2024 and 2023. Except for the structured entities the Group has consolidated as disclosed in Note 36, based on management assessment, these structured entities are not controlled by the Group. The Group therefore did not consolidate these structured entities.

The total net assets of unconsolidated funds, asset management schemes and limited partnership set up and managed by the Group amounted to RMB247,085 million as at 31 December 2024 (31 December 2023: RMB257,708 million). The relating asset and fund management fee income for the year ended 31 December 2024 amounted to RMB1,402 million (31 December 2023: RMB2,268 million). The Group classified the investments in unconsolidated funds, asset management schemes and limited partnership as financial assets at FVTPL and investments in associates as at 31 December 2024 and 2023. As at 31 December 2024, the carrying amount of the Group's interests in unconsolidated funds, asset management schemes and limited partnership were RMB3,000 million (31 December 2023: RMB3,846 million), which approximates the maximum risk exposure of the Group.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

31. INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES (Continued)

31.1 Structured entities set up and managed by the Group (Continued)

As at 31 December 2024

	Carrying amount RMB'000	Maximum loss exposure RMB'000
Financial assets at fair value through profit or loss	2,392,114	2,392,114
Investments in associates	607,897	607,897
Total	3,000,011	3,000,011

As at 31 December 2023

	Carrying amount RMB'000	Maximum loss exposure RMB'000
Financial assets at fair value through profit or loss	2,951,495	2,951,495
Investments in associates	894,634	894,634
Total	3,846,129	3,846,129

31.2 Structured entities set up and managed by third party institutions in which the Group holds an interest

The types of structured entities that the Group does not consolidate but in which it holds an interest mainly include funds, asset management schemes, limited partnership, trust schemes and wealth management products issued by banks or other financial institutions. The nature and purpose of these structured entities are to generate fees from managing assets on behalf of investors. These vehicles are financed through the issue of units to investors.

The table below shows the carrying amount of unconsolidated funds, asset management schemes, limited partnership, trust schemes and wealth management products in which the third party acted as investment manager and the Group held interests and its maximum exposure to loss in relation to those interests as at 31 December 2024 and 2023.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

31. INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES (Continued)

31.2 Structured entities set up and managed by third party institutions in which the Group holds an interest (Continued)

As at 31 December 2024

	Carrying amount RMB'000	Maximum loss exposure RMB'000
Financial assets at fair value through profit or loss	37,295,103	37,295,103
Investments in associates	139,920	139,920
Total	37,435,023	37,435,023

As at 31 December 2023

	Carrying amount RMB'000	Maximum loss exposure RMB'000
Financial assets at fair value through profit or loss	35,120,650	35,120,650
Investments in associates	161,385	161,385
Total	35,282,035	35,282,035

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

32. RIGHT-OF-USE ASSETS

	Buildings RMB'000	Motor Vehicles RMB'000	Total RMB'000
COST
As at 1 January 2024	1,811,158	5,597	1,816,755
Additions	1,052,958	6,289	1,059,247
Deductions	(918,986)	(7,731)	(926,717)
Exchange difference	1,075	–	1,075
As at 31 December 2024	1,946,205	4,155	1,950,360
ACCUMULATED DEPRECIATION
As at 1 January 2024	1,255,383	4,038	1,259,421
Charge for the year	356,924	2,897	359,821
Deductions	(736,447)	(5,251)	(741,698)
Exchange difference	393	–	393
As at 31 December 2024	876,253	1,684	877,937
CARRYING AMOUNT
As at 1 January 2024	555,775	1,559	557,334
As at 31 December 2024	1,069,952	2,471	1,072,423

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

32. RIGHT-OF-USE ASSETS (Continued)

| | Buildings
RMB'000 | Motor Vehicles
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- |
| COST | | | |
| As at 1 January 2023 | 1,655,000 | 6,111 | 1,661,111 |
| Additions | 297,345 | 323 | 297,668 |
| Deductions | (142,076) | (837) | (142,913) |
| Exchange difference | 889 | – | 889 |
| As at 31 December 2023 | 1,811,158 | 5,597 | 1,816,755 |
| ACCUMULATED DEPRECIATION | | | |
| As at 1 January 2023 | 1,017,736 | 3,460 | 1,021,196 |
| Charge for the year | 365,276 | 1,225 | 366,501 |
| Deductions | (128,355) | (647) | (129,002) |
| Exchange difference | 726 | – | 726 |
| As at 31 December 2023 | 1,255,383 | 4,038 | 1,259,421 |
| CARRYING AMOUNT | | | |
| As at 1 January 2023 | 637,264 | 2,651 | 639,915 |
| As at 31 December 2023 | 555,775 | 1,559 | 557,334 |

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

32. RIGHT-OF-USE ASSETS (Continued)

For the year ended 31 December 2024, total cash outflow for leases amounted to RMB412,283 thousand (31 December 2023: RMB411,652 thousand).

In addition, lease liabilities of RMB1,058,950 thousand were recognised as at 31 December 2024 (31 December 2023: RMB547,475 thousand) (Note 48). Interest expenses of lease liabilities are set out in Note 13. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

As at 31 December 2024 and 2023, the Group did not enter into leases that were not yet commenced.

33. INVESTMENT PROPERTIES

	As at 31 December
	2024 RMB'000	2023 RMB'000
COST
At beginning of the year	189,595	286,502
Transfer during the year	4,607	-
Disposal	(144,208)	(96,907)
At end of the year	49,994	189,595
ACCUMULATED DEPRECIATION
At beginning of the year	24,182	20,919
Charge for the year	1,467	8,076
Transfer during the year	3,192	-
Disposal	(9,783)	(4,813)
At end of the year	19,058	24,182
CARRYING VALUES
At beginning of the year	165,413	265,583
At end of the year	30,936	165,413

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

34. PROPERTY AND EQUIPMENT

	Leasehold land and buildings RMB'000	Electronic and communication equipment RMB'000	Motor vehicles RMB'000	Office equipment RMB'000	Leasehold improvements RMB'000	Construction in progress RMB'000	Total RMB'000
COST
As at 1 January 2024	1,885,041	1,177,282	39,832	158,691	701,085	765,409	4,727,340
Additions	3,575	56,540	550	6,105	9,927	78,672	155,369
Disposals	-	(59,093)	(4,564)	(9,247)	-	-	(72,904)
Transfer during the year	(4,607)	41,526	-	1,731	26,242	(71,925)	(7,033)
Exchange difference	-	293	-	39	-	46	378
As at 31 December 2024	1,884,009	1,216,548	35,818	157,319	737,254	772,202	4,803,150
ACCUMULATED DEPRECIATION
As at 1 January 2024	386,315	872,014	33,927	113,694	582,021	-	1,987,971
Additions	64,066	140,923	2,106	14,429	64,721	-	286,245
Disposals	(3,192)	(57,240)	(4,428)	(8,565)	-	-	(73,425)
Exchange difference	-	237	-	17	(91)	-	163
As at 31 December 2024	447,189	955,934	31,605	119,575	646,651	-	2,200,954
CARRYING VALUES
As at 31 December 2024	1,436,820	260,614	4,213	37,744	90,603	772,202	2,602,196
As at 31 December 2023	1,498,726	305,268	5,905	44,997	119,064	765,409	2,739,369

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

34. PROPERTY AND EQUIPMENT (Continued)

	Leasehold land and buildings RMB'000	Electronic and communication equipment RMB'000	Motor vehicles RMB'000	Office equipment RMB'000	Leasehold improvements RMB'000	Construction in progress RMB'000	Total RMB'000
COST
As at 1 January 2023	1,885,041	1,096,348	43,720	146,581	661,868	36,304	3,869,862
Additions	-	40,519	256	16,696	38,906	810,895	907,272
Disposals	-	(39,926)	(4,426)	(6,166)	-	-	(50,518)
Transfer during the year	-	80,056	273	1,505	-	(81,834)	-
Exchange difference	-	285	9	75	311	44	724
As at 31 December 2023	1,885,041	1,177,282	39,832	158,691	701,085	765,409	4,727,340
ACCUMULATED DEPRECIATION
As at 1 January 2023	321,392	770,940	35,404	90,545	521,114	-	1,739,395
Charge for the year	64,923	137,738	2,808	28,727	60,684	-	294,880
Eliminated on disposals	-	(36,878)	(4,294)	(5,634)	-	-	(46,806)
Exchange difference	-	214	9	56	223	-	502
As at 31 December 2023	386,315	872,014	33,927	113,694	582,021	-	1,987,971
CARRYING VALUES
As at 31 December 2023	1,498,726	305,268	5,905	44,997	119,064	765,409	2,739,369
As at 31 December 2022	1,563,649	325,408	8,316	56,036	140,754	36,304	2,130,467

Annual Report 2024 DFZQ

F-180 -

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

35. OTHER INTANGIBLE ASSETS

	Trading rights RMB'000	Computer software RMB'000	Data assets RMB'000	Total RMB'000
COST
As at 1 January 2024	61,553	1,147,335	–	1,208,888
Additions	–	142,493	4,272	146,765
Disposals	–	(5,214)	–	(5,214)
Exchange difference	–	486	–	486
As at 31 December 2024	61,553	1,285,100	4,272	1,350,925
ACCUMULATED DEPRECIATION
As at 1 January 2024	39,810	882,354	–	922,164
Charge for the year	–	155,904	167	156,071
Eliminated on disposals	–	(125)	–	(125)
Exchange difference	–	422	–	422
As at 31 December 2024	39,810	1,038,555	167	1,078,532
CARRYING AMOUNT
As at 31 December 2024	21,743	246,545	4,105	272,393

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

35. OTHER INTANGIBLE ASSETS (Continued)

	Trading rights RMB'000	Computer software RMB'000	Total RMB'000
COST
As at 1 January 2023	61,553	967,131	1,028,684
Additions	–	186,282	186,282
Disposals	–	(6,554)	(6,554)
Exchange difference	–	476	476
As at 31 December 2023	61,553	1,147,335	1,208,888
ACCUMULATED DEPRECIATION
As at 1 January 2023	39,810	742,831	782,641
Charge for the year	–	145,710	145,710
Eliminated on disposals	–	(6,554)	(6,554)
Exchange difference	–	367	367
As at 31 December 2023	39,810	882,354	922,164
CARRYING AMOUNT
As at 31 December 2023	21,743	264,981	286,724

Trading rights mainly comprise the trading rights in the Shanghai Stock Exchange, the Shenzhen Stock Exchange and the National Equities Exchange and Quotations, where the Group is allowed to trade securities and futures contracts.

Impairment testing on trading rights with indefinite useful lives

The trading rights held by the Group are considered by the directors of the Company as having indefinite useful lives because they are expected to contribute net cash inflows indefinitely. The trading rights will not be amortised until their useful life is determined to be finite. Instead, they will be tested for impairment annually, or whenever there is an indication that they may be impaired.

The respective recoverable amounts of the cash-generating unit relating to brokerage business whereby these trading rights are allocated to, using a value in use calculation, exceed their carrying amounts. Accordingly, the management of the Group determined that there was no impairment of the trading rights as at 31 December 2024 and 2023.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

36. PARTICULARS OF PRINCIPAL SUBSIDIARIES OF THE COMPANY

At the end of each reporting period, the Company has the following subsidiaries comprising the Group:

Name of subsidiaries	Type of legal entity registered	Place of incorporation/establishment/operations	Equity interest held by the Group as at 31 December		Registered capital as at 31 December 2024	Principal activities
			2024	2023
上海東證期貨有限公司
Orient Securities Futures Co., Ltd. (1)	Limited liability company	PRC	100.00%	100.00%	RMB4,800,000,000	Commodity futures brokerage, financial futures brokerage, and futures investment advisory
上海東抓投資管理有限公司
Shanghai Dongqi Investment Management Co., Ltd. *	Limited liability company	PRC	100.00%	100.00%	RMB250,000,000	Equity investment, investment management, and asset management
東證潤和資本管理有限公司
Orient Runhe Asset Management Co., Ltd. *	Limited liability company	PRC	100.00%	100.00%	RMB1,000,000,000	Equity investment, investment management, and asset management
上海東方證券資產管理有限公司
Shanghai Orient Securities Asset Management Co., Ltd. (1)	Limited liability company	PRC	100.00%	100.00%	RMB300,000,000	Securities asset management, securities investment, and fund management
上海東方證券資本投資有限公司
Orient Securities Capital Co., Ltd. (1)	Limited liability company	PRC	100.00%	100.00%	RMB4,000,000,000	Private equity investment, bond investment, and related investment advisory

Annual Report 2024

DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

36. PARTICULARS OF PRINCIPAL SUBSIDIARIES OF THE COMPANY (Continued)

Name of subsidiaries	Type of legal entity registered	Place of incorporation/establishment/operations	Equity interest held by the Group as at 31 December		Registered capital as at 31 December 2024	Principal activities
			2024	2023
東方睿義(上海)投資管理有限公司
Orient Ruiyi (Shanghai) Investment Management Co., Ltd. *	Limited liability company	PRC	100.00%	100.00%	RMB1,350,000,000	Investment management and investment advisory
東方思睿(上海)投資管理有限公司
Orient Securities Yirui (Shanghai) Investment Management Co., Ltd. *	Limited liability company	PRC	51.00%	51.00%	RMB2,000,000	Investment management, asset management, and industrial investment
誠麒環球有限公司
Chengqi Global Limited *	Limited liability company	British Virgin Islands ("BVI")	N/A	N/A	USD100	Equity investment and industrial investment
東方金融控股(香港)有限公司
Orient Finance Holdings (Hong Kong) Limited (1)	Limited liability company	Hong Kong	100.00%	100.00%	HKD2,754,078,015	Investment holding and provision of management services
Golden Power Group Limited	Limited liability company	BVI	100.00%	100.00%	USD100	Equity investment and industrial investment
東方證券(香港)有限公司
ORIENT SECURITIES (HONG KONG) LIMITED	Limited liability company	Hong Kong	100.00%	100.00%	HKD1,000,000,000	Securities brokerage
東方期貨(香港)有限公司
ORIENT FUTURES (HONG KONG) LIMITED	Limited liability company	Hong Kong	100.00%	100.00%	HKD100,000,000	Futures brokerage

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

36. PARTICULARS OF PRINCIPAL SUBSIDIARIES OF THE COMPANY (Continued)

Name of subsidiaries	Type of legal entity registered	Place of incorporation/establishment/operations	Equity interest held by the Group as at 31 December		Registered capital as at 31 December 2024	Principal activities
			2024	2023
東方資產管理(香港)有限公司
ORIENT ASSET MANAGEMENT (HONG KONG) LIMITED	Limited liability company	Hong Kong	100.00%	100.00%	HKD100,000,000	Asset management
東方融資(香港)有限公司
ORIENT CAPITAL (HONG KONG) LIMITED	Limited liability company	Hong Kong	100.00%	100.00%	HKD150,000,000	Provision of corporate finance advisory services
東方信貸財務(香港)有限公司
ORIENT CREDIT FINANCE (HONG KONG) LIMITED	Limited liability company	Hong Kong	100.00%	100.00%	HKD31,000,000	Credit operations
東方清盛有限公司
ORIENT HONGSHENG LIMITED (3)	Limited liability company	BVI	100.00%	100.00%	USD1	Special purpose
ORIENT ZHISHENG LIMITED (3)	Limited liability company	BVI	100.00%	100.00%	USD1	Special purpose
東方智匯有限公司
ORIENT ZHIHUI LIMITED	Limited liability company	BVI	100.00%	100.00%	USD1	Special purpose

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

36. PARTICULARS OF PRINCIPAL SUBSIDIARIES OF THE COMPANY (Continued)

Name of subsidiaries	Type of legal entity registered	Place of incorporation/establishment/operations	Equity interest held by the Group as at 31 December		Registered capital as at 31 December 2024	Principal activities
			2024	2023
東方證券承銷保團有限公司
Orient Securities Investment Banking Co., Ltd. (4)	Limited liability company	PRC	100.00%	100.00%	RMB800,000,000	Securities underwriting and sponsor
南京東證明匯產業投資管理有限公司
Nanjing Orient Mingzhan Industrial Investment Management Co., Ltd. *	Limited liability company	PRC	66.00%	66.00%	RMB10,000,000	Investment management and advisory
ORIENT HUIZHI LIMITED	Limited liability company	BVI	100.00%	100.00%	USD1	Special purpose
上海東方證券創新投資有限公司
Shanghai Orient Securities Innovation Investment Co., Ltd. (1) *	Limited liability company	PRC	100.00%	100.00%	RMB7,500,000,000	Financial assets investment, securities investment, investment management and advisory
東方睿信有限公司
Orient Ruixin Limited	Limited liability company	Hong Kong	100.00%	100.00%	HKD10,000	Equity investment, industrial investment
東證國際金融集團有限公司
Orient Securities International Financial Group Co., Ltd.	Limited liability company	Hong Kong	100.00%	100.00%	HKD2,010,000,000	Investment holding and provision of management services
東證期貨國際(新加坡)私人有限公司
Orient Futures International (Singapore) Pte. Ltd.	Private Company Limited by shares	Singapore	100.00%	100.00%	SGD92,000,000	Foreign exchange brokers and dealers
東證科技(深圳)有限公司
Orient Securities Technology (Shenzhen) Co., Ltd. *	Limited liability company	Shenzhen	100.00%	100.00%	RMB27,000,000	Software development service
Orient International Investment Products Limited	Limited liability Company	BVI	100.00%	100.00%	USD1	Product investment
Orient OAM GP Limited	Limited liability Company	Cayman	100.00%	100.00%	USD1	Special purpose

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

36. PARTICULARS OF PRINCIPAL SUBSIDIARIES OF THE COMPANY (Continued)

Name of subsidiaries	Type of legal entity registered	Place of incorporation/establishment/operations	Equity interest held by the Group as at 31 December		Registered capital as at 31 December 2024	Principal activities
			2024	2023
Orient OAM Investment Limited	Limited liability Company	Cayman	100.00%	100.00%	USD1	Special purpose

These subsidiaries do not have official English names. English translated names are for identification only.
(1) These subsidiaries are directly held by the Company.
(2) None of the subsidiaries had issued any debt securities at the end of the year except for ORIENT HONGSHENG LIMITED and ORIENT ZHISHENG LIMITED.
(3) East Milestone Company Limited, Orient Xinghui (Beijing) Investment Funds Management Co., Ltd. and Orient Hongtai Capital Investment (Chengdu) Co., Ltd. had been liquidated as of 31 December 2024.
(4) From 2 September 2024, Orient Securities Investment Banking Co., Ltd., which was wholly-owned by the Group was merged to the Company, the existing customers and business of the Orient Securities Investment Banking Co., Ltd. have been integrated into the Company as a whole.

Interests in consolidated structured entities

The Group has consolidated certain structured entities including asset management schemes, funds and limited partnership. For the asset management schemes where the Group involves as manager or as investor, the Group assesses whether the combination of investments it holds together with its remuneration creates exposure to variability of returns from the activities of the structured entities that is of such significance and indicates that the Group is a principal.

The total net assets of the consolidated asset management schemes, funds and limited partnership amounted to RMB11,529 million as at 31 December 2024 (31 December 2023: RMB3,891 million).

Interests in all consolidated asset management schemes, funds and limited partnership held by the Group amounted to fair value of RMB11,241 million as at 31 December 2024 (31 December 2023: RMB3,522 million). The Group held no interest in the subordinated tranche of these structured products in 2024 and 2023.

Interests held by other interest holders are included in financial liabilities designated at FVTPL.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

37. GOODWILL

Impairment testing on goodwill

For the purpose of impairment testing, goodwill is related to two individual cash-generating units (CGUs), including securities brokerage branches acquired by the Company ("Unit A") and Orient Securities Futures Co., Ltd. acquired by the Company ("Unit B"). The carrying amounts of goodwill as at 31 December 2024 and 2023 relevant to these units are as follows:

As at 31 December
	2024 RMB'000	2023 RMB'000
Cost and carrying value
Unit A – securities brokerage branches	18,948	18,948
Unit B – Orient Securities Futures Co., Ltd.	13,187	13,187
Total	32,135	32,135

As at 31 December 2024 and 2023, the Group performed annual goodwill impairment test and determined that there was no impairment of the relevant CGUs as the recoverable amount of the CGUs exceeded their carrying amount respectively.

38. DEFERRED TAXATION

The following is the analysis of the deferred tax balances for financial reporting purposes:

As at 31 December
	2024 RMB'000	2023 RMB'000
Deferred tax assets	1,490,513	2,079,575
Deferred tax liabilities	(218)	(35,936)
Total	1,490,295	2,043,639

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

38. DEFERRED TAXATION (Continued)

The following are the major deferred tax assets and liabilities recognised and movements during the years:

	Financial instrument at FVTPL and derivatives RMB'000	Employee benefits payable RMB'000	Financial instruments at FVOCI RMB'000	Allowance for impairment losses RMB'000	Other RMB'000	Total RMB'000
As at 1 January 2024	(617,301)	334,223	(81,314)	1,925,007	483,024	2,043,639
Credit/(charge) to profit or loss	225,566	148,803	16,852	(347,015)	(58,566)	(14,360)
Credit/(charge) to other comprehensive income	3,150	-	(607,590)	-	-	(604,440)
Transfer out upon disposal of equity instruments at FVOCI	1,418	-	14,547	-	-	15,965
Other	-	49,491	-	-	-	49,491
As at 31 December 2024	(387,167)	532,517	(657,505)	1,577,992	424,458	1,490,295
As at 1 January 2023	(482,530)	342,494	45,957	1,805,742	118,942	1,830,605
(Charge)/credit to profit or loss	(130,662)	(8,271)	(20,127)	119,265	364,465	324,670
Credit/(charge) to other comprehensive income	3,202	-	(114,838)	-	-	(111,636)
Transfer out upon disposal of equity instruments at FVOCI	-	-	7,694	-	(7,694)	-
Other	(7,311)	-	-	-	7,311	-
As at 31 December 2023	(617,301)	334,223	(81,314)	1,925,007	483,024	2,043,639

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

39. OTHER ASSETS

	As at 31 December
	2024 RMB'000	2023 RMB'000
Other receivables	4,158,020	4,994,426
Inventories	1,564,301	258,364
Prepayments	242,005	278,769
Other	552,668	519,649
Less: impairment allowance	(3,234,881)	(1,950,440)
Total	3,282,113	4,100,768

The following table shows reconciliation of loss allowances that have been recognised for other receivables.

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
As at 1 January 2024	3,171	-	1,947,269	1,950,440
- Impairment losses recognised/(reversed)	5,310	-	(5,258)	52
- Transfer in	-	-	2,714,462	2,714,462
- Write off	-	-	(1,430,919)	(1,430,919)
- Foreign exchange differences and other	2	-	844	846
As at 31 December 2024	8,483	-	3,226,398	3,234,881

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

39. OTHER ASSETS (Continued)

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
As at 1 January 2023	3,529	–	1,751,672	1,755,201
– Impairment losses (reversed)/recognised	(360)	–	16,911	16,551
– Transfer in	–	–	1,031,773	1,031,773
– Write off	–	–	(853,087)	(853,087)
– Foreign exchange differences and other	2	–	–	2
As at 31 December 2023	3,171	–	1,947,269	1,950,440

The tables below detail the credit risk exposures of the Group's other receivables, which are subject to ECL assessment.

As at 31 December 2024

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	890,553	–	3,267,467	4,158,020

As at 31 December 2023

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	2,977,603	–	2,016,823	4,994,426

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

40. PLACEMENTS FROM BANKS AND FINANCIAL INSTITUTIONS

	As at 31 December
	2024
RMB'000	2023
RMB'000
Placements from banks (Note a)	25,130,563	13,288,745
Placements from China Securities Finance Corporation Limited (Note b)	5,224,352	2,513,349
Placements from Shanghai Gold Exchange (Note c)	8,839,710	9,867,965
Total	39,194,625	25,670,059

Note a: As at 31 December 2024, the effective interest rates bearing on the outstanding amount of placements from banks ranged from 1.00% to 5.05% (31 December 2023: 1.50% to 2.30%) per annum. The amount of placements from banks were repayable within one year (31 December 2023: eight days) from the end of the reporting period.

Note b: As at 31 December 2024, the effective interest rate of placements from China Securities Finance Corporation Limited ranged from 2.10% to 2.61% (31 December 2023: 2.16% to 2.93%) per annum. The amount of placements from China Securities Finance Corporation Ltd. were repayable within one year (31 December 2023: six months) from the end of the reporting period.

Note c: As at 31 December 2024, the effective interest rates of placements from Shanghai Gold Exchange varied from 1.80% to 2.57% (31 December 2023: 0.60% to 2.00%) per annum. The amount of placements from Shanghai Gold Exchange were repayable within one year from the end of the reporting period.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

41. SHORT-TERM DEBT INSTRUMENTS

	As at 31 December
	2024 RMB'000	2023 RMB'000
Short-term commercial paper and corporate bonds (Note a)	3,008,107	1,609,352
Income certificates (Note b)	2,670,798	1,188,348
Total	5,678,905	2,797,700
Analysed by market:
Stock exchange	3,008,107	1,609,352
Over the counter	2,670,798	1,188,348
Total	5,678,905	2,797,700

Note a: As at 31 December 2024 and 2023, short-term commercial paper and corporate bonds were unsecured and unguaranteed debt securities issued on the PRC Inter-bank market by the Company and were repayable within 1 year. As at 31 December 2024, the yields of the outstanding short-term debt instruments was 1.99% per annum (31 December 2023: 2.41%).
Note b: As at 31 December 2024, the yields of all the outstanding income certificates ranged from 2.00% to 2.80% per annum (31 December 2023: 2.25% to 2.95% respectively).

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

42. ACCOUNT PAYABLES TO BROKERAGE CLIENTS

No ageing analysis is disclosed as in the opinion of the directors of the Company, the ageing analysis does not give additional value in view of the nature of these businesses.

Account payables to brokerage clients mainly include money held on behalf of clients in the banks and clearing houses by the Group, and are interest-bearing at the prevailing market interest rate.

As at 31 December 2024, approximately RMB4,464 million (31 December 2023: RMB3,655 million) of margin deposits and cash collateral received from clients for margin financing and securities lending arrangement were included in the Group's account payables to brokerage clients.

43. REPURCHASE AGREEMENTS

As at 31 December

| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Analysed by collateral type | | |
| – Bonds | 80,198,270 | 68,720,716 |
| – Funds | 1,344,780 | 964,213 |
| – Advances to customers | 2,901,947 | 300,270 |
| – Gold | – | 636,722 |
| – Perpetual instruments | 1,471,303 | 3,094,222 |
| Total | 85,916,300 | 73,716,143 |
| Analysed by market | | |
| – Stock exchanges | 53,115,946 | 29,149,889 |
| – Inter-bank market | 26,293,066 | 41,919,630 |
| – Over the counter | 6,507,288 | 2,646,624 |
| Total | 85,916,300 | 73,716,143 |

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

44. FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

	As at 31 December
	2024 RMB'000	2023 RMB'000
Debt securities	7,002,742	6,490,853
Designated at fair value through profit or loss
- Interests attributable to other holders of consolidated structured entities (Note a)	288,206	368,838
- Income certificates (Note b)	6,978,165	7,144,110
- Other (Note c)	439,388	1,298,033
Total	14,708,501	15,301,834

Note a: Interests attributable to other holders of consolidated structured entities consist of third-party unit holders' interests in these consolidated structured entities which are recognised as a liability since the Group has the obligation to pay other investors or limited partners upon the maturity dates of the structured entities based on the net asset value and related terms of those consolidated structured entities.
Note b: The income certificates were hybrid contracts containing embedded derivatives.
Note c: Other mainly includes the structured note issued by a subsidiary of the Group. The fair value of the structured note is linked to the performance of a third party perpetual bond. The Group irrevocably designates these financial liabilities as measured at FVTPL to eliminate an accounting mismatch.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

45. CONTRACT LIABILITIES

	As at 31 December
	2024 RMB'000	2023 RMB'000
Asset and fund management services	4,910	6,712
Investment banking services	39,967	33,633
Sales of bulk commodity	112,332	107,060
Total	157,209	147,405

46. EMPLOYEE BENEFITS PAYABLE

	As at 31 December
	2024 RMB'000	2023 RMB'000
Salaries, bonus and allowances	2,368,982	1,686,452
Social welfare	1,685	758
Annuity schemes	-	16,832
Total	2,370,667	1,704,042

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

47. BORROWINGS

	As at 31 December
	2024
RMB'000	2023
RMB'000
Unsecured short-term borrowings repayable within one year	1,081,234	1,700,024
Pledged long-term borrowings repayable more than one year	468,183	–
Total	1,549,417	1,700,024
Floating rate borrowings
– repayable within one year at interest rates ranging from 1 month SOFR plus 0.5% per annum to 1 month HIBOR plus 0.55% per annum (31 December 2023: 6.01% to 6.81%)	1,060,562	1,482,803
– repayable more than one year at interest rates ranging from 1 month SOFR plus 0.85% per annum to 1 month SOFR plus 0.98% per annum (31 December 2023: Nil)	468,183	–
Fixed rate borrowings
– repayable within one year at interest rates 3.6% (31 December 2023: 3.42% to 4.2%)	20,672	217,221
Total	1,549,417	1,700,024

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

48. LEASE LIABILITIES

As at 31 December

| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Lease liabilities payable: | | |
| Within three months | 96,866 | 119,970 |
| Within a period of more than three months but not more than one year | 227,149 | 163,639 |
| Within a period of more than one year but not more than two years | 241,108 | 140,645 |
| Within a period of more than two years but not more than three years | 186,506 | 68,009 |
| Within a period of more than three years but not more than five years | 289,592 | 45,136 |
| Within a period of more than five years | 17,729 | 10,076 |
| Total | 1,058,950 | 547,475 |

49. DEBT SECURITIES ISSUED

As at 31 December

| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Corporate bonds | 34,812,335 | 30,063,388 |
| Subordinated bonds | 20,279,393 | 24,906,609 |
| Offshore bonds | 5,102,574 | 5,057,958 |
| Income certificates (Note a) | 540,016 | 129,890 |
| Total | 60,734,318 | 60,157,845 |

Note a: The amount represents income certificates issued by the Company with maturities of more than one year. As at 31 December 2024, the outstanding income certificates carried yield from 2.15% to 2.75% (31 December 2023: 2.60% to 2.95%) per annum.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

DEBT SECURITIES ISSUED (Continued)

Issues	Currency	Issue amount (Original currency in million)	Issue amount (RMB in million)	Issue date	Maturity date	Coupon rate
17-3 Corporate Bond	RMB	4,000	4,000	03/08/2017	03/08/2027	4.98%
22-1 Corporate Bond	RMB	2,000	2,000	21/07/2022	21/07/2025	2.79%
22-2 Corporate Bond	RMB	1,500	1,500	21/07/2022	21/07/2027	3.18%
22-3 Corporate Bond	RMB	2,000	2,000	25/08/2022	25/08/2027	3.00%
22-4 Corporate Bond	RMB	3,500	3,500	14/12/2022	14/12/2025	3.40%
23-1 Corporate Bond	RMB	1,500	1,500	21/02/2023	21/02/2025	2.92%
23-2 Corporate Bond	RMB	2,500	2,500	21/02/2023	21/02/2026	3.13%
23-3 Corporate Bond	RMB	1,600	1,600	21/03/2023	21/03/2028	3.32%
23-4 Corporate Bond	RMB	3,000	3,000	24/05/2023	24/05/2026	2.90%
24-1 Corporate Bond	RMB	1,800	1,800	25/01/2024	25/01/2027	2.73%
24-2 Corporate Bond	RMB	1,000	1,000	08/08/2024	08/08/2029	2.05%
24-3 Corporate Bond	RMB	2,000	2,000	08/08/2024	08/08/2034	2.30%
24-4 Corporate Bond	RMB	3,000	3,000	23/08/2024	23/08/2029	2.18%
24-6 Corporate Bond	RMB	3,000	3,000	17/10/2024	17/10/2029	2.28%
24-8 Corporate Bond	RMB	2,000	2,000	21/11/2024	21/11/2027	2.15%
Subtotal			34,400
21-3 Orient Subordinated Bond	RMB	1,500	1,500	16/04/2021	16/04/2026	4.20%
22-1 Orient Subordinated Bond	RMB	2,500	2,500	13/01/2022	13/01/2025	3.16%
23-1 Orient Subordinated Bond	RMB	3,000	3,000	24/04/2023	24/04/2026	3.30%
23-2 Orient Subordinated Bond	RMB	3,000	3,000	10/08/2023	10/08/2026	3.08%
23-3 Orient Subordinated Bond	RMB	2,800	2,800	30/10/2023	30/10/2026	3.30%
23-4 Orient Subordinated Bond	RMB	700	700	30/10/2023	30/10/2028	3.50%
23-5 Orient Subordinated Bond	RMB	2,000	2,000	23/11/2023	23/11/2026	3.18%
24-1 Orient Subordinated Bond	RMB	2,000	2,000	26/06/2024	26/06/2029	2.33%
24-2 Orient Subordinated Bond	RMB	2,500	2,500	08/07/2024	08/07/2029	2.31%
Subtotal			20,000

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

49. DEBT SECURITIES ISSUED (Continued)

Issues	Currency	Issue amount (Original currency in million)	Issue amount (RMB in million)	Issue date	Maturity date	Coupon rate
22 Offshore EUR Bond	EUR	100	742	05/05/2022	05/05/2025	1.75%
22–1 Offshore USD Bond	USD	300	2,089	17/05/2022	17/05/2025	3.50%
22–2 Offshore USD Bond	USD	300	2,089	26/10/2022	26/10/2025	5.125%
Subtotal			4,920
Total			59,320

50. OTHER LIABILITIES

	As at 31 December
	2024 RMB'000	2023 RMB'000
Other account payables
– Payables for underwriting and products distribution fees	200,151	239,788
– Settlement payables	133,451	45,055
– Notes payable	763,826	1,244,900
– Other	74,826	14,712
Other payables and accruals
– Value-added taxes and other taxes	117,752	96,926
– Payables for securities and futures investor protection fund	29,360	34,687
– Futures risk reserve	284,829	251,805
– Derivatives deposit received from customers	7,431,639	7,896,172
– Acting underwriting securities	385,000	121,750
– Other	723,485	658,154
Total	10,144,319	10,603,949

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

51. SHARE CAPITAL

All shares issued by the Company are fully paid common shares. The par value is RMB1. The Company's number of shares issued and their nominal value are as follows:

	Opening RMB'000	Addition RMB'000	Closing RMB'000
Registered, issued and fully paid ordinary shares of RMB1 each: Year ended 31 December 2024	8,496,645	-	8,496,645
Year ended 31 December 2023	8,496,645	-	8,496,645

Pursuant to the CSRC's Approval in respect of the Rights Issue of 東方證券股份有限公司 (Zheng Jian Xu Ke [2022] No. 540) («關於核准東方證券股份有限公司配股的批覆》(證監許可[2022]540號)), new A rights shares were allotted to all A Share holders on the basis of two point eight A rights shares for every ten existing A Shares ("A Share Rights Issue"). As of 29 April 2022, 1,502,907,061 new A rights shares were issued at a price of RMB8.46 per share, raising approximately RMB12,715 million in total. The Company completed the registration at China Securities Depository and Clearing Corporation Limited Shanghai Branch on 9 May 2022, and the new A Shares were listed on the Shanghai Stock Exchange on 13 May 2022.

Pursuant to the CSRC's Approval in respect of the Rights Issue of Overseas Listed Foreign Shares of 東方證券股份有限公司 (Zheng Jian Xu Ke [2022] No. 348) 《(關於核准東方證券股份有限公司發行境外上市外資股的批覆》(證監許可[2022]348號)), new H rights shares were allotted to qualified H Share holders on the basis of two point eight H rights shares for every ten existing H Shares ("H Share Rights Issue"). As of 20 May 2022, 82,428 new H rights shares were issued at a price of HKD10.38 per share, raising approximately HKD856 thousand in total. The new H Shares were listed on the Hong Kong Stock Exchange on 31 May 2022.

After the completion of the above right issues, a total of 1,502,989,489 new share were issued. The fund raised in excess of the par value of the new shares (net of issuance cost) was credited to capital reserve.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

51. SHARE CAPITAL (Continued)

On 30 October 2023, the Board of Directors of the Company approved The Proposal to Repurchase the Company's A Shares through Centralised Bidding Transaction to maintain the Company value and the shareholders' interests. These repurchased stocks could be sold through centralised bidding after 12 months or cancelled after 3 years. As at 31 December 2024, a total of 34,843,324 A shares have been repurchased through centralised bidding transaction at an aggregated consideration of RMB310 million. The details are as follows:

Month of repurchase	No. of ordinary shares	Prices per share		Aggregate consideration paid
		Highest	Lowest
November 2023	30,844,124	RMB9.14	RMB8.81	RMB277 million
December 2023	2,642,300	RMB8.75	RMB8.18	RMB22 million
January 2024	1,356,900	RMB8.33	RMB7.99	RMB11 million

52. OTHER EQUITY INSTRUMENT

	As at 31 December
	2024 RMB'000	2023 RMB'000
Perpetual subordinated bond	5,000,000	5,000,000

The Company issued a perpetual subordinated bond with a principal amount of RMB5 billion in August 2020, with the initial interest rate of 4.75% per annum.

The perpetual subordinated bond is unsecured. The interest rate for perpetual subordinated bond is repriced every five years. The repriced interest rate is determined as the sum of the current base rate and the initial spread plus 300 basis points. The current base rate is defined as the average yield of 5 years treasury from the bond yield curve published on China Bond website 5 working days before the repricing date of interest rate. Upon the maturity of every repricing cycle, the Company has the option to extend the maturity of the bond for another repricing cycle, or redeem the bond entirely.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

52. OTHER EQUITY INSTRUMENT (Continued)

The Company has the option to defer interest payment, except in the event of mandatory interest payments, so that at each interest payment date, the Company may choose to defer the interest payment to the next payment date for the current year as well as all interests and accreted interest already deferred, without being subject to any limitation with respect to the number of deferrals. The mandatory interest payment events are limited to dividend distributions to ordinary shareholders of the Company and reductions of registered capital within 12 months before the interest payment date.

The perpetual subordinated bond issued by the Company is classified and presented as other equity instrument in the consolidated statement of financial position.

53. RESERVES

(1) Capital reserve

Capital reserve mainly includes share premium arising from the issuance of new shares at prices in excess of par value, the change of carrying amount of the Group's investments in associate other than profit or loss and OCI, the difference between the considerations of acquisition of equity interests from non-controlling shareholders and the carrying amount of the proportionate net assets.

The movements of the capital reserve of the Group are set out below:

	Opening RMB'000	Addition RMB'000	Closing RMB'000
Share premium	39,373,960	-	39,373,960
Other capital reserve	160,560	-	160,560
As at 31 December 2024	39,534,520	-	39,534,520
Share premium	39,373,960	-	39,373,960
Other capital reserve	160,560	-	160,560
As at 31 December 2023	39,534,520	-	39,534,520

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

53. RESERVES (Continued)

(2) Surplus reserve

The surplus reserve includes statutory surplus reserve and discretionary surplus reserve.

Pursuant to the Company Law of the PRC, 10% of the net profit of the Company, as determined under the relevant accounting rules in the PRC, is required to be transferred to the statutory surplus reserve until such time when this reserve reaches 50% of the share capital of the Company. The reserve appropriated can be used for offsetting accumulated losses, expansion of business and capitalisation, in accordance with the Company's articles of association and approved by the shareholders in a shareholders' general meeting.

	Opening RMB'000	Addition RMB'000	Closing RMB'000
Statutory reserve	3,771,520	414,043	4,185,563
Discretionary reserve	846,486	-	846,486
For the year ended 31 December 2024	4,618,006	414,043	5,032,049
Statutory reserve	3,447,056	324,464	3,771,520
Discretionary reserve	846,486	-	846,486
For the year ended 31 December 2023	4,293,542	324,464	4,618,006

(3) General reserve

The general reserve includes general risk reserve and transaction risk reserve.

