Group 1: Brokerage Business - The company is enhancing customer service quality to improve client output [2] - It is implementing a regional deepening strategy to strengthen competitive advantage [3] - The focus is on increasing the proportion of non-channel business revenue and optimizing the income structure [3] - Wealth management is prioritized to accelerate the strategic transformation of brokerage business [3] Group 2: Investment Banking - The investment banking segment has seen rapid revenue growth this year, with ample project reserves in IPOs, refinancing, and major asset restructuring [3] - Financial advisory services for restructuring will be a key focus for future development [3] - The company is actively developing private bonds for SMEs, corporate bonds, and enterprise bonds approved by the National Development and Reform Commission [3] Group 3: Proprietary Trading - Proprietary trading remains a traditional strength, with an increase in overall scale while optimizing asset allocation to reduce risks [4] - The company is controlling equity investment scale and increasing bond investment efforts, achieving good returns [4] - Research on convertible bonds has intensified, with a focus on large-cap blue-chip convertible bonds [4] - The company has strengthened research and implementation of innovative financial products, including individual stock options [4] Group 4: Innovative Business - The company is exploring innovative models for margin financing and securities lending, enhancing customer service and brand competitiveness [4] - There is a commitment to invest in new third board recommendation business and market-making business [4] - Internet finance is being utilized as a means of information service, with the necessary infrastructure in place [4] Group 5: "Belt and Road" Investment Opportunities - Specific favorable policies related to the "Belt and Road" initiative have not yet been issued, but the company has expanded its operations westward [5] - Branches have been established in Ningxia and Gansu, and business has commenced in Xinjiang [5] Group 6: Use of Funds from Private Placement - The funds raised from private placement will primarily supplement operational capital, focusing on margin financing, fixed income, proprietary trading, and branch establishment [5] Group 7: e-Rongbao - The "e-Rongbao" service is an innovative small-scale financing product based on stock pledge repurchase transactions, with funds available on T+1 day [5] - This service meets the growing demand for quick and efficient small-scale financing, playing a strategic role in business innovation and profit source expansion [5]

[Key Financial Data](index=1&type=section&id=%E4%B8%80%E3%80%81%E4%B8%BB%E8%A6%81%E8%B4%A2%E5%8A%A1%E6%95%B0%E6%8D%AE) [Key Accounting Data and Financial Indicators](index=1&type=section&id=%EF%BC%88%E4%B8%80%EF%BC%89%20%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 three quarters of 2022, total operating revenue decreased while net profit attributable to the parent company declined significantly Core Income Statement Indicators for Q1-Q3 and Q3 2022 | Indicator | Year-to-Date (CNY) | YoY Change | Current Reporting Period (CNY) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenue | 4,365,097,635.03 | -8.92% | 1,624,009,658.46 | 3.10% | | Net Profit Attributable to Shareholders of the Parent Company | 497,348,244.32 | -49.78% | 138,078,645.05 | -49.81% | | Net Profit Attributable to Shareholders of the Parent Company after Deducting Non-recurring Gains and Losses | 484,470,399.05 | -50.70% | 128,347,367.16 | -53.23% | Key Financial Ratios and Balance Sheet Indicators for Q1-Q3 2022 | Indicator | Year-to-Date | YoY Change / Change from Prior Year-end | | :--- | :--- | :--- | | Basic Earnings Per Share (CNY/Share) | 0.1113 | -49.41% | | Weighted Average Return on Equity | 1.83% | Decreased by 1.93 percentage points | | Total Assets (CNY) | 95,877,164,374.46 | 12.64% | | Equity Attributable to Shareholders of the Parent Company (CNY) | 27,086,669,599.74 | -0.06% | | Net Cash Flow from Operating Activities (CNY) | -4,174,674,009.61 | Not Applicable | [Non-recurring Profit and Loss Items and Amounts](index=2&type=section&id=%EF%BC%88%E4%BA%8C%EF%BC%89%20%E9%9D%9E%E7%BB%8F%E5%B8%B8%E6%80%A7%E6%8D%9F%E7%9B%8A%E9%A1%B9%E7%9B%AE%E5%92%8C%E9%87%91%E9%A2%9D) The company's non-recurring profit and loss for the year-to-date period totaled CNY 12,877,845.27, primarily derived from government grants Non-recurring Profit and Loss Items from the Beginning of the Year to the Reporting Period End | Item | Amount (CNY) | | :--- | :--- | | Government Grants | 18,918,942.34 | | Other profit and loss items