Report Overview [Important Notice](index=1&type=section&id=Important%20Content%20Notice) The board of directors, supervisory board, and senior management assure the truthfulness, accuracy, and completeness of the quarterly report content, with unaudited financial statements for this quarter - The company's board of directors, supervisory board, and senior management assume legal responsibility for the truthfulness, accuracy, and completeness of the quarterly report content[3](index=3&type=chunk) - The financial statements for this quarter are unaudited[3](index=3&type=chunk) Key Financial Data [Key Accounting Data and Financial Indicators](index=1&type=section&id=%28I%29Key%20Accounting%20Data%20and%20Financial%20Indicators) Year-to-date revenue and net profit attributable to shareholders increased, but Q3 net profit declined by 25.34%; operating cash flow significantly grew by 66.11% Key Accounting Data and Financial Indicators (Year-to-Date) | Item | Year-to-Date Amount (Yuan) | Period-over-Period Change (%) | | :--- | :--- | :--- | | Operating Revenue | 6,458,626,853.43 | 12.82 | | Net Profit Attributable to Shareholders of Listed Company | 1,928,277,072.19 | 30.08 | | Net Profit Attributable to Shareholders of Listed Company Excluding Non-recurring Gains and Losses | 1,911,745,485.76 | 26.89 | | Net Cash Flow from Operating Activities | 10,079,184,742.16 | 66.11 | | Basic Earnings Per Share (Yuan/share) | 0.23 | 27.78 | | Diluted Earnings Per Share (Yuan/share) | 0.23 | 27.78 | | Weighted Average Return on Net Assets (%) | 4.76 | Increased by 0.98 percentage points | | Total Assets | 148,507,421,704.99 | 20.49 | | Owners' Equity Attributable to Shareholders of Listed Company | 41,398,515,209.32 | 4.49 | Key Financial Indicators (Q3) | Item | Current Period Amount (Yuan) | Period-over-Period Change (%) | | :--- | :--- | :--- | | Operating Revenue | 2,378,677,004.88 | 2.02 | | Net Profit Attributable to Shareholders of Listed Company | 627,729,913.06 | -25.34 | | Net Profit Attributable to Shareholders of Listed Company Excluding Non-recurring Gains and Losses | 606,937,762.65 | -28.07 | | Basic Earnings Per Share (Yuan/share) | 0.07 | -30.00 | | Diluted Earnings Per Share (Yuan/share) | 0.07 | -30.00 | | Weighted Average Return on Net Assets (%) | 1.52 | Decreased by 0.60 percentage points | [Non-recurring Gains and Losses](index=2&type=section&id=%28II%29Non-recurring%20Gains%20and%20Losses%20and%20Amounts) Non-recurring gains and losses totaled 20.79 million Yuan for the quarter and 16.53 million Yuan year-to-date, primarily from government subsidies and other non-operating items Non-recurring Gains and Losses and Amounts | Item | Current Period Amount (Yuan) | Year-to-Date Amount (Yuan) | | :--- | :--- | :--- | | Gains and losses from disposal of non-current assets | -1,266,877.31 | -1,491,462.57 | | Government subsidies recognized in current profit or loss | 5,481,448.27 | 11,686,058.37 | | Other non-operating income and expenses apart from the above | 23,214,052.24 | 14,978,405.49 | | Less: Income tax impact | 6,495,563.23 | 8,333,071.13 | | Minority interest impact (after tax) | 140,909.56 | 308,343.73 | | **Total** | **20,792,150.41** | **16,531,586.43** | [Analysis of Financial Indicator Changes](index=2&type=section&id=%28III%29Changes%20and%20Reasons%20for%20Key%20Accounting%20Data%20and%20Financial%20Indicators) Year-to-date net interest income increased by 42% due to higher interest from other debt investments and financing, while investment banking fees and investment income declined due to reduced project revenue and consolidated structured entity investment income; operating cash flow surged by 66.11% from changes in client funds, financial assets, and repurchase scale Year-to-Date Changes and Reasons for Key Financial Indicators | Item Name | Year-to-Date Amount (Yuan) | Prior Year Same Period (Yuan) | Change Ratio (%) | Primary Reasons | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | 1,616,945,225.89 | 1,138,695,422.06 | 42.00 | Increase in interest income from other debt investments and financing business | | Net Fee and Commission Income from Investment Banking Business | 311,111,424.70 | 499,732,198.25 | -37.74 | Decrease in investment banking project income | | Investment Income | 553,741,091.27 | 1,083,191,077.57 | -48.88 | Decrease in investment income from consolidated structured entities | | Gains from Changes in Fair Value | -9,539,353.22 | -582,957,505.98 | Not Applicable | Changes in fair value of financial instruments held for trading | | Non-operating Income | 27,802,540.11 | 7,807,049.46 | 256.12 | Receipt of litigation-related deposits | | Non-operating Expenses | 20,308,913.59 | 64,521,076.80 | -68.52 | Prior period pending litigation | | Income Tax Expense | 648,444,255.71 | 416,019,696.41 | 55.87 | Increase in taxable income | | Net Profit | 1,971,689,767.97 | 1,498,160,830.44 | 31.61 | Market conditions impacting brokerage business and subsidiary earnings | | Total Comprehensive Income | 1,845,822,256.58 | 1,311,021,934.29 | 40.79 | Market conditions impacting brokerage business and subsidiary earnings, and fair value changes of financial investment instruments | | Net Cash Flow from Operating Activities | 10,079,184,742.16 | 6,067,925,139.80 | 66.11 | Changes in client fund scale, financial asset scale, and repurchase scale | Changes and Reasons for Key Balance Sheet Items (End of Reporting Period) | Item Name | End of Current Period (Yuan) | End of Prior Year (Yuan) | Change Ratio (%) | Primary Reasons | | :--- | :--- | :--- | :--- | :--- | | Accounts Receivable | 3,142,959,488.17 | 469,132,776.49 | 569.95 | Increase in pledged deposits receivable and clearing receivables | | Financial Assets Held Under Resale Agreements | 690,607,542.90 | 1,487,479,876.71 | -53.57 | Decrease in stock pledge repurchase scale | | Other Debt Investments | 32,752,958,167.50 | 14,190,249,453.69 | 130.81 | Increase in financial asset investment scale | | Other Equity Instrument Investments | 0 | 5,156,843,276.17 | -100.00 | Decrease in financial asset investment scale | | Right-of-Use Assets | 654,123,669.71 | Not Applicable | Not Applicable | Adoption of new lease standards | | Short-term Borrowings | 172,582,476.53 | 317,783,132.80 | -45.69 | Repayment of short-term borrowings | | Financial Liabilities Held for Trading | 50,037,235.85 | 4,806,183,918.95 | -98.96 | Decrease in consolidated structured product scale | | Financial Assets Sold Under Repurchase Agreements | 31,691,078,233.23 | 13,332,074,099.80 | 137.71 | Increase in bond pledge repurchase and income rights transfer repurchase scale | | Accounts Payable | 15,785,888,089.71 | 11,075,970,165.60 | 42.52 | Increase in payable margin deposits | | Lease Liabilities | 607,639,620.15 | Not Applicable | Not Applicable | Adoption of new lease standards | | Other Liabilities | 1,266,394,787.14 | 583,621,533.21 | 116.99 | Increase in payable deposits | | Other Comprehensive Income | 100,297,898.09 | 226,165,409.48 | -55.65 | Fair

[Definitions](index=4&type=section&id=%E7%AC%AC%E4%B8%80%E8%8A%82%20%E9%87%8A%E4%B9%89) This section provides definitions of key terms used throughout the report [Company Profile and Key Financial Indicators](index=5&type=section&id=%E7%AC%AC%E4%BA%8C%E8%8A%82%20%E5%85%AC%E5%8F%B8%E7%AE%80%E4%BB%8B%E5%92%8C%E4%B8%BB%E8%A6%81%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) This section provides an overview of the company's basic information and key financial performance metrics [Company Information](index=5&type=section&id=%E4%B8%80%E3%80%81%20%E5%85%AC%E5%8F%B8%E4%BF%A1%E6%81%AF) Founder Securities Co., Ltd. is a comprehensive securities company with full business licenses, led by legal representative Shi Hua and registered capital of RMB 8.232 billion - The company holds comprehensive business qualifications, covering **53 licenses** including securities brokerage, investment banking, asset management, futures, and fund sales[10](index=10&type=chunk)[11](index=11&type=chunk) Company Basic Information | Item | Information | | :--- | :--- | | **Chinese Name** | Founder Securities Co., Ltd. | | **Stock Abbreviation** | Founder Securities | | **Stock Code** | 601901 | | **Listing Exchange** | Shanghai Stock Exchange | | **Legal Representative** | Shi Hua | | **Registered Capital** | 8,232,101,395.00 RMB | [Key Accounting Data and Financial Indicators](index=7&type=section&id=%E4%B8%83%E3%80%81%20%E5%85%AC%E5%8F%B8%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E5%92%8C%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) In the first half of 2021, the company achieved strong performance growth with operating revenue up 20.25% and net profit attributable to shareholders surging by 102.70%, while total assets grew by 16.06% Key Accounting Data for H1 2021 (Consolidated Statements) | Key Indicator | Jan-Jun 2021 | Jan-Jun 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | | **Operating Revenue (RMB)** | 4,079,949,848.55 | 3,392,945,977.69 | 20.25% | | **Operating Profit (RMB)** | 1,698,333,862.46 | 932,669,957.82 | 82.09% | | **Net Profit Attributable to Parent (RMB)** | 1,300,547,159.13 | 641,612,762.39 | 102.70% | | **Net Profit Attributable to Parent (Excl. Non-recurring Items) (RMB)** | 1,304,807,723.11 | 662,770,083.00 | 96.87% | | **Net Cash Flow from Operating Activities (RMB)** | 5,485,626,407.41 | 4,987,911,780.71 | 9.98% | Key Financial Indicators for H1 2021 (Consolidated Statements) | Key Indicator | Jan-Jun 2021 | Jan-Jun 2020 | Change | | :--- | :--- | :--- | :--- | | **Basic EPS (RMB/share)** | 0.16 | 0.08 | 100.00% | | **Weighted Average ROE (%)** | 3.24 | 1.66 | Increased by 1.58 percentage points | Balance Sheet Key Data (Consolidated Statements) | Key Indicator | Jun 30, 2021 | Dec 31, 2020 | Change from Prior Year-End (%) | | :--- | :--- | :--- | :--- | | **Total Assets (RMB)** | 143,049,097,757.91 | 123,256,369,688.39 | 16.06% | | **Owners' Equity Attributable to Parent (RMB)** | 40,707,839,886.82 | 39,620,740,244.32 | 2.74% | Parent Company Core Risk Control Indicators | Key Indicator | Jun 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Net Capital (RMB)** | 22,918,642,968.41 | 20,958,329,450.55 | | **Risk Coverage Ratio (%)** | 340.48 | 337.16 | | **Capital Leverage Ratio (%)** | 24.19 | 27.30 | | **Liquidity Coverage Ratio (%)** | 138.99 | 154.60 | | **Net Stable Funding Ratio (%)** | 134.57 | 142.08 | [Management Discussion and Analysis](index=10&type=section&id=%E7%AC%AC%E4%B8%89%E8%8A%82%20%E7%AE%A1%E7%90%86%E5%B1%82%E8%AE%A8%E8%AE%BA%E4%B8%8E%E5%88%86%E6%9E%90) This section provides an in-depth analysis of the company's industry, business operations, core competencies, and financial performance [Industry and Main Business Overview during the Reporting Period](index=10&type=section&id=%E4%B8%80%E3%80%81%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%85%AC%E5%8F%B8%E6%89%80%E5%B1%9E%E8%A1%8C%E4%B8%9A%E5%8F%8A%E4%B8%BB%E8%90%A5%E4%B8%9A%E5%8A%A1%E6%83%85%E5%86%B5%E8%AF%B4%E6%98%8E) In H1 2021, the securities industry experienced high prosperity, benefiting the company's five main business segments, which maintained leading positions in wealth management and fund market-making - The company's main businesses encompass **five segments**: wealth management, investment banking, asset management, institutional services, and investment and trading, providing comprehensive financial services to clients[23](index=23&type=chunk) - In H1 2021, A-share market activity was robust, with stock and fund transaction volume reaching **RMB 115.73 trillion**, a 22.21% year-on-year increase; margin financing and securities lending balance reached **RMB 1.68 trillion**, up 29.99% from the beginning of the year, fostering a favorable environment for brokerage business development[24](index=24&type=chunk) - The company's wealth management business ranks among the **top tier in the industry**, with over **12 million clients** and an industry ranking of **8th**; its self-developed "Xiaofang" APP's monthly active users rank **4th** in the industry[25](index=25&type=chunk) - The company's fund market-making business is industry-leading, ranking **2nd** in the industry by the number of market-making funds[26](index=26&type=chunk) [Analysis of Core Competencies during the Reporting Period](index=11&type=section&id=%E4%BA%8C%E3%80%81%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E6%A0%B8%E5%BF%83%E7%AB%9E%E4%BA%89%E5%8A%9B%E5%88%86%E6%9E%90) The company's core competencies include strong comprehensive strength, leading wealth management, optimized business model, excellent talent, and robust compliance and risk control - The company demonstrates strong comprehensive strength, with its **total assets, net assets, and operating revenue** all ranking among the **top 20** in the industry in 2020[27](index=27&type=chunk) - Wealth management business is a flagship for the company, with multiple key indicators such as **total client count, number of branches, and APP monthly active users** consistently ranking in the **top tier** of the industry[28](index=28&type=chunk) - The company has received an **A-class regulatory rating** from the China Securities Regulatory Commission for **4 consecutive years**, indicating robust compliance and risk control capabilities[29](index=29&type=chunk) [Discussion and Analysis of Operating Performance](index=13&type=section&id=%E4%B8%89%E3%80%81%E7%BB%8F%E8%90%A5%E6%83%85%E5%86%B5%E7%9A%84%E8%AE%A8%E8%AE%BA%E4%B8%8E%E5%88%86%E6%9E%90) In H1 2021, the company maintained stable operations despite shareholder restructuring, achieving significant financial improvements, including a 102.70% increase in net profit attributable to the parent Overall Operating Performance for H1 2021 | Indicator | Amount (Billion RMB) | YoY Growth | | :--- | :--- | :--- | | **Operating Revenue** | 40.80 | 20.25% | | **Operating Profit** | 16.98 | 82.09% | | **Net Profit Attributable to Parent** | 13.01 | 102.70% | - Despite some impact on the company's financing and business expansion due to the controlling shareholder's restructuring, the company's operations and team remained stable, with internal and external environments gradually improving[30](index=30&type=chunk) [Wealth Management Business](index=13&type=section&id=%EF%BC%88%E4%B8%80%EF%BC%89%E8%B4%A2%E5%AF%8C%E7%AE%A1%E7%90%86%E4%B8%9A%E5%8A%A1) Wealth management, a core business, performed strongly in H1 2021, with significant growth in brokerage, investment advisory, and financial product distribution income - Net income from securities brokerage business reached **RMB 1.826 billion**, a **13.34%** year-on-year increase; total clients exceeded **12.7 million**, ranking **8th** in the industry; Xiaofang APP's monthly active users rank **4th** in the industry[31](index=31&type=chunk) - Financial product distribution income was **RMB 245 million**, surging by **191.06%** year-on-year, with sales of equity private products increasing by **357.00%** year-on-year[31](index=31&type=chunk) - Futures brokerage fee income reached **RMB 312 million**, a **85.77%** year-on-year increase; clients' average daily equity grew by **36.84%** year-on-year[32](index=32&type=chunk) [Investment Banking Business](index=14&type=section&id=%EF%BC%88%E4%BA%8C%EF%BC%89%E6%8A%95%E8%B5%84%E9%93%B6%E8%A1%8C%E4%B8%9A%E5%8A%A1) In the reporting period, investment banking business generated RMB 177 million in revenue, with equity underwriting at RMB 1.655 billion and bond underwriting at RMB 19.03 billion Investment Banking Business Revenue Composition for H1 2021 | Business Type | Underwriting Scale (Billion RMB) | Business Revenue (Million RMB) | | :--- | :--- | :--- | | **Equity Business** | 1.655 | 36.67 | | **Bond Business** | 19.03 | 140.26 | [Asset Management Business](index=14&type=section&id=%EF%BC%88%E4%B8%89%EF%BC%89%E8%B5%84%E4%BA%A7%E7%AE%A1%E7%90%86%E4%B8%9A%E5%8A%A1) Asset management business achieved significant active management transformation, with securities asset management equity scale growing by 60% and private equity net profit surging by 438.15% - Securities asset management business firmly pursued active management transformation, with equity scale reaching **RMB 5.684 billion**, a **60.00%** increase[34](index=34&type=chunk) - Private equity funds (Founder Hesheng) performed exceptionally, achieving a net profit of **RMB 118 million**, a **438.15%** year-on-year increase[35](index=35&type=chunk) - Public funds (Founder Fubon) equity fund scale reached **RMB 8.122 billion**, a **226.05%** year-on-year increase[35](index=35&type=chunk) [Institutional Services Business](index=15&type=section&id=%EF%BC%88%E5%9B%9B%EF%BC%89%E6%9C%BA%E6%9E%84%E6%9C%8D%E5%8A%A1%E4%B8%9A%E5%8A%A1) Institutional