Financial Performance - The company's operating revenue for Q1 2022 was CNY 4,830,257,440, a decrease of 44.16% compared to CNY 8,650,533,658 in the same period last year[3] - Net profit attributable to shareholders was CNY 1,070,996,613, down 55.95% from CNY 2,431,210,656 in Q1 2021[3] - The net profit after deducting non-recurring gains and losses was CNY 1,015,612,612.15, a decrease of 57.77% compared to CNY 2,404,984,632.04 in the previous year[3] - Basic and diluted earnings per share were both CNY 0.04, down 60% from CNY 0.10 in the same period last year[3] - The total profit for the period was RMB 1,139,407,278.86, down 61.4% from RMB 2,948,458,565.64 in Q1 2021[12] - The total comprehensive income for the period was RMB 907,371,803.75, a decrease of 56.9% from RMB 2,104,853,644.14 in the same quarter last year[12] - The company's total operating expenses were RMB 3,683,722,289.42, down from RMB 5,699,567,126.04 in Q1 2021, indicating a reduction of 35.4%[12] Cash Flow and Assets - The net cash flow from operating activities was CNY 8,583,559,593.22, showing a significant improvement from a negative cash flow of CNY -5,431,710,737.93 in the previous year[3] - The company's cash and cash equivalents reached RMB 119.89 billion, up from RMB 108.58 billion, indicating a growth of about 10.71%[11] - The company reported a total cash and cash equivalents balance of RMB 156,368,994,937.47 at the end of Q1 2022, up from RMB 133,372,355,411.39 at the end of Q1 2021[13] - Total assets increased by 3.14% to CNY 619,863,397,872.56 from CNY 601,011,467,253.09 at the end of the previous year[3] - As of March 31, 2022, total assets amounted to RMB 619.86 billion, an increase from RMB 601.01 billion as of December 31, 2021, reflecting a growth of approximately 3.08%[11] Shareholder Information - The total number of common shareholders at the end of the reporting period is 307,154[8] - China Jianyin Investment Co., Ltd. holds 26.34% of shares, totaling 6,596,306,947 shares[8] - Central Huijin Investment Ltd. holds 20.05% of shares, totaling 5,020,606,527 shares[8] - The top ten shareholders include state-owned entities, with the majority holding RMB ordinary shares[8] - The company’s total number of preferred shareholders is not applicable for this reporting period[10] Liabilities and Equity - Total liabilities stood at RMB 511.90 billion, compared to RMB 493.96 billion, marking an increase of approximately 3.67%[11] - The company's equity attributable to shareholders reached RMB 107.96 billion, up from RMB 107.05 billion, reflecting a growth of about 0.85%[11] - The total equity of minority shareholders was RMB 11.86 billion, compared to RMB 11.83 billion, reflecting a slight increase of about 0.25%[11] Other Financial Metrics - Credit impairment losses increased by 178.86% to CNY 268,922,263.96 compared to CNY 96,436,446.98 in the previous year[7] - The company reported a significant decrease in income tax expenses, down 97.49% compared to the previous year, reflecting a reduction in taxable income[7] - Net commission and fee income increased to RMB 2,127,113,188.52 from RMB 1,996,315,055.27, representing a growth of 6.6% year-over-year[12] - The company incurred a net interest expense of RMB 77,109,652.63, compared to net interest income of RMB 600,494,453.51 in the previous year[12] - The company's weighted average return on equity decreased by 1.60 percentage points to 1.12% from 2.72% in the previous year[3] Corporate Actions - The company completed the issuance of corporate bonds totaling RMB 3 billion, with two varieties: RMB 1.8 billion at a 3.11% interest rate for 3 years and RMB 1.2 billion at a 3.50% interest rate for 5 years[10] - The company provided a guarantee of RMB 100 million for its wholly-owned subsidiary Hongyuan Hengli (Shanghai) Industrial Co., Ltd.[10] - The number of shares held by Shanghai Jiushi (Group) Co., Ltd. decreased by 7,277,000 shares compared to December 2021 due to participation in margin trading[9] - Sichuan Development (Holding) Co., Ltd. increased its holdings by 49,500,000 shares compared to December 2021 due to margin trading activities[9] - The company’s H-share shareholders are represented by Hong Kong Central Clearing (Agent) Co., Ltd., which holds 2,503,800,170 shares[9]

Dividend Distribution - The company plans to distribute a cash dividend of RMB 1.00 per 10 shares, totaling RMB 2,503,994,456.00, based on a total share capital of 25,039,944,560 shares as of December 31, 2021[2]. - The company reported that the undistributed profits after the dividend distribution will be RMB 438,572,989.61, which will be carried forward to the next year[2]. - The company will adjust the per-share distribution ratio if there are changes in total share capital before the dividend distribution date[2]. Financial Performance - Total revenue and other income for 2021 reached RMB 46,171,470 thousand, an increase of 17.92% compared to RMB 39,156,373 thousand in 2020[29]. - Profit before tax for 2021 was RMB 11,079,122 thousand, reflecting an 18.51% increase from RMB 9,348,467 thousand in 2020[29]. - Net profit attributable to shareholders for 2021 was RMB 9,398,369 thousand, up 21.02% from RMB 7,766,175 thousand in 2020[29]. - Basic earnings per share for 2021 were RMB 0.38, an increase of 22.58% from RMB 0.31 in 2020[29]. - The weighted average return on equity for 2021 was 10.26%, up from 9.05% in 2020[29]. Audit and Compliance - The annual financial report for 2021 has been audited by PwC and received a standard unqualified opinion[2]. - The financial report is prepared in accordance with International Financial Reporting Standards, ensuring compliance and transparency[2]. - The board of directors and senior management have guaranteed the truthfulness, accuracy, and completeness of the annual report[2]. Risk Management - The company emphasizes the importance of understanding potential market risks, credit risks, liquidity risks, operational risks, policy risks, legal compliance risks, and product/business innovation risks[2]. - The company has established a comprehensive risk management system to