In accordance with the Financial Rules for Financial Enterprises issued by the Ministry of Finance of the PRC, the Company is required to appropriate 10% of net profit derived in accordance with the relevant accounting rules in the PRC before distribution to shareholders as general risk reserve from retained earnings.

Pursuant to the Securities Law of the PRC, the Company is required to appropriate 10% of the net profit derived in accordance with the relevant accounting rules in the PRC before distribution to shareholders as transaction risk reserve from retained earnings and cannot be distributed or transferred to share capital.

General reserves for the Company's subsidiaries are appropriated according to relevant requirements.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

53. RESERVES (Continued)

(3) General reserve (Continued)

The movements of general reserve of the Group are set out below:

	Opening RMB'000	Addition RMB'000	Closing RMB'000
General risk reserve	6,276,962	667,881	6,944,843
Transaction risk reserve	5,857,580	447,385	6,304,965
For the year ended 31 December 2024	12,134,542	1,115,266	13,249,808
General risk reserve	5,659,758	617,204	6,276,962
Transaction risk reserve	5,475,324	382,256	5,857,580
For the year ended 31 December 2023	11,135,082	999,460	12,134,542

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

53. RESERVES (Continued)

(4) Investment revaluation reserve

The movements of the investment revaluation reserve of the Group are set out below:

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
At beginning of the year	489,687	100,899
Equity instruments at FVOCI:
Net fair value changes during the year	1,193,784	(19,640)
Income tax related to net fair value changes during the year	(298,241)	4,911
Debt instruments at FVOCI:
Net fair value changes during the year	3,365,870	1,465,297
Income tax related to net fair value changes during the year	(848,270)	(350,470)
Reclassification adjustment to profit or loss on disposal	(1,761,245)	(842,475)
Reclassification adjustment to profit or loss on expected credit loss	69,265	(79,371)
Income tax related to reclassification adjustment to profit or loss during the year	(16,987)	230,721
Share of other comprehensive income of associates	(11,882)	–
Share of fair value gain on debt instruments measured at FVOCI of associates	5,931	4,518
Transfer to retained earnings for cumulative fair value change of equity instruments at FVOCI upon disposal	43,642	(23,083)
Other	864	(1,620)
At end of the year	2,232,418	489,687

(5) Translation reserve

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated into the presentation currency of the Group at the rate of exchange prevailing at the end of the reporting period, and the income and expenses are translated at the average exchange rates or at the approximate exchange rates for the period. Exchange differences arising, if any, are recognised in OCI and accumulated in the translation reserve.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

53. RESERVES (Continued)

(6) Hedge reserve

Hedge reserve represents the gains and losses of hedging activities of the Group's hedges of equity instruments at FVOCI.

54. RETAINED EARNINGS

The movements of retained earnings of the Group are set out below:

	As at 31 December
	2024
RMB'000	2023
RMB'000
At beginning of the year	8,757,396	8,838,412
Profit for the year	3,350,208	2,753,755
Appropriation to surplus reserve	(414,043)	(324,464)
Appropriation to general reserve	(1,115,266)	(999,460)
Dividends recognised as distribution	(1,903,905)	(1,274,497)
Cumulative fair value change transfer to retained earnings upon disposal of equity instruments at FVOCI	(43,642)	23,083
Other	(4,253)	(21,933)
Distribution to holders of other equity instrument	(475,000)	(237,500)
At end of the year	8,151,495	8,757,396

55. DIVIDENDS

	As at 31 December
	2024
RMB'000	2023
RMB'000
Dividends recognised as distribution (Note a)	1,903,905	1,274,497
Distribution to holders of other equity instrument	475,000	237,500
Total	2,378,905	1,511,997

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

55. DIVIDENDS (Continued)

Note a: Final dividend in respect of the year ended 31 December 2023 amounting to RMB1.50 (tax inclusive) per 10 shares, totalling RMB1,269 million (2023: RMB1,274 million) was approved by shareholders in 2023 general meeting.

Final dividend in respect of the year ended 30 June 2024 amounting to RMB0.75 (tax inclusive) per 10 shares, totalling RMB635 million was approved by shareholders in 2024 first extraordinary general meeting.

56. TRANSFERS OF FINANCIAL ASSETS

Securities lending arrangements

The Group entered into securities lending agreements with clients to lend out its equity securities and exchange-traded funds classified as FVTPL, which are secured by client's securities and deposits held as collateral. As stipulated in the securities lending agreements, the legal ownership of these equity securities and exchange-traded funds is transferred to the clients. Although the clients are allowed to sell these securities during the covered period, they have the obligations to return these securities to the Group at specified future dates. The Group has determined that it retains substantially all the risks and rewards of these securities and therefore has not derecognised these securities in the consolidated financial statements.

Repurchase agreements

Sales and repurchase agreements are transactions in which the Group sells a financial asset and simultaneously agrees to repurchase it (or an asset that is substantially the same) at the agreed date and price. The repurchase price is fixed and the Group is still exposed to substantially all the risks and rewards of the financial asset sold. The financial asset is not derecognised from the consolidated financial statements but is regarded as "collateral" for the liabilities because the Group retains substantially all the risks and rewards of the financial asset. A financial liability is recognised for cash received.

Annual Report 2024 DFZQ

F-208 -

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

56. TRANSFERS OF FINANCIAL ASSETS (Continued)

Repurchase agreements (Continued)

The following tables provide a summary of carrying amounts of transferred financial assets that are not derecognised in their entirety and the associated liabilities:

As at 31 December 2024

	Financial assets at fair value through profit or loss		Debt instruments at FVOCI	Debt instruments measured at amortised cost	Equity instruments at FVOCI	Advances to customers	Total
	RMB'000	Repurchase agreements	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Carrying amount of transferred assets	317,823	36,730	461,737	-	52,098	2,961,264	3,829,652
Carrying amount of associated liabilities	299,135	-	440,273	-	49,551	2,901,948	3,690,907

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

57. DIRECTORS' AND SUPERVISORS' EMOLUMENTS

The emoluments of the Directors and Supervisors of the Company paid/payable by the Group for the years ended 31 December 2024 and 2023 are set out below:

For the year ended 31 December 2024

Name	Independent director and supervisor fee* RMB'000	Salary and allowances RMB'000	Employer's contribution to pension schemes RMB'000	Discretionary bonuses RMB'000	Total RMB'000
Executive Directors:
Gong Dexiong	-	-	-	-	-
Lu Weiming	-	990	-	-	990
Lu Dayin 38	-	1,456	-	-	1,456
Jin Wenzhong 50	-	908	-	-	908
Non-executive Directors:
Xie Weiqing 51	-	-	-	-	-
Yang Bo 52	-	-	-	-	-
Shi Lei 53	-	-	-	-	-
Li Yun	-	-	-	-	-
Xu Yongmiao 6	-	-	-	-	-
Ren Zhixiang	-	-	-	-	-
Sun Weidong 52	-	68	-	-	68
Zhou Donghui 24	-	-	-	-	-
Zhu Jing 9	-	807	-	-	807
Yu Xuechun 6	-	-	-	-	-
Independent Non-executive Directors:
Wu Hong	190	-	-	-	190
Feng Xingdong	160	-	-	-	160
Luo Xinyu	160	-	-	-	160
Chan Hon	160	-	-	-	160
Zhu Kai	190	-	-	-	190

Annual Report 2024 DFZQ

F-210 -

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

57. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)

The emoluments of the Directors and Supervisors of the Company paid/payable by the Group for the years ended 31 December 2024 and 2023 are set out below: (Continued)

For the year ended 31 December 2024 (Continued)

| Name | Independent director and supervisor fee*
RMB'000 | Salary and allowances
RMB'000 | Employer's contribution to pension schemes
RMB'000 | Discretionary bonuses
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- | --- |
| Supervisors: | | | | | |
| Liu Wei^{96} | – | – | – | – | – |
| Du Xinhong^{8} | – | – | – | – | – |
| Shen Guangjun | – | – | – | – | – |
| Ling Yun | – | – | – | – | – |
| Ruan Fei | – | 820 | – | – | 820 |
| Ding Yan | – | 820 | – | – | 820 |
| Zhang Yun^{99} | – | 68 | – | – | 68 |
| Du Weihua^{99} | – | 724 | – | – | 724 |
| Wu Junhao^{69} | – | – | – | – | – |
| Xia Lijun^{69} | 92 | – | – | – | 92 |
| Total | 952 | 6,661 | – | – | 7,613 |

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

57. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)

The emoluments of the Directors and Supervisors of the Company paid/payable by the Group for the years ended 31 December 2024 and 2023 are set out below: (Continued)

For the year ended 31 December 2023

Name	Independent director and supervisor fee* RMB'000	Salary and allowances RMB'000	Employer's contribution to pension schemes RMB'000	Discretionary bonuses RMB'000	Total RMB'000
Executive Directors:
Jin Wenzhong	–	990	122	1,645	2,757
Gong Dexiong (a)	–	–	–	–	–
Lu Weiming	–	990	122	1,608	2,720
Song Xuefeng (c)	–	–	–	–	–
Non-executive Directors:
Yu Xuechun	–	–	–	–	–
Zhou Donghui	–	–	–	–	–
Li Yun (a)	–	–	–	–	–
Ren Zhixiang	–	–	–	–	–
Zhu Jing	–	880	122	1,032	2,034
Cheng Feng (c)	–	–	–	–	–
Independent Non-executive Directors:
Jin Qinglu (a)	174	–	–	–	174
Wu Hong	190	–	–	–	190
Feng Xingdong	160	–	–	–	160
Luo Xinyu	160	–	–	–	160
Chan Hon	160	–	–	–	160
Zhu Kai (a)	32	–	–	–	32

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

57. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)

The emoluments of the Directors and Supervisors of the Company paid/payable by the Group for the years ended 31 December 2024 and 2023 are set out below: (Continued)

For the year ended 31 December 2023 (Continued)

Name	Independent director and supervisor fee* RMB'000	Salary and allowances RMB'000	Employer's contribution to pension schemes RMB'000	Discretionary bonuses RMB'000	Total RMB'000
Supervisors:
Du Weihua	–	790	122	1,253	2,165
Wu Junhao	–	–	–	–	–
Xu Yongmiao (a)	–	–	–	–	–
Shen Guangjun	–	–	–	–	–
Ling Yun (a)	–	–	–	–	–
Xia Lijun	100	–	–	–	100
Ruan Fei	–	820	122	936	1,878
Ding Yan	–	820	122	1,070	2,012
Zhang Jian (a)	–	–	–	–	–
Tong Jie (a)	–	–	–	–	–
Total	976	5,290	732	7,544	14,542

Executive directors and non-executive directors do not receive any director fee.
a. Lu Dayin was appointed as director in November 2024.
b. Jin Wenzhong resigned as director in November 2024.
c. Xie Weiqing was appointed as director in November 2024.
d. Yang Bo was appointed as director in November 2024.
e. Shi Lei was appointed as director in November 2024.
f. Xu Yongmiao was appointed as director and resigned as supervisor in November 2024.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

57. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)

g. Sun Weidong was appointed as director in November 2024.
h. Zhou Donghui resigned as director in November 2024.
i. Zhu Jing resigned as director in November 2024.
j. Yu Xuechun resigned as director in November 2024.
k. Liu Wei was appointed as chairman of the supervisory board in November 2024.
l. Du Xinhong was appointed as supervisor in November 2024.
m. Zhang Yun was appointed as supervisor in November 2024.
n. Du Weihua resigned as supervisor in November 2024.
o. Wu Junhao resigned as supervisor in November 2024.
p. Xia Lijun resigned as independent supervisor in November 2024.
q. Gong Dexiong was appointed as director in October 2023.
r. Song Xuefeng resigned as director in October 2023.
s. Li Yun was appointed as director in August 2023.
t. Cheng Feng resigned as director in August 2023.
u. Jin Qinglu resigned as director in October 2023.
v. Zhu Kai was appointed as independent director in October 2023.
w. Xu Yongmiao was appointed as supervisor in October 2023.
x. Ling Yun was appointed as supervisor in October 2023.
y. Zhang Jian and Tong Jie resigned as supervisor in October 2023.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

57. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)

The executive directors' emoluments shown above were for their services in connection with the management of the affairs of the Company and the Group.

The independent directors' and non-executive directors' emoluments shown above were for their services as directors of the Company.

The supervisors' emoluments shown above were for their services as supervisors of the Company.

For the years ended 31 December 2024 and 2023, none of the directors or supervisors of the Company waived any emoluments and no emoluments were paid by the Company to any of the directors or supervisors as an inducement to join or upon joining the Group or as compensation for loss of office.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

58. FIVE HIGHEST PAID INDIVIDUALS

Of the five individuals with the highest emoluments, none of them are directors or supervisors whose emoluments are disclosed in Note 57 (2023: None). Details of the remuneration of the five highest paid employees during the year ended 2024 and 2023 are as follows:

Year ended 31 December
	2024 RMB'000	2023 RMB'000
Basic salaries and allowances	11,210	9,838
Discretionary bonuses	2,628	24,362
Employer's contribution to pension schemes	–	1,148
Total	13,838	35,348

Bonuses are discretionary and determined by reference to the Group's/Company's and the individuals' performance. No emoluments have been paid or payable to these individuals as an inducement to join or upon joining the Group or as compensation for loss of office for the years ended 31 December 2024 and 2023.

The emoluments of the highest-paid individuals of the Group fall within the following bands:

Number of individuals
	2024	2023
Emolument bands
– RMB2,000,001 to RMB2,500,000	1	–
– RMB2,500,001 to RMB3,000,000	4	–
– RMB5,500,001 to RMB6,000,000	–	1
– RMB6,000,001 to RMB6,500,000	–	1
– RMB6,500,001 to RMB7,000,000	–	1
– RMB7,000,001 to RMB7,500,000	–	1
– RMB8,500,001 to RMB9,000,000	–	1
Total	5	5

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

59. COMMITMENTS AND CONTINGENT LIABILITY

(1) Capital commitments

	As at 31 December
	2024 RMB'000	2023 RMB'000
Capital expenditure in respect of acquisition of property and equipment: Contracted but not provided for	10,723	25,310

(2) Contingent liability

In November 2024, the Company received a legal notice served by the Shanghai Financial Court regarding a lawsuit filed by Guangdong Guangzhou Daily Media Co., Ltd. The plaintiff initiated the litigation due to a service contract dispute with the Company, claiming the return of financial advisory fees, compensation for losses, and legal costs totalling RMB328 million, in addition to related litigation expenses. As of December 31, 2024, the case has not yet gone to trial. The Company's management believes that this matter does not currently have a material impact on the Group's financial condition or operational results.

60. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS

(1) Relationship of related parties

Major shareholder of the Company

Following major shareholder holding more than 10% shares of the Company is considered as a related party of the Group:

| | Percentage of shares held
As at 31 December | |
| --- | --- | --- |
| | 2024
% | 2023
% |
| 申能(集團)有限公司 | | |
| Shenergy (Group) Company Limited | 26.63 | 26.63 |

Associates

The details of the associates of the Group are set out in Note 30.

Others

The Directors and Supervisors of the Company have served as directors or senior management of these related parties during the year of 2024.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

60. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(2) Related party transaction and balances

Other than as disclosed elsewhere in these consolidated financial statements, the Group had the following material related party transactions and balances:

As at 31 December 2024 and 2023, the Group had the following material balances with the major shareholder and entities under its control:

	As at 31 December
	2024 RMB'000	2023 RMB'000
Account payables to brokerage clients	40,217	10,579
Other payables	794	-

For the years ended 31 December 2024 and 2023, the Group had the following material transactions with the major shareholder and entities under its control:

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Commission and fee income	11,283	6,056
Interest expenses	159	54
Other operating expenses	37,872	19,311
Net investment gains	(463)	-

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

60. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(2) Related party transaction and balances (Continued)

As at 31 December 2024 and 2023, the Group had the following material balances with associates:

As at 31 December

| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Account payables to brokerage clients | 43,224 | 5,258 |
| Other receivables | 3,051 | 2,522 |
| Other account payables | 496 | 2,271 |

As at 31 December 2024 and 2023, the Group had the following material investment balances of products managed by associates:

As at 31 December

| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Financial assets at FVTPL | 1,115,550 | 613,229 |

As at 31 December 2024 and 2023, the Group had the following material investment balances of securities issued by associates:

As at 31 December

| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Debt instruments at FVOCI | 90,347 | 100,444 |
| Financial assets at FVTPL | 70,634 | 62,090 |

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

60. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(2) Related party transaction and balances (Continued)

For the years ended 31 December 2024 and 2023, the Group had the following material transactions with associates:

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Commission and fee income	23,021	110,375
Interest income	6,027	4,134
Interest expenses	44	69
Net investment gains	10,662	1,045

As at 31 December 2024 and 2023, the Group had the following material balances with other related parties:

	As at 31 December
	2024 RMB'000	2023 RMB'000
Other receivables	892	2,467
Other account payables	457	267
Account payables to brokerage clients	3	8

As at 31 December 2024 and 2023, the Group had the following material investment balances of products managed by other related parties:

	As at 31 December
	2024 RMB'000	2023 RMB'000
Financial assets at FVTPL	532,586	435,038

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

60. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(2) Related party transaction and balances (Continued)

As at 31 December 2024 and 2023, the Group had the following material investment balances of securities issued by other related parties:

As at 31 December
	2024 RMB'000	2023 RMB'000
Financial assets at FVTPL	682,928	939,420
Debt instruments at FVOCI	144,030	51,810
Equity instruments at FVOCI	10,576	10,149

For the years ended 31 December 2024 and 2023, the Group had the following material transactions with other related parties:

Year ended 31 December
	2024 RMB'000	2023 RMB'000
Net investment gains	41,550	36,768
Interest income	11,429	1,447
Commission and fee income	1,232	10,809
Interest expenses	1	17
Other operating expenses	7,479	2,919

(3) Key management personnel

In 2024, the key management personnel of the Company received the pre-tax salary of RMB14.7170 million from the Company. The final remunerations of key management personnel who received remunerations from the Company during the reporting period are still in the process of being confirmed, and the remaining portion will be disclosed after confirmation.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

61. STATEMENT OF FINANCIAL POSITION AND RESERVE OF THE COMPANY

As at 31 December

| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Cash and bank balances | 42,800,521 | 31,849,486 |
| Clearing settlement funds | 15,088,751 | 13,680,735 |
| Deposits with exchanges and financial institutions | 1,723,860 | 1,873,987 |
| Derivative financial assets | 1,616,815 | 1,870,390 |
| Advances to customers | 27,614,243 | 20,775,137 |
| Account receivables | 480,053 | 218,162 |
| Reverse repurchase agreements | 3,845,640 | 5,401,847 |
| Financial assets at fair value through profit or loss | 73,169,284 | 78,154,448 |
| Debt instruments at fair value through other comprehensive income | 106,069,814 | 88,811,040 |
| Equity instruments at fair value through other comprehensive income | 19,584,128 | 6,268,133 |
| Debt instruments measured at amortised cost | 1,586,905 | 1,586,591 |
| Investments in associates | 4,139,654 | 3,859,511 |
| Investments in subsidiaries | 18,952,460 | 19,473,304 |
| Right-of-use assets | 767,819 | 331,953 |
| Investment properties | 30,936 | 30,989 |
| Property and equipment | 1,726,866 | 1,832,720 |
| Other intangible assets | 193,422 | 205,526 |
| Goodwill | 18,948 | 18,948 |
| Deferred tax assets | 1,152,000 | 1,719,662 |
| Other assets | 2,139,533 | 3,360,250 |
| Total assets | 322,701,652 | 281,322,819 |

Annual Report 2024 DFZQ

– F-222 –

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

61. STATEMENT OF FINANCIAL POSITION AND RESERVE OF THE COMPANY

(Continued)

As at 31 December

	2024	2023
	RMB'000	RMB'000
Placements from banks and financial institutions	39,194,625	25,670,059
Short-term debt instruments	5,678,905	2,797,700
Account payables to brokerage clients	36,789,378	27,566,246
Repurchase agreements	82,556,395	72,006,511
Financial liabilities at fair value through profit or loss	13,980,907	13,607,161
Derivative financial liabilities	694,654	822,514
Contract liabilities	39,967	500
Current tax liabilities	11,439	-
Employee benefits payable	1,502,620	437,638
Lease liabilities	758,042	318,289
Debt securities issued	58,561,339	58,016,945
Other liabilities	7,085,868	7,876,152
Total liabilities	246,854,139	209,119,715
Share capital	8,496,645	8,496,645
Treasury stock	(310,896)	(299,780)
Other equity instrument	5,000,000	4,995,755
Reserves	56,492,283	53,188,375
Retained earnings	6,169,481	5,822,109
Total equity	75,847,513	72,203,104
Total equity and liabilities	322,701,652	281,322,819

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

61. STATEMENT OF FINANCIAL POSITION AND RESERVE OF THE COMPANY

(Continued)

	Share capital RMB'000	Treasury stock RMB'000	Other equity instrument RMB'000	Capital reserve RMB'000 (Note a)	Surplus reserve RMB'000	General reserve RMB'000	Investment revaluation reserve RMB'000	Hedge reserve RMB'000	Retained earnings RMB'000	Total RMB'000
As at 1 January 2024	8,496,645	(299,780)	4,995,755	39,218,737	4,613,706	8,869,021	474,586	12,325	5,822,109	72,203,104
Profit for the year	-	-	-	-	-	-	-	-	4,140,432	4,140,432
Other comprehensive income for the year	-	-	-	-	-	-	1,748,720	(14,622)	-	1,734,098
Total comprehensive income for the year	-	-	-	-	-	-	1,748,720	(14,622)	4,140,432	5,874,530
Repurchase of A shares	-	(11,116)	-	-	-	-	-	-	-	(11,116)
Appropriation to surplus reserve	-	-	-	-	414,043	-	-	-	(414,043)	-
Appropriation to general reserve	-	-	-	-	-	828,412	-	-	(828,412)	-
Distribution to holders of other equity instrument	-	-	-	-	-	-	-	-	(475,000)	(475,000)
Dividends recognised as distribution	-	-	-	-	-	-	-	-	(1,903,905)	(1,903,905)
Transfer to retained earnings for cumulative fair value change of equity instruments at fair value through other comprehensive income upon disposal	-	-	-	-	-	-	43,642	4,253	(47,895)	-
Other	-	-	4,245	18,109	-	261,351	-	-	(123,805)	159,900
As at 31 December 2024	8,496,645	(310,896)	5,000,000	39,236,846	5,027,749	9,958,784	2,266,948	1,956	6,169,481	75,847,513

Annual Report 2024 DFZQ

F-224 -

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

61. STATEMENT OF FINANCIAL POSITION AND RESERVE OF THE COMPANY

(Continued)

	Share capital RMB'000	Treasury stock RMB'000	Other equity instrument RMB'000	Capital reserve RMB'000 (Note a)	Surplus reserve RMB'000	General reserve RMB'000	Investment revaluation reserve RMB'000	Hedge reserve RMB'000	Retained earnings RMB'000	Total RMB'000
As at 1 January 2023	8,496,645	-	4,995,755	39,218,737	4,289,242	8,219,596	128,877	-	5,062,213	70,411,065
Profit for the year	-	-	-	-	-	-	-	-	3,244,632	3,244,632
Other comprehensive income for the year	-	-	-	-	-	-	368,792	(9,608)	-	359,184
Total comprehensive income for the year	-	-	-	-	-	-	368,792	(9,608)	3,244,632	3,603,816
Repurchase of A shares	-	(299,780)	-	-	-	-	-	-	-	(299,780)
Appropriation to surplus reserve	-	-	-	-	324,464	-	-	-	(324,464)	-
Appropriation to general reserve	-	-	-	-	-	649,425	-	-	(649,425)	-
Distribution to holders of other equity instrument	-	-	-	-	-	-	-	-	(237,500)	(237,500)
Dividends recognised as distribution	-	-	-	-	-	-	-	-	(1,274,497)	(1,274,497)
Transfer to retained earnings for cumulative fair value change of equity instruments at fair value through other comprehensive income upon disposal	-	-	-	-	-	-	(23,083)	-	23,083	-
Other	-	-	-	-	-	-	-	21,933	(21,933)	-
As at 31 December 2023	8,496,645	(299,780)	4,995,755	39,218,737	4,613,706	8,869,021	474,586	12,325	5,822,109	72,203,104

Note a: Capital reserve of the Company represents primarily the share premium arising from the issuance of the Company's shares.

Annual Report 2024

DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

62. FINANCIAL INSTRUMENTS

Categories of financial instruments

	As at 31 December
	2024 RMB'000	2023 RMB'000
Financial assets
Financial assets at fair value through profit or loss	92,154,462	98,947,294
Debt instruments at FVOCI	110,519,911	90,813,713
Equity instruments at FVOCI	19,634,600	6,298,178
Financial assets measured at amortised cost	181,595,163	174,880,258
Total	403,904,136	370,939,443
Financial liabilities
Financial liabilities at fair value through profit or loss	15,801,083	16,176,036
Financial liabilities measured at amortised cost	317,796,426	286,455,263
Total	333,597,509	302,631,299

63. FINANCIAL RISK MANAGEMENT

63.1 Risk management overview and organisation

(1) Risk management overview

The risk management implemented by the Group fully covers market risk, credit risk, liquidity risk, operational risk, technology risk, reputation risk, compliance risk, legal risk and ethical risk, etc., realising the management control on the overall risk assessment and supervision.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.1 Risk management overview and organisation (Continued)

(1) Risk management overview (Continued)

(2) Structure of the risk-management organisation

The Group is committed to establishing a robust and effective risk management system that features "three lines of defence" approach. The first line of defence is the check-and-balance mechanism of two-person, dual roles, dual responsibilities and position separation in the important front-line positions in each operational department, branch and subsidiary; the second line is inspection and supervision on the compliance and risk management affairs by relevant functional management departments within their range of duties; the third line is effective risk supervision performed by risk supervision and management departments on the risk management affairs of each functional management departments.

Pursuant to the requirements of the Rules for the Risk Management of Securities Firms (《證券公司全面風險管理規範》) ("Rules for the Risk Management") and own operations, the Company has set up a multiple-level risk management structure, comprising: (i) the Board, (ii) the Supervisory Committee, (iii) the management, and (iv) risk management function for each business department, branch and subsidiary.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.2 Credit risk

Credit risk mainly refers to the probability of losses arising from the counterparty or a debtor's failure to meet its contractual obligations in a timely manner, or the deterioration of credit quality of them. The first one is direct credit risk, i.e. the risk arising from failure of issuer to meet its contractual obligations; the second one is counterparty risk, i.e. the risk arising from a breach of contract by the counterparties in the business including over-the-counter derivatives or credit transactions; the third one is settlement risk, i.e. the risk arising from a breach of contract during the settlement of a transaction. In short, the Company fulfils its delivery obligation while the counterparty defaults in the business.

(1) Credit risk management

The Company implements limit management on credit risk in accordance with regulatory requirements and risk management needs and sets credit risk limits based on the Company's risk tolerance and net capital to control the quality of credit assets and credit risk concentration, so as to achieve refined management of credit risk exposure. In the process of business development, the Company strictly implements the credit risk limits approved by the Company and establishes a daily monitoring mechanism for limit indicators to control the credit risk effectively.

The Group establishes credit risk management systems for the bond issuers, counterparty and customers of margin financing and securities lending. The Group enhances the assessments of clients' qualifications and risks, and achieves credit risk management by contract inspections and transaction monitoring. Besides, the Group focuses on the potential default throughout the transaction process, and prepares for risk treatment contingency plan. Regarding the bond investments and other businesses relating to credit risk, the Group strengthens the fundamental analysis on the bond issuers and counterparties and establishes internal rating system to monitor credit risk. The Group realises various functions including the internal rating, uniform credit management, investment concentration management, pledge bond management, defaulting client management, stress testing, early-warning monitoring, risk reporting through credit risk management system, strengthening credit risk control and enhancing the ability of credit risk management. In the derivative transactions, the Group sets margin ratio and trade rules to counterparties, and controls the credit risk exposure of counterparty by means of daily mark-to-market, margin calls and forced close of positions, etc. In the credit trading business, the Group establishes mechanisms including client credit rating assessment, facility and collateral management, concentration management, monitoring report and others, and addresses the potential risk projects through forced liquidation mechanism, judicial channels, etc.

In addition, the Company has established the same-business and same-customer management mechanism in accordance with external guidelines and actual business operations of the Company. It conducts unified quantitative measurement, monitoring and management on the credit business, improves its centralised credit management system of the Company's credit business and further enhances the refined level of the credit risk management.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.2 Credit risk (Continued)

(2) Credit risk and impairment assessment

The Group performs impairment assessment under ECL model using the simplified approach of lifetime ECL on account receivables. The Group monitors all other financial assets to assess whether there has been a significant increase in credit risk since initial recognition. If there has been a significant increase in credit risk since initial recognition, the Group will measure the loss allowance based on lifetime rather than 12m ECL.

In making the impairment assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. The Group uses different criteria to determine whether credit risk has increased significantly per each portfolio of assets.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly:

significant changes in external market indicators of credit risk for a particular financial instrument or similar financial instruments with the same expected life;
an actual or expected significant change in the financial instrument's external credit rating;
expected adverse changes in business, financial or economic conditions that are expected to cause a significant change in the borrower's ability to meet its debt obligations;
an actual or expected significant change in the operating results of the borrower;
an actual or expected significant adverse change in the regulatory, economic, or technological environment of the borrower that results in a significant change in the borrower's ability to meet its debt obligations;
significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements;
an actual or expected significant change in the quality of credit enhancement; and
significant changes in the expected performance and behaviour of the borrower.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.2 Credit risk (Continued)

(2) Credit risk and impairment assessment (Continued)

The credit risk on liquid funds including bank balances, clearing settlement funds, deposits with exchanges and financial institutions is limited because the counterparties are mainly state-owned banks, clearing house, stock exchanges, futures exchanges, commodity exchanges or banks with high credit ratings assigned by international credit-rating agencies. There have been no significant increase in credit risk since initial recognition associated with the amounts of cash and bank balances, clearing settlement funds, deposits with exchanges and financial institutions for the year ended 31 December 2024.

The Group mainly relies on external credit ratings to assess the credit risk of bond investments. In general, the following information is considered in assessing whether there has been a significant increase in credit risk of the bond investment: the credit rating downgrade to below AA (exclusive) and above B (exclusive) if original external rating is AA or above (inclusive) from domestic rating agencies on the initial recognition date; the credit rating downgrade to above B (exclusive) if original external rating is below AA (exclusive) from domestic rating agencies on the initial recognition date. As of 31 December 2024, the Group invests primarily in bonds with debt ratings of AA or above (inclusive).

Margin trading assets consist of advances to customers and securities lent to customers. The main credit risk of these financial assets is customers' failure to repay the principal, interests or securities lent to them. The Group monitors margin trading clients' accounts on an individual basis and call for additional margin deposits, including cash collateral or securities, whenever necessary. The advances to margin clients are monitored through their collateral to loan ratios, which ensures the value of the pledged assets is sufficient to cover the advances. The Group considers margin trading assets to have experienced a significant increase in credit risk if the collateral to loan ratios fell below the pre-determined margin call thresholds taking into account of the obligor's credit quality.

Regarding the reverse repurchase agreements, the Group mainly focuses on the performance guarantee ratio, past due status, and other qualitative and quantitative criteria to determine whether credit risk has increased significantly. In terms of stock-pledged reverse repurchase agreements, the Group sets different forced liquidation thresholds for various financing entities or transaction in consideration of factors such as the industry, liquidity, and sales restriction of the pledged securities. Normally, the forced liquidation threshold is no less than 140% for restricted shares and no less than 130% for unrestricted shares. The Group assesses the changes in credit risk of each transaction since initial recognition date by taking full consideration of the credit status of the financing entity, contract maturity date, the related collateral securities information including the industry, liquidity, sales restriction, concentration, volatility, performance guarantee and the issuer's operating conditions.

Annual Report 2024 DFZQ

F-230 -

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.2 Credit risk (Continued)

(3) Measurement of ECL

Generally, there are three stages on a financial asset based on the following criteria: when the performance guarantee ratio is over the forced liquidation threshold and there is no past due, it is classified under Stage 1; when the performance guarantee ratio is lower than the forced liquidation threshold, or overdue but not exceeding the grace period, or there exists other events indicating significant increase in credit risk, is considered to be not credit-impaired in terms of the substance of the transaction, it is classified under Stage 2; when the performance guarantee ratio falls below the forced liquidation threshold or overdue exceeds the grace period, the Group evaluates whether those transactions are credit-impaired in terms of the substance of the transaction, taking into account of factors such as the obligor's solvency, repayment willingness, value of pledged assets and other loan settlement measures. If credit impairment has occurred, it is classified under Stage 3.

The Group applies a three-stage approach to measure ECL on financial assets measured at amortised cost and debt instruments at FVOCI. Financial assets migrate through the following three stages based on the change in credit quality since initial recognition:

Stage 1: 12m ECL

For exposures where there has not been a significant increase in credit risk since initial recognition, the portion of the lifetime ECL associated with the probability of default events, occurring within the next 12 months, is recognised;

Stage 2: Lifetime ECL – not credit impaired

For credit exposures where there has been a significant increase in credit risk since initial recognition but that are not credit impaired, a lifetime ECL is recognised;

Stage 3: Lifetime ECL – credit impaired

For financial assets that are credit impaired, a lifetime ECL is recognised and interest revenue is calculated by applying the effective interest rate to the amortised cost rather than the gross carrying amount.

The Group uses PD, LGD and EAD to measure credit risks.

The expected credit losses are measured based on the probability weighted results of PD, LGD and EAD.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.2 Credit risk (Continued)

(3) Measurement of ECL (Continued)

The assessment of significant increase in credit risk and the measurement of expected credit losses all involve forward-looking information. Through the analysis of historical data, the Group identifies the key economic indicators affecting the credit risk and expected credit losses of each asset portfolio. Key economic indicators include macroeconomic indicators and indicators that can reflect market volatility, including but not limited to Money Supply ("M2"), Consumers Price Index ("CPI"), Industrial Product Price Index ("PPI"), etc.

In order to determine the relationship between the economic indicators and the default probability as well as the default loss rate, the Group constructs an econometric model to determine the impact of historical changes in these indicators on the PD and LGD.

The Group makes forward-looking estimation of the ECL based on the scenario reflecting key economic indicators above. When ECL are measured on a collective basis, the financial instruments are grouped on the basis of shared risk characteristics, such as credit risk grade, overdue information. The groupings are reviewed on a regular basis to ensure that each group is comprised of homogenous exposures.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.2 Credit risk (Continued)

(3) Measurement of ECL (Continued)

The Group takes on exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. The maximum credit risk exposure of the Group is as follows:

	As at 31 December
	2024 RMB'000	2023 RMB'000
Advances to customers	28,047,525	21,071,801
Account receivables	973,364	670,759
Other receivables and other	1,078,594	3,464,273
Debt instruments at FVOCI	110,519,911	90,813,713
Reverse repurchase agreements	3,984,103	5,437,734
Financial assets at fair value through profit or loss	38,990,482	44,260,049
Debt instruments measured at amortised cost	1,586,905	1,586,591
Derivative financial assets	1,965,131	1,877,650
Deposits with exchanges and financial institutions	27,654,365	3,241,547
Clearing settlement funds	15,177,207	35,314,411
Cash and bank balances	103,093,101	104,093,142
Total	333,070,688	311,831,670

Overall, the Group monitors and manages credit risk at all times, and takes every possible measure to mitigate and control credit risk exposure to an acceptable level.

63.3 Market risk

Market risk is the risk of loss arising from fluctuations in stock prices, interest rates and exchange rates in the securities markets. The Group faces market risk primarily in the Group's securities investment business. The Group's business departments, branches and subsidiaries are the first line of defence against market risk. The Group's risk management functional units are responsible for overall market risk management.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.3 Market risk (Continued)

To enhance the management of market risk, the Group currently adopts the following measures:

Using mark-to-market, concentration analysis and quantitative risk model, to manage business scale, risk exposure and others to establish dynamic-tracking stop-loss mechanisms.
Identifying the key factors affecting portfolio returns through sensitivity analysis, and evaluating the tolerance of investment portfolios to extreme market fluctuations by using scenario analysis and stress-testing.
Ensuring diversified and scientific asset allocation, using derivatives such as stock index futures to hedge against risks, and using various investment strategies for hedging.
Closely monitoring the macroeconomic indicators and trends and significant development in economic policies, and evaluating the systematic risk on investment that may arise from changes in macro-economic factors.
Set up the institution for decision-making, performance and responsibility for the significant events, prepare emergency plans under various predicable extreme cases, and grade and manage the significant events according to their severity.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Group’s exposure to interest rate risk relates primarily to the Group’s interest bearing financial assets and financial liabilities. Management actively monitors the Group’s net interest rate exposure through setting limits on the level of mismatch of interest rate repricing and duration gap and aims at maintaining an interest rate spread, such that the Group is always in a net interest-bearing asset position and derive net interest income.

Fluctuations of prevailing rate quoted by the People’s Bank of China, Shanghai Inter-bank offered rate and Hong Kong Inter-bank offered rate are the major sources of the Group’s cash flow interest rate risk.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.3 Market risk (Continued)

Interest rate risk (Continued)

The tables below summarise the Group's interest bearing financial assets and financial liabilities by their remaining terms to repricing or contractual maturity date, whichever is earlier.