services business experienced rapid growth, with research commission income reaching a historical high and private comprehensive services revenue surging by 240.75% - Research business achieved commission income of **RMB 170 million**, setting a new historical high[37](index=37&type=chunk) - Private comprehensive business income reached **RMB 136 million**, a **240.75%** year-on-year increase[37](index=37&type=chunk) [Investment and Trading Business](index=16&type=section&id=%EF%BC%88%E4%BA%94%EF%BC%89%E6%8A%95%E8%B5%84%E4%B8%8E%E4%BA%A4%E6%98%93%E4%B8%9A%E5%8A%A1) Investment and trading businesses diversified, with strong performance in equity and fixed income, and fund market-making maintaining an industry-leading position - Fund market-making business maintained its industry-leading position, providing market-making services for **215 fund products**, accounting for **44.42%** of the total ETF market, with business revenue of **RMB 100 million**, a **7.00%** year-on-year increase[38](index=38&type=chunk) - Bond investment advisory business achieved significant growth, leading the industry in both client numbers and assets under management[38](index=38&type=chunk) [Key Operating Performance during the Reporting Period](index=17&type=section&id=%E5%9B%9B%E3%80%81%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E4%B8%BB%E8%A6%81%E7%BB%8F%E8%90%A5%E6%83%85%E5%86%B5) The company's net profit surged by 105.20% due to favorable market conditions and increased subsidiary earnings, while investment banking fees declined and fixed income activities increased Financial Statement Key Item Variation Analysis | Key Indicator | Current Period | Prior Period | Change (%) | Explanation of Change | | :--- | :--- | :--- | :--- | :--- | | **Net Interest Income** | 930,725,013.28 RMB | 711,080,276.50 RMB | 30.89% | Primarily due to changes in liability structure during the current period | | **Net Investment Banking Fee and Commission Income** | 195,437,295.90 RMB | 302,820,279.29 RMB | -35.46% | Primarily due to a decrease in investment banking project income during the current period | | **Credit Impairment Losses** | 118,444,624.28 RMB | 302,835,323.81 RMB | -60.89% | Primarily due to credit impairment losses recognized in the prior period | | **Net Profit** | 1,340,352,747.57 RMB | 653,197,942.24 RMB | 105.20% | Primarily due to market conditions impacting brokerage business and increased subsidiary earnings during the current period | Balance Sheet Key Item Variation Analysis | Item | Current Period End | Prior Period End | Change (%) | Explanation of Change | | :--- | :--- | :--- | :--- | :--- | | **Other Debt Investments** | 29,358,951,942.46 RMB | 14,190,249,453.69 RMB | 106.90% | Primarily due to an increase in financial asset investment scale during the current period | | **Financial Assets Sold Under Repurchase Agreements** | 27,797,522,291.52 RMB | 13,332,074,099.80 RMB | 108.50% | Primarily due to an increase in bond pledged repurchase and income right transfer repurchase scale during the current period | [Analysis of Major Holding and Participating Companies](index=21&type=section&id=%E5%85%AD)%20%E4%B8%BB%E8%A6%81%E6%8E%A7%E8%82%A1%E5%8F%82%E8%82%A1%E5%85%AC%E5%8F%B8%E5%88%86%E6%9E%90) In H1 2021, major subsidiaries generally performed well, with Founder Hesheng Investment and Founder Securities Investment showing outstanding net profit, while some entities incurred losses Major Subsidiary Operating Performance for H1 2021 (Unit: Million RMB) | Holding Company Name | Net Assets | Operating Revenue | Net Profit | | :--- | :--- | :--- | :--- | | **Founder Underwriting & Sponsorship** | 3,178.84 | 208.79 | 30.30 | | **Founder Hesheng Investment** | 2,280.26 | 166.21 | 118.36 | | **Founder Securities Investment** | 1,354.45 | 134.18 | 97.78 | | **Founder Mid-term Futures** | 1,515.55 | 461.67 | 121.26 | | **Founder Fubon Fund** | 438.02 | 76.88 | -5.80 | | **Founder Hong Kong Financial Holdings** | 177.44 | -87.20 | -108.98 | | **Credit Suisse Securities (Participating)** | 1,503.30 | 242.31 | 32.50 | [Potential Risks Faced](index=22&type=section&id=(%E4%B8%80)%20%E5%8F%AF%E8%83%BD%E9%9D%A2%E5%AF%B9%E7%9A%84%E9%A3%8E%E9%99%A9) The company manages primary risks including credit, liquidity, market, and operational risks through a comprehensive risk management system with established controls and monitoring [1. Credit Risk](index=22&type=section&id=1%E3%80%81%E4%BF%A1%E7%94%A8%E9%A3%8E%E9%99%A9) Credit risk primarily stems from client defaults in credit businesses and issuer defaults in bond investments, managed through various control measures, with overall risk controllable Credit Business Performance Guarantee Levels | Credit Business | Jun 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Average Maintenance Guarantee Ratio for Margin Financing and Securities Lending Clients** | 311.99% | 320.44% | | **Average Performance Guarantee Ratio for Stock Pledge Repurchase Clients** | 186.25% | 125.66% | Credit Risk Exposure (Unit: RMB) | Financial Asset Category | Jun 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Funds Lent Out** | 27,159,977,441.91 | 23,952,491,443.95 | | **Other Debt Investments** | 29,358,951,942.46 | 14,190,249,453.69 | | **Financial Assets Purchased Under Resale Agreements** | 1,467,681,999.14 | 1,487,479,876.71 | | **Total Credit Risk Exposure** | **122,885,893,058.74** | **101,443,923,402.87** | [3. Market Risk](index=24&type=section&id=3%E3%80%81%E5%B8%82%E5%9C%BA%E9%A3%8E%E9%99%A9) Market risk, encompassing interest rate, exchange rate, and equity price risks, is managed through size, duration, and stop-loss limits, with equity VaR at RMB 68 million Bond Portfolio Interest Rate Risk Indicators | Date | Modified Duration (Years) | Basis Point Value (Million RMB) | | :--- | :--- | :--- | | **Jun 30, 2021** | 1.98 | 6.96 | | **Dec 31, 2020** | 1.22 | 3.05 | - The VaR (Value at Risk) for equity securities holdings (99% confidence level, 1-day holding period) was **RMB 68 million**[65](index=65&type=chunk) - Sensitivity analysis indicates that a 5% change in the fair value of the company's financial instruments would result in a **6.05%** corresponding change in the company's net assets[66](index=66&type=chunk) [Corporate Governance](index=28&type=section&id=%E7%AC%AC%E5%9B%9B%E8%8A%82%20%E5%85%AC%E5%8F%B8%E6%B2%BB%E7%90%86) This section details the company's corporate governance structure, including shareholder meetings and changes in directors, supervisors, and senior management [Overview of Shareholder Meetings](index=28&type=section&id=%E4%B8%80%E3%80%81%20%E8%82%A1%E4%B8%9C%E5%A4%A7%E4%BC%9A%E6%83%85%E5%86%B5%E7%AE%80%E4%BB%8B) During the reporting period, the company held two shareholder meetings, approving key proposals and experiencing a change in independent directors - During the reporting period, the company held the **first extraordinary general meeting of shareholders in 2021** and the **2020 annual general meeting of shareholders**[69](index=69&type=chunk) - There was a change in independent directors: Mr. Ye Lin resigned, and **Ms. Cao Shinan** was elected as an independent director of the company's fourth board of directors on **May 18, 2021**[70](index=70&type=chunk) [Environmental and Social Responsibility](index=30&type=section&id=%E7%AC%AC%E4%BA%94%E8%8A%82%20%E7%8E%AF%E5%A2%83%E4%B8%8E%E7%A4%BE%E4%BC%9A%E8%B4%A3%E4%BB%BB) This section outlines the company's commitment and actions regarding environmental protection and social responsibility initiatives [Environmental Information](index=30&type=section&id=%E4%B8%80%E3%80%81%20%E7%8E%AF%E5%A2%83%E4%BF%A1%E6%81%AF%E6%83%85%E5%86%B5) The company actively fulfills its environmental and social responsibilities through measures like waste sorting, energy conservation, and promoting poverty alleviation linked to rural revitalization - The company implemented various measures to protect the environment and reduce carbon emissions, including **waste sorting, water and electricity conservation, paperless office, and reducing fuel consumption for official vehicles**[74](index=74&type=chunk)[75](index=75&type=chunk) - The company continuously promotes the alignment of its poverty alleviation model with rural revitalization, fulfilling its social responsibilities through **industrial funds, strategic cooperation, public welfare projects, and consumption-based poverty alleviation**[76](index=76&type=chunk) [Significant Matters](index=32&type=section&id=%E7%AC%AC%E5%85%AD%E8%8A%82%20%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A1%B9) This section highlights critical events and developments, including the controlling shareholder's restructuring and major litigation cases [Explanation of the Integrity Status of the Company, its Controlling Shareholder, and Actual Controller during the Reporting Period](index=37&type=section&id=%E4%B9%9D%E3%80%81%20%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%85%AC%E5%8F%B8%E5%8F%8A%E5%85%B6%E6%8E%A7%E8%82%A1%E8%82%A1%E4%B8%9C%E3%80%81%E5%AE%9E%E9%99%85%E6%8E%A7%E5%88%B6%E4%BA%BA%E8%AF%9A%E4%BF%A1%E7%8A%B6%E5%86%B5%E7%9A%84%E8%AF%B4%E6%98%8E) The most significant matter was the controlling shareholder's bankruptcy reorganization, which will lead to a change in the company's indirect control to Ping An and a shift to no actual controller, pending regulatory approval - On **July 5, 2021**, the court ruled to approve the reorganization plan of the controlling shareholder, Peking University Founder Group[87](index=87&type=chunk) - According to the reorganization plan, the company's controlling shareholder is proposed to change to the "New Founder Group," and **Ping An Life Insurance Company of China, Ltd. or its wholly-owned entity** will become the controlling shareholder of New Founder Group, thereby enabling **Ping An to indirectly control the company**[87](index=87&type=chunk)[103](index=103&type=chunk) - This equity change will result in the company's actual controller changing from Peking University to **no actual controller**, but the change is still subject to approval by the China Securities Regulatory Commission[103](index=103&type=chunk)[448](index=448&type=chunk) [Major Litigation and Arbitration Matters](index=36&type=section&id=%E4%B8%83%E3%80%81%20%E9%87%8D%E5%A4%A7%E8%AF%89%E8%AE%BC%E3%80%81%E4%BB%B2%E8%A3%81%E4%BA%8B%E9%A1%B9) During the reporting period, the company had no major litigation or arbitration matters, with most securities misrepresentation cases settled and recourse sought from Founder Group - During the reporting period, there were **no major litigation or arbitration matters** as defined in the Listing Rules[82](index=82&type=chunk) - Lawsuits involving amounts exceeding **RMB 10 million** primarily concerned routine business disputes such as margin financing and securities lending, stock pledges, contract disputes, and securities misrepresentation[83](index=83&type=chunk) - Out of **2,992 securities misrepresentation cases** arising from the failure to disclose shareholder related-party relationships, most have been settled according to judgments or mediation, with cumulative compensation amounting to approximately **RMB 146 million**, and the company has filed a claim with Founder Group to exercise its right of recourse[90](index=90&type=chunk)[439](index=439&type=chunk) [Share Changes and Shareholder Information](index=42&type=section&id=%E7%AC%AC%E4%B8%83%E8%8A%82%20%E8%82%A1%E4%BB%BD%E5%8F%98%E5%8A%A8%E5%8F%8A%E8%82%A1%E4%B8%9C%E6%83%85%E5%86%B5) This section provides details on changes in the company's shares and information about its shareholders [Top Ten Shareholders and Top Ten Circulating Shareholders (or Non-Restricted Shareholders) as of the End of the Reporting Period](index=42&type=section&id=(%E4%BA%8C)%20%E6%88%AA%E6%AD%A2%E6%8A%A5%E5%91%8A%E6%9C%9F%E6%9C%AB%E5%89%8D%E5%8D%81%E5%90%8D%E8%82%A1%E4%B8%9C%E3%80%81%E5%89%8D%E5%8D%81%E5%90%8D%E6%B5%81%E9%80%9A%E8%82%A1%E4%B8%9C%EF%BC%88%E6%88%96%E6%97%A0%E9%99%90%E5%94%AE%E6%9D%A1%E4%BB%B6%E8%82%A1%E4%B8%9C%EF%BC%89%E6%8C%81%E8%82%A1%E6%83%85%E5%86%B5%E8%A1%A8) As of the reporting period end, the company's share structure remained unchanged, with Peking University Founder Group and Beijing Zhengquan Holdings as top shareholders, both with frozen shares Top Ten Shareholders (as of June 30, 2021) | Shareholder Name | Number of Shares Held | Percentage (%) | Share Status | | :--- | :--- | :--- | :--- | | **Peking University Founder Group Co., Ltd.** | 2,284,609,852 | 27.75 | Frozen | | **Beijing Zhengquan Holdings Co., Ltd.** | 1,799,591,164 | 21.86 | Frozen | | **Hong Kong Securities Clearing Company Limited** | 1,449,267,847 | 17.61 | Unrestricted | | **Harbin Hatou Investment Co., Ltd.** | 194,086,999 | 2.36 | Unrestricted | | **China Securities Finance Corporation Limited** | 139,461,318 | 1.69 | Unrestricted | | **Central Huijin Asset Management Co., Ltd.** | 138,731,200 | 1.69 | Unrestricted | - Shares held by the first largest shareholder, **Peking University Founder Group**, and the second largest shareholder, **Beijing Zhengquan Holdings**, were both judicially frozen[98](index=98&type=chunk) [Preferred Shares Related Information](index=45&type=section&id=%E7%AC%AC%E5%85%AB%E8%8A%82%20%E4%BC%98%E5%85%88%E8%82%A1%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5) This section provides information regarding the company's preferred shares [Preferred Shares Related Information](index=45&type=section&id=%E7%AC%AC%E5%85%AB%E8%8A%82%20%E4%BC%98%E5%85%88%E8%82%A1%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5) During the reporting period, the company had no preferred shares related information - The company has **no preferred shares**[104](index=104&type=chunk) [Bonds Related Information](index=46&type=section&id=%E7%AC%AC%E4%B9%9D%E8%8A%82%20%E5%80%BA%E5%88%B8%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5) This section provides details on the company's outstanding bonds and their repayment status [1. Basic Information on Corporate Bonds](index=46&type=section&id=1.%20%E5%85%AC%E5%8F%B8%E5%80%BA%E5%88%B8%E5%9F%BA%E6%9C%AC%E6%83%85%E5%86%B5) As of the reporting period, the company had two outstanding non-public corporate bonds totaling RMB 3.1 billion, maintaining an AAA credit rating with strengthened debt-paying ability Outstanding Corporate Bonds Basic Information (Unit: Million RMB) | Bond Abbreviation | Code | Issue Date | Maturity Date | Bond Balance | Interest Rate (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | **19 Founder F1** | 151205 | 2019/2/27 | 2022/2/27 | 2,500 | 4.71 | | **19 Founder F2** | 151290 | 2019/3/21 | 2022/3/21 | 600 | 4.65 | - United Credit Rating Co., Ltd. maintained an **AAA credit rating** for the company's entity and relevant bond issues on June 28, 2021, with a **stable outlook**[108](index=108&type=chunk) Key Debt-Paying Ability Financial Indicators | Key Indicator | Current Reporting Period (Jan-Jun 2021) | Prior Period (Jan-Jun 2020) | Change | | :--- | :--- | :--- | :--- | | **Interest Coverage Ratio** | 3.35 | 2.04 | Increased by 64.22% | | **EBITDA Interest Coverage Ratio** | 3.61 | 2.19 | Increased by 64.84% | [Financial Report](index=49&type=section&id=%E7%AC%AC%E5%8D%81%E8%8A%82%20%E8%B4%A2%E5%8A%A1%E6%8A%A5%E5%91%8A) This section includes the company's unaudited 2021 semi-annual consolidated and parent company financial statements, along with detailed notes covering key accounting policies, changes, and significant events [Financial Statements](index=49&type=section&id=%E4%BA%8C%E3%80%81%20%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) This section presents the company's consolidated and parent company balance sheets as of June 30, 2021, and the income statement, cash flow statement, and statement of changes in owners' equity for H1 2021 [Notes to Financial Statements](index=67&type=section&id=%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E9%99%84%E6%B3%A8) The notes detail financial statement preparation, accounting policies, and major items, including new lease standards, financial instruments, related party transactions, and the controlling shareholder's restructuring - The company adopted **new lease standards** from January 1, 2021, retrospectively adjusting opening financial statements to recognize right-of-use assets and lease liabilities, which increased total assets and liabilities but had **no significant impact on owners' equity and net profit**[218](index=218&type=chunk)[219](index=219&type=chunk) - The notes extensively disclose the reorganization progress of the controlling shareholder, **Peking University Founder Group**, a matter that may lead to a change in the company's control, with **Ping An intending to indirectly control the company**[447](index=447&type=chunk)[448](index=448&type=chunk) - The notes also reveal the progress of the **RMB 2.05 billion payment matter** from former China Minzu Securities; as of the report date, the amount has not been fully recovered, and a **bad debt provision of RMB 522.45 million** has been made[450](index=450&type=chunk)[492](index=492&type=chunk) [Securities Company Information Disclosure](index=197&type=section&id=%E7%AC%AC%E5%8D%81%E4%B8%80%E8%8A%82%20%E8%AF%81%E5%88%B8%E5%85%AC%E5%8F%B8%E4%BF%A1%E6%8A%AB%E9%9C%B2) This section provides information on the company's administrative licenses and regulatory ratings [Regulatory Classification Results for the Company](index=197&type=section&id=%E4%BA%8C%E3%80%81%20%E7%9B%91%E7%AE%A1%E9%83%A8%E9%97%A8%E5%AF%B9%E5%85%AC%E5%8F%B8%E7%9A%84%E5%88%86%E7%B1%BB%E7%BB%93%E6%9E%9C) During the reporting period, the company obtained administrative approval to expand its business scope and received an A-class A-level regulatory rating for three consecutive years - On **January 22, 2021**, the company obtained administrative approval from the Hunan Securities Regulatory Bureau to **expand its business scope**[573](index=573&type=chunk) - The company received an **A-class A-level regulatory classification result** for **three consecutive years** (2019, 2020, 2021)[573](index=573&type=chunk)