effectively prevent liquidity risks[142]. - The company is facing challenges from market risks due to global economic uncertainties and is implementing measures to enhance risk management[162]. Business Operations - The company operates through its subsidiaries, including Shenwan Hongyuan Securities, Shenwan Hongyuan West, and Shenwan Hongyuan Underwriting and Sponsorship[15]. - The company maintains its main business scope, which includes investment management, equity investment, and investment consulting, since its listing[15]. - The company is involved in securities business, securities investment consulting, and securities investment fund sales services[16]. Capital Structure - The registered capital of Shenwan Hongyuan Group Co., Ltd. is RMB 25,039,944,560[10]. - The company has not disclosed any significant changes in share capital during the reporting period[3]. - Central Huijin holds a 55.38% stake in Shenwan Hongyuan after acquiring 1.22 billion shares in 2012[22]. Market Position - The company maintains a leading position in the industry, with strong asset quality and financial health, ranking among the top tier in operating income, net profit, and return on net assets[44]. - The wealth management market in China has surpassed RMB 200 trillion, making it the second-largest wealth management market globally, driven by a shift from savings to investment among residents[42]. Awards and Recognition - The company has received multiple awards, including the A-class underwriter credit rating for corporate bonds from the National Development and Reform Commission[53]. - The company was recognized as an outstanding underwriter for corporate bonds by the Shanghai Stock Exchange[54]. - The company achieved significant recognition in the New Fortune 2021 Investment Banking Rankings, including Best M&A Investment Bank and Best Domestic Investment Bank[56]. Shareholder Engagement - The company held 3 shareholder meetings, 11 board meetings, and 8 supervisory board meetings during the reporting period[185]. - The participation rate for the 2020 Annual General Meeting was 62.54%[188]. - The 2021 First Extraordinary General Meeting had a participation rate of 62.17%[190]. Governance and Compliance - The company has complied with all provisions of the Corporate Governance Code and has not faced any penalties or public reprimands during the reporting period[179]. - The company has established a clear governance structure with defined responsibilities among the shareholders' meeting, board of directors, supervisory board, and management[185]. - The company ensures the protection of minority shareholders' rights and has not infringed upon their interests[185].

Dividend Distribution - The company plans to distribute a cash dividend of RMB 1.00 per share to shareholders, totaling RMB 2,503,994,456.00, based on a total share capital of 25,039,944,560 shares as of December 31, 2021[4]. - The company's retained earnings after the dividend distribution will be RMB 438,572,989.61, which will be carried forward to the next fiscal year[4]. - The board of directors has approved the annual profit distribution plan, which is subject to shareholder meeting approval[4]. Financial Performance - The company's operating revenue for 2021 was RMB 34,307,428,053.23, representing a 16.66% increase from RMB 29,409,186,016.58 in 2020[39]. - The net profit attributable to shareholders for 2021 was RMB 9,398,369,399.70, a 21.02% increase compared to RMB 7,766,174,742.43 in 2020[39]. - The total assets at the end of 2021 amounted to RMB 601,011,467,253.09, reflecting a 22.37% increase from RMB 491,124,275,720.23 at the end of 2020[39]. - The total liabilities at the end of 2021 were RMB 493,956,873,232.83, which is a 23.17% increase from RMB 401,033,686,262.09 at the end of 2020[39]. - The basic earnings per share for 2021 was RMB 0.38, up 22.58% from RMB 0.31 in 2020[39]. - The weighted average return on equity for 2021 was 10.26%, an increase of 1.21 percentage points from 9.05% in 2020[39]. Risk Management - The company emphasizes the importance of understanding various risks, including market, credit, liquidity, operational, policy, legal compliance, and product/innovation risks, as detailed in the management discussion and analysis section[4]. - The company faces significant risks including market, credit, liquidity, operational, policy, legal compliance, and innovation risks[198]. - The company has established a risk control indicator system focusing on market risk, with a Value at Risk (VaR) of RMB 139 million for its proprietary investment business[199]. Business Operations - The company has maintained its main business operations since its listing, focusing on investment management, equity investment, and securities services[25]. - Shenwan Hongyuan Group operates through three subsidiaries providing various securities services[25]. - The company has a comprehensive range of qualifications, including securities investment consulting and fund sales services[26]. - The company has been actively involved in market expansion and diversification of financial services[26]. - The company operates a diversified financial service model, including corporate finance, personal finance, institutional services, and investment management, with a focus on investment banking and principal investment[57]. Awards and Recognition - The company received multiple awards for its performance, including recognition as an A-class underwriter for corporate bonds and accolades for digital transformation in the financial sector[61]. - The company was recognized as the "Best Investment Bank" in the 2021 New Fortune Investment Bank Rankings[64]. - The company ranked 3rd in the "Best Research Institution" category at the 15th Sell-Side Analyst Crystal Ball Awards[65]. - The company achieved the "Best Financial Futures Service Award" from Futures Daily and Securities Times[65]. - The company was awarded the "Best Asset Management Product" by Futures Daily and Securities Times[65]. Investment and Financing - The company has invested RMB 23 billion in principal investments, focusing