As at 31 December 2024

	Less than 1 month RMB'000	1 month to 3 months (inclusive) RMB'000	3 months to 1 year (inclusive) RMB'000	1 year to 5 years (inclusive) RMB'000	Over 5 years RMB'000	Non interest-bearing RMB'000	Total RMB'000
Financial Assets
Cash and bank balances	72,296,894	11,417,639	19,262,629	65,413	-	50,526	103,093,101
Clearing settlement funds	15,177,207	-	-	-	-	-	15,177,207
Deposits with exchanges and financial institutions	27,654,365	-	-	-	-	-	27,654,365
Derivative financial assets	-	-	-	-	-	1,965,131	1,965,131
Advances to customers	2,163,891	4,198,674	21,484,966	1,827	-	198,167	28,047,525
Account receivables	-	-	-	-	-	973,364	973,364
Reverse repurchase agreements	3,983,389	-	-	-	-	714	3,984,103
Debt instruments at FVOCI	471,049	1,176,604	4,391,194	44,985,176	58,093,054	1,402,834	110,519,911
Equity instruments at FVOCI	-	-	-	-	-	19,634,600	19,634,600
Financial assets at FVTPL	1,177,482	952,074	4,205,696	12,818,812	22,575,487	48,459,780	90,189,331
Debt instruments measured at amortised cost	2,920	-	-	1,559,825	-	24,160	1,586,905
Other receivables and other	-	-	-	-	-	1,078,594	1,078,594
Subtotal	122,927,197	17,744,991	49,344,485	59,431,053	80,668,541	73,787,870	403,904,137

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.3 Market risk (Continued)

Interest rate risk (Continued)

As at 31 December 2024 (Continued)

	Less than 1 month RMB'000	1 month to 3 months (inclusive) RMB'000	3 months to 1 year (inclusive) RMB'000	1 year to 5 years (inclusive) RMB'000	Over 5 years RMB'000	Non interest-bearing RMB'000	Total RMB'000
Financial Liabilities
Placements from banks and financial institutions	23,948,500	3,352,006	11,779,534	-	-	114,585	39,194,625
Short-term debt instruments	1,198,008	159,411	4,294,061	-	-	27,425	5,678,905
Account payables to brokerage clients	112,557,840	-	-	-	-	1,079,525	113,637,365
Repurchase agreements	82,113,645	2,095,052	1,678,024	-	-	29,579	85,916,300
Financial liabilities at FVTPL	10,376,267	1,945,764	1,654,895	392,154	-	339,421	14,708,501
Derivative financial liabilities	-	-	-	-	-	1,092,582	1,092,582
Borrowings	972,354	-	106,937	467,357	-	2,769	1,549,417
Lease liabilities	39,750	57,116	227,149	717,206	17,729	-	1,058,950
Debt securities issued	2,503,727	1,509,991	10,575,578	43,322,118	1,992,503	830,401	60,734,318
Other account payables and other payables	-	-	-	-	-	10,026,545	10,026,545
Subtotal	233,710,091	9,119,340	30,316,178	44,898,835	2,010,232	13,542,832	333,597,508
Net interest-bearing position	(110,782,894)	8,625,651	19,028,307	14,532,218	78,658,309	60,245,038	70,306,629

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.3 Market risk (Continued)

Interest rate risk (Continued)

As at 31 December 2023

	Less than 1 month RMB'000	1 month to 3 months (Inclusive) RMB'000	3 months to 1 year (Inclusive) RMB'000	1 year to 5 years (Inclusive) RMB'000	Over 5 years RMB'000	Non interest-bearing RMB'000	Total RMB'000
Financial Assets
Cash and bank balances	65,345,809	4,336,170	34,345,546	65,413	-	204	104,093,142
Clearing settlement funds	35,314,411	-	-	-	-	-	35,314,411
Deposits with exchanges and financial institutions	3,241,547	-	-	-	-	-	3,241,547
Derivative financial assets	-	-	-	-	-	1,877,650	1,877,650
Advances to customers	1,837,141	5,653,225	13,581,314	121	-	-	21,071,801
Account receivables	-	-	-	-	-	670,759	670,759
Reverse repurchase agreements	5,437,734	-	-	-	-	-	5,437,734
Debt instruments at FVOCI	515,970	1,101,297	4,390,732	33,140,777	51,664,937	-	90,813,713
Equity instruments at FVOCI	-	-	-	-	-	6,298,178	6,298,178
Financial assets at FVTPL	1,017,352	1,607,782	5,058,324	18,204,877	18,371,714	52,809,595	97,069,644
Debt instruments measured at amortised cost	2,921	-	-	1,583,670	-	-	1,586,591
Other receivables and other	-	86,994	-	-	-	3,377,279	3,464,273
Subtotal	112,712,885	12,785,468	57,375,916	52,994,858	70,036,651	65,033,665	370,939,443
Financial Liabilities
Placements from banks and financial institutions	14,816,131	3,660,719	7,193,209	-	-	-	25,670,059
Short-term debt instruments	53,035	115,557	2,629,108	-	-	-	2,797,700
Account payables to brokerage clients	111,570,987	-	-	-	-	-	111,570,987
Repurchase agreements	73,132,281	474,565	109,297	-	-	-	73,716,143
Financial liabilities at FVTPL	7,133,138	4,779,646	1,533,778	1,432,951	-	422,321	15,301,834
Derivative financial liabilities	-	-	-	-	-	874,202	874,202
Borrowings	1,482,803	182,176	35,045	-	-	-	1,700,024
Lease liabilities	-	119,970	163,639	253,790	10,076	-	547,475
Debt securities issued	4,165,994	2,597,041	10,690,975	42,703,835	-	-	60,157,845
Other account payables and other payables	-	-	-	-	-	10,295,031	10,295,031
Subtotal	212,354,369	11,929,674	22,355,051	44,390,576	10,076	11,591,554	302,631,300
Net interest-bearing position	(99,641,484)	855,794	35,020,865	8,604,282	70,026,575	53,442,111	68,308,143

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.3 Market risk (Continued)

Interest rate risk (Continued)

Sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to interest rates for interest bearing financial assets and financial liabilities, which covers both the cash flow interest rate risk of variable rate instruments and fair value interest rate risk of fixed rate FVTPL and debt instruments at FVOCI. The analysis is prepared assuming the interest bearing financial assets and financial liabilities outstanding at the end of each respective reporting periods were outstanding for the whole year. When reporting to the management on the interest rate risk, a 50 basis points increase or decrease in the relevant interest rates will be adopted for sensitivity analysis, when considering the reasonably possible change in interest rates.

	Year ended 31 December
	2024
RMB'000	2023
RMB'000
Profit after income tax for the year
50 basis points increase	(1,440,465)	(1,282,564)
50 basis points decrease	1,585,782	1,282,230
Equity
50 basis points increase	(3,135,531)	(3,373,943)
50 basis points decrease	3,331,743	3,517,371

Currency risk

Currency risk refers to the unfavourable volatilities of the Group's financial condition and cash flows due to the fluctuation of the foreign exchange rates. Except for overseas subsidiaries which hold financial assets and financial liabilities denominated in foreign currencies that are different from the relevant group entity's functional currency, the Group only holds a minimal amount of foreign currency denominated investments. The management considers the foreign exchange rate risk of the Group is not material as the proportion of the Group's foreign currency asset and foreign currency liability is minimal.

Price risk

Price risk is primarily about the unfavorable changes of share price, gold price, financial derivative instruments prices and commodity price that cause financial losses. Quantitatively, price risk the Group faces is mainly the proportionate fluctuation in the Group's profits due to the price fluctuation of the trading financial instrument and the proportionate fluctuation in the Group's equity due to the price fluctuation of the equity instruments at FVOCI. Other than daily monitoring the investment position, trading and earnings indicators, the Group mainly use risk sensitivity indicators, stress testing indicators in daily risk monitoring.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.3 Market risk (Continued)

Price risk (Continued)

Sensitivity analysis

The analysis below is performed to show the impact on profit and OCI before income tax due to change in the prices of equity securities, funds, derivatives, collective asset management schemes and other trading financial instruments by 10% with all other variables held constant. A positive number below indicates an increase in profit and OCI before income tax and vice versa.

	Year ended 31 December
	2024 RMB'000	2023 RMB'000
Profit after income tax for the year
Increase by 10%	4,715,663	2,888,341
Decrease by 10%	(4,715,663)	(2,888,341)
Other comprehensive income after income tax for the year
Increase by 10%	1,196,408	629,818
Decrease by 10%	(1,196,408)	(629,818)

63.4 Liquidity risk

Liquidity risk refers to securities firms' potential failure to obtain sufficient funds at reasonable cost to repay liabilities in a timely manner as they become due, meet other payment obligations and satisfy capital requirements in the normal course of business. The Group's objectives in liquidity risk management are to establish a sound liquidity risk management system and to effectively identify, measure, monitor and control liquidity risk, to ensure that the Group's liquidity demand can be met at reasonable cost and in a timely manner.

In the aspect of liquidity risk management, during the reporting period, the Company improves the liquidity risk management system and internal management system continuously, and sets up a special position in charge of dynamic monitoring, early-warning, analysis and reporting of the liquidity risk in accordance with the Rules for the Risk Management of Securities Companies, the Provisions on the Calculation Standards of Risk Control Indicators of Securities Companies and other regulatory requirements, as well as the Company's daily liquidity management needs. The Company prudently determines the qualitative principles and quantitative standards of liquidity risk preference at the beginning of each year, and adjusts the relevant liquidity risk control indicators timely in accordance with the market changes and business development during the year. The Company also conducts liquidity stress testing and emergency drilling regularly, and reports to the regulator such indicators as liquidity coverage rate and net stable capital rate daily. The above practices can ensure that the Company is able to satisfy the liquidity demand timely at reasonable cost, and will control the liquidity risk within the tolerable scope.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.4 Liquidity risk (Continued)

Undiscounted cash flows by contractual maturities of non-derivative financial liabilities

The tables below present the cash flows payable by the Group within the remaining contractual maturities of non-derivative financial liabilities at the end of each respective periods. The amounts disclosed in the tables are the contractual undiscounted cash flows. The tables include both interest and principal cash flows. To the extent that interest rates are floating, the undiscounted amount is derived from interest rate at the end of respective reporting periods. The liquidity risk of derivative financial liabilities of the Group is insignificant and not disclosed below.

As at 31 December 2024

	On Demand RMB'000	Within 3 months (Inclusive) RMB'000	3 months to 1 year (inclusive) RMB'000	1 year to 5 years (inclusive) RMB'000	Over 5 years RMB'000	Total RMB'000	Carrying amount RMB'000
Placements from banks and financial institutions	-	27,388,534	11,993,579	-	-	39,382,113	39,194,625
Short-term debt instruments	-	1,389,711	4,388,132	-	-	5,777,843	5,678,905
Account payables to brokerage clients	113,637,365	-	-	-	-	113,637,365	113,637,365
Repurchase agreements	3,061,400	81,190,886	1,693,384	-	-	85,945,670	85,916,300
Financial liabilities at fair value through profit or loss	9,842,971	2,851,563	1,666,146	388,855	-	14,749,535	14,708,501
Borrowings	930,950	30,526	152,438	491,251	-	1,605,165	1,549,417
Lease liabilities	16,557	80,152	243,979	809,576	14,523	1,164,787	1,058,950
Debt securities issued	-	4,317,926	12,147,463	46,238,090	2,230,000	64,933,479	60,734,318
Other account payables and other payables	10,026,545	-	-	-	-	10,026,545	10,026,545
Total	137,515,788	117,249,298	32,285,121	47,927,772	2,244,523	337,222,502	332,504,926

Annual Report 2024 DFZQ

F-240 -

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

63. FINANCIAL RISK MANAGEMENT (Continued)

63.4 Liquidity risk (Continued)

Undiscounted cash flows by contractual maturities of non-derivative financial liabilities (Continued) As at 31 December 2023

	On Demand RMB'000	Within 3 months (Inclusive) RMB'000	3 months to 1 year (Inclusive) RMB'000	1 year to 5 years (Inclusive) RMB'000	Over 5 years RMB'000	Total RMB'000	Carrying amount RMB'000
Placements from banks and financial institutions	-	18,498,270	7,300,593	-	-	25,798,863	25,670,059
Short-term debt instruments	-	169,170	2,667,118	-	-	2,836,288	2,797,700
Account payables to brokerage clients	111,570,987	-	-	-	-	111,570,987	111,570,987
Repurchase agreements	-	73,670,346	110,393	-	-	73,780,739	73,716,143
Financial liabilities at fair value through profit or loss	53,483	12,117,496	1,533,778	1,609,376	-	15,314,133	15,301,834
Borrowings	-	1,671,808	35,368	-	-	1,707,176	1,700,024
Lease liabilities	-	120,625	167,581	272,004	12,756	572,966	547,475
Debt securities issued	-	7,042,454	12,125,201	45,028,249	-	64,195,904	60,157,845
Other account payables and other payables	10,295,031	-	-	-	-	10,295,031	10,295,031
Total	121,919,501	113,290,169	23,940,032	46,909,629	12,756	306,072,087	301,757,098

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

64. FAIR VALUE OF FINANCIAL INSTRUMENTS

Level 1: Inputs are quoted prices (unadjusted) in active market for identical assets or liabilities that the entity can access at the measurement date;

Level 2: Inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

Level 3: Inputs are unobservable inputs for the asset or liability.

Fair value of the financial assets and financial liabilities that are not measured on a recurring basis

The fair value of financial assets and financial liabilities not measured at fair value on a recurring basis is estimated by the active market quotation or determined in accordance with discounted cash flow method.

The key parameters used in discounted cash flow method for financial instruments held by the Group that are not measured on a recurring basis include interest rates, foreign exchange rates and counterparty credit spreads.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are not measured on a recurring basis (Continued)

The table below summarises the carrying amounts and expected fair values of those financial assets and liabilities not presented on the Group's consolidated statement of financial position at their fair values.

As at 31 December

	2024		2023
	Carrying amount RMB'000	Fair value RMB'000	Carrying amount RMB'000	Fair value RMB'000
Financial asset
Debt instruments measured at amortised cost	1,586,905	1,610,773	1,586,591	1,609,708
Financial liability
Debt securities issued
- Corporate bonds	34,812,335	35,716,429	30,063,388	30,510,604
- Subordinated bonds	20,279,393	20,676,902	24,906,609	24,971,136
- Offshore bonds	5,102,574	5,060,420	5,057,958	4,978,820
- Income certificates	540,016	539,762	129,890	129,963
Total	60,734,318	61,993,513	60,157,845	60,590,523

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are not measured on a recurring basis (Continued)

As at 31 December 2024

As at 31 December 2023

| | Level 1
RMB'000 | Level 2
RMB'000 | Level 3
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| Financial asset | | | | |
| Debt instruments measured at amortised cost | 284,033 | 1,325,675 | – | 1,609,708 |
| Financial liability | | | | |
| Debt securities issued | 55,481,740 | 5,108,783 | – | 60,590,523 |

The fair values of the financial assets and financial liabilities included in the level 2 categories above have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant input being the discount rate that reflects the credit risk of respective group entities or counterparties.

Except for the above, the directors of the Company consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the Group's statements of financial position approximate their fair values.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

As at 31 December 2024

| | Level 1
RMB'000 | Level 2
RMB'000 | Level 3
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| Financial assets: | | | | |
| Debt instruments at FVOCI | | | | |
| – Debt securities | 52,622,444 | 57,839,597 | 57,870 | 110,519,911 |
| Equity instruments at FVOCI | | | | |
| – Equity securities | 10,652,043 | 22,313 | 173,627 | 10,847,983 |
| – Perpetual instruments | 1,247,059 | 6,422,059 | – | 7,669,118 |
| – Other | 1,113,270 | 4,229 | – | 1,117,499 |
| Financial assets at FVTPL | | | | |
| – Debt securities | 11,035,507 | 27,951,601 | 3,374 | 38,990,482 |
| – Equity securities | 3,360,035 | 125,471 | 3,657,050 | 7,142,556 |
| – Associates | – | – | 1,310,792 | 1,310,792 |
| – Funds | 5,395,513 | 16,885,370 | – | 22,280,883 |
| – Other investments | 2,007,416 | 16,593,229 | 1,863,973 | 20,464,618 |
| Derivative financial assets | – | 933,807 | 1,031,324 | 1,965,131 |
| Total | 87,433,287 | 126,777,676 | 8,098,010 | 222,308,973 |
| Financial liabilities: | | | | |
| Financial liabilities at FVTPL | 73,422 | 7,443,633 | 7,191,446 | 14,708,501 |
| Derivative financial liabilities | – | 650,095 | 442,487 | 1,092,582 |
| Total | 73,422 | 8,093,728 | 7,633,933 | 15,801,083 |

Annual Report 2024 DFZQ

– F-246 –

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

As at 31 December 2023

| | Level 1
RMB'000 | Level 2
RMB'000 | Level 3
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| Financial assets: | | | | |
| Debt instruments at FVOCI | | | | |
| – Debt securities | 49,568,073 | 41,245,640 | – | 90,813,713 |
| Equity instruments at FVOCI | | | | |
| – Equity securities | 4,327,729 | 5,814 | 188,359 | 4,521,902 |
| – Perpetual instruments | 130,890 | 1,645,386 | – | 1,776,276 |
| Financial assets at FVTPL | | | | |
| – Debt securities | 9,703,923 | 34,464,634 | 91,492 | 44,260,049 |
| – Equity securities | 2,731,902 | 15,592 | 4,169,369 | 6,916,863 |
| – Associates | – | – | 1,800,815 | 1,800,815 |
| – Funds | 3,126,650 | 12,811,951 | – | 15,938,601 |
| – Other investments | 4,922,070 | 21,269,432 | 1,961,814 | 28,153,316 |
| Derivative financial assets | – | 754,158 | 1,123,492 | 1,877,650 |
| Total | 74,511,237 | 112,212,607 | 9,335,341 | 196,059,185 |
| Financial liabilities: | | | | |
| Financial liabilities at FVTPL | 2,413,390 | 5,430,470 | 7,457,974 | 15,301,834 |
| Derivative financial liabilities | 300 | 570,277 | 303,625 | 874,202 |
| Total | 2,413,690 | 6,000,747 | 7,761,599 | 16,176,036 |

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

The following table presents the valuation techniques and inputs used for the major financial instruments in Level 3.

Financial instruments	As at 31 December 2024 RMB'000	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable input(s) to fair value
Equity securities/ Associates	5,014,477 (asset)	Calculated based on pricing/yield such as price-to-earnings (P/E), price-to-book value (P/B) and price-to-sales (P/S) ratio of comparable companies with an adjustment of discount for lack of marketability.	P/E multiples
P/B multiples
P/S multiples
Discount for lack of marketability	The higher the multiples, the higher the fair value.
The higher the discount, the lower the fair value.
Equity securities	81,641 (asset)	The fair value is determined with reference to the quoted market prices with an adjustment of discount for lack of marketability. This discount is determined by option pricing model. The key input is historical volatility of the share prices of the securities.	Discount for lack of marketability	The higher the discount, the lower the fair value.
Equity securities/ Associates	72,943 (asset)	Recent transaction price with an adjustment of discount for the marketability.	Discount for lack of marketability	The higher the discount, the lower the fair value.
Debt securities	57,870 (asset)	Future cash flows are discounted by the risk adjusted discount rate of the bonds.	Discount rate	The higher the discount rate, the lower the fair value.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

Financial instruments	As at 31 December 2024 RMB'000	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable input(s) to fair value
Derivative financial instruments	1,031,324 (asset) 442,487 (liability)	The option pricing model is used which applies the option exercise price, the price and volatility of the underlying asset, the option exercise time, and the risk-free interest rate.	The volatility of the underlying asset for option	The higher the volatility, the greater the impact on the fair value.
Income certificates designated at FVTPL	6,978,165 (liability)	The option pricing model is used which applies the option exercise price, the price and volatility of the underlying asset, the option exercise time, and the risk-free interest rate.	The volatility of the underlying asset for option	The higher the volatility, the greater the impact on the fair value.
Other investments	1,839,756 (asset) 51,215 (liability)	The fair value is determined with reference to the net asset value of the underlying investments with an adjustment of discount for the credit risk of various counterparties.	Discount rate	The higher the discount rate, the lower the fair value.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

Financial instruments	As at 31 December 2024 RMB'000	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable input(s) to fair value
Interests attributable to other holders of consolidated structured entities	162,065 (liability)	Shares of the net value of the structured entities, determined with reference to the net asset value of the structured entities, calculated based on pricing/ yield of comparable companies with an adjustment of discount for lack of marketability of underlying investment portfolio and adjustments of related expenses.	P/E multiples Discount for lack of marketability	The higher the multiples, the higher the fair value.
The higher the discount, the lower the fair value.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

There were no significant transfers between instruments in Level 1 and Level 2 during the relevant year.

The following tables represent the changes in Level 3 financial instruments for the relevant years.

Year ended 31 December 2024

	Equity Instruments at FVOCI RMB'000	Financial assets at FVTPL RMB'000	Financial liabilities at FVTPL RMB'000	Derivative financial instruments RMB'000
At beginning of the year	188,359	8,023,490	(7,457,974)	819,867
Changes in fair value recognised in other comprehensive income	(102,973)	–	–	–
Changes in fair value recognised in profit or loss	–	(1,155,465)	26,995	(449,579)
Additions (Note a)	59,071	1,216,975	(6,685,343)	399,679
Transfer into Level 3	29,170	624,307	–	(104,486)
Transfer out of Level 3 (Note b)	–	(217,354)	–	–
Disposals and settlements	–	(1,656,764)	6,924,876	(76,644)
At end of the year	173,627	6,835,189	(7,191,446)	588,837
Total (losses)/gains for assets/liabilities held at end of the year
– unrealised losses recognised in other comprehensive income	(61,877)	–	–	–
– unrealised losses/(gains) recognised in profit or loss	–	(746,560)	(38,565)	644,138

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

Year ended 31 December 2023

	Equity Instruments at FVOCI RMB'000	Financial assets at FVTPL RMB'000	Financial liabilities at FVTPL RMB'000	Derivative financial instruments RMB'000
At beginning of the year	217,708	8,129,745	(5,360,267)	426,505
Changes in fair value recognised in other comprehensive income	(16,216)	–	–	–
Changes in fair value recognised in profit or loss	–	(430,258)	(169,278)	657,531
Additions (Note a)	–	2,748,657	(8,693,287)	(153,036)
Transfer out of Level 3 (Note b)	–	(1,024,948)	–	–
Disposals and settlements	(13,133)	(1,399,706)	6,764,858	(111,133)
At end of the year	188,359	8,023,490	(7,457,974)	819,867
Total (losses)/gains for assets/liabilities held at end of the year
– unrealised losses recognised in other comprehensive income	(17,495)	–	–	–
– unrealised losses/(gains) recognised in profit or loss	–	(1,148,345)	174,958	71,992

Note a: These mainly included unlisted equity investments, restricted stocks and other investments with significant unobservable inputs applied in valuing these investments.
Note b: These mainly included equity securities traded on stock exchanges with lock-up periods. They were transferred from Level 3 to Level 1 when the lock-up period lapsed and became unrestricted.

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024

65. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group's consolidated statement of cash flows as cash flows from financing activities.

Items	1 January 2024	Increase for the year		Decrease for the year		31 December 2024
		Cash	Non-cash	Cash	Non-cash
Borrowings	1,700,024	3,176,103	111,994	3,438,704	-	1,549,417
Short-term debt instruments	2,797,700	7,274,761	73,961	4,467,517	-	5,678,905
Debt securities issued	60,157,845	17,994,611	1,848,943	19,267,081	-	60,734,318
Lease liabilities	547,475	-	907,799	396,324	-	1,058,950
Financial liabilities at fair value through profit or loss	7,144,110	14,475,862	359,047	15,000,854	-	6,978,165
Total	72,347,154	42,921,337	3,301,744	42,570,480	-	75,999,755

Annual Report 2024 DFZQ

Notes to the Consolidated Financial Statements for the year ended 31 December 2024

65. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

(Continued)

Items	1 January 2023	Increase for the year		Decrease for the year		31 December 2023
		Cash	Non-cash	Cash	Non-cash
Borrowings	2,008,823	2,795,179	62,754	3,166,732	-	1,700,024
Short-term debt instruments	8,300,603	3,031,531	110,438	8,644,872	-	2,797,700
Debt securities issued	55,802,403	20,228,186	2,276,396	18,149,140	-	60,157,845
Lease liabilities	645,777	-	303,167	401,469	-	547,475
Financial liabilities at fair value through profit or loss	4,749,492	18,573,210	393,199	16,571,791	-	7,144,110
Total	71,507,098	44,628,106	3,145,954	46,934,004	-	72,347,154

66. SUBSEQUENT EVENTS

Issuance of corporate bonds

On 13 January 2025, the Company issued a corporate bond with par value of RMB2.0 billion, which bears interest rate at 1.64% with a term of 1 year; on 17 March 2025, the Company issued a subordinated bond with par value of RMB2.2 billion, which bears interest rate at 2.45% with a term of 5 years.

Proposed profit distribution

Pursuant to the Board resolution passed on 28 March 2025, it is proposed that cash dividends of RMB1.00 (tax inclusive) be distributed for every 10 shares based on the Company's existing share capital of 8,496,645 thousand shares deducting 34,843 thousand shares deposited in the Company's special securities account for repurchase as of 31 December 2024. This proposed distribution of cash dividends is subject to the approval of the Shareholders' general meetings.

Annual Report 2024 DFZQ

Independent Auditor's Report

Deloitte.
德勤

TO THE SHAREHOLDERS OF 東方證券股份有限公司
(Incorporated in the People's Republic of China with limited liability)

OPINION

We have audited the consolidated financial statements of 東方證券股份有限公司 (the "Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 338 to 524, which comprise the consolidated statement of financial position as at 31 December 2023, and the consolidated statement of profit or loss, consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information and other explanatory information.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2023, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards ("IFRSs") issued by the International Accounting Standards Board and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing ("ISAs") issued by the International Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) ("the Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

332 DFZQ Annual Report 2023

Independent Auditor's Report

KEY AUDIT MATTERS

Key audit matter	How our audit addressed the key audit matter
Measurement of expected credit loss(“ECL”) of stock-pledged reverse repurchase agreements
We identified the measurement of ECL for the Group’s stock-pledged reverse repurchase agreements as a key audit matter due to the significance of these assets to the Group’s consolidated financial statements and the significant management judgement and estimation required in the measurement.

As disclosed in Note 4 to the consolidated financial statements, significant management judgement and estimation required in the measurement of ECL includes assessing whether the credit risk of an asset has significantly increased and whether an asset is credit impaired, using appropriate models and assumptions, determining the key inputs including probability of default (“PD”), loss given default (“LGD”) and forward-looking information.

As at 31 December 2023, the Group held stock-pledged reverse repurchase agreements of RMB6,470 million, less impairment allowance of RMB4,889 million as disclosed in Note 25 to the consolidated financial statements. | Our procedures in relation to management’s measurement of ECL for stock-pledged reverse repurchase agreements included:

• Testing and evaluating key controls of the management over the measurement of ECL;

• Evaluating the appropriateness of the ECL model, and the critical assumptions and parameters used in the model;

• Evaluating the determination of the criteria for significant increase in credit risk and credit impairment of financial assets by management and, on a sample basis, testing its application;

• For credit impaired assets, on a sample basis, assessing the impairment allowances made by management based on the expected future cash flow with reference to financial information of borrowers and guarantors, and the latest collateral valuations, as appropriate;

• Checking the calculation process of the ECL. |

Annual Report 2023 DFZQ

Independent Auditor's Report

KEY AUDIT MATTERS (Continued)

Key audit matter	How our audit addressed the key audit matter
Determination of consolidation scope of structured entities
We identified the determination of consolidation scope of structured entities as a key audit matter due to significant judgement applied by management in determining whether a structured entity is required to be consolidated by the Group and the significance of these balances to the Group’s consolidated financial statements as a whole.

The Group held interests as investor or acted as investment manager in various structured entities including collective asset management schemes, funds and limited partnerships. As disclosed in Note 4 to the consolidated financial statements, to determine whether a structured entity should be consolidated, the management applied significant judgement in determining whether the Group has power over the structured entities, and assess whether the combination of investments it held together with its remuneration and credit enhancement creates exposure to variability of returns from the activities of the collective asset management schemes, funds and limited partnerships that is of such significance that it indicates the Group controlled the structured entities.

As disclosed in Notes 36 and 31 to the consolidated financial statements, as at 31 December 2023, the total net assets of the consolidated structured entities amounted to RMB3,891 million and the total net assets of the unconsolidated structured entities set up and managed by the Group amounted to RMB257,708 million, respectively. | Our procedures in relation to management’s determination of consolidation scope of structured entities included:

• Testing and evaluating key controls of the management in determining the consolidation scope of structured entities;

• Examining, on a sample basis, the documents and information used by the management in assessing the consolidation criteria of structured entities against the related agreements and other related service agreements of structured entities newly established, invested or with changes in proportion of ownership interests or contractual terms during the year;

• Checking and evaluating, on a sample basis, management’s quantitative analysis on the Group’s exposure or right to variable returns with its economic interests in the structured entity and examining the data used in these calculations by reference to the related contracts;

• Assessing management judgement in determining the scope for consolidation and, on a sample basis, assessing the conclusion about whether a structured entity should be consolidated or not. |

DFZQ Annual Report 2023

Independent Auditor's Report

OTHER INFORMATION

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRSs and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors of the Company determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

F-258 -

Independent Auditor's Report

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors of the Company.
Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

336 DFZQ Annual Report 2023

Independent Auditor's Report

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in the independent auditor's report is Shi Chung Fai.

Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
27 March 2024

Annual Report 2023 DFZQ

Consolidated Statement of Profit or Loss

For the year ended 31 December 2023

	NOTES	Year ended 31 December
		2023 RMB'000	2022 RMB'000
Revenue
Commission and fee income	6	10,298,336	8,878,552
Interest income	7	6,064,164	5,685,794
		16,362,500	14,564,346
Net investment gains	8	2,387,769	1,900,081
Other income, gains and losses, net	9	5,527,120	6,642,936
Total revenue, other income and net gains and losses		24,277,389	23,107,363
Depreciation and amortisation	10	(809,398)	(778,054)
Staff costs	11	(4,564,804)	(4,638,113)
Commission and fee expenses	12	(3,363,740)	(844,499)
Interest expenses	13	(4,299,827)	(4,045,617)
Other operating expenses	14	(7,652,584)	(9,037,388)
Impairment losses under expected credit loss model, net of reversal	15	(1,030,199)	(832,930)
Other impairment losses		(221,947)	(218,726)
Total expenses		(21,942,499)	(20,395,327)
Share of results of associates		584,250	665,984
Profit before income tax		2,919,140	3,378,020
Income tax expense	16	(162,536)	(367,688)
Profit for the year		2,756,604	3,010,332
Attributable to:
Equity holders of the Company		2,753,755	3,010,558
Non-controlling interests		2,849	(226)
		2,756,604	3,010,332
Earnings per share attributable to the shareholders of the Company
(Expressed in RMB Yuan per share)
- Basic	17	0.30	0.35

The accompanying notes form part of these consolidated financial statements.

338 DFZQ Annual Report 2023

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the year ended 31 December 2023

	NOTES	Year ended 31 December
		2023 RMB'000	2022 RMB'000
Profit for the year		2,756,604	3,010,332
Other comprehensive (expense)/income, net of income tax:
Items that will not be reclassified to profit or loss:
Fair value (losses)/gains on investments in equity instruments at fair value through other comprehensive (expense)/income	53(4)	(19,640)	904,567
Hedging instruments for fair value hedges		(12,810)	-
Income tax relating to items that will not be reclassified to profit or loss	53(4)	8,113	(226,142)
Subtotal		(24,337)	678,425
Items that may be reclassified subsequently to profit or loss:
Fair value gains/(losses) on debt instruments measured at fair value through other comprehensive income	53(4)	622,822	(1,213,166)
Impairment loss for debt instruments at fair value through other comprehensive (expense)/income	53(4)	(79,371)	20,138
Income tax impact relating to items that may be reclassified subsequently to profit or loss	53(4)	(119,749)	298,701
Share of other comprehensive income of associates, net of related income tax	53(4)	4,518	16,958
Exchange differences arising on translation		14,818	129,685
Other		(1,620)	-
Subtotal		441,418	(747,684)
Other comprehensive income/(expense) for the year, net of income tax		417,081	(69,259)
Total comprehensive income for the year		3,173,685	2,941,073
Attributable to:
Equity holders of the Company		3,170,836	2,941,299
Non-controlling interests		2,849	(226)
		3,173,685	2,941,073

The accompanying notes form part of these consolidated financial statements.

Annual Report 2023 DFZQ

Consolidated Statement of Financial Position

As at 31 December 2023

As at 31 December

	NOTES	2023 RMB'000	2022 RMB'000
Cash and bank balances	18	104,093,142	121,862,060
Clearing settlement funds	20	35,314,411	29,106,272
Deposits with exchanges and financial institutions	21	3,241,547	4,343,234
Derivative financial assets	22	1,877,650	1,017,334
Advances to customers	23	21,071,801	19,498,899
Account receivables	24	670,759	908,399
Reverse repurchase agreements	25	5,437,734	8,610,881
Financial assets at fair value through profit or loss	26	97,069,644	83,763,730
Debt instruments at fair value through other comprehensive income	27	90,813,713	76,862,096
Equity instruments at fair value through other comprehensive income	28	6,298,178	3,721,658
Debt instruments measured at amortised cost	29	1,586,591	3,164,972
Investments in associates	30	6,253,974	6,241,920
Right-of-use assets	32	557,334	639,915
Investment properties	33	165,413	265,583
Property and equipment	34	2,739,369	2,130,467
Other intangible assets	35	286,724	246,043
Goodwill	37	32,135	32,135
Deferred tax assets	38	2,079,575	1,908,541
Other assets	39	4,100,768	3,742,820
Total assets		383,690,462	368,066,959

The accompanying notes form part of these consolidated financial statements.

340 DFZQ Annual Report 2023

F-263 -

Consolidated Statement of Financial Position

As at 31 December 2023

As at 31 December

| | NOTES | 2023
RMB'000 | 2022
RMB'000 |
| --- | --- | --- | --- |
| Placements from banks and financial institutions | 40 | 25,670,059 | 8,352,456 |
| Short-term financing bill payables | 41 | 2,797,700 | 8,300,603 |
| Account payables to brokerage clients | 42 | 111,570,987 | 123,041,420 |
| Repurchase agreements | 43 | 73,716,143 | 62,299,523 |
| Financial liabilities at fair value through profit or loss | 44 | 15,301,834 | 18,539,311 |
| Derivative financial liabilities | 22 | 874,202 | 308,446 |
| Contract liabilities | 45 | 147,405 | 64,505 |
| Current tax liabilities | | 102,664 | 233,603 |
| Accrued staff costs | 46 | 1,704,042 | 2,129,721 |
| Borrowings | 47 | 1,700,024 | 2,008,823 |
| Lease liabilities | 48 | 547,475 | 645,777 |
| Debt securities issued | 49 | 60,157,845 | 55,802,403 |
| Deferred tax liabilities | 38 | 35,936 | 77,936 |
| Other liabilities | 50 | 10,603,949 | 8,864,143 |
| Total liabilities | | 304,930,265 | 290,668,670 |
| Share capital | 51 | 8,496,645 | 8,496,645 |
| Treasury stock | 51 | (299,780) | - |
| Other equity instrument | 52 | 5,000,000 | 5,000,000 |
| Reserves | 53 | 56,791,270 | 55,051,415 |
| Retained earnings | 54 | 8,757,396 | 8,838,412 |
| Equity attributable to equity holders of the Company | | 78,745,531 | 77,386,472 |
| Non-controlling interests | | 14,666 | 11,817 |
| Total equity | | 78,760,197 | 77,398,289 |
| Total equity and liabilities | | 383,690,462 | 368,066,959 |

The consolidated financial statements on pages 338 to 524 were approved and authorised for issue by the Board of Directors on 27 March 2024 and signed on its behalf by:

Jin Wenzhong
Chairman of the Board

Lu Weiming
Executive Director

The accompanying notes form part of these consolidated financial statements.

Annual Report 2023
DFZQ

Consolidated Statement of Changes in Equity

For the year ended 31 December 2023

NOTES	Equity attributable to equity holders of the Company												Non-controlling interestsRMB 500
	Share capitalRMB 500(Note 31)	Treasury stockRMB 500(Note 32)	Other equity instrumentRMB 500(Note 33)	Reserves						Retained earningsRMB 500(Note 34)	SubtotalRMB 500
				Capital reserveRMB 500(Note 33)	Surplus reserveRMB 500(Note 33)	General reserveRMB 500(Note 33)	Investment revaluation reserveRMB 500(Note 33)	Translation reserveRMB 500(Note 33)	Hedge reserveRMB 500(Note 33)
As at 1 January 2023	8,496,645	-	5,000,000	39,534,520	4,293,542	11,135,082	100,699	(12,628)	-	8,838,412	77,386,472	11,817	77,398,289
Profit for the year	-	-	-	-	-	-	-	-	-	2,753,755	2,753,755	2,849	2,756,604
Other comprehensive income/(expense) for the year	-	-	-	-	-	-	411,871	14,818	(9,608)	-	417,081	-	417,081
Total comprehensive income/(expense) for the year	-	-	-	-	-	-	411,871	14,818	(9,608)	2,753,755	3,170,836	2,849	3,173,685
Repurchase of A shares	51	-	(299,780)	-	-	-	-	-	-	-	(299,780)	-	(299,780)
Appropriation to surplus reserve	-	-	-	-	324,464	-	-	-	-	(324,464)	-	-	-
Appropriation to general reserve	-	-	-	-	-	999,460	-	-	-	(999,460)	-	-	-
Distribution to holders of other equity instrument	55	-	-	-	-	-	-	-	-	(237,500)	(237,500)	-	(237,500)
Dividends recognised as distribution	55	-	-	-	-	-	-	-	-	(1,274,497)	(1,274,497)	-	(1,274,497)
Transfer to retained earnings for cumulative fair value change of equity instruments at fair value through other comprehensive (expense)/income upon disposal	28	-	-	-	-	-	(23,083)	-	-	23,083	-	-	-
Other	-	-	-	-	-	-	-	-	21,933	(21,933)	-	-	-
At 31 December 2023	8,496,645	(299,780)	5,000,000	39,534,520	4,618,006	12,134,542	489,687	2,190	12,325	8,757,396	78,745,531	14,666	78,760,197

The accompanying notes form part of these consolidated financial statements.

DFZQ Annual Report 2023

Consolidated Statement of Changes in Equity

For the year ended 31 December 2023

	Equity attributable to equity holders of the Company
	Share capitalRMB'000(Note 51)	Other equity instrumentRMB'000(Note 52)	Reserves					Retained earningsRMB'000(Note 53)	SubtotalRMB'000	Non-controlling interestsRMB'000	Total equityRMB'000
			Capital reserveRMB'000(Note 53)	Surplus reserveRMB'000(Note 53)	General reserveRMB'000(Note 53)	Investment revaluation reserveRMB'000(Note 53)	Translation reserveRMB'000(Note 53)
As at 1 January 2022	6,993,656	5,000,000	28,353,325	3,999,317	10,028,633	764,321	(142,313)	9,130,172	64,127,111	15,995	64,143,106
Profit/(loss) for the year	-	-	-	-	-	-	-	3,010,558	3,010,558	(226)	3,010,332
Other comprehensive (expense)/income for the year	-	-	-	-	-	(198,944)	129,685	-	(69,259)	-	(69,259)
Total comprehensive (expense)/income for the year	-	-	-	-	-	(198,944)	129,685	3,010,558	2,941,299	(226)	2,941,073
Issuance of shares	51	1,502,989	-	11,122,255	(4,462)	-	-	-	12,620,782	-	12,620,782
Capital returned to non-controlling shareholders upon liquidation of a subsidiary	-	-	-	-	-	-	-	-	-	(3,370)	(3,370)
Appropriation to surplus reserve	-	-	-	298,687	-	-	-	(298,687)	-	-	-
Appropriation to general reserve	-	-	-	-	1,106,449	-	-	(1,106,449)	-	-	-
Distribution to holders of other equity instrument	55	-	-	-	-	-	-	(237,500)	(237,500)	-	(237,500)
Dividends recognised as distribution	55	-	-	-	-	-	-	(2,124,160)	(2,124,160)	(582)	(2,124,742)
Transfer to retained earnings for cumulative fair value change of equity instruments at fair value through other comprehensive income upon disposal	28	-	-	-	-	(464,478)	-	464,478	-	-	-
Other	-	-	58,940	-	-	-	-	-	58,940	-	58,940
At 31 December 2022	8,496,645	5,000,000	39,534,520	4,293,542	11,135,082	100,899	(12,628)	8,838,412	77,386,472	11,817	77,398,289

The accompanying notes form part of these consolidated financial statements.

Annual Report 2023 DFZQ 343

Consolidated Statement of Cash Flows

For the year ended 31 December 2023

	Year ended 31 December
	2023
RMB'000	2022
RMB'000
OPERATING ACTIVITIES
Profit before income tax	2,919,140	3,378,020
Adjustments for:
Interest expenses	4,299,827	4,045,617
Share of results of associates	(584,250)	(665,984)
Depreciation and amortisation	809,398	778,054
Impairment losses under expected credit loss model, net of reversal	1,030,199	832,930
Other impairment losses	221,947	218,726
Gains on disposal of property and equipment, right-of-use assets and investment properties	(138,244)	(108,236)
Foreign exchange losses, net	57,866	178,363
Net realised losses/(gains) arising from disposal of associates	1,891	(2,807)
Net realised gains and income arising from financial assets at fair value through profit or loss	(919,438)	(372,319)
Interest income and net realised gains and income arising from debt instruments at fair value through other comprehensive income	(3,582,136)	(3,842,779)
Dividend income arising from equity instruments at fair value through other comprehensive income	(401,020)	(335,222)
Net realised losses arising from financial liabilities at fair value through profit or loss	110,502	33,919
Net realised losses/(gains) arising from derivative financial instruments	47,445	(38)
Interest income and net realised gains and income from debt instruments measured at amortised cost	(92,480)	(114,447)
Unrealised fair value change of financial assets at fair value through profit or loss	(77,782)	1,117,664
Unrealised fair value change of financial liabilities at fair value through profit or loss	54,236	365,696
Unrealised fair value change of derivative financial instruments	(404,764)	(911,214)

(continued)

The accompanying notes form part of these consolidated financial statements.