[Definitions](index=11&type=section&id=Item%201.%20Definitions) This chapter defines key company entity abbreviations, common terms, and professional terminology used in the report, providing a foundation for understanding its content - This chapter defines key company entity abbreviations, common terms, and professional terminology, providing a basis for understanding the report's content, including **Founder Securities** (the Company) and **Founder Group** (controlling shareholder) and its subsidiaries[10](index=10&type=chunk) [Company Profile and Key Financial Indicators](index=12&type=section&id=Item%202.%20Company%20Profile%20and%20Key%20Financial%20Indicators) This section provides an overview of the company's basic information, historical development, organizational structure, and key financial performance over the past three years [Company Information](index=12&type=section&id=I.%20Company%20Information) This chapter provides Founder Securities' basic business information, including names, legal representative, registered and net capital, and lists **54 securities and futures-related business qualifications** Registered Capital and Net Capital (As of December 31, 2020) | Indicator | Year-end 2020 (CNY) | Year-end 2019 (CNY) | | :--- | :--- | :--- | | Registered Capital | 8,232,101,395.00 | 8,232,101,395.00 | | Net Capital | 20,958,329,450.55 | 20,903,236,065.74 | - The company possesses comprehensive business qualifications, covering multiple licenses in securities brokerage, investment consulting, asset management, underwriting and sponsorship, margin financing and securities lending, futures brokerage, and Hong Kong market operations, totaling **54 items**[11](index=11&type=chunk)[12](index=12&type=chunk) [Other Company Information](index=14&type=section&id=VI.%20Other%20Company%20Information) This chapter outlines the company's historical evolution, organizational structure, and branch network, detailing its transformation into a nationwide comprehensive securities firm with **6 major subsidiaries** and **372 branches** - Key milestones in the company's development include renaming to **Founder Securities in 2003**, absorbing and merging with Taiyang Securities in **2008**, listing on the Shanghai Stock Exchange in **2011**, and acquiring China Minzu Securities in **2014**[22](index=22&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk)[25](index=25&type=chunk) - The group's organizational structure centers around the executive committee, with various business and functional departments, providing diversified financial services through **6 domestic and overseas holding subsidiaries**, including Founder Underwriting & Sponsorship, Founder Hesheng Investment, Founder Mid-term Futures, Founder Securities Investment, Founder Fubon Fund, and Founder Hong Kong Financial Holdings[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - As of year-end 2020, the company operated **347 securities branches** and **25 sub-branches**, forming an extensive nationwide business network[39](index=39&type=chunk) [Key Accounting Data and Financial Indicators for the Past Three Years](index=19&type=section&id=VIII.%20Key%20Accounting%20Data%20and%20Financial%20Indicators%20for%20the%20Past%20Three%20Years) During the reporting period, the company achieved steady operational growth, with **operating revenue of CNY 7.542 billion** and **net profit attributable to parent company shareholders of CNY 1.096 billion** in 2020, while maintaining robust financial health with all risk control indicators meeting regulatory requirements Key Accounting Data for the Past Three Years (Consolidated Statements) | Indicator | 2020 (CNY) | 2019 (CNY) | YoY Change (%) | 2018 (CNY) | | :--- | :--- | :--- | :--- | :--- | | **Operating Revenue** | 7,541,809,241.46 | 6,594,941,981.46 | 14.36 | 5,722,593,356.59 | | **Operating Profit** | 1,598,955,369.10 | 1,105,519,767.03 | 44.63 | 875,574,918.89 | | **Net Profit Attributable to Parent Company Shareholders** | 1,096,492,270.90 | 1,007,595,631.59 | 8.82 | 661,365,890.51 | | **Net Cash Flow from Operating Activities** | 7,560,165,073.16 | 25,308,338,518.16 | -70.13 | -6,389,566,460.98 | | **Total Assets (Period-end)** | 123,256,369,688.39 | 136,595,190,001.95 | -9.77 | 148,221,762,529.66 | | **Equity Attributable to Parent Company Shareholders (Period-end)** | 39,620,740,244.32 | 38,551,805,514.29 | 2.77 | 37,753,056,946.74 | Key Financial Indicators | Indicator | 2020 | 2019 | Change | 2018 | | :--- | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (CNY/share) | 0.13 | 0.12 | 8.33% | 0.08 | | Weighted Average Return on Net Assets (%) | 2.81 | 2.65 | Increased by 0.16 percentage points | 1.76 | | Net Assets Per Share Attributable to Parent Company Shareholders (CNY/share) | 4.81 | 4.68 | 2.78% | 4.59 | Parent Company Net Capital and Key Risk Control Indicators (Year-end 2020) | Indicator | Value | Regulatory Standard | | :--- | :--- | :--- | | Net Capital (CNY) | 20,958,329,450.55 | - | | Risk Coverage Ratio (%) | 337.16 | ≥100% | | Capital Leverage Ratio (%) | 27.30 | ≥8% | | Liquidity Coverage Ratio (%) | 154.60 | ≥100% | | Net Stable Funding Ratio (%) | 142.08 | ≥100% | [Quarterly Financial Data](index=25&type=section&id=X.%20Key%20Quarterly%20Financial%20Data%20for%202020) The company's 2020 performance showed quarterly fluctuations, with the **third quarter being the strongest** in net profit attributable to parent company shareholders, while the **fourth quarter recorded a loss** Key Quarterly Financial Data for 2020 (Unit: CNY) | Item | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 1,935,684,801.34 | 1,457,261,176.35 | 2,331,597,482.31 | 1,817,265,781.46 | | Net Profit Attributable to Parent Company Shareholders | 378,859,238.84 | 262,753,523.55 | 840,813,744.87 | -385,934,236.36 | | Net Cash Flow from Operating Activities | 8,740,684,768.57 | -3,752,772,987.86 | 1,080,013,359.09 | 1,492,239,933.36 | [Business Overview](index=27&type=section&id=Item%203.%20Business%20Overview) This section outlines the company's main business segments, operating model, industry conditions, significant asset changes, and core competitive advantages [Description of Company's Main Businesses, Operating Model and Industry Conditions During the Reporting Period](index=27&type=section&id=I.%20Description%20of%20Company's%20Main%20Businesses%2C%20Operating%20Model%20and%20Industry%20Conditions%20During%20the%20Reporting%20Period) The company's main businesses are divided into five segments: wealth management, investment banking, asset management, institutional services, and investment and trading, benefiting from capital market reforms and favorable liquidity conditions in 2020 - The group's main businesses are divided into **five major segments**: wealth management, investment banking, asset management, institutional services, and investment and trading[55](index=55&type=chunk) - In 2020, capital market reforms deepened, with IPO and refinancing amounts increasing by **74.69%** and **41.67%** year-on-year, respectively, while A-share annual trading volume grew by **62%** and margin financing and securities lending balances increased by **59%**, creating a favorable environment for securities firm business development[56](index=56&type=chunk) [Explanation of Significant Changes in Company's Major Assets During the Reporting Period](index=29&type=section&id=II.%20Explanation%20of%20Significant%20Changes%20in%20Company's%20Major%20Assets%20During%20the%20Reporting%20Period) As of year-end 2020, the company's total assets decreased by **9.77%** to **CNY 123.256 billion**, primarily due to adjustments in financial asset investment scale, while margin financing and securities lending balances increased Major Asset Item Changes (Year-end 2020 vs Year-end 2019) | Asset Item | Year-end 2020 (CNY Billion) | Change from Previous Year-end (%) | Primary Reason | | :--- | :--- | :--- | :--- | | **Total Assets** | **123.256** | **-9.77** | - | | Funds Lent Out | 23.952 | +18.09 | Increase in margin financing and securities lending scale | | Financial Assets Held for Trading | 20.906 | -29.14 | Decrease in financial asset investment scale | | Other Debt Investments | 14.190 | -43.01 | Decrease in financial asset investment scale | | Financial Assets Purchased Under Resale Agreements | 1.487 | -61.40 | Decrease in stock pledge and bond repurchase scale | [Analysis of Core Competencies During the Reporting Period](index=29&type=section&id=III.%20Analysis%20of%20Core%20Competencies%20During%20the%20Reporting%20Period) The company's core competencies include strong comprehensive strength, leading wealth management, optimized business models, excellent professional talent, and robust compliance and risk control capabilities - The company demonstrates strong comprehensive strength, with its **total assets, net assets, and operating revenue ranking 19th, 15th, and 19th** in the industry in 2020, respectively[63](index=63&type=chunk) - Its wealth management business is industry-leading, serving **over 12 million customers** and operating **407 branches**, with core indicators such as mobile APP monthly active users and product sales ranking in the top tier of the industry[64](index=64&type=chunk) - The company has developed a synergistic business model where wealth management drives other businesses, and financial technology and research drive wealth management, investment and trading, and institutional services, leading to **balanced development across its five major business segments**[65](index=65&type=chunk) - The company has received an **A-class rating from the CSRC for three consecutive years**, and its subsidiary Founder Mid-term Futures has been rated **AA for eight consecutive years**, demonstrating robust compliance and risk control capabilities[67](index=67&type=chunk) [Discussion and Analysis of Operations](index=30&type=section&id=Item%204.%20Discussion%20and%20Analysis%20of%20Operations) This section discusses the company's operational performance, financial condition, future development strategies, and comprehensive risk management implementation [Discussion and Analysis of Operations](index=30&type=section&id=I.%20Discussion%20and%20Analysis%20of%20Operations) In 2020, despite challenges from its controlling shareholder's restructuring, the company achieved **operating revenue of CNY 7.542 billion** (up **14.36%**) and **net profit attributable to parent company shareholders of CNY 1.096 billion** (up **8.82%**), driven by strong wealth management and record-high investment banking performance 2020 Key Operating Performance | Indicator | 2020 (CNY Billion) | YoY Growth (%) | | :--- | :--- | :--- | | Operating Revenue | 7.542 | 14.36 | | Operating Profit | 1.599 | 44.63 | | Net Profit Attributable to Parent Company Shareholders | 1.096 | 8.82 | - Wealth Management Business: Net income from securities brokerage business reached **CNY 3.689 billion**, a **51.67%** year-on-year increase; the "Xiaofang APP" ranked **4th** in the industry for monthly active users; total customer count exceeded **12 million**, ranking **6th** in the industry[69](index=69&type=chunk) - Investment Banking Business: Achieved operating revenue of **CNY 0.604 billion**, a new historical high; equity underwriting scale reached **CNY 3.65 billion**, up **142%** year-on-year; bond underwriting scale reached **CNY 75.034 billion**, with corporate bonds and enterprise bonds ranking **16th** in the industry[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - Asset Management Business: Total entrusted asset scale reached **CNY 127.382 billion**; active management transformation showed significant results, with equity product scale growing **6.36 times** to **CNY 3.552 billion**, and channel-based products reduced by **over CNY 50 billion**[80](index=80&type=chunk)[82](index=82&type=chunk) - Investment and Trading Business: Fund market-making business revenue reached **CNY 0.145 billion**, a **135%** year-on-year increase, and the company was rated as an "**AA-grade ETF lead market maker**" by the Shanghai and Shenzhen Stock Exchanges[88](index=88&type=chunk) [Key Operating Conditions During the Reporting Period](index=36&type=section&id=II.%20Key%20Operating%20Conditions%20During%20the%20Reporting%20Period) This chapter analyzes the company's financial position and operating results, highlighting a **42.73% increase in net fee and commission income** as the main driver of revenue growth, while total assets and liabilities decreased due to active compression of financial asset investments and debt Profit Statement Key Item Variation Analysis | Item | Current Period (CNY) | Prior Year Period (CNY) | Change (%) | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Net Fee and Commission Income | 5,238,940,907.22 | 3,670,492,803.69 | 42.73 | Increase in brokerage and investment banking business income | | Investment Income | 1,254,728,040.03 | 1,918,070,762.16 | -34.58 | Decrease in proprietary trading and other business income | | Credit Impairment Losses | 969,932,834.64 | 469,342,916.18 | 106.66 | Increase in credit impairment provisions for financial assets | | Net Cash Flow from Operating Activities | 7,560,165,073.16 | 25,308,338,518.16 | -70.13 | Changes in scale of financial assets, repurchases, and interbank borrowings | Balance Sheet Key Item Variation Analysis | Item | Current Period End (CNY) | Prior Period End (CNY) | Change (%) | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Financial Assets Purchased Under Resale Agreements | 1,487,479,876.71 | 3,853,273,932.37 | -61.40 | Decrease in stock pledge repurchase scale | | Other Debt Investments | 14,190,249,453.69 | 24,901,391,747.20 | -43.01 | Decrease in financial asset investment scale | | Short-term Financing Payables | 10,719,391,771.17 | 2,017,503,661.39 | 431.32 | Increase in income certificate scale | | Bonds Payable | 6,854,255,985.84 | 19,939,519,050.91 | -65.62 | Maturity and repayment of corporate bonds | - The company's financing channels primarily include bonds, income certificates, re-financing, and interbank borrowing; despite some obstacles from the controlling shareholder's restructuring in 2020, the company secured approximately **CNY 23 billion** in financing by adjusting its strategies, ensuring stable business operations[107](index=107&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) [Discussion and Analysis of Company's Future Development](index=46&type=section&id=III.