meeting the definition of non-recurring | 3,668,625.10 | | Minority Interest Impact (After Tax) | -3,839,216.02 | | Income Tax Impact | -5,572,353.76 | | **Total** | **12,877,845.27** | - The company classifies gains from fair value changes of trading financial instruments and investment income as recurring items as they fall within the scope of its normal business operations[8](index=8&type=chunk) [Analysis of Changes in Key Financial Indicators and Reasons](index=3&type=section&id=%EF%BC%88%E4%B8%89%EF%BC%89%20%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%E5%8F%91%E7%94%9F%E5%8F%98%E5%8A%A8%E7%9A%84%E6%83%85%E5%86%B5%E5%8F%8A%E5%8E%9F%E5%9B%A0) Multiple financial indicators experienced significant volatility, with net profit declining due to losses from fair value changes and increased interest expenses Key Balance Sheet Item Changes (Period-end vs Prior Year-end) | Item | Change | Primary Reason | | :--- | :--- | :--- | | Derivative Financial Assets | 385.54% | Scale and fair value changes of derivative financial instruments | | Financial Assets Sold Under Repurchase Agreements | 30.36% | Increased scale of repurchase business | | Bonds Payable | 193.12% | Increased scale of corporate bond issuance | | Trading Financial Liabilities | -88.68% | Deconsolidation of structured entities | Key Income Statement Item Changes (Current Period vs Prior Period) | Item | Change | Primary Reason | | :--- | :--- | :--- | | Net Interest Income | Not Applicable | Interest expense increased by 64.17% YoY | | Net Fee and Commission Income from Asset Management Business | 163.68% | Increased income from collective asset management business | | Gains from Changes in Fair Value | Not Applicable | Fair value changes of financial instruments due to stock market volatility | | Credit Impairment Losses | Not Applicable | Increased credit impairment provisions for reverse repurchase agreements and margin financing | Key Cash Flow Statement Item Changes (Current Period vs Prior Period) | Item | Change | Primary Reason | | :--- | :--- | :--- | | Cash Received from Issuing Bonds | 210.62% | Increased scale of corporate bond issuance in the current period | | Cash Paid for Repayment of Debts | 7672.57% | Increased principal repayment of matured debt financing in the current period | [Shareholder Information](index=5&type=section&id=%E4%BA%8C%E3%80%81%E8%82%A1%E4%B8%9C%E4%BF%A1%E6%81%AF) [Shareholding of Common Stock Shareholders](index=5&type=section&id=%EF%BC%88%E4%B8%80%EF%BC%89%20%E6%99%AE%E9%80%9A%E8%82%A1%E8%82%A1%E4%B8%9C%E6%80%BB%E6%95%B0%E5%92%8C%E8%A1%A8%E5%86%B3%E6%9D%83%E6%81%A2%E5%A4%8D%E7%9A%84%E4%BC%98%E5%85%88%E8%82%A1%E8%82%A1%E4%B8%9C%E6%95%B0%E9%87%8F%E5%8F%8A%E5%89%8D%E5%8D%81%E5%90%8D%E8%82%A1%E4%B8%9C%E6%8C%81%E8%82%A1%E6%83%85%E5%86%B5%E8%A1%A8) As of the reporting period end, the company had 171,585 common stock shareholders, with a relatively stable structure dominated by state-owned legal entities - At the end of the reporting period, the total number of common stock shareholders was **171,585**[13](index=13&type=chunk) Top Five Shareholders | Shareholder Name | Shareholder Type | Shareholding Ratio | Number of Shares | | :--- | :--- | :--- | :--- | | Shaanxi Investment Group Co, Ltd | State-owned Legal Entity | 35.32% | 1,578,533,859 | | Shanghai Chengtou Holding Co, Ltd | State-owned Legal Entity | 10.26% | 458,496,467 | | Chang'an Huitong Investment Management Co, Ltd | State-owned Legal Entity | 2.89% | 129,032,258 | | Beijing Yuanda Huachuang Investment Co, Ltd | Domestic Non-state-owned Legal Entity | 2.64% | 117,894,200 | | Western Trust Co, Ltd | State-owned Legal Entity | 1.92% | 86,000,000 | - The controlling shareholder, Shaanxi Investment Group Co, Ltd, also holds a **57.78% stake** in the fifth-largest shareholder, Western Trust Co, Ltd, establishing a related-party relationship[14](index=14&type=chunk) [Other Significant Matters](index=6&type=section&id=%E4%B8%89%E3%80%81%E5%85%B6%E4%BB%96%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A1%B9) The company actively engaged in financing, with new borrowings exceeding 40% of prior year-end net assets, and also obtained ETF option market maker qualifications - In the third quarter, the company conducted multiple issuances and redemptions of short-term financing bills and completed interest payments and redemptions for some corporate bonds[15](index=15&type=chunk) - As of August 31, 2022, the company's cumulative new borrowings reached **41.02%** of the prior year-end net assets, exceeding the 40% disclosure threshold[16](index=16&type=chunk) - Effective September 19, 2022, the company obtained qualifications as a primary market maker for