344 DFZQ Annual Report 2023

F-267 -

Consolidated Statement of Cash Flows

For the year ended 31 December 2023

	Year ended 31 December
	2023 RMB'000	2022 RMB'000
Operating cash flows before movements in working capital	3,352,337	4,595,943
(Increase)/decrease in advances to customers	(1,576,044)	4,841,427
Decrease in reverse repurchase agreements	1,770,995	1,570,606
Decrease in placements to banks and other financial institutions	-	382,833
(Increase)/decrease in financial assets at fair value through profit or loss and derivative financial assets	(10,534,467)	10,061,536
(Increase)/decrease in restricted deposits and deposits with exchanges and financial institutions	(1,690,742)	568,409
Decrease/(increase) in bank balances and clearing settlement funds restricted or held on behalf of customers	11,288,909	(32,979,096)
Decrease/(increase) in account receivables and other assets	199,737	(1,802,669)
Increase in other liabilities and contract liabilities	1,397,027	3,768,085
(Decrease)/increase in account payables to brokerage clients	(11,470,433)	33,029,295
Decrease in financial liabilities at fair value through profit or loss and derivative financial liabilities	(4,798,403)	(1,068,734)
Increase/(decrease) in repurchase agreements	11,530,691	(578,250)
Increase/(decrease) in placements from banks and other financial institutions	17,170,018	(139,000)
Cash generated from operations	16,639,625	22,250,385
Income taxes paid	(618,145)	(1,111,038)
Interest paid	(1,976,642)	(1,377,258)
NET CASH GENERATED FROM OPERATING ACTIVITIES	14,044,838	19,762,089

(continued)

The accompanying notes form part of these consolidated financial statements.

Consolidated Statement of Cash Flows

For the year ended 31 December 2023

	Year ended 31 December
	2023
RMB'000	2022
RMB'000
INVESTING ACTIVITIES
Dividends and interest received from investments	3,506,584	3,644,316
Proceeds on disposal of property and equipment and investment properties	236,059	184,218
Proceeds on disposal or redemption of:
financial assets at fair value through profit or loss	28,765,147	12,959,741
equity instruments at fair value through other comprehensive income	1,636,208	1,414,050
debt instruments at fair value through other comprehensive income	166,920,386	78,546,874
debt instrument measured at amortised cost	1,525,937	403,283
Capital injection in associates	(52,000)	-
Purchases of:
financial assets at fair value through profit or loss	(31,030,086)	(16,300,757)
equity instruments at fair value through other comprehensive income	(4,245,179)	(92,988)
debt instruments at fair value through other comprehensive income	(179,469,022)	(96,693,709)
Purchases of property and equipment and other intangible assets	(1,093,554)	(306,670)
Payments for right-of-use assets	(2,756)	(3,577)
Proceeds from disposal of or capital reduction in associates	260,633	224,249
Gross cash outflow from foreign currency forward contracts	(29,244)	-
NET CASH USED IN INVESTING ACTIVITIES	(13,070,887)	(16,020,970)

(continued)

The accompanying notes form part of these consolidated financial statements.

346 DFZQ Annual Report 2023

F-269 -

Consolidated Statement of Cash Flows

For the year ended 31 December 2023

	NOTES	Year ended 31 December
		2023 RMB'000	2022 RMB'000
FINANCING ACTIVITIES
Proceeds from H and A shares issued		-	12,715,329
Proceeds from issuance of debt securities, short-term financing bill payables and income certificates designated at fair value through profit and loss	65	41,832,927	38,347,584
Repayments on debt securities issued, short-term financing bill payables and income certificates designated at fair value through profit and loss	65	(41,031,324)	(46,608,566)
Proceeds from borrowings	65	2,795,179	3,177,276
Repayments of borrowings	65	(3,111,317)	(1,747,283)
Repayments of lease liabilities	65	(381,744)	(348,386)
Dividends paid to ordinary shareholders	65	(1,274,496)	(2,124,742)
Dividends paid to holders of other equity instrument	65	(237,500)	(237,500)
Transaction costs paid on issue of H and A shares		-	(94,547)
Interest paid on debt securities issued, short-term financing bill payables and income certificates designated at fair value through profit and loss	65	(2,352,681)	(2,858,156)
Interest paid on borrowings	65	(55,415)	(31,778)
Interest paid on lease liabilities	65	(19,725)	(25,179)
Payment for repurchase of A-shares		(299,780)	-
Payments on capital returned to non-controlling shareholders		-	(3,370)
NET CASH (USED IN)/GENERATED FROM FINANCING ACTIVITIES		(4,135,876)	160,682
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS		(3,161,925)	3,901,801
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR		26,154,534	21,937,713
Effect of foreign exchange rate changes		97,627	315,020
TOTAL CASH AND CASH EQUIVALENTS AT END OF THE YEAR	19	23,090,236	26,154,534
Net cash generated from operating activities including:
Interest received		3,310,650	3,135,392
Interest paid		(1,976,642)	(1,377,258)

The accompanying notes form part of these consolidated financial statements.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements
For the year ended 31 December 2023

1. GENERAL INFORMATION

東方證券股份有限公司, formerly known as Orient Securities Limited Liability Company (東方證券有限責任公司), was a limited liability company established on 10 December 1997. On 8 October 2003, upon approval from the China Securities Regulatory Commission ("CSRC") and the Shanghai Municipal Government, Orient Securities Limited Liability Company was converted into a joint stock limited liability company, and was renamed as 東方證券股份有限公司 (the "Company"). On 23 March 2015, the Company became listed on the Shanghai Stock Exchange with the stock code of 600958. On 8 July 2016, the Company became listed on The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") with the stock code of 03958.

The registered office of the Company is located at Orient Securities Building, No. 119, South Zhongshan Road, Shanghai, the People's Republic of China ("PRC").

The Company and its subsidiaries (the "Group") are principally engaged in securities and futures brokerage, margin financing and securities lending, securities investment advisory, securities proprietary trading, asset management, agency sale of financial products, security underwriting and sponsorship, and other business activities approved by the CSRC.

The consolidated financial statements are presented in Renminbi ("RMB"), which is also the functional currency of the Company.

2. APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRSs")

New and amendments to IFRSs that are mandatorily effective for the current year

In the current year, the Group has applied the following new and amendments to IFRSs issued by the International Accounting Standards Board ("IASB") for the first time, which are mandatorily effective for the Group's annual period beginning on 1 January 2023 for the preparation of the consolidated financial statements:

IFRS 17 (including the June 2020 and December 2021 Amendments to IFRS 17)	Insurance Contracts
Amendments to IAS 8	Definition of Accounting Estimates
Amendments to IAS 12	Deferred Tax related to Assets and Liabilities arising from a Single Transaction
Amendments to IAS 12	International Tax Reform-Pillar Two model Rules
Amendments to IAS 1 and IFRS Practice Statement 2	Disclosure of Accounting Policies

The application of the new and amendments to IFRSs in the current year has had no material impact on the Group's financial positions and performance for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

34B DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

2. APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRSs") (Continued)

Amendments to IFRSs in issue but not yet effective

The Group has not early applied the following amendments to IFRSs that have been issued but are not yet effective:

Amendments to IFRS 10 and IAS 28
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture¹

Amendments to IFRS16
Lease Liability in a Sale and Leaseback²

Amendments to IAS 1
Classification of Liabilities as Current or Non-current²

Amendments to IAS 1
Non-current Liabilities with Covenants²

Amendments to IAS 7 and IFRS 7
Supplier Finance Arrangements²

Amendments to IAS 21
Lack of Exchangeability³

Effective for annual periods beginning on or after a date to be determined.
Effective for annual periods beginning on or after 1 January 2024.
Effective for annual periods beginning on or after 1 January 2025.

The directors of the Company anticipate that the application of all of the above amendments to IFRSs will have no material impact on the consolidated financial statements in the foreseeable future.

Annual Report 2023 DFZQ 349

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION

Basis of preparation of consolidated financial statements

The consolidated financial statements have been prepared in accordance with IFRSs issued by the IASB. For the purpose of preparation of the consolidated financial statements, information is considered material if such information is reasonably expected to influence decisions made by primary users. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”) and by the Hong Kong Companies Ordinance.

The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values, as explained in the accounting policies set out below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purpose in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing transactions that are accounted for in accordance with IFRS 16 Leases (“IFRS 16”), and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 Inventories or value in use in IAS 36 Impairment of Assets (“IAS 36”).

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.

350 DFZQ Annual Report 2023

– F-273 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company:

has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

When the Group has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Group considers all relevant facts and circumstances in assessing whether or not the Group's voting rights in an investee are sufficient to give it power, including:

the size of the Group's holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
potential voting rights held by the Group, other vote holders or other parties;
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the Group has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders' meetings.

When the Group is an investor of a fund in which the Group also acts as a fund manager, the Group will determine whether it is a principal or an agent for the purpose of assessing whether the Group controls the relevant fund.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Basis of consolidation (Continued)

An agent is a party primarily engaged to act on behalf and for the benefit of another party or parties (the principal(s)) and therefore does not control the investee when it exercises its decision-making authority. In determining whether the Group is an agent to the fund, the Group would assess:

the scope of its decision-making authority over the investee;
the rights held by other parties;
the remuneration to which it is entitled in accordance with the remuneration agreements; and
the decision maker’s exposure to variability of returns from other interests that it holds in the investee.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary.

Profit or loss and each item of other comprehensive income are attributed to the shareholders of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the shareholders of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Non-controlling interests in subsidiaries are presented separately from the Group’s equity therein, which represent present ownership interests entitling their holders to a proportionate share of net assets of the relevant subsidiaries upon liquidation.

352 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Basis of consolidation (Continued)

Changes in the Group's interests in existing subsidiaries

Changes in the Group's interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's relevant components of equity and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries, including re-attribution of relevant reserves between the Group and the non-controlling interests according to the Group's and the non-controlling interests' proportionate interests.

Any difference between the amount by which the non-controlling interests are adjusted, and the fair value of the consideration paid or received is recognised directly in equity and attributed to the shareholders of the Company.

When the Group loses control of a subsidiary, the assets and liabilities of that subsidiary and non-controlling interests (if any) are derecognised. A gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the carrying amount of the assets (including goodwill), and liabilities of the subsidiary attributable to the shareholders of the Company. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 Financial Instruments ("IFRS 9") or, when applicable, the cost on initial recognition of an investment in an associate.

Business combinations

A business is an integrated set of activities and assets which includes an input and a substantive process that together significantly contribute to the ability to create outputs. The acquired processes are considered substantive if they are critical to the ability to continue producing outputs, including an organised workforce with the necessary skills, knowledge, or experience to perform the related processes or they significantly contribute to the ability to continue producing outputs and are considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs.

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former shareholders of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Business combinations (Continued)

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net amount of the identifiable assets acquired and the liabilities assumed as at acquisition date. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the relevant subsidiary's net assets in the event of liquidation are initially measured at the non-controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets.

When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control), and the resulting gain or loss, if any, is recognised in profit or loss or other comprehensive income, as appropriate. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income and measured under IFRS 9 would be accounted for on the same basis as would be required if the Group had disposed directly of the previously held equity interest.

Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination, which represent the lowest level at which the goodwill is monitored for internal management purposes and not larger than an operating segment.

354 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Goodwill (Continued)

A cash-generating unit (or group of cash-generating units) to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. For goodwill arising on an acquisition in a reporting period, the cash-generating unit (or group of cash-generating units) to which goodwill has been allocated is tested for impairment before the end of that reporting period. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis based on the carrying amount of each asset in the unit (or group of cash-generating units).

On disposal of the relevant cash-generating unit or any of the cash-generating unit within the group of cash-generating units, the attributable amount of goodwill is included in the determination of the amount of profit or loss on disposal. When the Group disposes of an operation within the cash-generating unit (or a cash-generating unit within a group of cash-generating units), the amount of goodwill disposed of is measured on the basis of the relative values of the operation (or the cash-generating unit) disposed of and the portion of the cash-generating unit (or the group of cash-generating units) retained.

Investments in associates

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control over those policies.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. The financial statements of associates used for equity accounting purposes are prepared using uniform accounting policies as those of the Group for like transactions and events in similar circumstances. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the associate. Changes in net assets of the associate other than profit or loss and other comprehensive income are not accounted for unless such changes resulted in changes in ownership interest held by the Group. When the Group's share of losses of an associate exceeds the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Investments in associates (Continued)

An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.

The Group applies the exemptions under IAS 28 Investments in Associates and Joint Ventures from applying the equity method when the investment in the associate is held by, or is held indirectly through venture capital organisations. The exemption is elected at inception on an investment-by-investment basis. Those investments in associates may be measured at fair value through profit or loss in accordance with IFRS 9 and presented within “Financial assets at fair value through profit or loss”.

The Group assesses whether there is an objective evidence that the interest in an associate may be impaired. When any objective evidence exists, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

When the Group ceases to have significant influence over an associate, it is accounted for as a disposal of the entire interest in the investee with a resulting gain or loss being recognised in profit or loss. When the Group retains an interest in the former associate and the retained interest is a financial asset within the scope of IFRS 9, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition. The difference between the carrying amount of the associate and the fair value of any retained interest and any proceeds from disposing of the relevant interest in the associate is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) upon disposal/partial disposal of the relevant associate.

When a group entity transacts with an associate of the Group, profits and losses resulting from the transactions with the associate are recognised in the Group’s consolidated financial statements only to the extent of interests in the associate that are not related to the Group.

356 DFZQ Annual Report 2023

– F-279 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Investments in associates (Continued)

Changes in the Group's interests in associates

When the Group reduces its ownership interest in an associate but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

Acquisition of additional interests in associates

When the Group increases its ownership interest in an associate but the Group continues to use the equity method, goodwill is recognised at acquisition date if there is excess of the consideration paid over the share of carrying amount of net assets attributable to the additional interests in associates acquired. Any excess of share of carrying amount of net assets attributable to the additional interests in associates acquired over the consideration paid are recognised in the profit or loss in the period in which the additional interest are acquired.

Leases

Definition of a lease

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

For contracts entered into or modified on or after the date of initial application of IFRS 16 or arising from business combinations, the Group assesses whether a contract is or contains a lease based on the definition under IFRS 16 at inception, modification date or acquisition date, as appropriate. Such contract will not be reassessed unless the terms and conditions of the contract are subsequently changed.

The Group as a lessee

Allocation of consideration to components of a contract

For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

Non-lease components are separated from lease component on the basis of their relative stand-alone prices.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Leases (Continued)

The Group as a lessee (Continued)

Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to leases of buildings that have a lease term of 12 months or less from the commencement date and do not contain a purchase option. It also applies the recognition exemption for lease of low-value assets. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

Right-of-use assets

The cost of right-of-use assets includes:

the amount of the initial measurement of the lease liability;
any lease payments made at or before the commencement date, less any lease incentives received;
any initial direct costs incurred by the Group; and
an estimate of costs to be incurred by the Group in dismantling and removing the underlying assets, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.

Right-of-use assets in which the Group is reasonably certain to obtain ownership of the underlying leased assets at the end of the lease term are depreciated from commencement date to the end of the useful life. Otherwise, right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.

The Group presents right-of-use assets that do not meet the definition of investment property as a separate line item on the consolidated statement of financial position. The right-of-use assets that meet the definition of investment property are presented within "investment properties".

358

DFZQ

Annual Report 2023

– F-281 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Leases (Continued)

The Group as a lessee (Continued)

Refundable rental deposits

Refundable rental deposits paid are accounted under IFRS 9 and initially measured at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments and included in the cost of right-of-use assets.

Lease liabilities

At the commencement date of a lease, the Group recognises and measures the lease liability at the present value of lease payments that are unpaid at that date. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable.

The lease payments include:

fixed payments (including in-substance fixed payments) less any lease incentives receivable;
variable lease payments that depend on an index or a rate;
amounts expected to be paid under residual value guarantees;
the exercise price of a purchase option reasonably certain to be exercised by the Group; and
payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate.

Variable lease payments that reflect changes in market rental rates are initially measured using the market rental rates as at the commencement date. Variable lease payments that do not depend on an index or a rate are not included in the measurement of lease liabilities and right-of-use assets, and are recognised as expense in the period on which the event or condition that triggers the payment occurs.

After the commencement date, lease liabilities are adjusted by interest accretion and lease payments.

Annual Report 2023 DFZQ 359

– F-282 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Leases (Continued)

The Group as a lessee (Continued)

Lease liabilities (Continued)

The Group remeasures lease liabilities (and makes a corresponding adjustment to the related right-of-use assets) whenever:

the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the related lease liability is remeasured by discounting the revised lease payments using a revised discount rate at the date of reassessment;
the lease payments change due to changes in market rental rates following a market rent review/ expected payment under a guaranteed residual value, in which cases the related lease liability is remeasured by discounting the revised lease payments using the initial discount rate.

The Group presents lease liabilities as a separate line item on the consolidated statement of financial position.

Lease modifications

The Group accounts for a lease modification as a separate lease if:

the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
the consideration for the leases increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

For a lease modification that is not accounted for as a separate lease, the Group remeasures the lease liability based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

The Group accounts for the remeasurement of lease liabilities by making corresponding adjustments to the relevant right-of-use assets. When the modified contract contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the modified contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Leases (Continued)

The Group as a lessor

Classification and measurement of leases

Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

Amounts due from lessees under finance leases are recognised as receivables at commencement date at amounts equal to net investments in the leases, measured using the interest rate implicit in the respective leases. Initial direct costs are included in the initial measurement of the net investments in the leases. Interest income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group's net investment outstanding in respect of the leases.

Rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset, and such costs are recognised as an expense on a straight-line basis over the lease term. Variable lease payments for operating leases that depend on an index or a rate are estimated and included in the total lease payments to be recognised on a straight-line basis over the lease term. Variable lease payments that do not depend on an index or a rate are recognised as income when they arise.

Allocation of consideration to components of a contract

When a contract includes both leases and non-lease components, the Group applies IFRS 15 Revenue from Contracts with Customers ("IFRS 15") to allocate consideration in a contract to lease and non-lease components. Non-lease components are separated from lease component on the basis of their relative stand-alone selling prices.

Sublease

When the Group is an intermediate lessor, it accounts for the head lease and the sub-lease as two separate contracts. The sub-lease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Property and equipment

Property and equipment are tangible assets that are held for use in the supply of services, or for administrative purposes (other than construction in progress as described below). Property and equipment are stated in the consolidated statement of financial position at cost less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.

Construction in progress is carried at cost, less any recognised impairment loss. Costs include any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management, including costs of testing whether the related assets is functioning properly and, for qualifying assets, borrowing costs capitalised in accordance with the Group's accounting policy. Depreciation of these assets, on the same basis as other property and equipment, commences when the assets are ready for their intended use.

When the Group makes payments for ownership interests of properties which includes both leasehold land and building elements, the entire consideration is allocated between the leasehold land and the building elements in proportion to the relative fair values at initial recognition. To the extent the allocation of the relevant payments can be made reliably, interest in leasehold land is presented as "right-of-use assets" in the consolidated statement of financial position. When the consideration cannot be allocated reliably between non-lease building element and undivided interest in the underlying leasehold land, the entire properties are classified as property and equipment.

Depreciation is recognised so as to write off the cost of items of property and equipment, other than construction in progress, less their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Property and equipment (Continued)

The estimated residual value rates and useful lives of each class of property and equipment, other than construction in progress, are as follows:

Classes	Estimated residual value rates	Useful lives
Leasehold land and buildings	3%	Over the shorter of the lease term and estimated useful life of buildings of 30 years
Electronic and communication equipment	3%	3-10 years
Motor vehicles	0% – 3%	6 years
Office equipment	3%	5 years
Leasehold improvements	nil	Over the lease term

Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation.

Investment properties are initially measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are stated at cost less subsequent accumulated depreciation and any accumulated impairment losses. Depreciation is recognised so as to write off the cost of investment properties over their estimated useful lives and after taking into account of their estimated residual value, using the straight-line method.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. A leased property which is recognised as a right-of-use asset is derecognised if the Group as intermediate lessor classifies the sublease as a finance lease. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Intangible assets

Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and any accumulated impairment losses. Amortisation for intangible assets with finite useful lives is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimates being accounted for on a prospective basis. Intangible assets with indefinite useful lives (i.e. trading rights) that are acquired separately are carried at cost less any subsequent accumulated impairment losses.

Internally-generated intangible assets – research and development expenditure

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development activities (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:

the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally-generated intangible asset is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.

364 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Intangible assets (Continued)

Internally-generated intangible assets – research and development expenditure (Continued)

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses (if any), on the same basis as intangible assets that are acquired separately.

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains and losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

Impairment on property and equipment, right-of-use assets, investment properties and intangible assets other than goodwill

At the end of the reporting period, the Group reviews the carrying amounts of its property and equipment, right-of-use assets, investment properties and intangible assets with finite useful lives to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Intangible assets with indefinite useful lives are tested for impairment at least annually, and whenever there is an indication that they may be impaired.

The recoverable amount of property and equipment, right-of-use assets, investment properties and intangible assets are estimated individually, when it is not possible to estimate the recoverable amount of an asset individually, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

In testing a cash-generating unit for impairment, corporate assets are allocated to the relevant cash-generating unit when a reasonable and consistent basis of allocation can be established, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be established. The recoverable amount is determined for the cash-generating unit or group of cash-generating units to which the corporate asset belongs, and is compared with the carrying amount of the relevant cash-generating unit or group of cash-generating units.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Impairment on property and equipment, right-of-use assets, investment properties and intangible assets other than goodwill (Continued)

If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or the cash-generating unit) is reduced to its recoverable amount. For corporate assets or portion of corporate assets which cannot be allocated on a reasonable and consistent basis to a cash-generating unit, the Group compares the carrying amount of a group of cash-generating units, including the carrying amounts of the corporate assets or portion of corporate assets allocated to that group of cash-generating units, with the recoverable amount of the group of cash-generating units. In allocating the impairment loss, the impairment loss is allocated first to reduce the carrying amount of any goodwill (if applicable) and then to the other assets on a pro-rata basis based on the carrying amount of each asset in the unit. The carrying amount of an asset is not reduced below the highest of its fair value less costs of disposal (if measurable), its value in use (if determinable) and zero. The amount of the impairment loss that would otherwise have been allocated to the asset is allocated pro rata to the other assets of the unit or the group of cash-generating units. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit or a group of cash-generating units) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit or a group of cash-generating units) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Cash and cash equivalents

Cash and cash equivalents presented on the consolidated statement of financial position include:

cash, which comprises of cash on hand and demand deposits, excluding bank balances that are subject to regulatory restrictions that result in such balances no longer meeting the definition of cash; and
cash equivalents, which comprise of short-term (generally with original maturity of three months or less), highly liquid investments that are readily convertible to a known amount of cash and which are subject to an insignificant risk of changes in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Cash and cash equivalents (Continued)

For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts which are repayable on demand and form an integral part of the Group's cash management. Such overdrafts are presented as short-term borrowings in the consolidated statement of financial position.

Bank balances for which use by the Group is subject to third party contractual restrictions are included as part of cash unless the restrictions result in a bank balance no longer meeting the definition of cash. Contractual restrictions affecting use of bank balances are disclosed in Note 18.

Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recognised at the rates of exchanges prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are recognised in profit or loss in the period in which they arise.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated into the presentation currency of the Group (i.e. RMB) using exchange rates prevailing at the end of each reporting period. Income and expenses items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity under the heading of translation reserve (attributed to non-controlling interests as appropriate).

On the disposal of a foreign operation (i.e. a disposal of the Group's entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the shareholders of the Company are reclassified to profit or loss.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Foreign currencies (Continued)

In addition, in relation to a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to non-controlling interests and is not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or joint arrangements that do not result in the Group losing significant influence), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. Settlements of monetary items which formed part of net investment in foreign operations without changes in the Group's ownership interests is not considered as partial disposals.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants related to income that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable. Such grants are presented under "other income, gains and losses".

368 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Employee benefits

In the reporting period in which an employee has rendered services, the Group recognises the employee benefits expenses for those services in profit or loss.

Retirement benefit costs

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

Short-term and other long-term employee benefits

Short-term employee benefits are recognised at the undiscounted amount of the benefits expected to be paid as and when employees rendered the services. All short-term employee benefits are recognised as an expense unless another IFRS requires or permits the inclusion of the benefit in the cost of an asset.

A liability is recognised for benefits accruing to employees (such as wages and salaries, annual leave and sick leave) after deducting any amount already paid.

Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Group in respect of services provided by employees up to the reporting date. Any changes in the liabilities' carrying amounts resulting from service cost, interest and remeasurements are recognised in profit or loss except to the extent that another IFRS requires or permits their inclusion in the cost of an asset.

Social welfare

Social welfare expenditure refers to payments for employees' social welfare system established by the government of the PRC, including social pension insurance, health care insurance, housing funds and other social welfare contributions. The Group contributes on a regular basis to these funds based on certain percentage of the employees' salaries and the contributions are recognised in profit or loss for the period when employees have rendered service entitling them to the contribution. The Group's liabilities in respect of these funds are limited to the contribution payable in the relevant period.

Annuity scheme

The Group also sets up annuity scheme for qualified employees. Annuity contributions are accrued based on a certain percentage of the participants' total salary when employees have rendered service entitling them to the contributions. The contribution is recognised in profit or loss when employees have rendered service entitling them to the contributions.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from “profit before income tax” as reported in the consolidated statement of profit or loss because of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of each reporting period.

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax base used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit and at the time of the transaction does not give rise to equal taxable and deductible temporary differences. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted or substantively enacted by the end of each reporting period.

DFZQ Annual Report 2023

370 - F-293 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Taxation (Continued)

The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

For the purposes of measuring deferred tax for leasing transactions in which the Group recognises the right-of-use assets and the related lease liabilities, the Group first determines whether the tax deductions are attributable to the right-of-use assets or the lease liabilities. For leasing transactions in which the tax deductions are attributable to the lease liabilities, the Group applies IAS 12 requirements to the lease liabilities and the related assets separately. The Group recognises a deferred tax asset related to lease liabilities to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised and a deferred tax liability for all taxable temporary differences.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority on either:

the same taxable entity; or
different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.

Financial assets and financial liabilities are initially measured at fair value except for trade receivables arising from contracts with customers which are initially measured in accordance with IFRS 15. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets or financial liabilities at fair value through profit or loss ("FVTPL")) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating interest income and interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts and payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset or financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Financial assets

Classification and subsequent measurement of financial assets

Financial assets that meet the following conditions are subsequently measured at amortised cost:

the financial asset is held within a business model whose objective is to collect contractual cash flows; and
the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

372 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Classification and subsequent measurement of financial assets (Continued)

Financial assets that meet the following conditions are subsequently measured at fair value through other comprehensive income ("FVTOCI"):

the financial asset is held within a business model whose objective is achieved by both selling and collecting contractual cash flows; and
the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

All other financial assets are subsequently measured at FVTPL, except that initial recognition of a financial asset the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if that equity investment is neither held for trading nor contingent consideration recognised by an acquirer in a business combination to which IFRS 3 Business Combinations ("IFRS 3") applies.

A financial asset is held for trading if:

it has been acquired principally for the purpose of selling in the near term; or
on initial recognition it is a part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.

In addition, the Group may irrevocably designate a financial asset that is required to be measured at the amortised cost or FVTOCI as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Classification and subsequent measurement of financial assets (Continued)

(i) Amortised cost and interest income

Interest income is recognised using the effective interest method for financial assets measured subsequently at amortised cost and debt instruments subsequently measured at FVTOCI. For financial instruments other than purchased or originated credit-impaired financial assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired. For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset from the next reporting period. If the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset from the beginning of the reporting period following the determination that the asset is no longer credit impaired.

(ii) Debt instruments classified as at FVTOCI

Subsequent changes in the carrying amounts for debt instruments classified as at FVTOCI as a result of interest income calculated using the effective interest method, and foreign exchange gains and losses are recognised in profit or loss. All other changes in the carrying amount of these debt instruments are recognised in other comprehensive income and accumulated under the heading of investment revaluation reserve. Impairment allowances are recognised in profit or loss with corresponding adjustment to other comprehensive income without reducing the carrying amounts of these debt instruments. When these debt instruments are derecognised, the cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss.

(iii) Equity instruments designated as at FVTOCI

Investments in equity instruments designated as at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the investment revaluation reserve; and are not subject to impairment assessment. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, and will be transferred to retained earnings.

374

DFZQ

Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Classification and subsequent measurement of financial assets (Continued)

(iii) Equity instruments designated as at FVTOCI (Continued)

Dividends from these investments in equity instruments are recognised in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment. Dividends are included in the “net investment gains” line item in profit or loss.

Interest income which are derived from the Group’s ordinary course of business are presented as revenue.

(iv) Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI or designated as FVTOCI are measured at FVTPL.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss. The net gain or loss recognised in profit or loss includes any dividend or interest earned on the financial asset and is included in the “net investment gains” line item.

Impairment of financial assets and other items subject to impairment assessment under IFRS 9

The Group performs impairment assessment under expected credit loss (“ECL”) model on financial assets which are subject to impairment assessment under IFRS 9, including advances to customers, debt instruments at FVTOCI, reverse repurchase agreements, debt instruments measured at amortised cost, account receivables, deposits with exchanges and financial institutions, clearing settlement funds, cash and bank balances, loan commitments, contract assets and other receivables. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant instrument. In contrast, 12-month ECL (“12m ECL”) represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after the reporting date. Assessments are done based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future conditions.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets and other items subject to impairment assessment under IFRS 9 (Continued)

The Group applied the IFRS 9 simplified approach to measure ECL and recognises lifetime ECL for account receivables and contract assets. To measure the ECL, account receivables and contract assets have been grouped based on shared credit risk characteristics.

For all other instruments, the Group measures the loss allowance equal to 12m ECL, unless when there has been a significant increase in credit risk since initial recognition, in which case the Group recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition.

(i) Significant increase in credit risk

In assessing whether the credit risk has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly:

an actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit rating;
significant deterioration in external market indicators of credit risk, e.g. a significant increase in the credit spread, the credit default swap prices for the debtor;
existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;
an actual or expected significant deterioration in the operating results of the debtor;
an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations.

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets and other items subject to impairment assessment under IFRS 9 (Continued)

(i) Significant increase in credit risk (Continued)

Irrespective of the outcome of the above assessment, the Group presumes that the credit risk has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise.

Despite the foregoing, the Group assumes that the credit risk on a debt instrument has not increased significantly since initial recognition if the debt instrument is determined to have low credit risk at the reporting date. A debt instrument is determined to have low credit risk if i) it has a low risk of default, ii) the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and iii) adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. The Group considers a debt instrument to have low credit risk when it has an internal or external credit rating of “investment grade” as per globally understood definitions.

For loan commitments, the date that the Group becomes a party to the irrevocable commitment is considered to be the date of initial recognition for the purposes of assessing impairment. In assessing whether there has been a significant increase in the credit risk since initial recognition of a loan commitment, the Group considers changes in the risk of a default occurring on the loan to which a loan commitment relates.

The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

(ii) Definition of default

For internal credit risk management, the Group considers an event of default occurs when information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collaterals held by the Group).

The Group considers that default has occurred when the instrument is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets and other items subject to impairment assessment under IFRS 9 (Continued)

(iii) Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

significant financial difficulty of the issuer or the borrower;
a breach of contract, such as a default or past due event;
the lender(s) of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
the disappearance of an active market for that financial asset because of financial difficulties.

(iv) Write-off policy

The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, for example, when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over eight years past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Group's recovery procedures, taking into account legal advice where appropriate. A write-off constitutes a derecognition event. Any subsequent recoveries are recognised in profit or loss.

378

DFZQ

Annual Report 2023

F-301 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets and other items subject to impairment assessment under IFRS 9 (Continued)

(v) Measurement and recognition of ECL

The measurement of ECL is a function of the probability of default ("PD"), loss given default ("LGD") (i.e. the magnitude of the loss if there is a default) and the exposure at default ("EAD"). The assessment of the probability of default and loss given default is based on historical data and forward-looking information. Estimation of ECL reflects an unbiased and probability-weighted amount that is determined with the respective risks of default occurring as the weights.

Generally, the ECL is the difference between all contractual cash flows that are due to the Group in accordance with the contract and the cash flows that the Group expects to receive, discounted at the effective interest rate determined at initial recognition.

For undrawn loan commitments, the ECL is the present value of the difference between the contractual cash flows that are due to the Group if the holder of the loan commitments draws down the loan, and the cash flows that the Group expects to receive if the loan is drawn down.

For ECL on loan commitments for which the effective interest rate cannot be determined, the Group will apply a discount rate that reflects the current market assessment of the time value of money and the risks that are specific to the cash flows but only if, and to the extent that, the risks are taken into account by adjusting the discount rate instead of adjusting the cash shortfalls being discounted.

Where ECL is measured on a collective basis or cater for cases where evidence at the individual instrument level may not yet be available, the financial instruments are grouped based on shared credit risk characteristics. The grouping is regularly reviewed by management to ensure the constituents of each group continue to share similar credit risk characteristics.

Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit impaired, in which case interest income is calculated based on amortised cost of the financial asset.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets and other items subject to impairment assessment under IFRS 9 (Continued)

(v) Measurement and recognition of ECL (Continued)

Except for debt instruments at FVTOCI, the Group recognises an impairment gain or loss in profit or loss by adjusting their carrying amount. For all other financial assets that are subject to ECL, the corresponding adjustment is recognised through a loss allowance account. For investments in debt instruments that are measured at FVTOCI, the loss allowance is recognised in other comprehensive income and accumulated in the investment revaluation reserve without reducing the carrying amounts of these debt instruments. Such amount represents the changes in the investment revaluation reserve in relation to accumulated loss allowance.

Foreign exchange gains and losses

The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period. Specifically:

For financial assets measured at amortised cost that are not part of a designated hedging relationship, exchange differences are recognised in profit or loss in the 'Net investment gains' line item as part of the net foreign exchange gains/(losses);
For debt instruments measured at FVTOCI that are not part of a designated hedging relationship, exchange differences on the amortised cost of the debt instrument are recognised in profit or loss in the 'Other income, gains and losses, net' line item as part of the net foreign exchange gains/(losses). As the foreign currency element recognised in profit or loss is the same as if it was measured at amortised cost, the residual foreign currency element based on the translation of the carrying amount (at fair value) is recognised in other comprehensive income in the fair value through other comprehensive income/revaluation reserve;
For financial assets measured at FVTPL that are not part of a designated hedging relationship, exchange differences are recognised in profit or loss in the 'Net investment gains' line item as part of the gain/(loss) from changes in fair value of financial assets;
For equity instruments measured at FVTOCI, exchange differences are recognised in other comprehensive income in the fair value through other comprehensive income/revaluation reserve.

380 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

On derecognition of an investment in a debt instrument classified as at FVTOCI upon application of IFRS 9, the cumulative gain or loss previously accumulated in the FVTOCI reserve is reclassified to profit or loss.

On derecognition of an investment in equity instrument which the Group has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously accumulated in the equity investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings.

Financial liabilities and equity

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity according to the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

Perpetual instruments, which include no contractual obligation for the Group to deliver cash or other financial assets or the Group has the sole discretion to defer payment of distribution and redemption of principal amount indefinitely are classified as equity instruments.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial liabilities and equity (Continued)

Financial liabilities

All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of an acquirer in a business combination to which IFRS 3 applies, (ii) held for trading or (iii) it is designated as at FVTPL.

A financial liability is held for trading if:

it has been acquired principally for the purpose of repurchasing it in the near term; or
on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or
it is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument.

A financial liability other than a financial liability held for trading or contingent consideration of an acquirer in a business combination may be designated as at FVTPL upon initial recognition if:

such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits the entire combined contract to be designated as at FVTPL.

382 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial liabilities and equity (Continued)

Financial liabilities at FVTPL (Continued)

For financial liabilities that are designated as at FVTPL, the amount of changes in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. For financial liabilities that contain embedded derivatives, such as convertible loan notes, the changes in fair value of the embedded derivatives are excluded in determining the amount to be presented in other comprehensive income. Changes in fair value attributable to a financial liability's credit risk that are recognised in other comprehensive income are not subsequently reclassified to profit or loss; instead, they are transferred to retained earnings upon derecognition of the financial liability.

Financial liabilities at amortised cost

Financial liabilities including borrowings, short-term financing bill payables, placements from banks and financial institutions, account payables to brokerage clients, other liabilities, debt securities issued and repurchase agreements are subsequently measured at amortised cost, using the effective interest method.

Foreign exchange gains and losses

For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments. These foreign exchange gains and losses are recognised in the 'Net investment gains' line item in profit or loss as part of net foreign exchange gains/(losses) for financial liabilities that are not part of a designated hedging relationship. For those which are designated as a hedging instrument for a hedge of foreign currency risk, foreign exchange gains and losses are recognised in other comprehensive income and accumulated in a separate component of equity.

The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss for financial liabilities that are not part of a designated hedging relationship.

Annual Report 2023 DFZQ 383

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Financial liabilities and equity (Continued)

Derecognition/modification of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

When the contractual terms of a financial liability are modified, the Group assess whether the revised terms result in a substantial modification from original terms taking into account all relevant facts and circumstances including qualitative factors. If qualitative assessment is not conclusive, the Group considers that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received, and discounted using the original effective interest rate, is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability. The above said fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. Accordingly, such modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. The exchange or modification is considered as non-substantial modification when such difference is less than 10 per cent.

For non-substantial modifications of financial liabilities that do not result in derecognition, the carrying amount of the relevant financial liabilities will be calculated at the present value of the modified contractual cash flows discounted at the financial liabilities’ original effective interest rate. Transaction costs or fees incurred are adjusted to the carrying amount of the modified financial liabilities and are amortised over the remaining term. Any adjustment to the carrying amount of the financial liability is recognised in profit or loss at the date of modification.

Derivative financial instruments

Derivatives are initially recognised at fair value at the date when derivative contracts are entered into and are subsequently remeasured to their fair value at the end of the reporting period. The resulting gain or loss is recognised in profit or loss unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not due to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

384 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Derivative financial instruments (Continued)

Embedded derivatives

Derivatives embedded in hybrid contracts that contain financial asset hosts within the scope of IFRS 9 are not separated. The entire hybrid contract is classified and subsequently measured in its entirety as either amortised cost or fair value as appropriate.

Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of IFRS 9 are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at FVTPL.

Generally, multiple embedded derivatives in a single instrument that are separated from the host contracts are treated as a single compound embedded derivative unless those derivatives relate to different risk exposures and are readily separable and independent of each other.

Offsetting a financial asset and a financial liability

A financial asset and a financial liability are offset and the net amount presented in the consolidated statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the recognised amounts; and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Hedge accounting

The Group designates certain derivatives as hedging instruments for fair value hedges.

At the inception of the hedging relationships, the Group documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument is highly effective in offsetting changes in fair values of the hedged item attributable to the hedged risk.

Annual Report 2023 DFZQ 385

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Hedge accounting (Continued)

Assessment of hedging relationship and effectiveness

For hedge effectiveness assessment, the Group considers whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements:

there is an economic relationship between the hedged item and the hedging instrument;
the effect of credit risk does not dominate the value changes that result from that economic relationship; and
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item.

If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective for that designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship (i.e. rebalances the hedge) so that it meets the qualifying criteria again.

386

DFZQ

Annual Report 2023

– F-309 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial instruments (Continued)

Hedge accounting (Continued)

Fair value hedges

When the hedging instrument hedges an equity instrument designated at FVTOCI, the fair value change is recognised in other comprehensive income.