%20Discussion%20and%20Analysis%20of%20Company's%20Future%20Development) The company aims to become a stable, efficient, and distinctive large-scale comprehensive securities firm, focusing on consolidating wealth management, seizing investment banking opportunities, and strengthening asset management, institutional services, and investment trading, while actively managing credit, liquidity, and market risks - Future Development Strategy: Adhere to a business model that emphasizes **wealth management driving asset management, supporting investment banking, investment and trading, and institutional services**, with financial technology and research driving wealth management, investment and trading, and institutional services, ensuring **balanced and synergistic development across all five major business segments**[124](index=124&type=chunk) - 2021 Operating Plan: Consolidate transaction-based wealth management and expand into asset allocation wealth management; seize opportunities from the registration-based IPO system to achieve leapfrog development in investment banking; pursue active management and scale expansion in asset management; enhance institutional service capabilities; and expand non-directional investment scale[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - Key Risk Identification: - **Credit Risk**: Primarily arises from client defaults in credit businesses such as margin financing and securities lending, and stock pledges, as well as bond investment default risks - **Liquidity Risk**: Refers to the risk of being unable to obtain sufficient funds in a timely manner at a reasonable cost - **Market Risk**: Refers to the risk of changes in the fair value of financial instruments due to adverse market price movements (equity prices, interest rates, exchange rates)[131](index=131&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) [Implementation of Comprehensive Risk Management](index=53&type=section&id=IV.%20Implementation%20of%20Comprehensive%20Risk%20Management) The company has established a comprehensive risk management system aligned with its development strategy, covering all subsidiaries, business departments, and branches, ensuring risks are measurable, controllable, and acceptable through continuous monitoring, measurement, analysis, and response mechanisms - The company ensures comprehensive risk management through "establishing systems, recruiting talent, implementing systems, and increasing investment," with risk management covering all holding subsidiaries, business departments, branches, and major risk types including credit, market, liquidity, and operational risks[147](index=147&type=chunk)[148](index=148&type=chunk) - The company utilizes various indicators such as **VaR, basis point value, and stress testing** to measure different types of risks and has established a mature internal rating system covering corporate clients in credit risk businesses[150](index=150&type=chunk) [Significant Matters](index=56&type=section&id=Item%205.%20Significant%20Matters) This section details significant corporate events including profit distribution, major litigation, controlling shareholder's integrity status, and other material developments [Proposed Profit Distribution or Capital Reserve Conversion Plan for Ordinary Shares](index=56&type=section&id=I.%20Proposed%20Profit%20Distribution%20or%20Capital%20Reserve%20Conversion%20Plan%20for%20Ordinary%20Shares) The company's 2020 profit distribution plan proposes a cash dividend of **CNY 0.10 per 10 shares** (tax inclusive), totaling no more than **CNY 82.32 million**, with dividends for shareholder Zhengquan Holdings withheld due to capital withdrawal issues Dividend Distribution Plans for the Past Three Years | Dividend Year | Dividend per 10 shares (CNY) (tax inclusive) | Cash Dividend Amount (CNY) (tax inclusive) | Ratio to Net Profit Attributable to Parent Company Shareholders (%) | | :--- | :--- | :--- | :--- | | 2020 | 0.10 | 82,321,013.95 | 7.51 | | 2019 | — | — | — | | 2018 | 0.26 | 213,744,729.63 | 32.32 | - According to the Supreme People's Court's judgment, the cash dividends corresponding to the shares held by shareholder Zhengquan Holdings will not be distributed until its capital withdrawal issue is rectified[158](index=158&type=chunk) [Significant Litigation and Arbitration Matters](index=62&type=section&id=X.%20Significant%20Litigation%20and%20Arbitration%20Matters) During the reporting period, the company and its subsidiaries were involved in multiple litigation and arbitration cases, primarily related to stock pledge repurchase disputes, margin financing and securities lending disputes, and securities misrepresentation liability disputes - Investor lawsuits against the company and Founder Group for securities misrepresentation liability: Arising from the 2017 administrative penalty, Changsha Intermediate People's Court accepted **2,992 cases**, of which **2,978 have been judged or settled** with compensation paid, while a few remaining cases are still pending[172](index=172&type=chunk) - Stock Pledge and Margin Financing & Securities Lending Disputes: Involve multiple client default cases, such as litigation or enforcement cases with Yang Lijie (LeEco), Cai Mengjun, Guangzhou Ruifeng Group, and Changlehui Company, where the company is pursuing debt recovery through legal channels[169](index=169&type=chunk)[171](index=171&type=chunk)[173](index=173&type=chunk) [Explanation of the Integrity Status of the Company, its Controlling Shareholder, and Actual Controller During the Reporting Period](index=64&type=section&id=XII.%20Explanation%20of%20the%20Integrity%20Status%20of%20the%20Company%2C%20its%20Controlling%20Shareholder%2C%20and%20Actual%20Controller%20During%20the%20Reporting%20Period) During the reporting period, the company's controlling shareholder, Peking University Founder Group Co., Ltd., was ruled by the court to undergo restructuring in February 2020, with a consortium of Zhuhai Huafa Group, Ping An Insurance, and Shenzhen TEFA Group confirmed as restructuring investors in January 2021 - In February 2020, the Beijing No. 1 Intermediate People's Court ruled for the restructuring of Founder Group; on January 29, 2021, a consortium comprising **Zhuhai Huafa, China Ping An, and Shenzhen TEFA** was confirmed as the restructuring investor[174](index=174&type=chunk) [Explanation of Other Significant Matters](index=67&type=section&id=XVI.%20Explanation%20of%20Other%20Significant%20Matters) During the reporting period, the company increased capital in several subsidiaries to support business development, including **CNY 0.489 billion** to Founder Hong Kong Financial Holdings, and also provided a guarantee for a **USD 48.5 million** loan for Founder Hong Kong Financial Holdings - Capital increases completed for several subsidiaries: - Founder Hong Kong Financial Holdings: Capital increase of **CNY 0.489 billion**, increasing registered capital to **HKD 1.046 billion** - Founder Securities Investment: Capital increase of **CNY 0.6 billion**, increasing registered capital to **CNY 1.5 billion** - Founder Underwriting & Sponsorship: Capital reserve conversion of **CNY 0.6 billion**, increasing registered capital to **CNY 1.4 billion** - Founder Mid-term Futures: Capital reserve and undistributed profit conversion, increasing registered capital to **CNY 1.005 billion**[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - Provided a **margin pledge guarantee** for a **USD 48.5 million** overseas bank loan of its wholly-owned subsidiary, Founder Hong Kong Financial Holdings[189](index=189&type=chunk) [Changes in Ordinary Shares and Shareholder Information](index=76&type=section&id=Item%206.%20Changes%20in%20Ordinary%20Shares%20and%20Shareholder%20Information) This section presents information on changes in ordinary share capital, the company's shareholder structure, and details of its controlling shareholder and actual controller [Changes in Ordinary Share Capital](index=76&type=section&id=I.%20Changes%20in%20Ordinary%20Share%20Capital) During the reporting period, the company's total share capital and capital structure remained unchanged at **8,232,101,395 shares**, all of which are unrestricted tradable A-shares, with all previously repurchased shares sold to supplement working capital - As of year-end 2020, the company's total share capital was **8,232,101,395 shares**, with no changes observed[216](index=216&type=chunk) - By June 23, 2020, the company had sold all previously repurchased **11,150,255 shares** through centralized bidding, generating a total of **CNY 80.45127985 million** to supplement its working capital[217](index=217&type=chunk) [Shareholder and Actual Controller Information](index=77&type=section&id=III.%20Shareholder%20and%20Actual%20Controller%20Information) As of year-end 2020, the company had **175,477 ordinary shareholders**, with its top two shareholders, Peking University Founder Group Co., Ltd. and Beijing Zhengquan Holdings Co., Ltd., having their shares frozen, and Peking University identified as the actual controller Top Ten Shareholders' Shareholding (As of Year-end 2020) | Shareholder Name | Number of Shares Held | Proportion (%) | Share Status | | :--- | :--- | :--- | :--- | | Peking University Founder Group Co., Ltd. | 2,284,609,852 | 27.75 | Frozen | | Beijing Zhengquan Holdings Co., Ltd. | 1,799,591,164 | 21.86 | Frozen | | Hong Kong Securities Clearing Company Limited | 1,474,851,714 | 17.92 | Unrestricted | | China Securities Finance Corporation Limited | 261,985,096 | 3.18 | Unrestricted | | Harbin Hatou Investment Co., Ltd. | 197,556,999 | 2.40 | Unrestricted | - The company's controlling shareholder is **Peking University Founder Group Co., Ltd.**, and its actual controller is **Peking University**[223](index=223&type=chunk) - **8.62%** of the company's shares (**709,886,375 shares**) held by the second-largest shareholder, Zhengquan Holdings, were ruled by the court to be offset to Guotong Trust and will subsequently be distributed to China Cinda, pending CSRC approval for this share transfer[222](index=222&type=chunk) [Directors, Supervisors, Senior Management and Employees](index=84&type=section&id=Item%208.%20Directors%2C%20Supervisors%2C%20Senior%20Management%20and%20Employees) This section provides an overview of the remuneration and shareholdings of directors, supervisors, and senior management, along with detailed employee demographics [Shareholding Changes and Remuneration](index=84&type=section&id=I.%20Shareholding%20Changes%20and%20Remuneration) During the reporting period, all directors, supervisors, and senior management held no company shares, with their total pre-tax remuneration for 2020 amounting to **CNY 34.1011 million**, and some executive compensation subject to deferred payment - During the reporting period, all current and former directors, supervisors, and senior management held **zero shares** at both the beginning and end of the year[238](index=238&type=chunk)[239](index=239&type=chunk) - The total pre-tax remuneration received from the company during the reporting period (attributable to and paid in 2020) amounted to **CNY 34.1011 million**, with Mr. Gao Li, Vice Chairman of the Executive Committee and President, receiving the highest remuneration of **CNY 4.6321 million**[238](index=238&type=chunk)[239](index=239&type=chunk) [Employee Information of Parent Company and Major Subsidiaries](index=94&type=section&id=VII.%20Employee%20Information%20of%20Parent%20Company%20and%20Major%20Subsidiaries) As of year-end 2020, the group had **8,090 employees**, with the parent company accounting for **6,795**, primarily in brokerage, and a significant portion of employees aged 31-40 with bachelor's degrees or higher Employee Composition (As of Year-end 2020) | Category | Composition | Number of People | | :--- | :--- | :--- | | **Total Employees** | **Total On-the-Job Employees** | **8,090** | | Professional Composition | Brokerage Personnel | 5,595 | | | Information Technology Personnel | 340 | | | Investment Banking Personnel | 321 | | Age Composition | 31-40 years old | 3,693 | | | 30 years old (inclusive) and younger | 2,549 | | Education Level | Bachelor's Degree | 5,562 | | | Postgraduate and above | 1,743 | - As of year-end 2020, the company had **3,041 securities brokers**[274](index=274&type=chunk) [Corporate Governance](index=97&type=section&id=Item%209.%20Corporate%20Governance) This section describes the company's corporate governance framework, its compliance with regulatory requirements, and the ongoing development of its compliance management system [Explanation of Corporate Governance](index=97&type=section&id=I.%20Explanation%20of%20Corporate%20Governance) The company has established a governance structure comprising the Shareholders' Meeting, Board of Directors, Board of Supervisors, and management, forming a system of clear responsibilities and standardized operations, with the Board of Directors having five specialized committees - The company's corporate governance structure consists of the Shareholders' Meeting, Board of Directors, Board of Supervisors, and a management team centered around the Executive Committee, ensuring clear responsibilities and mutual checks and balances[276](index=276&type=chunk)[280](index=280&type=chunk) - The Board of Directors comprises **9 directors**, including **3 independent directors**, meeting regulatory requirements, and has **five specialized committees**: Strategy and Development, Risk Control, Audit, Nomination, and Remuneration and Assessment[278](index=278&type=chunk) [Explanation of Company's Compliance Management System Construction](index=103&type=section&id=XII.%20Explanation%20of%20Company's%20Compliance%20Management%20System%20Construction) During the reporting period, the company continuously improved its compliance management system, implementing a "line-of-business compliance officer" mechanism, enhancing branch compliance management, and strengthening risk monitoring and early warning capabilities through informatization and anti-money laundering system optimization - The company updated and improved multiple compliance management systems, including the **Compliance Manual**, **Employee Professional Conduct Guidelines**, and suitability management measures[297](index=297&type=chunk) - Compliance management informatization was advanced, with the compliance management system fully covering subsidiaries, headquarters departments, and branches, and continuously strengthening risk monitoring, early warning, and disposal functions[301](index=301&type=chunk) - During the reporting period, the Compliance Department conducted on-site compliance inspections of **2 headquarters departments** and **45 branches**; the Audit Department completed a total of **354 audit projects**, covering headquarters, subsidiaries, and branches[306](index=306&type=chunk)[307](index=307&type=chunk) [Corporate Bonds Information](index=106&type=section&id=Item%2010.%20Corporate%20Bonds%20Information) This section details the company's outstanding corporate bonds, their repayment status, and recent credit ratings [Basic Information on Corporate Bonds](index=106&type=section&id=I.%20Basic%20Information%20on%20Corporate%20Bonds) As of the end of the reporting period, the company had **3 outstanding non-publicly issued corporate bonds and subordinated bonds**, totaling **CNY 4.66 billion**, and successfully completed the timely and full principal and interest repayment for **5 matured bonds** during the period Outstanding Non-Publicly Issued Corporate Bonds (As of Year-end 2020) | Bond Abbreviation | Code | Maturity Date | Bond Balance (CNY Billion) | Interest Rate (%) | | :--- | :--- | :--- | :--- | :--- | | 19 Founder F1 | 151205 | 2022/2/27 | 2.50 | 4.71 | | 19 Founder F2 | 151290 | 2022/3/21 | 0.60 | 4.65 | | 19 Founder C1 | 151470 | 2021/4/24 | 1.56 | 4.80 | - During the reporting period, the company timely and fully repaid the principal and interest for **5 matured bonds**: "18 Founder C1," "18 Founder F1," "18 Founder F3," "17 Founder C1," and "17 Founder C2"[309](index=309&type=chunk) - The **USD 200 million** overseas bond (FNDSHK) issued by subsidiary Founder Hong Kong Financial Holdings matured on November 16, 2020, with principal and interest fully settled[310](index=310&type=chunk) [Corporate Bond Rating Information](index=107&type=section&id=IV.%20Corporate%20Bond%20Rating%20Information) According to the tracking rating report issued by United Credit Rating Co., Ltd. in June 2020, the company's **main credit rating is AAA with a stable outlook**, and its bond ratings for "19 Founder F1" and "19 Founder C1" are AAA and AA+ respectively, consistent with previous ratings - Main credit rating: **AAA**, with a stable outlook[313](index=313&type=chunk) - Bond credit ratings: "**19 Founder F1**" is **AAA**, and "**19 Founder C1**" is **AA+**[313](index=313&type=chunk) [Financial Report](index=110&type=section&id=Item%2011.%20Financial%20Report) This section contains the independent auditor's report and the company's consolidated financial statements, including balance sheets, income statements, and cash flow statements [Audit Report](index=125&type=section&id=I.