on debt investment and direct equity investment[187]. - The company plans to use approximately 30% of the raised funds for principal investments and 20% for further developing international business[185]. - The company provided financing support of over RMB 20 billion to small and micro enterprises[82]. - The company aims to enhance its investment business by integrating it with securities operations, focusing on the Sci-Tech Innovation Board and Growth Enterprise Market[83]. Cash Flow and Expenses - Cash inflow from operating activities totaled RMB 98.04 billion, a 13.05% increase from 2020, while cash outflow increased by 32.92% to RMB 138.86 billion[151]. - Total operating expenses for 2021 were RMB 23.18 billion, a year-over-year increase of 15.76%[148]. - Business and management expenses rose to RMB 10.73 billion, representing a 19.75% increase year-over-year[150]. Future Plans - The company plans to enhance its capital layout and financial technology layout in 2022 to optimize client and business structures[93]. - The company aims to transform from pure product sales to asset allocation services, enhancing resource integration and product research capabilities in 2022[103]. - The company plans to enhance its quantitative strategy development and expand its swap business in 2022, aiming to become a leading financial derivatives service provider[125]. - The company aims to establish a dedicated asset management subsidiary in 2022 to further improve its research and investment management systems[130]. Market Environment - The regulatory environment in 2021 emphasized a "registration system" reform, which is expected to increase the proportion of direct financing and expand the IPO market for securities firms[54]. - The wealth management market in China has surpassed ¥200 trillion, becoming the second-largest globally[52]. - The company recognizes the increasing competition in the securities industry and aims to enhance its overall strength to adapt to market changes[197].

[Section 1. Important Notice, Table of Contents, and Definitions](index=1&type=section&id=Section%201.%20Important%20Notice,%20Table%20of%20Contents,%20and%20Definitions) This section provides essential notices, the report's table of contents, and definitions of key terms [Section 2. Company Profile and Key Financial Indicators](index=9&type=section&id=Section%202.%20Company%20Profile%20and%20Key%20Financial%20Indicators) This section introduces the company's background and presents its key financial performance and position metrics [Company Profile](index=9&type=section&id=Company%20Profile) Shenwan Hongyuan Group Co., Ltd. is an A+H share listed company with main offices in Beijing and Hong Kong, and Mr. Huang Hao as its legal representative - The company is an A+H share listed company, with stock codes **000166** (SZSE) and **6806** (HKEX) respectively[9](index=9&type=chunk) [Key Accounting Data and Financial Indicators](index=12&type=section&id=Key%20Accounting%20Data%20and%20Financial%20Indicators) During the reporting period, the company achieved significant year-on-year growth in total revenue and profit attributable to equity holders, with total assets also increasing, and no material differences in financial results under domestic and international accounting standards Key Financial Indicators for H1 2021 (IFRS) | Indicator | H1 2021 | H1 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue and Other Income (Thousand RMB) | 21,280,128 | 17,790,098 | 19.62% | | Profit Before Tax (Thousand RMB) | 5,347,139 | 4,955,930 | 7.89% | | Profit Attributable to Equity Holders of the Company (Thousand RMB) | 4,520,910 | 4,034,768 | 12.05% | | Basic Earnings Per Share (RMB/Share) | 0.18 | 0.16 | 12.50% | | Weighted Average Return on Net Assets (%) | 5.01 | 4.75 | Increase of 0.26 percentage points | Key Balance Sheet Indicators as of June 30, 2021 (IFRS) | Indicator | June 30, 2021 | December 31, 2020 | Change from Prior Year-End (%) | | :--- | :--- | :--- | :--- | | Total Assets (Thousand RMB) | 520,597,662 | 491,124,277 | 6.00% | | Total Liabilities (Thousand RMB) | 426,634,352 | 401,033,687 | 6.38% | | Total Equity Attributable to Equity Holders of the Company (Thousand RMB) | 92,269,280 | 88,464,617 | 4.30% | - There is no material difference in net profit and total equity attributable to equity holders of the company between financial reports prepared under IFRS and China Accounting Standards for Business Enterprises[17](index=17&type=chunk) [Net Capital and Related Risk Control Indicators](index=13&type=section&id=Net%20Capital%20and%20Related%20Risk%20Control%20Indicators) Shenwan Hongyuan Securities' parent company net capital increased by **9.43%** to **RMB 72.28 billion**, with all risk control indicators meeting regulatory requirements despite slight decreases in liquidity coverage and net stable funding ratios Shenwan Hongyuan Securities Parent Company Key Risk Control Indicators | Indicator | End of Current Reporting Period | End of Prior Year | Change | | :--- | :--- | :--- | :--- | | Net Capital (Thousand RMB) | 72,283,843 | 66,054,127 | 9.43% | | Risk Coverage Ratio | 186.70% | 163.70% | Increase of 23.00 percentage points | | Capital Leverage Ratio | 15.74% | 16.06% | Decrease of 0.32 percentage points | | Liquidity Coverage Ratio | 203.82% | 205.07% | Decrease of 1.25 percentage points | | Net Stable Funding Ratio | 123.73% | 133.71% | Decrease of 9.98 percentage points | [Section 3. Management Discussion and Analysis](index=14&type=section&id=Section%203.