When the hedged item is an equity instrument designated at FVTOCI, the hedging gain or loss remains in other comprehensive income to match that of the hedging instrument.

Discontinuation of hedge accounting

The Group discontinues hedge accounting prospectively only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised.

Repurchase agreements and reverse repurchase agreements

Financial assets sold subject to repurchase agreements, which do not result in derecognition of the financial assets, are continued to be recorded as financial assets at FVTPL, debt instruments at FVTOCI, equity instruments at FVTOCI, or debt instruments measured at amortised cost as appropriate. The corresponding liability is included in "Repurchase agreements". Consideration paid for financial assets held under agreements to resell are recorded as "Reverse repurchase agreements". Repurchase agreements and reverse repurchase agreements are initially measured at fair value and are subsequently measured at amortised cost using the effective interest method.

Securities lending

The Group lends securities to clients and the cash collateral balances required under the securities lending agreements and the interest arisen from the cash collateral are included in "account payables to brokerage clients". For those securities held by the Group that are lent to clients, they are not derecognised and are continued to be recorded as financial assets at FVTPL or equity instruments at FVTOCI. The corresponding fee income was recorded in commission and fee income.

Annual Report 2023

DFZQ

387

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Revenue from contracts with customers

The Group recognises revenue when (or as) a performance obligation is satisfied, i.e. when “control” of the goods or services underlying the particular performance obligation is transferred to the customer.

A performance obligation represents a good or service (or a bundle of goods or services) that is distinct or a series of distinct goods or services that are substantially the same.

Control is transferred over time and revenue is recognised over time by reference to the progress towards complete satisfaction of the relevant performance obligation if one of the following criteria is met:

the customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs;
the Group’s performance creates or enhances an asset that the customer controls as the Group performs; or
the Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.

Otherwise, revenue is recognised at a point in time when the customer obtains control of the distinct good or service.

A contract asset represents the Group’s right to consideration in exchange for goods or services that the Group has transferred to a customer that is not yet unconditional. It is assessed for impairment in accordance with IFRS 9. In contrast, a receivable represents the Group’s unconditional right to consideration, i.e. only the passage of time is required before payment of that consideration is due.

A contract liability represents the Group’s obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer.

A contract asset and a contract liability relating to the same contract are accounted for and presented on a net basis.

388

DFZQ

Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Revenue from contracts with customers (Continued)

Contracts with multiple performance obligations (including allocation of transaction price)

For contracts that contain more than one performance obligations, the Group allocates the transaction price to each performance obligation on a relative stand-alone selling price basis, except for the allocation of discounts and variable consideration.

The stand-alone selling price of the distinct good or service underlying each performance obligation is determined at contract inception. It represents the price at which the Group would sell a promised good or service separately to a customer. If a stand-alone selling price is not directly observable, the Group estimates it using appropriate techniques such that the transaction price ultimately allocated to any performance obligation reflects the amount of consideration to which the Group expects to be entitled in exchange for transferring the promised goods or services to the customer.

Over time revenue recognition: measurement of progress towards complete satisfaction of a performance obligation

Output method

The progress towards complete satisfaction of a performance obligation is measured based on output method, which is to recognise revenue on the basis of direct measurements of the value of the goods or services transferred to the customer to date relative to the remaining goods or services promised under the contract, that best depict the Group's performance in transferring control of goods or services.

Input method

The progress towards complete satisfaction of a performance obligation is measured based on input method, which is to recognise revenue on the basis of the Group's efforts or inputs to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation, that best depict the Group's performance in transferring control of goods or services.

Variable consideration

For contracts that contain variable consideration, the Group estimates the amount of consideration to which it will be entitled using either (a) the expected value method or (b) the most likely amount, depending on which method better predicts the amount of consideration to which the Group will be entitled.

Annual Report 2023 DFZQ 389

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Revenue from contracts with customers (Continued)

Variable consideration (Continued)

The estimated amount of variable consideration is included in the transaction price only to the extent that it is highly probable that such an inclusion will not result in a significant revenue reversal in the future when the uncertainty associated with the variable consideration is subsequently resolved.

At the end of each reporting period, the Group updates the estimated transaction price (including updating its assessment of whether an estimate of variable consideration is constrained) to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period.

Principal versus agent

When another party is involved in providing goods or services to a customer, the Group determines whether the nature of its promise is a performance obligation to provide the specified goods or services itself (i.e. the Group is a principal) or to arrange for those goods or services to be provided by the other party (i.e. the Group is an agent).

The Group is a principal if it controls the specified good or service before that good or service is transferred to a customer.

The Group is an agent if its performance obligation is to arrange for the provision of the specified good or service by another party. In this case, the Group does not control the specified good or service provided by another party before that good or service is transferred to the customer. When the Group acts as an agent, it recognises revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified goods or services to be provided by the other party.

The Group's revenue mainly comes from the following types of business:

Commission and fee income

(a) Commission and fee income arising from securities brokerage services is recognised on the date of the securities transaction;

(b) Commission and fee income arising from investment banking services is recognised when the contractual obligations are fulfilled;

390 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Revenue from contracts with customers (Continued)

Commission and fee income (Continued)

(c) Commission and fee income arising from asset management services is recognised in accordance with the conditions and proportions agreed in the contract when management services meets the relevant revenue recognition conditions.

Interest income

Interest income from a financial asset is accrued on a timely basis using the effective interest method.

Other income

Other income is recognised when the contractual obligations are fulfilled.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation, and the amount of the obligation can be reliably estimated.

The amount recognised as provision is the best estimate of the consideration required to settle the present obligation at the end of each reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Annual Report 2023 DFZQ 391

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group's accounting policies, which are described in Note 3, the directors of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

4.1 Critical judgements in applying accounting policies

Consolidation of structured entities

All facts and circumstances must be taken into consideration in the assessment of whether the Group, as an investor, controls the investee. The principle of control sets out the following three elements of control: (a) power over the investee; (b) exposure, or rights, to variable returns from involvement with the investee; and (c) the ability to use power over the investee to affect the amount of the investor's returns. The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

For collective asset management schemes, funds and limited partnerships where the Group involves as manager, the Group considers whether it has the power over the structured entities and assesses whether the combination of investments it holds together with its remuneration and credit enhancements creates exposure to variability of returns from the activities of the collective asset management schemes, funds and limited partnerships that is of such significance that it indicates the Group controlled the structured entities. The collective asset management schemes, funds and limited partnerships are consolidated if the Group acts in the role of principal.

392

DFZQ

Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued)

4.1 Critical judgements in applying accounting policies (Continued)

Classification of financial assets

Classification and measurement of financial assets depends on the results of whether the contractual terms of the financial asset give rise on specific dates to cash flows that are solely payments of principal and interest on the principal amount outstanding and the business model test. The Group determines the business model at a level that reflects how groups of financial assets are managed together to achieve a particular business objective. This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed and how the managers of the assets are compensated. The Group monitors financial assets measured at amortised cost or FVTOCI that are derecognised prior to their maturity to understand the reason for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held.

4.2 Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Fair value of financial assets

The Group uses valuation techniques to estimate the fair value of financial assets which are not quoted in an active market. These valuation techniques include the use of recent transaction prices of the same or similar instruments, discounted cash flow analysis, etc. To the extent practical market observable inputs and data are used when estimating fair value through a valuation technique. Where market observable inputs are not available, they are estimated using assumptions that are calibrated as closely as possible to market observable data. However, areas such as the credit risk of the Group and the counterparty, volatilities and correlations require management to make estimates. Changes in assumptions about these factors could affect the estimated fair value of financial assets.

Impairment of stock-pledged reverse repurchase agreements

The Group estimates the amount of loss allowance for ECL on stock-pledged reverse repurchase agreements. The estimation of the ECL involves high degree of uncertainty.

Annual Report 2023 DFZQ 393

F-316 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued)

4.2 Key sources of estimation uncertainty (Continued)

Impairment of stock-pledged reverse repurchase agreements (Continued)

Significant increase in credit risk and credit-impaired financial asset

ECL are measured either at 12m ECL or lifetime ECL. An asset moves to the stage of lifetime ECL (not credit-impaired) when its credit risk has increased significantly since initial recognition, and it moves to the stage of lifetime ECL (credit-impaired) when it is credit impaired. In assessing whether the credit risk of an asset has significantly increased and whether a financial asset is credit-impaired, the Group takes into account qualitative and quantitative forward looking information on a reasonable and supportable basis, which is detailed in Note 63.

Models and assumptions used

The Group uses various models and assumptions in estimating ECL. Judgement is applied in identifying the most appropriate model for each type of assets, as well as for determining the assumptions used in these models, including assumptions that relate to key drivers of credit risk, which are detailed in Note 63.

Forward-looking information

When measuring ECL, the Group uses reasonable and supportable forward looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. Further information is detailed in Note 63.

Probability of default

PD constitutes a key input in measuring ECL. PD is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions. Further information is detailed in Note 63.

394

DFZQ

Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued)

4.2 Key sources of estimation uncertainty (Continued)

Impairment of stock-pledged reverse repurchase agreements (Continued)

Loss given default

LGD is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, taking into account cash flows from collateral and integral credit enhancements. Further information is detailed in Note 63.

Income taxes

There are certain transactions and activities for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially estimated, such differences will impact the current income tax and deferred income tax in the period during which such a determination is made.

The realisation of the deferred tax asset mainly depends on whether sufficient future profits or taxable temporary differences will be available in the future.

In cases where it becomes probable that sufficient profits or taxable temporary differences are expected to be generated, deferred tax assets would be recognised in profit or loss in that period. On the contrary, if sufficient profits or taxable temporary differences are not expected to be generated, deferred tax assets would be reversed in profit or loss in that period. Details of the tax losses and deductible temporary differences are disclosed in Notes 16 and 38.

5. SEGMENT REPORTING

Information reported to the Board of Directors, being the chief operating decision maker (hereinafter refer to as the "CODM") of the Company, for the purposes of resource allocation and assessment of segment performance focuses on the nature of products sold and services provided by the Group, which is also consistent with the Group's basis of organisation, whereby the businesses are organised and managed separately as individual strategic business units that offer different products and serve different markets. Segment information is measured in accordance with the accounting policies and measurement criteria adopted by each segment when reporting to CODM, which are consistent with the accounting and measurement criteria in the preparation of the consolidated financial statements. The inter-segment revenue and expenses arising from internal use of funds are determined by internal transfer price. The Group enhanced the disclosure of segment information by extending the internal transfer pricing mechanism to cover the headquarter segment for the year ended 31 December 2023. Comparative figures are re-presented accordingly.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

5. SEGMENT REPORTING (Continued)

Specifically, the Group's reportable and operating segments are as follows:

(a) Securities sales and trading, which primarily includes investment gains, commission and fee income earned from trading of stocks, bonds, funds, derivatives, alternative investments and other financial products and fees earned from providing related investment research activities;

(b) Investment management, which primarily includes management and advisory fees earned from providing asset management, fund management and private equity investment management services to clients, as well as investment gains from private equity investments;

(c) Brokerage and securities financing, which primarily includes fees and commissions earned from providing brokerage and investment advisory services for the trading of stocks, bonds, funds, and warrants, as well as futures on behalf of the customers, bulk commodity trading, and also interest earned from providing margin financing and securities lending services;

(d) Investment banking, which primarily includes commissions and fees earned from equity underwriting and sponsorship, debt underwriting and financial advisory services;

(e) Headquarters and other, which includes head office operations and the overseas business in Hong Kong, including interest income earned and expense incurred for general working capital purpose.

Inter-segment transactions, if any, are conducted with reference to the prices charged to third parties and there was no change in the basis during the year of 2023 and 2022.

396

DFZQ

Annual Report 2023

F-319 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

5. SEGMENT REPORTING (Continued)

The segment information provided to the CODM for the operating segments for the years ended 31 December 2023 and 2022 are as follows:

Operating segment

	Securities sales and trading RMB 000	Investment management RMB 000	Brokerage and securities financing RMB 000	Investment banking RMB 000	Headquarters and other RMB 000	Segment total RMB 000	Eliminations RMB 000	Consolidated total RMB 000
For the year ended 31 December 2023
Segment revenue and results
Segment revenue and net investment gains	5,720,690	2,212,870	8,335,530	1,598,083	5,578,609	23,445,782	(4,695,513)	18,750,269
Segment other income, gains and losses, net	173,694	89,914	5,294,641	24,399	(55,528)	5,527,120	-	5,527,120
Segment revenue, other income and net gains and losses	5,894,384	2,302,784	13,630,171	1,622,482	5,523,081	28,972,902	(4,695,513)	24,277,389
Segment expenses	(4,458,900)	(1,916,206)	(13,665,705)	(1,039,228)	(4,107,342)	(25,187,381)	3,244,882	(21,942,499)
Segment results	1,435,484	386,578	(35,534)	583,254	1,415,739	3,785,521	(1,450,631)	2,334,890
Share of results of associates	60,006	555,193	(12,947)	-	(18,002)	584,250	-	584,250
Profit/(loss) before income tax	1,495,490	941,771	(48,481)	583,254	1,397,737	4,369,771	(1,450,631)	2,919,140
Other segment information
Amounts included in the measure of segment profit or loss or segment assets:
Depreciation and amortisation	53,880	95,111	337,842	50,083	278,251	815,167	-	815,167
Charge for impairment losses	24,320	219,344	1,005,285	76	3,121	1,252,146	-	1,252,146
Capital expenditure	210	828,401	283,169	5,691	273,751	1,391,222	-	1,391,222
As at 31 December 2023
Segment assets and liabilities
Segment assets	175,984,168	13,393,226	162,438,191	1,886,811	54,600,402	408,302,798	(24,612,336)	383,690,462
Segment liabilities	112,871,885	1,351,307	121,940,509	479,364	73,422,454	310,065,519	(5,135,254)	304,930,265

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

5. SEGMENT REPORTING (Continued)

Operating segment (Continued)

	Securities sales and trading RMB'000	Investment management RMB'000	Brokerage and securities financing RMB'000	Investment banking RMB'000	Headquarters and other RMB'000	Segment total RMB'000	Eliminations RMB'000	Consolidated total RMB'000
For the year ended 31 December 2022 (Restated)
Segment revenue and results
Segment revenue and net investment gains	5,248,676	3,066,257	5,833,447	1,933,328	5,105,611	21,187,319	(4,722,892)	16,464,427
Segment other income, gains and losses, net	200,912	134,104	6,482,234	25,111	(198,691)	6,643,670	(734)	6,642,936
Segment revenue, other income and net gains and losses	5,449,588	3,200,361	12,315,681	1,958,439	4,906,920	27,830,989	(4,723,626)	23,107,363
Segment expenses	(3,832,378)	(1,895,117)	(12,338,432)	(1,233,889)	(4,361,840)	(23,661,656)	3,266,329	(20,395,327)
Segment results	1,617,210	1,305,244	(22,751)	724,550	545,080	4,169,333	(1,457,297)	2,712,036
Share of results of associates	65,489	648,528	3,911	-	(51,944)	665,984	-	665,984
Profit/(loss) before income tax	1,682,699	1,953,772	(18,840)	724,550	493,136	4,835,317	(1,457,297)	3,378,020
Other segment information
Amounts included in the measure of segment profit or loss or segment assets:
Depreciation and amortisation	50,130	86,346	304,415	49,180	287,983	778,054	-	778,054
Charge for/(reversal of) impairment losses	100,954	(299)	946,526	152	4,323	1,051,656	-	1,051,656
Capital expenditure	173	50,165	279,629	11,302	201,312	542,581	-	542,581
As at 31 December 2022
Segment assets and liabilities
Segment assets	149,725,659	14,090,848	173,123,944	2,556,851	55,714,739	395,212,041	(27,145,082)	368,066,959
Segment liabilities	86,888,306	2,060,521	134,282,385	731,761	74,664,352	298,627,325	(7,958,655)	290,668,670

The Group's non-current assets are mainly located in the PRC (country of domicile). The Group's revenue are substantially derived from its operations in the PRC.

The Group has no single customer which contributes to 10 percent or more of the Group's revenue for the years ended 31 December 2023 and 2022.

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

6. COMMISSION AND FEE INCOME

	Year ended 31 December
	2023 RMB'000	2022 RMB'000
Commission on securities broking, dealing and handling fee income	2,312,609	2,666,376
Commission on futures and options contracts broking, dealing and handling fee income (Note a)	3,604,536	1,027,028
Asset and fund management fee income	2,267,880	2,848,766
Underwriting, sponsors and financial advisory fee income	1,599,352	1,788,634
Consultancy fee income	72,808	185,599
Other	441,151	362,149
	10,298,336	8,878,552

Note a: In accordance with the relevant provisions of the Implementation Rules for the Financial Treatment of Futures Companies, starting from 2023, the handling fee charged by the Futures Exchanges is recognised in handling fee expenses account, instead of netting off with handling fee income. Handling fee expenses are presented in securities and futures broking and dealing expenses under Note 12. The comparative figures do not need to be adjusted retrospectively as per the new requirements.

The major business types of commission and fee income from customers are as follows:

(1) Brokerage

(2) Asset management

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

6. COMMISSION AND FEE INCOME (Continued)

(3) Investment Banking

Most contracts with customers have original expected duration of less than one year and therefore information about their remaining performance obligations is not disclosed.

7. INTEREST INCOME

	Year ended 31 December
	2023 RMB'000	2022 RMB'000
Advances to customers	1,144,068	1,237,478
Reverse repurchase agreements	491,316	145,360
Deposits with exchanges and financial institutions and bank balances	1,598,262	1,679,099
Interest income from debt instruments measured at amortised cost	83,059	113,135
Interest income from debt instruments at FVTOCI	2,739,661	2,506,589
Other	7,798	4,133
	6,064,164	5,685,794

400 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

8. NET INVESTMENT GAINS

	Year ended 31 December
	2023 RMB'000	2022 RMB'000
Net realised (losses)/gains from disposal of associates	(1,891)	2,807
Net realised gains from disposal of debt instruments at FVTOCI	842,475	1,336,190
Net realised gains/(losses) from disposal of financial assets at FVTPL	235,705	(727,127)
Net realised (losses)/gains arising from financial liabilities at FVTPL	(600,363)	23,897
Net realised gains arising from disposal of debt instrument measured at amortised cost	9,421	1,312
Net realised losses arising from derivative financial instruments	(1,065,583)	(339,835)
Dividend income from equity instruments at FVTOCI
- relating to investments derecognised during the year	30,171	225,411
- relating to investments held at the end of the reporting period	370,849	109,811
Dividend income and interest income from financial assets at FVTPL	2,138,675	1,839,761
Unrealised fair value change of financial assets at FVTPL	77,782	(1,117,664)
Unrealised fair value change of financial liabilities at FVTPL	(54,236)	(365,696)
Unrealised fair value change of derivative financial instruments	404,764	911,214
	2,387,769	1,900,081

9. OTHER INCOME, GAINS AND LOSSES, NET

	Year ended 31 December
	2023 RMB'000	2022 RMB'000
Foreign exchange losses, net	(57,866)	(178,363)
Rental income	4,476	3,405
Government grants	201,633	223,021
Bulk commodity trading income	5,197,756	6,428,079
Other	181,121	166,794
	5,527,120	6,642,936

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

10. DEPRECIATION AND AMORTISATION

	Year ended 31 December
	2023 RMB'000	2022 RMB'000
Depreciation of property and equipment	294,880	282,144
Depreciation of right-of-use assets	360,732	350,183
Depreciation of investment properties	8,076	11,439
Amortisation of other intangible assets	145,710	134,288
	809,398	778,054

11. STAFF COSTS

	Year ended 31 December
	2023 RMB'000	2022 RMB'000
Salaries, bonus and allowances	3,619,421	3,766,666
Social welfare	782,336	689,177
Contributions to annuity schemes	163,047	182,270
	4,564,804	4,638,113

402

DFZQ

Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

12. COMMISSION AND FEE EXPENSES

	Year ended 31 December
	2023 RMB'000	2022 RMB'000
Securities and futures broking and dealing expenses (Note a)	3,136,192	608,657
Underwriting, sponsors and financial advisory fee expenses	89,046	55,373
Other service expenses	138,502	180,469
	3,363,740	844,499

Note a: Refer to Note 6 for details of the change in presentation requirement in 2023.

13. INTEREST EXPENSES

	Year ended 31 December
	2023 RMB'000	2022 RMB'000
Account payables to brokerage clients	117,953	128,999
Repurchase agreements	1,494,077	1,353,382
Borrowings	55,595	34,008
Placements from banks and financial institutions	358,652	87,593
Short-term financing bill payables	110,438	227,128
Debt securities issued	2,143,252	2,188,818
Lease liabilities	19,860	25,689
	4,299,827	4,045,617

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

14. OTHER OPERATING EXPENSES

	Year ended 31 December
	2023
RMB'000	2022
RMB'000
Advisory expenses	161,175	132,666
Auditor's remuneration	8,219	8,055
Business travel expenses	142,892	85,354
Communication expenses	215,813	226,943
Electronic equipment operating expenses	371,302	297,235
Entertainment expenses	113,400	110,946
Administrative expenses	329,018	373,287
Short-term leases and low value assets rental expenses	10,183	16,953
Products distribution expenses	636,743	847,178
Securities and futures investor protection funds	54,664	61,862
Stock exchange management fees	120,187	102,554
Sundry expenses	184,776	192,283
Tax and surcharges	83,604	81,490
Donation	25,715	24,773
Bulk commodity trading expenses	5,193,403	6,472,810
Other	1,490	2,999
	7,652,584	9,037,388

404 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

15. IMPAIRMENT LOSSES UNDER EXPECTED CREDIT LOSS MODEL, NET OF REVERSAL

	Year ended 31 December
	2023 RMB'000	2022 RMB'000
Expected credit losses in respect of
- Reverse repurchase agreements	990,715	767,458
- Advances to customers	2,471	733
- Account receivables and other receivables	10,396	4,758
- Debt instruments at FVTOCI	26,666	60,098
- Debt instruments measured at amortised cost	(49)	(117)
	1,030,199	832,930

16. INCOME TAX EXPENSE

	Year ended 31 December
	2023 RMB'000	2022 RMB'000
Current tax:
- PRC Enterprise Income Tax	466,980	718,186
- Hong Kong Profits Tax	-	8,575
	466,980	726,761
Adjustments in respect of current income tax in relation to prior years:
- PRC Enterprise Income Tax	20,226	(20,663)
Deferred tax	(324,670)	(338,410)
	162,536	367,688

Annual Report 2023 DFZQ 405

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

16. INCOME TAX EXPENSE (Continued)

Under the Enterprise Income Tax of the PRC (the "EIT Law") and the Implementation Regulation of the EIT Law, the tax rate of the Group's PRC subsidiaries is 25% for both years.

The income tax expense for the year can be reconciled to the profit before income tax as follows:

	Year ended 31 December
	2023
RMB'000	2022
RMB'000
Profit before income tax	2,919,140	3,378,020
Tax at the statutory tax rate of 25%	729,785	844,505
Effect of share of results of associates	(142,633)	(203,194)
Adjustments for prior years	20,226	(20,663)
Tax effect of expenses not deductible for tax purpose	65,756	46,602
Tax effect of income not taxable for tax purpose (Note a)	(493,427)	(474,287)
Tax effect of deductible temporary differences and tax losses not recognised (Note b)	59,655	256,308
Utilisation of tax losses previously not recognised	(38,582)	(57,284)
Income tax at concessionary rate	21	(11)
Effect of different tax rates of subsidiaries operating in other jurisdictions	21,110	35,087
Other (Note c)	(59,375)	(59,375)
Income tax expense for the year	162,536	367,688

Note a: Income not taxable for tax purpose mainly includes interest income from government bonds.
Note b: The Group has estimated unutilised tax losses which are not recognised as deferred tax assets of approximately RMB1,406 million as at 31 December 2023 (31 December 2022: RMB1,210 million), available for offsetting against future profits. No deferred tax assets have been recognised in respect of estimated tax losses due to the unpredictability of future profit streams. Those tax losses arising from the subsidiaries in Hong Kong and Singapore could be carried forward indefinitely.
Note c: According to the announcement on corporate income tax policy of perpetual bonds (Announcement No. 64, 2019 of the Ministry of Finance and the State Taxation Administration), when an enterprise issues perpetual bonds that meet specified conditions, the current year interest expense attributable to perpetual bond paid by the issuer is allowed to be deducted for the purpose of enterprise income tax computation.

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

17. EARNINGS PER SHARE

The calculation of basic earnings per share attributable to the shareholders of the Company is as follows:

	Year ended 31 December
	2023 RMB'000	2022 RMB'000
Earnings for the purpose of basic earnings per share:
Profit for the year attributable to equity holders of the Company	2,753,755	3,010,558
Less: profit attributable to holders of perpetual subordinated bond	(237,500)	(237,500)
Subtotal	2,516,255	2,773,058
Number of shares (in thousand):
Number of issued shares on 1 January	8,496,645	6,993,656
Effect of A share and H share rights issue (Note a)	–	1,011,199
Effect of treasury stock (Note 51)	(4,625)	–
Weighted average number of ordinary shares in issue	8,492,020	8,004,855
Basic earnings per share (RMB Yuan)	0.30	0.35

There were no potential dilutive ordinary shares in issue during the years ended 31 December 2023 and 2022, thus no diluted earnings per share is presented.

Note a: During the year ended 31 December 2022, the Company offered rights issue to its existing A share and H share shareholders, respectively. As the price for A rights share was below the market price at the time of rights issue, there were bonus elements for A share rights issue and the weighted average number of ordinary shares was adjusted accordingly.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

18. CASH AND BANK BALANCES

	As at 31 December
	2023
RMB'000	2022
RMB'000
House accounts	21,115,779	24,840,675
including: restricted bank deposits (Note a)	1,480,962	1,042,908
Cash held on behalf of clients (Note b)	82,977,363	97,021,385
	104,093,142	121,862,060

Cash and bank balances comprise cash on hand and demand deposits which bear interest at the prevailing market rates.

Note a: The restricted bank deposits as of 31 December 2023 and 31 December 2022 included pledged bank deposits and other restricted bank deposits.

19. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise the following:

	As at 31 December
	2023
RMB'000	2022
RMB'000
Cash and bank balances	21,083,116	24,817,952
Clearing settlement funds	6,654,860	3,201,834
Less: clearing settlement funds of
Orient Securities Futures Co., Ltd.	(8,000)	(8,000)
bank deposits with original maturity of more than three months	(3,158,778)	(814,344)
restricted bank deposits (Note 18)	(1,480,962)	(1,042,908)
	23,090,236	26,154,534

408 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

20. CLEARING SETTLEMENT FUNDS

	As at 31 December
	2023
RMB'000	2022
RMB'000
Clearing settlement funds held with clearing houses for:
House accounts	6,654,860	3,201,834
Clients	28,659,551	25,904,438
	35,314,411	29,106,272

21. DEPOSITS WITH EXCHANGES AND FINANCIAL INSTITUTIONS

	As at 31 December
	2023
RMB'000	2022
RMB'000
Trading deposits	404,519	793,571
Credit deposits	49,727	41,497
Performance bonds	2,787,301	3,508,166
	3,241,547	4,343,234

– F-332 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

22. DERIVATIVE FINANCIAL INSTRUMENTS

	As at 31 December 31 2023
	Notional amountsRMB'000	Fair ValueAssetsRMB'000	LiabilitiesRMB'000
Hedging instruments (i)
- Currency derivatives
Foreign exchange forward	904,761	16,434	-
Non-hedging instruments
- Interest rate derivatives
Interest rate swaps (ii)	870,815,000	26,770	16,812
Treasury bond futures (iii)	67,060,207	-	84
Collar options	7,371,130	13,694	64,510
- Equity derivatives
Stock index futures (iv)	10,892,190	-	301
Equity linked derivatives	29,870,989	1,102,221	198,154
Stock index options	21,275,020	201,781	198,432
- Currency derivatives
Foreign exchange options (ii)	12,320,687	12,728	41,294
Foreign exchange swaps (ii)	29,780,501	26,433	1,240
Foreign exchange forward	2,019,619	31,323	-
- Credit derivatives
Credit default swap	1,339,000	17,365	314
- Other derivative instruments
Total return swaps	16,025,950	121,438	225,923
Commodity futures (iii)	29,572,761	-	-
Gold swaps	122,422	292	-
Gold forwards	4,959,508	248,764	-
Gold deferred contracts (iii)	480	-	-
Commodity options	15,792,613	58,407	127,138
Standard bond forward (iii)	10,000	-	-
	1,120,132,838	1,877,650	874,202

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

22. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

	As at 31 December 2022
	Notional amounts RMB'000	Fair Value Assets RMB'000	Liabilities RMB'000
Non-hedging instruments
- Interest rate derivatives
Interest rate swaps (ii)	674,940,000	8,328	4,931
Treasury bond futures (iii)	21,914,525	-	-
Collar options	204,220	-	7,233
- Equity derivatives
Stock index futures (iv)	9,805,390	-	672
Equity linked derivatives	24,753,845	551,075	124,570
Stock index options	12,433,694	109,451	46,263
- Currency derivatives
Foreign exchange options (ii)	2,094,581	1,667	25,332
Foreign exchange swaps (ii)	27,069,842	1,657	1,449
Foreign exchange forward	5,410,290	45,831	-
- Credit derivatives
Credit default swap	1,175,000	21,379	-
- Other derivative instruments
Total return swaps	4,257,833	58,446	68,099
Commodity futures (iii)	57,951,047	-	-
Gold swaps	3,016,037	136,628	-
Gold forwards	2,125,140	76,935	-
Gold deferred contracts (iii)	410	-	-
Commodity options	6,293,995	5,937	29,897
Standard bond forward (iii)	150,000	-	-
	853,595,849	1,017,334	308,446

F-334 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

22. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

(i) Fair value hedges

Fair value hedges are used by the Group to protect against changes in the fair value of equity instruments at fair value through other comprehensive income due to exchange rate fluctuations in the foreign exchange market.

As of 31 December 2023, the notional amount of hedging instruments designated as fair value hedge is HKD984,924 thousand and the tenure is within 6 months.

As of 31 December 2023, the carrying amount of the hedged item is RMB999,119 thousand, and losses associated with hedging risk on hedged items is RMB22,811 thousand.

During the year ended 31 December 2023, net losses arising from derivatives qualified as fair value hedges amounting to RMB16,434 thousand were recognised in other comprehensive income.

(ii) Interest rate swaps, foreign exchange swaps and foreign exchange options: Daily mark-to-market settlement arrangement was implemented for some transactions of these derivatives. Any gains or losses of the Group's position in these transactions were settled daily.

(iii) Treasury bond futures, commodity futures, gold deferred contracts and standard bond forward: Under the daily mark-to-market settlement arrangement, any gains or losses of the Group's position in these derivatives were settled daily and the corresponding receipts and payments were included in "clearing settlement funds", except that treasury bond futures in Hong Kong market is not under the daily mark-to-market settlement arrangement and is presented in gross.

(iv) Stock index futures: Under the daily mark-to-market settlement arrangement, any gains or losses of the Group's position in stock index futures ("SIF") were settled daily and the corresponding receipts and payments were included in "clearing settlement funds", except that SIF in Hong Kong market is not under the daily mark-to-market settlement arrangement and is presented in gross.

412 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

22. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

Details of the Group's treasury bond futures, commodity futures, gold deferred contracts and standard bond forward are set out below:

As at 31 December

	2023		2022
	Notional amount RMB'000	Fair value RMB'000	Notional amount RMB'000	Fair value RMB'000
Treasury bond futures	67,060,207	56,854	21,914,525	32,855
Less: settlement		56,938		32,855
Net position of treasury bond futures		(84)		-
Commodity futures	29,572,761	(2,723)	57,951,047	5,442
Less: settlement		(2,723)		5,442
Net position of commodity futures		-		-
Gold deferred contracts	480	53	410	(17)
Less: settlement		53		(17)
Net position of gold deferred contracts		-		-
Standard bond forward	10,000	366	150,000	185
Less: settlement		366		185
Net position of standard bond forward		-		-

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

22. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

Details of the Group's interest rate swaps are set out below:

As at 31 December

	2023		2022
	Notional amount RMB'000	Fair value RMB'000	Notional amount RMB'000	Fair value RMB'000
Interest rate swaps	870,815,000	(256,583)	674,940,000	101,314
Less: settlement		(266,541)		97,917
Net position of interest rate swaps		9,958		3,397

Details of the Group's foreign exchange swaps are set out below:

As at 31 December

	2023		2022
	Notional amount RMB'000	Fair value RMB'000	Notional amount RMB'000	Fair value RMB'000
Foreign exchange swaps	29,780,501	41,286	27,069,842	(79,401)
Less: settlement		16,093		(79,609)
Net position of foreign exchange swap		25,193		208

414 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

22. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

Details of the Group's foreign exchange options are set out below:

As at 31 December

	2023		2022
	Notional amount RMB'000	Fair value RMB'000	Notional amount RMB'000	Fair value RMB'000
Foreign exchange options	12,320,687	(28,587)	2,094,581	(23,670)
Less: settlement		(21)		(5)
Net position of foreign exchange options		(28,566)		(23,665)

Details of the Group's SIF are set out below:

As at 31 December

	2023		2022
	Notional amount RMB'000	Fair value RMB'000	Notional amount RMB'000	Fair value RMB'000
SIF	10,892,190	(22,522)	9,805,390	(116,284)
Less: settlement		(22,221)		(115,612)
Net position of SIF		(301)		(672)

Annual Report 2023 DFZQ 415

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

23. ADVANCES TO CUSTOMERS

	As at 31 December
	2023
RMB'000	2022
RMB'000
Loans to margin clients	21,127,701	19,551,657
Less: impairment allowance	(55,900)	(52,758)
	21,071,801	19,498,899

The credit facility limits to margin clients are determined by the discounted market value of the collateral securities accepted by the Group.

Advances to customers were secured by the customers' securities and cash collateral, which were pledged to the Group as collateral. The total undiscounted market values of collaterals held in clients' margin accounts in respect of margin financing business amounted to approximately RMB67,734 million as at 31 December 2023 (31 December 2022: RMB64,597 million).

416 DFZQ Annual Report 2023

F-339 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

23. ADVANCES TO CUSTOMERS (Continued)

The following table shows reconciliation of loss allowances that has been recognised for advances to customers.

| | 12m ECL
RMB'000 | Lifetime ECL
(not credit-impaired)
RMB'000 | Lifetime ECL
(credit-impaired)
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| As at 1 January 2023 | 1,121 | 699 | 50,938 | 52,758 |
| – Transfer to lifetime not credit-impaired | (11) | 11 | – | – |
| – Transfer to 12m ECL | 74 | (74) | – | – |
| – Impairment losses recognised/(reversed) | 848 | (206) | 1,829 | 2,471 |
| – Foreign exchange differences | 2 | – | 669 | 671 |
| As at 31 December 2023 | 2,034 | 430 | 53,436 | 55,900 |
| | 12m ECL
RMB'000 | Lifetime ECL
(not credit-impaired)
RMB'000 | Lifetime ECL
(credit-impaired)
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| As at 1 January 2022 | 1,299 | 215 | 46,648 | 48,162 |
| – Transfer to lifetime not credit-impaired | (162) | 162 | – | – |
| – Transfer to 12m ECL | 182 | (182) | – | – |
| – Impairment losses (reversed)/recognised | (200) | 504 | 429 | 733 |
| – Foreign exchange differences | 2 | – | 3,861 | 3,863 |
| As at 31 December 2022 | 1,121 | 699 | 50,938 | 52,758 |

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

23. ADVANCES TO CUSTOMERS (Continued)

The table below details the credit risk exposures of the Group's advances to customers, which are subject to ECL assessment.

As at 31 December 2023

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	19,985,108	1,089,157	53,436	21,127,701

As at 31 December 2022

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	18,473,192	1,027,527	50,938	19,551,657

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

24. ACCOUNT RECEIVABLES

	As at 31 December
	2023
RMB'000	2022
RMB'000
Account receivables from/related to:
- Clearing house	132,812	66,046
- Brokers	106,762	255,539
- Asset management fee and trading seats commission	391,594	548,595
- Advisory and investment banking commission	43,730	48,490
Subtotal	674,898	918,670
Less: impairment allowance	(4,139)	(10,271)
	670,759	908,399

Aging analysis of account receivables from the revenue recognition dates is as follows:

	As at 31 December
	2023
RMB'000	2022
RMB'000
Within 1 year	652,356	856,390
Between 1 and 2 years	13,786	45,089
Between 2 and 3 years	4,617	2,515
Over 3 years	-	4,405
	670,759	908,399

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

24. ACCOUNT RECEIVABLES (Continued)

The following table shows reconciliation of loss allowances that has been recognised for account receivables.

	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
As at 1 January 2023	4,398	5,873	10,271
– Impairment losses reversed	(950)	(5,205)	(6,155)
– Foreign exchange differences	23	–	23
As at 31 December 2023	3,471	668	4,139
	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
---	---	---	---
As at 1 January 2022	5,405	5,853	11,258
– Impairment losses (reversed)/recognised	(1,170)	120	(1,050)
– Write off	–	(100)	(100)
– Foreign exchange differences	163	–	163
As at 31 December 2022	4,398	5,873	10,271

420 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

24. ACCOUNT RECEIVABLES (Continued)

The table below details the credit risk exposures of the Group's account receivables, which are subject to ECL assessment.

As at 31 December 2023

	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	674,230	668	674,898

As at 31 December 2022

	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	907,090	11,580	918,670

As at 31 December 2023, included in the Group's account receivables balance are those with aggregate carrying amount of RMB668 thousand (31 December 2022: RMB10,236 thousand) which are past due as at the reporting date.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

25. REVERSE REPURCHASE AGREEMENTS

	As at 31 December
	2023
RMB'000	2022
RMB'000
Analysed by collateral type:
- Stock	6,469,633	9,965,133
- Bonds	3,857,202	3,575,907
Subtotal	10,326,835	13,541,040
Less: impairment allowance	(4,889,101)	(4,930,159)
	5,437,734	8,610,881
Analysed by market:
- Stock exchange	8,334,166	10,749,892
- Inter-bank market	1,992,669	2,791,148
Less: impairment allowance	(4,889,101)	(4,930,159)
	5,437,734	8,610,881

422 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

25. REVERSE REPURCHASE AGREEMENTS (Continued)

The following tables show reconciliation of loss allowances that have been recognised for financial assets (collateralised by stock) held under resale agreements.

| | 12m ECL
RMB'000 | Lifetime ECL
(not credit-impaired)
RMB'000 | Lifetime ECL
(credit-impaired)
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| As at 1 January 2023 | - | - | 4,930,159 | 4,930,159 |
| - Impairment losses recognised | - | - | 990,715 | 990,715 |
| - Transfer out | - | - | (1,031,773) | (1,031,773) |
| As at 31 December 2023 | - | - | 4,889,101 | 4,889,101 |
| | 12m ECL
RMB'000 | Lifetime ECL
(not credit-impaired)
RMB'000 | Lifetime ECL
(credit-impaired)
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| As at 1 January 2022 | - | - | 5,382,806 | 5,382,806 |
| - Impairment losses recognised | - | - | 767,458 | 767,458 |
| - Transfer out | - | - | (1,196,286) | (1,196,286) |
| - Write off | - | - | (23,819) | (23,819) |
| As at 31 December 2022 | - | - | 4,930,159 | 4,930,159 |

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

25. REVERSE REPURCHASE AGREEMENTS (Continued)

The table below details the credit risk exposures of the Group's reverse repurchase agreements, which are subject to ECL assessment.

As at 31 December 2023

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	3,857,202	–	6,469,633	10,326,835
– Stock	–	–	6,469,633	6,469,633
– Bonds	3,857,202	–	–	3,857,202

As at 31 December 2022

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	3,575,907	–	9,965,133	13,541,040
– Stock	–	–	9,965,133	9,965,133
– Bonds	3,575,907	–	–	3,575,907

Both the gross carrying amount of the Group's reverse repurchase agreements in credit-impaired stage and the amount of ECL of this stage decreased as at 31 December 2023 as compared with 31 December 2022.