ChiNext ETF options and a general market maker for CSI 500 ETF options on the Shenzhen Stock Exchange, as well as a general market maker for CSI 500 ETF options on the Shanghai Stock Exchange[16](index=16&type=chunk) - The company, as a manager, has filed for arbitration regarding a defaulted asset management plan involving approximately **CNY 2.355 billion**, but expects no impact on its profits or solvency[16](index=16&type=chunk) [Quarterly Financial Statements](index=7&type=section&id=%E5%9B%9B%E3%80%81%E5%AD%A3%E5%BA%A6%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) [Consolidated Balance Sheet](index=7&type=section&id=1%E3%80%81%E5%90%88%E5%B9%B6%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8) As of September 30, 2022, total assets reached CNY 95.88 billion, a 12.64% increase from the beginning of the year, driven by growth in financial assets Key Consolidated Balance Sheet Items (September 30, 2022) | Item | Period-end Balance (CNY) | Change from Beginning of Year | | :--- | :--- | :--- | | **Total Assets** | **95,877,164,374.46** | **12.64%** | | Trading Financial Assets | 61,034,965,187.67 | 18.81% | | Financial Assets Sold Under Repurchase Agreements | 26,927,368,319.56 | 30.36% | | **Total Liabilities** | **68,648,380,131.09** | **18.55%** | | Bonds Payable | 12,439,580,047.94 | 193.12% | | **Total Equity Attributable to Shareholders of the Parent Company** | **27,086,669,599.74** | **-0.06%** | [Consolidated Income Statement](index=8&type=section&id=2%E3%80%81%E5%90%88%E5%B9%B6%E5%B9%B4%E5%88%9D%E5%88%B0%E6%8A%A5%E5%91%8A%E6%9C%9F%E6%9C%AB%E5%88%A9%E6%B6%A6%E8%A1%A8) For the first three quarters of 2022, operating revenue was CNY 4.37 billion, down 8.92% YoY, while net profit attributable to the parent company fell sharply by 49.78% Key Consolidated Income Statement Items (January-September 2022) | Item | Current Period Amount (CNY) | Prior Period Amount (CNY) | YoY Change | | :--- | :--- | :--- | :--- | | **Operating Revenue** | **4,365,097,635.03** | **4,792,626,721.29** | **-8.92%** | | Net Fee and Commission Income | 1,312,694,273.12 | 1,402,997,753.55 | -6.44% | | Net Interest Income | -144,118,433.32 | 204,921,425.37 | Not Applicable | | Investment Income | 1,348,568,202.90 | 1,322,024,818.70 | 2.01% | | Gains from Changes in Fair Value | -170,939,030.93 | -10,170,375.17 | Not Applicable | | **Operating Profit** | **696,295,072.46** | **1,339,745,912.77** | **-47.95%** | | **Net Profit Attributable to Shareholders of the Parent Company** | **497,348,244.32** | **990,435,769.91** | **-49.78%** | [Consolidated Cash Flow Statement](index=9&type=section&id=3%E3%80%81%E5%90%88%E5%B9%B6%E5%B9%B4%E5%88%9D%E5%88%B0%E6%8A%A5%E5%91%8A%E6%9C%9F%E6%9C%AB%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) Net cash outflow from operating activities was CNY 4.17 billion in the first three quarters, with financing activities being the main source of cash inflow Key Consolidated Cash Flow Statement Items (January-September 2022) | Item | Current Period Amount (CNY) | Prior Period Amount (CNY) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -4,174,674,009.61 | -12,960,125,962.98 | | Net Cash Flow from Investing Activities | -123,244,844.31 | -163,308,826.20 | | Net Cash Flow from Financing Activities | 5,209,757,805.25 | 7,225,578,869.48 | | Net Increase in Cash and Cash Equivalents | 915,171,286.29 | -5,898,012,868.63 |

[Important Notice, Table of Contents, and Definitions](index=3&type=section&id=%E7%AC%AC%E4%B8%80%E8%8A%82%20%E9%87%8D%E8%A6%81%E6%8F%90%E7%A4%BA%E3%80%81%E7%9B%AE%E5%BD%95%E5%92%8C%E9%87%8A%E4%B9%89) The company's board of directors, supervisory board, and senior management guarantee the annual report's content is true, accurate, and complete, free from misrepresentation or material omissions - The company's 2020 profit distribution plan is to distribute a cash dividend of **RMB 0.76 (tax inclusive) per 10 shares** based on the total share capital of **4,469,581,705 shares** as of December 31, 2020, totaling **RMB 339,688,209.58**. No bonus shares will be issued, nor will capital reserves be converted into share capital this year[3](index=3&type=chunk) - The company's annual financial report was audited by ShineWing Certified Public Accountants (Special General Partnership) and received a standard unqualified audit opinion[3](index=3&type=chunk) [Company Profile and Key Financial Indicators](index=6&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) [Company Basic Information](index=6&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E4%BF%A1%E6%81%AF) Western Securities Co., Ltd. (stock code: 002673) is a national comprehensive securities firm listed on the Shenzhen