%20Audit%20Report) ShineWing Certified Public Accountants (Special General Partnership) issued a standard unqualified audit opinion on the company's 2020 financial report, identifying key audit matters including impairment of financial assets, fair value assessment of Level 3 financial instruments, goodwill impairment testing, and consolidation of structured entities - Audit Opinion Type: **Standard Unqualified Opinion**[340](index=340&type=chunk) - Key Audit Matters: - Impairment of other debt investments, funds lent out, financial assets purchased under resale agreements, and other receivables - Fair value assessment of Level 3 financial instruments - Goodwill impairment testing - Consolidation of structured entities[342](index=342&type=chunk)[345](index=345&type=chunk)[344](index=344&type=chunk)[346](index=346&type=chunk) [Financial Statements](index=129&type=section&id=II.%20Financial%20Statements) The financial statements show that as of year-end 2020, the company's consolidated total assets were **CNY 123.256 billion**, total liabilities **CNY 82.899 billion**, and equity attributable to parent company shareholders **CNY 39.621 billion**, with 2020 operating revenue of **CNY 7.542 billion** and net profit of **CNY 1.198 billion** Consolidated Balance Sheet Key Data (December 31, 2020) | Item | Amount (CNY) | | :--- | :--- | | **Total Assets** | **123,256,369,688.39** | | Funds Lent Out | 23,952,491,443.95 | | Financial Assets Held for Trading | 20,905,910,709.74 | | Other Debt Investments | 14,190,249,453.69 | | **Total Liabilities** | **82,898,959,138.82** | | Client Funds | 27,835,009,932.39 | | Financial Assets Sold Under Repurchase Agreements | 13,332,074,099.80 | | Short-term Financing Payables | 10,719,391,771.17 | | **Total Equity Attributable to Parent Company Shareholders** | **39,620,740,244.32** | Consolidated Income Statement Key Data (2020) | Item | Amount (CNY) | | :--- | :--- | | **Operating Revenue** | **7,541,809,241.46** | | Net Fee and Commission Income | 5,238,940,907.22 | | Net Interest Income | 1,560,455,807.96 | | Investment Income | 1,254,728,040.03 | | Fair Value Change Gains | -619,277,200.12 | | Credit Impairment Losses | 969,932,834.64 | | **Total Profit** | **1,548,030,137.32** | | **Net Profit** | **1,198,143,096.95** | | Net Profit Attributable to Parent Company Shareholders | 1,096,492,270.90 | [Securities Company Information Disclosure](index=111&type=section&id=Item%2013.%20Securities%20Company%20Information%20Disclosure) This section presents the company's regulatory classification results from the past three years, reflecting its compliance and risk management performance [Regulatory Classification Results for the Past Three Years](index=111&type=section&id=II.%20Regulatory%20Classification%20Results%20for%20the%20Past%20Three%20Years) The company consistently received an **A-class A-level classification** from the China Securities Regulatory Commission for **three consecutive years** (2018, 2019, and 2020), indicating its sustained high standards in risk management and compliant operations - The company's regulatory classification results for the past three years (**2018-2020**) have all been **A-class A-level**[324](index=324&type=chunk)

Section I Definitions [1.1 Definitions of Common Terms](index=4&type=section&id=1.1%20Definitions%20of%20Common%20Terms) This chapter defines key terms such as company names, group scope, reporting period, and major subsidiaries to ensure clarity throughout the report - The Company, Company, Founder Securities refer to Founder Securities Co., Ltd[7](index=7&type=chunk) - The Group refers to Founder Securities Co., Ltd. and all subsidiaries within the scope of consolidated financial statements[7](index=7&type=chunk) - The Reporting Period refers to January 1, 2020, to June 30, 2020[7](index=7&type=chunk) - Major subsidiaries include Founder Underwriting & Sponsorship, Founder Hesheng Investment, Founder CIFCO Futures, Founder Fubon Fund, etc[7](index=7&type=chunk) Section II Company Profile and Key Financial Indicators [2.1 Company Information](index=5&type=section&id=2.1%20Company%20Information) This section details Founder Securities' basic information, including its legal representative, capital, and extensive business qualifications as a comprehensive securities firm - The company's Chinese name is Founder Securities Co., Ltd., abbreviated as Founder Securities[8](index=8&type=chunk) - The legal representative is Shi Hua, and the director of the company's Executive Committee is He Yagang[8](index=8&type=chunk) Comparison of Registered Capital and Net Capital | Indicator | As of Jun 30, 2020 (CNY) | As of Dec 31, 2019 (CNY) | | :--- | :--- | :--- | | Registered Capital (CNY) | 8,232,101,395.00 | 8,232,101,395.00 | | Net Capital (CNY) | 20,622,589,033.89 | 20,903,236,065.74 | - The company holds **27 individual business qualifications**, including securities brokerage, investment consulting, proprietary trading, asset management, and margin financing and securities lending[9](index=9&type=chunk)[10](index=10&type=chunk) [2.2 Key Accounting Data and Financial Indicators](index=7&type=section&id=2.2%20Key%20Accounting%20Data%20and%20Financial%20Indicators) This section presents the company's consolidated and parent financial data for H1 2020, highlighting changes in revenue, net profit, and compliance with risk control indicators Consolidated Key Accounting Data (Jan-Jun 2020 vs Jan-Jun 2019) | Item | Current Period (Jan-Jun 2020) (CNY) | Prior Period (Jan-Jun 2019) (CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 3,392,945,977.69 | 3,588,331,627.34 | -5.45 | | Operating Profit | 932,669,957.82 | 931,676,724.11 | 0.11 | | Net Profit Attributable to Shareholders of Listed Company | 641,612,762.39 | 763,412,372.22 | -15.95 | | Net Cash Flow from Operating Activities | 4,987,911,780.71 | 21,354,388,167.54 | -76.64 | Consolidated Key Financial Indicators (Jun 30, 2020 vs Dec 31, 2019) | Item | As of Jun 30, 2020 (CNY) | As of Dec 31, 2019 (CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 128,087,648,977.67 | 136,595,190,001.95 | -6.23 | | Total Liabilities | 88,450,087,263.59 | 97,114,809,390.97 | -8.92 | | Total Equity Attributable to Shareholders of Listed Company | 39,056,650,974.95 | 38,551,805,514.29 | 1.31 | | Asset-Liability Ratio | 55.59% | 62.23% | decreased by 6.64 percentage points | Parent Company Net Capital and Risk Control Indicators (Jun 30, 2020 vs Dec 31, 2019) | Item | As of Jun 30, 2020 (CNY) | As of Dec 31, 2019 (CNY) | | :--- | :--- | :--- | | Net Capital | 20,622,589,033.89 | 20,903,236,065.74 | | Risk Coverage Ratio (%) | 270.88 | 259.00 | | Capital Leverage Ratio (%) | 25.98 | 23.49 | | Liquidity Coverage Ratio (%) | 216.40 | 221.52 | | Net Stable Funding Ratio (%) | 140.89 | 130.45 | [2.3 Non-Recurring Gains and Losses Items and Amounts](index=12&type=section&id=2.3%20Non-Recurring%20Gains%20and%20Losses%20Items%20and%20Amounts) This section details the company's non-recurring gains and losses for the period, which resulted in a negative total primarily due to other non-operating income and expenses Non-Recurring Gains and Losses Items (Jan-Jun 2020) | Non-Recurring Gains and Losses Item | Amount (CNY) | | :--- | :--- | | Gains and Losses on Disposal of Non-Current Assets | 1,889,838.71 | | Government Subsidies Included in Current Profit and Loss | 17,149,069.71 | | Other Non-Operating Income and Expenses Apart from the Above | -46,995,400.97 | | Impact on Minority Shareholders' Equity | -169,255.90 | | Income Tax Impact | 6,968,427.84 | | **Total** | **-21,157,320.61** | [2.4 Items Measured at Fair Value](index=12&type=section&id=2.4%20Items%20Measured%20at%20Fair%20Value) This section details financial assets and liabilities measured at fair value, noting a significant period-end decrease and a positive impact on current profit Items Measured at Fair Value (Jun 30, 2020 vs Dec 31, 2019) | Item | As of Jun 30, 2020 (CNY) | As of Dec 31, 2019 (CNY) | Current Period Change (CNY) | Impact on Current Period Profit (CNY) | | :--- | :--- | :--- | :--- | :--- | | Derivative Financial Instruments | 12,024,436.23 | -217,347,917.55 | 229,372,353.78 | -92,022,561.05 | | Trading Financial Assets | 24,968,936,035.11 | 29,503,157,282.29 | -4,534,221,247.18 | 265,505,721.07 | | Other Debt Investments | 14,916,362,785.32 | 24,901,391,747.20 | -9,985,028,961.88 | 517,145,049.53 | | Trading Financial Liabilities | 6,023,695,008.61 | 11,982,384,656.09 | -5,958,689,647.48 | -120,537,061.87 | | **Total** | **50,985,353,898.47** | **71,382,946,926.92** | **-20,397,593,028.45** | **570,091,147.68** | Section III Business Overview [3.1 Description of Main Businesses, Operating Model, and Industry Conditions During the Reporting Period](index=13&type=section&id=3.1%20Description%20of%20Main%20Businesses%2C%20Operating%20Model%2C%20and%20Industry%20Conditions%20During%20the%20Reporting%20Period) This section outlines Founder Securities' four core business segments, operating models, and the H1 2020 capital market environment, including COVID-19 impacts and reform opportunities - The Group's main businesses are divided into four segments: wealth management, institutional business and investment banking, investment and trading, and asset management[24](index=24&type=chunk) - Wealth management business provides securities and futures brokerage, margin financing and securities lending, options, and other services through branch networks and internet financial platforms, charging commissions or fees[24](index=24&type=chunk) - In H1 2020, the A-share market showed a structural trend, with the Shanghai Composite Index falling by **2.15%**, the Shenzhen Component Index rising by **14.97%**, and the ChiNext Index rising by **36%**[25](index=25&type=chunk) - The primary market benefited from policies like the registration-based IPO system, with **128 new shares issued**, a **104% year-on-year increase**, and **IPO financing amounting to CNY 143.6 billion**, a **134% year-on-year increase**[26](index=26&type=chunk) [3.2 Explanation of Significant Changes in the Company's Major Assets During the Reporting Period](index=14&type=section&id=3.2%20Explanation%20of%20Significant%20Changes%20in%20the%20Company%27s%20Major%20Assets%20During%20the%20Reporting%20Period) This section explains the decrease in total assets at period-end and details the reasons for changes in major assets, primarily linked to market conditions and business scale - As of June 2020, the Group's total assets were **CNY 128.088 billion**, a **6.23% decrease** from the end of the previous year[27](index=27&type=chunk) - Monetary funds increased by **11.45% to CNY 36.528 billion**, settlement reserves increased by **7.59% to CNY 7.43 billion**, and funds lent increased by **7.94% to CNY 21.893 billion**, primarily due to changes in client deposits, reserves, and margin financing and securities lending scale influenced by market conditions[27](index=27&type=chunk) - Trading financial assets decreased by **15.37% to CNY 24.969 billion**, and other debt investments decreased by **40.10% to CNY 14.916 billion**, primarily due to changes in the company's holdings of financial assets influenced by market conditions[27](index=27&type=chunk) - Financial assets purchased under resale agreements decreased by **35.18% to CNY 2.498 billion**, primarily due to a decrease in stock pledge business scale[27](index=27&type=chunk) [3.3 Analysis of Core Competencies During the Reporting Period](index=14&type=section&id=3.3%20Analysis%20of%20Core%20Competencies%20During%20the%20Reporting%20Period) This section outlines Founder Securities' eight core competencies, encompassing strategic clarity, efficient management, extensive network, advanced fintech, and robust risk control - The Group has formulated its strategic goals and initiatives for the next three years (2020-2022), aiming to become a large comprehensive securities firm with stable business development, efficient operations, distinct features, significant influence, and certain international competitiveness[28](index=28&type=chunk) - The company has established an Executive Committee as its highest operational management body, implementing a refined, standardized, flat, and differentiated branch management model[29](index=29&type=chunk) - As of the end of the reporting period, the Group has **338 securities branches** and **24 regional branches** covering 28 provinces (municipalities, autonomous regions) nationwide[30](index=30&type=chunk) - The company continues to strengthen its financial technology, with its self-developed "Xiaofang" APP showing continuous and significant growth in daily active users, ranking **4th** among securities firm APPs[31](index=31&type=chunk)[32](index=32&type=chunk) - The Group's compliance and risk management capabilities have been elevated to a strategic level, with a significant increase in company-wide compliance awareness and all risk indicators meeting regulatory requirements[36](index=36&type=chunk) Section IV Discussion and Analysis of Operations [4.1 Discussion and Analysis of Operations](index=16&type=section&id=4.1%20Discussion%20and%20Analysis%20of%20Operations) This section reviews H1 2020 operations, noting decreased revenue and net profit but increased operating profit, with all business segments adapting to complex market conditions - As of the end of the reporting period, the Group's total assets were **CNY 128.088 billion**, a **6.23% decrease** from the end of the previous year; net assets were **CNY 39.638 billion**, a **0.40% increase** from the end of the previous year[37](index=37&type=chunk) - Operating revenue reached **CNY 3.393 billion**, a **5.45% decrease** year-on-year; operating profit was **CNY 933 million**, a **0.11% increase** year-on-year; net profit attributable to shareholders of the listed company was **CNY 642 million**, a **15.95% decrease** year-on-year[37](index=37&type=chunk) - Brokerage business acquired **430,000 new clients**, bringing the total client count to **11.55 million**; net income from agency securities trading business was **CNY 1.358 billion**, a **10.98% year-on-year increase**; investment advisory business income was **CNY 184 million**, a **50.44% year-on-year increase**[38](index=38&type=chunk) - Asset management business had a total entrusted asset scale of **CNY 160.556 billion**, generating net fee and commission income of **CNY 171.4584 million**[39](index=39&type=chunk)[40](index=40&type=chunk) - Proprietary trading business achieved operating revenue of **CNY 550.3147 million**; credit business generated interest income of **CNY 737.0784 million**; financial product distribution sales reached **CNY 249.738 billion**, generating distribution income of **CNY 84.0883 million**[41](index=41&type=chunk)[42](index=42&type=chunk)[45](index=45&type=chunk) [4.2 Analysis of Main Business](index=18&type=section&id=4.2%20Analysis%20of%20Main%20Business) This section analyzes main business financial performance, detailing income/expense changes, cash flow, cost structure, and regional revenue/profit, highlighting segment and area characteristics Changes in Key Financial Items (Jan-Jun 2020 vs Jan-Jun 2019) | Item | Jan-Jun 2020 (CNY) | Jan-Jun 2019 (CNY) | Change (%) | Explanation of Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 3,392,945,977.69 | 3,588,331,627.34 | -5.45% | Primarily due to the business transformation of Founder CIFCO Futures' wholly-owned subsidiary, which ceased its spot business | | Investment Income | 781,561,859.05 | 1,041,473,649.93 | -24.96% | Primarily due to a decrease in investment income influenced by market conditions during the period | | Net Cash Flow from Operating Activities | 4,987,911,780.71 | 21,354,388,167.54 | -76.64% | Primarily due to a decrease in funds borrowed and sell-back repurchase business | - Net cash flow from operating activities was **CNY 4.988 billion**, a **CNY 16.366 billion decrease** compared to the same period in 2019, primarily due to cash outflows from repurchase business and funds borrowed[48](index=48&type=chunk) Composition of Operating Costs (Jan-Jun 2020 vs Jan-Jun 2019) | Business Category | Current Period Amount (CNY 10,000) | Current Period % of Total Cost | Prior Period Amount (CNY 10,000) | Prior Period % of Total Cost | Current Period % Change from Prior Period | | :--- | :--- | :--- | :--- | :--- | :--- | | Brokerage and Credit Trading | 109,830.19 | 44.64% | 130,217.55 | 49.02% | -15.66% | | Proprietary Investment | -6,431.22 | -2.61% | 8,873.30 | 3.34% | -172.48% | | Headquarters and Others | 121,773.10 | 49.50% | 97,814.27 | 36.81% | 24.49% | | **Total** | **246,027.60** | **100.00%** | **265,665.49** | **100.00%** | **-7.39%** | Business and Management Expenses (Jan-Jun 2020 vs Jan-Jun 2019) | Item | Current Period Amount (CNY 10,000) | Current Period % of Business and Management Expenses | Prior Period Amount (CNY 10,000) | Prior Period % of Business and Management Expenses | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Staff Costs | 146,968.34 | 69.01% | 143,721.48 | 68.68% | 2.26% | | Amortization of