DFZQ Annual Report 2023

– F-347 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

26. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

	As at 31 December
	2023
RMB'000	2022
RMB'000
Analysed by type:
- Debt securities (Note a)	44,260,049	36,616,115
- Equity securities	6,916,863	6,205,297
- Funds	15,938,601	11,707,357
- Associates (Note b)	1,800,815	1,933,905
- Other investments (Note c)	28,153,316	27,301,056
	97,069,644	83,763,730
Analysed as:
- Listed (Note d)	21,239,787	18,742,963
- Unlisted (Note e)	75,829,857	65,020,767
	97,069,644	83,763,730

Note b: This consists of 67 associates measured at fair value as at 31 December 2023 (31 December 2022: 55) and none of these associates is individually material.

Note c: Other investments mainly represent investments in collective asset management schemes issued and managed by the Group, perpetual instruments, wealth management products issued by banks and targeted asset management schemes (or trust investments) managed by non-bank financial institutions. These investments mainly invest in debt securities and publicly traded equity securities listed in the PRC.

Note d: Securities and funds traded on stock exchanges are included in the "Listed" category.

Note e: The unlisted debt securities and perpetual instruments were traded on inter-bank market.

As at 31 December 2023, the Group's pledged collateral of bonds and funds included in financial assets at fair value through profit or loss in connection with its repurchase agreements and securities borrowing amounted to RMB30,812 million (31 December 2022: RMB28,779 million) and RMB2,658 million (31 December 2022: RMB2,125 million), respectively.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

27. DEBT INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

	As at 31 December
	2023
RMB'000	2022
RMB'000
Analysed by type:
- Government bonds	37,329,351	24,202,295
- Bonds issued by policy banks	1,497,672	1,686,510
- Bonds issued by commercial banks and other financial institutions	3,406,222	3,648,763
- Other debt securities (Note a)	48,580,468	47,324,528
	90,813,713	76,862,096
Analysed as:
- Listed (Note b)	49,568,073	43,715,110
- Unlisted (Note c)	41,245,640	33,146,986
	90,813,713	76,862,096

As at 31 December 2023, the Group's pledged collateral of bonds included in debt instruments at FVTOCI in connection with its repurchase agreements and securities borrowing amounted to RMB44,956 million (31 December 2022: RMB25,802 million) and RMB7,671 million (31 December 2022: RMB13,918 million), respectively.

426 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

27. DEBT INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Continued)

The following table shows reconciliation of loss allowances that have been recognised for debt instruments at FVTOCI.

| | 12m ECL
RMB'000 | Lifetime ECL
(not credit-impaired)
RMB'000 | Lifetime ECL
(credit-impaired)
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| As at 1 January 2023 | 18,187 | - | 235,431 | 253,618 |
| - Transfer to lifetime not credit-impaired | (13) | 13 | - | - |
| - Transfer to lifetime credit-impaired | - | (4,650) | 4,650 | - |
| - Impairment losses recognised | 3,645 | 4,637 | 18,384 | 26,666 |
| - Write off | - | - | (106,037) | (106,037) |
| - Foreign exchange differences | (125) | - | - | (125) |
| As at 31 December 2023 | 21,694 | - | 152,428 | 174,122 |
| | 12m ECL
RMB'000 | Lifetime ECL
(not credit-impaired)
RMB'000 | Lifetime ECL
(credit-impaired)
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| As at 1 January 2022 | 11,225 | 25,350 | 196,896 | 233,471 |
| - Transfer to lifetime not credit-impaired | (32) | 32 | - | - |
| - Transfer to lifetime credit-impaired | - | (25,382) | 25,382 | - |
| - Impairment losses recognised | 6,985 | - | 53,113 | 60,098 |
| - Write off | - | - | (39,960) | (39,960) |
| - Foreign exchange differences | 9 | - | - | 9 |
| As at 31 December 2022 | 18,187 | - | 235,431 | 253,618 |

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

27. DEBT INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Continued)

The table below details the credit risk exposures of the Group's debt instruments at FVTOCI, which are subject to ECL assessment.

As at 31 December 2023

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	90,644,003	–	288,918	90,932,921

As at 31 December 2022

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	77,236,316	–	366,111	77,602,427

428 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

28. EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

	As at 31 December
	2023
RMB'000	2022
RMB'000
Analysed by type:
- Equity securities (Note a)	4,521,902	3,390,348
- Perpetual instruments (Note b)	1,776,276	331,310
	6,298,178	3,721,658
Analysed as:
- Listed (Note c)	4,458,619	3,498,354
- Unlisted (Note d)	1,839,559	223,304
	6,298,178	3,721,658

Note a: The above equity investments include those ordinary shares of the entities listed on the Shanghai Stock Exchange, the Shenzhen Stock Exchange and the Hong Kong Stock Exchange and those equity securities traded on National Equities Exchange and Quotations (the "NEEQ"). These investments are not held for trading, instead, they are held for long-term strategic purposes. The Group has elected to designate these investments in equity instruments as at FVTOCI as it believes that recognising short-term fluctuations in these investments' fair value in profit or loss would not be consistent with the Group's strategy of holding these investments for long-term purposes and realising their performance potential in the long run.

Besides, some of the above equity investments represent the Group's equity interests in private entities established in the PRC. The directors of the Company have elected to designate these investments in equity instruments as at FVTOCI for the strategy of holding these investments for long-term purposes.

In the current year, the Group disposed of certain investments in equity securities traded on the NEEQ, equity investments listed on stock exchanges and private equity investments as these investments no longer meet the investment objective of the Group. The cumulative losses net of income tax on disposal of RMB1,288 thousand (2022: cumulative losses net of income tax on disposal of RMB903 thousand) on equity securities traded on the NEEQ, and the cumulative gains net of income tax on disposal of RMB14,776 thousand (2022: cumulative gains net of income tax on disposal of RMB463,225 thousand) on equity securities listed on stock exchanges and RMB2,589 thousand (2022: cumulative gains net of income tax on disposal of RMB2,156 thousand) on private equity investments have been transferred to retained earnings respectively.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

28. EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Continued)

Note b: Those perpetual instruments are equity instruments which are not held for trading. Instead, they are held for long-term strategic purposes. The Group has elected to designate these perpetual instruments as at FVTOCI as it believes that recognising short-term fluctuations in these investments' fair value in profit or loss would not be consistent with the Group's strategy of holding these investments for long-term purposes and realising their dividend income in the long run. In 2023, the Group disposed of certain perpetual instruments as these investments no longer meet the investment objective of the Group. The cumulative gains net of income tax on disposal of RMB7,006 thousand (2022: Nil) on perpetual instruments have been transferred to retained earnings respectively.

Note c: Securities traded on stock exchanges are included in the "Listed" category.

Note d: The unlisted perpetual instruments were traded on inter-bank market.

As at 31 December 2023, the Group's perpetual instruments recorded in equity instruments at FVTOCI pledged as collateral for the Group's repurchase agreements amounted to nil (31 December 2022: RMB310 million) and for securities borrowing amounted to RMB51 million (31 December 2022: Nil), respectively.

29. DEBT INSTRUMENTS MEASURED AT AMORTISED COST

	As at 31 December
	2023 RMB'000	2022 RMB'000
Analysed by type:
- Government bonds	957,585	957,585
- Bonds issued by commercial banks and other financial institutions	440,417	1,862,751
- Other debt securities (Note a)	188,651	344,747
Less: impairment allowance	(62)	(111)
	1,586,591	3,164,972
Analysed as:
- Listed (Note b)	279,498	435,544
- Unlisted (Note c)	1,307,093	2,729,428
	1,586,591	3,164,972

Note a: Other debt securities mainly comprise bonds and notes issued by corporates.

Note b: The debt securities traded on stock exchanges are included in the "Listed" category.

Note c: The unlisted debt securities were traded on inter-bank market.

430 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

29. DEBT INSTRUMENTS MEASURED AT AMORTISED COST (Continued)

The following table shows reconciliation of loss allowances that has been recognised for debt instruments measured at amortised cost.

| | 12m ECL
RMB'000 | Lifetime ECL
(not credit-impaired)
RMB'000 | Lifetime ECL
(credit-impaired)
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| As at 1 January 2023 | 111 | - | - | 111 |
| - Impairment losses reversed | (49) | - | - | (49) |
| As at 31 December 2023 | 62 | - | - | 62 |
| | 12m ECL
RMB'000 | Lifetime ECL
(not credit-impaired)
RMB'000 | Lifetime ECL
(credit-impaired)
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| As at 1 January 2022 | 228 | - | - | 228 |
| - Impairment losses reversed | (117) | - | - | (117) |
| As at 31 December 2022 | 111 | - | - | 111 |

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

29. DEBT INSTRUMENTS MEASURED AT AMORTISED COST (Continued)

The table below details the credit risk exposures of the Group's debt instruments measured at amortised cost, which are subject to ECL assessment:

As at 31 December 2023

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	1,586,653	-	-	1,586,653

As at 31 December 2022

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	3,165,083	-	-	3,165,083

As of 31 December 2023 and 2022, all of the Group's debt instruments measured at amortised cost are bonds that are investment grade. Therefore, these investments are considered to be low credit risk investments.

As at 31 December 2023, the Group pledged bonds included in debt instruments measured at amortised cost as collateral in connection with its repurchase agreements amounting to RMB1,581 million (31 December 2022: RMB2,777 million) and in connection with its securities borrowing amounting to nil (31 December 2022: RMB223 million), respectively.

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

30. INVESTMENTS IN ASSOCIATES

	As at 31 December
	2023
RMB'000	2022
RMB'000
Cost of unlisted investments in associates	2,850,491	2,748,867
Share of post-acquisition profits and other comprehensive income, net of dividends received	3,800,651	3,711,779
Less: impairment allowance (Note a)	(397,168)	(218,726)
	6,253,974	6,241,920

Note a: The impairment allowance of investments in associates as at 31 December 2023 related to three associates invested by the Group. In 2023, there were indications of impairment for OCI International Holdings Limited as a result of the continued decline in its share price and the continued losses from operations. The impairment loss of the other two associates were not material. The Group performed impairment test for OCI International Holdings Limited by comparing its recoverable amounts with its carrying amount. A provision for impairment of approximately RMB220 million was made during the year ended 31 December 2023.

At the end of each reporting period, the Group had the following principal associates accounted for using the equity method:

Name of associates	Place and date of establishment	Equity interest held by the Group as at 31 December		Principal activities
		2023	2022
匯添富基金管理股份有限公司	PRC	35.41%	35.41%	Fund management
China Universal Asset Management Company Limited ("China Universal")	3 February 2005
東證睿波(上海)投資中心(有限合夥)	PRC	55.63%	55.63%	Investment management
Orient Securities Ruibo (Shanghai) Investment Center LLP. (1)*	25 June 2015
				Annual Report 2023 DFZQ 433

– F-356 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

30. INVESTMENTS IN ASSOCIATES (Continued)

Name of associates	Place and date of establishment	Equity interest held by the Group as at 31 December
		2023	2022
海寧東證藍海併購投資合夥企業(有限合夥)	PRC
13 July 2016	25.75%	25.75%	Investment management
Haining Orient Securities Lanhai Merge
Investment Partnership LLP. *
東建國際控股有限公司
OCI International Holdings Limited	Cayman Islands
6 June 2015	20.94%	20.94%	Securities Investment
誠泰融資租賃(上海)有限公司
Chengtay Financial Leasing
(Shanghai) Co., Ltd.	PRC
11 September 2015	20.19%	20.19%	Leasing
宜興東證睿元股權投資合夥企業(有限合夥)	PRC
11 March 2020	19.19%	19.18%	Investment management
Yixing Dongzheng Ruiyuan Equity
Investment Partnership LLP. (2)*
寧波梅山保稅港區東證夏德投資合夥企業(有限合夥)	PRC
11 February 2018	18.89%	18.89%	Investment management
Ningbo Meishan Bonded Port Area
Orient Securities Xiade Investment
Partnership LLP. (2)*
南通東證富象股權投資中心(有限合夥)	PRC
7 November 2017	19.93%	19.93%	Investment management
Nantong Orient Securities Fuxiang
Equity Investment Center LLP. (2)*
成都交子東方投資發展合夥企業(有限合夥)	PRC
17 January 2020	50.00%	50.00%	Leasing and investment management
Chengdu Jiaozi Oriental Investment
Development Partnership LLP. (1)*

English translated names are for identification purpose only.

434 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

30. INVESTMENTS IN ASSOCIATES (Continued)

China Universal

	As at 31 December
	2023
RMB'000	2022
RMB'000
Total assets	13,936,772	13,547,905
Total liabilities	4,063,448	4,158,872
Net assets	9,873,324	9,389,033
	Year ended 31 December
---	---	---
	2023
RMB'000	2022
RMB'000
Total revenue	5,371,161	6,787,450
Profit for the year	1,415,499	2,093,657
Other comprehensive income	9,807	46,481
Total comprehensive income	1,425,306	2,140,138

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

30. INVESTMENTS IN ASSOCIATES (Continued)

China Universal (Continued)

Reconciliation of the above consolidated financial information to the carrying amount of the interest in above associate recognised in the financial statements:

	As at 31 December
	2023
RMB'000	2022
RMB'000
Equity attributable to equity holders of the associate	9,873,324	9,389,033
Proportion of equity interests held by the Group	35.41%	35.41%
Carrying amount	3,496,013	3,324,542

Aggregate information of associates that are not individually material:

	Year ended 31 December
	2023
RMB'000	2022
RMB'000
The Group's share of profits/(losses)	83,021	(75,381)
The Group's share of other comprehensive income	1,045	499
The Group's share of total comprehensive income/(expenses)	84,066	(74,882)
Aggregate carrying amount of the Group's interests in these associates	2,757,961	2,917,378

436 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

31. INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES

31.1 Structured entities set up and managed by the Group

The Group served as the investment manager of structured entities (including funds, collective asset management schemes and limited partnerships), therefore had power over them during the years ended 31 December 2023 and 2022. Except for the structured entities the Group has consolidated as disclosed in Note 36, based on management assessment, these structured entities are not controlled by the Group. The Group therefore did not consolidate these structured entities.

The total net assets of unconsolidated funds, asset management schemes and limited partnership set up and managed by the Group amounted to RMB257,708 million as at 31 December 2023 (31 December 2022: RMB310,285 million). The relating asset and fund management fee income for the year ended 31 December 2023 amounted to RMB2,268 million (31 December 2022: RMB2,849 million). The Group classified the investments in unconsolidated funds, asset management schemes and limited partnership as financial assets at FVTPL and investments in associates as at 31 December 2023 and 2022. As at 31 December 2023, the carrying amount of the Group's interests in unconsolidated funds, asset management schemes and limited partnership were RMB3,846 million (31 December 2022: RMB3,563 million), which approximates the maximum risk exposure of the Group.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

31. INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES (Continued)

31.1 Structured entities set up and managed by the Group (Continued)

As at 31 December 2023

	Carrying amount RMB'000	Maximum loss exposure RMB'000
Financial assets at fair value through profit or loss	2,951,495	2,951,495
Investments in associates	894,634	894,634
Total	3,846,129	3,846,129

As at 31 December 2022

	Carrying amount RMB'000	Maximum loss exposure RMB'000
Financial assets at fair value through profit or loss	2,412,242	2,412,242
Investments in associates	1,151,231	1,151,231
Total	3,563,473	3,563,473

438 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

31. INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES (Continued)

31.2 Structured entities set up and managed by third party institutions in which the Group holds an interest

As at 31 December 2023

	Carrying amount RMB'000	Maximum loss exposure RMB'000
Financial assets at fair value through profit or loss	35,120,650	35,120,650
Investments in associates	161,385	161,385
Total	35,282,035	35,282,035

As at 31 December 2022

	Carrying amount RMB'000	Maximum loss exposure RMB'000
Financial assets at fair value through profit or loss	30,710,810	30,710,810
Investments in associates	176,241	176,241
Total	30,887,051	30,887,051

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

32. RIGHT-OF-USE ASSETS

440 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

32. RIGHT-OF-USE ASSETS (Continued)

| | Buildings
RMB'000 | Motor Vehicles
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- |
| COST | | | |
| As at 1 January 2022 | 1,568,661 | 3,429 | 1,572,090 |
| Additions | 232,545 | 3,366 | 235,911 |
| Deductions | (158,547) | (684) | (159,231) |
| Transfer during the year | 6,888 | - | 6,888 |
| Exchange difference | 5,453 | - | 5,453 |
| As at 31 December 2022 | 1,655,000 | 6,111 | 1,661,111 |
| ACCUMULATED DEPRECIATION | | | |
| As at 1 January 2022 | 795,620 | 2,457 | 798,077 |
| Charge for the year | 348,502 | 1,681 | 350,183 |
| Deductions | (137,081) | (678) | (137,759) |
| Transfer during the year | 6,888 | - | 6,888 |
| Exchange difference | 3,807 | - | 3,807 |
| As at 31 December 2022 | 1,017,736 | 3,460 | 1,021,196 |
| CARRYING AMOUNT | | | |
| As at 1 January 2022 | 773,041 | 972 | 774,013 |
| As at 31 December 2022 | 637,264 | 2,651 | 639,915 |

F-364 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

32. RIGHT-OF-USE ASSETS (Continued)

For both years, the Group leased various buildings and vehicles for its operations. Lease contracts are entered into for term of 1 year to 10 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. In determining the lease term and assessing the length of the non-cancellable period, the Group applies the definition of a contract and determines the period for which the contract is enforceable.

For the year ended 31 December 2023, total cash outflow for leases amounted to RMB411,652 thousand (31 December 2022: RMB390,518 thousand); expense relating to short-term leases and leases of low value assets excluding short-term leases of low value assets amounted to RMB8,564 thousand and RMB1,619 thousand respectively (31 December 2022: RMB15,875 thousand and RMB1,078 thousand respectively).

As at 31 December 2023 and 2022, the portfolio of short-term leases is similar to the portfolio of short-term leases to which the short-term lease expense disclosed in Note 14.

In addition, lease liabilities of RMB547,475 thousand were recognised as at 31 December 2023 (31 December 2022: RMB645,777 thousand) (Note 48). Interest expenses of lease liabilities are set out in Note 13. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

As at 31 December 2023 and 2022, the Group did not enter into leases that were not yet commenced.

442 | DFZQ Annual Report 2023

F-365 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

33. INVESTMENT PROPERTIES

| | As at
31 December
2023
RMB'000 | As at
31 December
2022
RMB'000 |
| --- | --- | --- |
| COST | | |
| At beginning of the year | 286,502 | 372,457 |
| Transfer during the year | - | (13,103) |
| Disposal | (96,907) | (72,852) |
| At end of the year | 189,595 | 286,502 |
| ACCUMULATED DEPRECIATION | | |
| At beginning of the year | 20,919 | 20,046 |
| Charge for the year | 8,076 | 11,439 |
| Transfer during the year | - | (8,881) |
| Disposal | (4,813) | (1,685) |
| At end of the year | 24,182 | 20,919 |
| CARRYING VALUES | | |
| At beginning of the year | 265,583 | 352,411 |
| At end of the year | 165,413 | 265,583 |

– F-366 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

PROPERTY AND EQUIPMENT

	Leasehold land and buildings RMB'000	Electronic and communication equipment RMB'000	Motor vehicles RMB'000	Office equipment RMB'000	Leasehold improvements RMB'000	Construction in progress RMB'000	Total RMB'000
COST
As at 1 January 2023	1,885,041	1,096,348	43,720	146,581	661,868	36,304	3,869,862
Additions	-	40,519	256	16,696	38,906	810,895	907,272
Disposals	-	(39,926)	(4,426)	(6,166)	-	-	(50,518)
Transfer during the year	-	80,056	273	1,505	-	(81,834)	-
Exchange difference	-	285	9	75	311	44	724
As at 31 December 2023	1,885,041	1,177,282	39,832	158,691	701,085	765,409	4,727,340
ACCUMULATED DEPRECIATION
As at 1 January 2023	321,392	770,940	35,404	90,545	521,114	-	1,739,395
Charge for the year	64,923	137,738	2,808	28,727	60,684	-	294,880
Eliminated on disposals	-	(36,878)	(4,294)	(5,634)	-	-	(46,806)
Exchange difference	-	214	9	56	223	-	502
As at 31 December 2023	386,315	872,014	33,927	113,694	582,021	-	1,987,971
CARRYING VALUES
As at 31 December 2023	1,498,726	305,268	5,905	44,997	119,064	765,409	2,739,369

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

34. PROPERTY AND EQUIPMENT (Continued)

	Leasehold land and buildings RMB'000	Electronic and communication equipment RMB'000	Motor vehicles RMB'000	Office equipment RMB'000	Leasehold improvements RMB'000	Construction in progress RMB'000	Total RMB'000
COST
As at 1 January 2022	1,879,840	1,071,380	43,841	145,556	629,057	26,712	3,796,386
Additions	-	57,213	260	8,346	30,979	80,737	177,535
Disposals	(1,014)	(103,385)	(434)	(9,156)	-	-	(113,989)
Transfer during the year	6,215	69,814	-	1,599	-	(71,413)	6,215
Exchange difference	-	1,326	53	236	1,832	268	3,715
As at 31 December 2022	1,885,041	1,096,348	43,720	146,581	661,868	36,304	3,869,862
ACCUMULATED DEPRECIATION
As at 1 January 2022	259,621	725,189	32,276	83,227	461,207	-	1,561,520
Charge for the year	60,436	143,388	3,492	15,984	58,844	-	282,144
Eliminated on disposals	(658)	(98,626)	(412)	(8,804)	-	-	(108,500)
Transfer during the year	1,993	-	-	-	-	-	1,993
Exchange difference	-	989	48	138	1,063	-	2,238
As at 31 December 2022	321,392	770,940	35,404	90,545	521,114	-	1,739,395
CARRYING VALUES
As at 31 December 2022	1,563,649	325,408	8,316	56,036	140,754	36,304	2,130,467

F-368 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

35. OTHER INTANGIBLE ASSETS

	Trading rights RMB'000	Computer software RMB'000	Total RMB'000
COST
As at 1 January 2023	61,553	967,131	1,028,684
Additions	–	186,282	186,282
Disposals	–	(6,554)	(6,554)
Exchange difference	–	476	476
As at 31 December 2023	61,553	1,147,335	1,208,888
ACCUMULATED AMORTISATION
As at 1 January 2023	39,810	742,831	782,641
Charge for the year	–	145,710	145,710
Eliminated on disposals	–	(6,554)	(6,554)
Exchange difference	–	367	367
As at 31 December 2023	39,810	882,354	922,164
CARRYING VALUES
As at 31 December 2023	21,743	264,981	286,724

446 DFZQ Annual Report 2023

– F-369 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

35. OTHER INTANGIBLE ASSETS (Continued)

	Trading rights RMB'000	Computer software RMB'000	Total RMB'000
COST
As at 1 January 2022	61,553	836,268	897,821
Additions	–	129,135	129,135
Exchange difference	–	1,728	1,728
As at 31 December 2022	61,553	967,131	1,028,684
ACCUMULATED AMORTISATION
As at 1 January 2022	39,810	607,364	647,174
Charge for the year	–	134,288	134,288
Exchange difference	–	1,179	1,179
As at 31 December 2022	39,810	742,831	782,641
CARRYING VALUES
As at 31 December 2022	21,743	224,300	246,043

Impairment Testing On Trading Rights with Indefinite Useful Lives

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

36. PARTICULARS OF PRINCIPAL SUBSIDIARIES OF THE COMPANY

At the end of each reporting period, the Company has the following subsidiaries comprising the Group:

Name of subsidiaries	Type of legal entity registered	Place of incorporation/establishment/operations	Equity interest held by the Group As at 31 December		Registered capital as at 31 December 2023	Principal activities
			2023	2022
上海莱德期黄有限公司
Orient Securities Futures Co., Ltd. (1) (4)	Limited liability company	PRC	100.00%	100.00%	RMB4,300,000,000	Commodity futures brokerage, financial futures brokerage, and futures investment advisory
上海莱锡投资管理有限公司
Shanghai Dongqi Investment Management Co., Ltd. *	Limited liability company	PRC	100.00%	100.00%	RMB250,000,000	Equity investment, investment management, and asset management
莱德商和资本管理有限公司
Orient Runhe Asset Management Co., Ltd. *	Limited liability company	PRC	100.00%	100.00%	RMB1,000,000,000	Equity investment, investment management, and asset management
上海莱方提供资质管理有限公司
Orient Securities Asset Management Co., Ltd. (1)	Limited liability company	PRC	100.00%	100.00%	RMB300,000,000	Securities asset management, securities investment, and fund management
上海莱方提供资本投资有限公司
Orient Securities Capital Co., Ltd. (1)	Limited liability company	PRC	100.00%	100.00%	RMB4,000,000,000	Private equity investment, bond investment, and related investment advisory
莱方睿嘉(上海)投资管理有限公司
Orient Ruiyi (Shanghai) Investment Management Co., Ltd. *	Limited liability company	PRC	100.00%	100.00%	RMB1,350,000,000	Investment management and investment advisory
莱方变牌(北京)投资基金管理有限公司
Orient Xinghui (Beijing) Investment Funds Management Co., Ltd. *	Limited liability company	PRC	57.95%	57.95%	RMB8,800,000	Investment management and investment advisory

448

DFZQ

Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

36. PARTICULARS OF PRINCIPAL SUBSIDIARIES OF THE COMPANY (Continued)

Name of subsidiaries	Type of legal entity registered	Place of incorporation/establishment/operations	Equity interest held by the Group As at 31 December		Registered capital as at 31 December 2023	Principal activities
			2023	2022
東石發展有限公司
East Milestone Company Limited	Limited liability company	Hong Kong	100.00%	100.00%	HKD3,000,000	Investment management and investment advisory
東方眾睿(上海)投資管理有限公司
Orient Securities Yirui (Shanghai) Investment Management Co., Ltd. *	Limited liability company	PRC	51.00%	51.00%	RMB2,000,000	Investment management, asset management, and industrial investment
東方弘泰資本投資(成都)有限公司
Orient Hongtai Capital Investment (Chengdu) Co., Ltd. *	Limited liability company	PRC	51.00%	51.00%	RMB30,000,000	Investment management, asset management, and project investment
Golden Power Group Limited	Limited liability company	British Virgin Islands ("BVI")	100.00%	100.00%	USD100	Equity investment and industrial investment
誠麟環球有限公司(1)
Chengqi Global Limited *	Limited liability Company	BVI	N/A	100.00%	USD100	Equity investment and industrial investment
東方金融控股(香港)有限公司
Orient Finance Holdings (Hong Kong) Limited (1)	Limited liability company	Hong Kong	100.00%	100.00%	HKD2,754,078,015	Investment holding and provision of management services
東方證券(香港)有限公司
ORIENT SECURITIES (HONG KONG) LIMITED	Limited liability company	Hong Kong	100.00%	100.00%	HKD1,000,000,000	Securities brokerage
東方開貨(香港)有限公司
ORIENT FUTURES (HONG KONG) LIMITED	Limited liability company	Hong Kong	100.00%	100.00%	HKD100,000,000	Futures brokerage
東方資產管理(香港)有限公司
ORIENT ASSET MANAGEMENT (HONG KONG) LIMITED	Limited liability company	Hong Kong	100.00%	100.00%	HKD100,000,000	Asset management

F-372 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

36. PARTICULARS OF PRINCIPAL SUBSIDIARIES OF THE COMPANY (Continued)

Name of subsidiaries	Type of legal entity registered	Place of incorporation/establishment/operations	Equity interest held by the Group As at 31 December		Registered capital as at 31 December 2023	Principal activities
			2023	2022
東方融資(香港)有限公司
ORIENT CAPITAL (HONG KONG) LIMITED	Limited liability company	Hong Kong	100.00%	100.00%	HKD150,000,000	Provision of corporate finance advisory services
東方信貸財務(香港)有限公司
ORIENT CREDIT FINANCE (HONG KONG) LIMITED	Limited liability company	Hong Kong	100.00%	100.00%	HKD31,000,000	Credit operations
東方浦盛有限公司
ORIENT HONGSHENG LIMITED (2)	Limited liability company	BVI	100.00%	100.00%	USD1	Special purpose
ORIENT ZHISHENG LIMITED (2)	Limited liability company	BVI	100.00%	100.00%	USD1	Special purpose
東方智慧有限公司
ORIENT ZHIHUI LIMITED	Limited liability company	BVI	100.00%	100.00%	USD1	Special purpose
東方證券承銷保囑有限公司
Orient Securities Investment Banking Co., Ltd. (1)	Limited liability company	PRC	100.00%	100.00%	RMB800,000,000	Securities underwriting and sponsor
上海東方證券創新投資有限公司
Shanghai Orient Securities Innovation Investment Co., Ltd. (1)*	Limited liability company	PRC	100.00%	100.00%	RMB7,500,000,000	Financial assets investment, securities investment, investment management and advisory
南京東證明屋產業投資管理有限公司
Nanjing Orient Mingzhan Industrial Investment Management Co., Ltd. *	Limited liability company	PRC	66.00%	66.00%	RMB10,000,000	Investment management and advisory
ORIENT HUIZHI LIMITED	Limited liability company	BVI	100.00%	100.00%	USD1	Special purpose
東方睿佳有限公司
Orient Ruixin Limited	Limited liability company	Hong Kong	100.00%	100.00%	HKD10,000	Equity investment, industrial investment

450

DFZQ

Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

36. PARTICULARS OF PRINCIPAL SUBSIDIARIES OF THE COMPANY (Continued)

Name of subsidiaries	Type of legal entity registered	Place of incorporation/establishment/operations	Equity interest held by the Group As at 31 December		Registered capital as at 31 December 2023	Principal activities
			2023	2022
東建國際金融集團有限公司
Orient Securities International Financial Group Limited	Limited liability company	Hong Kong	100.00%	100.00%	HKD2,010,000,000	Investment holding and provision of management services
東建開富國際(新加坡)私人有限公司
Orient Futures International (Singapore) Pte. Ltd.	Private Company Limited by shares	Singapore	100.00%	100.00%	SGD92,000,000	Foreign exchange brokers and dealers
東建科技(深圳)有限公司
Orient Securities Technology (Shenzhen) Co., Ltd. *	Limited liability company	Shenzhen	100.00%	100.00%	RMB27,000,000	Software development service
Orient International Investment Products Limited	Limited liability company	BVI	100.00%	100.00%	USD1	Product investment
Orient OAM GP Limited	Limited liability company	Cayman	100.00%	N/A	USD1	Special purpose
Orient OAM Investment Limited	Limited liability company	Cayman	100.00%	N/A	USD1	Special purpose

These subsidiaries do not have official English names. English translated names are for identification only.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

36. PARTICULARS OF PRINCIPAL SUBSIDIARIES OF THE COMPANY (Continued)

(1) These subsidiaries are directly held by the Company.

(2) None of the subsidiaries had issued any debt securities at the end of the year except for ORIENT HONGSHENG LIMITED and ORIENT ZHISHENG LIMITED.

(3) This subsidiary had been liquidated as of 31 December 2023.

(4) During the year ended 31 December 2023, the registered capital and paid-in capital of this subsidiary was increased by RMB500 million to RMB4,300 million.

Interests in consolidated structured entities

The total net assets of the consolidated asset management schemes, funds and limited partnership amounted to RMB3,891 million as at 31 December 2023 (31 December 2022: RMB4,692 million).

Interests in all consolidated asset management schemes, funds and limited partnership held by the Group amounted to fair value of RMB3,522 million as at 31 December 2023 (31 December 2022: RMB4,021 million). The Group held no interest in the subordinated tranche of these structured products in 2023 and 2022.

Interests held by other interest holders are included in financial liabilities designated at FVTPL.

452 DFZQ Annual Report 2023

– F-375 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

37. GOODWILL

Impairment testing on goodwill

	As at 31 December
	2023 RMB'000	2022 RMB'000
Cost and carrying value
Unit A – securities brokerage branches	18,948	18,948
Unit B – Orient Securities Futures Co., Ltd.	13,187	13,187
	32,135	32,135

As at 31 December 2023 and 2022, the Group performed annual goodwill impairment test and determined that there was no impairment of the relevant CGUs as the recoverable amount of the CGUs exceeded their carrying amount respectively.

38. DEFERRED TAXATION

The following is the analysis of the deferred tax balances for financial reporting purposes:

	As at 31 December
	2023 RMB'000	2022 RMB'000
Deferred tax assets	2,079,575	1,908,541
Deferred tax liabilities	(35,936)	(77,936)
	2,043,639	1,830,605

F-376 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

38. DEFERRED TAXATION (Continued)

The following are the major deferred tax assets and liabilities recognised and movements during the years:

	Financial instrument at FVTPL and derivatives RMB'000	Accrued staff cost RMB'000	Financial instruments at FVTOCI RMB'000	Allowance for impairment losses RMB'000	Other RMB'000	Total RMB'000
At 1 January 2023	(482,530)	342,494	45,957	1,805,742	118,942	1,830,605
(Charge)/credit to profit or loss	(130,662)	(8,271)	(20,127)	119,265	364,465	324,670
Credit/(charge) to other comprehensive income	3,202	-	(114,838)	-	-	(111,636)
Transfer out upon disposal of equity instruments at FVTOCI	-	-	7,694	-	(7,694)	-
Other	(7,311)	-	-	-	7,311	-
As at 31 December 2023	(617,301)	334,223	(81,314)	1,925,007	483,024	2,043,639
At 1 January 2022	(474,599)	316,795	(186,398)	1,772,688	(8,850)	1,419,636
(Charge)/credit to profit or loss	(7,931)	25,699	4,970	33,054	282,618	338,410
Credit to other comprehensive income	-	-	72,559	-	-	72,559
Transfer out upon disposal of equity instruments at FVTOCI	-	-	154,826	-	(154,826)	-
As at 31 December 2022	(482,530)	342,494	45,957	1,805,742	118,942	1,830,605

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

39. OTHER ASSETS

	As at 31 December
	2023 RMB'000	2022 RMB'000
Other receivables	4,994,426	4,475,557
Prepayments	278,769	233,795
Other	778,013	788,669
Less: impairment allowance	(1,950,440)	(1,755,201)
	4,100,768	3,742,820

The following table shows reconciliation of loss allowances that have been recognised for other receivables.

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
As at 1 January 2023	3,529	-	1,751,672	1,755,201
- Impairment losses (reversed)/recognised	(360)	-	16,911	16,551
- Transfer in	-	-	1,031,773	1,031,773
- Write off	-	-	(853,087)	(853,087)
- Foreign exchange differences	2	-	-	2
As at 31 December 2023	3,171	-	1,947,269	1,950,440

– F-378 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

39. OTHER ASSETS (Continued)

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
As at 1 January 2022	4,866	–	1,560,586	1,565,452
– Impairment losses (reversed)/recognised	(1,344)	–	7,152	5,808
– Transfer in	–	–	1,196,286	1,196,286
– Write off	–	–	(1,012,361)	(1,012,361)
– Recoveries of other receivables previously written off	–	–	9	9
– Foreign exchange differences	7	–	–	7
As at 31 December 2022	3,529	–	1,751,672	1,755,201

The tables below detail the credit risk exposures of the Group's other receivables, which are subject to ECL assessment.

As at 31 December 2023

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	2,977,603	–	2,016,823	4,994,426

As at 31 December 2022

	12m ECL RMB'000	Lifetime ECL (not credit-impaired) RMB'000	Lifetime ECL (credit-impaired) RMB'000	Total RMB'000
Gross carrying amount	2,688,788	–	1,786,769	4,475,557

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

40. PLACEMENTS FROM BANKS AND FINANCIAL INSTITUTIONS

As at 31 December

| | 2023
RMB'000 | 2022
RMB'000 |
| --- | --- | --- |
| Placements from banks (Note a) | 13,288,745 | 6,341,448 |
| Placements from China Securities Finance Corporation Limited (Note b) | 2,513,349 | 2,011,008 |
| Placements from Shanghai Gold Exchange (Note c) | 9,867,965 | - |
| | 25,670,059 | 8,352,456 |

Note a: As at 31 December 2023, the effective interest rates bearing on the outstanding amount of placements from banks ranged from 1.50% to 2.30% (31 December 2022: 1.00% to 2.60%) per annum. The amount of placements from banks were repayable within eight days (31 December 2022: six days) from the end of the reporting period.

Note b: As at 31 December 2023, the effective interest rate of placements from China Securities Finance Corporation Limited ranged from 2.16% to 2.93% (31 December 2022: 2.10% to 2.50%) per annum. The amount of placements from China Securities Finance Corporation Ltd. were repayable within six months (31 December 2022: six months) from the end of the reporting period.

Note c: As at 31 December 2023, the effective interest rates of placements from Shanghai Gold Exchange varied from 0.60% to 2.00% per annum. The amount of placements from Shanghai Gold Exchange were repayable within one year from the end of the reporting period.

F-380 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

41. SHORT-TERM FINANCING BILL PAYABLES

As at 31 December

| | 2023
RMB'000 | 2022
RMB'000 |
| --- | --- | --- |
| Short-term commercial paper and corporate bonds (Note a) | 1,609,352 | 8,095,027 |
| Income certificates (Note b) | 1,188,348 | 205,576 |
| | 2,797,700 | 8,300,603 |
| Analysed by market: | | |
| Stock exchange | 1,609,352 | 8,095,027 |
| Over the counter | 1,188,348 | 205,576 |
| | 2,797,700 | 8,300,603 |

Note a: As at 31 December 2023 and 2022, short-term commercial paper and corporate bonds were unsecured and unguaranteed debt securities issued on the PRC Inter-bank market by the Company and were repayable within 1 year. As at 31 December 2023, the yields of the outstanding short-term financing bill payable was 2.41% per annum (31 December 2022: 2.03% to 2.38%).
Note b: As at 31 December 2023, the yields of all the outstanding income certificates ranged from 2.25% to 2.95% per annum (31 December 2022: 2.25% to 2.95% respectively).

458

DFZQ

Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

42. ACCOUNT PAYABLES TO BROKERAGE CLIENTS

No ageing analysis is disclosed as in the opinion of the directors of the Company, the ageing analysis does not give additional value in view of the nature of these businesses.

Account payables to brokerage clients mainly include money held on behalf of clients in the banks and clearing houses by the Group, and are interest-bearing at the prevailing market interest rate.

As at 31 December 2023, approximately RMB3,655 million (31 December 2022: RMB3,149 million) of margin deposits and cash collateral received from clients for margin financing and securities lending arrangement were included in the Group's account payables to brokerage clients.