%20Management%20Discussion%20and%20Analysis) This section provides an in-depth analysis of the company's operational performance, financial condition, and future outlook [Overview of Principal Businesses](index=14&type=section&id=Principal%20Businesses%20Engaged%20by%20the%20Company%20During%20the%20Reporting%20Period) The company operates as an investment holding group primarily focused on securities business, structured into four main segments: Corporate Finance, Personal Finance, Institutional Services and Trading, and Investment Management - The company's business structure is divided into four major segments: - **Corporate Finance**: Includes investment banking and principal investment businesses - **Personal Finance**: Provides brokerage, margin financing, and securities lending services to individual and non-professional institutional investors - **Institutional Services and Trading**: Offers prime brokerage, research and consulting, and proprietary trading services - **Investment Management**: Encompasses asset management, public fund management, and private fund management[20](index=20&type=chunk)[21](index=21&type=chunk) [Analysis of Core Competencies](index=15&type=section&id=Analysis%20of%20Core%20Competencies) The company's core strengths include leading comprehensive capabilities, a broad business scope, strategic regional presence, effective risk management, and a robust talent system, all contributing to its industry leadership - The company's core competencies include: - **Leading Comprehensive Strength**: Strong shareholder advantages and robust capital strength position it among the industry leaders in comprehensive competitiveness - **Comprehensive Business Layout**: Possesses a full range of licenses and a complete securities business product line, actively expanding its investment footprint - **Favorable Regional Advantages**: Strategic forward-looking布局 in traditional advantageous regions like Shanghai and Xinjiang, as well as key strategic areas such as the Guangdong-Hong Kong-Macao Greater Bay Area and Beijing-Tianjin-Hebei region - **Effective Risk Management**: Established a group-wide risk management system, with all risk control indicators meeting regulatory requirements - **Robust Talent Mechanism**: Centered on market-oriented mechanisms to promote shared interests among the company, shareholders, and employees[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [Analysis of Principal Businesses](index=16&type=section&id=Analysis%20of%20Principal%20Businesses) In H1 2021, the company achieved strong overall operating performance with revenue and net profit growth exceeding industry averages, primarily driven by institutional services and trading, while investment management revenue declined Operating Performance by Business Segment for H1 2021 (Unit: Thousand RMB) | Business Segment | Total Revenue and Other Income | Total Expenses | YoY Change in Total Revenue (%) | YoY Change in Total Expenses (%) | | :--- | :--- | :--- | :--- | :--- | | Corporate Finance | 1,500,418 | 1,160,004 | 16.43% | 24.66% | | Personal Finance | 6,402,444 | 4,357,245 | 6.57% | 8.44% | | Institutional Services and Trading | 12,482,678 | 10,106,586 | 31.65% | 36.42% | | Investment Management | 894,588 | 708,121 | -11.57% | 5.64% | | **Total** | **21,280,128** | **16,331,956** | **19.62%** | **25.37%** | [Corporate Finance Business](index=17&type=section&id=Corporate%20Finance%20Business) The Corporate Finance segment generated **RMB 1.5 billion** in total revenue, a **16.43%** year-on-year increase, driven by strong growth in investment banking, while principal investment business revenue declined - Investment banking seized market opportunities, completing **14** equity financing projects domestically with a financing amount of **RMB 16.24 billion**, and leading underwriting of corporate bonds totaling **RMB 78.23 billion**, ranking **7th** in the industry[37](index=37&type=chunk) - Principal investment business steadily expanded, with Hongyuan Huizhi adding **RMB 720 million** in private, small, and medium-sized enterprise investments and financing, and Shenwan Direct Investment having **4** portfolio companies successfully listed[38](index=38&type=chunk) [Personal Finance Business](index=19&type=section&id=Personal%20Finance%20Business) The Personal Finance segment achieved **RMB 6.40 billion** in total revenue, a **6.57%** year-on-year increase, benefiting from robust securities brokerage and strong financial product sales, while stock pledge business was actively compressed - Securities brokerage business: Net income from agency trading business was **RMB 1.895 billion**, client assets under custody reached **RMB 4.31 trillion**, with a market share of **6.41%**[40](index=40&type=chunk) - Futures brokerage business: Shenwan Futures' average daily client equity increased by **38.66%** year-on-year, and Hongyuan Futures' average daily client equity increased by **73.16%** year-on-year[41](index=41&type=chunk)[42](index=42&type=chunk) - Margin financing and securities lending business: Year-end scale was **RMB 80.68 billion**, a slight decrease of **0.20%** from the prior year-end, with a market share of **4.52%**[43](index=43&type=chunk) - Stock pledge financing business: Financing balance was **RMB 8.18 billion**, a **28.85%** decrease from the prior year-end, reflecting active risk control[44](index=44&type=chunk) - Financial product sales: Sales of self-developed products reached **RMB 101.14 billion**, a **173.78%** year-on-year increase; agency sales of third-party products reached **RMB 51.54 billion**, a **34.71%** year-on-year increase[45](index=45&type=chunk) [Institutional Services and Trading Business](index=22&type=section&id=Institutional%20Services%20and%20Trading%20Business) The Institutional Services and Trading segment performed strongly, achieving **RMB 12.48 billion** in total revenue, a **31.65%** year-on-year increase, driven by prime brokerage, FICC, and equity sales and trading, with significant growth in derivatives and cross-border businesses - Prime brokerage business: Trading unit seat commission income was **RMB 405 million**, a **31.90%** year-on-year increase; PB system total scale was approximately **RMB 248.97 billion**[47](index=47&type=chunk)[48](index=48&type=chunk) - FICC sales and trading business: Bond business investment return rate surpassed market indices, and the company obtained market maker qualification for interbank bond spot trading[50](index=50&type=chunk)[51](index=51&type=chunk) - Derivatives business: OTC options business scale ranked among the top in the industry, and cross-border business scale increased by over **300%** from