Long-Term Deferred Expenses | 3,792.46 | 1.78% | 2,036.04 | 0.97% | 86.27% | | Electronic Equipment Operating Expenses | 1,984.62 | 0.93% | 1,099.48 | 0.53% | 80.51% | | **Total** | **212,979.91** | **100.00%** | **209,250.66** | **100.00%** | **1.78%** | Main Business by Industry (Jan-Jun 2020) | Item | Operating Revenue (CNY 10,000) | Operating Cost (CNY 10,000) | Operating Profit Margin | Operating Revenue Change from Prior Period | Operating Cost Change from Prior Period | Operating Profit Margin Change from Prior Period | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Brokerage and Credit Trading | 265,881.76 | 109,830.19 | 58.69% | -1.75% | -15.66% | 6.81% | | Proprietary Investment | 59,645.52 | -6,431.22 | 110.78% | -12.93% | -172.48% | 23.74% | | Asset Management | 17,517.38 | 5,154.19 | 70.58% | -47.44% | -32.31% | -6.58% | | Investment Banking | 29,843.36 | 15,701.34 | 47.39% | 9.61% | -25.75% | 25.06% | | **Total** | **339,294.60** | **246,027.60** | **27.49%** | **-5.45%** | **-7.39%** | **1.53%** | Geographical Distribution of Operating Revenue (Jan-Jun 2020) | Region | Number of Branches | Operating Revenue (CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Hunan Province | 103 | 565,777,671.93 | 11.45% | | Zhejiang Province | 56 | 258,718,886.16 | 13.59% | | Beijing Municipality | 10 | 74,470,903.48 | 29.93% | | **Branch Subtotal** | **338** | **1,359,486,698.84** | **13.47%** | Geographical Distribution of Operating Profit (Jan-Jun 2020) | Region | Number of Branches | Operating Profit (CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Hunan Province | 103 | 356,361,118.60 | 16.08% | | Zhejiang Province | 56 | 148,755,547.53 | 29.51% | | Beijing Municipality | 10 | 40,469,115.87 | 99.57% | | **Branch Subtotal** | **338** | **747,049,945.62** | **30.76%** | [4.3 Analysis of Assets and Liabilities](index=22&type=section&id=4.3%20Analysis%20of%20Assets%20and%20Liabilities) This section analyzes asset and liability composition and changes, explaining key item fluctuations, highlighting asset quality, risk control compliance, and restricted assets Changes in Major Assets (Jun 30, 2020 vs Dec 31, 2019) | Item Name | As of Jun 30, 2020 (CNY) | As of Dec 31, 2019 (CNY) | Change (%) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Monetary Funds | 36,528,098,977.91 | 32,774,928,025.34 | 11.45% | Increase in client deposits | | Funds Lent | 21,892,686,180.67 | 20,282,441,857.80 | 7.94% | Increase in funds lent | | Financial Assets Purchased Under Resale Agreements | 2,497,672,175.45 | 3,853,273,932.37 | -35.18% | Decrease in stock pledge business scale | | Trading Financial Assets | 24,968,936,035.11 | 29,503,157,282.29 | -15.37% | Decrease in trading financial assets held | | Other Debt Investments | 14,916,362,785.32 | 24,901,391,747.20 | -40.10% | Decrease in other debt investments held | | Long-Term Equity Investments | 697,069,929.75 | 0.00 | Not applicable | Conversion to equity method accounting for Credit Suisse Founder | Changes in Major Liabilities (Jun 30, 2020 vs Dec 31, 2019) | Item Name | As of Jun 30, 2020 (CNY) | As of Dec 31, 2019 (CNY) | Change (%) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Short-Term Financing Payables | 7,498,601,505.94 | 2,017,503,661.39 | 271.68% | Increase in scale of income certificates | | Funds Borrowed | 2,005,166,666.65 | 5,915,946,944.42 | -66.11% | Decrease in re-lending funds borrowed | | Trading Financial Liabilities | 6,023,695,008.61 | 11,982,384,656.09 | -49.73% | Consolidated structured products ended | | Client Funds for Securities Trading | 29,668,754,126.94 | 25,111,795,977.07 | 18.15% | Increase in client funds for securities trading influenced by market conditions | | Bonds Payable | 15,351,474,655.37 | 19,939,519,050.91 | -23.01% | Maturity and repayment of corporate bonds | - After deducting client trading settlement funds, the Group's total assets were **CNY 88.855 billion**, a **13.66% decrease** from the end of the previous year; the asset-liability ratio was **55.59%**[60](index=60&type=chunk) - The parent company's net capital was **CNY 20.623 billion**, risk coverage ratio **270.88%**, capital leverage ratio **25.98%**, liquidity coverage ratio **216.40%**, and net stable funding ratio **140.89%**, with all risk control indicators meeting regulatory requirements[60](index=60&type=chunk) Major Restricted Assets (Jun 30, 2020) | Item | Amount (CNY) | Reason for Restriction | | :--- | :--- | :--- | | Monetary Funds | 67,596,545.52 | Fixed deposits for general risk reserves of fund business, securities subscription funds | | Funds Lent | 2,348,958,980.85 | Pledged for OTC agreement repurchase business | | Trading Financial Assets | 4,460,316,480.35 | Pledged for bond repurchase business, pledged for borrowing funds business, pledged for quotation repurchase business, collateral for re-lending business, restricted shares, ST shares, lent securities, funds held for less than 3 years | | Other Debt Investments | 12,065,925,483.96 | Pledged for bond repurchase business, pledged for quotation repurchase business, pledged for borrowing funds business, pledged as substitute for futures account margin | | **Total** | **18,942,797,490.68** | | [4.4 Analysis of Investment Status](index=24&type=section&id=4.4%20Analysis%20of%20Investment%20Status) This section analyzes external equity investments, noting a significant increase in the reporting period, and details fair value financial assets and their profit impact - Investment amount during the reporting period was **CNY 568.64 million**, compared to **CNY 0** in the same period last year, with the change percentage not applicable[64](index=64&type=chunk) - Investee company names include Founder Securities Investment, Founder HK Financial Holdings, and Credit Suisse Founder[64](index=64&type=chunk) Financial Assets Measured at Fair Value (Jun 30, 2020 vs Dec 31, 2019) | Item Name | As of Jun 30, 2020 (CNY) | As of Dec 31, 2019 (CNY) | Current Period Change (CNY) | Impact on Current Period Profit (CNY) | | :--- | :--- | :--- | :--- | :--- | | Trading Financial Assets | 24,968,936,035.11 | 29,503,157,282.29 | -4,534,221,247.18 | 265,505,721.07 | | Other Debt Investments | 14,916,362,785.32 | 24,901,391,747.20 | -9,985,028,961.88 | 517,145,049.53 | | Other Equity Instrument Investments | 4,892,961,244.51 | 5,041,986,770.20 | -149,025,525.69 | — | | Derivative Financial Instruments | 12,024,436.23 | -217,347,917.55 | 229,372,353.78 | -92,022,561.05 | [4.5 Analysis of Major Controlled and Investee Companies](index=26&type=section&id=4.5%20Analysis%20of%20Major%20Controlled%20and%20Investee%20Companies) This section analyzes the operating performance of major subsidiaries, highlighting strong results from some and challenges for others, with Credit Suisse Founder no longer consolidated - Founder Underwriting & Sponsorship achieved operating revenue of **CNY 321.4274 million**, net profit of **CNY 83.7917 million**, and completed bond underwriting of **CNY 36.554 billion**[69](index=69&type=chunk) - Founder Hesheng Investment achieved operating revenue of **CNY 47.968 million**, net profit of **CNY 21.9937 million**, and newly established **2 private equity funds** with a total scale of **CNY 5.501 billion**[70](index=70&type=chunk) - Founder Securities Investment achieved operating revenue of **CNY 46.1404 million**, net profit of **CNY 25.6791 million**, completed **13 equity investment projects**, with a cumulative investment scale of **CNY 1.0275249 billion**[71](index=71&type=chunk) - Founder HK Financial Holdings achieved operating revenue of **-CNY 224.6564 million** and net profit of **-CNY 271.5615 million**, primarily impacted by investment income and fair value changes in fixed income proprietary trading[72](index=72&type=chunk) - Founder CIFCO Futures achieved operating revenue of **CNY 286.2708 million**, net profit of **CNY 59.9545 million**, with brokerage business fee income increasing by **31.05%** year-on-year, and asset management business AUM increasing by **298.09%** year-on-year[73](index=73&type=chunk)[74](index=74&type=chunk) - Credit Suisse Founder achieved operating revenue of **CNY 61.0576 million** and net profit of **-CNY 36.4033 million**. As of **June 1, 2020**, Credit Suisse Founder is no longer included in the company's consolidated financial statements[76](index=76&type=chunk) [4.6 Information on Structured Entities Controlled by the Company](index=28&type=section&id=4.6%20Information%20on%20Structured%20Entities%20Controlled%20by%20the%20Company) This section details the company's controlled structured entities, consolidating 11 asset management plans with total assets of **CNY 8.961 billion** at period-end - As of **June 30, 2020**, the company consolidated **11 structured entities**, primarily including asset management plans[77](index=77&type=chunk) - The total assets of the aforementioned consolidated structured entities amounted to **CNY 8.961 billion**[77](index=77&type=chunk) Section V Significant Matters [5.1 Brief Introduction to Shareholder Meetings](index=34&type=section&id=5.1%20Brief%20Introduction%20to%20Shareholder%20Meetings) This section briefly introduces the 2019 Annual General Meeting held on May 20, 2020, with resolutions duly disclosed - The 2019 Annual General Meeting was held on **May 20, 2020**[93](index=93&type=chunk) - Resolutions were published on the Shanghai Stock Exchange website www.sse.com.cn, with a disclosure date of **May 21, 2020**[93](index=93&type=chunk) [5.2 Profit Distribution or Capital Reserve Conversion Plan](index=34&type=section&id=5.2%20Profit%20Distribution%20or%20Capital%20Reserve%20Conversion%20Plan) This section confirms no proposed profit distribution or capital reserve conversion plan for the reporting period - The proposed profit distribution or capital reserve conversion plan for this half-year is "None"[94](index=94&type=chunk) [5.3 Fulfillment of Commitments](index=34&type=section&id=5.3%20Fulfillment%20of%20Commitments) This section details the fulfillment of commitments by the company and related parties, noting most were met, but asset integrity commitments with Zhengquan Holdings are in forced execution - Peking University, PKU Asset Management Co., Ltd., and Founder Group all committed to resolving horizontal competition issues, which remain long-term effective and have been timely and strictly fulfilled[95](index=95&type=chunk) - Founder Securities committed to resolving horizontal competition with Credit Suisse Founder, with the transaction completed on **June 1, 2020**, and Credit Suisse Founder no longer consolidated, fully resolving the horizontal competition issue[97](index=97&type=chunk) - Regarding Zhengquan Holdings' commitment to the asset integrity of China Minzu Securities, item 4, due to the long-term inability to transfer trading financial assets, the company has filed a lawsuit and obtained a partial compensation judgment, but Zhengquan Holdings has not yet fulfilled its payment obligations, and the company has applied for forced execution[98](index=98&type=chunk) [5.4 Appointment and Dismissal of Accounting Firms](index=38&type=section&id=5.4%20Appointment%20and%20Dismissal%20of%20Accounting%20Firms) This section reports the 2019 Annual General Meeting approved Shinewing Certified Public Accountants as the company's 2020 auditor and internal control auditor - On **May 20, 2020**, the company's 2019 Annual General Meeting approved the appointment of Shinewing Certified Public Accountants (Special General Partnership) as the company's 2020 auditor and internal control auditor, with total audit fees not exceeding **CNY 1.43 million**[99](index=99&type=chunk) [5.5 Bankruptcy Reorganization Matters](index=38&type=section&id=5.5%20Bankruptcy%20Reorganization%20Matters) This section confirms no bankruptcy reorganization matters for the company during the reporting period - The company had no bankruptcy reorganization matters during this reporting period[100](index=100&type=chunk) [5.6 Major Litigation and Arbitration Matters](index=38&type=section&id=5.6%20Major%20Litigation%20and%20Arbitration%20Matters) This section reports no major litigation reaching disclosure standards, but details progress on several lawsuits exceeding **CNY 10 million**, involving margin financing, Zhengquan Holdings, and bond trading disputes - The company had no major litigation or arbitration matters reaching the disclosure standard of the "Shanghai Stock Exchange Listing Rules" during this reporting period[100](index=100&type=chunk) - In the company's lawsuit against Cai Mengjun for margin financing and securities lending transaction disputes, Cai Mengjun was ordered to repay principal of **CNY 16,534,564.41** plus interest due to margin financing and securities lending default, with the second instance upholding the original judgment[104](index=104&type=chunk)[105](index=105&type=chunk) - In the company's lawsuit against Zhengquan Holdings regarding disputes related to the company, the company sued Zhengquan Holdings for disguised capital withdrawal, demanding the return of dividends and cessation of shareholder rights; the Hunan High Court ruled in favor of ceasing shareholder rights but rejected the claims for dividend return and interest compensation; both parties have appealed, and the Supreme People's Court is hearing the second instance[106](index=106&type=chunk)[108](index=108&type=chunk) - In China Minzu Securities' lawsuit against Shandong Shanshui Company for bond transaction disputes, Shandong Shanshui defaulted on bonds, and China Minzu Securities has recovered all principal and interest through a settlement agreement[109](index=109&type=chunk)[110](index=110&type=chunk) [5.7 Penalties and Rectification for Listed Company, Directors, Supervisors, Senior Management, Controlling Shareholders, Actual Controllers, and Acquirers](index=42&type=section&id=5.7%20Penalties%20and%20Rectification%20for%20Listed%20Company%2C%20Directors%2C%20Supervisors%2C%20Senior%20Management%2C%20Controlling%20Shareholders%2C%20Actual%20Controllers%2C%20and%20Acquirers) This section confirms no penalties or rectification for the company, its directors, supervisors, senior management, controlling shareholders, actual controllers, or acquirers during the reporting period - The company, its directors, supervisors, senior management, controlling shareholders, actual controllers, and acquirers had no penalties or rectification situations during this reporting period[110](index=110&type=chunk) [5.8 Explanation of the Integrity Status of the Company, its Controlling Shareholders, and Actual Controllers During the Reporting Period](index=42&type=section&id=5.8%20Explanation%20of%20the%20Integrity%20Status%20of%20the%20Company%2C%20its%20Controlling%20Shareholders%2C%20and%20Actual%20Controllers%20During%20the%20Reporting%20Period) This section discloses that controlling shareholder Founder Group was ruled to undergo reorganization during the period, which is currently ongoing - In **February 2020**, the Beijing No. 1 Intermediate People's Court ruled for the reorganization of Founder Group; in **July 2020**, it ruled for the substantive consolidated reorganization of Founder Group and five other companies, with the reorganization currently ongoing[111](index=111&type=chunk) [5.9 Information on the Company's Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures and Their Impact](index=42&type=section&id=5.9%20Information%20on%20the%20Company%27s%20Equity%20Incentive%20Plans%2C%20Employee%20Stock%20Ownership%20Plans%2C%20or%20Other%20Employee%20Incentive%20Measures%20and%20Their%20Impact) This section confirms no equity incentive plans, employee stock ownership plans, or other employee incentive measures were implemented during the reporting period - The company had no equity incentive plans, employee stock ownership plans, or other employee incentive measures during this reporting period[111](index=111&type=chunk) [5.10 Major Related Party Transactions](index=43&type=section&id=5.10%20Major%20Related%20Party%20Transactions) This section discloses major related party transactions, including estimated and actual daily operating transactions and specific acquisitions like advertising rights - The company's board of directors approved the resolution on the confirmation of 2019 annual ordinary related party transaction amounts and the estimation of 2020 annual ordinary related party transaction amounts, with an estimated total of **CNY 200 million** for 2020[112](index=112&type=chunk) - The company signed agreements with Beijing Hangxiang Advertising Co., Ltd., Shanghai Jinghuicheng, and PKU Founder Finance to acquire advertising rights and related obligations for the Capital