Stock Exchange, with a registered capital of RMB 4.47 billion and net capital of RMB 23.27 billion - The company's controlling shareholder changed to Shaanxi Investment Group Co., Ltd. in August 2019, with no change in the ultimate controlling party[9](index=9&type=chunk)[20](index=20&type=chunk) - As of the end of the reporting period, the company had **102 securities branches** and **9 important domestic branches** nationwide[24](index=24&type=chunk)[22](index=22&type=chunk) - The company owns **four controlled subsidiaries**: Western Futures Co., Ltd. (100%), Western Lead Fund Management Co., Ltd. (51%), Western Advantage Capital Investment Co., Ltd. (100%), and Western Securities Investment (Xi'an) Co., Ltd. (100%)[23](index=23&type=chunk) [Key Financial and Regulatory Indicators](index=19&type=section&id=%E4%B9%9D%E3%80%81%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 2020, the company achieved significant performance growth, with operating revenue increasing by 40.85% to RMB 5.18 billion and net profit attributable to shareholders increasing by 83.07% to RMB 1.12 billion 2020 Key Financial Data (Consolidated) | Indicator | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | **Operating Revenue (RMB)** | 5,184,163,900.03 | 3,680,544,587.40 | 40.85% | | **Net Profit Attributable to Shareholders (RMB)** | 1,117,003,407.01 | 610,163,902.78 | 83.07% | | **Basic Earnings Per Share (RMB/share)** | 0.32 | 0.17 | 88.24% | | **Weighted Average Return on Net Assets** | 6.18% | 3.50% | Increased by 2.68 percentage points | | **Total Assets (RMB)** | 63,862,883,987.81 | 48,598,499,333.65 | 31.41% | | **Net Assets Attributable to Shareholders (RMB)** | 26,016,145,400.03 | 17,658,865,653.66 | 47.33% | Parent Company Core Risk Control Indicators | Indicator | End of Reporting Period | End of Previous Year | Change | | :--- | :--- | :--- | :--- | | **Net Capital (RMB)** | 23,272,965,942.45 | 15,196,154,370.18 | 53.15% | | **Risk Coverage Ratio** | 443.14% | 317.03% | Increased by 126.11 percentage points | | **Capital Leverage Ratio** | 47.15% | 42.55% | Increased by 4.60 percentage points | | **Liquidity Coverage Ratio** | 444.00% | 224.41% | Increased by 219.59 percentage points | | **Net Stable Funding Ratio** | 290.22% | 178.34% | Increased by 111.88 percentage points | - The company's regulatory rating has continuously improved over the past three years, reaching **Class A, Level A in 2020**, a significant improvement from Class B, Level B in 2019 and Class B, Level BB in 2018[35](index=35&type=chunk) [Company Business Overview](index=28&type=section&id=%E7%AC%AC%E4%B8%89%E8%8A%82%20%E5%85%AC%E5%8F%B8%E4%B8%9A%E5%8A%A1%E6%A6%82%E8%A6%81) [Main Businesses, Operating Model, and Core Competencies](index=28&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%E4%BB%8E%E4%BA%8B%E7%9A%84%E4%B8%BB%E8%A6%81%E4%B8%9A%E5%8A%A1) The company's business is divided into six major segments, transitioning from a traditional channel-driven model to a capital and expertise-driven one, supported by strong shareholder backing and a comprehensive financial service platform - The company categorizes its existing businesses into **six major segments**: wealth management, proprietary investment, investment banking, credit business, asset management, and research consulting, to adapt to industry trends and define profit growth paths[54](index=54&type=chunk) - The company's core competencies include: - **Shareholder Support**: Controlling shareholder Shaanxi Investment Group provides strategic support and capital assurance - **Governance Structure**: A sound corporate governance and efficient internal decision-making system - **Regional Advantage**: Deep roots in western China, with a leading market position in Shaanxi Province - **Integrated Platform**: Capability to provide full-chain, one-stop integrated financial services - **Strategic Planning**: Clear strategic goals and market-oriented assessment mechanisms - **Compliance and Risk Control**: A robust compliance and risk control system and stable information systems[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) [Significant Changes in Major Assets](index=29&type=section&id=%E4%BA%8C%E3%80%81%E4%B8%BB%E8%B5%84%E4%BA%A7%E9%87%8D%E5%A4%A7%E5%8F%98%E5%8C%96%E6%83%85%E5%86%B5) The company's major assets experienced significant changes, with cash and equivalents increasing by 74.96% and receivables by 164.43%, while buy-back financial assets and debt investments decreased due to risk reduction Explanation of Significant Changes in Major Assets | Major Asset | Change (%) | Explanation of Significant Change | | :--- | :--- | :--- | | Cash and Bank Balances | 74.96% | Primarily