the prior year-end[53](index=53&type=chunk) [Investment Management Business](index=25&type=section&id=Investment%20Management%20Business) The Investment Management segment generated **RMB 895 million** in total revenue, an **11.57%** year-on-year decrease, with asset management scale reaching **RMB 319.20 billion** and significant growth in public fund management through its associate, Fullgoal Fund - Asset management business: As of the end of the reporting period, business scale was **RMB 319.20 billion**, ranking **9th** in the industry[56](index=56&type=chunk) - Public fund management business: Fund investment advisory services reached **81,000** clients, with an AUM of nearly **RMB 2.9 billion**; associate Fullgoal Fund's AUM reached **RMB 790.7 billion**, a **34.49%** increase from the beginning of the year[57](index=57&type=chunk) [Financial Statement Analysis](index=27&type=section&id=Financial%20Statement%20Analysis) The company maintained a stable financial position during the reporting period, with total assets and liabilities increasing, driven by growth in fee and commission income, net investment income, and other income, while operating cash flow was a net outflow due to increased financial instrument investments [Analysis of Consolidated Statement of Profit or Loss](index=27&type=section&id=Analysis%20of%20Consolidated%20Statement%20of%20Profit%20or%20Loss) In H1 2021, the Group's total revenue and other income increased by **19.62%**, primarily driven by fee and commission income, net investment income, and other income, while total expenses rose by **25.37%** due to higher commodity sales costs, interest expenses, and staff costs Revenue Composition for H1 2021 (Unit: Thousand RMB) | Item | H1 2021 | H1 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Fee and Commission Income | 5,134,700 | 4,273,827 | 20.14 | | Interest Income | 5,579,696 | 5,666,902 | -1.54 | | Net Investment Income | 4,635,058 | 3,289,342 | 40.91 | | Other Income and Gains | 5,930,674 | 4,560,027 | 30.06 | | **Total Revenue and Other Income** | **21,280,128** | **17,790,098** | **19.62** | Expense Composition for H1 2021 (Unit: Thousand RMB) | Item | H1 2021 | H1 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Interest Expense | 4,632,538 | 3,799,738 | 21.92 | | Staff Costs | 3,499,091 | 3,031,318 | 15.43 | | Other Operating Expenses | 6,627,393 | 4,789,057 | 38.39 | | **Total Expenses** | **16,331,956** | **13,027,158** | **25.37** | [Analysis of Consolidated Statement of Cash Flows](index=29&type=section&id=Analysis%20of%20Consolidated%20Statement%20of%20Cash%20Flows) As of June 30, 2021, the Group's cash and cash equivalents increased by **51.59%** to **RMB 48.05 billion**, with a net cash inflow of **RMB 10.51 billion** during the period, driven by net cash inflow from investing activities offsetting net outflow from operating activities - Net cash outflow from operating activities was **RMB 26.94 billion**, an increase of **RMB 19.32 billion** in outflow year-on-year, primarily due to increased cash outflow from the purchase of financial instruments at fair value through profit or loss[62](index=62&type=chunk) - Net cash inflow from investing activities was **RMB 34.97 billion**, compared to a net outflow of **RMB 15.73 billion** in the prior period, mainly due to increased cash inflow from the disposal of financial assets at fair value through other comprehensive income[62](index=62&type=chunk) [Analysis of Consolidated Statement of Financial Position](index=30&type=section&id=Analysis%20of%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2021, the Group's total assets reached **RMB 520.6 billion**, a **6.00%** increase from the beginning of the year, primarily driven by an increase in financial assets at fair value through profit or loss, with a balanced debt structure and controllable liquidity risk - The main reason for the increase in current assets was a **RMB 48.41 billion** increase in 'financial assets at fair value through profit or loss' from the beginning of the year[67](index=67&type=chunk) - The main reason for the increase in current liabilities was a **RMB 28.91 billion** increase in 'long-term bonds due within one year' from the beginning of the year[67](index=67&type=chunk) - The company's financing channels include interbank borrowing, income certificates, and corporate bonds; as of the end of the reporting period, liabilities due in over one year accounted for **46.93%**, and those due within one year accounted for **53.07%**, with no overdue debts[68](index=68&type=chunk)[70](index=70&type=chunk) [Analysis of Investment Status](index=36&type=section&id=Analysis%20of%20Investment%20Status) During the reporting period, the company's equity in associates and joint ventures decreased by **11.45%** to **RMB 4.17 billion**, with no new significant equity or non-equity investments, and its securities portfolio primarily consisting of asset management plans, bonds, and stocks - Equity investments in associates and joint ventures amounted to **RMB 4.17 billion**, a **11.45%** decrease from **RMB 4.71 billion** in the prior year[76](index=76&type=chunk) - The top ten securities investments at period-end included Rongyu Fund Shenwan Hongyuan Securities No. 1 Collective Asset Management Plan, **CATL**, **Hikvision**, and **Kweichow Moutai**[78](index=78&type=chunk) [Analysis of Major Subsidiaries and Associates](index=38&type=section&id=Analysis%20of%20Major%20Subsidiaries%20and%20Associates) The company holds several wholly-owned and controlled subsidiaries, with Shenwan Hongyuan Securities Co., Ltd. being a core contributor with **RMB 4.45 billion** in net profit for H1, and associate Fullgoal Fund Management Co., Ltd. also performing strongly with **RMB 1.24 billion** in net profit Operating Performance of Major Subsidiaries for H1 2021 (Unit: Thousand RMB) | Company Name | Type | Total Assets | Net Assets | Net Profit | | :--- | :--- | :--- | :--- | :--- | | Shenwan Hongyuan Securities Co., Ltd. | Wholly-owned Subsidiary | 479,955,774 | 92,444,987 | 4,451,834 | | Hongyuan Huizhi Investment