Airport T3 terminal express train, with a related party transaction amount of **CNY 28.9019 million**[113](index=113&type=chunk)[114](index=114&type=chunk) - During this reporting period, the company had no related party transactions involving asset or equity acquisition/disposal, no major related party transactions involving joint external investments, and no related party creditor-debtor relationships[115](index=115&type=chunk) [5.11 Major Contracts and Their Fulfillment](index=44&type=section&id=5.11%20Major%20Contracts%20and%20Their%20Fulfillment) This section confirms no entrustment, contracting, or leasing matters, but details external guarantees to subsidiaries totaling **CNY 2.434 billion**, or **6.14%** of net assets - The company had no entrustment, contracting, or leasing matters during this reporting period[115](index=115&type=chunk) - As of the end of the reporting period, the total guarantee balance for subsidiaries was **CNY 2.434 billion**, accounting for **6.14%** of the company's net assets[120](index=120&type=chunk) - The company provided a net capital guarantee commitment of **CNY 1 billion** for its wholly-owned subsidiary Founder Underwriting & Sponsorship[120](index=120&type=chunk) - Founder HK Financial Holdings provided guarantees for its wholly-owned subsidiaries, with a guarantee balance of **USD 202.49 million** at the end of the reporting period[120](index=120&type=chunk) [5.12 Listed Company's Poverty Alleviation Work](index=46&type=section&id=5.12%20Listed%20Company%27s%20Poverty%20Alleviation%20Work) This section details the company's H1 2020 targeted poverty alleviation efforts, including planning, implementation, achievements, and future plans, utilizing multi-dimensional measures to support poverty-stricken areas - The Group formulated and released the "Poverty Alleviation Work Plan (2017-2020)", continuously deepening targeted poverty alleviation business and actively promoting the implementation of the "2+3" targeted poverty alleviation model[121](index=121&type=chunk) - In H1 2020, the Group focused on financial and industrial poverty alleviation, complemented by educational, public welfare, and consumption-based poverty alleviation, to support county-level poverty eradication[122](index=122&type=chunk) Achievements in Targeted Poverty Alleviation (H1 2020) | Indicator | Quantity and Implementation Status | | :--- | :--- | | Funds | 10.12825 million CNY | | Number of Poor Students Supported | 164 people | | Social Poverty Alleviation | 7.91265 million CNY | | Other Projects | 2.2156 million CNY (4 consumption-based poverty alleviation projects) | - The company was selected as one of the **50 '2019 Best Cases of Chinese Enterprises in Poverty Alleviation'** by the State Council Leading Group Office of Poverty Alleviation and Development, and received the 'Outstanding Contribution in 2019' award from the China Foundation for Poverty Alleviation[123](index=123&type=chunk) - Subsequent targeted poverty alleviation plans will strengthen the poverty alleviation project library with the concept of "wealth creation", conduct educational poverty alleviation through the "Wisdom & Wealth" lecture series, enhance consumption-based poverty alleviation with "Gathering Love for Prosperity", and leverage public welfare poverty alleviation with "Boundless Good Deeds, Boundless Love"[129](index=129&type=chunk)[130](index=130&type=chunk) [5.13 Convertible Corporate Bonds](index=48&type=section&id=5.13%20Convertible%20Corporate%20Bonds) This section confirms no convertible corporate bonds for the company during the reporting period - The company had no convertible corporate bonds during this reporting period[131](index=131&type=chunk) [5.14 Environmental Information](index=48&type=section&id=5.14%20Environmental%20Information) This section states the company is not a key pollutant-discharging unit, emphasizing its commitment to energy conservation, environmental protection, and green office practices - The company and its subsidiaries are not classified as key pollutant-discharging units by environmental protection authorities[131](index=131&type=chunk) - The company values energy conservation and environmental protection, diligently implements national environmental laws and regulations such as the "Environmental Protection Law", promotes energy saving, and fosters a green office environment[132](index=132&type=chunk) [5.15 Explanation of Other Significant Matters](index=49&type=section&id=5.15%20Explanation%20of%20Other%20Significant%20Matters) This section discloses other significant matters, including subsidiary capital increases, asset impairment provisions, and judicial freezing/unfreezing of controlling shareholder shares, impacting financial position and equity structure - Founder HK Financial Holdings completed a capital increase equivalent to **CNY 200 million** in HKD, changing its registered capital to **HKD 718,657,378**[134](index=134&type=chunk) - Founder Securities Investment's registered capital changed from **CNY 900 million** to **CNY 1.5 billion**, with the company having increased capital by **CNY 350 million**[135](index=135&type=chunk) - Founder Underwriting & Sponsorship's registered capital changed from **CNY 800 million** to **CNY 1.4 billion**; Founder CIFCO Futures' registered capital changed from **CNY 421.94771892 million** to **CNY 1.005 billion**[136](index=136&type=chunk)[137](index=137&type=chunk) - The company provided a net capital guarantee commitment of **CNY 1 billion** for Founder Underwriting & Sponsorship, with a one-year term[138](index=138&type=chunk) - In Q1 2020, various credit impairment losses and provisions for liquidity support to asset management plans totaled **CNY 351.1701 million**, impacting Q1 2020 net profit by **-CNY 263.3776 million**[139](index=139&type=chunk) - Founder Group's **1,109,609,852 shares** in the company and their accrued benefits were judicially rotationally frozen, with some later unfrozen; as of the report disclosure date, the cumulative frozen shares accounted for **48.57%** of its total holdings and **13.48%** of the company's total share capital[140](index=140&type=chunk)[141](index=141&type=chunk) Section VI Changes in Ordinary Shares and Shareholder Information [6.1 Changes in Share Capital](index=52&type=section&id=6.1%20Changes%20in%20Share%20Capital) This section reports no changes in share capital or structure, but details the completed sale of treasury stock, with proceeds supplementing working capital - As of the end of the reporting period, the company's total share capital was **8,232,101,395 shares**, all of which are unrestricted tradable A-shares, with no changes during the reporting period[142](index=142&type=chunk) - The company completed its share repurchase plan on **April 10, 2019**, repurchasing a total of **11,150,255 shares**, accounting for **0.14%** of the total share capital, using **CNY 57.8059 million**[142](index=142&type=chunk) - As of **June 23, 2020**, all **11,150,255 repurchased shares** have been sold, with an average transaction price of **CNY 7.22/share**, and total proceeds of **CNY 80.4513 million** used to supplement the company's working capital[142](index=142&type=chunk) [6.2 Shareholder Information](index=53&type=section&id=6.2%20Shareholder%20Information) This section discloses the total shareholders and top ten shareholders' holdings at period-end, including share status and nature, noting the court ruling on Zhengquan Holdings' shares - Total number of shareholders at the end of the reporting period was **202,292**[143](index=143&type=chunk) Top Ten Shareholders' Shareholding (Jun 30, 2020) | Shareholder Name | Period-End Shareholding (Shares) | Percentage (%) | Share Status | Pledged or Frozen Shares (Shares) | Shareholder Nature | | :--- | :--- | :--- | :--- | :--- | :--- | | Peking University Founder Group Co., Ltd. | 2,284,609,852 | 27.75 | Pledged | 1,109,609,852 | State-owned Legal Person | | Beijing Zhengquan Holdings Co., Ltd. | 1,799,591,164 | 21.86 | Frozen | 1,799,591,164 | Domestic Non-State-owned Legal Person | | Hong Kong Securities Clearing Company Limited | 1,469,112,518 | 17.85 | None | 0 | Unknown | | China Securities Finance Corporation Limited | 261,985,096 | 3.18 | None | 0 | State-owned Legal Person | | Harbin Hatou Investment Co., Ltd. | 197,556,999 | 2.40 | None | 0 | State-owned Legal Person | | Central Huijin Asset Management Co., Ltd. | 138,731,200 | 1.69 | None | 0 | State-owned Legal Person | | Leshan State-owned Assets Investment and Operation (Group) Co., Ltd. | 105,955,845 | 1.29 | Pledged | 40,000,000 | State-owned Legal Person | | Founder Industrial Holdings Co., Ltd. | 78,627,162 | 0.96 | None | 0 | State-owned Legal Person | | China Construction Bank Co., Ltd. - Guotai CSI All Share Securities Company ETF | 58,097,459 | 0.71 | None | 0 | Unknown | | Bosera Fund - Agricultural Bank of China - Bosera CSI Financial Asset Management Plan | 53,580,300 | 0.65 | None | 0 | Unknown | - The Dalian Intermediate People's Court ruled to offset **709,886,375 shares** of the company held by Zhengquan Holdings against the civil claims of Guotong Trust against Zhengquan Holdings; the related share change still requires approval from the China Securities Regulatory Commission[146](index=146&type=chunk) Section VII Preferred Shares Related Information [7.1 Preferred Shares Related Information](index=55&type=section&id=7.1%20Preferred%20Shares%20Related%20Information) This section confirms no preferred shares related information for the company during the reporting period - The company had no preferred shares related information during this reporting period[147](index=147&type=chunk) Section VIII Information on Directors, Supervisors, and Senior Management [8.1 Changes in Shareholdings](index=56&type=section&id=8.1%20Changes%20in%20Shareholdings) This section reports no changes in shareholdings for current or resigned directors, supervisors, and senior management, nor were equity incentives granted - There were no changes in the shareholdings of current and resigned directors, supervisors, and senior management during the reporting period[148](index=148&type=chunk) - Directors, supervisors, and senior management were not granted equity incentives during the reporting period[148](index=148&type=chunk) [8.2 Changes in Company Directors, Supervisors, and Senior Management](index=56&type=section&id=8.2%20Changes%20in%20Company%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) This section discloses changes in directors, supervisors, and senior management during the period, mainly concerning Executive Committee appointments - On **August 14, 2020**, the company held its Sixth Meeting of the Fourth Board of Directors, appointing Mr. He Yagang, Mr. Gao Li, Mr. Sun Bin, Mr. Yin Lei, Mr. Wu Ke, Mr. Jiang Zhijun, and Mr. Xu Zibing as members of the company's Executive Committee[150](index=150&type=chunk) - Mr. He Yagang was appointed Director of the Executive Committee, and Mr. Gao Li as Deputy Director of the Executive Committee; Mr. Gao Li was appointed President, Mr. Sun Bin as Chief Compliance Officer, and Mr. He Yagang as Board Secretary[150](index=150&type=chunk) Section IX Corporate Bonds Related Information [9.1 Basic Information on Corporate Bonds](index=57&type=section&id=9.1%20Basic%20Information%20on%20Corporate%20Bonds) This section lists basic information for non-publicly issued bonds, including names, codes, dates, balances, and rates, noting timely repayment for some Non-Publicly Issued Bonds (Partial) | Bond Name | Abbreviation | Code | Issue Date | Maturity Date | Bond Balance (CNY 10,000) | Interest Rate | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Founder Securities Co., Ltd. 2017 Non-Public Issuance Subordinated Bonds (Tranche 1) | 17 Founder C1 | 145812 | 2017/9/19 | 2020/9/19 | 190,000 | 5.70% | | Founder Securities Co., Ltd. 2017 Non-Public Issuance Subordinated Bonds (Tranche 2) | 17 Founder C2 | 145842 | 2017/10/12 | 2020/10/12 | 222,000 | 5.70% | | Founder Securities Co., Ltd. 2019 Non-Public Issuance Corporate Bonds (Tranche 1) | 19 Founder F1 | 151205 | 2019/2/27 | 2022/2/27 | 250,000 | 4.71% | | Founder Securities Co., Ltd. 2019 Non-Public Issuance Subordinated Bonds (Tranche 1) | 19 Founder C1 | 151470 | 2019/4/24 | 2021/4/24 | 156,000 | 4.80% | - **18 Founder F1** has been fully and timely repaid[153](index=153&type=chunk) [9.2 Use of Corporate Bond Proceeds](index=58&type=section&id=9.2%20Use%20of%20Corporate%20Bond%20Proceeds) This section confirms all bond proceeds were used as agreed in offering circulars, primarily for working capital or debt repayment - The proceeds from all bonds issued by the company have been fully utilized, and after deducting issuance and related expenses, all were used to supplement the company's working capital or repay maturing debts, consistent with the uses, plans, and other agreements specified in the offering circular[155](index=155&type=chunk) [9.3 Corporate Bond Rating Status](index=58&type=section&id=9.3%20Corporate%20Bond%20Rating%20Status) This section discloses the company's bond credit ratings, with Lianhe Credit Rating Co., Ltd. assigning an **AAA** corporate rating (stable outlook) and bond ratings of **AA+** or **AAA** - Lianhe Credit Rating Co., Ltd. assigned an **AAA** corporate credit rating to the company, with a stable outlook[156](index=156&type=chunk)[157](index=157&type=chunk) - The bond credit ratings for "**17 Founder C1**", "**17 Founder C2**", and "**19 Founder C1**" are **AA+**[156](index=156&type=chunk)[157](index=157&type=chunk) - The bond credit rating for "**19 Founder F1**" is **AAA**[157](index=157&type=chunk) [9.4 Corporate Bond Enhancement Mechanisms, Repayment Plans, and Other Related Matters During the Reporting Period](index=59&type=section&id=9.4%20Corporate%20Bond%20Enhancement%20Mechanisms%2C%20Repayment%20Plans%2C%20and%20Other%20Related%20Matters%20During%20the%20Reporting%20Period) This section confirms timely interest and principal repayment for all bonds, demonstrating good repayment capability, supported by capital accumulation, profitability, and operating cash flow - During the reporting period, the company timely fulfilled its annual interest payment and principal and interest repayment obligations for all bonds, demonstrating good repayment capability[158](index=158&type=chunk) - Repayment funds primarily originate from the company's capital accumulation, daily profit accumulation, and cash flow generated from operating activities[158](index=158&type=chunk) [9.5 Corporate Bondholders' Meeting Convening Status](index=59&type=section&id=9.5%20Corporate%20Bondholders%27%20Meeting%20Convening%20Status) This section confirms no bondholders' meetings were convened by the company in H1 2020 - The company did not convene any bondholders' meetings in H1 2020[159](index=159&type=chunk) [9.6 Corporate Bond Trustee Performance](index=60&type=section&id=9.6%20Corporate%20Bond%20Trustee%20Performance) This section reports that bond trustees Wanhe Securities and Jinyuan Securities fulfilled their duties by issuing 2019 annual trustee performance reports - Wanhe Securities Co., Ltd., as the trustee for multiple bond tranches, issued its 2019 annual trustee performance report[159](index=159&type=chunk) - Jinyuan Securities Co., Ltd., as the trustee for **19 Founder C1**, issued its 2019 annual trustee performance report[159](index=159&type=chunk) [9.7 Key Accounting Data and Financial Indicators as of Period-End and Prior Year-End (or Current Period and Prior Period)](index=60&type=section&id=9.7%20Key%20Accounting%20Data%20and%20Financial%20Indicators%20as%20of%20Period-End%20and%20Prior%20Year-End%20(or%20Current%20Period%20and%20Prior%20Period)) This section presents key accounting data and financial indicators, showing a decreased asset-liability ratio and increased EBITDA interest coverage, reflecting improved solvency Key Financial Indicators (Jun 30, 2020 vs Dec 31, 2019) | Item | As of Jun 30, 2020 | As of Dec 31, 2019 | Change (%) | Explanation of Change | | :--- | :--- | :--- | :--- | :--- | | Current Ratio | 2.20 | 2.02 | 8.91 | | | Asset-Liability Ratio | 55.59% | 62.23% | decreased by 6.64 percentage points | | | EBITDA Interest Coverage Ratio | 2.19 | 1.81 | 20.99 | Primarily due to a decrease in debt scale during the period | | Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) | 1,863,247,946.02 | 2,272,232,070.09 | -18.00 | Primarily due to a decrease in debt scale during the period | [9.8 Interest Payment and Repayment Status of Other Bonds and Debt Financing Instruments](index=61&type=section&id=9.8%20Interest%20Payment%20and%20Repayment%20Status%20of%20Other%20Bonds%20and%20Debt%20Financing%20Instruments) This