due to increased funds raised from non-public stock offerings and bond issuances this year | | Funds Lent | 40.15% | Due to increased scale of financing business at year-end | | Accounts Receivable | 164.43% | Primarily due to increased securities clearing receivables at year-end | | Financial Assets Purchased Under Resale Agreements | -44.93% | Primarily due to reduced scale of stock pledge repurchase business and impairment provisions | | Debt Investments | -80.17% | Due to reduced scale of bond investments at year-end | | Construction in Progress | 55.45% | Primarily due to increased office building construction projects | [Management Discussion and Analysis](index=31&type=section&id=%E7%AC%AC%E5%9B%9B%E8%8A%82%20%E7%BB%8F%E8%90%A5%E6%83%85%E5%86%B5%E8%AE%A8%E8%AE%BA%E4%B8%8E%E5%88%86%E6%9E%90) [Operating Overview](index=31&type=section&id=%E4%B8%80%E3%80%81%E6%A6%82%E8%BF%B0) In 2020, the company achieved rapid performance growth, with operating revenue increasing by 40.85% to RMB 5.18 billion and net profit by 83.73% to RMB 1.13 billion, significantly outperforming industry averages - In 2020, the company's performance grew significantly, with consolidated operating revenue reaching **RMB 5.18 billion**, a **40.85% year-on-year increase**, and net profit reaching **RMB 1.13 billion**, an **83.73% year-on-year increase**, with key operating indicators significantly exceeding industry averages[64](index=64&type=chunk) - The company completed a non-public offering of A-shares in 2020, raising a total of **RMB 7.5 billion** to enhance its capital strength, risk resistance, and core competitiveness[62](index=62&type=chunk) [Analysis of Main Businesses](index=31&type=section&id=%E4%BA%8C%E3%80%81%E4%B8%BB%E8%90%A5%E4%B8%9A%E5%8A%A1%E5%88%86%E6%9E%90) In 2020, all main business segments developed well, with wealth management and investment banking showing strong growth, while asset management underwent transformation 2020 Operating Revenue Composition (Consolidated) | Business Category | Amount (RMB) | Proportion of Operating Revenue | YoY Change | | :--- | :--- | :--- | :--- | | **Net Fee and Commission Income** | 1,816,536,623.38 | 35.04% | 44.32% | | Brokerage Business | 1,036,978,206.13 | 20.00% | 57.43% | | Investment Banking Business | 529,377,541.89 | 10.21% | 66.72% | | Asset Management Business | 12,425,572.52 | 0.24% | -44.40% | | **Net Interest Income** | 248,751,999.74 | 4.80% | 10.51% | | **Investment Income** | 1,555,235,430.72 | 30.00% | 4.90% | | **Gains/Losses from Changes in Fair Value** | 211,401,901.73 | 4.08% | 32.09% | | **Other Business Income** | 1,309,653,600.76 | 25.26% | 150.59% | - Credit impairment losses significantly decreased by **60.25% year-on-year**, primarily due to reduced impairment losses from stock pledge business, positively contributing to profit growth[69](index=69&type=chunk)[70](index=70&type=chunk) - The investment banking segment achieved operating revenue of **RMB 518 million**, a **71.50% year-on-year increase**. In equity-related businesses, the company underwrote and sponsored **8 IPO projects**, marking the best performance in the company's investment banking history[80](index=80&type=chunk) [Analysis of Assets and Liabilities](index=39&type=section&id=%E4%BA%94%E3%80%81%E8%B5%84%E4%BA%A7%E5%8F%8A%E8%B4%9F%E5%80%BA%E7%8A%B6%E5%86%B5%E5%88%86%E6%9E%90) As of year-end 2020, total assets reached RMB 63.86 billion, with a 31.41% increase, while total liabilities grew by 22.34% to RMB 37.75 billion, reflecting strong liquidity and a reasonable debt structure Major Balance Sheet Item Changes | Item | 2020 Year-end (RMB) | 2019 Year-end (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Assets** | 63,862,883,987.81 | 48,598,499,333.65 | 31.41% | | Cash and Bank Balances | 21,125,476,461.86 | 12,074,739,149.97 | 74.96% | | Trading Financial Assets | 27,946,573,750.05 | 23,611,853,750.30 | 18.36% | | Funds Lent | 6,436,584,433.54 | 4,592,771,030.85 | 40.15% | | **Total Liabilities** | 37,754,888,216.16 | 30,861,813,589.80 | 22.34% | | Financial Assets Sold Under Repurchase Agreements | 12,305,344,624.31 | 11,836,826,524.89 | 3.96% | | Client Funds Held on Behalf of Clients | 13,578,964,783.11 | 12,093,603,887.85 | 12.28% | | Bonds Payable | 4,031,848,110.76 | 2,299,073,939.48 | 75.37% | | Short-term Financing Payables | 3,011,736,986.30 | 0.00 | Not applicable | - The company's financing channels include debt financing (bond repurchase, interbank borrowing, corporate bond issuance) and equity financing. As of year-end 2020, excluding client funds held on behalf of clients, total liabilities were **RMB 24.18 billion**, a **28.81% year-on-year