Co., Ltd. | Wholly-owned Subsidiary | 6,346,205 | 2,191,605 | 77,440 | | Hongyuan Futures Co., Ltd. | Wholly-owned Subsidiary | 14,728,525 | 1,441,377 | 85,217 | | Shenwan Futures Co., Ltd. | Controlled Subsidiary | 26,903,064 | 3,628,510 | 137,256 | Operating Performance of Major Associates for H1 2021 (Unit: Thousand RMB) | Company Name | Type | Total Assets | Net Assets | Net Profit | | :--- | :--- | :--- | :--- | :--- | | Fullgoal Fund Management Co., Ltd. | Associate | 9,590,773 | 5,732,272 | 1,241,936 | [Use of H-share Proceeds](index=41&type=section&id=Use%20of%20H-share%20Proceeds) The net proceeds from the 2019 H-share issuance were allocated as planned, with approximately **50%** for securities business, **30%** for principal investments, and **20%** for international business, and all funds were fully utilized by the end of the reporting period - H-share proceeds allocation: approximately **50%** for securities business development, **30%** for principal investments, and **20%** for international business development[86](index=86&type=chunk) - During the reporting period, **RMB 1.5 billion** of the proceeds was injected into Shenwan Hongyuan Securities to support the international group's business development[86](index=86&type=chunk) - As of June 30, 2021, all proceeds have been fully utilized, with no unutilized amounts[90](index=90&type=chunk) [Risk Analysis and Response](index=43&type=section&id=Risks%20Faced%20by%20the%20Company%20and%20Countermeasures) The company faces market, credit, liquidity, operational, policy, legal compliance, innovation, and exchange rate risks, and has established a comprehensive group-wide risk management system with specific countermeasures for each risk type - **Market Risk**: Primarily arises from proprietary trading and other businesses; the company manages this through a 'risk appetite-tolerance-limit' system, VaR, and stress testing, with Shenwan Hongyuan Securities' proprietary investment business VaR (1-day, 95%) at **RMB 140 million** at period-end[92](index=92&type=chunk) - **Credit Risk**: Primarily stems from financing businesses and fixed-income proprietary trading; the company addresses this by compressing stock pledge business scale (a **28.85%** decrease in H1), establishing an internal rating system, and strengthening due diligence[94](index=94&type=chunk) - **Liquidity Risk**: Managed by improving liquidity reserves, optimizing asset-liability structure, and diversifying financing channels; during the reporting period, both the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) met regulatory standards[96](index=96&type=chunk) [Business Outlook](index=48&type=section&id=Operating%20Plan%20and%20Related%20Measures%20for%20the%20Next%20Reporting%20Period) For the next reporting period, the company plans to focus on developing light-asset businesses, enhancing core competitiveness, strengthening internal resource integration and synergy, and continuously optimizing development quality through improved risk management, fintech empowerment, and refined management - Key future operating plans include: - Vigorously developing light-asset businesses - Enhancing synergistic development capabilities and strengthening internal resource integration - Solidifying management foundations, including risk management, fintech empowerment, and refined management[102](index=102&type=chunk) [Section 4. Corporate Governance](index=49&type=section&id=Section%204.%20Corporate%20Governance) This section details the company's governance structure, compliance with regulations, and changes in its board, supervisory committee, and senior management [Overview of Corporate Governance](index=49&type=section&id=Corporate%20Governance%20Status) As an A+H listed company, the company strictly adheres to listing regulations, continuously improves its governance structure, complied with all provisions of the Corporate Governance Code, and held its 2020 Annual General Meeting to approve key resolutions - The company strictly complies with the laws and regulations of its listing venues, and during the reporting period, it adhered to all provisions of the Corporate Governance Code[103](index=103&type=chunk) - The 2020 Annual General Meeting was held on May 28, 2021, reviewing and approving **17** proposals, including the re-election of the Board of Directors[104](index=104&type=chunk)[105](index=105&type=chunk) [Changes in Directors, Supervisors, and Senior Management](index=52&type=section&id=Changes%20in%20the%20Company's%20Directors,%20Supervisors,%20and%20Senior%20Management) During the reporting period, the company completed the re-election of its Board of Directors and Supervisory Committee on May 28, 2021, with Mr. Chu Xiaoming re-elected as Chairman and Mr. Xu Yiyang elected as Chairman of the Supervisory Committee, alongside appointments and adjustments to senior management - The company completed the re-election of its Board of Directors on May 28, 2021, forming the Fifth Board of Directors with **11** members, and Mr. Chu Xiaoming was re-elected as Chairman[108](index=108&type=chunk)[109](index=109&type=chunk) - The company completed the re-election of its Supervisory Committee, forming the Fifth Supervisory Committee with **5** members, and Mr. Xu Yiyang was elected as Chairman of the Supervisory Committee[111](index=111&type=chunk)[112](index=112&type=chunk) - Changes occurred in senior management, with the appointment of a new Executive Committee and Mr. Xu Liang as Board Secretary[113](index=113&type=chunk)[114](index=114&type=chunk) [Employees and Remuneration Policy](index=57&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2021, the company had **11,591** employees and implements a market-oriented, performance-linked remuneration system, complemented by a tiered training system to support talent development aligned with its strategic goals - As of the end of the reporting period, the company had a total of **11,591** employees, with the vast majority being employees of Shenwan Hongyuan Securities[117](index=117&type=chunk) - The company implements a market-oriented remuneration policy, where compensation is directly linked to company, departmental, and individual performance[118](index=118&type=chunk) [Section 5. Environmental and Social Responsibility](index=59&type=section&id=Section%205.