43. REPURCHASE AGREEMENTS

	As at 31 December
	2023 RMB'000	2022 RMB'000
Analysed by collateral type
- Bonds	68,720,716	53,441,494
- Funds	964,213	1,437,900
- Advances to customers	300,270	200,159
- Gold	636,722	6,911,917
- Perpetual instruments	3,094,222	308,053
	73,716,143	62,299,523
Analysed by market
- Stock exchanges	29,149,889	21,183,237
- Inter-bank market	41,919,630	31,852,424
- Over the counter	2,646,624	9,263,862
	73,716,143	62,299,523

Annual Report 2023 DFZQ 459

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

44. FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

	As at 31 December
	2023
RMB'000	2022
RMB'000
Debt securities	6,490,853	8,956,988
Gold borrowings	-	3,210,032
Designated at fair value through profit or loss
- Interests attributable to other holders of consolidated structured entities (Note a)	368,838	670,653
- Income certificates (Note b)	7,144,110	4,749,492
- Other (Note c)	1,298,033	952,146
	15,301,834	18,539,311

460

DFZQ

Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

45. CONTRACT LIABILITIES

	As at 31 December
	2023
RMB'000	2022
RMB'000
Asset and fund management services	6,712	8,250
Investment banking services	33,633	31,864
Sales of bulk commodity	107,060	24,391
	147,405	64,505
	Asset and fund management services
RMB'000	Investment banking services
RMB'000
For the year ended 31 December 2023
Revenue recognised that was included in the contract liability balance at the beginning of the year	8,250	17,759
	Asset and fund management services
RMB'000	Investment banking services
RMB'000
For the year ended 31 December 2022
Revenue recognised that was included in the contract liability balance at the beginning of the year	8,211	24,443

– F-384 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

46. ACCRUED STAFF COSTS

	As at 31 December
	2023
RMB'000	2022
RMB'000
Salaries, bonus and allowances	1,686,452	2,077,839
Social welfare	758	936
Annuity schemes	16,832	50,946
	1,704,042	2,129,721

47. BORROWINGS

	As at 31 December
	2023
RMB'000	2022
RMB'000
Unsecured short-term borrowings repayable within one year	1,700,024	1,171,563
Unsecured long-term borrowings repayable after one year	-	837,260
	1,700,024	2,008,823
of which:
Floating rate borrowings
- repayable within one year at interest rates ranging from 6.01% to 6.81% (31 December 2022: 5.52% to 6.02%)	1,482,803	911,240
- repayable after one year (31 December 2022: 1 month SOFR plus 1.5% per annum)	-	837,260
Fixed rate borrowings
- repayable within one year at interest rates ranging from 3.42% to 4.2% (31 December 2022:3.95% to 4.50%)	217,221	260,323
	1,700,024	2,008,823

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

48. LEASE LIABILITIES

| | As at
31 December
2023
RMB'000 | As at
31 December
2022
RMB'000 |
| --- | --- | --- |
| Lease liabilities payable: | | |
| Within three months | 119,970 | 100,445 |
| Within a period of more than three months but not more than one year | 163,639 | 250,763 |
| Within a period of more than one year but not more than two years | 140,645 | 175,288 |
| Within a period of more than two years but not more than three years | 68,009 | 78,859 |
| Within a period of more than three years but not more than five years | 45,136 | 37,390 |
| Within a period of more than five years | 10,076 | 3,032 |
| | 547,475 | 645,777 |

49. DEBT SECURITIES ISSUED

	As at 31 December
	2023
RMB'000	2022
RMB'000
Corporate bonds	30,063,388	36,463,074
Subordinated bonds	24,906,609	13,292,467
Offshore bonds	5,057,958	6,045,793
Income certificates (Note a)	129,890	1,069
	60,157,845	55,802,403

Note a: The amount represents income certificates issued by the Company with maturities of more than one year. As at 31 December 2023, the outstanding income certificates carried yield from 2.60% to 2.95% (31 December 2022: 2.55% to 2.85%) per annum.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

49. DEBT SECURITIES ISSUED (Continued)

Issues	Currency	Issue amount (Original currency in million)	Issue amount (RMB in million)	Issue date	Maturity date	Coupon rate
17-3 Corporate Bond	RMB	4,000	4,000	03/08/2017	03/08/2027	4.98%
21-1 Corporate Bond	RMB	4,000	4,000	27/01/2021	27/01/2024	3.60%
21-2 Corporate Bond	RMB	4,000	4,000	24/11/2021	24/11/2024	3.08%
22-1 Corporate Bond	RMB	2,000	2,000	21/07/2022	21/07/2025	2.79%
22-2 Corporate Bond	RMB	1,500	1,500	21/07/2022	21/07/2027	3.18%
22-3 Corporate Bond	RMB	2,000	2,000	25/08/2022	25/08/2027	3.00%
22-4 Corporate Bond	RMB	3,500	3,500	14/12/2022	14/12/2025	3.40%
23-1 Corporate Bond	RMB	1,500	1,500	21/02/2023	21/02/2025	2.92%
23-2 Corporate Bond	RMB	2,500	2,500	21/02/2023	21/02/2026	3.13%
23-3 Corporate Bond	RMB	1,600	1,600	21/03/2023	21/03/2028	3.32%
23-4 Corporate Bond	RMB	3,000	3,000	24/05/2023	24/05/2026	2.90%
Subtotal			29,600
21-1 Orient Subordinated Bond	RMB	2,500	2,500	08/03/2021	08/03/2024	3.95%
21-2 Orient Subordinated Bond	RMB	3,000	3,000	16/04/2021	16/04/2024	3.70%
21-3 Orient Subordinated Bond	RMB	1,500	1,500	16/04/2021	16/04/2026	4.20%
22-1 Orient Subordinated Bond	RMB	2,500	2,500	13/01/2022	13/01/2025	3.16%
22-2 Orient Subordinated Bond	RMB	3,500	3,500	21/10/2022	21/10/2024	2.53%
23-1 Orient Subordinated Bond	RMB	3,000	3,000	24/04/2023	24/04/2026	3.30%
23-2 Orient Subordinated Bond	RMB	3,000	3,000	10/08/2023	10/08/2026	3.08%
23-3 Orient Subordinated Bond	RMB	2,800	2,800	30/10/2023	30/10/2026	3.30%
23-4 Orient Subordinated Bond	RMB	700	700	30/10/2023	30/10/2028	3.50%
23-5 Orient Subordinated Bond	RMB	2,000	2,000	23/11/2023	23/11/2026	3.18%
Subtotal			24,500
22 Offshore EUR Bond	EUR	100	742	05/05/2022	05/05/2025	1.75%
22-1 Offshore USD Bond	USD	300	2,089	17/05/2022	17/05/2025	3.50%
22-2 Offshore USD Bond	USD	300	2,089	26/10/2022	26/10/2025	5.125%
Subtotal			4,920
Total			59,020

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

50. OTHER LIABILITIES

	As at 31 December
	2023
RMB'000	2022
RMB'000
Other account payables
- Payables for underwriting and products distribution fees	239,788	391,397
- Settlement payables	45,055	546,091
- Notes payable	1,244,900	248,000
- Other	14,712	-
Other payables and accruals
- Value-added taxes and other taxes	96,926	119,239
- Payables for securities and futures investor protection fund	34,687	39,162
- Futures risk reserve	251,805	202,589
- Derivatives deposit received from customers	7,896,172	6,751,508
- Acting underwriting securities	121,750	-
- Other	658,154	566,157
	10,603,949	8,864,143

51. SHARE CAPITAL

All shares issued by the Company are fully paid common shares. The par value is RMB1. The Company's number of shares issued and their nominal value are as follows:

| | Opening
RMB'000 | Addition
RMB'000 | Closing
RMB'000 |
| --- | --- | --- | --- |
| Registered, issued and fully paid ordinary shares of RMB1 each: | | | |
| Year ended 31 December 2023 | 8,496,645 | - | 8,496,645 |
| Year ended 31 December 2022 | 6,993,656 | 1,502,989 | 8,496,645 |

F-388 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

51. SHARE CAPITAL (Continued)

Pursuant to the CSRC's Approval in respect of the Rights Issue of 東方證券股份有限公司(Zheng Jian Xu Ke [2022] No. 540)(《關於核准东方證券股份有限公司配股的批覆》(證監許可[2022] 540號)), new A rights shares were allotted to all A Share holders on the basis of two point eight A rights shares for every ten existing A Shares ("A Share Rights Issue"). As of 29 April 2022, 1,502,907,061 new A rights shares were issued at a price of RMB8.46 per share, raising approximately RMB12,715 million in total. The Company completed the registration at China Securities Depository and Clearing Corporation Limited Shanghai Branch on 9 May 2022, and the new A Shares were listed on the Shanghai Stock Exchange on 13 May 2022.

Pursuant to the CSRC's Approval in respect of the Rights Issue of Overseas Listed Foreign Shares of 東方證券股份有限公司(Zheng Jian Xu Ke [2022] No. 348)(《關於核准东方證券股份有限公司发行境外上市外資股的批覆》(證監許可[2022]348號)), new H rights shares were allotted to qualified H Share holders on the basis of two point eight H rights shares for every ten existing H Shares ("H Share Rights Issue"). As of 20 May 2022, 82,428 new H rights shares were issued at a price of HKD10.38 per share, raising approximately HKD856 thousand in total. The new H Shares were listed on the Hong Kong Stock Exchange on 31 May 2022.

On 30 October 2023, the Board of Directors of the Company approved The Proposal to Repurchase the Company's A Shares through Centralised Bidding Transaction to maintain the Company value and the shareholders' interests. These repurchased stocks could be sold through centralised bidding after 12 months or cancelled after 3 years. As at 31 December 2023, a total of 33,486,424 A shares have been repurchased through centralised bidding transaction at an aggregated consideration of RMB299 million. The details are as follows:

Month of repurchase	No. of ordinary shares	Prices per share		Aggregate consideration paid
		Highest	Lowest
November 2023	30,844,124	RMB9.14	RMB8.81	RMB277 million
December 2023	2,642,300	RMB8.75	RMB8.18	RMB22 million

466

DFZQ

Annual Report 2023

F-389 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

52. OTHER EQUITY INSTRUMENT

	As at 31 December
	2023
RMB'000	2022
RMB'000
Perpetual subordinated bond	5,000,000	5,000,000
	5,000,000	5,000,000

The Company issued a perpetual subordinated bond with a principal amount of RMB5 billion in August 2020, with the initial interest rate of 4.75% per annum.

The perpetual subordinated bond issued by the Company is classified and presented as other equity instrument in the consolidated statement of financial position.

– F-390 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

53. RESERVES

(1) Capital reserve

Capital reserve mainly includes share premium arising from the issuance of new shares at prices in excess of par value, the change of carrying amount of the Group's investments in associate other than profit or loss and other comprehensive income, the difference between the considerations of acquisition of equity interests from non-controlling shareholders and the carrying amount of the proportionate net assets.

The movements of the capital reserve of the Group are set out below:

	Opening RMB'000	Addition RMB'000	Closing RMB'000
Share premium	39,373,960	–	39,373,960
Other capital reserve	160,560	–	160,560
As at 31 December 2023	39,534,520	–	39,534,520
Share premium	28,251,705	11,122,255	39,373,960
Other capital reserve	101,620	58,940	160,560
As at 31 December 2022	28,353,325	11,181,195	39,534,520

468 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

53. RESERVES (Continued)

(2) Surplus reserve

The surplus reserve includes statutory surplus reserve and discretionary surplus reserve.

	Opening RMB'000	Addition RMB'000	Closing RMB'000
Statutory reserve	3,447,056	324,464	3,771,520
Discretionary reserve	846,486	–	846,486
For the year ended 31 December 2023	4,293,542	324,464	4,618,006
Statutory reserve	3,148,369	298,687	3,447,056
Discretionary reserve	850,948	(4,462)	846,486
For the year ended 31 December 2022	3,999,317	294,225	4,293,542

– F-392 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

53. RESERVES (Continued)

(3) General reserve

The general reserve includes general risk reserve and transaction risk reserve.

General reserves for the Company's subsidiaries are appropriated according to relevant requirements.

The movements of general reserve of the Group are set out below:

	Opening RMB'000	Addition RMB'000	Closing RMB'000
General risk reserve	5,659,758	617,204	6,276,962
Transaction risk reserve	5,475,324	382,256	5,857,580
For the year ended 31 December 2023	11,135,082	999,460	12,134,542
General risk reserve	4,956,151	703,607	5,659,758
Transaction risk reserve	5,072,482	402,842	5,475,324
For the year ended 31 December 2022	10,028,633	1,106,449	11,135,082

470 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

53. RESERVES (Continued)

(4) Investment revaluation reserve

The movements of the investment revaluation reserve of the Group are set out below:

Year ended 31 December
	2023 RMB'000	2022 RMB'000
At beginning of the year	100,899	764,321
Equity instruments at FVTOCI:
Net fair value changes during the year	(19,640)	904,567
Income tax related to net fair value changes during the year	4,911	(226,142)
Debt instruments at FVTOCI:
Net fair value changes during the year	1,465,297	123,024
Income tax related to net fair value changes during the year	(350,470)	(30,376)
Reclassification adjustment to profit or loss on disposal	(842,475)	(1,336,190)
Reclassification adjustment to profit or loss on expected credit loss	(79,371)	20,138
Income tax related to reclassification adjustment to profit or loss during the year	230,721	329,077
Share of other comprehensive income of associates	4,518	16,958
Transfer to retained earnings for cumulative fair value change of equity instruments at FVTOCI upon disposal	(23,083)	(464,478)
Other	(1,620)	–
At end of the year	489,687	100,899

(5) Translation reserve

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

53. RESERVES (Continued)

(6) Hedge reserve

Hedge reserve represents the gains and losses of hedging activities of the Group's hedges of equity instruments at fair value through other comprehensive income.

54. RETAINED EARNINGS

The movements of retained earnings of the Group are set out below:

	As at 31 December
	2023 RMB'000	2022 RMB'000
At beginning of the year	8,838,412	9,130,172
Profit for the year	2,753,755	3,010,558
Appropriation to surplus reserve	(324,464)	(298,687)
Appropriation to general reserve	(999,460)	(1,106,449)
Dividends recognised as distribution	(1,274,497)	(2,124,160)
Cumulative fair value change transfer to retained earnings upon disposal of equity instruments at FVTOCI	23,083	464,478
Other	(21,933)	-
Distribution to holders of other equity instrument	(237,500)	(237,500)
At end of the year	8,757,396	8,838,412

472 DFZQ Annual Report 2023

F-395 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

55. DIVIDENDS

	As at 31 December
	2023 RMB'000	2022 RMB'000
Dividends recognised as distribution (Note a)	1,274,497	2,124,160
Distribution to holders of other equity instrument	237,500	237,500
	1,511,997	2,361,660

Note a: Final dividend in respect of the year ended 31 December 2022 amounting to RMB1.50 (tax inclusive) per 10 shares, totaling RMB1,274 million (2021: RMB2,124 million) was approved by shareholders in 2022 general meeting.

Final dividend in respect of the year ended 31 December 2023 amounting to RMB1.50 (tax inclusive) per 10 shares based on the Company's existing share capital of 8,496,645 thousand shares deducting 34,843 thousand shares deposited in the Company's special securities account for repurchase as of 27 March 2024, totaling RMB1,269 million, has been approved by the board of directors of the Company and is subject to approval by the shareholders at the forthcoming general meeting.

56. TRANSFERS OF FINANCIAL ASSETS

Securities lending arrangements

The Group entered into securities lending agreements with clients to lend out its equity securities and exchange-traded funds classified as financial assets at fair value through profit or loss of carrying amount totaling RMB258 million and RMB351 million as at 31 December 2023 and 2022, respectively, which are secured by client's securities and deposits held as collateral. As stipulated in the securities lending agreements, the legal ownership of these equity securities and exchange-traded funds is transferred to the clients. Although the clients are allowed to sell these securities during the covered period, they have the obligations to return these securities to the Group at specified future dates. The Group has determined that it retains substantially all the risks and rewards of these securities and therefore has not derecognised these securities in the consolidated financial statements.

Repurchase agreements

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

56. TRANSFERS OF FINANCIAL ASSETS (Continued)

Repurchase agreements (Continued)

The following tables provide a summary of carrying amounts of transferred financial assets that are not derecognised in their entirety and the associated liabilities:

As at 31 December 2023

	Financial assets at fair value through profit or loss RMB'000	Debt instruments at FVTOCI RMB'000	Equity instruments at FVTOCI - Perpetual instruments RMB'000	Advances to customers RMB'000	Debt instruments measured at amortised cost RMB'000	Securities borrowing arrangements RMB'000	Total RMB'000
Carrying amount of transferred assets	30,812,400	44,956,020	-	311,142	1,581,123	4,963,492	82,624,177
Carrying amount of associated liabilities	26,628,116	38,305,352	-	300,270	1,404,065	6,441,618	73,079,421
Net position	4,184,284	6,650,668	-	10,872	177,058	(1,478,126)	9,544,756

As at 31 December 2022

	Financial assets at fair value through profit or loss RMB'000	Debt instruments at FVTOCI RMB'000	Equity instruments at FVTOCI - Perpetual instruments RMB'000	Advances to customers RMB'000	Debt instruments measured at amortised cost RMB'000	Securities borrowing arrangements RMB'000	Total RMB'000
Carrying amount of transferred assets	28,779,382	25,801,892	310,203	204,829	2,777,131	3,463,175	61,336,612
Carrying amount of associated liabilities	23,703,675	24,402,936	308,053	200,159	2,515,819	4,256,964	55,387,606
Net position	5,075,707	1,398,956	2,150	4,670	261,312	(793,789)	5,949,006

DFZQ Annual Report 2023

F-397 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

57. DIRECTORS' AND SUPERVISORS' EMOLUMENTS

The emoluments of the Directors and Supervisors of the Company paid/payable by the Group for the years ended 31 December 2023 and 2022 are set out below:

For the year ended 31 December 2023

| Name | Independent director and supervisor fee^{a}
RMB'000 | Salary and allowances
RMB'000 | Employer's contribution to pension schemes
RMB'000 | Discretionary bonuses
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- | --- |
| Executive Directors: | | | | | |
| Jin Wenzhong | – | 990 | 122 | 1,645 | 2,757 |
| Gong Dexiong (a) | – | – | – | – | – |
| Lu Weiming | – | 990 | 122 | 1,608 | 2,720 |
| Song Xuefeng (b) | – | – | – | – | – |
| Non-executive Directors: | | | | | |
| Yu Xuechun | – | – | – | – | – |
| Zhou Donghui | – | – | – | – | – |
| Li Yun (c) | – | – | – | – | – |
| Ren Zhixiang | – | – | – | – | – |
| Zhu Jing | – | 880 | 122 | 1,032 | 2,034 |
| Cheng Feng (d) | – | – | – | – | – |
| Independent Non-executive Directors: | | | | | |
| Jin Qinglu (e) | 174 | – | – | – | 174 |
| Wu Hong | 190 | – | – | – | 190 |
| Feng Xingdong | 160 | – | – | – | 160 |
| Luo Xinyu | 160 | – | – | – | 160 |
| Chan Hon | 160 | – | – | – | 160 |
| Zhu Kai (f) | 32 | – | – | – | 32 |

F-398 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

57. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)

The emoluments of the Directors and Supervisors of the Company paid/payable by the Group for the years ended 31 December 2023 and 2022 are set out below: (Continued)

For the year ended 31 December 2023 (Continued)

Name	Independent director and supervisor fee^{4} RMB'000	Salary and allowances RMB'000	Employer's contribution to pension schemes RMB'000	Discretionary bonuses RMB'000	Total RMB'000
Supervisors:
Du Weihua	–	790	122	1,253	2,165
Wu Junhao	–	–	–	–	–
Xu Yongmiao^{1)}	–	–	–	–	–
Shen Guangjun	–	–	–	–	–
Ling Yun^{1)}	–	–	–	–	–
Xia Lijun	100	–	–	–	100
Ruan Fei	–	820	122	936	1,878
Ding Yan	–	820	122	1,070	2,012
Zhang Jian^{1)}	–	–	–	–	–
Tong Jie^{1)}	–	–	–	–	–
	976	5,290	732	7,544	14,542

476 DFZQ Annual Report 2023

– F-399 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

57. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)

The emoluments of the Directors and Supervisors of the Company paid/payable by the Group for the years ended 31 December 2023 and 2022 are set out below: (Continued)

For the year ended 31 December 2022

Name	Independent director and supervisor fee* RMB'000	Salary and allowances RMB'000	Employer's contribution to pension schemes RMB'000	Discretionary bonuses RMB'000	Total RMB'000
Executive Directors:
Jin Wenzhong	–	990	162	2,996	4,148
Lu Weiming ①	–	940	161	2,664	3,765
Song Xuefeng	–	–	–	–	–
Non-executive Directors:
Yu Xuechun	–	–	–	–	–
Zhou Donghui	–	–	–	–	–
Cheng Feng	–	–	–	–	–
Ren Zhixiang	–	–	–	–	–
Zhu Jing	–	866	162	1,756	2,784
Liu Wei (k)	–	–	–	–	–
Independent Non-executive Directors:
Jin Qinglu	190	–	–	–	190
Wu Hong	190	–	–	–	190
Feng Xingdong	160	–	–	–	160
Luo Xinyu	160	–	–	–	160
Chan Hon (l)	27	–	–	–	27
Xu Zhiming (m)	160	–	–	–	160

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

57. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)

The emoluments of the Directors and Supervisors of the Company paid/payable by the Group for the years ended 31 December 2023 and 2022 are set out below: (Continued)

For the year ended 31 December 2022 (Continued)

Name	Independent director and supervisor fee* RMB'000	Salary and allowances RMB'000	Employer's contribution to pension schemes RMB'000	Discretionary bonuses RMB'000	Total RMB'000
Supervisors:
Du Weihua	–	785	161	2,432	3,378
Wu Junhao	–	–	–	–	–
Zhang Jian	–	–	–	–	–
Shen Guangjun	–	–	–	–	–
Tong Jie	–	–	–	–	–
Xia Lijun	100	–	–	–	100
Ruan Fei	–	820	162	1,504	2,486
Ding Yan	–	787	159	1,648	2,594
Zhang Qian 99	–	–	–	–	–
	987	5,188	967	13,000	20,142

Executive directors and non-executive directors do not receive any director fee.
a. Gong Dexiong was appointed as director in October 2023.
b. Song Xuefeng resigned as director in October 2023.
c. Li Yun was appointed as director in August 2023.
d. Cheng Feng resigned as director in August 2023.
e. Jin Qinglu resigned as director in October 2023.

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

57. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)

f. Zhu Kai was appointed as independent director in October 2023.
g. Xu Yongmiao was appointed as supervisor in October 2023.
h. Ling Yun was appointed as supervisor in October 2023.
i. Zhang Jian and Tong Jie resigned as supervisor in October 2023.
j. Lu Weiming was appointed as director in June 2022.
k. Liu Wei resigned as director in March 2022.
l. Chan Hon was appointed as independent director in November 2022.
m. Xu Zhiming resigned as independent director in November 2022.
n. Zhang Qian resigned as chairman of the supervisory board in September 2022.

The executive directors' emoluments shown above were for their services in connection with the management of the affairs of the Company and the Group.

The independent directors' and non-executive directors' emoluments shown above were for their services as directors of the Company.

The supervisors' emoluments shown above were for their services as supervisors of the Company.

The bonuses are discretionary and determined by reference to the Group's or Company's and the individuals' performance. The amounts of bonus paid and disclosed for the year ended 31 December 2023 relate to performance bonus in 2022 and 2021.

For the years ended 31 December 2023 and 2022, none of the directors or supervisors of the Company waived any emoluments and no emoluments were paid by the Company to any of the directors or supervisors as an inducement to join or upon joining the Group or as compensation for loss of office.

F-402 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

58. FIVE HIGHEST PAID INDIVIDUALS

Of the five individuals with the highest emoluments, none of them are directors or supervisors whose emoluments are disclosed in Note 57 (2022: None). Details of the remuneration of the five highest paid employees during the year ended 2023 and 2022 are as follows:

Year ended 31 December
	2023
RMB'000	2022
RMB'000
Basic salaries and allowances	9,838	11,540
Discretionary bonuses	24,362	31,508
Employer's contribution to pension schemes	1,148	966
	35,348	44,014

The emoluments of the highest-paid individuals of the Group fall within the following bands:

Number of individuals
	2023	2022
Emolument bands
- RMB5,500,001 to RMB6,000,000	1	-
- RMB6,000,001 to RMB6,500,000	1	-
- RMB6,500,001 to RMB7,000,000	1	-
- RMB7,000,001 to RMB7,500,000	1	-
- RMB8,500,001 to RMB9,000,000	1	5
	5	5

480 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

59. COMMITMENTS AND CONTINGENT LIABILITY

Capital commitments

	As at 31 December
	2023
RMB'000	2022
RMB'000
Capital expenditure in respect of acquisition of property and equipment:
Contracted but not provided for	25,310	27,269

60. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS

(1) Relationship of related parties

Major shareholder of the Company

Following major shareholder holding more than 10% shares of the Company is considered as a related party of the Group:

| | Percentage of shares held
As at 31 December | |
| --- | --- | --- |
| | 2023
% | 2022
% |
| 申能(集團)有限公司 | | |
| Shenergy (Group) Company Limited | 26.63 | 26.63 |

Associates

The details of the associates of the Group are set out in Note 30.

Others

The Directors and Supervisors of the Company have served as directors or senior management of these related parties during the year of 2023.

– F-404 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

60. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(2) Related party transaction and balances

Other than as disclosed elsewhere in these consolidated financial statements, the Group had the following material related party transactions and balances:

As at 31 December 2023 and 2022, the Group had the following material balances with the major shareholder and entities under its control:

	As at 31 December
	2023 RMB'000	2022 RMB'000
Account payables to brokerage clients	10,579	11,847
Other account payables	-	1,472

For the years ended 31 December 2023 and 2022, the Group had the following material transactions with the major shareholder and entities under its control:

	Year ended 31 December
	2023	2022
	RMB'000	RMB'000
Commission and fee income	6,056	3,117

482 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

60. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(2) Related party transaction and balances (Continued)

For the years ended 31 December 2023 and 2022, the Group had the following material transactions with the major shareholder and entities under its control: (Continued)

	Year ended 31 December
	2023 RMB'000	2022 RMB'000
Interest expenses	54	483
Other operating expenses	19,311	19,454

As at 31 December 2023 and 2022, the Group had the following material balances with associates:

	As at 31 December
	2023 RMB'000	2022 RMB'000
Account payables to brokerage clients	5,258	15,681
Other receivables	13,067	12,185
Other account payables	2,271	2,122

As at 31 December 2023 and 2022, the Group had the following material investment balances of products managed by associates:

	As at 31 December
	2023 RMB'000	2022 RMB'000
Financial assets at FVTPL	613,229	658,903

F-406 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

60. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(2) Related party transaction and balances (Continued)

As at 31 December 2023 and 2022, the Group had the following material investment balances of securities issued by associates:

As at 31 December

| | 2023
RMB'000 | 2022
RMB'000 |
| --- | --- | --- |
| Financial assets at FVTPL | 62,090 | 40,240 |
| Debt instruments at FVTOCI | 100,444 | 100,462 |

For the years ended 31 December 2023 and 2022, the Group had the following material transactions with associates:

Year ended 31 December

| | 2023
RMB'000 | 2022
RMB'000 |
| --- | --- | --- |
| Commission and fee income | 206,490 | 271,171 |
| Interest income | 4,134 | 407 |
| Interest expenses | 69 | 208 |
| Net investment gains | 1,045 | 16,608 |
| Other operating expenses | - | 1,726 |

484 DFZQ Annual Report 2023

– F-407 –

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

60. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(2) Related party transaction and balances (Continued)

As at 31 December 2023 and 2022, the Group had the following material balances with other related parties:

As at 31 December

| | 2023
RMB'000 | 2022
RMB'000 |
| --- | --- | --- |
| Account payables to brokerage clients | 8 | 5 |
| Other receivables | 50 | 28 |
| Other account payables | 267 | 1,048 |

As at 31 December 2023 and 2022, the Group had the following material investment balances of products managed by other related parties:

As at 31 December

| | 2023
RMB'000 | 2022
RMB'000 |
| --- | --- | --- |
| Financial assets at FVTPL | 435,038 | 107,625 |

Annual Report 2023 DFZQ 485

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

60. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(2) Related party transaction and balances (Continued)

As at 31 December 2023 and 2022, the Group had the following material investment balances of securities issued by other related parties:

As at 31 December
	2023
RMB'000	2022
RMB'000
Financial assets at FVTPL	939,420	689,695
Equity instruments at FVTOCI	10,149	41,055
Debt instruments at FVTOCI	51,810	104,434

For the years ended 31 December 2023 and 2022, the Group had the following material transactions with other related parties:

Year ended 31 December
	2023
RMB'000	2022
RMB'000
Commission and fee income	15,721	6,175
Interest income	1,447	4,879
Net investment gains	36,768	25,236
Interest expenses	17	123
Year ended 31 December
---	---	---
	2023
RMB'000	2022
RMB'000
Other operating expenses	2,919	2,629
Commission and fee expenses	-	69

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

60. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (Continued)

(3) Key management personnel

Remuneration for key management personnel of the Group are as follows:

Year ended 31 December
	2023
RMB'000	2022
RMB'000
Short-term benefits:
Salaries, allowance and bonuses	23,819	30,750
Post-employment benefits:
Employer's contribution to pension schemes/annuity plans	1,337	1,344
	25,156	32,094

The amounts of bonus paid and disclosed for the year ended 31 December 2023 relate to performance bonus in 2022.

Annual Report 2023 DFZQ 487

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

61. STATEMENT OF FINANCIAL POSITION AND RESERVE OF THE COMPANY

	As at 31 December
	2023
RMB'000	2022
RMB'000
Cash and bank balances	31,849,486	33,551,974
Clearing settlement funds	13,680,735	9,081,227
Deposits with exchanges and financial institutions	1,873,987	2,470,494
Derivative financial assets	1,870,390	1,005,692
Advances to customers	20,775,137	19,145,313
Account receivables	218,162	207,349
Reverse repurchase agreements	5,401,847	8,391,822
Financial assets at fair value through profit or loss	78,154,448	65,810,350
Debt instruments at fair value through other comprehensive income	88,811,040	76,329,251
Equity instruments at fair value through other comprehensive income	6,268,133	3,661,774
Debt instruments measured at amortised cost	1,586,591	3,164,972
Investments in associates	3,859,511	3,343,431
Investments in subsidiaries	19,473,304	19,173,304
Right-of-use assets	331,953	412,478
Investment properties	30,989	32,540
Property and equipment	1,832,720	1,951,263
Other intangible assets	205,526	176,386
Goodwill	18,948	18,948
Deferred tax assets	1,719,662	1,622,758
Other assets	3,360,250	3,298,558
Total assets	281,322,819	252,849,884

488 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

61. STATEMENT OF FINANCIAL POSITION AND RESERVE OF THE COMPANY

(Continued)

As at 31 December

| | 2023
RMB'000 | 2022
RMB'000 |
| --- | --- | --- |
| Placements from banks and financial institutions | 25,670,059 | 8,352,456 |
| Short-term financing bill payables | 2,797,700 | 8,298,911 |
| Account payables to brokerage clients | 27,566,246 | 28,526,831 |
| Repurchase agreements | 72,006,511 | 60,147,737 |
| Financial liabilities at fair value through profit or loss | 13,607,161 | 16,671,261 |
| Derivative financial liabilities | 822,514 | 307,276 |
| Contract liabilities | 500 | 991 |
| Accrued staff costs | 437,638 | 412,420 |
| Lease liabilities | 318,289 | 406,449 |
| Debt securities issued | 58,016,945 | 52,573,976 |
| Other liabilities | 7,876,152 | 6,740,511 |
| Total liabilities | 209,119,715 | 182,438,819 |
| Share capital | 8,496,645 | 8,496,645 |
| Treasury stock | (299,780) | - |
| Other equity instrument | 4,995,755 | 4,995,755 |
| Reserves | 53,188,375 | 51,856,452 |
| Retained earnings | 5,822,109 | 5,062,213 |
| Total equity | 72,203,104 | 70,411,065 |
| Total equity and liabilities | 281,322,819 | 252,849,884 |

Annual Report 2023 DFZQ 489

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

61. STATEMENT OF FINANCIAL POSITION AND RESERVE OF THE COMPANY

(Continued)

| | Share capital
RMB'000 | Treasury stock
RMB'000 | Other equity instrument
RMB'000 | Capital reserve
RMB'000
(Note a) | Surplus reserve
RMB'000 | General reserve
RMB'000 | Investment escalation reserve
RMB'000 | Hedge reserve
RMB'000 | Retained earnings
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| As at 1 January 2023 | 8,496,645 | - | 4,995,755 | 39,218,737 | 4,289,242 | 8,219,596 | 128,877 | - | 5,062,213 | 70,411,065 |
| Profit for the year | - | - | - | - | - | - | - | - | 3,244,632 | 3,244,632 |
| Other comprehensive income/
(expense) for the year | - | - | - | - | - | - | 368,792 | (9,608) | - | 359,184 |
| Total comprehensive income/
(expense) for the year | - | - | - | - | - | - | 368,792 | (9,608) | 3,244,632 | 3,603,816 |
| Repurchase of A shares | - | (299,780) | - | - | - | - | - | - | - | (299,780) |
| Appropriation to surplus reserve | - | - | - | - | 324,464 | - | - | - | (324,464) | - |
| Appropriation to general reserve | - | - | - | - | - | 649,425 | - | - | (649,425) | - |
| Distribution to holders of other equity instrument | - | - | - | - | - | - | - | - | (237,500) | (237,500) |
| Dividends recognised as distribution | - | - | - | - | - | - | - | - | (1,274,497) | (1,274,497) |
| Transfer to retained earnings for cumulative fair value change of equity instruments at fair value through other comprehensive income upon disposal | - | - | - | - | - | - | (23,083) | - | 23,083 | - |
| Other | - | - | - | - | - | - | - | 21,933 | (21,933) | - |
| At 31 December 2023 | 8,496,645 | (299,780) | 4,995,755 | 39,218,737 | 4,613,706 | 8,869,021 | 474,586 | 12,325 | 5,822,109 | 72,203,104 |

490 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

61. STATEMENT OF FINANCIAL POSITION AND RESERVE OF THE COMPANY

(Continued)

| | Share capital
RMB'000 | Other equity instrument
RMB'000 | Capital reserve
RMB'000
(Note a) | Surplus reserve
RMB'000 | General reserve
RMB'000 | Investment revaluation reserve
RMB'000 | Retained earnings
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| As at 1 January 2022 | 6,993,656 | 4,995,755 | 28,154,426 | 3,999,317 | 7,621,811 | 788,646 | 4,868,992 | 57,422,603 |
| Profit for the year | - | - | - | - | - | - | 2,986,875 | 2,986,875 |
| Other comprehensive expense for the year | - | - | - | - | - | (195,291) | - | (195,291) |
| Total comprehensive (expense)/income for the year | - | - | - | - | - | (195,291) | 2,986,875 | 2,791,584 |
| Issuance of shares | 1,502,989 | - | 11,064,311 | (8,762) | - | - | - | 12,558,538 |
| Appropriation to surplus reserve | - | - | - | 298,687 | - | - | (298,687) | - |
| Appropriation to general reserve | - | - | - | - | 597,785 | - | (597,785) | - |
| Distribution to holders of other equity instrument | - | - | - | - | - | - | (237,500) | (237,500) |
| Dividends recognised as distribution | - | - | - | - | - | - | (2,124,160) | (2,124,160) |
| Transfer to retained earnings for cumulative fair value change of equity instruments at fair value through other comprehensive income upon disposal | - | - | - | - | - | (464,478) | 464,478 | - |
| At 31 December 2022 | 8,496,645 | 4,995,755 | 39,218,737 | 4,289,242 | 8,219,596 | 128,877 | 5,062,213 | 70,411,065 |

Note a: Capital reserve of the Company represents primarily the share premium arising from the issuance of the Company's shares.

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

62. FINANCIAL INSTRUMENTS

Categories of financial instruments

	As at 31 December
	2023
RMB'000	2022
RMB'000
Financial assets
Financial assets at fair value through profit or loss	97,069,644	83,763,730
Derivative financial assets	1,877,650	1,017,334
Debt instruments at FVTOCI	90,813,713	76,862,096
Equity instruments at FVTOCI	6,298,178	3,721,658
Financial assets measured at amortised cost	174,880,258	190,622,313
	370,939,443	355,987,131
Financial liabilities
Financial liabilities at fair value through profit or loss	16,176,036	18,847,757
Financial liabilities measured at amortised cost	286,455,263	269,089,118
	302,631,299	287,936,875

63. FINANCIAL RISK MANAGEMENT

63.1 Risk management overview and organisation

(1) Risk management overview

The Group is committed to the philosophy of "full compliance by all staff and focus on risk management". The Group focuses on building management mechanisms for overall risk and internal controls and fostering a risk management culture. The Group strives to realise organic integration and interlinking of risk management, compliance management and internal control. The Group has established a substantially mature and endogenous overall risk management system and an effective internal control mechanism, which covers all businesses, departments, branches and employees and runs through the processes of decision-making, execution, supervision and feedback.

492 | DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.1 Risk management overview and organisation (Continued)

(1) Risk management overview (Continued)

The risk management implemented by the Group fully covers market risk, credit risk, liquidity risk, operational risk, technology risk, reputation risk, compliance risk, legal risk and ethical risk, etc., realising the management control on the overall risk assessment and supervision.

A comprehensive risk management system is inseparable from a complete information technology system. In recent years, the Group has continuously increased its investment in information technology. Through the construction of a risk management cockpit dashboard, a dynamic management system for risk control indicators and various specific risk management information systems, the Group has continuously promoted the practical application of information technology in risk management, and the timeliness and accuracy of risk management have been effectively improved.

(2) Structure of the risk-management organisation

The Group is committed to establishing a robust and effective risk management system that features "three lines of defense" approach. The first line of defense is the check-and-balance mechanism of two-person, dual roles, dual responsibilities and position separation in the important front-line positions in each operational department, branch and subsidiary; the second line is inspection and supervision on the compliance and risk management affairs by relevant functional management departments within their range of duties; the third line is effective risk supervision performed by risk supervision and management departments on the risk management affairs of each functional management departments.

Pursuant to the requirements of the Rules for the Risk Management of Securities Firms (《證券公司全面風險管理規範》) ("Rules for the Risk Management") and our own operations, the Company has set up a multiple-level risk management structure, comprising: (i) the Board, (ii) the Supervisory Committee, (iii) the management, and (iv) risk management function for each business department, branch and subsidiary.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.2 Credit risk

Credit risk mainly refers to the probability of losses arising from the counterparty or a debtor's failure to meet its contractual obligations in a timely manner, or the deterioration of credit quality of them. The first one is direct credit risk, i.e. the risk arising from failure of issuer to meet its contractual obligations; the second one is counterparty risk, i.e. the risk arising from a breach of contract by the counterparties in the business including over-the-counter derivatives or securities financing business; the third one is settlement risk, i.e. the risk arising from a breach of contract during the settlement of a transaction. In short, the Company fulfils its delivery obligation while the counterparty defaults in the business.

(1) Credit risk management

The Group establishes credit risk management systems for the bond issuers, counterparty and customers of margin financing and securities lending. The Group enhances the assessments of clients' qualifications and risks, and achieves credit risk management by contract inspections and transaction monitoring. Besides, the Group focuses on the potential default throughout the transaction process, and prepares for risk treatment contingency plan. Regarding the bond investments and other businesses relating to credit risk, the Group strengthens the fundamental analysis on the bond issuers and counterparties and establishes internal rating system to monitor credit risk. The Group realises various functions including the internal rating, uniform credit management, investment concentration management, pledge bond management, defaulting client management, stress testing, early-warning monitoring, risk reporting through credit risk management system, strengthening credit risk control and enhancing the ability of credit risk management. In the derivative transactions, the Group sets margin ratio and trade rules to counterparties, and controls the credit risk exposure of counterparty by means of daily mark-to-market, margin calls and forced close of positions, etc. In the securities lending and margin financing business, the Group establishes mechanisms including client credit rating assessment, facility and collateral management, concentration management, monitoring report and others, and addresses the potential risk projects through forced liquidation mechanism, judicial channels, etc.