increase**[99](index=99&type=chunk)[100](index=100&type=chunk) [Analysis of Major Controlled and Invested Companies](index=49&type=section&id=%E5%85%AB%E3%80%81%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) Subsidiary performance varied, with Western Futures and Western Lead Fund showing strong growth, Western Securities Investment achieving a good start with STAR Market follow-on investments, while Western Advantage Capital's business slowed Major Controlled and Invested Companies' 2020 Operating Performance | Company Name | Net Assets (RMB) | Operating Revenue (RMB) | Net Profit (RMB) | | :--- | :--- | :--- | :--- | | Western Futures Co., Ltd. | 531,698,773.18 | 1,442,340,130.49 | 29,274,243.31 | | Western Advantage Capital Investment Co., Ltd. | 289,481,571.04 | -60,818,449.47 | -56,994,742.24 | | Western Securities Investment (Xi'an) Co., Ltd. | 423,747,058.70 | 34,178,261.74 | 23,387,586.15 | | Western Lead Fund Management Co., Ltd. | 187,449,738.04 | 278,298,183.16 | 29,454,704.38 | [Future Development Outlook and Risks](index=51&type=section&id=%E5%8D%81%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E6%9C%AA%E6%9D%A5%E5%8F%91%E5%B1%95%E7%9A%84%E5%B1%95%E6%9C%9B) The company aims to become a leading listed brokerage firm by focusing on customer-centricity, strengthening asset-liability management, advancing financial technology, and exploring international development, while actively managing various risks - The company's future development strategies include: - **Adhering to the Party Committee's leadership** - **Providing full-lifecycle financial services** - **Strengthening asset-liability management** - **Promoting client structure upgrade** - **Enhancing financial technology leadership** - **Deepening compliance and risk control for synergistic efficiency** - **Exploring international development**[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) - The company faces major risk factors including **policy risk**, **market risk**, **credit risk**, **liquidity risk**, **operational risk**, **compliance risk**, **innovation business risk**, **talent loss risk**, **goodwill impairment risk**, and **reputation risk**[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) [Significant Matters](index=57&type=section&id=%E7%AC%AC%E4%BA%94%E8%8A%82%20%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A1%B9) [Profit Distribution](index=57&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E6%99%AE%E9%80%9A%E8%82%A1%E5%88%A9%E6%B6%A6%E5%88%86%E9%85%8D%E5%8F%8A%E8%B5%84%E6%9C%AC%E5%85%AC%E7%A7%AF%E9%87%91%E8%BD%AC%E5%A2%9E%E8%82%A1%E6%9C%AC%E6%83%85%E5%86%B5) The company adheres to its cash dividend policy, proposing a 2020 dividend of RMB 0.76 per 10 shares, totaling RMB 340 million, representing 30.41% of net profit attributable to shareholders Cash Dividend Distribution of Common Shares in the Last Three Years | Dividend Year | Dividend per 10 Shares (RMB) (Tax Inclusive) | Cash Dividend Amount (RMB) (Tax Inclusive) | Ratio to Net Profit Attributable to Shareholders | | :--- | :--- | :--- | :--- | | 2020 | 0.76 | 339,688,209.58 | 30.41% | | 2019 | 0.63 | 220,615,905.51 | 36.16% | | 2018 | 0.58 | 203,106,706.66 | 101.33% | [Major Litigation and Arbitration](index=64&type=section&id=%E5%8D%81%E4%B8%80%E3%80%81%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) The company is involved in multiple major lawsuits, primarily related to defaults in stock pledge repurchase business and as lead underwriter for '16 Shengyun 01' corporate bonds, actively pursuing legal remedies - Lawsuits with stock pledge business clients such as Jia Yueting, Jia Yuemin, and Liu Hong have reached settlement and entered enforcement procedures, but some cases have been terminated due to the absence of executable assets from the defendants[179](index=179&type=chunk)[180](index=180&type=chunk) - As the lead underwriter for the '16 Shengyun 01' corporate bond, the company faces multiple lawsuits from investors seeking joint liability for compensation, with related cases still under trial[323](index=323&type=chunk) [Significant Post-Balance Sheet Events](index=74&type=section&id=%E5%8D%81%E4%B9%9D%E3%80%81%E5%85%B6%E4%BB%96%E9%87%8D%E5%A4%A7%E6%9C%9F%E5%90%8E%E4%BA%8B%E9%A1%B9%E7%9A%84%E8%AF%B4%E6%98%8E) Post-reporting period, the company completed a RMB 7.5 billion non-public A-share offering, recognized RMB 122 million in asset impairment provisions, and saw changes in senior management - The company's non-public offering of **967,741,935 A-shares** successfully listed, raising a total of **RMB 7.5 billion**, increasing total share capital to **4,469,581,705 shares** after issuance[206](index=206&type=chunk) - In the fourth quarter