%20Environmental%20and%20Social%20Responsibility) This section outlines the company's commitment to environmental protection and social welfare through green finance initiatives, low-carbon operations, and targeted poverty alleviation efforts [Environmental Responsibility](index=59&type=section&id=Environmental%20Responsibility) The company actively supports national 'carbon peak and carbon neutrality' strategies by developing green finance, practicing low-carbon operations, and engaging in green research, including hosting a 'carbon neutrality' conference and publishing a white paper - The company vigorously develops green finance by underwriting green bonds, investing in environmental protection enterprises, and establishing 'carbon neutrality' funds[121](index=121&type=chunk) - The company was successfully selected as a Vice Chairman Unit of the China Green Carbon Foundation and established the industry's first 'carbon neutrality' sector team[122](index=122&type=chunk) [Social Responsibility](index=60&type=section&id=Social%20Responsibility) The company actively fulfills its social responsibilities by continuing targeted assistance to areas like Huining County in Gansu and Makit County in Xinjiang, investing **RMB 32.25 million** in H1 2021 for education, insurance, industry, ecological, and talent support projects - In H1 2021, the company cumulatively invested **RMB 32.25 million** in designated poverty alleviation areas[123](index=123&type=chunk) - Assistance measures include: - **Education Assistance**: Establishing 'Shenwan Hongyuan Classes' and subsidizing students from disadvantaged families - **Insurance Assistance**: Promoting 'Comprehensive Anti-Poverty Return Insurance' and 'Insurance + Futures' projects - **Industrial Assistance**: Investing **RMB 7 million** to support Huining's advantageous industries and leading enterprises - **Ecological Assistance**: Investing **RMB 5 million** to implement 'Carbon Sink Afforestation Projects' - **Talent Assistance**: Investing **RMB 14 million** to support the construction of Huining Cadre College[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[129](index=129&type=chunk) [Section 6. Significant Matters](index=64&type=section&id=Section%206.%20Significant%20Matters) This section covers key events including the change of accounting firms, ongoing litigation, significant related party transactions, and important matters concerning the company's subsidiaries [Change of Accounting Firm](index=64&type=section&id=Appointment%20and%20Dismissal%20of%20Accounting%20Firms) Due to KPMG Huazhen reaching its maximum continuous engagement period, the company changed its accounting firm for 2021, appointing PwC Zhongtian and PricewaterhouseCoopers as its domestic and international auditors, respectively, following board and shareholder approval - Due to reaching the maximum continuous engagement period, the company's 2021 auditors were changed from KPMG Huazhen to PwC Zhongtian (domestic) and PricewaterhouseCoopers (international)[134](index=134&type=chunk) [Litigation Matters](index=65&type=section&id=Litigation%20Matters) During the reporting period, the company had no major lawsuits or arbitrations, but its subsidiary Shenwan Hongyuan Securities was involved in multiple margin financing and stock pledge disputes ranging from tens of millions to hundreds of millions of yuan, with some cases in enforcement and others still pending - During the reporting period, Shenwan Hongyuan Securities had several new lawsuits, primarily involving margin financing and securities lending disputes and pledged securities repurchase contract disputes, such as the case against Liu Xiangdai (principal of **RMB 108 million**) and the case against Zhang Liuyang (principal of **RMB 85 million**)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) - Progress was made in several legacy cases, such as the pledged securities repurchase dispute case against Shen Peijin and Zhu Lijing (principal of **RMB 695 million**), where the judgment has become effective and entered enforcement proceedings[143](index=143&type=chunk) [Significant Related Party Transactions](index=76&type=section&id=Significant%20Related%20Party%20Transactions) During the reporting period, the company engaged in routine related party transactions with affiliates, including securities financial services, product trading, leasing, and comprehensive services, all conducted within approved limits and at market-based prices, with no significant asset acquisitions or disposals - The company engaged in routine related party transactions, including securities brokerage, investment banking, and asset management, with China Jianyin Investment and its affiliates, Shanghai International Trust, and SAIC Group Finance Co., Ltd.[159](index=159&type=chunk)[160](index=160&type=chunk) - The company conducted securities and financial product transactions, such as repurchase transactions and bond trading, with related parties including Shanghai International Trust and Bank of Shanghai[165](index=165&type=chunk)[167](index=167&type=chunk) [Significant Matters of Company Subsidiaries](index=102&type=section&id=Significant%20Matters%20of%20Company%20Subsidiaries) During the reporting period, subsidiary Shenwan Hongyuan Securities issued multiple corporate, subordinated, and perpetual subordinated bonds, and received regulatory warning letters or rectification orders for internal control and employee conduct issues, which have since been rectified - Subsidiary Shenwan Hongyuan Securities issued multiple tranches of corporate bonds, subordinated bonds, and perpetual subordinated bonds to support its business development[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) - During the reporting period, Shenwan Hongyuan Securities and its subsidiaries received warning letters or rectification orders from the Xinjiang, Chongqing, and Jiangsu CSRC bureaus due to issues such as employee conduct norms and inadequate internal controls[207](index=207&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) [Section 7. Share Changes and Shareholder Information](index=116&type=section&id=Section%207.