section confirms timely principal and interest payments on all other debt financing instruments, including interbank borrowings, repurchases, and income certificates - In H1 2020, the company's other debt financing instruments included interbank borrowings, bond outright repurchase, bond pledged repurchase, income certificates, asset income rights transfer, and re-lending[162](index=162&type=chunk) - The company timely paid principal and interest on all its financings[162](index=162&type=chunk) [9.9 Bank Credit Facilities During the Reporting Period](index=61&type=section&id=9.9%20Bank%20Credit%20Facilities%20During%20the%20Reporting%20Period) This section discloses the company's bank credit facilities, totaling **CNY 30.44 billion** in comprehensive credit, with **CNY 25.59 billion** available - As of **June 30, 2020**, the company had cumulatively obtained comprehensive credit lines totaling **CNY 30.44 billion** from **23 banking institutions**[163](index=163&type=chunk) - Currently, **CNY 4.85 billion** of the credit line has been utilized, with a remaining available credit line of **CNY 25.59 billion**[163](index=163&type=chunk) [9.10 Fulfillment of Corporate Bond Offering Circular Agreements and Commitments During the Reporting Period](index=61&type=section&id=9.10%20Fulfillment%20of%20Corporate%20Bond%20Offering%20Circular%20Agreements%20and%20Commitments%20During%20the%20Reporting%20Period) This section confirms strict compliance with all corporate bond offering circular agreements and commitments, including proceeds use, interest payments, and information disclosure - During the reporting period, the company strictly fulfilled all agreements and commitments in the offering circulars for each bond tranche, used proceeds compliantly, timely paid corporate bond interest, and regularly disclosed company information at the agreed locations and times[164](index=164&type=chunk) [9.11 Impact of Significant Matters on Company Operations and Solvency](index=61&type=section&id=9.11%20Impact%20of%20Significant%20Matters%20on%20Company%20Operations%20and%20Solvency) This section states that disclosed significant matters will not materially adversely impact daily operations or overall solvency - The significant matters disclosed by the company will not affect its daily operations, nor will they have a material adverse impact on its overall solvency[165](index=165&type=chunk) Section X Financial Report [10.1 Audit Report](index=62&type=section&id=10.1%20Audit%20Report) This section confirms that this half-year report has not been audited by an accounting firm - This half-year report has not been audited by an accounting firm[3](index=3&type=chunk) [10.2 Financial Statements](index=62&type=section&id=10.2%20Financial%20Statements) This section indicates that financial statements, including consolidated and parent balance sheets, income statements, cash flow statements, and equity changes, are appended - Financial statements (attached) include consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in shareholders' equity[166](index=166&type=chunk)[169](index=169&type=chunk)[171](index=171&type=chunk)[173](index=173&type=chunk)[175](index=175&type=chunk)[177](index=177&type=chunk)[179](index=179&type=chunk)[181](index=181&type=chunk)[183](index=183&type=chunk)[185](index=185&type=chunk)[187](index=187&type=chunk)[189](index=189&type=chunk) [10.3 Notes to Financial Statements](index=62&type=section&id=10.3%20Notes%20to%20Financial%20Statements) This section provides detailed notes to the financial statements, covering basic company information, accounting policies, consolidation scope, taxes, major financial items, related party transactions, and risk management - The notes to the financial statements provide detailed disclosures on the company's basic information, accounting policies, consolidation scope, taxes, annotations for major financial items, related party transactions, contingencies, commitments, post-balance sheet events, and risk management[190](index=190&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[266](index=266&type=chunk)[273](index=273&type=chunk)[436](index=436&type=chunk)[437](index=437&type=chunk)[445](index=445&type=chunk)[455](index=455&type=chunk)[469](index=469&type=chunk)[471](index=471&type=chunk)[473](index=473&type=chunk)[476](index=476&type=chunk)[502](index=502&type=chunk)[529](index=529&type=chunk)[595](index=595&type=chunk) [10.3.1 Company's Basic Information](index=82&type=section&id=10.3.1%20Company%27s%20Basic%20Information) This subsection outlines the company's history, current registered capital, total shares, and organizational structure, including subsidiaries, branches, and employee count - The company's predecessor was Zhejiang Securities Co., Ltd., which was wholly converted into a joint-stock company in **2010** and listed on the Shanghai Stock Exchange in **2011**[190](index=190&type=chunk) - Current registered capital is **CNY 8.232101395 billion**, with a total of **8.232101395 billion shares**, all of which are tradable shares[191](index=191&type=chunk) - As of **June 30, 2020**, the company has **6 second-tier subsidiaries**, **24 branches**, **338 securities brokerage offices**, and **6,734 employees**[191](index=191&type=chunk) [10.3.2 Scope of Consolidated Financial Statements](index=83&type=section&id=10.3.2%20Scope%20of%20Consolidated%20Financial%20Statements) This subsection defines the scope of the Group's consolidated financial statements, including directly or indirectly controlled subsidiaries - The Group's consolidated financial statements include directly or indirectly controlled subsidiaries, such as Founder Hesheng Investment, Founder Securities Investment, Founder CIFCO Futures, Founder Underwriting & Sponsorship, Founder Fubon Fund, Founder HK Financial Holdings, and their controlled companies[192](index=192&type=chunk) [10.3.3 Basis of Preparation of Financial Statements](index=83&type=section&id=10.3.3%20Basis%20of%20Preparation%20of%20Financial%20Statements) This subsection explains that the financial statements are prepared on a going concern basis, adhering to relevant accounting standards - The financial statements are prepared on a going concern basis, in accordance with the "Accounting Standards for Business Enterprises" and relevant regulations issued by the Ministry of Finance[193](index=193&type=chunk) - The Group has a recent history of profitable operations and financial resources to support it, making the preparation of financial statements on a going concern basis reasonable[194](index=194&type=chunk) [10.3.4 Company's Major Accounting Policies and Accounting Estimates](index=83&type=section&id=10.3.4%20Company%27s%20Major%20Accounting%20Policies%20and%20Accounting%20Estimates) This subsection details the company's significant accounting policies and estimates, including financial instrument recognition, measurement, impairment, and the adoption of new revenue standards - These financial statements comply with the requirements of Accounting Standards for Business Enterprises, truly and completely reflecting the financial position, operating results, and cash flows of the Company and the Group[195](index=195&type=chunk) - The accounting period runs from **January 1 to December 31** of the Gregorian calendar, with Renminbi as the functional currency[195](index=195&type=chunk)[196](index=196&type=chunk) - Detailed accounting methods for initial recognition and classification, subsequent measurement, impairment, and derecognition of financial instruments are elaborated[203](index=203&type=chunk)[205](index=205&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk) - The Group has adopted the new revenue standards for preparing its 2020 financial statements, and this change does not have a significant impact on the Group's financial statements[264](index=264&type=chunk) [10.3.5 Taxes](index=106&type=section&id=10.3.5%20Taxes) This subsection lists the main types of taxes and their applicable rates for the company and its subsidiaries - Major tax types and rates include Value-Added Tax (**6%**, **3%**), Property Tax (**1.2%**, **12%**), Urban Maintenance and Construction Tax (**7%**, **5%**), Education Surcharge (**3%**), Local Education Surcharge (**1%**, **1.5%**, **2%**, **3%**), and Corporate Income Tax (**9%**, **16.5%**, **25%**)[266](index=266&type=chunk) - Subsidiary Founder Hesheng Investment applies a **9%** corporate income tax rate[272](index=272&type=chunk) [10.3.6 Notes to Major Items in Consolidated Financial Statements](index=108&type=section&id=10.3.6%20Notes%20to%20Major%20Items%20in%20Consolidated%20Financial%20Statements) This subsection provides detailed annotations for major items in the consolidated financial statements, including monetary funds, funds lent, trading financial assets, short-term financing payables, bonds payable, and key revenue figures - Monetary funds at period-end amounted to **CNY 36,528,098,977.91**, of which client deposits were **CNY 29,751,794,225.93**[274](index=274&type=chunk) - Funds lent at period-end amounted to **CNY 21,892,686,180.67**, primarily for margin financing and securities lending business[283](index=283&type=chunk) - Trading financial assets at period-end amounted to **CNY 24,968,936,035.11**, primarily including bonds, funds, and stocks[311](index=311&type=chunk) - Short-term financing payables at period-end amounted to **CNY 7,498,601,505.94**, primarily due to an increase in the scale of income certificates[348](index=348&type=chunk) - Bonds payable at period-end amounted to **CNY 15,351,474,655.37**, primarily including subordinated bonds, corporate bonds, and income certificates[370](index=370&type=chunk) - Operating revenue for the current period reached **CNY 3,392,945,977.69**, net fee and commission income was **CNY 2,336,317,689.69**, and investment income was **CNY 781,561,859.05**[393](index=393&type=chunk)[395](index=395&type=chunk)[400](index=400&type=chunk) [10.3.7 Changes in Consolidation Scope](index=150&type=section&id=10.3.7%20Changes%20in%20Consolidation%20Scope) This subsection explains the change in the company's consolidation scope, specifically the exclusion of Credit Suisse Founder due to a change in ownership structure - As of **June 1, 2020**, the company no longer consolidates Credit Suisse Founder, as Credit Suisse's shareholding increased to **51.00%** after capital injection, while the company's shareholding decreased to **49.00%**[436](index=436&type=chunk) - The company's equity interest in Credit Suisse Founder is accounted for as a long-term equity investment using the equity method[436](index=436&type=chunk) [10.3.8 Interests in Other Entities](index=150&type=section&id=10.3.8%20Interests%20in%20Other%20Entities) This subsection details the Group's interests in other entities, including important subsidiaries and managed unconsolidated structured entities - The Group owns important subsidiaries such as Founder CIFCO Futures, Founder Fubon Fund, and Founder Underwriting & Sponsorship[437](index=437&type=chunk) - Founder CIFCO Futures has a minority shareholder stake of **7.56%**, with profit/loss attributable to minority shareholders of **CNY 45.3256 million** for the current period[438](index=438&type=chunk) - Founder Fubon Fund has a minority shareholder stake of **33.30%**, with profit/loss attributable to minority shareholders of **-CNY 0.3156 million** for the current period[438](index=438&type=chunk) - The total assets of unconsolidated structured entities managed by the company amounted to **CNY 155,137,405,572.58**[442](index=442&type=chunk) [10.3.9 Disclosure of Fair Value](index=152&type=section&id=10.3.9%20Disclosure%20of%20Fair%20Value) This subsection describes the Group's approach to fair value measurement and discloses the total amounts of financial assets and liabilities measured at fair value - The Group determines and discloses the fair value of financial instruments based on Level 1, Level 2, and Level 3 inputs[445](index=445&type=chunk) - Total financial assets continuously measured at fair value amounted to **CNY 44,968,155,233.93**, of which trading financial assets were **CNY 24,968,936,035.11**[446](index=446&type=chunk)[448](index=448&type=chunk) - Total liabilities continuously measured at fair value amounted to **CNY 6,030,191,352.68**, primarily trading financial liabilities[448](index=448&type=chunk) - The Group's financial instruments valued using Level 3 inputs primarily include equity investments measured at fair value[452](index=452&type=chunk) [10.3.10 Related Party Relationships and Transactions](index=156&type=section&id=10.3.10%20Related%20Party%20Relationships%20and%20Transactions) This subsection identifies the company's controlling shareholder and ultimate controller, and details significant related party transactions, including procurement of goods/services and compensation to key management personnel - The controlling shareholder is Peking University Founder Group Co., Ltd., and the ultimate controlling party is Peking University[456](index=456&type=chunk) - Related party transactions for purchasing goods/receiving services in the current period include receiving services from Peking University for **CNY 1,165,048.54** and purchasing insurance from PKU Founder Life Insurance Co., Ltd. for **CNY 1,163,474.75**[459](index=459&type=chunk)[460](index=460&type=chunk) - The total remuneration paid by the company to key management personnel was **CNY 16.2413 million**[464](index=464&type=chunk) - The Group donated **CNY 8,112,650.00** to Hunan Founder Securities Huiai Public Welfare Foundation[464](index=464&type=chunk) [10.3.11 Contingent Matters](index=159&type=section&id=10.3.11%20Contingent%20Matters) This subsection describes the company's contingent matters, primarily investor lawsuits related to securities misrepresentation liability, including the status of resolved and newly accepted cases - The company is involved in investor lawsuits concerning securities misrepresentation liability disputes; **1,323 prior cases** have received first-instance judgments, rulings, or mediation, with **853 cases concluded**, and some plaintiffs applying for retrial[470](index=470&type=chunk) - The company received **807 newly accepted securities misrepresentation liability dispute cases** from the Changsha Intermediate People's Court, of which **629 cases** reached settlement agreements, with the company's total compensation amounting to **CNY 34.6698 million**[470](index=470&type=chunk) [10.3.12 Commitments](index=160&type=section&id=10.3.12%20Commitments) This subsection discloses the Group's future irrevocable minimum lease payments - The Group's total irrevocable minimum lease payments to be paid in future years amount to **CNY 686,058,050.82**[472](index=472&type=chunk) [10.3.13 Post-Balance Sheet Events](index=161&type=section&id=10.3.13%20Post-Balance%20Sheet%20Events) This subsection details significant events occurring after the balance sheet date, including bond repurchases, litigation-related payments, and a loan-linked structured note default - Founder HK Financial Holdings' wholly-owned subsidiary, First FZ Bond Limited, repurchased offshore bonds with a face value of **USD 88.71 million** between **June 15, 2020, and June 29, 2020**, and cancelled them in July[473](index=473&type=chunk) - From the reporting date to the disclosure date, the company incurred compensation payments of **CNY 33,721,600.92** due to litigation[474](index=474&type=chunk) - Founder Asset Management (Hong Kong) Limited, a subsidiary of Founder HK Financial Holdings, invested in the loan-linked structured note COSCIC 7 08/11/20, which matured on **August 11, 2020**, with the underlying loan defaulting, totaling **USD 26,779,167.50** in principal and interest[475](index=475&type=chunk) [10.3.14 Risk Management](index=161&type=section&id=10.3.14%20Risk%20Management) This subsection describes the Group's comprehensive risk management framework, covering credit, market, liquidity, and operational risks, including governance structure, risk assessment, and mitigation strategies - The Group has established comprehensive and systematic risk control policies and procedures, covering credit risk, market risk, liquidity risk, and operational risk[476](index=476&type=chunk) - The risk governance organizational structure includes the Board of Directors, Board Risk Control Committee, Executive Committee, Risk Management Committee, Chief Risk Officer, Risk Management Department, Audit Department, and various business functional departments[478](index=478&type=chunk) - Credit risk primarily arises from client defaults in credit businesses such as margin finan