of 2020, the company recognized **RMB 122 million** in various asset impairment provisions, primarily related to pledged shares of 'LeTV.com', 'Kingold Jewelry', and '17 Yinji Entertainment CP001' among other financial assets[207](index=207&type=chunk) - Changes occurred in the company's senior management, with former General Manager Mr. He Fang resigning and the Board of Directors appointing Mr. Qi Bing as the new General Manager[208](index=208&type=chunk) [Share Changes and Shareholder Information](index=86&type=section&id=%E7%AC%AC%E5%85%AD%E8%8A%82%20%E6%99%AE%E9%80%9A%E8%82%A1%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) [Share Changes](index=86&type=section&id=%E4%B8%80%E3%80%81%E8%82%A1%E4%BB%BD%E5%8F%98%E5%8A%A8%E6%83%85%E5%86%B5) Due to a non-public A-share offering, the company's total share capital increased from 3.50 billion shares to 4.47 billion shares, with new shares being restricted and listed in January 2021 - Due to a non-public offering of A-shares, the company's total share capital increased by **967,741,935 shares** to **4,469,581,705 shares**[225](index=225&type=chunk)[226](index=226&type=chunk) [Shareholders and Ultimate Controlling Party](index=88&type=section&id=%E4%B8%89%E3%80%81%E8%82%A1%E4%B8%9C%E5%92%8C%E5%AE%9E%E9%99%85%E6%8E%A7%E5%88%B6%E4%BA%BA%E6%83%85%E5%86%B5) As of year-end 2020, the company had 183,981 shareholders, with Shaanxi Investment Group Co., Ltd. as the controlling shareholder and ultimate controlling party, holding 27.45% of shares Top Ten Shareholders' Shareholding (As of Year-end 2020) | Shareholder Name | Shareholder Nature | Shareholding Ratio (%) | Number of Shares Held (shares) | | :--- | :--- | :--- | :--- | | Shaanxi Investment Group Co., Ltd. | State-owned Legal Person | 27.45% | 961,370,818 | | Shanghai Chengtou Holding Co., Ltd. | State-owned Legal Person | 13.09% | 458,496,467 | | Western Trust Co., Ltd. | State-owned Legal Person | 9.79% | 342,775,944 | | Beijing Yuanda Huachuang Investment Co., Ltd. | Domestic General Legal Person | 3.37% | 117,894,200 | | Central Huijin Asset Management Co., Ltd. | State-owned Legal Person | 1.75% | 61,178,040 | - Controlling shareholder Shaanxi Investment Group Co., Ltd. also holds **57.78%** equity in Western Trust Co., Ltd., the third largest shareholder, constituting an affiliated relationship and concerted action[236](index=236&type=chunk) [Directors, Supervisors, Senior Management, and Employees](index=94&type=section&id=%E7%AC%AC%E4%B9%9D%E8%8A%82%20%E8%91%A3%E4%BA%8B%E3%80%81%E7%9B%91%E4%BA%8B%E3%80%81%E9%AB%98%E7%BA%A7%E7%AE%A1%E7%90%86%E4%BA%BA%E5%91%98%E5%92%8C%E5%91%98%E5%B7%A5%E6%83%85%E5%86%B5) [Changes in Directors, Supervisors, Senior Management, and Remuneration](index=94&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E7%8E%B0%E4%BB%BB%E5%8F%8A%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E7%A6%BB%E4%BB%BB%E8%91%A3%E4%BA%8B%E3%80%81%E7%9B%91%E4%BA%8B%E5%92%8C%E9%AB%98%E7%BA%A7%E7%AE%A1%E7%90%86%E4%BA%BA%E5%91%98%E6%8C%81%E8%82%A1%E5%8F%98%E5%8A%A8%E5%8F%8A%E6%8A%A5%E9%85%AC%E6%83%85%E5%86%B5) Senior management changes occurred with Mr. Qi Bing appointed as General Manager, while the company's workforce is young and highly educated, with over 85% holding bachelor's degrees or higher - Post-reporting period, General Manager He Fang resigned and was succeeded by Qi Bing; Qi Bing's former roles as Compliance Director and Chief Risk Officer were taken over by Chen Wei; the company also appointed Zhu Song as a new Deputy General Manager[258](index=258&type=chunk) Employee Structure | Item | Category | Number of People | Proportion | | :--- | :--- | :--- | :--- | | **Age Distribution** | 35 years old and below | 1455 | 52.43% | | | 36 to 50 years old | 1150 | 41.45% | | | 51 years old and above | 170 | 6.12% | | **Education Level** | Master's degree and above | 811 | 29.22% | | | Bachelor's degree | 1565 | 56.40% | | | Junior college and below | 399 | 14.38% | [Corporate Governance](index=102&type=section&id=%E7%AC%AC%E5%8D%81%E8%8A%82%20%E5%85%AC%E5%8F%B8%E6%B2%BB%E7%90%86) [Corporate Governance and Internal Control](index=102&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E6%B2%BB%E7%90%86%E7%9A%84%E5%9F%BA%E6%9C%AC%E7%8A%B6%E5%86%B5) The company maintains a robust corporate governance structure and internal control system, operating in compliance with regulations, with no significant internal control deficiencies identified - The company has established a corporate governance structure comprising the shareholders' meeting, board of directors, supervisory board, and management, with clear responsibilities and standardized operations. During the reporting period, **3 