%20Share%20Changes%20and%20Shareholder%20Information) This section details the company's share capital structure and the holdings of its major shareholders, including changes due to securities lending activities [Share Changes](index=116&type=section&id=Share%20Changes) During the reporting period, the company's total share capital remained unchanged at **25,039,944,560** shares, with unrestricted shares accounting for **99.9983%** and restricted shares for **0.0017%** Share Structure | Share Type | Number of Shares | Percentage | | :--- | :--- | :--- | | Restricted Shares | 437,244 | 0.0017% | | Unrestricted Shares | 25,039,507,316 | 99.9983% | | **Total Share Capital** | **25,039,944,560** | **100.00%** | [Shareholder Information](index=118&type=section&id=Number%20of%20Shareholders%20and%20Shareholding%20Information) As of June 30, 2021, the company had **295,060** common shareholders, with China Jianyin Investment and Central Huijin Investment as the top two shareholders, holding **26.34%** and **20.05%** respectively, and some shareholder holdings changed due to securities lending activities Top Ten Common Shareholders' Shareholding Information (As of June 30, 2021) | Shareholder Name | Shareholder Nature | Shareholding Percentage (%) | Number of Shares | | :--- | :--- | :--- | :--- | | China Jianyin Investment Ltd. | State-owned Legal Person | 26.34 | 6,596,306,947 | | Central Huijin Investment Ltd. | State Share | 20.05 | 5,020,606,527 | | HKSCC Nominees Limited | Overseas Legal Person | 10.00 | 2,503,803,370 | | Shanghai Jiushi (Group) Co., Ltd. | State-owned Legal Person | 4.71 | 1,178,251,789 | | China Everbright Group Co., Ltd. | State-owned Legal Person | 3.99 | 999,000,000 | | Sichuan Development Holding Co., Ltd. | State-owned Legal Person | 3.54 | 886,043,633 | - Central Huijin Investment Ltd. holds **100%** equity in China Jianyin Investment Ltd. and is the company's ultimate controlling shareholder[216](index=216&type=chunk) [Section 8. Bond-Related Information](index=125&type=section&id=Section%208.%20Bond-Related%20Information) This section provides an overview of the company's outstanding bonds, their repayment status, and key debt-servicing capacity indicators [Corporate Bond Information](index=125&type=section&id=Corporate%20Bond%20Information) During the reporting period, the company had multiple outstanding public and non-public corporate bonds, successfully executed a put option and interest rate adjustment for '18 Shenhong 01' bond, with all bonds serviced on time and no defaults, and maintained AAA credit ratings with a stable outlook - The company exercised the investor put option for the '18 Shenhong 01' bond, with a put amount of **RMB 467 million**, and subsequently lowered the coupon rate to **3.20%**[240](index=240&type=chunk) - During the reporting period, the company's bond credit rating remained unchanged, with the main credit rating maintained at **AAA** and a stable outlook[241](index=241&type=chunk) [Key Debt-Servicing Capacity Indicators](index=132&type=section&id=Key%20Accounting%20Data%20and%20Financial%20Indicators%20for%20the%20Past%20Two%20Years) As of the end of the reporting period, the company's asset-liability ratio was **77.76%**, a slight increase from the prior year-end, and its interest coverage ratio decreased to **2.20** times, while loan repayment and interest payment rates remained at **100%** Key Financial Indicators | Item | Current Reporting Period | Prior Year Period | Change | | :--- | :--- | :--- | :--- | | Asset-Liability Ratio (%) | 77.76 | 77.08 (Prior Year-End) | Increase of 0.68 percentage points | | Interest Coverage Ratio | 2.20 | 2.36 | Decrease of 0.16 | | Loan Repayment Rate (%) | 100.00 | 100.00 | — | | Interest Payment Rate (%) | 100.00 | 100.00 | — | [Section 9. Financial Report](index=133&type=section&id=Section%209.%20Financial%20Report) This section presents the interim condensed consolidated financial statements, including the review report, and detailed notes on accounting policies, financial instruments, and segment reporting [Review Report and Financial Statements](index=133&type=section&id=Review%20Report%20and%20Financial%20Statements) This section includes the review report by PricewaterhouseCoopers and the unaudited interim condensed consolidated statements of profit or loss, comprehensive income, financial position, changes in equity, and cash flows, prepared in accordance with IFRS, with no matters found to suggest non-compliance - This interim condensed consolidated financial report is unaudited but has been reviewed by PricewaterhouseCoopers in accordance with International Standard on Review Engagements 2410[251](index=251&type=chunk)[485](index=485&type=chunk) [Notes to the Interim Condensed Consolidated Financial Report](index=143&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Report) The notes to the financial report provide detailed information on the company's background, accounting basis, significant accounting policies, and a breakdown of major consolidated statement items, including revenue composition, financial instrument details, segment reporting, related party transactions, fair value measurements, and financial instrument risk management - The notes provide detailed segment reporting information, classifying the company's businesses into four segments: Corporate Finance, Personal Finance, Institutional Services and Trading, and Investment Management, and presenting each segment's revenue, expenses, assets, and liabilities[401](index=401&type=chunk)[403](index=403&type=chunk) - The notes provide a three-level fair value hierarchy and detailed disclosures for financial instruments, and describe the company's management policies, methods, and sensitivity analysis for credit risk, liquidity risk, and market risk[407](index=407&type=chunk)[423](index=423&type=chunk)