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.2 Credit risk (Continued)

(2) Credit risk and impairment assessment

As explained in Note 3, the Group performs impairment assessment under ECL model using the simplified approach of lifetime ECL on account receivables. The Group monitors all other financial assets to assess whether there has been a significant increase in credit risk since initial recognition. If there has been a significant increase in credit risk since initial recognition, the Group will measure the loss allowance based on lifetime rather than 12m ECL.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly:

significant changes in external market indicators of credit risk for a particular financial instrument or similar financial instruments with the same expected life;
an actual or expected significant change in the financial instrument's external credit rating;
expected adverse changes in business, financial or economic conditions that are expected to cause a significant change in the borrower's ability to meet its debt obligations;
an actual or expected significant change in the operating results of the borrower;
an actual or expected significant adverse change in the regulatory, economic, or technological environment of the borrower that results in a significant change in the borrower's ability to meet its debt obligations;
significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements;
an actual or expected significant change in the quality of credit enhancement; and
significant changes in the expected performance and behavior of the borrower.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.2 Credit risk (Continued)

(2) Credit risk and impairment assessment (Continued)

The Group mainly relies on external credit ratings to assess the credit risk of bond investments. In general, the following information is considered in assessing whether there has been a significant increase in credit risk of the bond investment: the credit rating downgrade to below AA (exclusive) and above B (exclusive) if original external rating is AA or above (inclusive) from domestic rating agencies on the initial recognition date; the credit rating downgrade to above B (exclusive) if original external rating is below AA (exclusive) from domestic rating agencies on the initial recognition date. As of 31 December 2023, the Group invests primarily in bonds with debt ratings of AA or above (inclusive).

496 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.2 Credit risk (Continued)

(2) Credit risk and impairment assessment (Continued)

Regarding the reverse repurchase agreements, the Group mainly focuses on the collateral-to-loan ratio, past due status, and other qualitative and quantitative criteria to determine whether credit risk has increased significantly. In terms of stock-pledged reverse repurchase agreements, the Group sets different forced liquidation thresholds for various financing entities in consideration of factors such as the industry, liquidity, and sales restriction of the pledged stock. Normally, the forced liquidation threshold is no less than 140% for restricted shares and no less than 130% for unrestricted shares. The Group assesses the changes in credit risk of each transaction since initial recognition date by taking full consideration of the credit status of the financing entity, contract maturity date, the related collateral securities information including the industry, liquidity, sales restriction, concentration, volatility, performance guarantee and the issuer's operating conditions.

(3) Measurement of ECL

F-420 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.2 Credit risk (Continued)

(3) Measurement of ECL (Continued)

The Group applies a three-stage approach to measure ECL on financial assets measured at amortised cost and debt instruments at FVTOCI. Financial assets migrate through the following three stages based on the change in credit quality since initial recognition:

Stage 1: 12m ECL

Stage 2: Lifetime ECL – not credit impaired

For credit exposures where there has been a significant increase in credit risk since initial recognition but that are not credit impaired, a lifetime ECL is recognised;

Stage 3: Lifetime ECL – credit impaired

The Group uses PD, LGD and EAD to measure credit risks.

The expected credit losses are measured based on the probability weighted results of PD, LGD and EAD.

498

DFZQ

Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.2 Credit risk (Continued)

(3) Measurement of ECL (Continued)

Growth rate of M2: the forecast rate as of 31 December 2023 ranges between 9.15% to 12.14% (31 December 2022: 8.40% to 11.19%);
Growth rate of CPI: the forecast rate as of 31 December 2023 ranges between 1.09% and 1.44% (31 December 2022: 1.88% to 2.51%);
Growth rate of PPI: the forecast rate as of 31 December 2023 ranges from 0.26% to 0.34% (31 December 2022: -0.17% to -0.22%).

In order to determine the relationship between these economic indicators and the default probability as well as the default loss rate, the Group constructs an econometric model to determine the impact of historical changes in these indicators on the PD and LGD.

F-422 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.2 Credit risk (Continued)

(3) Measurement of ECL (Continued)

The Group takes on exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. The maximum credit risk exposure of the Group is as follows:

As at 31 December

| | 2023
RMB'000 | 2022
RMB'000 |
| --- | --- | --- |
| Advances to customers | 21,071,801 | 19,498,899 |
| Account receivables | 670,759 | 908,399 |
| Other receivables and other | 3,464,273 | 3,127,596 |
| Debt instruments at FVTOCI | 90,813,713 | 76,862,096 |
| Reverse repurchase agreements | 5,437,734 | 8,610,881 |
| Financial assets at fair value through profit or loss | 44,260,049 | 36,616,115 |
| Debt instruments measured at amortised cost | 1,586,591 | 3,164,972 |
| Derivative financial assets | 1,877,650 | 1,017,334 |
| Deposits with exchanges and financial institutions | 3,241,547 | 4,343,234 |
| Clearing settlement funds | 35,314,411 | 29,106,272 |
| Cash and bank balances | 104,093,142 | 121,862,060 |
| | 311,831,670 | 305,117,858 |

Overall, the Group monitors and manages credit risk at all times, and takes every possible measure to mitigate and control credit risk exposure to an acceptable level.

63.3 Market risk

Market risk is the risk of loss arising from fluctuations in stock prices, interest rates and exchange rates in the securities markets. The Group faces market risk primarily in the Group's securities investment business. The Group's business departments, branches and subsidiaries are the first line of defense against market risk. The Group's risk management functional units are responsible for overall market risk management.

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.3 Market risk (Continued)

To enhance the management of market risk, the Group currently adopts the following measures:

Using mark-to-market, concentration analysis and quantitative risk model, to manage business scale, risk exposure and others to establish dynamic-tracking stop-loss mechanisms.
Identifying the key factors affecting portfolio returns through sensitivity analysis, and evaluating the tolerance of investment portfolios to extreme market fluctuations by using scenario analysis and stress-testing.
Ensuring diversified and scientific asset allocation, using derivatives such as stock index futures to hedge against risks, and using various investment strategies for hedging.
Closely monitoring the macroeconomic indicators and trends and significant development in economic policies, and evaluating the systematic risk on investment that may arise from changes in macro-economic factors.
Set up the institution for decision-making, performance and responsibility for the significant events, prepare emergency plans under various predicable extreme cases, and grade and manage the significant events according to their severity.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Group's exposure to interest rate risk relates primarily to the Group's interest bearing financial assets and financial liabilities. Management actively monitors the Group's net interest rate exposure through setting limits on the level of mismatch of interest rate repricing and duration gap and aims at maintaining an interest rate spread, such that the Group is always in a net interest-bearing asset position and derive net interest income.

Fluctuations of prevailing rate quoted by the People's Bank of China, Shanghai Inter-bank offered rate and Hong Kong Inter-bank offered rate are the major sources of the Group's cash flow interest rate risk.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.3 Market risk (Continued)

Interest rate risk (Continued)

A fundamental reform of major interest rate benchmarks has been undertaken globally to replace some interbank offered rates ("IBORs") with alternative nearly risk-free rates. Details of the impacts on the Group's risk management strategy arising from the interest rate benchmark reform and the progress towards implementation of alternative benchmark interest rates are set out under Note 63.5.

The tables below summarise the Group's interest bearing financial assets and financial liabilities by their remaining terms to repricing or contractual maturity date, whichever is earlier.

As at 31 December 2023

	Less than 1 month RMB'000	1 month to 3 months (inclusive) RMB'000	3 months to 1 year (inclusive) RMB'000	1 year to 5 years (inclusive) RMB'000	Over 5 years RMB'000	Non interest-bearing RMB'000	Total RMB'000
Financial Assets
Cash and bank balances	65,345,809	4,336,170	34,345,546	65,413	-	204	104,093,142
Clearing settlement funds	35,314,411	-	-	-	-	-	35,314,411
Deposits with exchanges and financial institutions	3,241,547	-	-	-	-	-	3,241,547
Derivative financial assets	-	-	-	-	-	1,877,650	1,877,650
Advances to customers	1,837,141	5,653,225	13,581,314	121	-	-	21,071,801
Account receivables	-	-	-	-	-	670,759	670,759
Reverse repurchase agreements	5,437,734	-	-	-	-	-	5,437,734
Debt instruments at FVTOCI	515,970	1,101,297	4,390,732	33,140,777	51,664,937	-	90,813,713
Equity instruments at FVTOCI	-	-	-	-	-	6,298,178	6,298,178
Financial assets at FVTPL	1,017,352	1,607,782	5,058,324	18,204,877	18,371,714	52,809,595	97,069,644
Debt instruments measured at amortised cost	2,921	-	-	1,583,670	-	-	1,586,591
Other receivables and other	-	86,994	-	-	-	3,377,279	3,464,273
Subtotal	112,712,885	12,785,468	57,375,916	52,994,858	70,036,651	65,033,665	370,939,443

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.3 Market risk (Continued)

Interest rate risk (Continued)

As at 31 December 2023 (Continued)

	Less than 1 month RMB'000	1 month to 3 months (Inclusive) RMB'000	3 months to 1 year (Inclusive) RMB'000	1 year to 5 years (Inclusive) RMB'000	Over 5 years RMB'000	Non interest-bearing RMB'000	Total RMB'000
Financial Liabilities
Placements from banks and financial institutions	14,816,131	3,660,719	7,193,209	-	-	-	25,670,059
Short-term financing bill payables	53,035	115,557	2,629,108	-	-	-	2,797,700
Account payables to brokerage clients	111,570,987	-	-	-	-	-	111,570,987
Repurchase agreements	73,132,281	474,565	109,297	-	-	-	73,716,143
Financial liabilities at FVTPL	7,133,138	4,779,646	1,533,778	1,432,951	-	422,321	15,301,834
Derivative financial liabilities	-	-	-	-	-	874,202	874,202
Borrowings	1,482,803	182,176	35,045	-	-	-	1,700,024
Lease liabilities	-	119,970	163,639	253,790	10,076	-	547,475
Debt securities issued	4,165,994	2,597,041	10,690,975	42,703,835	-	-	60,157,845
Other account payables and other payables	-	-	-	-	-	10,295,031	10,295,031
Subtotal	212,354,369	11,929,674	22,355,051	44,390,576	10,076	11,591,554	302,631,300
Net interest-bearing position	(99,641,484)	855,794	35,020,865	8,604,282	70,026,575	53,442,111	68,308,143

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.3 Market risk (Continued)

Interest rate risk (Continued)

As at 31 December 2022

	Less than 1 month RMB'000	More than 1 month to 3 months (Inclusive) RMB'000	More than 3 months to 1 year (Inclusive) RMB'000	1 year to less than 5 years (Inclusive) RMB'000	Over 5 years RMB'000	Non interest-bearing RMB'000	Total RMB'000
Financial Assets
Cash and bank balances	70,568,119	8,470,760	42,757,598	65,413	-	170	121,862,060
Clearing settlement funds	29,106,272	-	-	-	-	-	29,106,272
Deposits with exchanges and financial institutions	4,343,234	-	-	-	-	-	4,343,234
Derivative financial assets	-	-	-	-	-	1,017,334	1,017,334
Advances to customers	1,732,651	5,820,430	11,945,818	-	-	-	19,498,899
Account receivables	-	-	-	-	-	908,399	908,399
Reverse repurchase agreements	8,610,881	-	-	-	-	-	8,610,881
Debt instruments at FVTOCI	300,596	1,318,464	7,389,895	42,694,147	25,158,994	-	76,862,096
Equity instruments at FVTOCI	-	-	-	-	-	3,721,658	3,721,658
Financial assets at FVTPL	826,212	659,773	9,681,209	16,617,379	8,831,542	47,147,615	83,763,730
Debt instruments measured at amortised cost	103,390	174,630	55,575	2,831,377	-	-	3,164,972
Other receivables and other	-	406,360	-	-	-	2,721,236	3,127,596
Subtotal	115,591,355	16,850,417	71,830,095	62,208,316	33,990,536	55,516,412	355,987,131

504 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.3 Market risk (Continued)

Interest rate risk (Continued)

As at 31 December 2022 (Continued)

	Less than 1 month RMB'000	More than 1 month to 3 months (Inclusive) RMB'000	More than 3 months to 1 year (Inclusive) RMB'000	1 year to less than 5 years (Inclusive) RMB'000	Over 5 years RMB'000	Non interest-bearing RMB'000	Total RMB'000
Financial Liabilities
Placements from banks and financial institutions	7,352,281	-	1,000,175	-	-	-	8,352,456
Short-term financing bill payables	28,300	72,484	8,199,819	-	-	-	8,300,603
Account payables to brokerage clients	123,041,420	-	-	-	-	-	123,041,420
Repurchase agreements	56,185,718	2,523,534	3,590,271	-	-	-	62,299,523
Financial liabilities at FVTPL	9,640,498	2,900,321	4,005,249	1,276,500	-	716,743	18,539,311
Derivative financial liabilities	-	-	-	-	-	308,446	308,446
Borrowings	1,748,499	90,113	170,211	-	-	-	2,008,823
Lease liabilities	-	100,445	250,763	291,537	3,032	-	645,777
Debt securities issued	-	-	16,301,568	39,500,835	-	-	55,802,403
Other account payables and other payables	-	-	-	-	-	8,638,113	8,638,113
Subtotal	197,996,716	5,686,897	33,518,056	41,068,872	3,032	9,663,302	287,936,875
Net interest-bearing position	(82,405,361)	11,163,520	38,312,039	21,139,444	33,987,504	45,853,110	68,050,256

F-428 -

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.3 Market risk (Continued)

Interest rate risk (Continued)

Sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to interest rates for interest bearing financial assets and financial liabilities, which covers both the cash flow interest rate risk of variable rate instruments and fair value interest rate risk of fixed rate financial assets at fair value through profit or loss and debt instruments at FVTOCI. The analysis is prepared assuming the interest bearing financial assets and financial liabilities outstanding at the end of each respective reporting periods were outstanding for the whole year. When reporting to the management on the interest rate risk, a 50 basis points increase or decrease in the relevant interest rates will be adopted for sensitivity analysis, when considering the reasonably possible change in interest rates.

	Year ended 31 December
	2023 RMB'000	2022 RMB'000
Profit after income tax for the year
50 basis points increase	(1,282,564)	(686,838)
50 basis points decrease	1,282,230	716,924
Equity
50 basis points increase	(3,373,943)	(2,353,793)
50 basis points decrease	3,517,371	2,511,284

Currency risk

506 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.3 Market risk (Continued)

Price risk

Price risk is primarily about the unfavorable changes of share price, gold price, financial derivative instruments prices and commodity price that cause financial losses. Quantitatively, price risk the Group faces is mainly the proportionate fluctuation in the Group's profits due to the price fluctuation of the trading financial instrument and the proportionate fluctuation in the Group's equity due to the price fluctuation of the equity instruments at FVTOCI. Other than daily monitoring the investment position, trading and earnings indicators, the Group mainly use risk sensitivity indicators, stress testing indicators in daily risk monitoring.

Sensitivity analysis

The analysis below is performed to show the impact on profit and other comprehensive income before income tax due to change in the prices of equity securities, funds, derivatives, collective asset management schemes and other trading financial instruments by 10% with all other variables held constant. A positive number below indicates an increase in profit and other comprehensive income before income tax and vice versa.

Year ended 31 December
	2023
RMB'000	2022
RMB'000
Profit after income tax for the year
Increase by 10%	2,888,341	2,198,789
Decrease by 10%	(2,888,341)	(2,198,789)
Other comprehensive income after income tax for the year
Increase by 10%	629,818	372,166
Decrease by 10%	(629,818)	(372,166)

Annual Report 2023 DFZQ 507

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.4 Liquidity risk

In the aspect of liquidity risk management, during the reporting period, the Company improves the liquidity risk management system and internal management system continuously, and sets up a special position in charge of dynamic monitoring, early-warning, analysis and reporting of the liquidity risk in accordance with the Rules for the Risk Management and new measures for the administration of risk control indicators. The Company prudently determines the qualitative principles and quantitative standards of liquidity risk preference at the beginning of each year, and adjusts the relevant liquidity risk control indicators timely in accordance with the market changes and business development during the year. The Company also conducts liquidity stress testing and emergency drilling regularly, and reports to the regulator such indicators as liquidity coverage rate and net stable capital rate daily. The above practices can ensure that the Company is able to satisfy the liquidity demand timely at reasonable cost, and will control the liquidity risk within the tolerable scope.

Undiscounted cash flows by contractual maturities of non-derivative financial liabilities

50B

DFZQ

Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.4 Liquidity risk (Continued)

Undiscounted cash flows by contractual maturities of non-derivative financial liabilities (Continued)

As at 31 December 2023

	On Demand RMB'000	Within 3 months (inclusive) RMB'000	3 months to 1 year (inclusive) RMB'000	1 year to 5 years (inclusive) RMB'000	Over 5 years RMB'000	Total RMB'000	Carrying amount RMB'000
Placements from banks and financial institutions	-	18,498,270	7,300,593	-	-	25,798,863	25,670,059
Short-term financing bill payables	-	169,170	2,667,118	-	-	2,836,288	2,797,700
Account payables to brokerage clients	111,570,987	-	-	-	-	111,570,987	111,570,987
Repurchase agreements	-	73,670,346	110,393	-	-	73,780,739	73,716,143
Financial liabilities at fair value through profit or loss	53,483	12,117,496	1,533,778	1,609,376	-	15,314,133	15,301,834
Borrowings	-	1,671,808	35,368	-	-	1,707,176	1,700,024
Lease liabilities	-	120,625	167,581	272,004	12,756	572,966	547,475
Debt securities issued	-	7,042,454	12,125,201	45,028,249	-	64,195,904	60,157,845
Other account payables and other payables	10,295,031	-	-	-	-	10,295,031	10,295,031
	121,919,501	113,290,169	23,940,032	46,909,629	12,756	306,072,087	301,757,098

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.4 Liquidity risk (Continued)

Undiscounted cash flows by contractual maturities of non-derivative financial liabilities (Continued)

As at 31 December 2022

	On Demand RMB'000	Within 3 months (Inclusive) RMB'000	3 months to 1 year (Inclusive) RMB'000	1 year to 5 years (Inclusive) RMB'000	Over 5 years RMB'000	Total RMB'000	Carrying amount RMB'000
Placements from banks and financial institutions	-	7,354,987	1,010,617	-	-	8,365,604	8,352,456
Short-term financing bill payables	-	101,149	8,279,719	-	-	8,380,868	8,300,603
Account payables to brokerage clients	123,041,420	-	-	-	-	123,041,420	123,041,420
Repurchase agreements	-	58,791,040	3,638,321	-	-	62,429,361	62,299,523
Financial liabilities at fair value through profit or loss	46,090	13,055,427	4,025,681	1,418,425	-	18,545,623	18,539,311
Borrowings	-	1,005,478	171,790	840,100	-	2,017,368	2,008,823
Lease liabilities	-	100,703	258,651	313,243	3,755	676,352	645,777
Debt securities issued	-	321,750	17,739,007	41,713,150	-	59,773,907	55,802,403
Other account payables and other payables	8,638,113	-	-	-	-	8,638,113	8,638,113
	131,725,623	80,730,534	35,123,786	44,284,918	3,755	291,868,616	287,628,429

510 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.5 Capital management

The Group's and the Company's objectives of capital management are:

To safeguard the Group's and the Company's ability to continue as a going concern so that they can continue to provide returns for shareholders and benefits for other stakeholders;
To support the Group's and the Company's stability and growth;
To maintain a strong capital base to support the development of their business; and
To comply with the capital requirements under the PRC and Hong Kong regulations.

In accordance with Administrative Measures for Risk Control Indicators of Securities Firms (Revision 2020) (the "Administrative Measures") issued by CSRC, the Company is required to meet the following standards for risk control indicators on a continual basis:

The ratio of net capital divided by the sum of its various risk capital provisions shall be no less than 100% ("Ratio 1");
The ratio of core net capital divided by the sum of on-balance-sheet and off-balance-sheet assets shall be no less than 8% ("Ratio 2");
The ratio of high-quality liquid assets divided by net cash outflow of the next thirty days shall be no less than 100% ("Ratio 3");
The ratio of available stable capital divided by required stable capital shall be no less than 100% ("Ratio 4");
The ratio of net capital divided by net assets shall be no less than 20% ("Ratio 5");
The ratio of net capital divided by liabilities shall be no less than 8% ("Ratio 6");
The ratio of net assets divided by liabilities shall be no less than 10% ("Ratio 7");
The ratio of the value of equity securities and derivatives held divided by net capital shall not exceed 100% ("Ratio 8"); and
The ratio of the value of non-equity securities and derivatives held divided by net capital shall not exceed 500% ("Ratio 9").

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

63. FINANCIAL RISK MANAGEMENT (Continued)

63.5 Capital management (Continued)

Net capital refers to net assets minus risk adjustments on certain types of assets as defined in the Administrative Measures.

As at 31 December 2023 and 2022, the Company has met the above risk control indicators requirements.

Certain subsidiaries of the Company are also subject to capital requirements under the PRC and Hong Kong regulations, imposed by the CSRC and the Hong Kong Securities and Futures Commission, respectively.

64. FAIR VALUE OF FINANCIAL INSTRUMENTS

Level 1: Inputs are quoted prices (unadjusted) in active market for identical assets or liabilities that the entity can access at the measurement date;

Level 2: Inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

Level 3: Inputs are unobservable inputs for the asset or liability.

Fair value of the financial assets and financial liabilities that are not measured on a recurring basis

512 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are not measured on a recurring basis (Continued)

As at 31 December

	2023		2022
	Carrying amount RMB'000	Fair value RMB'000	Carrying amount RMB'000	Fair value RMB'000
Financial asset
Debt instruments measured at amortised cost	1,586,591	1,609,708	3,164,972	3,192,105
Financial liability
Debt securities issued
- Corporate bonds	30,063,388	30,510,604	36,463,074	36,855,594
- Subordinated bonds	24,906,609	24,971,136	13,292,467	13,329,203
- Offshore bonds	5,057,958	4,978,820	6,045,793	5,878,148
- Income certificates	129,890	129,963	1,069	1,068
Total	60,157,845	60,590,523	55,802,403	56,064,013

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are not measured on a recurring basis (Continued)

As at 31 December 2023

As at 31 December 2022

| | Level 1
RMB'000 | Level 2
RMB'000 | Level 3
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| Financial asset | | | | |
| Debt instruments measured at amortised cost | 436,008 | 2,756,097 | – | 3,192,105 |
| Financial liability | | | | |
| Debt securities issued | 50,184,797 | 5,879,216 | – | 56,064,013 |

514 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis

Annual Report 2023 DFZQ 515

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

As at 31 December 2023

| | Level 1
RMB'000 | Level 2
RMB'000 | Level 3
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| Financial assets: | | | | |
| Debt instruments at FVTOCI | | | | |
| – Debt securities | 49,568,073 | 41,245,640 | – | 90,813,713 |
| Equity instruments at FVTOCI | | | | |
| – Equity securities | 4,327,729 | 5,814 | 188,359 | 4,521,902 |
| – Perpetual instruments | 130,890 | 1,645,386 | – | 1,776,276 |
| Financial assets at FVTPL | | | | |
| – Debt securities | 9,703,923 | 34,464,634 | 91,492 | 44,260,049 |
| – Equity securities | 2,731,902 | 15,592 | 4,169,369 | 6,916,863 |
| – Associates | – | – | 1,800,815 | 1,800,815 |
| – Funds | 3,126,650 | 12,811,951 | – | 15,938,601 |
| – Other investments | 4,922,070 | 21,269,432 | 1,961,814 | 28,153,316 |
| Derivative financial assets | – | 754,158 | 1,123,492 | 1,877,650 |
| Total | 74,511,237 | 112,212,607 | 9,335,341 | 196,059,185 |
| Financial liabilities: | | | | |
| Financial liabilities at FVTPL | 2,413,390 | 5,430,470 | 7,457,974 | 15,301,834 |
| Derivative financial liabilities | 300 | 570,277 | 303,625 | 874,202 |
| Total | 2,413,690 | 6,000,747 | 7,761,599 | 16,176,036 |

516 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

As at 31 December 2022

| | Level 1
RMB'000 | Level 2
RMB'000 | Level 3
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- |
| Financial assets: | | | | |
| Debt instruments at FVTOCI | | | | |
| – Debt securities | 43,709,766 | 33,152,330 | – | 76,862,096 |
| Equity instruments at FVTOCI | | | | |
| – Equity securities | 3,165,489 | 7,151 | 217,708 | 3,390,348 |
| – Perpetual instruments | 310,203 | 21,107 | – | 331,310 |
| Financial assets at FVTPL | | | | |
| – Debt securities | 9,558,952 | 26,766,786 | 290,377 | 36,616,115 |
| – Equity securities | 1,763,049 | 48,711 | 4,393,537 | 6,205,297 |
| – Associates | – | – | 1,933,905 | 1,933,905 |
| – Funds | 2,219,324 | 9,488,033 | – | 11,707,357 |
| – Other investments | 3,876,238 | 21,912,892 | 1,511,926 | 27,301,056 |
| Derivative financial assets | – | 466,259 | 551,075 | 1,017,334 |
| Total | 64,603,021 | 91,863,269 | 8,898,528 | 165,364,818 |
| Financial liabilities: | | | | |
| Financial liabilities at FVTPL | 3,210,032 | 9,969,012 | 5,360,267 | 18,539,311 |
| Derivative financial liabilities | 672 | 183,204 | 124,570 | 308,446 |
| Total | 3,210,704 | 10,152,216 | 5,484,837 | 18,847,757 |

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

The following table presents the valuation techniques and inputs used for the major financial instruments in Level 3.

Financial instruments	As at 31 December 2023 RMB'000	As at 31 December 2022 RMB'000	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable input(s) to fair value
Equity securities/ Associates	4,259,125 (asset)	4,207,295 (asset)	Calculated based on pricing/yield such as price-to-earnings (P/E), price-to-book value (P/B) and price-to-sales (P/S) ratio of comparable companies with an adjustment of discount for lack of marketability.	P/E multiples
P/B multiples
P/S multiples
Discount for lack of marketability	The higher the multiples, the higher the fair value.
The higher the discount, the lower the fair value.
Equity securities	739,362 (asset)	1,348,062 (asset)	The fair value is determined with reference to the quoted market prices with an adjustment of discount for lack of marketability. This discount is determined by option pricing model. The key input is historical volatility of the share prices of the securities.	Discount for lack of marketability	The higher the discount, the lower the fair value.
Equity securities/ Associates	1,160,056 (asset)	989,793 (asset)	Recent transaction price with an adjustment of discount for the marketability.	Discount for lack of marketability	The higher the discount, the lower the fair value.
Debt securities	91,492 (asset)	290,377 (asset)	Future cash flows are discounted by the risk adjusted discount rate of the bonds.	Discount rate	The higher the discount rate, the lower the fair value.
Derivative financial instruments	1,123,492 (asset)
303,625 (liability)	551,075 (asset)
124,570 (liability)	The option pricing model is used which applies the option exercise price, the price and volatility of the underlying asset, the option exercise time, and the risk-free interest rate.	The volatility of the underlying asset for option	The higher the volatility, the greater the impact on the fair value.

DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

Financial instruments	As at 31 December 2023 RMB'000	As at 31 December 2022 RMB'000	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable input(s) to fair value
Income certificates designated at FVTPL	7,144,110 (liability)	4,749,492 (liability)	The option pricing model is used which applies the option exercise price, the price and volatility of the underlying asset, the option exercise time, and the risk-free interest rate.	The volatility of the underlying asset for option	The higher the volatility, the greater the impact on the fair value.
Other investments	1,961,814 (asset)
53,362 (liability)	1,511,926 (asset)
46,090 (liability)	The fair value is determined with reference to the net asset value of the underlying investments with an adjustment of discount for the credit risk of various counterparties.	Discount rate	The higher the discount rate, the lower the fair value.
Interests attributable to other holders of consolidated structured entities	260,502 (liability)	564,685 (liability)	Shares of the net value of the structured entities, determined with reference to the net asset value of the structured entities, calculated based on pricing/ yield of comparable companies with an adjustment of discount for lack of marketability of underlying investment portfolio and adjustments of related expenses.	P/E multiples
Discount for lack of marketability	The higher the multiples, the higher the fair value.
The higher the discount, the lower the fair value.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

There were no significant transfers between instruments in Level 1 and Level 2 during the relevant year.

The following tables represent the changes in Level 3 financial instruments for the relevant years.

Year ended 31 December 2023

	Equity Instruments at FVTOCI RMB'000	Financial assets at FVTPL RMB'000	Financial liabilities at FVTPL RMB'000	Derivative financial instruments RMB'000
At beginning of the year	217,708	8,129,745	(5,360,267)	426,505
Changes in fair value recognised in other comprehensive income	(16,216)	–	–	–
Changes in fair value recognised in profit or loss	–	(430,258)	(169,278)	657,531
Additions (Note a)	–	2,748,657	(8,693,287)	(153,036)
Transfer out of Level 3 (Note b)	–	(1,024,948)	–	–
Disposals and settlements	(13,133)	(1,399,706)	6,764,858	(111,133)
At end of the year	188,359	8,023,490	(7,457,974)	819,867
Total (losses)/gains for assets/liabilities held at end of the year
– unrealised losses recognised in other comprehensive income	(17,495)	–	–	–
– unrealised losses/(gains) recognised in profit or loss	–	(1,148,345)	174,958	71,992

520 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

64. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair value of the financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

Year ended 31 December 2022

	Equity Instruments at FVTOCI RMB'000	Financial assets at FVTPL RMB'000	Financial liabilities at FVTPL RMB'000	Derivative financial instruments RMB'000
At beginning of the year	431,914	5,508,041	(3,182,059)	(133,636)
Changes in fair value recognised in other comprehensive income	(17,688)	–	–	–
Changes in fair value recognised in profit or loss	–	425,089	(76,544)	493,164
Additions (Note a)	–	4,431,531	(4,550,993)	(23,101)
Transfer out of Level 3 (Note b)	–	(855,116)	–	–
Disposals and settlements	(196,518)	(1,379,800)	2,449,329	90,078
At end of the year	217,708	8,129,745	(5,360,267)	426,505
Total (losses)/gains for assets/liabilities held at end of the year
– unrealised losses recognised in other comprehensive income	4,321	–	–	–
– unrealised losses/(gains) recognised in profit or loss	–	409,032	(41,498)	300,762

Note a: These mainly included unlisted equity investments, restricted stocks and other investments with significant unobservable inputs applied in valuing these investments.

Note b: These mainly included equity securities traded on stock exchanges with lock-up periods. They were transferred from Level 3 to Level 1 when the lock-up period lapsed and became unrestricted.

Annual Report 2023 DFZQ

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

65. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

| | Borrowings
RMB'000 | Financial
Liabilities at
FVTPL –
Income
Certificates
RMB'000 | Debt
securities
issued and
short-term
financing bill
payables
RMB'000 | Derivative
financial
assets and
liabilities
RMB'000 | Lease
liabilities
RMB'000 | Other
liabilities –
dividend
payable
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| At 1 January 2023 | 2,008,823 | 4,749,492 | 64,103,006 | (76,935) | 645,777 | 80 | 71,430,243 |
| Financing cash flows | (371,553) | 2,001,420 | (3,534,297) | (18,201) | (401,469) | (1,511,996) | (3,836,096) |
| Interest expenses | 55,595 | - | 2,253,690 | - | 19,860 | - | 2,329,145 |
| New lease entered/lease modified | - | - | - | - | 283,011 | - | 283,011 |
| Dividends declared | - | - | - | - | - | 1,511,996 | 1,511,996 |
| Net investment gains | - | 110,502 | - | 18,201 | - | - | 128,703 |
| Fair value adjustments | - | 282,696 | - | (171,829) | - | - | 110,867 |
| Foreign exchange | 7,159 | - | 133,146 | - | 296 | - | 140,601 |
| At 31 December 2023 | 1,700,024 | 7,144,110 | 62,955,545 | (248,764) | 547,475 | 80 | 72,098,470 |

522 DFZQ Annual Report 2023

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

65. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

(Continued)

| | Borrowings
RMB'000 | Financial Liabilities at
FVTPL – Income
Certificates
RMB'000 | Debt securities issued and
short-term financing bill
payables
RMB'000 | Derivative financial assets and
liabilities
RMB'000 | Lease liabilities
RMB'000 | Other liabilities – dividend
payable
RMB'000 | Total
RMB'000 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| At 1 January 2022 | 558,645 | 2,674,736 | 74,606,020 | 10,839 | 781,842 | 80 | 78,632,162 |
| Financing cash flows | 1,398,215 | 2,119,966 | (13,239,142) | 38 | (373,565) | (2,362,242) | (12,456,730) |
| Interest expenses | 34,008 | - | 2,415,946 | - | 25,689 | - | 2,475,643 |
| New lease entered/lease modified | - | - | - | - | 210,190 | - | 210,190 |
| Dividends declared | - | - | - | - | - | 2,362,242 | 2,362,242 |
| Net investment gains | - | 33,919 | - | (38) | - | - | 33,881 |
| Fair value adjustments | - | (79,129) | - | (87,774) | - | - | (166,903) |
| Foreign exchange | 17,955 | - | 320,182 | - | 1,621 | - | 339,758 |
| At 31 December 2022 | 2,008,823 | 4,749,492 | 64,103,006 | (76,935) | 645,777 | 80 | 71,430,243 |

66. RECLASSIFICATION OF COMPARATIVE FIGURES

Certain comparative figures have been re-presented to conform to the current year presentation.

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

67. SUBSEQUENT EVENTS

Implementation of share repurchase

As at 30 January, 2024, the Company has repurchased a total of 34,843,324 A shares, representing 0.4101% of the total share capital of the Company, with a maximum repurchase price of RMB9.14 per share, a lowest repurchase price of RMB7.99 per share and an average repurchase price of RMB8.92 per share, in which the total amount of funds utilised was RMB311 million (excluding trading fees).

Issuance of corporate bonds

On 25 January 2024, the Company issued a corporate bond with par value of RMB1.8 billion. The bond bears interest rate at 2.73% with a term of 3 years.

Proposed profit distribution

Pursuant to the Board resolution passed on 27 March 2024, it is proposed that cash dividends of RMB1.50 (tax inclusive) be distributed for every 10 shares based on the Company's existing share capital of 8,496,645 thousand shares deducting 34,843 thousand shares deposited in the Company's special securities account for repurchase as of 27 March 2024. This proposed distribution of cash dividends is subject to the approval of the Shareholders' general meetings.

524 DFZQ Annual Report 2023

F-447 -

ISSUER

Orient ZhiSheng Limited
Vistra Corporate Services Centre
Wickhams Cay II, Road Town
Tortola, VG1110
British Virgin Islands

TRUSTEE
REGISTRAR
PRINCIPAL PAYING AGENT, CALCULATION AGENT AND TRANSFER AGENT

Citicorp International Limited
40/F, Champion Tower
3 Garden Road
Central
Hong Kong

Citibank, N.A., London Branch
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB
United Kingdom
c/o Citibank, N.A., Dublin Branch
1 North Wall Quay
Dublin 1
Ireland

LEGAL ADVISERS

To the Issuer and the Guarantor as to English and Hong Kong law
To the Issuer and the Guarantor as to Luxembourg law
To the Issuer as to British Virgin Islands law

Linklaters
11th Floor, Alexandra House
Chater Road, Central
Hong Kong

Linklaters
35, avenue John F. Kennedy
L-1855 Luxembourg
Grand Duchy of Luxembourg

Ogier
11th Floor Central Tower
28 Queen's Road Central
Central
Hong Kong

To the Issuer and the Guarantor as to PRC law
To the Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers as to PRC law

Grandall Law Firm (Shanghai)
25-28/F, Suhe Centre
99 North Shanxi Road
Shanghai 200085
China

To the Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers as to English law and Hong Kong law

Divis Polk & Wardwell
10/F, The Hong Kong Club Building
3A Chater Road
Hong Kong

Jin Mao Partners
13F, Hong Kong New World Tower
No. 300 Huaihai Zhong Road
Shanghai

To the Trustee as to English law and Hong Kong law

Davis Polk & Wardwell
10/F, The Hong Kong Club Building
3A Chater Road
Hong Kong

PREVIOUS AUDITOR OF THE GUARANTOR
CURRENT AUDITOR OF THE GUARANTOR

Deloitte Touche Tohmatsu
35/F, One Pacific Place
88 Queensway
Hong Kong

KPMG
8th Floor, Prince's Building
Central
Hong Kong

AI assistant

DFZQ — Capital/Financing Update 2025

50931_rns_2025-09-30_ebfd72b2-f031-43d6-a389-19dc2be41216.pdf

PUBLICATION OF OFFERING CIRCULAR

IMPORTANT NOTICE

ORIENT ZHISHENG LIMITED

U.S.$300,000,000 FLOATING RATE GUARANTEED BONDS DUE 2028 UNCONDITIONALLY AND IRREVOCABLY GUARANTEED BY

Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers

NOTICE TO INVESTORS

Notice to capital market intermediaries and prospective investors pursuant to paragraph 21 of the Hong Kong SFC Code of Conduct – Important Notice to Prospective Investors

CERTAIN DEFINITIONS, CONVENTIONS AND CURRENCY PRESENTATION

PRESENTATION OF FINANCIAL INFORMATION

INDUSTRY AND MARKET DATA

FORWARD-LOOKING STATEMENTS

GLOSSARY

TABLE OF CONTENTS

SUMMARY

THE ISSUER

THE GROUP

Overview

Resignation and Appointment of Non-Executive Director

Proposed Amendments to Articles of Association and its Annexes and Proposed abolishment of the Supervisory Committee

A-share Repurchase

Competitive Strengths

Business Strategies

SUMMARY FINANCIAL INFORMATION OF THE GUARANTOR

RISK FACTORS

RISKS RELATING TO OUR BUSINESS AND INDUSTRY

General economic and market conditions could adversely affect our business.

Our institutional and sales trading business accounts for sizeable portion of our overall business, and we may incur substantial losses from market volatility or sub-optimal investment strategies.

Our brokerage commission and fee income may decrease.

Our derivative transactions are subject to various risks and may expose us to unexpected risks and potential losses.

Our investment banking and alternative investment business is affected by regulations and policies affecting securities market transactions.

Poor investment performance of our asset management schemes and mutual funds may materially and adversely affect our asset management business.

A significant decrease in our internal or external liquidity could adversely affect our business and reduce client confidence in us.

A failure to identify and address conflicts of interest appropriately could adversely affect our business.

We may pursue joint ventures or acquisitions that could present unforeseen integration difficulties or costs and may not enhance our business as we expect.

Our risk management policies and procedures and internal controls, as well as the risk management tools available to us, may not fully protect us against various risks inherent in our business.

Our operations depend on key management and professional staff and our business may suffer if we are unable to retain or replace them.

RISKS RELATING TO CONDUCTING BUSINESS IN CHINA

The PRC Government's control of currency conversion may adversely affect the value of investors' investments.

There can be no assurance of the accuracy or comparability of facts and statistics contained in this Offering Circular with respect to the PRC, its economy or the relevant industry.

The Bonds may not be a suitable investment for all investors.

Investors may experience difficulties in enforcing judgments obtained from non-PRC courts against us.

The Issuer may issue additional Bonds in the future.

The market continues to develop in relation to SOFR as a reference rate for the Bonds.

RISKS RELATING TO THE MARKET GENERALLY

A trading market for the Bonds may not develop.

Investors in the Bonds may be subject to foreign exchange risks.

The liquidity and price of the Bonds following the offering may be volatile.

International financial markets and world economic conditions may adversely affect the market price of the Bonds.

USE OF PROCEEDS

CAPITALISATION AND INDEBTEDNESS

TERMS AND CONDITIONS OF THE BONDS

1 FORM, DENOMINATION, STATUS AND GUARANTEE OF THE BONDS

(a) Form and Denomination

(d) NDRC Post-Issuance Filing and Notification

(e) Financial Statements

4 INTEREST

(a) Interest Rate and Interest Payment Dates

(b) SOFR Index Unavailable

(a) Final redemption

(b) Redemption for tax reasons

10 REPLACEMENT OF BOND CERTIFICATES

11 TRUSTEE AND AGENTS

12 MEETINGS OF BONDHOLDERS; MODIFICATION AND WAIVER

(a) Meetings of Bondholders

13 ENFORCEMENT

14 INDEMNIFICATION

15 FURTHER ISSUES

16 NOTICES

17 CURRENCY INDEMNITY

18 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

19 GOVERNING LAW AND JURISDICTION

(a) Governing law

(b) Jurisdiction

(c) Waiver of immunity

(d) Agent for Service of Process

SUMMARY OF PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM

PAYMENT

DFZQ Capital/Financing Update 2025