shareholders' meetings**, **10 board meetings**, and **6 supervisory board meetings** were held[270](index=270&type=chunk) - The company has established a comprehensive compliance management organizational system, ensuring compliance management covers all business departments, branches, subsidiaries, and all staff[293](index=293&type=chunk) - According to the company's internal control evaluation report, no material weaknesses or significant deficiencies in internal control were identified during the reporting period. The accounting firm issued a standard unqualified attestation report on internal control[303](index=303&type=chunk)[307](index=307&type=chunk) [Corporate Bonds Information](index=115&type=section&id=%E7%AC%AC%E5%8D%81%E4%B8%80%E8%8A%82%20%E5%85%AC%E5%8F%B8%E5%80%BA%E5%88%B8%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5) [Overview of Corporate Bonds and Debt Repayment Capability](index=115&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E5%80%BA%E5%88%B8%E5%9F%BA%E6%9C%AC%E6%83%85%E5%86%B5) The company issued RMB 7 billion in new bonds, enhancing its capital structure and improving debt repayment capability, with all maturing bonds repaid on time Corporate Bonds Issued During the Reporting Period | Bond Name | Bond Code | Issue Date | Maturity Date | Bond Balance (RMB 100 million) | Interest Rate | | :--- | :--- | :--- | :--- | :--- | :--- | | 20 Western 01 | 149176 | 2020-7-27 | 2023-7-27 | 20.00 | 3.77% | | 20 Western 02 | 149216 | 2020-8-28 | 2022-8-28 | 20.00 | 3.68% | | 20 Western D1 | 117599 | 2020-11-27 | 2021-11-27 | 30.00 | 4.20% | Key Debt Repayment Capability Indicators | Indicator | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Asset-Liability Ratio | 48.08% | 51.41% | Decreased by 3.33 percentage points | | EBITDA to Total Debt Ratio | 9.79% | 8.57% | Increased by 1.22 percentage points | | Interest Coverage Ratio | 3.88 | 2.29 | 69.43% | [Financial Report](index=121&type=section&id=%E7%AC%AC%E5%8D%81%E4%BA%8C%E8%8A%82%20%E8%B4%A2%E5%8A%A1%E6%8A%A5%E5%91%8A) [Audit Report](index=122&type=section&id=%E5%AE%A1%E8%AE%A1%E6%8A%A5%E5%91%8A) ShineWing Certified Public Accountants issued a standard unqualified audit opinion on the 2020 financial report, with key audit matters identified as impairment provisions for funds lent and financial assets purchased under resale agreements, and fair value assessment of financial assets - The auditing firm is ShineWing Certified Public Accountants (Special General Partnership), which issued a standard unqualified audit opinion[343](index=343&type=chunk) - Key audit matters include: - **Impairment provisions for funds lent and financial assets purchased under resale agreements**: Due to the complexity of the expected credit loss measurement model, involving significant management judgment and assumptions, and material amounts[345](index=345&type=chunk) - **Fair value assessment of financial assets**: Due to the material amount of financial assets measured at fair value, and the complexity of valuing some assets, involving significant management judgment[346](index=346&type=chunk) [Consolidated Financial Statements](index=128&type=section&id=%E5%90%88%E5%B9%B6%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) In 2020, total assets reached RMB 63.86 billion, with net profit attributable to parent company shareholders of RMB 1.12 billion, while operating cash flow was negative due to increased trading financial assets and repurchase business Consolidated Balance Sheet Summary (December 31, 2020) | Item | Amount (RMB) | | :--- | :--- | | **Total Assets** | **63,862,883,987.81** | | Cash and Bank Balances | 21,125,476,461.86 | | Trading Financial Assets | 27,946,573,750.05 | | Funds Lent | 6,436,584,433.54 | | **Total Liabilities** | **37,754,888,216.16** | | Client Funds Held on Behalf of Clients | 13,578,964,783.11 | | Financial Assets Sold Under Repurchase Agreements | 12,305,344,624.31 | | Bonds Payable | 4,031,848,110.76 | | **Total Shareholders' Equity** | **26,107,995,771.65** | | Total Equity Attributable to Parent Company Shareholders | 26,016,145,400.03 | Consolidated Income Statement Summary (2020) | Item | Amount (RMB) | | :--- | :--- | | **Operating Revenue** | **5,184,163,900.03** | | Net Fee and Commission Income | 1,816,536,623.38 | | Investment Income | 1,555,235,430.72 | | Other Business Income | 1,309,653,600.76 | | **Operating Expenses** | **3,662,320,969.61** | | Business and Management Expenses | 2,078,321,628.18 | | Other Business Costs | 1,297,280,757.92 | | **Total Profit** | **1,508,204,719.84** | | **Net Profit** | **1,132,258,688.44** | | Net Profit Attributable to Parent Company Shareholders | 1,117,003,407.01 |